Construction, Forestry, Maritime, Mining and Energy Union v Kimberly-Clark Australia Pty Ltd

[2019] FWC 5886

[2019] FWC 5886

FAIR WORK COMMISSION

DECISION

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

Construction, Forestry, Maritime, Mining and Energy Union
v
Kimberly-Clark Australia Pty Ltd
(C2018/734)

DEPUTY PRESIDENT ANDERSON ADELAIDE, 26 AUGUST 2019

Alleged dispute about matters arising under an enterprise agreement and the NES – dispute resolution procedure in enterprise agreements – jurisdiction – whether private arbitration powers survive an agreement ceasing to operate – whether jurisdiction sourced from language of successor agreement

Alleged dispute about matters arising under an enterprise agreement and the NES – production employees – number of annual shifts per year – rotating 4 shift roster

Alleged dispute about matters arising under an enterprise agreement and the NES – production employees – annual leave entitlement – whether continuous shift workers

Alleged dispute about matters arising under an enterprise agreement and the NES – production employees – annualised salary

[1] On 13 February 2018 the Construction, Forestry, Mining and Energy Union (CFMEU or the Union, now known as the Construction, Forestry, Maritime, Mining and Energy Union ‘CFMMEU’) applied to the Fair Work Commission (the Commission) under section 739 of the Fair Work Act 2009 (the FW Act) to deal with a dispute.

[2] The dispute concerns the operation of the Kimberly-Clark Australia Pty Limited Millicent Mill Production Enterprise Agreement 2012 (the 2012 Agreement).

[3] In its application, the CFMMEU contend that clause 31 (Annual Leave) and clause 24 (Hours of Work / Shift Work) of the 2012 Agreement are not being lawfully and properly applied by Kimberly-Clark Australia Pty Ltd (Kimberly-Clark or the employer). The CFMMEU consider that certain employees are working an excessive number of shifts resulting in lesser annual leave accrual for those employees and an incorrect approach to the setting of annualised salaries.

Background

[4] Prior to making this application, the Union invoked the dispute settlement provisions of the 2012 Agreement (clause 45). The parties sought to resolve the matter at the workplace level. Despite correspondence, consideration and discussions (including between managers, Union officials and delegates) the dispute did not resolve. It was brought before the Commission for conciliation and arbitration under that dispute procedure.

[5] The issues raised by the application are complex and multi-faceted. The dispute was not accompanied by industrial action or threats thereof. The existence of the dispute did not derail parallel negotiations conducted by the employer and the Union for a new agreement. With the assistance of the Commission in separate bargaining dispute proceedings 1, a new agreement was reached in February 2019 between the employer and its employees. That agreement is the Kimberly-Clark Australia Pty Limited Millicent Mill Production Enterprise Agreement 2018 (the 2018 Agreement).

[6] Proceedings on this application (C2018/734) occurred over a seventeen month period (February 2018 to July 2019). During this period (in April 2019) the 2012 Agreement ceased to operate and was superseded by the now operating 2018 Agreement. Later in this decision I consider the implications of this, if any, for the Commission’s jurisdiction to determine the application before me.

[7] The Commission conciliated the dispute on 27 March 2018, 31 July 2018 and 18 December 2018. The matter did not resolve. Directions hearings were held on 21 June 2018, 24 January 2019 and 17 May 2019.

[8] On 24 January 2019, and at the request of the parties, I listed the matter for arbitration. I issued directions on 25 January 2019 and Further Directions on 29 March 2019 and 17 May 2019.

[9] I made two interlocutory decisions concerning representation. On 28 February 2019 and by consent I granted leave to both the applicant Union and the respondent employer to be legally represented at the hearing of the matter. 2 I made an earlier decision on 21 March 2018 granting permission to the employer (opposed by the Union) to be legally represented in conciliation proceedings.3

[10] The parties to the dispute have made substantial efforts to access relevant historical and contemporary documentation related to this dispute. This included an examination of historical and archived materials held by the Union, the employer and the Commission concerning the working of rosters at the Millicent Mill since the 1990s and since the approval of the 2012 Agreement and its antecedents. These searches both informed and delayed the conciliation and arbitration of the dispute.

[11] I arbitrated the matter on 7 June 2019 (in Adelaide) and 22 July 2019 (in Melbourne). I reserved my decision on 22 July, which I now deliver.

What this dispute concerns

[12] The dispute, as notified to the Commission on 13 February 2018, is described by the applicant Union in its F10 Application as follows:

1. CFMEU represents members employed with Kimberly-Clark Australia at its Millicent Mill site and covered by the Kimberly-Clark Australia Pty Ltd Millicent Mill Production Enterprise Agreement 2012.

2. A dispute has [sic: arisen] concerning hours worked by shift workers whereby workers believe they are working an excessive number of shifts resulting in lesser annual leave accrual for those working as shift workers.

3. Our members working as shift workers believe they are to be rostered for no more than 209 shifts per annum. Our members’ calculations may be presented at the Conciliation Conference.

4. The Respondent maintains the number of shifts per year must be 212.31.

5. Some employees believe this results in lessening of their annual leave entitlement, therefore contravening the EBA and the NES.

[13] The relief sought was expressed as follows:

1. In the first instance the CFMEU seeks assistance from the Commission by way of an in-person Conciliation Conference.

2. We would seek assistance from a member of the Commission, well versed in handling complicated shift rostering arrangements, to assist the parties to reach an agreement under the auspice of the Commission.

3. In particular, we seek from the Respondent to:

a) Explain what the ordinary hours of work are per annum?

b) Has there been an adjustment to annualized wage for additional hours worked by the workers?

[14] The application, as arbitrated before me, has not been amended since being filed on 13 February 2018.

[15] Upon conciliation (including subsequent further private discussions between the parties) not resolving the dispute, both parties sought and agreed to arbitration.

Questions for determination

[16] On 25 January 2019 I directed the parties to develop an agreed question (or questions) for arbitration.

[17] The parties have ‘agreed’ (with one qualification) the questions for determination. They are as follows:

Question 1

What was the maximum number of shifts under the Agreement and at law that could be rostered for Employees engaged on the Roster in each year?

Question 2

Have the Employees been provided with the correct period of annual leave each year in accordance with the Agreement and the National Employment Standards? This question includes a consideration of:

(a) periods of annual leave where that annual leave included days when an Employees was not designated to work pursuant to the Roster; and

(b) has the deduction from the relevant leave accrual been correctly applied?

Question 3

Has the annualised wage of the Employees been calculated and/or applied correctly?

Question 4

Based on the findings in relation to questions 1, 2 and 3, what actions are to be taken by the relevant party in respect of the findings?

[18] The parties have agreed that the first three of these questions (which deal with merit) be determined by this decision and that the fourth question (which deals with implementation) not be answered until the parties have considered this decision and its reasons, and sought to conciliate matters arising. I have agreed to that course.

[19] The qualification concerning the questions posed pertains to question 2. In its original agreed form it was common ground between the parties that employees the subject of this application were “continuous shift workers” and entitled to five weeks of annual leave per year. However, in developing its case for arbitration the employer formed the view that the relevant production workers were not at law “continuous shift workers” (though as a matter of practice it continued to provide five weeks annual leave per year). It remained the Union’s position that the relevant employees were and remain continuous shift workers. Accordingly, question 2 as now before me does not include a preamble that concedes this point. That issue becomes a subset of issues that needs to be determined in answering question 2. The Union’s ‘agreement’ to the question 2 in the abovementioned form is not a concession by the Union that it considers the employees anything but continuous shift workers.

[20] Further, the parties propose that the Commission answer questions 1 to 3 with respect to both the 2012 Agreement and, in view of the fact that the 2012 Agreement has been superseded by a successor agreement, the 2018 Agreement. Hence the parties are, in practice, asking the Commission to answer six questions, being questions 1 to 3 with respect to the 2012 Agreement and the same questions with respect to the 2018 Agreement.

[21] One further matter arises for determination beyond the questions put by the Union and the employer. I raised with the parties of my own motion on 7 June 2019 whether, in light of the 2012 Agreement now having been superseded by the 2018 Agreement, the Commission has jurisdiction to hear and determine a dispute under the 2012 Agreement and whether there is utility in doing so?

[22] I received written and oral submissions from the parties on this further question of jurisdiction and utility.

[23] I deal with that matter in this decision.

The Facts

[24] I received written and oral evidence from three persons:

•  Nigel Ross, Production Worker Millicent Mill and CFMMEU delegate;

•  Scott Whicker, Manager Millicent Mill; and

•  Brie Agnew, Human Resources Business Partner, Kimberly-Clark.

[25] I received considerable documentary material, including historical material from the archives of the Union, the employer and the Commission.

[26] The facts concerning working arrangements at the Millicent Mill during the life of the 2012 Agreement and the 2018 Agreement are largely not in dispute. Neither is evidence of industrial relations negotiations that arose concerning both the dispute and the negotiation of the 2012 and 2018 Agreements.

[27] Both the Union and Kimberly-Clark rely on historical events prior to the 2012 Agreement, and seek to rely on historical facts or assert inferences from historical events. The parties are to be commended for their attention to the historical context bearing on the matters in dispute. That reliance is in part based on the documentary record, and in part based on the oral evidence of witnesses. However, whilst each of the three witnesses had some direct connection to historical working arrangements at the Millicent Mill (and in particular Mr Ross since 1995 and Mr Whicker since 1988) I exercise caution concerning historical evidence and in particular drawing inferences from historical events. Aside from those events being many years ago and that in itself dulling memories, the witnesses were not directly involved in many of the historical events or the preparation of historical documents. Their evidence was genuinely given to the best of their knowledge and belief but (with respect to historical matters) generally not first-hand; it was based on research, on what they had been told by others, on faded recollections and in some cases understandings, surmise and inference.

[28] That said, the historical record does help inform the oral evidence and, where relevant, contributes to the body of evidence before me. In some instances historical documents, such as rosters worked or the record of Commission proceedings, speaks for itself.

[29] Aside from the evidence of witnesses on the issue of the annualised salary (which I deal with when considering question 3), key elements of the oral evidence before me can be summarised as follows.

[30] Mr Ross has been a production worker at the Millicent Mill since 1995, and a CFMMEU delegate since 2004. He has indirect knowledge of 4 shift rosters worked on the Lotion Line and by BF1 employees, but his direct work has been as a 4 shift roster on a different production line (tissue machine).

[31] On general matters Mr Ross’s evidence was:

•  He was aware that under the 2012 Agreement Lotion Line and BF1 employees were working an average of a 36 hour week but this was done without the Union’s agreement. Whilst working a 4 shift roster on the tissue machine he worked an average of a 35 hour week 4;

•  A pre-1995 4 shift roster provided to him by another employee provided for an average of 35 hours per week 5;

•  He did not believe that the Union agreed at any time to ordinary hours of work of more than 35 per week 6 though acknowledged that BF1 and Lotion Line rosters under the 2012 Agreement appear to be based on a 36 hour week and the rosters were known to the Union at the time but believes that the 36 hour week component had not been disclosed by the employer7; and

•  He believes that correspondence between the Union and the employer in 1995 and 1996 concerning 220 shifts worked each year related to the 5 shift roster 8.

[32] Mr Whicker has held the position of Millicent Mill Manager since 2008. He has worked at the Mill since 1988 other than two periods of redeployment (1993-1994 and 2006-2008). He has been involved in some but not all collective bargaining negotiations. His knowledge of the collective bargaining negotiations of the 1990s is largely based on what others have told him, what he has read and what he saw implemented.

[33] On general matters Mr Whicker’s evidence was:

•  4 shift rosters commenced being worked by Lotion Line employees in 2006 and by BF1 employees in 2007 9;

•  Different versions of the 4 shift roster applied to other production workers from as early as 1993 10;

•  Rosters worked in at least the 1990s appear to have been based on a 35 hour week 11;

•  Since 2007 the roster rotated for production crews over a 4 year period 12;

•  The practice of the past 30 years has been that if rostering changes are not agreed with the Union, they are not implemented 13;

•  Between 1993 and 1997 4 hours of overtime on Wednesdays was built into the roster though Mr Whicker was not sure whether this occurred at the time of the annualised salary being introduced 14; and

•  Some shift workers averaged 36 hours a week 15 whilst some day workers averaged 35 hours per week16.

[34] Ms Agnew has worked for Kimberly-Clark since 2007 in payroll and human resources roles. She is currently HR Business Partner. Over her ten years of employment she has become familiar with the working of rosters (including at the Millicent Mill) and the provision of entitlements to employees as Kimberly-Clark understood its obligations to be under the various iterations of collective agreements with the CFMMEU.

[35] On general matters Ms Agnew’s evidence was:

•  4 shift 6-6-6 rosters for Lotion Line and BF1 employees commenced in 2007. In June 2018 the BF1 line moved to a 5 shift roster. The Lotion Line employees remained on a 4 shift roster 17;

•  The 6 working days of the 4 shift roster commenced Wednesday 7am until the following Tuesday 7am 18;

•  For Ms Agnew’s entire period in payroll and human resources, employees on the BF1 and Lotion Line 4 shift roster have worked an average of 36 hours per week 19;

•  With rostered leave, the roster picks up from where it ceased prior to annual leave 20;

•  There is no documentation available explaining why BF1 or Lotion Line employees receive 5 weeks annual leave. The current definition of continuous work has been in antecedent agreements since 1993 21; and

•  She was not directly involved in the collective bargaining negotiations for a new agreement in either 2009 or 2012 but does not believe that the Union agreed then or previously to any roster other than a 35 hour week 22.

[36] I make the following findings.

[37] Kimberly-Clark Australia Pty Ltd is the Australian subsidiary of a global company manufacturing and supplying personal hygiene and related goods.

[38] For almost sixty years the company has operated a paper mill at Millicent in south-east South Australia which, amongst other products, manufactures facial tissues. The Mill currently employs around 250 persons. It is a significant local employer in the region. 23

[39] The persons the subject of this dispute are two classes of production employees who worked a 4 shift roster: BF1 production employees and production employees working the Lotion Line. At the time of notifying this dispute those persons were employed under the 2012 Agreement.

[40] Those still employed are now employed under the 2018 Agreement.

2012 and 2018 Agreements

[41] The 2012 Agreement was approved by the Commission on 14 December 2012 24. It operated from 22 December 2012. It had a nominal expiry date of 1 July 2015. The CFMMEU was covered by that Agreement.

[42] The 2018 Agreement was made (executed) by the parties on 8 and 11 February 2019 (respectively). It was approved by the Commission on 9 April 2019, with undertakings (dated 29 March 2019)  25. It has operated since 16 April 2019. It has a nominal expiry date of 31 December 2020. The CFMMEU is covered by the 2018 Agreement.

Antecedent Agreements

[43] Since 1993, production employees at the Millicent Mill have been employed under a collectively negotiated certified agreement underpinned by a relevant award of the Commission (since 2010, the Timber Industry Award).

[44] Between 1993 and 2012 there were seven such agreements negotiated between the employer and the Union: the 1993 Agreement, the 1995 Agreement, the 1997 Agreement, the 2000 Agreement, the 2003 Agreement, the 2006 Agreement and the 2009 Agreement.

[45] Each of these Agreements was approved by the Commission (or its predecessors) according to then operating statutory provisions.

4 Shift Rosters

[46] Production employees at the Mill work a variety of rosters. One such roster is a 4 shift roster. A 4 shift roster (in some form) has been worked since approximately 1995 when annualised salaries were first introduced for production employees. A 4 shift roster pertaining to production employees the subject of this dispute was not introduced for Lotion Line and BF1 employees until 2006 and 2007 respectively.

[47] The 4 shift roster as worked by the relevant employees was a rotating roster 26. The 4 shift roster worked by BF1 employees and on the Lotion Line involved four crews who worked a pattern of 6 day shifts and 1 day off then 6 afternoon shifts and 1 day off then 6 night shifts then 8 days off. This pattern equalled 4 weeks (28 days) and was repeated each 4 weeks27.

[48] The 4 week pattern began on a Wednesday (day shift beginning at 7am) and concluded on the following Tuesday (night shift ending at 7am). Each shift was 8 hours long. It involved working three weekends in four.

[49] On 6 June 2018 (during the life of the 2012 Agreement) BF1 production employees ceased to work a 4 shift roster. They moved to a 5 shift roster. Lotion Line production employees continued to work a 4 shift roster.

[50] In 2019, following the commencement of the 2018 Agreement, further operational changes were made by Kimberly-Clark. These saw the working of the 4 shift roster by Lotion Line production employees cease on 29 May 2019 and 6 June 2019 when employees transitioned from the 4 shift roster to a 5 shift roster 28.

[51] Rosters for production workers were prepared by the employer in advance of each year. Under the terms of the 2012 (and 2018) Agreement those rosters were “fixed by agreement” with the Union prior to each calendar year commencing 29.

[52] The 2017 and the 2018 4 shift roster (BF1 Lotion Line) is in evidence, as are all 4 shift rosters worked between 2005 and 2018 30.

4 Shift Rosters and Annual Leave

[53] Until 2014 employees working a 4 shift roster took annual leave at differing times during a year once approval was given (on operational grounds), with opportunities to take leave fairly shared within a workgroup 31. Production was not stopped whilst an employee took annual leave, as other employees continued to work the roster.

[54] In 2014 the employer introduced a business practice whereby all employees working the 4 shift roster on the BF1 Lotion Line (all four crews) were rostered to take annual leave at the same time. The relevant production facility was shut; no production was undertaken during the period of leave. Blocks of the annual calendar to be taken by employees as leave (with production ceased) were identified in advance on the annual roster agreed with the Union. This came to be known as the practice of ‘rostered leave’, whereby collectively taken annual leave days were embedded into the 4 shift roster well in advance.

[55] Under this arrangement, upon the resumption of work from a block of annual leave the roster recommenced for each employee from the point the roster cycle had reached immediately prior to the taking of annual leave. In other words, the rotating roster continued to rotate having simply been interrupted by the period of leave 32.

Annualised Salaries

[56] Prior to 1995 production employees were paid a wage plus (where an entitlement arose) overtime rates, shift penalty rates, shift allowances, leave loadings and other allowances.

[57] Since 1995 an annualised salary has been paid to production employees. According to clause 22.8 of the 2012 (and 2018) Agreement, this annualised salary is expressly inclusive of “normal hours, overtime, shift penalties, shift allowance, leave loadings, relevant disability allowance, chemical allowance (maintenance and services), crew meetings, meal allowance and tool or licence allowance (tradespeople only)”.

[58] The introduction of the annualised salary in 1995 was by agreement between the employer and the Union. Its terms were reflected in a negotiated certified agreement approved by the (then) Commission to operate from 25 July 1995. 33

[59] In dealing with question 3, I consider the evidence before me concerning the annualised salary including proceedings conducted before Commissioner Lewin on 25 July 1995 and related representations made at that time by the parties.

Jurisdiction and utility

The private arbitration jurisdiction

[60] The Commission only has power that is specifically conferred on it by the FW Act. It has no inherent jurisdiction. The Parliament, by virtue of sections 738 and 739 of the FW Act, has determined that it is in the public interest for the Commission to exercise private arbitration powers over the industrial disputes of private parties where those parties intend it to do so.

[61] It is well established that proceedings of this type are of a private nature between parties to the dispute. The Commission is exercising jurisdiction conferred on it by the enterprise agreement itself 34:

“Thus it is well established that “arbitration” by FWC pursuant to a term in an enterprise agreement is a private arbitration, based upon the consent of the parties, and not upon the coercive authority of the Australian state.”

[62] In a leading case on private arbitration, the High Court said 35:

“Where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. Of its nature, judicial power is a power that is exercised independently of the consent of the person against whom the proceedings are brought and results in a judgement or order that is binding of its own force. In the case of private arbitration, however, the arbitrator’s powers depend on the agreement of the parties, usually embodied in a contract, and the arbitrator’s award is not binding of its own force. Rather, its effect, if any, depends on the law which operates with respect to it.”

[63] The Commission’s private arbitration jurisdiction is not unconstrained. It is constrained in at least three ways:

1. It needs to be a jurisdiction founded on the authority of section 739 of the FW Act and exercised within the limits set by that provision;

2. It needs to be a jurisdiction sourced from the terms of the industrial instrument and exercised in a manner contemplated by that instrument; and

3. It needs to be a jurisdiction exercised with respect to the industrial dispute as notified.

[64] In exercising this jurisdiction, the Commission is bound by the rules that govern the operation of administrative tribunals, including rules of procedural fairness, subject to the terms and procedures agreed by the parties.

[65] Sections 738 and 739 of the FW Act are relied upon by the CFMMEU and Kimberly-Clark as the source of authority for the Commission to deal with this dispute. The application brought under section 739 is a dispute notification made in accordance with the dispute resolution procedure of the 2012 Agreement. Clause 45 of that Agreement provides for Fair Work Australia (now the Commission) to exercise such powers relating to conciliation and arbitration as are given by the FW Act and as are necessary for resolution of the dispute.

[66] I am satisfied that the Commission has before it a lawfully made application under section 739 of the FW Act which purports to confer on the Commission a jurisdiction of private arbitration to make a decision in settlement of the dispute as notified by the CFMMEU within the meaning of clause 45.2 of the 2012 Agreement, subject to the desire of the parties to confer on that decision in advance of being so bound.

[67] I am also satisfied that the parties have complied with the required steps of the procedure in clause 45 of the 2012 Agreement in advance of seeking assistance from the Commission and in particular that the five earlier stages of dispute settlement in clause 45.1 had been undertaken prior to the application being made.

[68] Thus, on the face of the application, I am lawfully conferred with jurisdiction and power to privately arbitrate.

[69] However, the 2012 Agreement no longer operates. During the life of this matter it was superseded by the 2018 Agreement.

[70] Two issues arise: one of jurisdiction and the other of utility. Firstly, do private arbitration powers concerning a dispute under an expired agreement survive that agreement ceasing to operate so as to provide a continuing source of the Commission’s jurisdiction and, if so, in what circumstances?

[71] An associated question is relevant to practicality, not jurisdiction: secondly, if private arbitration powers did survive the 2012 Agreement ceasing to operate, is there utility in the Commission arbitrating this dispute given that the 2012 Agreement no longer operates or in circumstances where the 4 shift roster is no longer worked?

Submissions on jurisdiction

[72] The parties made oral and written submissions on jurisdiction and utility.

[73] Both parties contend (with one qualification by the employer) that the answer to these questions is ‘yes’.

[74] Although the parties agreed that the Commission has continuing jurisdiction to determine the dispute, I must satisfy myself of this matter.

[75] The CFMMEU submit that the issues raised by the dispute were matters “under the agreement” or about “any other work related matter” within the meaning of clause 45 of the 2012 Agreement and that that dispute remains live notwithstanding the 2012 Agreement having ceased to apply. It points to the fact that production employees were working the 4 shift roster at the time of the application being made to the Commission and continued to do so throughout the life of the 2012 Agreement and into the life of the 2018 Agreement (before ceasing to do so, for operational reasons, in May 2019). The Union also asserts that, at all relevant times, the employees were covered by an enterprise agreement which provided for resolution of disputes by the Commission. Further, and in the alternative it submits that if the dispute cannot be supported by the phrase “disputes about this agreement” in clause 45 of the 2012 Agreement (on the basis that the agreement has ceased to apply) then continuing jurisdiction is sourced from the terms of the dispute resolution clause of the 2018 Agreement (clause 43) which uses the same language (“any other work related matter”)  36.

[76] Kimberly-Clark submit in similar terms as the Union save for one point: the employer submits that the Commission does not have jurisdiction to resolve the 4 shift roster dispute as notified concerning the BF1 production employees because, as a matter of fact, those employees were not working the 4 shift roster at the time the 2012 Agreement ceased to apply 37. The employer says that jurisdiction exists with respect to Lotion Line production employees because they continued to work the 4 shift roster beyond the commencement of the 2018 Agreement and that this fact, together with the terms of the 2018 Agreement, preserved the Commission’s jurisdiction.

[77] The CFMMEU and the employer place weight on the fact that that the dispute resolution provisions in the 2012 and 2018 Agreement are in materially similar terms, and likewise the clauses of the two Agreements that are the subject of the substantive dispute (Hours of Work; Annual Leave; Payment of Annualised Wage).

Legal principles concerning jurisdiction and expired agreements

[78] Whether a dispute can continue to be dealt with by the Commission under a dispute settlement procedure of a collective agreement that has ceased to apply has been the subject of previous consideration by the Commission, as have related questions about the effect of expired agreements on the Commission’s jurisdiction. 38

[79] These past cases typically involve unique factual circumstances which make each distinguishable from the other. Some also concern statutory regimes where different provisions applied concerning dispute resolution in collective agreements and where those differences may be material. The law on this question is not settled.

[80] Past cases such as Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Jemena Asset Management Pty Ltd 39 (Jemena) and Construction, Forestry, Mining and Energy Union v North Goonyella Coal Mines Pty Ltd40 (North Goonyella) have some broad parallel to the matter before me in that each case:

•  Was determined under the current statutory regime (FW Act);

•  Involved a dispute concerning rights and obligations arising during the life of an expired agreement;

•  That the expired agreement ceased to apply by virtue of being superseded by a new collective agreement between the parties;

•  That arbitration was conducted after the expired agreement ceased to operate; and

•  It was asserted that the private arbitration jurisdiction in the new agreement could enliven a dispute arising under the expired agreement.

[81] I note however that in Jemena the dispute application was made to the Commission after the successor agreement commenced, whereas in North Goonyella and in the matter before me the dispute application was made whilst the expired agreement was operating.

[82] In Jemena Deputy President Gostencnik concluded that the dispute settlement procedure of the particular successor agreement before the Commission did not contain language so as to enliven jurisdiction to deal with disputes under the former agreement. He went on to observe 41:

“It seems to me that the decisions referred to in footnote 8 to Jemena’s outline of submissions, although decided in relation to agreements made under a different legislative scheme are apposite, having regard to the limitation on power in s. 739(3) and clause 2.1.2 of the current Agreement.”

[83] In North Goonyella Deputy President Asbury summarised the (then) authorities as follows 42:

“A number of general principles can be distilled from the cases. Where a dispute clause in an enterprise agreement empowers the Commission to settle a dispute about matters arising under the agreement and a dispute is commenced, the Commission will no longer have jurisdiction to deal with the dispute if the agreement ceases to operate while the dispute is on foot, unless the successor agreement has a savings clause, or a dispute settlement term that empowers the Commission to settle disputes about matters that are not confined to the application or terms of that agreement.

For example, where a previous agreement and a current agreement contain the same or a substantially similar provision, and the current agreement has a broad dispute settlement procedure that is not limited to disputes arising under it, the Commission may have jurisdiction to continue to deal with a dispute that arose under the previous agreement. In order to establish jurisdiction to deal with a dispute in such circumstances, it will be necessary for the Commission to consider the terms of the dispute settlement procedure that is sought to be invoked as a source of jurisdiction and to characterise the dispute to ascertain whether it is amenable to being dealt with under the procedure.”

[84] In the recent decision of Battye v John Holland Pty Ltd 43 Commissioner Bissett concluded, on the authority of an earlier Full Bench decision in Stephenson44(decided under a previous statutory regime), that the Commission has no jurisdiction to deal with a dispute in circumstances where an agreement to which the dispute related had ceased to operate. A contrary view concerning the applicability of the decision in Stephenson was expressed by Deputy President Sams in APESMA v TransGrid.45

[85] In BlueScope Steel (AIS) Port Kembla v The Australian Workers’ Union, the Australian Manufacturing Workers Union & the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia a Full Bench of the Commission, by majority, decided that the Commission had jurisdiction to conduct a review contemplated by an earlier decision of the Commission made under the dispute resolution provision of an agreement that had ceased to apply by the time the review was due to be conducted. The majority (Vice President Catanzariti and Commissioner Spencer) refused permission to appeal on the narrow ground that it was premature to determine the issue as a review did not necessarily involve arbitral determination. The majority expressly did not consider “the general law authorities concerning, for example, the right to receive performance of an accrued contractual obligation after termination of a contract” 46.

[86] Deputy President Colman, in dissent, concluded that clause 3.1 of the particular successor agreement “disavows any intention that remnants of the earlier instrument survive. In the face of this provision, and the absence of any relevant savings clause, there can be no argument that the dispute that was referred to the Commission under the 2012 Agreement and that was the subject of the 2015 Decision was preserved by the coming into operation of the 2015 Agreement.” 47

Do private arbitration powers survive an agreement that ceases to operate?

[87] Section 58(2)(e) of the FW Act deals with the interaction between an enterprise agreement and its successor. It provides as follows:

“the earlier agreement ceases to apply to the employee when the later agreement comes into operation, and can never so apply again.” (emphasis added)

[88] This is a clear statutory rule prohibiting, in absolute terms, the continuing application of the earlier agreement to relevant employees and is a clear declaration of the Legislature that, as a matter of law, the earlier agreement thereafter “ceases to apply”.

[89] As a statutory instrument, an agreement that has ceased to apply does not cease to have had historical operation including its prior force of law. That force of law conferred past rights and obligations on an employer (or employers) and on employees. Even when it no longer “applies” it remains an instrument over which past rights (such as underpayments or civil remedies for breaches under section 544 of the FW Act) can be litigated in a court seized of such jurisdiction (subject to statutes of limitations for historical claims).

[90] Thus, in the context of section 58(2)(e) of the FW Act, and provided the scope clause of the successor agreement encompasses all persons who were employed under the expired agreement, I consider that the phrase “ceases to apply” means to cease to operate such that the instrument has no further effect and creates no continuing rights and obligations except where expressly preserved.

[91] Also relevant is that under the scheme of the FW Act, there are no parties to agreements. Agreements simply bind a nominated employer(s) and employees. Hence, upon an agreement ceasing to apply to an employer and employee it cannot be said to confer ongoing rights on other persons “covered” 48 by it (such as a Union). As it has ceased to apply to employers and employees (and creates no further legal rights between them) it does not follow, in the absence of some express statutory provision to the contrary (which does not exist), that other persons covered have or retain any continuing rights beyond those of the employer and employees.

[92] Given that the source of the private arbitration power is the agreement itself, an appropriate starting point is to consider the terms of each agreement. Dispute resolution terms in agreements vary. They should be interpreted based on the ordinary canons of construction applying to such instruments 49 but should not be narrowly construed50.

[93] Deputy President Asbury in North Goonyella noted that the terms of the relevant dispute settlement procedure said to invoke jurisdiction were “critical”  51. I agree. However, private arbitration clauses in a successor agreement sit within the framework of that successor agreement as a whole. I consider the terms of the successor agreement when read as a whole to also be relevant including, equally critically, its scope and operation.

[94] I do not conclude that the dispute procedure of an expired agreement can survive that agreement’s expiry so as to be a continuing source of the Commission’s jurisdiction to determine an unresolved dispute that arose during the life of that agreement. As that agreement is no longer in operation it can no longer be a source of authority for the Commission to deal with that dispute 52.

[95] However, this is not the full extent of the matter in circumstances where an agreement expires as a consequence of it being replaced by a successor agreement.

[96] Subject to further guidance from Full Benches of the Commission or relevant courts, and having regard to the authorities and the statutory provisions I conclude that there are a limited number of circumstances where a dispute arising during the life of an expired agreement is able to be heard and determined by the Commission notwithstanding that agreement having expired. Those circumstances include:

•  Where dispute resolution machinery of the successor agreement is broad enough to encompass a dispute that arose under an expired predecessor agreement 53; or

•  Where the Commission has already made a decision in relation to the dispute prior to the predecessor agreement ceasing to operate and the Commission’s further role involves the continuing application of that decision 54.

[97] The former circumstance includes the situation where a successor agreement contains an express savings provision preserving private arbitration of disputes that arose prior to its commencement or preserving part-heard disputes (in the sense of being part resolved under the disputes procedure). It also includes the situation where the dispute resolution procedure of the successor agreement uses language not limited to resolution of disputes under that agreement. An example would be where the successor agreement provides for private arbitration of a dispute over “any work related matter” rather than simply a matter “under the agreement”.

[98] In those circumstances the dispute resolution procedure of the operating (successor) agreement is an available source of jurisdiction to resolve the dispute.

[99] This approach gives primacy to the language of the successor agreement in determining whether private arbitration powers survive an agreement ceasing to operate. That is the appropriate course given that language used by the parties best reflects their intent to confer (or not confer) jurisdiction on a third party to settle or continue to settle their historical disputes. As the High Court said in the Private Arbitration Case: 55

“The parties to an industrial situation are free to agree between themselves as to the terms on which they will conduct their affairs.”

Does jurisdiction exist for resolving the dispute as notified by the CFMMEU?

[100] I now apply this approach to the facts before me.

[101] In this matter, the right that is said to have survived the 2012 Agreement ceasing to apply is the right to hear and determine the dispute that existed and was notified on 13 February 2018.

[102] The 2012 Agreement operated beyond its nominal expiry date (1 July 2015). By virtue of the provisions of section 58(2)(e) of the FW Act it operated until 16 April 2019 when the 2018 Agreement came into operation (which was 7 days after 9 April 2019).

[103] It is not in dispute that the relevant production employees for the purposes of this dispute came to be employed under the 2018 Agreement.

[104] The opening words of clause 45 of the 2012 Agreement set out the purpose of its dispute settlement procedure:

“To ensure the orderly conduct of the speedy resolution of disagreements, conflicts and disputes, the following resolution procedure will be adopted by both parties in relation to disputes about this agreement, the NES (including subsections 65(5) or 76(4)), or about any other work related matter or legislation.” (emphasis added)

[105] Clause 43 ‘Settlement of Disputes or Grievances’ in the 2018 Agreement is expressed in similar terms:

“43.1 To ensure the orderly conduct of the speedy resolution of disagreements, conflicts and disputes, the following resolution procedure will be adopted by the Parties in relation to disputes about:

43.1.1 this Agreement; or

43.1.2 the NES; or

43.1.3 about any other work related matter.” (emphasis added)

[106] Both the 2012 Agreement and the 2018 Agreement then provide more detailed provisions such as when private conciliation and arbitration by the Commission is to occur, how it is to operate, and the effect of arbitrated decisions on those in dispute. Both Agreements provide that private conciliation and arbitration is to occur only after a five stage process of endeavouring to first reach agreement at a workplace or officials level. The Agreements then contain similar but not identical machinery provisions:

2012 Agreement

“45.2 If no negotiated settlement can be achieved and the process is exhausted without the dispute being resolved, the parties will jointly or individually refer the matter to Fair Work Australia, for conciliation and if necessary arbitration. The decision of Fair Work Australia will be final and accepted by, and binding on, the parties, subject to a right of appeal which may be exercised by either party. Fair Work Australia may exercise such powers in relation to conciliation and arbitration as are necessary to make the conciliation or arbitration effective including all of the powers given to Fair Work Australia by the Fair Work Act 2009.”

“45.7 Fair Work Australia may exercise such powers in relation to conciliation and arbitration as are necessary to make the conciliation or arbitration effective including all of the powers given to Fair Work Australia by the Fair Work Act 2009.”

2018 Agreement

“43.6 If discussions at the workplace level do not resolve the dispute, the Parties may jointly or individually refer the matter to the Fair Work Commission.”

“43.9 The Parties to the dispute agree to be bound by a decision made by the FWC in accordance with this clause.”

[107] Clause 45 of the 2012 Agreement sits within the framework of an industrial instrument, being an enterprise agreement approved under the FW Act. By virtue of the FW Act, the instrument (including clause 45) only came into operation following approval of the agreement by the Commission (section 54(1)); in the case of the 2012 Agreement, from 22 December 2012. Under the scheme of the FW Act (section 54(2)), an enterprise agreement operates beyond its nominal expiry date unless terminated by the Commission (under section 224 or 227) or section 58 applies.

[108] As to the scope and operation of the 2018 Agreement, clause 4 and clause 6 provide as follows:

“4. SCOPE OF AGREEMENT

4.1 This Agreement details the relationship between the Company, the Employees and the Union. It is the intention of the Parties to abide by and accept all aspects of the Agreement during the duration of its application to the Mill.

4.2 The terms and conditions of this Agreement constitute the terms and conditions of employment for all Employees.”

“6. COMMENCEMENT AND TERM OF AGREEMENT

6.1 This Agreement will come into operation seven days after being approved by the Fair Work Commission and will remain in force until 31 December 2020.

6.2 The Parties agree to commence negotiations for a further Agreement no later than three months before the expiry of this Agreement.”

[109] It is noteworthy that neither clause 4 (Scope of Agreement) nor clause 6 (Commencement and Term of Agreement) nor clause 43 (Settlement of Disputes or Grievances) make reference to the 2012 Agreement. The 2018 Agreement is silent on that issue. Further, the scope of the 2018 Agreement wholly subsumes the employment of the relevant production employees who were, prior to its commencement, employed under the 2012 Agreement.

[110] Clause 45 of the 2012 Agreement and clause 43 of the 2018 Agreement are expressed to concern “disputes about this agreement…or about any other work related matter”. This language is broader than the minimum prescribed dispute settlement provision required for agreements by section 186(6) of the FW Act. Those who made these Agreements intended broad scope for industrial issues to be the subject of dispute notifications under either the 2012 or 2018 Agreements. Such notifications are not limited to “matters arising under the agreement” 56. The breadth of such provisions raises no jurisdictional or constitutional impediment57.

[111] The unresolved dispute relating to production workers that remains live between the CFMMEU and Kimberly-Clark over historical industrial matters is a dispute over “a work related matter”. I conclude that the subject matter of the dispute as notified in the CFMMEU’s application is within the scope of the dispute resolution provision of the 2018 Agreement.

[112] Accordingly:

•  The dispute before me arose during the life of the 2012 Agreement;

•  In order to have the dispute resolved, the Union invoked the dispute resolution provision of the 2012 Agreement prior to its expiry (in April 2019). This included the five stage internal dispute resolution process and then (in February 2018) made an application for private conciliation and arbitration by the Commission;

•  At the time of the 2012 Agreement ceasing to apply, private conciliation by the Commission had been conducted (in March, July and December 2018) but had not resolved the matter. By agreement, the dispute had been set down for private arbitration. It was between the date of unsuccessful conciliation and impending private arbitration that the 2012 Agreement ceased to apply by virtue of it being replaced by the successor 2018 Agreement;

•  The machinery of the dispute resolution provisions of the (expired) 2012 Agreement and the 2018 (successor) Agreement are substantially the same;

•  The subject matter of the dispute falls within the terms of the dispute resolution provisions of both the 2012 Agreement and the 2018 Agreement;

•  The substantive clauses of the 2012 Agreement and the 2018 Agreement requiring interpretation are substantially the same;

•  The 2018 Agreement does not expressly disavow the continuing operation of any remnants of the 2012 Agreement; and

•  The 2018 Agreement contains no express savings provisions for historical disputes under the 2012 Agreement or portions thereof.

[113] I note that the Union has not chosen to amend its application to refer to the 2018 Agreement (or its terms) nor to notify a fresh dispute under the terms of clause 43 of the 2018 Agreement.

[114] This notwithstanding, the machinery of the 2012 Agreement was lawfully invoked by the CFMMEU to deal with a dispute and that dispute was at an advanced stage of being resolved in accordance with that machinery when the 2012 Agreement ceased to apply. The successor agreement did not disavow the continuing operation of past notified but unresolved disputes. The successor agreement contained dispute resolution machinery over any work related matter, not just matters under its terms. The unresolved dispute is a dispute over a work related matter. It follows that the Commission has jurisdiction sourced from the 2018 Agreement to undertake private arbitration of the unresolved dispute as notified by the CFMMEU on 13 February 2018. I so conclude.

[115] However, I only consider this to be the case with respect to the three questions before me arising under the 2012 Agreement. There is no application before me that has sought to resolve the dispute by applying or interpreting the terms of the 2018 Agreement. Although the CFMMEU has asked me to do so, it has not lodged a dispute notification to that effect nor sought leave to amend its originating proceedings that would enable me to do so. Whilst this may be a moot point given the similarity between the substantive terms in dispute under both agreements, it is a matter that goes to jurisdiction. Jurisdiction can only be exercised to resolve the dispute that is notified. In this instance, that was the dispute as to the application and interpretation of the 2012 Agreement.

[116] I do not accept Kimberly-Clark’s submission that I do not have jurisdiction to deal with the dispute as it pertains to the former BF1 production employees. The approach I have applied to determine jurisdiction does not depend on a class of employees working an unchanged roster throughout the life cycle of dispute resolution machinery being applied or working that roster throughout the life span of an agreement. As the Full Bench said in Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia 58:

“The cessation of employment under the Kentz Agreement did not have the effect of changing the character of the dispute commenced in respect of former employees, whilst they were employed, or extinguishing the right to have the dispute resolved under clause 18.”

Utility

[117] An associated issue is whether there is utility in the Commission arbitrating a historical dispute notified under an agreement that has expired even where it has jurisdiction to do so.

[118] The powers given to the Commission by the parties under the 2012 Agreement are stated to include “all of the powers given…by the Fair Work Act 2009” 59. This would include the discretionary power to not arbitrate a matter if arbitration is considered to serve no useful or practical purpose, such as if a historical dispute had become wholly theoretical in character. Given that the Commission has an obligation to perform a variety of statutory tasks and does not exist solely to conduct private arbitration under section 739 I consider that, in an appropriate case, an application without utility would be an abuse of process and could be dismissed under section 587 of the FW Act if not otherwise discontinued or amended to give it meaningful purpose.

[119] In this matter, I consider there to be practical utility to proceed with private arbitration of the three questions posed by the parties concerning their dispute under the 2012 Agreement. This dispute is not of historical or theoretical relevance only. I take into account that, at the time of arbitration, no relevant production employees at the Millicent Mill were working a 4 shift roster. However, I am satisfied that arbitrating the issues in dispute has utility for the following reasons:

•  The dispute concerns accrued rights and obligations of current employees and their current employer in circumstances where those employees and the employer maintain a material and ongoing difference of view about the correctness of the working arrangements implemented pursuant to those rights and obligations;

•  Many of the relevant production employees who worked under the 2012 Agreement continue to work for the employer at the Millicent Mill. That difference of view has the capacity to affect the quality of their current industrial relationship;

•  The issues in dispute remain live given that the terms of the 2012 Agreement concerning Hours of Work, Annual Leave and Payment of Annualised Wage are broadly reflected in comparable provisions of the 2018 Agreement;

•  At the time of the 2012 Agreement ceasing to apply and the 2018 Agreement commencing (16 April 2019) Lotion Line production employees continued (for a number of weeks) to work the 4 shift roster beyond the commencement of the 2018 Agreement; and

•  The employer is capable of lawfully reactivating work under a 4 shift roster at any time, subject to providing appropriate notice. 60

[120] The fact that BF1 production employees ceased working a 4 shift roster in June 2018 is relevant to utility. However, I consider there to be utility in exercising the Commission’s jurisdiction with respect to these BF1 production employees for the following reasons:

•  The accrued rights of BF1 production employees whilst they worked a 4 shift roster remain in dispute even though those employees ceased to work that roster prior to the 2012 Agreement ceasing to apply; and

•  The employer is capable of lawfully reactivating work for these employees under a 4 shift roster at any time, subject to providing appropriate notice.

[121] Resolving the dispute with respect to Lotion Line and BF1 production employees has meaningful purpose.

Conclusion on jurisdiction and utility

[122] For these reasons I conclude that:

1. The dispute resolution procedure of the 2018 Agreement is framed in a sufficiently broad manner so as to provide a source of jurisdiction for the Commission to exercise private arbitration powers over historical work related matters at the Millicent Mill;

2. The dispute as notified by the CFMMEU on 13 February 2018 is of such a character that the Commission has jurisdiction to determine that dispute with respect to production employees who worked under the 2012 Agreement;

3. The dispute as notified by the CFMMEU on 13 February 2018 did not concern the 2018 Agreement and in the absence of an application the Commission has no jurisdiction to determine rights and obligations under the 2018 Agreement; and

4. There is utility in determining the dispute with respect to both the Lotion Line production employees and BF1 production employees who worked the 4 shift roster during the life of the 2012 Agreement.

Question 1: maximum number of rostered shifts per year

[123] Question 1 requiring determination in settlement of the dispute is:

“What was the maximum number of shifts under the Agreement and at law that could be rostered for Employees engaged on the Roster in each year?”

[124] As noted, the “employees” for the purposes of this question are the two classes of production employees (BF1 and Lotion Line) and the “roster” is the 4 shift roster (or rosters) worked by those employees during the life of the 2012 Agreement.

Submissions

[125] In its application the CFMMEU assert that the maximum number of shifts in each year is 209. This calculation takes leave into account.

[126] In its submissions the CFMMEU submit that the maximum number of shifts in each year (not taking leave into account) is 228.

[127] The Union arrives at this calculation by multiplying the number of weeks in a year (52.16) by the number of ordinary hours worked per week (35) equalling 1,825.6 hours worked per year then dividing that number by the number of hours per shift (8) to equal 228 shifts per year 61.

[128] In making this calculation the Union claims that the 4 shift roster (and the annualised salary paid to employees) historically was, is (in the context of the 2012 and 2018 Agreements) and should remain based on a 35 hour week. It contends that the employer has incorrectly and unilaterally turned the 4 shift roster into a 36 hour week by adding one hour of rostered overtime per week into the annual roster, contrary to the terms of the 2012 Agreement.

[129] Kimberly-Clark submits that the maximum number of shifts in each year (not taking leave into account) is 220.

[130] In advancing this position the employer relies on clause 24.4.6 of the 2012 Agreement 62.

[131] The employer further submits that where an employee works in excess of 220 shifts per year, time off in lieu was provided.

Facts

[132] The 2017 roster is an example of the annual roster worked by employees under the 2012 Agreement 63.

[133] That annual roster was, as were all rosters, agreed in advance between the employer and the Union.

[134] The annual roster was in fact, four rosters; a roster setting out annual shifts for each of the four shifts. Although each employee worked the same rotation, being a 4 shift continuous roster incorporating day shift, afternoon shift and night shift each of the four shift crews worked their unique sequence of days. Given different start days for each sequence, the result was that over a given year the number of ‘days’ worked (or more correctly shifts worked) was not identical. For example, in 2017:

•  Shift 1 worked 221 shifts;

•  Shift 2 worked 227 shifts;

•  Shift 3 worked 222 shifts; and

•  Shift 4 worked 217 shifts.

[135] Over a period of 4 years this cycle would repeat four times but due to the rotating nature of the roster (provided a shift commenced the following year where it had left off) the number of shifts worked would even out to an average of 221.75 shifts per year per employee (221 + 227 + 222 + 217 = 887 divided by 4).

Consideration

[136] Whatever the circumstances as worked by a particular shift crew, all production employees were covered by the same agreement: the 2012 Agreement. The employer’s obligation was to roster the number of shifts lawfully according to the terms of that Agreement.

[137] It is the terms of the Agreement (properly interpreted and applied) that determine the answer to the question posed. Whilst the language of the Agreement must be considered in context (including the industrial context in which the Agreement was operating), objective background facts and evidence of surrounding circumstances (such as the manner in which the Agreement has been applied or common intent of the parties) are only able to be taken into account as an aide to interpretation where the language of the Agreement is ambiguous or capable of dual or multiple interpretations 64.

[138] Interpreting an agreement is not an exercise in determining what is or should be a fair outcome except in the narrow sense of observing that a fair outcome is to give effect to that which was agreed by those who made the agreement. The language used in an industrial instrument is the expression of the policy intent of those who framed the instrument. The Commission when interpreting an industrial instrument is not undertaking a policy task. It cannot substitute a different meaning to language used in order to give effect or better effect to the policy intent 65.

[139] Clause 24 Hours of Work of the 2012 Agreement provides:

“The average ordinary hours of work shall be 35 per week. Rosters and working arrangements may be agreed that permit the averaging of hours worked to occur over a period of several weeks.

…

24.2 Shiftwork

…

The roster for 3 shift 6 day work shall be a 4 shift roster which will average out over a 4 week period.

…

24.4 Transfer to and between Shifts

…

24.4.6 Where an employee works in excess of 220 days in a year due to shift changes, the employee will be entitled to have time off work, with pay to the extent of the number of days worked in excess of 220 days. Further it should be noted that the roster year will be the year considered when calculating the days worked.”

[140] The role of the Commission is to objectively apply the language of the Agreement to the facts as a whole; in this case the complete working pattern that production employees were contracted to perform. That means taking into account the rotating nature of work under the 4 shift roster as worked by each of the four shift crews. The language of the 2012 Agreement when read as a whole, including these clauses, tends to the conclusion that:

•  The Agreement provides for a 35 hour week of ordinary hours (clause 24 first sentence);

•  That each shift is of 8 hours duration (clause 24.1);

•  That employees who are continuous shift workers can be worked an average of 37 ordinary hours per week provided hours worked in excess of an average of 35 are taken into account in setting the annualised wage (clause 24.2); and

•  220 days (shifts) in a year is able to be rostered but if more than 220 days are worked, due to shift changes, days in excess of 220 are compensated in lieu (clause 24.4.6).

[141] On the face of the language of the Agreement, and in particular clause 24.4.6 I conclude that 220 shifts per year was the maximum that could be rostered before having to provide days (shifts) off in lieu with pay. Further, I consider it consistent with the terms of clause 24.4.6 that where a paid day in lieu was not provided (in other words, if the prior or following rostered period was not adjusted by a day off) then a day of pay was to be provided.

[142] The CFMMEU submit that clause 24.4.6 did not apply to production employees on the 4 shift roster as that clause only related to the circumstance where an employee is transferred between day work and shift work or vice versa.

[143] I do not agree. I consider that a transfer from day shift to afternoon shift to night shift on the 4 shift roster constituted a transfer between shifts for the purposes of clause 24.4. The opening sentence of clause 24.4 is not limited to the interchange between day shift and shift work. It refers to a transfer from “one shift to another”. I consider that is what production employees on the 4 shift roster did on three occasions inside each 4 week cycle. The 4 shift roster in evidence uses the very words ‘shift 1’, ‘shift 2’, ‘shift 3’ and shift 4’ 66.

[144] I conclude that production employees on the 4 shift roster were able to be rostered 220 days (shifts) in a year under the 2012 Agreement provided that where more than 220 days in a year were worked, days in excess of 220 were required to be compensated as days off or payment for a day (or days) in lieu or paid as extra time under clause 27.

[145] In answering question 1 I am not directly asked to consider whether employees working the rosters, such as the 2017 4 shift roster, were properly paid and compensated.

[146] This is a matter on which the parties may wish to further confer, and in particular on whether those employees in a given year who worked more than 220 shifts (such as shift 1 in 2017 who worked 221 days, shift 2 in 2017 who worked 227 days and shift 3 in 2017 who worked 222 days) were in fact provided days in lieu for the number of shifts each employee worked in excess of 220 in a given year.

[147] The CFMMEU submit that the employer infected the 4 shift roster with a notional 36 hour week provision whereas the Agreement required an average of 35 ordinary hours to be worked.

[148] I do not consider the answer to question 1 to be reliant on the average number of weekly hours worked by an employee. If the employer had in fact rostered employees beyond the weekly average permitted by the Agreement it may have been in breach of the Agreement. It does not follow that it has breached the maximum number of permitted shifts that an employee can be required to work each year.

[149] In any event, the evidence before me does not indicate that the employer has rostered employees on an average beyond 35 hours per week in a given year. Taking the 2017 roster as an example 67, shift 1 employees worked 1768 hours in that year at an average of 34 hours per week, shift 2 employees worked 1816 hours in that year at an average of 34.9 hours per week, shift 3 employees worked 1776 hours in that year at an average of 34.1 hours per week and shift 4 employees worked 1736 hours in that year at an average of 33.4 hours per week.

[150] These calculations are based on a calendar year of 52 weeks. I consider this consistent with the language of the Agreement (for example, clause 24.4.6 refers to “the roster year will be the year considered when calculating the days worked”; it does not refer to 365 days per year). However, given that one in each four years is a leap year, 52.18 weeks per year 68 could be said to be a more accurate divisor across a four year period. If this divisor were used, the average hours worked per year in each of the shifts would be marginally lower than set out above.

[151] Reference was made in submissions by both the CFMMEU and Kimberly-Clark to the terms of historical correspondence between the (then) CFMEU Sub Branch Secretary Mr Johnston on 5 February 1996 and the then Kimberly-Clark Manager of Corporate Industrial Relations Mr Downes dated 28 February 1996 69.

[152] Mr Johnston wrote to the employer:

“Dear Sir,

If has been brought to my attention that when employees working at the K.C.A. Millicent Mill change from one shift to another on the five shift roster or from three or four shift onto the five shift roster they may be working a greater number of days than they are being paid for under the new average pay system.

As you are aware, when the new pay structure was worked out for the present Enterprise Agreement it was calculated on the basis that shift work employees would be working for an average of 217 days per year.

Therefore it is the Millicent Sub Branch of the C.F.M.E.U position that any employee working past 220 days [ie the greatest amount of days worked by any one shift in a roster year] should be given the opportunity to take the extra days worked off without loss of pay.

A discussion and your views on this matter would be appreciated as soon as it is convenient.

Yours Faithfully,

R.A. JOHNSTON”

[153] Mr Downes replied:

“It has been agreed by the Management Group that your proposal re the impact of increasing work days (in excess of 220 days) due to shift changes be adopted (see attached proposal).

Further it should be noted that the Roster year will be the year considered when calculating the days worked.

The intention would be to allow any employee required to work excess days (in excess of 220 days) time off to the extent of the excess over 220 days.

Thank you for raising this issue as it was not considered during the course of negotiating the recent Enterprise Agreement.

J W Downes”

[154] I do not consider it necessary to take account of these historical background facts in interpreting the 2012 Agreement insofar as it relates to the number of shifts that could have been worked by production employees on the 4 shift roster. To do so is unnecessary because clause 24 can be properly interpreted by reference to the language of the provision itself. In particular clause 24.4.6 stipulates, for reasons I have advanced, that 220 days per year could have been worked by the relevant employees before extra time provisions of the Agreement applied. Further, it is not apparent on the evidence before me that it would be safe to correlate the 4 shift roster as it applied in 1995 to the 4 shift roster as it applied, for example, in 2017 or other rosters under the 2012 Agreement. I note however that, broadly speaking, the content of clause 24 of the 2012 Agreement (as interpreted) appears to share some common ground with the 1996 correspondence.

Conclusion on Question 1

[155] I answer question 1 as follows:

Production employees on the 4 shift roster were able to be rostered 220 days (shifts) in a year under the 2012 Agreement provided that where more than 220 days in a year were worked, days in excess of 220 were required to be compensated as days off or payment for a day (or days) in lieu or paid as extra time under clause 27.

Question 2: quantum and deduction of annual leave

[156] Question 2 requiring determination in settlement of the dispute is:

Have the Employees been provided with the correct period of annual leave each year in accordance with the Agreement and the National Employment Standards? This question includes a consideration of:

(a) periods of annual leave where that annual leave included days when an Employees was not designated to work pursuant to the Roster; and

(b) has the deduction from the relevant leave accrual been correctly applied?

[157] During the life of the 2012 Agreement, the employer adopted two practices concerning the taking of annual leave. Until 2014, the employer granted leave to individuals on application to be taken at a time that accommodated operational requirements of the business and circumstances of the individual. From 2014, the employer ceased dealing with individual applications for leave. It applied the practice of incorporating pre-determined blocks of annual leave into the annual roster.

Submissions

[158] The CFMMEU contends that both practices, in their application, denied employees their full and lawful entitlement to annual leave under the Agreement and the statutory National Employment Standards (NES).

[159] In response the employer submits that the practice which was applied in both instances complied with its lawful obligations.

[160] The employer further submits that whilst it adopted the practice of granting production employees on the 4 shift roster five weeks annual leave each year (and continues to do so), it now contends that it only had (and has) a lawful obligation to provide those employees four weeks of annual leave, not five. Hence, the quantum of annual leave is also in issue.

Quantum of annual leave

[161] Kimberly-Clark submit that the relevant employees were not “continuous shift workers” within the meaning of the 2012 Agreement.

[162] Clause 31 of the 2012 Agreement provides as follows:

“31. ANNUAL LEAVE

31.1 Accrual of Leave

All full-time employees shall accrue 4 weeks of paid Annual Leave per year and Continuous Shiftworkers (see clause 24.2) will accrue an additional week.

All accruals will become entitlements on the 1st of January each year. Employees who have not completed a full year of service at this time will have a pro rata entitlement.

31.1.1 Where an employee has worked as a continuous shift worker and as a day worker or non-continuous shift worker for part of the year their leave accrual will be calculated on a pro rata basis to the rates prescribed in clause 31.1.

31.1.2 In the case of an employee on long-term paid Workers Compensation absence the provisions of the Workers Rehabilitation and Compensation Act (as amended) will apply.”

[163] Clause 24.2 of the 2012 Agreement provides as follows:

“24.2 Shiftwork

For continuous shiftworkers, the average ordinary hours of work shall not exceed thirty seven per week. The average hours for continuous shiftworkers will be fixed by agreement between the Company and the Union and may be determined in accordance with a roster arrangement which provides for the average hours to be calculated over the duration of the roster. Hours in excess of 35 will be taken into account in calculating the annualised wage of continuous shift workers.”

[164] The clause then provides definitions of “Continuous Work” and “Shift Worker” as follows:

•  “Continuous Work” means work carried on with consecutive shifts throughout the 24 hours of each day on a roster arrangement which requires employees to work on any day of the week including Saturdays, Sundays and Public Holidays without interruption except during meal breaks, breakdowns, general overhaul or stoppages due to causes beyond the control of the Company.

•  A “Shift Worker” is an employee who is engaged in work which is carried on for two or more shifts during five, or more days per week, or one who works any day, afternoon or night shift as described herein.”

[165] The Agreement, when read as a whole, draws a distinction (at least for certain purposes) between a “continuous shift worker” and “other shift workers” (see for example, clause 24.3, clause 27.6.1 which uses the phrase “non-continuous shift work employees” and clause 31.1.1 which uses the phrase “non-continuous shift worker”). It follows that whilst all continuous shift workers employed by the employer were shift workers, not all shift workers were continuous shift workers.

[166] A fifth week of annual leave is only accrued by employees who are continuous shift workers (clause 31.1). Other employees (such as “day workers” or “shift workers”) accrue four weeks of annual leave only.

[167] There is no definition in the Agreement of “continuous shift workers”. However, given the existence of definitions of “Continuous Work” and “Shift Worker” and given that those definitions fall within clause 24.4 which deals with shift work hours and rosters (including the hours and rosters of continuous shift workers) I conclude that the plain meaning of “continuous shift worker” for the purposes of the Agreement is an employee who is a “shift worker” (as defined) and who undertakes “continuous work” (as defined) whist working as a shift worker.

[168] Were the production employees on the 4 shift roster shift workers performing continuous work?

[169] Having regard to the 2017 roster as typical of the 4 shift roster over a given year, the production employees performed shift work as defined. Over a four week cycle the employees worked two or more shifts during five or more days of a week. They also worked afternoon or night shift on any given day of the week. This conclusion is not contested by the employer 70.

[170] What is in contest is whether the production employees performed continuous work as defined. The employer advances the proposition that the proper interpretation of the definition is that it required an employee to work on each day of the seven days of a week. The employer submits that as the roster was a 6 day roster only, then each day of the week was not worked.

[171] I do not agree. The interpretation of the phrase “24 hours of each day” in the definition of “continuous work” as applied by the employer is misconceived. This phrase does not require the working of each day of the seven days of a week. Rather, the words “each day” inform the obligation to have worked across “24 hours” of a day, not the working of every day of a week. The employer’s interpretation gives no practical utility to the words “24 hours of” in the phrase “24 hours of each day”. The phrase needs to be read as a whole; it is well established that, as a general rule, all words used in an instrument must be given utility and purpose.

[172] When working the 4 shift roster, production employees:

•  Worked, at varying times, across 24 hours of each day;

•  Worked “on any day of the week”;

•  Worked a roster that included Saturdays, Sundays and Public Holidays; and

•  Worked without interruption except for breaks or stoppages for machinery breakdown or other causes beyond the control of the employer.

[173] Accordingly, each element of the definition of “continuous work” in clause 24.2 of the 2012 Agreement was met.

[174] I conclude that the production employees working the 4 shift roster were continuous shift workers. By virtue of the provisions of clause 31.1 of the Agreement they were entitled to five weeks of annual leave.

[175] I note for the purposes of completeness that the CFMMEU also assert a right to five weeks of annual leave under the NES. Having found that the right to that quantum of leave exists under the terms of the 2012 Agreement, I do not need to deal with the NES and the interpretation and application of section 87(1)(b) of the FW Act.

Rostered leave

[176] The CFMMEU submit that the practice of rostered leave was contrary to the terms of the 2012 Agreement and the NES that leave be granted to employees by agreement and not unilaterally.

[177] I do not agree. This submission fails to give full effect to the terms of clause 31 of the Agreement when read as a whole. That clause expressly provides for “rostered leave” and leave taken “in accordance with an approved roster” (clauses 31.2 and 31.3). Neither the Agreement nor the NES enabled an employee to take leave at a time of their choosing. Rostered leave, by its nature, is embedded into the annual roster to meet operational requirements. That annual roster is approved in advance by the Union under the terms of the Agreement. With respect to non-rostered leave, clause 31.2 specifically provides that “leave will be granted on the basis of meeting operational requirements and ensuring that opportunities to take leave are fairly shared between members of a workgroup.” The NES does not alter this position.

[178] I conclude that the practice of rostered leave was a lawful option open to the employer under the 2012 Agreement and the NES provided that the leave was rostered and taken in a manner consistent with the terms of the Agreement and the NES.

[179] The CFMMEU submit that the practice of embedding annual leave into the roster since 2014 has had the effect of failing to provide the employees with their full entitlement of annual leave. The Union contends that whilst blocks amounting to five weeks in each year were allocated to annual leave, some employees were deducted leave on days when they were not and would not have been rostered to work under the 4 shift roster 71.

[180] Kimberly-Clark submit that over the course of a year blocks of annual leave amounting to five weeks in total are embedded in the roster and taken by employees at a time when the plant is shut down. It submits that the 4 shift roster provided an average of 18 shifts per employee over each four weeks, representing 47 weeks of rostered work per year 72. The remaining five weeks were annual leave and not worked by the employees.

[181] The employer’s calculation is based on an average of 211.5 shifts worked each year by each crew. This average is calculated by taking the four crew average. The employer’s figures, whilst accurate against the 2017 roster, reveal that the annual average of shifts worked by each of the four crews differs. In 2017 shift crews 1, 3 and 4 worked an average of 210 shifts per year whereas shift crew 2 worked 216 shifts 73.

[182] However, over a cycle of four years, the average number of shifts worked by each employee in any of the four shift crews resulted in 47 weeks of work each year, and five weeks of leave.

[183] Under the Agreement and the NES annual leave is accrued in weeks, not in days 74. It is accrued year upon year of service. It does not cease to accrue by virtue of not being taken. It can be taken in weeks, or in days or multiples of days. Leave accrued but not taken is paid out on employment ceasing.

[184] Five weeks of annual leave were clearly allocated to each production employee each year under the annual roster. Under the roster (taking the 2017 4 shift roster as an example) annual leave was not rostered on any public holidays. Employees received both annual leave and the benefit of a public holiday, as was their entitlement. On the face of the roster, a clear five weeks was provided for.

[185] The CFMMEU’s contention is that some employees, depending on which of the four shift crews, had annual leave attributed to days on which they would not have been rostered.

[186] Is it a breach of the Agreement or the NES to have had annual leave allocated to a day when an employee would not otherwise have been rostered if in the following year or years the employee received the shortfall through fewer rostered days?

[187] In the circumstances where the Agreement provided that the roster was a rotating roster and provided the rotation of the roster on return from annual leave did in fact resume where it left off (had leave not been allocated and taken), I think not.

[188] The Agreement required the accrual of five weeks leave. That remained each employee’s accrued entitlement. The working of fewer rostered shifts in the following years to make up for the fact that five weeks of leave was not wholly taken in a given year (by virtue of leave allocated to a day that would not have otherwise been rostered) is akin to an employee accruing but not taking all of their accrued annual leave in a given year.

[189] Provided the other terms of the Agreement applied (five weeks quantum provided for in a rotating roster and on return from annual leave the roster resumed where it left off) that arrangement was not prohibited by the Agreement or the NES.

[190] However, I express a proviso to this conclusion.

[191] Under both the Agreement and the NES an employee was entitled to their accrued annual leave on their employment ceasing. Accrued annual leave means leave lawfully accrued but not taken. I consider that the arrangement applied by the employer was consistent with the 2012 Agreement and the NES provided that an employee was paid out their accrued leave balance on their employment ceasing should they not have been subsequently provided a paid rostered day off in lieu. An accrued leave balance in this context is the number of days allocated as leave on days when that employee would not have otherwise been rostered and where that employee had not received (either prior to the allocated leave day or subsequently) the benefit of a day’s paid absence when they would otherwise have been rostered to work.

The method of deducting approved leave

[192] The CFMMEU submit that where rostered leave applied, an employee should have 1/25^th of their leave balance deducted per shift (day) of rostered leave 75. It says that this equates to 5 days leave deduction for that week, even were the employee was to have worked 6 rostered days had the week not been a week of rostered leave. In the alternative the Union submits that the equivalent of one week should have been deducted (1/5^th of the yearly accrual).76

[193] The employer submits that the rotating nature of the roster permitted deduction of one week of annual leave accrual irrespective of whether the employee would have been rostered for 5 or 6 days in the week of rostered leave.

[194] With respect to rostered leave, clause 31.2 of the 2012 Agreement provides:

“Rostered leave will be debited on the basis of a 5 day 35 hour week, and will be shown as such in the roster.”

[195] Rostered leave must be debited by the week. That debit must correlate to a 5 day 35 hour week. This is the express stipulation agreed in clause 31.2. The number of rostered days of leave debited in a given week must therefore not have exceeded 5 days of 35 hours equivalence.

[196] This equates to 1/5^th of the annual leave entitlement. This percentage for each week of rostered leave should have been debited by the employer from each employees accrued entitlement (or allocated as leave (or portion of days thereof) taken in advance should the employee not have accrued that level of entitlement when the week of rostered leave was taken).

Conclusion on Question 2

[197] I answer question 2 as follows:

1. The employees on the BF1 and Lotion Line 4 shift roster were entitled to five weeks of annual leave as they were continuous shift workers. The employer provided that quantum of leave in practice. Whilst continuing to work that roster, they had an entitlement to that quantum as a matter of law.

2. The employer’s dual practices of (from 2014) providing for annual leave by rostered leave embedded in an annual roster and (prior to 2014) on application by an individual employee were consistent with its obligations under the 2012 Agreement.

3. The employer’s practice concerning accrual of leave for employees on rostered leave was consistent with the 2012 Agreement and the NES provided that an employee was paid out their accrued leave balance on their employment ceasing should they not have been subsequently provided a paid rostered day off in lieu. An accrued leave balance in this context is the number of days allocated as leave on days when that employee would not have otherwise been rostered and where that employee has not received (either prior to the allocated leave day or subsequently) the benefit of a day’s paid absence when they would otherwise have been rostered to work.

4. The employer’s practice of debiting rostered leave was required to be based on a debit of 1/5^th of the annual leave entitlement for each week of rostered leave. This percentage was required to be debited by the employer from each employee’s accrued entitlement (or allocated as leave (or portion of days thereof) taken in advance should the employee not have accrued that level of entitlement when the week of rostered leave was taken).

Question 3: calculation of annualised wage

[198] Question 3 requiring determination in settlement of the dispute is:

Has the annualised wage of the Employees been calculated and/or applied correctly?

Submissions

[199] The CFMMEU submit that the annualised salary as it existed for employees working a 4 shift roster at the commencement of the 2012 Agreement was based on parameters set for 4 shift roster employees when the annualised salary was first established at the Millicent Mill in 1995. The CFMMEU says that the 4 shift rosters that applied from 2017 onwards altered the parameters for the annualised salary because the 2017 roster (allegedly) required the working of an extra 52.16 hours by employees, for which they were not additionally compensated 77. Accordingly, the CFMMEU submits that at least from 2017 the annualised salary has not been applied correctly, resulting in disadvantage to employees.

[200] Kimberly-Clark submit that there have been some minor, largely arithmetical errors in the calculation and application of the annualised salary since 1995, including during the life of the 2012 Agreement. The employer says that these calculation errors have been to the advantage, not disadvantage of employees. The employer further says, based on what it believes to be an understanding reached between the employer and the Union in 1995, that the annualised salary is not open to review or negotiation even to correct arithmetical errors or (alleged) overpayments.

Utility of background facts

[201] Both the CFMMEU and the employer rely on pre 2012 conduct, and in particular the status of the annualised salary in 1995 to advance their competing propositions.

[202] I received considerable information concerning historical matters. For reasons earlier expressed, I exercise caution making findings from the historical evidence and in particular drawing inferences from historical events.

[203] Aside from that caveat, the relevance of evidence of pre-Agreement conduct (even conduct evincing a common intention) for the purposes of interpreting and applying the provisions of the 2012 Agreement requires caution. Whilst common intention may be relevant to the construction of an industrial instrument (particularly if there is ambiguity) 78, a subjective belief held singularly by an employer or by employees is not79. As was said in Berri80:

“11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(ii) notorious facts of which knowledge is to be presumed; and

(iii) evidence of matters in common contemplation and constituting a common assumption.

13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.

14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.”

[204] Applying this approach, I take account of the historical material before me where I am able to adduce evidence of common intention or where, on the face of the record (such as a decision of the Commission) the facts are non-controversial. However, I only do so for the purposes of those surrounding circumstances being viewed as objective background facts. Further, those objective background facts only inform my determination to the extent of assisting whether an ambiguity exists in the language of the agreement and, if the agreement has a plain meaning, not otherwise 81.

Historical context and evidence

[205] Having expressed the aforementioned caveats, I now outline relevant historical material before me as it relates to the annualised salary at the Millicent Mill.

[206] It is not in dispute that the annualised salary at the Millicent Mill was first introduced in 1995 via an agreement certified by the then Australian Industrial Relations Commission. It was the product of negotiation between the employer and the CFMEU (as it then was) for an agreement to replace a 1993 Agreement between the parties. Negotiations successfully concluded in mid-1995. Kimberly-Clark applied to the Commission for the agreement to be approved under the provisions of the then Industrial Relations Act 1988. Proceedings were held before Commissioner Lewin on 25 July 1995 82. The Commissioner sought answers to a number of questions concerning the annualised salary in order to be satisfied that the agreement was in a form that could be approved (whether or not it would disadvantage employees contrary to the public interest). Following receipt of further information on 4 August 199583, the 1995 Agreement was approved.

[207] The evidence of Mr Ross with respect to the annualised wage was:

•  He does not agree that a number of calculations asserted by the employer as errors were in fact errors; and

•  He agrees that the annualised wage quantum applies to a 35 hour week but not to a 36 hour week.

[208] The evidence of Mr Whicker with respect to the annualised wage was:

•  The annualised wage was first introduced at the Millicent Mill in 1995. Its objective was to have employees paid the same amount each week irrespective of the hours worked in that particular week 84. It was expanded to Saturday day-off shift workers in 2009. The calculation of the annualised wage was not reviewed at that time85;

•  Overstatements and errors in calculation of the annualised wage existed at the time it was made and have been allowed to remain 86;

•  The components of the annualised wage when first negotiated in 1995 were set out in a calculation document provided to the Commission on 4 August 1995 87;

•  Annualised wages continued under the 2012 Agreement but were referred to as skills based rates 88; and

•  Soon after the annualised wage was first introduced there was a dispute over the number of shifts that could be worked in a year. This was resolved in terms of the correspondence between the CFMEU and Mill management. That agreement did not alter the quantum of the annualised wage or its calculation 89.

[209] The evidence of Ms Agnew with respect to the annualised wage was:

• There was no claim by the CFMMEU for the annualised wage to be recalculated in the 2018 collective bargaining negotiations between the company and the Union. This dispute was on foot in the Commission at that time 90.

The Agreement

[210] Clause 22 of the 2012 Agreement provides as follows:

“22. PAYMENT OF ANNUALISED WAGE

22.1 All employees will be paid an annualised all-purpose wage which is inclusive of the base wage, skills acquisition, shift premiums/allowances, disability and overtime allowances, as per the list at clause 22.8.

22.2 1/26 of the annualised wage will be paid direct to up to 2 nominated bank accounts of each employee on a fortnightly basis except for employees who had nominated 3 accounts prior to the making of this Agreement in which case the existing arrangement can continue.

22.3 The annualised wage will not reflect a payment for call outs or continuous 12 hour shifts worked, payment for these shall be claimed separately (Clause 26).

22.4 In the event that a system or other major failure results in the fortnightly wages not being transferred into employees bank accounts, employee representatives will be immediately advised and the Payroll Disaster Contingency Plan will be implemented.

22.5 On or prior to pay day, the Company shall email to all employees’ work email address an electronic pay advice showing the amount of wages to which the employee is entitled, the amount of deductions made there from and the net amount being paid to the employee. Any employee who does not have a work email address may elect to have a paper payslip provided or have the payslip sent to a private email address. Where the payslip is sent to a work email address the company will ensure that the employee has access to a computer and with a reasonable degree of privacy to view or print their pay advice.

22.6 Upon termination of employment, wages due to an employee shall be paid to the employee on the day of such termination, or if that is not practicable on the next working day; but, if the employee so desires, they shall be posted to the last known address of the employee.

22.7 Deductions from annualised wage shall be made for any purpose appropriate for the benefit of employees for which the consent in writing of the employee concerned has been obtained. Providing that where a new deduction is proposed the requisite minimum number of employees seeking the deduction is met (50).

22.8 Annualised wages as previously defined include payments for the following:

Normal Hours

Overtime

Shift Penalties

Shift Allowance

Leave Loadings

Relevant Disability Allowance,

Chemical Allowance (Maintenance & Services)

Crew Meetings

Meal Allowance

Tool or Licence Allowance (Tradespeople Only)

22.9 During the life of the agreement the Company will give consideration to the introduction of any tax effective salary sacrifice measure which is:

•  Legal,

•  Administratively acceptable

•  At no additional cost to the Company, and

•  Has adequate safeguards to ensure employees do not become overcommitted.

22.10 Employees will be personally responsible for their punctuality in attending work and the observation of agreed working hours. Employees will not be required to use time clocks to indicate their hours of work.

Consideration

[211] The employer’s practice when applying the annualised salary during the life of the 2012 Agreement was to take the annualised salary prescribed at the commencement of the Agreement and during its life apply the agreed percentage wage increases to that salary. The employer did not otherwise review or alter the structure of the annualised salary or its component elements. Specifically it did not alter the annualised salary arrangements upon the introduction of new or differing rosters, including 4 shift rosters.

[212] The question posed by the parties in dispute is whether the annualised salary has been calculated “correctly”. What is correct for the purposes of resolving this dispute is that the annualised salary obligations of the employer as set out in clause 22 of the 2012 Agreement and the quantum set out for various classifications in clause 15 ‘Production Annualised Wage Rates’ were complied with, as adjusted in accordance with clause 13 (Annualised Wage Adjustments).

[213] Clause 22.1 imposed an active obligation on the employer to pay the annualised all-purpose wage. It is not in dispute that Kimberly-Clark paid an annualised wage, and it is not in dispute that it applied the rates in clause 15.

[214] I do not consider it relevant to the proper application of clause 22 and clause 15 whether the rates set out in the 2012 Agreement contained in-built errors either to the advantage or disadvantage of employees. Those were the rates agreed by the employer and the CFMEU and were the product of collective bargaining negotiations between the parties. They were approved by the Commission and became legally enforceable from the commencement of the Agreement.

[215] To look behind that Agreement, and those rates as expressed, to discern whether historical or arithmetical errors existed or whether there was error in the expression of a joint intent (much less a singular intent of one or other of the negotiating parties) is not a proper basis on which to interpret and apply the Agreement. In the period that followed the 2012 Agreement being approved and commencing to operate the parties must be compelled to apply the Agreement as agreed and approved.

[216] If the employer or the Union for that matter believe there to have been errors in the calculation of the annualised salary which require rectification then there were mechanisms available at the time to do so yet neither made application to vary the Agreement or renegotiate these issues during its life. There is no evidence of joint or common intention as to the supposed errors.

[217] Nor is there a proper basis to resolve this aspect of the dispute by reference to what was or was not historically included in the calculation of the annualised salary.

[218] On that issue, the Agreement speaks for itself. Clause 22.1 says that the annualised salary is “inclusive of the base wage, skills acquisition, shift premiums/allowances, disability and overtime allowances, as per the list at clause 22.8”. Clause 22.8 provides more specific categories of entitlements that are so included. Those words have a plain meaning. Whether they accord or do not accord with the categories of inclusion expressed, intended or outlined in 1995 when the annualised salary was first introduced is not to the point. Comparing the historical position intended or expressed in 1995 provides no answer to the question as to whether the 2012 Agreement was being correctly applied. It was being correctly applied if it was being applied according to its terms.

[219] The Union’s submission that the annualised salary is not being correctly applied because (it is said) that it is (for the relevant production employees) based on a 36 hour week rather than a 35 hour week resulting in a shortfall of payment for hours worked is similarly misconceived.

[220] The annualised salary is expressed to be an “all-purpose wage” (clause 22.1), and amongst other matters is expressed to be inclusive of payments for overtime (clause 22.1 and 22.8).

[221] The annualised wage is not expressed to be paid by reference to the working of a particular number of weekly hours nor a particular average of weekly hours. Whether its calculation in the 2012 Agreement was made by reference to a 35 or 36 hour week or some other arrangement of weekly hours or average thereof is not apparent from the terms of the Agreement. Those that made the Agreement elected not to specify such a number. This is not surprising given that the annualised salary expressly includes payment for overtime. It is reasonable to draw the conclusion, based on the plain meaning of those clauses, that the annualised salary was not based on a fixed number (or fixed average number) of ordinary hours worked as it included a component of overtime hours. Both the CFMMEU and Kimberly-Clark agree that the 1995 Production 4 Shift Roster, as provided to Commissioner Lewin, included (at that time) an overtime component of 2.75 hours in the annualised salary calculation 91.

[222] It is a reasonable conclusion to draw from reading the Agreement as a whole that work performed (in return for which the annualised salary is payable) must be work in accordance with a lawful rostering arrangement. Lawful rostering arrangements are regulated by clause 24 ‘Hours of Work’ (and related provisions). Under the terms of clause 24.2, 4 shift rosters for continuous shift workers must be “fixed by agreement between the Company and the Union”.

[223] The evidence before me is that the annual rosters were fixed in advance by agreement between the employer and the Union, and I make that finding. This alone did not render the roster lawful. If a roster was not consistent with clause 24 then hours worked for which the annualised salary was paid would not have been lawfully worked. For reasons that include those outlined in answering question 1, there is no evidence before me to enable a safe conclusion that the rosters agreed with the Union under the 2012 Agreement (including the 2017 roster) were not consistent with clause 24 of the 2012 Agreement.

[224] In any event, an incorrectly constructed or applied roster does mean that the annualised salary was incorrectly calculated or applied. If Kimberly-Clark required an employee to work hours that were unlawful (alleged by the Union as totalling 52.16 per year since the 4 shift roster was changed in 2017) then that question falls to be determined as an issue of compliance with clause 24 (Hours of Work) and related rostering provisions, not the annualised salary (for example, an alleged breach of clause 24 may give rise to civil remedy proceedings under Part 4-1 of the FW Act).

[225] I do not consider that the historical material before me assists in determining the quantum of hours (including overtime) to be worked in return for the annualised salary. Whilst reference is made in the 1995 historical material before me to a 2.75 hour overtime component in the rosters applying following the introduction of the annualised salary in 1995, it cannot be safely concluded that there was a common intention in 2012 as to whether those components of overtime remained or were in full satisfaction of the annualised salary applying to the then 4 shift rosters. As noted, the 4 shift rosters worked under the 2012 Agreement for employees the subject of this dispute were not introduced until 2006 and 2007. It is not possible on the evidence before me to conclude on the balance of probabilities what specific quantum of overtime hours was incorporated into the annualised salary worked under the 2012 Agreement other than to conclude in general terms that a component of overtime had been built into the annualised salary, which in the 2012 Agreement was unspecified. To conclude more specifically would be speculative, and whilst what is before me may be the best available historical material it is not a proper basis to determine this aspect of the dispute as it applied under the 2012 Agreement.

[226] The appropriate recourse is to the terms of the Agreement, read as a whole. This includes clause 27 Extra Time. That clause provides for extra time to be worked in certain limited circumstances, including by shift workers. It defines extra time to be “hours worked above and beyond the hours set by an approved roster or standard working arrangement and included in the calculation of the annualised salary” (clause 27.1.1). The clause has a plain meaning. Extra time is work in addition to the approved rostered hours that incorporate the components of the annualised salary. Extra time was therefore work beyond the overtime component incorporated into the approved roster and the annualised salary to which it related. The existence of the concept of extra time as separate from the annualised salary and different from the notion of already compensated for overtime supports the view that clause 22 does not limit the annualised salary to the working of a 35 hour week or average thereof. Employees working extra hours beyond the approved roster had a basis under the Agreement to be further compensated for those hours, beyond the annualised salary and its incorporated overtime. This is so irrespective of the meaning of the phrase “normal hours” in clause 22.8. Extra hours under clause 27 were in addition to “normal hours” referred to in clause 22.8 or “ordinary hours” in clause 24.

[227] In these circumstances it cannot be said that the annualised salary was being applied incorrectly. I am unable to conclude that the payment of the annualised salary was incorrect to 4 shift production employees who from 2017 worked an approved roster beyond an average of 35 hours per week or that those employees were denied recompense to the value of 52.16 hours per year, as the Union contends.

Conclusion on Question 3

[228] The annualised salary was being correctly applied so long as it was paid at the quantum required by clause 13 (Annualised Wage Adjustments) and clause 15 (Production Annualised Wage Rates) to employees who worked a lawful roster under the 2012 Agreement. That annualised salary incorporated an unspecified quantum of overtime. Whether employees were entitled to an additional payment for hours worked beyond the annualised salary depended on whether they worked Extra Time within the meaning of clause 27, not whether they worked in excess of an average of 35 hours per week.

Conclusion

On jurisdiction and utility

1. The dispute resolution procedure of the 2018 Agreement is framed in a sufficiently broad manner so as to provide a source of jurisdiction for the Commission to exercise private arbitration powers over historical work related matters at the Millicent Mill;

2. The dispute notified by the CFMMEU on 13 February 2018 is of such a character and the Commission has jurisdiction to determine that dispute with respect to production employees who worked under the 2012 Agreement;

3. The dispute notified by the CFMMEU on 13 February 2018 did not concern the 2018 Agreement and in the absence of an application the Commission has no jurisdiction to determine rights and obligations under the 2018 Agreement; and

4. There is utility in determining the dispute with respect to both the Lotion Line production employees and BF1 production employees who worked the 4 shift roster during the life of the 2012 Agreement.

On Question 1

What was the maximum number of shifts under the Agreement and at law that could be rostered for Employees engaged on the Roster in each year?

Answer:

Production employees on the 4 shift roster were able to be rostered 220 days (shifts) in a year under the 2012 Agreement provided that where more than 220 days in a year were worked, days in excess of 220 were required to be compensated as days off or payment for a day (or days) in lieu or paid as extra time under clause 27.

On Question 2:

Have the Employees been provided with the correct period of annual leave each year in accordance with the Agreement and the National Employment Standards? This question includes a consideration of:

•  periods of annual leave where that annual leave included days when an Employees was not designated to work pursuant to the Roster; and

•  has the deduction from the relevant leave accrual been correctly applied?

Answer:

1. The employees on the BF1 and Lotion Line 4 shift roster were entitled to five weeks of annual leave as they were continuous shift workers. The employer provided that quantum of leave in practice. Whilst continuing to work that roster, they had an entitlement to that quantum as a matter of law.

2. The employer’s dual practices of (from 2014) providing for annual leave by rostered leave embedded in an annual roster and (prior to 2014) on application by an individual employee were consistent with its obligations under the 2012 Agreement.

3. The employer’s practice concerning accrual of leave for employees on rostered leave was consistent with the 2012 Agreement and the NES provided that an employee was paid out their accrued leave balance on their employment ceasing should they not have been subsequently provided a paid rostered day off in lieu. An accrued leave balance in this context is the number of days allocated as leave on days when that employee would not have otherwise been rostered and where that employee has not received (either prior to the allocated leave day or subsequently) the benefit of a day’s paid absence when they would otherwise have been rostered to work.

4. The employer’s practice of debiting rostered leave was required to be based on a debit of 1/5^th of the annual leave entitlement for each week of rostered leave. This percentage was required to be debited by the employer from each employee’s accrued entitlement (or allocated as leave or portion of days thereof taken in advance should the employee not have accrued that level of entitlement when the week of rostered leave was taken).

On Question 3

Has the annualised wage of the Employees been calculated and/or applied correctly?

Answer:

The annualised salary was being correctly applied so long as it was paid at the quantum required by clause 13 (Annualised Wage Adjustments) and clause 15 (Production Annualised Wage Rates) to employees who worked a lawful roster under the 2012 Agreement. That annualised salary incorporated an unspecified quantum of overtime. Whether employees were entitled to an additional payment for hours worked beyond the annualised salary depended on whether they worked Extra Time within the meaning of clause 27, not whether they worked in excess of an average of 35 hours per week.

[229] At the request of the parties, I consider it appropriate that the fourth question before me (which deals with implementation) not be answered until the parties have considered this decision and its reasons, and (if needed) sought to conciliate matters arising.

[230] Subject to any need to deal with question 4, I determine this dispute accordingly.

DEPUTY PRESIDENT

Appearances:

G. Borenstein, with permission, for the CFMMEU

A. Farr, with permission, for Kimberly-Clark Australia Pty Ltd

Hearing details:

2019.

Adelaide and Melbourne;

7 June and 22 July.

Printed by authority of the Commonwealth Government Printer

<PR711646>

 1   B2018/1083 and B2018/1107

 2   [2019] FWC 1304

 3   [2018] FWC 1659

 4   A1 Statement of Nigel Ross paras 5, 7, 8

 5   Ibid para 9

 6   Ibid para 10

 7   Mr Ross PN 155–157, 163-169

 8   Ibid para 11

 9   Ibid paras 11 and 13

 10   Ibid paras 17 to 18

 11   Mr Whicker PN 800, 862, 836-838, 862

 12   Ibid para 15(a)

 13   Ibid para 23

 14   Ibid

 15   Ibid paras 11, 40 and 48

 16   Ibid para 21

 17 R2 Statement of Brie Agnew para 5

 18   Ibid para 7

 19   Ibid para 10

 20   Ibid para 15

 21   Ibid paras 16 to 19

 22   Ibid paras 14 to 17

 23   Judicial notice is taken of these facts based on earlier and related proceedings: C2017/5174, B2018/1083 and B2018/1107

 24   [2012] FWAA 10485

 25   [2019] FWCA 2397

 26   In addition to the 4 shift BF1 Lotion Line roster, there is also a 4 Shift (non-Saturday) roster provided for the in the Agreement: clause 15.3

 27   This roster is based on the following provision in clause 24.2 of the 2012 Agreement: “The roster for 3 shift 6 day work shall be a 4 shift roster which will average out over a 4 week period.”

 28   Submission of the Applicant on Jurisdiction 16 July 2019 para 7; Kimberly-Clark Submissions with respect to Jurisdiction 16 July 2019 paras 5 and 6

 29   2012 Agreement clause 24.2; 2018 Agreement clause 24.5

 30   SW1 and SW2

 31   2012 Agreement clause 31.2

 32 R1 Statement of Scott Whicker para 74; R2 Statement of Brie Agnew para 15; Mr Ross at PN 222, 233; Ms Agnew at PN 1277

 33   SW8

 34   Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305 at [35] cited by Bromberg J with approval in Energy Australia Yallourn Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2017] FCA 1245 at [64]

 35   Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (2001) 203 CLR 645 at [31]

 36   Submission of the Applicant on Jurisdiction 16 July 2019 paras 8, 9, 10 and 17

 37   Kimberly-Clark Submissions with respect to Jurisdiction 16 July 2019 para 14

 38   Stephenson v Special Minister of State PR 952743; Pulle v Commonwealth (2009) 190 IR 365; de Jong v Australian Broadcasting Corporation (2010) 196 IR 145; Queensland Services Industrial Union of Employees v Ergon Energy Corporation Limited[2013] FWC 7025; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Jemena Asset Management Pty Ltd [2015] FWC 1189; Construction, Forestry, Mining and Energy Union v North Goonyella Coal Mines Pty Ltd 2016] FWC 8360; APESMA v TransGrid[2018] FWC 6335; BlueScope Steel (AIS) Port Kembla v The Australian Workers’ Union, the Australian Manufacturing Workers Union & the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2018] FWCFB 856; Battye v John Holland Pty Ltd[2019] FWC 4122

 39   [2015] FWC 1189

 40   [2016] FWC 8360

 41   [2015] FWC 1189 at [22] - [23]

 42   [2016] FWC 8360 at [21] - [22]

 43   [2019] FWC 4122

 44   PR 952743 (28 October 2004)

 45   APESMA v TransGrid[2018] FWC 6335 (Sams DP); Staniforth v Qantas Airways[2018] FWC 2895 (Sams DP)

 46   [2018] FWCFB 856 at [59.4]

 47   Ibid at [77]

 48 Sections 53(2) and 183 FW Act

 49   Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers' Union (AMWU) v Berri Limited (‘Berri’)[2017] FWCFB 3005 at [114]

 50   Construction, Forestry, Mining and Energy Union v Mt Arthur Coal Pty Ltd [2016] FWC 2959 at [6] - [8]

 51   [2016] FWC 8360 at [19]

 52   Johnson v Finance Sector Union of Australia[2018] FWC 1035 at [15] - [18]; BlueScope Steel (AIS) Port Kembla v The Australian Workers’ Union, the Australian Manufacturing Workers Union & the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2018] FWCFB 856

 53   Boeing Aerostructures Australia Pty Ltd v Michael Gualano, Nathan Tuddenham, Glen Rowlands[2018] FWC 7490

 54   BlueScope Steel (AIS) Port Kembla v The Australian Workers’ Union, the Australian Manufacturing Workers Union & the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2018] FWCFB 856

 55 (2001) 203 CLR 645 at [34]

 56 Section 186(6)(a)(i) FW Act

 57   Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia[2016] FWCFB 2019 at [59]

 58   Ibid at [66]

 59   2012 Agreement Clause 45.2

 60   Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia[2016] FWCFB 2019 at [67] – [68]

 61   Outline of Submissions of the Applicant 29 May 2019 para 31

 62   Kimberly-Clark Australia Pty Ltd Outline of Submissions 23 April 2019 para 2

 63   A1 to Outline of Submissions of the Applicant 29 May 2019

 64   Berri at [114] principles 10, 11 and 12; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35]

 65   Berri at [114] principle 2

 66   A1 to Outline of Submissions of the Applicant 29 May 2019

 67   Conventional Lotion Line & BF1 Four Shift Continuous Roster 2017 in Exhibit SW2

 68   365 days + 365 days + 365 days + 366 days = 1461 days divided by 7 (days per week) = 208.7 weeks divided by 7 days per week = 208.7 weeks divided by 4 years = 52.18 weeks per year

 69   SW3

 70   Kimberly-Clark Australia Pty Ltd Outline of Submissions 23 April 2019 para 7

 71   Outline of Submissions of the Applicant 29 May 2019 para 48 - 49

 72   Kimberly-Clark Australia Pty Ltd Outline of Submissions 23 April 2019 para 20

 73   Ibid para 19

 74   RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union[2015] FWCFB 2881 at [82]

 75   Outline of Submissions of the Applicant 29 May 2019 para 50(d)

 76   Ibid para 50(e)

 77   Ibid para 56

 78   Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352; Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104 at [50]

 79   Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104 at [50]

 80   Berri at [114]

 81   Berri at [114] principles 8 and 9

 82   SW8

 83   SW7

 84 R1 Statement of Scott Whicker para 49

 85   Ibid paras 42 to 44

 86   Ibid paras 56, 62, 67 to 68

 87   Ibid paras 51 to 55 and SW7

 88   Ibid para 47

 89   Ibid paras 24 to 30

 90   Ibid para 12

 91   A3 and A6 to Outline of Submissions of the Applicant ‘Production 4 Shift 30 June 1995’ A6 Line 56; Outline of Submissions of the Applicant 29 May 2019 para 68; Kimberly-Clark Australia Pty Ltd Outline of Submissions 23 April 2019 para 42