Construction, Forestry, Mining and Energy Union v Core Toughened Pty Ltd

[2016] FWC 5838

[2016] FWC 5838

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Construction, Forestry, Mining and Energy Union
v
Core Toughened Pty Ltd
(C2016/1514)

COMMISSIONER RYAN MELBOURNE, 22 AUGUST 2016

Alleged dispute about rate for additional hours for shiftworkers.

[1] The CFMEU contends that shiftworkers employed by Core Toughened Pty Ltd who work additional hours should be paid in accordance with the provisions of clause 30.2(a) of the Joinery and Building Trades Award 2010 (the Award) which provides as follows:

“30.2(a) Except as provided for in clauses 30.6 and 30.7, for all work done outside of ordinary hours by a day worker the overtime rate is 150% for the first two hours and 200% thereafter and for all work done outside of ordinary by a shiftworker the overtime rate is 200%.”

[2] Core Toughened contends that shiftworkers who work additional hours are correctly paid in accordance with the provisions of clause 12.5 of the Core Toughened Pty Ltd and CFMEU (FFTS Branch) Enterprise Agreement 2012 – 2015 (the Agreement), which provides as follows:

“12.5 Additional Hours

Additional hours will be paid at 150% for the first 2 hours worked and 200% for additional hours thereafter. This will be based on the employee’s applicable level as per clause 12.4.”

[3] The dispute was the subject of conciliation before the Commission but without success. The dispute was subject to arbitration by the Commission in accordance with Clause 14 – Dispute Resolution Procedure of the Agreement.

Relevant Authorities

[4] The proper approach to the interpretation of enterprise agreements was set out in the Full Bench decision in AMIEU v Golden Cockerel P/L as follows:

“[41] From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

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

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

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

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) 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;

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

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

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

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

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

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

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.” 1

The principles distilled by the Full Bench reflect the range of authorities considered in that decision and I have had regard both to the principles stated by the Full Bench as well as to the authorities from which those principles have been drawn.

Contentions of the Parties

[5] The CFMEU contended that clause 30.2(a) of the Award which was incorporated into the Agreement by clause 2.1 of the Agreement was not overridden by any inconsistent provision of the Agreement. As clause 12.5 of the Agreement did not specifically deal with overtime worked by shiftworkers, then the CFMEU contended that the overtime entitlement of shiftworkers was to be found in clause 30.2(a) of the Award as incorporated into the Agreement. The CFMEU contended that their approach to the interaction between clause 30.2(a) of the Award and clause 12.5 of the Agreement was supported by the operation of clause 2 of the Agreement which, in the case of shiftworkers, resulted in a number of provisions of the Award being incorporated into and becoming the operative provisions of the Agreement in relation to the conditions of shiftworkers. The CFMEU contended that clause 2.4 and clause 12.2 operated so as to protect existing conditions of employment and in the case of shift workers this meant that they kept the higher overtime rate specified by clause 30.2(a) of the Award.

[6] Core Toughened contended that clause 12.5 of the Agreement was inconsistent with clause 30.2 (a) of the Award and that clause 2.2 of the Agreement operated to ensure that clause 12.5 of the Agreement prevailed over clause 30.2(a) of the Award. Core Toughened also contended that clause 12 covered the field and that no provision of the Award which dealt with a matter dealt with by clause 12 of the Agreement could operate as the provisions of clause 2.2 of the Agreement ensured that the terms of clause 12 of the Agreement prevailed over the inconsistent terms of the Award. Core Toughened contended that clause 2.4 and clause 12.2 provided no benefit to employees. In relation to clause 12.2 Core Toughened contended that:

“What clause 12.2 doesn't do, is what my friend is trying to get it to do, is to contradict what this agreement very clearly says in clause 2 which is the award can't apply where it's inconsistent with the agreed terms in this agreement.  Now, 12.5 is the agreed basis on which overtime will be paid.  And you can't read 12.2, which is quite a broad clause, in a way that is inconsistent with what is very clearly stated in the agreement at clause 12.5 and clause 2.  It's just not the way you can – it doesn't sort of bring back the award when it's clearly been excluded by the parties.  And it's been excluded on the basis that it's directly inconsistent and it's indirectly inconsistent and that's the effect of 2.1 and 2.2.  So 12.5 has to be given effect in accordance with its plain meaning, and it's agreed that it has a plain meaning.”  2

Consideration

Does the Agreement have a plain meaning or does it contain ambiguity?

[7] The Agreement comprises both the terms of the Agreement and the terms of the Joinery and Building Trades Award 2010 (the Award) which has been incorporated into the Agreement by clause 2.1 of the Agreement.

[8] Not all clauses of the Award operate as terms of the Agreement as clause 2.2 operates to give precedent to an express Agreement provision which is inconsistent with an Award provision.

[9] The proper operation of clause 2.2 of the Agreement was the subject of differing interpretations as between the parties as was the proper operation of the sub-clauses of clause 2 of the Agreement as between each other. Clause 2 of the Agreement provides as follows:

“2. Relationship to Awards and Standards

2.1 This agreement incorporates and applies wholly in conjunction with the Joinery and Building Trades Award 2010, as varied from time to time.

2.2 Where there is an inconsistency between an express provision of this agreement and a provision in the Award, the provisions of this agreement shall prevail to the extent of the inconsistency.

2.3 The employer agrees not to implement the Award in such a manner that would reduce any conditions, entitlements or benefits which were available to employees either prior making this agreement or prior to modernisation. Any classification structure or definition included in any Award which covered the workplace prior to modernisation will apply to all employees covered by this agreement. Any increase, improvement, or broadening of entitlements in the award will be taken to be included in this agreement.

2.4 The making of this Agreement does not affect existing above agreement payments and conditions of employment, unless the terms of this Agreement expressly provide that no other arrangements will apply.

2.5 Upon incorporating Award terms into the Agreement the incorporated terms are to be read as altered with the appropriate changes to make them provisions of the Agreement rather than provisions of an award: references within the Award to the “Award” shall be read to mean this Agreement.

2.6 If, at any time, the conditions set out in this Agreement, including the incorporated Award, are less favourable than those in the National Employment Standard, in any particular respect, the conditions in the Standard will apply to the exclusion of this Agreement in the particular respect in which they are more favourable.”

[10] It is very clear that clause 2.1 of the Agreement incorporates the entire Award.

[11] Clause 2.2 of the Agreement deals with the issue of inconsistency between the Agreement and the Award.

[12] Clause 2.3 of the Agreement has three specific provisions. The first sentence creates an obligation on the employer which operates to protect pre-existing terms and conditions of employment which flowed from the Award. As the sentence refers only to implementation of the Award then as a matter of logic this obligation on the employer can only apply to those terms of the Award which have work to do after clause 2.2 of the Agreement has been applied. The second sentence deals with a specific issue by protecting an entitlement that predated the Award. There is a very clear inconsistency between the classification structure in the Award and classification structure in the Agreement and therefore the classification structure in the Agreement prevails over that in the Award. Having said that the second sentence of clause 2.3 of the Agreement provides that if there was a “classification structure or definition included in any award which covered the workplace prior to modernisation” then that classification structure of definition will apply to the employees. If nothing else it is clear that the second sentence of clause 2.3 of the Agreement could operate to displace the classification structure of the Agreement. However, given the operation of the Workplace Relations Act, as amended by the Work Choices provisions, it may very well be the case that there was no “classification structure or definition included in any award which covered the workplace prior to modernisation”. The third sentence of clause 2.3 of the Agreement provides that improvements in the Award which benefit employees are to be included in the Agreement. As with the first sentence of clause 2.3 of the Agreement this sentence only operates after clause 2.2 of the Agreement has been applied.

[13] Clause 2.4 of the Agreement provides a protection for pre-existing payments and conditions of employment which are above the payments and conditions of the Agreement unless the terms of the Agreement “expressly provide that no other arrangements will apply.”

[14] Clause 2.5 of the Agreement is a machinery provision which assists in reading the incorporated terms of the Award.

[15] Clause 2.6 of the Agreement deals with the relationship between the Agreement and the NES.

[16] The key provision for the purposes of the present dispute is clause 2.2 of the Agreement.

[17] Core Toughened relied on the decision of Mason J in R v Credit Tribunal; Ex parte General Motors Acceptance Corporation (Australia) 3 to contend that “inconsistency” when used in clause 2.2 included both indirect inconsistency (a cover the field argument) and direct inconsistency as between a provision of the Agreement and a provision of the Award.

[18] There is no difficulty in accepting that an inconsistency provision such as clause 2.2 of the Agreement may operate in relation to both direct and indirect inconsistency. However, the real issue is whether any inconsistency arises as between the Agreement and the Award and what is the nature of the inconsistency which has been found to exist. Only then can the operation of clause 2.2 of the Agreement be examined. Importantly the requirement is for an inconsistency to exist between “an express provision” of the Agreement, on the one hand and “a provision” in the Award on the other hand.

[19] As the issue in dispute concerns clause 12.5 of the Agreement then it is necessary to determine what if any inconsistency exists between clause 12 of the Agreement and the corresponding provisions of the Award.

[20] The primary contention by Core Toughened that clause 12 - Wage Rates & Classification Structure of the Agreement covers the field in relation to shiftwork and that none of the provisions of the Award relating to shiftwork have any work to do is simply not reasonable. Equally the contention of the CFMEU that because clause 12.5 of the Agreement does not specifically mention shiftwork then the provisions of clause 30.2(b) of the Award apply is also unreasonable.

[21] It is necessary to have regard to the structure and language of clauses 9 and 12 of the Agreement and to clauses 28 and 30 of the Award. The full clauses are appended to this decision.

[22] Clause 9 of the Agreement makes no provision whatsoever for shiftwork. In fact the very structure of the clause would suggest that work outside of the span of hours of 6am to 6pm must be additional hours paid at the overtime rate. This is clearly not the case and it is very clear from the presence of clause 12.6 that the Agreement is intended to provide for the performance of and payment for shift work.

[23] Whilst clause 12.6 of the Agreement provides for shift work allowances for afternoon and night shift there is nothing in the Agreement that provides a definition of shiftwork or for the span of hours of shift workers.

[24] Clause 2.2 of the Agreement ensures that the shiftwork provisions in clause 28 of the Award are incorporated into the Agreement. Once incorporated then it is necessary to determine if there is an inconsistency between clauses 9 and 12 of the Agreement and clauses 28 and 30 of the Award.

[25] Clause 28.3(a) of the Award provides for definitions of various shifts. Two of these definitions are necessary to make the Agreement work. A direct inconsistency would appear to exist as between clause 28.3(a)(iii) and (iv) of the Award and clause 12.6 of the Agreement. The inconsistency is resolved in favour of the Agreement and results in the definitions in clause 28.3(a)(iii) and (iv) of the Award being effectively inoperative within the Agreement.

[26] Clause 28.3(b) of the Award provides for the calculation of ordinary hours of work and much of the clause is necessary to make the Agreement work. There appears to be a direct inconsistency between the first sentence of clause 9 of the Agreement and clause 28.3(b)(ii) of the Award and therefore the first sentence of clause 9 of the Agreement prevails. The effect of this is that there is no accruing of time for the purpose of having a shift off in each 20 day cycle.

[27] Clause 28.3(d) of the Award provides for rates for shift work which are directly inconsistent with the rates for shiftwork provided by clause 12.6 of the Agreement. The inconsistency is resolved in favour of the Agreement and thus the lower shift rates provided by the Agreement will apply.

[28] Clause 28.3(e)(ii) of the Award provides for both a rate to be paid to shiftworkers required to work on a public holiday and the minimum payment to be made for overtime worked on a public holiday. There is a similar provision in clause 30.7 of the Award which applies to all employees. There is a direct inconsistency between these Award provisions and clause 11.12 of the Agreement which provides for the same rate but not for a minimum payment and which provides that additional hours on public holidays are not required but may be requested. The inconsistency is resolved in favour of the Agreement which would mean that employees may be requested but not required to work on a public holiday and where an employee agrees to the request there is no minimum payment to be made, only payment for time worked.

[29] Clause 28.3(f) of the Award provides for the giving of notice to an employee to work shift work and for the fixing of shiftwork hours of work. The Agreement does not make any provision in relation to the same matters and it would appear that clause 28.3(f) of the Award must apply in order to allow the Agreement to work properly.

[30] Clauses 9.2 and 12.5 of the Agreement in conjunction with each other provide for the working of additional hours and for the rates for additional hours. In the Award additional hours are dealt with in clause 30.

[31] Clause 9.2 of the Agreement refers to “reasonable additional hours” but does not provide any guidance as to the meaning of the phrase. Clause 30.1 of the Award provides guidance as to what is “reasonable overtime”. Whilst the Award and the Agreement use different terms they are speaking to the same subject. As clause 30 of the Award is incorporated into the Agreement it would appear that clause 30.1 of the Award provides the practical guide for the operation of the additional hours provisions of the Agreement.

[32] Clause 30.3 of the Award deals with call backs, clause 30.4 of the Award deals with rest period after overtime, and clause 30.8 of the Award deals with transport of employees after overtime. None of these three subjects is dealt with in the Agreement. It is reasonable to conclude that clause 2.2 of the Agreement operates so that each of clauses 30.3, 30.4 and 30.8 of the Award apply as operating terms of the Agreement.

[33] Clauses 30.5 and 30.6(d) and (e) of the Award deal with crib breaks in relation to overtime. This is directly inconsistent with the third paragraph of clause 9.2 of the Agreement and hence clause 9.2 of the Agreement prevails. The effect is that employees do not receive the entitlements of either clause 30.5 or clause 30.6(d) and (e) of the Award rather they receive the entitlements of clause 9.2 of the Agreement.

[34] Clause 9.2 of the Agreement refers to clause 12.5 of the Agreement for the rates to be paid for additional hours other than on public holidays and clause 11.12 of the Agreement provides for the rate to be paid for work on a public holiday. The same subject matter is dealt with in clauses 30.2, 30.6 and 30.7 of the Award. There is an inconsistency as between the Agreement provisions and some of the Award provisions. I have already dealt with the issue of additional hours on a public holiday.

[35] In relation to additional hours or overtime on week days and weekends (excluding public holidays) it is clear that the Award has a far more expansive set of provisions than does the Agreement. Clause 12.5 of the Agreement provides for a general rate for additional hours of 150% for the first 2 hours and 200% for any additional hours. Clause 12.5 of the Agreement does not provide any different payments as between weekdays and weekends. Clause 12.5 of the Agreement does not make any provision for minimum payments of overtime. Clause 30.2 of the Award provides for different overtime rates as between day workers and shift workers and clauses 30.6(a), (b) and (c) of the Award provide specific entitlements to payments for overtime worked on a weekend, including a minimum payment for overtime on weekends.

[36] It is quite obvious that where both the Agreement and the Award provide for specific and different additional hours/overtime rates then an inconsistency arises and must be resolved in favour of the Agreement provisions prevailing over the inconsistent Award provisions.

[37] The subject matter of a minimum overtime period or minimum payment of overtime which is dealt with in clause 30.6(c) of the Award is not directly inconsistent with any provision of the Agreement. Nor can the Agreement be read as preventing the operation of clause 30.6(c) of the Award.

[38] The result of this interaction between clause 12.5 of the Agreement and clause 30.2 and 30.6(a), (b) and (c) of the Award is that clause 12.5 of the Agreement prevails over clause 30.2 and 30.6 of the Award in relation to specifying the rate to be paid to employees who work additional hours/overtime on any day other than a public holiday. However, clause 30.6(c) of the Award has work to do in providing for a minimum number of hours of overtime or a minimum payment for overtime and this clause applies as a term of the Agreement as it is not inconsistent with any express term of the Agreement.

[39] Whilst the above discussion concerns the issue of inconsistency between express provisions of the Agreement and provisions of the Award the matter in dispute cannot be resolved solely on the basis of a decision as to inconsistency. There are two specific provisions of the Agreement, clauses 2.4 and 12.2, which refer to terms and conditions of employment which are not in the Agreement.

[40] The two provisions are as follows:

“2.4 The making of this Agreement does not affect existing above agreement payments and conditions of employment, unless the terms of this Agreement expressly provide that no other arrangements will apply.”

“12.2 Wage Schedules

The minimum rates of pay to be paid to an employee in each classification are set out below. This does not prevent agreement being reached to pay an employee more than these rates.

Where an employee is paid more than these rates, the existing rate of pay will be retained. No existing employees will suffer any reduction in existing wages, conditions and allowances as a result of the making of this Agreement.”

[41] The reference in clause 2.4 of the Agreement to “above agreement payments and conditions of employment” must relate to payments and conditions of employment which are in existence at the time the Agreement was made and which are more beneficial to an employee than the terms of the Agreement. It is clear from the language of clause 2.4 of the Agreement that the better pre-existing payments and conditions of employment continue to apply unless there is an express term of the Agreement which provides that pre-existing arrangements will not apply.

[42] The second paragraph of clause 12.2 of the Agreement deals with the same subject matter but does so from a slightly different perspective. The first sentence of the second paragraph of clause 12.2 of the Agreement specifically provides for the retention by an employee of a rate of pay which at the time the Agreement commenced was more than the rate of pay provided by the Agreement. The second sentence of the second paragraph of clause 12.2 of the Agreement operates to prevent any reduction in the wages, conditions and allowances which an employee was receiving at the time the Agreement was made.

[43] The repetition of the same concept in two separate terms of the Agreement is a reasonably clear indicator that the preservation of wages and conditions of employment existing at the time the Agreement was made was a significant issue. When considered in context it is clear that prior to the making of the Agreement employees’ wages and conditions of employment were set by the Award and the contract of employment and statutory entitlements. Therefore the two provisions must be considered as operating to protect above agreement conditions of employment which were in the Award but which are not in the Agreement.

[44] There is nothing novel about the concept that an enterprise agreement will protect existing terms and conditions of employment for employees employed at the time the enterprise agreement was made, whilst providing lesser terms and conditions of employment for employees who commence employment after the enterprise agreement is made. There is a significant difference between clause 2.4 and clause 12.2 and that is that there is no qualification or limitation in the protections provided by clause 12.2 such as there is in clause 2.4. Whilst there is a qualification in clause 2.4 it appears to be more illusory than real. The general protection of existing above agreement payments and conditions of employment will not apply if a term or terms of the Agreement “expressly provide that no other arrangements will apply”. The qualification in clause 2.4 is not an inconsistency issue. Rather the general protection of clause 2.4 will only not apply if some term of the Agreement specifically states that no other arrangement can apply in relation to a specific subject matter or term or condition of employment. The word “expressly” as used in clause 2.4 should be given its ordinary meaning and the Macquarie Dictionary Online provides the following definition:

expressly
/əkˈsprɛsli/ (say uhk'spreslee), /ɛk-/ (say ek-)
adverb 1. in an express manner; explicitly.
2. for the express purpose; specially.

[45] In relation to the subject matter of the overtime or additional hours rate for shiftworkers, there is no term of the Agreement that expressly or explicitly provides that no other arrangement is permitted to apply to oust the general operation of clause 2.4 or 12.2. The very language of clause 12.5 does no more than state the entitlement to a rate of pay for additional hours worked. There is nothing in that clause (or in any other clause of the Agreement) which would expressly stop shiftworkers who were employed at the time the Agreement was made from claiming the entitlement to the more beneficial additional hours rate for shiftworkers which was in operation at the time the Agreement was made and which is protected by clause 2.4 and clause 12.2.

[46] The above discussion has been conducted having regard to the submissions of the parties and without regard to what the Full Bench in Golden Cockerel described as the “surrounding circumstances”. In the present matter both parties were content to have the Commission resolve this dispute on the basis of submissions and without either side leading any evidence in support of their submission. “Surrounding circumstances” are simply not relevant in the determination of the matter in dispute.

[47] Having considered the submissions of the parties and the language and structure of the Agreement it is clear that there is no ambiguity or uncertainty as to the operation of clauses 2.2 and 12.5 as they deal with the setting of rates for additional hours and it is clear that there is no ambiguity or uncertainty as to the operation of clauses 2.4, 12.2 and 12.5 as they deal with the preservation of pre-existing above agreement conditions of employment such as the entitlement of shiftworkers to a higher rate for additional hours than provided for in
clause 12.5.

Conclusion

[48] Shiftworkers who commenced employment after the commencement of the Agreement are entitled to payment for additional hours worked on other than public holidays at the rate specified by clause 12.5 of the Agreement.

[49] Shiftworkers who were employed prior to the commencement of the Agreement are entitled to payment for additional hours worked, other than on public holidays, at the rate specified by clause 30.2 of the Award. Additionally, these shiftworkers are entitled to the benefit of a minimum overtime period or minimum overtime payment as provided by clause 30.6(c) of the Award.

COMMISSIONER

Appearances:

L. Dooley for the Construction, Forestry, Mining and Energy Union;

J. Tracey of Counsel for Core Toughened Pty Ltd

Hearing details:

2016.

Melbourne

August 10.

 1   [2014] FWCFB 7447 at [41].

 2   Transcript at PN231.

 3 [1977] HCA 34.

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