B. C. Meale's Pty Ltd v Construction, Forestry, Mining and Energy Union
[2010] FWA 8584
•8 NOVEMBER 2010
[2010] FWA 8584 |
|
DECISION |
Fair Work Act 2009
s.320 - Application to vary a transferable instrument - an agreement
B. C. Meale's Pty Ltd
v
Construction, Forestry, Mining and Energy Union
(AG2010/18175)
Building, metal and civil construction industries | |
SENIOR DEPUTY PRESIDENT RICHARDS | BRISBANE, 8 NOVEMBER 2010 |
Summary: whether transferrable instrument can be varied in a transfer of business to reduce pay rates and allowances.
[1] This application under s.320 of the Fair Work Act 2009 (“the Act”) concerns the variation of a transferable instrument (in this case, the applicable enterprise agreement). The terms of s.320 of the Act are set out later in this decision. I issued a provisional decision, which scoped the relevant issues and was intended to be of assistance to the parties, on 18 October 2010 [2010 FWA 7964] (“the earlier decision”).
[2] The transferable instrument in question is the Brisbane Concrete Pumping Meal’s Pty Ltd CFMEU Collective Agreement 2009-2011, which was certified by FWA in November 2009. The nominal expiry date of the agreement is 31 March 2011.
[3] Having set out in the earlier decision some of the issues that were important to the issue of construction that was in contest, I invited the Applicant, B.C. Meale’s Pty Ltd (“BCM”), which is the new employer for the Act’s purposes, to review whether it wished to press the matter. The Applicant elected to do so on 26 October 2010 and the matter subsequently was bought on for hearing on 3 November 2010. The Construction, Forestry, Mining and Energy Union (“CFMEU”) is covered by the transferable instrument to which the employer and the transferring employees are a party to. The CFMEU opposed the application.
[4] The application before me seeks to vary the transferable instrument, an enterprise agreement that is to transfer along with the transferring employees upon the transfer of business within the relevant corporate structure. That is, Brisbane Concrete Pumping Meale’s Ltd (“BCPM”) seeks to transfer a component of its business (the mobile concrete pumping business) to BCM, which proposes to conduct a new business in the field of mobile concrete pumping.
[5] Both BCM and BCPM are related corporate entities within the Brisbane Concrete Pumping Group of companies (“BCPG”).
[6] The variation to the transferable instrument that is sought concerns a reduction in the wages and the allowances of the transferring employees below those that currently exist so that transferrable instrument but, it is submitted, in excess of the applicable Modern Award. The applicable Modern Award is the Building and Construction General On-Site Award 2010. It was also put to me as submission that the transferrable employees would also enjoy continuity of service, in all respects.
[7] The essential background to the application is as follows:
- BCPM is current covered by the transferable instrument and conducts an integrated high rise concrete pumping and mobile concrete pumping business under its terms.
- the reason for this application to vary the transferable instrument is that it is said that the market conditions in Brisbane have not evolved as forecast and BCPM has found itself a party to an enterprise agreement the rates and allowances for which are proving to be a commercial constraint upon its ability to be competitive within the mobile concrete pumping market. BCPM faces competition from 100 other competitors in the mobile concrete pumping market.
- the commercial position of BCPM has been precarious at times, having only come out of receivership in January 2009 by way of what appears to be significant, new investments from current investors.
- BCPM now seeks to transfer its mobile concrete pumping business to an related entity within BCPG (that is, to BCM) and to vary the relevant transferable instrument (the details of which are set out below) to reduce the wages and allowances of those (32 permanent 1) employees covered by the transferable instrument who fall within classifications relating to the mobile concrete pumping aspects of the employer’s business.
- The transferable instrument, as the agreement, also applies to (nine permanent) employees who are covered by classifications relevant to the high rise concrete pumping business. It is not intended that the variations to the transferable instrument extend to these classifications and these employees, upon the transferable instrument transferring to BCM. These employees would continue to be covered by the agreement as employees of BCPM and the high rise concrete pumping business would not transfer to BCM.
[8] Section 320 of the Act reads as follows:
320 Variation of transferable instruments
Application of this section
(1) This section applies in relation to a transferable instrument that covers, or is likely to cover, the new employer because of a provision of this Part.
Power to vary transferable instrument
(2) FWA may vary the transferable instrument:
(a) to remove terms that FWA is satisfied are not, or will not be, capable of meaningful operation because of the transfer of business to the new employer; or
(b) to remove an ambiguity or uncertainty about how a term of the instrument operates if:
(i) the ambiguity or uncertainty has arisen, or will arise, because of the transfer of business to the new employer; and
(ii) FWA is satisfied that the variation will remove the ambiguity or uncertainty; or
(c) to enable the transferable instrument to operate in a way that is better aligned to the working arrangements of the new employer’s enterprise.
Who may apply for a variation
(3) FWA may make the variation only on application by:
(a) a person who is, or is likely to be, covered by the transferable instrument; or
(b) if the application is to vary a named employer award—an employee organisation that is entitled to represent the industrial interests of an employee who is, or is likely to be, covered by the named employer award.
Matters that FWA must take into account
(4) In deciding whether to make the variation, FWA must take into account the following:
(a) the views of:
(i) the new employer or a person who is likely to be the new employer; and
(ii) the employees who would be affected by the transferable instrument as varied;
(b) whether any employees would be disadvantaged by the transferable instrument as varied in relation to their terms and conditions of employment;
(c) if the transferable instrument is an enterprise agreement—the nominal expiry date of the agreement;
(d) whether the transferable instrument, without the variation, would have a negative impact on the productivity of the new employer’s workplace;
(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument, without the variation;
(f) the degree of business synergy between the transferable instrument, without the variation, and any workplace instrument that already covers the new employer;
(g) the public interest.
Restriction on when variation may come into operation
(5) A variation of a transferable instrument under subsection (2) must not come into operation before the later of the following:
(a) the time when the transferable instrument starts to cover the new employer;
(b) the day on which the variation is made. [My emphasis]
[9] Section 320(2) of the Act sets out the scope of the power to vary a transferable instrument. FWA may vary the transferable instrument only for the purposes prescribed in s.320(2)(a), s.320(2)(b)(i) and s.320(2)(b)(ii), and s.320(2)(c) of the Act.
[10] The application before does not deal with the circumstances contemplated in s.320(2)(a), or s.320(2)(b)(i) or s.320(2)(b)(ii) of the Act. The application concerns only s.320(2)(c) of the Act.
[11] The critical question posed by the application is whether s.320(2)(c) of the Act, in so far as it relates to “working arrangements”, envisages variations to transferable instruments that affect employees’ pay rates and allowances. Consequently, this matter concerns the power of FWA to give effect to the application as made.
SUMMARY OF APPLICANT’S CONTENTIONS
[12] I have attempted to summarise the Applicant’s contentions in support of the applications as follows. In an effort to be concise I may have sacrificed some of the felicity of the Applicant’s argument.
[13] It was put to me in these proceedings, as well as the earlier proceedings, that I should consider a purposive approach to the construction of s.320(2)(c) of the Act in the context of the relevant Part, including the objects of the Part, which are set out at s.309 of the Act. The objects of the Part envisage the machinery provisions of the Part to be a means of balancing the protection of employees’ “terms and conditions of employment under enterprise agreements” with the operational and commercial interest of employers.
[14] In this sense, I was invited to construe “working arrangements”, for the purposes of s.320(2)(c) of the Act, to be a synonym for the arguably wider notion of “terms and conditions of employment”, which reasonably implies a reference to pay rates and allowances.
[15] To buttress this submission, it was put to me further that s.320(2)(c) of the Act should be read in conjunction with s.320(4)(e) of the Act. Section 320(4)(e) of the Act requires FWA to take into account whether without the variation the new employer would incur significant economic disadvantage as a result of the transferable instrument.
[16] This provision, it was argued, focused the attention of FWA upon the financial position of the new employer for purposes of considering whether to make an order for the variation. The nexus between the reference to “economic disadvantage” in s.320(4)(e) of the Act and the financial position of the employer arises from the words of the Supplementary Explanatory Memorandum.
[17] Item 149 of the Supplementary Explanatory Memorandum refers to s.320(4)(e) of the Act, amongst other sub sections as newly introduced in s.320(4) of the Act (in respect of the Fair Work Bill 2008), and reads as follows:
Item 4 – Clause 320
149. This item amends clause 320 to include additional matters that FWA must take into account when deciding whether to make a variation under subclause 320(1). This is intended to ensure that FWA has regard to the new employer’s financial position, the efficient operation of the new employer’s enterprise and the degree of fit between any transferable instrument and arrangements that already exist in the new employer’s enterprise. (My emphasis)
[18] The elemental point is that if s.320(4)(e) of the Act concerns the new employer’s financial position, that is strongly suggestive that FWA is being invited to considering, within the context of s.320(2)(c) of the Act, such matters as labour cost inputs.
[19] The structure of s.320(4) of the Act, it was suggested, lends itself further to this construction. This is because s.320(4)(d) and s.320(4)(f) of the Act concern issues relating to productivity and efficiency concerns, which relate to matters concerning the way in which work is organised under the transferable instrument, whilst s.320(4)(e) of the Act concerns impacts upon the new employer’s financial position (which relates to labour cost inputs). The argument being, in effect, that s.320(4)(e) of the Act had no work to do unless it referred to different matters than s.320(4)(d) and s.320(4)(f) of the Act.
[20] An argument was also put to me that a consequential effect of not construing “working arrangements” as encompassing a reference to wage rates and allowances is that employers may be required to make application to ensure the entirety of the transferrable instrument not transfer with the transferring business and the transferring employees. That is, if labour cost inputs could not be reduced directly through s.320(2)(c) of the Act then applicants would be required to make application under s.318 of the Act to ensure that the transferable instrument does not transfer to the new employer in its entirety.
[21] Arguably, such a limitation would make it more difficult for the Act to achieve the objects of Part 2-8 set out at s.309 of the Act because it restricts discrete variations to terms and conditions of employment and makes it less likely to achieve balances or accommodations between employee’s terms and conditions of employment and the commercial interests of employees.
CONSIDERATION
[22] It appears to me that I should of course adopt the modern approach to statutory construction and endeavour to interpret the statute in its relevant context, and not in isolation.
[23] But in so doing, I should not depart without good reason from the plain words of the Act or otherwise strain the ordinary language the Parliament has chosen to use in the relevant provisions.
[24] The words “working arrangements” in s.329(2)(c) of the Act do not in my view appear to be interchangeable with “terms and conditions of employment”.
[25] The ordinary meaning of “working arrangements” appears to me to be no more than a reference to the way in which the work that is required to be performed is arranged. In effect, therefore, the scope of the meaning of “working arrangements” goes to such operational matters as the span of hours, rosters, shifts, cribs breaks and their structures and perhaps RDOs and so forth.
[26] It is not a term that in my view that ordinarily connotes rates of pay and allowances, which are the subject of the current variation application
[27] More widely, the language of s.320(2)(c) of the Act reads:
(c) to enable the transferable instrument to operate in a way that is better aligned to the working arrangements of the new employer’s enterprise.
[28] The alignment of a transferable instrument with the new employer’s working arrangements, again, appears to me to suggest the alignment of operational-type concerns (not to the labour costs structures within the transferable instrument).
[29] I further note that Parliament has elected to use the more ubiquitous term “terms and conditions of employment” elsewhere in the Part (as I have mentioned). But it has chosen to use different language in relation to s.320(2)(c) of the Act.
[30] I note the term “working arrangements” also appears in s.65 of the Act, and there in relation to the National Employment Standard that deals with requests for flexible working arrangements, which includes changes in the hours, patterns and the location of work.
[31] Apart from the ordinary language of the s.320(2)(c) of the Act, it does not appear to me that the wider statutory context in which s.320(2)(c) of the Act should be construed bears otherwise on this construction.
[32] In the first instance, I discern no necessary disjunction between s.320(2)(c) of the Act and s.320(4)(e) of the Act.
[33] It seems to me that the economic disadvantage to which a new employer might be exposed if a variation in the working arrangements was not approved might be a relevant consideration in determining whether to approve the variation. It further seems reasonable to me that working arrangements may cause an employer economic disadvantage, particularly in relation to hours of operation in a capital intensive business, but no doubt in other respects as well.
[34] In my view, the contextual construction only falls into question because of the words of the Supplementary Explanatory Memorandum. Item 149 of the Supplementary Explanatory Memorandum introduces new words (“financial position”) seemingly as a synonym for “economic disadvantage” in s.320(4)(e) of the Act. The “financial position” of a new employer has a different scope of meaning compared to whether the new employer is exposed to “significant economic disadvantage” without the variation.
[35] I do not consider that I should have regard to such parliamentary materials, such as Item 149 of the Supplementary Explanatory Memorandum, that alter the ordinary words of the Act.
[36] In Appeals by National Retail Association Ltd and Master Grocers Australia Ltd against decision of Watson VP of 9 July 2010 – Re: General Retail Industry Award 2010 [2010] FWAFB 7838 (8 October 2010), the Full Bench gave consideration to the meaning of s.157 of the Act, which had been the subject of some commentary through various parliamentary materials, including the Regulatory Impact Statement as was attached, on the occasion of the Fair Work Bill 2008, to the Explanatory Memorandum. As the appropriate approach to construction in circumstances where the parliamentary materials brought new words and qualifications to the plain language of the Act, the Full Bench observed as follows:
In our view synonyms such as exceptional, indispensable and requisite and the compound phrase “exceptional circumstances” are of limited value and their use is likely to lead to confusion. While synonyms might in some circumstances assist in the construction of statutes, they ought not to be substituted for the words that the legislature has used. 1 [My emphasis]
[37] Similarly, in Construction, Forestry, Mining and Energy Union v Tahmoor Coal P/L[2010] FWAFB 3510 (5 May 2010), the Full Bench which considered the construction of s.228 of the Act, where the ordinary language of the Act was subject to construction by reference to extraneous materials and authorities. In that case the Full Bench stated:
Whether a party observes or fails to observe the good faith bargaining requirements set out in s.288(1) is to be determined in light of all of the relevant circumstances. While at one level this is stating the obvious, it is appropriate in view of the submissions in the appeal to indicate that the question will rarely be decided by reference to one action or series of actions. Equally it would be undesirable to read into the legislation concepts which do not already appear in it for the purpose of explaining its operation. That approach is likely to lead to error in the construction and application of the provisions. 2 [My emphasis]
[38] In light of these authorities, I am further not inclined to construe s.320(4)(e) of the Act as having meaning beyond its ordinary meaning, and because of this, I do not discern any disjunction with s.320(2)(c) of the Act (as I have found its scope of meaning to be).
[39] The Applicant in this matters asks further that I should adopt a purposive approach and construe “working arrangements” in a wider context such as “terms and conditions of employment” for purposes of s.309 of the Act (and noting also that s.320(4)(b) of the Act makes a similar reference).
[40] I have no doubt that “working arrangements” form a sub set of an employee’s terms and conditions of employment, but I do not conceive them as being a common set, let alone interchangeable industrial concepts or synonyms.
[41] Consequently, I do not readily discern any incompatibility between s.309 of the Act and s.320(4)(b) of the Act and the meaning I have attributed to s.320(2)(c) of the Act. In respect of s.320(4)(b) of the Act, it is of no surprise that working arrangements may affect terms and conditions of employment (as may the consequences of other matters that might arise in s.320(2)(a) and s.320(b) of the Act). Again, I do not discern any necessary disjunction in relation to the relationship between the language of the Part or the objects or the Part and its particular provisions that should cause me to adopt a wider scope of meaning to s.320(2)(c) than the ordinary scope of meaning that I have adopted.
[42] Finally, I deal with the argument that in the absence of a capacity to vary pay rates and allowances by way of the operation of s.320(2)(c) of the Act, parties would be left with the option of seeking to make application (under s.318 of the Act) that the transferrable instrument in its entirety not transfer to the new employer.
[43] I am not able to take this argument very far. I am not able to draw an inference from this that I should read the ordinary language of s.320(2)(c) in a different way. The fact that Parliament has chosen the language it has and has limited the scope of variations to transferable instruments in business transfer contexts (at least on the construction I have preferred) is ultimately a matter of policy, and an issue for the Parliament, consequently.
[44] I have previously provided some comment to the parties as to the avenues for varying agreements and transferable instruments. These are set out in my earlier decision. I would reserve comment, however, upon the manner of varying enterprise agreements that have transferred along with a set of transferable employees to a new employer but where the agreement continues to operate in relation to another set of employees and the “original” employer. That is a situation that could arise prospectively in relation to the current matter.
[45] Those observations aside, given the above discussion, I dismiss the application before me under s.320(2)(c) of the Act as on the construction I have preferred, the application is not within the jurisdiction of FWA. That is, FWA does not have the power to vary the transferable instrument in the manner sought by the Applicant.
SENIOR DEPUTY PRESIDENT
Appearances:
Mr. S. Dewberry of Freehills for the Applicant
Mr. K. Crank of the Construction, Forestry, Mining and Energy Union
Hearing details:
2010.
Brisbane.
November 3.
1 Appeals by National Retail Association Ltd and Master Grocers Australia Ltd against decision of Watson VP of 9 July 2010 – Re: General Retail Industry Award 2010 [2010] FWAFB 7838 (8 October 2010) at PNS 21 and 23
2 Construction, Forestry, Mining and Energy Union v Tahmoor Coal P/L[2010] FWAFB 3510 (5 May 2010) at PN 24
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