Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Woodside Energy Ltd
[2024] FWC 3361
•3 DECEMBER 2024
| [2024] FWC 3361 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
Woodside Energy Ltd
(C2024/5859)
| DEPUTY PRESIDENT O’KEEFFE | PERTH, 3 DECEMBER 2024 |
Application to have the FWC deal with a dispute arising from the wording of an agreement.
The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (CEPU) has applied under s.739 of the Fair Work Act 2009 (Cth) (the Act) to have the Fair Work Commission (FWC) resolve a dispute with Woodside Energy Ltd (Woodside) regarding the the proper interpretation of clause 11.6 of the Woodside Energy Lt North-West Shelf Gas Platforms Enterprise Agreement 2023 (the Agreement).
The clause in question reads in full as follows:
“11.6 Flexible Working Arrangements / Part Time
Flexible work arrangements will be guided by Woodside’s Making Flexibility Work Guideline.
Part time employment is when an employee works less than the full-time hours on a regular basis. The minimum and employee can work part time is 20% (equal to 1 day per week) in the Perth office and 50% in remote locations. Part-time employment includes job-sharing and transitional arrangements such as transitioning back to work from parental leave, illness or injury or transitioning to retirement.
Employees who are on a job-share arrangement at the time their employment may end on the grounds of redundancy, will be entitled to redundancy payments on a pro-rata basis. Prior to a job-share arrangement commencing, the Employee’s supervisor or line manager will explain this to the Employee in writing.”
The parties are in dispute over the meaning of the first sentence of the final paragraph.
Background
The clause was negotiated as part of the broader negotiations for the Agreement. As the Agreement replaced an arrangement of common-law contracts underpinned by the relevant Modern Award and supplemented by various policies, there is no effective agreement antecedent clause to examine. However, it is common ground between the parties that the issue of the correct redundancy payment for job-share workers arose during negotiations.
Where the parties are at odds is over the meaning of “pro-rata”. The CEPU contends that the agreed position in negotiations was that an employee who moved into a part-time job-share position would – if made redundant – receive recognition of their previous full-time service in their redundancy pay. By way of example, an employee who worked for ten years on a full-time basis (38 hours per week) and one year part time at 19 hours per week would receive 10 years of redundancy benefit at 38 hours per week and one year of redundancy benefit at 19 hours per week.
Woodside contends that, consistent with its internal policies and the position it put in bargaining, an employee who is made redundant has their redundancy entitlement calculated according to their status at the time of redundancy. As such, in the above example, the employee would receive 11 years of redundancy benefit at 19 hours per week. The parties were unable to resolve the matter between themselves. Woodside accepted that the dispute has been validly raised in accordance with clause 25 – Dispute Resolution Procedure of the Agreement. Given this, the FWC is empowered to deal with the matter in accordance with s.739 of the Act. I attempted to conciliate between the parties, but an agreement could not be reached.
As such, the matter proceeded - as permitted by clause 25.1(e)(ii) of the Agreement – to arbitration. Woodside proposed that the question for the FWC to determine was as follows:
“Does the Agreement require Woodside to calculate a job-share employee’s redundancy payments at their full-time rate for any period of service they worked full-time and their part-time rate for any period of service they worked part-time?”
The CEPU did not concede that the dispute should be solely confined to answering this question but agreed that answering that question was an important part of resolving the dispute
Submissions and Evidence
I note at the outset that bargaining for the Agreement involved employee organisations other than the CEPU and some individual bargaining representatives. It appears that the claim to have redundancy treated as per the CEPU’s submissions in this case was not initially made by the CEPU. Nevertheless, the CEPU supported the position and so for ease I will refer to the claim as the CEPU’s claim.
The CEPU submitted that the principles of enterprise agreement interpretation are well settled and referred to the summary in James Cook University v Ridd (Ridd), which is set out as follows (citations removed):
“The starting point is the ordinary meaning of the words, read as a whole and in context.
(ii)A purposive approach is preferred to a narrow or pedantic approach — the framers of such documents were likely to be of a “practical bent of mind” The interpretation “turns upon the language of the particular agreement, understood in the light of its industrial context and purpose”
Context is not confined to the words of the 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”
(iv)Context may include “... ideas that gave rise to an expression in a document from which it has been taken”
Recourse may be had to the history of a particular clause “Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form...””[1]
The CEPU submitted that there were further principles which were particularly relevant to this matter, citing the principle that words and sentences in an agreement must be given some meaning and effect and that as agreements are instruments intended to confer a benefit, interpretation should prefer a generous construction consistent with conferring a benefit.
As to the meaning of “pro-rata”, the CEPU submitted that in the industrial context it could have multiple interpretations and provided a number of examples of how this could be the case, including examples from the Agreement itself. The CEPU correctly identified that an established principle of interpretation is that an ambiguity must first be established before looking at matters beyond the written terms.[2] Essentially, the submission was that the imprecise nature and context dependency of “pro-rata” created an ambiguity and in doing so, enlivened the prospect of consideration of other matters such as objective intentions in bargaining.
It was the CEPU’s submission that having established an ambiguity, the FWC should look to the objective intentions of the CEPU when the clause was being negotiated. The CEPU had regarded the proposition of a full time employee moving to part time and losing the benefit of their full time service if made redundant as unfair. As such, it had sought to ensure that such an employee retained the benefit of their full time service. The CEPU further submitted that the notion of paying redundancy based on the history of an employee’s status – as opposed to their status at the time of redundancy was “entirely ordinary and natural”.[3]
The CEPU also submitted that I should be mindful of the principle of contra proferentem – that ambiguities should be resolved against the drafter of a document – as the principle had been adopted in industrial matters.[4] The CEPU proposed that the following factors suggested that the contra proferentem principle was applicable in the current matter:
“a. Express evidence that the clause was drafted by the Respondent,
b. The drafting party was represented by legally qualified persons acting opposite lay persons (albeit some of whom were industrially experienced and had access to legal assistance),
c. The drafting party prepared explanatory material provided to employees that did not address the point.
d. There is evidence that there was a contemporaneous understanding of the meaning of the impugned expression,
e. There is evidence of an intention (objective and subjective) intended by the relevantly ambiguous words,
f.There is evidence of mutuality of understanding at the bargaining table that the relevant word would have a certain effect and meaning. The employer adopted the words of an employee representative and has capriciously contented to attach a different meaning to it,
g. The explanatory materials prepared by the drafting party are conspicuously silent on their contention about the operation of the clause,
h. The understanding of the representatives, and employees was reasonable in the circumstances, and
i.The employer knew, or should reasonably have known, that there was a material difference in understanding between the employee representatives and the employer.”[5]
Evidence for the CEPU was given by Mr Les Segger (Mr Segger) and Mr Adam Woodage (Mr Woodage). Mr Segger is an employee covered by the Agreement who was also present at some of the bargaining meetings. In particular, he was present at a meeting where the issue of redundancy pay for ‘job-share” employees was raised. Job share employees work part time such that a full time position is essentially split between them with one employee taking half of the “swings” and the other employee taking the other half. The consensus between the parties seems to be that this is the only practical way for part time employment to work at the site.
It appears that there are a number of employees who have moved into such arrangements and others who were contemplating them at the time of the negotiation of the Agreement. These people were the first practical instances of part time employment at the site. Given that it would always be the case that such part time employees would have moved or be moving from full time employment, the CEPU had believed the issue of their redundancy entitlements should be resolved.
Woodside had a note-taker at the meeting on 10 August 2023 where the matter was discussed and an excerpt from those notes was entered into evidence by both parties. The relevant part of the excerpt is shown below. LM and DS are the Respondent’s bargaining representatives. DH, LS, GS and LL are employee bargaining representatives.
· “LS raised an issue with par time. If a drop in FTE it doesn’t seem fair.
· LM noted we don’t stagger it based on previous rem.
· DH Les is right, could offer job share and make them redundant later.
· DS point would be that if someone requested job share we would explain content and what might happen. DH it would be a block on job share arrangements tom reduce so significantly.
· LM other way to look at it is redundancy ties you over until next job. If you’ve gone onto job share your redundancy pay should represent 50% work. It’s not for years of service.
· DH if accurate everyone would get the same.
· (f) agreed subject to the point re: job share point.
· GS company point of view, you’re a lot more exposed in job share scenario.
· DH should be pro-rated from the date they took the job share.
· DS view is you can go into job share eyes wide open. DH you want to encourage it.
· LL document should reflect going to part time reflects a loss in redundancy should you choose to part time.
· DH when we get to job share arrangements that prior to signing job share they will be advised that redundancy entitlement would be impacted.”[6]
It was Mr Segger’s evidence that arising from this discussion he understood that the period of full time work would be preserved for a job share employee and they would receive full value of such period if made redundant. It was his further evidence that this was a consensus view amongst the employee representatives in the meeting. Mr Segger also stated that claims were not usually accepted in the bargaining room, but that claims could be taken as accepted when they appeared in the drafting. As the draft agreement had been updated to note pro-rata for job share employees after the meeting, he took this to mean the CEPU claim had been accepted.
Under cross-examination, Mr Segger confirmed that his evidence reflected his subjective understanding of what had transpired during bargaining. In answer to my question he confirmed that he had not seen or heard the Woodside representatives agree to the CEPU’s claim in the meeting on 10 August 2023 and that his understanding was that at that point the Company was maintaining its position – meaning a job share employee would get their entire redundancy at the part time pro-rata rate. However, he believed this position had changed based on his reading of the draft of the Agreement provided by Woodside subsequent to the 10 August 2023 meeting.
Mr Woodage is the Western Australian Secretary of the CEPU and was also present at the meeting on 10 August 2023 albeit that he did not make any comments during the part of the meeting set out above. In his evidence, Mr Woodage states that he believed that there was no ambiguity in the clause and that it reflected what had been dealt with directly at the bargaining table. It was his evidence that when Mr Sproule (marked as “DS” at paragraph 15 above) had said that people would go into job share with their eyes open he meant that they would receive a pro-rata redundancy benefit from that point but still receive full redundancy value for their full time service. Mr Woodage further states that when he saw that the Woodside representatives had drafted the term “pro-rata” into the wording around job share he took this to mean the CEPU claim had been accepted.
Under cross examination Mr Woodage confirmed that in each case where he expressed an understanding this was his personal subjective understanding. I put to Mr Woodage that his evidence was that the claim had been dealt with directly at the bargaining table. However, it did not appear to me that the notes of the meeting on 10 August 2023 reflected the Woodside actually giving any agreement. Mr Woodage explained that he had understood that it had been agreed based on the conversation between Mr Sproule and Mr Heath (marked as “DH” in paragraph 15) during the meeting on 10 August 2023. However, he conceded that he could not recall a time where Woodside had clearly and unequivocally stated that they were changing their position on the claim.
In its submissions, Woodside contended that clause 11.6 was in fact clear and unambiguous and as such there was no need to look to any extrinsic materials to determine its meaning. It noted the finding of the Full Court in Bianco Walling v CFMMEU (Bianco)
“It may well be the case that the mere existence of rival contentions as to the meaning or application of a provision or provisions in an enterprise agreement is not sufficient to indicate ambiguity or uncertainty for the purposes of s 217.”[7]
Woodside submitted that
“(t)he effect of the phrase ‘pro rata’ in clause 11.6 is that the redundancy entitlement of job share employees is a proportionate amount of the redundancy entitlement that a full-time employee with the same continuous service would receive on termination. For example, if the employee is working a 50% job share arrangement at the time of termination they would receive half the amount of an equivalent full-time employee. This interpretation is clear when the phrase is read in the context of:
(a)the subject matter to which it relates (i.e. the redundancy entitlement which crystallises on termination of employment on grounds of redundancy); and
(b)the Agreement as a whole, including the express formula in clause 10(f) of the Agreement.”[8]
Woodside further submitted that even if it was found that the clause was ambiguous, the extrinsic material supported its contention as to the correct interpretation. As with the CEPU, Woodside submitted that the principles of agreement interpretation are well settled and cited the findings in Skene v Workpac Pty Ltd (2018) 280 IR 191, Australian Manufacturing Workers’ Union v Berri Pty Ltd (2017) 268 IR 285 and Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd (2014) 245 IR 394 as support for the following propositions:
“(a)The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context.
(b)The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose. Context might appear from:
(1) the text of the agreement viewed as a whole;
(2) the disputed provision’s place and arrangement in the agreement; (3) the legislative context under which the agreement was made and in which it operates.
(c) The words are not to be interpreted in a vacuum divorced from industrial realities; rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament.
(d)A purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced.
(e)If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
(f)If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aid the interpretation of the agreement. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:
(1)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;
(2) notorious facts of which knowledge is to be presumed;
(3)evidence of matters in common contemplation and constituting a common assumption.
(g)A common intention is identified objectively; that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement. This means evidence tending to establish objective background facts known to both parties that informed the subject matter of the agreement.
(h)What employees were told for the purpose of satisfying the explanation obligations 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.
(i)Regard is not to be had to the subjective intentions or expectations of the parties.
(j)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.”[9]
Woodside then submitted that its interpretation of pro-rata arises from the ordinary meaning – being a proportionate amount of – and the context of clause 11.6 and the Agreement as a whole. It contended that pro-rata in clause 11.6 is directly referable to the words that precede it, being “redundancy payments” and that to achieve the CEPU’s interpretation, additional words would be needed to delineate different types of employment during the employee’s tenure. Woodside further submitted that clause 11.6 fixes the entitlement at a particular point in time, being the time an employee’s employment ends on the grounds of redundancy.
Woodside says this fixed point in time is relevant because the entitlement to redundancy is not a progressively accruing entitlement but rather one that crystallises at a point in time. Further, the Agreement does not contemplate that crystallised entitlement drawing upon any part of the employee’s employment other than the status applying at the time of redundancy.
Woodside submits that the Agreement – at clause 10(f) – provides an express calculation for redundancy payments based on an employee’s weekly rate of pay inclusive of base pay plus certain allowances as relevant. Consistent with clauses 12.2 and 12.4(b), these amounts are pro-rated for part time employees. The weeks of redundancy pay to which an employee is entitled is then calculated based on their length of service, with no reference to the nature of the employment during that time. In concluding its submissions regarding the Agreement as a whole, Woodside also notes that clause 11.6 is also consistent with clause 10(k) – which states that part time employees receive a pro rata benefit for redundancy and clause 6(d) – which states that part time employees receive the Agreement benefits on a pro-rata basis.
In terms of the broader industrial context, Woodside submitted that its interpretation was consistent with the provisions of the Act at s.119, the underpinning Award – which it notes simply applies the provisions of s.119 – and in a previous case finding of one of the FWC’s predecessor bodies, being the Australian Industrial Relations Commission in The Australian Workers’ Union v Electrolux Home Products Automated Equipment and Testing (2004) 55 AILR 100-266(5) at [40]. Woodside contended that for an agreement provision to deviate from the industrial norm would require clear and express language. Woodside also made submissions with respect to its interpretation being consistent with the intention of redundancy payments as established in case precedents. It further illustrated its point with references to the accrual of annual leave and long service leave.
Having made significant submissions with respect to the notion of there being no ambiguity, Woodside then addressed the extrinsic materials it said were relevant to the FWC’s considerations and supported its interpretation. It submitted as follows:
“(a)Woodside’s position from the outset of bargaining was that it would ‘lock in’ its existing policy positions into the Agreement.
(b)In relation to redundancy payments, the existing policy position was found in Woodside’s Separation Guideline... The Separation Guideline provides for the same entitlement in terms of weeks of redundancy pay on termination for grounds of redundancy in clause 4.9.2, but does not address part-time employee entitlements expressly. Ms Mussared’s witness statement addresses how this policy was applied practically to part-time employees.
(c) Woodside’s representatives did not have a mandate in the relevant bargaining meetings to deviate from the existing policy position on redundancy pay, and the evidence in relation to what was said in the meetings support this. There was no need to seek an alternative mandate based on the discussions and none was sought.
(d)The evidence of what was said in the bargaining meetings does not support that any concession was made by Woodside during the bargaining meetings; rather, the evidence demonstrates that
(1)Woodside explained its position to the bargaining representatives and provided justification for its position;
(2)the union and employee representatives disputed that this was unfair; and
(3)while Woodside did not agree to change its position on the entitlement, it agreed to expressly include an obligation on it to explain this position to Employees before they commenced in a job share arrangement, by explaining the impact (i.e. reduction that would result) to their redundancy entitlements.
(e)The contemporaneous minutes support the above summary of the progression of the discussion during the relevant meeting. There is nothing in the evidence to suggest a ‘mutuality of understanding’ at the bargaining table adopting CEPU’s interpretation other than the subjective intentions and expectations of CEPU’s witnesses.
(f)The explanation document for the Agreement which was provided during the access period to Employees simply replicated the clause and did not provide any further commentary in relation to the meaning or effect of this clause. Woodside’s position is that there was no additional explanation required because the plain and ordinary meaning of clause 11.6 of the Agreement was consistent with the existing policy position, the FW Act and the Award. There was no difference to be explained, and there was no requirement to explain a claim that had not been agreed to during bargaining.
(g)Had CEPU’s interpretation, i.e., to preserve the periods an Employee worked ‘full time’ in the definition of continuous service, been accepted by Woodside, the evidence is that Woodside’s representatives would also have used this considerable concession on its part as a significant selling point to Employees to vote up the Agreement. The explanatory materials do not contain such a ‘selling point’.
(h)The limited conversation in the minutes, and the concise drafting supports a finding that CEPU’s interpretation was not adopted, because it would have required a detailed discussion and extensive drafting on how to ‘preserve’ the FTE component of the redundancy pay entitlement.”[10]
Evidence for Woodside was given by Ms Elizabeth Mussared (Ms Mussared). Ms Mussared was part of the bargaining team for Woodside. Her evidence was that Woodside had considered the redundancy proposals that formed part of the CEPU claims but had rejected them and proposed instead to “lock in” to the Agreement the provisions of the Woodside Separation Guideline (the Guideline). The Guideline was and is Woodside’s internal policy document that deals with redundancy entitlements for all Woodside employees.
The Guideline was tendered into evidence and as stated by Ms Mussared, does not specify that any period of full time work is preserved for redundancy purposes when an employee moves into part time employment. Instead, the process was to establish a number of weeks’ entitlement based on years of service – irrespective of status - and then apply the weekly rate of pay prevailing at the time of redundancy.
Ms Mussared’s further evidence was that while there were some discussions about redundancy in the meetings prior to 10 August 2023, the specific issue of entitlements for part time job share employees was not raised until that date. Ms Mussared provided her recollections of the portion of that meeting as set out in paragraph 15 above. In summary, her evidence is that neither she nor Mr Sproule departed from the Woodside position of paying redundancy in a manner consistent with the Guideline nor had they agreed to the CEPU claim regarding preserving the value of full time service.
Ms Mussared states that she subsequently drafted new wording into clause 11.6 to reflect the position that part time job share employees would receive a pro-rata redundancy entitlement and that Woodside would advise employees entering a job share arrangement that this was the case. Given that none of the bargaining representatives raised any queries or issues with the drafting, Ms Mussared had regarded that matter as closed.
In reply submissions, the CEPU proposed that Woodside’s submissions were not persuasive. It sought to position those submissions as starting with a conclusion and then essentially backfilling the argument and proposed a number of examples of what it called “pseudo-arguments”. The CEPU also contended that Woodside’s preferred interpretation rendered the relevant provision “utterly without meaning”.
The CEPU also took issue with Woodside’s notion that a redundancy entitlement “crystallises” at a point in time and Woodside’s reliance on the notion of accrued entitlements as a distinction between redundancy and certain forms of leave such as annual leave. The CEPU also took issue with Woodside’s use of the finding in Bianco as follows:
“The employer is highly selective in its quoting of paragraph [70] of that decision. The Full Court is not endorsing the statement, though allowing that it may be correct.
The submission that the employer relies on Bianco to support is apt to mislead.
Far from a barrier to considering extrinsic material absent a finding of ambiguity. The same paragraph cited by the employer goes on to state “as was noted by the Full Bench in Tenix, ‘the [FWC] 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.’”
The case stands for the principle that in s 217 proceedings “far from being precluded from having regard to evidence of the parties’ common intention and to the history of cl 1.2, the Deputy President was permitted to have regard to them as part of the “equity, good conscience and the merits” of the matter” (at [68]).
It is also authority for the proposition that “the identification of the true meaning of a provision is distinct from the question of whether it is ambiguous or uncertain. Ambiguity exists when a provision in an enterprise agreement is capable of more than one meaning. … [A]mbiguity may be apparent on the face of the document or may become apparent only when extrinsic evidence is adduced” (at [67].)”[11]
Consideration
In the first instance I should make comment about the witnesses who appeared before the FWC. For the Respondent, Ms Mussared was cross examined for over an hour and a half on her involvement in bargaining and how various discussions were undertaken. I have reviewed the transcript of that cross-examination and I find that Ms Mussared was a calm, honest and credible witness who maintained her position without deviation throughout cross-examination. I find that she was clearly aware of the Woodside position that part time employees should receive pro-rata redundancy – being the number of weeks of severance pay based on the total years of service paid at the part time weekly rate - and did not deviate from that position in any meeting with the employee bargaining representatives.
However, I find that Mr Woodage and Mr Segger were also credible witnesses who had formed a view of what had been agreed and were honestly stating their beliefs about that agreement. However, for reasons that I will outline below, I have formed the view that their understanding of what was agreed was not consistent with what was actually agreed.
In the first instance I note the principles of agreement interpretation and I find I should start with a reading of the relevant words to find their ordinary meaning in the context in which they appear. The words in question are in a clause entitled “Flexible Working Arrangements / Part Time” and read as follows:
Employees who are on a job-share arrangement at the time their employment may end on the grounds of redundancy, will be entitled to redundancy payments on a pro-rata basis.
As set out above, a job-share arrangement means that an employee is working on a part time basis. The words make it clear that such an employee will – if made redundant – receive redundancy payments on a pro-rata basis. In other words, they will not receive a full redundancy benefit, but rather a proportion of the redundancy benefit. Given that job-share positions are part time, this notion of receiving a pro-rata benefit for redundancy is consistent with the provisions of cl. 10(k) of the Agreement which states as follows:
“Part time employees will be entitled to benefits under this clause on a pro-rata basis.”
I note that cl.10(k) is a subclause of clause 10 which is entitled “Redundancy”.
As such there does not appear to be any apparent ambiguity in the wording. The concept of pro-rata redundancy for a part time employee does not appear to me to be particularly controversial in normal industrial parlance. Section 119 of the Act does not mention pro-rata but it entitles an employee to a certain number of weeks of pay “at the employee’s base rate of pay for his or her ordinary hours of work”.
As such, where a part time employee’s ordinary hours of work are 19 hours per week, the employee receives the relevant number of weeks’ pay at the rate of 19 hours per week, as opposed to a full time employee with the same amount of service who would receive the same number of weeks of pay as the part timer but at the rate of 38 hours per week. The benefit to the part time employee is thus a proportion of the full time entitlement.
The CEPU points out – correctly – that there may be different methods of applying pro-rata in various circumstances. However, in the various examples the CEPU provides, the concept remains the same in that the employee receives, at the relevant time, a proportional benefit rather than a full benefit, where the full benefit is normally taken to be that to which a full time employee is entitled. I note that the CEPU in its discussion of various permutations of pro-rata also cites the system used in the Long Service Leave Act (WA) (the LSL Act) for employees whose hours have varied over the period of employment. In fact, that system is an averaging system rather than a process of calculating pro-rata at a point in time and that section of the LSL Act does not refer to the concept of pro-rata.
Given this, it is hard to see where the argument for ambiguity arises and it is tempting to rely upon the notion from Bianco that the mere existence of a contrary view does not equal ambiguity. It is certainly true that there needs to be some arguable case for the competing interpretation. While no clear case emerges from a reading of the words in the clause, that may change if one were to accept the submission of the CEPU that it is permissible to look to the extrinsic circumstances to find the ambiguity.
If I then look to the discussions and interactions that went on during bargaining, do they indicate that the clause as drafted and as it appears in the Agreement is ambiguous? To arrive at that conclusion I would need to find that the CEPU’s claim was accepted albeit that this may not be sufficient to establish an ambiguity. To illustrate this issue by way of example, if both parties had agreed that the Offshore Allowance was to be $105,000 per annum but the clause as drafted and as it appeared in the Agreement said the Offshore Allowance was $110,000 would this represent an ambiguity or an error? In my view, it would clearly be the latter as the clause as written would be clear and unambiguous. The Act provides avenues for parties to apply to the FWC to correct errors, but this is not such an application.
The clause under scrutiny is perhaps somewhat less straightforward than a clause that sets out a fixed dollar amount. Given this, if I were to take a further step in the direction that the CEPU invites me to take and say that it is ambiguous and I can look to the extrinsic circumstances, where does this lead? Essentially, I would still have to find that the CEPU’s claim was accepted. Clearly, the claim was discussed. The CEPU had a position it advanced but Woodside had a policy position that could not contemplate the CEPU claim. The witness evidence – including that given by the witnesses for the CEPU - is that Woodside never verbally agreed to or in any way indicated in a bargaining meeting that it would accept the CEPU claim.
However, what the CEPU witnesses say is that it was uncommon for claims to be agreed at the table. It was more usual for them to be indicated as agreed by Woodside when Woodside provided updated drafts of the Agreement that included provisions that reflected the claim. It was the evidence of the CEPU witnesses that when the drafting as it appears in the final Agreement appeared in a draft submitted by Woodside to the bargaining representatives, they assumed their claim had been agreed. While I accept that they did make this assumption, I cannot accept that they had reasonable grounds to do so.
What the CEPU was claiming - as per the claim it put in the bargaining meeting – was that for job share employees, redundancy:
“…should be pro-rated from the date they took the job share.” (my emphasis)
This definition means that – in effect – an employee who moves from full time into a job share arrangement retains the value of their full time redundancy entitlement – presumably as calculated at the time of the change to part time employment - and then from that point on, the redundancy entitlement is calculated at the pro-rata / part time rate. To use an example used by the CEPU, an employee who did ten years full time, moved to part time for a year and was then made redundant would get ten years’ worth of redundancy pay at the full time rate and one year at the part time rate. The draft clause presented to the bargaining representatives – being the clause as found in the final Agreement – makes no mention whatsoever of the pro-rata period starting at the commencement of a job-share arrangement. Nor does it in any way preserve the period of full time employment. It merely says that a redundant job share employee receives a pro-rata redundancy benefit, which is consistent with their status as part time employees.
Put another way, what the clause says on its plain reading is completely consistent with the Woodside Employment Separation Guideline. If Woodside had wanted to maintain the meaning from that Guide, the wording in the Agreement is in my view entirely appropriate. If, on the other hand, there was an intention to capture the meaning contended for by the CEPU, this would have required additional wording to properly capture a concept that is not consistent with pro-rata per se, but rather a mix of pro-rata and full value.
Had the parties agreed and then further contemplated the issue they would also have discovered that further explanation was needed to clarify the entitlement. The redundancy entitlements in the Agreement start with a base payment of 13 weeks, plus three weeks per year for the first five years, four weeks per year for the next five years and then five weeks per year after that (capped at 78 weeks). In the example above of the 10 year full time / one year part time employee, a different result can be derived depending on how one interprets the meaning of the CEPU claim. It could be the case that the employee gets the 13 weeks upfront payment plus the first 10 years’ worth (split between three weeks per year and four weeks per year) at the full time rate and then one year – being five weeks’ worth – at the part time rate. Or, it could be the case that there are two redundancies calculated – one for 11 years full time and one for 11 years part time and the employee then gets a percentage of each based on their split of service (in this case 91% full time and 9% part time). The two methods deliver a different result.
Given the wording needed to give effect and clarity to the CEPU claim, I cannot accept that it was agreed to by virtue of Woodside’s drafting of clause 11.6 in the Agreement. The CEPU interpretation simply cannot be found in the Agreement as drafted and as approved by the FWC and my conclusion is that irrespective of what the employee bargaining representatives may have concluded, Woodside did not agree to the CEPU claim and it is not reflected in the Agreement.
I should address two further issues. The first issue is the CEPU contention that the clause in question has no work to do. I disagree for two reasons. Firstly, it accurately reiterates the part time redundancy entitlement found at clause 10(k) and it does so in a clause that seeks to deal with the concept of job share. It creates no ambiguity with respect to the employee’s entitlement but rather it re-states the entitlement set out in the redundancy clause in the clause dealing with job share arrangements. Secondly, it is an important contextual sentence to proceed the sentence that follows it, being:
“Prior to a job-share arrangement commencing, the Employee’s supervisor or line manager will explain this to the Employee in writing.”
This drafting reflects the discussion in the meeting on 10 August 2023 that employees who move to job share should be made aware that their redundancy entitlement will be impacted. Taken together, the two sentences are perfectly harmonious – for job share employees this is the redundancy entitlement, and this entitlement will be explained to you if you move to job-share.
The second issue goes to the CEPU’s argument with Woodside’s assertion that redundancy entitlement crystallises at a point in time. It is clearly the case that different industrial entitlements are treated differently. Annual leave accrues progressively, and untaken annual leave is paid out to the employee on termination. Personal leave accrues but is only paid when the entitlement arises – by virtue of illness or caring responsibilities – and is not paid out on termination. Compassionate leave does not accrue, is only paid when the entitlement arises and is not paid out on termination. Long service leave (in Western Australia) is said by the LSL Act to accrue when the entitlement arises as a result of the appropriate length of service but does not accrue prior to this point.
While there are some redundancy arrangements where the redundancy may be said to accrue – for example on certain construction projects where it is a guaranteed payment at the end of the project – a more correct interpretation would be to say that redundancy is an entitlement that arises and is paid in a certain circumstance without it having accrued. Absent the construction example, employees do not get paid out redundancy entitlements if they retire or resign or are terminated other than in circumstances of redundancy. It is an entitlement that arises at a particular point in time and when it arises, the employee is compensated based on their employment circumstances at the time. I note that this principle is applied consistently throughout the Woodside Employment Separation Guideline, as under the Guide a part time employee who is made full time and is subsequently made redundant as gets the benefit of a redundancy at the full time rate with no discount for their part time service.
Conclusion
I find that there is no ambiguity in the terms of clause 11.6 of the Agreement and it makes clear that a job share employee, being a part time employee, is entitled to receive a redundancy benefit on a pro-rata basis if they are made redundant. Even if I go beyond the words of the Agreement and examine the interactions between the parties during bargaining for the Agreement, I cannot conclude that the position for which the CEPU contends was ever agreed. The question proposed for determination is as follows:
“Does the Agreement require Woodside to calculate a job-share employee’s redundancy payments at their full-time rate for any period of service they worked full-time and their part-time rate for any period of service they worked part-time?”
I find that the answer to the question is no.
As such, when correctly interpreted, pro-rata in clause 11.6 means that to determine a redundancy entitlement for a job share employee, Woodside should first calculate the employee’s total length of service, irrespective of whether that service was full time or part time. They should then apply the relevant calculations as per cl.10(f)(i)-(iii) of the Agreement to derive a total number of weeks of severance pay to which the employee is entitled. These weeks are then all to be paid at the employee’s weekly rate of pay at the time of redundancy, being in the case of a job share employee their part time week’s pay as defined.
The dispute is determined accordingly.
DEPUTY PRESIDENT
Appearances:
J Fox for the Applicant.
O Klimczak for the Respondent.
Hearing details:
2024.
Perth (by video):
November 19.
[1] James Cook University v Ridd [2020] FCAFC 123 at [65]
[2] See AMWU v Berri Pty Ltd [2017] FWCFB 3005 at [38]
[3] CEPU Submissions Page 6 Paragraph 36
[4] See SDA v Toys R Us [1997] IRCA 171 and CFMMEU v Transdev [2018] FWC 3421
[5] CEPU Submissions Page 8 Paragraph 42
[6] See Court Book Page 56
[7] Bianco Walling v CFMMEU [2020] FCAFC 50 at [70]
[8] Woodside Submissions Pages 1-2 Paragraph 6
[9] Woodside Submission Pages 4-5 Paragraph 17
[10] Woodside Submissions Pages 11-12 Paragraph 51
[11] CEPU Submissions Pages 8-9 Paragraphs 41-44
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