Construction, Forestry, Mining and Energy Union v Wollongong Coal Limited (formerly Gujarat NRE Coking Coal Limited and Gujarat NRE Wonga Pty Ltd)

[2014] FWC 5942

[2014] FWC 5942

The attached document replaces the document previously issued with the above code on 29 August 2014.

The references to the publication identification numbers ([AE885487] and [AE889393]) appearing next to the Price Code at the end of the decision have been removed. No other amendment has been made.

Sophie Bonnette

Associate to Senior Deputy President Harrison

Dated 1 September 2014

[2014] FWC 5942

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Construction, Forestry, Mining and Energy Union
v
Wollongong Coal Limited (formerly Gujarat NRE Coking Coal Limited and Gujarat NRE Wonga Pty Ltd)
(C2013/7772)

Coal industry
SENIOR DEPUTY PRESIDENT HARRISON	SYDNEY, 29 AUGUST 2014

Application to deal with a dispute in accordance with a dispute resolution procedure - interpretation of “as if at work” within the long service leave clause of the NRE Wongawilli Colliery Workplace Agreement 2011 and the NRE No.1 Colliery Workplace Agreement 2011.

[1] This is an application, made by the Construction, Forestry, Mining and Energy Union (CFMEU or the Union) pursuant to s.739 of the Fair Work Act 2009 (the Act). The matter in issue concerns the amount of long service leave that an employee is to be paid and relates to the interpretation of clause 13.20 of two enterprise agreements.

[2] The employer party to the dispute is Wollongong Coal Limited. 1 When this application was originally lodged two employer parties were identified, they were Gujarat NRE Coking Coal Limited and Gujarat NRE Wonga Pty Ltd. The previous names of the employing companies however are the ones contained in the enterprise agreements that are the subject of this decision.

[3] Gujarat NRE Coking Coal Limited and its employees who work at the NRE No.1 Colliery are covered by the NRE No.1 Colliery Workplace Agreement 2011 (No.1 Agreement). The CFMEU is also covered by that agreement. This agreement commenced operation on 17 November 2011. Its nominal expiry date is 30 September 2015. 2

[4] Gujarat NRE Wonga Pty Ltd and its employees who work at the NRE Wongawilli Colliery are covered by the NRE Wongawilli Colliery Workplace Agreement 2011 (the Agreement). The Agreement alsocovers the CFMEU. This agreement commenced operation on 26 May 2011. Its nominal expiry date is 28 February 2015. 3

[5] The two agreements are in similar terms and the various clauses relied upon by the parties in this dispute are either identical or not relevantly different. Accordingly, in this decision, I will refer to clauses in the Agreement but unless I state otherwise it should be taken that my reasons apply to each agreement. I will also refer to both of the employers, as they were then named, and covered by the two agreements as “the employer”.

[6] There was no dispute between the parties that the matter had proceeded through the various steps contained in the dispute settlement procedure in the Agreement and remained in dispute. It was also accepted that the matter in issue was one which, consistent with s.739 of the Act, I am empowered to deal with by arbitration.

[7] Although I will refer to the matters in issue in more detail later, for present purposes I can summarise the dispute as being about what a sentence reading “Payment will be made as if at work” means. The sentence is contained in clause 13.20 which is titled “Long Service Leave”. I set out the whole of the clause later in this decision. The parties disagree as to what components should be included in the calculation of an employee’s long service leave entitlements when the employee is either taking, or being paid out, accrued long service leave. The employer has been paying long service leave taking into account the components of the relevant hourly rate, rostered overtime and bonus. The CFMEU contends that additionally, a component reflecting the shift allowances that an employee would have been paid had they worked their rostered shifts should be included. The employer contends that the calculations should not take shift allowances into account. I should note that at the commencement of the hearing the CFMEU indicated that it did not seek for meal or tool allowances to be considered as components of any long service leave that may be payable.

[8] At the hearing Mr Walkaden appeared for the CFMEU and Mr Nagle, of Counsel, was granted permission to appear for the employer. Prior to the hearing each party had filed detailed written submissions. A statement of the employer’s Human Resources Manager had been filed however no application was made at the hearing for that to be tendered. Accordingly, I need say no more about it.

[9] There was no issue between the parties as to the principles I should apply in interpreting the provisions of the Agreement. 4 Accordingly, I do not propose to set out the detailed written submissions about this matter which are contained in paragraphs 11-15 of the CFMEU’s written submissions. I have considered the provisions of the Agreement guided by these principles.

Clause 13.20

[10] I should now reproduce clause 13.20 and, in doing so, I have highlighted the words at the centre of this dispute. I refer to the highlighted words in this decision as “the relevant words” or I will reproduce them. Clause 13.20 is in these terms:

“Long Service Leave

13.20 The employer recognises employees’ continuous service in the coal mining industry including that which occurred prior to the commencement of this workplace agreement and with any other employer.

Continuous service is not broken by absence on workers compensation, on any paid leave or unpaid leave with the permission of the employer. In such cases the period of absence counts as service.

Continuous service is not broken by any break made by an employer with the intention of avoiding long service leave, any break of less than three months due to retrenchment, appointment as an Official of the CFMEU or as a District Check Inspector/Industry Safety and Health Representative, any unauthorised leave which does not result in dismissal, absence from employment in the industry for three months or less or for any longer period agreed as reasonable between the employer and employee or representative in accordance with principles laid down by the Coal Industry Tribunal or the Australia Industrial Relations Commission in respect to bridging orders (where no agreement is reached - as determined under the disputes procedure). The period of any break does not count as service unless otherwise agreed in writing between the employer and employee.

Employees accrue long service leave at the rate of thirteen weeks for each eight years of continuous service in the coal mining industry.

The first accrual of thirteen weeks long service leave may be taken at any time upon the giving of reasonable notice by the employee and provided that the operations of the mine will not, in the reasonable opinion of the employer, be adversely affected and providing the leave is taken in periods of no less than two weeks. Subsequent accruals of long service leave may be taken after each sixty-four weeks of service.

Payment will be as if at work.

Any recognised public holiday falling on a day that would have ordinarily been a working day for the employee on long service leave will be added to the period for leave.

Employees with at least eight years of continuous service in the industry who are dismissed or terminated due to statute, ill health or death will be paid out their long service leave.

An employee who has a minimum of six years of continuous service in the industry and who is retrenched and who, within three months of the date of termination, has been unable to obtain further employment in the industry despite taking all reasonable steps, or who has· reached sixty years of age, or dies, is to be paid for any accumulated long service leave. “Reasonable steps” will be given the meaning afforded to it by long service leave decisions of the Coal Industry Tribunal or Australian Industrial Relations Commission and where agreement is not reached it will be determined through the disputes procedure.” [Emphasis added]

[11] Clause 13 is titled “Leave Management” and, in addition to the above clause, contains others dealing with annual leave, personal/carer’s leave, attendance management, abandonment of employment, public holidays and “other leave”. I refer to some of these clauses later in this decision.

The manner in which employees are rostered to work and are paid

[12] The CFMEU submitted that it is necessary to understand the manner in which employees are rostered to work and are paid. Clause 11.1(a) of the Agreement provides that all employees are paid an hourly rate that is inclusive of all allowances, with the exception of shift loadings, meal allowance and tool allowance. The hourly rate is paid for all ordinary time worked between Monday to Friday. Penalty rates are paid for work performed on the weekend.

[13] Clause 11.1 sets out the shift loadings and does so by reference to the rosters worked at the mine. Those rosters are set out in Appendix 2 to the Agreement. Clause 11.1 makes it clear that the respective shift loadings for afternoon and night shift are for “employees working a roster” which incorporates one or other of these shifts.

[14] The ordinary hours are 35 per week. Overtime rates are paid for all hours worked in excess of the ordinary hours of work. Clause 2 of the Agreement defines rostered overtime. It is “overtime which is an integral part of an employee’s roster and must be worked”. This is also acknowledged in clause 9.2 which provides that each employee can be required to work a reasonable amount of overtime in a week.

[15] It was not in issue that there is a significant level of predictability in relation to the number of rostered hours and the shift patterns worked by the employees. The rosters that are worked are identified in Appendix 2 to the Agreement. Employees are allocated to one of the three rosters in that appendix. There is no rotating shift roster and the CFMEU submitted there would be no agreement for one to be introduced. 5 The employees have a regular roster and work the set shifts in the relevant roster.6

[16] Employees are also paid a bonus and the bonus scheme is contained in Appendix 1 to the Agreement.

Interpretation of the relevant words in clause 13.20

[17] Against that background I turn to clause 13.20 of the Agreement. As I have earlier noted that clause deals with long service leave. The CFMEU submits that the words “Payment will be as if at work” have a plain and ordinary meaning. It contends there is nothing ambiguous or unclear about them. The Union refers the Australian Concise Oxford Dictionary definition of “payment”. 7 It is as follows:

“1. The act or an instance of paying;

2. An amount paid;

3. Reward, recompense.”

[18] The definition of “pay” is in these terms:

“1. Give (a person etc) what is due for services done, goods received, debts incurred etc;

2. (a) Give (usually a specified amount) for work done, a debt, ransom etc (they pay $10 an hour);

3. (b) Hand over the amount of (a debt, wages, recompense etc).”

[19] I agree with the CFMEU submission that the plain and ordinary meaning of the word “payment”in the context of clause 13.20 is a reference to the amount of money the employer must pay for long service leave.

[20] The employer submits that the relevant words only deal with the frequency with which payments of long service leave are to be made. The sentence serves only to reflect the obligation for the payment of long service leave to be made as if the employee was at work, that is, the frequency of that payment being weekly. It does not deal with the composition of the amount to be paid. The CFMEU submits it means the amount which the employee would have been entitled to receive had they, relevantly, worked the shift(s) for which they were absent. Having considered all of the parties’ submissions I am persuaded that the meaning to be given to the words is that for which the CFMEU contends.

[21] I turn to the reasons why I prefer the CFMEU’s interpretation. The CFMEU submits that I should not be attracted to the employer’s interpretation as it ignores the plain and ordinary meaning of the relevant words. It submits that the word “payment”features repeatedly in the Agreement. That word, and variations of it being “pay” or “paid”,with limited exceptions, refer to an amount (of the particular entitlement) to be paid. The CFMEU notes numerous clauses in the Agreement where these words are contained. By way of example, it refers to clause 13.10 where “payment”is clearly referring to the amount of annual leave to be paid. Other examples can be found at clauses 13.30, 22 and Appendix 3 of the Agreement. Each of these clauses includes the word “payment”. In each example, the word “payment” is clearly referring to the amount of each entitlement to be paid. It is not likely the intention of the framers of the clause was to use the word “payment” throughout the Agreement as referring to the amount to be paid, but to mean something entirely different when used in the context of the relevant words in clause 13.20.

[22] The wording of the clauses the CFMEU describes as the exceptions is instructive. These clauses are clauses 11.1(c) and 13.9. Each of these clauses deals with the frequency in which certain entitlements are to be paid. In the case of clause 11.1(c) it expressly uses the word “frequency”. In the case of clause 13.9 it indicates that the annual leave is to be paid “as it falls for the approved leave period”.

[23] Next the CFMEU notes that clause 13.20 provides that in certain circumstances long service leave will be paid out. The only employees who are entitled to be paid out their long service leave are those with at least 8 years of service and who are dismissed, leave due to ill health or die. Those employees have no ongoing entitlement to receive periodical payments of wages. It follows that the relevant provision cannot mean that such persons are to be paid their long service leave with the same frequency at which they receive wages.

[24] Another class of employee referred to in clause 13.20 is one with a minimum of 6 years of service and who is retrenched and unable to obtain further employment within a certain time, who turn 60 years old or dies. That employee “is to be paid” for any accumulated long service leave. It is unlikely the framers of the clause intended those persons would receive that payment on a periodical basis.

[25] I have considered the employer submission that the various clauses in which the word payment is used should be read precisely in the context of their respective terms and confined to those terms. In this respect it refers to clauses 13.30, 22, and to Appendix 3. It submits those provisions contain very specific formulations. Compassionate leave at clause 13.30 states “Payment in respect of each day of compassionate leave shall be at the rostered rate”.Clause 22 deals with union business and provides “Payment shall be 1 hours ordinary time paid at double time”. Appendix 3 refers to certain allowance payments and provides for the dollar amount, the roster rate or calculation for the allowances referred to.

[26] The employer submits that the clauses of the Agreement which contain the word “payment” are distinguishable from the wording used in clause 13.20. I acknowledge that the drafting in the Agreement does not reflect a high level of consistency in terms and phrases used, nonetheless, I prefer the CFMEU submission about the context throughout the Agreement in which the word payment is used. Sometimes the relevant clause does identify the components and other times it does not but the point made is that overwhelmingly, the word is used in a clause which provides for an amount which is to be paid. The relevant words mean the amount which is to be paid is the amount the employee would have received had they been at work during the relevant time.

[27] The employer submits that the Agreement is silent in relation to the method by which long service leave is to be calculated. There is no calculation clause or definition in the Agreement suggesting which components are to be taken into account. It submits that what appears to have occurred is that long service leave has been paid in a manner consistent with the way in which annual leave is paid. It refers to clauses 13.9 and 13.10. I am not persuaded by this submission. Clause 13.9, as I have earlier noted, expressly provides for the frequency at which annual leave is to be paid. There is nothing in clause 13 to suggest that the provision applies to long service leave. I also note in the case of termination of employment clause 13.8 provides that the entitlement will be no less than the National Employment Standards. Those standards do not allow for periodical payment of annual leave after employment is terminated. 8 Finally, clause 13.10 provides for the components which are to be paid on account of annual leave or an amount of 120% of the employee’s classification rate, whichever is the greater. There is no suggestion anywhere in clause 13 this formula is to apply to long service leave. That the employer may have adopted part of this formula to calculate long service leave does not assist in ascertaining the meaning to be ascribed to the relevant words in clause 13.20.

[28] I also here note the terms of the Coal Mining Industry (Long Service Leave) Administration Act 1992. Sections 39AC and 39EB of that act are as follows:

“39AC Payment for long service leave

(1) If an eligible employee takes a period of long service leave, the employer must pay the employee for the long service leave no less than an amount that is equal to the base rate of pay (including incentive-based payments and bonuses) that would have been payable to the employee during the period had the employee not taken the leave.”

...

39EB Relationship with industrial instruments

This Part establishes minimum entitlements and rights in respect of long service leave for an eligible employee and is not intended to override entitlements or rights in respect of long service leave under an industrial instrument that covers the employee.”

[29] Long service leave has not been paid on the basis of s.39AC. The employer acknowledges that it includes rostered overtime in its calculations. It is clear the Agreement provides for long service leave entitlements and rights in terms envisaged by s.39EB. That is, superior entitlements and rights.

[30] The employer submits that the CFMEU had not dealt with the construction of Appendix 1 of the Agreement. It notes that there is an express provision set out in clause 4 of that appendix that the bonus is to be paid for each day of long service leave. It submits that if clause 13.20 was to be interpreted as the Union suggests there would be no need to have made explicit in paragraph 4 of Appendix 1 that the bonus was payable for each day of long service leave. The CFMEU response is that not a great deal can be read into this. It notes that Appendix 1 also provides that bonus is to be paid on accident pay and when one has regard to clause 16, which specifically deals with this entitlement, it also makes reference to the obligation for bonus to be paid for such accident pay.

The relevance of the wording in clause 16

[31] The CFMEU submits its interpretation is also supported by the wording found in clause 16 of the Agreement. I have noted above that this clause concerns accident pay. It provides that an employee on workers compensation is to receive the difference between the workers compensation payments and “what the employee would have received as he was at work. This includes rostered overtime, shift allowance and bonus. This does not include non-rostered overtime”.

[32] The CFMEU says the words in clauses 13.20 and 16 are almost identical. It notes that the definition in clause 16 confirms the construction that should be put on the words “as if at work”. That is, shift allowances should be taken into account when long service leave pay is calculated. The CFMEU submits that it would be illogical and inconsistent to give what is an almost identical phrase a different meaning for the purpose of clause 13.20. Reading the Agreement as a whole, this is the only conclusion which can be reached.

[33] The employer submits that there is nothing in the Agreement to suggest that the parties contemplated that the two clauses would be interpreted in the same way. Had they intended to do so it would have been easy to have placed a definition into the beginning of the Agreement which would then govern the use of that term throughout the Agreement. Alternatively, the wording contained in clause 16 could have been mirrored in clause 13.20.

[34] I am not persuaded that this argument of the CFMEU is as significant, or indeed conclusive, as it submits. I do accept however that the wording in clause 16 is consistent with the construction of the relevant words in clause 13.20.

The purpose of the relevant provision

[35] I have considered what may be accepted to have been the purpose of the relevant words in clause 13.20. I agree with the CFMEU that its evident purpose is to ensure that employees are no worse off financially when being on long service leave or being paid out accrued long service leave.

[36] I also accept the CFMEU submission that it is not readily apparent why the parties turned their minds to a range of considerations relating to long service leave, including continuous service, accrual, public holidays and circumstances where long service leave will be paid out and not turned their minds to the amount that would be payable. That is unlikely to have been the common or mutual intention of the parties. Such a construction leaves one very significant element missing from the rights and entitlements of the parties in respect of long service leave.

History of the relevant provision

[37] Next the CFMEU submits that the history of clause 13.20 as expressed in predecessor industrial instruments forms part of the context which can properly be considered.

[38] A predecessor agreement to the No.1 Agreement was the NRE No.1 Colliery Workplace Agreement 2006 (No.1 Agreement 2006). It dealt with long service leave at clause 13.21. It also contained the relevant words “payment will be as if at work”. There was no other reference to the amount of long service leave to be paid in clause 13.21.

[39] The NRE No.1 Colliery Workplace Agreement 2010 (No.1 Agreement 2010) replaced the No.1 Agreement 2006. The No.1 Agreement 2010 dealt with long service leave at clause 13.22. With one exception, clause 13.22 of the No.1 Agreement 2010 was identical to clause 13.21 of the No.1 Agreement 2006. The exception was that the words “payment will be as if at work”were omittedfrom clause 13.22 of the No.1 Agreement 2010 and a clause 13.23 was included. It provided:

“Paymentfor Long Service Leave will be paid as at the employees’ projected weekly rostered earnings including Bonus (excluding non-rostered overtime and shift penalties).”

[40] The next agreement, known as the NRE No.1 Colliery Workplace Agreement 2011 which replaced the No.1 Agreement 2010 reverted to the same wording as had been in clause 13.21 of the No.1 Agreement 2006.

[41] The NRE Wongawilli Colliery Workplace Agreement 2009, the predecessor to the Agreement, contained a clause in the relevant terms as are in clause 13.20 of the Agreement.

[42] The CFMEU submits that this history of the two agreements demonstrates that the parties intended to include a provision in the Agreement that deals with the amount of long service leave to be paid. Clause 13.23 of the No.1 Agreement 2010 had been agreed by the parties to describe the manner in which the payment was to be made and, in the subsequent agreement, the parties reverted to describing the payment to be made by using the relevant words. It cannot logically be suggested that the parties agreement to exclude the terms of clause 13.23 and to revert back to the relevant words reflects a mutual intention the function of the clause would change to become one dealing only with frequency of payments.

[43] I acknowledge that there was no evidence of mutual intention of the parties before me. However, a consideration of the terms of the predecessor enterprise agreements and the manner in which the successive versions developed is, in my opinion, a relevant consideration to take into account. It supports the construction the CFMEU contends I should place on the relevant words.

The other agreements in the industry

[44] The CFMEU next submitted that the relevant words in clause 13.20 are widely used and understood across the coal industry. The CFMEU submits this consideration is one acknowledged by Madwick J in the often quoted case of Kucks v CSR Limited. 9His Honour there said that the drafters of enterprise agreements were likely to be of a practical bent of mind and, as a result, may have expressed an intention in a way which would have been understood in the context of the relevant industry.

[45] The Union identified a number of enterprise agreements in the coal industry which used the relevant words to describe the payment to be made to an employee when absent from work in a variety of circumstances, such as annual leave, long service leave, personal leave, attending training and when injured.

[46] I do not intend to detail the examples which were given by the CFMEU but note its submission is supported by a perusal of the terms of those other agreements. The CFMEU submits that the relevance of the examples given is that it demonstrates that the words “as if it at work” are widely used in enterprise agreements across the coal industry. There can be no doubt as to the meaning of those words. Those words are understood across the coal industry to mean that an employee will receive an amount equivalent to what they would have received had they worked the rostered shift(s) for which they were absent.

[47] I accept that it is appropriate, when interpreting particular words in an industrial instrument, for resort to be had to the understanding in the relevant industry about what those particular words mean. The employer submits however that I should place no weight on this submission. No evidence has been led which suggests that there was ever any intention by the employer to calculate long service leave in the same manner which other collieries may have adopted. It says the attempt by the CFMEU to draw inferences from the existence of similar wording in other enterprise agreements is not helpful. It only serves to further confuse what the true position really is.

[48] In the absence of some additional evidence supportive of the CFMEU submission I am not inclined to place significant weight on the similarity of words used in numerous other enterprise agreements in the coal industry. I accept however that the construction it gives to the relevant words in clause 13.20 is not inconsistent with the manner in which it appears the same words are used in the industry. I am unable to find however, that the mutual intention of the parties to the Agreement was to adopt a form of words in relation to the payment of long service leave informed by an accepted and notorious understanding in the coal industry as to what those words mean.

[49] I have also taken into account the employer’s submission that the CFMEU has not, until recent times, challenged the manner in which it has paid long service leave. It submits it has taken the CFMEU a significant period of time to bring any dispute to the attention of the employer or the Commission. Accepting that to be correct it does not assist me with the task of interpreting the relevant words. It is equally apparent that it has not been until recent industrial issues have arisen between the employer and members of the CFMEU that close attention has been given to the manner in which employee entitlements were being calculated.

Conclusion

[50] For the foregoing reasons I am persuaded the construction the CFMEU places on the relevant words in clause 13.20 is correct. I have also decided that I should issue a determination resolving the dispute. The CFMEU seeks that I determine this dispute by issuing an order. A draft was tendered by the Union. It provides that the payment of long service leave by the employer should include the applicable hourly rate, bonus and (if applicable) shift loading and rostered overtime. The order also directs the employer to pay to any employee who is, or was, covered by either the Agreement or the No.1 Agreement and who took a period of long service leave on and from the date each agreement came into operation, the difference between the amount paid to the employee for the period of leave and an amount calculated which would be inclusive of hourly rate of pay, bonus and (if applicable) rostered overtime and shift loading.

[51] The CFMEU submits that consistent with s.598(4) I am able to reflect the relief that it seeks in an order. In this respect I also note the terms of s.595(3) of the Act. It provides that the Commission “...may deal with a dispute by arbitration (including by making any orders it considers appropriate)” but only if it is “expressly authorised to do so under or in accordance with another provision of this Act”.

[52] I have indicated at the commencement of this decision that the matter in dispute between the parties has been brought to the Commission by application pursuant to s.739 of the Act. That section allows me to deal with a dispute in accordance with the dispute settlement procedures in an enterprise agreement. The Agreement’s dispute settlement procedure at clauses 20.4(b)(i) and (ii) provides that the Commission may “arbitrate the dispute” and “make a determination that is binding on the parties”.

[53] I have decided to reflect the relief sought by the CFMEU in an instrument described as a determination. I should not be taken to have reached a concluded view about whether I have power to grant the relief in an instrument expressed as an order. My choice of a determination being issued is informed by the wording of clause 20.4(b)(ii) of the Agreement. It is clear the determination is binding on the CFMEU and the employer. My expectation is that it will be complied with as soon as practicable.

[54] A determination will issue at the same time as these reasons are published.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr Walkaden and Mr Davies on behalf of the Construction, Forestry, Mining and Energy Union

Mr Nagle of Counsel and Mr Welch on behalf of Wollongong Coal Limited (formerly Gujarat NRE Coking Coal Limited and Gujarat NRE Wonga Pty Ltd).

Hearing details:

2014.

Sydney

May 19.

 1   Gujarat NRE Wonga Pty Ltd was a wholly owned subsidiary of Gujarat NRE Coking Coal Limited. The later corporation has now changed its name to Wollongong Coal Limited. Counsel for the companies advised that the ACN had not changed - there had only been a name change.

 2   [2011] FWAA 7803.

 3   [2011] FWAA 2764.

 4   PN202-203.

 5   Clause 8.1.

 6   PN40-41.

 7   Australian Concise Oxford Dictionary, 4th Edition, at page 1039.

 8   Fair Work Act 2009 (Cth) s.90.

 9 [1996] 66 IR 182.

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