Construction, Forestry, Mining and Energy Union v Port Kembla Coal Terminal Limited

[2015] FWC 5903

[2015] FWC 5903

FAIR WORK COMMISSION

DECISION

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

Construction, Forestry, Mining and Energy Union
v
Port Kembla Coal Terminal Limited
(C2015/1528)

COMMISSIONER CAMBRIDGE SYDNEY, 27 AUGUST 2015

Dispute settlement procedure - interpretation of terms of enterprise agreement - disputed terms dealing with taking of long service leave - practice of long service leave being taken in multiple periods of one week’s duration interposed with a week’s annual leave - determination of whether terms of enterprise agreement permitted the taking of long service leave in multiple periods of one week’s duration - no ambiguity found - construction of relevant terms as urged by applicant found to be incorrect - application refused - Parties to consult as to any Order.

[1] This Decision is made in respect of an application that was taken under section 739 of the Fair Work Act 2009 (the Act) for the Fair Work Commission (the Commission) to deal with a dispute in accordance with a Dispute Settlement Procedure (DSP). The application was lodged at Sydney on 3 February 2015, and it was made by the Construction, Forestry, Mining and Energy Union (the CFMEU) and taken against Port Kembla Coal Terminal Limited (PKCT or the employer).

[2] The Commission is empowered to deal with this matter by virtue of a DSP which is found at clause 6 of the Port Kembla Coal Terminal Limited Enterprise Agreement 2012 (the Agreement).

[3] The dispute was unable to be resolved by conciliation and the matter has proceeded to arbitration involving a Hearing conducted in Sydney on 26 May 2015. The CFMEU was represented by Mr A Walkaden who introduced evidence in the form of two witness statements which were admitted into evidence without requirement for the respective deponents of the statements to be cross-examined.

[4] PKCT was represented by Mr B Rauf, barrister instructed by Ms A Linton, solicitor from Ashurst Australia. Mr Rauf adduced evidence from one witness as material which supported the employer’s case which opposed the application.

Background

[5] The question in dispute in this instance has involved a claim by the CFMEU that PKCT has sought to adopt an incorrect interpretation of the terms of the Agreement which concern the taking of Long Service Leave (LSL). There was very little factual contest about the circumstances which gave rise to the dispute and the historical account of the application of the relevant terms contained in the Agreement and similar terms which were contained in predecessor Enterprise Agreements.

[6] Since about 2005 employees of PKCT have been able to take LSL in a minimum period of one week. Prior to this time the minimum period for taking LSL was one month.

[7] The shift work patterns for employees of PKCT involve the working of alternating long and short weeks with wage payments averaged and accumulate hours resulting in regular compulsory days off (CDOs). When annual leave is taken it is debited on an hour for hour basis so that a week of annual leave taken during a long week will result in a larger debiting of leave than if the leave was taken during a short week. However, debiting of LSL is made on a weekly basis set on the nominal weekly hours averaged across both short and long weeks.

[8] Consequently, if an employee takes a period of leave which involves a combination of LSL and annual leave interposed on a weekly basis such that the LSL weeks coincide with long weeks and the annual leave is taken to cover the short weeks, the overall number of hours debited for the period of leave will be less than would otherwise be the case. There is a clear attraction for an employee who is taking a period of leave to arrange for LSL to be taken in respect of the long weeks during that period and to have annual leave apply to the short weeks. The process of taking a period of leave which involves interposed weeks of LSL and annual leave is referred to as the sandwiching of leave.

[9] It is important to note that the leave arrangement provisions of the Agreement are unusual in that the ordinary approval process for the taking of leave does not reside with the employer but instead is determined by work teams. Decisions of the relevant work teams regarding leave approvals are managed and monitored by a Leave Review Group (LRG) which is comprised of both employer and employee representatives. Therefore the employer does not approve leave requests nor does it have a veto right in respect to leave approvals made by work teams and/or the LRG.

[10] Since about 2005 when the relevant Enterprise Agreement terms were altered to provide that the minimum period of taking LSL was reduced from a month to a week, the sandwiching of leave has, somewhat understandably, increased in frequency.

[11] In 2011, during the negotiations for the Agreement, the employer attempted to alter the terms of the Agreement to prohibit the sandwiching of leave. The employer was unsuccessful in having specific terms included in the Agreement which prohibited the sandwiching of leave. It was ultimately agreed that the relevant terms of the Agreement would remain as they had existed in the previous Enterprise Agreement.

[12] In December 2014, the employer advised local CFMEU representatives that it considered that the sandwiching of leave was not permitted by virtue of the operation of certain provisions of the Long Service Leave Act 1955 [NSW] (the LSL Act). The employer considered that the interaction of the terms of the Agreement with the provisions of the LSL Act did not permit the sandwiching of leave and it intended to advise “…Payroll and Employees that from 19 January 2015, all LSL requests are to be granted in line with the LSL Act as referred to in the Agreement.”
[13] Subsequently, various meetings which were held between the employer and the CFMEU failed to resolve the contest which had emerged as to whether the terms of the Agreement and any relevant application of the provisions of LSL Act, did or did not permit the sandwiching of leave. Consequently, the CFMEU made the application which gave rise to these proceedings.

[14] Accordingly, these dispute proceedings have required the Commission to determine whether the terms of the Agreement permit the sandwiching of leave or, in the alternative, and notwithstanding the extensive occurrence of the sandwiching of leave in recent years, it is a practice which, as the employer contends, is not permitted by virtue of the operation of particular provisions of the LSL Act which apply notwithstanding the terms of the Agreement.

The CFMEU Case

[15] At the Hearing, Mr A Walkaden appeared on behalf of the CFMEU. Mr Walkaden made submissions which elaborated upon written outlines of submissions which had been filed on behalf of the CFMEU.

[16] Mr Walkaden commenced his submissions by stating that the determination of the matter involved the settlement of competing interpretations of particular terms of the Agreement. Mr Walkaden referred to the particular terms of the Agreement which dealt with LSL and the means by which approval for any leave was granted by the work team. Mr Walkaden submitted that the Parties required an interpretation of the relevant provisions so as to ascertain whether the team could approve a leave request whereby a person would sandwich their leave.

[17] The submissions of Mr Walkaden focused upon clause 22.9 of the Agreement which he said dealt with the issue relating to the sandwiching of leave. Mr Walkaden said that clause 22.9 of the Agreement dealt with the taking of LSL in a manner which was inconsistent with section 4 (3) (b) of the LSL Act and therefore, having regard to subsection 29 (1) of the Act, the terms of the Agreement prevailed over the provisions of the LSL Act. In this regard, Mr Walkaden further submitted that clause 22.9 of the Agreement supplemented section 4 (3) (b) of the LSL Act.

[18] The submissions made by Mr Walkaden referred to the Full Bench Decision in the case of The Australasian Meat Industry Employees Union v Golden Cockrell Pty Limited  1 (Golden Cockerel). Mr Walkaden said that the Golden Cockrell Decision summarised the well-known and settled principles to guide the determination required in this matter. Mr Walkaden also referred to various other authorities which provided guidance on the question of the appropriate approach to the interpretation of the contested terms of the Agreement.

[19] Mr Walkaden made further submissions which criticised an approach that was urged by those representing the employer and which introduced consideration of an issue regarding business common sense. The submissions made by Mr Walkaden urged the Commission to confine consideration to the principles which were clearly enunciated in the Golden Cockrell Decision and to avoid any interpretation which had regard for business common sense and the concept of industrial realities whatever those particular concepts may mean.

[20] Mr Walkaden submitted that the disputed terms of the Agreement had a plain meaning which could be established by reference to four particular factors. These factors were; firstly the language of the clause itself, secondly, the context in which the terms should be considered, thirdly, the matter of purpose, and fourthly, the issue of surrounding circumstances. Mr Walkaden made detailed submissions which elaborated upon each one of these factors.

[21] It was submitted by Mr Walkaden that a detailed examination of the actual words used particularly in clause 22.9 of the Agreement, referred to periods of leave of not less than one week and therefore the plural of the word “periods” supported the proposition that numerous one-week periods of LSL were contemplated as occurred with the sandwiching of leave. Mr Walkaden said that the language of the clause revealed no ambiguity. He said that it was a simply drafted clause which by reference to the use of the plural word “periods” established an inconsistency with the provisions of section 4 (3) (b) of the LSL Act.

[22] Mr Walkaden further submitted that the terms of clause 22.9 of the Agreement should be considered in the context of the history of dispute regarding these terms. In this regard Mr Walkaden said it was important to note that the minimum period of LSL had been reduced from one month to one week in the negotiations for the 2005 Agreement. According to the submissions made by Mr Walkaden this alteration clearly provided for a more beneficial outcome for an employee because it gave greater choice and flexibility regarding the taking of LSL. It was therefore, according to Mr Walkaden, a term which should be considered in the context of an improvement which provided greater flexibility and greater choice for employees.

[23] In respect to the question of purpose, Mr Walkaden submitted that the purpose of clause 22.9 of the Agreement may have been different than the purposes of the LSL Act. In this respect it was submitted that the Parties intended to depart from the provisions of the LSL Act in respect of particular arrangements for the taking of LSL. However, the underlying meaning and practical interpretation of clause 22.9 of the Agreement would be entirely consistent with providing an employee with a period of rest after many years of employment with an employer.

[24] The fourth factor which Mr Walkaden submitted was relevant to establishing the interpretation that should be given to clause 22.9 of the Agreement involved relevant surrounding circumstances. In this regard it was submitted that there was evidence of common contemplation and common assumption of the Parties that the clause permitted the sandwiching of leave. Further, the employer had agreed to keep the current wording of the clause and thereby had accepted that the existing arrangements which provided for the sandwiching of leave would continue.

[25] Mr Walkaden made further submissions about the interaction between clause 22.9 of the Agreement and section 4 (3) (b) of the LSL Act. Mr Walkaden said that the terms of the Agreement supplemented the laws of the State or Territory that were saved. Mr Walkaden acknowledged that the Agreement could not exclude the LSL Act but that it could most certainly supplement it and in this instance it provided an enhanced provision in respect of greater choice and flexibility for employees.

[26] In summary, Mr Walkaden stressed that there was an inconsistency between the terms of clause 22.9 of the Agreement and section 4 (3) (b) of the LSL Act. According to the submissions made by Mr Walkaden, the inconsistency should be resolved in favour of the terms contained in the Agreement. Mr Walkaden urged that the Commission provide for an interpretation of clause 22.9 which permitted the sandwiching of leave as it represented an enhanced benefit for employees.

The PKCT Case

[27] Mr B Rauf, barrister, was granted permission to appear on behalf of PKCT. Mr Rauf referred to and relied upon written submissions which had been filed on behalf of PKCT. Mr Rauf made further oral submissions in elaboration of the earlier filed material and in response to the submissions made on behalf of the CFMEU.

[28] The submissions of Mr Rauf acknowledged that the dispute involved a contest as to whether the terms of the Agreement provided for employees to be able to take LSL in a manner understood as the sandwiching of leave. Mr Rauf commenced his submissions by identifying what he described as a broader implication of the interpretation of the relevant provisions of the Agreement as was urged by the CFMEU whereby employees would be able to take LSL in an unlimited number of weekly periods.

[29] Mr Rauf made submissions which emphasised that the contested terms of the Agreement should be considered having regard for the plain and ordinary meaning of clause 22 as a whole and not just clause 22.9. Mr Rauf submitted that upon a careful and considered reading of the words contained in the clause there could be no established right for employees to take unlimited periods of one week of LSL including the sandwiching of the leave.

[30] Mr Rauf further submitted that clause 22 did not exclude, nor was it inconsistent with section 4 (3) of the LSL Act but rather it operated in a complimentary fashion. Mr Rauf made detailed submissions regarding the interaction of the provisions of clause 22 of the Agreement and the LSL Act. In this regard, Mr Rauf stressed that there were particular aspects of the terms of the LSL Act which could not be contravened by the terms in the Agreement.

[31] The submissions made by Mr Rauf also referred to subsection 739 (5) of the Act which required that any determination made by the Commission could not result in an outcome which was contrary to the Act. In particular, Mr Rauf referred to the words contained in section 4 (3) (b) of the LSL Act, “ …and not otherwise” as stipulating the strict regime for the arrangements of the taking of LSL and which were not contradicted by the terms of clause 22 of the Agreement.

[32] Mr Rauf said that the primary submission of the employer was that there was no conflict or inconsistency between the terms of clause 22 of the Agreement and the provisions of the LSL Act. Mr Rauf submitted that the plain and ordinary meaning of the words contained in clause 22.9 established a minimum period of LSL and those words were entirely reconcilable with and could work consistently with section 4 (3) (b) of the LSL Act.

[33] Mr Rauf made further submissions which stressed that clause 22.9 of the Agreement simply specified a minimum period of LSL and that on its plain and ordinary meaning it did no more than specify that LSL could be taken in a period of not less than one week. Mr Rauf submitted that clause 22.9 did not establish a basis for there to be any number of one-week periods for the taking of LSL. Consequently, the primary position advanced on behalf of the employer contended that there was no ambiguity with the contested terminology and the plain, ordinary meaning of the words contained in clause 22.9 of the Agreement did not or could not be construed to establish capacity for the sandwiching of leave.

[34] In further alternative submissions, Mr Rauf addressed the proposition that if ambiguity arose, the Commission should have regard for certain practical operational implications. Mr Rauf made submissions which urged that if there was ambiguity in respect of clause 22.9 there was no construction which would positively provide for the interpretation as sought by the CFMEU. Mr Rauf submitted that the belief of employees that they could take an unlimited number of one-week periods of LSL was not a proper basis upon which to interpret the contested terms of the Agreement. Mr Rauf acknowledged that the employer had sought to alter the terms of the Agreement to clearly prohibit the sandwiching of leave. However, Mr Rauf submitted that the evidence established that the employer did not accept that the terms of clause 22.9 necessarily permitted the practice of the sandwiching of leave.

[35] In conclusion, Mr Rauf submitted that the dispute in this instance should be determined on the basis that the plain and ordinary meaning of the terms contained in clause 22 of the Agreement were not ambiguous and when read in conjunction with section 4 (3) (b) of the LSL Act, did not permit the sandwiching of leave. Mr Rauf submitted that a determination in accordance with the plain, ordinary meaning which should be attributed to the words in clause 22 of the Agreement would establish and clarify that the practice of granting of any sandwiching of leave would be impermissible.

Consideration

[36] The dispute in this instance has involved a contest regarding the correct interpretation or construction that should apply to particular terms of the Agreement.

[37] The principles that are to apply to the approach to interpretation/construction of the terms contained in an Enterprise Agreement has been the subject of an authoritative Decision of a Full Bench of this Commission in the matter of The Australasian Meat Industry Employees Union v Golden Cockrell Pty Limited  2 (Golden Cockerel). At paragraph 41 of the Golden Cockerel Decision the Full Bench set out the following principles that apply to the approach to interpretation/construction of terms of an Enterprise Agreement:

“[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.”

[38] Accordingly, the principles as established by the Full Bench Decision in Golden Cockerel have been adopted and relevantly applied in this instance to the contested construction of the terms of the Agreement.

[39] The contested construction question in this instance can be summarised as an argument as to whether the terms of the Agreement specifically clause 22, and in particular sub-clause 22.9, permit the practice described as the sandwiching of leave.

[40] The CFMEU have asserted that the words of the contested provisions should be construed as providing an enhanced LSL benefit and as such they represent terms that are inconsistent with the provisions of the LSL Act. Further, the CFMEU has contended that on the basis of such established inconsistency the terms of the Agreement prevail over the provisions of the LSL Act and therefore the terms of the Agreement provide for the sandwiching of leave.

[41] Alternatively, PCKT has contended that the words contained in clause 22 of the Agreement and sub-clause 22.9 specifically, have a plain and unambiguous meaning. Further, PCKT has asserted that the plain and unambiguous words of clause 22 when read in conjunction with the LSL Act, do not conflict with the particular provisions of section 4 (3) (b) of the LSL and as a consequence, the taking of LSL is governed by and must comply with, the provisions of section 4 (3) (b) of the LSL Act which do not permit the sandwiching of leave.

[42] It is relevant to set out the entire provisions contained in clause 22 the Agreement which is in following terms:

“22. Long Service Leave

22.1. Long Service Leave of sixty calendar days shall become due on completion of ten years' continuous service.

22.2. Subsequent entitlements will accrue at the rate of fifteen calendar days' leave for each further year of continuous service.

22.3. An Employee who has completed at least five years' continuous service and whose employment is terminated by:

PKCT for any reason other than Serious Misconduct; or

the Employee on account of illness, incapacity or domestic or other pressing necessity, or by reason of the death of the Employee,

shall be entitled to a proportionate amount of leave calculated on the basis of sixty calendar days leave for ten years' service.

Where employment is terminated in accordance with Clause 22.3(b) the Company may request that the Employee provides sufficient documentary evidence.

22.4. Unless otherwise provided by this clause, long service leave shall be granted and paid in accordance with the Long Service Leave Act 1955 (NSW) as at date of registration of this Agreement.

22.5. For all Employees, all Long Service Leave accrued will be paid at the applicable Annualised Rate.

22.6. Due consideration should be given to the Employees' request, however the overriding consideration for the team is that any leave taken must not jeopardise the operational requirements of PKCT.

22.7. For Long Service Leave periods of greater than four weeks, where possible, and provided a minimum of four months notice has been received, the Company will arrange appropriate relief for the Long Service Leave period on recommendation from the LRG.

22.8 Payment in lieu of taking leave is prohibited by the Act, except upon termination.

22.9. Leave must be given and taken in periods of not less than one week, and in periods of complete weeks, ie. 7 calendar days.

22.10. When a public holiday occurs during Long Service Leave on a day which would have been an ordinary working day for the Employee had they not been on leave, a calendar day may be added to the period of leave or added to the Employee's Long Service Leave entitlement.

22.11. Payment for leave may be:

a. in advance (two weeks' notice required); or

b. at the time payment would have been made if the Employee was at work.”

[43] The most significant terms are those words which are contained in sub-clause 22.4 which state;

“Unless otherwise provided by this clause, long service leave shall be granted and paid in accordance with the Long Service Leave Act 1955 (NSW)”

and those words contained in sub-clause 22.9 which state;

“Leave must be given and taken in periods of not less than one week, and in periods of complete weeks,”.

[44] It is also relevant to set out the provisions of section 4 (3) of the LSL Act which are in the following terms:

“(3) Subject to subsection (5), where a worker has become entitled to long service leave in respect of the service of the worker with an employer, the employer shall give to the worker and the worker shall take the leave:

(a) as soon as is practicable having regard to the needs of the employer’s establishment, or, where the employer and the worker agree that the taking of the leave be postponed until an agreed date, as from that date,

(b) in one continuous period or, if the worker and the employer so agree, in the following separate periods and not otherwise:

(i) where the amount of the leave is 2 months, in two separate periods,

(ii) where the amount of the leave exceeds 2 months and does not exceed nineteen and one-half weeks, in two or three separate periods,

(iii) where the amount of the leave exceeds nineteen and one-half weeks, in two, three or four separate periods:”

The Question of Ambiguity

[45] The approach to resolving the contested construction question should logically commence with an examination of the relevant words so as to discern whether or not these words contain some ambiguity. It is well established that the approach to resolving questions of contested construction should focus upon providing the words under examination with their plain and ordinary meaning unless for some cogent reason such ordinary meaning is inappropriate and unavailable.

[46] The words “Unless otherwise provided by this clause, long service leave shall be granted and paid in accordance with the Long Service Leave Act 1955 (NSW)” which are found in sub-clause 22.4, have a clear and uncontroversial meaning. These words establish that the provisions of the LSL Act will govern the granting and payment of LSL unless a particular aspect of the granting and/or payment of LSL is specifically dealt with by another provision contained in clause 22 of the Agreement. This position may be alternatively expressed as; the provisions of the LSL Act are imported into the Agreement and are taken to be terms of the Agreement unless a particular provision of clause 22 deals with the subject matter of a particular provision of LSL Act.

[47] The words “Leave must be given and taken in periods of not less than one week, and in periods of complete weeks,” which are found in sub-clause 22.9, when given their plain and ordinary meaning, establish that any period of LSL cannot be less than one week. These words do no more than fix a minimum period of LSL. Importantly, the words contained in sub-clause 22.9 do not deal with any other aspect of the period of LSL other than that it cannot be less than one (complete) week.

[48] Further, there are no other provisions in clause 22 which deal with any other aspect of a period of LSL. Consequently, clause 22 and specifically sub-clause 22.9, provides a prescription in respect to one aspect of the taking of LSL namely, that it cannot be taken in periods of less than one week. However, clause 22 of the Agreement is otherwise silent in respect to any other aspect of the taking of any period of LSL.

[49] Consequently, the terms of sub-clause 22.9 when read and considered in conjunction with the context established by the other provisions of clause 22, are capable of being given their plain and ordinary meaning. In my view, the language of these terms of the Agreement is not ambiguous or susceptible to more than one meaning.

[50] It is also relevant to observe that if the words “Leave must be given and taken in periods of not less than one week, and in periods of complete weeks,” could be construed to permit multiple one week periods of LSL, in circumstances where the employer had the usual authority to approve or reject leave applications, employees may be required to take LSL in discrete one week periods. Consequently, the construction as urged by the CFMEU may appear to represent a beneficial outcome because the taking of LSL is largely determined by the relevant work group and not the employer. However, if this situation changed and the employer made the decisions about the taking of leave, the proposition advanced for the interpretation of these words may provide the employer with the potential to deny employees an opportunity to have a lengthy period of absence from the workplace on LSL.

The LSL Act

[51] As mentioned above, the practical effect of sub-clause 22.9 is that it imports the provisions of the LSL Act into the Agreement as terms of the Agreement except for and unless an aspect of LSL is prescribed by a term of clause 22. The provisions of section 4 (3) of the LSL Act deal with a prescription which establishes that certain continuous periods must be provided when taking LSL. The LSL Act does not appear to contain a prescription which would restrict any period of LSL to be no less than one week. Theoretically it would appear that the LSL Act would permit perhaps as little as one day of LSL to be taken. However, because of the provisions of section 4 (3) (b) of the LSL Act, if a period of LSL of less than one week was taken, then a longer continuous period of LSL would have to be provided as a “counterbalance” to the shorter period of LSL taken.

[52] An examination of the LSL Act and in particular section 4 (3), discloses an emphasis, indeed a primacy, which is placed upon the taking of LSL in continuous periods of lengthy duration rather than leave of a short duration. It is relevant to note that the LSL Act establishes entitlements to LSL in periods of months as opposed to weeks, days or hours. The entitlement to 2 months of LSL arises in respect of 10 years of service and then a further LSL entitlement of one month arises in respect of each subsequent five years of service.

[53] Further consideration of the LSL Act confirms the primacy for providing a statutory regime which provides for a period of lengthy, continuous absence from the workplace. This primacy is reflected by the use of the words “and not otherwise” in section 4 (3) (b) when prescribing arrangements for the taking of LSL in other than one continuous period of at least two months leave.

[54] Consequently, if the construction of sub-clause 22.9 permitted the taking of multiple periods of LSL of not less than one week’s duration it would directly conflict with section 4 (3) (b) of the LSL Act. Whether such a term of the Agreement would prevail over the provisions of the LSL Act is a matter which does not require contemplation in the present circumstances because the plain and ordinary meaning of sub-clause 22.9 establishes that it does not deal with that particular aspect of the taking of LSL which involves the overall length of the duration of the leave. Instead, section 4 (3) (b) of the LSL Act establishes a regime that requires LSL be taken in a fashion which includes a lengthy period of leave. This aspect of the overall length of the duration of a period of LSL is plainly not addressed by sub-clause 22.9 of the Agreement.

Past Practice and Attempted Change

[55] The fact that there had been a long-standing practice of non-observance of particular provisions of the various industrial instruments that applied over time does not operate to establish ambiguity with terms which have a plain meaning. If such a basis could be used to establish ambiguity the interpretation of the terms of the instrument would involve rewriting the Agreement to achieve either what may be regarded as a fair or just outcome, or a reflection of what had hitherto represented the behaviour of the Parties in the form of non-observance of the particular terms of the Agreement.
[56] It is also relevant to observe that, in this instance there are a number of factors which have operated to underpin the non-observance of the provisions of section 4 (3) (b) of the LSL Act.

[57] Firstly, although sub-clause 22.4 of the Agreement imports the provisions of section 4 (3) (b) of the LSL Act into the Agreement, those provisions are not physically apparent when reading the Agreement document. Therefore, unless someone who is interpreting the Agreement bothered to consult section 4 (3) (b) of the LSL Act it is likely and somewhat understandable that these provisions would be overlooked.

[58] Secondly, as mentioned earlier in this Decision there is a clear attraction for an employee who is taking a period of leave to arrange for the sandwiching of that leave.

[59] Thirdly, the approval of leave is a determination made by a work group rather than the employer. The employer apparently has no veto in respect to leave approvals. Strangely, the non-observance of the (imported) terms of the Agreement in the form of section 4 (3) (b) of the LSL Act, is conduct attributable to the work group rather than the employer.

[60] Fourthly, although the evidence on this point was incomplete, it appeared that in most instances the sandwiching of leave involved a continuous, lengthy period of leave which would probably be held to have been consistent with the underlying intent of section 4 (3) (b) of the LSL Act. The outcome generated by the non-observance therefore appeared to involve a sufficiently lengthy period, albeit a continuous period of leave which was comprised of different forms of leave.

[61] The employer's attempt to negotiate an alteration to the terms of the Agreement so as to prohibit the sandwiching of leave did not appear to be initially motivated by any concern for the prospect that the rationale for the taking of LSL in continuous, lengthy periods may have been infringed. Instead, the employer's desire to prohibit the sandwiching of leave was aroused by identification of potential cost saving.

[62] Irrespective of the motivation for any attempted change of the past practice, the recognition of that practice and its attempted change by alteration to the terms of the Agreement may understandably be implied as the employer’s acceptance that the terms of the Agreement permitted the sandwiching of leave. However, the employer rejected any such implied acceptance and in circumstances where it did not have the practical capacity to implement the terms of the Agreement in accordance with the construction for which it contended, the employer was left with little alternative other than to acquiesce to the practice which is believed to be contrary to the terms of the Agreement.

[63] In circumstances where during the course of the enterprise bargaining negotiations the employer unsuccessfully attempted to alter the terminology of the Agreement to prohibit the sandwiching of leave there would be a natural tendency to assume that the terms of the Agreement permitted the sandwiching of leave. However, such an assumption cannot translate into a factor which is relevant to support a determination that the construction of the terms should be consistent with the past practice of sandwiching of leave.

[64] Further, in respect to the question of the past practice of the Parties, it is relevant to refer to the following extract from the Full Bench Decision in Essential Energy v Australian Municipal, Administrative, Clerical and Services Union and Others  3 (Essential Energy):

“[23] In addition, there is one well-established further principle relevant to the interpretation of industrial instruments, including enterprise agreements, which we consider to be relevant, namely that it is not permissible to take into account the conduct of parties which occurs after an industrial instrument is made as an aid to interpret that industrial instrument.”

[65] It is also relevant to refer to the paragraphs which immediately precede the extract quoted above from the Essential Energy Decision and which includes the often cited extract from Madgwick J in Kucks v CSR Limited  4:

“But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.”

[66] Accordingly, the words “Leave must be given and taken in periods of not less than one week, and in periods of complete weeks,” which are contained in sub-clause 22.9 of the Agreement, do not conflict with and must be read in conjunction with section 4 (3) (b) of the LSL Act. Consequently, the Agreement when read in conjunction with the LSL Act, establishes that LSL cannot be taken in a period of less than one week and it must be taken in either one continuous period or in separate periods which accord with the prescriptions contained in paragraphs (i), (ii) and (iii) of section 4 (3) (b) of the LSL Act.

Conclusion

[67] The determination of the dispute in this instance has involved a requirement to settle a contested construction question arising from particular terms contained in an Enterprise Agreement. The contest has emerged as a result of some unusual circumstances involving the taking of a period of leave which involves a combination of LSL and annual leave interposed on a weekly basis. The taking of leave in this sandwiching fashion provides benefit to employees by virtue of their particular rostering arrangements and the employer’s leave debiting processes.

[68] The contest has primarily focussed upon the competing propositions as to whether the words “Leave must be given and taken in periods of not less than one week, and in periods of complete weeks,” permit the sandwiching of leave. The CFMEU contended that these words were inconsistent with the provisions of the LSL Act and displaced in particular, section 4 (3) (b) of the LSL Act, therefore permitting the sandwiching of leave. PKCT asserted that the plain and ordinary meaning of these words did not conflict with section 4 (3) (b) of the LSL Act and therefore the sandwiching of leave was contrary to section 4 (3) (b) of the LSL Act.

[69] Upon analysis, and application of the principles for resolution of questions of contested construction as established by the Golden Cockerel Decision, I have concluded that the disputed terms of the Agreement cannot be identified as containing ambiguity. Therefore these words should be given their plain and ordinary meaning as contended for by the employer.

[70] The correct construction of sub-clauses 22.4 and 22.9 of the Agreement results in a prescription that LSL cannot be taken in any period of less than one week and it must be taken in either one continuous period or in separate periods which accord with the prescriptions contained in paragraphs (i), (ii) and (iii) of section 4 (3) (b) of the LSL Act. Specifically, the terms of the Agreement when read in conjunction with the LSL Act where appropriate, do not permit the taking of a period of leave which involves a combination of LSL and annual leave interposed on a weekly basis (the sandwiching of leave).

[71] However, in passing I note that if the total duration of every period of leave which involved sandwiching of the leave was equal to or exceeded the longer periods of leave which are identifiable in the prescriptions contained in paragraphs (i), (ii) and (iii) of section 4 (3) (b) of the LSL Act, there is every likelihood that such periods of sandwiched leave could be held to be compliant with the requirements of paragraphs (i), (ii) and (iii) of section 4 (3) (b) of the LSL Act and therefore permissible under the terms of the Agreement. This particular proposition was not the subject of any argument in the proceedings in this matter and it may be more appropriately an issue that could be dealt with by way of an application to the Industrial Relations Commission of New South Wales under section 5 (2) of the LSL Act.

[72] In view of the conclusions that I have reached the application made by the CFMEU must fail.

[73] The Parties are required to consult in respect to any requirement for an Order to be issued to reflect the determination of the dispute and advise the Commission accordingly within 21 days from the date of this Decision.

COMMISSIONER

Appearances:

Mr A Walkaden appeared for the Construction, Forestry, Mining and Energy Union.

Mr B Rauf of Counsel, instructed by Ms A Linton, solicitor from Ashurst Australia appeared for Port Kembla Coal Terminal.

Hearing details:

2015.

Sydney:

May, 26.

 1   The Australasian Meat Industry Employees Union v Golden Cockrell Pty Limited [2014] FWCFB 7447.

 2   The Australasian Meat Industry Employees Union v Golden Cockrell Pty Limited [2014] FWCFB 7447.

 3   Essential Energy v Australian Municipal, Administrative, Clerical and Services Union; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; The Association of Professional Engineers, Scientists and Managers, Australia [2015] FWCFB 1981.

 4 Kucks v CSR Limited [1996] IRCA 166 (19 April 1996), 66IR182.

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