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

[2020] FWCFB 4727

[2020] FWCFB 4727

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Construction, Forestry, Maritime, Mining and Energy Union
v
Sunset Power International T/A Delta Electricity
(C2020/3041)

DEPUTY PRESIDENT ASBURY
DEPUTY PRESIDENT DEAN
COMMISSIONER HAMPTON BRISBANE, 10 DECEMBER 2020

Appeal against decision [[2020] FWC 1866] of Deputy President Cross at Sydney on 9 April 2020 in matter number C2019/4465.

1. Introduction

[1] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) seeks permission to appeal and appeals a decision of Deputy President Cross issued on 9 April 2020 (Decision). The Decision was made pursuant to s 739 of the Fair Work Act (the Act) and the dispute resolution procedure in the Delta Electricity Employees’ Agreement 2019 (the 2019 Agreement). The subject matter of the dispute before the Deputy President concerned the proper interpretation of clause 17.5(1) of the Agreement and the correct rate of payment for annual leave to certain employees of Sunset Power International Pty Ltd T/A Delta Electricity (Delta).

[2] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) sought to intervene in the appeal and supported the submissions of the CFMMEU.

[3] There was no contest that the dispute arose under the 2019 Agreement, and it was common ground that the requisite steps in the Dispute Settlement Procedure had been followed and the Commission had the power to arbitrate the dispute pursuant to the dispute resolution procedure in clause 8 of the 2019 Agreement.

[4] Some discussion of the factual context is necessary to describe the issue which the Deputy President was called on to resolve. Delta operates the Vales Point Power Station and employs two types of employees – shift workers covered by a Total Salary Package (TSP) agreement (TSP employees) and shift workers not subject of a TSP agreement (non-TSP employees). The non-TSP employees are covered by the 2019 Agreement and are entitled to three kinds of shift payments under the 2019 Agreement when working:

•  A shift allowance as provided for in clause 11.6;

•  A shift penalty as provided for in clause 11.13; and

•  A roster loading as provided for in clause 11.15.

[5] The quantum of those payments varies depending on the nature of the roster being worked by the employee. Clause 17.5 of the Agreement deals with payment for annual leave, and provides as follows:

“17.5 Payment for annual leave

(1) 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.”

[6] The dispute was raised in relation to payment of Mr Landesmann, a member of the CFMMEU who is a non-TSP employee and related to payments required to be made to non-TSP employees in respect of annual leave, and in particular, whether they are entitled to payment of:

•  The wage rate for ordinary hours, specific allowances payable on annual leave and the roster loading only (as maintained by Delta); or

•  The wage rate for ordinary hours, specific allowances payable on annual leave, the shift penalty and the roster loading as claimed by the CFMMEU and the CEPU.

[7] The Deputy President determined that the non-TSP employees are entitled to the wage rate for ordinary hours, specific allowances payable on annual leave and the roster loading only (as maintained by Delta). It is from that Decision that the CFMMEU (supported by the CEPU) appeals.

2. The Decision

[8] It was common ground between the parties both before the Deputy President and in the appeal, that prior to the 2019 Agreement, a series of instruments have covered the Sunset Power and its employees. Those instruments were tendered by the parties and included:

•  Delta Electricity Employees Award 1997 (the 1997 Award);

•  Delta Electricity Employees Award 2000 (the 2000 Award);

•  Delta Electricity Employees Award 2001 (the 2001 Award);

•  Delta Electricity Employees Award 2003 (the 2003 Award);

•  Delta Electricity Employees Award 2005 (the 2005 Award);

•  Delta Electricity Employees Enterprise Agreement 2008 (the 2008 Agreement);

•  Delta Electricity Employees Enterprise Agreement 2009 (the 2009 Agreement);

•  The Delta Electricity Employees Enterprise Agreement 2011 (the 2011 Agreement); and

•  The Delta Electricity Employees Enterprise Agreement 2015 (the 2015 Agreement).

[9] Prior to the making of the 2011 Agreement, the instruments were approved by the Industrial Relations Commission of New South Wales. Thereafter, the 2011 Agreement, the 2015 Agreement and the 2019 Agreement were approved by the Fair Work Commission (and its earlier iterations).

[10] The Deputy President commenced his analysis with a summary of the evidence. The CFMMEU and the CEPU each called evidence from Production Operators who are non-TSP employees, to the effect that when working a 12 hour roster and taking annual leave, they received less that they would have received had they worked through the annual leave period and were paid their base rate plus a 4.35% roster loading. Each of the Production Operators gave evidence of the extent to which they claimed to have been underpaid.

[11] Mr Wilkinson, a Production Operator who is a non-TSP employee, gave evidence that he is paid as a 12 hour shift worker under clause 11.39 of the 2019 Agreement. The core roster includes night shifts and work on weekends and Mr Wilkinson is paid shift allowances and penalties under clause 11.39 of the 2019 Agreement for that work. When Mr Wilkinson is on annual leave, he is not paid the shift allowances and penalties under clause 11.39 but is paid the SP salary rate at clause 4.2 of the Agreement plus a 4.4% roster loading.

[12] The Deputy President then set out the evidence of the Company Secretary of Sunset Power, Mr Gurney. Mr Gurney’s evidence was that since 1991, the Company had paid non-TSP shift workers for hours worked by reference to an ordinary rate of pay, any specified allowances payable, shift penalties and a roster loading. Mr Gurney also said that:

a. prior to the Delta Electricity Employees Award 1996, annual leave was paid at the ordinary rate plus shift penalty 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 penalty payments) and any specified allowances that are payable; and

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

[13] Mr Gurney also stated that he is aware from his roles with the Respondent and Delta Electricity, as well as from enquiries that has made, that since 1991 Delta has never paid non-TSP shift workers both shift penalty payments and the roster loading while they are on annual leave. Further, Mr Gurney stated that Delta's payslips had always identified for the non-TSP shift worker that shift penalty payments are not paid on annual leave.

[14] 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. According to Mr Gurney’s evidence the TSP loading, is calculated based on how employees would be paid if paid they were paid according to the roster.

[15] Mr Gurney tendered a document setting out the 2000 Calculation created during the negotiations for the 2001 Award. Mr Gurney’s evidence was that the 2000 Calculation distinguished between the working hours in a year (1,826.25) and the actual hours worked (1,563.25) and that the difference between the working hours and actual hours worked was annual leave hours (175) and public holiday hours (88). The 2000 Calculation showed that the loading was based on the actual hours worked by the TSP shift worker and that the actual hours worked was used to determine the component of the loading for shift allowances, Saturday penalties and Sunday penalties. Mr Gurney’s understanding was that the 2000 Calculation provided that the loading included payment for annual leave hours (175) but did not pay the shift allowances, Saturday or Sunday penalties for those annual leave hours. Mr Gurney also stated his understanding that the Unions and Delta employees did not dispute that method of calculation where shift allowances and weekend penalties are not paid on annual leave hours.

[16] 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 that, as was previously the case with the 2000 calculation, it included payment for annual leave hours (175) but did not pay shift allowances and Saturday or Sunday penalties for those annual leave hours. Mr Gurney also said that from his involvement in the dispute, he could 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 of the New South Wales Industrial Commission;

c. At no time did the Unions or employees dispute that method of calculation where shift allowances, Saturday penalties or Sunday penalties are not calculated on annual leave hours. 1

[17] Mr Gurney also gave evidence regarding the course of negotiations for the 2011 Agreement, the 2015 Agreement, and the 2019 Agreement, which he either led or was involved in. Mr Gurney’s evidence regarding the negotiations for the 2011 Agreement was that there was no demand by the Company or the Unions to change the method of payment for annual leave. In relation to the 2011 Agreement, Mr Gurney said that during the course of the negotiations, he prepared an annual leave clause. The clause prepared by Mr Gurney was annexed to his statement as “SG-5” and was in the following terms: “Annual leave is provided in the NES as amended from time to time. This clause supplements or deals with matters incidental to the NES.”

[18] Mr Gurney stated that in November 2010 when he presented the clause he had drafted at a meeting attended by Mr Peter McPherson of Unions NSW and Mr Allen Drew of the CFMMEU, one or both said that they did not want to use his 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). Mr Gurney further stated that he specifically recalled 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”.

[19] Mr Gurney said that after the negotiation meeting, he prepared another version of the annual leave clause. In doing so, Mr Gurney looked at the terms of s 90 of the FW Act and replicated the wording of s 90 into this version of the clause. That version of the clause, tendered by Mr Gurney as “SG-6” stated that employees taking annual leave were to be paid at their “base rate of pay for the employee’s ordinary hours of work during the period.” Mr Gurney also said in his evidence that:

“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.

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.”

[20] Mr Gurney tendered a copy of the document used to explain to staff the terms of the 2011 Agreement and said that there is no reference in the presentation to the payment of annual leave to shift workers (including non-TSP shift workers), or to a change to the manner in which it is paid. The further revised clause, also tendered by Mr Gurney as “SG-7” to his statement of evidence, provided that: “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.”

[21] The Deputy President set out Mr Gurney’s evidence that there was no discussion of s. 18 of the FW Act during the negotiations for the 2011 Agreement and no reference to the payment of annual leave to shift workers (including non-TSP shift workers) in the Form F16 and Form F17 filed by the Company in support of the approval of the 2011 Agreement or in the Form F18 filed by the CFMMEU. Mr Gurney said that from his discussions with Ms Clayton, he is 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 payable).

[22] In relation to the evidence of Mr McGrath the Deputy President noted that it was in reply to the statement of Mr Gurney and was remarkable for the failure to deal with 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, 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 Deputy President also referred to Mr Gurney’s evidence about the meeting as “unattributed hearsay”. The Deputy president observed that 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.

[23] After summarising the submissions of the parties, the Deputy President commenced his consideration by observing that the resolution of the dispute required the resolution 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.”

[24] The Deputy President also noted that Question 1 was a positive assertion of the interpretation advanced by the CFMMEU and the CEPU and Question 2 was a positive assertion of the interpretation advanced by Sunset Power. The Deputy President then set out the principles applicable to the construction of enterprise agreements distilled from relevant case law by a Full Bench of the Commission in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers (AMWU) v Berri Pty Limited 2(Berri) and turned to apply those principles.

[25] The Deputy President first considered principle 1 – the language of the Agreement having regard to its context and purpose, with such context being apparent from: the text of the Agreement viewed as a whole; the place and arrangement of the disputed provision in the agreement; and the legislative context under which the Agreement was made and in which it operates.

[26] In relation to the text of the 2019 Agreement the Deputy President noted that it provides for numerous expressions of rates of pay and referenced the following clauses:

•  Clause 17.5.1 which refers to “full time rate of pay” 3 in respect of employees taking annual leave;

•  Clause 18.4 which refers to the employee’s “appointed rate of pay” in relation to employees taking long service leave;

•  Clause 19.1 which states that personal carer’s leave is provided for in the NES and is silent in relation to the rate of pay for such leave with the result that s. 99 of the Act would apply and such leave is paid for at the employees base rate for the ordinary hours of work in the period; and

•  Clause 20.4 which provides that compassionate leave is paid for payment at the same rate as for annual leave being “…the employee’s full time 4 rate of pay for the employee’s ordinary hours of work in the period”.

[27] The Deputy President then cited the observation of a Full Bench of the Industrial Relations Commission of New South Wales in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and Anor v Sunset Power International Pty Ltd trading as Delta Electricity 5 that:

“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”.

[28] The Deputy President went on to state that this observation is equally apposite to the 2019 Agreement and that in the absence of uniformity in drafting it is difficult to draw any conclusions regarding the parties’ intentions simply from them having used the term “full rate of pay”. The Deputy President then noted that the 2019 Agreement provides for a number of allowances, with some being paid for certain entitlements including annual leave, while others are specified as not being taken into account for annual leave. In this regard, the Deputy President referred to clauses 4.3(c) and clause 4.4. The clauses referred to by the Deputy President respectively provide that an allowance for employees holding certain certification under the Company’s access rules is paid for all ordinary time worked and during periods of annual leave, long service leave, public holiday, paid personal leave and workers’ compensation leave (albeit with some exclusions) and daily allowance which is not taken into account for the purpose of calculating penalty rates, overtime, long service leave, annual leave, personal leave, accident pay, public holidays, travelling time or any similar payments.

[29] The Deputy President set out various provisions of the 2019 Agreement in relation to shift work payments, first identifying that pursuant to clauses 5.6 and 5.7, the provisions of the TSP Agreement operated in lieu of clauses 11.6 to 11. 22, 11.39(a), 11.39(c) and clause 18.4. The first type of shift work payments identified by the Deputy President were those in clauses 11.6 and 11.7 which deal with shift allowances. The second type of shift work payments were identified as shift penalties found in clauses 11.12, 11.13 and 11.39, for 12 hour shift workers. The third type of shift payment identified by the Deputy president was the roster loading dealt with in clauses 11.15 and 11.16. The Deputy President also referred to clause 11.21 which refers to the remuneration to be paid to shift workers while they at Training School and provides that: “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” The Deputy President observed that the 2019 Agreement does not specify such remuneration by reference to “full rate of pay”.

[30] The Deputy President went on to note the submission of Delta to the effect that the terms of each shift payment require work to be actually performed and so exclude a period on annual leave. The Deputy President rejected that submission on the basis that the absence of uniformity in drafting throughout the 2019 Agreement makes conclusions difficult and that the submission was inconsistent with the Company’s past practice and the interpretation advanced in the proceedings before him – that non-TSP shift workers are paid for annual leave at the ordinary rate of pay plus roster loading and any specified allowances that are payable.

[31] In relation to legislative context, the Deputy President noted that clause 17.1 of the 2019 Agreement refers to the NES and that section 90 of the FW Act provides that payment for annual leave is at the employee’s “base rate of pay” as defined in s.16(1). The Deputy President also noted that while the FW Act defines “full rate of pay”, that defined term is used only in relation to pregnant employees transferring to safe jobs (s. 81(4)) or payment in lieu of notice for dismissed employees in s. 117(2)(b).

[32] Turning to consider the question of ambiguity, the Deputy President first noted the submissions of the CFMMEU and the CEPU that the reference to “full rate of pay” in clause 17.5(1) carries the same meaning as the equivalent term in s. 18 of the FW Act and that the 2011 and 2019 Agreements where the term “full rate of pay” was first used, were the first Agreements made under the FW Act. The Deputy President also noted the oral submissions made by the CFMMEU that it was clear that there was an attempt made by the negotiators for consistency with the FW Act. In relation to these submissions, the Deputy President said:

“[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.”

[33] The Deputy President went on to observe that the reference to “full rate of pay” in clause 17.5(1) of the 2019 Agreement does not on its face, simplistically possess the same meaning and effect as the equivalent term in s. 18 of the FW Act and noted that clause 17.5(1) also refers to “the employee’s ordinary hours of work in the period”, with ordinary hours being defined in clause 11.3 as an average of 35 over the roster cycle. The Deputy President also noted that s. 18 of the FW Act refers to “overtime or penalty rates” and that this “absence of equivalency” points to ambiguity. A further basis for a finding of ambiguity was said to be that both parties had advanced arguable cases for different constructions of the disputed clause. The Deputy President also observed that the term “full pay” used in other instruments and discussed in other cases, was of limited use in the interpretation of the 2019 Agreement, particularly in circumstances where the 2019 Agreement specifically provides that certain allowances are not be taken into account in calculating entitlements, including annual leave.

[34] Having determined that clause 17.5(1) of the 2019 Agreement is ambiguous, the Deputy President then turned to consider evidence of the surrounding circumstances known to both parties, which inform the subject matter of the Agreement. The Deputy President noted that Sunset Power relied on the history of Award and Agreement provisions relating to annual leave for shift workers and concluded that from the 1997 Award to the 2009 Agreement, referred to annual leave being paid as “full pay”. The Deputy President said that the provisions in those Awards and Agreements were vague and went on to find that:

“[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.”

[35] The Deputy president concluded that clause 17.5(1) of the 2019 Agreement does not adopt the expression “full rate of pay” from s. 18 of the Act and so require Sunset Power to pay a non-TSP employee on annual leave a shift penalty (comprising a penalty rate or a shift allowance or both) and both a shift penalty and roster loading. The Deputy President also concluded that Sunset Power is required to pay a non-TSP employee for annual leave: the wage rate for ordinary hours; any specified allowances explicitly payable on annual leave and the roster loading.

3. The appeal grounds

[36] The grounds of appeal as set out in the Appellant’s Form F7 notice of appeal are as follows:

1. The Deputy President erred by not finding that the proper construction of the expression “full rate of pay” in clause 17.5(1) of the Agreement includes shift penalties.

2. The Deputy President erred by misconstruing the expression “full rate of pay” in clause 17.5(1) as excluding shift penalties by:

a) giving that expression a different meaning to its ordinary meaning;

b) giving that expression a different meaning to the definition of that expression in s.18 of the Fair Work Act;

c) determining that the expression is ambiguous;

d) taking into account the subjective intentions expressed during negotiations;

e) taking into account the practice of the Respondent (and its predecessors) in paying annual leave under previous industrial instruments from 1996 to 2010;

f) taking into account negotiations relating to the calculation of annual leave of employees not covered by cl 7.5(1);

g) taking into account the manner in which the Respondent (and its predecessors) made payment for annual leave under industrial instruments and the Agreement from 2011; and

h) taking into account post-agreement of the absence of a complaint to establish a common understanding.

[37] The CFMMEU submitted it is in the public interest to grant permission to appeal on the following grounds:

1. The Deputy President has failed to apply the proper principles applicable to the construction of Enterprise Agreements.

2. The decision is affected by error.

3. The relevant employees lose an entitlement to payment at the full rate of pay whilst on annual leave as a result of the decision.

4. The dispute has not been resolved in a manner consistent with the terms of the Enterprise Agreement.

4. Submissions

CFMMEU

[38] The CFMMEU contends the expression “full rate of pay” in clause 17.5(1) includes the employee's base rate of pay and any bonus, loadings, monetary allowances, overtime or penalty rates and any other separately identifiable amounts. The CFMMEU submits that, in accordance with the statement of principle in GlaxoSmithKline Australia Pty Ltd v Makin 6, permission to appeal must be given, as the public interest is attracted because the interpretation given to the term “full rate of pay” is contrary to the definition of the same term in s. 18 of the FW Act, is counter intuitive, and the means by which the Deputy President arrived at the interpretation is disharmonious with other recent decisions such as that of the Full Bench in Berri7dealing with the interpretation of enterprise agreements.

[39] Appeal ground 1 contends that the Deputy President erred by not finding that the proper construction of the expression “full rate of pay” in clause 17.5(1) of the 2019 Agreement includes shift penalties. In Appeal grounds 2(a) – (h) the CFMMEU alleges errors which led the Deputy President to misconstrue the relevant clause. The CFMMEU submits that little focus is given to the discrete meaning of the expression “full rate of pay” in clause 17.5 (1) in the Deputy President’s decision. The subclause is set out incorrectly at [2] of the Decision. The crucial words “full rate of pay” are set out as “full time rate of pay” in the quote in that paragraph. Elsewhere in the Decision the Deputy President refers to the contest as being about the words “full time rate of pay” at [20], [40], [45] and [62]. The headnote refers to the “meaning of full time rate of pay”.

[40] The CFMMEU also contends that consideration of clause 17.5(1) commenced not with a consideration of the words used but by reference to other terms of the Agreement which express rates of pay applicable to various forms of leave (Decision [40]). At [47] the Deputy President concluded that there is no uniformity in the drafting of other provisions of the Agreement and so those provisions do not assist. At [49] – [55] the provisions of the Agreement relating to shift work are also considered. The Deputy President again concluded that the drafting of the Agreement on this topic is not uniform and does not assist in reaching a conclusion regarding the parties’ intentions (Decision [54]).

[41] The CFMMEU further contends that the Deputy President considered the legislative context provided by the definitions in the FW Act but there is no express conclusion on this issue. At [58] the Deputy President appears to conclude that the definition of the expression “full rate of pay” does not assist because the expression is not used in the FW Act in relation to pregnant employees and payment in lieu of notice for dismissed employees.

[42] The CFMMEU submits that the Deputy President’s conclusion in relation to s. 18 of the FW Act is flawed. On its face, subsection 18(1) provides for a general meaning of the expression “full rate of pay” for national system employees and while it is only used in the Act for the purpose of setting the payment for the transfer of pregnant employees to safe work (s81(5)) and payments in lieu of notice on termination (s117(2)(b)), it was relevant to, and assists in, the construction of clause 17.5(1) of the 2019 Agreement. It provides legislative context to how the term is used for the purpose of determining payment and supports the construction contended for by the CFMMEU.

[43] At [61] the Deputy President posits that there was an inconsistency in the submissions advanced by the CFMMEU in relation to ambiguity. The nature of that ambiguity is not clear. Whether there was ambiguity in the submission of the CFMMEU, is beside the point. The question is whether there is ambiguity in the wording of the clause.

[44] At [62] to [64] the Deputy President notes the definition of “full rate of pay” in s. 18 of the FW Act to point out that it includes overtime while clause 17.5(1) of the 2019 Agreement confines the expression to ordinary hours. The CFMMEU submits that the qualifying words in the Agreement do not detract from the proposition that it was intended that the expression “full rate of pay” in the 2019 Agreement was intended to be the same as that expression in the FW Act. Rather, the qualifying words indicate that the expressions mean the same and that the qualifying words were necessary to modify that definition for the purpose of the Agreement.

[45] The Deputy President’s finding of ambiguity in the Decision at [64] is simply that the CFMMEU and the CEPU on the one hand and Delta on the other, advanced arguable cases for different constructions of clause 17.5 of the 2019 Agreement. The test for ambiguity described in Berri, requires more than a reference back to the arguments of the parties. It requires a consideration of whether the term has a plain meaning or is ambiguous and susceptible of more than one meaning. The Deputy President failed to consider this question and as a result, failed to apply the principles in Berri to this question. The finding that there is ambiguity was thereby flawed and contrary to principle.

[46] In relation to the intention of the parties, at [67] of the Decision, the Deputy President sets out the history of Award and Agreement provisions dealing with the payment of annual leave and concludes that they were also vague. At [68] the Deputy President describes the fact that under the Awards and Agreements in the period between 1996 to 2010, Delta did not pay both shift penalties and roster loadings on annual leave, as a compelling circumstance reflecting common understanding. This is a reference to conduct associated with earlier Awards and Agreements. The CFMMEU submits that in Berri, the Full Bench pointed out that surrounding circumstances relating to earlier agreements may assist in construing those agreements but will provide negligible assistance in the construction of a later agreement, especially, as was also the case here, where the wording in the later agreements is quite different.

[47] At [69] reference is made to the negotiations for the 2011 Agreement which is when the expression “full rate of pay” was inserted into the Agreement. The Deputy President refers to the evidence that there was no reference to s. 18 of the FW Act during those negotiations, and that there was no claim to change the way Delta paid annual leave, including in negotiations for the 2015 and 2019 Agreements. The CFMMEU submits that this is similar to the circumstances in Berri, where the Full Bench described a lack of attention to the specific provisions in negotiations as being of no assistance in informing the interpretation of a term and went on to observe that even if such discussions took place they would need to be treated with a degree of caution as under the FW Act the Agreement is made with employees, and of more relevance is the question of what the employees were told. Evidence that explanatory notices provided to employees and statutory declarations filed with the Commission in relation to the 2011 Agreement were silent in relation to the payment of annual leave entitlements, also did not assist in the construction of the 2011 Agreement because no common understanding can be divined from silence on a topic.

[48] Similarly, disputes in relation to the calculation of the TSP in 2000 and 2013, did not deal with annual leave payments. The resolution of the disputes involved a means of calculation that was said to assume that roster loadings and shift penalties were not both payable on annual leave but there was no direct evidence of any discussion or negotiation which dealt directly with that topic. Even if it had, it would be of little assistance in construing the words “full rate of pay” in clause 17.5(1) of the 2019 Agreement.

[49] The Deputy President does not indicate how the practice of Delta from 2011 to 2018 to not pay shift penalties during periods of annual leave was taken into account. In Berri, the Full Bench cautioned against the use of such material in interpreting agreements, warning that care must be taken to distinguish common understanding from common inadvertence and said that such post-agreement conduct must show that there has been a meeting of minds, a consensus. The Deputy President did not consider, and made no finding, that the practice demonstrated a consensus between the parties. The fact that once the CFMMEU became aware of the practice it was raised as a dispute, suggests otherwise.

[50] The CFMMEU contends that rather than commencing with the ordinary meaning of the relevant words in accordance with the principles of construction of enterprise agreements, the Deputy President skipped this step and commenced his consideration by reference to terms used in other clauses of the Agreement. In this regard, the CFMMEU contends that the text of clause 17.5(1) is clear and unambiguous. Its meaning is plain; it is not susceptible to more than one meaning. The approach taken by the Deputy President was to consider other expressions relating to payment in the Agreement and to conclude that as there was no uniformity in drafting, it was difficult to draw any conclusions regarding the parties’ intentions from those provisions.

[51] The CFMMEU submitted that while the term “full rate of pay” is not defined in the Agreement, the payment provisions are readily identifiable. The payment provisions relevant to the dispute are clause 4, which sets wage rates and allowances, and clause 11, which provides for roster allowances and shift penalties. Relevantly, subclauses 4.3(a)(iii) and 4.3(c) provide that the location and high voltage allowances respectively must be paid on annual leave. There is no provision other than clause 17.5 requiring the roster loading in clause 11.16(a) be paid on annual leave.

[52] So far as context is concerned the clear meaning of clause 17.5(1) is supported by the legislative context of the Agreement; it being an agreement made and approved in accordance with the FW Act. In this regard the CFMMEU submits that there are two matters that are relevant: First, the FW Act includes a definition of “full rate of pay” at s 18 as follows:

“18. Meaning of full rate of pay

General meaning

(1) The full rate of pay of a national system employee is the rate of pay payable to the employee, including all the following:

(a) incentive-based payments and bonuses;

(b) loadings;

(c) monetary allowances;

(d) overtime or penalty rates;

(e) any other separately identifiable amounts.”

[53] The CFMMEU contends that the FW Act must necessarily form part of the legislative context of an enterprise agreement given that such agreements are made and approved under the Act. Further, there are extensive references to the FW Act and the NES in the 2019 Agreement (and the 2015 and 2011 Agreements), providing a clear indication that not only was the Agreement made under the FW Act but many of the conditions it provided for, including annual leave, were referable to that Act. In particular, in relation to annual leave, clause 17.1 states that: Annual Leave is provided for in the NES, as amended from time to time. In oral submissions Mr Slevin for the CFMMEU emphasised that the Decision of the High Court in Amcor Limited v Construction, Forestry Mining and Energy Union and Others 8(Amcor) establishes that the legislative framework is a matter that is relevant to the construction of industrial instruments and that in the CFMMEU’s view, the FW Act is the first place to go, after looking at the terms of the Agreement.

[54] Secondly, the Electrical Power Industry Award 2010, which was the relevant modern award for the purpose of the better off overall test, provides for payment on annual leave as follows:

“21. 3 Additional monetary entitlements

(a) An employee receiving an allowance on a continuous basis will continue to receive the allowance on all annual leave, subject to, in the case of higher duties allowance in clause 15.5, the employee resuming higher duties on completion of the leave.

(b) An employee taking leave will also be entitled to a sum equal to the greater of:

(i) 17.5% of their weekly rate including appropriate allowances (excluding shift penalties and weekend penalty payments); or

(ii) shift allowance and/or Saturday or Sunday penalty rates according to the employee’s roster or projected roster.”

[55] The CFMMEU submits that this provision requires allowances, including roster allowances and shift penalties, to be taken into account when calculating annual leave payments. The context confirms the CFMMEU’s view that the text in clause 17.5(1) has a clear and unambiguous meaning which is that payments on annual leave include payment for allowances, roster loadings, and shift penalties.

[56] We observe that there was some evidence of surrounding circumstances in the first instance proceedings. It went to historical awards and agreements starting from 1991, and the practice of Delta to not include shift penalties in annual leave payments, and negotiations for the prior instruments. As to the predecessor instruments, the evidence established that prior to the 2011 Agreement, the terms and conditions of Delta employees were regulated by Awards and Agreements made under the Industrial Relations Act 1991 (NSW) and the Industrial Relations Act 1996 (NSW). Delta’s evidence about the entitlements to annual leave payments in those instruments shows that there was little change in the provisions for payment of annual leave. Shift penalties were expressly provided for in the 1991 Award; the 1994 Agreement; and the 1996 Award. The five awards and two agreements from 1997 to 2009 were unchanged. Also, the instruments from 1994 to 2009 used the expression “full pay” when describing the entitlement to payments for annual leave.

[57] The first Agreement under the FW Act was the 2011 Agreement which made extensive changes to its predecessor to accommodate the change to the federal jurisdiction. It was followed by the 2015 Agreement. The annual leave payment provisions in the 2011 and 2015 Agreements were in the same terms as clause 17.5(1) of the 2019 Agreement.

[58] The CFMMEU submits that despite the provisions in the instruments, Delta provided evidence that its practice was not to pay roster loadings and shift penalties to employees whilst on annual leave. This evidence of post contractual conduct does not, in the present case, establish a common understanding or settled interpretation accepted by the parties. The evidence of the CFMMEU Official involved in the negotiations for the 2015 and 2019 Agreements was that he understood that Delta had been paying the roster loading and the shift penalties on annual leave. Delta’s evidence should be given no weight. Delta also relied upon the lack of claim by the unions, during negotiations or otherwise, about the practice. This is, at best, a submission that common inadvertence amounted to common understanding. This approach is flawed. In Berri, the Full Bench referred to the observations of Gray J in ALHMWU v Prestige Property Services Pty Ltd 9:

“Care must be taken … to distinguish a common understanding from common inadvertence ... In order to have an understanding, it is necessary that there be a meeting of minds, a consensus. There can be no meeting of minds, no consensus, if no one has thought about the issue.” 10

[59] The CFMMEU submits that the evidence did not reveal any relevant discussions concerning annual leave payments in negotiations for the various awards and agreements other than in the negotiations for the 2011 Agreement. Delta’s evidence was that the union parties to those instruments did not make claims for a change to the Delta practice in the negotiations for the various awards or agreements. This is not evidence of a common understanding that the annual leave clauses did not require the payment of both the roster loading and the penalties.

[60] The evidence concerning the negotiations for the 2011 Agreement confirms the CFMMEU’s view of the clause. In those negotiations Delta commenced with a draft clause which used the expression “base rate of pay” for the purpose of annual leave payments. The expression “base rate of pay” is also defined in the FW Act at s 16. The definition excludes loadings and penalty rates. The evidence is that the union negotiators pointed out that Delta paid more than the base rate and Delta provided a further draft that referred to “full rate of pay”. The use of the expressions defined in the FW Act during negotiations for the first agreement to be made under the FW Act is indicative that those expressions were intended to take their meaning from the Act. The evidence of negotiations of prior agreements should be treated cautiously.

[61] In any event, the evidence does not evince a common understanding, reveal notorious facts, nor disclose matters in common contemplation. Rather it demonstrates there was no discussion, save for the 2011 negotiations, of the terms dealing with the payment on annual leave. The lack of any such discussion or negotiation cannot provide any assistance in establishing surrounding circumstances or an objective framework of facts, to aid in the interpretation of the Agreement.

[62] The CFMMEU also submits that the evidence in relation to the 2011 negotiations suggests that those negotiating the first agreement under the FW Act were using terms that were defined in that Act and suggest that the expression “full rate of pay” should be read to have the same meaning in the FW Act and the Agreement.

[63] Consequently, the only surrounding circumstances that assists in the construction of the clause, either for the purpose of establishing or resolving an ambiguity in the clause, are the circumstances of the negotiation of the 2011 Agreement. That evidence confirms the CFMMEU’s view that the provision is not ambiguous, and it includes both the roster allowance and shift penalties. The correct construction of clause 17.5(1) is that Delta is required to pay employees their full rate of pay while on annual leave and that includes all of the payments set out in paragraph [9] herein. The Deputy President erred in construing the Agreement otherwise.

[64] In oral submissions, Mr Slevin for the CFMMEU referred to clause 4.2 of the 2019 Agreement which refers to weekly wage rates incorporating the “annual leave special payment” and argued that there was nothing to indicate that shift penalties should be excluded from annual leave because it is covered by the rolling up of the wage rate. In terms of disposition of the appeal, the CFMMEU asks that the Decision be quashed and that the dispute be resolved by a finding that the construction of cause 17.5(1) contended for by the CFMMEU at first instance is correct.

Delta

[65] Delta submits that it is not in the public interest to grant permission to appeal on the basis that the grounds of appeal do not reveal or establish error or arguable error; do not concern matters of principle or issues of importance and general application; and do not concern a diversity of decisions at first instance.

[66] The grounds of appeal concern the interpretation of a particular phrase in a single agreement applying only to one employer and a limited number of employees and introduced in unique circumstances. The 2019 Agreement at clause 27.4(e) contemplates that primacy is to be afforded to the decision of the Deputy President at first instance. Further, there is no basis to suggest a substantial injustice will arise if permission was refused (with the practical impact of the dispute affecting only a limited number of non-TSP employees of Delta in a confined circumstance of annual leave). Delta submits that there is no other appropriate basis to grant permission to appeal.

[67] In relation to appeal ground 2(a), Delta submits that there is no ordinary meaning of the phrase “full rate of pay”. There is no case law that holds or suggests that there is an ordinary meaning of the phrase “full rate of pay” and the case law cited by the Appellant at first instance does not establish an ordinary meaning of that phrase. The Deputy President did not find or conclude (correctly) that the phrase “full rate of pay” had an ordinary meaning. In any event, the ordinary meaning (if it exists) is not determinative and is merely a starting point, consistent with principle 1 in Berri.

[68] Delta also submits that the Deputy President proceeded (correctly) by considering the language of the 2019 Agreement having regard to its context and purpose and that such an approach was consistent with authority. The context included the text of the relevant clause and the text of the 2019 Agreement as a whole. In this regard, Delta maintains that context is to be considered in the first instance and not merely in the case of ambiguity.

[69] The text of the relevant clause included the phrase “for the employee’s ordinary hours of work in the period”. The text of the 2019 Agreement as a whole, included clause 11.21 providing for payment for attendance at the Training School (with the payment extending to the shift allowance, the shift penalty and the roster loading). The Deputy President considered (correctly) the text of the relevant clause (see Decision at [62]) and the text of the 2019 Agreement as a whole (see Decision at [40]-[53]).

[70] Delta also contends that the Deputy President proceeded (correctly) on the basis that the exclusion of some allowances from the calculation of specified entitlements entailed that an ordinary meaning (if it existed) was not applied in the 2019 Agreement. Once again, such an approach was the correct application of authority emphasising the need to have regard to context. Additionally, such a conclusion was correct given the content of the 2019 Agreement, especially the exclusion of the daily allowance from the calculation of the payment for annual leave per clause 4.4 of the 2019 Agreement. The Commission should reject the ground.

[71] In relation to appeal ground 3, Delta submits that the Deputy President was not obliged to give the phrase “full rate of pay” the same meaning as the definition of the phrase in section 18. There is no case law that holds or suggests that a phrase used in an enterprise agreement must be assigned the same meaning as a definition in the FW Act.

[72] The Deputy President’s conclusion that the phrase could not have had the same meaning as the definition of section 18, due to the use of the phrase “ordinary hours of work” in clause 17.5(1) of the 2019 Agreement and the definition of “ordinary hours” for shift workers in clause 11.3 of the 2019 Agreement was correct. In this regard, the Deputy President noted that the definition of “ordinary hours” in clause 11.3 was confined to 35 hours per week and did not extend to overtime hours and then contrasted (correctly) the definition in section 18 of the FW Act which included overtime and penalty rates.

[73] The Deputy President was obliged to consider the text of the 2019 Agreement as a whole and noted (correctly) the text of other provisions in the 2019 Agreement relating to rates of pay. The Deputy President also noted (correctly) the text of the provision relating to the payment of the shift allowance, the shift penalty and the roster loading to shift workers whilst at Training School. The express specification of the shift allowance, the shift penalty and the roster loading being paid for shift workers whilst at Training School suggested that the phrase “full rate of pay” did not cover the three elements and did not correspond with the definition in s. 18 of the FW Act.

[74] Delta also submits that the CFMMEU seems to suggest that the use of the phrase “ordinary hours of work” in the relevant clause was necessary to modify the definition of the phrase in s. 18 of the FW Act for the purposes of the 2019 Agreement. However, the stated need to modify the statutory definition demonstrates that the phrase was not intended to have the same meaning in the 2019 Agreement. The Commission should reject the ground.

[75] Delta submits that contrary to the assertion of the CFMMEU in appeal ground 2(c), the phrase “full rate of pay” was (and is) ambiguous, evidenced by the existence of the disputed construction. The phrase is not defined in the definitions clause of the 2019 Agreement and does not have a clear meaning when other clauses in the 2019 Agreement are considered and when the surrounding circumstances are considered, including prior negotiations, notorious facts and common assumptions.

[76] Delta also points to the reliance of the CFMMEU on an external definition – s. 18 of the FW Act – in order to seek to establish that the phrase has a clear meaning and submits that the process of relying on an external definition indicates that the phrase is not clear. Delta further submits that the CFMMEU appears to proceed on a narrow basis for the existence of ambiguity. However, ambiguity extends to a circumstance where the intention of the parties is doubtful 11, or the words used do not have a plain meaning12. In the 2019 Agreement, the intention of the parties – through the use of the relevant phrase “full rate of pay” – was doubtful and the words used did not have a plain meaning (Decision at [64]).

[77] The CFMMEU’s suggestion that the Deputy President determined the existence of ambiguity by reference to a single matter – the advancing of arguable cases for different constructions – is incorrect and the Deputy President also referred expressly to the absence of equivalence of definitions (a short-hand reference to s. 18 of the FW Act extending to overtime whereas the annual leave clause in the 2019 Agreement was confined to ordinary hours). It is also plain that, as a matter of substance, the Deputy President formed the impression that the relevant phrase was ambiguous and susceptible to more than one meaning and the CFMMEU’s assertion to the contrary should be rejected.

[78] In relation to appeal ground 2(d), Delta submits that the Deputy President did not consider the subjective intentions of the parties (and, in particular, the subjective intentions of the Respondent) and that the Deputy President considered objective background facts, (none of which were the subjective intentions of the parties) such as:

•  the payments for annual leave from 1996 to 2010 not including both the shift penalty and the roster loading;

•  the lack of claim by the unions in 2010 (when negotiating the 2011 Agreement) to change the way in which annual leave was paid;

•  the explanation document and the statutory declaration relating to the 2011 Agreement not identifying a change in the way in which annual leave was to be paid;

•  the 2000 Calculation (which was not disputed by the unions) excluding shift penalties from the way annual leave was calculated;

•  the 2013 Calculation (which was also not disputed by the unions) excluding shift penalties from the way that annual leave was calculated;

•  the 2013 Calculation not being disputed when placed before members of the Industrial Relations Commission of NSW; and

•  the payments from 2011 to 2018 for annual leave not including both the shift penalty and the roster loading.

[79] In relation to appeal ground 2(e), Delta submits that given that the phrase “full rate of pay” was ambiguous, it was open for the Deputy President to consider the surrounding circumstances, one being the payments (not disputed by the unions) for annual leave made prior to the making of the 2011 Agreement, when the phrase “full rate of pay” was first introduced into an industrial instrument between the parties. The Deputy President considered (correctly) the fact that the payments did not include both shift penalties and roster loading (see Decision at [68] (AB 28)).

[80] Delta also submits that there is no significant difference between the phrase used in previous industrial instruments (“full pay”) and the relevant phrase under the 2019 Agreement (“full rate of pay”). Delta also submits that at first instance, the CFMMEU relied upon case law relating to “full pay” as being applicable to the meaning of the relevant phrase in the 2019 Agreement thereby revealing the absence of significant difference, and that the Commission should reject the ground.

[81] In relation to appeal ground 2(f), Delta accepts that the 2000 Calculation and 2013 Calculation concerned the calculation of annual salary but submits that one component of the annual salary was an amount for annual leave and (relevantly) the amount was determined by reference to wages and roster loading only (and did not include shift penalties or shift allowances).

[82] In relation to Ground 2(g), Delta contends that the CFMMEU did not make a submission at first instance that the Deputy President should not have considered the practice of the predecessor to the Respondent and the Respondent paying annual leave under previous industrial instruments from 2011 to 2018. Given that the phrase “full rate of pay” was ambiguous, it was open for the Deputy President to consider the surrounding circumstances, one of which was the payments not disputed by the unions. The CFMMEU’s apparent suggestion that the payments between 2011 and 2018 constituted post-agreement conduct should be rejected on the basis that the conduct between 2011 and 2018 occurred prior to the making of the 2019 Agreement. In the alternative, if the Commission was to accept this ground, it would not have led to a different outcome and the Deputy President would have reached the same result if attention was confined to the other objective background facts that were considered or if attention was confined to the text of the Agreement, including the clause providing for payment for attendance at the Training School.

[83] In relation to appeal ground 2(h) Delta submits that the Deputy President did not take into account any absence of complaint after the 2019 Agreement was made. Other matters about which Delta made submissions included:

•  The Deputy President was led into “mis-stating” the relevant phrase as “full time rate of pay” rather than “full rate of pay”) at various points in the Decision by the CFMMEU mis-stating the relevant phrase in the same way in its own submissions at first instance;

•  The Deputy President’s conclusion that there was no uniformity in drafting of other provisions of the 2019 Agreement and that those other provisions did not assist in construing the relevant phrase, only discounted the relevance of some other provisions of the 2019 Agreement and did not discount the relevance of the payment for the attendance at Training School;

•  Contrary to the assertion by the CFMMEU, the Deputy President found that the legislative context provided little assistance in determining the meaning of the phrase in the annual leave clause in the 2019 Agreement;

•  The Deputy President did not focus inappropriately on the negotiations between the parties rather than statements made to employees and referred expressly to the explanation provided to employees at the time of the making of the 2011 Agreement, noting that employees were not informed that there was to be a change in practice in the payment for annual leave.

[84] In relation to the CFMMEU’s claim that clause 27.3 of the Electrical Power Industry Award 2010 confirms that the relevant phrase in the annual leave clause has a clear and unambiguous meaning, Delta submits that the Award clause does not use the phrase “full rate of pay” at all, is headed “Additional monetary entitlements”, and has express provisions requiring the payment of shift allowances and shift penalties when annual leave is taken. There is also no suggestion that the parties turned their minds to clause 27.3 when negotiating the annual leave clause in the 2011 Agreement.

[85] Delta also submits that contrary to the CFMMEU’s claim that shift penalties were included in payment for annual leave under the 1991 Award and the 1994 Agreement, the relevant annual leave clause in each industrial instrument provided for either the payment of the shift penalties or the payment of the roster loading, and not both. In addition, the practices of Delta in paying annual leave reflected payment prior to the making of the 2011 Agreement and thus did not constitute post contractual conduct.

[86] Further, Delta submits that the 2000 Calculation recorded the agreed method of calculating payments for annual leave for employees (thereby negating common inadvertence as the parties reached agreement) and demonstrated the common understanding (not common inadvertence) that the payments were to comprise roster loading only (and not both shift penalties and roster loading). It was also established by the evidence of Mr Gurney that during the negotiations for the 2011 Agreement, the officials of the Unions requested that the relevant clause be amended so that annual leave was as it was under the 2009 Agreement and previous industrial instruments. The 2009 Agreement and previous industrial instruments involved payments comprising roster loading only and not both shift penalties and roster loading, and the 2013 Calculation recorded the agreed method of calculating payments for annual leave for employees and demonstrated the common understanding that the payments were to comprise roster loading only.

5. Permission to appeal

[87] The dispute resolution procedure in the Agreement does not confer an independent right of appeal on a party to a dispute. Accordingly, an appeal of the Decision is governed by s. 604 of the Act, which requires that permission to appeal must be obtained. Section 604 of the FW Act provides as follows:

“604 Appeal of decisions

(1) A person who is aggrieved by a decision:

(a) made by the FWC (other than a decision of a Full Bench or an Expert Panel); or

(b) made under the Registered Organisations Act by:

(i) the General Manager (including a delegate of the General Manager); or

(ii) the Registered Organisations Commissioner (including a delegate of the Commissioner);

may appeal the decision, with the permission of the FWC.

(2) Without limiting when the FWC may grant permission, the FWC must grant permission if the FWC is satisfied that it is in the public interest to do so.

Note: Subsection (2) does not apply in relation to an application for an unfair dismissal (see section 400).

(3) A person may appeal the decision by applying to the FWC.”

[88] Generally, an appeal of a decision is not as of right and permission to appeal must first be obtained. 13 Subsection 604(2) of the Act requires the Commission to grant permission to appeal if satisfied that it is ‘in the public interest to do so’. The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.14

[89] Other than the special case in s.604(2), the grounds for granting permission to appeal are not specified. Considerations that would usually justify the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration, or that substantial injustice may result if leave is refused. 15

[90] The approach of a Full Bench to the determination of an appeal depends on the nature of the decision below. In the present case, the Deputy President was resolving a dispute involving the interpretation of an enterprise agreement. This task of determining the proper interpretation of the 2019 Agreement did not involve the exercise of discretion. Accordingly, the Full Bench must determine whether the interpretation of the Agreement adopted by the Deputy President was correct. 16 While other decisions made during the course of hearing and determining the construction of an enterprise agreement at first instance might involve the exercise of discretion so that they are appealable on the bases identified in House v The King,17 there are no such errors asserted in the present case. We therefore proceed on the basis that we are required to determine whether the Decision of the Deputy President was correct.

6. Consideration

[91] It is common ground between the parties that the principles relevant to the construction of enterprise agreements are those distilled from the cases by a Full Bench of the Commission in Berri. The principles are well established, and it is not necessary to set them out in full. The principles were set out by the Deputy President in the Decision subject of this appeal. The common theme in the grounds of appeal advanced by the CFMMEU is that in his construction of the disputed term in the 2019 Agreement, the Deputy President failed to apply, or misapplied, the principles relevant to the construction of industrial instruments set out by a Full Bench of the Commission in Berri.

[92] It is convenient to deal with the grounds of appeal in the order in which they are set out within the notice of appeal filed by the CFMMEU and in its submissions. In short compass, appeal grounds 2(a) – (c) concern text and context, and centre on whether the Deputy President erred in his approach in finding that the disputed term – “full rate of pay” does not have an ordinary meaning and is ambiguous or uncertain with the result that he incorrectly resorted to considering other terms of the 2019 Agreement.Appeal grounds 2(d) – (h) generally concern whether, having found that the term is ambiguous, the Deputy President erred by having regard to extrinsic matters or surrounding circumstances, in reaching his conclusion as to the proper construction of the disputed term. We turn now to consider each of those grounds.

Appeal grounds 2(a) – (c)

[93] Appeal ground 2(a) concerns whether the Deputy President erred by giving the expression “full rate of pay” a meaning different to its ordinary meaning. In submissions the CFMMEU elaborated on this ground asserting that the Deputy President skipped a step and failed to make a finding as to whether the term has a plain meaning before turning to consider other terms in the 2019 Agreement.

[94] In its submissions below and on appeal, the CFMMEU did not specify the ordinary meaning it asserted that the term “full rate of pay” bears. At first instance, the CFMMEU’s primary submission was that the 2019 Agreement was the first agreement made under the FW Act and that the term should be given the same meaning as the equivalent term in s 18 of that Act. The CFMMEU also submitted that the term “full pay” has a well-known meaning and meant a person’s full pay.

[95] As a starting point, we do not accept the inherent proposition in appeal ground 2(a), that it is necessary in construing an agreement, to make a finding as to whether the term under consideration has a plain meaning, before considering contextual matters, including other terms in the enterprise agreement in which the disputed term appears. As the Full Bench of the Commission in Berri made clear, in principle 1:

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 …

[96] Further, language considered in its context will often have a clear meaning and context will often not displace that meaning – “but not always”. 18 Context is of particular significance in the construction of enterprise agreements. In this regard the oft cited observation of Madgwick J in Kucks v CSR that framers of awards “were likely of 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”19, is apposite. We accept the submission of Delta that the ordinary meaning taken at face value – if it exists – is not determinative and is merely a starting point.

[97] In any event, on a fair reading of the Deputy President’s Decision in the present case, he found that the disputed provision did not have an ordinary meaning. That he did so after considering contextual matters, including other terms of the 2019 Agreement, is an orthodox application of the relevant legal principles in relation to the interpretation of enterprise agreements and does not constitute error. We are also of the view that the conclusion that the term “full rate of pay” in the context of the 2019 Agreement does not have an ordinary meaning, is correct.

[98] There are a number of textual indications in the 2019 Agreement that support the finding that clause 17.5(1) does not have a plain meaning as contended by the CFMMEU. The 2019 Agreement does not provide for a definition of the term “full rate of pay”. Payment for various forms of leave is described as “full rate of pay for the employee’s ordinary hours of work in the period” for annual leave and compassionate leave (clauses 17.5(1) and 20.4); “the employee’s appointed rate of pay” for long service leave (clause 18.4). The Deputy President also noted that Personal Carer’s Leave is said in clause 19.1 of the 2019 Agreement, to be provided for in the NES, with the result that it is paid for at the employee’s base rate of pay for the employee’s ordinary hours in the period. The internal inconsistency in the manner in which payment for various forms of leave is provided for in the 2019 Agreement supports a finding that clause 17.5(1) does not have an ordinary meaning.

[99] A further textual indication that the term “Full rate of pay” does not have the asserted ordinary meaning is the range of allowances in the 2019 Agreement which are specifically stated to be payable on forms of leave including annual leave as follows:

•  Location allowances in clause 4.3(a) which provides at (iii) that such allowances must continue to be paid to employees while on long service leave, annual leave, paid personal/carers leave or accident leave;

•  Allowances in Clause 4.3(b) and (c) for employees who hold certain certificates which are payable for all ordinary time worked and during periods of annual leave, long service leave, public holidays, paid personal leave and for periods of absence for which workers compensation is paid, excluding those periods which attract the workers compensation statutory rate only; and

•  Tool allowance in clause 4.3(h) which must be paid for all purposes including overtime, long service leave, annual leave, personal leave, accident pay, public holidays and travelling time;

[100] The specific inclusion of these allowances in annual leave payments would not be necessary if the term “full rate of pay” meant that the employee was paid all monetary amounts that he or she would have earned had the employee worked during the period of leave. The 2019 Agreement also provides for allowances which are specifically stated not to be payable while employees are on forms of leave. In this regard, clause 4.4(h) provides that employees “whilst on duty”, are entitled to be paid a daily allowance comprising various disability payments which are not taken into account for the purpose of calculating penalty rates for overtime, long service leave, annual leave, personal leave, accident pay, public holidays, travelling time or any similar payments. The exclusion of the allowances which comprise the daily allowance indicates that the term “full rate of pay” means something less than employees would be paid if they were at work.

[101] Further, the 2019 Agreement contains clauses providing for allowances which do not specify whether the relevant allowance is paid on annual or other forms of leave. In this regard, clause 11.11 provides that the night shift allowance in clauses 11.8, is not paid to shift workers for overtime, or for any shift where they are paid overtime penalty rates but does not specify that it is not payable on annual leave. Provisions for penalty rates and shift allowance for 12 hour shift workers are found in clause 11.39. By virtue of 11.39(a)(i) – (iii), 12 hour shift workers working Saturdays, Sundays or public holidays are entitled to penalty rates. By virtue of clause 11.39(a)(iv) 12 hour shift workers are entitled to be paid night shift allowance for night shifts and for four hours of a day shift. That such allowances are directly connected to the day and time a shift is worked is apparent from these provisions, even to the extent that employees are entitled to be paid night shift allowance for four hours of a 12 hour day shift, which presumably recognises that such hours are within a span of hours which would be worked as an afternoon or night shift if the shift was for a lesser duration than 12 hours. This is a further textual indication that the allowances are related to and paid for time worked and are not paid to an employee on leave.

[102] Clause 11.15 provides for a roster loading and states the rationale for such loading as follows:

“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.”

[103] The quantum of the roster loading is set out in clause 11.16. The preface to clause 11.16 states that: “The roster loading for ordinary hours actually worked is…” and goes on to specify quantum. The reference to hours actually worked is also an indication that the allowance is not payable to an employee on leave and there is no contra-indication to the effect that the allowance is payable on leave.

[104] As we have stated, clause 17(5)(1) of the 2019 Agreement is ambiguous. We also note that there are textual considerations that support the conclusion ultimately reached by the Deputy President in relation to the proper construction of that clause. In this regard, some general observations can be made. Firstly, the allowances which are stated in the 2019 Agreement as being payable on annual leave and other forms of leave, are allowances which are not specifically related to employees being at work. Location allowances appear to be concerned with whether employees are located at a head office or an operating power station and encompass allowances from clause 5.3 of the 2009 Agreement, which included allowances for vehicle damage and reimbursement of motor vehicle licence fees as well as some absorption of previous allowances.

[105] Secondly, allowances which are specified as not being paid on annual leave, are allowances which can generally be described as disability allowances or allowances that relate to disutility with respect to the time hours are worked or the days on which they are worked. The allowances which make up the daily allowance are for working in areas with excessive amounts of coal dust, working in areas which have not been cleaned out or are confined spaces, using oxyacetylene equipment, or handling particular materials or working in close proximity to particular materials. In short, the circumstances which these allowances compensate employees for can only be encountered while employees are actually working.

[106] Thirdly, the allowances where there is no direct specification as to whether they are paid on annual leave and other forms of leave, can be categorised as follows:

•  Shift allowances which compensate employees for the disutility associated with the days and times work is performed; and

•  Roster loading which compensates employees for matters other than those compensated for by shift allowances, such as unevenness of earnings associated with the roster.

[107] When the rationale for the payment of shift allowances is considered, there is a consistency between shift allowances (which the 2019 Agreement does not specify are paid to employees on annual leave) and allowances which the 2019 Agreement specifies are not payable to employees on annual leave. Conversely, there is a consistency between roster loading (which is not specified as being paid to employees on annual leave) and other allowances which are specified as being paid to employees on annual leave.

[108] A further textual consideration is clause 11.21, which provides that 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, while they are at training school. Two points may be made about this clause. Firstly, it is axiomatic that employees at training school are not on leave and are effectively deemed to be at work by being paid allowances that are otherwise paid when they are working. This clause therefore provides an indication of the fact that certain payments are made to employees while they are at work and not while they are on leave. Secondly, if the term “full rate of pay” had the meaning contended for by the CFMMEU, then it could have been included in clause 11.21 and it would not have been necessary to specify the payments that are made to employees while at training school.

[109] Appeal ground 2(b) is concerned with the Deputy President’s conclusion that the term “full rate of pay” should be given a different meaning to that expression in s. 18 of the FW Act. We commence our consideration of this appeal ground by noting that the reliance by the CFMMEU on a provision of the FW Act to give meaning to the term “full rate of pay” in clause 17.5(1) of the 2019 Agreement, indicates that the term does not have a plain meaning. We also observe that the fact that an enterprise agreement contains an identical or substantially similar term to a term defined in the FW Act, is a contextual matter which may be relevant to the proper construction of the enterprise agreement.

[110] We do not accept that the Deputy President erred, in the circumstances of the present case, by concluding that the term “full rate of pay” did not have the same meaning as s 18 of the FW Act. That section is in the following terms:

“General meaning

(1)  The full rate of pay of a national system employee is the rate of pay payable to the employee, including all the following:

(a)  incentive-based payments and bonuses;

(b)  loadings;

(c)  monetary allowances;

(d)  overtime or penalty rates;

(e)  any other separately identifiable amounts.”

[111] The terms are not synonymous. Section 18 of the FW Act includes overtime or penalty rates while the term in the 2019 Agreement refers to the “employee’s full rate of pay for the employee’s ordinary hours of work during the period”. The Deputy President noted – in our view correctly – that the definition in s 18 of the FW Act could be contrasted with clause 11.3 of the Agreement which provides that ordinary hours are 35 hours per week and do not include overtime hours. Further, the Deputy President noted – again correctly – that the term “full rate of pay” in s 18 of the FW Act is for limited purposes, none of which concern annual leave. We would add that “full rate of pay” in s. 18 of the Act includes amounts that are able to be separately identified and would include the disability payments in the 2019 Agreement that are specifically excluded from being paid on annual leave.

[112] The CFMMEU explains the differences in the terms of s. 18 of the FW Act and clause 17.5(1) of the 2019 Agreement, by submitting that the qualifying words in the 2019 Agreement provision in relation to ordinary hours, modify the definition in s 18 of the Act for the purposes of the Agreement. In our view, the fact that such modification is necessary, is a strong indication that the provision in clause 17.5(1) of the Agreement is not intended to have the same meaning as s. 18 of the FW Act. We reject this ground of appeal.

[113] In ground 2(c) it is asserted that the Deputy President erred in concluding that the term “full rate of pay” is ambiguous. In principle 8, the Full Bench in Berri said that regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists. The authorities referred to in Berri and in the earlier Full Bench Decision in AMIEU v Golden Cockerel 20 also make clear that context and purpose are relevant to the construction of an enterprise agreement and must be considered even where the words of the provision being construed appear, on their face, to have a clear and unambiguous meaning.

[114] In Marr Contracting Pty Ltd v FAI Insurance Ltd & Ors 21, McHugh J cited the passage in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales22, to the effect that evidence of surrounding circumstances is not admissible to contradict language which has a plain meaning23, and went on to observe:

“However, few, if any, English words are unambiguous or not susceptible of more than one meaning or have a plain meaning. Until a word, phrase or sentence is understood in the light of the surrounding circumstances, it is rarely possible to know what it means. In my view, evidence of surrounding circumstances will generally be admissible if it is known to both parties or sufficiently notorious to be within their knowledge.” 24

[115] In deciding that the term “full rate of pay” was ambiguous, the Deputy President also adopted an orthodox approach to the construction of agreements which discloses no error. Firstly, the concept of ambiguity includes a term that has doubtful meaning or is susceptible of more than one meaning. Secondly, for the reasons we have set out earlier, there are provisions in the 2019 Agreement, which support a construction that the term “full rate of pay” means something less than the full amount that an employee would earn if the employee was working in the period that leave is taken. These provisions were identified and considered by the Deputy President in concluding that the term “full rate of pay” is ambiguous. Thirdly, counsel at first instance and on appeal, have respectively advanced arguable cases for a different construction of the same provision. These matters all point to a conclusion that the relevant term is ambiguous or susceptible of more than one meaning.

[116] While it is necessary in the construction of an enterprise agreement to determine whether a disputed term has a plain meaning or is ambiguous or susceptible of more than one meaning, regard may be had to surrounding circumstances to assist in determining whether there is an ambiguity (Berri principles 7 and 8). In short, evidence of surrounding circumstances is admissible both to expose and to resolve an ambiguity. In the present case, there was a sound basis for the Deputy President’s finding that clause 17.5(1) of the 2019 Agreement is ambiguous and the finding is correct.

Appeal grounds 2(d) – (h)

[117] Appeal grounds 2(d) to (h) concern the resort by the Deputy President to evidence of surrounding circumstances including: previous iterations of the 2019 Agreement; subjective intentions during negotiations; Delta’s past practice in relation to payment of employees on annual leave; and post agreement conduct. Relevant to these appeal grounds are the terms of previous iterations of the 2019 Agreement which were tendered by Mr Gurney. It is well established that evidence of surrounding circumstances tending to establish objective background facts is relevant to the construction of an enterprise agreement. Principles 11 – 14 in Berri deal with this issue as follows:

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

12. Evidence of objective background facts will include:

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

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

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

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

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

[118] In our view, surrounding circumstances which can properly be taken into account in the construction of an enterprise agreement include previous iterations of the agreement. As Justice Burchett observed in Short v FW Hercus Pty Ltd 25:

“The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is a part, or to other documents with which there is an association. Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped if every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used.”  26

[119] It is common ground between the parties that the 2011 Agreement was the first enterprise agreement negotiated and approved under the auspices of the FW Act. It is also common ground that the term “full rate of pay” first appeared in the 2011 Agreement. Prior to the 2011 Agreement, as the Deputy President correctly observed, each of the 1997, 2000, 2001, 2003 and 2005 Awards provided that annual leave was paid as “full pay”. None of the Awards defined the term “full pay”. The terms of those awards (in contrast with how they may have been applied or the manner in which the parties conducted themselves from time to time) are objective background facts insofar as the actual terms are facts of which both parties can be presumed to have knowledge. Resort to the terms of previous instruments as an aide to the construction of the 2019 Agreement, is consistent with the principles of construction in relation to such material. The awards and agreements were tendered by Mr Gurney in the proceedings before the Deputy President and he was correct to have regard to them both to expose ambiguity and to determine the proper application of the 2019 Agreement. Accordingly, we turn now to consider the terms of the earlier awards and agreements which applied to Delta and its employees.

[120] The 1991 Award provided as follows at clause 20(a)(v):

“Rate of Pay for Shift Workers on Annual Leave – A shift worker during a period of annual leave shall be paid at his ordinary rate of pay together with either the ordinary shift work penalty payments he would have received or the annual leave special payment prescribed in subclause (f) of this clause, whichever is the greater; provided that where a shift worker is in receipt of the roster loading prescribed in sub-clause (x) of clause 17, Shift Work, of this Award, and the amount of such roster loading exceeds the ordinary shift work penalty payments or the annual leave – special payment loading prescribed herein to which he would otherwise be entitled, then such shift worker shall be paid during periods of annual leave at his ordinary rate of pay only.”

[121] The annual leave special payment was 17.5% of four weeks ordinary pay as specified in clause 20(f). Clause 17(x) provided that the roster loading was paid on all ordinary hours worked and different loadings were prescribed for various kinds of shift workers including seven day continuous shift workers, rotating shift workers not regularly working on Saturdays and Sundays, or employees working day shift only. The reasons for payment of the roster loading were set out in clause 17(v), as follows:

“Reasons for payment – The payment of roster loading is made in compensation for unevenness of Award payments, and as such is in lieu of the Annual Leave – Special payment … and is also in lieu of shift disabilities not covered by payments under this Award…”

[122] It is clear from these provisions that employees, while on annual leave, were entitled to be paid the greater amount of their shift work penalty payments for a projected roster in the period of leave or the annual leave special payment, whichever was greater or the roster loading if that was greater than the other amounts. It is implicit in the wording of clause 20(a)(v) that the roster loading in clause 17(x) was included in the ordinary rate of pay for shift workers. This is apparent from the fact that that after stating that an employee on annual leave is entitled to be paid the greater of shift work penalties or annual leave special payment, the clause states that if the roster loading exceeds those amounts the employee is paid his or her ordinary rate of pay only, which by implication, would include the roster loading.

[123] There is some likelihood that the roster loading would have exceeded shift work penalty payments, given that the roster loading was paid for all ordinary hours worked and the shift penalties were paid only for ordinary hours on particular shifts. There is also some likelihood that the roster loading would have exceeded the amount of the annual leave special loading. Even if this assumption is incorrect, it is clear that employees were paid only one of the three amounts while on annual leave and were not entitled to be paid both the roster loading and the shift penalties.

[124] The relevant provisions changed in the 1994 Agreement which provided that day workers were paid “full pay” for annual leave and that shift workers were paid for annual leave the greater amount of their ordinary rate of pay plus ordinary shift work penalties had the employee not been on annual leave or “ordinary rate of pay” if the roster loading was more than the ordinary shift work penalty payments. Again, the wording of the provision implicitly provides that roster loading is part of the ordinary rate of pay. The 1994 Agreement also provided for a phasing out of the 17.5% annual leave special payment, and an increase to salaries to incorporate that payment into base rates of pay (refer clauses 17.8 and 3.2(b)).

[125] Accordingly, the terms of the 1991 Award and the 1994 Agreement are consistent with the evidence of Mr Gurney to the effect that Delta has never paid both the roster loading and shift penalties to employees on annual leave. The terms of the 1994 Agreement also make clear that “full pay” was a lesser amount than the actual pay which would have been received by shift workers if they worked during the period of the leave by virtue of the provision that employees while on annual leave, received the greater of their ordinary shift work penalties or the roster loading, but not both.

[126] There was a significant change in the provisions of the 1996 Award. That Award provided that the rate of pay for annual leave was “full pay” and the previous provisions for shift worker annual leave payments being the higher of the roster loading or their shift work penalties, were removed. The roster loading provisions, including the reasons for the payment of the roster loading, were continued in the 1996 Award in virtually identical terms to those in the 1991 Award and the 1994 Agreement. There is also no reference in the 1996 Award to employees receiving the greater amount of the roster loading or the annual leave special payment, presumably because the incorporation of the annual leave special payment into base salaries obviated the need for such a reference.

[127] Thereafter, the 1997 Award, the 2000 Award, the 2001 Award, the 2003 Award, and the 2009 Agreement continued to provide for roster loading in identical terms and for annual leave to be paid at “full pay”. The provisions whereby shift workers received the higher of the shift penalties or the roster loading were not reintroduced. It is against this background that Delta continued to pay shift workers on annual leave the roster loading and did not pay them the shift penalties. The 2011 Agreement was the first iteration where the term “full rate of pay” was used and it was repeated in the 2019 Agreement. We have considered the provisions of those agreements above. It suffices to say that when the terms of the awards and agreements between 1991 and 2010 are considered, the manner of payment adopted by Delta from 2011 onwards, was not inconsistent with those terms. It can also be said that Delta treated the term “full rate of pay” in the 2011 and later the 2015 and the 2019 Agreements as being synonymous with the term “full pay” in the immediately preceding agreements from 1994 to 2009 and continued to pay shift workers taking annual leave in the same manner as it had paid them under the awards and agreements since 1991. Against that background, we turn to consider appeal grounds 2(d) – (h).

[128] In appeal ground 2(d) it is contended that the Deputy President erred by taking into account subjective intentions expressed by the parties during negotiations. In its submissions in relation to this ground, the CFMMEU refers to the negotiations for the 2011 Agreement. As set out above, the Agreements prior to the 2011 Agreement had specifically provided that shift workers did not receive both shift penalties and roster loading on annual leave. The terms of those Agreements are objective background facts against which the 2011 Agreement was negotiated and for reasons set out above the Deputy President did not err by considering them as such.

[129] However, the intentions of the parties in the negotiations for the 2011 Agreement are another matter entirely. In Berri,the Full Bench set out principles at 11 – 14 dealing with the admissibility of evidence of surrounding circumstances, including prior negotiations. We have set these principles out earlier in this Decision. In short compass, evidence of prior negotiations is admissible to the extent that it establishes objective background facts known to all parties and the subject matter of the agreement; notorious facts of which knowledge is to be presumed; and evidence of matters constituting a common assumption. However, a cautious approach to the admission of, or reliance upon, evidence of prior negotiations is warranted because of the diversity of interests involved in making an enterprise agreement and the nature of such instruments.

[130] In his Decision the Deputy President considered in some detail the evidence of Mr Gurney in relation to the negotiations for the 2011 Agreement and in particular, the process he followed in drafting the annual leave clause. Essentially, Mr Gurney’s evidence on this point is that he first included the term “base rate of pay” in the clause he proposed and changed the reference to “full rate of pay” at the request of union representatives, who pointed out that Delta paid allowances to employees on annual leave. Mr Gurney also stated that the union bargaining representatives did not request a change to how annual leave was paid and that no-one at the meeting referred to s 18 of the Act in relation to the term “full rate of pay”. The Deputy President criticised the CFMMEU’s failure to lead evidence responding to Mr Gurney’s evidence about the negotiations for the 2011 Agreement. The Deputy President went on to conclude that the lack of reference to s 18 of the FW Act in the negotiations for the 2011 Agreement, and the lack of a claim for a change in the manner of payment which Delta had adopted under prior awards and agreements, were objective background facts.

[131] We disagree with the Deputy President’s characterisation of these matters as objective background facts. In our view, taken at its highest Mr Gurney’s evidence establishes only what Delta’s representatives in the negotiations understood, and does not establish a rebuttable proposition that there was a meeting of minds or a consensus in relation to whether the term “full rate of pay” had the same meaning as in s 18 of the FW Act or that the term reflected Delta’s previous practices in relation to payment of annual leave or that the Union negotiators understood what those practices were.

[132] One of the few objective facts that can be discerned from this evidence was that both parties understood that Delta paid more than the base salary or wage rate while employees were on annual leave. Mr Gurney’s evidence establishes that the meaning of the term “full rate of pay” was not discussed and taken at its highest, there was common inadvertence about the extent to which the term encompassed amounts employees were entitled to receive while on annual leave. The fact that the employer declarations in support of the approval of the 2011, 2015 and 2019 Agreements did not refer to a change in the manner of payment of annual leave to shift workers, was also not, given the circumstances, evidence of objective background facts such as is necessary to establish common assumption.

[133] The relevant reference instrument for the purposes of the better off overall test (BOOT) was the Electrical Power Industry Award 2010. That Award provides that employees are paid the greater of 17.5% of the weekly rate including appropriate allowances and excluding shift penalties and weekend penalty rates, or shift allowance and/or Saturday or Sunday penalty rates according to the employee’s projected roster. It is arguable that the fact that shift loadings and shift penalties were not paid to employees on annual leave should have been identified by Delta as a less beneficial term which was offset by some other more beneficial term. In contrast, the fact that the 17.5% leave loading was not in the Agreements was identified as a less beneficial term with the incorporation of the loading into wage rates being identified as a countervailing beneficial term. In our view, the fact that the declarations do not identify a change to the manner of payment for annual leave does not evidence a common assumption that there was no such change. Rather, it reflects the fact that the parties had not contemplated the matter at all, at least not jointly.

[134] In relation to appeal ground 2(d), to the extent that the Deputy President relied on the negotiations for the 2011 Agreement as establishing objective background facts, that positively supported his construction of the 2019 Agreement, he was in error.

[135] It is convenient to next consider appeal ground 2(f) given that it also concerns negotiations, albeit in relation to the manner of calculating the salary package of TSP-employees. Mr Gurney’s evidence in this regard was dealt with by the Deputy President at [71] – [75] of the Decision. In relation to the document referred to as the 2000 calculation, we accept the submissions of the CFMMEU to the effect that the document does not evidence common assumption. It is clear from Mr Gurney’s evidence in the proceedings at first instance, that he did not prepare the document and that he was informed that another employee of Delta believed that the document related to discussions concerning the introduction of 12 hour shift arrangements. There is no evidence that the document was provided to the Unions much less that they endorsed it or accepted the calculation. The 2000 calculation document is not evidence that the Deputy President could properly have taken into account in construing the 2019 Agreement and to the extent that he did so, he was in error.

[136] However, the document referred to as the 2013 calculation is another matter. That document was prepared in relation to a dispute about a TSP rate for proposed new shifts, that was dealt with by the New South Wales Industrial Relations Commission. Mr Gurney’s evidence is that this document was given to the Unions and was discussed extensively during conferences before Commissioner Stanton and Deputy President Harrison. The 2013 calculation document shows that shift allowances and Saturday and Sunday penalty rates for ordinary shifts are not included in the TSP calculation. We accept that the TSP calculation was the base position for employees covered by the 2011 Agreement notwithstanding that the employees it was prepared for were not covered by that Agreement. The Unions did not dispute that they received the document and put no evidence before the Deputy President to establish that they had ever rejected the position set out in it. Accordingly, the 2013 calculation is evidence supporting a common assumption to which the Deputy President could properly have had regard in reaching his conclusion as to the proper construction of the 2019 Agreement. We will return to the question of weight to be afforded to this document given its apparent purpose. However, we uphold appeal ground 2(f) insofar as it relates to the 2000 calculation document.

[137] We turn now to consider appeal grounds 2(e), (g) and (h). These grounds concern the conduct of the parties. Grounds (e) and (g) concern the manner in which Delta paid shift workers for annual leave from 1996 to 2010 and from 2011 onwards. At paragraph [68] the Deputy President concluded that the fact that employees were not paid both the shift penalties and a roster loading from 1996 to 2010 was a compelling circumstance reflecting common assumption between the parties.

[138] To the extent that the Deputy President relied on this matter to support his conclusions as to the proper construction of the 2019 Agreement, he was in error. In our view, the evidence in relation to Delta’s past practice of paying employees for annual leave, did not establish a common assumption or understanding. As the cases discussed by the Full Bench in Berri establish, post agreement conduct may be relevant in the construction of an enterprise agreement, but must be such as to show that there has been a meeting of minds or a consensus. This is particularly so in cases where there is a history of a particular provision being included in successive industrial instruments.

[139] In Shop Distributive and Allied Employees’ Association v Woolworths Limited 27there was a discussion about common understanding in the context of the operation of clauses in previous agreements. In that case, Gray ACJ was considering a dispute about the correct calculation of long service leave payments under a collective agreement. The agreement in that case incorporated legislative provisions in relation to long service leave including a definition of “ordinary pay” which did not include shift penalties. The agreement in that case also contained a definition of “ordinary pay” for the agreement which did include shift penalties. The question was which definition applied. The dispute arose because the employer ceased a past practice of paying employees in accordance with the agreement definition and commenced paying them at a lesser rate pursuant to the legislative definition. In relation to the presumption that terms used in one version of an agreement mean the same as those in another version, or that there is internal consistency in an agreement with respect to the use of terms in an agreement, his Honour said:

“If the presumption of consistent use of terminology is so weak in legislative drafting, it must be even weaker in the context of a Certified Agreement. Typically such agreements are the product of hard negotiation, in which the wording of particular clauses is often agreed without reference to other provisions of the same document. Provisions are often transmitted from one agreement to the next in a series, without regard to whether their terminology sits well with the words used in newly adopted terms. The use of other agreements, and awards, as precedents can often result in the borrowing of provisions, again without regard to whether the words used in them are consistent with the rest of the agreement under consideration. For these and other reasons, consistency will often be absent. It is easy to see that the same word can be used in different provisions with different meanings.”

[140] The applicant in that case contended that past conduct of the parties could be relied upon as an aid to construction of the agreement. His Honour said in relation to the principle of common assumption, that the circumstances in which it can be used in construing an agreement are limited and there must be clear evidence that the parties have acted upon a common understanding as to the meaning of the relevant provision and not for other reasons such as common inadvertence as to its true meaning. 28 His Honour then went on to make the following observations:

“In the present case, there is no evidence to indicate that there was any common understanding between the applicant and the respondent about the meaning of the relevant clauses in preceding agreements. All that has been established is that, until 2004, the respondent had a practice of paying employees entitled to long service leave at a rate of pay inclusive of penalties and shift premiums, if applicable. There is no evidence as to why it did this. The reason might have been inadvertence on the part of those responsible for making the payments as to the presence of the definition in the LSL Act. It may have been an act of generosity on the part of the respondent from which it has not resiled. There is no evidence that any relevant person on the applicant’s side was aware of the respondent’s practice of making payments at the higher rate, much less of any belief on the part of any relevant officer of the applicant that payment at the higher rate represented the appropriate construction of the relevant provisions. There is therefore no evidence of a settled interpretation, of which the parties had a common understanding.” 29

[141] Those observations are apposite in the present case. While Delta had a practice whereby it did not pay shift penalties to employees on annual leave, there is no evidence that any representative of the CFMMEU or the CEPU knew that this was the case or that it represented the appropriate construction of the awards and agreements prior to the 2011 Agreement. However, by 2013 following a dispute which gave rise to the 2013 calculation, circumstances changed. While the 2013 calculation dealt with TSP employees, it also established a base for non-TSP employees. Significantly, and in contrast with the 2000 calculation, it was tendered to the New South Wales Industrial Relations Commission in proceedings relating to a dispute. The 2013 calculation, viewed in light of the previous awards and agreements which had provided for either the roster loading or shift penalties to be paid on annual leave and not both payments, and in light of the fact that shift penalties had not been paid on annual leave, was in our view, sufficient to establish a common objective assumption. Accordingly, to the extent that the Deputy President relied on the 2013 calculation he was not in error and we reject appeal grounds (e), (g) and (h).

[142] We now consider where these conclusions leave us in circumstances where we have found that some of the bases upon which the Deputy President reached his conclusion in relation to the proper construction of the 2019 Agreement, were erroneous. On balance, we consider that the Deputy President’s construction of the 2019 Agreement is correct and that the errors we have identified do not lead to a different outcome. We have reached this conclusion for the following reasons.

[143] While the term “full rate of pay” is capable of having a plain meaning – all amounts to which an employee would be entitled if the employee was at work – the term as used in the 2019 Agreement is ambiguous and susceptible of more than one meaning. Read in the context of the 2019 Agreement as a whole, it is apparent that the term “full rate of pay” means an amount less than an employee engaged on shift work would earn if the employee worked his or her roster in the period of leave. In this regard, an employee at work would earn disability payments termed Daily Allowance for a range of disabilities. Daily Allowance is specifically stated in the 2019 Agreement as not being paid to employees on forms of leave.

[144] Employees at work would also be entitled to overtime payments, which are specifically excluded from being paid on annual leave by virtue of clause 17.5(1) despite the provision requiring that employees are paid their “full rate of pay”. Further, the fact that clause 11.21 specifies that employees must be paid the roster loading, shift allowance and penalty rates while they are at training school, further indicates that these amounts do not constitute the employee’s “full rate of pay” for annual leave purposes. Further, the fact that some allowances in the 2019 Agreement are specified as not being paid on annual leave while others are specified as being paid on annual leave is a further indication that the term “full rate of pay” does not have a plain meaning.

[145] It is also the case that allowances which the 2019 Agreement specifically requires to be paid on annual leave are those which do not attach to employees being at work. In this regard, the locations allowance in clause 4.3 pertains to places employees are appointed to (eg. operating power station, head office); certification allowances relate to qualifications held by employees; and tool allowances relate to the requirement for employees to provide or maintain tools. In contrast, daily allowances, which the 2019 Agreement specifically provides are not paid to employees while they are on leave, are for disabilities which can only be encountered while employees are at work.

[146] The provisions of the 2019 Agreement with respect to roster loading, shift allowances and shift penalties are silent as to whether they are paid to employees while they are on leave. Roster loading, which Delta pays to employees while they are on leave, is payable as compensation for the unevenness of payments under the Agreement and for disabilities other than those covered by shift allowances and penalties. While clause 11.16 of the 2019 Agreement refers to roster loading for ordinary hours actually worked, the reference relates to the manner of calculating the quantum of roster loading rather than the days and times at which work is performed. The matters covered by roster loading are matters which are encountered by employees generally rather than simply when they are at work. Roster loadings are akin to other allowances in the 2019 Agreement which are required to be paid on annual leave. In contrast, shift allowances and penalties, which are not paid by Delta to employees when they are on leave, relate directly to the days and times at which shifts are worked and the disutility resulting from the days and times upon which employees are required to work. Roster loading is therefore of the same nature as allowances which are specified in the 2019 Agreement as being payable to employees on annual leave while shift allowances and penalties are similar to disability payments which are specified as being not paid on annual leave.

[147] It is also the case that the manner in which Delta pays shift workers while they are on annual leave, is consistent with the terms of previous awards and agreements stretching back to 1991 and with the principle established in those awards and agreements that employees are entitled to either roster loading or shift allowances and shift penalties, but are not entitled to both payments. There is no evidence to support the notion that any change to this approach was sought, agreed or advised to the employees. Further, although this is of lesser weight, our conclusion is supported by the 2013 calculation in combination with the terms of the previous instruments and the long established payment practices, which we accept establishes a common assumption of the parties that shift allowances and shift penalties are not paid to employees on annual leave.

7. Conclusion and orders

[148] We consider therefore that the conclusion reached by the Deputy President in determination of the dispute was correct, albeit for different reasons. Accordingly, the appeal must be dismissed.

[149] We order as follows:

(1) Permission to appeal is granted.

(2) The appeal is dismissed.

DEPUTY PRESIDENT

Appearances:

Mr T Slevin of Counsel with Mr K Endacott for the CFMMEU.

Mr A Jacka for the CEPU.

Mr A Gotting of Counsel with Mr J Mattson for Delta.

Hearing details:

2020.

By telephone.

23 June.

Printed by authority of the Commonwealth Government Printer

<PR722482>

 1   Exhibit R1 - Statement of Steve Gurney 19 September 2019 paragraphs 78-83.

 2   [2017] FWCFB 3005 at [114].

 3   There is a typographical error in the Deputy President’s Decision and the word “time” does not appear in clause 17.5.1.

 4   There is a typographical error in the Deputy President’s Decision and the word “time” does not appear in clause 20.4.

 5 [2018] NSWIR Comm 1072.

 6   [2010] FWAFB 5343 at [26]-[27].

 7   [2017] FWCFB 3005 at [114].

 8 (2005) 222 CLR 241.

 9 [2006] FCA 11.

 10 Ibid at [44].

 11   South Sydney Council v Royal Botanic Gardens [1999] NSWCA 478 at [35] per Spigelman CJ; see also Lewison, Hughes, The Interpretation of Contracts in Australia, (2012), [8.01], p346

 12   Manufacturer’s Mutual Insurance Limited v Withers (1988) 5 ANZ Ins Cases 60-853 at 75,343 per McHugh JA; see also Lewison, Hughes, The Interpretation of Contracts in Australia, (2012), [8.01], p347).

 13 Section 604(1) Fair Work Act 2009 (Cth).

 14   GlaxoSmithKline Australia Pty Ltd v Making[2010] FWAFB 5343 at [26]-[27]; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth[2010] FWAFB 10089 at [28], affirmed on judicial review; Coal & Allied Mining Services Pty Ltd v Lawler [2011] FCAFC 54; Ferrymen Pty Ltd v Maritime Union of Australia[2013] FWCFB 8025; and NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663.

 15   Also see CFMEU v AIRC (1998) 89 FCR 200; and Wan v AIRC (2001) 116 FCR 481. Also see the Explanatory Memorandum to what is now s.604, at paragraph 2328.

 16   Pawel v AIRC [1999] FCA 1660.

 17   House v The King (1936) 55 CLR 499.

 18   Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at 384 per McHugh, Gummow, Kirby and Hayne JJ.

 19 (1996) 66 IR 182 at 184.

 20   [2014] FWCFB 7447.

 21 (1988) 5 ANZ Insurance Cases 60-854.

 22 (1982) 149 CLR 337.

 23   Ibid per Mason J at 352.

 24   Marr Contracting Op. cit at 75,343.

 25 (1993) 40 FCR 511.

 26   Short v Hercus ibid at [7]

 27 [2006] FCA 616.

 28 Ibid at [31].

 29 Ibid at [32].