Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Jelani Pty Ltd T/A Matera Electrical Services
[2020] FWC 3019
•30 JUNE 2020
| [2020] FWC 3019 |
| 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
Jelani Pty Ltd T/A Matera Electrical Services
(C2020/559)
DEPUTY PRESIDENT BEAUMONT | PERTH, 30 JUNE 2020 |
Alleged dispute about any matters arising under the enterprise agreement and the NES
[1] This decision concerns an application made by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the Union) under s 739 of the Fair Work Act 2009 (Cth) (the Act) for the Commission to deal with a dispute in accordance with the disputes settlement procedure in cl 8 of the Matera Electrical Services Electrical Agreement 2018 (2018 Agreement). 1
[2] The 2018 Agreement is binding on Jelani Pty Ltd (Jelani) and applies to employees of the company engaged on any work involving maintenance, modification, and upgrade at the Karratha Gas Plant, Pluto LNG Plant and the King Bay Supply Base, all in Western Australia (collectively, the sites). Jelani provides services to its client, Woodside Energy Limited.
[3] While the CEPU is covered by the 2018 Agreement, there is also an acceptance by the parties that the Union brought the application on behalf of its members who are employed by Jelani, are covered by the 2018 Agreement and are employed as Trade Assistants, Electrical Apprentices and Electrical Tradespersons within the classifications in cl 21 of the 2018 Agreement.
[4] The present dispute concerns whether employees are entitled to be paid:
a) their annual leave at their Total Hourly Rate, inclusive of the all-purpose allowances, under cl 26.3 of the Agreement; and
b) their personal leave at their Total Hourly Rate, inclusive of the all-purpose allowances, under cl 27.5 of the Agreement.
[5] The application was listed before me for conference pursuant to the steps in the dispute settlement procedure. The matter remained unresolved, and the Union sought to have its application proceed to arbitration. It was common ground, and I agree, that the Commission is authorised to arbitrate the dispute under cl 8 of the 2018 Agreement.
[6] Initially, the parties indicated a preference for a two-day hearing. Consequently, I issued directions for the filing and service of submissions and evidentiary material. However, once materials were to hand, the parties decided that they would prefer to use the hearing time to provide closing submissions only. I considered that it was appropriate for me to allow this course and hence my determination arises from a consideration of those closing submissions and the papers filed.
The dispute
[7] In short, the parties have framed the dispute such that the Applicant seeks a determination that employees are entitled:
a) under cl 26.3 of the Agreement to be paid annual leave at their Total Hourly Rate, inclusive of the all-purpose allowance as follows:
i. Karratha/Pluto Goas Plant Allowance pursuant to cl 22.8 of the Agreement;
ii. Leading Hand Allowance pursuant to cl 22.11 of the Agreement;
iii. Electricians Licence Allowance pursuant to cl 22.13 of the Agreement;
iv. Dual Trade Allowance pursuant to cl 22.14 of the Agreement;
v. Tool Allowance pursuant to cl 22.15 of the Agreement; and
vi. EEHA Advisor Allowance pursuant to cl 22.16 (collectively the All-Purpose Allowances); and
b) under cl 27.5 of the Agreement to be paid personal leave at their Total Hourly Rate, inclusive of the All-Purpose Allowances.
Relevant clauses in the 2018 Agreement
[8] As observed, the dispute has arisen in respect of the interpretation of cl 26.3 of the 2018 Agreement and cl 27.5. Clause 26 sets out the provisions concerning annual leave. It reads:
Annual Leave Entitlement
26.1 Annual leave is provided for in the NES.
26.2 For each year of service, the NES entitles an Employee (other than a casual Employee) to:
26.2.1 4 weeks of paid annual leave; or
26.2.2 5 weeks of paid annual leave if the Employee is a continuous shift worker i.e. the Employee is regularly required to work in a rotational system of shift work in which work is carried on all day and every day of the week.
Leave Loading
26.3 An Employee going on annual leave shall be paid for such leave the amount in respect of the ordinary hours the Employee would have worked had the Employee been at work during the relevant period. In addition, the Employee shall receive a loading of 17.5% on the ordinary hourly rate.
…
Cashing Out Annual Leave
26.9 Annual leave may be cashed out if the request is in writing and the cashing out would result in the Employee’s remaining accrued entitlement being no less than four (4) weeks. (Emphasis added in italics)
[9] While the definitions clause of the 2018 Agreement does not define ‘ordinary hours’, cl 10 is headed ‘Ordinary Hours’.
10.0 ORDINARY HOURS
38 Hours Per Week
10.1 In the event of a rostered arrangement the ordinary hours of work shall be an average of 38 hours per week.
10.2 An average of 38 hours per week over the period of the Employee’s roster can be worked provided such period does not exceed eight (8) weeks.
10.3 The ordinary hours of work may be worked on any day/s of the week Monday-Friday inclusive and, except in the case of shift Employees, shall be worked continuously, except for meal breaks, at the discretion of [sic] Employer between 6.00am and 6.00pm.
…
[10] Clause 22 of the 2018 Agreement sets out the ‘Ordinary Rates of Pay and Allowances’. It reads:
22.1 The Ordinary Rates of Pay and Allowance applicable to the Employee classification level are detailed in below.
22.2 Ordinary Rates of Pay expressed below provide for all conditions of employment. All allowances for varying workplace conditions are included in these Ordinary Rates of Pay.
22.3 The following ordinary hourly rates shall be paid to Employees working ordinary house engaged under this Schedule.
Classification | Effective from Monday 19 August 2019 |
Trades Assistant – Level 4 | $33.66 |
Electrical Tradesperson – Level 5 | $36.87 |
Electrical Tradesperson – Level 6 | $37.74 |
Electrical Tradesperson – Level 7 | $38.85 |
Electrical Tradesperson – Level 8 | $40.20 |
Electrical Apprentices – Year 1 | $15.40 |
Electrical Apprentices – Year 2 | $25.15 |
Electrical Apprentices – Year 3 | $26.88 |
Electrical Apprentices – Year 4 | $30.82 |
…
22.6 The ordinary hourly rates in subclause 22.3 above incorporate all payments, entitlements, wage benefits and other compensation except where expressly provided elsewhere in this Agreement, including but not limited to:
22.6.1 Payment for industry and supplementary payments[;]
22.6.2 Payment for special rates and provisions;
22.6.3 Site Allowances;
22..6.4 Fares and travelling time;
22.6.5 Location allowances;
22.6.6 Any special allowance;
22.6.7 The lack of an afternoon smoking break;
22.6.8 Travelling time on overtime or callouts;
22.6.9 The effects on the environment;
22.6.10 Climatic Considerations[;]
22.6.11 Fire, emergency, first aid, safety evacuation or muster drills.
[11] When it comes to personal leave, the 2018 Agreement sets out in cl 27.5:
Employees entitled to take a period of personal leave will be paid in that period the Employee’s Ordinary Hours detailed in cl 10.
[12] Clause 2 of the 2018 Agreement provides a definition of ‘Total Hourly Rate’, it reads:
"Total Hourly Rate" means the total of any applicable all-purpose allowances plus the
applicable ordinary hourly rate of pay.
[13] The 2018 Agreement further refers to the ‘Total Hourly Rate’ in the following clauses:
Changing from Night Shift to Day Shift
13.8 If the Employee changes from night shift to day shift, he/she will be entitled to one (1) paid rest day after the completion of the last night shift worked irrespective of the day of the week that this occurs. The Employee shall be paid the Total Hourly Rate of Pay up to the equivalent rostered hours of work that day.
Shift Loading
13.14 Employees working on night shift shall be paid a loading of 25% calculated on the Employee's Total Hourly Rate of Pay for all hours worked during the nightshift except in the following circumstances where the overtime rate applies:
13.14.1 Where an Employee works less than 5 shifts.
13.14.2 When a Night shift falls on a weekend or a public holiday a loading of 25% on
all rostered hours will be paid.
Severance Entitlement
19.1 Each permanent Employee will accrue a severance accrual payment of two (2) hours at the Total Hourly Rate of Pay as applicable at the date of the accrual for each completed working week of service
Training
39.2 Where an Employee is required to undertake training whilst off-duty, the Employee shall be paid at their total hourly rate up to a maximum of 7.6 hours per day for each day that the Employee is required to attend. Employee representatives will be given the opportunity to provide input to the annual training and development requirements each calendar year together with site management. [emphasis added in italics]
The background to the dispute
[14] It should be said from the outset, the Union maintains that the leave in question is to be paid at Total Hourly Rates based on the ordinary meaning of the 2018 Agreement. However, if the Commission is not satisfied in that regard, the Union contends that consideration should be had to evidence of the surrounding circumstances as an aide to the interpretation of the Agreement, and to evidence of the objective facts known to the parties and in common contemplation of both.
The terms and conditions – 2017
[15] It is for that reason the background to the dispute is traversed, starting from the time when Jelani initially engaged employees to perform work on the sites back in 2017. At that point, Jelani engaged employees on a permanent part-time or full-time basis, under terms detailed in individual letters of offer and project assignment letters (Assignment Conditions). Both documents were said to constitute the employees’ contracts of employment. 2 The Jelani Pty Ltd T/A Matera Electrical Services Enterprise Agreement 2014 (2014 Agreement)3 applied to the employees in their employment.
[16] The Union submitted that pursuant to the 2014 Agreement and the Assignment Conditions:
a) the employees were paid an all-purpose hourly rate of pay inclusive of their base rate of pay and any all-purpose allowances they were entitled to under the Assignment Conditions;
b) the employees were paid the same all-purpose hourly rate of pay inclusive of all-purpose allowances for all-purposes of the applicable 2014 Agreement including hours worked, rostered days off, public holidays, notice of termination, annual leave and personal leave. Penalties and overtime were said to have been calculated on the same all-purpose hourly rate of pay. 4
[17] It was the Union’s view that the entitlement to be paid an all-purpose hourly rate of pay for all-purposes of the 2014 Agreement (including for paid annual and personal leave) were derived from the following clauses in the 2014 Agreement and Assignment Conditions, respectively:
a) cl 17.7 of the 2014 Agreement, which states, ‘[E]mployees on annual leave are paid their applicable hourly rate of pay for the ordinary hours they would have worked if not for the period of annual leave’;
b) cl 19.1.2 of the 2014 Agreement, which states, ‘[F]ull time and part time employees are paid for the ordinary hours of work falling during their period of personal/carer’s leave’;
c) cl 10.4 of the Assignment Conditions, which states, ‘[A]nnual leave will be paid at the employee’s ordinary rate of pay for the ordinary hours that the employee would have worked had it not been for the period of leave, plus a loading of 17.5%’; and
d) clauses 2.6, 2.7, 2.8 and 2.9 of the Assignment Conditions setting out the various allowance.
Bargaining for the Agreement
[18] Bargaining for a new agreement commenced in August 2018. The Union submitted that over a series of bargaining meetings Jelani agreed to the employees’ demand to roll over into the new agreement their current conditions under the 2014 Agreement and the Assignment Conditions. 5
[19] The Union submitted it was notable that annual and personal leave provisions in all 11 revisions of the draft agreement were nearly identical in terms to the 2014 Agreement (under which, said the Union, employees were entitled to be paid their leave at their all-purpose hourly rate), and with respect to the cashing out of annual leave under the draft of the 2018 Agreement, the relevant clause read:
[T]he Employee’s cashed out annual leave will be paid as if the annual leave had been taken (i.e. at the Total Hourly Rate and leave loading applied).
[20] According to the Union, the cashing out of annual leave clause under the 2014 Agreement left no confusion as to the rate of pay at which annual leave was paid. 6
[21] Jelani disputed the Union’s submissions that the 2014 Agreement and 2018 Agreement annual leave and personal leave provisions were nearly identical. Jelani drew the Commission’s attention to two differences:
a) the 2014 Agreement provided for a 17.5% annual leave loading to be incorporated into the minimum hourly rate of pay. 7 The 2018 Agreement provided for a 17.5% annual leave loading to be paid in addition to the ordinary rate of pay.
b) Annual leave in the 2018 Agreement is provided for in the NES and this is not the case in the 2014 Agreement. 8
[22] To support its assertion that the intention of Jelani and the employees was that employees under the Agreement were to be paid leave at their ‘Total Hourly Rate’, and the meaning of that term was adopted from the Electronics and Communications Award 2010 (the Award), the Union referred to the discussions held between Mr Alistair Robinson, Organiser for the CEPU and Jelani. 9 In addition, it relied upon the evidence of Mr Nicholas Pipkin, Electrician for Jelani, and Mr Adam Calvert, Electrician for Jelani.10
[23] Mr Calvert gave evidence that both he and Mr Robinson, clarified with representatives of Jelani, the employees required a rollover of their current conditions; Mr Robinson stated at a meeting following the bargaining meeting on 5 September 2018 (where incidentally the meeting minutes recorded ‘rollover of current conditions as per current EA’):
…we want a rollover of the current conditions in the project letter.
[24] According to Mr Calvert, Mr Mark Hudson of the company SHR who was representing Jelani, and Mr Dean Kerns, Director of Jelani, agreed they would roll over the ‘Assignment Conditions’ into the Agreement. 11 Mr Calvert’s evidence was that the reason the rollover of current conditions was important was because it was really the Assignment Conditions that applied to the Woodside Project and detailed the employees’ allowances and entitlements.12
[25] The draft 2018 Agreement was put to the vote three times. 13 Mr Calvert said that the explanatory documents were sent to employees on 8 December 2018, 24 May 2019, and for the purpose of the final vote on 9 August 2019.14 However, he observed that the explanation sheets for the draft 2018 Agreement, did not explain:
a) the employees would not continue to be paid their hourly rate (inclusive of all-purpose allowances) on annual leave or personal leave;
b) the term all-purpose allowance in the draft agreement had any other meaning other than its ordinary meaning; or
c) the employees would be worse off under the draft agreement (when compared to the Award) because under the Award employees were entitled to be paid an all-purpose rate (inclusive of all-purpose allowances) for all purposes of the Award including when calculating entitlements to paid leave (annual and personal leave) and public holidays. 15
[26] Mr Calvert stated Jelani sent changes and revision tables for the draft 2018 Agreement to employees with the access period emails. The revision tables set out:
a) the meaning of all-purpose allowance in the draft agreement is consistent with its proper meaning as given by the Award; and
b) where the draft agreement states that an employee is entitled to be paid for their normal rostered hours, the entitlement is to be paid at their total hourly rate. 16
[27] Mr Calvert gave evidence that at no time did anyone at Jelani explain to him or other Union delegates that the employees would not be paid all-purpose allowances on holidays and personal leave. 17
[28] On 24 July 2019, Mr Calvert said he was copied to an email from Mr Kerns that attached the ‘revised EA for review and comment which we plan to put to the vote’. 18 It appeared from the email correspondence that the draft 2018 Agreement attached was the eleventh revision of the draft 2018 Agreement (Rev 11), which was purported to be the final draft 2018 Agreement, which Jelani would put up for the vote.19 Mr Calvert said that he reviewed every clause in Rev 11 of the Agreement, and cl 26.10, the provision that dealt with the cashing out of annual leave, was the same as earlier revisions, noting that annual leave was paid on the total hourly rate.
[29] While Jelani agrees that on 24 July 2019 Mr Kerns sent an email to Mr Robinson which attached Rev 11, it submits that Mr Robinson was aware further changes were made to the draft 2018 Agreement and he also requested changes to be made to Rev 11.
[30] Contrary to the perspective of the Union, Jelani contends:
a) on 1 August 2019, Mr Robinson sent to Mr Kerns an email in which he advised that following discussions with the night and day crews, further changes to the draft agreement were required (Mr Calvert and Mr Pipkin were copied to the email);
b) subsequent to the 1 August 2019 email, Jelani made changes to the draft agreement in respect of the ‘tool allowance’ and ‘stand down clause’;
c) Mr Robinson’s requests for changes to Rev 11 appeared inconsistent with his claims that Rev 11 was the final agreement which would be put to the vote;
d) the final draft agreement put to the vote as sent to employee on 9 August 2019 was clearly labelled ‘Version 12’.
[31] Jelani advanced that it provided employees with a full nine day access period in which to consider whether to approve the 2018 Agreement, before it was put to the vote on 9 August 2019 for the final vote.
[32] Clause 2 of the draft 2018 Agreement relevantly defined the term ‘Total Hourly Rate’, as meaning the total of any applicable all-purpose allowances plus the applicable ordinary hourly rate of pay.
[33] After the 2018 Agreement was approved, and later came into effect on 23 September 2019, Mr Calvert stated that the employees became aware that Jelani was not intending to pay the employees at their total hourly rate for annual and personal leave as required (according to Mr Calvert), by the 2018 Agreement. 20 After several pay queries from employees not being paid their annual leave correctly, Jelani’s accountant was said to have issued a printout that read ‘[C]hanges from Previous EA (2014) to New Ea (2018) started on the 23/9/19’.21 Mr Calvert reported that this was the first time that Jelani had ever informed the employees that they would not be receiving the all-purpose allowances under the 2018 Agreement and that entitlements to personal and sick leave would be different.22
[34] Mr Robinson similarly gave evidence that Rev 11 included cl 26.10, which read, ‘[T]he Employee’s cashed out annual leave will be paid as if the annual leave had been taken (i.e. at the Total Hourly Rate and leave loading applied). 23 Mr Robinson said he understood that it was Revision 11 that was the one he was referring to when having conversations with members of the Union about the vote.24 Mr Robinson recounted a conversation he had with employees at one of the sites, where he stated:
I read out clause 26.10 of Revision 11 including that ‘under the NES you get 4 weeks annual leave, 5 weeks if you’re a shift worker. Annual leave will be paid and cashed out at the Total Hourly Rate with leave loading’. 25
[35] Mr Robinson gave evidence that it was not until after the 2018 Agreement was approved that:
a) Jelani said anything about all-purpose allowances not being paid on paid leave as they had been up until that point; and
b) he found out that the version of the 2018 Agreement the employees had voted on had the reference to the total hourly rate in the cashing out annual leave clause removed. 26
[36] When it came to the approval of the 2018 Agreement, Mr Robinson’s evidence was that he had no reason to believe that the 2018 Agreement lodged by Jelani was any different from the agreement negotiated, and therefore he did not lodge an objection. 27
The Union’s submissions
Annual leave
[37] The Union submitted that it remained abundantly clear that on the ordinary meaning of the terms of the 2018 Agreement and from the text of the 2018 Agreement viewed as a whole, the entitlement to paid leave (both annual and personal) is to paid leave at the employees’ total hourly rate.
[38] Referring to cl 26.3, the Union submitted that the entitlement to payment is to the ‘amount’ the employee would have earned had they worked their ordinary hours.
[39] The Union continued that Jelani had relied upon cl 26.1 to allege that the entitlement was to the employees’ base rate of pay as provided for under the National Employment Standards (NES), which, said the Union, was incorrect. This was because cl 5 of the 2018 Agreement provided that the terms of the NES will only prevail to the extent that they are more beneficial than those contained in the Agreement. Further, cl 26.2 operated such that it expanded upon the entitlement that is contained in the NES, that is to be paid four weeks of annual leave per year or five weeks if the employee is a shiftworker.
[40] According to the Union, cl 26.3 of the 2018 Agreement provided a precise and more beneficial entitlement than that under the NES, which meant it prevailed over the less beneficial entitlement in the NES.
Personal leave
[41] The Union submitted that cl 27 set out the employees’ entitlement to paid personal leave, and cl 10 provided that an employees’ ordinary hours were 38 hours per week, which may be averaged over eight weeks. It argued that the entitlement to be paid personal leave at the ‘Total Hourly Rate’ is derived from the ordinary meaning of the relevant words, and the context of the 2018 Agreement (based on the text of the 2018 Agreement viewed as a whole and the legislative context under which the 2018 Agreement was made). It submitted:
a) the entitlement to payment is to be paid for the employees’ ordinary hours;
b) for any period of the employees’ ordinary hours of work (as detailed in cl 10) the employees are entitled to be paid their total hourly rate;
c) the term ‘all-purpose allowance’ in each of the clauses listed at [7] of this decision has an ordinary and given meaning that the allowance is payable for all purposes of the 2018 Agreement or Award (including the calculation of overtime, penalties, annual and paid leave, rostered days off and public holidays);
d) the legislative context of cl 27.5 of the Agreement, being in similar terms to its corresponding clause in the 2014 Agreement (under which in conduction with the Assignment Conditions the Employees were entitled to be paid their all-purpose rate of pay).
Jelani’s submissions
[42] In short, Jelani contends that in accordance with the terms of the 2018 Agreement, it is required to pay employees during periods of annual or personal leave at their ordinary hourly rate of pay and not at the total hourly rate.
[43] Under the 2018 Agreement, annual leave is provided for in the NES. The NES sets out that annual leave is at an employee’s base rate of pay for ordinary hours of work, 28 and similarly payment for paid personal/carer’s leave is at the employee’s base rate for the employee’s ordinary hours of work.29 Turning to cl 22.3 of the 2018 Agreement, Jelani observes that annual leave is to be paid in respect of the ordinary hours the employee would have worked had they been at work, with an additional 17.5% loading. The entitlement to paid personal leave in a period is set out such that the personal leave paid in a period is for the employee’s ordinary hours as detailed in cl 10 of the Agreement.
[44] Turning to cl 10, Jelani submits that the clause provides that ordinary hours for a full-time employee are 38 hours per week and in a rostered arrangement, an average of 38 hours per week. When it comes to the ordinary rate of pay, this rate provides for all conditions of employment with all allowances for varying workplace conditions included, except where expressly provided elsewhere in the Agreement.
[45] Essentially, Jelani argues that if annual and personal leave was to be paid at the total hourly rate, the relevant clauses would specify this, and they do not. Under the 2018 Agreement, an all-purpose allowance is part of the ‘total hourly rate’ defined as, ‘the total of any applicable all-purpose allowances plus the applicable ordinary hourly rate of pay’. The 2018 Agreement specifies that total hourly rates are only used when calculating: (a) shift loading (cl 13.14); (b) severance entitlements (cl 19.1); and (c) employees undertaking training whilst off duty (cl 39.2).
[46] Noting that a large amount of historical material provided by the Unions was not relevant to the disputed rate of payment for annual and personal leave, Jelani expressed consternation that the Union’s submissions in part, appeared to be an attempt to re-open the process of how the 2018 Agreement was made.
[47] However, insofar as the historical evidence related to the bargaining process, Jelani refuted that the evidence supported a finding that it agreed to the employees’ core demand for a ‘roll over of conditions’. It said, to the contrary, that in the minutes of the early bargaining meetings it only referred to the 2014 Agreement and not the conditions as set in the Assignment Conditions.
[48] For the purpose of interpreting the Agreement, Jelani observed that reliance on bargaining positions (and positions early in the negotiation process) was unlikely to be relevant for interpreting joint intent or agreement. Referring to the Full Bench decision in AMWU v Berri Pty Ltd 30(Berri), Jelani noted that a diversity of interests involved in the negotiation and making of enterprise agreements, which warranted the adoption of a cautious approach to the admission and reliance upon evidence of positions advanced during the negotiation process.31
[49] To reinforce its position in this respect, Jelani cited the decision of CFMMEU v Kimberly-Clark Australia Pty Ltd, 32in which the Deputy President had stated:
[215] To look behind that Agreement, and those rates as expressed, to discern whether historical or arithmetical errors existed or whether there was error in the expression of a joint intent (much less a singular intent of one or other of the negotiating parties) is not a proper basis on which to interpret and apply the Agreement. In the period that followed the 2012 Agreement being approved and commencing to operate the parties must be compelled to apply the Agreement as agreed and approved..
Relevant principles
[50] The principles that govern the interpretation of enterprise agreements are well-established. In WorkPac Pty Ltd v Skene, 33 (Workpac) the Full Federal Court elucidated the following principles:
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). 34
[51] In that same decision, the Full Federal Court voiced 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. 35 And so, despite the broad purposive approach to be adopted when interpreting industrial agreements, that cannon of construction regarding the ‘ordinary meaning’ remains applicable as a starting point.36
[52] The Full Bench of the Commission in Berri, and the earlier decision in Golden Cockerel, 37embraced 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.
[53] Where there is a dispute over the interpretation of an enterprise agreement, the resolution will turn on the language of the agreement, having regard to its context and purpose. 38 Context might appear from the text of the agreement as a whole, the disputed provision’s place and arrangement in the agreement, and the legislative framework under which the agreement was made.39 However, the task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome.40
[54] In Berri, the Full Bench summarised the principles relevant to the task of construing a single enterprise agreement as follows:
1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:
(i) the text of the agreement viewed as a whole;
(ii) the disputed provision’s place and arrangement in the agreement;
(iii) the legislative context under which the agreement was made and in which it operates.
2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.
3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.
4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.
5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.
6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.
7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.
8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.
11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.
12. Evidence of objective background facts will include:
(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(ii) notorious facts of which knowledge is to be presumed; and
(iii) evidence of matters in common contemplation and constituting a common assumption.
13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.
14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.
15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding. 41
[55] The Full Bench of the Commission in CFMEU v Endeavour Coal Pty Ltd 42 considered Golden Cockerel and Berri in the following terms:
[42] In Golden Cockerel, the Full Bench set out authorities which make it clear that while the task of construction begins with consideration of the ordinary meaning of the words of the agreement, regard must be paid to the context and purpose of the provision or expression being construed. Those authorities make clear that context and purpose are relevant to construction and must be considered even where the words of the provision being construed appear, on their face, to have a clear and unambiguous meaning.
[43] In this regard, the Full Bench in Golden Cockerel had set out at [29] the explanation of this point by the NSW Court of Appeal in Mainteck Services Pty Ltd v Stein Heurtey SA.Relevantly, that explanation emphasises the following matters:
• Until a word or phrase is understood in the light of the surrounding circumstances, it is rarely possible to know what it means and there is always some context to any statement;
• Language considered in its context will often have a clear meaning and context will often not displace that meaning – “but not always”;
• To state that a legal text is clear reflects the outcome of an interpretation process and means that there is nothing in the context that detracts from the ordinary literal meaning and cannot mean that context can be put to one side;
• The phrase used by Mason J in Codelfa “if the language is ambiguous or susceptible of more than one meaning” does not mean that the susceptibility of the language to more than one meaning must be assessed without reference to the surrounding circumstances and in order to determine whether more than one meaning is available it may be necessary to turn to context; and
• Context has also been described as surrounding circumstances and the meaning of terms normally requires consideration not only of the text, but of the surrounding circumstances known to the parties and the purpose and object of the transaction.
[56] Further, the Full Bench of the Commission in United Firefighters Union of Australia v Emergency Services Telecommunications Authority T/A ESTA, stated:
[35] As stipulated in Berri, the starting point for interpreting an enterprise agreement is to have regard to the ordinary meaning of the words used. Further, the text must be interpreted in the context of the agreement as a whole. Principles 7 and 10 elicited in Berri emphasise that ambiguity in a provision within an enterprise agreement must be identified before one is to have regard to evidence of the surrounding circumstances. However, principle 8 makes it clear that, in determining whether ambiguity exists, one may have regard to evidence of the surrounding circumstances. That is, such evidence can be used to identify and resolve any ambiguity.
Consideration
Annual leave
[57] Understandably, the employees in this case are disgruntled that their paid annual leave entitlement and paid personal leave entitlement appear to be worth less than they did before the 2018 Agreement came into operation. It is therefore unsurprising that a dispute has arisen, and the Union has sought to provide context as to how this situation unfolded.
[58] In my opinion however, Jelani’s interpretation of cl 26.3 of the 2018 Agreement is correct and therefore the Union’s interpretation must be rejected. Clause 26.3 must be read on its terms, in the context of the entire clause and the 2018 Agreement as a whole. There is no textual basis in cl 26.3 or any other clause or clauses in the 2018 Agreement, that supports the construction proffered by the Union.
[59] Clause 26.3 speaks of the employee be paid ‘the amount in respect of the ordinary hours the Employee would have worked had the Employee been at work during the relevant period’. The reference point in this sentence is to the amount paid is in respect of the ‘ordinary hours’. While it is true the that 2018 Agreement does not provide a definition of the term ‘ordinary hours’, 43 cl 10 illuminates what the term ‘ordinary hours’ refers to, aptly under the heading of ‘Ordinary Hours’.
[60] While the heading of cl 10 is not determinative as far as providing a definition of the term ‘ordinary hours’, it signals the subject matter of the clause. The clause reads that where there is a rostered arrangement the ‘ordinary hours of work shall be an average of 38 hours per week’. Clauses 10.2 and 10.3 simply elaborate that the ordinary hours may be averaged and when such hours may be worked with regard to both day and time.
[61] It logically follows that the ordinary hours an employee would have worked, if at work, would have been 38 hours per week (or an average) unless of course there was an agreement in place between Jelani and the employees to work 40 hours each week. In my view, this is clear from the terms of cl 26.3 and cl 10, read in the context of the Agreement as a whole. However, it is important to revisit the question framed by the parties. In short, that question was only whether employees are to be paid annual leave at their ‘Total Hourly Rate’, inclusive of the all-purpose allowances under cl 26.3 of the 2018 Agreement.
[62] The last sentence of the cl 26.3 is telling, because it expressly provides, ‘[I]n addition, the Employee shall receive a loading of 17.5% on the ordinary hourly rate’. It is implicit in this sentence that if one is to receive a loading ‘on the ordinary hourly rate’, then one must be receiving the ‘ordinary hourly rate’. This presumption is neither far-fetched nor fanciful. It is an interpretation which gives primacy to the plain meaning of the text in circumstances where there is, in my view, no ambiguity.
[63] While cl 10 gives meaning to the term ‘ordinary hours’, it is cl 22 of the 2018 Agreement that informs as to what constitutes the ‘Ordinary Rates of Pay’ or the ‘ordinary hourly rates’; terms which under the 2018 Agreement are seemingly synonymous. Specifically, cl 22.1 and cl 22.2 speak of ‘Ordinary Rates of Pay’ and cl 22.3 provides ‘[T]he following ordinary hourly rates shall be paid to Employee working ordinary hours…’. The use of the word ‘Ordinary’ is evidently referable to the term ‘ordinary hours’. So much is clear simply from the use of the word ‘ordinary’, but the construction becomes more obvious from cl 22.3. Further, cl 22.7 of the 2018 Agreement confirms that the ‘Ordinary Hourly Rate’ is prescribed in cl 22.3, it reads:
In addition to the appropriate Ordinary Hourly Rate prescribed in subclause 22.3 Employees will be paid the following allowances where they meet the criteria.
[64] The conclusion reached regarding the construction of cl 26.3, is reinforced by the absence of the defined term ‘Total Hourly Rate’ within the clause. This contrasts with several clauses in the 2018 Agreement that specify the payment of total hourly rates when calculating: (a) shift loading (cl 13.14); (b) severance entitlements (cl 19.1); and (c) employees undertaking training whilst off duty (cl 39.2). Where the drafters of the 2018 Agreement saw fit to apply a total hourly rate, they specified the same in the clause. The meaning of the term ‘Total Hourly Rate’ clearly having been derived from cl 2 of the 2018 Agreement, which assigns to it the meaning the ‘total of any applicable all-purpose allowances plus the applicable ordinary hourly rate of pay’.
[65] I have concluded that the 2018 Agreement has a plain meaning, and therefore evidence of the surrounding circumstances will not be drawn upon to contradict the plain language of the 2018 Agreement.
[66] Consequent from this analysis and construction of the relevant clauses of the 2018 Agreement, and on application to the facts of the present dispute, I have concluded that the employees are not entitled to be paid their annual leave at their ‘Total Hourly Rate’, inclusive of the All-Purpose Allowances. It follows that the applicable rate is the ‘ordinary hourly rates’ of pay as set out in cl 22.3 of the 2018 Agreement.
Personal leave
[67] In my view cl 27.5 of the 2018 Agreement is unambiguous in its terms, its plain meaning readily apparent. It reads that employees entitled to take a period of personal leave ‘will be paid in that period the Employee’s Ordinary Hours detailed in clause 10’ (italics my emphasis). I do not consider that the clause requires a detailed examination in light of the preceding analysis concerning ‘annual leave’. It is sufficient to turn the pages of the 2018 Agreement to locate cl 10.
[68] Clause 10 of the 2018 Agreement, as has been identified, sets out that the ‘ordinary hours’ of work shall be an average of 38 hours per week. While the term ‘ordinary hours’ in this context is not capitalised, which may usually indicate the term has a defined meaning, it is evident from the context of the Agreement as a whole, that cl 10 clarifies what constitutes ‘ordinary hours’.
[69] Clause 10 makes no reference to cl 22, yet it is evident from the 2018 Agreement as a whole, that cl 22 sets out the rates of pay for ‘ordinary hours’ The clause informs the reader that ‘ordinary hourly rates’ will be paid to employees working ‘ordinary hours’ engaged under ‘this Schedule’. Clause 22.7 reinforces the interpretation that cl 22.3 sets out the ‘ordinary hourly rates’ of pay, given that it acknowledges that the ‘Ordinary Hourly Rate’ is prescribed in cl 22.3.
[70] In light of this analysis, it is not the case that cl 27.5 of the 2018 Agreement requires employees to be paid personal leave at their Total Hourly Rate, inclusive of the All-Purpose Allowance. The applicable rate of pay is the ‘Ordinary Hourly Rate’.
Conclusion
[71] It follows that I have determined the employees:
a) are not entitled under cl 26.3 of the 2018 Agreement to be paid annual leave at their Total Hourly Rate, inclusive of the All-Purpose Allowances; and
b) are not entitled under cl 27.5 of the 2018 Agreement to be paid personal leave at their Total Hourly Rate, inclusive of the All-Purpose Allowances.
DEPUTY PRESIDENT
Appearances:
E Skelding, of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, for the Applicants.
D Dyer, of the Chamber of Commerce and Industry WA, for the Respondent.
Hearing details:
2020;
Perth (by video):
June 9.
Final written submissions:
15 June 2020.
Printed by authority of the Commonwealth Government Printer
<PR720049>
1 AE505230.
2 Pipkin Statement [6]; Calvert Statement [13] and [14].
3 AE410041.
4 Pipkin Statement [8] and [9]; Calvert Statement [15], [18] and [19].
5 Robinson Statement [10] and [11]; Pipkin Statement [14]-[20]; Calvert Statement [24]-[30]; A6 - Applicants’ Exhibits tabs 4, 5, and 7.
6 Robinson Statement [24] – [25]; Pipkin Statement [25]; Calvert Statement [34] - [39]; A6 - Applicants’ Exhibits tab 8.
7 Jelani Pty Ltd T/A Matera Electrical Service Enterprise Agreement 2014, cl 13.3; Matera Electrical Services Electrical Agreement 2018,cl 36.3.
8 Matera Electrical Services Electrical Agreement 2018, cl 26.1.
9 Robinson Statement [12]-[15].
10 Calvert Statement [26] – [31].
11 Ibid [29].
12 Ibid [29].
13 Ibid [39].
14 Ibid [39].
15 Ibid [40].
16 Ibid [40].
17 Ibid [46].
18 Ibid [48].
19 Ibid [48].
20 Ibid [53].
21 Ibid [55].
22 Ibid [56].
23 Robinson Statement [27].
24 Ibid [28].
25 Ibid [29], point (b).
26 Ibid [35].
27 Ibid [33].
28 Fair Work Act 2009 (Cth) s 90(1).
29 Fair Work Act 2009 (Cth) s 99.
30 [2017] FWCFB 3005.
31 Berri [88].
32 [2019] FWC 5886, [215]-[216].
33 [2018] FCAFC 131.
34 Ibid [197].
35 Ibid [202].
36 Ibid [202].
37 [2014] FWCFB 7447.
38 Ibid.
39 Berri point 1 at [114]; Golden Cockerel point 8 at [41].
40 Berri point 2 at[114].
41 Berri, [114]
42 Construction, Forestry, Mining and Energy Union v Endeavour Coal Pty Ltd T/A Appin Mine[2017] FWCFB 4487.
43 Matera Electrical Services Electrical Agreement 2018, cl 2.
0