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

[2014] FWC 4949

[2014] FWC 4949

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
Rheem Australia Pty Ltd
(C2013/7521)

Manufacturing and associated industries
SENIOR DEPUTY PRESIDENT RICHARDS	BRISBANE, 29 JULY 2014

Summary: principles of construction - plain text - whether objective background facts that modify plain meaning of text - evidence - obligation to pay award derived allowances to the extent they apply.

[1] This matter concerns the claim by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (“the CEPU”) that under the terms of the Rheem, Brisbane Service Agreement, 2013 (“the Agreement”) the employer, Rheem Australia Pty Ltd, has an obligation to pay its service technicians any applicable allowances under either the Manufacturing and Associated Industries and Occupations Award 2010 or the Plumbing and Fire Sprinklers Award 2010 (“the awards”) in addition to their ordinary rate of pay and any other allowances expressly provided for in the Agreement.

[2] The employer, for its purposes, challenges this claim and contends instead that it provides a rolled up rate of pay (which incorporates payment for any allowances not stipulated in the Agreement but otherwise applicable under the awards).

[3] The claim has been subject to a very considerable degree of unproductive agitation by both sides over some time and efforts to achieve a conciliation outcome have been fruitless. A party has also made another application relating or incidental to the same issue.

[4] The matter, as I have summarised it above, has therefore been referred to me for purposes of arbitration by way of clause 11 of the Agreement. There have been various other issues raised along the way about the Commission’s jurisdiction in relation to the disputes procedure on the way to this decision, and these matters were resolved, ultimately, in the course of the proceedings.

[5] It is enough to say that I have been satisfied that pursuant to subclause 11.4 of the Agreement that discussions at the workplace level between the CEPU (as a representative of the service technicians) and the employer have not resolved a dispute and the dispute has been referred to me by a representative of a party (an employee) to the dispute.

The issue in contest

[6] Clause 7 of the Agreement provides as follows:

7. Incorporated Awards

In accordance with the Fair Work Australia Act 2009 ("the Act"), this Agreement incorporates, by reference, the terms of the "Manufacturing and Associated Industries & Occupations Award, 2010" and the "Plumbers & Fire Sprinklers Award, 2010" as in its operation at the date which this Agreement came into effect. In the event that the Agreement is silent on a matter and the 2 Incorporated Awards have different provisions, the parties will discuss which Award's provisions will apply to the matter in dispute.

[7] Clause 15 of the Agreement is headed, “Wage Rates”, and sets out the classifications of relevant employees, the applicable rate of pay and the schedule of increases. Clause 15 also includes a reference to an annual performance review carried out on an individual basis and which may result in increases above those otherwise scheduled.

[8] The CEPU is covered by the Agreement and was a bargaining representative.

[9] The Agreement was approved on 20 September 2013 by Deputy President Lawrence.

[10] The CEPU contends that clause 7 of the Agreement is a conventional means by which an agreement incorporates material pursuant to s.257 of the Act. Section 257 of the Act provides as follows:

257 Enterprise agreements may incorporate material in force from time to time etc.

Despite section 46AA of the Acts Interpretation Act 1901, an enterprise agreement may incorporate material contained in an instrument or other writing:

(a) as in force at a particular time; or

(b) as in force from time to time.

[11] Contrary to the employer’s position, the CEPU contends that there is no ambiguity inherent in clause 7 of the Agreement as it currently stands. The clause means no more than that the Agreement incorporates the terms of two awards (to the extent of any inconsistency with the Agreement) and that where there may be competing entitlements (between the two named awards) there will be a discussion between the parties.

[12] Further, the CEPU contends that the wages clause does nothing to suggest that the wages there set out are to be taken as rolled up rates which exclude the payment of allowances. Thus, there is no requirement (as the employer presumes) to read clause 7 in conjunction with clause 15 of the Agreement.

[13] In essence, the employer contends that up until 2013 its Queensland operations had not been subject to an enterprise agreement made under a legislative framework.

[14] Instead, the employer had an industrial practice of paying employees an annualised salary, or rolled up rate, which compensated them for their ordinary hours of work and any applicable allowances.

[15] Overtime and annual leave loading entitlements are paid separately to the rolled up rate of pay.

[16] It was contended by the employer that the employer’s interstate operations (in Victoria and New South Wales) are covered by enterprise agreements which reflect an identical practice. That is, employees are paid a higher rate of pay to offset any applicable allowances (other than those allowances discreetly identified in the relevant enterprise agreements).

[17] The employer’s history of the negotiations stressed that the CEPU log of claims sought as its goal that:

Members are seeking that they immediately move to the same rates of pay and conditions as their colleagues [and] and that we strike a short agreement that brings us in line with the Victorian agreement expires on 30 September 2013.

[18] The Rheem Australia Pty Ltd, Rheem Service, Victoria and CEPU Plumbing Division Collective Agreement 2011-2013 (“the Victorian Agreement”) replaces the relevant award and (only) provides for five expressly stipulated allowances.

[19] The CEPU log of claims made to the employer sought the payment of four particular allowances (charging personal data machine and company phone; storage of Company vehicle; hand tools; and extra tools supplied).

[20] The employer contends that over the course of the enterprise bargaining discussions, which are largely recorded below, the employer held the following view (in summary) in relation to these four allowances:

It rejected the charging allowance as employers were able to charge their phones and tablets in company vehicles during the day; rejected the claim for an allowance for storage of a company vehicle as employees could return the company vehicle to the employer’s premises if he did not wish to store it at home; rejected the claim for an allowance for hand tools (other than where stolen); and rejected the claim for extra tools allowance as the employer intended to provide additional tools at its own discretion.

[21] The Agreement is not silent on allowances altogether. The Agreement makes specific reference to an entitlement to the following two allowances:

• The travelling time allowance (clause 13.4 of the Agreement); and



• The personal tools allowance (clause 19.1 of the Agreement, and which reflects clause 21.4 of the Plumbing and Fire Sprinklers Award 2010).

[22] The employer contends that at no stage over the course of negotiations did any representative of the CEPU make a claim for any other allowances. The employer cited a CEPU delegate’s report prepared at the time (15 April 2013) which included no reference to award-derived allowances either.

[23] The employer further contends that at the first enterprise bargaining meeting it set out its financial circumstances and indicated to the CEPU that that it was considering a wage increase of between 0% and 1.25% per annum for the life of the proposed agreement.

[24] In the initial draft of the Agreement, issued on 23 April 2013, clause 7 provided as follows:

In accordance with the Fair Work Australia (sic) Act 2009 (the Act), this agreement incorporates, by reference, the terms of the "Manufacturing and Associated Industries & Occupations Award, 2010" and the "Plumbers (sic) & Fire Sprinklers Award, 2010" as an operation at the date which this agreement came into effect.

[25] There appears to have been some subsequent discussion in early May 2013 as to the applicability of both awards as referred to above. The CEPU contended that the only relevant award was the Plumbing and Fire Sprinklers Award 2010. The employer contended that its service activities extended, or may extend, beyond the terms of the one award.

[26] The only discussion about the applicability of the awards was in relation to how any competing entitlements, as they may be, might be resolved. That evidence is supported by witnesses for both the CEPU and the employer. I will return to the relevance of discussing “entitlements” further below.

[27] Only two issues were discussed the second enterprise bargaining meeting and they concerned wages and tools for employees. The former issue was adjourned for future discussion and a process was entered into for purposes of determining the list of tools that the employer would provide to its employees.

[28] The delegate’s report of the second enterprise bargaining meeting makes no reference to award-derived allowances. The evidence of the CEPU organiser, Mr Weich, supported a conclusion it had not raised any award-derived allowances issues with the employer, nor had any employees pressed such a claim upon the employer through the CEPU.

[29] That said, the employer contends that the absence of reference to the allowances by the CEPU in negotiations to this point indicated it had no expectations to this end, and did not press a claim that any allowances should be paid as may be derived from the awards.

[30] The CEPU contends that in so far as the Agreement incorporated the awards through clause 7, which makes for incorporation by reference, it had anticipated such terms as may apply would be discharged by the employer. This was the very reason that the parties discussed the applicability of one or either awards and the process by which disputes over which entitlement from which award was to be resolved was under discussion. It poses the rhetorical questions, in effect, being what purpose would clause 7 otherwise serve and why were there discussions about managing disputes about entitlements arising from the awards unless the entitlements were to apply? That is, the CEPU contends both parties understood, or must reasonably have understood, that the awards as incorporated into the Agreement gave rise to entitlements.

[31] This (according to the CEPU) was why the CEPU and the employer had various discussions about how to resolve differences in entitlement standards between the two awards as incorporated.

[32] The CEPU gave evidence of its internal discussions in this regard - which was to the effect that there was no need to press allowance claims as the award entitlements had been incorporated into the Agreement by clause 7. It never expressly stated so much to the employer (or its members), I add. But equally, the employer never conveyed to the CEPU (or its employees) its alternative approach - being that the Agreement provided for rolled up rates (in lieu of award-derived allowances).

[33] I add that the CEPU makes this claim on the basis that clause 15 of the Agreement, on its own terms, has no conditioning effect on clause 7 of the Agreement.

[34] At the third enterprise bargaining meeting there was further discussion of the process by which any different entitlements between the awards would be resolved, along with continuing discussions about tools. The meeting also focused on wage increases.

[35] The employer contends that the discussion in relation to wages focused on the CEPU claim that the employer should adopt the wage rates from the Victorian Agreement. The employer declined on the basis that the Victorian and Queensland markets were different. After some discussion about alternative sources of rates, the employer advised the CEPU that it would offer a wage increase of some 2.1%.

[36] At the fourth enterprise bargaining meeting on 28 May 2013 the issue of award-derived allowances was not raised.

[37] At the enterprise bargaining meeting of 6 June 2013 the wage increases as proposed by the employer and the issue of awards was again discussed (with the CEPU seeking the retention exclusively of the Plumbing and Fire Sprinklers Award 2010). The employer rejected this proposal.

[38] At this fifth enterprise bargaining meeting the employer contends that the subject of award-derived allowances was not raised.

[39] Shortly thereafter (on 11 June 2013) the employer distributed a further draft of the Agreement. Clause 7 of the Agreement was amended from the earlier draft and reflected that which I have set out earlier.

[40] A vote was conducted in relation to the proposed agreement on 2 July 2013. The vote did not achieve the required majority support. As a consequence, a further draft of the Agreement was developed and a sixth enterprise bargaining meeting was conducted on 29 July 2013.

[41] The employer contended there was no discussion at that time about any award-derived allowances. The minutes of the meeting prepared by the CEPU provide no indication of any discussion about award-derived allowances. This is evident in the CEPU e-mail to the employer of the same date.

[42] There appear to have been some further interactions between the employer and the CEPU over the course of late July and early August in relation to such matters as wage rates, training clauses, the performance review scheme and so forth. But there is no reference to any award-derived allowances.

[43] At a further enterprise bargaining meeting on 9 August 2013 an amended offer by the employer was proposed in relation to wage increases and it was agreed the proposed Agreement would be put to a vote on 21 August 2013.

[44] A final enterprise bargaining meeting was conducted on 12 August 2013. Its contents do not appear to be relevant to these proceedings, other than that it gave rise to no discussion about any allowances.

[45] On 21 August 2013, a second vote was conducted in relation to the proposed agreement and it achieved majority support. As referred to above, the Agreement was approved by the Commission on 20 September 2013.

[46] On 21 October 2013 the employer received e-mail correspondence from the CEPU requesting, amongst other things, payment of relevant allowances. It appears that the employer did not grasp at that time the significance of the reference to allowances as being a reference to the award-derived allowances.

[47] Further correspondence was received from the CEPU on 11 November 2013 which this time pointed to various allowances such as the:

• Lost time loading allowance;



• Industry allowances;



• Plumbing trade allowance;



• Registration allowance;



• Special fixed allowance;



• Tool allowance; and



• Acting on licence allowance.

[48] For the purpose of these proceedings the CEPU contends that the range of allowances arising under the Plumbing and Fire Sprinklers Award 2010 extend at least to the following:

• Industry allowance;



• Plumbing trade allowance;



• Registration allowance;



• Special fixed allowance;



• Tool allowance;



• Meal allowance;



• Compensation for tools and clothes allowance;



• Employees accepting responsibility for statutory authorities allowance;



• First aid allowance;



• Computing quantities allowance;



• Aluminium foil allowance; and



• Inclement weather allowance.

[49] On its calculations, the employer contends that these allowances, to the extent they apply, would be readily comprehended in the rolled up rates provided for in the Agreement.

[50] The employer rejected any obligation to pay these allowances on the basis that they had never been the subject of any discussion in the enterprise bargaining negotiations and that there was a mutually recognised intention to provide for a rolled up rate of pay (with additional allowances specified in the Agreement).

[51] The employer contends that the CEPU never raised the entitlement to allowances under the awards and in so far as it held a view that there were allowance entitlements arising from clause 7 it engaged in a deception in not advising the employer of its belief in this regard. This is particularly so when the CEPU had raised other allowance-related claims which were the subject of negotiations but had never referred to its belief that the suite of allowances under the awards had been incorporated into the (then proposed) Agreement.

[52] As I have indicated above, the CEPU position is to the contrary.

Principles of interpretation

[53] The principles of interpretation that apply in relation to the construction of a non-greenfields single enterprise agreement were recently set out by the Full Bench in [2014] FWCFB 4218 (“Re: Lacy”). Those principles are as follows:

[20] The principles of interpretation of (non greenfields) single enterprise agreements are not in dispute. Rather, in this case, it is the application of those principles that presents the difficulty. An agreement is obviously of a different nature to an Act of Parliament or an Award, although there are some similar principles of construction that apply to industrial agreements and industrial awards.

[21] The leading High Court case on the interpretation of enterprise agreements is Amcor Ltd v Construction, Forestry, Mining and Energy Union; Minister for Employment and Workplace Relations v Construction, Forestry, Mining and Energy Union  (Amcor). In that case Gummow, Hayne and Heydon JJ stated:

“30. Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.”

[22] Kirby J said:

“94. ....However, certified agreements such as this commonly lack the precise drafting of legislation. As appears from a scrutiny of the provisions of the Agreement, it bears the common hallmarks of colloquial language and a measure of imprecision. Doubtless this is a result of the background of the drafters, the circumstances and possibly the urging of the preparation, the process of negotiation and the omission to hammer out every detail - including possibly because such an endeavour would endanger the accord necessary to consensus and certification by the Commission.

.....

96. The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court, of interpreting industrial instruments and especially certified agreements. I agree with the following passage in the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed:

‘It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.’” (references omitted)

[23] Callinan J stated that there was substance in the abovementioned observations of Madgwick J in Kucks v CSR Limited (Kucks). He then said:

“131. An industrial agreement has a number of purposes, to settle disputes, to anticipate and make provision for the resolution of future disputes, to ensure fair and just treatment of both employer and employees, and generally to promote harmony in the workplace. It is with the third of these that cl 55 of the Agreement is particularly concerned. It is important to keep in mind therefore the desirability of a construction, if it is reasonably available, that will operate fairly towards both parties. …”

[24] In Kucks, following the passage quoted above, Madgwick J went on to say:

“But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.”

[25] A leading case on the treatment of extrinsic material in relation to the interpretation of agreements is Codelfa Construction Pty Ltd v State Rail Authority of NSW. The dicta of Justice Mason, as he then was, (with whom Stephen, Aickin and Wilson JJ agreed) has frequently been adopted and applied in matters concerning the interpretation of enterprise agreements. In Codelfa His Honour said (at 352):

“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.”

[26] Justice Mason has since made clear that the modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise. In Toll (FGCT) Pty Ltd v Alphapharm Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said:

“The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also the surrounding circumstances known to the parties, and the purpose and object of the transaction.”

[27] An additional consideration arises in this case. Enterprise agreements (other than greenfields agreements) approved by the Commission under the Fair Work Act 2009 are made between the employer and the employees employed at the time the agreement is made and who will be covered by the agreement: s172(2). The agreement is made when a majority of those employees who cast a valid vote in a ballot approve the agreement: s182(1). Such a vote will usually follow a process of negotiation which involves one or more bargaining representatives of employees, however, it would not be unusual for some employees to be unrepresented in the negotiations. This circumstance has been mentioned as a reason why care should be exercised in placing importance on common understandings as part of considering the context of an enterprise agreement. In Health Services Union v Ballarat Health Services, Justice Gray said:

“The second need for care arises in the context of the manner in which industrial instruments are now created. In the days when an award might be negotiated between a union and an employer, and made by consent, the existence of a common understanding between the union and the employer as to the meaning of terms might have had some role to play in their construction. Whatever were the terms of such an agreement, and whatever was their meaning, those terms were imposed upon the employees who became bound by the award. In the current era, most industrial instruments are required to be put to a vote of the employees whose work will be covered by them, before they can be certified or approved so as to become enforceable by statute. The union and the employer who negotiated the terms might have had a common understanding of the meaning of them, but that understanding might not have been shared by all or some of the employees who voted for the operation of the agreement. They may have been entirely ignorant of the common understanding. In those circumstances, the occasions on which it can be said that a party to an agreement who entered into it on a common understanding should not be allowed to resile from that understanding will be rarer than they have been in the past.” (citations removed)

[54] In this dispute, both sides largely posed the same principles of construction, though there were some variants (particularly by reference to single member decisions). Reference was made, I indicate, by the CEPU to the Acts Interpretation Act 1901 as an applicable source in relation to the construction of agreements. It has been held to be so by decisions of this Commission. But the decision by the Full Court of the Federal Court of Australia in Toyota Motor Corporation Australia Limited v Marmara [2014] FCAFC 84 (18 July 2014) has excised that authority from the principles relevant to the construction of agreements:

Toyota’s final argument on the construction of cl 4 of the Agreement (ie aside from those that were interwoven with its case on the repugnancy point) was based on the provision of the Agreement that made it an objective to attain cost structures similar to those of other members of the Toyota group worldwide. It was contended that, pursuant to ss 46 and 15AA of the Acts Interpretation Act 1901 (Cth) (“the AI Act”), an interpretation of the Agreement which would best achieve that objective is to be preferred to each other interpretation. We do not, however, accept the premise from which this argument proceeds. Section 46 of the AI Act applies where “a provision confers on an authority the power to make an instrument”. There is no provision of the FW Act which confers on the Commission the power to make an enterprise agreement. Such an agreement is made by the employer and the relevant employees under ss 172(2) and 182(1). We consider, therefore, that the constructional questions which arise for resolution in this appeal must be addressed without assistance from the AI Act.

[55] It is, of course, the application of the principles of construction to the relevant circumstances that is critical.

[56] The initial point to consider in constructing the Agreement is the wording of the Agreement terms themselves, and then in its relevant context as a term of a wider agreement.

[57] Next, it is necessary to consider the history of the negotiations to determine if the history discloses an objective framework of facts such that there was a mutual intention of the parties to accord the Agreement a particular meaning.

[58] The plain words of the text (clause 7) disclose no more than that the awards are incorporated into the Agreement, subject to their consistency with the Agreement, and that some machinery was envisaged in circumstances in which there was a dispute about which entitlements were to apply where both awards gave rise to an entitlement. Clause 15 of the Agreement does not condition clause 7, other than that it displaces the award specified minimum wage rates and articulates its own classification structure. The clause does not give rise to any ambiguity on its own terms.

[59] The plain meaning of the text of the Agreement (clause 7 read on its own and in conjunction with clause 15 of the Agreement) supports a conclusion that the award-derived allowances apply to the relevant extent.

[60] I turn to the history of negotiations.

[61] In could be the case, as Justice Mason stated, that “prior negotiations will tend to establish objective background facts which were known to both parties in the subject matter of the contract.” His Honour went on to state that to the “extent to which they have this tendency they are admissible”, and that “the objective framework of facts within which the contract came into existence, and to the parties presumed intention in this setting” could be relevant.

[62] The CEPU contends that as a bargaining representative, it held a view that the allowances under the awards applied because of the operation of clause 7 of the Agreement, and that it perceived no obligation to raise this with the employer as it was self-evident.

[63] That is the view of a bargaining representative. It was evidenced by reference to internal CEPU discussions.

[64] This construction of the Agreement does not appear to have been expressly put to any of the employees who made the Agreement.

[65] As referred to by the Full Bench cited above, Justice Gray in his judgment in Health Services Union v Ballarat Health Services raised the salience of the views of those employees who made the agreement as opposed to the employer and the union who may have negotiated the agreement.

[66] It is asserted by the employer that employees were aware by way of prior experience (that is, pre-September 2013) that they had been paid a rolled up rate and that this discharged any obligation to pay allowances under an award. That is, a background fact was known to the employees and the employer, and that this should inform the construction of clause 7 in relation to clause 15 of the Agreement for the reason that the employer and the employees had a shared, common view of the function of the wage rates in the context of the employer’s business.

[67] But to give substance to that claim so that it would have such weight to modify the plain reading of the text of the Agreement (as I have set out above) it would be expected that the evidence would have been adduced in relation to the employees themselves as to whether they shared a common understanding with their employer, based on prior experience. That is, that the employees, like their employer, agreed that their common expectation and agreed understanding was that their wage rates were rolled up rates and would operate to the exclusion of any allowances under the terms of the awards.

[68] Properly evidenced, this would give rise to a set of objective background facts that might cause me to contextualise the reading of the plain text of the Agreement.

[69] But no such evidence was led in these proceedings. The employees in question were not called to give evidence in this respect. I do not know as a matter of evidence that they held the view that the prior approach to the setting of rolled up wage rates was to be continued upon translation into the bargained enterprise agreement.

[70] It is uncontested that the factual background prior to the Agreement is as the employer contends - that prior to this Agreement coming into effect the employees were paid a rolled up rate and that this rate of pay discharged their entitlement to any allowances under the applicable award. But it would be a matter of evidence as to whether the employees brought to their understanding of the terms of the Agreement upon which they voted their prior experience of how their rates operated relative to any allowances.

[71] Because I am without such evidence, it is not possible for me to conclude a view that the employees and the employer shared a common understanding as an objective fact, and that this should modify my objective construction of the particular terms of the Agreement. The only evidence I have of the employees’ views is that Mr Weich, the organiser, was not pressed by them to assert a claim for any particular allowances. But that is not evidence of sufficient scope that allows me to extrapolate their views on the particulars of the agreement they made, such that I could set aside the plain reading of the text that was before them. Of course, whether unalloyed evidence could ever emerge from the long period over which this matter has been agitated is another question.

[72] I am left, in the end, only with the reasonably inferred fact that the employees construed the Agreement that they made with their employer on the basis of the plain reading of the text of that Agreement, as I have set out above, as was before them. There is no other evidence that directs me otherwise.

[73] To all of this, I add that neither party appears to have communicated to the employees (who made the Agreement) any detail as to their respective claims, or indicated to the employees that the allowances set out in the awards would or would not apply.

[74] The employer’s view of the operative effect of the Agreement on the entitlement to award-derived allowances remains a subjective view, albeit it one borne of its pre-agreement experience. The CEPU presumed a view about construction from the plain text, regardless of the history of the wages system in the business, and felt no obligation to raise the matter in negotiations (particularly as no contrary claim had been made).

[75] In the end, an agreement with particular wording was placed before employees who read it on its face and voted in support of it such that the Agreement was made. It is more apparent to me than not that both parties approached the bargaining process with differing sets of presumptions.

[76] The CEPU took the view that incorporated awards meant award-derived allowances would form a term of the Agreement above and beyond the wage rates and other allowances which formed part of the negotiations.

[77] The employer took the view that it had rolled over its pre-agreement wages approach into the formal agreement arrangements and that it incorporated the awards (as referred to) because this had been the approach in the “NSW Agreement”. It held that the awards might cover exceptional circumstances where the business undertook activities in new areas not covered by the scope of the Agreement. Other than that, the employer assumed the CEPU had been seeking a Victorian-style agreement (with reference to the agreement that covered the employer’s Victorian operations and which did not pay allowances).

[78] As I mentioned earlier, there is no indication by way of evidence that either party disclosed its own presumptions to the other side, let alone the employees (or the CEPU’s members). In short, there were no common or mutual intentions arising from the negotiation process that form objective facts which inform the plain reading of the text of the Agreement read in its (textual) context.

Conclusion

[79] On the basis of this approach to construction, I am inclined to conclude that the plain reading of the text of the Agreement I have proffered above applies - that the award-derived allowances apply to the relevant extent and they are not displaced by the wage rates specified in clause 15 of the Agreement (which make no reference to being wage rates that comprehend allowances or else are qualified as all-purpose wage rates).

[80] It is true that the in the period before the negotiation of the Agreement the employer paid no allowances but only a rolled up rate. This favours the employer’s claim. But I have no evidence of the employees’ views so that I could conclude that the employer and the employees shared a mutual understanding the operation of the Agreement that was above and beyond the plain words of the text. I have discussed this earlier.

[81] The history of the negotiations of the Agreement requires attention as well.

[82] There is no body of shared understandings that form objective facts that cause me to modify the plain reading of the text. I have before me only the subjective views of the parties who negotiated the Agreement. The CEPU internally believed the award-derived allowances would apply. The employer, internally, believed itself to be making an agreement modelled on past wages/allowances policies and within a defined labour costs envelope (and for reasons otherwise set out above).

[83] The CEPU, despite it having an internal view about the applicability of the award-derived allowances never made a claim to that effect. It contends the circumstance was just “assumed” to be a common point by the negotiating parties.

[84] There were no discussions between the parties that expressly dealt with the issue of allowances. There is no ascertainable mutual intention in evidence that bears on the express issues of the allowances. This does not favour the employer’s case. It does mean that consideration of the history of the negotiations does not yield any objective background facts by way of a mutual intention. Rather, because of the absence of background facts, the circumstances favour the plain meaning of the text of the Agreement itself.

[85] Nor, as I have noted, did either of the parties provide any communications to the employees about the issue of the allowances, such that these communications might give evidence of a mutual intention (if they were something more than subjective views alone). The employer would contend that the silence on the part of the CEPU is indicative of its actual intention not to negotiate an agreement that comprehended award-derived allowances. But in the end, neither party has taken steps to generate any documentation about its intentions (to provide to the employees), thus the reference point for determining the proper construction of the Agreement returns to the plain words of the text itself and not the negotiation process or the views of the CEPU and the employer. And in the end, it was the plain words of the Agreement that were before the employees when a majority of the employees made the agreement with their employer.

[86] Of course, it was always open for the employer to investigate its exposure to award-derived allowances when the issue of how to resolve entitlement disputes between the two awards was repeatedly raised with it by the CEPU. But as the evidence (through Mr Ross, the General Manager - Human Resources and Mr Risbey, the National Service & Customer Support Manager for the employer) revealed, the employer rested on its own presumptions about the characteristics of the Agreement it had negotiated (and which it had itself drafted) and the goals of the CEPU, and this inquiry was never initiated. Mr Ross, for his part, recognised under cross examination that award “entitlements” might have extended to allowances, but his curiosity was never triggered at the relevant time given the presumptions he held about the Agreement he had drafted.

[87] The employer believes itself to have been misled by the CEPU, as the CEPU had not divulged its actual bargaining agenda. The CEPU did not disclose an agenda to invoke allowances under the award. But, of course, the same may be said of the employer’s conduct (in not expressly divulging that it was negotiating rolled up rates), noting too that it was the employer who introduced the award references into the Agreement.

[88] In short, the agreement making history does not give me cause to displace or construe the literal wording of the Agreement, as I have set it out.

[89] I am not inclined, I add, to invoke any anteriorily derived notions of fairness as having a role in construction, or to apply terms in a “beneficial” way, as was suggested in the proceedings that I might by reference to particular cases. The principles of construction do not direct me in that manner.

[90] In the end, the text of the Agreement provides for the payment of (properly calculated) award-stipulated allowances not otherwise dealt with in the Agreement, and as will apply to the work performed by the employees in their particular conditions.

[91] The conclusion I have reached in this matter will have serious ramifications for the labour costs anticipated to arise under the Agreement by the employer, given its views as to its current commercial status, as set out in the course of the negotiations.

[92] There may also be salutary warnings in the above discussion for persons who draft agreements on the basis of assumed common understandings. This much was also said by the Full Bench in Re: Lacy(as cited above), which concluded that:

This conclusion obviously highlights the lack of care of the drafters of the agreement if their actual intention was not to create such an entitlement. But such a circumstance should not displace the proper interpretation that we consider flows from the text and the context of the Agreement [...] (at PN34)

[93] It may be that this finding is the basis of further discussion between the parties as to which allowances may arise on a regular basis, how they might be calculated accurately, and given the wage rates being paid, what now might form a reasonable and fair basis for resolving the dispute. I say this because whilst the words of the Agreement mean what they say, I have little doubt the employer entered into an agreement on terms it failed to understand or appreciate at the time. In such circumstances, there is little scope for an employer to find relief - see CJ Manfield Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia[2012] FWAFB 3534 (at PN56-62).

[94] I am conscious that there are submissions before me on the part of the employer and the CEPU in these proceedings as to which if any allowances should apply to its employees and what the proper basis for determining these allowances might be. But I point out to the parties that the dispute to this day has not reached such a degree of particularity. The dispute has turned exclusively upon the meaning to be given to clause 7 and clause 15 of the Agreement in a broad sense that I have dealt with above.

[95] I do not consider, therefore, that I am vested with authority under the dispute resolution clause to determine what particular allowances ought to apply to the employer’s business. The authority I have through the dispute resolution clause to determine the matter in dispute is limited to a determination as to whether or not clause 7 of the Agreement, notwithstanding clause 15 of the Agreement, entitles the employees to be paid applicable and relevant allowances. A dispute about further, albeit related particularities, has not been the subject of the disputes clause escalation process and is not properly before me therefore.

SENIOR DEPUTY PRESIDENT

Appearances:

Ms M. Delaware, of the CEPU

Mr M. Swan, of the Australian Industry Group, for the employer

Hearing details:

Brisbane

2014

22 July

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<Price code C, AE404245  PR553447>