Basel Alogaidi v Telstra Corporation Limited

[2021] FWC 2882

[2021] FWC 2882

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Basel Alogaidi
v
Telstra Corporation Limited
(C2020/7071)

DEPUTY PRESIDENT CLANCY MELBOURNE, 19 MAY 2021

Alleged dispute about a matter arising under an enterprise agreement – jurisdictional objection – meaning of “things covered in this Agreement” considered – Commission found to have jurisdiction to conciliate and arbitrate in accordance with the Dispute Resolution Clause of the enterprise agreement. Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)].

Procedural Background

[1] On 19 September 2020, Mr Basel Alogaidi filed an application (the Application) under s.739 of the Fair Work Act 2009 (the Act) for the Fair Work Commission (the Commission) to deal with a dispute. Mr Alogaidi brought the Application pursuant to Clause 25 of the Telstra Enterprise Agreement 2019-2021 (the Agreement).

[2] There was some correspondence between my chambers and the parties regarding matters raised by the Application and the dispute was thereafter the subject of a conference before me on 1 February 2021, however, the matter did not resolve.

[3] Telstra raised a jurisdictional objection to the Application, contending that the Commission does not have power to determine this dispute.

[4] I therefore issued Directions on 2 February 2021 for the filing and service of material and conducted a hearing on 24 March 2021 via Microsoft Teams.

Factual Background

[5] Mr Alogaidi began his employment with Telstra as a Senior Business Analyst in July 2017 and at the material time was a “Job Family” employee for the purposes of the Agreement.

[6] Each year, employees at Telstra are awarded a rating of between 1 and 5 under a performance rating system, where 5 indicates the highest level of performance. In order for this to occur, Telstra provides its managers with Performance Rating Descriptors, a Calibration Session Guide and Communication of final rating guidance to assist them in their rating (the Performance Rating Materials). 1

[7] In June 2020, Mr Alogaidi met with his manager for his annual performance review and was informed that his rating for 2019/2020 was a ‘3’. Mr Alogaidi lodged a request for an independent review of his performance in accordance with Telstra’s Internal Resolution Process in the belief that he should have received a rating of at least a ‘4’, and further, that it was not clear how his manager had determined his rating in light of the evidence he had provided in relation to his achievements for the previous year.

[8] The review took place and on 9 September 2020, Ms Emma Reilly, Global Case Management: Employee Relations & HSWE: Transformation & People, upheld the original rating of ‘3’.

Dispute Resolution Procedure

[9] Clause 25 of the Agreement contains dispute resolution provisions, as follows:

“25. HOW DISPUTES ARE RESOLVED

25.1. Telstra aims to provide a productive, safe and non discriminatory environment for its employees. This environment should be characterised by co-operation, mutual respect and open communication between employees and managers.

25.2. The Parties want to avoid disputes about things covered in this Agreement, or about the National Employment Standards. But if disputes occur, this is how they must be resolved.

25.3. You may be assisted by your union or another representative of your choice at any step in this process.

25.4. Step 1

Talk to your manager about the issue in dispute as soon as you can and ask him/her to resolve it. Your manager must try to resolve the dispute within 5 working days of you first asking for it to be resolved.

25.5. Step 2

If that doesn't resolve the dispute, ask your manager's manager (your 2-up manager) to resolve the dispute. You or your union/representative must do this within 5 working days (or such time as is reasonable in the individual circumstances) of your manager being unable to resolve the dispute. Your 2-up manager must try to resolve the dispute within 5 working days and may seek assistance from a more senior manager if required.

25.6. Step 3

a) If the dispute still hasn't been resolved, ask the Executive of Transformation and People for your Function and the Executive - Employee Relations in Transformation and People to resolve the dispute. You or your union/representative must do this within 5 working days (or such time as is reasonable in the individual circumstances) of your 2-up manager being unable to resolve the dispute. HR must try to resolve the dispute within 5 working days.

b) While steps 1 to 3 are being followed:

i) you must work normally; and

ii) Telstra must not implement anything that is in dispute.

25.7. Step 4

If the dispute still hasn't been resolved, you or your union/representative or Telstra may refer the dispute to the Fair Work Commission for conciliation. The Fair Work Commission's role is limited to providing assistance in an attempt to resolve, if possible, the dispute.

25.8. Step 5

If conciliation does not resolve the dispute you or your union/representative or Telstra may ask the Fair Work Commission to arbitrate the dispute and the Fair Work Commission must do so.

25.9. Other rules applying to disputes

a) To avoid doubt, this process:

i) does not prejudice the position of a party in a genuine health and safety situation; and

ii) applies to disputes over whether Telstra has reasonable business grounds to refuse a request under the National Employment Standards for flexible working arrangements or a request under the National Employment Standards for extended parental leave.

b) While steps 4 and 5 are being followed, Telstra may implement anything that is in dispute. However, if Telstra does, it is not intended to influence the outcome of steps 4 and 5 in any way.

c) You, your union/representative (if you have one) and Telstra must follow each step and not skip any, regardless of the nature of the dispute.

d) You, your union/representative (if you have one) and Telstra must also follow all of the time limits in this dispute resolution process. This is because it is in everyone's interests that disputes are resolved quickly.

e) Occasionally, there may be a good reason why it is not possible to follow all of the steps or time limits. Accordingly:

i) the steps and time limits can be waived if you and Executive - Employee Relations, in each case acting reasonably, agree to this, and

ii) you can go straight to step 3 in the case of urgent disputes where the matter in dispute is due to be implemented in the time taken to undertake steps 1 and 2 (i.e., a decision that is due to be finally implemented in the next 15 working days).

f) Where a dispute concerns work which is subject to a procurement code or guidelines, any decision under Step 5 will observe the requirements of the applicable code or guidelines, as in force from time to time.”

(my emphasis)

Submissions

Telstra

[10] Telstra submits that the Commission does not have jurisdiction to deal with the dispute because the subject matter of the dispute is not a “thing covered” by the Agreement or the National Employment Standards (NES), as required by Clause 25 of the Agreement.

[11] In the alternative, Telstra submits that, on a proper construction of the Agreement, the parties did not intend for the Commission to have the power to arbitrate a dispute relating to an individual employee’s performance rating.

[12] Telstra asserts that the methodology and application of its performance ratings, which Mr Alogaidi seeks to challenge in this dispute, is not a “thing covered” by the Agreement. It says this is apparent from the plain words of the Agreement, the context evident in the Agreement and industrial norms.

[13] Telstra acknowledges that Appendix A of the Agreement (Pay for Job Family Employees) makes reference to performance ratings but submits that mere reference to particular subject matter or a policy is not sufficient to incorporate it into an enterprise agreement.

[14] Telstra refers to Australian Rail, Tram and Bus Industry Union v KDR Victoria Pty Ltd t/as Yarra Trams, 2 in which Justice Marshall considered whether a disciplinary policy was incorporated into an enterprise agreement by virtue of a clause which provided “(s)taff discipline will continue to be conducted in accordance with the Yarra Trams Disciplinary Counselling Policy and Procedures”. Telstra particularly relies upon paragraph [16], in which it was stated by His Honour:

“For a person to be in breach of, or to contravene a provision of an enterprise agreement, that person must have failed to perform some obligation which the provision imposes. Apart from the exceptions set out in the last two paragraphs of the clause, concerning obligations on supervisors in some cases, cl 23 does not itself impose any obligation on Yarra Trams. Rather, it observes that staff discipline issues will be dealt with under the disciplinary document.”

[15] Telstra submits that Appendix A2 is similar in that it observes that employees will receive a performance rating, and this will be one factor taken into account in its “guidance” to managers on how to distribute the remuneration increase budget. Telstra submits, however, that Appendix A2 does not impose any obligations on Telstra with respect to the manner in which an employee’s performance is assessed and the particular rating which is awarded to them.

[16] Telstra submits that such matters are solely governed by the Performance Rating Materials, which establish the 1 to 5 rating system, and explain how a manager should assess a team member’s performance. Telstra submits that if the Commission had jurisdiction to consider the dispute it would need to consider the application of these materials, yet they are not referred to in the Agreement nor incorporated into it. Telstra notes that they are revised on an annual basis without varying the Agreement. Telstra describes them as being akin to policies, which Clause 73 of the Agreement states are not incorporated into the Agreement. Telstra says that the subject matter of the Performance Rating Materials should be construed as separate to, and not “covered by”, the Agreement.

[17] Telstra emphasises that Clause A2.1(f) notes that an employee who is unhappy with their rating can seek a review under Telstra’s “internal resolution process”. Telstra points out that this clause does not refer to the dispute resolution process set out in Clause 25 of the Agreement, and that this is consistent with an interpretation that the ratings system and its application to individual employees is not covered by the Agreement.

[18] Similarly, Telstra notes that Clause A1.5 refers to satisfactory performance being “a rating ‘3’ or higher based on the performance ratings applicable at the time of making this Agreement”. Telstra submits that this is an implicit acknowledgement that the rating system is outside the ambit of the Agreement and is subject to change. They note in this regard that, as M Alogaidi’s rating was ‘3’, this dispute is not about whether or not his employment was “satisfactory” for the purposes of Clause A1.5.

[19] Telstra invites the Commission to take judicial notice of the fact that the assessment of an individual employee’s performance is usually a matter determined solely by the employer and is not reviewable. In the absence of clear words, Telstra submits that the Commission should not construe the Agreement as departing from this usual position and industrial context in which the Agreement was made.

[20] Telstra also submits its construction of the Agreement better contributes to a “sensible industrial outcome” as, if individual employees could challenge their performance rating under such a construction of the Agreement, delays or retrospective variations to the distribution of the pay poll fixed by Clause A2 could result. Telstra submits that, determined objectively, this is unlikely to have been the intention of the parties.

[21] As an alternative to the submission that its performance ratings system is not “a thing” covered by the Agreement, Telstra argues that the Agreement should be read as limiting the Commission’s power to deal with disputes regarding an individual employee’s performance rating. Telstra submits that the reference to “the term” in s.739(3) of the Act should not be read so narrowly as to mean it only applies to limitations on the Commission’s power within a dispute settlements procedure contained in a single clause. Telstra’s submission is that all provisions of the agreement that, taken together, make up the dispute settlement procedure should be read as part of “the term” therefore limiting the Commission’s power prescribed in some other clause of the agreement. Telstra refers to The Australian Workers’ Union v Alcoa World Alumina Australia Limited 3in support.

[22] Telstra thereby asserts that Clause A2.1(f) limits the Commission’s power to arbitrate this matter as it provides that an employee who is unhappy with their performance rating and / or pay review may ask for a review under Telstra’s internal resolution policy, with an independent review as the final stage. Telstra therefore submits that if it had been intended that an employee could use the dispute settlement procedure in Clause 25 then it would not have been necessary to refer to the internal resolution process, distinguishing an employee’s performance rating and pay review from all other matters in the Agreement (other than the suitability of a role to which an employee is appointed under Clause 48, which are similarly limited to the internal resolution process). Telstra notes that any construction other than the one put forth would be inconsistent with the words “final stage” in Clause A2.1(f).

[23] Telstra submits that this construction of the Agreement is supported by the highly discretionary nature of the pay scheme (of which an employee’s performance is merely one component addressed by the non-binding guidance materials published by Telstra) established by Appendix A for “Job Family” employees.

Mr Alogaidi

[24] In disputing Telstra’s submissions, Mr Alogaidi argues that the application of Telstra’s performance rating descriptors is “a thing” intended to be covered by the Agreement and is therefore within the range of matters that the Commission is empowered to deal with under Clause 25.2 of the Agreement. He also submits that there is nothing in the Agreement that limits the Commission’s ability to intervene and determine matters.

[25] Mr Alogaidi states that employees have no input into the performance ratings system, are not advised of specific criteria that they are subject to relating to job performance and the objectives of the workplace nor what measures are in place that allow a manager to carefully and precisely distinguish between excellent, satisfactory and unsatisfactory performance. He further notes that an employee is not advised specifically what quantitative and qualitative measures they are expected to meet in order to achieve a certain rating.

[26] Mr Alogaidi describes Telstra’s performance ranking system as a typical “Forced Ranking” system in that people are placed into a position on a Bell Curve Distribution, tied to the remuneration pay pool, such that even if the whole team are average or high performers, some will be distributed with a rating of 1 or 2, with financial impact. Mr Alogaidi submits that this creates “poor performers” who may be selected for redundancy or performance managed.

[27] Mr Alogaidi submits that the only reference to Telstra’s “internal resolution policy” occurs at Clause 48.4 and Appendix A2.1(f). He submits that the placement of the Dispute Resolution Clause and its primacy requires the Agreement to be viewed as a whole.

[28] Mr Alogaidi proffers that the common assumption of Telstra “Job Family” employees is that they have recourse to an independent review in the event of a dispute over their performance ranking and that the words “independent review” mean independent of Telstra. Mr Alogaidi also asserts that the independent reviewer is understood by the employees as a neutral party that is not influenced or subject to the authority of any party in the review. He argues that the terms of the Agreement have therefore authorised the Commission to take this role as an independent reviewer.

[29] Mr Alogaidi asserts that Telstra did not provide an independent reviewer and the internal review conducted does not meet the criteria of “Independent Review” therefore leaving employees with no other choice but to seek arbitration from the Commission as an independent reviewer.

[30] Mr Alogaidi highlights Clause 25.8 of the Agreement, which he says clearly indicates that if disputes cannot be resolved internally, they may be referred to the Commission. He submits that the language provides no limit or exclusions as to the nature of the dispute and seeks to emphasise that the clause states the Commission must address these disputes.

[31] Mr Alogaidi does not accept Telstra’s assertion that “the parties did not intend for the Commission to have the power to arbitrate a dispute relating to an individual employee’s performance rating”. He asserts that the weaker party (employees) entered the Agreement with the reasonable assumption that any matter disputable is either solvable internally between the parties or can be brought before the Commission as an independent body for arbitration if internal processes do not result in an agreement. He asserts that no part of the Agreement is excluded from being brought to the Commission.

[32] Mr Alogaidi also asserts that Telstra have designed or maintained an internal process that conflicts with the new Agreement and by not adhering to its clear wording, Telstra has breached its obligation under the Agreement thereby giving the Commission jurisdiction to hear and determine the matter that gives rise to the dispute.

[33] Mr Alogaidi suggests Telstra claims that “it is the application of these materials that it would need to consider. However, they are not even referred to in, let alone incorporated into, the Agreement.” In response, Mr Alogaidi submits that while the Agreement does not incorporate or refer to tools or applications of any materials that the Commission would need to consider, accepting Telstra’s statement would mean that no dispute that arises from the Agreement can be brought to the Commission because Telstra has deliberately not included materials in the Agreement. Mr Alogaidi contends that this raises the question of whether Telstra’s bargaining for the Agreement was really in good faith.

[34] Mr Alogaidi submits that whether the remuneration calculation is a policy or process is not relevant because in either case it conflicts with the Agreement and therefore falls within the Commission’s jurisdiction under Clause 25.8 Step 5. For clarification however, Mr Alogaidi states that the remuneration calculation is described in A1.4 as a process, not a policy.

[35] Mr Alogaidi refers to Clause A1.5, which states:

“Subject to item A3, provided that your performance was at a satisfactory level throughout the 1 July 2019 -30 June 2020 performance year (this being a rating ‘3’ or higher based on the performance ratings applicable at the time of making this Agreement), you will receive at least a 1 % increase in Fixed Remuneration.”

[36] Mr Alogaidi submits Clause A1.5 cannot be read as an exclusion to other parts of the Agreement, as it forms part of the Agreement.

[37] Mr Alogaidi concludes by asserting that the core issue is whether Telstra, being the stronger party, is bound by the Agreement when it doesn’t suit them as much as when it is in their interest. Mr Alogaidi highlights Telstra’s obligation to be transparent regarding the remuneration calculation relating to himself and Telstra employees. He states that Telstra as an offeror and the stronger party in the Agreement should not be exempted from honouring its promise within the Agreement at A2.1(a) “Telstra is committed to ensuring that the remuneration review process is transparent and understood by you.”

Telstra Submissions in Reply

[38] Telstra rejects Mr Alogaidi’s submission that the reference to an “independent review” under Telstra’s internal resolution process in Clause A2.1(f) of the Agreement authorises the Commission to deal with his dispute. Telstra notes that the reference to an employee’s ability to seek a review of their performance rating is under Telstra’s “internal resolution process” (Telstra’s emphasis) and that includes an independent review as its final stage. They argue that the process itself is not incorporated into the Agreement and that it is the process, not the Agreement, which governs what is required in terms of the review. They say that this is consistent with it not being “a thing” covered by the Agreement and as such, the nature of a review carried out under Telstra’s internal resolution process is not susceptible to scrutiny by the Commission in a dispute brought pursuant to Clause 25 of the Agreement.

[39] Having regard to the industrial context in which the words of Clause A2.1(f) were drafted, Telstra notes that the current process and Telstra’s practical application of it have been in place for many years prior to the making of the Agreement. It submits that “Telstra’s internal resolution process” is distinct form the process set out at Clause 25 of the Agreement and particularly refers to Telstra’s Internal Resolution Policy, available to employees via Telstra’s intranet. This process, Telstra submits, does not itself provide for any role to be played by the Commission.

[40] As regards its alternative case, Telstra maintains Clause A2.1(f) limits the power of the Commission to deal with a dispute about a performance rating by providing for it to be dealt with in accordance with Telstra’s internal resolution process.

[41] Telstra adds that Clause A2.1(a) is merely aspirational or hortatory in nature and does not impose any obligations on it. Alternatively, Telstra submits that a commitment to ensuring transparency around the remuneration review process is not sufficient to bring a dispute regarding the performance rating awarded to an individual employee within scope of the Agreement.

[42] Telstra says that its remuneration process is entirely transparent, but that the current dispute relates to Mr Alogaidi’s desire to be awarded a higher performance rating, not about the transparency of the remuneration process.

Consideration

[43] When asked to identify the clause of the Agreement to which his dispute relates, Mr Alogaidi advised the Commission it was Clause A2 in Appendix A. When asked to clarify how he says that Clause A2 in Appendix A of the Agreement has been breached or not complied with, Mr Alogaidi’s response included:

•  In relation to Clause A2.1(a), that the remuneration review process was not transparent, and the results were not explained; and

•  In relation to Clause A2.1(d), that the pay increase matrix issued by Telstra was not adhered to by his manager, thereby affecting the outcome of the performance review.

[44] The essence of the Application is that Mr Alogaidi disputes the performance rating of ‘3’ he received in his 2019/2020 annual performance review. Mr Alogaidi seeks a review by the Commission of the outcome of the internal resolution process upholding his performance rating and remuneration review.

[45] In determining whether the Commission has jurisdiction to deal with the dispute Mr Alogaidi seeks to agitate, it is necessary to consider the nature of the Dispute Resolution Clause in the Agreement. In approving the Agreement on 12 June 2020, 4 Commissioner McKinnon was satisfied the requirements of s.186 of the Act had been met.5 It is worth noting that s.186(6) of the Act sets out the requirement for an agreement to include a term about settling disputes in the following terms:

“Requirement for a term about settling disputes

s186(6) The FWC must be satisfied that the agreement includes a term:

(a) that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:

(i) about any matters arising under the agreement; and

(ii) in relation to the National Employment Standards; and

(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure.”

(my emphasis)

[46] Section 737 of the Act provides:

“737 Model term about dealing with disputes

737 The regulations must prescribe a model term for dealing with disputes for enterprise agreements.”

[47] Regulation 6.01 of the Fair Work Regulations 2009 (Regulations) provides that for s.737 of the Act, the model term for dealing with disputes for enterprise agreements is that set out in Schedule 6.1 of the Regulations. Schedule 6.1 relevantly reads, as follows:

“Model term

(1) If a dispute relates to:

(a) a matter arising under the agreement; or

(b) the National Employment Standards;

this term sets out procedures to settle the dispute…”

(my emphasis)

[48] By way of contrast at Clause 25.2 of the Agreement, the Dispute Resolution Clause is expressed in the following terms:

“The Parties want to avoid disputes about things covered in this Agreement, or about the National Employment Standards. But if disputes occur, this is how they must be resolved.”

(my emphasis)

[49] There is a difference between a dispute relating to “a matter arising under” and “disputes about things covered in”an Agreement. As to the latter, it may be noted that the Australian Concise Oxford Dictionary defines “cover” as:

“include, comprise, deal with (subject)”

[50] Similarly, the Macquarie Dictionary defines “cover” as:

“to include, comprise, provide for, take in”

[51] These definitions lead me to the conclude that if something is simply included in the Agreement and there is a dispute about it, the parties may avail themselves of the processes within the Dispute Resolution Clause of the Agreement (Clause 25) and the Commission therefore has jurisdiction to exercise the powers in Steps 4 and 5 outlined above. In this regard, I observe that the words “performance rating” or “performance ratings” appear five times in the Agreement and all of these occur in Appendix A, as follows:

•  Clause A1.5;

•  Clause A2.1(c);

•  Clause A2.1(d);

•  Clause A2.1(f); and

•  Clause A2.1(g).

[52] The term “remuneration review” also appears five times, as follows:

•  Clause 23.7 - (in relation to consultation obligations with the unions covered by the Agreement);

•  Clause A2.1(a) - (as ‘remuneration review process’);

•  Clause A2.1(f) - twice; and

•  Clause A2.1(g) - (as ‘remuneration review period’).

[53] In this regard, I note:

a) Mr Alogaidi was notified of his performance rating and the outcome of his remuneration review (a requirement in Clause A2.1(f) of Appendix A);

b) Being unhappy with his performance rating and/or remuneration review, Mr Alogaidi requested a review under Telstra’s internal resolution process (the availability of which is also referred to in Clause A2.1(f)); and

c) Telstra’s internal resolution process was undertaken and included an independent review as its final stage (as outlined in Clause A2.1(f)).

[54] I note Mr Alogaidi wishes to dispute the outcome of the internal review process on the basis of there having been a failure by Telstra to comply with Clause A2.1(f) of Appendix A because the words “independent review” in Clause A2.1(f) required the final stage of the internal resolution process to be a review independent of Telstra. I do not accept this premise. I consider the second sentence of Clause A2.1(f) “If you are unhappy with your rating or remuneration review, you can ask for either (or both) to be reviewed under Telstra’s internal resolution process (which includes an independent review as its final stage)” must be read as a whole, such that the independent review referred to, is one to be conducted internally. However, I do not accept the submission of Telstra that Clause A2.1(f) prevents the Commission conciliating or arbitrating this matter. The independent review referred to in Clause A2.1(f) is the final stage of Telstra’s internal resolution process but it is not expressed as being the final stage, following which no other review is available.

[55] Clearly Mr Alogaidi wishes to dispute the outcomes from both the remuneration review process (an inherent component of which was his performance rating) and Telstra’s internal review process. He asserts the renumeration review process was not transparent. He asserts the guidance in the pay increase matrix was not followed by his manager. I consider these processes are things covered in the Agreement and therefore, Mr Alogaidi is entitled to avail himself of Steps 4 and 5 in the Dispute Resolution Clause of the Agreement (Clause 25).

Conclusion

[56] For the reasons outlined above, I am satisfied Mr Alogaidi’s disputed matters are about things covered in the Agreement and therefore the Commission has jurisdiction to deal with this dispute. How the dispute might ultimately be resolved is another issue altogether because the Agreement neither prescribes nor provides guidance as to how a performance rating is to be determined, save that it is stated that the commitment of Telstra is to ensure the remuneration process is transparent and understood by employees. 6 The parties may wish to reflect on this before advising my Chambers as to their future intentions in relation to this dispute.

DEPUTY PRESIDENT

Appearances:

Mr B Alogaidi, on his own behalf

Mr W Spargo for Telstra

Hearing details:

2021.

By Video via Microsoft Teams.

24 March

Printed by authority of the Commonwealth Government Printer

<PR729997>

 1 Exhibit R1 at [6].

 2 [2013] FCA 330.

 3   [2012] FWA 9222 at [86]-[88].

 4   [2020] FWCA 3097.

 5 Ibid at [10].

 6   Clause A.2.1(a) of Appendix A of the Agreement.