Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia And Automotive, Food, Metals, Engineering, Printing and Kindred Industries Unionv KONE Elevators...
[2021] FWC 108
•11 JANUARY 2021
| [2021] FWC 108 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
And
Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union
vKONE Elevators Pty Ltd
(C2020/6237 and C2020/6352)
DEPUTY PRESIDENT CROSS | SYDNEY, 11 JANUARY 2021 |
Alleged dispute about any matters arising under an enterprise agreement –– dispute resolved and concluded.
[1] This dispute concerns a claim by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (the CEPU), and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (the AMWU), regarding the rate of upon which superannuation contributions should be made to employees of KONE Elevators Australia Pty Ltd (KONE).
[2] The matter was allocated to me on 13 August 2020, and on 10 September 2020, I issued directions for the filing and service of evidence and outlines of submissions. At the hearing of the matter on 16 October 2020, Mr D Austin appeared for the CEPU, and Ms K Presdee appeared for the AMWU. Mr D Chin SC and Mr D Fuller of Counsel, appeared for KONE. No objection to permission to appear was taken by the CEPU or the AMWU, and permission was granted for KONE to be legally represented, pursuant to s.596 of the Fair Work Act 2009 (the ‘Act’). The appearance of very competent and experienced union advocates and legal practitioners greatly contributed to the efficient conduct and disposal of the proceeding.
[3] There was no issue that the dispute related a matter arising under the relevant Enterprise Agreement, nor that the requisite steps in the disputes procedure clause for the dispute had been followed.
[4] KONE accepted that:
a) The Fair Work Commission (the Commission) has jurisdiction to determine the dispute by arbitration (Clause 58 of the Agreement, and section 739(4) of the Act);
b) The Commission is not precluded from dealing with the dispute; and
c) The CEPU and AMWU are covered by the relevant Enterprise Agreement and had standing to agitate the dispute in the Commission.
[5] The dispute principally concerns the operation and interpretation of clause 36 of the Kone Elevators Sydney Regions Enterprise Agreement 2017 (the 2017 Agreement). That clause provides:
“KONE will contribute to an approved superannuation fund of the Employee's own choice, as detailed in the KONE superannuation plan policy or in the absence of employee's choice the default superannuation fund is KONE Superannuation Plan. The said contributions, currently 12% for permanent employees, will as a minimum satisfy all legislation including the government "superannuation guarantee charge". From 15 September 2018, superannuation contributions will increase to 12.25%.”
[6] Other clauses relevant to the dispute are Clauses 34 and 42 of the 2017 Agreement. Clause 34 provides for shift allowances to be paid for regular shift work that commences at or after 11am on one day and concludes before 6am in the following day. That Clause relevantly provides:
Shift allowances
(a) When an employee is employed continuously (inclusive of public holidays) for five shifts Monday to Friday, the following rates will apply:
(i) afternoon and night shift- ordinary time hourly rate plus 50%;
(ii) morning and early afternoon shifts- ordinary time hourly rate plus 25%.
(b) Where a job finishes after proceeding on shiftwork for more than five consecutive days or the employer terminates the employee's services during the week, the employee must be paid at the rate specified above for the time actually worked.
(c) If an employee works less than five consecutive shifts, they shall be paid for each day at the rate of time and a half for the first two hours and double time thereafter provided that when a job finishes after proceeding on shift work for more than one week, or the employee terminates his/her services during the week, he/she shall be paid at the rate specified, for the time actually worked.
[7] Clause 42 of the 2017 Agreement provides that shift workers receive annual leave loading at the rate of their shift allowance wherever that allowance exceeds 17.5%.
THE EVIDENCE
[8] The following persons provided witness statements in the proceeding:
• Mr Stephen Bankes, dated 11 September 2020 – for the CEPU;
• Mr Malcolm Hoy, with two statements dated 9 and 11 September 2020 respectively – for the CEPU
• Mr Stephen Arthur Hobbs, dated – for the AMWU;
• Ms Claudia Tong, dated 6 October 2020 – for Kone;
• Mr Terrence Jackson, dated 6 October 2020 – for Kone;
• Mr Ajay Sankaran, dated – for Kone;
• Ms Julie Daw, dated 1 October 2020 – for Kone
• Mr Antony Facchin, dated 1 October 2020 – for Kone; and
• Ms Huang Ho, with two statements dated 6 and 9 October 2020 respectively – for Kone.
[9] There was very limited cross-examination of Mr Hobbs, Ms Daw, Mr Facchin and Ms Ho. Otherwise the statements of witnesses were relied upon by each party.
a) Mr Bankes
[10] Mr Bankes is employed as an Organiser for the CEPU. In his role as Organiser, he represents the industrial interests of CEPU members who are employed by KONE in New South Wales. He represented CEPU members in the negotiation of the 2017 Agreement, which started around 25 October 2016, but had no involvement in any relevant enterprise agreements prior to the 2017 Agreement.
[11] Mr Bankes noted that in the negotiations for the 2017 Agreement he received a document containing a comparison of the rates in an offer made by KONE with the rates of KONE’s main competitor, Schindler. That email contained a table comparing the superannuation rates for each company. The table for KONE contained an amount for superannuation that was higher than 12% of base rates only.
[12] Mr Bankes stated that on Monday 18 September 2017, he attended an Agreement negotiation meeting with KONE. At one point in that meeting the combined unions agreed to take the new proposal to their members, including a 0.25% increase to Superannuation. There was no discussion in that meeting of the rates or allowances to which the new rate of 12.25% superannuation applied.
[13] The next day, on 19 September 2017, KONE sent Mr Bankes an email summarising the revised offer in negotiations for the 2017 Agreement. That included a 0.25% increase in the rate of superannuation contributions, from 12% to 12.25%. The offer did not say which parts of an employee’s income attracted the 12.25% rate. The 2017 Agreement was thereafter made on 20 October 2017.
b) Mr Hoy
[14] Mr Hoy has been employed by KONE since 4 April 1990. He has been a delegate of the CEPU since 25 May 2009.
[15] Mr Hoy noted that when he started work for KONE in 1990, KONE made superannuation contributions to a defined benefits superannuation scheme for all of its employees at the rate of 15%.
[16] In about 2014, KONE announced that any new employees would be on a new superannuation plan, rather than the defined benefits plan. Mr Hoy was advised that when less than 10% of the company’s employees were in the defined benefits scheme the employees in that scheme would be transferred to a different fund.
[17] The new superannuation plan was run by Plum Financial Services. The payout from that fund was based on the investment return of managed funds rather than a defined benefits scheme. Employees had the option to move to a different scheme, but Mr Hoy remained in the default fund with Plum Financial Services.
[18] Mr Hoy recalled there were negotiations in 2000 and 2001 for a new agreement, the (2001 Agreement). KONE did not announce any changes around superannuation when that agreement was being negotiated.
[19] Mr Hoy noted that a new superannuation clause was introduced in the KONE Elevators Sydney CBD Region and Sydney Metropolitan Region 2007 Collective Agreement (the 2007 Agreement). The clause provided for a 12% rate of superannuation. Mr Hoy did not, however, join the EBA committee in negotiations for a new agreement until 2010.
[20] Mr Hoy was involved throughout 2016 and 2017 in negotiations for the 2017 Agreement. All he could apparently recall from those negotiations was that the superannuation rates increased from 12% to 12.25% following those negotiations, and the company did not say in the negotiations or in mass meetings prior to the vote that the increase was only on base rates.
c) Mr Hobbs
[21] Mr Hobbs is employed by KONE as a fitter, and has worked for KONE for about 13 years. He gave evidence regarding his work patterns and entitlements. He also gave evidence of the temporary increase in superannuation received in early 2020, and of various enquiries made of the Australian Taxation Office.
d) Ms Tong
[22] Ms Tong is the Finance Director of KONE. Her main responsibility is to make sure KONE's financial reporting is in order for Australia and New Zealand, consolidating and working with the business on financial health checks and strategic direction going forward. She reports to the Managing Director of KONE Australia and New Zealand.
[23] Ms Tong noted that it had been the long standing KONE practice to pay superannuation to their employees on a higher than statutory rate just on the base rate of pay, currently 12.25% as opposed to 9.5% of ordinary times earnings (OTE). To ensure that overall KONE's superannuation contributions will not fall under the 9.5% statutory rate calculated on all earnings within the definition of OTE, a quarterly top up contribution is made in the month following the quarters ending in March, June, September and December respectively.
[24] As Finance Director, Ms Tong was copied into correspondence regarding costings related to the negotiation of the 2017 Agreement. On 9 August 2017, while those enterprise agreement negotiations were on foot, Ms Tong was copied into the email containing the comparison of terms and conditions of employment between KONE, Schindler and OTIS including in respect of superannuation.
[25] Ms Tong deposed that if this dispute was to be decided against KONE, KONE's estimated financial liability for Sydney employees would be AUD $2.448 million. If there was a national flow-on effect the liability would be approximately $7.78 million. The short term and long term financial impacts would affect KONE's competitiveness and the ongoing sustainability of KONE's operations.
e) Mr Jackson
[26] Mr Jackson is the Head of Safety, Quality and Environment at KONE. During the negotiations for the 2017 Agreement, Mr Jackson was employed as the General Manager for the Sydney Service Division (SSD). He attended around six meetings during those negotiations.
[27] Mr Jackson recalled there were discussions at these meetings about KONE increasing the rate of its superannuation contributions from 12% to 12.25% for employees who would be covered by the 2017 Agreement, however, he did not recall any discussions about the amount or amounts of earnings to which this rate would be applied. He did not recall any suggestion by anyone in the negotiations (on behalf of KONE or the employees) that superannuation would be calculated on any different basis from how KONE was calculating it at the time, which he understood to be on base wages.
f) Mr Sankaran
[28] Mr Sankaran is employed by KONE as General Manager of Sales for NSW and the ACT. From around April 2016 until December 2017, he was the General Manager for New Equipment Business (NEB), and was responsible for all new construction and Greenfields sites in the Sydney region.
[29] During the negotiations related to the 2017 Agreement, as the General Manager for NEB, he was involved in those negotiations. He recalled they commenced in around October 2016 and ran up until a first vote in around September 2017.
[30] He recalled the increase in superannuation contributions from 12 to 12.25% being discussed at these meetings. However, he did not recall any other discussions about superannuation, including the amount of earnings that would be used to the calculate superannuation contributions.
g) Ms Daw
[31] Ms Daw is employed with KONE in the capacity of Industrial Relations Specialist. In her role she has access to KONE’s records in relation to human resources and industrial relations matters.
[32] Ms Daw noted that KONE previously had a defined benefit superannuation plan for some of its employees. On or around 30 June 2013, the defined benefit superannuation plan ceased and employees who were previously members of the plan were transferred to accumulation superannuation plans.
[33] On or around 30 April 2013, KONE sent correspondence to approximately 113 employees who remained in the defined benefit superannuation plan. The correspondence enclosed a ‘Superannuation information brochure’ describing the changes to these employees’ superannuation arrangements.
[34] Ms Daw stated that KONE's enterprise agreement-covered employees are issued with letters of appointment at the commencement of their employment with the business. She reviewed all of the letters of appointment issued to KONE employees which are stored electronically in the period from 2001 to 2020. Of the letters Ms Daw reviewed dated from 2001, 98 to 99 percent have stated to the effect that superannuation contributions would be calculated on the employee’s base salary, and a number of examples, including a letter to Mr Hobbs, were annexed. None of the letters of appointment Ms Daw reviewed referred to superannuation being calculated as a percentage of ordinary times earnings.
h) Mr Facchin
[35] Mr Facchin is employed with KONE in the capacity of permanent full-time Head of Legal, Australia & New Zealand. In that role he has access to KONE's records in relation to superannuation matters, and has had involvement in matters concerning superannuation, including corresponding with representatives of Plum Super, a trading name of NULIS Nominees (Australia) Limited, which is the Trustee of the MLC Super Fund (Plum Super).
[36] Mr Facchin stated that he understood that Product Disclosure Statements (PDSs) are provided to new employees at KONE around the time they joined the KONE Superannuation Plan. The process was that new employees were invited to make a superannuation fund choice and if they did not elect to have their superannuation contributions to be paid into a different fund then their contributions defaulted to the KONE Superannuation Plan with Plum Super. Employees would be provided with the PDS for the KONE Superannuation Plan after they chose to join or defaulted to joining the KONE Superannuation Plan.
[37] The PDSs published between 2005 and 2010 referred to KONE making superannuation contributions equal to 12% of ‘base pay’. 'Base pay' was defined as the amount advised to the Trustee by KONE as the employee's base remuneration excluding overtime. The PDSs prepared between 2011 and 2020, were of a more general nature, and did not refer to the rate of superannuation contributions or the amount of earning to which that rate would be applied.
[38] Mr Facchin also noted that KONE Superannuation Plan Benefit statements issued in June 2017, included a definition of 'Salary': 'This is your Base Pay which is your annual level of ordinary earnings, excluding overtime, commissions, bonuses and other allowances and benefits.'
i) Ms Ho
[39] Ms Ho is currently employed with KONE in the capacity of permanent full-time Financial Controller, and has been so employed for two years. Her areas of responsibility include accounts payable, payroll, financial controlling, external reporting and tax compliance, and overall monitoring of KONE accounts receivable performance.
[40] Ms Ho noted that employees covered by the 2017 Agreement currently have superannuation calculated at 12.25% of base wages, being normal hours' pay including paid leave like annual leave and personal leave as well as absences on workers compensation (Work Cover) but excluding allowances, loadings and overtime. KONE makes superannuation contributions on a monthly basis.
[41] Ms Ho deposed that queries from employees in relation to pay, and specifically calculation of superannuation contributions, would often be directed to the payroll team. Payroll team members would at times elevate responses to queries by enterprise agreement covered employees regarding superannuation to Ms Ho, so that she could ensure the response to the employee concern was accurate. Her responses were always to the effect that superannuation is calculated at 12% of base pay but top ups were paid where necessary to ensure that the requirement of 9.5% of ordinary time earnings (OTE) was satisfied.
[42] Each quarter a review is conducted by the payroll team to ensure that the superannuation contributions of 12.25% on base pay do not fall below the minimum 9.5% rate on OTE as defined in the Superannuation Guarantee (Administration) Act 1992 (Cth). Previously the primary responsibility for the review rested with the former Payroll Supervisor, who left KONE in around October 2019. If the quarterly review shows that an employee requires a top up to their superannuation contributions in order to ensure the legislative minimum is met, it is paid in the month following the reconciliation, typically around the 10th-12th of the following month. Top up payments are included in an employee's usual superannuation contribution on their payslip for the month in which the top up is paid, and are not shown as a separate identifiable superannuation contribution on their payslip. In her second statement Ms Ho identified that top up payments would only ever be required to be made to shift workers who received relatively higher levels of shift allowances, being only approximately 10% of employees covered by the 2017 Agreement.
[43] Ms Ho sated that on or around 15 January 2020, there was a procedural error made in relation to the calculation of superannuation contributions for some employees covered by the 2017 Agreement by a newly employed Payroll Manager who was not familiar with KONE's payroll system. The procedural error arose when, subsequent to an enquiry from an operative in Victoria, the new Payroll Manager mistakenly turned on two shift allowance codes being 50% and 100% shift allowance codes applicable in relation to, for example, night and weekend allowances, in KONE's payroll system to be paid on superannuation, without consulting Ms Ho or KONE’s Industrial Relations team. As a result of the procedural error, some employees covered by the Agreement had their superannuation contributions calculated at 12.25% of their base pay plus those two applicable shift allowances, rather than 12.25% of their base pay alone.
[44] The procedural error was not formally rectified until around July 2020, and since that time, KONE has reverted to calculating superannuation at 12.25% of base pay for all employees covered by the 2017 Agreement.
The Submissions of the CEPU
[45] The CEPU noted that the dispute relates to the rate at which KONE makes superannuation contributions for employees who are engaged in work that attracts shift penalties. Since 1 July 2020 and prior to January 2020, KONE Elevators has paid superannuation in respect of employees’ base wages only. The CEPU on behalf of its members maintains that superannuation should be paid in respect of shift penalties and annual leave loading attributable to shift penalties.
[46] The CEPU identified the dispute to concern the proper construction of clause 36 of the 2017 Agreement. The issues which the CEPU asks the Commission to determine are:
a. Whether the terms of clause 36 are ambiguous as to the income upon which a contribution of 12.25% superannuation will be made; and
b. In its proper construction does Clause 36 include shift allowances and leave loading in income subject to superannuation contributions.
The CEPU submits that both issues should be determined in the affirmative.
[47] The CEPU submitted that in resolving this dispute the Commission must have regard to and apply the relevant principles of construction of an enterprise agreement, reformulated by the Full Bench of this Commission in AMWU v Berri Pty Limited 1 (‘Berri’). In particular, the Commission must have a mind to the consideration of the context and purpose of the provisions in dispute, the text and operation of the agreement as a whole and with reference to the particular the provisions of Clause 36 “Superannuation”, in the context of the legislative background against which it was made. As maintained by the Full bench in Berri, “the construction of an enterprise agreement, like that of a statute or a contract, begins with a consideration of the ordinary meaning of the relevant words. The disputed words must be construed in the context of the agreement as a whole. The process of interpretative analysis focusses upon the language of the agreement itself.”2
[48] If the agreement is ambiguous, regard may be had to evidence of objective background facts which were known to both parties, including:
(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. 3
[49] The CEPU noted the evidence of Mr Bankes and Mr Hoy that a clause providing for superannuation contributions at the rate of 12% was introduced to the 2007 Agreement, and remains substantially unchanged apart from an amendment of the rate to 12.25% in the 2017 Agreement. The portion of income to which superannuation applied was not identified in negotiation of any of the agreements. Superannuation was not a core focus of discussion in negotiations of the agreements from 2007 to 2017.
[50] The CEPU submitted Clause 36 of the Agreement does not say that the rate of 12.25% should apply to only “base rates” or “ordinary time hourly rates” under the 2017 Agreement. No words of Clause 36 indicate that the rate should be inclusive or exclusive of shift allowances. Clause 36 is therefore ambiguous with respect to the income to which superannuation contributions should apply.
[51] Should the Commission find such ambiguity in the Agreement then the terms of the Superannuation Guarantee (Administration) Act 1992 (the SGA Act) (when used as an aid to the task of interpreting the agreement) do comprise objective background facts which were known to both parties and the subject matter of the Agreement when it was made. The Superannuation Act provides the legislative context for the ordinary meaning of the words “superannuation contributions”. The SGA Act provides a framework of objective and notorious facts that support the application of a superannuation rate to a bundle of income including more than merely base rates, defined as “Ordinary Time Earnings”.
[52] The CEPU noted the SGA Act defines “ordinary time earnings” at section 6, as:
c. the total of:
i. earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment:
A. a payment in lieu of unused sick leave;
B. an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997;
ii. earnings consisting of over-award payments, shift-loading or commission; or
d. if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter—the maximum contribution base.
[53] In the legislative context of the 2017 Agreement therefore, superannuation has an objective meaning that includes payments attributable to shift-loading, including shift allowances and annual leave loading. That construction of the clause is consistent with the statutory scheme which is referenced in the second sentence of the clause by the words “will as a minimum satisfy all legislation including the government “superannuation guarantee charge”’.
[54] The CEPU disputed KONE’s application of the clause to periodically amend the rate of superannuation contributions paid on base rates in order to meet a shortfall against the superannuation guarantee of 9.5% ordinary time earnings. It submitted that no part of the clause provides a mechanism for that correction or a time for the correction to be made. The use of the words “superannuation guarantee charge” instead of “superannuation guarantee” is significant. A “superannuation guarantee” is the rate of employer contribution on ordinary time earnings mandated by the SGA Act. A “superannuation guarantee charge” includes both the superannuation guarantee and a component of interest and is payable for late or incomplete contributions.
[55] The CEPU submitted the effect of the words “will as a minimum satisfy all legislation including the government “superannuation guarantee charge”’ is to absorb legislated increases in the rate of superannuation guarantee and absorb the interest component of any superannuation guarantee charge applied to late or incomplete contributions. KONE may thereby offset its statutory liability to the extent of the higher rate.
[56] The CEPU submitted that the conduct of the parties in relation to superannuation since the agreement was made should not determine the construction of Clause 36 of the 2017 Agreement
[57] In conclusion, the CEPU submitted ambiguity was made out in the words of Clause 36 by the provision of a rate for superannuation contributions, without words to express the portion of income that attracts that rate. The legislative scheme for superannuation, calculable on ordinary time earnings rather than base rates, provides an objective basis and a notorious fact in which to ground the proper construction of Clause 36. That fact supports a construction of the clause that includes superannuation contributions on shift allowances and annual leave loading referrable to shift allowances as part of ordinary time earnings.
Submissions of the AMWU
[58] The AMWU supported the CEPU’s submissions and also referred to the principles of interpretation outlined in Berri. The AMWU submitted that, in the absence of a clearly defined rate of pay on which to calculate the superannuation entitlement, Clause 36 of the Agreement contains an ambiguity which will enable the Commission to provide an interpretation of that clause to resolve the dispute.
[59] The AMWU submitted that the reliance on past practice is only one possible interpretation of the clause. That is particularly because the wording of the clause has changed little over that time, however it is not clear whether the parties actually had reached an objective agreement at the time that the “current” contribution (as referred to in Clause 36 of the 2017 Agreement) and how it was calculated should continue as how superannuation should be calculated.
[60] Regarding what it referred to as the “industrial definition of superannuation”, the AMWU also noted the legislated system of compulsory superannuation that may form a common point of reference or understanding for parties. It submitted that since the introduction of compulsory superannuation in 1992, there has been a legislated definition of how superannuation should be calculated. The superannuation guarantee charge that is levied on an employer under section 19 of the Superannuation Guarantee (Administration) Act 1992 (“SGA Act”) is directly reduced by the amount paid by the employer into eligible superannuation accounts. Such payments by employers are derived by paying a proportional amount of an employee’s ordinary time earnings as defined in the SGA Act.
[61] The AMWU submitted that the industrial concept of superannuation would be referable to the SGA Act. As such there is likely to be an understanding, particularly among permanent shiftworkers, that the loadings they earned for working shifts would be considered for superannuation purposes. In particular, using Mr Hobbs as an example, his shiftwork attracts a 50% loading, making the shift allowance a significant portion of his take home pay.
[62] The AMWU specifically noted that it was not submitting that the 12.25% superannuation is based on an employee’s take-home pay. The AMWU’s submission is that the 12.25% has to be in reference to “something”; and that there needs to be an objective agreement as to what that “something” is. That “something” could be agreed as base rates, ordinary time earnings, or take home pay and it is not clear from reading the 2017 Agreement what that agreement actually is.
[63] In conclusion, the AMWU submitted the dispute had arisen because the 2017 Agreement merely states a rate, and it does not provide a reference point against which the rate should be applied. As such it creates an ambiguity by requiring a contribution of 12.25% of something to satisfy the obligation of the Respondent to make superannuation contributions under the 2017 Agreement. For those workers who perform shiftwork, there is a substantial portion of their remuneration that is not currently taken into account when their superannuation is being calculated. The AMWU believes that it is reasonable for a common understanding of superannuation to be based on ordinary time earnings, not just base salary, and submits that the Commission find that Clause 36 of the Agreement is ambiguous and that shift loading and leave loading be included in the calculation of the required 12.25%.
Submissions of Kone
[64] KONE commenced by noting that from at least 2001, it had always calculated superannuation contributions to accumulation funds on employees’ base salaries. This included all employees who are (or were) party to and covered by the 2017 Agreement and/or its predecessors. The only ever exception to this long-standing practice was the period of approximately six months from the beginning of 2020, when KONE inadvertently made contributions for these employees based on base salaries plus shift allowances.
[65] KONE submitted Clause 36 of the 2017 Agreement unambiguously requires KONE only to make superannuation contributions that are at least sufficient to avoid KONE having to pay the superannuation guarantee charge. This is consistent with:
(a) the text and context of Clause 36, including the statutory context of the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA Act) and the Superannuation Guarantee Charge Act 1992 (Cth) (SGC Act); and
(b) the common understanding of KONE and the employees who were parties to the 2017 Agreement at the time it was made, based on KONE’s long-standing practice of paying superannuation contributions only on base salaries (topped up as necessary to avoid the superannuation guarantee charge).
[66] KONE noted that the appropriate starting point in construing an enterprise agreement is ‘the language of the particular agreement, understood in the light of its industrial context and purpose’. 4 This does not involve a ‘narrow or pedantic’ approach, but one that treats the drafters of the agreement as having ‘a practical bent of mind’, and ‘meanings which avoid inconvenience or injustice may reasonably be strained for’.5 The relevant industrial context includes
(a) documents associated with the agreement; 6
(b) the history of the relevant provision; 7 and
(c) the customs and working conditions of the industry in which the agreement is made. 8
[67] The fact that parties have consistently applied a provision in a particular way may evince a common understanding as to its meaning, although common understanding must be distinguished from mere inadvertence or generosity. Whether a common understanding exists is determined objectively, not by reference to evidence of what the parties’ representatives say they understood.
[68] KONE submitted that to the extent that the Applicants’ contend that it is necessary for the Commission to firstly identify ambiguity in the 2017 Agreement before it may have regard to evidence of surrounding circumstances, they were wrong. The Full Bench in Berri(on which the Applicants rely) explicitly recognised that ‘[r]egard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists’. 9 This is also the predominant position in contract law.10. Thus, there is no ‘ambiguity gateway’ inhibiting the Commission from considering, at the outset, the industrial context of an enterprise agreement, including evidence of any common understanding.
[69] KONE’s primary submission was Clause 36 of the 2017 Agreement is textually unambiguous. The Applicants appear to acknowledge the reference to ‘the government “superannuation guarantee charge”’ is clearly a reference to the charge established under ss.5 and 6 of the SGC Act. Those provisions impose a superannuation guarantee charge on an employer equal to the amount of their ‘superannuation guarantee shortfall’ for a quarter, which the SGA Act then requires to be paid. Generally, there will be no superannuation guarantee shortfall for an employee if the employer contributes the ‘charge percentage’ (currently 9.5%) multiplied by the employee’s ‘ordinary time earnings’, which includes earnings from ordinary hours of work and other payments such as shift loadings.
[70] The SGA Act and SGC Act do not impose an obligation on employers to make superannuation contributions in relation to their employees. Rather, they give employers a choice: to make superannuation contributions, or to pay the superannuation guarantee charge. 11 In this particular statutory context, the provision in Clause 36 for KONE to make contributions that ‘will as a minimum satisfy all legislation including the government “superannuation guarantee charge”’ imposes a requirement on KONE to make such contributions to employees as will avoid it having to pay the superannuation guarantee charge in relation to the employees covered by the Agreement.
[71] KONE submitted the plain text of Clause 36 imposes on it an obligation to: (1) make contributions to an approved superannuation fund of the employee’s choice, or to the KONE Superannuation Plan, that will (2) avoid a requirement under the SGA Act to pay the superannuation guarantee charge. Contrary to the Applicants’ submissions, Clause 36 does not otherwise impose on KONE an obligation to calculate superannuation contributions on a particular earnings base, and certainly does not impose an obligation to do so on the basis of ordinary time earnings as defined in the SGA Act.
[72] Regarding contextual support for KONE’s construction, KONE submitted:
(a) The Building and Construction General On-site Award 2010 (the Building Award), which would otherwise apply to the employees covered by the 2017 Agreement and is incorporated into the 2017 Agreement by reference, has not at any time included an obligation to make superannuation contributions at a particular rate or on a particular earnings base. The only obligation it has included as to the amount of superannuation contributions is to make such contributions as will avoid the employer being required to pay the superannuation guarantee charge with respect to an employee. This is consistent with KONE’s construction of Clause 36 of the Agreement.
(b) Clause36 refers to the ‘KONE superannuation plan policy’ (the Policy). The Policy did not refer to any particular superannuation contribution rate or earnings base. It described KONE’s policy as being simply:
‘to establish and maintain a superannuation plan which as a minimum, satisfies the Company’s obligation under the government “Superannuation Guarantee Charge” and also assist all permanent Company employees (full and / or part- time) to plan for their longer term financial security.’
(c) The financial consequences of the Applicants' construction make it objectively unlikely that KONE would have agreed to calculate superannuation contributions on the basis they propound.
[73] Finally, KONE submit that their construction of Clause 36 reflects the common understanding of KONE and the employees covered by the 2017 Agreement at the time it was approved. The existing approach to calculation was accepted by employees and the Applicants for at least a decade before the Agreement was made and approved in 2017.
[74] In conclusion, KONE submitted the disputes should be resolved in their favour. The plain terms and industrial context of Clause 36 of the 2017 Agreement unambiguously establish that KONE is not required to make superannuation contributions on ordinary time earnings as defined in the SGA Act, including on shift allowances, leave loading and similar entitlements.
Factual Findings
[75] At all material times from at least 2001, with the exception of the inadvertent contributions made in the first half of 2020, KONE has always made superannuation contributions for the employees now covered by the 2017 Agreement, who are members of accumulation funds, calculated on their base salaries (not including shift allowances or leave loading).
[76] Each quarter a review is conducted by the payroll team of KONE to ensure that the superannuation contributions of 12 or 12.25% on base pay do not fall below the minimum 9.5% rate on ordinary time earnings as defined in the Superannuation Guarantee (Administration) Act 1992 (Cth). If the quarterly review shows that an employee requires a top up to their superannuation contributions in order to ensure the legislative minimum is met, it is paid in the month following the reconciliation, typically around the 10th-12th of the following month. Top up payments are included in an employee's usual superannuation contribution on their payslip for the month in which the top up is paid, and are not shown as a separate identifiable superannuation contribution on their payslip. Only approximately 10% of employees covered by the 2017 Agreement are subject to a ‘top-up’ payment.
[77] Since at least 2001, almost all employment contracts of KONE employees covered by the 2017 Agreement (and its predecessors) have expressly stated that superannuation contributions would be made on the employee’s ‘Base pay’ or ‘base remuneration’.
[78] On or around 15 January 2020, a procedural error occurred wherein a new Payroll Manager mistakenly turned on two shift allowance codes in KONE's payroll system to be paid on superannuation. Some employees covered by the 2017 Agreement had their superannuation contributions calculated at 12.25% of their base pay plus those two applicable shift allowances, rather than 12.25% of their base pay alone. The procedural error was not formally rectified until around July 2020, and since that time, KONE has reverted to calculating superannuation at 12.25% of base pay for all employees covered by the 2017 Agreement.
[79] Prior to the procedural error, the making of superannuation contributions calculated on base salaries was not an issue between either KONE and its employees, or between KONE and the Applicant Unions.
[80] Since 2007, all of the predecessors to the 2017 Agreement have included a provision in similar terms to Clause 36. Surprisingly, and notwithstanding that numerous witnesses were at many enterprise agreement negotiations, no witness was able to recall any discussion of the pay basis upon which the 12 or 12.25% would be calculated.
Consideration
[81] The starting point in the resolution of this dispute is the text of Clause 36 of the 2017 Agreement. It provides:
“KONE will contribute to an approved superannuation fund of the Employee's own choice, as detailed in the KONE superannuation plan policy or in the absence of employee's choice the default superannuation fund is KONE Superannuation Plan. The said contributions, currently 12% for permanent employees, will as a minimum satisfy all legislation including the government "superannuation guarantee charge". From 15 September 2018, superannuation contributions will increase to 12.25%.”
[82] The first sentence of the Clause imposes an obligation on KONE to make contributions to a superannuation fund of the employee's choice, or a default fund. The second sentence informs the meaning of the first sentence by identifying "the said contributions” will, as a minimum, satisfy the government superannuation guarantee charge. The third sentence simply notes the date upon which an increase in the contribution rate will occur.
[83] The “government superannuation guarantee charge” is created by ss. 3, 5 and 6 of the Superannuation Guarantee Charge Act 1992 (the SGC Act), which provide:
3 Incorporation of the Superannuation Guarantee (Administration) Act
The Superannuation Guarantee (Administration) Act 1992 is incorporated and is to be read as one with this Act.
5 Imposition of charge
Charge is imposed on any superannuation guarantee shortfall of an employer for a quarter.
6 Amount of charge
The amount of superannuation guarantee charge payable on a superannuation guarantee shortfall of an employer for a quarter is an amount equal to the amount of the shortfall.
[84] Sections 5 and 6 of the SGC Act impose a charge and quantify the amount of that charge as being equal to the amount of what's known as the superannuation guarantee shortfall.
[85] Sections 16, 17, 19 and 23 of the Superannuation Guarantee (Administration) Act 1992 (the SGA Act) provide:
16 Charge payable by employer
Superannuation guarantee charge imposed on an employer’s superannuation guarantee shortfall for a quarter is payable by the employer.
17 Superannuation guarantee shortfall
If an employer has one or more individual superannuation guarantee shortfalls for a quarter, the employer has a superannuation guarantee shortfall for the quarter worked out by adding together:
(a) the total of the employer’s individual superannuation guarantee shortfalls for the quarter; and
(b) the employer’s nominal interest component for the quarter; and
(c) the employer’s administration component for the quarter.
19 Individual superannuation guarantee shortfalls
(1) An employer’s individual superannuation guarantee shortfall for an employee for a quarter is the amount worked out using the formula:
where:
charge percentage,for an employer for a quarter, means:
(a) the number specified in subsection (2) for the quarter (unless paragraph (b) applies); or
(b) if the number specified in subsection (2) for the quarter is reduced in respect of the employee by either or both sections 22 and 23—the number as reduced.
quarterly salary or wages base, for an employer in respect of an employee, for a quarter means the sum of:
(a) the total salary or wages paid by the employer to the employee for the quarter; and
(b) any sacrificed salary or wages amounts of the employee for the quarter in respect of the employer.
(2) The charge percentage for a quarter in a year described in an item of the table is the number specified in column 2 of the item.
Charge percentage (unless reduced under section 22 or 23) | ||
Item | Column 1 | Column 2 |
1 | Year starting on 1 July 2013 | 9.25 |
2 | Year starting on 1 July 2014 | 9.5 |
3 | Year starting on 1 July 2015 | 9.5 |
4 | Year starting on 1 July 2016 | 9.5 |
5 | Year starting on 1 July 2017 | 9.5 |
6 | Year starting on 1 July 2018 | 9.5 |
7 | Year starting on 1 July 2019 | 9.5 |
8 | Year starting on 1 July 2020 | 9.5 |
9 | Year starting on 1 July 2021 | 10 |
10 | Year starting on 1 July 2022 | 10.5 |
11 | Year starting on 1 July 2023 | 11 |
12 | Year starting on 1 July 2024 | 11.5 |
13 | Year starting on or after 1 July 2025 | 12 |
(2A) If an employer makes one or more contributions (the no choice contributions) to an RSA or a complying superannuation fund other than a defined benefit superannuation scheme, for the benefit of an employee during a quarter and the contributions are not made in compliance with the choice of fund requirements, the employer’s individual superannuation guarantee shortfall for the employee for the quarter is increased by the amount worked out in accordance with the formula:
where:
notional quarterly shortfall is the amount that would have been worked out under subsection (1) if the no choice contributions had not been made.
Note 1: See also subsection (2E) and section 19A.
Note 2: Part 3A sets out the choice of fund requirements.
(2B) If:
(a) a reduction of the charge percentage for an employee for a quarter is made under subsection 22(2) in respect of a defined benefit superannuation scheme; and
(b) there is at least one relevant day in the quarter where, if contributions (the notional contributions) had been made to the scheme by the employer for the benefit of the employee on the day, the notional contributions would have been made not in compliance with the choice of fund requirements; and
(c) section 20 (which deals with certain cases where defined benefit members cannot choose another fund) does not apply to the employer in respect of the employee in respect of the scheme for the quarter;
the employer’s individual superannuation guarantee shortfall for the employee for the quarter is increased by the amount worked out in accordance with the formula:
where:
notional quarterly shortfall is the amount that would have been worked out under subsection (1) if no reduction were made under subsection 22(2) in respect of the scheme.
number of breach of condition days is the number of relevant days in the quarter on which, if a contribution had been made to the scheme by the employer for the benefit of the employee, those contributions would have been made not in compliance with the choice of fund requirements.
Note 1: See also subsection (2E) and section 19A.
Note 2: Part 3A sets out the choice of fund requirements.
(2C) The following days in a quarter are relevant days for the purposes of subsection (2B):
(a) if the value of B in the formula in subsection 22(2) for the quarter is 1—every day in the quarter; or
(b) in any other case—every day in the quarter that is in the shorter of the scheme membership period or the certificate period referred to in subsection 22(2).
(2CA) For the purposes of paragraph (2B)(b), if the employee is a defined benefit member of a superannuation fund, subsection 32C(2) applies in relation to the employee and the fund as if it did not include paragraph 32C(2)(c) (requirement that fund includes a MySuper product).
(2D) A reference in subsections (2A) and (2B) to an employer’s individual superannuation guarantee shortfall being increased includes a reference to the shortfall being increased from nil.
(2E) The Commissioner may, after taking account, wherever appropriate, of the operation of section 19A, reduce (including to nil) the amount of an increase in an employer’s individual superannuation guarantee shortfall for an employee for a quarter under subsection (2A) or (2B).
Note: The Commissioner must have regard to written guidelines when deciding whether or not to make a decision under this subsection: see section 21.
(3) For the purposes of the definition of quarterly salary or wages base in subsection (1), disregard an amount in a quarter if:
(a) the amount would be covered by paragraph (a) of that definition for the quarter (about amounts paid to the employee); but
(b) the amount is taken into account under paragraph (b) of that definition (about sacrificed salary or wages amounts) for any quarter.
Note: This prevents double counting if a sacrificed salary or wages amount is later paid as salary or wages, instead of being contributed to superannuation.
(4) If the quarterly salary or wages base, for an employer in respect of an employee, for a quarter exceeds the maximum contribution base for the quarter, the employer’s quarterly salary or wages base to be taken into account for the purposes of the application of subsection (1) in relation to the quarter is the amount equal to the maximum contribution base.
23 Reduction of charge percentage if contribution made to RSA or to fund other than defined benefit superannuation scheme
(1) This section applies only in relation to RSAs and to superannuation funds other than defined benefit superannuation schemes.
Reduction of charge percentage where contributions are made by employer
(2) If, in a quarter, an employer makes a contribution (other than a sacrificed contribution) for the benefit of an employee to a complying superannuation fund or an RSA, then the charge percentage for the employer (as specified in subsection 19(2)) for the employee for the quarter is reduced by the number worked out using the formula:
where:
contribution is the number of dollars in the amount of the contribution.
ordinary time earnings base is the number of dollars in the sum of:
(a) the ordinary time earnings of the employee for the quarter in respect of the employer; and
(b) any sacrificed ordinary time earnings amounts, of the employee for the quarter in respect of the employer.
(3) A reduction under subsection (2) in respect of a contribution is in addition to:
(a) any other reduction under that subsection in respect of any other contribution; and
(b) any reduction under section 22.
Some contributions made after a quarter ends may be taken into account in the quarter
(6) A contribution to a complying superannuation fund or an RSA made by an employer for the benefit of an employee may be taken into account under this section as having been made in a quarter if it is in fact made within the period of 28 days after the end of the quarter.
Certain contributions made before a quarter may be taken into account in the quarter
(7) A contribution to a complying superannuation fund or an RSA made by an employer for the benefit of an employee may be taken into account under this section as if it had been made during a particular quarter if the contribution is made not more than 12 months before the beginning of the quarter.
Sacrificed ordinary time earnings amounts taken into account in a quarter not to be taken into account for any other quarter
(7A) For the purposes of the definition of ordinary time earnings base in subsection (2), disregard an amount in a quarter if:
(a) the amount would be covered by paragraph (a) of that definition for the quarter (about ordinary time earnings of the employee); but
(b) the amount is taken into account under paragraph (b) of that definition (about sacrificed ordinary time earnings amounts) for any quarter.
Note: This prevents double counting if a sacrificed ordinary time earnings amount is later paid as ordinary time earnings, instead of being contributed to superannuation.
Contributions taken into account for a quarter not to be taken into account for any other quarter
(8) A contribution to a superannuation fund or an RSA made by an employer for the benefit of an employee that is taken into account under this section in relation to a quarter is not to be taken into account under this section in relation to any other quarter.
[Contribution made when conversion notice has effect not to be taken into account under this section]
(8A) A contribution to a superannuation fund or superannuation scheme made by an employer for the benefit of an employee at a time when a conversion notice has effect in relation to the fund or scheme is not at any time to be taken into account under this section.
[Contributions to estate of deceased employee]
(9A) If:
(a) an employee has died; and
(b) the employer would, if the employee had not died, have made a contribution to a complying superannuation fund or RSA for the benefit of the employee; and
(c) the employer pays to the legal personal representative of the employee an amount equal to the amount of the contribution that would have been paid;
the amount paid is taken for the purposes of this section to have been a contribution made by the employer to a complying superannuation fund or RSA for the benefit of the employee.
[Charge percentage not to be less than 0]
(10) The charge percentage for an employer for a quarter cannot be reduced below 0.
[Reduction of notional earnings base if amount excluded from employee’s salary or wages]
(11) If an employee’s notional earnings base includes an amount of the employee’s salary or wages that, because of section 27 or 28, is not taken into account for the purpose of making a calculation under section 19, the employee’s notional earnings base for the purposes of this section is taken to be reduced by that amount.
Reduction of ordinary time earnings base if amount excluded from employee’s salary or wages
(12) If, because of section 27 or 28, an amount of an employee’s salary or wages is not taken into account for the purpose of making a calculation under section 19, the employee’s ordinary time earnings base for the purposes of this section is taken to be reduced by that amount.
(13) Subject to subsection (15), if:
(a) an employer makes a deposit under the Small Superannuation Accounts Act 1995 in respect of an employee before 1 July 2006; and
(b) the deposit form that accompanied the deposit, in so far as the form relates to the deposit, did not contain a declaration that is false or misleading;
this section has effect as if the deposit were a contribution made by the employer for the benefit of the employee to a complying superannuation fund.
(14) Subsection (13) has effect despite section 9 of the Small Superannuation Accounts Act 1995.
(15) If:
(a) an employer makes a deposit under the Small Superannuation Accounts Act 1995 in respect of an employee; and
(b) the employer receives a payment under Part 8 of that Act by way of a refund of the deposit;
this section has effect as if the deposit had never been made.
(16) In subsections (13) and (15):
deposit has the same meaning as in the Small Superannuation Accounts Act 1995.
deposit form has the same meaning as in the Small Superannuation Accounts Act 1995.
[86] Section 16 of the SGA Act imposes the superannuation guarantee charge on the employer’s superannuation shortfall, and Section 17 identifies the superannuation guarantee shortfall which is levied on the employer. Section 19 establishes the quantum of the superannuation guarantee charge shortfall and, consequentially the superannuation guarantee charge by reference to a formula that adopts the charge percentage, currently at 9.5 per cent, as a proportion of total salary paid.
[87] Section 23(2) outlines how an employer reduces or erases its liability to pay the superannuation guarantee charge, measured by reference to the superannuation guarantee shortfall. The contribution referred to in s.23(2), for the purposes of this matter, is the 12.25% of base rate of employees that is paid. Provided that contribution figure exceeds the 9.5 percentage of Ordinary Time Earnings (as defined in s.6 of the SGC Act), then the superannuation guarantee shortfall is reduced to zero.
[88] The definition of Ordinary Time Earnings at s.6 of the SGA Act is as follows:
ordinary time earnings, in relation to an employee, means:
(a) the total of:
(i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment:
(A) a payment in lieu of unused sick leave;
(B) an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997; and
(ii) earnings consisting of over-award payments, shift-loading or commission; or
(b) if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter—the maximum contribution base.
[89] A similar provision to Clause 36 of the 2017 Agreement was considered by the Full Court of the Federal Court in Bluescope Steel (AIS) Pty Ltd v Commissioner of Taxation, in which Collier CJ, with whom Rangiah J agreed, held: 12
It is necessary to deal with these conclusions at the outset, because if the appellants are correct and neither cl 7 of the 2006 Award nor cl 7.2 of the 2012 and 2015 Agreements contains a legal obligation to make contributions, there can be no relevant contravention.
In relation to these threshold questions, my view is that the primary judge was: (a)correct that cl 7 of the 2006 Award did not contain a legal obligation to make contributions for superannuation;
(b)not correct that cl 7 of the 2006 Award contained an acknowledgment of a requirement to make a contribution;
(c)not correct that to contravene an award or enterprise agreement one needed only to find that there was an acknowledgment of a requirement to make a contribution imposed otherwise and that such had not been made; and
(d)correct that cl 7.2 of the 2012 and 2015 Agreements did contain a legal obligation to make contributions for superannuation.
The words of cl 7 of the 2006 Award are entirely free of any text connoting obligation. There is only a recognition that Commonwealth legislation governs the matter of superannuation. Nor does any language acknowledge any requirement to make contributions. The reference to the Commonwealth legislation does not do that. Such lack of acknowledgement of requirement reflects the legislation in which there is no statutory obligation placed on employers to make superannuation contributions on behalf of employees. Rather, the legislation operates as a tax encouraging employers to pay superannuation contributions to avoid a significantly more expensive imposition of a (non-deductible) superannuation guarantee charge, if deductible contributions are not made. In practical parlance it may be said that employers are required to make contributions for superannuation. That is not the legal form or substance. It is unnecessary at this point to explain the precise working of the superannuation legislation.
[90] As to the rationale for such a provision, Collier CJ, with whom Rangiah J agreed, observed: 13
I read cl 7.2 as an undertaking of future conduct by the Company. The difficulty with such cases as Akmeemana v Murray (2009) 190 IR 66 and Cook v Chesterton International Pty Ltd [2015] NSWSC 283 is that they proceed on a false assumption. Both Davies J and Young AJA assumed, and expressly stated, that the employer had a duty imposed by law to pay superannuation contributions. That is not so. To the extent that the primary judge appears to have found that it was so, at [61], [64], [71], [73], [90] and [94] of his reasons, I would respectfully disagree. If contributions are not made the employer suffers a tax. This is not an idle distinction, especially in the light of the fact that the superannuation legislation does not confer on an employee any right to require the Commissioner of Taxation to do anything for him or her in respect of superannuation: Kronen v Federal Commissioner of Taxation (2012) 213 FCR 495 at [50]. There is every reason for those representing employees to include in an enterprise agreement an obligation to pay superannuation at the minimum level that will avoid a charge or tax. That reason is the direct enforceability of the obligation. True it is that if an employer fails to pay the minimum contribution it is then faced with both the imposition of a tax and the possible enforcement of obligations in the enterprise agreement. That problem is easily avoided: comply with the obligations freely entered into in the enterprise agreement. This possible duality of consequences is no reason not to view the enterprise agreement as containing binding obligations which can be enforced on behalf of employees for their protection and proper payment, for instance by seeking relief under civil remedy provisions such as ss 539(2), 540, 545(1), (2)(a) and (b) of the Fair Work Act .
[91] Understanding the statutory scheme of the SGC Act and the SGA Act, which are specifically referred to in Clause 36 of the 2017 Agreement, the difficulty in the case advanced by the Applicant Unions is highlighted. If, in the absence of a rate specified in Clause 36 upon which to apply the 12 or 12.25%, you refer to Ordinary Time Earnings as defined in the SGA Act, why would Clause 36 need to specify ‘The said contributions, currently 12% for permanent employees, will as a minimum satisfy all legislation including the government "superannuation guarantee charge"”? 12 or 12.25% of Ordinary Time Earnings will always exceed, and so “satisfy”, 9.5% of Ordinary Time Earnings specified in the SGA Act. If the Applicant Unions’ argument were correct, the second sentence would be otiose.
[92] I find that the legislative context compellingly and unambiguously supports a conclusion that pursuant to Clause 36 of the 2017 Agreement, KONE is obliged to make contributions to an approved superannuation fund chosen by the employee, or the default fund that will, as a minimum, avoid the requirement for it to pay the superannuation guarantee charge. That means KONE must contribute the equivalent of at least 9.5%of Ordinary Time Earnings. The 12 or 12.25% figures outlined in Clause 36 identify, explicitly, the means by which KONE fulfils its obligation, to make contributions that eradicate the superannuation guarantee charge. The calculations of 12 or 12.25% are made on base rates of pay.
[93] I further consider that the Building and Construction General On-site Award 2010, which would otherwise apply to the employees covered by the 2017 Agreement, and is incorporated into the 2017 Agreement by reference, provides further contextual support to my above conclusion. It also only obliges employers to make such contributions as will avoid the employer being required to pay the superannuation guarantee charge with respect to an employee.
[94] The interpretations advance by the CEPU and the AMWU would involve the impermissible imposition of an obligation to pay 12 or 12.25% of Ordinary Time Earnings to satisfy the statutory obligation to make contributions that eradicate the superannuation guarantee charge equivalent to 9.5% of Ordinary Time Earnings. It would involve the insertion of words never contemplated, to create a meaning that was both never intended, and which creates a nonsensical result.
[95] As noted above, I have found there to be no ambiguity in the relevant provision based upon contextual considerations. I also note that each the CEPU and the AMWU had submitted that the provision was ambiguous due to the absence of a specified rate upon which to base calculation. It is not necessary to first identify ambiguity in the 2017 Agreement before I may have regard to contextual considerations and evidence of surrounding circumstances. 14 I can have regard to such matters in determining whether ambiguity existed.
[96] I note that KONE pressed reliance upon the common understanding of KONE and the employees who were parties to the 2017 Agreement at the time it was made, based on KONE’s long-standing practice of paying superannuation contributions only on base salaries (topped up as necessary to avoid the superannuation guarantee charge), and that but for the procedural error of the new Payroll Manager the issue the subject of this matter would not have arisen. While I have placed no weight on those matters, I consider they do not detract from my conclusion.
Conclusion
[97] The evidence of surrounding circumstances supports the interpretation advanced by KONE. It follows from that conclusions that I am unable to find the interpretation advanced by the CEPU and the AMWU is correct. The Applications must therefore be dismissed.
DEPUTY PRESIDENT
Appearances:
Mr D Austin appearing on behalf of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
Ms K Presdee appearing on behalf of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union.
Mr D Chin SC and Mr D Fuller of counsel appearing on behalf of the Respondent.
Hearing details:
2020
Sydney:
October 12
Printed by authority of the Commonwealth Government Printer
<PR726084>
1 [2017] FWCFB 3005.
2 Berri at [41].
3 Berri at [114].
4 Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241, 246-47 [2] (Gleeson CJ and McHugh J); applied in, eg, WorkPac Pty Ltd v Skene (2018) 264 FCR 536, 580 [197] (Tracey, Bromberg and Rangiah JJ); James Cook University v Ridd [2020] FCAFC 123, [65] (Griffiths and S C Derrington JJ).
5 Kucks v CSR Ltd (1996) 66 IR 182, 184 (Madgwick J); quoted with approval in the context of industrial agreements in Amcor (2005) 222 CLR 241, 270-71 [96] (Kirby J); see also Skene (2018) 264 FCR 536, 580 [197] (Tracey, Bromberg and Rangiah JJ); Ridd [2020] FCAFC 123, [65] (Griffiths and S C Derrington JJ).
6 See, eg, Short v FW Hercus Pty Ltd (1993) 40 FCR 511 (Short), 518 (Burchett J, Drummond J agreeing); Ridd
[2020] FCAFC 123, [65] (Griffiths, Rangiah and S C Derrington JJ).
7 See, eg, Short (1993) 40 FCR 511, 518 (Burchett J, Drummond J agreeing); Ridd [2020] FCAFC 123, [65] (Griffiths, Rangiah and S C Derrington JJ).
8 Skene (2018) 264 FCR 536, 580 [197] (Tracey, Bromberg and Rangiah JJ); Ridd [2020] FCAFC 123, [65] (Griffiths and S C Derrington JJ).
9 Berri at [114].
10 See, eg, Mainteck Services Pty Ltd v Stein Hurley SA (2014) 89 NSWLR 633, 652-56 [72]-[86] (Leeming JA, Ward and Emmett JJA agreeing); referred to with approval by the Full Federal Court in Stratton Finance Pty Ltd v Webb (2014) 245 IR 223, 232 [40] (Allsop CJ, Siopsis and Flick JJ). See also Cherry (2017) 96 NSWLR 548, 566.
11 Bluescope Steel (AIS) Pty Ltd v Commissioner of Taxation (2018) 368 ALR 643, at [13].
12 (2018) 368 ALR 643, at [11] to [13].
13 (2018) 368 ALR 643, at [19].
14 Berri at [114].
0
14
0