Barrier Social Democratic Club Ltd v Broken Hill Town Employees' Union, The

[2018] FWC 877

[2018] FWC 877

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s 739 - Application to deal with a dispute

Barrier Social Democratic Club Ltd
v
Broken Hill Town Employees' Union, The
(C2017/2933)

DEPUTY PRESIDENT SAMS SYDNEY, 8 FEBRUARY 2018

Application for the Commission to deal with a dispute under an Agreement’s dispute settlement procedure – club industry in Broken Hill NSW – negotiations for a new agreement – concurrent underpayment claims from former Duty Managers – claims of failure to pay overtime or provide reasonable hours – significant deterioration in Club’s financial viability – allegation that claims are ‘derailing’ negotiations – exemption rates for managers under the Agreement and the relevant Modern Award – interpretation of Agreement clause – principles of agreement interpretation – words in disputed clause not ambiguous, uncertain or capable of more than one meaning – Union’s interpretation illogical and contrary to the clear and unambiguous meaning of the words used – managers received a 30% loading in lieu of cl 26 and 22 of the Agreement – Club’s interpretation consistent with industry wide practice and terms of Modern Award – Union’s claims on behalf of four former Duty Managers must be rejected – dispute determined in accordance with relief proposed by Club – the correct interpretation of cl 15 of the Agreement is that former and existing Managers who receive the Manager exemption rates are not entitled to any of the entitlements or conditions under clauses 13, 17, 22, 23, 26 and 27 of the Agreement.

BACKGROUND

[1] On 1 June 2017, the Barrier Social Democratic Club (the ‘Club’) lodged an application, pursuant to s 739 of the Fair Work Act 2009 (the ‘Act’), which requests the Fair Work Commission (the ‘Commission’) to deal with a dispute in accordance with the Dispute Settlement Procedure (‘DSP’) under an Agreement; namely, the Barrier Social Democratic Club Limited Management Enterprise Agreement 2014 (the ‘Agreement’). The application identifies the Broken Hill Town Employees’ Union (the ‘BHTEU’ or the ‘Union’) as the respondent to the dispute.

[2] Relevantly, the Club is currently engaged in negotiations for new enterprise agreements to cover some 80 employees of the Club engaged in non-managerial and managerial positions. The two agreements which are to be replaced are:

• The Barrier Social Democratic Club Limited – Management Enterprise Agreement 2014 (AE407866); and

• The Barrier Social Democratic Club Limited – Enterprise Agreement 2011(AE891617).

[3] The negotiations commenced in December 2015 and have coincided with a significant deterioration in the Club’s financial viability. In or around March 2017, Ms Rosslyn Ferry, Secretary of the Union, and representing four former Duty Managers of the Club, wrote to the Club formalising claims of underpayment for the former employees. Ms Ferry claimed the former employees had been underpaid for over two years, in that they had not been paid overtime after 38 hours per week, in circumstances where they were required to work 45 hours per week. The amounts of underpayment were not insignificant. In the context of the Club’s deteriorating financial position, the Club’s response, was that these claims (if granted) would cripple the Club and possibly force its closure. In any event, the Club strenuously denied any claims of underpayment. It responded that managerial employees were not entitled to overtime or ordinary hours of work and rosters, consistent with the exemptions of a number of agreement conditions because the Managers received a 30% loading under cl 15 of the Agreement (the ‘Managers Exemption Rate’ or the ‘Exemption Rate’ ).

[4] On 8 May 2017, the Club made an application under s 240 of the Act for the Commission to deal with a dispute in respect to the non-managerial enterprise Agreement. This notification also set out the difficulties the Club was encountering in respect to the intersection of the underpayment claims for the former Duty Managers with the negotiations for the bulk of the employees covered by the non-managerial Agreement. While a telephone conference with the parties on 29 May 2017 failed to make any headway in resolving the s 240 dispute, it was obvious that this s 739 notification related to and overtook the issues the Club sought to resolve by the earlier application.

[5] Within this context, the Club’s dispute notification was filed on 1 June 2017 because the Club believed the Union was encouraging existing and former employees to join its campaign of underpayment claims against the Club and thereby ‘derail’ progress in negotiations for a new Agreement covering the Club’s non-managerial employees. It further alleged the Union was creating a culture of mistrust amongst the workforce.

[6] The relief sought by the Club was set out as:

‘The Fair Work Commission exercises its powers to provide an interpretation of Clause 15 that is consistent with that provided by the Fair Work Ombudsman, industry practice and the Club’s interpretation of the agreement.’

[7] The Commission convened conferences with the parties on 7 and 25 July 2017. No settlement of the dispute could be reached and directions were issued for the filing and service of submissions, witness statements and any documentary evidence relied upon by the parties. Ms H Carayannis, Solicitor (H&R Workplace Strategies) represented the Club and Mr R Ferry, Solicitor (Ferry’s Law Firm) represented the Union, with permission being granted, pursuant to s 596 of the Act, for both parties to be legally represented.

[8] Notwithstanding three witness statements were filed in the proceeding, the parties agreed that the Commission could determine the dispute ‘on the papers’. The statements were from:

• Ms Karen Howe, General Manager of the Club;

• Mr Peter Cooper, Senior Industrial Advocate for the Club Managers’ Association of Australia (the ‘CMA’); and

• Ms Rosslyn Ferry, Secretary, Broken Hill Town Employees’ Union.

[9] At this juncture, it is necessary to set out the Commission’s powers conferred by the parties in the terms of the Agreement’s DSP. Clause 38.5 reads:

38.5 FWC may deal with the dispute in two stages:

38.5.1 FWC will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

38.5.2 if FWC is unable to resolve the dispute at the first stage FWC may then:

a) arbitrate the dispute; and

b) make a determination that is binding on the parties.

Note: If FWC arbitrates the dispute, it may also use the powers that are available to it under the Act. A decision that FWC makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 9.1 of the Act. Therefore, an appeal may be made against the decision.

[10] I do not apprehend any contest as to the Commission’s powers to arbitrate the matter and I will proceed to do so on that basis.

The relevant Agreement provisions

[11] Given the terms of the relief sought by the Club obviously involves an exercise of interpreting cl 15 of the Agreement, I set out that clause in full and the other clauses relied on by the Union in this context.

[12] Clause 15 reads:

15 MANAGER EXEMPTIONS

15.1 The provisions of the following clauses shall not apply to an Employee receiving a salary of 25% in excess of the minimum wage rate for managerial classification levels in accordance with Schedule A:

15.1.1 clause 13 -Higher Duties;

15.1.2 clause 17 - Penalty Rates;

15.1.3 clauses 22 and 23- Ordinary Hours of Work and Rostering;

15.1.4 clause 26- Recall to Duty; and 15.1.5 clause 27- Overtime.

15.2 Notwithstanding sub clause 15.1, Employees that were in receipt of a salary that was 30% in excess of the minimum wage rate for managerial classification levels in accordance with Schedule A, prior to the commencement of the Agreement, shall maintain that percentage.

15.3 The provisions of the following clauses shall not apply to an Employee receiving a salary of 50% in excess of the minimum wage rate for managerial classification levels in accordance with Schedule A:

15.3.1 clause 13- Higher Duties;

15.3.2 clause 17 - Penalty Rates;

15.3.3 subclause 18.2 - Laundry Allowance;

15.3.4 subclause 18.4- Vehicle Allowance;

15.3.5 subclause 18.5 - Meal Allowance;

15.3.6 clauses 22 and 23- Ordinary Hours of Work and Rostering;

15.3. 7 clause 24- Rostered Days Off; 15.3.8 clause 26 - Recall to Duty;

15.3.9 clause 27 - Overtime; and 15.3.1 0 subclause 28.2 and 28.4- Public holidays.

[13] Clause 27 relates to overtime and reads:

27 OVERTIME

27.1 The Club may require Employees to work reasonable overtime at overtime rates.

27.2 All overtime worked by Employees shall be paid at time-and-three-quarters of their ordinary hourly rate of pay.

27.3 Overtime on any day shall stand alone.

27.4 If an Employee is so long on overtime duty that the Employee has not had ten hours' rest before the Employee's next regular starting time, the Employee shall be allowed at least ten hours' rest without deduction of pay or shall be paid at overtime rates for all time of duty until the Employee has had at least ten hours' rest.

27.5 Notwithstanding the rate prescribed in subclause 27.2 at the instigation of the Employee there may be an agreement in writing between the Employee and the Club to take time off in lieu equivalent to the amount for which payment would otherwise have been made. This means that one hour's payment at the rate of time and a half the ordinary hourly rate of pay shall be the equivalent of one-and-a-half hours time off in lieu, or one hour's payment at the rate of double-time the ordinary hourly rate of pay shall be the equivalent of two hours time off in lieu. Such accumulated time must be taken within four weeks from the time of accrual or longer with the prior written approval from the Club.

27.6 An Employee required to work overtime for more than two hours without being notified on the previous day or earlier that they will be so required to work shall be either supplied with a meal by the Club or be paid the allowance prescribed in Schedule C.

[14] Clause 22 deals with Ordinary Hours of Work and Rostering for full time employees and reads:

22 FULL TIME EMPLOYEES

22.1 The ordinary hours of work shall be 152 ordinary hours per four week period, plus reasonable additional hours.

22.2 The margin of hours shall not exceed 14. The Club and an Employee may agree to modify the provisions of this subclause.

22.3 Employees shall be provided a minimum of eight hours time off between ordinary time rostered shifts.

22.4 Employees shall be notified of their rostered days and ROO's as soon as practicable. Any change to a roster shall occur:

22.4.1 by mutual consent at any time; or

22.4.2 by the Club at any time when such a change is necessary because of absence, sickness or other circumstances beyond the Club's control; or

22.4.3 by the Club giving seven days notice for any other reason.

THE EVIDENCE

Ms Karen Howe

[15] Ms Howe is the General Manager of the Club, and has held this position for the last 12 years. Prior to that, she was the Finance and Assistant Manager for 10 years. She has also been a Director of the CMA since 2015 and was a CMA Council Member prior to that.

[16] Ms Howe explained the background to this dispute. The Club is currently covered by two enterprise Agreements; see: para [2] above. Negotiations for replacement agreements have been ongoing since December 2015, mostly via written exchanges. Unfortunately, the Club has suffered a substantial deterioration in its financial viability since negotiations commenced. Ms Howe provided a letter (dated 2 May 2017), from the Club’s accountant, Mr G Russell of Russell Corporate Advisory, warning that the Club must reduce the amount of revenue it expends on wages and entitlements, or risk a withdrawal of its financing (from the Commonwealth Bank of Australia) and face possible closure.

[17] Ms Howe said that Ms Ferry of the BHTEU had written to the Club on 20 March 2017, setting out underpayment claims on behalf of three former Managers. The letter reads:

‘The Broken Hill Town Employees' Union (the Union) acts on behalf of the following former employees of The Demo Club (the Club), who were classified as Duty Managers during their period of employment:

Matt Richards

Bronte Kolinac

Peter Hynes

In brief, the Union claims that, whilst so classified, these employees were rostered 45 hours per week, on a rotating roster, but were only paid 38 hours per week.

As such, I request an urgent meeting in a genuine attempt to resolve this matter and avoid the necessity for a formal claim.

Please contact me on XXXXX or XXXX to arrange a suitable time to meet.’

(A fourth former employee, Mr Darryl Martin, later joined in the claim).

[18] Ms Howe believed that the BHTEU has been actively encouraging other employees (current and former) to join this underpayment campaign. She believed this campaign is derailing negotiations for the non-managerial Agreement and has created a culture of mistrust amongst the staff.

[19] On 21 March 2017, the BHTEU wrote to the Club’s then representative, and asserted that Managers on the Exemption Rate ought to be paid the exempted rate for all ordinary hours. The relevant excerpt of the letter reads:

‘The Union claims that the 30% loading was in lieu of any penalties that may have applied, including the overtime penalty. In essence, the Union claims that the employees were entitled to be paid, at the 130% rate, for all 'ordinary' hours up to a maximum of forty five (45) hours per week.’

[20] The relevant clause of the Agreement - cl 15 - has had similar Management Exemption arrangements throughout the history of enterprise agreements at the Club. The exemption arrangements have been modelled on the equivalent provisions in the various Club Industry Awards, including the Clubs Managers (State) Award and the Registered and Licensed Clubs Award 2010 (the ‘Modern Award’). Clause 17.3 of the Modern Award is the current incarnation of the Manager Exemption Rates and reads:

17.3 Non-application of particular provisions of this award to employees within particular classifications receiving specified salaries

(a) Managerial classifications—levels 7–13 inclusive in clause 17.2

[17.3 varied by PR998378 from 17Jun10]

(i) Subject to the requirements of the NES, the provisions of clauses:

• 18.1(h) – Higher duties
• 18.3 – Broken shifts
• 26 – Ordinary hours of work and rostering (other than sub clause 26.8 – Special provisions for accrued rostered days off – club managers)
• 27 – Recall to duty – club managers
• 28 – Overtime; and
• 29 – Penalty rates

will not apply to a club manager receiving a salary of 20% in excess of the minimum annual salary rates for the appropriate classification prescribed in Schedule C – Classification Definitions

(ii) Subject to the requirements of the NES, the provisions of clauses:

• 18.1(a)—Meal allowance;
• 18.1(c)—Uniforms—club managers;
• 18.1(d)—Vehicle allowance;
• 18.1(h)—Higher duties;
• 18.3—Broken shifts;
• 26—Ordinary hours of work and rostering;
• 27—Recall to duty—club managers;
• 28—Overtime;
• 29—Penalty rates; and
• 34.3—Additional arrangements for full-time employees

will not apply to club managers receiving a salary in excess of 50% above the minimum annual salary rate for the appropriate classification prescribed in Schedule C – Classification Definitions.

(iii) To avoid doubt, where a club manager is not paid in accordance with either paragraph (i) or (ii) above, the club manager will be entitled to the benefits of all relevant provisions of this Award.

[21] Ms Howe said that the Club’s interpretation, and application of the clause, has always been consistent with the advice given to the Club by the industry association, ClubsNSW. The clause had never been disputed by either the BHTEU or the CMA. The effect of these provisions is that once a Manager receives the higher rate in accordance with cl 15, the Ordinary Hours of Work clause as well as certain other entitlements cease to apply to them. Ms Howe said that the Club has never ‘abused’ this system, and does not require its Managers to work excessive hours. The arrangement benefits both the Club and the Managers. Ms Howe said that the arrangement is made clear to all Managers in their letters of offer, which includes the following standard statement on the first page of the offer:

‘I would like to offer you the following package:

•  Manager Level D + 50% Exemption Rate $92,592.03 per annum.

•  The 50% Exemption includes all necessary overtime to satisfactorily undertake your role (This is further explained at Clause 15.3)’(emphasis in original)

[22] Ms Howe said the Club, through its representatives had contacted the Fair Work Ombudsman (the ‘FWO’) on 3 August 2017 to seek its interpretation of the provisions. The FWO confirmed the Club’s interpretation and provided the following written advice:

‘You have asked the FWO to interpret the clauses below in the Barrier Social Democratic Club Ltd.

[clauses 15.1-15.3 omitted]

This means the employee receives a salary of 25%, 30% or 50% higher than the agreement rate. The loaded rate of pay is to compensate them for a loss of entitlements defined in the above clauses.

That means the employees may be expected to work reasonable additional hours for no extra pay. If the arrangement is to the benefit of the employee overall it would apply.

If they were unreasonably required to work so much overtime or time that attracts penalty rates etc that meant the loading is not fair compensation the arrangement may be called into question.’

Mr Peter Cooper

[23] Mr Cooper is a Senior Industrial Advocate for the CMA. He has held this position for the last 22 years. During his tenure, he has been responsible for negotiating industrial instruments on behalf of the CMA and its members. He has been directly involved in the negotiations for the NSW State Award, pre-reform Federal Awards and the current Modern Award. Mr Cooper attended a meeting with the Club’s Duty Managers when the current Agreement was offered by the Club. He could not recall any issues being raised in relation to the Agreement. It preserved their conditions and entitlements.

[24] Mr Cooper said that the Manager Exemption provision in the Agreement mirrors the equivalent provisions in the Modern Award. He said that he was personally involved in the negotiations and the development of the Club Managers (State) Award which first introduced the concept of Manager Exemption Rates. He said that the CMA supported these provisions being retained in the Modern Award. He is not aware of any dispute that had ever been raised about the provision. Its meaning and application are clear and unambiguous.

[25] Mr Cooper noted that the effect of the Manager Exemption provisions in the Modern Award is that Managers are essentially on a salaried arrangement i.e. they are paid the Exemption Rate and in exchange the ordinary hours of work provision does not apply, nor do some other aspects of the Award. In theory and practice, this means Managers can work any number of hours and expect the same loaded salary.

[26] Mr Cooper was aware of this dispute between the BHTEU and the Club. He understood that the BHTEU’s submission is that Managers on Exemption rates ought to be paid the loaded rate of pay on 45 hours, or however many hours they work each week. Such an interpretation is incorrect. The Manager Exemption Rates are calculated on the basis of 38 hours per week. The loading covers any additional hours that are worked. The provisions in the Agreement are almost identical to the equivalent provisions in the Modern Award. Consistent with this interpretation, the same would also apply to the enterprise agreement.

[27] The CMA views the provision as beneficial to its members. It means that Managers receive higher rates of pay while on leave, rather than just receiving penalties and overtime on the occasions they work in the relevant periods. It is beneficial to clubs, as it results in certainty around wage costs and makes it simpler for the administration of payroll.

For the Union

Ms Rosslyn Ferry

[28] Ms Ferry is the Secretary of the Union and has held this position since 1999. She explained that the Union’s members comprise employees in the Registered and Licensed Clubs Industry, who are based in the County of Yancowinna (essentially, Broken Hill and its environs).

[29] Ms Ferry explained the background to the dispute. Mr Matthew Richards, previously a Duty Manager at the Club, appointed the Union as his bargaining representative for the negotiations of the current Agreement in 2013. Mr Richards ceased employment with the Club in September 2013.

[30] In mid 2016, Ms Ferry became aware of the Club’s practice to roster Managers to work additional hours, without any additional remuneration. This practice had been in place when Mr Richards had been employed in 2013. She then spoke with Mr Richards about the matter and advised him to try to resolve the issue with the Club directly, without the need for the Union to be involved, as she was conscious that the Union was in negotiations with the Club for a new agreement for the Club’s non managerial employees.

[31] Ms Ferry believed that employees were usually rostered a total of 135 hours each three week period. They work a standard, 7 day, rotating shift roster and average 45 hours per week. Ms Ferry provided copies of the Club’s rosters which illustrate this pattern of hours. In relation to clause 20 – Hours of Work for Full Time Employees - Ms Ferry said that the clause states that employees work an average of 45 hours work week, totalling 180 hours per four week period.

[32] Ms Ferry said that notwithstanding the Managers receive the 30% Exemption rate, they are paid for 38 hours per week, or 152 hours per four week period. This meant all additional hours were unpaid. She provided a pay advice slip for one of the relevant Duty Managers during the period 18 July 2011 to 24 July 2011. Ms Ferry claimed that at times, employees would work on their rostered days off and this work would also be unpaid.

[33] Ms Ferry submitted that cl 15 does not allow the employer to direct employees to work an unspecified number of additional hours, whether considered reasonable or not. Rather, the clause requires employees to be paid at ‘the appropriate rate’ for all hours worked. The Exemption Rate is in lieu of any penalty rate that otherwise would have applied in lieu of remuneration for additional hours worked. She said that if employees were not placed on the Exemption Rate, they would be paid penalty rates as otherwise provided for in the Agreement. She believed this would result in employees being significantly better off.

[34] Ms Ferry rejected the Club’s claim that Managers were provided with contracts of employment which advised them of how cl 15 was to apply. All four former employees denied receiving a letter of offer. In any event, not being remunerated properly for all hours worked is unlawful, and employees cannot be forced into such an arrangement.

[35] Ms Ferry also rejected the FWO’s interpretation because it was incorrectly based on a 38-hour week. It does not take into account that employees actually work excess hours, without pay. Further, she said there is no evidence the FWO was provided with the full details of how the Club was applying the Exemption Rate provision. She added that ‘no extra pay’ (which the FWO had referred to) did not mean ‘no pay’.

[36] Ms Ferry disputed Mr Cooper’s evidence. In particular, she said that the Exemption hourly rate is to apply to all hours of work, in lieu of such penalty rates that would have otherwise applied. She claimed that all additional hours would need to be paid at the Exempted Rate, rather than no pay at all. She rejected his assertion that this arrangement is at all beneficial for employees.

[37] In reply to Ms Howe’s evidence, Ms Ferry asserted that the Club’s finances are not relevant to this matter - employees should not be penalised for any mismanagement of the Club. Ms Ferry was not aware of Ms Howe’s claim of ‘a culture of mistrust’ at the Club. Ms Ferry rejected Ms Howe’s evidence that the Club only became aware of the claim in March 2017. She understood Mr Kolinac raised the issue with Ms Howe in mid 2016 and two other employees (Mr Richards and Mr Hynes) had emailed Ms Howe noting their underpayment claims on 23 August 2016.

SUBMISSIONS

For the applicant

[38] Ms Carayannis observed that the Club is negotiating replacement agreements for the current Agreements. Negotiations have stalled in light of this dispute regarding the Manager Exemption Rates. The BHTEU’s claim can be summarised as follows.

[39] Managers have been rostered 45 hours per week, on a rotating roster. They were only paid 38 hours per week when the BHTEU say they should have received payment for all hours worked. The 30% loading was in lieu of any penalties that may have applied, including the overtime penalty. In essence, the BHTEU’s claim is that Managers are entitled to be paid at the 130% rate for all ‘ordinary’ hours up to a maximum of 45 hours per week and therefore, the BHTEU is seeking back payment for the four former Duty Managers who received a salary in accordance with Clause 15 – Manager Exemptions.

[40] Ms Carayannis explained that Schedule B of the Agreement sets out the annual salary rates for Managers on the 25%, 30% and 50% Exemption Rates of pay. Under cl 15.3, cls 22 and 23 – Ordinary Hours of Work and Rostering are expressly excluded from applying to these Managers. It follows that on its proper construction, the Exemption Rate salaries are calculated on the basis of a 38 hour week, with the expectation that Managers will be required to work in excess of 38 hours, without any extra remuneration. Each of their contracts of employment confirmed the application of clause 15, in line with the Club’s interpretation.

[41] Ms Carayannis relied on the FWO’s interpretation and submitted that it is consistent with the Club’s interpretation and how it has applied over its long history. She submitted that cl 17.3 of the Modern Award is in identical terms. The wider Club Industry applies that provision in the same way that the Club does. Other Registered Clubs have also copied this provision in their own enterprise agreements. For this reason, Ms Carayannis submitted that should the Commission find in favour of the Union’s interpretation, it would have widespread ramifications on the broader Club Industry.

[42] Ms Carayannis submitted that the clause is clear and the Union has interpreted the clause in a manner which is not open to it. By contrast, the Club has provided evidence from the CMA and the FWO which is consistent with the Club’s interpretation.

For the Union

[43] Mr Ferry rejected the Club’s interpretation that cl 15 only requires Managers to be paid for 38 hours worked and that any additional hours are unpaid. The BHTEU believes this is incorrect, Managers should be paid for all hours of work. On average, Managers are required to work seven additional hours each week. Mr Ferry said there is no evidence that rosters were to be reviewed to ensure that hours would be considered reasonable. Mr Ferry submitted that this pattern of hours is contrary to the provisions of cl 22.1 of the Agreement.

[44] Mr Ferry suggested that there are two possible outcomes that flow from the Club’s interpretation. Firstly, a finding that they have failed to pay the correct wage, or secondly, that the additional overtime is considered ‘reasonable’. The BHTEU believes that the pattern of hours worked is such that the Club has failed to pay them correctly.

[45] Mr Ferry explained how the four former Managers, were classified as Level A Managers at all relevant times, and received salaries in excess of 30% of the minimum wage under the Agreement. There was no evidence they were able to ‘opt out’ of the arrangement, should they have chosen to do so.

[46] Mr Ferry said that it is agreed the relevant Exemption Rates are calculated on a 38 hour week. To determine the hourly rate, one simply divides it by 38. Mr Ferry said that this rate should then be applied to all hours, including reasonable additional hours worked by the Manager. Neither the 2009, nor the 2011 Agreements allowed the Club to direct employees to work unpaid hours.

[47] Mr Ferry submitted that notwithstanding the relevant Hours of Work clauses under the Agreement do not apply to Managers on an Exemption Rate, the roster had been designed to reflect the provisions of cl 20.1.1 of the 2009 Agreement. This clause provided that ordinary hours of work for a full time employee would be 180 per four week period (45 per week).

[48] Mr Ferry listed the underpayment amounts claimed by each of the four former Duty Managers. These range from $35,390.12 to $65,522.85 and total $214,346.26. Mr Ferry also sought an order that the Club pay the legal costs of the four former Duty Managers.

[49] In reply, Ms Carayannis agreed that Managers are required to work an average of seven additional hours per week. The Exemption Rate was designed to compensate Managers for the requirement to work beyond the standard 38 hours per week. Managers are required to work these extra hours for several reasons, including the nature of the workplace and taking into account their management responsibilities. They receive sufficient notice of any additional hours they are required to work. The number of hours is not so great as to pose a foreseeable risk to health and safety. In all the circumstances, the additional hours are reasonable.

[50] Ms Carayannis posited that if cl 15 does not enable the Club to roster Managers additional hours, there would be no logical or economically sound reason to pay them the higher rates of pay. Indeed, this is one of the main incentives for clubs to offer Exemption Rates to Managers.

[51] In respect to the BHTEU’s claim that the hours are unpaid, Ms Carayannis explained that there is a financial benefit for the Managers in having the Exemption Rate apply to them. They receive the higher salary, whether or not they work additional hours or work on weekends. Their annual leave and long service leave is also paid at the higher rate of pay.

[52] Ms Carayannis submitted that it is irrelevant whether Managers can ‘opt out’ of the arrangement. The Exemption Rates are not individual flexibility agreements where employees can terminate the arrangement and revert to the minimum agreement rates. The Exemption Rates are offered as a condition of employment and were offered to all of the Club’s Managers upon commencement.

[53] Mr Carayannis pointed out that notwithstanding the Union concedes in their submissions that ‘the provisions of the relevant hours of work clauses do not apply’, their submissions, when read as a whole, ignore this fact. The Union is ‘picking and choosing’ what aspects of the Exemption Rate applies in order to justify its claims.

CONSIDERATION

[54] Before turning to cl 15 of the Agreement, I make the following observations.

[55] On its best case, the Union is perhaps arguing that under the National Employment Standards (the ‘NES’), 45 hours of work per week is ordinary hours (38) and 7 hours of overtime. The working of reasonable overtime is covered by the NES at s 62 of the Act. Even accepting that an extra 7 hours overtime is unreasonable - which I do not - this is not a dispute about the NES, but whether the terms of the Agreement permit the construction of cl 15, for which the BHTEU contends.

[56] It was Ms Ferry’s evidence that the four former employees had not signed letters of appointment setting out their working arrangements and rates of pay according to cl 15. She added that in any event, not being properly remunerated was unlawful. I can dispose of these two claims in short order.

[57] There was no direct evidence from any of the four former employees that they had not understood their terms and conditions, or they had not signed letters of offer. It was just Ms Ferry’s say so. Indeed, there was no evidence from any of the four former employees on any matter. If this was an issue of some import, it might have been expected that the former employees would have provided statements to that effect. Ms Ferry’s evidence cannot be accepted as it is purportedly put on behalf of the four former employees.

[58] As to the claim of unlawfulness, this is a very serious allegation which must be supported by cogent evidence. Just because Ms Ferry boldly asserts the Club’s actions were unlawful, with nothing more, does not necessarily make them so. Given that Ms Ferry did not explain how it is the Club’s actions were unlawful and provided no evidence of her allegation, it must be rejected. I do so without qualm or hesitation.

[59] While the Club did not challenge the Union’s standing in bringing claims on behalf of former employees, it does, nevertheless raise some interesting questions. It is unclear whether the former employees are, or ever were members of the BHTEU. The Union was not a bargaining representative for either the 2009 or 2014 Agreements (although Ms Ferry said she was appointed by Mr Richards as his bargaining representative in 2013. No evidence of this appointment was provided). The Union is not covered by the 2014 Agreement, pursuant to s 201(2) of the Act; see: Barrier Social Democratic Club Limited – Management Enterprise Agreement [2014] FWCA 2759. That coverage is the exclusive preserve of the CMA. I do not apprehend the Union purports to represent any of the current Managers at the Club in their negotiations for a new agreement following the expiry of the 2014 Agreement on 5 May 2016.

[60] Of course, there is no doubt that former employees can bring underpayment claims against their former employer for up to six years after the underpayment claim was said to have occurred. In the absence of any argument, it would be improper of me to make findings as to the standing of the Union in this matter. That said, given that the four employees have provided signed authorisations for the Union to act on their behalf (which is hardly surprising), I am prepared to accept, for present purposes, that at the very least, Ms Ferry and/or the Union was acting as an agent on their behalf.

[61] Nevertheless, I sincerely hope the Union has not held out any false expectations to the former employees, that each of their claims, amounting to tens of thousands of dollars, were bound to succeed. In my opinion, the claims were misconceived from the outset and it should have been apparent that they had no reasonable prospects of success. I shall shortly provide a foundation for this conclusion.

[62] That said, there is little doubt that the determination of this matter requires the Commission to apply the principles of enterprise agreement interpretation to cl 15 of the Agreement. Although the parties repeatedly referred to the meaning and intent of cl 15 – Managers Exemption – I was not taken to the principles the Commission is to apply in this case.

[63] That being so, I intend to apply the principles set out by the more recent Full Bench of the Commission in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union v Berri Pty Ltd (AMWU) [2017] FWCFB 3005 (‘Berri’), which modified the principles of enterprise agreement interpretation which had hitherto been applied on the basis of the principles set out in Australian Meat Industry Employees’ Union v Golden Cockerel Pty Ltd [2014] FWCFB 7447 (‘Golden Cockerel’).

Relevant principles

[64] The ‘Berri Principles’ are as follows:

•  The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;

(ii) the disputed provision’s place and arrangement in the agreement;

(iii) the legislative context under which the agreement was made and in which

it operates.

2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.

3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.

4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.

5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.

6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.

7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.

8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aid the interpretation of the agreement.

11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(ii) notorious facts of which knowledge is to be presumed; and

(iii) evidence of matters in common contemplation and constituting a common assumption.

13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.

14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.

15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding. 

[65] The ‘Berri Principles’ have as their foundation the long line of historic authority as to the approach to be applied by the Courts, Commissions and Tribunals when called upon to interpret the words in an industrial instrument. Prior to the preponderance of agreements and enterprise agreements, this was invariably applied to Awards. Recent iterations of the legislative framework, necessitated a refinement of these principles; but some of the basic fundamentals remain. I refer to some of these cases to make good this proposition.

[66] I harken back to some of the early well-known cases which dealt with the construction of Awards. In City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 (‘City of Wanneroo’), French J said at 53:

‘53 The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘... the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘... ideas that gave rise to an expression in a document from which it has been taken’ – Short v FW Hercus Pty Ltd [1993] FCA 51; (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services Union v Treasurer of the Commonwealth of Australia (1998) 80 IR 345 (Marshall J).’

Then at paragraph 57, His Honour observed:

‘57 It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities – City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned – see eg Geo A Bond and Co Ltd (in liq) v McKenzie [1929] AR 499 at 503-4 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):

‘Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.’’

[67] Madgwick J in Kucks v CSR Ltd [1996] IRCA 166 (‘Kucks’); (1996) 66 IR 182 opined that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, but:

“... [T]he task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.” 

[68] As the legislative focus shifted towards agreement making, the same principles were recognised to apply to the interpretation of certified/enterprise agreements.  In Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 (‘Amcor’), the High Court Gummow, Hayne and Heydon JJ: 

“Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.” 

[69] In Amcor, His Honour Kirby J said:

“However, certified agreements such as this commonly lack the precise drafting of legislation. As appears from a scrutiny of the provisions of the Agreement, it bears the common hallmarks of colloquial language and a measure of imprecision. Doubtless this is a result of the background of the drafters, the circumstances and possibly the urging of the preparation, the process of negotiation and the omission to hammer out every detail - including possibly because such an endeavour would endanger the accord necessary to consensus and certification by the Commission.

. . .

The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court, of interpreting industrial instruments and especially certified agreements. I agree with the following passage in the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed:

‘It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.’ [references omitted]” 

[70] Again in Amcor, His Honour Callinan J said there was substance in the observations of Madgwick J in Kucks.  His Honour then said:

“An industrial agreement has a number of purposes, to settle disputes, to anticipate and make provision for the resolution of future disputes, to ensure fair and just treatment of both employer and employees, and generally to promote harmony in the workplace. It is with the third of these that cl 55 of the Agreement is particularly concerned. It is important to keep in mind therefore the desirability of a construction, if it is reasonably available, that will operate fairly towards both parties.” 

[71] In Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 (‘Codelfa’) Mason J, as he then was, (and with whom Stephen, Aickin and Wilson JJ agreed) said:

“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.” 

[72] The nature of the present task was emphasised by the Full Bench of the Commission in DP World Brisbane Pty Ltd v The Maritime Union of Australia[2013] FWCFB 8557 in the following terms:

‘[31] Importantly, the task of interpreting an enterprise agreement does not involve re-writing a provision in order to give effect to the Commission’s view of what would be fair and just, without regard to the terms of the agreement. As Madgwick J observed in Kucks v CSR Limited:

‘But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’

[73] All of the above observations are concordant with the approach set out in Golden Cockerel and Berri. In short, the Commission’s task here is to ascertain the objective intention of the contested words, based upon the language and terms of the 2014 Agreement, when read as a whole, having regard to their context and purpose.

[74] In my opinion, there cannot be a shadow of doubt as to the meaning of the words in cl 15, even without taking into account the intent and purpose of the clause when viewed in the context of the Agreement as a whole. To make it perfectly plain – Managers who are in receipt of a 30% Manager Exemption Rate are not entitled to claim benefits or conditions arising from cls 13, 17, 22, 23, 26 and 27 of the Agreement. These clauses have not and do not apply to them. There is nothing to be found elsewhere in the Agreement to suggest otherwise. It is utterly irrelevant that these other provisions might require inclusion in the terms of the Managers’ contracts of employment.

[75] Once having established that the words in cl 15 are clear, unambiguous and not susceptible to different meanings, that is the end of the matter in so far as the principles of agreement interpretation are concerned; see Berri Principle 9. However, there are other matters which decidedly tell against the interpretation of cl 15 pressed by the Union.

[76] Firstly, even if it had been necessary to consider ‘surrounding circumstances’ such as the intention of the parties during the negotiations for the 2014 Agreement, there was no evidence that the parties had intended cl 15 to operate in a way for which the Union contends. Indeed, the very opposite is true, as Mr Cooper’s evidence, whose Union had sole responsibility for negotiating the 2014 Agreement, makes abundantly obvious. The Manager Exemption arrangement is strongly supported by the CMA and its longstanding and experienced Industrial Advocate, Mr Peter Cooper, whose evidence I note was not challenged (nor was he required for cross examination).

[77] Secondly, in my view, accepting the Union’s interpretation of cl 15 would be contrary to the intent and purpose of the clause and that of the Agreement as a whole. That purpose is to provide flexibility to the Club on the one hand and financial benefit to Managers on the other. If the BHTEU’s interpretation was accepted, no club would utilise cl 15 where it would amount to paying employees ‘penalties on top of penalties’ for the same inconvenience. It would render the Manager Exemption provision utterly superfluous; with no work to do. Thus, interpreting the clause in that way would result in an absurd and illogical outcome contrary to the principles of agreement interpretation.

[78] Thirdly, in my opinion, not only is the BHTEU’s interpretation wrong and illogical, but to apply the Agreement in the manner sought would create mayhem in the Club Industry Australia wide, not to mention the enormous cost implications, given the Manager Exemption Rates in the Agreement are for all relevant purposes, the same as is found in the Modern Award.

[79] The BHTEU dismissed the Club’s submission that a claim totalling $214,346 would likely push the Club into insolvency and therefore threaten the jobs and livelihoods of its 80 employees. Ms Ferry claimed that the four former employees should not be held responsible for the ‘mismanagement’ of the Club. Putting aside that Ms Ferry provided no evidence for the allegation of ‘mismanagement’ and importantly, did not dispute the financial impact of the claim, such a submission ignores the industrial and employment reality in Broken Hill, with which I am very familiar. In recent history, numerous clubs in the city have closed their doors. The few which remain are struggling under the weight of falling patronage, higher costs and a depressed local economy, as mining and local employment continues to contract.

[80] The Union’s glib submission is in my view, disingenuous and most regrettable. It demonstrates a lack of empathy for the 80 current employees of the Club, their families and the serious impact on the local community, if the ‘Demo’ Club was to close.

CONCLUSION

[81] The Club’s interpretation and application of cl 15 of the Agreement is correct. I determine that clauses 13, 17, 22, 23, 26 and 27 of the Barrier Social Democratic Club Limited Management Enterprise Agreement 2014 shall not apply to Manager employees who have, or are paid a Manager Exemption Rate in accordance with cl 15 the Agreement.

[82] It follows that I consider that the claims of the BHTEU on behalf of Ms Bronte Kolinac, Mr Peter Hynes, Mr Darryl Martin and Mr Mathew Richards have no prospects of success. Dispute C2017/2933 is determined accordingly and the matter is concluded.

[83] As a postscript, I note that the President of the Commission has established a special Full Bench whose specific task is to examine the concept of ‘loaded rates’ in enterprise agreements, vis a vis the application of the BOOT, in the Commission’s processes for approving enterprise agreements under s 186 of the Act.

DEPUTY PRESIDENT

Final written submissions:

For the applicant, 11 September 2017.

For the BHTEU, 6 September 2017.

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