Construction, Forestry, Mining and Energy Union v Toll North Pty Ltd

[2013] FWC 6409

[2013] FWC 6409 [Note: a correction has been issued to this document]

FAIR WORK COMMISSION

DECISION

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

Construction, Forestry, Mining and Energy Union
v
Toll North Pty Ltd
(C2013/4467)

Coal industry
COMMISSIONER SPENCER	BRISBANE, 13 NOVEMBER 2013

Alleged dispute regarding clause 18 - rates of pay.

Introduction

[1] This decision relates to an application made by the Construction, Forestry, Mining and Energy Union (the Applicant/Union) pursuant to s.739 of the Fair Work Act 2009 (Cth) (the Act) for the Fair Work Commission (the Commission) to deal with a dispute under the Toll Mining Services North Dyno Contract (Dawson Mine) and CFMEU Agreement 2012 (the Agreement). The Agreement was approved by the Commission on 25 February 2013 and commenced operation on 4 March 2013.The nominal expiry date of the Agreement is 1 January 2014.

[2] The alleged dispute relates to employees employed by Toll North Pty Ltd (the Respondent) in the position of Operator at the Respondent’s depot located at Dawson Mine, in Moura Queensland.

[3] A conference was convened in this matter but the dispute was unable to be resolved. The Applicant requested that the matter proceed to Hearing for arbitration. Directions were issued in the matter and a Hearing listed for one day.

[4] This dispute relates to alleged non-compliance with rates of pay clause in the Agreement and in particular a 4% pay increase “effective from 1 January 2013” 1. The full terms of the relevant clause are extracted below. The Applicant alleges that the increase has not been appropriately passed on to employees but the question is complicated by the fact that the Respondent implemented a roster change, which it was entitled to do pursuant to the Agreement, on or about the time that the pay increase was to take effect.2 The Applicant did not dispute that the Respondent was able to implement the roster change.

[5] The Applicant was represented by Mr Slevin, of Counsel instructed by Mr Chris Newman, Legal Officer CFMEU. The Respondent was represented by Mr Copeland, of Copeland Workplace Law.

[6] While all submissions and materials in this matter have not been referred to all of such have been considered.

Relevant Provisions of the Legislation and Agreement

[7] The application is made pursuant to s.739 of the Act which provides:

“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.”

[8] Section 739 of the Act applies “if a term referred to in section 738 requires or allows the FWC to deal with a dispute” 3. Section 738 of the Act provides:

“738 Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or

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

(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or

(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.”

(underlining added)

[9] The Agreement clause 10 provides for the “DISPUTE RESOLUTION PROCEDURE” as follows:

“10. DISPUTE RESOLUTION PROCEDURE

10.1 If a dispute relates to:

a) a matter arising under the Agreement; or

b) the Award; or

c) the NES; or

d) any other work-related matter, this clause sets out procedures to settle the dispute.

10.2 An Employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.

10.3 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.

10.4 If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to FWA.

10.5 FWA may deal with dispute in 2 stages:

a) FWA will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a non-binding recommendation; and

b) if FWA is unable to resolve the dispute a (sic) the first stage, FWA may then:

i. arbitrate the dispute; and

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

If FWA arbitrates the dispute, it may also use the powers that are available to it under the Act. In exercising its role under this clause, Fair Work Australia may exercise any of its powers under the Fair Work Act 2009 and in accordance with this dispute resolution procedure, any additional conciliation or arbitration powers it finds are necessary to effectively resolve the matter or issue in dispute.

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

...”

[10] The relevant clause of the Agreement in relation to the dispute is clause 18 which provides:

“18. RATES OF PAY

18.1 The Base Hourly Rate at the commencement of the Agreement is $28.0229 per hour.

18.2 To normalise each pay week a normalised weekly wage will be paid. The normalised weekly wage is the average weekly pay calculated from the roster. This normalised weekly wage includes payment for all overtime, penalties, Public Holidays and any allowances, including Industry and otherwise paid in the Coal Mining Industry. If the roster is changed then the normalised wage will be recalculated to reflect the revised roster. Any dispute over recalculations will be dealt with expeditiously in accordance with Clause 10, commencing at step 10.4.

18.3 The normalised weekly wage for the roster at the commencement of the Agreement is $1,836.62 calculated for the 5 on /4 off, 5 on/4 off, 5 on/5 off roster, and preserved for any even time continuous dayshift roster.

18.4 Work in addition to the normal rostered hours will be paid at double the Base Hourly Rate of pay.

18.5 In the first and last pay weeks of employment the Employee will not be paid the normalised weekly wage. The Employee will be paid for the actual hours worked calculated in accordance with the roster, including penalties, overtime and allowances that may apply.

18.6 During the initial period of employment any training undertaken will be paid at the base rate as well as any penalties, overtime or allowances that may apply.

18.7 The Base Hourly Rate will be increased once during the term of the Agreement by 4% effective from 1 January 2013. In addition Employees will be back paid the 4% increase from 1 January 2012 to 1 July 2012.”

[11] The term “Base Hourly Rate” is relevant defined in clause 2 as:

“Base Hourly Rate means the hourly rate payable to Employees for their ordinary hours of work, but not including any of the following:

a) loadings;

b) monetary allowances;

c) overtime or penalty rates; and

d) any other separately identifiable amounts.”

[12] Clause 20 of the Agreement provides:

“20. HOURS OF WORK

20.1 Toll’s business operations are conducted on a 24 hour, 7 day cycle, which includes shift work, weekend and public holidays. The hours of work are rostered to meet client demand.

20.2 A full-time Employee’s ordinary hours of work will be an average of 35 hours per week, plus reasonable additional overtime. The actual hours of work each week will depend on the specific roster Employees work.

20.3 Subject to the requirements of Dyno Nobel and the mine operator, Employees will work a 7 on/ 7 off continuous day shift roster from on or about the commencement date of this Agreement.”

Summary of the Applicant’s Submissions and Evidence

[13] The Applicant seeks a determination by the Commission pursuant to clause 10.5(b)(i) and (ii) of the Agreement in relation to clause 18 of the Agreement.

[14] The Applicant accepts that at the time the Agreement commenced operation the hourly base rate of pay, pursuant to clause 18.1, was $28.0229. 4

[15] The Applicant submitted that clause 18.2 of the Agreement allowed the Respondent to implement a roster which included a normalised wage. This normalised wage included payment for penalty rates when the roster required work to be undertaken that would attract a penalty rate. In this regard the Applicant submitted that the clause “requires” that in doing a roster change the Respondent is to recalculate the employee’s normalised weekly wage paid and that any dispute as to the recalculation can be disputed through the disputes procedure in clause 10.

[16] The Applicant referred to clause 18.3 of the Agreement (extracted above) which states that the normalised weekly wage at the commencement of the agreement “is” $1836.62 (the commencement wage) on the basis of the rosters prevailing at the time, being 5 on/ 4 off, 5 on/ 5 off and 5 on/ 5 off rosters. Of relevance, the commencement wage is “preserved for any even time continuous dayshift roster” 5. The term even time continuous dayshift roster is not defined in the Agreement.

[17] The Applicant submitted that by way of letter of 26 March 2013 the Respondent advised employees that their employment conditions had changed, specifically that the rosters had been changed from a 5/4 ordinary time roster to a 7/7 ordinary time roster. A copy of this letter was annexed to the affidavit of Mr Stephen Briscoe, employee Driver/Operator of the Respondent. 6

[18] Relevantly the correspondence stated:

“WAGES

4.1 You will be paid at a base rate of $29.1438 per hour. To normalise each pay week the company will pay the following normalised weekly wage:

$1836.62 gross per week.

4.2 This normalised weekly wage is based on a 7 on 7 off roster and the starting and finishing times per shift as advised to you at your site. Should you be required to change shift rosters, a different weekly wage may be calculated.

4.3 This normalised weekly wage includes payment for any and all allowances, including Industry and Public Holidays, otherwise paid in the Coal Mining Industry and Regional Allowances applied to meet the requirements of the Agreement.”

[19] The letter of 26 March 2013 stated that “these changes” would commence on 20 March 2013.

[20] The Applicant accepted that the reference in item 4.1 of the letter of 26 March 2013 (extracted above) to a base rate (which is assumed to be a reference to the “base hourly rate” as provided for in the Agreement) of $29.1438 per hour is consistent with clause 18.7 and the wage increase provided for in that clause. The Applicant contests the normalised weekly wage, contained in the letter, which is the same as the commencement wage, being $1836.32 gross per week.

[21] The Applicant submitted that on 11 April 2013 employees covered by the Agreement received back pay for the period of 1 January 2013 to 30 March 2013 in accordance with clause 18.7. The Applicant submitted that this backpay amounted to the difference in the weekly wage of $1836.62 gross per week versus the adjusted normalised weekly wage, taking into account the 4% increase, of $1902.08 gross per week. The Applicant submitted that from 20 March 2013, being the date that the roster changed, the Respondent reverted to a normalised weekly wage of $1836.62 gross per week.

[22] The Applicant’s contention is that the Respondent, in setting the normalised weekly wage, from 20 March 2013, has not “preserved” the normalised weekly wage as required by clause 18.3. The Applicant submitted that the normalised weekly wage for the 5/4 roster, at the time of the change to the 7/7 roster was $1910.08. This rate is the commencement wage adjusted to take into account the 4% wage increase to the base hourly rate.

[23] The Applicant submitted that the dispute is to the proper construction of clause 18 of the Agreement. The Applicant relied upon the two differing interpretations that the parties have in relation to this clause as giving rise to an ambiguity. The Applicant relied upon the Full Bench decision in Re Tenix Defence Systems Pty Ltd Certified Agreement 2001-2004 7where it was stated:

“[31] The Commission will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention.”

[24] The Applicant also relied upon the High Court decision in Amcor Ltd v Construction Forestry, Mining and Energy Union 8 was follows:

“The High Court considered the construction of industrial instruments in Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [2] and [96]. In that case Gleeson CJ and Mc Hugh J said at paragraph [2] that:

(t)he resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose, and the nature of the particular reorganisation.

At paragraph [13], their Honours referred to:

…the industrial purpose of the agreement, and the commercial and legislative context in which it applies.

Further, Kirby J said at paragraph [96]:

The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court, of interpreting industrial instruments and especially certified agreements. I agree with the following passage in the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed:

It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.” 9

[25] The Applicant approached the dispute on a two prong basis. The first limb of the submission is that clause 18, when read as a whole, preserves the normalised weekly wage, of the 5/4 rosters for the purposes of any future change to a 7/7 roster. This preserved rate is $1836.62 gross per week. The second limb of the submission is that the relevant purpose of clause 18 is to provide for a 4% increase to the existing base hourly rate which would then flow through to the normalised weekly wage.

[26] It is this second recalculated normalised weekly wage that the Applicant submits was preserved for the purposes of the change to a 7/7 roster. The Applicant submitted their interpretation of clause 18.3 as follows:

“Once the increase was effected, using the wording in clause 18.3, the normalised weekly wage for the “roster at the commencement of the Agreement” (the 5/4 roster) was $1,910.08 and that rate was “preserved for any even time continuous dayshift roster”.” 10

[27] The Applicant submitted that this interpretation reflected the “purpose” of clause 18 being to firstly preserve the 5/4 roster weekly rate and secondly provide for a 4% increase from 1 January 2013. This purpose, it was submitted, reflects the purpose of the framers of the document and the industrial purpose of the provision in the industrial context of reaching an enterprise agreement that provided fair terms and conditions of employment.

[28] The Applicant submitted that this interpretation is also consistent with the common intention of the parties expressed during negotiations and the subsequent approval process of the Agreement.

[29] The Applicant referred to the Full Bench authority of SDA v Woolworths 11where the Full Bench said, in relation to ascertaining the common intentions of the parties:

“The second limitation is that regard cannot be had to the respective subjective intentions and expectations of the parties as demonstrated by their “statements and actions” in negotiating the agreement. Rather, the task is to identify the common intention of the parties as they have expressed it in the terms of their agreement. In the context of commercial contracts, this task was described by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd in the following way:

“It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.”” 12

[30] In this regard the Applicant submitted into evidence an affidavit of Mr Glenn Power, District Vice President, and an affidavit of Mr Stephen Reginald Briscoe, employed as Driver/Operator, at the Respondent’s depot at the Dawson Mine.

Summary of the Respondent’s Submissions and Evidence

[31] The Respondent submitted that the Commission, in considering whether an ambiguity in the meaning of the terms, should have regard to the decision of Watson SDP in Master Builders Australia Limited 13 where his Honour stated:

“The approach to determining whether an agreement or award contains an uncertainty or ambiguity was usefully summarised by Senior Deputy President Marsh in Re Beltana No.1 Salaried Staff Certified Agreement 2001 as follows:

the correct approach to identifying an ambiguity or uncertainty requires the making of an objective judgment as to whether, on the proper construction of the relevant provision of an agreement, the wording of that provision is susceptible to more than one meaning (PR917548 at para.49, PR903843 at para.7, Print M2454 at p.3);

the words used in the provision are construed in their context including where appropriate the relevant parts of the parent award with which a complementary provision is to be read (Print Q2603 at para.30 per Munro J);

s.170MD(6)(a) is not confined to the identification of which words of a clause give rise to an ambiguity or uncertainty. A combination of clauses may have that effect (Print R2431 at para.12);

the Commission will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention (Print M2454 at p.4, Print R2431 at para.14);

the Commission’s task is to make an objective judgment as to whether the wording of a provision is susceptible to more than one meaning. It must avoid contentions that are ‘self serving’ (PR924146 at para.20 and PR903843 at para. 7).” 14

[32] The Respondent submitted that this decision was upheld on appeal.

[33] The Respondent submitted that applying the principles referred to by his Honour, there is no uncertainty or ambiguity in the relation to the relevant portions of clause 18 of the Agreement.

[34] In relation to clause 18.1 the Respondent submitted that the Agreement commenced on 4 March 2013 and that at 4 March 2013 the Base Hourly Rate was $28.0229 per hour. The Respondent submitted that there is no ambiguity or uncertainty in this clause.

[35] The Respondent does not dispute that the normalised weekly wage for the “long roster” at the commencement of the Agreement was $1836.62. The Respondent submitted that in accordance with clause 18.7 the Base Hourly Rate was increased by 4% and the normalised weekly wage for the “long roster” was recalculated with the new Base Hourly Rate. The result was that the normalised weekly salary increased to $1910.08.

Consideration

[36] The Respondent has not raised any jurisdictional objections to the matter progressing to arbitration contemplated by clause 10.5(b). The Commission is however satisfied that it is a “dispute” within jurisdiction and contemplated by clause 10.1, specifically clause 10.1(a), being a dispute relating to a matter arising under the Agreement. Further the dispute is a dispute pursuant to clause 10.1(d) being a dispute relating to any other work-related matter.

[37] The parties confirmed at Hearing that the matter had proceeded through the disputes procedure in the normal course in any event.

[38] The Applicant has referred the dispute to the Commission in accordance with clause 10.4 and under s.739 of the Act. The Commission has attempted to resolve the dispute by conciliation which was unsuccessful. The Commission is satisfied that it has jurisdiction to resolve the dispute by arbitration.

[39] The term “normalised weekly wage” is not defined in the Agreement. The Applicant does not dispute that the normalised weekly wage, utilising the increased Base Hourly Rate, for the new 7/7 roster is $1751.99 per week. The dispute is, what rate, for the normalised weekly wage, was preserved for the purposes of the Agreement, and, more specifically, for the impending roster change that was in the minds of the parties at the time of negotiation?

[40] The Agreement has not been drafted in a way that takes into account that the Agreement was not filed for approval by the Commission until after the pay increase in clause 18.7 was agreed to be “effective from”. This creates a conflict between clause 18.1, where the Base Hourly Rate is said to be $28.0229 per hour “at the commencement of the Agreement” (being 4 March 2013), and clause 18.7 which provides that from 1 January 2013 (before commencement) the Base Hourly Rate “will be increased....by 4%”.

[41] The Applicant Union contends that it would not have agreed to a clause in an Agreement that did not provide for a wage increase. The Respondent contends that the Respondent would not have agreed to a clause that allowed for their employees to work less days per year (as has occurred by the introduction of the new roster) and continue to receive the same wage, let alone receive a higher wage. It is not the role of the Commission to balance these two views nor are they relevant to the exercise of the interpretation of the Agreement as they refer to the subjective intention of the parties in negotiating the Agreement.

[42] After having considered the matter, the submissions put by the parties and the evidence in the matter the Commission is satisfied that there is an ambiguity or uncertainty arising from the Agreement. The Commission does not reach the same conclusion as the Respondent as to what the actual operation of the Agreement is.

[43] The proper interpretation of the clauses, on their plain words, and taking into account the application of the Agreement as a whole, is that submitted by the Applicant, and the result is that clause 18.1 and clause 18.3 contain factual errors when one considers the operation of each clause on its terms and in terms of the Agreement as a whole.

[44] The starting point is the commencement date of the Agreement. Commencement date is defined in clause 2 to mean:

“...the date 7 days after Fair Work Australia approves this Agreement.”

[45] The Agreement was approved by decision of 25 February 2013 that stated that the Agreement “will operate from” 4 March 2013. The date of commencement is 4 March 2013.

[46] Several clauses in the Agreement hinge upon the phrase “at the commencement” of the Agreement.

[47] The first clause is clause 18.1 which provides that “at the commencement” of the Agreement the Base Hourly Rate is $28.0229.

[48] The next clause to hinge on this term is clause 18.3 which provides that “at the commencement” of the Agreement the normalised weekly wage is $1836.62.

[49] These clauses must be read in the context of the Agreement as a whole and, where permissible, in the industrial context upon which the Agreement exists. Clause 18.7 provides that the Base Hourly Rate will be increased “effective from 1 January 2013”. As at the commencement date, 4 March 2013, clause 18.7 began to operate and have a legally enforceable effect under the Act. Pursuant to clause 18.7 a pay increase of 4% applied to the Base Hourly Rate which was, at the time $28.0229. Consequently, effective from 1 January 2013 the Base Hourly Rate is $29.1438 per hour.

[50] The Respondent accepts this operation because the Respondent undertook the exercise of back paying employees for the difference between the lower normalised weekly wage of $1836.62 and the increased normalised weekly wage, because of the operation of clause 18.7, being $1902.08.

[51] Having accepted that it then becomes clear that clause 18.3 is factually incorrect because “at the commencement of the Agreement” the normalised weekly wage for the roster (in place at the time) was not $1836.62, it is, by operation of clause 18.7, $1902.08.

[52] Clause 18.3 then continues to preserve “[T]he normalised weekly wage for the roster at the commencement of the Agreement” which I find is $1902.08. This is the rate that was preserved for the purposes of any even time continuous dayshift roster because the clause preserved the “normalised weekly wage for the roster at the commencement of the Agreement”.

[53] Upon a proper reading of the Agreement as a whole, the preserved rate is $1902.08 and is preserved for the purposes of the new 7/7 roster.

Conclusion

[54] The Agreement, upon a proper construction as a whole, preserved the normalised weekly wage for the roster at the commencement of the Agreement of $1902.08.

[55] This is the rate that was preserved for the purposes of any even time continuous dayshift roster.

[56] I Order accordingly.

COMMISSIONER

 1   Toll Mining Services North Dyno Contract (Dawson Mine) and CFMEU Agreement 2012 clause 18.7.

 2   Ibid at clauses 18.2 and 20.3.

 3   Fair Work Act 2009 (Cth) s.739(1).

 4   Applicant submissions at 5.

 5   Toll Mining Services North Dyno Contract (Dawson Mine) and CFMEU Agreement 2012 clause 18.3.

 6   Affidvait of Stephen Briscoe, sworn 5 July 2013, Annexure SRB5.

 7   PR917548.

 8 (2005) 222 CLR 241.

 9   Applicant submissions at 19 - 21.

 10   Applicant submissions at 24.

 11   [2013] FWCFB 2814.

 12 Ibid at [13].

 13   [2012] FWA 62.

 14 Ibid at [39].

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