Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v BAE Systems Australia Limited
[2022] FWC 1596
•29 AUGUST 2022
| [2022] FWC 1596 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
BAE Systems Australia Limited
(C2022/2655)
| DEPUTY PRESIDENT BEAUMONT | PERTH, 29 AUGUST 2022 |
Alleged dispute about any matters arising under the enterprise agreement and the NES; [s 186(6)]; back pay; Construction, Forestry, Maritime, Mining and Energy Union v Falcon Mining Pty Ltd
The issue and conclusion
This decision concerns an application made by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the Applicant) under s 739 of the Fair Work Act 2009 (Cth) (the Act) for the Fair Work Commission (the Commission) to deal with a dispute about back pay in accordance with the dispute settlement procedure in clause 40 of the BAE Systems Australia Limited (Henderson) Enterprise Agreement 2020-2023 (the 2020 Agreement).[1]
Before the commencement of the 2020 Agreement, the BAE Systems Australia Limited (Henderson) Collective Agreement 2017-2020 (2017 Agreement)[2] covered BAE Systems Australia Limited (the Respondent).[3] In addition to covering the Respondent, the 2020 Agreement and prior to that, the 2017 Agreement (together, the Agreements), applied to all licenced electricians employed by the Respondent. These electricians perform work at the Respondent’s facilities located at Henderson, Western Australia.[4]
To understand the dispute on foot, it is important to appreciate that under the 2017 Agreement, there were two classification levels relevant to electricians. The Level N3 classification applied to electricians with more than 3 years’ relevant industry experience who were more senior and better paid than the Level N4 electricians (all other licensed electricians).
As part of the bargaining for the 2020 Agreement, the parties agreed to classify all electricians under the 2020 Agreement as Level N3. Any electrician who was classified as a Level N4, as that was described under the 2017 Agreement, became a Level N3, as that is described under the 2020 Agreement. Electricians who were classified as Level N3 under the 2017 Agreement were also classified as Level N3 under the 2020 Agreement. There were approximately ten Level N4 electricians who were reclassified as Level N3 upon the operation of the 2020 Agreement (Relevant Employees).[5] There was no dispute between the parties that the Level N4 electricians were reclassified at the time the 2020 Agreement came into operation.
Overall, the two Agreements have similar classification tables. Other than the inclusion of all electricians under Level N3 and their exclusion from Level N4, the 2020 Agreement has a few other differences in its classification table, which we will come back to later.
The matter starts to become complex because of the inclusion of what is commonly referred to by the parties as a ‘back pay clause’ in the 2020 Agreement. To explain further, the back pay clause is located at clause 8.2 of the 2020 Agreement and sets out, in part, the following:
| Classification Level | Hourly Pay Rates 1st full pay period on or after 08/09/2020 | Hourly Pay Rates 1st full pay period on or after 08/09/2021 | Hourly Pay Rates 1st full pay period on or after 08/09/2022 |
| LH (Leading Hand) | $52.04 | $53.09 | $54.15 |
| N3 | $46.39 | $47.32 | $48.26 |
| N4 | $45.28 | $46.19 | $47.11 |
As can be observed, the first column in the table at clause 8.2 is dated by reference to the first full period after 8 September 2020. This is some 12 or more months before the commencement of the 2020 Agreement.
There is no question that the Respondent promised its employees back pay on the operation of the 2020 Agreement, and there is no question that the Relevant Employees received back pay at the Level N4 hourly pay rate. Essentially the dispute appears to be one about identifying the correct classification level, which will ultimately impact upon the quantum of the back pay entitlement. The question asked by the parties follows:
Was the Respondent required to calculate the Relevant Payment for the Relevant Employees based on the Level N4 or Level N3 ordinary rate of pay under the 2020 Agreement?[6]
As I expressed to the parties, the question is premised upon presumptions that: (a) an enterprise agreement may give effect to a wage increase from an earlier date; and (b) there is an entitlement under the 2020 Agreement for a wage increase in a period before the 2020 Agreement came into operation.
These presumptions and the question asked of this Commission will be addressed in the reasons that follow. However, briefly stated, I have concluded that properly construed, clause 8.2 of the 2020 Agreement provides for back pay of the Relevant Employees on a Level N4 hourly pay rate. My reasons follow.
Background
Before embarking upon the background to the matter, I note it was uncontroversial that: (a) there is a dispute between the Applicant and Respondent; (b) the dispute has been properly notified to the Commission; and (c) the requirements of the dispute settlement procedure have been complied with.
The resolution of the dispute by reference to the question posed turns on the proper construction of the 2020 Agreement in the context of largely uncontested facts. It has therefore proven unnecessary to provide a detailed exposition regarding the credibility of the witnesses. All witnesses who presented for hearing struck me as providing reliable accounts insofar as their recollections would allow them to do so. When recall waivered, it did so legitimately, in my opinion.
2.1Negotiations for the 2020 Agreement
Between July 2020 and July 2021, there were approximately 26 bargaining meetings held between the Respondent and various unions.[7] The Australian Shipbuilding Federation of Unions, comprising of the Applicant, the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers’ Union (AMWU) and the Association of Professional Engineers, Scientists and Managers Australia, provided the Respondent with their Log of Claims on 6 August 2020.[8] In or around April 2021, the Maritime Union of Australia also joined the negotiations and attended bargaining meetings (collectively, the Unions).[9]
Ms Saringer, People Business Partner of the Respondent, recalls, to the best of her recollection, having attended all of the bargaining meetings.[10] Her role in those meetings included assisting with the drafting of the 2020 Agreement, upkeeping an ‘EBA Negotiations Progress Tracker’, taking proposals and claims and putting them forward at bargaining meetings to the business to confirm the company’s position, taking minutes, chairing bargaining meetings on occasion, and otherwise attending and assisting with the scheduling of bargaining meetings.[11]
According to Ms Saringer, for the period of 6 August 2020 until 13 November 2020, minutes of the bargaining meetings were taken by Mr Panuccio, an administrative support HR Advisor.[12] After each of the bargaining meetings, Mr Pannucio would draft up formal minutes and send them to various representatives of the Respondent for review.[13] Following the review, the minutes would then be sent to bargaining representatives.[14]
In August 2020, Ms Saringer created an ‘EBA Negotiation Tracker’ to keep track of the negotiations, updating it periodically to reflect the status of each claim which formed part of the Log of Claims and those raised in the bargaining meetings.[15] After having the tracker reviewed by company representatives, Ms Saringer would send a copy of the tracker to bargaining representatives.[16]
Whilst communications were distributed to employees throughout the negotiations, once agreement had been reached between bargaining representatives on the terms of the 2020 Agreement, the Respondent prepared communications to employees advising them about and explaining the agreed terms.[17] Ms Saringer noted that she was involved in that process.
Ms Saringer gave evidence in respect of the agreement negotiations culminating in the removal of the Level N4 classification in respect of electricians.
Ms Saringer said that at the Henderson site, qualified electricians are required to hold an electrician’s licence to perform their role.[18] In the Log of Claims, under the heading ‘Allowances’, claim 13 read, ‘Introduce trade licence allowance’.[19] Ms Saringer said that it was her understanding from her attendance as the bargaining meetings that the purpose of the claim was to compensate electricians for their high risk work in comparison to other tradespeople, and for the risks and obligations associated with holding an electrician’s licence.[20]
Ms Saringer explained that the Respondent’s response to the electricians was that they were already paid more per hour than other tradespersons.[21] However, in a bargaining meeting on 14 August 2020, the idea surfaced of reviewing the classifications for electricians as an alternative solution to the claim for the allowance.[22]
On 20 August 2020, a ‘classifications’ working group met for the first time, and whilst it is apparent that the group’s purpose was a broader piece of work than just the classification of electricians, nevertheless the group concluded that all electricians should be classified at Level N3.[23]
The bargaining meeting of 2 September 2020 saw the classification item tabled for discussion.[24] Ms Saringer said that the Respondent’s representatives outlined in the bargaining meeting that all electricians could be classified at the higher Level N3.[25] Ms Saringer said that following the discussions on 14 August 2020, this was put forward by way of compromise on the claim for an allowance.[26]
Ms Saringer said that her understanding was that the Unions tabled the proposal for all electricians to be classified as Level N3 at a mass meeting with employees on 8 September 2020.[27] It was reported at the 9 September 2020 bargaining meeting, the workforce feedback was that they believed all electricians should be classified as Level N3.[28]
In respect of pay increases, Ms Saringer noted that pay increases were included in the Log of Claims, but the amount of pay increases was one of the final things to be agreed in bargaining.[29]
According to Ms Saringer, at the bargaining meeting on 4 November 2020, the parties reached in-principle agreement on the back pay issue.[30] Ms Saringer clarified that she did not specifically recall the exchanges held regarding the back pay issue but understood there were discussions because of the minutes of the bargaining meetings.[31]
The agreement was that the Respondent would back pay the percentage increases to the employees, who had not had a pay rise for the duration of time taken to reach agreement in bargaining.[32] Ms Saringer said that the agreement was limited to back payment of the percentage pay rise increases, and in this respect referred to a copy of the bargaining meeting minutes of 4 November 2020, which, in part read:
John asked if the back pay would be on all terms and conditions. Emma clarified that the back pay would just be the pay rise and all other conditions would be paid from the date of the agreement.[33]
Ms Saringer observed that the exchange regarding back pay, which was included in the minutes of the bargaining meeting on 4 November 2020, was consistent with the content of the EBA Negotiations Progress Tracker dated 25 January 2021, which stated:
BAE have agreed to backdate proposed % pay increase to the first full pay on or after 08/09/2020.[34]
Ms Saringer further observed that the Respondent prepared a ‘Summary of the BAE Offer Package’ document which was provided to the workforce and included (among other things) a summary of the offer on back pay in the following terms:
Clause 8.3 – Backdating of Pay Increases
Pay increases of 1.75% to be backdated to the first full pay period on or after 8 September 2020. This includes all hours worked, paid leave taken and overtime worked.[35]
Ms Saringer said that later communications provided to the Respondent’s employees as part of the Respondent’s explanatory materials following agreement on the 2020 Agreement’s terms and in preparation for the vote, also recorded that back pay was separate to the changes to classifications.[36] Ms Saringer referred specifically to a copy of the communications provided to employees between 23 to 30 July 2021, which included a Bargaining Update, a Letter dated 23 July 2021, and a summary document which stated, in part, the following:
Bargaining Update
23 July 2020
…
Some of the key benefits include:
• Annual wage increases of 2% (above current private sector growth)
• Back pay to September last year;
• A range of changes to the agreement which improve job security;
• Reimbursement of electrical license renewal fees…[37]…
Back-pay
The proposed Agreement includes back-payment of your first 2% annual wage increase (which impacts wages and other payments including overtime and shift penalties, where applicable) from the first full pay period on or after 8 September 2020.
If the Agreement is voted down by the workgroup, back-pay may not be offered again as part of any future Agreement…A 6% increase in wages over the life of the Agreement comprising:
• 2% wage increase per year during the term of the Agreement (occurring in the first full pay period from the commencement of the Agreement, and on or after 8 September 2021 and 8 September 2022), which are above current private sector wage growth.
• back-payment of the first 2% increase to wages from the first full pay period on or after 8 September 2020.
…[38]
It was Ms Saringer’s evidence that she did not recall any discussion in any bargaining meeting where the Respondent’s representatives suggested or agreed that the back pay would effectively include, or be based upon, the reclassified level for electricians.[39]
The Respondent also called Mr Hindley, Electrical Manager, who whilst in attendance at almost all of the negotiation meetings for the 2020 Agreement,[40] did not recall that the reclassification of electricians was raised in respect of back pay, with the two matters always addressed separately.[41]
The Respondent’s witness Mr Pilgrim, Head of Operations, was not called for cross-examination. In his witness statement, Mr Pilgrim highlighted that he was the lead negotiator for the 2020 Agreement from around May 2021, and recalled from comments made to him in bargaining meetings, in addition to his review of documents, that: (a) the claim for the back pay of wage increases sat separately to the classification change for electricians; and (b) the back pay percentage wage increases had been agreed upon by the Respondent as a way of compensating the workforce for a protracted bargaining process and because the wages outcome had not met the initial amount claimed by the Unions.[42]
Mr Woodage, Organiser at the Electrical Trades Union (ETU), gave evidence on behalf of the Applicant. He noted that he became involved in the bargaining for the 2020 Agreement in early 2021 and began attending bargaining meetings from late March.[43] Mr Woodage explained that prior to his involvement, Mr Mocerino, an official with the ETU who subsequently resigned in late 2020, had been bargaining on behalf of the union. Mr Woodage also noted that Mr Sear, who was the ETU Delegate, had been involved in the bargaining for the entire course.[44]
Mr Woodage acknowledged that his knowledge about the negotiations prior to his involvement was derived from documents that had been distributed to the parties during the bargaining and his discussions with Messrs Sear and Mocerino.[45]
Mr Woodage said that of particular importance to ETU members was claim number 13, which was a claim for a trade licence allowance. This applied mainly to electricians who are required to hold an electrical licence.[46]
Understanding that the Respondent did not accept this claim on the basis that it perceived it as an additional allowance, Mr Woodage said that the matter was ultimately resolved on the following basis:
a) the ETU conceded its claim for an electrical licence allowance;
b) the Respondent would reimburse the cost of the electrical licence; and
c) the Respondent would move all electricians onto the same pay grade.[47]
Mr Woodage noted that before he attended his first bargaining meeting on 26 March 2021, he received an email from Ms Sewell of the Respondent.[48] Attached to that email was a document which summarised the progress of bargaining at that stage (Progress Tracker). Mr Woodage noted that a template of this document was used to track the progress of negotiations (Progress Trackers for 17 August, 19 August, 2 September, 16 September and 23 September 2020).[49] With respect to the Progress Tracker Mr Woodage received on 26 March 2021, Mr Woodage observed that back pay was already agreed.[50]
2.2The content of the 2020 Agreement
The Agreements both have a classification table which contains ‘levels’.[51] The number of levels, the term for each level and the order in which they appear in the 2020 Agreement, is identical to the 2017 Agreement.[52] In both Agreements, those ‘levels’ are matched up against one or more ‘positions’ which are subsequently defined by ‘minimum position requirements’.[53] There is a minor difference of terminology between the two Agreements in respect of the latter two phrases. This is described below. For convenience, the terminology of the 2020 Agreement has been adopted for the purpose of this decision.
| 2017 Agreement | 2020 Agreement |
| Trade Group | Position |
| Requirements – Qualifications, Experience & Competencies | Minimum position requirements |
Both Agreements include a level called ‘N3’, but this is described differently in each agreement:
a) Under the 2017 Agreement, Level N3 was described to include the position of ‘Experienced Electrician’ which was further defined as having a minimum position requirement of ‘3 years’ experience in the Marine and and/or Defence industry.’ No other positions were included next to the Level N3. The Level N4 was described as including an ‘Electrician’ with ‘minimum industry experience’. Numerous other positions and corresponding descriptions were included next to Level N4.[54]
b) Under the 2020 Agreement, the Level N3 is described as a ‘Licenced Electrician’ with a ‘Relevant Trade Qualification’ and recognised ‘Electrical licence’. It does not include any other position. The Level N4 under the 2020 Agreement does not include any licenced electricians.[55]
In short, under the 2017 Agreement, the Level N3 classification applies to electricians (with more than 3 years’ relevant industry experience) who were more senior and better paid than the Level N4 electricians (all other licensed electricians).
Evidently, as part of the bargaining for the 2020 Agreement, the parties agreed to categorise all electricians under the 2020 Agreement as Level N3. Any electrician who was classified as a Level N4, as that was described under the 2017 Agreement, became a Level N3, as that is described under the 2020 Agreement. Electricians who were classified as a Level N3 under the 2017 Agreement are also classified as a Level N3, as described under the 2020 Agreement. The Relevant Employees were reclassified as Level N3 upon the commencement of the 2020 Agreement.[56]
With respect to the Relevant Employees, the Respondent gave a one-off back payment (Relevant Payment) for the period from the first full pay period after 8 September 2020 until the commencement of the 2020 Agreement (Relevant Period).[57]
The Applicant’s submissions
The Applicant submits that, on a proper construction, clause 8.2 requires the Respondent to back pay the Relevant Employee for the Relevant Period as they would be classified for that
period under the 2020 Agreement. In other words, Level ‘N3’ is to be read as meaning a licenced electrician irrespective of their experience. This is in keeping with the plain meaning of the word when read in conjunction with the whole 2020 Agreement. Level N3 is defined in clause 8.1 as any licenced electrician.
The Applicant observed that the Respondent’s argument was that clause 8.2 required back payment of the Relevant Employees at a Level N4 rate of pay until 1 October 2021. However, the Applicant viewed the Respondent’s construction of the clause as being infused with two contradictory meanings. First, it meant an electrician with at least three years’ experience and an electrician with any experience, the meaning depending on the context. Second, when applied in reference to an employee’s wages for the period up to 1 October 2021, the Level N3 derived its meaning from the 2017 Agreement, but when applied in reference to wages earned after that period, its meaning stems from the 2020 Agreement.
Observing that the Respondent appeared to have adopted a purposive approach to the construction of the 2020 Agreement, the Applicant submitted that supposedly, pay increases linked to reclassification were intended apply only from when the 2020 Agreement commenced operation, while those linked to the general increase were intended to apply from the nominal expiry of the 2017 Agreement. However, the Applicant noted that there was no doubt that the parties’ objective intention was for clause 8.2 to have some kind of retrospective operation. It prescribed wage rates for work done and leave taken before the commencement of the 2020 Agreement. While not retrospective in the strict sense, submitted the Applicant, it still gave employees a claim (i.e. pay rates) which was dependent on events (work performed) and a state of affairs (their classification) occurring before the passage of the 2020 Agreement. The Applicant contended that the claim was greater than the rights the employees derived from the same state of affairs under the 2017 Agreement.
The Applicant submitted that the classification table at clause 8.1 began with ‘All Employees other than apprentices will be employed in one of the classification levels set out in the table below’. The Applicant further submitted that Columns 2 and 3 of the table in clause 8.1 were to be construed as definitions of the words in Column 1. According to the Applicant, this approach was consistent with the Full Court decision in WorkPac Pty Ltd v Skene (WorkPac), which treated a competency-based classification table as a definition of those terms.[58] In this case, pressed the Applicant, where Level N3 is used in the 2020 Agreement, it is to be read as an electrician with a ‘Relevant Trade Qualification’ and an ‘Electrical Licence’.
The Applicant contended that to the extent that there is any ambiguity about the intent of clause 8.1, the Commission must construe having regard to the objective intention of the parties. The Applicant proposed that this would be done by reference to how a reasonable person would have understood the impugned provisions. Turning to the words and structure of the 2020 Agreement, the Applicant observed that clause 8.1 had made it clear that it was intended to be a definitional table given its placement preceding clause 8.2, which uses each of the terms listed under the Level. The Applicant submitted that Columns 2 and 3 of clause 8.3 are placed next the terms in Column 1, which would be understood by any reasonable person as the corresponding definitions.
The Applicant said that consistent with the principles in Australian Manufacturing Workers’ Union v Berri Pty Ltd (Berri)[59] and WorkPac, the Commission cannot read into the 2020 Agreement words which contradict this definition. The Applicant submitted that the Commission could not use extrinsic evidence, such as matters occurring during negotiation, to displace the plain meaning.
Regarding the words ‘pay rates 1st full pay period on or after 8 September 2020’, the Applicant submitted that taken in isolation these words may be considered ambiguous. Clearly, the 2020 Agreement lists ordinary pay rates outside of a period during which the Agreement operates. The Applicant submitted that this gave rise to the question of how an enterprise agreement can have pay rates which apply to a time before its commencement.
According to the Applicant, the surrounding context of the 2020 Agreement is that parties agreed to back pay. The Respondent also communicated this to employees and it was at least in the common assumption of the parties that the early pay date of clause 8.2 was a means of requiring back pay. On the Applicant’s evidence, there was no common assumption on which level applied with respect to back pay. Only that back pay in some form would be applied to 8 September 2020.[60]
To the extent that there is any ambiguity in clause 8.2, the Applicant submits this is limited to whether it requires a one-off back payment at the applicable rates for work done or leave taken before the commencement of the agreement. On this point, the Applicant concluded that given clause 8.2 required a look back in time, it was still necessary to determine the classification level under clause 8.2 to which an employee was matched and, as argued, a Level N3 under clause 8.2 is defined as any licenced electrician. It followed, according to the Applicant, that so long as an employee was a licenced electrician during the Relevant Period, they are entitled to a back payment at the rate of an N3.
The Respondent’s submissions
The Respondent pressed two arguments on alternative bases. The first, the 2020 Agreement does not provide an entitlement to back pay for work completed between September 2020 and September 2021. Instead, the back payments made by the Respondent to employees in 2021 were based on an agreement between the Respondent and the Applicant which sat outside the terms of the 2020 Agreement. The second, and in the alternative, the Respondent says that if the Commission finds that clause 8 in the 2020 Agreement did create an obligation to back pay employees, and that it has jurisdiction to determine the dispute about that agreement, then it should find that the Respondent fulfilled it obligation to pay all employees, including the electricians, the appropriate amount of back pay.
In respect of the Applicant’s claim, the Respondent contends it is misconceived in several respects. It says:
a) the 2020 Agreement cannot apply to work which was completed prior to it coming into operation;
b) clause 8.2 does not require the Respondent to make back payments;
c) the enforcement of an agreement must be prosecuted in a court of competent jurisdiction; and
d) even if clause 8.2 is found to create an obligation to back pay employees, the Respondent fulfilled that obligation.
Relevant legal principles
The principles that govern the interpretation of enterprise agreements are well-established. In WorkPac, the Full Federal Court elucidated the following:
The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context: City of Wanneroo v Holmes (1989) 30 IR 362 (Holmes) at 378 (French J). The interpretation “turns on the language of the particular agreement, understood in the light of its industrial context and purpose”: Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 (Amcor) at [2] (Gleeson CJ and McHugh J). The words are not to be interpreted in a vacuum divorced from industrial realities (Holmes at 378); rather, industrial agreements are made for various industries in the light of the customs and working conditions of each and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament (Holmes at 378-379, citing George A Bond & Company Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503 (Street J)). To similar effect, it has been said that the framers of such documents were likely of a “practical bent of mind” and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced: see Kucks v CSR Ltd (1996) 66 IR 182 at 184 (Madgwick J); Shop, Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16] (Marshall, Tracey and Flick JJ); Amcor at [96] (Kirby J).[61]
The Full Federal Court in WorkPac went on to explain that where a term is undefined, unless there is a contrary indication, it ought to be presumed that the draftsperson intended that the term have its ordinary meaning.[62] And so, despite the broad purposive approach to be adopted when interpreting industrial agreements, that canon of construction regarding the ‘ordinary meaning’ remains applicable as a starting point.[63]
The Full Bench of the Commission in Construction, Forestry, Mining and Energy Union v Endeavour Coal Pty Ltd,[64] Berri, and the earlier decision in The Australasian Meat Industry Employees Union v Golden Cockerel,[65] embraced such principles.
Berri affirmed that the interpretation of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words, and as such requires a determination of whether an agreement has a plain meaning, or is ambiguous or susceptible of more than one meaning.[66]
In determining whether ambiguity was at play, the Full Bench stated that regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.[67] If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.[68] But, if the language of the agreement is ambiguous or susceptible to more than one meaning, then evidence of the surrounding circumstances will be admissible to aid the interpretation of the agreement.[69]
As to admissible evidence, the Full Bench said that it was the evidence of surrounding circumstances, limited, however, to evidence tending to establish objective background facts known to both parties that informed the subject matter of the agreement.[70] In this respect, evidence of the subjective intentions of the parties was not relevant.[71] Objective background facts were said to include evidence of prior negotiations, notorious facts of which knowledge is to be presumed and evidence of matters in common contemplation and constituting common assumptions.[72]
The Full Bench cautioned about the admission of, and reliance upon, evidence of prior negotiations, due to the diversity of interests involved in negotiations.[73] However, it observed that what employees were told for the purpose of satisfying the explanation obligations under s 180(5) of the 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.[74]
Perhaps one of the most salutary propositions of the Full Bench was that whilst admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, 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.[75]
Statutory framework
The consideration of the question asked and the posturing of the parties requires an understanding of the legislative framework from which the 2020 Agreement arose.
Part 2-4 of the Act contains an enterprise bargaining and agreement making framework and Part 2-1, Division 2, Subdivision D, sets out the ‘Terms and conditions of employment provided by an enterprise agreement’. Within Subdivision D, s 51 provides:
51 The significance of an enterprise agreement applying to a person
(1) An enterprise agreement does not impose obligations on a person, and a person does not contravene a term of an enterprise agreement, unless the agreement applies to the person.
(2) An enterprise agreement does not give a person an entitlement unless the agreement applies to the person.
For an enterprise agreement to provide an entitlement to an employee, it must apply to that same employee. Section 52 prescribes when an enterprise agreement applies to an employee, employer or employee organisation. The requirements are that the agreement is in operation,[76] the agreement covers the employee, employer or organisation,[77] and no other provisions of the Act have the effect or provide that the agreement does not apply.[78]
Turning to when an enterprise agreement covers an employee, it does so when it is expressed to cover (however described) the employee or the employer,[79] subject to some exceptions[80] which are not relevant here. An enterprise agreement does not cover an employee, employer or employee organisation when the enterprise agreement has ceased to operate.[81]
An enterprise agreement operates seven days after it has been approved by the Commission, or if a later day is specified in the agreement, from that later day.[82] An enterprise agreement ceases to operate on the earlier of the day on which termination under ss 224 or 227 comes into operation, or the day on which s 58 has the effect that there is no employee to whom the agreement applies.
Section 58(1) of the Act sets out that only one enterprise agreement can apply to an employee at a particular time, and a later agreement does not apply until the earlier agreement has passed its nominal expiry date.[83]
The nominal expiry date of the 2017 Agreement is 8 September 2020. The 2020 Agreement commenced operation from 1 October 2021. It is not in dispute that the 2020 Agreement covers employees employed directly at the Respondent’s facilities in Henderson in the classification levels set out in clause 8.1.
Consideration
To recount, the question asked of this Commission is whether the Respondent was required by the 2020 Agreement to calculate the Relevant Employees ordinary rate of pay for a back payment based on the Level N4 rate of pay or the Level N3 rate of pay.
As previously observed, the question asked operates on the presumptions that: (a) an enterprise agreement may give effect to a wage increase from an earlier date; and (b) there is an entitlement under the 2020 Agreement to a wage increase for a period before the 2020 Agreement came into operation.
The Respondent contends that the 2020 Agreement cannot apply to work which was completed prior to it coming into operation, and whilst the Applicant submits that is not the question that is asked of this Commission, I have considered the Respondent’s submission necessary to address.
It was adroitly stated in item 196 of the Explanatory Memorandum to the Fair Work Bill 2008 (Cth) (the EM) that the terms of an agreement can only have any effect when an agreement commences operation. However, the EM clarified that this did not preclude an agreement from including a term that has retrospective effect (e.g. a backdated wage increase).
In The Australian Workers’ Union v TAD Pty Ltd, Watson SDP contended with circumstances where the question asked was whether the ‘TAD Agreement’ provided for retrospective application of the rates of pay specified within it.[84] The Senior Deputy President observed that an agreement is made by the parties in accordance with s 182 of the Act, operates in accordance with s 52 and applies the terms and conditions agreed between the parties in accordance with s 54. The Senior Deputy President further observed that ss 52, 54, and 182 do not deal with prohibitions or restrictions on the content of an agreement or the dates from which terms and conditions within an agreement have effect in accordance with the agreement of the parties.[85]
In support of the proposition that enterprise agreements may include a term of retrospective effect, the Senior Deputy President drew upon the Full Bench decision in Australian and International Pilots Association v Qantas Airways Limited (Qantas Pilots Determination).[86] The Senior Deputy President noted that the Full Bench had made certain observations concerning the operation of ss 54 and 276 and did not accept that the Commission was without power to include in a workplace determination a provision requiring the payment of a wage rate from a time earlier than the date on which the workplace determination operates. Relevantly, the Full Bench identified in the Qantas Pilots Determination that s 276(1) was not different in effect than s 54(1) which specified the date from which an enterprise agreement operates from.[87] The Senior Deputy President, having considered the authorities, proceeded on the basis that an enterprise agreement may provide for a wage increase relevant to a period prior to the operation of an enterprise agreement. In light of the past approach adopted by the Commission and in the absence of any objection from the parties, I similarly have proceeded on that basis.
The next factor to consider is whether the 2020 Agreement provided for a wage increase for a period prior to its operation.
To determine this point, the text of the 2020 Agreement and the context found in its various provisions requires further inspection.
Clause 2.1 of the 2020 Agreement prescribes its coverage, which extends to the Respondent, some unions, including the Applicant, and the employees of the Respondent at the facilities located at Henderson, Western Australia, in the classification levels set out in clause 8.1.
As noted in the coverage clause, clause 8.1 of the 2020 Agreement sets out the various classifications, extracted in part as follows:
8.1 Classifications
All Employees other than apprentices will be employed in one of the classification levels set out in the table below.
Level Positions Minimum Position Requirements Leading Hand All Leading Hands Recognised Trade Qualification or relevant certifications, demonstrated capabilities in leading and supervising trade and non-trade personnel N3 Licenced Electrician Relevant Trade Qualification and recognised Electrical Licence N4 Boilermaker or Metal Fabricator… Certificate III in Engineering Trade (Fabrication) or equivalent
The position of ‘Licenced Electrician’, which requires the ‘Minimum Position Requirements’ of ‘Relevant Trade Qualification and recognised Electrical Licence’, sits under the classification of Level N3.
It was uncontroversial that the reclassification of the Relevant Employees from Level N4 to Level N3 did not happen until the 1 October 2021. It follows that when performing work prior to the operation of the 2020 Agreement, the Relevant Employees were classified at Level N4, and performed their work under that same classification of Level N4.
When the 2020 Agreement commenced operation from 1 October 2021, by virtue of s 58 of the Act and clause 2.2 of the 2020 Agreement, the 2017 Agreement was no longer in operation and therefore did not apply to the Relevant Employees.
To note, clause 2.2 of the 2020 Agreement sets out:
This Agreement replaces and operates to the exclusion of any award, preserved State agreement, workplace agreement or other agreement (whether registered or not), or other industrial instrument which may or would otherwise apply to the employment.
From 1 October 2021, the only classification under the 2020 Agreement relevant to electricians who were licenced electricians holding the relevant trade qualification was the Level N3. The parties also agreed that the Relevant Employees fell under Level N3 of the 2020 Agreement, noting that the Level N4 no longer provided for the ‘Trade Group’ ‘Electrician’, as was included in the 2017 Agreement.
Clause 8.2 sets out the ‘Ordinary Rates of Pay under this Agreement’. The reference to ‘this Agreement’ clearly contemplates the 2020 Agreement. The ‘Ordinary Rate of Pay’ is defined at clause 6 of the 2020 Agreement as meaning ‘[a]n Employee’s base rate of pay for Ordinary Hours of Work excluding allowances, penalties, loadings and superannuation’.
The term ‘Ordinary Hours of Work’ is defined in clause 6 of the 2020 Agreement as being the ‘Employee’s normal rostered hours of work per clause 9, which do not attract overtime rates’.
Clause 9.1 of the 2020 Agreement provides that the maximum ‘Ordinary Hours of Work’ are an average of 38 per week, Monday to Friday but not exceeding 152 hours in a 28 day cycle. Clause 9.1 continues, setting out the total hours worked (clause 9.1(b)), when more than 12 hours can be worked (clause 9.1(c)), the circumstances under which regular 12 hour days or shifts may be introduced (clause 9.1(d)), the scheduling of additional work shifts (clause 9.1(e)), and a prohibition on employees working more than 13 consecutive days. The remainder of clause 9 touches on day work, afternoon and night shiftwork, continuous shiftwork, and rostered days off.
At this juncture, it is relevant to point out that in respect of the definition of the ‘Ordinary Rate of Pay’ under clause 6, that rate of pay is payable for the ‘Ordinary Hours of Work’, and the ‘Ordinary Hours of Work’ defined in clause 6 are the ‘normal rostered hours of work’ as defined in clause 9. As should be evident from above, clauses 6 and 9 of the 2020 Agreement refer to the ‘Ordinary Hours of Work’ as they relate to those hours worked from 1 October 2021. Before that time, the 2020 Agreement was not in operation and as such it imposed no obligation on either the Relevant Employees or the Respondent in respect of hours of work.
However, whilst the 2020 Agreement did not come into operation until 1 October 2021, the table at clause 8.2 of the 2020 Agreement sets out hourly pay rates for the first full pay period on or after 8 September 2020, the relevant part extracted below:
8.2 Rates of Pay
The Ordinary Rates of Pay under this Agreement are as follows:
Classification Level Hourly Pay Rates 1st full pay period on or after 08/09/2020 Hourly Pay Rates 1st full pay period on or after 08/09/2021 Hourly Pay Rates 1st full pay period on or after 08/09/2022 LH (Leading Hand) $52.04 $53.09 $54.15 N3 $46.39 $47.32 $48.26 N4 $45.28 $46.19 $47.11
On first blush, clause 8.2 may be considered curiously worded because, as observed, the table refers in its first pay rate column to an hourly pay rate that predates the operation of the 2020 Agreement. It can be further observed that the second pay rate column of the table refers to hourly pay rates for the 1st full pay period on or after 08/09/2021. Given that the 2022 Agreement commenced operation on 1 October 2021 and based on the ordinary words of the second column, on its face, it would appear that this first column has no work to do – or as the Respondent frames it, this part of the clause 8.2 is ultimately redundant. This point requires further consideration.
The Respondent observes that the text of clause 8 is expressed in the present tense and has immediate and prospective application. It continues that clause 8.1 provides that ‘[a]ll employees other than apprentices will be employed in one of the classification levels set out in the table below’ (the italics are the emphasis of the Respondent).
As we know, clause 8.2 relevantly sets out that the ‘Ordinary Rates of Pay under this Agreement are as follows…” (emphasis added). The clause lists the pay rates which will apply during the following three periods:
a)the first full pay period on or after 8 September 2020;
b)the first full pay period on or after 8 September 2021; and
c)the first full pay period on or after 8 September 2022.
The Respondent points to the text in relation to each period as being pellucid. Work carried out during the first full pay period on or after 8 September 2020 and before 8 September 2021 will be paid at the applicable 2020 rate. Work carried out during the first full pay period on or after 8 September 2021 and before 8 September 2022 will be paid at a 2021 rate. Work carried out during the first full pay period on or after 8 September 2022 will be paid at a 2022 rate.
The Respondent argues that as a consequence of the operation of s 58 of the Act, however, employees were only entitled to the pay rates set out in clause 8.2 if the 2020 Agreement applied to them at the time the work was completed. Axiomatically, no work was ever completed by employees under the 2020 Agreement prior to 1 October 2021. As a result, the provision regarding the pay rates between 8 September 2020 and 7 September 2021 was redundant and had no legal effect on employees’ entitlements.
As noted, if the Respondent’s interpretation is accepted, it effectively renders the first pay rate column in the table at clause 8.2 devoid of purpose. The Respondent presses, however, that it is unremarkable that the 8 September 2020 to 7 September 2021 pay rates were contained in the proposed 2020 Agreement despite it not becoming operational until October 2021. It argues that those to be covered by 2020 Agreement began to sign the agreed version of it in early August 2021, prior to filing the agreement with the Commission for approval in September 2021. According to the Respondent, the parties could not have known at the time of agreeing the 2020 Agreement whether it would ultimately be approved by the Commission prior to the conclusion of the first annual pay rate period on 7 September 2021. The pay rates for the 8 September 2020 to 7 September 2021 period were contained in clause 8.2 of the 2020 Agreement, but never took effect. The Respondent’s argument is undoubtedly engaging but ultimately, is somewhat speculative.
As a general proposition, it would be correct to say that when interpreting an instrument (be it a statue or an enterprise agreement), one should strive to give meaning and effect to each of its terms.[88] However, as was said by the Full Bench in “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Simplot Australia Pty Ltd, ‘[w]e are not at liberty to consider any word or sentence as superfluous or insignificant. All words must prima facie be given some meaning and effect.’[89]
Berri informs that 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.[90] When ascertaining whether a clause is ambiguous or susceptible to more than one meaning, regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.[91]
Clause 8.2 is prefaced with the statement that ‘[t]he Ordinary Rates of Pay under this Agreement are as follows’, in circumstances where the same clause purports to set an hourly pay rate for a period, namely a full pay period on or after 8 September 2020, when another enterprise agreement was clearly in operation. This fact was known to the parties at the time the 2020 Agreement was being negotiated.
In my view, regard can be had to the evidence of the surrounding circumstances to assist in determining whether an ambiguity exists. There is evidence before the Commission concerning the negotiation of the 2020 Agreement and what, if anything, the employees covered by the 2020 Agreement were told by way of explanation of its terms and their effect. With respect to bargaining, the evidence shows that during the course of bargaining for the 2020 Agreement, it was agreed that there would be back pay.[92]
At paragraph [29] of this decision, reference is made to those explanatory materials and the content of what was communicated to employees covered by the 2020 Agreement. The explanatory materials detail that back pay would be provided in terms of ‘[b]ack pay to September last year’, ‘back-payment of your first 2% annual wage increase… from the first full pay period on or after 8 September 2020’ and a ‘2% wage increase per year during the term of the Agreement (occurring in the first full pay period from the commencement of the Agreement, and on or after 8 September 2021 and 8 September 2022)…’. The excerpts represent unambiguous, specific and significant words that self-evidently reflect the objectively ascertainable intention of that which was commonly contemplated by the parties – which ultimately informed the subject matter of the 2020 Agreement.
This admissible extrinsic evidence does not contradict the plain language of the agreement but simply illuminates the ambiguity which plagues clause 8.2, whilst also assisting as an aid to the interpretation of the 2020 Agreement.
It follows that the Respondent’s assertions that: (a) clause 8.2 does not require it to make back payments; and (b) the back payments made by the Respondent to employees in 2021 were based on an agreement between the Respondent and the Applicant which sat outside the terms of the 2020 Agreement, are unable to be sustained on what, in my view, constitutes the correct interpretation of the 2020 Agreement. I have concluded that the reference to ‘Hourly Pay Rates 1st full pay period on or after 08/09/2020’ is to be interpreted such that the provision provides back pay for the period specified at the rates provided in the table of clause 8.2.
Having reached the abovementioned conclusion, it has proved unnecessary to extend my consideration to those enterprise agreements that predated the current 2020 Agreement and the operation of back pay clauses in each.
However, the dispute does not end there. The words in clause 8.2 appear to be of little assistance in discerning whether the Relevant Employees are to be back paid at the rate of pay specified for the Level N3 or the Level N4 for the first full pay period on or after 08/09/2020.
Counsel for the Respondent submitted that whilst there is an industrial context and the Commission and the courts cannot be blind to that industrial context, in circumstances where the text is plain, there is no need to have recourse to context. However, I do not consider the text of clause 8 to be plain or devoid of ambiguity, in part because of its silence concerning the subject matter in dispute. This silence renders the task of exegesis ever so more challenging.
In interpreting an agreement, recourse may be had to the history of a particular clause, if, for example, the conclusion can be drawn that a clause in an award, or in this case an agreement, is the product of a history out of which the clause grew to be adopted in its present form.[93]
The complicating factor that has beset this dispute from its inception has been the removal from the Level N4 classification under that 2020 Agreement of the ‘Trade Group’ ‘Electrician’ and from the Level N3 classification the ‘Experienced Electrician’. The 2020 Agreement now refers to ‘Licenced Electrician’ at Level N3. That is not, however, to say that the Level N4 classification in the 2020 Agreement has been abolished. It remains, but it no longer specifies the ‘Trade Group’ ‘Electrician’ at Level N4 and does not set out the ‘Minimum Position Requirements’ for an ‘Electrician’.
It should not be assumed that these were the only classification changes made in the 2020 Agreement when compared to the 2017 Agreement. As Counsel for the Respondent correctly observed, under the 2017 Agreement, Level N5 set out, in part, the following:
| Level | Trade Group | Requirements – Qualifications, Experience, & Competencies |
| N5 | All Entry Level Trades | All Trades: AQF certified or equivalent. |
Under the 2020 Agreement, the ‘Trade Group’ of ‘All Entry Level Trades’ is no longer under the Level N5 classification, but it appears that all trades are now under Level N4. Counsel for the Respondent submitted that if the Applicant’s construction was correct then those employees who had moved from Level N5 to Level N4 would also be entitled to more monies. And yet, when one trawls through the evidence and submissions, there is limited, if not no, suggestion that the back pay to ‘All Entry Level Trades’ was to be paid at a Level N4 hourly pay rate rather than a Level N5 hourly pay rate.
Turning to the negotiations and specifically the evidence of Mr Woodage, whose witness statement attached copies of the EBA Negotiations Progress Tracker, it is observed that in the EBA Negotiations Progress Tracker AW-6 (17 August 2020), the notation read ‘Remove “all trades” from N5 level’, the status was ‘To be Discussed’ and the comment was that the ‘Working group to review classification structure Needs to be costed’.[94] The EBA Negotiations Progress Tracker AW-10 (23 September 2020) showed that by 23 September 2020, the removal of all trades from N5 level was at the point of ‘to review and agree on proposed changes to be presented to the EBA negotiation team for consideration and feedback’. Further, this same tracker provided under ‘Rates of Pay’ that ‘All licensed Electricians to be on N3 classification’.
The history surrounding clause 8.1 can be located in the evidence provided by the parties. What is apparent from that evidence is that while changes to the classification structure formed part of bargaining for the 2020 Agreement and ultimately culminated in changes to the Level N5, Level N4 and Level N3 classifications that were under the 2017 Agreement, those classification changes were not retrospective. That is, there is no suggestion in the text of the Agreement, in the history of clause, or in respect of the evidence concerning the explanation given to employees about the changes to classifications, that the changes would operate retrospectively. The explanatory document titled ‘Appendix: Summary of Key Benefits and High Level Summary of Changes’ sets out:
Some of the key benefits under the Agreement include:
·A 6% incraSease in wages over the life of the Agreement comprising:
o2% wage increase per year during the term of the Agreement (occurring in the first full pay period from the commencement of the Agreement, and on or after 8 September 2021 and 8 September 2022), which are above current private sector wage growth.
oback-payment of the first 2% increase to wages from the first full pay period on or after 8 September 2020.
oReimbursement of costs of renewing electrical licence.
oUpdates to classification structure to clarify that all Electricians will now be at N3, and all qualified Trades will now be at N4 as a minimum.
(italics my emphasis).
On the construction contended for by the Applicant, a Level N3 classification under clause 8.1 is defined as a ‘Licenced Electrician’, and so long as an employee was a Licenced Electrician during the Relevant Period (back pay period), they are entitled to a back payment at the rate of a Level N3 classification. However, it would be both an absurd and unjust result to draw the conclusion that the definitional wording in clause 8.1 gives rise to obligations to provide back pay to the Relevant Employees at an hourly pay rate attributable to the Level N3 classification.
This is particularly the case because it is not apparent from the ordinary meaning of the words in clause 8.2 that the hourly pay rate for the Relevant Employees in that period was at the Level N3 rate. Further, it was an indubitable fact that at the time the work was performed by the Relevant Employees, they were classified as Level N4 under the 2017 Agreement – their reclassification only occurring on the operation of the 2020 Agreement. I would add that the admissible extrinsic evidence is not persuasive of it being in the common contemplation of the parties and constituting a common assumption that the back pay of the Relevant Employees would be at an hourly pay rate based on the Level N3 classification. On this point, it is apposite to note that electricians were not the only cohort impacted by a reclassification, with the trade group also subject to reclassification and yet again there is no evidence before me suggestive that back pay would be provided to the trades at the reclassified rate. Finally, and as has been pointed out by the Respondent, the reclassification of electricians addressed a particular issue unrelated to any consensus to afford a general pay increase (and in this case to backdate it) to the 2020 Agreement-covered employees.
It is trite to note a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced given that the framers of documents such as the 2020 Agreement were likely of a ‘practical bent of mind’ and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon.[95] Having adopted a purposive approach, which I do not consider is misplaced in the context of this application, the correct classification for the Relevant Employees for the first full pay period on or after 08/09/2020 was Level N4.
Conclusion
The parties asked this Commission whether the Respondent was required to calculate the Relevant Payment for the Relevant Employees based on the Level N4 or Level N3 ordinary rate of pay under the 2020 Agreement.
As will be evident by now, I have considered that it is appropriate for the Commission to deal with the application, as there is a prima facie unresolved dispute about the operation of clause 8.2 of the 2020 Agreement. The application for the Commission to deal with the dispute was made when the 2020 Agreement was in operation and there was the requisite agreement for arbitration.[96] As identified at the beginning of this decision, it was uncontroversial that the steps in the dispute resolution procedure had been followed and that clause 40 of the 2020 Agreement provide for disputes to be arbitrated. More precisely, clause 40.6(b) expressly provides that the Commission may arbitrate a dispute and make a determination that is binding on the parties.
Briefly stated, the Respondent characterised the dispute as one concerning the quantum of entitlement, noting there was no question that back pay was promised by the Respondent to employees and was paid, leaving the only question of whether the right amount was paid. I do not necessarily disagree with that characterisation albeit ultimately the Commission is called upon to simply identify whether Level N4 or Level N3 sets the correct hourly pay rate.
The Respondent submitted that the Commission cannot determine or enforce a legal right to payment of wages on the part of employees in respect of a past period – noting that this is simply not something that is available to the Commission to determine. The basis for the Respondent’s proposition having derived in part from Re Cram; Ex parte The Newcastle Wallsend Coal Company Pty Ltd (Re Cram)[97]. It is this latter contention that requires further attention.
In Re Cram, the issue confronting the High Court was whether a Local Coal Authority (Authority) was deciding a claim for payment of wages made as a matter of legal right or a claim for payment of wages made not as a matter of legal right, but as a matter of what was ‘right and fair’.[98] If the former, then the decision constituted an attempted exercise of judicial power and was not the resolution of a dispute as to an ‘industrial matter’, and if the latter, then the decision resolved a dispute as to such a matter.[99]
In Re Cram, members of the unions involved had participated in work stoppages and on returning to work, were informed that they had disentitled themselves to the provision of work and wages until they signed a proposed agreement, which included a ‘no strike’ provision. Each union notified the Authority of a dispute, and whilst the notifications did not expressly demand payment for wages, that is what effectively the applications claimed.[100]
The employer’s argument was that the Authority had no jurisdiction to hear and determine an application for the interpretation and enforcement of two Awards and that the hearing and determination of such an application involved an exercise of judicial power of the Commonwealth.[101] The two Awards in question were made by the Coal Industry Tribunal pursuant to the Coal Industry Act 1946 (Cth) and the Coal Industry Act 1946 (NSW).
The Authority in question had also been established by Coal Industry Act 1946 (Cth) and the Coal Industry Act 1946 (NSW) and was empowered to settle any dispute as to any local industrial matter likely to affect the amicable relations of employers in the coal-mining industry of the State.
In an oft cited passage, the majority of the High Court in Re Cram stated:
A claim for the payment of wages due and payable by an employer to an employee is a claim for the enforcement of an existing legal right. Likewise, a claim for the enforcement of a provision in an award for the payment of wages to an employee is also a claim for the enforcement of an existing legal right. Claims for the enforcement of existing legal rights necessarily invoke the exercise of judicial power. As the judicial power of the Commonwealth is reposed by s.71 of the Constitution in Ch.III courts, an Authority is necessarily without jurisdiction to hear and determine claims of the kind already mentioned to the extent to which the right sought to be enforced arises under federal law. In conformity with the dispositions made by the Constitution governing the exercise of federal judicial power, s.38 of the Commonwealth Act, which deals with the jurisdiction of Local Coal Authorities , makes no endeavour to arm them with judicial power. Likewise, the corresponding provision of the State Act, s.44, makes no attempt to do so…
The result is that the Authority had no jurisdiction to determine or enforce a legal right to payment of wages on the part of employees in respect of a past period during which they had been stood down or refused to work or to enforce the provisions of an award regulating the right to payment of wages of employees for such a period…[102]
The majority of the Court expressed that the principle denied to the Authority the power of judicial determination which included, as expressed by ‘Kitto J. in Aberdare Collieries: “the giving of decisions in the nature of adjudications upon disputes as to rights or obligations arising from the operation of the law upon past events or conduct”’.[103] The Court continued:
The making of a binding declaration of right is an instance of the exercise of judicial power. It stands outside the arbitral function. But there is no substance in the suggestion that an industrial tribunal cannot interpret laws, awards and other legal instruments. A tribunal could not discharge its arbitral functions if it were unable to form an opinion on a matter of interpretation. The formation of views and opinions on matters of interpretation in arbitral proceedings does not in itself amount to a usurpation of judicial power. Indeed, a tribunal may find it necessary to form an opinion as to the existing legal right of the parties as a step in arriving at the ultimate conclusions on which the tribunal bases the making of an award intended to regulate the future right of the parties…[104]
There are two points to address concerning the Respondent’s reliance on Re Cram.
First, the dispute before me now arises under an enterprise agreement established under Part 2-4 of the Act, in which those covered by that agreement have agreed to resolve certain disputes in accordance with a dispute resolution procedure that was struck as part of the bargain in making the 2020 Agreement. That procedure clearly sets out the type of dispute that clause 40 lends itself to, the steps that those covered are required to take as part of the procedure and an acceptance that a party may refer a dispute to the Commission where ultimately, if the Commission is unable to resolve the dispute at the first stage, it has discretion to arbitrate the dispute and make a determination that is binding on the parties. Furthermore, clause 40 of the 2020 Agreement, clarifies that the decision reached when arbitrating a dispute is a decision for the purpose of Division 3 of Part 5.1 of the Act, and therefore an appeal may be brought against the decision.
Second, the decision of Re Cram did not deal with an agreed or private arbitration, and I caution here that by ‘private arbitration’, I am not referring to arbitration where the Commission’s powers simply rely only upon the agreement of the parties. In my view, and as expressed in Construction, Forestry, Maritime, Mining and Energy Union v Falcon Mining Pty Ltd (Falcon),[105] the Commission’s power to arbitrate disputes pursuant to applications under s 739 arises from the enterprise agreement and the terms of Act, and as a consequence Re Cram may not assist the Respondent with its argument.
To explain further, in Falcon, the concepts and confusion regarding private arbitration were traversed, the Full Bench expressing:
The respondent’s submission appears to proceed from a misunderstanding of the judicial characterisation of the power exercised under s 739(4) as being one of private arbitration. That characterisation has its source in the High Court decision in Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (Gordonstone). Gordonstone was, for relevant purposes, concerned with the constitutional validity of s 170MH of the Industrial Relations Act 1988 (Cth) (IR Act), which provided that procedures in a certified agreement for preventing and settling disputes between employers and employees might, if the Australian Industrial Relations Commission (AIRC) approved, empower the AIRC to settle disputes over the application of the agreement or appoint a board of reference to settle such disputes. The Court rejected a contention that, by reason of s 51(xxxv) of the Constitution, a certified agreement can only validly provide for procedures for the resolution of disputes which are within the compass of the industrial dispute or situation which led to its making. In doing so, the Court distinguished between agreed and arbitrated dispute settlement procedures. The Court said:
“[30] There is, however, a significant difference between agreed and arbitrated dispute settlement procedures. As already indicated, the Commission cannot, by arbitrated award, require the parties to submit to binding procedures for the determination of legal rights and liabilities under an award because Ch III of the Constitution commits power to make determinations of that kind exclusively to the courts. However, different considerations apply if the parties have agreed to submit disputes as to their legal rights and liabilities for resolution by a particular person or body and to accept the decision of that person as binding on them.
[31] Where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. Of its nature, judicial power is a power that is exercised independently of the consent of the person against whom the proceedings are brought and results in a judgment or order that is binding of its own force. In the case of private arbitration, however, the arbitrator's powers depend on the agreement of the parties, usually embodied in a contract, and the arbitrator's award is not binding of its own force. Rather, its effect, if any, depends on the law which operates with respect to it.[106]
At paragraph [72], the Full Bench continued:
The word “arbitration”, according to its ordinarily understood meaning, is “a process by which disputes are settled by a third party, appointed for that purpose by the parties to the dispute” and thus encompasses the whole process of adjudication leading to the making of the final decision. In the context of the FW Act, once the Commission is authorised to arbitrate under s 739(4), it is permitted by s 595(4) to engage in the entire process of adjudication for which the FW Act provides, including interlocutory and procedural decision-making and the conduct of hearings as well as the making of the final decision, unless there is some limitation upon the exercise of powers contained in the relevant dispute resolution term to which effect must be given by virtue of s 739(3). The respondent pointed to no such limitation in clause 7 of the 2017 Agreement which would have affected the Deputy President’s capacity to arbitrate the dispute before him. (citations omitted)
The concept of arbitration in the context before me necessarily implies an outcome which is binding upon the parties that have submitted to the arbitration, which in this case the parties have.[107] And as is apparent from ss 595(2) and (3) and from clause 40, arbitration is intended to be more than simply ‘expressing an opinion’.[108] The parties have agreed to submit their dispute as to their legal rights and liabilities for resolution by the Commission and to accept the Commission’s decision as binding on them. In this respect, the Commission does not exercise judicial power but engages in its arbitral function in accordance with the terms of the 2020 Agreement and the relevant provisions of Part 5-1 and Part 6-2 of the Act.[109]
Turning to Part 5-1, s 595(3) empowers the Commission, when expressly authorised to arbitrate, to make any orders it considers appropriate. In Falcon, the Full Bench observed that this provision would operate in respect of any arbitration conducted pursuant to s 739(4) provided that the relevant dispute resolution procedure did not prohibit or restrict the making of orders by the Commission and thus engage the limitation on the Commission’s powers contained in s 739(5).[110] Any order made by the Commission under the Act is given legal effect by s 675.
If it were appropriate to do so, I would conclude that the preferred approach is one premised on the acceptance that it was within power to issue an order to the effect that the Relevant Employees were to be back paid for the period on or after 08/09/2020 in accordance with the first pay rate column in the table at clause 8.2, at the Level N4 hourly pay rate. However, there is no utility in making such an order, because, as indicated by the Respondent, such payment has already been made.
DEPUTY PRESIDENT
Appearances:
A Aghazarian for the applicant.
H Millar of Counsel for the respondent.
Hearing details:
2022.
Perth (via Microsoft Teams):
August 15.
Final written submissions:
Applicant, 10 August 2022.
Respondent, 26 July 2022.
Printed by authority of the Commonwealth Government Printer
<PR742948>
[1] AE513255 (2020 Agreement).
[2] AE425982 (2017 Agreement).
[3] Statement of Agreed Facts and Question for Determination, [5].
[4] Ibid [6] – [7].
[5] Ibid [12].
[6] Ibid [17].
[7] Witness Statement of Jo Saringer, [6] (Saringer Statement).
[8] Ibid.
[9] Ibid [7].
[10] Ibid [9].
[11] Ibid [8].
[12] Ibid [11].
[13] Ibid [12].
[14] Ibid.
[15] Ibid [15].
[16] Ibid [17].
[17] Ibid [19].
[18] Ibid [21].
[19] Ibid [20].
[20] Ibid [22].
[21] Ibid [23].
[22] Ibid [25], annexure JS-6.
[23] Ibid [26], annexure JS-7.
[24] Ibid [27].
[25] Ibid.
[26] Ibid.
[27] Ibid [28].
[28] Ibid [28], annexure JS-9.
[29] Ibid [29].
[30] Ibid [35].
[31] Ibid [37].
[32] Ibid [35].
[33] Ibid annexure JS-12.
[34] Ibid [37], annexure JS-4.
[35] Ibid [37], annexure JS-13.
[36] Ibid [37].
[37] Ibid annexure JS-14.
[38] Ibid.
[39] Ibid [38].
[40] Witness Statement of David Hindley, [4] (Hindley Statement).
[41] Ibid [18].
[42] Witness Statement of Blake Pilgrim, [8].
[43] Witness Statement of Adam Woodage, [3] (Woodage Statement).
[44] Ibid [3].
[45] Ibid [8].
[46] Ibid [10].
[47] Ibid [13].
[48] Ibid [15].
[49] Ibid [16].
[50] Ibid [18].
[51] 2017 Agreement (n 2) cl 10.3; 2020 Agreement (n 1) cl 8.1.
[52] 2017 Agreement (n 2) cl 10.3; 2020 Agreement (n 1) cl 8.1.
[53] 2017 Agreement (n 2) cl 10.3; 2020 Agreement (n 1) cl 8.1.
[54] 2017 Agreement (n 2) cl 10.3.
[55] Ibid cl 8.1.
[56] Statement of Agreed Facts and Question for Determination, [12].
[57] Ibid [13], [15].
[58] (2018) 264 FCR 536 (WorkPac).
[59] (2017) 268 IR 265 (Berri).
[60] Woodage Statement (n 43) [17]; Witness Statement of Daniel Sear, [10] (Sear Statement).
[61] WorkPac (n 58) 580 [197].
[62] Ibid 581 [202].
[63] Ibid.
[64] [2017] FWCFB 4487.
[65] (2014) 245 IR 394.
[66] Berri (n 59) 311 [114.7].
[67] Ibid 311 [114.8].
[68] Ibid 311 [114.9].
[69] Ibid 311 [114.10].
[70] Ibid 311 [114.11].
[71] Ibid.
[72] Ibid.
[73] Ibid 311 [114.13].
[74] Ibid.
[75] Ibid 311 [114.14].
[76] Fair Work Act 2009 (Cth) s 52 (1)(a).
[77] Ibid s 52 (1)(b).
[78] Ibid s 52 (1)(c).
[79] Ibid s 53(1).
[80] Ibid s 53(4).
[81] Ibid s 53(5).
[82] Ibid s 54(1).
[83] Ibid s 58(2).
[84] [2016] FWC 1794.
[85] Ibid [39].
[86] (2013) 230 IR 238.
[87] Ibid 309 [329].
[88] “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Simplot Australia Pty Ltd[2018] FWCFB 1156, [28].
[89] Ibid, citing Project Blue Skv Australian Broadcasting Authority (1998) 194 CLR 355, 382 (McHugh, Gummow, Kirby and Hayne JJ); Rezaei v Minister for Immigration and Multicultural Affairs [2001] FCA 1294, [92] – [93] (Allsop J).
[90] Berri (n 59) 311 [114.7].
[91] Ibid 311 [114.8].
[92] Sear Statement (n 60) [10]; Saringer Statement (n 7) [35]; Hindley Statement (n 40) [19].
[93] James Cook University v Ridd (2020) 278 FCR 566, 580 [65(v)], not disturbed on appeal (2021) 95 ALJR 878.
[94] Woodage Statement (n 43) annexure AW-6.
[95] WorkPac (n 58) 580 [197].
[96] Construction, Forestry, Maritime, Mining and Energy Union v Falcon Mining Pty Ltd[2022] FWCFB 93, [71] (Falcon).
[97] (1987) 163 CLR 140.
[98] Ibid 152.
[99] Ibid.
[100] Ibid 147.
[101] Ibid 148.
[102] Ibid (citations omitted).
[103] Ibid 149, quoting R v Gallagher; Ex parte Aberdare Collieries Pty Ltd (1963) 37 ALJR 40, 43.
[104] Ibid 149 (citations omitted).
[105] Falcon (n 96).
[106] Ibid [60].
[107] Ibid [75].
[108] Ibid.
[109] Ibid [60] – [63], [68] – [70].
[110] Ibid [76].
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