Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Sydney Trains

[2020] FWC 3991

[2020] FWC 3991

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
Sydney Trains
(C2020/1836)

DEPUTY PRESIDENT BULL SYDNEY, 30 JULY 2020

S.739 Application to deal with a dispute. Interpretation of Sydney Trains Enterprise Agreement 2018. Whether ambiguity exists in wording of clause.

[1] In this matter, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU) has made an application pursuant to s.739 of the Fair Work Act 2009 (the Act) for the Commission to deal with a dispute in accordance with the dispute settlement procedure set out in clause 8 of the Sydney Trains Enterprise Agreement 2018 (the 2018 Enterprise Agreement). The respondent to the dispute is Sydney Trains which is bound by the 2018 Enterprise Agreement together with the CEPU as per clause 5 Coverage of the Agreement.

[2] Sections 738 and 739 of the Act authorise the Commission to arbitrate a dispute in accordance with a term of a dispute settlement procedure in an enterprise agreement.

[3] The CEPU submits that the dispute, which is detailed below, is a matter that can be dealt with under Clause 8 – Dispute Settlement Procedure of the Agreement as it is a matter pertaining to the relationship between the employer and employees and the operation and application of the 2018 Enterprise Agreement. Where the dispute remains unresolved any party may refer the matter to the Fair Work Commission (the Commission) for conciliation and, failing resolution, the Commission may arbitrate the dispute. The dispute concerns the meaning and application of various clauses of the Agreement. Sydney Trains accepts that the Commission is able to arbitrate the dispute pursuant to the Dispute Settlement Procedure of the Agreement.

[4] The matter was subject to a Commission conciliation conference on 27 March 2020, at which time the dispute was limited to whether Sydney Trains was able to terminate the employment of an employee, Mr Graham Cross, based on medical grounds where a dispute about his proposed termination had been raised. The CEPU had submitted that the ‘status quo’ provision in the Dispute Settlement Procedure meant that the notice to terminate Mr Cross’s employment could not be acted upon by Sydney Trains until the dispute was finally resolved. This view of the status quo provision of the Agreement was not shared by Sydney Trains.

[5] Directions were issued for the parties to file and serve their written submissions and witness statements with the matter listed for hearing. Subsequently, the parties advised they had agreed that the dispute to be determined should be varied to whether the terms of the Agreement act to prevent the proposed dismissal of Mr Cross occurring until his benefits under a salary continuance insurance policy are exhausted. 1 The hearing of the matter was then relisted.2

[6] Mr Daniel Austin, Research Officer appeared for the CEPU and Mr Anthony Woods a solicitor from Lander and Rogers appeared with leave 3 on behalf of Sydney Trains.

The dispute to be determined

[7] In the written submissions of Sydney Trains 4 it was put that the dispute to be determined by the Commission was whether:

(a) the meaning of clause 83 of the Agreement is not clear, and if so, whether the “former conditions of sick leave and insurance” that form part of Mr Cross's conditions of employment, mean that Mr Cross must remain employed for as long as he either continues to be a beneficiary under the salary continuance insurance policy or dies, whichever occurs first; and

(b) the circumstances that give rise to Mr Cross's termination on medical advice (TOMA) fall within the remit of clause 37.6 of the Agreement, and if so, whether that clause means that the Mr Cross's termination must be delayed for as long as he continues to benefit under the salary continuance insurance policy or has accrued sick leave.

[8] The formulation of the dispute in the above terms was accepted by the CEPU. 5

Background

[9] Mr Graham Cross is employed by Sydney Trains as a Shift Network Controller and has held this position since 2004. Mr Cross is 50 years of age and, in October 2016, was diagnosed with a congestive heart disorder. Mr Cross states that he has chronic obstructive pulmonary disease and congenital heart disease. He has been absent from work since 9 September 2016. Mr Cross states he has very little capacity even for light activity, and he can only be active for 15-30 minutes at any one time and needs to rest whenever possible.

[10] Mr Cross requires a heart transplant. The parties do not expect that Mr Cross will ever have the capacity to return to work.

[11] On 8 May 2019, Sydney Trains provided written notice to Mr Cross that following discussions with him regarding his health and based on the medical advice he had provided, it wished to meet with him to discuss his ongoing employment options including the possibility of his termination based on medical advice which indicated that he was unfit to perform the inherent duties of his substantive position.

[12] Following discussions held on 8 May 2019, Sydney Trains then wrote to Mr Cross on 3 June 2019 and advised that based on medical evidence presented it has been recommended that his employment be terminated in accordance with its Termination of Employment on Medical Advice Procedure (the Procedure). In accordance with the Procedure, Mr Cross had until 24 June 2019 to provide any reasonable alternatives to his termination based on medical advice.

[13] On 24 June 2019, Mr Austin from the CEPU 6 wrote to Sydney Trains disputing the ability of Sydney Trains to dismiss Mr Cross. It was contended that Mr Cross could not be dismissed on medical grounds until he has reached the age of 65 (being when his salary continuance would cease) and he had exhausted his sick leave.

[14] On 2 July 2019, Sydney Trains replied to the CEPU advising that it did not accept their interpretation of the 2018 Enterprise Agreement and that it intended to proceed with the proposed termination based on medical advice subject to any election that Mr Cross may make to use his accrued leave entitlements. 7

[15] On 4 October 2019, Sydney Trains wrote to Mr Cross and advised that after careful consideration a decision had been made to progress termination of his employment on medical advice effective from 26 March 2020.

[16] On 14 October 2019, Mr Cross requested a review of the decision to terminate his employment and, on 28 January 2020, he was advised that the termination of his employment would proceed as previously advised. Mr Cross was also advised that he would continue to receive his salary continuance payments up until the age of 65 despite being terminated based on medical advice.

[17] On 6 March 2020, the CEPU notified the Commission of a dispute in respect of the above. Sydney Trains has undertaken to maintain Mr Cross’s employment while this process takes place.

Agreement coverage

[18] Mr Cross commenced work with the information and technology group RailCom which became part of the Rail Access Corporation (RAC) an asset management group when City Rail was broken up in 1998.

[19] Mr Cross states 8 that he has been covered by salary continuance insurance that has been maintained by his employer since moving across to the RAC. He was covered by the Rail Access Corporation Bargaining Enterprise Agreement 1997, at the time RAC employees had the benefit of salary continuance. In 1998, Mr Cross commenced work in the Argus telecommunications division of the RAC and was covered by the Rail Access Corporation (Argus Telecommunications Office Staff) Enterprise Agreement 1999.

[20] The Rail Infrastructure Corporation (RIC) was formed on 1 January 2001 through the amalgamation of Rail Services Australia and the Rail Access Corporation 9 and was the owner and maintainer of the NSW rail network. The amalgamation arose from the Commission of Enquiry into the 1999 Glenbrook Rail Disaster.10

[21] In 2002, the Argus operations of the RAC were incorporated into the Rail Infrastructure Corporation. In 2002, the Rail Infrastructure Corporation Enterprise Bargaining Agreement 2002 was negotiated andclause 33 - Sick Leave provided that Argus employees were to elect on an individual basis whether they wished to retain their existing conditions of sick leave and salary continuance insurance or accept the standard sick leave provisions under the new 2002 Enterprise Agreement.

[22] In 2005, the Rail Infrastructure Corporation was merged into RailCorp and an agreement known as the Rail Corporation New South Wales Rail Infrastructure Corporation and State Rail Authority of New South Wales Enterprise Agreement 2005 was negotiated. The 2005 Enterprise Agreement was replaced by a new enterprise agreement in 2008 which was replaced in 2010.

[23] In 2014, the Sydney Trains Enterprise Agreement 2014 was negotiated and replaced the 2010 Enterprise Agreement, this was then replaced by the current 2018 Enterprise Agreement, the relevant terms of which give rise to the current dispute before the Commission. 11

Submissions and evidence

CEPU

[24] The CEPU submits that Mr Cross is unable to be dismissed by Sydney Trains while he continues to benefit from salary continuance which, under the salary continuance insurance policy taken out by Sydney Trains for the benefit of former RAC employees, continues until Mr Cross turns 65. Mr Cross’s salary continuance insurance has been carried over from his previous employment by the RAC as a condition of his employment with Sydney Trains and its predecessors.

[25] The CEPU states that the terms of the 2018 Enterprise Agreement prevent Mr Cross’s dismissal and maintain his right to remain employed while on salary continuance until the age of 65.

[26] In support of their position the CEPU relied on their written submissions and the evidence of Mr Cross and Mr Maxwell Murray also an employee of Sydney Trains.

[27] Prior to 2002, Mr Cross was covered by the Rail Access Corporation (Argus Telecommunications Office Staff) Enterprise Agreement 1999. In 2002 when the Rail Access Corporation was subsumed by the Rail Infrastructure Corporation, Mr Cross was offered by RIC the right to retain the sick leave entitlements and salary continuance insurance he was entitled to when working for RAC; he elected to retain these conditions.

[28] The salary continuance insurance arrangements provided that, where eligible and after a prescribed waiting period, an employee could receive 75% of their salary until aged 65 years.

[29] Clause 83 of the 2018 Enterprise Agreement preserves this entitlement.

[30] On 2 July 2019, Sydney Trains advised that it intended to proceed with the termination of Mr Cross subject to any election by Mr Cross to first utilise any accrued leave.

[31] Clause 37 of the 2018 Enterprise Agreement is titled Insurance Cover for Accidents. Subclause 37.6 is in the following terms:

“36.6 Where an Employee is determined by medical advice as permanently unfit for their normal duties, the Employer will attempt to place the employee into a suitable alternate position and the Employee will thereafter be paid the rate of pay of the position into which they have been placed. Alternatively, if no suitable alternative positions are available, medical retirement procedures will commence. The Employee will be able to use their sick leave entitlements, annual leave, and long service leave accruals prior to the medical retirement taking effect.”

(My underline)

[32] It is put by the CEPU that the reference to ‘medical retirement procedures will commence’ in subclause 37.6 is that the employer must follow its established procedures for these circumstances. The procedures are found in the employer’s procedure on Termination of Employment on Medical Advice 12 and under clause 9 Entitlements subclause 9.2 – Use of Leave is set out in the following terms:

“9.2 Those employees who may be directed to perform work falling within the definition of rail safety work covered by the National Standard for Health Assessment of Rail Safety Workers will be able to use their leave entitlements, including sick leave prior to a termination on medical advice taking effect (refer Enterprise Agreement 2010 cl.39.6).

All leave entitlements including annual leave, sick leave, and long service leave will accrue until the last day of service. Annual and long service leave that has accrued by the agreed end date will be paid out to the employee.”

(My underline)

[33] Paragraph 9.2 above is said to reflect the second limb of clause 37.6 of the 2018 Enterprise Agreement, being that an employee notified by the employer of the intention to be dismissed on medical advice is able to utilise their sick leave prior to any dismissal taking effect. On this basis, an employee’s dismissal on medical advice can be deferred where an employee chooses to utilise their accrued leave. 13

[34] Where the term ‘sick leave entitlements’ is used in clause 37.6 of the 2018 Enterprise Agreement, the CEPU submits that this wording should not be interpreted as only being a reference to sick leave accruals. The phrase ‘sick leave entitlements’ in its literal and industrial context ‘invites consideration of sick leave conditions and salary continuance under clause 83 of the 2018 Enterprise Agreement’. 14 The evidence of Mr Cross and Mr Maxwell is said to support the industrial context of this phrase.

[35] The word ‘entitlements’ when used in conjunction with the words sick leave is said to encompass more than sick leave accruals. The word ‘accruals’ in subclause 37.6 is used when referring to annual and long service leave but not when referring to sick leave.

[36] Clause 83 Sick Leave of the 2018 Enterprise Agreement in Division 6 – Former RAC Employees refers to the sick leave entitlements of employees who were employed by RAC until their employment with Sydney Trains. The clause reads as follows:

“83 Sick Leave

Employees who are covered by the Rail Access Corporation Enterprise Bargaining Agreement 1997 or the Rail Access Corporation (Argus Telecommunications Office Staff) Enterprise Agreement 1999 and who individually elected as at 29 August 2002 to retain their former conditions of sick leave and insurance under these Agreements:

83.1 are entitled to 10 days of sick leave per annum;

83.2 when on extended sick leave may be given the benefit of discretionary extensions to sick leave by the Employer but this will be strictly a matter for the discretion of the Employer in the circumstances of the individual; and

83.3 any such Employees having attained 65 years of age, will be entitled to accrue sick leave in accordance with Sub-clause 28.4 of Section 1 of this Agreement in the event that the insurance cover ceases at 65 years of age.”

[37] The CEPU submits that the wording in clause 83 of the 2018 Enterprise Agreement is ambiguous as the clause is silent in respect of the former conditions of sick leave and insurance that employees elected to retain in 2002. 15 Subclauses 83.1 to 83.3 do not state that the retained conditions are limited to the matters listed in subclause 83.1 to 83.3.16 It is only a person familiar with the history, purpose and industrial context of the former sick leave and insurance conditions who would understand the true meaning of clause 83.17 The CEPU submits that the intention and the practice of the parties when clause 83 was agreed are relevant considerations in interpreting the clause.

[38] For example, the Rail Infrastructure Corporation Enterprise Bargaining Agreement 2002 at clause 33 within Section 5: Argus Field Staff states:

“33 Sick Leave

Argus employees at the time of the Agreement to elect on an individual basis whether to retain pre existing conditions of sick leave and insurance or to accept standard sick leave provisions in clause 5.2 – Sick Leave, of this Agreement.”

(My underline)

[39] The CEPU contends that the words “pre existing conditions of sick leave and insurance” should not be taken to refer only to the conditions contained in the 1999 Enterprise Agreement as salary continuance was not a term of the 1999 Agreement but contained in a policy of the employer, the RAC. 18

[40] The CEPU submits that salary continuance referred to in clause 83 is claimed and paid as a form of sick leave and is therefore a sick leave entitlement for the purposes of clause 37.6 of the Agreement.

[41] Mr Cross a Shift Network Controller gave evidence and submitted two witness statements. 19 Mr Cross stated that he had been ill and off work since September 2016. In October 2016, he was hospitalised and diagnosed with congestive heart disorder and has not returned to work. Mr Cross provided his understanding of the history of sick leave and salary continuance benefits he had enjoyed since commencing with RailCom in 1987. Mr Cross’s evidence was that every time he transferred to a new employing authority or was covered by a new enterprise agreement, he was advised that he would retain his previous sick leave and insurance conditions consistent with his election do so in 2002 as a former RAC employee.20

[42] Mr Cross states he always understood that salary continuance and life insurance was part of his overall sick leave entitlements that he had elected to maintain. 21 He states that he intends to use his annual leave and long service leave accruals after his ‘sick leave’ entitlements end and that is at the age of 65.22

[43] Mr Murray Maxwell, an employee of Sydney Trains and currently a Planned Outage Coordinator in the Operational Technology, Network Maintenance Division also gave evidence on behalf of the CEPU. Mr Murray was working for the State Rail Authority when it was ‘vested’ to the RAC in June 1998. Between 1997 and 2003, Mr Murray acted as an ETU delegate and was involved in enterprise agreement negotiations in 1999 and 2002. In Mr Murray’s view, ‘It was a given that we would continue in employment on unlimited salary maintenance to our age of retirement at 65 years of age’. 23

[44] Mr Murray’s evidence was that the phrase ‘sick leave entitlements’ was inserted into the Rail Corporation New South Wales Rail Infrastructure Corporation and State Rail Authority of New South Wales Enterprise Agreement 2005 24 to account for those staff who had elected to retain their sick leave entitlements.25

Sydney Trains

[45] Sydney Trains does not accept that the meaning of clause 83 of the 2018 Enterprise Agreement is ambiguous. It is submitted that there is no warrant to assume that the listed sick leave conditions in subclauses 83.1 to 83.3 are not exhaustive. The conditions listed under 83.1 to 83.3 are said to be the entirety of sick leave entitlements for former RAC employees. It is further contended that the reference to insurance in clause 83 is not ambiguous, as it is clearly a reference to life insurance policies taken out by Sydney Trains. 26

[46] Sydney Trains submits that tracing the history of clause 83 of the 2018 Enterprise Agreement does not provide any basis to find ambiguity in the words of the clause. Sydney Trains argues that at no time has Sydney Trains or its predecessors advised former RAC employees that the insurance policies guarantee employment for as long as they are receiving insurance payments under the policies. All written advice to former RAC employees, which set out the insurance benefits, has never included a stipulated right to remain employed while in receipt of salary continuance. This includes correspondence sent in 2002 to RAC employees, and a memorandum sent to former RAC employees in or around 9 March 2003, which both dealt with the sick leave and insurance benefits for former RAC employees.

[47] In Sydney Trains’ view there is no ‘common understanding’ that former RAC employees cannot be terminated on medical grounds while enjoying the benefits of salary continuance insurance. Such an understanding is not reflected in any documentation and any understanding that this is the case is only based on ‘assumptions’ held by two former RAC employees Mr Cross and Mr Murray. 27

[48] Sydney Trains called a number of witnesses to support their position all of whom were subject to cross examination.

[49] Mr John Cairns, who previously worked with the RAC as the Executive Manager of Employee Relations in 1998, and later became the General Manager of People and Performance for RIC, gave evidence on behalf of Sydney Trains. 28 Mr Cairns stated that he could not recall the proposition that insurance arrangements for former RAC employees prevented them from being dismissed on medical grounds having ever being raised or discussed. In Mr Cairns’ evidence, had the subject been raised with him he would have confirmed that this was not his understanding.29

[50] Ms Lynn Herisson, who is employed by Sydney Trains in the Transport Service as Associate Director Financial Accounting Management, GroupRail gave evidence on behalf of Sydney Trains. Ms Herisson’s responsibilities have included working on insurance issues for RailCorp and subsequently Sydney Trains and NSW TrainLink since 2013.

[51] Ms Herisson explained that the management of salary continuance is the responsibility of the Insurance Team within the Group Finance and Business Services Directorate. When an employee makes a salary continuance claim it is submitted to the Insurance Team and then to the insurer via the Sydney Trains broker. If the claim is accepted and the waiting period has been completed, the insurer calculates the employee’s monthly benefit of 75% of the employee’s pre-disability income and then pays the benefit monthly in arrears to Sydney Trains.

[52] The insurer undertakes a monthly benefit assessment and the Insurance Team receives monthly advice from the broker and payment to the employee is processed by Sydney Trains’ payroll who have created an earnings code for salary continuance insurance payments. If an employee is terminated the employee will continue to receive their benefit directly from the insurer. 30

[53] Ms Luisa Jane Taveuveu, who is the Acting Associate Director for Personal and Payroll for Transport Shared Services which provides payroll services to Sydney Trains, and whose substantive position is Team Leader Payroll, stated that her Team has been responsible for processing Mr Cross’s payroll payments. Payroll has created a code for processing salary continuance. The code is not an allowance or leave code and has no impact on leave accruals, nor does the code used have any relationship with the 2018 Enterprise Agreement. 31

[54] Ms Taveuveu’s evidence was that once an eligible employee has been informed that their employment is to be terminated on medical advice their termination date is calculated on their accrued sick, annual and long service leave as at the date the decision is made. 32 Ms Taveuveu was not personally aware of any employee having been terminated on medical grounds.

[55] Mr Kececi, who commenced working for the State Rail Authority in 2002 as an Assistant Industrial Relations Officer also gave evidence on behalf of Sydney Trains. Mr Kececi was employed in various positions in the Industrial Relations team for RailCorp and then Sydney Trains up until May 2019. Mr Kececi did not recall any specific discussion in 2014 with Mr Murray about insurance and sick leave as was stated by Mr Murray. However, Mr Kececi’s evidence was that Mr Murray’s understanding of what he said would have been consistent with his understanding that insurance and sick leave entitlements of former RAC employees would not change under the 2014 Agreement.

[56] It was also submitted by Sydney Trains that clause 37 Health Standards of the 2018 Enterprise Agreement relates only to rail workers who are required to undertake periodic health assessments and is not applicable to Mr Cross as he was not identified as medically unfit from attending a periodic medical assessment.

[57] Ms Rachael Kelly, who is employed at Sydney Trains as a Senior Workplace Relations Consultant gave evidence that having conducted ‘limited enquiries’ it was clear that not all former RAC employees covered by salary continuance insurance were rail workers and subject to mandatory health assessments at the time of the 2005 Enterprise Agreement negotiations. 33

Conclusion

[58] The CEPU has argued that the proper interpretation of clause 83 Sick Leave and clause 37.6 of the 2018 Enterprise Agreement is that the proposed dismissal of Mr Cross on medical advice by Sydney Trains is not permissible as he is entitled to remain employed while in receipt of income from salary continuance insurance. This is based on having, as a former RAC employee, elected in 2002 to retain his sick leave entitlements which includes as a sick leave entitlement, salary continuance. Clause 37.6 mandates that an employee is permitted to access their sick leave entitlements prior to a dismissal on medical grounds.

[59] Should the dispute be determined as sought by the CEPU, Mr Cross, who is 50 years of age, unable to return to work and has not worked since September 2016, would remain employed by Sydney Trains until aged 65 if he so chooses, without the need to attend work or be fit to resume his former role.

[60] The determination as sought by Sydney Trains would allow Sydney Trains to proceed with the proposed termination of Mr Cross’s employment based on medical grounds being that he is unable to perform his role as a Shift Network Controller and is unlikely to ever have the physical capacity to do so.

Interpretation of industrial agreements

[61] The Full Bench decision of Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited 34 (Golden Cockerel) traversed the approach to be taken in interpreting enterprise agreements and stated that the general approach to the construction of enterprise agreements was as explained in the judgment of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) (City of Wanneroo).

[62] In City of Wanneroo French J, observed: 35

“The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘...the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘....ideas that gave rise to an expression in a document from which it has been taken’ - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services union v Treasurer of the Commonwealth of Australia (1998) 80 IR 345 (Marshall J).” 36

[63] The Full Bench in Golden Cockerel then drew on other authorities to expand on the approach to be taken at paragraphs 20 to 22 of their decision including the decision in Kucks v CSR Limited 37 (Kucks).

[64] In Kucks, a matter relating to the interpretation of an industrial award, Madgwick J held that that a narrow pedantic approach to interpretation of awards should be avoided and meanings which avoid inconvenience or injustice may reasonably be strained for:

“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.

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 mean 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.” 38

[65] In 2017, a Full Bench of the Commission in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (known as the Australian Manufacturers Workers Union (AMWU) v Berri Pty Ltd 39 made the following observations in relation to interpreting enterprise agreements:

“[41] The construction of an enterprise agreement, like that of a statute or a contract, begins with a consideration of the ordinary meaning of the relevant words. The disputed words must be construed in the context of the agreement as a whole. The process of interpretative analysis focusses upon the language of the agreement itself. In Amcor Limited v CFMEU, 40 Gleeson CJ and McHugh J described the process in the following terms: ‘[t]he resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose ...’.41 Or, as Kirby J put it in the same case, ‘[i]nterpretation is always a text-based activity’.42

[66] Later in their decision, at paragraph [114], the Full Bench determined that the summary of principles relevant to the task of construing an enterprise agreement summarised in Golden Cockerel should be modified as follows:

“The principles relevant to the task of construing a single enterprise agreement may be summarised 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.”

(My underline)

[67] More recently, Flick J in Qantas Airways Ltd v Australian Licensed Aircraft Engineers Association (No 2) 43 summarised the approach to construing an award or enterprise agreement drawing on earlier court decisions consistent with the above extracts.

The predecessor agreements

[68] It is necessary to briefly traverse the enterprise agreement history in respect of the relevant 2018 Enterprise Agreement clauses.

[69] In 2002, the Rail Infrastructure Corporation Enterprise Bargaining Agreement 2002 providedthat former RAC employees would elect on an individual basis as to whether they wanted to adopt the general sick leave provisions provided in the 2002 Enterprise Agreement at clause 5.2 Sick Leave or retain the sick leave and insurance entitlements they had when employed by RAC. The election was provided for in clause 33 which stated:

“33.0 SICK LEAVE

Argus employees at the time of the Agreement to elect on an individual basis whether to retain pre existing conditions of sick leave and insurance or to accept standard sick leave provisions in clause 5.2 - Sick Leave, of this Agreement.”

[70] The Rail Corporation New South Wales, Rail Infrastructure Corporation and State Rail Authority of New South Wales Enterprise Agreement 2005 replaced the 2002 Enterprise Agreement and at clause 30 provided that:

“The current leave provisions applicable to the employees covered by this Agreement are those that applied in the former SRA or RIC”

[71] The 1997 RAC Enterprise Agreement and the 1999 RAC Enterprise agreement were listed in Schedule B as industrial instruments incorporated into the 2005 Collective Agreement.

[72] The Rail Corporation New South Wales Union Collective Agreement 2008 replaced the 2005 Enterprise Agreement. Clause 32.4 Sick Leave of Section 1 – Core Conditions of the 2008 Agreement which had organisational wide application, provided sick leave entitlements and at subclause 32.4.1 stated:

“Sick leave on full pay accrues to an Employee at the rate of 15 days (maximum of 114 hours) each calendar year, and any such accrued leave, which is not taken, is cumulative.”

[73] Clause 89 of the 2008 Collective Agreement in Section 2 Salaried Professional Division 7 - Former RAC Employees provided as follows:

“89 Sick Leave

Employees who are covered by the Rail Access Corporation Enterprise Bargaining Agreement 1997 or the Rail Access Corporation (Argus Telecommunications Office Staff) Enterprise Agreement 1999 and who individually elected as at 29 August 2002 to retain their former conditions of sick leave and insurance under these Agreements:

(a) are entitled to 10 days sick leave per annum which may be accumulated to a maximum of 50 days.

(b) when on extended sick leave may be given the benefit of discretionary extensions to sick leave by the Employer but this will be strictly a matter for the discretion of the Employer in the circumstances of the individual.”

[74] The RailCorp Enterprise Agreement 2010 replaced the 2008 Collective Agreement. In the 2010 Enterprise Agreement clause 90 Sick Leave in Section 2 Salaried Employees, Division 7 Former RAC Employees stated as follows:

“90. Sick Leave

Employees who are covered by the Rail Access Corporation Enterprise Bargaining Agreement 1997 or the Rail Access Corporation (Argus Telecommunications Office Staff) Enterprise Agreement 1999 and who individually elected as at 29 August 2002 to retain their former conditions of sick leave and insurance under these Agreements:

90.1. are entitled to 10 days sick leave per annum;

90.2. when on extended sick leave may be given the benefit of discretionary extensions to sick leave by the Employer but this will be strictly a matter for the discretion of the Employer in the circumstances of the individual; and

90.3. any such Employee having attained 65 years of age, will be entitled to accrue sick leave in accordance with Sub-clause 31.4 of this Agreement in the event that the insurance cover ceases at 65 years of age.”

[75] In 2013, RailCorp's operation and maintenance functions of its metropolitan rail passenger services were transferred to Sydney Trains. 44

[76] In 2014, the Sydney Trains Enterprise Agreement 2014 replaced the 2010 Enterprise Agreement. The 2014 Enterprise Agreement at clause 83 in Division 6 - Former RAC Employees Section 2, Salaried Employees sets out the sick leave entitlements which are substantively the same as the 2010 Enterprise Agreement.

[77] The 2018 Enterprise Agreement replaced the 2010 Enterprise Agreement. Clause 83 in Section 2 (extracted above at [36]) is in the same terms as clause 83 of the 2014 Enterprise Agreement.

Is there ambiguity in clause 83 of the 2018 Enterprise Agreement?

[78] Based on the above authorities, the interpretation of an industrial agreement begins with a consideration of the natural and ordinary meaning of the words in question. The words are to be read as a whole and in context. Ambiguity and uncertainty, if any, may be resolved by a consideration of the history and subject matter of an agreement, but ambiguity must first be identified. It is not possible to term as ambiguous words that otherwise have a plain meaning by drawing on subjective and extrinsic matters where they are not accepted as reflecting the common understanding of both parties.

[79] In a decision of Mason J (as his Honour then was) of the High Court of Australia in a matter involving the State Rail Authority NSW, Codelfa Construction Pty Ltd v State Rail Authority of New South Wales; 45 (Codelfa) with Stephen & Wilson JJ agreeing, Mason J stated:

“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.”

(My underline)

[80] Ross VP (as he then was) in Re Grocon & CFMEU Enterprise Agreement 2001 - 2002 46made the following comments:

“The Commission will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention. It is not enough that there are rival contentions as to the proper construction of the terms of an agreement. As Williams SDP pointed out in SJ Higgins Pty Ltd and others v CFMEU, such contentions "may well be self serving". The Commission's task is to make an objective judgement as to whether the wording of a provision is susceptible to more than one meaning.” 47

[81] In the decision of SJ Higgins Pty Ltd and others v CFMEU, 48 referred to in the above decision of VP Ross, SDP Williams stated after referring to the Victorian Public Transport case49:

“It must be noted, however, that, immediately prior to its reference to the observations of Gray J, that Full Bench stated that the first part of the process “involves an objective assessment as to whether or not an ambiguity or uncertainty exists”. In my view, it is not enough that there are or may be rival contentions as to the proper construction of the terms of an award or agreement. Nor is it enough that claims may have been made in the field for the application of a particular provision in circumstances and its applicability of the provision is disputed. Such contentions and claims may well be self serving. The correct approach, as applied by the Full Bench, requires the making of an objective judgment as to whether, on the proper construction of the relevant provision of an agreement, the wording of that provision is susceptible to more than one meaning”. 50

[82] The CEPU contends that clause 83 Sick Leave of the Agreement set out in Division 6 – Former RAC Employees is ambiguous regarding the sick leave entitlements of former Rail Access Corporation employees. The CEPU relies upon the evidence of Mr Cross and that of Mr Murray, and their stated understanding of negotiations of earlier iterations of the 2018 Enterprise Agreement.

[83] The CEPU submits that clause 83 is ambiguous in its reference to employees who elected in 2002 to retain their former conditions of sick leave and insurance. This is because in considering all the circumstances and the historical context, salary continuance is a sick leave entitlement for the purposes of clause 37.6 of the Agreement.

[84] While there is a dispute between the parties as to the meaning of the words in clause 83, disputation does not constitute or establish ambiguity. Disagreement between parties as to the meaning of the words of an industrial instrument is not uncommon but not determinative of ambiguity. As stated by the Full Bench in Bianco Walling Pty Ltd T/A Bianco Precast v Construction, Forestry, Maritime, Mining and Energy Union 51:

“As noted in Berri, regard may be had to evidence of surrounding circumstances to assist in determining whether ambiguity exists. However it does not follow that regard must be had to evidence of surrounding circumstances. Recourse to surrounding circumstances in determining whether ambiguity exists depends on the circumstances of each particular case. Here the ordinary meaning of the words in the 2016 Agreement are plainly clear and therefore the Deputy President’s decision not to have recourse to evidence of surrounding circumstances, does not disclose error.

[85] A Full Bench in Glen Cameron Nominees Pty Ltd (t/a Glen Cameron Trucking) v Transport Workers’ Union of Australia 52 made the following observations at [41]

“In SDA v Woolworths[2013] FWCFB 2814, the Full Bench affirmed that in the process of interpretative analysis the “task is to identify the common intention of the parties as they expressed it in the terms of their agreement”. Although the Full Bench recognised that “…it is permissible to take into account the industrial context and purpose of the agreement”, the Full Bench held that there are two important limitations:

(a) first, as noted above, the process of interpretative analysis must focus, first and foremost, upon the language of the agreement itself; and,

(b) second, regard cannot be had to the respective subjective intentions and expectations of the parties as demonstrated by their “statements and actions” in negotiating the agreement.”

[86] Clause 37.6 of the Agreement states that where an employee is determined by medical advice as permanently unfit for their normal duties and no alternate positions are available, medical retirement procedures will commence. The medical retirement procedures are those set out in the employer’s Termination of Employment on Medical Advice Procedure which states that all leave entitlements including annual leave, sick leave, and long service leave will accrue until the last day of service.

[87] It is put by the CEPU that where in clause 37.6 the words ‘sick leave entitlements’ and ‘annual leave and long service leave accruals’ are used, this indicates that sick leave entitlements must be greater than just sick leave accruals, and include as a condition of sick leave, insurance for former RAC employees which is referred to in clause 83 Sick Leave of the 2018 Enterprise Agreement.

[88] Clause 83 is a specific provision in the 2018 Enterprise Agreement that relates solely to former RAC employees. Mr Cross elected in 2002 to retain his former conditions of sick leave and insurance and is entitled to the benefits of clause 83. Importantly, the clause refers to former RAC employees who elected to retain their former RAC conditions of sick leave and insurance. The former conditions are stated as two separate entitlements; sick leave and insurance. The sick leave entitlements are then set out in 83.1 to 83.3, being 10 days sick leave per annum, access to discretionary extensions to sick leave, and the standard sick leave entitlement as per clause 28.4 should an employee reach 65 years of age sick and their salary continuance has ceased.

[89] To determine whether this clause is ambiguous, the Commission must make an objective judgement as to whether the wording is susceptible to more than one meaning. I am unable to discern any inherent ambiguity in the words used in clause 83 of the 2018 Enterprise Agreement. The sick leave entitlements are set out, whereas the insurance details are not. This does not lead to an ambiguity. The words delineate sick leave and insurance. The relevant enterprise agreement history demonstrates that the insurance details are not set out in the enterprise agreements, whereas the sick leave entitlements usually are.

[90] Having regard to the natural meaning of the words ‘sick leave and insurance’ in clause 83, they do not appear to raise any issue of ambiguity. There is nothing in the wording of clause 83 that indicates that salary continuance is a sick leave entitlement. The wording is not objectively susceptible to more than one meaning. The wording is not silent on the sick leave conditions they are set out at 83.1 to 83.3. Insurance is separately identified, but not as a sick leave condition. This does not logically lead to a conclusion that the clause is ambiguous.

[91] It would ordinarily be expected that if an employee enjoying the benefits of salary continuance under an insurance policy funded by the employer is unable to be dismissed on medical grounds until the age of 65, that such a significant beneficial condition would be made clear in the enterprise agreement or at least some other employer documentation.

[92] The argument put forward by the CEPU rests on the Commission having regard for the views of the Mr Cross and Mr Maxwell. While I accept that the two employee witnesses for the CEPU were genuinely of the belief that salary continuance insurance is a sick leave entitlement under the 2018 Enterprise Agreement, I also accept the firm belief of the relevant witnesses for Sydney Trains that sick leave entitlements and insurance are distinct entitlements. There is no common understanding on this matter for the Commission to draw on to establish any ambiguity as urged by the CEPU in contradistinction to the plain wording of clause 83. And as Mason J stated in Codelfa:

“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. 53

(My underline)

[93] I am thus satisfied that on an objective reading the sick leave entitlements referred to in clause 37.6, as they apply to former RAC employees, are plainly only those set out in subclauses clause 83.1 to 83.3.

[94] It is accepted that the word ‘entitlements’ in clause 37.6 is used in association with the words ‘sick leave’ (entitlements), whereas the word ‘accruals’ is used in conjunction with annual and long service leave (accruals). However, the use of the word ‘entitlements’ as opposed to ‘accruals’ is appropriate where former RAC employees who elected to retain their former conditions of sick leave have a different entitlement to employees who receive sick leave as per clause 28.4 Sick Leave of the 2018 Enterprise Agreement which includes for example, when on extended sick leave the benefit of discretionary extensions to sick leave.

[95] I do not read, as suggested by Sydney Trains, that clause 37 Health Standards and in particular subclause 37.6 has no application to Mr Cross simply on the basis that he obtained his own medical advice and was not subject to an employer mandated medical test. It appears that Sydney Trains has up until this hearing applied the provisions of clause 37.6 to Mr Cross. 54

[96] Mr Cross is a rail safety worker and as stated in subclause 37.1 the clause applies to any employee who may be directed to perform work falling within the definition of rail safety work covered by the National Standards for Health Assessment of Rail Safety Workers. Mr Cross fits this description.

[97] The dispute is disposed of by my findings above as to the correct meaning and application of clauses 37.6 and 83 of the 2018 Enterprise Agreement, that being that there is no prohibition in the 2018 Enterprise Agreement that prevents an employee in receipt of salary continuance being subject to termination on the grounds of medical advice. Sydney trains has complied with clause 37.6 and its procedures set out in its Termination of Employment on Medical Advice Procedure.

[98] Should Mr Cross’s termination based on medical advice proceed as desired by Sydney Trains, Mr Cross will continue to receive his salary continuance payments while he satisfies the insurance policy eligibility requirements, as remaining in employment with Sydney Trains is not a condition of eligibility under the salary continuance insurance policy.

DEPUTY PRESIDENT

Appearances:

Mr D Austin Research Officer for the CEPU
Mr A Woods Solicitor on behalf of Sydney Trains

Hearing details:

Sydney

2020

By telephone

June

9, 12

Printed by authority of the Commonwealth Government Printer

<PR721403>

 1   Email of Tony Woods 9 April 2020

 2   The matter was heard by telephone

 3   Granted pursuant to s.596(2)(a) of the Act

 4   6 May 2020

 5   In transcript on 9 June 2020

 6   Correspondence was under the banner of ETU NSW & ACT

 7   Tab 35 of Respondent’s Tender Bundle

 8   Witness statement of 3 April 2020

 9   Preamble to 2002 RIC Enterprise Agreement by CEO

 10   Witness statement of Mr Maxwell Murray of 17 April 2020 at [25]

 11   Witness statement of Mr Maxwell Murray of 17 April 2020

 12   CEPU’s written submissions of 20 April 2020 at [18] appear to incorrectly refer to the Attendance and Leave Procedure

 13   Written submissions of 20 April 2020 at [19]

 14   Ibid at [21]

 15   CEPU written submissions of 20 April 2020 at [28]

 16   Ibid

 17   Ibid at [29]

 18   Ibid at [32]

 19   Exhibit A4 - 20 May 2020 and Exhibit A3 - 3 April 2020

 20   Exhibit A3 Witness statement of 3 April 2020 at [17 – 18, 35 – 36, 39]

 21   Exhibit A4 Witness statement of 20 May 2020 at [7]

 22   Witness statement of 3 April 2020 at [93]

 23   Exhibit A1 Witness statement 17 April 2020 at [23]

 24   See clause 38.7 of 2005 Agreement

 25   Exhibit A1 Witness statement 17 April 2020 at [45]

 26   Written submissions of 5 May 2020 at [10-12]

 27   Ibid at [34]

 28   Mr Cairns left RIC in 2003

 29  Exhibit R2 Witness statement of 6 May 2020 at [14-15]

 30   Exhibit R3 Witness statement of 5 May 2020 at [10-14]

 31   Exhibit R5 Witness statement of 6 May 2020 at [9]

 32   Ibid at [27]

 33   Exhibit R1 Witness statement of 6 May 2020 at [4] and [9]

 34  [2014] FWCFB 7447

 35 (2006) 153 IR 426

 36   Ibid at 438

 37 (1996) 66 IR 182

 38   Ibid at 184

 39   [2017] FWCFB 3005

 40 (2005) 222 CLR 241

 41   Ibid at 246

 42   Ibid at 262

 43 [2020] FCA 951 at [16-17]

 44   Sydney Trains written submissions 6 May 2020 at [30]

 45 [1982] HCA 24; (1982) 149 CLR 337 at 352.

 46   PR924146

 47   Ibid at [20]

 48   Print PR903843, 2 May 2001 per Williams SDP

 49   Print M2454, 7 June 1995 (Ross VP, Polites SDP and Grimshaw C).

 50   Ibid at [7]

 51   [2019] FWCFB 161 at [40]

 52   2018 FWCFB 3744

 53 149 CLR 337 at 352.

 54   PN 1139