Construction, Forestry, Mining and Energy Union v Stegbar Pty Ltd

[2017] FWC 4975

[2017] FWC 4975

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.739—Dispute resolution

Construction, Forestry, Mining and Energy Union

v

Stegbar Pty Ltd

(C2017/2659)

Building, metal and civil construction industries
COMMISSIONER PLATT	ADELAIDE, 22 SEPTEMBER 2017

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] – Commissions power to arbitrate under the Agreement – no express power to arbitrate – application  dismissed.

Background

1. In December 2016 the Construction, Forestry, Mining and Energy Union (CFMEU) lodged a dispute (C2016/7553) with the Fair Work Commission (the Commission) in relation to the employment conditions of four Installers engaged by Stegbar Pty Ltd (Stegbar). This matter was heard by Senior Deputy President O’Callaghan who put the parties on notice that should the matter not be resolved, a determination would need to be made concerning the Commission’s jurisdiction.

1. On 19 May 2017, the CFMEU lodged the current application which again concerns the employment conditions for a number of Installers engaged by Stegbar under the Stegbar Pty Ltd (SA Division) Enterprise Agreement 2014-2017[1] (the Agreement) which commenced on 4 December 2014.

1. The Commission conducted a conciliation conference on 7 June 2017.

1. One of the principal issues in this matter is whether the Installers engaged by Stegbar are employees or independent contractors.

1. The matter did not resolve by conciliation and the CFMEU has asked the Commission to arbitrate the matter. Stegbar does not consent to the matter being arbitrated and contend that the dispute resolution procedure in clause 15 and Appendix A of the Agreement does not confer unilateral arbitral powers on the Commission.

1. On 17 July 2017, I issued directions for the provision of written submissions from the CFMEU by 28 July 2017, any response from Stegbar by 4 August 2017 and any reply from the CFMEU by 11 August 2017.

1. There being no facts in dispute, the matter has been determined on the papers.

Dispute resolution provision in the Agreement

1. Clause 15 of the Agreement contains the dispute resolution procedure which provides as follows:

“15.0 Grievance and Disputes Procedure

The parties to this Agreement shall observe the procedures set out in Appendix A in relation to avoidance of disputes.”

1. Appendix A of the Agreement is as follows:

“Appendix A Avoidance of Industrial Disputes Procedure

It is the intention of this agreement to eliminate disputes which result in stoppages, bans or limitations and it is agreed that the parties to this agreement shall confer in good faith with a view to resolving the matter by direct negotiations and consultation.

The parties further agree that subject to the provisions of the Fair Work Act 2009, all grievances, claims or disputes shall be dealt with in the following manner so as to ensure the orderly settlement of the mater in question.

1. Any grievance or dispute, which arises, shall where possible, be settled by discussion on the job between the employee and the supervisor. Provided further that at any stage throughout this process either party may seek assistance of a representative of their choice. For employees this may be a site delegate or other person nominated by the employee.

2. If the matter is not resolved at this level, the matter will be further discussed between the affected employee, the supervisor and the appropriate manager.

3. If no agreement is reached at this stage the matter may be referred to a more senior manager.

4. Should the matter still not be resolved the parties may refer it to the Fair Work Australia for settlement. Any outcome from this stage will not be inconsistent with the current legislation nor inconsistent with the National Building Industry Code and guidelines as amended from time to time.

5. Whilst the procedure is being followed, work shall continue normally where it is agreed that there is an existing custom, but in other cases, the work shall continue in accordance with the directions of the company save and except for genuine issues of risk which may affect a specific employee’s safety. No party shall engage in industrial action and no party will be prejudiced as to the final settlement by the continuance of work in accordance to this sub clause.” (emphasis added)

Relevant legislation

1. Section 738 of the Act provides as follows:

“738 Application of this Division

…

(b)  an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6);”

1. The application of the CFMEU was made pursuant to s.739 of the Act which provides as follows:

“739 Disputes dealt with by the FWC

(1)  This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2)  The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a)  the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note:          This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3)  In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4)  If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note:          The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5)  Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6)  The FWC may deal with a dispute only on application by a party to the dispute.

1. Section 595 provides the Commission with power to deal with disputes:

“595 FWC’s power to deal with disputes

(1)  The FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

(2)  The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:

(a)  by mediation or conciliation;

(b)  by making a recommendation or expressing an opinion.

(3)  The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

Example:    Parties may consent to the FWC arbitrating a bargaining dispute (see subsection 240(4)).

(4)  In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.

Example:    The FWC could direct a person to attend a conference under section 592.

(5)  To avoid doubt, the FWC must not exercise the power referred to in subsection (3) in relation to a matter before the FWC except as authorised by this section.”

Submissions

1. The CFMEU’s position is summarised as follows:

·  Section 595 of the Act provides power for the Commission to deal with disputes and that subsection 595(3) provides for arbitration only if the Commission is expressly authorised to do so.

·  Section 739 of the Act provides how the Commission will deal with disputes.  Subsection 739(4) provides that, if in accordance with the dispute resolution term, the parties have agreed that the Commission may arbitrate (however described), the Commission may do so. Section 739 does not require that a dispute resolution term explicitly stipulate that parties agree to arbitrate for the Commission to have jurisdiction.

·  The decision in Woolworths Ltd trading as Produce and Recycling Distribution Centre[2] (Woolworths) resulted from a requirement that ‘parties’ agree and that such a pre-condition is not present in the Agreement. 

·  There is an ‘implicit agreement’ in the Agreement that a matter may proceed to arbitration.

·  The insertion of the requirement that any outcome under the dispute resolution term not be inconsistent with the National Building Industry Code and guidelines implies that the Commission has arbitral powers and fettered same.

·  The Commission should infer from the history that there was a common intent that the Commission has arbitral powers.

·  The Commission should adopt the orthodox principles of construction referred to by Deputy President Gostencnik in CFMEU v Laminex Group Pty Ltd.[3]

·  The CFMEU contend that the terms of the Agreement dispute resolution clause are distinguishable from the facts in CC Pty Ltd (trading as Cook Colliery) v CFMEU.[4]

·  The CFMEU provided historical context concerning dispute resolution clauses contained its predecessor agreements[5] it had reached with Stegbar and I note that since 1993 the dispute resolution provisions in the agreements referred to have all provided for ‘the parties’ to submit disputes to the Commission ‘for settlement’.

·  The reference to ‘the parties’ means ‘each of the parties’.

· The reference to ‘settlement’ means to reach decision or agreement, or to end a disagreement, and the word settlement must be read in the context of s.134 of the Industrial Relations Act 1988.

1. Stegbar’s position is summarised as follows:

·  It does not agree to the dispute being arbitrated by the Commission.

·  Section 595 of the Act only permits the Commission to deal with a dispute if ‘expressly’ authorised to do so.

·  When interpreting an Agreement the construction should provide a sensible outcome which, if reasonably possible, is fair to both parties. See Amcor Ltd v Construction, Forestry, Mining and Entergy Union.[6]

·  The Agreement history submitted by the CFMEU is not evidence of common intent.

·  The dispute provision is not unclear or ambiguous.

·  The dispute provision does not confer unilateral arbitration powers upon the Commission.

Principles of Interpretation

1. The Full Bench in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited[7] of the Commission recently modified the approach to interpretation set out in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd (Berri).[8] I adopt those revised principles.

Relevant Case Authorities

1. In Woolworths, the Full Bench considered the Commission’s power in dealing with disputes and stated:

“[19] The section is concerned with the powers the tribunal may exercise in dealing with disputes. Section 595(1) provides that Fair Work Australia may only deal with a dispute if it is expressly authorised to do so. Section 595(2) provides that the tribunal may deal with a dispute by mediation, conciliation, making a recommendation or expressing an opinion subject to the qualification that it may not deal with the dispute by arbitration. Section 595(3) permits the tribunal to arbitrate if it is expressly authorised to do so. Section 595(4) operates to confer procedural powers. It seems to us clear enough from the text of these provisions that the legislature intended that Fair Work Australia can deploy voluntary methods of dispute resolution without the consent of the parties to the dispute, provided the dispute is one with which it is authorised to deal, but can only arbitrate if it has been specifically empowered to do so.

[20] Sections 738 and 739 are also directly relevant. They provide:

[legislative extract omitted]

[21] Section 738 specifies the type of dispute resolution terms to which the division applies. Section 738(b) makes it clear that the division applies in relation to a dispute resolution procedure of the kind described in s.186(6). Section 739(1) provides that the section applies if a term in s.738 requires or allows Fair Work Australia to deal with a dispute. Section 739(2) is not relevant. Section 739(3) provides that a dispute resolution term can limit the powers available to Fair Work Australia to settle a dispute. Section 739(4) sets out the circumstances in which Fair Work Australia may arbitrate a dispute, providing that if the parties have agreed that Fair Work Australia may arbitrate, Fair Work Australia may do so. It appears to us that s.739(4) strongly implies the negative stipulation that if the parties have not agreed, Fair Work Australia has no power to arbitrate.

[22] The operation of these provisions in relation to dispute resolution terms in enterprise agreements is specifically referred to in the Explanatory Memorandum to the Fair Work Bill 2008. We refer first to paragraph 2290. That paragraph deals with the relationship between s.595 and s.739. It reads:

“2290. Subclause 595(4) ensures that, when FWA is dealing with any of these disputes, FWA can exercise any of its powers under Subdivision B. For example, FWA could direct a person to attend a conference under clause 592. However, there is an exception for Part 6-2 disputes. The procedure in the modern award, enterprise agreement, workplace determination or contract of employment can limit the powers that FWA can exercise in dealing with the dispute (see subclause 739(3)).”

[23] This paragraph repeats the direct indication in s.739(3) that a dispute resolution term might limit the powers otherwise available to Fair Work Australia. It appears from the reference to s.595(4) that the paragraph is primarily referring to the procedural powers conferred by Subdivision B rather than the power to arbitrate. Relevantly, however, the concluding sentence of the paragraph supports the implication in the words of s.739(4) that in the absence of agreement Fair Work Australia has no power to arbitrate. If the legislature has specifically provided for limits upon the use of arbitral power pursuant to dispute resolution procedures, it is difficult to see how the conclusion could be sustained that “arbitration is a prerequisite to the approval of an agreement.

[24] The Commissioner relied upon the model term for dealing with disputes for enterprise agreements provided for in s.737 of the Fair Work Act, as did a number of parties to the appeal. It will be necessary to examine the relevant provisions and the parliamentary materials. Section 737 reads:

“737 Model term about dealing with disputes

The regulations must prescribe a model term for dealing with disputes for enterprise agreements.”

[25] The model term is found in Schedule 6.1 to the Fair Work Regulations 2009:

“SCHEDULE 6.1 MODEL TERM FOR DEALING WITH DISPUTES FOR ENTERPRISE AGREEMENTS

(regulation 6.01)

Model term

(1) If a dispute relates to:

(a) a matter arising under the agreement; or

(b) the National Employment Standards;

this term sets out procedures to settle the dispute.

(2) An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.

(3) In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management.

(4) If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Australia.

(5) Fair Work Australia may deal with the dispute in 2 stages:

(a) Fair Work Australia will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

(b) if Fair Work Australia is unable to resolve the dispute at the first stage, Fair Work Australia may then:

(i) arbitrate the dispute; and

(ii) make a determination that is binding on the parties.

Note   If Fair Work Australia arbitrates the dispute, it may also use the powers that are available to it under the Act.

A decision that Fair Work Australia makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.

(6) While the parties are trying to resolve the dispute using the procedures in this term:

(a) an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and

(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

(i) the work is not safe; or

(ii) applicable occupational health and safety legislation would not permit the work to be performed; or

(iii) the work is not appropriate for the employee to perform; or

(iv) there are other reasonable grounds for the employee to refuse to comply with the direction.

(7) The parties to the dispute agree to be bound by a decision made by Fair Work Australia in accordance with this term.”

[26] Having set out the terms of clause 5 of the model term, the Commissioner observed:

“This reinforces, in my view, the construction I prefer as to the meaning and operation of s.186(6). Again, whilst it is not necessary to use the model clause nonetheless, there are, in my view, essential ingredients.”

[27] Consistent with our earlier conclusion, it appears to us that the construction the Commissioner was referring to was one in which compulsory arbitration is an “essential ingredient” in the procedure. As the Commissioner noted, however, the model term is not mandatory. Reference to the Explanatory Memorandum makes this clear. Paragraph 2730 and 2731 are relevant:

“2730. This requirement means, for example, that while the initial stages of a dispute resolution process may involve the direct participants, such as the manager and the employee (and his of [sic] her representative), the final stage of the process must involve FWA or any independent person or body, such as [sic] professional mediator.

2731. Employers and employees (and their bargaining representatives) can refer to the model term for guidance, and may agree to include the term, or part of it, in a proposed enterprise agreement.”

[28] These paragraphs do not support the conclusion that the legislature intended arbitration to be an “essential ingredient” in dispute resolution terms. They support the contrary view. The reference in paragraph 2730 to a “professional mediator” is a clear indication that arbitration is not an essential ingredient. A less direct, but nevertheless relevant indication is the statement in paragraph 2731 that the model term is for guidance and parties may agree to include part of the term only in a proposed agreement. The concept of “essential ingredients” is not grounded in anything to be found in Schedule 6.1 or the Explanatory Memorandum.

[29] In our view the model term does no more than illustrate the types of procedures and powers that may be dealt with in a dispute resolution term. There is no basis for an implication that all of them must be included in every term. Such an implication would, in any event, be inconsistent with the express terms of s.739(3).

[30] Now we turn to the words of s.186(6). We do so in the context of some relevant authority. The critical words of s.186(6) are as follows:

“a term… that provides a procedure that requires or allows FWA, or another person… to settle disputes…”

[31] In 1998 in Ampol Refineries (NSW Pty Ltd and Australian Institute of Marine and Power Engineers (1998) (Ampol) a Full Bench of the Commission was required to consider the construction of a statutory provision which was very similar, although not identical, to s.186(6). The provision was s.170LT(8) of the Workplace Relations Act 1996 (WR Act). That section read:

“The agreement must include procedures for preventing and settling disputes between:

(a) the employer; and

(b) the employees whose employment will be subject to the agreement;

about matters arising under the agreement.”

[32] The Full Bench had before it a dispute settlement procedure in an agreement which provided for unresolved disputes to be referred to the Commission but did not require arbitration of such disputes. It was held that the procedure in question was one which met the requirements of s.170LT(8). In the course of its decision the Full Bench indicated that in its view s.170LT(8) required a procedure for preventing and settling disputes, not one which guaranteed a settlement in each case. The Full Bench gave a number of reasons. Ampol was decided in February 1998. The decision has never been challenged and there has been no requirement that dispute resolution procedures in agreements contain an arbitration clause, or for that matter any other mechanism to guarantee settlement of a dispute.

[33] The Commissioner held that the statutory context of the Fair Work Act, and in particular the terms of s.186(6), are such that Ampol could and should not be applied to applications for approval of enterprise agreements under s.185.

[34] We note firstly that the language of s.186(6) is very similar to the language of s.170LT(8). Relevantly the expression “to settle disputes” has replaced the words “for… settling disputes”. It was submitted that this change in drafting was intended to be a substantive one and that it supports the construction the Commissioner adopted. It was also submitted that the requirement in s.186(6) that the procedure “requires or allows Fair Work Australia, or another person who is independent” to settle disputes is also a relevant change.

[35] At the time Ampol was decided the powers of the Commission in relation to disputes under agreements were dealt with in s.170LW of the WR Act. That section should be set out in full:

“170LW Procedures for preventing and settling disputes

Procedures in a certified agreement for preventing and settling disputes between the employer and employees whose employment will be subject to the agreement may, if the Commission so approves, empower the Commission to do either or both of the following:

(a) to settle disputes over the application of the agreement;

(b) to appoint a board of reference as described in section 131 for the purpose of settling such disputes.”

[36] It can be seen that, pursuant to this section, unless the agreement conferred dispute settling functions on it, the Commission had no power to perform those functions and the parties had a choice in that regard. It was argued that the words “requires or allows” in s.186(6) of the Fair Work Act should be read distributively so that “requires” refers to Fair Work Australia and “allows” refers to “another person who is independent”. That argument cannot stand in light of the words of s. 739(1), which are set out earlier in this decision. More importantly, the opening words of s.170LW use the expression “for … settling disputes” and subsection (a) uses the expression “to settle disputes”. This language suggests that no significance should be attached to changes in language as between s.170LT(8) and s.186(6). The exact words upon which reliance is placed in this case as indicating a change in meaning, “to settle disputes”, were part of the statutory description of the powers that the Commission could exercise when Ampol was decided.

[37] The changes in terminology relied upon by those opposing the appeal are not significant. If the legislature had intended to alter the effect of the Full Bench decision in Ampol it could easily have made that intention explicit. The absence of an express statement of intention suggests there is no such intention. Furthermore, as we have endeavoured to show, other relevant parts of the Fair Work Act do not support the conclusion the Commissioner reached, rather they tell strongly against it.” (citations omitted and emphasis added)

Consideration

1. The key provision in issue is the first sentence of clause 4 of Appendix A, “Should the matter still not be resolved the parties may refer it to the Fair Work Australia for settlement.”

1. It is not in dispute that the subject matter of the complaint has not been resolved.

1. The next issue is the meaning of the term ‘the parties’.

1. Whilst it appears the reference to ‘the parties’ may infer a requirement for a joint reference of any dispute, if that construction was preferred it would have the result of the Agreement not meeting the requirements of s.186(6) of the Act. It appears to me that the reference to the parties means either party may refer a matter to the Commission. This construction would meet the requirements of s.186(6) of the Act and is consistent with s.739(6) of the Act and the approach taken in CFMEU v Laminex Group Pty Ltd.[9]

1. The next issue is the reference to Fair Work Australia as opposed to the Fair Work Commission. The Fair Work Amendment Act 2012 had the effect of renaming Fair Work Australia to the Fair Work Commission.  The statement of Mr Kirner of the CFMEU suggests that since the first collective agreement was reached with Stegbar, subsequent agreements were based on the first agreement and mostly represented a ‘roll over’ of the previous agreement’s terms. I suspect that this ‘roll over’ process was the reason why the name of the Commission was not updated in the Agreement. Whilst the parties have not addressed this aspect in their submissions, I have no doubt that the reference to Fair Work Australia is a reference to Commission now known as the Fair Work Commission.

1. The final and key issue, is the meaning of the term ‘for settlement’ and whether this phrase confers arbitral power on the Commission.

1. In Ampol Refineries (NSW) Pty Ltd v Australian Institute of Marine and Power Engineers P8620) the meaning of the word ‘for’ was discussed as detailed below:

“Second, we are of the view that the word "for" in "procedures for preventing and settling" means "with the object or purpose of". While the word "for" can have various meanings, an examination of dictionary definitions (e.g. The Macquarie Dictionary, 3rd edition, p. 825) indicates to us that the primary and most common meaning of the word is "with the object or purpose of".”

1. As discussed above, s.186(6) of the Act does not require a dispute resolution provision to confer arbitral powers on the Commission.[10]

1. In Woolworths[11] it was held that s.739(4) of the Act strongly implies the negative stipulation that if the parties have not agreed, Fair Work Australia has no power to arbitrate.

1. In my view, a power to settle matters is not analogous to a power to arbitrate. The Commission can and does settle disputes by various means other than arbitration.

1. I am unable to accept that the term ‘settlement’ is sufficient to confer arbitral powers on the Commission in respect of determining disputes under the Agreement.

1. I find that the Commission does not have power under the Agreement to arbitrate this dispute and, accordingly, this application is dismissed.

COMMISSIONER

Final written submissions:

Construction, Forestry, Mining and Energy Union 28 July 2017 and 14 August 2017.

Stegbar Pty Ltd 4 August 2017.

[1] AE411273, [2017] FWCA 8303

[2] [2010] FWAFB 1464

[3] [2016] FWC 8259 at [6]

[4] [2017] FWCFB 2749

[5] Stegbar Norfe (Regency Park)(Enterprise Bargaining) Agreement 1993; Stegbar Pty Ltd (SA Division) Enterprise Bargaining Agreement 1997;  Stegbar Pty Ltd (SA Division Enterprise Bargaining Agreement 1999-2012;  Stegbar Pty Ltd (SA Division) Enterprise Bargaining Agreement 2004; Stegbar Pty Ltd (SA Division) Enterprise Bargaining Agreement 2008; Stegbar Pty Ltd (SA Division) Enterprise Agreement 2011;

[6] (2005) 222 CLR 241

[7] [2017] FWCFB 3005

[8] [2014] FWCFB 7447

[9] [2016] FWC 8259 at [6]

[10] Re Woolworths Ltd (t/as Produce and Recycling Distribution Centre) (2010) 192 IR 124

[11] [2010] FWAFB 1464

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