Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Otis Elevator Company Pty Ltd
[2024] FWC 1541
•14 JUNE 2024
| [2024] FWC 1541 |
| 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
Otis Elevator Company Pty Ltd
(C2023/7248)
| DEPUTY PRESIDENT BOYCE | SYDNEY, 14 JUNE 2024 |
Alleged dispute about any matters arising under an enterprise agreement - dispute raised by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia as to the site allowance payable to relevant employees under the OTIS Elevator Company Pty Ltd (New South Wales) Construction & Service Employees Enterprise Agreement 2023 on the construction site located at “5 Uhrig Road, Lidcombe, New South Wales” - dispute dismissed.
An application[1] has been made by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (Applicant) for the Commission to resolve a dispute under the OTIS Elevator Company Pty Ltd (New South Wales) – Construction & Service Employees Enterprise Agreement 2023 (2023 Agreement).[2]
The Respondent to the dispute is the OTIS Elevator Company Pty Ltd (Respondent). The Respondent is in the business of installing and maintaining elevators, including construction site installation of elevators.
There is no dispute that the 2023 Agreement:
a) applies to the Respondent;
b) applies to relevant employees of the Respondent; and
c) covers the Applicant.
There is no contest between the parties as to the jurisdiction of the Commission to resolve this dispute, being a matter arising under the 2023 Agreement, by way of arbitration in accordance with clause 7 of the 2023 Agreement, and s.739 of the Fair Work Act 2009 (Act). I equally make this finding.[3]
The dispute concerns clause 2.4 of Appendix 2 of the 2023 Agreement (Disputed Clause), and what monetary amount (or dollar quantum) of the applicable hourly site allowance is to be paid to relevant employees that work at, or worked on, the construction site located at 5 Uhrig Road, Lidcombe, New South Wales (Lidcombe Project), specifically Lot 99 of that project. The Applicant says that the amount is $4.15 per hour, whilst the Respondent says that the amount is $2.80 per hour. The different amounts arise from a dispute as to the meaning of the terms “Project” and “Estimated Project Value” (EPV), and the specific facts of this case as they apply to the terms of the Disputed Clause.[4]
After conciliation was unsuccessful, directions were issued to program the matter for hearing (both parties complied with these directions). At the hearing, Mr Alister Kentish, CEPU Legal Officer, appeared for the Applicant, and Mr Michael Mead, Partner, Kingston Reid lawyers, appeared with permission for the Respondent.[5]
Interpretation of enterprise agreements
My determination in this matter applies the principles set out in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union v Berri Pty Ltd.[6] Such principles were neatly and helpfully summarised by Deputy President Gostencnik in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union v Paper Australia Pty Ltd[7]:
“In short compass, much like the approach to construing a statute, the construction of a provision in an enterprise agreement begins with a consideration of the ordinary meaning of the words used, having regard to the context and evident purpose of the provision or expression being construed. Context may be found in the provisions of the agreement taken as a whole, or in their arrangement and place in the agreement being considered. The statutory framework under which the agreement is made may also provide context, as might an antecedent instrument or instruments from which a particular provision or provisions might have been derived. The industrial context in making an enterprise agreement and in which it operates is also relevant.”[8]
Terms of the Disputed Clause
The Disputed Clause (clause 2.4 of Appendix 2 of the 2023 Agreement), reads:
“2.4 MINIMUM SITE PRODUCTIVITY ALLOWANCE – Construction & Major Modernisation Sites
The Minimum Site Productivity Allowance for employees working on construction and major modernisation sites will be paid during the term of this Agreement.
This site allowance will only be paid to employees while they are working on the jobsite. The exception to this is when an employee is required to attend a management authorised offsite safety committee meeting, or in the event they are required and authorised to travel offsite in relation to an anciliary (sic) jobsite task(s) related to that employee’s jobsite (e.g. Visiting an electrical wholesaler for purchasing consumables during working hours), in which in both these cases it will be paid.
The following hourly site allowance will apply to all Projects that have an “Estimated Project Value” (total building) available in either Cordell or BCI, whichever is greater, as at the time of tendering.
Construction Contract Value in
Millions of DollarsHourly Site Allowance 0-10 2.00 >10-15 2.05 >15-35 2.10 >35-50 2.15 >50-75 2.20 >75-100 2.25 >100-125 2.30 >125-150 2.40 >150-175 2.55 >175-200 2.80 >200-225 3.15 >225-250 3.50 >250-300 3.80 >300-350 4.15 >350-400 4.45 >400-500 4.90 >500-600 5.50 >600-700 6.00 >700 7.00 ”[9]
Clause 2.4 of Appendix 2 of the OTIS Elevator Company Pty Ltd (New South Wales) – Construction & Service Employees Enterprise Agreement 2019 (2019 Agreement),[10] is also relevant, it reads:
“2.4 MINIMUM SITE PRODUCTIVITY ALLOWANCE – Construction & Major Modernisation Sites
The Minimum Site Productivity Allowance for employees working on construction and major modernisation sites will be paid during the term of this Agreement.
This site allowance will only be paid to employees while they are working on the jobsite. The exception to this is when an employee is required to attend a management authorised offsite safety committee meeting, or in the event they are required and authorised to travel offsite in relation to an anciliary (sic) jobsite task(s) related to that employee’s jobsite (e.g. visiting an electrical wholesaler for purchasing consumables during working hours), in which in both these cases it will be paid.
The following hourly site allowance will apply to eligible projects from 1st May 2021, for all Projects that have an “Estimated Project Value” (total building) available within Cordell.
Construction Contract Value in
Millions of DollarsHourly Site Allowance 0-10 2.00 >10-15 2.05 >15-35 2.10 >35-50 2.15 >50-75 2.20 >75-100 2.25 >100-125 2.30 >125-150 2.40 >150-175 2.55 >175-200 2.80 >200-225 3.15 >225-250 3.50 >250-300 3.80 >300-350 4.15 >350-400 4.45 >400-500 4.90 >500-600 5.50 >600-700 6.00 >700 7.00 ”
Factual Findings
I make the following factual findings in this dispute:
a) The Lidcombe Project has two stages:
i)Stage 1 concerns Lot 11 of the Lidcombe Project. Stage 1 was the subject of Development Application DA/1269/2016, that was approved by City of Parramatta on 21 December 2017. The Respondent did not perform any work on Stage 1 (another lift installer/provider did this work). Stage 1 was completed in around March 2020 (i.e. relevant construction work ceased on Stage 1 at this time).[11]
ii)Stage 2 concerns Lot 99 of the Lidcombe Project, and was the subject of Development Application DA/739/2019, that was approved by City of Parramatta on 17 December 2020. The Respondent tendered for relevant work on Stage 2 in or around 14 May 2021, and was advised in or around August 2021 that its tender was successful. Construction commenced on Stage 2 in February 2023. The Respondent commenced work on Stage 2 in or around August 2023.[12]
b) Employees are being, or have already been, paid $2.80 per hour site allowance pursuant to the Disputed Clause for their work on Stage 2.
c) The 2023 Agreement was made in August 2023, approved on 19 September 2023, and commenced operation on 26 September 2023, i.e. the 2023 Agreement commenced operation after the Respondent and relevant employees had commenced work on Stage 2 (in August 2023).
d) The 2023 Agreement replaced the 2019 Agreement.
Consideration
It can be seen that the only difference between clause 2.4 (Appendix 2) of the 2019 Agreement, and clause 2.4 (Appendix 2) of the 2023 Agreement is the last paragraph of each of the clauses preceding the monetary table. That difference is that the 2019 Agreement uses the project valuation in a Cordell EPV report (not necessarily linked in time, to the time of tendering), whilst the 2023 Agreement uses the higher project valuation from a Cordell report, or a BCI report, as at the time that the Respondent tenders to win work on a relevant project. That said, there is no real difference between the parties as to the project values of Stage 1 and Stage 2 of the Lidcombe Project, or their combined values. The Applicant says that the combined values are to be used in setting the EPV, whilst the Respondent says that only the Stage 2 EPV is to be used.
The Applicant relies upon the EPV of $340.98M in the BCI report (which combines or aggregates the EPVs of Stages 1 and 2),[13] producing a site allowance of $4.15. The Respondent relies upon the Stage 2 EPV of $177.5M (the same figure is in both the Cordell report, and the BCI report),[14] producing a site allowance of $2.80.
It can be seen that the Applicant’s case comes down to the following contention:
‘The Lidcombe Project is taken to be one project because the BCI report contains an overall (combined, or aggregated) EPV for Stages 1 and 2. This overall EPV is to be used when determining the value of the site allowance to be paid to relevant employees under clause 2.4 of Appendix 2 of the 2023 Agreement.’[15]
Mr Mead, on behalf of the Respondent, correctly pointed this out in his oral submissions:
“Instead we are simply saying that what appears to be from our perspective a rationale that underpins the CEPU case is that two projects can be rolled into one report, and that can then be used as the basis for determining the estimated project value and construction contract value to elevate the site allowance. And we say that that was not the intended consequence, and relies on effectively that first proposition that we outlined, that the BCI report in some way gets to define what estimated project value and construction contract value mean, and we say that it does not.”[16]
…
“In essence the union’s submissions say that the site allowance should be calculated by reference to a contract for works which Otis never had, for which no Otis employee ever undertook work, which occurred at a physical location where no Otis employee ever set foot, and which was completed the best part of three and a half years before any Otis employee ever set foot on a site to perform work. We say that these realities do nothing to demonstrate a realisation, context or purpose which is inherent in clause 2.4.”[17]
There are a number of reasons as to why, in the facts and circumstances of this case, the Applicant’s contention cannot be supported.
In my view, Stage 2, whilst part of the Lidcombe Project, is a wholly separate construction project (and construction site).[18] So much is apparent from the fact that work on Stage 1 (as a construction project) ceased in March 2020, whilst work on Stage 2 commenced in February 2023. This time differential alone identifies that Stages 1 and 2 of the Lidcombe Project are separate construction projects.
There are no words contained in the text of the Disputed Clause that provide for an EPV to be assessed based upon the whole of a development, in circumstances where that development might contain a number of unconnected construction stages on a site. I use the term “unconnected” in the sense of construction work ‘actually’ being performed. Of course, some developments will have a number of stages that all begin construction at the same time, or leap frog each other such that each of the stages of the development run concurrently, but begin at different times (e.g. Stage B may commence half-way through Stage A, and Stage C, may commence half-way through Stage B, etc). Other projects may have three stages, but Stage B will not commence until Stage A has been completed (and, for example, residential units are all sold so as to obtain cash to fund Stage B). It will always come down to the facts and circumstances of the particular case (i.e. site or development) as to what the relevant ‘project’ for EPV determination is.
In this case, Stage 1 and Stage 2 of the Lidcombe Project:
a) are physically located on different pieces of land;[19]
b) have different DA applications, with different DA approval dates;
c) were subject to different tendering process and timelines;
d) commenced (construction) work at different times;
e) ceased (construction) work at different times;
f) did not run concurrently at any time;
g) relevant employees did not work on Stage 1 (or the Stage 1 site);[20] and
h) when relevant employees did work on Stage 2, Stage 1 had already been completed.
Further, the Respondent did not tender or perform any work on Stage 1, and Stage 1 was completely finished before the Respondent tendered for, let alone commenced, construction work on Stage 2.
I concur with the Respondent’s submissions that the site allowance under the Disputed Clause is only paid when an employee physically works on a relevant site (including when an employee travels in connection with work on the site).[21] In this case, the only site relevant employees worked on, or at, was the Stage 2 site. Stages 1 and 2 were not, and have never been, the same (or a combined) construction site. The BCI report says what it says, or formulates its report however it does. But the BCI report does not determine what is the site or the project under the Dispute Clause. More is required to make such a determination, at least much more than the BCI report itself.
Conclusion
In resolving this dispute, I reject the Applicant’s contention that the terms “Project” and “Estimated Project Value” are to be construed solely by how a Cordell or BCI report may characterise and value an overall development. Under the Disputed Clause, it is the substance of the relevant project or site that relevant employees are working on that determines the EPV of the project, and thus the site allowance to be paid.[22] How the Disputed Clause is to be applied on an on-going basis will come down to the relevant facts and circumstances of the relevant project and construction site. There are no hard and fast rules. In some cases the EPV of the site or project will include the whole development, in others it will not. In the ultimate sense, in the specific facts and circumstances of this case, on the evidence before me, I find that the EPV under the Disputed Clause is to be determined based upon the EPV of Stage 2 of the Lidcombe Project, in the Cordell or the BCI reports, whichever is the greater.
Having resolved this dispute, it is appropriate that it be dismissed. An Order dismissing the proceedings will be issued contemporaneously with this decision.
DEPUTY PRESIDENT
Mr Alister Kentish, Legal Officer, appeared for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.
Mr Michael Mead, Partner, Kingston Reid lawyers, appeared with permission for the Respondent (Otis Elevator Company Pty Ltd).
[1] Form F10, 24 November 2023 (CB pp.52-58).
[2] OTIS Elevator Company Pty Ltd (New South Wales) – Construction & Service Employees Enterprise Agreement 2023[2023] FWCA 3026, 19 September 2023, AE521577, PR766366 (CB pp.2-51).
[3] Form F10, 24 November 2023, at Item 2.5 (CB pp.56-57).
[4] Applicant’s Submissions, 22 December 2023, at [6].
[5] Transcript, PN9-PN10, and PN14.
[6] [2017] FWCFB 3005, at [114]. See also James Cook University v Ridd [2020] FCAFC 123; (2020) 278 FCR
566, at [65].
[7] [2020] FWC 2130.
[8] Ibid, at [8]. See also authorities cited in Respondent’s Submissions, 19 January 2024, at [3.5].
[9] There is no dispute that work done by employees on the Lidcombe Project falls within the definition of “construction” in Appendix 2 of the 2023 Agreement.
[10] OTIS Elevator Company Pty Ltd (New South Wales) – Construction & Service Employees Enterprise Agreement 2019[2020] FWCA 794, 14 February 2020, AE505765, PR716736.
[11] CB pp.128-129, Stage 1 is referred to as “Stage North” in first diagram on p.128. See also CB p.224 showing further plan differentiating Stage 1 and Stage 2. Transcript, PN142-PN143, PN149, and PN160-PN161.
[12] CB pp.128-129, Stage 2 is referred to as “Stage South” in first diagram on p.128. See also CB p.224 showing further plan differentiating Stage 1 and Stage 2. Transcript, PN142-PN143, PN149, PN160-PN161.
[13] Mr Damien Hayes witness statement, 19 January 2024, at [24]-[30] (CB p.114), especially Annexures DH8 and DH9 (CB p.325 and p.327 (DH8), and CB p.341 and CB p.343 (DH9)). Note, Transcript, PN129.
[14] Mr Damien Hayes witness statement, 19 January 2024, at [24]-[30] (CB p.114), Annexures DH7, DH8 and DH9 (CB p.318 Cordell report, CB p.327, BCI report (DH8), and CB p.343, BCI Report (DH9)). Note, Transcript, PN129.
[15] Applicant’s Submissions, 22 December 2023, at [14]-[16].
[16] Transcript, PN53. See also at PN82 and PN106. Note Mr Kentish’s oral submissions at PN21, PN24 PN32, PN144, and Applicant’s Submission In Reply, 2 February 2024, at [9]-[15].
[17] Transcript, PN111.
[18] Transcript, PN56-PN70 (the Respondent’s submissions as to the facts herein were not disputed by the Applicant). Respondent’s Submissions, 19 January 2024, at [4.1]-[4.11].
[19] Mr Damien Hayes witness statement, 19 January 2024, Annexures DH3, CB p.172.
[20] Transcript, PN110.
[21] Transcript, PN103-PN109.
[22] I concur with the Respondent’s Submissions, 19 January 2024, at [5.1]-[5.12].
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