Benjamin Grimshaw v Falcon Mining Pty Ltd T/A Falcon Mining

[2020] FWC 6791

[2020] FWC 6791

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Vern Moana-Mason; Darren Sisson; Glenn Alexander; Robert Medley; Benjamin Grimshaw
v
Falcon Mining Pty Ltd T/A Falcon Mining
(C2020/2505)

DEPUTY PRESIDENT SAUNDERS NEWCASTLE, 16 DECEMBER 2020

Application to deal with a dispute in accordance with a dispute settlement procedure in an enterprise agreement – alleged entitlement to bonus payment for attendance at the workplace.

Introduction and background

[1] Mr Vern Moana-Mason, Mr Darren Sisson, Mr Glenn Alexander, Mr Robert Medley, and Mr Benjamin Grimshaw (Applicants) are in dispute with their former employer, Falcon Mining Pty Ltd T/A Falcon Mining (Respondent), in relation to their alleged entitlement to attendance bonus payments under clause 14 of the Falcon Mining Enterprise Agreement 2017 (Agreement), which applied to them during their employment with the Respondent (Dispute).

[2] The Applicants are members of the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and were represented by the CFMMEU throughout the Dispute. The Respondent was represented by its solicitor, Mr Michael Coonan.

[3] The Respondent conducts business as a mining contractor and, in particular, delivers specialist underground mining services. In the period from about 1 November 2017 until about 26 June 2020, the Respondent provided mining services at the Narrabri mine under a commercial arrangement with Whitehaven Coal. The Applicants are experienced underground mineworkers and were employed by the Respondent to work at the Narrabri mine on a 7 day on/7 day off 12 hour roster. The Applicants were fly in fly out or drive in drive out workers at the Narrabri mine.

[4] On about 20 April 2020 the CFMMEU filed an application pursuant to s 739 of the Fair Work Act 2009 (Cth) (Act) in the Fair Work Commission (Commission) for the Commission to deal with the Dispute pursuant to clause 7 of the Agreement. That clause sets out the procedures to resolve “a dispute about a matter under this agreement, or a dispute in relation to the NES”.

[5] I conciliated the Dispute but could not resolve it. The Applicants then asked for the Dispute to be arbitrated pursuant to clause 7.2(e) of the Agreement.

[6] There is no dispute between the parties that I have jurisdiction to arbitrate the Dispute. The arbitration hearing took place, by video conference, on 12-13 October 2020 and 10 December 2020. Evidence was given on behalf of the Applicants by Mr Jeremy McWilliams, a Vice President of the Northern Mining and New South Wales Energy District of the Mining and Energy Division of the CFMMEU, Mr Moana-Mason, Mr Sisson, Mr Grimshaw, and Mr Medley. The Respondent adduced evidence from Ms Vivienne Gayton, General Manager Human Resources for the Mastermyne Group of companies, of which the Respondent is a part.

Question for determination

[7] The agreed question for determination in this Dispute is as follows:

Has the Respondent complied with any obligation it has under clause 14 of the Agreement to pay bonus payments to each of the Applicants during their employment with the Respondent?

[8] The Applicants accept and the evidence shows 1 that the amount of money they were each paid by the Respondent during their employment with the Respondent met or exceeded the total amount of remuneration to which they were entitled under the Agreement. However, the Applicants contend, for the reasons explained below, that they had a separate and distinct entitlement to a weekly attendance bonus under clause 14 of the Agreement and they were not paid such a bonus by the Respondent.

A preliminary issue – has the dispute been resolved or are the Applicants estopped from raising the Dispute?

[9] The Respondent submits that January 2020 was not the first time that payment of the attendance bonus was put into dispute. The Respondent says the issue was raised on-site in early 2018 and was raised again in mid July 2018. The evidence of Ms Gayton was that on both occasions it was explained on site that the bonus was paid in the “all-inclusive” rate. Ms Gayton also says she discussed the matter with Mr McWilliams and explained to him that the attendance bonus was being paid in the “all-inclusive” rates paid to employees. Ms Gayton says she offered to Mr McWilliams to change the payment system to take the bonus out of the “all-inclusive” rate, pay it separately, and adjust the aggregate rate, but Mr McWilliams advised that he did not wish the Respondent to do so.

[10] The Respondent submits that there is obviously an estoppel against this matter being raised again or asserting a different position, but the Commission does not need to deal with it on a common-law estoppel basis. The Respondent contends that the Commission is entitled to treat the grievance over the payment of the attendance bonus as resolved under the Agreement since January 2018 or July 2018 at the latest.

[11] I reject these submissions. As to the estoppel argument, even taking the Respondent’s case at its highest, the evidence does not support there being an assumption or representation made by any or all of the Applicants concerning the resolution of their individual disputes with the Respondent in relation to their claim that they were not being paid an attendance bonus in accordance with clause 14 of the Agreement. Similarly, their grievances with the Respondent over the attendance bonus were not resolved in 2018. Issues concerning the performance bonus were raised by Mr McWilliams and individual employees on a number of occasions with Ms Gayton and other managers at the workplace. The Respondent consistently maintained the position that it had complied with its obligation to pay the attendance bonus as part of the “all-inclusive” rates of pay being paid to employees. However, at no time did the Applicants or the CFMMEU accept the Respondent’s position in that regard, nor did the Applicants make any representation or assumption about the resolution of their disputes. The reason for the delay between the earlier discussions in 2018 and the formal notification of the Dispute with the Respondent in January 2020 is the fact that, prior to January 2020, the CFMMEU did not have any individual members who were willing to put their names forward and pursue a dispute with the Respondent. That position changed in January 2020, with the result that the Dispute was advanced at that time in accordance with the dispute resolution procedure in the Agreement. There was no earlier resolution of the Dispute or any part of it.

Relevant provisions of the Agreement

[12] The following provisions of the Agreement are relevant to the Dispute:

“13. Wage Rates and Superannuation

13.1 The base rate of pay which an employee is to be paid is:

[table of rates omitted]

13.2 These rates include compensation for all allowances, skills, disabilities and tools.

13.3 During the nominal term of this Agreement, the rates above will be increased by 1.5% on each anniversary of the commencement date of the Agreement

13.4 The rates of pay and the increases set out in this clause are minimum rates of pay. Falcon may elect at its sole discretion, to pay the Employee higher rates of pay at any time.

13.5 Falcon may elect at its sole discretion, to pay a productivity bonus in accordance with production, safety, conduct and efficiency targets.

13.6 Falcon Mining may at its discretion pay an aggregated hourly rate which will take into consideration all aspects of the work that employees may be required to perform (including all disabilities, skills, allowances, tools and/or special rates overtime and penalty rates under clauses 16 to 20 and 21 to 24 of this Agreement), for all the rostered working hours work up to 44 hours per week, averaged over 12 weeks. Falcon Mining will pay the aggregated hourly rate as a flat amount calculated for the relevant classification, location and roster for the rostered hours worked by the employee and no penalties or additions to that rate will apply. Minimum aggregate hourly rates will not be less than the rate using the ordinary time rate applied to the penalty rates in clauses 16 to 20 and clause 22 of this Agreement, and where applicable the casual loading

13.7 No current employees will have their current rate reduced because of the making of this Agreement.

13.8 Unless otherwise agreed between Falcon Mining and the majority of employees at a mine site, wages will be paid weekly. In the absence of agreement to the contrary, not more than one week's pay will be kept in hand by Falcon Mining.

13.9 Wages will be paid by electronic funds transfer.

13.10 An employee absent from work is not entitled to payment for the period of absence unless paid absence is agreed by Falcon Mining, or permitted by this agreement or the Act.

13.11 Wages and entitlements will be paid subject to deductions authorised by the Employee in writing as agreed with Falcon. Subject to the Act, Employees authorise Falcon to deduct from Wages:

(a) all overpayments (if any, and after consultation with the Employee};

(b) any amount attributable to unauthorised absences, approved unpaid leave or monies owing to Falcon; and

(c) any other deductions authorised by the Employee and agreed by Falcon or as required by law.

13.12 Falcon Mining will make superannuation contributions on behalf of each employee covered by this agreement, in accordance with the Superannuation Guarantee Legislation, into either:

•  the Mine Wealth+ Wellbeing Superannuation Fund (the default fund); or

•  a complying superannuation fund agreed between Falcon Mining and an employee.

13.13 Subject to all relevant laws, an individual Employee may seek Falcon's agreement to a salary sacrifice arrangement. The obligations of Falcon in respect of payment of remuneration will be satisfied by Falcon complying with such an arrangement provided that the salary sacrificed amount and the residual wages combined are not less than the classification rate otherwise payable.

13.14 Where Falcon directs an Employee to act up in a higher classification than their usual classification for an entire shift and the Employee undertake the duties and responsibilities of that higher classification for the entire shift, then the Employee will be paid the base hourly wage rate outlined in clause 13 for the higher classification. Payment at the higher classification is conditional upon the Employee's timesheet being approved by the Employee's Senior Manager and the Client.

13.15 The parties recognise that strengthening market forces place increase demand on labour. When this occurs the Company will initiate discussions with the client and seek to obtain approval to increase the employee overall remuneration. Where increases to the employee overall remuneration are approved contractually by the client, the Company will pass them through to Employees in accordance with the contract terms (approved by the client).

14. Bonus payment

14.1 In addition to all other remuneration employees in the classification of Experienced Underground Mineworker, Experienced Underground Tradesman, and those Employees classified as Leading Hands and Supervisors who supervise underground crews, will be paid a gross weekly bonus of $300 for attendance at the workplace, and performance of work, for the normal rostered shift. This bonus is a flat payment, and is not paid for all purposes of the EA.

14.2 In addition to all other remuneration employees who undertake mining production and engineering work in the classification of Experienced Surface Mineworker, Experienced Surface Tradesman, and those Employees classified as Leading Hands and Supervisors who supervise employees undertaking surface mining production and engineering work, will be paid a gross weekly bonus of $300 for attendance at the workplace, and performance of work, for the normal rostered shift. This bonus is a flat payment, and is not paid for all purposes of the EA.

14.3 The company may choose at its sole discretion, to pay a bonus amount greater than that stated in 14.1. 14.4 Except where provided in Schedule 1, bonus will not be paid on any day an employee is absent from the workplace including:

(a) Approved leave;

(b) Unapproved leave;

(c) Industrial action (for those days industrial action takes place);

(d) All other paid or unpaid absences.

14.5 Where an employee does not attend the workplace or work in accordance with this clause, the bonus is calculated on a pro-rata basis based on the number of hours worked by the Employee each week, as a percentage of the rostered hours.

…

19. Overtime

19.1 ln calculating overtime, except for clause 19 .6, each day or shift is to be treated separately.

19.2 Subject to the exceptions in clause 19.3, all time worked in excess of or outside the ordinary hours of any shift on the following days will be paid for at the following rates:

Day of week	Rate of pay
Monday to Friday	First 3 hours at time and a half, then double time
Saturday	First 3 hours at time and a half, then double time
Sunday	Double time

19.3 All time worked in excess of or outside the ordinary hours of any shift by employees:

(a) who are six day roster employees or seven day roster employees;

(b) who work a roster which requires ordinary shifts on public holidays and not less than 272 ordinary hours per year on Sundays; or

(c) who work a roster which requires ordinary shifts on Saturday and Sunday where the majority of the rostered hours on the Saturday or Sunday shifts fall between midnight Friday and midnight Sunday;

will be paid for at the rate of double time.

19.4 An employee called on to work overtime on a Saturday or Sunday (that is not continuous with work started on the previous day) will be paid for at least three hours at the appropriate rate.

19.5 When overtime work is necessary it will be arranged where possible for employees to have at least 10 consecutive hours off duty between the work of successive days. Where the employee does not get a 10 hour rest

(a) The following conditions apply to an employee who works so much overtime that the employee has not had at least 10 consecutive hours off duty between the end of the employee's ordinary hours of work on one day and the start of the employee's ordinary hours of work on the next day:

•  the employee will be released from duty after that overtime is finished until the employee has had 10 consecutive hours off duty, and

•  there will be no loss of pay for ordinary hours of work time which occur during this absence.

(b) The following conditions apply to an employee who, on the instructions of Falcon Mining, resumes or continues work without having had 10 consecutive hours off duty in accordance with clause 19 .5(a):

•  the employee will be paid at double time during ordinary hours and after that until the employee is released from duty;

•  the employee will then be entitled to be absent for 10 consecutive hours; and

•  there will be no loss of pay for ordinary hours of work time which occur during this absence.

19.6 Call-back

(a) An employee who is recalled to work overtime after leaving the mine (whether the employee was notified before or after leaving the mine) will be paid for at least four hours work at the appropriate rate for each time the employee is recalled. Except where unforeseen circumstances arise, the employee will not be required to work the full four hours if the job to be performed is completed within a shorter period.

(b) The provisions of this sub~clause do not apply in the following cases:

•  where it is customary for an employee to return to the mine to perform a specific job outside the employee's ordinary working hours; or

•  where the overtime is continuous (subject to a reasonable meal break) with the end or start of ordinary working time.

19.7 Overtime worked in the circumstances specified in clause 19.6 will not be regarded as overtime for the purposes of a rest period as set down in clause 19.5 if the actual time worked is less than four hours on any recall or on each of any recalls.

…

21.9 An employee taking annual leave must be paid the greater of:

(a) the employee's ordinary rate of pay under the agreement plus a loading of 20% of that rate; or

(b) the employee's rostered earnings (exclusive of bonus) for the period of annual leave under the agreement, which includes all rostered overtime and rostered public holidays but does not include shift allowances, other than for seven day roster employees; or

(c) an amount which no less than the greater payment of clause 21.9(a) and 21.9(b) above.

21.10 Employees engaged under an aggregate hourly rate in accordance with clause 13.6 will be paid as if at work.”

[13] The following undertakings were given by the Respondent, and accepted by the Commission, when the Agreement was approved:

“Where an employee is paid an aggregated hourly rate in accordance with clause 13.6, Falcon Mining will undertake a reconciliation for each existing or new roster cycle.

The purpose of the reconciliation is to assess whether or not the employee would receive less pay in that roster cycle than they would have received under the Award or under the Agreement had they not been paid an aggregate hourly rate.

If the reconciliation shows that the employee would be paid less under the aggregate hourly rate over the roster cycle, Falcon Mining will pay to the employee the higher amount that otherwise would have been paid under the Award or under the Agreement.

Additionally, an employee who is paid an aggregate hourly rate in accordance with clause 13.6 may request Falcon Mining to perform such a reconciliation, up to one reconciliation per quarter.

If such a request is made, Falcon Mining will provide to the requesting employee detail of the reconciliation in relation to the 12 week period immediately prior to the time the employee requested the reconciliation.

If the reconciliation shows that the employee received less pay while being paid the aggregate hourly rate over the relevant period, Falcon Mining will pay to the employee the amount of the difference”

Principles of construction

[14] There is no dispute between the parties as to the principles that I must apply in properly construing the Agreement. Those principles were summarised by the Full Bench in AMWU v Berri Pty Ltd 2 (Berri) as follows:

“1. 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.”

[15] More recently, the Full Court of the Federal Court of Australia stated the principles applicable to the interpretation of an enterprise agreements in James Cook University v Ridd: 3

“(i) The starting point is the ordinary meaning of the words, read as a whole and in context.

(ii) A purposive approach is preferred to a narrow or pedantic approach — the framers of such documents were likely to be of a “practical bent of mind”. The interpretation “turns upon the language of the particular agreement, understood in the light of its industrial context and purpose”.

(iii) Context is not confined to the words of the 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”.

(iv) Context may include “... ideas that gave rise to an expression in a document from which it has been taken”.

(v) Recourse may be had to the history of a particular clause “Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form...”

(vi) A generous construction is preferred over a strictly literal approach, but “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”.

(vii) Words are not to be interpreted in a vacuum divorced from industrial realities but in the light of the customs and working conditions of the particular industry.” [references omitted]

Proper interpretation of clause 14 of the Agreement

[16] The Applicants contend that clause 14 of the Agreement required the Respondent to pay them a weekly attendance bonus payment of at least $300 (where they attended for all rostered shifts in a week), the bonus had to be paid as a flat payment, and the bonus did not have to be paid for all purposes. The Applicants also contend that the requirement in clause 14.1 for the attendance bonus to be paid “in addition to all other remuneration” meant that it had to be paid in addition to, and separate from, any other remuneration paid to the Applicants by the Respondent, whether pursuant to the Agreement, a contract or any other source of obligation. The Applicants submit that the history of the Agreement supports these contentions. In that regard, the Applicants rely on the fact that the Respondent made an enterprise agreement with its employees in 2016 and applied to the Commission to have the agreement approved. It was opposed by the CFMMEU. The Commission rejected the approval application. The rejected agreement did not provide for the mandatory payment of an attendance bonus. Instead the rejected agreement provided for the payment of an “all up” or aggregated rate of pay and the payment of a bonus was at the sole discretion of the Respondent. In the subsequent negotiations for the Agreement, the mandatory attendance bonus clause was one of the final issues to be resolved in the negotiations. The Applicants adduced evidence as to what was said by Mr McWilliams and Ms Gayton in those negotiations concerning the attendance bonus.

[17] The Applicants submit that they did not receive a weekly attendance bonus from the Respondent. In support of this contention the Applicants point to the fact that they did not receive any payslip or other record from the Respondent which showed that they had been paid a weekly attendance bonus. The Applicants rely on the requirements in the Act and the Fair Work Regulations requiring employers to make and keep accurate employee records. The Applicants also say, in response to the Respondent’s contention that it paid the attendance bonus as part of the Applicant’s “all inclusive” rates of pay, that clause 14.1 of the Agreement required the attendance bonus to be paid as a separate, flat payment, which did not have to be paid for all purposes of the Agreement.

[18] The Respondent submits that the Applicants have been paid their attendance bonuses under clause 14.1 of the Agreement. Such payments have been made as part of their contractual entitlement to an “all inclusive” rate of pay. The Respondent also contends that the Agreement does not oblige it to pay the attendance bonus as a separate payment. The expression “in addition to all other remuneration” in clause 14.1 of the Agreement means, so the Respondent contends, in addition to all other remuneration payable under the Agreement; it is not a reference to all other remuneration no matter how paid. The Respondent submits that the interpretation for which the Applicants contend would create an absurd, extraordinary, capricious and irrational outcome that was not intended.

[19] The Respondent also seeks to rely on what was said during bargaining for the Agreement and Mr McWilliams’ understanding of the expression “in addition to all other remuneration” in clause 14.1 of the Agreement. In particular, the Respondent points to evidence where Mr McWilliams agreed that the reference to “remuneration” in clause 14.1 is “remuneration in the agreement”. 4

[20] In my view, there is ambiguity in clause 14 of the Agreement. The ambiguity arises primarily because the expression “in addition to all other remuneration” is susceptible of more than one meaning. 5 First, it is arguable that the expression means in addition to all other remuneration, whether payable pursuant to the Agreement, a contract or any other source. Secondly, it is arguable that the expression means in addition to all other remuneration payable under the Agreement.

[21] For the reasons that follow, the evidence adduced of surrounding circumstances in this case does not assist in the task of interpreting the relevant provisions of the Agreement. First, it would be impermissible to use evidence of Mr McWilliams’ subjective understanding of the meaning of the expression “in addition to all other remuneration” in clause 14.1 to construe the Agreement. 6 Secondly, there is no evidence to suggest that what was said by Ms Gayton and/or Mr McWilliams in bargaining was explained to the employees who voted on the Agreement. This means that a cautious approach must be taken to any attempt to rely on the evidence of prior negotiations and the positions advanced during the negotiation process.7 In any event, what was said during those negotiations does not show any meeting of the minds as to whether there was an intention that the attendance bonus would have to be paid in addition to all other remuneration, whether payable under the Agreement, a contract of employment, or any other source of obligation.8

[22] Clause 14 of the Agreement must be construed in context. Part of that context includes the other provisions of the Agreement, particularly insofar as they relate to the payment of money or benefits. Clause 13.1 of the Agreement sets out the base rate of pay which an employee is to be paid, which (according to clause 13.2) includes “compensation for all allowances, skills, disabilities and tools”. Clauses 17 and 19 of the Agreement provide for loadings and penalties to be paid in particular circumstances, such as where shiftwork, overtime, or a call-back is performed. Clause 13.5 confers on the Respondent a “sole discretion to pay a productivity bonus in accordance with production, safety, conduct and efficiency targets”. Clause 13.6 permits the Respondent to pay employees an “aggregated hourly rate” in lieu of the base rate of pay, overtime and penalty rates otherwise payable under clauses 16 to 20 and 21 to 24 of the Agreement. Having regard to this context, I am of the view that the purpose of the expression “in addition to all other remuneration” in clause 14.1 is to ensure that any reasonable reader of the Agreement would understand that the attendance bonus had to be paid in addition to all other remuneration payable under the Agreement, including an aggregated hourly rate, if the Respondent exercises its discretion to make such payments under clause 13.6 of the Agreement. Absent the expression “in addition to all other remuneration” in clause 14.1, there may have been some confusion as to whether an aggregated hourly rate paid in accordance with clause 13.6 of the Agreement had some amount already factored into it in respect of the weekly attendance bonus provided for in clause 14.1 of the Agreement.

[23] In addition, the construction for which the Applicants contend would have given rise to absurd and non-sensical industrial outcomes. One example is sufficient to make good this point. If the Respondent entered into a contract with an employee to whom the Agreement applied and the contract required the Respondent to pay a weekly bonus of, say, $1,000 per week to the employee for the purpose of both incentivising the employee to remain in employment with the Respondent and in lieu of the attendance bonus payable under clause 14 of the Agreement, the Respondent would be obliged, on the Applicant’s construction of clause 14, to pay the employee both the contractual bonus of $1,000 per week and the attendance bonus of $300 per week in accordance with clause 14 of the Agreement.

[24] There is no requirement in the Agreement for the attendance bonus to be paid as a separate payment. The words of clause 14 do not support such a construction. Further, whether the payslips provided by the Respondent to the Applicants made any reference to an attendance bonus is not determinative of compliance with the obligation to pay an attendance bonus in accordance with clause 14 of the Agreement.

[25] In my view, the reference in clause 14.1 to the attendance bonus being a “flat payment” simply means that the amount of the weekly attendance bonus does not vary from one week to another; it is fixed at the rate of $300 per week. This construction accords the word “flat” its ordinary meaning of level or even.

[26] The fact that the attendance bonus does not have to be “paid for all purposes of the EA” means that it does not have to be paid as part of other benefits payable under the Agreement, such as when an employee is absent from work on approved annual leave. The Respondent could, of course, go beyond its obligations under the Agreement and pay the attendance bonus for “all purposes”, but it was not obliged by the Agreement to do so.

[27] It follows that I reject the Applicants’ contention that clause 14.1 of the Agreement imposed an obligation on the Respondent to pay the Applicants an attendance bonus in addition to, and separate from, any other remuneration paid to them, whether pursuant to the Agreement, a contract or any other source of obligation

The Applicants’ employment contracts

Mr Sisson, Mr Grimshaw & Mr Alexander

[28] The contracts of employment entered into by each of Mr Sisson, Mr Grimshaw and Mr Alexander with the Respondent included the following relevant terms:

“This Contract supersedes and replaces all prior representations and agreements, whether oral or in writing, concerning your employment with Mastermyne Group of Companies.

…

Enterprise Agreement

Your employment will be regulated by the Enterprise Agreement prescribed in Schedule A, the Fair Work Act2009, and the provisions of this Contract. The Enterprise Agreement does not form part of your contract of employment with Mastermyne, however it should be referred to in conjunction with this Contract when determining the terms of your engagement with Mastermyne.

…

Wage & Superannuation

Your hourly rate of pay is stated in Schedule A.

The all-inclusive hourly rate has been calculated by undertaking a better – off – overall – calculation of the relevant EA (level) rate and all other EA provisions, with your hours of work. This calculation has ensured your hourly rate meets or exceeds the provisions of the EA. Except where specified in the Schedule, the all-inclusive hourly rate will be applied for all hours worked (including any allowances or penalties that may otherwise apply).

…

General Provisions

…

Except as provided by the Enterprise Agreement, this contract sets out all of the terms of your employment with Mastermyne (and supersedes and replaces all prior representations and agreements, whether oral or in writing, concerning your employment with Mastermyne).

Prior to agreeing to this contract it is important you bring to the attention of your Mastermyne contact any matters you believe have been previously discussed or committed, but are not covered in this contract. Once you agree to this letter, you are confirming the contract is complete and no agreed terms are missing…”

Mr Medley

[29] Mr Medley’s contract of employment with the Respondent included the following relevant terms:

“This Contract supersedes and replaces all prior representations and agreements, whether oral or in writing, concerning your employment with any entity of the Mastermyne Group of Companies.

…

Enterprise Agreement

Your employment will be regulated by the Falcon Mining Enterprise Agreement 2017, the Fair Work Act2009, and the provisions of this Contract. The Enterprise Agreement (EA) does not form part of your contract of employment with Falcon Mining, however it should be referred to in conjunction with this Contract when determining the terms of your engagement with Falcon Mining.

…

Wage & Superannuation

Your hourly rate of pay is stated in Schedule A. Your wage will be paid weekly, via electronic transfer into the bank account of your choice.

…

General Provisions

…

Except as provided by the Enterprise Agreement, this contract sets out all of the terms of your employment with Falcon Mining (and supersedes and replaces all prior representations and agreements, whether oral or in writing, concerning your employment with any Mastermyne Group entity).

Prior to agreeing to this contract it is important you bring to our attention any matters you believe have been previously discussed or committed, but are not covered in this contract. Once you agree to this letter, you are confirming the contract is complete and no agreed terms are missing…”

[30] Schedule A to Mr Medley’s contract of employment stated the amount of his “All-inclusive Hourly Rate”, but unlike the contracts for Messrs Sisson, Grimshaw and Alexander, Mr Medley’s contract of employment did not include a term explaining how the all-inclusive rate had been calculated or what it covered.

Mr Moana-Mason

[31] Mr Moana-Mason was originally employed by the Respondent as a casual employee. His first contract of employment, dated 23 October 2017, with the Respondent includes the following relevant terms:

“Enterprise Agreement

Your employment will be regulated by Falcon Mining Enterprise Agreement 2017, the Fair Work Act2009, and the provisions of this Contract. A copy of the Workplace Agreement can be accessed upon request from your Project Manager or the Human Resource Department.

The Enterprise Agreement does not form part of your contract of employment with Falcon Mining, however it should be referred to in conjunction with this Contract when determining the terms of your engagement with Falcon Mining.

…

Wage & Superannuation

Your base ordinary hourly rate of pay is stated in Schedule A. Your wage will be paid weekly, via electronic transfer into the bank account of your choice.

…

General Provisions

…

Except as provided by the Enterprise Agreement, this contract sets out all of the terms of your employment with Falcon Mining (and supersedes and replaces all prior representations and agreements, whether oral or in writing, concerning your employment with Falcon Mining). Prior to agreeing to this contract it is important you bring to our attention any matters you believe have been previously discussed or committed, but are not covered in this contract. Once you agree to this letter, you are confirming the contract is complete and no agreed terms are missing…”

[32] Schedule A to Mr Moana-Mason’s first contract of employment with the Respondent stated the amount of his “All-inclusive Hourly Rate”, but unlike the contracts for Messrs Sisson, Grimshaw and Alexander, Mr Moana-Mason’s first contract of employment did not include a term explaining how the all-inclusive rate had been calculated or what it covered.

[33] Mr Moana-Mason entered into a second contract, dated 5 July 2019, with the Respondent. The terms set out in paragraph [28] above, from the contracts of employment made by each of Mr Sisson, Mr Grimshaw and Mr Alexander with the Respondent, were included in Mr Moana-Mason’s second contract of employment with the Respondent.

Ms Gayton’s evidence

[34] Ms Gayton gave the following evidence, which I accept, in relation to the contracts of employment entered into between the Respondent and each of the Applicants:

•  The Respondent used the Mastermyne Group standard form “all-inclusive” contracts in their various versions for the Narrabri project.

•  The Mastermyne standard form full time contract of employment provides that the hourly rate of pay is stated in Schedule A.

•  The pay rate stated in the standard form schedule for the Narrabri contracts is described as an “all-inclusive” rate.

•  The standard form contract includes the following clause (All Inclusive Clause):

“Wage & Superannuation

…

The all-inclusive hourly rate has been calculated by undertaking a better–off–overall calculation of the relevant EA (level) rate and all other EA provisions, with your hours of work. This calculation has ensured your hourly rate meets or exceeds the provisions of the EA. Except where specified in the Schedule, the all-inclusive hourly rate will be applied for all hours worked (including any allowances or penalties that may otherwise apply).”

•  The only thing the Respondent does not include in the “all-inclusive” rate is any production bonus, because such a bonus is an “at-risk” benefit which is generally paid periodically (not weekly) and is usually negotiated with the Respondent’s client based on periodic profit arrangements.

•  The Respondent uses its “all-inclusive” pay structure at all mines with a seven day on/seven day off roster arrangement because:

•  it is simpler for employees;

•  employees prefer the certainty of earnings;

•  to pay at, or where possible, above the market rate in order to attract the best employees;

•  the pay structure means that during their holidays employees receive what would otherwise not be paid to them; and

•  it is simpler for the Respondent and its payroll system.

•  The fact that the contract of employment for Mr Medley and the first contract of employment for Mr Moana-Mason did not contain the All Inclusive Clause was due to an administrative error.

Applicable principles re contracts of employment and enterprise agreements

[35] There is no dispute in this case that the terms of a contract of employment may be affected in their operation by a statutory instrument such as an enterprise agreement approved under the Act. The contract of employment may provide for matters additional to and not inconsistent with such a statutory instrument, and in that circumstance the instrument and the contract may be said to co-exist, but where the contract contains provisions inconsistent with those in the instrument, the provisions in the instrument will apply by virtue of the statute which gives it effect, and the inconsistent provisions of the contract will be displaced in their operation and rendered inoperative. 9 Further, because obligations in an employment relationship may originate in a statute or a contract of employment, questions often arise as to whether payments made by an employer to an employee in the performance of a contractual obligation may operate to discharge a concurrent statutory obligation.10

[36] In Rossato, Justice White summarised (at [865]) the principles applicable to the entitlement of an employer to set-off a payment against an obligation or, to put it another way, for certain payments made by the employer to be regarded as having satisfied its obligations under an award or enterprise agreement:

“(a) the issue may require the application of the parties’ contract: Poletti v Ecob at 332. If they agree that a sum of money is paid and received for a specific purpose which is over and above or extraneous to an award entitlement, the contract precludes the employer from later seeking to rely on the payment as satisfying an award obligation which is outside the agreed purpose of the payment: ibid. If the payment was made for the purpose of satisfying the kind of award obligation sought to be satisfied, it may be brought into account as satisfaction or part satisfaction of that obligation. If it was paid for some other purpose, then the employer cannot bring the payment into account: Discount Lounge Centre at [23]. Stated more generally, an employer cannot later reallocate an amount agreed to be paid to an employee in respect of subject A (for example, ordinary hours of work) to meet a claim in respect of subject B (for example, overtime): Ray v Radano at 478-9 (Sheldon J); Pacific Publications at 419; Discount Lounge Centre at [57]. The focus is on the purpose of the payment. If it arises out of the same purpose as the award obligation, it can be set off: ANZ v FSU at [48]-[52]. I will refer to this as the “Contractual Principle”;

(b) the issue may involve application of the common law principles concerning payment by a debtor to a creditor: Poletti v Ecob at 332-3. When there are outstanding award or enterprise agreement entitlements, a payment designated by the employer as being for a purpose other than satisfaction of the award entitlement cannot be regarded as having satisfied the award or enterprise agreement: ibid. I will refer to this as the “Designation Principle”;

(c) close regard must be had to the character of the payment on which the employer relies for the claimed set off and the purpose (usually, the agreed purpose) for which it was made; and

(d) the purpose for which a payment was made will be a question of fact in each case. It may be express or may be implied from the parties’ agreement or from the employer’s conduct: James Turner at [21(3)]. The “designation and appropriation” are matters to be determined by reference to the whole of the evidence: ANZ v FSU at [56].”

[37] The proper approach to be taken when construing commercial contracts was set out by the High Court (French CJ, Nettle and Gordon JJ) in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited: 11

“[46] The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[47] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

[48] Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

[49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

[50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.

[51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties ... intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

[52] These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales and Electricity Generation Corporation v Woodside Energy Ltd. We agree with the observations of Kiefel and Keane JJ with respect to Western Export Services Inc v Jireh International Pty Ltd.” (citations omitted)

Consideration

[38] It is apparent from the language used in the All Inclusive Clause in the contracts of employment for Mr Sisson, Mr Grimshaw, Mr Alexander and the second contract for Mr Moana-Mason that the purpose of the “all-inclusive hourly rate” is to compensate the employee for all payments, allowances, penalties and other benefits to which the employee is entitled under “all … EA provisions” for “hours worked”. The purpose of the attendance bonus payable under clause 14.1 of the Agreement is to reward an employee for their “attendance at the workplace, and performance of work, for the normal rostered shift”. There is plainly a close correlation between the nature of the contractual obligation contained in the All Inclusive Clause and the nature of the obligation contained in clause 14.1 of the Agreement. In my view, it is clear that the “all-inclusive hourly rate” paid pursuant to the All Inclusive Clause in the contracts of employment was made for the purpose of satisfying the kind of enterprise agreement obligation sought to be satisfied by clause 14.1 of the Agreement, with the result that it be may brought to account as satisfaction of that obligation.

[39] As to Mr Moana-Mason’s first contract and Mr Medley’s contract with the Respondent, they provide for the employees to be paid an “all-inclusive hourly rate”. Unlike the contracts which contain the All Inclusive Clause, Mr Moana-Mason’s first contract and Mr Medley’s contract do not contain an express statement of the purpose of the “all-inclusive hourly rate”. The ordinary meaning of “all-inclusive” is “covering everything necessary”. 12 Further, the contractual rate of pay being expressed as an “hourly rate” suggests that the purpose of the payment is to compensate the employee for the performance of work. The context in which the expression “all-inclusive hourly rate” must be construed includes the other terms of the contract, including the following provisions:

•  “Your employment will be regulated by the Falcon Mining Enterprise Agreement 2017, the Fair Work Act2009, and the provisions of this Contract.”

• “Except as provided by the Enterprise Agreement, this contract sets out all of the terms of your employment with Falcon Mining …”

[40] Construed in context, I am of the view that the purpose of the contractual provision requiring the Respondent to pay an “all-inclusive hourly rate” is to pay the employee a rate of pay which covers everything necessary to meet all the obligations the Respondent has to make payments to the employee for work performed by the employee, including obligations arising under the Agreement. It follows that the “all-inclusive hourly rate” paid to Mr Medley and Mr Moana-Mason was for the purpose of satisfying the kind of enterprise agreement obligation sought to be satisfied by clause 14.1 of the Agreement, with the result that it be may brought to account as satisfaction of that obligation.

[41] The expression “Except as provided by the Enterprise Agreement…” in the contracts for Mr Medley and Mr Moana-Mason recognises that a contract of employment cannot be effective to derogate from an enterprise agreement and the benefits that it confers. However, it remains the case that a payment made by an employer to an employee in the performance of a contractual obligation may operate to discharge a concurrent obligation under an enterprise agreement. That is what I have found to be the case for each of the Applicants insofar as the attendance bonus under clause 14.1 of the Agreement is concerned.

[42] Submissions were made by each party concerning the factors relevant to the implication of an implied term in a contract. However, I do not need to address those submissions in any detail, because it is the contention of each party that there were no relevant implied terms in any of the Applicant’s contracts of employment with the Respondent. As I have sought to demonstrate above, the primary issue in relation to the contracts of employment is whether payments made by the Respondent pursuant to the relevant express terms of the contracts, properly construed, can be regarded as having satisfied its obligation under clause 14.1 of the Agreement. A dispute of that character is plainly “a dispute about a matter under” the Agreement within the meaning of clause 7.1 of the Agreement, and is therefore within the jurisdiction of the Commission to arbitrate under step 5 of clause 7.2 of the Agreement.

Conclusion

[43] For the reasons given, I determine that the answer to the question for arbitration is “yes”. That is, the Respondent has complied with its obligation under clause 14 of the Agreement to pay attendance bonus payments to each of the Applicants during their employment with the Respondent.

DEPUTY PRESIDENT

Appearances:

Mr K Endacott, Industrial Officer of the CFMMEU, for the Applicants
Mr M Coonan, solicitor, for the Respondent

Hearing details:

2020.
Newcastle (by video conference):
12 - 13 October and 10 December.

Printed by authority of the Commonwealth Government Printer

<PR725497>

 1   Ex R2 at VG3

 2   [2017] FWCFB 3005

 3 [2020] FCAFC 123 at [65]

 4   PN341-2; see Respondent’s closing written submissions dated 17 November 2020

 5   Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1981-1982) 149 CLR 337 at 350 per Mason J; Grocon Constructors Pty Ltd v Construction, Forestry, Mining and Energy Union AG812496 PR924146 at [20] per Ross VP citing Re: Victorian Public Transport Enterprise Agreement 1994, Print M2454, 7 June 1995 per Ross VP, Polites SDP and Grimshaw C at p. 4; Re CFMEU Appeal, Print R2431, 25 February 1999 per Harrison SDP, Drake DP and Larkin C at para 13; Re Tenix Defence Systems Pty Limited Certified Agreement 2001-2004, Print PR917548, 9 May 2002 per Ross VP, O'Callaghan SDP and Foggo C

 6   Berri at [114(3) & (11)]

 7   Berri at [114(13)]

 8   Ex A1, A2 & R1

 9   DL Employment Pty Ltd v AMWU[2014] FWCFB 7946 at [42]; WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (Rossato) at [956]

 10   Rossato at [956]

 11 (2015) 256 CLR 104

 12   Macquarie Dictionary, Revised Third Edition