Construction, Forestry, Maritime, Mining and Energy Union v Qube Ports Pty Ltd T/A Qube Ports

[2018] FWC 7495

[2018] FWC 7495

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Construction, Forestry, Maritime, Mining and Energy Union
v
Qube Ports Pty Ltd T/A Qube Ports
(C2018/1371)

DEPUTY PRESIDENT BARCLAY HOBART, 7 DECEMBER 2018

Dispute about upgrading employees from one category to another arising under an enterprise agreement – whether a labour review is a condition precedent to upgrading the employees

[1] The Applicant applied in accordance with a dispute settlement procedure for resolution of a dispute relating to the proposed appointment by Qube of 35 Supplementary Employees (SE’s) to Guaranteed Wage Employees (GWE’s).

[2] To give this some context, the dispute arises under the Qube Ports (No 1) Pty Limited Tasmania Enterprise Agreement 2016 (the Agreement). The Agreement is in two parts. The first part relates to Qube businesses nationally (Part A). The second part 1 deals with Tasmania specifically (Part B). The Agreement contains clauses dealing, amongst other things, with categories of employees and their transition through the categories from SE’s to permanent full time employees. An SE is a casual employee. A GWE is the first rung on a ladder of permanent employees. Whilst they work irregular hours they are guaranteed a minimum payment and must make themselves available for work.2

[3] On 8 March 2018 Qube emailed the Applicant advising that it intended to move 35 SE’s to the GWE category. At that time the decision had been made without any consultation with the Applicant. 3 The effect of this change is to increase establishment numbers of GWE’s from 15 to 50. Indicative establishment numbers are identified in Part B of the Agreement to be 54 of which 15 are GWE’s. This of importance to the outcome of this matter.

[4] It can be seen then that the change from 15 to 50 GWE’s amounts to a considerable increase in the establishment numbers of GWE’s.

[5] The Applicants complaint is that the decision to transfer the SE’s to GWE’s was made without consultation. The Applicant asserts that the transition of employees from one category to another can only occur through a Labour Review within the meaning of clause 14 of Part A of the Agreement. The Labour Review requires the provision of data including earnings, hours, leave balances, workers’ compensation, shift balances, shift patterns and other relevant information. The Labour Review also requires consultation with the Employee Representative Committee and the Applicant.

[6] Qube asserts that that is not the case, and that subject to any individual SE employee consenting to the transition 4 can implement the change without first proceeding through a Labour Review.

Question to be Determined

[7] The parties have conveniently stated a question which I am required to answer which resolves the dispute identified. That question is:

Is Qube bound to follow the labour review process in Part A clause 14 of the Agreement before making and/or implementing any decision to upgrade 35 supplementary employees in accordance with its stated intention to make those employees GWEs. 5

[8] Clause 14 of Part A of the Agreement is headed “Reviews” and is in the following terms:

[9] The parties have agreed that the exercise upon which I must embark is one of construction. Does clause 14 of Part A require on its terms a labour review before employees can be upgraded or promoted?

[10] There was evidence lead at the hearing providing context to the dispute.A particular concern of the Applicant is that, by appointing a further 35 GWE’s, the hours allocated to them would potentially result in other permanent employees being unable to transition up through the categories (ultimately to full time permanent employees) due to the reduced hours available for employees to increase their wages and thus be upgraded.

[11] Permanent employees transition through the categories by reaching certain salary targets. Once the salary target is reached (and any minimum employment period which may apply has been met) the employee transitions to the next higher level, and so on until reaching the top employment classification. The concern is that an increase in GWE’s will inhibit other employees from earning enough to qualify for transition to the next level.

[12] The concern the Applicant has is explained by the way the hours of work are calculated. Qube has an estimated annual number of hours which will be required to be worked. Accordingly that number of hours is divided across the different categories of employee, hence the concern that employees may not receive sufficient hours to enable salary growth and transition through the classifications. The hours are in essence a cake which is divided into pieces. While the pieces may vary in size the cake (or overall hours available) remains essentially fixed.

[13] I also understand that the Applicant is concerned that the GWE’s may be affected in that any limitation to hours available to employees in that category will result in an income in the range of $33,000 per annum (the approximate guaranteed component of their salary) with little scope to increase those earnings. The Applicant notes this level of income is below the annual average earnings for adults in Australia.

[14] It is against this background that the Applicant asserts that it should be consulted, and that Part A clause 14 Labour Review should, and does apply to the transfer of employees between classifications.

[15] It was agreed at the hearing that I would take this evidence only as to context and not as evidence going to the construction of the Agreement. I also note that the evidence clearly gives rise to an industrial dispute and accordingly my decision is not merely declaratory, but goes to the resolution of the dispute between the parties.

Principles of Construction

[16] The parties are agreed as to the principles I should apply when construing the Agreement. They are those which have been drawn together in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Union v Berri Pty Ltd 6(Berri) where the Full Bench set out the following:7

“[114] The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:

1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;

(ii) the disputed provision’s place and arrangement in the agreement;

(iii) the legislative context under which the agreement was made and in which it operates.

2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.

3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.

4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.

5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.

6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.

7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.

8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

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

12. Evidence of objective background facts will include:

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

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

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

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

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

15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.

[17] In the present case it has not been suggested that the relevant provisions are ambiguous and that I should have regard to any evidence to assist in resolving ambiguity. It was also for this reason that the evidence adduced went to background and context and not construction. As a result (and in accordance with the agreed position of the parties) I should focus on the first three principles identified in Berri. That is, consideration of the language of the clause having regard to context and purpose. I do however take account of all the principles identified in Berri although, as contended by the Applicant, the first three are the most significant in this case.

The Parties Contentions

[18] The Applicant contends firstly that the Labour Review process in clause 14 of Part A is a code for promoting or upgrading employees from one category to another: “that is, it is not open to Qube to promote (or upgrade) employees other than in compliance with the Labour Review process”. 8

[19] Secondly the Applicant contends that an effect of the labour review process is that employees can only be promoted by agreement. That is, the parties have agreed an intention to maintain establishment numbers (subject to a change in operations). The labour review process is such that promotions or upgrades can only happen by a trigger in clause 13.5 (to create additional permanent positions higher up the classification than GWE’s) or by agreement in the absence of triggers. The Applicant submits as there is no clause 13.5 trigger the upgrade can only be by way of Agreement.

[20] In amplifying those contentions the Applicants written submissions were as follows:

73. The Part A, clause 14 Labour Review process, on its proper interpretation, is a code for the upgrading of employees from one category of employment to another. It co- exists with specific provisions in the Agreement whereby an employee may convert from one employment category to another: see Part A, clause 9.6.1.a as to a PVSE’s conversion to a VSE and a similar clause for the conversion of a PFSE to a FSE: Part A, clause 9.2.1b.

74. The Union makes the following contentions:

(a) the Agreement was negotiated on the basis that the parties intended to maintain the establishment employee numbers across different categories (Part B, clause 14.2) (subject to an inbuilt flexibility in the event significant operational change);

(b) Qube did not notify the Union or employees of any intention before the Agreement was made of increasing GWE numbers from 15 to 50;

(c) an increase in GWE numbers from 15 to 50 is likely to have a very significant impact upon those issues set out in clause 10.2;

(d) Labour Review under the Agreement is to be done in a systematic fashion periodically through the Agreement’s life: each July or, possibly, more regularly because a request for an additional Labour Review must not be unreasonably refused: (clause 14.1.1): it is not an ad hoc unilateral process;

(e) Labour Review is to be consultative (clause 14.1.2);

(f) Labour Review relies on data provision (clause 14.1.3);

(g) Labour Review (and particularly what Qube proposes) is likely to have a very significant effect on Qube’s employees;

(h) Labour Review assesses opportunity for promotion - which is upgrades or promotion generally and the clause 13.5 triggers. Labour Review is not limited to an assessment of whether the clause 13.5 trigger-mechanisms have been engaged; that is part only of the process (clause 14.1.4);

(i) the parties may agree upgrades in the absence of triggers (clause 14.1.4);

(j) if the trigger mechanism has not been reached there will be no upgrades without agreement in the absence of other particular provisions of the Agreement granting Qube power to promote employees

75. In this case, Qube’s stated intention of promoting 35 Supplementary Employees to GWE’s is, on the ordinary meaning of the words, a “Labour review”. It alters in a real and substantive way the establishment numbers in Part B, clause 14.

76. Any promotion must occur under the auspices of the Labour Review. It is the “review that will assess … the opportunity for promotion”: Part A, 14.1.4

77. Any attempt by Qube to operate outside the Labour Review process, without requesting a Labour Review, without consultation, without data provision and by promoting supplementary Employees to GWE’s without agreement constitutes an intention to operate not in accordance with the provisions of the Agreement and, in particular, not in accordance with the Labour Review provisions of the Agreement.

78. The last sentence of clause 14.1.4 stipulates that there will only be promotion by agreement in the absence of triggers.

79. Qube does not have a right elsewhere in the Agreement unilaterally to promote supplementary employees to GWE’s.”

[21] In essence therefore the Applicants contention is that the only way employees can transition between classifications is via clause 14 of Part A of the Agreement because it is a code for such transitions (whether described as upgrades or promotions).

[22] The Respondent contends that it is legally entitled to conduct and operate its business as it likes, subject only to external regulation, government (through legislation, regulations, official Codes of Practice and the like) and private (through leases, private contracts and the like). In the present case and for present purposes it is submitted that those external regulations are from two sources: contracts of employment or the Agreement.

[23] The Respondent accepts that speaking contractually the 35 SE’s proposed to be transferred to GWE’s must consent as there is no power for Qube to require the SE’s to transfer. However it submits it is free to offer the positions on the basis of a new contract and the employees are free to accept the new positions.

[24] In this way, the reference to “implementing” in the question I am to answer speaks of Qube unilaterally offering the positions to the 35 SE’s without the labour review. The Respondent submits therefore that unless and until the Commission construes the Agreement as positively (either expressly or by implication) prohibiting or preventing Qube from offering the positions, then Qube is free to do so. The Respondent submits that the Applicant must demonstrate from the text of the Agreement a prohibition on Qube offering the positions in the absence of the labour review. It notes that Applicant seeks to do so by submitting that clause 14 of Part A is a code.

Consideration

[25] At the heart of this dispute therefore is the question whether clause 14 of Part A is a code for the upgrading or promotion of employees.

[26] Relevant to the dispute is clause 13.5 of the Agreement. It is the triggers in this clause which are identified by a labour review. It provides:

[27] It can be seen that a labour review under clause 14 of Part A includes the assessment of the triggers referred to in clause 13.5. The Applicant submits that the labour review assesses the opportunity for upgrades generally and via clause 13.5 triggers. The Applicant also notes that upgrading can be by agreement where no triggers are identified. However the submission is that the labour review is a precondition to upgrading in any fashion – a code.

[28] In closing at the hearing counsel for the Applicant was asked to identify some textual matters which suggested that labour review was a code. The following exchange occurred:

THE DEPUTY PRESIDENT: Can you give me a hint as to some text that suggests it’s a code? Or there’s no text, it’s just you say the overall effect?

PN637

MR CHAMPION: Yes, it is a purpose and intent of the clause that when one reads it one goes looking and “Well, how does an employee get from one place to another?” and I gave the automatic conversion arguments and so forth. But then you have “Well, what happens if you want to change a lot of people? And as it were you see that the purpose and the intent of the agreement I think read as a whole is that there is a labour review mechanism and here it is, it’s in clause 14 and it says “Well, this is how it’s to happen if you want to review your labour”, subject to the debate we had about part of 14.

PN638

THE DEPUTY PRESIDENT: It can’t be a code then, can it, because of 14 Part B? There’s another mechanism to deal with the circumstances of this case in which case it can’t be a code.

PN639

MR CHAMPION: In my submission this is the appropriate - the parties have agreed a mechanism as to the major review of labour. But if the point is one of “Well, there’s two spots in which it happens so it can’t be a unique method and a code” in that sense then I can’t cavil, I can’t put it any higher.

PN640

THE DEPUTY PRESIDENT: Because obviously a code is a code and nothing is engaged outside of it.

PN641

MR CHAMPION: I can’t put it any higher.

[29] Clause 14 of Part B (which it is remembered is the site specific Part B of the Agreement) provides:

14.3 In the event of significant changes to these numbers, the Company agrees to discuss with the Union in accordance with clause 46 of Part A of this Agreement.

[30] Counsel for the Applicant and I then had the following exchange about that clause:

THE DEPUTY PRESIDENT: It’s not as if Part B 14 is the be all and end all and it’s only in the circumstances with a large labour force change.

PN651

MR CHAMPION: I do say this is significant. It just seems to me self - and perhaps that’s an own goal, Deputy President.

PN652

THE DEPUTY PRESIDENT: Yes, well, look to be frank with you - - -

PN653

MR CHAMPION: Perhaps that’s an own goal.

PN654

THE DEPUTY PRESIDENT: I agree that it’s a significant change and that’s why really I’m thinking about Part B.

PN655

MR CHAMPION: Yes.

PN656

THE DEPUTY PRESIDENT: Yes.

PN657

MR CHAMPION: I’m not sure I can take that much further.

PN658

[31] It seems clear therefore that the Applicant concedes that a change of the establishment number of GWE’s from 15 to 50 is a significant change. I agree. As such, clause 14 of Part B is engaged and takes one to Clause 46 of Part A. That clause is as follows (in so far as it relates to consultation):

[32] It can be seen that under clause 46 the obligation to consult arises where the proposed change is likely to have a significant effect on employees and includes circumstances which may affect promotional opportunities. It will be remembered that promotional opportunities are a matter of significance for the Applicant. Accordingly the Applicant is correct to regard the changes as significant.

[33] In my opinion clause 14 of Part A providing for labour reviews does not amount to a code for the upgrading or promotion of employees. As the facts of this case show, where it is proposed to upgrade a number of employees that decision may amount to a decision to make a significant change to the workforce (as it is conceded is the case here). Consultation may take place under clause 46 of Part A. This alternate route to the upgrading of employees demonstrates that the labour review route is not a code. A code is just that, the only way by which the subject matter of the code can be achieved. Here a significant change to the establishment numbers can take place via consultation under clause 46 of Part A via clause 14 of Part B. It is not contended by the Applicant otherwise.

[34] I also conclude that there is nothing in the text of clause 14 of Part A which gives a hint that it is intended to be a code. The clause provides for the establishment of a labour review. The labour review is a mechanism to consideration of promotions and the opportunity for promotions. Importantly nothing prevents the parties agreeing to upgrades absent any triggers. Further there is nothing in the words of the clause which might prevent promotions by agreement outside the labour review process. As pointed out by the Respondent issues of manning are a matter for Qube 9.

[35] I also note the words of clause 14 of Part B themselves suggest that a significant change to establishment numbers is a decision which can be taken by Qube subject to the obligation to consult: “In the event of significant changes to these [establishment] numbers, the company agrees to discuss……in accordance with clause 46 of Part A”. This is of course a mechanism for the upgrading of employees outside of the labour review.

[36] It is also not without significance that significant changes to establishment numbers appears in Part B. Part B prevails over Part A to the extent of any inconsistency. 10 If the Applicants contentions creates an inconsistency between whether the upgrading (being in this case a significant change to establishment numbers) is pursuant to clause 14 of Part A or clause 14 of Part B, then clause 14 of Part B would prevail.11

Outcome

[37] There are two limbs to the question I am asked to decide. The first is whether the labour review is a condition precedent making a decision to upgrade employees. The second is whether the labour review is a precondition to implementing the decision to upgrade the employees.

[38] For the reasons I have set out, there is no obligation to undertake a labour review prior to making a decision to upgrade the 35 SE’s because, on the facts of this case, that upgrade is a significant change to establishment numbers and accordingly clause 14 of Part B is engaged. I note however that there is an obligation to discuss the changes under the consultation provisions of Part A which I have set out above.

[39] As to implementation, there does not have to be a labour review. Rather there can be a labour review, or the changes are discussed via Part B clause 14 and Part A clause 46. There is nothing in the Agreement which requires a labour review where there are significant changes to establishment numbers.

[40] I therefore answer the question in the negative.

DEPUTY PRESIDENT

Appearances:

A Bull on behalf of Construction, Forestry, Maritime, Mining and Energy Union

J Swift on behalf of Qube Ports Pty Ltd

Hearing details:

2018

Hobart

22 June

Printed by authority of the Commonwealth Government Printer

<PR703009>

 1   Commencing at page 63 of the Agreement

 2   The other categories of permanent employee are defined at clause 2.1 (p) of the Agreement

 3   It seems that Qube first advised the Employee Representative Committee in December 2017 of the intention to transition the employees from SE’s to GWE’s. Nothing appears to turn on this.

 4   Qube concedes it has no contractual right to require any employee to transition between classifications

 5   Transcript PN 31

 6   [2017] FWCFB 3005

 7   At paragraph 114

 8   Applicants submissions paragraph 32

 9   Respondents written submissions paragraph 19 and footnote 16 identifying clauses 3.1 and 14.2 of Part B of the Agreement and clauses 12 and 21.2 of Part A of the Agreement

 10   The Agreement Part A clause 5.6

 11   Clause 5.6 of Part A is an expression of the rule of interpretation to the effect that provisions of specific application prevail over provisions of general application. For Tasmania Part B is of specific application and Part A is of general application.