Construction, Forestry, Maritime, Mining and Energy Union v Sunset Power International Pty Ltd T/A Delta Electricity

[2020] FWC 1866

[2020] FWC 1866

FAIR WORK COMMISSION

DECISION

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

Construction, Forestry, Maritime, Mining and Energy Union
v
Sunset Power International Pty Ltd T/A Delta Electricity
(C2019/4465)

DEPUTY PRESIDENT CROSS SYDNEY, 9 APRIL 2020

Alleged dispute about any matters arising under an enterprise agreement – power generation and supply industry –entitlement to paid annual leave –interpretation – meaning of ‘full time rate of pay’ – dispute resolved and concluded.

[1] This dispute concerns a claim by the Construction, Forestry, Maritime, Mining & Energy Union (the ‘CFMMEU’), Northern Mining & Energy District, supported by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the ‘CEPU’), regarding the rate of payment for annual leave to certain employees of Sunset Power International Pty Ltd (‘Sunset Power’ or ‘Delta’), at the Vales Point Power Station.

[2] The dispute concerns the operation and interpretation of clause 17.5(1) of the Delta Electricity Employees Enterprise Agreement 2019 (the ‘2019 Agreement’). That sub-clause provides:

“(1) If an employee takes a period of annual leave, the employer must pay the employee at the employee’s full time rate of pay for the employee’s ordinary hours of work in the period”

[3] The matter was allocated to me in late July 2019. At the hearing of the matter on 16 October 2019, Mr K Endacott appeared for the CFMMEU and Mr A Jacka appeared for the CEPU. Mr A Gotting of Counsel, instructed by Mr J Matson of Bartier Perry Solicitors, appeared for Sunset Power. No objection to permission to appear was taken by the CFMMEU or the CEPU, and permission was granted for Sunset Power to be legally represented, pursuant to s 596 of the Fair Work Act 2009 (the ‘Act’). The appearance of very competent and experienced union advocates and legal practitioners greatly contributed to the efficient conduct and disposal of the proceeding.

[4] There was no issue that the dispute related a matter arising under the 2019 Agreement (Clause 27.1(a) of the 2019 Agreement), nor that the requisite steps in the disputes procedure clause for the dispute had been followed.

[5] Sunset Power accepted that:

a) The Fair Work Commission (‘the Commission’) has jurisdiction to determine the dispute by arbitration (Clause 27.4(c)) of the 2019 Agreement, and section 739(4) of the Act;

b) The Commission is not precluded from dealing with the dispute; and

c) The Applicant is covered by the 2019 Agreement and has standing to agitate the dispute in the Commission.

THE EVIDENCE

[6] The following persons provided witness statements in the proceeding:

•  Mr Matthew Landesmann, Production Operator, dated 19 August 2019 – for the CFMMEU;

•  Mr Joshua Wilkinson, Production Operator, dated 21 August 2019– for the CEPU

•  Mr Steve Gurney, Company Secretary of Sunset Power, dated 19 September 2019; and

•  Mr Mark McGrath, District Vice President of the CFMMEU, dated 16 October 2019

a) Mr Landesmann

[7] Mr Landesmann noted that he is employed by Sunset Power as a Production Operator at the Vales Point Power Station. He outlined that the terms and conditions of his employment are governed by the 2019 Agreement. He also outlined the history of previous instruments that covered the work, and annexed copies of those instruments.

[8] Mr Landesmann outlined the history of the relevant shift patterns that he had previously worked. Then, relevantly for the controversy the subject of this dispute, Mr Landesmann outlined the following:

15. On 14 November 2016 I was permanently required to work 12 hour shifts. Attached and marked ML-5 is a copy of correspondence I received dated 14 November 2016 re: Shift Work Team. I was allocated to the 12 hour A shift crew reporting to Mr Glynn. Since that time I have been moved to the 12 hour E shift crew.

16. I am aware that when I work a 12 hour roster on a crew, the majority of crew members receive a Total Salary Package (TSP) payment. I am aware of this as I have been informed of this by them. I am also aware of this as the Vales Point Production Operator's Total Salary Package (TSP) Agreement 2015 and the Vales Point Production Operator's Total Salary Package (TSP) Agreement 2019 (‘TSP Agreement’), which are attachments to the 2015 and 2019 Enterprise Agreements respectively, identify those persons that receive the TSP.

17. I do not receive a TSP payment as I am not identified as being entitled to receive it in Annexure A of the TSP.

18. I receive payment in accordance with clause 11.39 "12-Hour Shifts" of the Enterprise Agreement when working the 12 hour roster.

19. When I was working the 12 hour roster and was in receipt of payments in accordance with 11.39 "12 Hour Shifts" of the Enterprise Agreement.

20. When working the 12 hour roster and when I took annual leave, I received a payment less than what I would have received had I worked through the annual leave period.

21. When I took annual leave I was paid my base rate plus a 4.35% shift payment.

22. I became aware that the 2015 Enterprise Agreement provided that annual leave should be paid at the "full rate of pay". I am aware that clause 17.5 "Payment of Annual Leave"

of the 2015 Enterprise Agreement read "If an employee takes a period of paid annual

leave, the employer must pay the employee at the employee 's full rate of pay for the employee's ordinary hours of work in the period.

23. The 2019 Enterprise Agreement provides for the exact same term. The clause numbering has remained unchanged.”

[9] Mr Landesmann stated that he became aware that he was being paid less than what he believed was his full rate of pay when on annual leave in late 2018. He then provided calculations of his alleged underpayments.

b) Mr Wilkinson

[10] Mr Wilkinson, like Mr Landesmann, is employed by Sunset Power as a Production Operator at the Vales Point Power Station. He outlined the core roster, and the operation of the TSP Agreement. Mr Wilkinson then stated:

“12. The 2015 Agreement included the Vales Point Production Operator Total Salary Package (TSP) Agreement 2015 (TSP Agreement), which applied to 43 employees named in the TSP Agreement and employed in the position of Production Operator (TSP Operator). Under the TSP Agreement, a TSP Operator is paid a loading of 37.7% on top of their salary. The loading is paid when they are at work and when they are on annual leave.

13. The TSP Agreement was carried over to the 2019 Agreement. There are 30 TSP Operators named in the 2019 Agreement. When a TSP Operators leaves the Company they are replaced by Operators who are not covered by the TSP Agreement.

14. TSP Operators and Production Operators both work on the Core Roster. The Core Roster is prepared 12 months in advance and the Company requires 12 months’ notice when taking annual leave.

15. I am not entitled to the TSP payment as I am not one of the employees named in the TSP Agreement.

16. On the Core Roster I am paid as a 12 hour shift worker under clause 11.39 of the 2019 Agreement. The Core Roster includes night shift work and working on weekends. I am paid shift allowances and penalties for that work under clause 11.39.

17. When I am on annual leave I am not paid the shift allowances and penalties under clause 11.39. I am paid the SP salary rate at clause 4.2 of the 2019 Agreement plus a 4.5% shift payment.”

[11] Regarding the alleged underpayment, Mr Wilkinson outlined the following:

20. While I was on annual leave I believe I was underpaid the following amounts:

a) 26 December 2017 to 5 January 2018 inclusive = $355.82

b) 13 November 2018 to 30 November 2018 inclusive = $1321.45

c) 27 March 2019 to 13 April 2019 inclusive = $2070.63

c) Mr Gurney

[12] Mr Gurney is the Company Secretary of Sunset Power. He was previously employed in various industrial relations roles from 2005 to 2015 by Delta Electricity, the state-owned corporation that previously operated Vales Point Power Station. Mr Gurney gave evidence regarding how shift workers had been paid since 1991, and outlined the provisions of each relevant industrial instrument from 1991 to 2019. In relation to the practice of Delta since 1991 regarding annual leave payment to shift workers, his evidence was:

“19. I am aware from my roles with the Respondent and Delta Electricity that since 1991 Delta has paid non-TSP shift workers for hours worked at the Vales Point Power Station by reference to an ordinary rate of pay, any specified allowances payable, shift penalties, shift allowances and a roster loading.

20. I am also aware from my roles with the Respondent and Delta Electricity, as well as enquiries that I have made, that since 1991 Delta has always paid annual leave for non-TSP shift workers as follows:

(a) prior to the Delta Electricity Employees Award 1996, at the ordinary rate plus shift penalties payments (and any specified allowances that are payable) OR the rate of ordinary rate plus the roster loading (if it is more than the shift penalties payments) (and any specified allowances that are payable); and

(b) after the Delta Electricity Employees Award 1996, at the ordinary rate plus the roster loading (and any specified allowances that are payable).

21. I am aware from my roles with the Respondent and Delta Electricity, as well as enquiries that I have made, that since 1991 Delta has never paid annual leave for non TSP shift workers with both shift penalties payments and the roster loading.

22. I am aware from my roles with the Respondent and Delta Electricity, as well as enquiries that I have made, that Delta's payslips have always identified for the non-TSP shift worker that shift penalty payments are not paid on annual leave.”

[13] Mr Gurney gave evidence regarding the calculation of annualised salaries for TSP shift workers in 2000 (‘the 2000 Calculation’), and a further calculation in 2013 (‘the 2013 Calculation’) that occurred during a dispute regarding a proposed restructuring of shift arrangements. In relation to the 2000 Calculation, Mr Gurney noted that it arose from discussions with unions to create a "loading" as part of an annualised salary that would eradicate uneven and unpredictable pay for the shift workers each pay period. The loading is paid on top of the ordinary rate of pay and covers shift penalties, including weekend penalties. By applying the loading to the ordinary rate of pay, employees receive a constant and predictable income each pay period. The loading, which is called a TSP loading, is calculated based on how employees are to be paid if paid according to the roster.

[14] Mr Gurney annexed a copy of a calculation document created in and around 2000 during negotiations for the Delta Electricity Employees Award 2001, that set out the 2000 Calculation. In describing that document, Mr Gurney stated:

“56. The 2000 Calculation distinguished between the working hours in a year (1,826.25) and the actual hours worked (1,563.25). On my understanding of the 2000 Calculation, the difference between the working hours and actual hours worked was annual leave hours (175) and public holiday hours (88).

57. The 2000 Calculation showed that the loading was based on the actual hours worked by the TSP shift worker. In particular, the 2000 Calculation showed that the actual hours worked was used to determine the component of the loading for shift allowances, Saturday penalties and Sunday penalties.

58. On my understanding of the 2000 Calculation, the loading included payment for annual leave hours (175) but did not pay the shift allowances, Saturday penalties or Sunday penalties for those annual leave hours.

60. At no time do I understand the union or employees disputed that method of calculation where shift allowances, Saturday penalties or Sunday penalties are not calculated on annual leave hours.”

[15] In relation to the 2013 Calculation, Mr Gurney noted that it was created during a dispute with the unions over a proposed restructuring involving new shift arrangements (other than the 12-hour shifts) and new TSP rates for the proposed shifts. His evidence regarding the 2013 Calculation was as follows:

“78. In 2012 and 2013, I was involved in the settlement negotiations for the dispute. As part of the settlement negotiations, and discussion of the TSP rates for the new proposed rosters, management (including me) presented on behalf of Delta Electricity to the unions a "TSP Calculation" document (the "2013 Calculation"). Annexed and marked "SG-11" is a true copy of the 2013 Calculation.

79. The 2013 Calculation distinguished between the working hours in a year (1,826.25) and the actual hours worked (1,563.25). The difference between the working hours and actual hours worked in the 2013 Calculation was annual leave hours (175) and public holiday hours (88).

80. The 2013 Calculation showed that the loading was based on the actual hours worked by the TSP shift worker. In particular, the 2000 Calculation showed that the actual hours worked (1,563.25) was used to determine the component of the loading for shift allowances, Saturday penalties and Sunday penalties.

81. The 2013 Calculation showed that the loading included payment for annual leave hours (175) but did not pay the shift allowances, Saturday penalties or Sunday penalties for those annual leave hours.

82. The 2013 Calculation showed that the loading included the roster loading for all working hours in the year (1,826.25), including, relevantly, annual leave hours.

83. As I was involved in the Production Operator Restructure Dispute, I can say that:

(a) The unions were given the 2013 Calculation document;

(b) The calculation of the annualised salary, including the various components and how they were calculated, was discussed extensively with the CFMEU during compulsory conferences held with Commissioner Stanton and DP Harrison;

(c) At no time did the union or employees dispute that method of calculation where shift allowances, Saturday penalties or Sunday penalties are not calculated on annual leave hours.”

[16] Mr Gurney also gave evidence regarding the course of negotiations for the Delta Electricity Employees Enterprise Agreement 2011 (the ‘2011 Agreement’), in which he led the negotiations for Delta. He also gave evidence regarding the course of negotiations for the Delta Electricity Employees Enterprise Agreement 2015 (the ‘2015 Agreement’), and the 2019 Agreement, in both of which he was involved in negotiations. Mr Gurney’s evidence regarding the negotiations for the 2011 Agreement was as follows:

“61. The Delta Electricity Employees Enterprise Agreement 2011 (the "2011 Agreement") was an enterprise agreement made and approved under the FW Act.

62. From my review of Delta's file, in the making of the 2011 Agreement, there was no demand made by Delta Electricity or the unions to change the way in which annual leave was paid for shift workers. The only demands made in respect of annual leave was:

(a) The unions wanted to increase the quantum of annual leave and allow annual leave at half pay;

(b) Delta Electricity wanted to have a provision to require the taking of excessive leave and to allow cashing out.

63. Both these proposals were rejected by the other party. Annexed and marked "SG-4" is a copy of the log of claims status document kept by Delta.

64. I led the negotiations for Delta for the 2011 Agreement.

65. During the course of the negotiations, I prepared an annual leave clause. The clause that I prepared cross-referred to the NES. Annexed and marked "SG-5" is a copy of the draft proposed annual leave clause.

66. I presented my clause to the unions at a negotiation meeting in the training room in the Munmorah Power Station in about November 2010. There were approximately 25 officials and delegates at the negotiation meeting. Mr Peter McPherson of Unions NSW and Mr Allen Drew of the CFMEU were two of the officials present at the negotiation meeting.

67. When I presented my clause to the unions, the union officials (either Mr McPherson or Mr Drew, or both) said that they did not want to use my clause as they wanted the annual leave entitlement to be more fully expressed (as they did not want to have to refer back to the FW Act). I specifically recall Mr McPherson saying words to the effect, "it's fucking stupid we need to go to the Fair Work Act to find the entitlement, put it in the agreement”.

68. After the negotiation meeting, I prepared another version of the annual leave clause. I looked at the terms of s 90 of the FW Act. I replicated the wording of s 90 into this version of the clause. Annexed and marked "SG-6" is a copy of this revised clause.

69. At a subsequent negotiation meeting (in about mid- December 2010), I presented the revised clause to the unions. At this meeting, the unions (either Mr McPherson or Mr Drew of the CFMEU, or both) stated that Delta paid annual leave with other amounts like allowances. The officials requested the revised clause be amended so that annual leave was as it was under the 2009 Agreement and previous industrial instruments. No person present at this bargaining meeting requested to change how annual leave was paid etc.

70. After that negotiation meeting, I prepared a further version of the annual leave clause. I looked at the reference to full pay in the 2009 Agreement. I used the phrase "full rate of pay". I did not have any regard to, or look at, the definition of "full rate of pay" under the FW Act. I did not draw any connection at all to the use of the phrase "full rate of pay" and that as defined in the FW Act. Annexed and marked" SG-7"is a copy of the further revised annual leave clause.

71. At a subsequent negotiating meeting, in about February 2011, I presented the further revised annual leave clause at "SG-7" to the unions. No person present at that meeting (or subsequently) requested a change to the clause. No person at that negotiating meeting (or subsequently) referred to the definition of "full rate of pay" under the FW Act.

72. Annexed and marked "SG-8" is a copy of the document used to explain to staff the terms and effect of the 2011 Agreement. There is no reference in the presentation to the payment of annual leave to shift workers (including non-TSP shift workers), including the way it has always been paid changing.

73. So far as I am aware from my involvement in the negotiations, and from my discussion with Mr McLachlan, there was no discussion of s 18 of the FW Act during the negotiations for the 2011 Agreement.

74. Annexed and marked "SG-9" is a copy of the application for approval of the 2011 Agreement (Form F16) and the accompanying statutory declarations (Form F17 and, for the CFMEU, Form F18). There is no reference in the application to the payment of annual leave to shift workers (including non-TSP shift workers).

75. From my discussions with Ms Clayton, I am aware that Delta Electricity continued to pay annual leave for non-TSP shift workers at the ordinary rate of pay plus the roster loading (and any specified allowances that were payable).”

d) Mr McGrath

[17] Mr McGrath noted that he is the District Vice President of the CFMMEU, with the responsibility for negotiating enterprise agreements. It is important to note that Mr McGrath’s statement was in reply to the statement of Mr Gurney. Being such a reply, Mr McGrath’s statement was remarkable for:

a) The failure to deal with many parts of Mr Gurney’s evidence, particularly surrounding the 2011 Agreement negotiations, even at the very least to explain the CFMMEU’s failure to lead evidence from Mr Allen Drew 1, whom Mr Gurney identified as present on behalf of the CFMEU at a meeting in November 2010 at which the annual leave clause of the 2011 Agreement was discussed. The only evidence regarding that negotiation was the following unattributed hearsay;

“16. I have enquired of the 2011 Enterprise Agreement negotiations and have been informed that during those negotiations, the Respondent wished the annual leave clause to be applied in the same manner as the NES. I am informed the Respondent proposed that the payment for annual leave should have been the “base rate of pay”. I am informed this was rejected and the Respondent proposed in response that it be the “full rate of pay” and the words “base rate of pay” were changed to “full rate of pay”.

b) That the statement resorted to submissions, rather than statements of fact.

[18] Insofar as he did state relevant facts, Mr McGrath outlined the history of TSP payments and payments to other Production Operators, and proceedings before Commissioner Stanton in the IRCNSW. Mr McGrath stated there was no demand made in the 2015 Agreement negotiations by any party to change the way annual leave was paid.

[19] Mr McGrath noted very generally that in both the 2015 and 2019 negotiations, “the FW Act and its implications were often discussed in the negotiations”. Finally, Mr McGrath noted that he filed Form 18 Statutory Declarations for both the 2015 and 2019 Agreements agreeing with Mr Gurney’s Form F17 Statutory Declarations, explaining why he so agreed.

The Submissions of the CFMMEU

[20] The CFMMEU noted that Clause 17.1 of the 2019 Agreement materially provides that an employee that takes annual leave must be paid by the employer “… at the employees full time rate of pay for the employee’s ordinary hours of work in the period”. The CFMMEU noted that s.18 of the Act defines the meaning of full rate of pay.

[21] The CFMMEU submitted that the reference to the “full rate of pay” in the Enterprise Agreement carries the same meaning and effect as the equivalent term defined in the Act at s.18. The predecessor Enterprise Agreements made under the Act all used the term “full rate of pay” in the annual leave clause.

[22] Using the exemplar of Mr Landesmann, who is required to and does work a five (5) panel, twelve (12) hour, rotating day and night shift, the CFMMEU noted that he receives shift penalty payments. It is these payments, as well as others that fall due under the Enterprise Agreement, that make up his full rate of pay. The CFMMEU submitted that the 2019 Agreement is clear, concise and unambiguous as to the entitlement to be afforded to the employees.

[23] The CFMMEU noted that the principles of interpretation of an Enterprise Agreement are well known. They have been outlined by the Full Bench of this Commission in AMWU v Berri Pty Limited 2 (‘Berri’), and should be applied to the interpretation of the 2019 Agreement. The term “full pay” had a well-known interpretation. It means a person’s full pay, as found in Glover v Tip Top Bakeries Industrial Court of South Australia3, and Crawford Productions Pty Ltd & Anor v. Film & Television Production Assn of Aust. & Ors, in the Federal Court both at first instance and on appeal4.

[24] The CFMMEU submitted that under a true operation and interpretation of the clause of the 2019 Agreement, Mr Landesmann as the exemplar should have received the full rate of pay, that being the full amount he would have received for working his ordinary hours had he not taken that leave.

Submissions of the CEPU

[25] The CEPU supported the CFMMEU’s submissions that the shift penalties (and other payments) make up a Production Operator’s full rate of pay as defined by s.18 of the FW Act.

[26] The evidence of Mr Wilkinson disclosed that he did not receive the full rate of pay as defined by s.18 of the FW Act when he took annual leave. Had Mr Wilkinson worked that period rather than taking annual leave, he would have been paid the full rate of pay in accordance with clause 11.39 of the 2019 Agreement. Instead, while on annual leave he did not receive the payments under clause 11.39 and he received a lesser amount.

[27] The CEPU submitted that words in the 2019 Agreement are plain and unambiguous, and the plain and ordinary language used in the 2019 Agreement supports such an interpretation.

Submissions of Sunset Power

[28] Sunset Power submitted that the Commission should determine that, on its proper construction, clause 17.5(1) of the 2019 Agreement requires the employer to pay a non-TSP employee at the rate of pay comprising:

a) the wage rate for ordinary hours;

b) any specified allowances that are explicitly payable on annual leave; and

c) the roster loading,

for each period taken by the non-TSP employee as paid annual leave.

[29] Sunset Power further submitted that the Commission should also determine that, on its proper construction, clause 17.5(1) of the 2019 Agreement does not require the employer to pay the non-TSP employee:

a) A shift penalty (comprising a penalty rate or a shift allowance or both) for each period taken by the non-TSP employee as paid annual leave; and

b) Both the shift penalty and roster loading.

[30] Sunset Power submitted thatthe 2019 Agreement provides for a number of allowances (see clauses 4.3 and 4.4 of the 2019 Agreement), including a “location allowance” (clause 4.3(a)), a “high voltage allowance” (clause 4.3(b)) and a “daily allowance” (clause 4.4).

[31] The 2019 Agreement also provides for a number of shift payments, including a shift allowance (clause 11.6), a shift penalty (clause 11.12) and a roster loading (clause 11.15), and also provides for a number of penalty rates, including for overtime (clauses 12.3 and 12.4).

[32] The 2019 Agreement specifies that some allowances are paid for certain entitlements, including annual leave (clause 4.3(c)), and that some allowances are not taken into account for the purpose of calculating certain entitlements, including annual leave (clause 4.4). The 2019 Agreement specifies the remuneration to be paid to shift workers whilst at Training School, including the roster loading, the shift allowance and the penalty rates for public holidays (clause 11.21). The 2019 Agreement does not specify such remuneration by reference to “full rate of pay”.

[33] Sunset Power also referred to and relied upon Berri, and accepted that the Commission should consider context (Principle 1 of Berri), and that the Commission should determine the common intention of the parties to the 2019 Agreement by reference to what a reasonable person would understand the language the parties have used to express their agreement (Principle 3 in Berri).

[34] Sunset Power submitted that the phrase “full rate of pay” is ambiguous and susceptible of more than one meaning (see Principle 7 of Berri), and noted that the reliance by both the CFMMEU and CEPU rely on an external definition (s.18 of the Act) to endeavour to establish that the meaning is plain and unambiguous is itself indicative that the meaning of the phrase is not clear, plain and unambiguous.

[35] Sunset Power submitted that evidence of surrounding circumstances is admissible (Principle 10 of Berri), and that that the common intention of the parties may be ascertained from the common understanding of the parties as reflected in their dealings with each other.

Consideration

[36] The resolution of this dispute involves the determination of one or more of the following questions:

Question 1. Does Clause 17.5 the 2019 Agreement adopt the definition of “full rate of pay” from Section 18 of the Act, and so require Sunset Power to pay a non-TSP employee on annual leave:

a. a shift penalty (comprising a penalty rate or a shift allowance or both) for each period taken by the non-TSP employee as paid annual leave; and

b. both the shift penalty and roster loading?

Question 2. If the answer to Question 1 above is “no”, is the proper construction of clause 17.5(1) of the 2019 Agreement that Sunset Power is required to pay a non-TSP employee at the rate of pay comprising:

a. the wage rate for ordinary hours;

b. any specified allowances that are explicitly payable on annual leave; and

c. the roster loading,

for each period taken by the non-TSP employee as paid annual leave?

Question 3. If the answer to Question 2 above is “no”, what is the proper construction of clause 17.5(1) of the 2019 Agreement.

[37] Question 1 above is a positive assertion of the interpretation advanced by the CFMMEU and the CEPU. Question 2 above is a positive assertion of the interpretation advanced by Sunset Power.

[38] There is no dispute between the parties as to the principles that I must apply in properly construing the Agreement. Those principles were summarised by the Full Bench in Berri (at paragraph [114]) 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 aid 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.”

(a) The Proper Construction of the Agreement

[39] As observed at principle 1 in Berri, the resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose, with such context being apparent from:

a) The text of the agreement viewed as a whole;

b) The disputed provision’s place and arrangement in the agreement; and

c) The legislative context under which the agreement was made and in which it operates.

(i) General Agreement Provisions

[40] The text of the 2019 Agreement provides for numerous expressions of “rates” of pay for various form of leave and other circumstances. As noted above, clause 17.5(1) the 2019 Agreement provides:

“(1) If an employee takes a period of annual leave, the employer must pay the employee at the employee’s full time rate of pay for the employee’s ordinary hours of work in the period.” (Emphasis added)

[41] However, Clause 17.1 of the 2019 Agreement provides:

“Annual Leave is provided for in the NES, as amended from time to time.”

[42] Clause 18.4 of the 2019 Agreement provides for payment of long service leave as follows:

“Long service leave is paid at the employee's appointed rate of pay at the time the leave is taken. Upon termination of employment with Delta Electricity, payment of the value of the long service leave is based on completed weeks of service.” (Emphasis added)

[43] As to personal/carers leave and accident pay, Clause 19.1 provides, in a fashion similar to Clause 17.1 regarding annual leave, that:

“Personal/Carer’s leave is provided for in the NES, as amended from time.”

[44] Clause 19 of the 2019 Agreement does not provide for a rate of pay for personal/carers leave, and pursuant to Clause 19.1, recourse would be had to s.99 of the Act which provides:

“Payment for paid personal/carer's leave

If, in accordance with this Subdivision, an employee takes a period of paid personal/carer's leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.”

[45] The provision for compassionate leave in the 2019 Agreement (Clause 20), while also adopting the reference to the NES as in Clauses 17.1 and 19.1, provides at Clause 20.4 for payment at the same rate as for annual leave, being “… the employee’s full time rate of pay for the employee’s ordinary hours of work in the period”.

[46] In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Anor v Sunset Power International Pty Ltd trading as Delta Electricity 5, the Full Bench of the Industrial Relations Commission of New South Wales, after considering similar provisions to those outlined above in the 2015 Agreement, observed6:

“We also observe that a number of terms are used throughout the Enterprise Agreement to describe an employee’s earnings. These include “full rate of pay” (clauses 17.5 and 20.4), “appointed rate of pay” (clause 18.4), “ordinary rate of pay” (clause 19.28(b)(i)) and “ordinary weekly rate of pay” (clause 21.8(a) and (c)). In the absence of uniformity in drafting throughout the Enterprise Agreement it is difficult to draw any conclusions regarding the parties’ intentions simply from them having used “single time” instead of “base rate”.

[47] The above observation is equally apposite to the 2019 Agreement. In the absence of uniformity in drafting it is difficult to draw any conclusions regarding the parties’ intentions simply from them having used “full rate of pay”.

[48] The 2019 Agreement also provides for a number of allowances, including a location allowance (Clause 4.3(a)), a high voltage allowance (Clause 4.3(b)) and a daily allowance (Clause 4.4). The 2019 Agreement specifies that some allowances are paid for certain entitlements, including annual leave (Clause 4.3(c)), while others are specified as not to be taken into account for the purpose of calculating certain entitlements, including annual leave (Clause 4.4).

(ii) Specific Agreement Provisions Regarding Shift Work

[49] The employees the subject of the subject dispute are those not covered by the TSP Agreement. The 2019 Agreement deals with the TSP Agreement in Clauses 5.6 and 5.7 as follows:

“5.6 The terms of the Vales Point Production Operator Total Salary Package (TSP) Agreement 2019 shall form part of this agreement Enterprise Agreement.

5.7 The provisions of the Vales Point Production Operator Total Salary Package (TSP) Agreement 2019 shall apply in lieu of Clauses 11.6 to 11.22, 11.39(a), 11.39(c) and Clause 18.4.”

[50] Clause 11 of the 2019 Agreement deals with Shift Work, and in particular outlines three different shift work payments. The first of those is described as a shift allowance, outlined at Clauses 11.6 and 11.7 as follows:

Shift Allowance

11.6 Shift work may be:

(a) Early Morning Shift - a shift commencing after 5:00am and before 6:30am.

(b) Afternoon Shift - a shift finishing after 6:00pm and at or before midnight.

(c) Night Shift - a shift:

(i) finishing between midnight and at or before 8:00am; or

(ii) commencing between midnight and at or before 5:00am.

Delta Electricity, in consultation with affected employees or their representatives, will decide the commencing and finishing times of shifts to suit the needs and circumstances of each establishment.

11.7 Shift workers who work on a shift work roster must be paid the following allowances:

Early the greater of 10% of single time Morning for the shift and:

The allowance shall be as set out in Item 23 of Appendix 1.

Afternoon the greater of 20% of single time and:

The allowance shall be as set out in Item 24 of Appendix 1.

Night the greater of 20% of single time and:

The allowance shall be as set out in Item 25 of Appendix 1.

[51] The second shift work payment, which is described as a shift penalty, relates to public holiday and weekend work. The relevant provisions are Clauses 11.12 and 11.13, or Clause 11.39 for 12 hour shift workers like both Mr Landesmann and Mr Wilkinson, of the 2019 Agreement, Clauses 11.12, 11.13 and 11.39 provide:

Shift Penalty

11.12 Shift workers must be paid for all time worked on a rostered shift on a public holiday the penalty of 150% of single time.

11.13 Shift workers must be paid the following penalties for all shifts worked on the following days that are not public holidays:

Shift Penalty

(a) Saturday - all shifts 50% of single time

(b) Sunday - all shifts 100% of single time

12-hour Shifts

11.39 The following provisions will apply (subject to subclause 11.28 of this clause) where a 12-hour shift roster system is introduced by agreement between Delta Electricity and a majority of affected employees or where an employee is transferred to such a 12-hour shift roster system (such transfer to be by agreement, subject to the employee’s agreement not being unreasonably withheld):

(a) Penalty rates:

(i) Saturday 1.5 times ordinary rate

(ii) Sunday 2 times ordinary rate

(iii) Public Holidays 2.5 times ordinary rate

(iv) Shift Allowance;

Day shift, on the basis that four hours only of the 12-hour shift duration will attract the 20% shift allowance

- Night shifts at 20%

The day of the shift will be treated as that on which the majority of the 12-hour shift is worked;

(b) Handover Time - based on 13 1/3 minutes per 12- hour shift;

(c) Public Holidays - whether rostered on or off, employees will be credited with eight hours leave in lieu, which will be added to their period of annual leave;

(d) Leave taken - Leave paid according to normal Enterprise Agreement provisions. Employees will be debited for 12 hours from the respective leave balance;

[52] The third shift work payment, described as a roster loading, provides two different percentage loading rates, though for both Mr Landesmann and Mr Wilkinson the rate was 4.35%. The relevant provisions are Clauses 11.15 and 11.16 of the 2019 Agreement, which provide:

Roster Loading

11.15 Payment of roster loading is made as compensation for the unevenness of payments under this Enterprise Agreement. Payment is also made instead of shift disabilities not covered by payments under this Enterprise Agreement including:

(a) the variety of starting and finishing times

(b) the need to be readily available for work and to work, as required, during crib breaks and at all other times during the shift

(c) minor variations to established duties

(d) the requirement to work as rostered on any day of the week.

Roster Loading - Rates

11.16 The roster loading for ordinary hours actually worked is:

(a) 4.35% of salary for:

(i) employees on seven-day continuous shift work rosters

(ii) employees regularly rostered to work ordinary shifts on both Saturdays and Sundays

(iii) employees rostered to work continuous afternoon or night shifts

(iv) employees working day shift only including a shift on Sundays.

(b) 2.12% of salary for:

(i) employees on rotating shift work who are rostered to work ordinary shifts involving afternoon and/or night shifts but who are not regularly rostered to work ordinary shifts on both Saturdays and Sundays

(ii) employees working day shift only on Monday to Saturday.

[53] One further shift work clause of the 2019 Agreement specifies the remuneration to be paid to shift workers whilst at Training School. Clause 11.21 provides “Shift workers must be paid the roster loading, shift allowance and penalty rates for public holidays, Saturday and Sunday shifts, which they would have received for their appointed duties if they are, including the roster loading, the shift allowance and the penalty rates for public holidays” if they are training (Clause 11.21). The 2019 Agreement does not specify such remuneration by reference to “full rate of pay”.

[54] Sunset Power submitted that the terms of each of the three shift work payments required work to be actually performed, and so exclude a period when on annual leave. It submitted that shift allowance is for “workers who work on a shift work roster”, shift penalty is for “all time worked” (Clause 11.12) and “for all shifts worked” (Clause 11.13), and roster loading is for “for ordinary hours actually worked” 7. I reject that submission. Once again, in the absence of uniformity in drafting throughout the 2019 Agreement, it is difficult to draw any conclusions regarding the parties’ intentions from the many varied expressions used.

[55] I also note that the above submission is inconsistent with the past practice of Sunset Power, and the interpretation they advance in these proceedings. Mr Gurney’s evidence was clear that non-TSP shift workers are paid annual leave at the ordinary rate of pay plus roster loading and any specified allowances that were payable. That is also the interpretation advanced in these proceedings.

(iii) Legislative Context

[56] The effect of the legislative context is of short compass. Clause 17.1 refers to the NES. Section 90 of the Act provides:

Payment for annual leave

(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.

(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.

[57] Base rate of pay for other than pieceworkers is defined at Section 16(1) of the Act as:

(1) The base rate of pay of a national system employee is the rate of pay payable to the employee for his or her ordinary hours of work, but not including any of the following:

(a) incentive-based payments and bonuses;

(b) loadings;

(c) monetary allowances;

(d) overtime or penalty rates;

(e) any other separately identifiable amounts.

[58] As noted above, the Act also defines “full rate of pay”, however that defined term is used in the Act only in relation to pregnant employees transferring to safe jobs (Section 81(4)) or the payment in lieu of notice of termination for a dismissed employee (Section 117(2)(b)).

(b) Ambiguity?

[59] The CFMMEU and CEPU submitted that the reference to the “full rate of pay” in Clause 17.5(1) of the 2019 Agreement carries the same meaning and effect as the equivalent term defined at s.18 of the Act. The CFMMEU submitted 8:

‘The clause at issue as it now reads uses the words “full rate of pay”. Predecessor Enterprise Agreements and Awards referred to “full pay”. The wording was amended when the Enterprise Agreement was made for the first time under the Act, which when made contained a definition of “full rate of pay”.’

[60] In the Hearing, the CFMMEU provided some elaboration on that submission. It put the following 9:

‘Now, there's a lot of evidence concerning the - you know, what happened in negotiations and with respect, we submit that little of it is of assistance to this Commission. But obviously, the Commission needs to look at the seeds of where words may have come from. But in this case, a few important components arise. One is, the wording was changed when the first enterprise agreement was negotiated and made under the Fair Work Act.

Simply looking at the structure of the enterprise agreement, your Honour, it's clear that there was an attempt made by the negotiators for some consistency with the nomenclature used in that Act.’

[61] It is important to note that the submissions in the above two paragraphs were advanced together with a submission that the 2019 Agreement is clear, concise and unambiguous as to the entitlement to be afforded to the employees under Clause 17.5. There was an inconsistency in the submission advanced by the CFMMEU, and adopted by the CEPU. On the one hand it was said to be clear that those negotiating the 2019 Agreement had purposely adopted the definition from the Act, yet the evidence of what actually happened in those negotiations is said to be of little assistance.

[62] Prior to any analysis beyond the ordinary meaning of the relevant words, it must be observed that the reference to the “full rate of pay” in Clause17.5(1) of the 2019 Agreement on its face does not simplistically possess the same meaning and effect as the equivalent term defined at s.18 of the Act. Clause 17.5(1) of the 2019 Agreement provides:

“(1) If an employee takes a period of annual leave, the employer must pay the employee at the employee’s full time rate of pay for the employee’s ordinary hours of work in the period.” (Emphasis added)

[63] The ordinary hours of work of shift workers under the 2019 Agreement are defined, after reference at Clause 8.1, in Clause 11.3 as:

11.3 The ordinary hours for shift workers are an average of 35 hours a week over a roster cycle. Shift workers may be required to work more than 35 hours in one or more

weeks, but the total number of ordinary hours worked in a roster cycle must not be more than:

Number of weeks in roster cycle multiplied by 35 hours.

[64] Section 18 of the Act, however, goes further than ordinary hours, and includes, at paragraph (d), “overtime or penalty rates”. While that absence of equivalence in definition points to the absence of plain meaning and the existence of ambiguity, there is a further basis for the conclusion of ambiguity. The fact that the CFMMEU and CEPU on one hand, and Sunset Power on the other hand, have advanced arguable cases for the different constructions of Clause 17.5 is sufficient for the disputed term to be described as ambiguous 10.

[65] The CFMMEU had submitted that the term “full pay” had a well-known interpretation. In simpliciter it meant a person’s full pay, and referred to Glover v Tip Top Bakeries 11, and Crawford Productions Pty Ltd & Anor v. Film & Television Production Assn of Aust. & Ors, both at first instance12 and on appeal13. At the very least, that submission cannot stand in circumstances where the Agreement specifically provides that certain allowances are not to be taken into account for the purpose of calculating certain entitlements, including annual leave. In a broader sense it would be an unsoundly simplistic approach. As observed by Madgwick J in Kucks v CSR Limited14:

“It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.” (Emphasis added)

(c) Surrounding Circumstances

[66] Having determined that Clause 17.5(1) of the 2019 Agreement is ambiguous, I can consider evidence of the surrounding circumstances that tend to establish objective background facts which were known to both parties which inform the subject matter of the agreement.

[67] One such circumstance that Sunset Power urged reliance upon was the history of Award and Agreement provisions relating to annual leave for shift workers. However, those provisions were also vague, and I note that the payment of annual leave clauses, or to the way in which annual leave was actually paid for non-TSP shift workers, under the following instruments:

a) Delta Electricity Employees Award 1997;

b) Delta Electricity Employees Award 2000;

c) Delta Electricity Employees Award 2001;

d) Delta Electricity Employees Award 2003;

e) Delta Electricity Employees Award 2005;

f) Delta Electricity Employees Enterprise Agreement 2008; and

g) Delta Electricity Employees Enterprise Agreement 2009 (‘the 2009 Agreement’).

Was as follows:

“Rate of Pay- Annual leave is paid as full pay”. (Emphasis added)

[68] A more compelling circumstance reflecting common assumption between the parties in the period of operation of the abovementioned industrial instruments is the fact that at no time were shift workers paid for annual leave taken in the period from 1996 to 2010 on the basis of both shift penalties and a roster loading.

[69] It was in the 2011 Agreement that the term “full pay” that existed in the 2009 Agreement was replaced with “full rate of pay”. The evidence before the Commission from Mr Gurney, which I accept, is that there was no reference to s.18 of the Act during the negotiations for either the 2011 Agreement, the 2015 Agreement or the 2019 Agreement. Further, there was no claim during the negotiations for the 2011 Agreement, the 2015 Agreement or the 2019 Agreement to change the way in which Sunset Power would pay shift workers (including non-TSP employees) for annual leave taken.

[70] The explanation document provided to employees to explain the terms and effect of the 2011 Agreement did not identify, either as an issue raised by either party or a matter agreed in principle, any change the way in which Delta paid shift workers (including non-TSP employees) for annual leave taken. Similarly, the F17 Statutory Declaration relied upon by Sunset Power in the approval of the 2011 Agreement did not identify any change in shift worker annual leave payments.

[71] Two further objective background facts that pre-date and post-date the making and approval of the 2011 Agreement, wherein the term “full pay” that existed in the 2009 Agreement was replaced with “full rate of pay”, are the 2000 Calculation and the 2013 Calculation.

[72] The 2000 Calculation was created during negotiations for the Delta Electricity Employees Award 2001. The 2000 Calculation distinguished between the working hours in a year (1,826.25) and the actual hours worked (1,563.25). The difference between the working hours and actual hours worked was annual leave hours (175) and public holiday hours (88).

[73] The 2000 Calculation showed that the actual hours worked was used in the calculation to determine the component of the loading for shift allowances, Saturday penalties and Sunday penalties. While the 2000 Calculation included payment for annual leave hours (175), it did not provide for payment of the shift allowances, Saturday penalties or Sunday penalties for those annual leave hours.

[74] Similarly, the 2013 Calculation, which was created during a dispute between Delta and the unions over a proposed restructuring involving new shift arrangements (other than the 12-hour shifts), and new TSP rates for the proposed shifts, distinguished between the working hours in a year (1,826.25) and the actual hours worked (1,563.25). As with the 2000 Calculation, the difference between the working hours and actual hours worked in the 2013 Calculation was annual leave hours (175) and public holiday hours (88).

[75] The 2013 Calculation also showed that the loading included payment for annual leave hours (175) but did not pay the shift allowances, Saturday penalties or Sunday penalties for those annual leave hours. The 2013 Calculation was given to the relevant unions, and discussed extensively with the CFMEU during compulsory conferences held in the Industrial Relations Commission of New South Wales before Commissioner Stanton and Deputy President Harrison. At no time did any union or employee dispute the method of calculation contained in the 2013 Calculation.

[76] The final objective background fact of relevance is the fact that Delta did not pay shift workers for annual leave taken in the period from 2011 to 2018, or thereafter, on the basis of both shift penalties and a roster loading. It was only in late 2018 that the claim that is finally agitated in these proceedings was made.

Conclusion

[77] The answers to the questions posed for determination of this dispute are:

Question 1. No.

Question 2. Yes.

Question 3. Not applicable.

[78] In the absence of uniformity in drafting it is difficult to draw any conclusions regarding the parties’ intentions simply from them having used “full rate of pay” in the 2019 Agreement. Further, the specific exclusion of certain allowances from annual leave payments is inconsistent with the interpretation advanced by the CFMMEU and the CEPU. Clause 17.5 is ambiguous, and does not adopt the definition of “full rate of pay” in Section 18 of the Act.

[79] The evidence of surrounding circumstances supports the interpretation advanced by Sunset Power. In particular:

a) The manner of payment of shift workers for annual leave taken in the period from 1996 to 2010;

b) The 2000 Calculation and the 2013 Calculation;

c) The absence of any reference to Section 18 of the Act, or any change to the way shift workers would be paid, during the negotiations for the 2011 Agreement in particular, but also the 2015 Agreement and the 2019 Agreement; and

d) The unchanged manner of payment of shift workers for annual leave taken in the period from 2011, and the absence of any claim until late 2018.

[80] It follows from the foregoing conclusions that I am unable to come to the conclusion advanced by the CFMMEU and the CEPU. The application must therefore be dismissed.

DEPUTY PRESIDENT

Appearances:

Mr K Endacott appearing on behalf of the Applicant
Mr A Jacka appearing on behalf of the Communications, Electrical, Electronic, Energy,
Information, Postal, Plumbing and Allied Services Union of Australia
Mr A Gotting of counsel with Mr J Matson appearing on behalf of the Respondent

Hearing details:

2019
Sydney:
October 16

Printed by authority of the Commonwealth Government Printer

<PR718155>

 1   As referred to at [66] of the Gurney Statement.

 2   [2017] FWCFB 3005.

 3 8 IR 308.

 4 2 IR 406 and 5 IR 413 respectively.

 5 [2018] NSWIR Comm 1072.

 6 At paragraph [52].

 7   Transcript PN 599.

 8 CFMMEU Outline of Submission at [14].

 9   Transcript PN 400 and 401.

 10   The Bacon Factories’ Union of Employees, Queensland v Swickers Kingaroy Bacon Factory Pty Ltd [2017] FWC 7049, at [54].

 11 8 IR 308.

 12 2 IR 406.

 13 5 IR 413.

 14 (1996) 66 IR 182 at 184