Construction, Forestry, Mining and Energy Union v MSS Security Pty Ltd and MSS Strategic Medical Pty Ltd
[2015] FWCFB 2872
•1 JULY 2015
| [2015] FWCFB 2872 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
MSS Security Pty Ltd and MSS Strategic Medical Pty Ltd
(C2014/5995)
VICE PRESIDENT HATCHER |
|
Appeal against decision [[2014] FWC 5113] of Commissioner Gregory at Melbourne on 15 August 2014 in matter numbers C2014/4395 and C2014/743.
Introduction
[1] The Construction, Forestry, Mining and Energy Union (CFMEU) has filed a notice of appeal under s.604 of the Fair Work Act 2009 (FW Act) in which it seeks permission to appeal and appeals a decision of Commissioner Gregory issued on 15 August 2014 1 (Decision). The Decision arose out of two applications made by the CFMEU for the Commission to deal with a dispute under s.739 of the FW Act (the disputes). The first application concerned what the CFMEU described as an announcement by MSS Security Pty Ltd and MSS Strategic Medical Pty Ltd (collectively MSS) of“an intention to make five Emergency Services Officer positions redundant at the Loy Yang site”. The second application concerned a purported change to the “minimum qualification requirements for classifications of employees”. Both applications were made pursuant to the dispute resolution procedure in clause 24 of the CFMEU MSS Enterprise Agreement 20122 (Agreement). Conciliation was unsuccessful in resolving the disputes, and they were ultimately the subject of arbitration by the Commissioner pursuant to arbitration powers conferred on the Commission by clause 24.2 of the Agreement. The two questions upon which the Commissioner arbitrated were formulated as follows3:
(1) Is MSS prohibited by the terms of the Agreement from changing the staffing arrangements and qualification requirements for Emergency Service Officers (ESOs)?
(2) Has MSS complied with the requirements of clauses 15, 23 and 24 of the Agreement in all the circumstances of this matter in regard to the various obligations to consult and maintain the status quo?
[2] In relation to the first question, the Commissioner determined that the Agreement did not prohibit MSS from varying the minimum qualification requirements for ESOs. On the second question, the Commissioner found that MSS had not complied with its consultation obligations under the Agreement. The Commissioner directed the parties to confer in accordance with clauses 15 and 23 of the Agreement in an endeavour to reach a written agreement about the implementation of changes.
[3] The CFMEU’s appeal challenges the Commissioner’s answer to the first of the two questions. Its notice of appeal contained three grounds of appeal in which it contended that the Commissioner erred:
(1) in fact and in law in determining that the pre-condition to changes to staffing levels contained in clause 15 of the Agreement was satisfied by Loy Yang Power expressing an intention or requirement for change;
(2) in determining that clause 15 of the Agreement enabled the respondent to change the minimum qualifications for Emergency Services Officers contained in clause 16 of the Agreement; and
(3) in failing to give any or adequate reasons for his decision.
[4] The CFMEU submitted that permission to appeal should be granted because the absence of reasons is a jurisdictional issue and because it is in the public interest that persons covered by enterprise agreements have the benefit of those agreements and are able to exercise rights in accordance with their terms. It sought that the Decision be set aside, and that the Full Bench re-determine the matter by giving a positive answer to the first question.
[5] In its notice of appeal, the CFMEU sought a stay of the Decision pending the hearing and determination of the appeal. The stay application was heard and granted on 2 September 2014 by Senior Deputy President Acton. 4
Background
[6] MSS is party to a contract with AGL Loy Yang Pty Ltd 5 (AGL) pursuant to which it provides a range of emergency services to AGL at the Loy Yang power generation and mining site in the Latrobe Valley including fire prevention and fire fighting, security, rescue and first aid6 (Contract). The personnel employed by MSS to carry out the contracted functions for AGL are covered by the Agreement. Clause 3 of the Agreement provides:
“This Agreement shall apply to all persons employed by the Company in emergency service roles at or in connection with Loy Yang power generation or mining sites (hereinafter referred to as the “employees”). Emergency service roles include fire-prevention/fighting, security, rescue and first-aid and exclude managerial roles.”
[7] The Agreement relevantly includes provisions dealing with staffing levels, classifications, the minimum qualifications required for each classification, consultation over change and dispute resolution. Clause 15, Staffing Levels, of the Agreement provides:
“15 STAFFING LEVELS
The following staffing levels shall apply under the Company’s current contract with Loy Yang Power. Should the contract with Loy Yang Power change, the relevant parties shall confer and reach agreement prior to any changes being implemented and such agreement shall not be unreasonably withheld.
The minimum number and classification of personnel present on rostered duty at any time shall be:
a) one Team Leader;
b) two Emergency Services Officers; and
c) one Gatehouse Officer.
Additionally, a Security Team Leader shall be on duty on a Monday to Friday basis excluding public holidays.
The minimum number of personnel employed on a permanent full-time equivalent basis shall be in accordance with the table below:
| MINIMUM STAFFING LEVELS | ||
| Team Leader (2x12 shift) | 6 | |
| Emergency Services Officer (2x12 shift) | 12 | |
| Security Team Leader (day-work) | 1 | |
| Gatehouse Officers (2x12 shift) | 6 | ” |
[8] Clause 16, Classifications, begins by providing:
“It is intended that the classifications structure be utilised as an opportunity for employees to enhance their skills and career opportunities.
The following table details the minimum qualifications required for each classification and the typical duties associated.”
[9] The clause then sets out in tabular form the minimum qualifications and typical duties for each of the six classifications of Team Leader, ESO, Security Team Leader, Gatehouse Officer, Security Officer and First Aid Officer. In respect of the ESO classification, the minimum qualification requirements are as follows:
“Certificate II in Public Safety – Fire Fighting and Emergency Operations (PUA20601) or equivalent including the following units:
• Respond to Wildfire (PUAFIR204A);
• Communicate in the Workplace (PUACOM001C);
• Provide Services to Clients (PUACOM002B); and
Any ten modules of Certificate III in Public Safety – Fire Fighting and Emergency Operations (PUA30601) or equivalent including the following units:
• Render Hazardous Materials Safe (PUAFIR306B);
• Employ Personal Protection at a Hazardous Materials Incident (PUAFIR308B);
• Operate Pumps (PUAFIR309B);
• Maintain Safety at an Incident Site (PUAOHS002B);
• Work Autonomously (PUATE002B);
• Monitor Hazardous Atmospheres (PUAFIR307B);
• Undertake Confined Space Rescue (PUASAR025A);
• Undertake Vertical Rescue (PUASAR032A); and
Medium Rigid Truck Licence;
Advanced First Aid – Level III (HLTFA404A) including semi-automatic external defibrillation, pain and asthma management;
Audiometric Testing;
Certificate II in Security Operations (CPP20207); and
Current Security Licence with Crowd Controller and Security Guard.”
[10] It can be seen that the above list does not require a minimum qualification as a Registered Nurse. It may be added that the typical duties for the ESO also do not include the administration of drugs and medicines of a type which only registered health practitioners can administer.
[11] Clause 7 of the Agreement specifies the rates of pay for each classification identified in clause 16.
[12] Clause 23, Consultation Over Change, provides for a consultation procedure in the event that MSS is “seriously considering a major change that is likely to have a significant effect on employees covered by this Agreement”. The first sentence of the clause provides: “For the avoidance of doubt, this clause does not allow the Company to vary matters expressly provided within this Agreement”.
[13] The origin of the disputes was summarised in the Decision in a non-controversial manner as follows:
“[2] MSS says AGL now wants to have an additional capacity on site to obtain and administer certain types of drugs and medication. This apparently reflects concerns about the number of employees on site at any one time, the age of the workforce, the location of the site, and the amount of time it can take for an ambulance to reach the site. However, the existing Emergency Service Officers (“ESOs”) are not qualified to obtain and administer these drugs under the current regulatory framework.”
[14] The manner in which MSS decided to meet AGL’s requirement described above was communicated in a notice to employees dated 19 March 2014 (Notice). The notice relevantly stated:
“There will be changes to the qualification requirements for five (5) Emergency Service Officer’s (ESO) roles, with the proposed changes effective from 1 July 2014.
Five ESO positions will be upgraded to include an additional Registered Nurse Qualification requirement. As it is not possible for incumbent ESOs to attain a Bachelor of Nursing and complete an internship to become a Registered Nurse in a reasonable timeframe, five ESO positions are required to be made redundant.”
[15] The CFMEU disputed that MSS was entitled to take the course proposed in the Notice on the basis that either it represented a change to ESO staffing numbers under clause 15 in circumstances where there had been no relevant change to the Contract or it was a unilateral change to the minimum qualification requirement for ESOs under clause 16. MSS’s position was that the changed staffing requirement of AGL constituted a contractual change of the type referred to under clause 15, and that the CFMEU was unreasonably withholding its consent to the implementation of the course proposed in the Notice. MSS also contended that the changes contemplated in clause 15 also extended to changes to minimum qualification requirements in clause 16.
Decision
[16] After setting out the parties’ submissions and the relevant authorities, the Commissioner stated the following conclusions:
“[52] However, clause 15 of the Agreement also contemplates the precise situation that has eventuated in the current circumstances; a change in what AGL requires. In this context the specific words in the Agreement are “Should the contract with Loy Yang Power change...” It is perhaps unclear as to what this precisely requires, and the CFMEU questions whether this trigger has actually been activated. However, I am satisfied it has been common knowledge now for at least nine months that AGL wanted MSS to somehow provide the enhanced level of medical support it wants on site, and this has been well known and understood by all concerned. In these circumstances it is ducking the real issue to dwell on what must actually occur to constitute the precondition, “Should the contract with Loy Yang Power change...” I have no reason to doubt, based on the evidence and submissions, that Loy Yang Power (AGL) want something different in place on the site and the relevant players have been well aware of this intention.
[53] As indicated, I am therefore satisfied the submissions of MSS are to be preferred and it is not precluded by the terms of the Agreement from entering into the prescribed processes to endeavour to reach agreement about these changes. I have reached this conclusion again, as indicated already, because clause 15 contemplates this eventuality. It also makes sense for such a proviso to be included in an agreement of this kind where MSS, as the employer, is ultimately at the whim of the principal it has contracted to provide services to. When those requirements change it makes sense for the service provider to have the ability to make changes to its employment arrangements as a consequence of what its client requires of it.
[54] However, there is also an issue about what changes might be able to be agreed upon. The relevant words about the contract changing are contained in the Staffing Levels clause 15. MSS contends that because the clause refers to “...The minimum number and classification of personnel present on roster duty at any time...” it intends that the scope of change potentially extends to both staffing levels and the classifications in place at the site (and presumably the qualifications required in respect of those classifications.) I am again satisfied this is a logical interpretation of what the clause intends, given the plain and ordinary meaning of its words. They suggest proposals for change could potentially go to both the numbers of employees and the classification requirements of those employees.”
[17] The Commissioner went on to consider the extent to which MSS had complied with its obligations under clauses 15 and 23 to confer and consult prior to any changes being implemented. The Commissioner found that MSS had “not complied with all of the obligations contained in clause 23, in particular, because it only commenced a process of consultation after it had made its decision about how AGL’s changed requirements would be met.” 7 The Commissioner then stated the following conclusions:
“[80] It is obviously not possible to “unscramble the egg”, or return the parties to the position they might have been in six, nine or even twelve months ago. However, I am satisfied it is appropriate for the parties to now be directed to confer in accordance with clause 23 and clause 15, against the background of this decision, in an endeavour to reach a written agreement about the implementation of changes that respond to the requirements of MSS’s client. That process is obviously subject to the proviso that agreement should not be unreasonably withheld, and if any party believes the process is being abused and delay is the primary motivation, then it would be at liberty to bring the matter back to the Tribunal.
[81] In coming to this decision the Commission is obviously mindful of the fact the changes are being implemented at the request of AGL with the laudable objective of providing a higher level of clinical care for employees on the site. It is also acknowledged that it is not a viable option for MSS to continue the employment of an additional number of employees in the longer term. To this end it is proposed that the parties focus during the next 10 – 15 working days on the processes of consultation, as directed by this decision, and in accordance with what the Agreement requires.”
Submissions
CFMEU submissions
[18] In relation to its first ground of appeal, the CFMEU submitted that if the five new positions for which the qualification of a Registered Nurse was required were regarded as new positions which supplanted five existing ESO positions, then this constituted an alteration to the staffing levels specified in clause 15. Such an alteration could only occur if the pre-condition in clause 15 “should the contract with Loy Yang Power change” was satisfied. The Commissioner erred in holding that the pre-condition was satisfied. The pre-condition, the CFMEU submitted, was to be interpreted as referring to a textual change to the Contract. There was no evidence that the Contract had changed, and there was therefore no basis to conclude that the pre-condition was satisfied. Discussions between MSS and AGL about the administration of specific drugs or preferred skill sets did not and could not amount to a variation of the Contract such as to satisfy the pre-condition in clause 15. Accordingly MSS remained obliged to comply with the staffing levels and classifications specified in clause 15, which meant that the removal of five of the existing ESO positions was not permitted.
[19] The CFMEU advanced its second ground of appeal based on an alternative characterisation of what MSS proposed to do, namely that it had purported unilaterally to alter the minimum qualifications of five of the ESO positions. Clause 16 specified the minimum qualifications for ESOs, and it was not open to MSS to establish a new requirement for some ESOs to hold a Registered Nurse qualification and then to make redundant five existing ESOs on the basis that they did not hold and could not in practical terms obtain such a qualification. The third appeal ground was not elaborated upon in submission.
MSS submissions
[20] MSS submitted that the Commissioner did not err in construing the phrase “should the contract with Loy Yang Power change” in clause 15 as requiring something less than a formally executed contractual variation before the change implementation process specified under clause 15 could be commenced. That pre-condition was to be interpreted as including “a change in what AGL requires”, in which case the parties to the Agreement could commence a process to reach agreement about these changes. In this regard MSS relied upon the words of clause 15 which required the relevant parties to “confer and reach agreement prior to any changes being implemented” and thus contemplated that the terms of such an agreement might precede and affect the final expression of the terms of a formal variation to the Contract. Likewise, MSS submitted, the consultation requirements of clause 23 were intended to permit the persons required to be consulted, including the CFMEU, to have input before a major change by way of a variation to the Contract was implemented. To interpret clause 15 as requiring a textual change to the Contract before consultations and negotiations for an agreement with the CFMEU were to occur would defeat the purpose of those consultations and negotiations and place MSS in an absurd industrial position. MSS submitted that the Commissioner’s preferred interpretation provided a fair and flexible process for all parties, when AGL as a third party, required a change in services provided by employees whose terms are governed by the Agreement. MSS further submitted that a finding to the contrary would be at odds with the objective intent of the parties, which was clearly to provide for the possibility that the CFMEU would have input into the implementation of change at the Loy Yang site, especially where redundancy was involved.
[21] Factually, MSS submitted that it was not in contest that there had been no written variation to the Contract, but there was ample evidence of AGL communicating a changed requirement in terms of the staff which it wanted MSS to supply. For that reason, there was no factual error in the Decision, and the facts supported the conclusion that the Commissioner reached.
[22] In relation to the CFMEU’s second ground of appeal, MSS submitted that the change to staff and classifications permitted by clause 15 upon satisfaction of the pre-condition extended to changes to the minimum qualifications for classifications in clause 16.
[23] MSS submitted that the CMFEU failed to demonstrate any relevant error in the Decision, that it was not in the public interest to grant permission to appeal and that permission to appeal should be refused; alternatively, the appeal should be dismissed.
Production of documents and further submissions
[24] At the hearing of this appeal on 23 December 2014, the Full Bench considered that it would be assisted by the production of further documents to the Commission that had not been before the Commissioner, namely a copy of the Contract, any variations to the Contract, and any documents evidencing a formal requirement by AGL upon MSS which were issued pursuant to any provision in the Contract and which related to the subject matter of the disputes. Once the documents were produced, the Full Bench indicated that it would allow the parties to make any further submissions they wished to make in relation to those documents.
[25] It was not envisaged by the Full Bench that these additional steps in the hearing of the appeal would take long to complete. However, as it turned out, they became the subject of inordinate delay. MSS indicated that it required the issue of an order for production of the documents because confidentiality requirements with AGL constrained it from producing the documents voluntarily. There was extensive disagreement about the terms of an order for production to be issued to MSS, with the result that the order in its final form was not issued until 5 March 2015. Upon the documents being produced, there was then a dispute about the extent to which the CFMEU should be permitted to inspect the documents because of confidentiality concerns. That issue was not resolved until 1 May 2015, when upon the CFMEU giving certain undertakings MSS consented to the CFMEU being granted access to the documents. It was then necessary to give the parties an opportunity to file further written submissions in relation to the documents that were produced. The CFMEU filed its submissions on 20 May 2015, and MSS filed its submissions in reply on 9 June 2015.
[26] The Contract was produced in a redacted form in order to protect commercially sensitive information. A number of provisions of the Contract are, for reasons which will become apparent, of critical relevance. Firstly, clause B20 of the Contract allows for unilateral changes to be made by AGL to the work performed under the Contract as follows:
“B20 VARIATIONS TO THE WORK
During the progress of the work the Responsible Officer may issue a written instruction to the Contractor to alter, amend, omit, add to, or otherwise vary any of the work.
Such variation shall be valued by the Responsible Officer unless the value thereof is otherwise agreed in writing.”
[27] Section D of the Contract specifies the scope of work to be performed under the Contract. Clause 1.3 of Section D deals with staffing levels, and relevantly provides as follows (noting that portions of the clause were redacted):
“1.3 MANNING
The level of resources to be provided under this Contract for the lump sum price in Schedule 1 is summarised in the table below.
| Summary of Personnel and Equipment to be provided: | Protective Services |
| Contractor Personnel summary: | |
| Site Manager | 1 x daywork 5-days/wk |
| Site Manager things | Site Manager things 1 x 24-7-365 |
| Site Manager | 1 x 24-7-365 |
| Emergency Services Officer (Team Leader) | 1 x 24-7-365 |
| Emergency Services Officer (ESO’s) | 2 x 24-7-365 |
. . .”
[28] Clause 1.4 of Section D deals with competencies, and relevantly provides:
“1.4 COMPETENCIES
. . .
The minimum Competency Standards to which personnel shall be qualified for specific components of the Work are listed in the following table.
| Emergency Services Officer | 1. Certificate II in Public Safety – Firefighting & Emergency Operations (PUA20601) or its equivalent, including the following Units: • Respond to Wildfire (PUAFIR204A) 2. Any ten modules of Certificate III in Public Safety – Firefighting Operations (PUA30601) or its equivalent including the following Units: • Render Hazardous Materials Safe (PUAFIR306B) 3. Certificate II in Security Operations (CPP20207) 4. Advanced First Aid – Level III (HLTFA404A) including Semi-Automatic External Defibrillation, pain and asthma management. • Audiometric Testing to meet current OHS requirements 5. Current Security Licence with Crowd Controller and Security Guard. 6. Medium Rigid Truck Licence. |
. . .”
[29] Although we will make reference to some of the additional documents produced by MSS, it is only necessary to set out one of them, namely a letter from AGL to MSS dated 8 September 2014 and headed “Variation to Contract - Nurse Competencies” which, omitting formal parts, stated:
- “Nurse” competencies in Table D1.4
- Updated clause D4 First Aid services to include “Nurse” scope, and detail related to changes to scope in clause D5.1
- Update to Schedule 1 – prices.
- Update to Schedule 2 – schedule of rates
“In accordance with Clause B20 of the Contract I give notice of the following Variation to the Contract work.
As directed in our email, dated 7/2/14 and communicated by the Loy Yang Brief of 19/3/14, we required you to supply one Emergency Services Officer, with registered Nurse qualifications, to each leg of the shift, so that they have the capability to administer scheduled medications. Overall resources shall remain as described in Clause A2.
In due course the following clauses will be updated to reflect this Variation:
The value of this Variation will be determined according to Clause B20, after your submission regarding the costs associated with this Variation is assessed.
- Please sign and return a copy of this letter to me confirming your agreement to the above terms.”
[30] There was nothing in the documents which suggested that MSS had signed and returned a copy of the 8 September 2014 letter.
[31] In its additional submission concerning the documents produced by MSS, the CFMEU submitted that there was nothing in the documents which demonstrated that there had been any relevant variation to the Contract, and that the Contract did not in any provision contain a requirement that ESOs hold the qualifications of a registered nurse or be capable of administering any scheduled medications pursuant to the Drugs, Poisons and Controlled Substances Act 1981 (Vic). What the documents disclosed, the CFMEU submitted, was only the following:
(1) Both MSS and AGL became aware in July 2013 of some difficulty in obtaining a prescription to obtain Penthrane at the Loy Yang site;
(2) In October 2013, MSS put a proposal to AGL for the inclusion of a Registered Nurse/ESO for AGL Loy Yang site operations, which among other things anticipated the replacement of five current ESOs or team leaders;
(3) In February 2014, AGL wrote to MSS to request further information in order to prepare a contract modification;
(4) In March 2014, AGL released a “brief” (to whom it is not clear) announcing that MSS would shortly be implementing a revised service model, which would improve the quality of clinical and emergency response capability at AGL Loy Yang;
(5) In March 2014, AGL again requested further information in order to prepare a contract variation; and
(6) In April 2014, AGL asked MSS to “hurry up” in providing the necessary information to prepare a contract variation.
[32] None of these events, the CFMEU submitted, was capable of constituting a variation to the Contract. There was no evidence that the information requested by AGL in April 2014 was ever provided to AGL. The CFMEU acknowledged that the 8 September 2014 letter had foreshadowed textual variations to the Contract, but pointed to the fact that there was no document produced which indicated an acceptance by MSS of the terms of the 8 September 2014 letter as demonstrating that there had been no contractual variation. Additionally, the CFMEU noted, this letter post-dated the Decision, which meant that it could not have supported the conclusion reached by the Commissioner. The documents produced by MSS therefore, the CFMEU submitted, supported its earlier submission that the pre-condition in clause 15 had not been satisfied.
[33] MSS submitted that the totality of the documents and surrounding circumstances demonstrated that the Contract changed such as to satisfy the pre-condition in clause 15 of the Agreement. It referred to the following sequence of events:
(1) MSS provided AGL with a proposal dated 9 October 2013 to provide five ESOs with Registered Nursing qualifications.
(2) An email from AGL dated 7 February 2014 demonstrated a change in the scope of the Contract in that it stated a request for the provision of a Registered Nurse “per leg of each shift”, and was to be taken as indicating acceptance of MSS’s proposal, as did subsequent communications from AGL.
(3) MSS then commenced consultation with employees at a meeting on 19 March 2014, and issued the Notice in conjunction with that meeting.
(4) MSS commenced to recruit Registered Nurses from 28 March 2014, and took further action to implement AGL’s request.
(5) The letter from AGL to MSS dated 8 September 2014 confirmed that the value of the existing change was to be determined in accordance with clause B20 of the Contract and that the Contract would be varied in accordance with the letter.
[34] MSS submitted that the clearest demonstration of a change to the Contract was the recruitment, training and provision of additional ESOs holding Registered Nurse qualifications, for which MSS has invoiced AGL and has been paid. The pre-condition in clause 15 did not require an actual textual variation to the Contract in order to be satisfied. The documents demonstrated that there was an offer, acceptance of that offer, and practical implementation of what was agreed. This was sufficient to demonstrate an alteration to the pre-existing contractual position between MSS and AGL and thus to satisfy the pre-condition in clause 15.
Consideration
[35] There was no contest that permission to appeal under s.604 of the FW Act is required in relation to the CFMEU’s appeal. We have decided to grant permission to appeal because we consider that the CFMEU’s appeal is strongly arguable and gives rise to issues concerning the interpretation and application of the Agreement which are of industrial significance because they are likely to affect the future employment of a number of persons currently engaged as ESOs by MSS. We will therefore proceed to a consideration of the merits of the appeal. In doing so, we will take into account and admit into evidence under s.607(2) of the FW Act the documents produced by MSS pursuant to the order for production of documents issued on 5 March 2015.
[36] It is necessary at the outset to properly characterise the change to its workforce requirements that MSS has either implemented or seeks to implement. We consider that those changes should be characterised in the way that they were described in the Notice - that is:
- the minimum qualification requirement for five ESO positions would be changed, effective from 1 July 2014, to include a Registered Nurse qualification.
- five incumbent holders of ESO positions would be made redundant on the basis that they did not currently meet this new minimum qualification requirement and could not practicably meet it in the near future.
[37] It is clear that the identified change involved a unilateral departure from clause 16. That provision, among other things, sets out minimum qualifications requirements for ESO positions and does not, as earlier stated, include any reference to a qualification as a Registered Nurse being required, nor does it include as typical duties any duties of a type for which qualification as a Registered Nurse would be necessary. Provisions such as clause 16 serve an important and legitimate purpose in enterprise agreements - they identify what qualifications persons are required to hold in order to remain in, or aspire to promotion to, a position within a given classification. They also have the important function of defining in which classification a person falls for the purpose of identification of the appropriate pay rate for that person, and may in addition represent the rationale for the quantum of the pay rate that has been struck. Under the Agreement, for example, a person who holds the minimum qualifications and performs the typical duties of an ESO as set out in clause 16, but not for the higher classification of Team Leader, can expect to be paid the rate of pay specified for an ESO in clause 7. The rates of pay in clause 7 can be assumed to have been quantified at least in part by reference to the qualifications required for each classification.
[38] Whilst it is trite to state the obvious, nevertheless we also wish to emphasise that this is an Agreement of the parties voluntarily entered into and the terms of which were created by the parties.
[39] In circumstances where MSS has proposed that five existing ESOs be dismissed on the basis that they do not meet the new minimum qualification requirement identified in the Notice and are to be replaced by five new employees who do, the conclusion that this is conduct directly inconsistent with clause 16 of the Agreement in its current form is inescapable.
[40] There has of course been no variation to the Agreement to effect any change to clause 16 consistent with the Notice, although MSS has the right under the FW Act to propose one and request that it be voted on by employees. 8 The basis upon which MSS contends that a modification to clause 16 is permissible without a substantive variation to the Agreement is that clause 15 authorises it. This involves two fundamental contentions:
(1) The pre-condition for change under clause 15, namely “Should the contract with Loy Yang Power change” is satisfied on the facts.
(2) The type of “changes” contemplated by clause 15 includes changes to the minimum qualification requirements in clause 16.
[41] Unless both of these contentions are accepted, it is clear that MSS’s case must fail and that it must be concluded that it is prevented by clause 16 from changing the minimum qualification requirements for any ESO positions.
[42] We consider that MSS’s first contention is correct insofar as we accept that there has been a change to the Contract. Clause D1.4 of the Contract as produced by MSS provides for minimum qualifications for the ESOs to be provided by MSS under the Contract in terms that are relevantly identical to clause 16 of the Agreement. Clause D1.3 specifies that two ESOs must be supplied at any given time (on a 24/7/365 basis). It is clear from the documents that MSS and AGL have entered into an agreement that one of the two ESOs provided at any given time must have a minimum qualification as a Registered Nurse. That constitutes a change to clause D1.4. It does not matter that there has been no textual alteration to the Contract to effect this change, since the terms of a contract may be varied by an inferred agreement arising from a course of dealing between the parties. 9 An inference of this nature is not lightly to be drawn where the existing contract is detailed and in writing10, but the documents do not permit any alternative to such an inference. It is supported by the letter of 8 September 2014, which evinces an intention to ultimately give effect to the change by way of textual alterations to the Contract, including to clause D1.4. This letter demonstrates a mutual understanding that what had been agreed and put into effect involved a change to the existing terms of the Contract.
[43] Additionally or alternatively, clause B20 empowers the “Responsible Officer” of AGL to issue a written instruction to MSS to “alter, amend, omit, add to, or otherwise vary any of the work”. The “work” is to be understood as a reference to the scope of work specified in Section D of the Contract (in which clause D1.3 and D1.4 are located). Clause B20 goes on to empower the Responsible Officer to value the instructed variation to the work unless it is otherwise agreed in writing. The communications between the parties disclosed in the documents produced by MSS demonstrate, in substance, that AGL has requested a change in the work through the provision of five ESOs with Registered Nursing qualifications and has engaged in a process to value this. Clause B20 is specifically invoked in AGL’s letter of 8 September 2014, and in that circumstance the consent of MSS was not required. We consider that the type of unilateral change to the work to be performed under the Contract by clause B20 is a change to the Contract for the purpose of clause 15 of the Agreement.
[44] However we do not accept that the changes to the Contract identified are changes of the type referred to in clause 15. It is apparent from the opening sentence of clause 15, which provides that “The following staffing levels shall apply under the Company’s current contract with Loy Yang Power”, that its purpose is to establish staffing levels consistent with the staffing requirements of the Contract. A comparison between clause 15 of the Agreement (which was signed on 20 July 2012) and the Contract (which was executed in April 2012) tends to confirm this. The staffing requirement in the Contract is set out at least in part if not wholly in clause D1.3 of the Contract, noting that it is difficult to be definitive about this because the redactions to clause D1.3 in the version of the Contract produced make it impossible to fully compare it with the requirements of clause 15 of the Agreement. Certainly, as earlier discussed, the staffing requirement for ESOs is set out in clause D1.3. The staffing level requirement in clause 15 of the Agreement is identified by way of the classifications of personnel to be provided, and their number. The unredacted staffing requirements in clause D1.3 of the Contract, including those for ESOs, are expressed in the same way, with the same numbers.
[45] Reading the second sentence in clause 15 of the Agreement in the context of the clause as a whole, including in particular the first sentence, we consider that the pre-condition “Should the contract with Loy Yang Power change” is referring to a specific type of contractual change, namely to the “staffing levels”. Consistent with both its ordinary meaning and its meaning in industrial usage, we consider the expression “staffing levels” in this context refers to the number and classification of staff required to be rostered on duty at a particular time. That this is the intended meaning is confirmed by the prescription contained in clause 15 itself, which sets out the classification and number of personnel required to be rostered at the specified times. In so doing, it reflects clause D1.3 of the Contract as discussed. Therefore, absent a change to the staffing levels, understood in this way, as prescribed by the Contract, the pre-condition is not satisfied. Other types of contractual changes will not satisfy the pre-condition because they are not the type of changes with which clause 15 is concerned.
[46] With the benefit of the documents produced by MSS, it is apparent that the change to the Contract which we have identified does not involve any change to the required staffing levels. It remains the case that AGL requires that two ESOs are to be provided at all times. Importantly, the textual variations to the Contract contemplated by the letter of 8 September 2014 do not include any variation to clause D1.3. The change is of a different nature, being a change to the minimum qualifications of ESOs under clause D1.4. That is not, for the reasons we have explained, the type of contractual change with which clause 15 is concerned. It follows that we cannot accept MSS’s first contention.
[47] Consistent with this reasoning, MSS’s second contention cannot be accepted either. There is no textual or implicit link between clause 15 and clause 16 that would support the conclusion that the change process contemplated by clause 15 extends to alterations to the minimum qualifications prescribed by clause 16. As earlier stated, clause 15 is concerned with changes in the Contract to staffing levels, namely the classifications and number of personnel to be supplied at any given time. Thus a relevant contractual change may be to the number of personnel supplied, or to their classification, or both. To the extent that the Commissioner accepted in paragraph [54] of the Decision that “the scope of change potentially extends to both staffing levels and the classifications in place at the site”, we agree, if that is understood as a reference to the type of prescription expressed in clause 15. However there is nothing in clause 15 which supports the proposition that the change can include alterations to the minimum qualifications in clause 16 any more than it would authorise alterations to the pay rates for those classifications in clause 7 or any other changes to conditions outside of clause 15 which apply to particular classifications or generally. Clause 16 is not concerned with staffing levels and is therefore not affected by the operation of clause 15. The relevant conclusion by the Commissioner in paragraph [54] added in parentheses the statement “(and presumably the qualifications required in respect of those classifications)”, but the basis for this presumption is, with respect, not apparent. Nor, contrary to the Commissioner’s further conclusion in paragraph [54] do we consider that there is anything in the “plain and ordinary meaning” of the words of clause 15 which supports the conclusion that the provision can operate to effect an alteration to the minimum qualification requirements of clause 16.
[48] Clause 23 of the Agreement requires consultation to occur where “the Company is seriously considering a major change that is likely to have a significant effect on employees covered by this Agreement”, but nonetheless states “For the avoidance of doubt, this clause does not allow the Company to vary matters expressly provided within this Agreement”. It may be accepted that this general provision operates subject to the specific change process in clause 15, as the Commissioner concluded in paragraph [57] of the Decision. But there is no reason to read the proviso in clause 23 as not applying to clause 16 in circumstances where, for the reasons explained, there is nothing in clause 15 to justify the conclusion that it can operate upon the requirements of clause 16.
[49] We therefore conclude that clause 15 did not authorise the alteration to the minimum qualification requirements for ESOs specified in the Notice. Absent a substantive variation to the Agreement, the minimum qualification requirements for ESOs remain as prescribed in clause 16 of the Agreement.
[50] This conclusion would not prevent MSS from recruiting a person to fill an ESO position who held the qualification of a Registered Nurse in addition to the qualifications required under clause 16. Nor would it prohibit MSS from rostering a third ESO on each shift with that extra nursing qualification, since the staffing requirement of two ESOs in clause 15 is described as the “minimum number”. But the displacement of an ESO who holds all the minimum qualifications prescribed by clause 16 on the basis that he or she did not hold an additional qualification as a Registered Nurse would be directly inconsistent with clause 16 of the Agreement.
[51] MSS did not argue that the description of the qualification requirements in clause 16 as “minimum” requirements allowed it, absent a substantive variation to the Agreement, to require qualifications in addition to the minimum. If such an argument had been advanced, we would have rejected it. Clause 16 specifies the “minimum qualifications required for each classification”. That means, we consider, that an employee must have at least the specified qualifications for a classification in order to fall within that classification, and may have additional qualifications, but it does not mean that MSS can add additional qualifications as a pre-condition for remaining within a classification.
[52] We therefore uphold the appeal on the basis that the Commissioner erroneously interpreted and applied the provisions of the Agreement. We note that in reaching that conclusion we had the benefit of access to relevant documents which were not placed before the Commissioner. The disputes should be resolved in a manner consistent with our reasons for decision. However it is not clear to us whether this is sufficient to resolve the disputes to finality. Accordingly we will grant leave to either party to apply to have the matters relisted if the further exercise of dispute resolution functions by the Commission is considered necessary.
[53] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The Decision is quashed.
(4) The disputes are to be resolved in accordance with these reasons for decision.
(5) Leave is granted to either party to apply to the Chambers of Vice President Hatcher to have the disputes relisted for the purpose of the further exercise of dispute resolution functions.
VICE PRESIDENT
Appearances:
E. White of counsel with C. Kazakoff solicitor for the Construction, Forestry, Mining and Energy Union.
R. Sweet of counsel with A. Kinton for MSS Security Pty Ltd and MSS Strategic Medical Pty Ltd.
Hearing details:
2014.
Melbourne:
23 December.
Final written submissions:
20 May 2015 - Construction, Forestry, Mining and Energy Union.
9 June 2015 - MSS Security Pty Ltd and MSS Strategic Medical Pty Ltd.
1 [2014] FWC 5113
2 AE895899
3 See paragraphs [7] and [8] of the Decision
4 PR554960
5 Formerly named “Loy Yang Power Management Pty Ltd”.
6 Decision at [1]
7 Decision at [77]
8 Toyota Motor Corporation Australia Limited v Marmara [2014] FCAFC 84 at [92]
9 Moratic Pty Ltd v Lawrence James Gordon [2007] NSWSC 5 at [21]
10 Ibid at [22]
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