[2019] FWC 4

FAIR WORK COMMISSION

DECISION

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

Construction, Forestry, Maritime, Mining and Energy Union
v
Flinders Adelaide Container Terminal Pty Ltd
(C2018/5208)

FLINDERS ADELAIDE CONTAINER TERMINAL STEVEDORING ENTERPRISE AGREEMENT 2017-2021

Stevedoring Industry

COMMISSIONER HAMPTON

ADELAIDE, 6 FEBRUARY 2019

Dispute about matters arising under the enterprise agreement – selection processes for recruitment and promotional opportunities – selection criteria in agreement incorrectly applied and appointments made – management relying upon alleged discretion seeks to maintain original selection – dispute about process and whether discretion exists to make a decision not in accordance with the ranking order produced by the correct application of the agreed selection criteria – agreement construction principles discussed – provisions ambiguous and capable of more than one meaning when considered in context – objective meaning ascertained and to be applied – consequences of findings to be considered by the parties in terms of the current circumstances with liberty granted to apply for final determination of the dispute application.

1. The dispute

[1] This decision concerns the determination of a dispute about the proper application of the Flinders Adelaide Container Terminal Stevedoring Enterprise Agreement 2017-2021 (the 2017 EA). That instrument is an enterprise agreement approved¹ by the Commission under the Fair Work Act 2009 (the FW Act). The matter is before the Commission as a result of an application lodged under s.739 of the FW Act by the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU). The CFMMEU relies upon clause 10 Dispute Resolution of the 2017 EA.

[2] The 2017 EA commenced operation on 30 March 2018 and it covers and applies to Flinders Adelaide Container Terminal Pty Ltd (FACT) - the respondent employer, the employees whose interests are impacted by the dispute, and the CFMMEU.

[3] The substance of this matter involves a dispute about the application of the 2017 EA, and in particular, the operation of Clause 26 – Career Paths and Work Grades. Amongst other matters, clause 26.10.3 sets out selection criteria as part of a process when selecting employees for training and employment vacancies. The matter has arisen in the context of the selection of three employees for vacant Team Leader roles in the early part of 2018 and the subsequent dispute about the appropriate application of the selection criteria in the 2017 EA.

[4] Although I will return to the detail of the facts, the context for this matter includes that a process was followed whereby the agreement selection criteria was applied to choose three candidates for the Team Leader roles. After selections had been made, it became apparent that one element of the criteria had not been correctly applied. This meant, at least under the application of the criteria, that two of the three applicants would be different in the order of merit. FACT has confirmed the appointment of the three top candidates based upon the original process, and in effect, contends that it is able, having considered the proper (corrected) selection criteria, to make a selection based upon an overall assessment of merit, which in that case involved the three employees originally selected. That is, under the Agreement it has the final discretion on appointments and this was also consistent with certain assurances given during negotiations leading to the 2017 EA.

[5] The CFMMEU contends, in effect, that the selection criteria in the agreement establishes the merit selection outcome and it is not open to FACT to ignore that outcome and appoint on some other basis. That is, there is an agreed selection criteria and process set out in the Agreement and this must be applied to determine the appointments. To that end, it contends that the outcomes of the corrected selection process should have been applied.

[6] The Commission conducted a conference with the parties on 28 September 2018. This, and the various direct discussions between the parties, did not resolve the dispute. Pursuant to clause 10.2.1(e) of the 2017 EA the CFMMEU requested that the matter be listed for arbitration and determined by the Commission.

[7] It is common ground that the Commission is empowered under s.739 of the FW Act and clause 10 of the 2017 EA to determine this dispute. To that end, a statement of agreed facts was filed by the parties prior to hearing. That statement sets out the relevant events which led to the filing of the s.739 application and confirms that the relevant procedures required by clause 10 were followed to have the matter properly before the Commission for determination.

[8] By directions dated 10 October 2018, the parties were requested to agree on a suitable question for determination by the Commission by no later than 26 October 2018. The parties did not agree upon the precise question to summarise the issues in dispute. However, the following formulation proposed by the Commission was subsequently adopted by the parties:

“In applying the Flinders Adelaide Container Terminal Stevedoring Enterprise Bargaining Agreement 2017-2021 is FACT bound to apply the results of the criteria in clause 26.10.3 when making the selection for training or internal vacancies?

This will involve consideration of the Agreement as a whole including:

• How clause 26.8 and clause 26.10 are intended to operate; and

• Whether clause 26.8.2 and/or clause 26.10.2 mean that management can make a selection using a general or other discretion.”

[9] It became apparent during the hearing of this matter that the original selection decision was undertaken during the life of the previous enterprise agreement applying to the parties; namely, the Flinders Adelaide Container Terminal Stevedoring Enterprise Agreement 2014-2017 (the 2014 EA). That is, the actual process and original decision was undertaken at an earlier time than originally contended by the CFMMEU. Further, the request from the CFMMEU that FACT apply the outcome of the corrected selection criteria, the decision by FACT to maintain the original selections, and the subsequent dispute processes were all conducted during the life of the 2017 EA. I note that with the exception of one subclause, which I will return to, the relevant provisions of the two enterprise agreements are the same for present purposes.

[10] The CFMMEU contends that the dispute before the Commission concerns FACT’s decision on 6 August 2018 to “not apply the correct tenure score confirming the selection of (two candidates)” which is wrong. Further, given this occurred after the 2017 EA was in operation, the question for determination before the Commission concerns the current terms in that Agreement. Accordingly, it posited that no issue arises in relation to the power of the Commission to determine the dispute under s.739 of the FW Act and the dispute resolution clause of that Agreement. 2

[11] FACT contended that the dispute arose from a decision made by it in August 2018, during the life of the 2017 EA. Accordingly, there is jurisdiction for the Commission to deal with the present matter.

[12] I accept that the dispute has arisen and was properly notified under the 2017 EA. It does, in effect, result from the decision of FACT not to change the original selection outcome. There is agreed jurisdiction for the Commission to determine this dispute. The potential complexity arises from the fact that the original process occurred under the terms of the 2014 EA, and amongst other elements, FACT is relying upon some events that have led to the making of the 2017 EA to support its view about that instrument.

[13] In these circumstances, and noting the question for arbitration adopted by the parties, I consider that the Commission should determine the proper application of the 2017 EA, utilising the context provided by the present dispute about the selection of the Team Leaders, whilst noting any differences arising between the two agreements. Having done so, the Commission will then hear further from the parties about the proper disposition of the matter having regard, amongst other matters, to those findings and the consequences (if any) of the fact that part of the decision-making process leading to the dispute took place under the terms of the 2014 EA. This approach also permits the parties to address the appropriate outcome in the knowledge of my findings and the current circumstances of those impacted by the decision.

2. The relevant terms of the Enterprise Agreement

[14] Without overlooking the other provisions of the 2017 EA more generally, the following provisions are directly relevant for present purposes:

“4. OPERATION OF AGREEMENT

4.1 This Agreement shall be read in conjunction with the following awards:

• Stevedoring Industry Award 2010; and

• Stevedoring Long Service Leave Award 1992, (collectively referred to as “the Awards”)

Where there is any inconsistency between this Agreement and any provisions of the Awards, the Agreement shall apply to the extent of the inconsistency.

4.2 This Agreement supersedes any other award, agreement whether certified or not, memorandum of understanding, exchange of correspondence, work practices), arrangement(s), written or unwritten which applied prior to the commencement of this varied Agreement and which regulated the terms and conditions of employment of Employees covered by this Agreement.

… …

26. CAREER PATHS AND WORK GRADES

26.1 Career Paths

26.1.1 The Company will provide opportunities for all Employees to progress through job tasks within the grades. Such opportunities will be offered on the basis of operational requirements but the Company recognises the importance of FSEs career paths and will ensure opportunities shall be made available to FSEs.

26.1.2 Performance reviews may be conducted to assist Employees and management in identifying skill requirements, upgrade potential and to provide an opportunity for both parties to partake in feedback on career development for individuals.

26.1.3 Once given a training or career opportunity employees will stay in the chosen career path, ie. Maintenance, Operations, Clerical or Other as shown in the below Career path flow charts. All shifts worked including weekends and overtime will be only be in the chosen career path.

26.1.4 The parties have agreed to maintain a minimum of 51% of the operational workforce employed as FSEs. The remaining 49% can be made up of irregularly engaged employees. This percentage can be higher when the business determines that there is a genuine requirement for more FSEs If VSEs are exceeding 1645 ordinary hours per annum this will result in a discussion with the ERC regarding recruitment needs.

26.1.5 In relation to the above ratio, the total number of employees will be reduced by an agreed number (up to 25) to support the new operational roster implementation. The final number will be determined no longer than 12 months after the implementation of the new operational roster.

26.1.6 Progression through the job tasks within the grades and the education and training program shall be dependent on a balance being struck between the aspirations and achievement of Employees and the operational requirements of the Company.

… …

26.7 Promotion between Employment Categories

When a Supplementary to VSE or VSE to FSE promotion is triggered, the following criteria (the selection criteria will not apply) will be used:

• Physical ability to undertake inherent requirements* of the available role.

• No formal and/or final warnings on file for previous 12 months

• Minimum 2 years in category (where applicable) and (not including interhire employees)

• Not on a current AMP at time of placement.

• Availability to suit applicable roster.

• Final selection will be made on the basis of tenure (based on intake groups recruited) and where there is no differential between candidates including tenure, feedback will be sought from team leaders or other senior staff and the final decision will be made by management.

*Inherent requirements to be discussed and determined by ERC and Management with consultation of appropriate areas.

26.8 Recruitment

26.8.1 The Company reaffirms that the criteria that will apply when assessing applicants for vacant positions will be identified and available at the commencement of each recruitment process. Selection processes are subject to the selection criteria as set out at clause 26.10. The process will be transparent and input to the selection process will be sought from Supervisors, Team Leaders, Foreman and Head/Senior Clerks as appropriate.

26.8.2 Priority for consideration will apply to existing Permanent Employees, VSEs, then casually engaged Employees, and the final selection will be made by management and will be merit based.

26.8.3 Recruitment shall be undertaken on an operational needs basis or to fulfil requirements listed in the selection criteria in clause 26.10.

26.8.4 All vacancies will be advertised internally in the first instance. If such vacancies are unable to be adequately filled by internal applicants from within FACT they may be advertised externally either within the Flinders Port Holdings Group or the broader market.

26.8.5 Employees shall be notified of externally advertised positions

… …

26.10 Selection Criteria for Internal Vacancies and Training

26.10.1 The selection criteria identified below will be used for promotional opportunities, training opportunities and secondments.

26.10.2 Priority for consideration will apply to existing FSEs, VSEs, then supplementary employees, and the final selection will be made by management.

26.10.3 The criteria assesses candidates’ applications using a total of 100 points. The table below determines application for various roles/opportunities. To avoid confusion, the panel discussions below are to differentiate between equal candidates. Where the panel discussion is not necessary/used, the relevant points will be awarded regardless.

Where sub panel discussions occur with an applicant, the sub panel will consist of 50% of the original panel convened for the performance/behaviour feedback process.

Further explanation on each criteria heading is as follows:

26.10.3.1 Where appropriate the selection process will determine an eligibility list. This list will determine eligibility for opportunities defined for a period of 12 months (subject to continued good performance)

26.10.3.2 Once selected for a training opportunity, the selected candidate will be required to undertake the training package. Training may involve training during actual operations or using simulated conditions. If competencies can’t be achieved in a reasonable timeframe and after additional assistance where the candidate shows no signs of improvement, the Training Coordinator in conjunction with the relevant Manager will determine whether the trainee continues on the training program subject to due process.

26.10.3.3 In the case where a trainee does not progress with the training, the next candidate on the eligibility list will be selected for training at the next opportunity.”

[15] Clause 19 establishes the Employee Representative Committee (ERC) and its functions include:

“19.3.1 The ERC shall:

discuss and consult on a range of issues which include:

• market conditions and prospects

• site labour, skill requirements and shifts worked (including additional recruitment)

• training

• proposed technological change

• other significant changes

• anticipated effects of change

• use of contractors

• work practices

• consultation about operation of the Depot interface in regards to the relocation of the Empty Depot

• any proposed flexible work arrangements that affect other workers

• unresolved shop floor problems

• current/future facilities

• Special Compassionate Leave pool balance/updates

• Develop and monitor the Allocation principles with relevant Managers

• other matters of concern

discuss and attempt to resolve by consensus matters of mutual interest.

discuss the application of the simulator for training and selection processes.

make recommendations to the General Manager, where appropriate.”

3. The positions of the parties

3.1 Construction, Forestry, Maritime, Mining and Energy Union

[16] The CFMMEU contends that FACT is bound to apply the results of the selection criteria in Clause 26.10.3 of the 2017 EA, and by doing so, appoint the top candidates for the position/s based on those scores. It further contends that the Agreement does not permit management to exercise an absolute discretion to determine the appointments to the training or vacant positions or to use criteria not set out in the relevant provisions.

[17] The basis of the CFMMEU’s contentions may be summarised as follows:

• The parties agreed during negotiations for the 2014 EA to include an objective “Selection Criteria” – and this was replicated in the 2017 EA at Clause 26.10;

• Clause 26.8.1 expressly sets out that selection processes are subject to the selection criteria;

• The selection criteria is set out in Clause 26.10 which includes a ‘performance panel/feedback’ score which is a subjective assessment of an employee whereas the other criteria (inherent requirements for the role, availability, absenteeism and tenure) are objective;

• It is clear that the intended purpose of the selection criteria in clause 26.10.3 was to include terms in the EA for an objective process when selecting employees for training and employment;

• The ‘sub panel discussion’ score is only to apply a subjective assessment of an employee where employees have an equal score and there is a deadlock;

• The purpose of having a selection criteria is to provide a transparent and objective process when selecting employees for roles;

• In the particular circumstances of the employees which prompted this dispute, there was an error in the initial calculations which resulted in some employees being incorrectly ranked higher than others – despite those errors, and once recalculated, FACT did not select the three highest ranked employees – in breach of the selection criteria;

• The performance/feedback score and the option to apply a sub panel discussion score in the selection criteria reflects a balance between the opportunity for FACT to exercise its discretion whilst ensuring an objective and transparent process;

• The words in clause 26.10.1 are clear that the selection criteria in the table below clause 26.10.3 will be used for “promotional opportunities” – and that table determines application(s) for various roles/opportunities – which when read in conjunction with clause 26.10.1 it is plain the selection criteria in clause 26.10.3 is the process to determine the selection of employees for roles at the terminal;

• It would be nonsensical for the words in clause 26.8.2 “…the final selection will be made by management and will be merit based” and clause 26.10.2 “…the final selection will be made by management” to be treated as empowering FACT with absolute discretion to determine the selection of employees as it would give rise to an internal inconsistency with clause 26.10.1 which plainly states that the selection criteria in clause 26.10.3 determines the applications for roles at the Terminal;

• Given the placement and arrangement of the provisions, the references to the “final selection” were intended to provide management with a discretion only to change the order of priority between existing FSEs, VSEs and supplementary employees (if it has a valid reason to do so);

• Clause 26.8.2 and clause 26.10.2 must both be read in context and cannot be relied upon to selectively determine which parts of the criteria are to be applied; and

• The approach urged by FACT would also, in effect, render the selection process and criteria void.

[18] In relation to the discussions taking place during the negotiations of the 2017 EA, the CFMMEU contends that:

• Clause 26.10 plainly and logically describes the selection process and the Commission should not admit evidence of representations made during negotiations for the Agreement. The binding obligations between parties are the terms of the Agreement, not representations made during enterprise agreement negotiations;

• The language of clause 4.2 was intended to be a coverall binding the parties to the terms of the Agreement and making it clear that any prior agreement or understandings written or unwritten were superseded by the making of the Agreement, and this includes any representations made or reliance on assumptions during bargaining; and

• The evidence relied upon by FACT was vague and uncertain and not such as to represent any common intention of the parties.

[19] The CFMMEU further contends that FACT has applied an absolute discretion to ignore the proper application of the selection criteria in this case (by relying upon the original outcome and ignoring the corrected rankings), and it was not entitled to do so. Any discretion that was exercised by the employer was undertaken in an unjust and unreasonable manner given the original mistake, the fact that the performance scores between the relevant applicants was very close, and the differentiating criteria allegedly used by FACT is not reflected in the terms of the Agreement. Further, the corrected rankings moved two of the originally selected applicants significantly down the ranking order.

[20] The CFMMEU is seeking a determination which reflects that FACT is bound to apply the results of the selection criteria in clause 26.10.3 and may only vary those results by the sub panel discussions score where employees have an equal score. Further, it seeks a determination that the decision to select two of the employees based on an error with calculating the score for tenure was premised on a misunderstanding of the enterprise agreement, unfair and unjust. It seeks an Order, or alternatively a recommendation, that the decision made to appoint those two employees be revoked.

[21] The CFMMEU relied upon two witness statements of Mr Jamie Newlyn, Branch Secretary, South Australia Branch of The Maritime Union of Australia Division of the CFMMEU,³ and witness statements provided by Mr Brett Larkin, Team Leader and member of the ERC, and Mr John Van Dommelle, Team Leader, member of the ERC and branch committee of the MUA section of the CFMMEU.

3.2 Flinders Adelaide Container Terminal Pty Ltd

[22] FACT contends that the terms of the 2017 EA which are in dispute are capable of a literal interpretation, in that the “plain meaning” of those phrases supports its assertion that the “final [promotion] selection” will be made by management whilst “based on merit”. Further, or in the alternative, it submits that the phrase(s) are “susceptible of more than one meaning” or are arguably “ambiguous” in all the circumstances, meaning that the Commission must look to external or extrinsic circumstances surrounding the parties’ “common understanding” of the “objective background facts”.

[23] On either case, it contends that it has a discretion (to be exercised reasonably and in accordance with the 2017 EA) to vary the strict application of the “points based” selection criteria. It does not contend that management has an absolute or unfettered discretion in terms of who may or may not be appointed to a particular role.

[24] The basis of FACT’s contentions may be summarised as follows:

• Applying the plain and ordinary meaning of the words in clause 28.8 – it is clear that the selection criteria as set out in clause 26.10 is the “starting point” for selection and that the “final selection” will be made by management and will be merit-based;

• The qualifications or discretion to the effect that the “final selection will be made by management” is mentioned twice in the 2017 EA and is directly relevant to the proposition in AMWU v Berri that the “disputed provisions place and arrangement” is particularly important;

• Similar phrases are used in clauses 26.10.1 and 26.10.2 which support that the Selection Criteria is the “starting point” and that the “final selection” is to be made by management;

• The interpretation suggested by the CFMMEU ignores the ordinary and plain meaning of the phrase “final selection” and it is unclear what the Union asserts is the purpose or intended effect of the wording in dispute if not for its literal reading;

• The sub panel discussions are not an option to be exercised at the discretion of management as the sub panel clearly consists of representatives from both management and the ERC;

• The Selection Criteria should be applied and where the employees do not have equal points, each employee will simply be awarded the 5 maximum points and the sub panel discussions will not occur – clauses 26.8.2 and 26.10.1 then provide management with the final decision as to who is appointed to the role;

• Clauses 26.8.2 and 26.10.2 do not allow the employer to disregard the Selection Criteria;

• The Selection Criteria plays a critical role in the “final decision” made by the employer – and the employer does not have the power to completely disregard or set aside the comprehensive point allocation process in the 2017 EA;

• The relevant clauses do allow the employer to consider the final scores in conjunction with its discretion to make the final decision to appoint someone to the role;

• If the 2017 EA is found to be ambiguous or susceptible to more than one meaning then, in any event, the surrounding circumstances unequivocally support FACT’s interpretation. This includes that the absence of a direct connection (between the managerial discretion and tenure) or a change in the wording of the 2017 EA is only because of assurances provided by representatives of the CFMMEU during the negotiation process; and

• The discretion of management to make the final selection has been expressly included in the three previous enterprise agreements including the DP World Adelaide Enterprise Agreement 2011 Agreement, the 2014 EA and the 2017 EA. This demonstrates that the discretion is a notorious fact of which knowledge should be presumed.

[25] FACT also contends that the discretion relied upon by the CFMMEU (to determine the categories of employment from which applicants would be sought) does not exist. Rather, the 2017 EA requires the employment categories be discussed and determined by the ERC and management as confirmed in the second table in clause 26.10.3. This, it posits, confirms that the discretion being stated in clause 28.8.2 and clause 26.10.2 is for FACT to make the final selection decision on the appointments.

[26] In relation to the “assurances” provided during negotiations, FACT variously contends that:

• The CFMMEU representatives appear to have misled FACT by giving representations as to the intended application of the provision;

• This is not merely a case of suggesting that FACT may have “learned a lesson about trusting in such assurances, and that it will have learned from its mistake in the next round of bargaining”; and

• Those assurances are representations which go directly to the objective intentions of the parties, in the manner contemplated by AMWU v Berri, where a literal interpretation gives rise to ambiguity.

[27] FACT is seeking a determination to the effect that the employer must in the first instance apply the selection criteria at clause 26.10.3 of the 2017 EA; but that the final selection for recruitment to a particular position is to be made by management in accordance with clause 26.8.2 and clause 26.10.2, provided that the exercise of that discretion is made reasonably, not capriciously and in compliance with clause 26 as a whole. Further, it seeks confirmation that it has complied with the 2017 EA in relation to those matters now brought into dispute by the CFMMEU.

[28] FACT relied upon the evidence of two of its management employees; Mr David Sleath, General Manager and Mr Michael Alexander, Business Administration Manager.

4. Observations on the evidence

[29] Much of the evidence represented the subjective views of the witnesses about the intended application of the 2017 EA. This is properly a matter for the Commission to determine and I have treated all of that material as submissions.

[30] All of the witnesses were cross-examined and I have found that each of them genuinely attempted to assist the Commission, including by making concessions where appropriate. There are some factual disputes and these in my view arise, for the most part, from the degree to which the witnesses have been directly involved in the matters and understandable difference of recollection given their respective roles and positions.

[31] The factual tensions in the evidence involve three main issues. Firstly, the precise statements made in the context of the negotiations of the 2017 EA around the claim by FACT, which was ultimately not pursued, to change the emphasis in the selection criteria on the length of service (tenure). In particular, whether the CFMMEU negotiators emphasised that there was no need for a change to the criteria as management already had the final discretion – the “final say” (as contended by FACT) – or that if the criteria produced a candidate that was unsuitable, FACT could ultimately exclude the unsuitable candidate and select the next ranked candidate (as contended by the CFMMEU).

[32] As will become clear, in the final result the dispute concerning this aspect is more about the context, intended meaning and consequences, rather than the statements themselves.

[33] Secondly, there are differing versions about the timing and precise steps taken in the lead up to the original appointments. I have resolved this aspect based upon the documentation and objective first hand evidence.

[34] Thirdly, there is some dispute about the process adopted by management and the ERC following the disclosure that there had been an error in the original application of the selection criteria. In particular, whether the ERC had agreed to redo the selection process again (as contended by FACT) or only to correct the tenure points and apply the corrected results to the merit outcome (as contended by the CFMMEU). Ultimately, I do not consider that this aspect is decisive in the determination of this matter.

5. The approach to be applied to determining the proper application of an enterprise agreement

[35] A number of Full Benches of the Commission have outlined the approach that should be adopted in considering the construction and meaning of an enterprise agreement. The most recent statement of the principles was set out in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited⁴ (AMWU v Berri) in the following terms:

“[114] 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 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.”

[36] This is a non-exhaustive statement of the principles to be adopted⁵ and I have applied this approach in determining this dispute.

[37] In Geo A Bond & Co Ltd (In Liq) v McKenzie,⁶ (Geo A Bond) Street J said:

“...it must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result ... from an agreement between the parties, couched in terms intelligible to themselves but often framed without that careful attention to form and draughtsmanship which one expects to find in an Act of Parliament. I think, therefore, in construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award.”

[38] In Re Aurora Energy Enterprise Partnership Agreement 2002 – 2005 Lacy SDP observed that:

“It is a widely accepted principle of statutory interpretation that the rules of construction are rules of common sense. Where the choice is between an interpretation that will result in inconvenience, injustice or absurdity and another which avoids such a result, then the latter ought to be adopted.”7

[39] The importance of context was emphasised by Burchett J in Short v Hercus Pty Ltd⁸ in the following terms:

“6. No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use. It is in those circumstances that the author of the award has inserted this particular clause into it, and they may fairly be regarded as having shaped his decision to do so. The rules of construction, Mason and Wilson JJ. said in Cooper Brookes (Wollongong) Proprietary Limited v. The Commissioner of Taxation of the Commonwealth of Australia [1981] HCA 26; (1981) 147 CLR 297 at 320, are really rules of common sense. Common sense would be much offended by a refusal to look at the facts I have summarized. As Isaacs J. said in Australian Agricultural Company v. Federated Engine-Drivers and Firemen's Association of Australasia [1913] HCA 41; (1913) 17 CLR 261 at 272, citing Lord Halsbury L.C.: "The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it.

… …

8. That much is fairly clear. Where there is seen to be a difficulty, the court can often go to the history of the matter. A number of illustrations will be found in Nurses (South Australia) Award (Interpretation) Case (ubi supra). But an ambiguity or obscurity may not be immediately seen on the face of a document. Both the problem and its solution may appear only when the wider context from which an expression first sprang is brought to notice. Is the court then forbidden to look past the document itself that is before it? The respondent says the instant award is clear, and we must shut our eyes to what went before. I think there are two answers to this argument. On the one hand, I do not accept that the award is clear on its face. The fact that I have given it a meaning by a process of construction (as it happens, contrary to the respondent's contention) cannot disguise the possibility of understanding the language, as the learned judge understood it, differently. (Cf. Pickard v. John Heine and Son Limited [1924] HCA 38; (1924) 35 CLR 1 at 9, per Isaacs A.C.J.) That is certainly sufficient to justify a reference to its source. 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, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. "Sometimes", McHugh J. said in Saraswati v. R [1991] HCA 21; (1991) 172 CLR 1 at 21, the purpose of legislation "can be discerned only by reference to the history of the legislation and the state of the law when it was enacted". Awards must be in the same position.”⁹

[40] The nature of the present task has also been emphasised by the Full Bench in DP World Brisbane Pty Ltd v The Maritime Union of Australia¹⁰ in the following terms:

“[31] Importantly, the task of interpreting an enterprise agreement does not involve re-writing a provision in order to give effect to the Commission’s view of what would be fair and just, without regard to the terms of the agreement. As Madgwick J observed in Kucks v CSR Limited:

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

[41] All of the above observations are consistent with the approach taken in AMWU v Berri. In the end, my present task is to ascertain the objective intention of the 2017 EA based upon the language and terms of the agreement, when read as a whole, and considered having regard to its context and purpose.

[42] For completeness, I observe that the Commission is not being requested to grant some form of declaratory relief and is not empowered to do so.¹¹ Rather, the Commission is determining the proper application of the 2017 EA in order to determine the dispute between the parties about that instrument under the terms of the agreed dispute resolution procedure.¹²

6. The broad factual context

6.1 The workplace

[43] FACT conducts a significant container terminal facility in the Port of Adelaide. The 2014 EA applied, and the 2017 EA applies, to the stevedoring employees engaged in that operation.

[44] FACT employs something in the order of 300 employees, including 20 Team Leaders. The categories of employees includes:

• Fixed Salaried Employees (FSEs) – who are considered to be permanent employees on fixed salaries;

• Variable Salaried Employees (VSEs) – also permanent employees but paid on a different salary basis; and

• Supplementary employees, also referred to as casual employees.

[45] The Team Leader roles are FSE positions and are considered to be senior leadership positions operating under the Supervisors.

[46] Team Leader vacancies occur on average only once in every two years and are keenly sought by the employees.

6.2 The history of the Agreement provisions

[47] The arrangements which preceded the 2014 and 2017 EAs provide some context for the present Agreement but are not relied upon more generally. 13

[48] The Adelaide terminal now operated by FACT was owned and managed by DP World in 2008 when the concept of a transparent selection process was introduced for the first time in the DP World Adelaide Terminal Enterprise Agreement 2008.

[49] The DP World Adelaide Enterprise Agreement 2011 set out particular selection criteria and an approach that included the following:

“8.15 The Company reaffirms that the criteria that will apply when assessing applicants for vacant positions will be identified and available at the commencement of each recruitment process. Selection processes are subject to the Selection Criteria as set out at Appendix 2. The process will be transparent and input to the selection process will be sought from Team Leaders, Foreman and Head/Senior Clerks as appropriate.

Priority for consideration will apply to existing Permanent Employees, VSEs, then casually engaged Employees, and the final selection will be made by management and will be merit based.”

[50] When FACT took over the Terminal in 2012 the employees transferred their employment and the employer continued to apply the terms and conditions in the DP World Adelaide Enterprise Agreement 2011 until a new Enterprise Agreement came into operation to replace it in 2014.

[51] The terms now found in clause 26 of the 2017 EA were originally negotiated and included as part of the 2014 EA. This arose in the context of an MUA claim to include a (more) objective selection criteria when employees were being selected for employment or training.

[52] During the negotiations leading to the 2017 EA, FACT contended that the selection criteria was “tenure biased” with “restrictive weightings” and proposed removing the tenure component in the selection criteria, or alternatively, reducing the weighting from 25 points to 20 points. FACT also suggested increasing the weighting for the feedback component in the selection process from 25 to 30 points.

[53] In his evidence, Mr Van Dommelle accepted that during the course of these discussions, he had indicated to Mr Sleath that management “had the final say” in relation to selection decisions and that if a candidate was considered unsuitable by management, they could overlook that person and move to the next candidate. 14 I will return to the disputed context and import of these discussions shortly.

[54] Ultimately, the negotiating parties agreed not to change or remove the selection criteria from the Agreement and it was approved by the employees in the present form. There were some minor drafting changes to other provisions and a variation in what is now subclause 26.10.3.1 from:

“26.9.3.1 For training opportunities, the selection process will determine an eligibility list. This list will determine eligibility for training in the skill area defined for a period of 6 months (subject to good performance)” – 2014 EA.

“26.10.3.1 Where appropriate the selection process will determine an eligibility list. This list will determine eligibility for opportunities defined for a period of 12 months (subject to continued good performance).” – 2017 EA

[55] As set out above, there is a dispute about the context and implications of some positions advanced by the CFMMEU representatives in these discussions. I have found that amongst the reasons given by the Union for resisting FACT’s proposals, was that FACT would in any event “have the final say”, or words to that effect. I accept that this was stated by one or more of the delegates in the context that this meant that if the process produced a candidate that was not suitable, the employer could prevent that outcome. This was based, at least in part, on the fact that the elimination of candidates that were not suitable, should, under the procedure, have been excluded at the outset; however this had not always been followed in that order and performance or disciplinary matters were at times dealt with later in the process.

[56] It is not clear on the evidence that this context, or any associated caveats, was expressed at the time and I accept that FACT would have reasonably understood the delegates to be indicating that it was the employer would have the ultimate say on the selection decisions. These statements were not reflected in any amendments to the enterprise agreement or formalised in any manner and there is no evidence before the Commission that this understanding was communicated to the employees during the agreement approval processes.

[57] I will return to the significance of, and weight to be given to, these exchanges.

6.3 The historical use of the disputed provisions

[58] There is little detailed evidence before the Commission about the use of the disputed provisions under the various enterprise agreements. However, the following is revealed by the relevant evidence:

• The process set out in the relevant Agreement has generally been followed to make selection decisions, albeit that the sequence and detail has not always been strictly complied with. This includes that the selection criteria has not always been applied to eliminate candidates before the performance/feedback process is undertaken and that the sub panel may have been utilised for further consultation and, at times, to consider the application of the eligibility criteria even when not strictly required by the agreement provisions;

• There has not been an occasion where the eligibility criteria for applicants could not be agreed between the ERC and management;

• The application of the (agreed) selection criteria and the points arising from the table in clause 26.10.3 is in practice undertaken by FACT’s Human Resources and Labour departments and provided to management. The specifics of any disciplinary matters and the points arsing from the table are not, in the normal course, provided to the ERC but may be given if requested; and

• FACT had not, until the present events, declined to apply the outcome of the selection criteria set out within the relevant enterprise agreement.

[59] The evidence also reveals that during the course of some ERC and other discussions during the last 18 months or so, Mr Larkin, and potentially others, made statements to Mr Sleath or Mr Alexander to the effect that they would respect management’s right to change the outcome of the selection process with a valid reason. 15 There is limited evidence about when and in what particular context these discussions took place, including that the notion was that management should not be worried about the criteria or process.16 On face value, these statements are more consistent with the notion that FACT had discretion to not apply the outcome of the agreed selection process in order to prevent the appointment of someone who was not, in the employer’s view, suitable. However, given the absence of any reliable evidence about context including what the comments were responding to, and the fact that what was actually intended was not tested at the time, or indeed at any time given the absence of a circumstance where FACT intended to exercise any such discretion, this falls short of the kind of common objective understanding of facts that would be influential under the approach required by AMWU v Berri.17

[60] All of these findings are relevant to an assessment of the context within which negotiations for the 2017 EA and the subsequent events took place. In the circumstances, they do not, however, directly inform the proper application of the Agreement.¹⁸

6.4 The events leading to the disputed selection decision

[61] As a result of changes in the rostering system, FACT determined to increase the number of Team Leaders by recruiting an additional three such employees.

[62] On 28 December 2017, FACT sent out an expression of interest¹⁹ regarding the three Team Leader roles with a closing date of 5.00pm 18 January 2018. Prior to doing so, management of FACT and the ERC discussed the eligibility criteria for the positions and agreed that applicants would be sought only from FSEs.

[63] After 12 expressions of interest were received, FACT undertook the selection process by applying (incorrectly in one respect – the tenure points) the selection criteria in clause 26.10.3 of the 2014 EA. This process included obtaining and assessing feedback from employees about the performance feedback criteria in clause 26.10.3 and consideration of that element by the panel, and was completed on 7 February 2018.

[64] On 19 February 2018, FACT made verbal offers to the three employees with the highest overall rankings and these offers were all accepted. These employees commenced their roles on 2 April 2018.

[65] Following the appointment of the Team Leaders, a number of applicants who were not successful approached Mr Alexander and raised concerns about their non-selection including that the feedback provided during the selection process was “biased”.

[66] In March 2018, Mr Alexander was involved in the recruitment process for another position (Relief Equipment Controller) and became concerned that the allocation of the tenure points in that process was not correct. That is, all of the candidates had been given the same points.

[67] On 10 April 2018, FACT management discussed how points should be calculated for tenure when applying the selection criteria in the relevant agreement. This arose from Mr Alexander’s concerns and a review of the allocation of tenure points more generally.

[68] On 8 May 2018, concerns were raised by the CFMMEU at an ERC meeting regarding perceived bias in the feedback component relating to the Team Leader positions. Following this meeting, Mr Alexander checked the tenure point calculations used for the Team Leader selections and found that the same error had occurred as discovered in relation to the Relief Equipment Controller position. In this case, the same tenure score had been applied despite the candidates having differing lengths of service. When the Team Leader results were recalculated using the corrected tenure scores, a different order of ranking emerged.

[69] It is a reasonable inference from the evidence that FACT was content with the original selections and that as a result of this and other factors, it did not prioritise the recalculation of the points, or the subsequent advice regarding the mistake to the ERC members.

[70] At the next ERC meeting on 7 June 2018, Mr Alexander met with Mr Larkin and Mr Clothier (another ERC representative) to advise that the tenure component had been incorrectly calculated during the recruitment process for the Team Leaders.

[71] On 6 July 2018, the ERC members and relevant management discussed the situation and this included consideration of the revised tenure scores and the process by which feedback would be considered when applying the selection process in future exercises.

[72] On 26 July 2018, the panel met to discuss the original feedback scores. The panel agreed, in effect, that the original feedback scores were reflective of each individual’s merit and that therefore, the feedback scores were left unchanged. The CFMMEU ERC members pressed for the three top ranked candidates under the revised scores to be appointed and Mr Alexander asserted that management had the final decision.

[73] On 30 July 2018, FACT management reviewed the corrected application of the selection criteria points but decided to retain the original selections. Management noted that the original feedback scores were correct (which very marginally favoured the three candidates already appointed) and the points awarded for all other categories (other than tenure) were broadly equivalent for each candidate. Mr Sleath and the management team also considered that the original selections were better candidates than two of the three top ranked applicants under the revised scores. This was based in part upon management’s opinion of the originally successful candidates having observed them perform in the leadership roles – having had a “try before you buy”. 20 I also find that the fact that appointments had already been made, albeit on an incorrect application of the agreed criteria, was a significant influencing factor in the decision to maintain the original appointments.

[74] Despite an understanding held by the ERC members that the appointment of the Team Leaders roles would be further discussed, in order to review the correct allocation of the selection points, this did not occur before the decision was ultimately made by management to confirm the original outcome.

[75] On 7 August 2018, Mr Alexander emailed the ERC, with a copy provided to Mr Newlyn, in the following terms:

“Hi ERC,

As you are aware we have recently reviewed the recent Team Leader recruitment selection process.

Once completed the review found the following:

While feedback had the 3 originally successful candidates still the preferred choices, once points for tenure were correctly added that was no longer the case.

However, given the unusual circumstances involved and that feedback supported the original selection based on merit, management has elected to exercise their rights under the EA to make the final decision, and have decided to let the original selections stand.

We are advising you here before notifying all the unsuccessful candidates so you are prepared for any questions that may be asked of you.

We anticipate advising all parties before close of business today.

We have attached the correct calculations/spreadsheet for transparency and per that outcome advise we will be seconding (the second ranked candidate on the revised list) into the Team Leader role to replace (JR) who is on leave till early October.

Please feel free to call me for further clarification if required.”

[76] The material accompanying the email confirmed the following:

• There were 12 candidates that had been ranked;

• The difference in rankings when applying the original (incorrect) points to the selection criteria between the top few candidates was a matter of a few points out of 100;

• The application of the corrected tenure points significantly changed the rankings; and

• The highest ranking employee remained in that position; however, the other two employees originally selected (2 and 3 on the original list) were ranked 8 and 9 in the corrected list.

[77] Mr Newlyn replied to Mr Alexander and contended, in effect, that FACT should appoint the three top ranked candidates from the corrected rankings and apply the agreed selection criteria.

[78] FACT subsequently confirmed that it would not be changing the original selections and on 15 August 2018 four of the employees involved in the process lodged personal grievances under clause 9 of the 2017 EA. Subsequently on 21 August 2018, Mr Newlyn formally placed the handling of the Team Leader selection in dispute on behalf of the Union and the matter was escalated through the procedure set out in clause 10 of the Agreement.

[79] The appointments made as a result of the process described above have been treated as being provisional given the grievances and dispute raised under the terms of the 2017 EA.

[80] As outlined above, one of the appointed Team Leaders was ranked number one in both the original and revised rankings and their appointment is not in dispute.

7. The proper application of the Enterprise Agreement to the dispute

7.1 Are the provisions ambiguous or capable of more than one meaning?

[81] This question arises from the approach summarised in the AMWU v Berri. In this respect, regard may be had to evidence of surrounding circumstances provided that those circumstances are not relied upon to contradict the plain language of the agreement.²¹

[82] I find that the terms of the Agreement are ambiguous and capable of more than one meaning, when considered both on the plain language and when informed by the context.

[83] There is tension between certain provisions including the statements made about the selection criteria being used for the selection decisions. The drafting of the clauses, including some apparent repetition of some provisions, but in slightly different terms, also adds to the challenge in attempting to garner an unambiguous meaning. Further, the references to FACT management having the final selection are not placed within the clauses in such a manner as to clearly confirm their import or the relationship between those provisions and the other agreement provisions more generally.

[84] The context does not indicate, or lead to the conclusion, that the clauses should be read as having only one meaning.

[85] As a result, the surrounding circumstances tending to establish objective background facts which were known to the parties, but not the subjective intention of the parties, are an aide to the interpretation of the Agreement.

[86] However, given my findings about the context and nature of the statements made during the negotiations, and the caution set out in AMWU v Berri,²² I do not consider that the statements made by the parties during the process leading to the 2017 EA form an objective background fact or evidence of matters in common contemplation and constituting a common assumption.

7.2 The meaning of the 2017 EA provisions when read as a whole and in context

[87] In terms of clause 4.1 of the 2017 EA, it is common ground that there are no provisions in the Stevedoring Industry Award 2010 which bear upon this matter.

[88] I have considered the impact of clause 4.2 of the 2017 EA which states, amongst other matters, that the Agreement supersedes any other agreement, whether certified or not, memorandum of understanding, exchange of correspondence, work practices or arrangements written or unwritten which applied prior to the commencement of the Agreement.

[89] The same provision was contained in the 2014 EA.

[90] In relation to clause 4.2, the CFMMEU contends that the provision means that the Agreement supersedes any previous agreements or understandings, including any representation or purported agreements reached during bargaining discussions.

[91] FACT accepts that this clause means that any prior enterprise agreements and discussions relating to those enterprise agreements are not relevant to the determination of the current dispute. These matters have been provided for contextual and background purposes to assist the Commission. However, FACT also posits that the “representations and assurances” given in the negotiations of the 2017 EA are evidence of surrounding circumstances which remain relevant under the AMWU v Berri principles.

[92] I consider that this provision is consistent with the notion that the practices and application of the earlier agreements, and any practices or understandings in operation at the time have been superseded by the 2014 EA and later the 2017 EA. In the case of the disputed provisions, these must be considered in their own right and any earlier arrangements do not inform the proper application of the relevant instrument beyond providing some of the context. In this case, this also tends to reduce the relevance of the fact that under previous enterprise agreements, management of FACT had always applied the outcome of the selection process. Whilst I consider that an Agreement could have expressly excluded representations made during its negotiations for interpretative purposes, clause 4.2 appears to be directed to agreed arrangements or understandings, not necessarily representations that may or may not have been made in the negotiations leading to the Agreement itself. However, for reasons set out above, I have in any event approached the statements made in the negotiations with appropriate caution.

[93] The relevant provisions of clause 26 under the 2014 and 2017 enterprise agreements are largely in the same terms. Clause 26.10.3.1 in the 2017 EA removed the express reference to training opportunities and extended the eligibility list created by the process to 12 months, from 6 months under the 2014 EA. It is common ground that this change is not significant and as a result I have treated the two agreements as largely the same for present purposes.

[94] As this matter has unfolded, it has become evident that both parties contend that FACT has a discretion in relation to the selection process and outcomes. The difference in view relates to the nature, scope and import of that discretion.

[95] It is useful to commence the consideration of these provisions with an understanding about how the Agreement intends the process to work, leaving aside the debate about how any discretion operates.

[96] Clause 26.1 recognises the importance of career paths for employees and the role that performance reviews may play in that process. Clause 26.7 establishes different selection criteria for the promotion between employment categories (VSE to FSE etc.) than applies to recruitment, filling of internal vacancies and training opportunities under clause 26.10.

[97] Clause 26.8 provides the framework within which the selection criteria and process is to operate for the recruitment in relation to vacant positions (and for training opportunities). This must be read in conjunction with other relevant provisions and provides in effect that:

• The criteria that will be applied when assessing applicants for vacant positions is that set out in clause 26.10;

• FACT will identify and make available the particular criteria (consistent with the terms of clause 26.10) that is to apply at the commencement of each recruitment process;

• The selection process will be open and transparent and input into the process will also be sought from the relevant management and leadership;

• Priority will be given to permanent employees, VSEs and then casuals, with the final selection (disputed – either on the categories of employees to be considered or upon the actual selection) to be made by management based upon merit;

• Recruitment is to be undertaken on an operational needs basis or to fulfil the requirements listed in clause 26.10; and

• Undertakings are made about the advertisement of internal and external vacancies.

[98] Clause 26.8 is relevant to this matter as it informs the intended operation of clause 26.10 and the Agreement more generally. It is also the case that the three Team Leader positions would be considered to be vacant positions as they were new positions with no existing occupants.

[99] Clause 26.10 sets out the selection criteria and process for filling internal vacancies (and training). It provides:

• The selection criteria in clause 26.10.3 will be used;

• A table is established by clause 26.10.3 with criteria points to be given for various positions set out in the table with the explanation provided for the establishment and measurement of the criteria in a further explanatory table;

• The categories of eligible applicants and the inherent requirements of the position are intended to be discussed and determined by the ERC and management at the outset of the selection process and candidates are to be assessed against that criteria prior to being considered for the next stages – performance, behaviour and attitude, absence management, availability, and length of service;

• The performance, behaviour and attitude points are to be assessed by a panel comprising, in the case of Team Leaders and other non-supervisory vacancies, at least equal representation of management and employees, and involve the assessment of feedback questions agreed between the ERC and management after input from other relevant staff; and

• A sub panel, comprising at least 50% of the original panel will be convened to consider the performance/behaviour feedback in order to differentiate between otherwise equal candidates.

[100] Clause 26.10 also envisages the selection criteria and process determining a ranked eligibility list for the relevant position. This list will determine eligibility for other opportunities (presumably other vacancies for the same or similar positions or additional training positions) for a period of 12 months, subject to good performance. In this regard I observe that the concept of an eligibility list in clause 26.10.3.1 must mean more than a list of eligible candidates because only eligible candidates are to be subject to the application of the criteria. This is reinforced by the fact that, at least in relation to training – which is dealt with on the same basis as recruitment to that point, clause 26.10.3.3 refers to the next candidate on the eligibility list being selected.

[101] The critical difference of approach is reflected in the purported import of two major elements relied upon by each of the parties; namely:

• “Selection processes are subject to selection criteria as set out in clause 26.10” (clause 26.8.1), “The selection criteria identified below will be used for promotional opportunities, training opportunities and secondments” (clause 26.10.1) and “where appropriate, the selection criteria will determine an eligibility list. The list will determine eligibility for opportunities defined for a period of 12 months (subject to continued good performance)” (clause 26.10.3.1) - indicating that it is the selection criteria that will be applied in the process and where appropriate, to produce an eligibility list – relied upon by the CFMMEU; and

• “… final selection will be made by management and will be merit based” (clause 26.8.2) and “… the final selection will be made by management” (clause 26.10.3) - indicating that the final selection for some or all purposes is to be made by management – relied upon by FACT.

[102] For reasons advanced earlier in this decision, these phrases must each be considered in the full context of clause 26 and the Agreement as a whole. That context includes that clause 26.8 appears to be the provision setting the overall framework and both statements about the “final selection” are found in clauses that also refer to the priority for eligible candidates. On the other hand, both of these provisions refer to “final selections” and the concept of “selections” when used within the agreement appears to sit more comfortably with the notion of selection for appointment rather than eligibility to apply (clause 26.10.3.3 is an example of this use). Further, given that the category of applicants is to be discussed and determined by the ERC and management (the criteria table in clause 26.10.3) this tends to indicate that the final selections being referenced in the two provisions are not limited to the determination of the category of applicants.

[103] The terms of the Agreement citing the selection process and criteria confirm their relevance and application to recruitment and other relevant decisions. With one possible exception, these clauses do not expressly set out that this process and criteria will determine the outcome. The possible exception being clause 26.10.3 which provides in relation to the table setting out the selection points:

“26.10.3 The criteria assesses candidates’ applications using a total of 100 points. The table below determines application for various roles/opportunities. To avoid confusion, the panel discussions below are to differentiate between equal candidates. Where the panel discussion is not necessary/used, the relevant points will be awarded regardless.”

[104] This clause is poorly drafted, including from a grammatical perspective. When raised with the parties during the final submissions, it was a common position that the note about the sub panel was not relevant to the current dispute. However, the CFMMEU relied upon the second sentence of clause 26.10.3 in earlier submissions to support its view that that the use of the selection criteria and points determines the applications.

[105] FACT contends that:

• This clause is of limited relevance to the present dispute, in that there were no equal candidates in terms of score;

• Further, or in the alternative, this clause would only have work to do if this clause expressly stated that the panel or sub-panel was directly relevant to the final decision, for example by stating that the “the relevant points will be awarded regardless, and the relevant points will determine the successful applicant”. It does not put such a proposition (or similar proposition); and

• Further, or in the alternative, this clause must be read in conjunction with the other clauses under analysis in this dispute, including the overarching discretion afforded to the employer in clause 26.10.2, and that this clause does not (expressly or impliedly) exclude or modify the other clauses in the EA (including the overarching discretion for management to make the “final decision”). 23

[106] It is clear that clause 26.10.3 is a somewhat poor explanation of how the 100 points are to be applied. That is, for two categories including Team Leaders, the table does not involve 100 points, unless the 5 points to be allocated by the sub-panel are included. Earlier the provision makes it clear that an actual sub-panel discussion, where different points may be given, is not required unless there are equal candidates. This is likely to mean that where unequal candidates are being considered, the 5 points in question are simply allocated in a manner that does not otherwise change the relative rankings.

[107] Read in isolation, the second sentence of clause 26.10.3 might variously be intended to mean that the table below determines how the criteria is to be applied for the various roles, or that the table below determines the job applications. It is not permissible to add words or rewrite a provision. Rather, in general terms the Commission must consider the ordinary meaning of all of the terms of the Agreement as produced by the parties without an overly technical approach being adopted. 24 In that light, the second sentence of clause 26.10.3 cannot be considered to be a clear statement about the final selection of the successful candidates. However, it and the detailed arrangements that are applied in the Agreement to set out the criteria and processes - including where equally ranked candidates are found (the sub panel process) - reinforces the importance of, and detailed weight to be given to, the agreed selection criteria in producing the ranked list of eligible candidates and in the overall outcome.

[108] When read together and considered in the context of the Agreement as a whole, I consider that clause 26 means that:

• The selection criteria and process set out in clause 26.10 is to be used for internal vacancies (including promotional positions such as the Team Leaders);

• The category of eligible candidates (FSEs/VSEs and/or Casuals) and the inherent requirements for the position will be discussed and determined by the ERC and management within the parameters of the requirements in the tables in clause 26.10.3, with management having the ability to determine those eligibility requirements, within the same framework, if agreement is not reached;

• Candidates who do not meet the inherent requirements are not eligible to have their applications further considered;

• The performance, behaviour and attitude outcomes for use within the overall score are to be considered by a panel assessing the results of feedback questions agreed between the ERC and management after input from other relevant staff;

• The performance, behaviour and attitude, absence management; availability; and tenure scores are to be applied to each of the eligible applicants according to the tables in clause 26.10.3 to produce a ranking of candidates;

• Where it becomes necessary to differentiate between candidates with equal scores, a sub panel, comprising at least 50% of the original panel will further assess the candidates and apply, in the case of a Team leader position, the additional five points referred to in table 26.10.3;

• The selection process and application of the selection criteria will establish an eligibility list ranked according to the application of the selection criteria and points allocations in clause 26.10.3 and appointments would in the normal course be made (determined) by applying the rankings determined on that list;

• The ranking list would also be used to determine relevant opportunities that arise over the 12 months following the process, subject to continued good performance; and

• Management make the final selection, but given the detailed and prescriptive nature of the selection criteria and process within the Agreement, should depart from that outcome in an open and transparent manner and only where sound objective reasons exist for doing so, which would need to be disclosed.

[109] Accordingly, some discretion does exist for management to make the final selection; however it is a discretion to be exercised strictly within the constraints that it has agreed to apply to these matters.

8. Conclusions

[110] The question for determination has been framed as follows:

This will involve consideration of the Agreement as a whole including:

• How clause 26.8 and clause 26.10 are intended to operate; and

• Whether clause 26.8.2 and/or clause 26.10.2 mean that management can make a selection using a general or other discretion.”

[111] The answer to the question must be somewhat nuanced given my findings about the objective intention of the Agreement. It is clear that FACT does not have an absolute or general discretion to ignore the selection process, criteria or outcomes of the same. It does have a limited discretion that may give it the opportunity to not apply the results of that process where sound objective reasons exist, but it must take into account and pay due regard to the outcome of the agreed selection process (including the rankings that it produces), and make any decision in an open and transparent manner.

[112] Ultimately, because of the fact that the differences in wording between the two agreements are not important, and in light of the approach that I have adopted to the relevance and weight to be afforded to the discussions leading to the 2017 EA, the above findings are also apposite to the 2014 EA under which the original selections were made.

[113] The present circumstances are very unfortunate for all of those involved. The existing appointments were made on a misapplication of the agreed selection criteria. I do not consider that the misapplication of the tenure points was deliberate and it appears that all members of the panel acted in good faith relying upon the information provided by FACT to that point. I do find that the prospect of the potential mistake in the application of the tenure points in the case of the Team Leaders should have been identified and acted upon earlier than it was. In any event, this has led to a case where FACT is seeking to rely upon a discretion, which I have found does exist to a point, to maintain a decision that was actually made on a different and incorrect basis.

[114] Although not intended, this process and outcome does not follow the kind of open and transparent process envisaged by clause 26 of the 2014 and 2017 EAs.

[115] Regrettably, this has led to some dispute about the legitimacy of two of the three appointments (who management now consider are performing well in the roles), and the non-appointment of two others, when the available evidence would indicate that all are qualified and capable of performing the Team Leader roles.

[116] There is little information about the present circumstances of the Team Leaders before the Commission other than the fact that the two contested appointees have been treated as being on an interim basis now for some 10 months or so. Further, one or both of the unsuccessful candidates have also acted for some periods in the role of Team Leader on a relief basis.

[117] I have not heard directly from the selected Team Leaders and none of the parties to this dispute have yet had an opportunity to consider their positions in light of my findings.

[118] Accordingly, I recommend that the parties consider their positions in light of this decision and seek to agree upon the appropriate outcome. The options for moving forward by agreement between them might include redoing the selection process for the Team Leader positions applying the process required by the agreement as determined by the Commission, letting the appointments stand, applying the corrected selection outcome in the absence of some good reason not to do so and/or making some arrangements for the four candidates directly affected.

[119] None of these options should disturb the appointment of the Team Leader who ranked first on each occasion.

[120] I also grant liberty to any of the parties to seek that the Commission ultimately determine the final outcome of the dispute to give effect to this decision.

COMMISSIONER

Appearances:

A Jacka with J Newlyn for the Maritime Union of Australia Branch of the Construction, Forestry, Maritime, Mining and Energy Union.

M Kay with E Gordon of Wallmans Lawyers, with permission, on behalf of Flinders Adelaide Container Terminal Pty Ltd.

Hearing details:

2018

Adelaide

19 December.

Final Written Submissions:

CFMMEU – 14 and 29 January 2019.

FACT – 21 January 2019.

Printed by authority of the Commonwealth Government Printer

1 [2018] FWCA 1738 on 23 March 2018.

2 Final written submissions of the CFMMEU, 14 January 2019.

3 Exhibit A1.

4 [2017] FWCFB 3005.

5 See also Paper Australia Pty Ltd t/a Australian Paper v Australian Manufacturing Workers’ Union [2017] FWCFB 1621 at [21].

6 [1929] AR (NSW) 498 at 503; See also City of Wanneroo v Holmes (1989) 30 IR 362 (at 378-379) and Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [2].

7 Re Aurora Energy Enterprise Partnership Agreement 2002 – 2005, [2008] AIRC 1074, at para 17; See also National Union of Workers v Plexicor Australia [2008] AIRC 1134.

8 (1993) 40 FCR 511.

9 This decision must be applied having regard to the fact that the instrument in that matter was an award of the Commission rather than an enterprise agreement made between the employer and a majority of the employees at the time of approval. See also AWU v Pasminco (2003) 131 IR 1 for the caution required in this regard.

10 [2013] FWCFB 8557.

11 AB v Tabcorp Holdings Limited[2015] FWCFB 523 at [11].

12 See Construction Forestry Mining and Energy Union v The Australian Industrial Relations Commission and Another [2001] HCA 16; (2001) 203 CLR 645, Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2016] FWCFB 2019 and Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2016] FCAFC 82.

13 Transcript PN24 to PN36.

14 Transcript PN320, PN322 and PN323.

15 The evidence of Mr Larkin, transcript PN387.

16 See for example, the evidence of Mr Alexander, transcript PN587 to PN589.

17 AMWU v Berri at [114] 10 – 12.

18 AMWU v Berri at [114].

19 Exhibit FACT 1.

20 The evidence of Mr Sleath, transcript PN518 and PN519.

21 AMWU v Berri at [114] 7 – 9.

22 AMWU v Berri at [114] 11– 13.

23 Final written submissions for FACT, 21 January 2019.

24 AMWU v Berri at [114] 2 and 6; Geo A Bond at 503.

Construction, Forestry, Maritime, Mining and Energy Union v Flinders Adelaide Container Terminal Pty Ltd