Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Electrix Pty Ltd

[2016] FWC 3185

[2016] FWC 3185

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
Electrix Pty Ltd
(C2015/5652)

DEPUTY PRESIDENT KOVACIC MELBOURNE, 19 MAY 2016

Application to deal with a dispute.

[1] On 12 August 2015 the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU - the Applicant) made an application under s.739 of the Fair Work Act 2009 (the Act) and in accordance with the dispute resolution process of the Electrix Ply Ltd & ETU Powerline Enterprise Agreement 2013-2016 1 (the Agreement).

[2] The dispute concerned the interpretation of clause 45.1 of the Agreement which deals with wage rates, with the CEPU contending that Electrix Pty Ltd (Electrix – the Respondent) had incorrectly paid employees back pay based on their classification level under the predecessor agreement as opposed to their classification level under the Agreement.

[3] The dispute was the subject of several conferences convened by the Fair Work Commission (the Commission) and further discussions between the parties which failed to resolve the dispute. Against that background, Directions were issued by the Commission on 27 November 2015, with the dispute heard on 5 February 2016.

[4] At the hearing, Ms Lucy Weber appeared for the CEPU, while Mr Anthony Dalton of the Australian Industry Group appeared for Electrix. Mr Matthew Boyd, an Organiser with the Victorian Branch of the Electrical Trades Union, gave evidence for the CEPU, while Mr Peter Bell, Electrix’s Human Resource Manager, and Ms Lauren Randalls, a Human Resource Advisor with Electrix, both gave evidence for the Respondent.

[5] For the reasons set out below, I have found that clause 45.1 of the Agreement has a plain meaning and requires that back pay is calculated with reference to the wages (normal and overtime) employees would have received under the Agreement inclusive of any increases flowing from the reclassification of employees.

The Agreement provision

[6] Clause 45.1 of the Agreement provides as follows:

“45. APPENDIX A- WAGE RATES

45.1 As some of the increases below are stated to apply prior to the date of operation of this Agreement, in the first pay period after this Agreement comes into operation, employees shall receive a payment equivalent to the difference between what they did receive and what they would have received for wages (normal and overtime earnings) if this Agreement had come into operation immediately prior to the date of the first wage increase set out below.

45.2 …

[7] The Agreement was approved by the Commission on 22 June 2015 and commenced operation on 29 June 2015.

The Applicant’s case

[8] The CEPU submitted that during bargaining it was agreed that high-voltage operating work would be incorporated into the Agreement’s classification level descriptions, rather than the previous arrangement where allowances were paid only when this type of work was performed. The CEPU further submitted that it was also agreed that crew leading would be combined with high-voltage operating and glove and barrier skills in the classification descriptions, resulting in the crew leading allowance arrangements that operated under the previous agreement being changed in the Agreement. As a result of these changes, some employees were reclassified to a higher classification level under the Agreement relative to the previous agreement.

[9] On the issue of back pay, the CEPU contended that its position at all times had been that back pay would be calculated as the difference in wages between what employees had received under the previous agreement and what they would have received under the Agreement, inclusive of any reclassifications resulting from the abovementioned agreed changes.

[10] The CEPU also submitted that the wording of clause 45.1 was clear and plain, adding that there was no ambiguity in the wording supporting any interpretation other than that back pay is calculated by reference to what employees would have received for wages if the Agreement had come into operation immediately prior to 31 August 2014. Further, the CEPU contended that what employees would have received for wages on 31 August 2014 can only be determined by reference to the classification descriptions in clause 41 of the Agreement. Beyond this, the CEPU submitted, inter alia, that:

• evidence of the surrounding circumstances cannot be admitted to contradict the plain language of the clause: MUA v Patrick Stevedores Holdings Pty Ltd 2(Patricks);

the fact that it and Electrix disagree as to the interpretation of clause 45.1 does not render the clause ambiguous; and

the fact that Electrix may consider the CEPU’s position to be unfair or unjust is not a consideration which is relevant to the task of interpreting clause 45.1: Kucks v CSR Limited 3.

[11] In summary, the CEPU submitted that:

• clause 45.1 of the Agreement has a plain meaning and does not contain any ambiguity;



• evidence of the surrounding circumstances does not help to identify any ambiguity;



• there was no objective common intention which indicates that the calculation of the back pay was to be based on the classification descriptions under the previous agreement, or that the classification descriptions contained in the Agreement would not be retrospective for the purposes of clause 45.1;



• the task of the Commission in interpreting clause 45.1 does not involve the rewriting of the clause to achieve an outcome which reflects the subjective intention or expectation of either party or which might be regarded as a fair or just outcome; and



• clause 45.1 operates so that back pay is calculated on an employee’s wage rate by reference to the classification level which applies under the Agreement.

[12] As to Electrix’s contention that the CEPU’s interpretation of clause 45.1 results in a double payment, the CEPU submitted that this was simply a by-product of the correct application of the clause.

[13] Mr Boyd in his witness statements 4 outlined the negotiations for the Agreement as they related to back pay. Specifically, Mr Boyd deposed that the union’s bargaining position had always been that back pay would be calculated as the difference in wages between what employees were receiving under the previous agreement and what they would receive under the Agreement, inclusive of any reclassifications. Mr Boyd also deposed that this was how the back pay issue was explained to members. In his second witness statement, Mr Boyd disputed aspects of Mr Bell’s and Ms Randalls’ witness statements, e.g. he disputed Mr Bell’s evidence that the outcome in respect of back pay was the same as in previous agreements.

In his oral evidence, Mr Boyd attested, inter alia, that:

• the union did not raise its view that back pay included any wage increases flowing from reclassifications as it considered the clause it had proposed was clear in this regard; and



• he did not believe that he should have raised the union’s view in this regard with Electrix.

[14] At the hearing, the CEPU reiterated that the clause was clear and unambiguous. The CEPU also submitted, inter alia, that:

• it was incumbent on Electrix to have considered the wording of the back pay clause and its implications, adding that Electrix had failed to do so on this occasion;



• the evidence before the Commission did not assist the Commission in interpreting clause 45.1, adding that it was clear from the evidence that the basis of calculating back pay was not discussed in the negotiations;



• in interpreting clause 45.1, the only thing that matters is the wording of the clause itself; and



• the intention of the parties in this case is overtaken by the wording of the Agreement.

The Respondent’s case

[15] Electrix submitted that the reclassifications agreed to as part of the Agreement came into effect when the Agreement commenced operation on 29 June 2015 and as such were excluded from the calculation of back pay. More specifically, Electrix contended that:

• the CEPU’s submissions were not supported by a plain reading of clause 45.1;



• clause 45.1 does not reference the issue of reclassification as a consideration in respect of back pay, adding that the words “normal and overtime earnings” were inserted at its request to exclude allowances from the calculation of back pay;



• it is not clear that clause 45.1 covers the reclassification changes in the calculation of back pay and as a result ambiguity exists as to the operation of clause 45.1;



• it did not agree to back pay for the reclassification based wage increases, adding that there was no evidence of any discussions on the issue;



• the evidence of Ms Randalls and Mr Bell was that the issue was not discussed by the parties in the negotiations nor was it agreed to by Electrix;



• the new classifications operated from the commencement of the Agreement;



• had it included the reclassification based wage increases in the back pay calculation it would have been double paying employees who had undertaken leading hand and high-voltage operating duties as both had been paid by way of allowance under the previous agreement; and



• in this case there had been a failure to communicate.

[16] Electrix relied on the decision in the Full Bench in Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited 5(Golden Cockerel) in support of its submissions.

[17] Mr Bell deposed in his witness statement 6 that to the best of his recollection there were no discussions during the negotiations that specifically dealt with the issue of back pay including the wage increase flowing from the reclassifications or that the changes to the classification structure would apply retrospectively. Mr Bell further deposed that at the meeting of 20 March 2015 when the parties discussed the issue of back pay they agreed that it was to apply to wages and overtime only, with allowances excluded as Electrix had already paid them. Mr Bell also deposed that this was the same approach that had been adopted in the three previous enterprise negotiations where back pay had been agreed.

[18] Beyond that, Mr Bell deposed that:

• it was his clear understanding that any changes to the classification structure would only take effect once the Agreement was approved by the Commission;



• the wording of clause 45.1 did not mention or refer to reclassifications; and



• the agreement in respect of back pay was that employees would receive the new rate of pay for their existing classification level, not the classification level which would apply to them on commencement of the Agreement.

[19] In his oral evidence, Mr Bell largely reiterated the key aspects of his witness statement. Among other things, Mr Bell attested that:

• all the changes in the Agreement other than wages came into effect when the Agreement commenced operation on 29 June 2015;



• he considered that back pay was limited to wages as this was how back pay had operated in previous agreements; and



• he did not see any need to ask the CEPU to clarify its intent regarding its proposed back pay clause as Electrix saw it operating solely in respect of wages.

[20] Ms Randalls deposed that she did not recall any discussion that specifically dealt with the issue of back pay including classification restructure changes at any stage of the negotiations, adding that there were no discussions regarding when the changes to the classification structure would apply. Ms Randalls further deposed that she recalled that the parties discussed and agreed on 20 March 2015 that back pay would apply from 1 September 2014 to wages and overtime only. Ms Randalls also deposed that the classification restructure in the Agreement resulted in 31 employees being reclassified to a higher classification as a result of the Leading Hand and High-Voltage Operating allowances being incorporated into the classification descriptors and therefore no longer being paid as separate allowances. Beyond this, Ms Randalls deposed that:

• she did not believe that the reclassification wage rates applied to back pay as doing so would result in a double payment for employees who were reclassified;



• the union’s proposed wording for clause 45.1 did not mention the issue of reclassification back pay which is why the issue was not queried; and



• Electrix considered that employees had already been compensated for the High-Voltage Operating and Leading Hand allowances under the provisions of the previous agreement.

[21] Key aspects of Ms Randalls’ oral evidence were that back pay was intended to apply to normal and overtime earnings but exclude allowances, there was no discussion as to which allowances were not included in back pay and the issue of reclassifications had already been agreed when the back pay issue was discussed in the negotiations.

[22] At the hearing, Electrix:

• referred to principle 3 in Golden Cockerel (see below);



• contended that it was not asking the Commission to take something out of the Agreement, but rather that the CEPU was seeking to have something incorporated into the Agreement;



• submitted that in the absence of specific agreement, the reclassifications did not operate until the Agreement commenced operation on 29 June 2015;



• as a result, clause 45.1 could not incorporate something which did not apply;



• argued that it was clear that the parties had negotiated that back pay would only apply to wages and overtime earnings;



• submitted that there was never any discussion that the reclassifications would be backdated; and



• described the CEPU’s claim as opportunistic.

Consideration of the issues

[23] The principles relating to the interpretation of enterprise agreements were, as alluded to in Electrix’s submissions, set out in Golden Cockerel. Below is the passage from that decision which sets out the key principles in this regard.

“[41] From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

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

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

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

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) 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;
(b) notorious facts of which knowledge is to be presumed;
(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;
(b) the disputed provision's place and arrangement in the agreement;
(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

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

[24] I adopt those principles in this case.

[25] Drawing on the second principle in Golden Cockerel, the Commission must first determine “whether an agreement has a plain meaning or contains an ambiguity.” As noted above, the CEPU, relying on the decision in Patricks, submitted that the fact that the parties disagree about the meaning of the clause does not render the provision ambiguous. Specifically, the Full Bench in Patricks stated that:

“[7] That two parties disagree about the meaning of a term of an agreement does not render it ambiguous.”

[26] A close examination of clause 45.1 indicates that the practical effect of the provision is that the wage rates set out in the clause are to be paid to employees as if the Agreement had come into effect immediately before 31 August 2014. The words “if this Agreement” in the clause are not limited to particular provisions of the Agreement, though the reference to wages in the clause is limited to “normal and overtime earnings” so as to exclude allowances. While I note Electrix’s submission that the reclassifications only applied from when the Agreement commenced operation on 29 June 2015, the words “if this Agreement had come into operation …” do not support that interpretation as they refer to the Agreement in its entirety as opposed to only one aspect of the Agreement, i.e. wage rates. The words are unambiguous in this regard and have a plain meaning.

[27] Further, clause 45.1 provides that the amount of back pay is calculated by deducting from what employees would have earned as wages (normal and overtime) under the Agreement and what they did receive for wages (normal and overtime) for the period 31 August 2014 (when the first increase under the Agreement came into effect) until 29 June 2015 when the Agreement commenced operation. Again there is no ambiguity in the clause in this regard.

[28] Accordingly, drawing on principle 4 in Golden Cockerel, there is no basis for the Commission to draw on the evidence of the surrounding circumstances to contradict the plain language of the Agreement. To that end, I note that much of the evidence in this case related to the parties’ perspectives regarding the negotiations on the issue of back pay and their interpretation of clause 45.1 in circumstances where there appear to have been no substantive discussions regarding what factors were included/excluded in calculating back pay. Consistent with the decision in Golden Cockerel, in circumstances where clause 45.1 has a plain meaning, no weight can be attached to the parties’ views as to the intent of the provision or their subjective interpretations of the clause.

[29] In summary, the above analysis supports a finding that clause 45.1 requires back pay to be calculated with reference to the wages employees would have received under the Agreement inclusive of any increases flowing from the reclassification of affected employees. While this does result in the 31 employees who were reclassified under the Agreement being paid twice for the Leading Hand and High-Voltage Operating allowances, I would highlight principle 10 in Golden Cockerel which provides that “The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties”.

Conclusion

[30] For all the above reasons, I have found that clause 45.1 of the Agreement has a plain meaning and requires back pay to be calculated with reference to the wages (normal and overtime) employees would have received under the Agreement inclusive of any increases flowing from the reclassification of employees.

Appearances:

L. Weber for the Communications, Electrical, Electronic, Energy, Information, Postal,

Plumbing and Allied Services Union of Australia.

A. Dalton for Electrix Pty Ltd.

Hearing details:

Melbourne.

2016:

February 5.

 1   AE414419

 2   [2015] FWCFB 4994

 3 (1996) 66 IR 182

 4   Exhibits W1 and W2

 5   [2014] FWCFB 7447

 6   Exhibit D2

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