Construction, Forestry, Mining and Energy Union v WorkPac Pty Ltd (No 2)

[2017] FWC 6340

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.739—Dispute resolution

Construction, Forestry, Mining and Energy Union

WorkPac Pty Ltd (No 2)

(C2016/4554)

Coal industry
DEPUTY PRESIDENT ASBURY	BRISBANE, 1 DECEMBER 2017

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] – Jurisdiction – Whether dispute settlement term authorises Commission to arbitrate dispute in absence of agreement from all parties to dispute – Construction of Agreement – Commission empowered to arbitrate dispute – Day Shift workers not entitled to be paid afternoon and night shift rates for all shifts worked.

BACKGROUND

This Decision concerns an application under s. 739 of the Fair Work Act 2009 (the Act) by Natalie Dorsa, Simon Sheldrick, Katrine Schwede and Kathy Rigby (the Applicants) for the Fair Work Commission (the Commission) to deal with a dispute arising under the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012 (the Agreement). The Applicants are represented by the Construction, Forestry, Mining and Energy Union (CFMEU). The Respondent is WorkPac Pty Ltd (WorkPac) – a labour hire company. The Applicants are employed by WorkPac at the Hail Creek Mine, which is operated by its client, Rio Tinto.

The background to the dispute is that the Agreement provides for employees who are termed “Field Team Members” (FTMs) to be employed on flat rates. The applicants were engaged as Flat Rate FTMs on a casual basis. The relevant schedule of flat rates appended to the Agreement has an hourly rate for “Day” of $40.93 and an hourly rate for “Afternoon & Night” of $43.04. The Applicants are working a roster whereby they work a sequence of 12.5 hour days between 6.45 am and 7.15 pm alternating with a sequence of 12.5 hour nights between 6.45 pm and 7.15 am. For a period of time the Applicants were paid the rate of $43.04 for both days and nights.

From 18 January 2016 to December 2016 (Ms Schwede and Ms Rigby) and from 18 January 2016 to February 2017 (Ms Dorsa and Mr Sheldrick) the Applicants were paid $40.93 for work performed between 6.45 am and 7.15 pm and at the rate of $43.04 for work performed between 6.45 pm and 7.15 am. The change to the Applicants’ rates of pay was introduced by WorkPac following a request from Rio Tinto that it reduce labour costs. Essentially the CFMEU contends that the Applicants are shift workers working a roster which rotates from day shift to night shift, and that they are entitled to be paid for all shifts worked according to that roster, at the Afternoon & Night rate of $43.04 per hour.

An application in relation to this dispute was originally filed on 21 July 2016. The CFMEU was the applicant in that matter on behalf of members, who were not named in the application. A jurisdictional objection by Workpac to that application was dismissed in a decision issued on 29 March 2017.[1] In dismissing the jurisdictional objection, I determined that although the CFMEU had validly engaged the dispute settlement procedure, the terms of that procedure required that the application be made by employees covered by the Agreement and an application under s. 739 of the Act could not be made by the CFMEU in its own right. I further determined that I would exercise the power under s. 586 of the Act to allow the application to be amended, provided that individual employees were named as applicants.

The CFMEU filed an amended application on 4 April 2017. On 10 April 2017, Clarke and Kann Lawyers on behalf of WorkPac wrote to the CFMEU asserting that on the basis of information set out in the amended application, WorkPac considered that there was no longer any dispute. The CFMEU responded to WorkPac on 19 April 2017, asserting that the dispute was not resolved and proposing a question for arbitration. The matter was listed for a Conference on 11 May 2017.

At the Conference, WorkPac did not agree to a question for arbitration and did not propose an alternative. Directions were issued for hearing of the matter including that the parties should hold discussions with a view to reaching agreement on a statement of facts. Agreement in relation to a statement of facts was not reached. When WorkPac filed its submissions, a further jurisdictional objection was raised. In this regard, WorkPac asserts that the dispute settlement procedure in the Agreement does not authorise the Commission to arbitrate a dispute unless the parties to the dispute agree to arbitration. WorkPac does not agree to arbitration and accordingly submitted that the Commission does not have jurisdiction to arbitrate the dispute.

The matter was listed for a further conference on 2 August 2017, to consider whether WorkPac wished to reconsider its further jurisdictional objection on the basis of an arguably contradictory statement it made in relation to the dispute settlement procedure in the Form F17 – Employer’s Statutory Declaration in Support of an Application for Approval of an Enterprise Agreement (F17 Declaration) filed by WorkPac in its application for approval of the Agreement on 8 June 2012. WorkPac indicated that it pressed the jurisdictional objection. It was agreed that the jurisdictional objection would be dealt with at the same time as the substantive issues in dispute, and the hearing of the matter proceeded on that basis on 28 August 2017. In the absence of any suggestion to the contrary from WorkPac, I determined to deal with the jurisdictional objection and if it was not upheld, to arbitrate the question as framed by the CFMEU.

The issues in dispute are whether on a proper construction of the Agreement the dispute settlement term authorises the Commission to arbitrate a dispute in the absence of agreement from all parties to the dispute. If the Agreement does authorise the Commission to arbitrate in relation to a dispute, then the question that the CFMEU seeks to have arbitrated is whether the Applicants were entitled to be paid $43.04 per hour for each shift worked as part of their rostered hours in the relevant period – the hourly rate for “Afternoon & Night” applicable for the period to which the dispute relates.

THE APPROACH TO CONSTRUCTION OF AGREEMENTS

Both of the issues in dispute require a construction of the Agreement, albeit that it will not be necessary to deal with the question for arbitration if the construction of the dispute settlement procedure in the Agreement advanced by WorkPac is correct. The approach to the construction of industrial instruments such as enterprise agreements was most recently summarised in a Decision of a Full Bench of the Commission in “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Ltd[2] as follows:

The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;
(ii) the disputed provision’s place and arrangement in the agreement;
(iii) the legislative context under which the agreement was made and in which it operates.

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.

The common intention of the parties is sought to be 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, without regard to the subjective intentions or expectations of the parties.
The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.
The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.
Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.
In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.
Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

10.If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.
11.The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.
12.Evidence of objective background facts will include:
(i) 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;
(ii) notorious facts of which knowledge is to be presumed; and
(iii) evidence of matters in common contemplation and constituting a common assumption.

13.The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.
14.Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.

15.In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.

In CFMEU v Endeavour Coal Pty Ltd T/A Appin Mine[3] a Full Bench of the Commission held that the context of an agreement provision is significant. In this regard, the Full Bench set out the explanation of this point by the NSW Court of Appeal in Mainteck Services Pty Ltd v Stein Heurtey SA,[4] emphasising the following matters:

· Until a word or phrase is understood in the light of the surrounding circumstances, it is rarely possible to know what it means[5] and there is always some context to any statement;[6]

·   Language considered in its context will often have a clear meaning and context will often not displace that meaning – “but not always”;[7]
·   To state that a legal text is clear reflects the outcome of an interpretation process and means that there is nothing in the context that detracts from the ordinary literal meaning and cannot mean that context can be put to one side;[8]
·   The phrase used by Mason J in Codelfa “if the language is ambiguous or susceptible of more than one meaning” does not mean that the susceptibility of the language to more than one meaning must be assessed without reference to the surrounding circumstances and in order to determine whether more than one meaning is available it may be necessary to turn to context;[9] and
·   Context has also been described as surrounding circumstances and the meaning of terms normally requires consideration not only of the text, but of the surrounding circumstances known to the parties and the purpose and object of the transaction.[10]

The case law in relation to the approach to the construction of enterprise agreements makes it clear that context and purpose are relevant to the construction of provisions in an enterprise agreement and must be considered even where the words of the provision being construed appear, on their face, to have a clear and unambiguous meaning.

THE JURISDICTIONAL OBJECTION

Disputes Settlement Procedure

The Dispute Settlement Procedure in the Agreement is in the following terms:

“7 DISPUTES SETTLEMENT PROCEDURE

It is the intention of the parties that all disputes arising out of the interpretation or application of this Agreement and in relation to the NES or in the course of employment shall be dealt with at the local level to the maximum extent possible

7.1 Procedure

7.1.1 In the event of any grievance the parties to the dispute will consult to reach settlement without loss of wages or production, provided always that work shall continue in the usual manner without bans or limitations on the performance of work, unless the FTM has a reasonable concern about an imminent risk to health and safety.

7.1.2 The parties to the dispute agree to comply with the words and intent of the Company’s dispute settlement procedure outlined below:
Stage 1

Any question or dispute arising in relation to the terms and conditions of this Agreement, in the first instance, will be raised with the FTM’s Company representative.
The Company representative will provide a response to the FTM within 48 hours or such other timeframe as agreed between the FTM and the Company representative.
Where the FTM is dissatisfied with the response or the response is not received within 48 hours (or agreed timeframe), the FTM may progress to stage 2 of the process.
Stage 2

In the event that a matter remains unresolved following Stage 1, the FTM may refer the matter to the Manager of the office which issued the most recent notice of offer.
The Manager will respond to the FTM within 48 hours or such other timeframe as is agreed between the FTM and the Manager.
Where the FTM is dissatisfied with the response from the Manager, or the response is not received within 48 hours (or agreed timeframe), the FTM may progress to Stage 3 of this process.
Stage 3

In the event that a matter remains unresolved following Stage 2, the FTM may request that the matter be referred to the appropriate Company Regional Manager.
The Company Regional Manager shall respond within seven (7) working days or such other timeframe as is agreed between the FTM and the Regional Manager.
Where the FTM is dissatisfied with the response from the Company Regional Manager, or the response is not received within seven (7) working days (or agreed timeframe), the FTM may progress to Stage 4 of this process.
Stage 4

In the event that a matter remains unresolved following Stage 3, the FTM may request that the matter be referred to the Company’s Industrial Relations Department or CEO.
The Company’s Industrial Relations Department or CEO shall respond within 14 working days or such other timeframe as is agreed between the FTM and the Regional Manager.
Where the FTM is dissatisfied with the response from the Company’s Industrial Relations Department or CEO, or the response is not received within fourteen (14) working days (or agreed timeframe), the FTM may progress to Stage 5 of this process.
Stage 5
In the event that a matter remains unresolved following Stage 4, the FTM or the Company may refer the matter to Fair Work Australia (FWA) for conciliation and/or arbitration.
FWA are not authorised to deal with a dispute to the extent that the dispute is about whether the Company had reasonable business grounds in relation to requests from the FTM for flexible working arrangements or an extension of their parental leave of up to 12 months in addition to the available parental leave period.
FWA is not permitted to arbitrate unless each of the proceeding stages have been completed or where there is agreement between the parties to bypass stages a dispute that is referred to it under this clause, unless it specifically relates to the NES or the interpretation and/or application of this Agreement.

7.1.3 At all stages of the dispute settlement procedure, and except where there is an immediate and significant threat to health and safety, work will continue and consideration of the needs of the business will remain a priority.

7.1.4 At any stage of this Disputes Settlement Procedure, the FTM may appoint a representative, including another FTM or any other person, to act as the FTM’s representative in an attempt to achieve resolution.”

Legislative Provisions

Legislative provisions in relation to the jurisdiction of the Commission to deal with a dispute pursuant to dispute settlement procedures in enterprise agreements are found in s. 595 and s. 739 of the Act. Section 595 states:

“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.

The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following (a) by mediation or conciliation(b) by making a recommendation or expressing an opinion.
(2)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)).

(3)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.”

Section 739 states:

“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.”

The Commission’s powers to deal with disputes derive, in the case of an enterprise agreement, from the terms of the disputes settlement procedure contained in the enterprise agreement. As a Full Bench of the Commission concisely observed in CFMEU v North Goonyella Coal Mines Pty Ltd[11]: the Commission may deal with a dispute only on application of a party to the dispute (s.739(6)); is prohibited from exercising any powers limited by the dispute settlement procedure (s.739(3)); may arbitrate only if the agreed dispute settlement procedure permits it to do so (s.739(4)); and must not make a decision that is inconsistent with the Act, the enterprise agreement and any other applicable fair work instrument (s.739(5)).

Submissions in relation to jurisdictional objection

In support of its jurisdictional objection in the present case, WorkPac refers to Stage 5 of the Dispute Settlement Procedure which is in the following terms:
“In the event that a matter remains unresolved following Stage 4, the FTM or the Company may refer the matter to Fair Work Australia for conciliation and/or arbitration” (emphasis added).

WorkPac submits that the use of the term “may” in the clause establishes that express agreement of the parties is required before the Commission can arbitrate a dispute under the Dispute Settlement Procedure. This is said to be consistent with the Decision of a Full bench of the Commission in CC Pty Ltd T/A Cook Colliery v Construction, Forestry, Mining and Energy Union[12] (the Cook Colliery Case). WorkPac refers to the following passages from that Decision in support of its argument:

“[33] However, clause 32 of the Agreement does not expressly state that such an agreement has been reached between the parties. The only reference to “agreement” between the parties in respect of arbitration in clause 32 is within the “Process” provision, which states the parties may agree on the process to be utilised by the Commission, including mediation, conciliation and arbitration. The term “may” confers the parties with discretion to agree upon the process the Commission may utilise, however, no such agreement was expressed by the parties. The notion that parties must reach an agreement before the Commission can arbitrate a dispute was considered in Woolworths, in which the Full Bench held:
“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.”

[34] In this regard, the Commission can only arbitrate a dispute with express agreement of the parties to that dispute. Thus, as clause 32 does not represent an agreement between the parties and there has been no other express agreement, clause 32 of the Agreement cannot be construed so as to allow the Commission to arbitrate the dispute.
[35] As there was no agreement, section 739(4) is not enlivened and, therefore, the Commission is not expressly authorised to deal with the dispute pursuant to section 595(3) of the Act” (footnotes omitted).

WorkPac submits that the relevant terms of the Dispute Settlement Procedure in the present case are similar to and have the same effect as the terms of the procedure in the Cook Colliery Case. According to WorkPac’s submission, the Dispute Settlement Procedure in the Agreement provides no express agreement by the parties to arbitrate every dispute. Consistent with the Decision of the Full Bench in the Cook Colliery Case, the Commission is not empowered to arbitrate in the present case on the basis that the Company does not agree to the dispute being arbitrated. Accordingly the substantive application should be dismissed.

Prior to the hearing, the Commission forwarded to the parties a copy of the F17 Declaration, filed by WorkPac when it applied for the approval of the Agreement and invited comment on this Declaration in submissions in relation to the jurisdictional objection. The F17 Declaration was completed by Ms Nicole Keating, a former employee of WorkPac. The F17 Declaration is in a question and answer form. Question 3.4 asks:

“Does the Agreement contain any terms or conditions of employment that are more beneficial than equivalent terms and conditions in the reference instrument(s) listed in questions 3.1 and 3.2 or does the Agreement confer any entitlements that are not conferred by those reference instrument(s)?”

This question is answered in the affirmative and in response to a further question in the F17 Declaration asking for the terms that are more beneficial to be identified, a table has been inserted into the F17 Declaration which states: “Mandatory Arbitration Clause 7.” Clause 7 is the Dispute Settlement Procedure subject of the present proceedings.

WorkPac’s submission in relation to the F17 Declaration was that the Commission should disregard it because: “it is apparent that Ms Keating (who is not a trained legal professional) misunderstood the concept of mandatory arbitration (a concept which has also been subject of debate in Courts in Australia for a number of years).” This was said to be because the Black Coal Industry Award 2010 (the Black Coal Award) which does not provide for mandatory arbitration, includes a dispute settlement term which is not dissimilar to that in the Agreement. WorkPac further submits that there is no ambiguity in the words of clause 7 of the Agreement and their plain meaning should apply.

The CFMEU submits that the Decision of the Full Bench in the Cook Colliery Case is uncontroversial and consistent with previous Full Bench authority that s. 739(4) of the Act requires that there be agreement between the parties in order for the Commission to arbitrate a dispute and that the section is a source of power if the parties have agreed that the Commission can arbitrate a dispute. In the present case, the critical question is whether the Dispute Settlement Procedure in clause 7 of the Agreement expresses an agreement between the parties that the Commission can arbitrate a dispute.

The CFMEU contends that the dispute resolution procedure considered by the Full Bench in the Cook Colliery Case differs significantly from the Dispute Settlement Procedure in the Agreement subject of these proceedings in terms of the power conferred on the Commission. The clause considered in the Cook Colliery Case provides that the parties may agree on the process to be used by the Commission and confers discretion on the parties in relation to this matter. However, the term “may” in the Agreement subject of this present dispute is simply intended to give the aggrieved party a choice as to whether or not to refer a dispute to the Commission so that such a referral is not mandatory. Once a dispute is referred to the Commission, the Procedure states that it is referred “for conciliation and/or arbitration”.

According to the CFMEU, taken together, these two parts of the first sentence of Stage 5 of the Dispute Settlement Procedure in clause 7 of the Agreement clearly expresses an agreement between the parties that the Commission can arbitrate. In simple terms, the agreement for arbitration required by s. 739(4) of the Act is “built into” the Dispute Settlement Procedure in the Agreement. The CFMEU also points to the limitations on arbitration in the second and third paragraphs of stage five of the Dispute Settlement Provision, as being indicative of a power to arbitrate disputes subject only to those limitations. The absence of a general limitation is instructive and reinforces the position advanced by the CFMEU. For these reasons, the Commission should find that the plain meaning of the Dispute Settlement Procedure in the Agreement is that it expresses an agreement between the parties that the Commission can arbitrate. It follows that the Commission has power under s. 739(4) of the Act to arbitrate disputes.

In relation to the F17 Declaration filed by WorkPac in the application for approval of the Agreement, the CFMEU submits that the form was completed by Ms Keating who declared that she believed the statements made in the Declaration were true and correct. The assertion that the person who is nominated as a contact for the purposes of future inquiries prepared the F17 Declaration is not supported by any evidence. The assertion that Ms Keating is not a trained legal professional is false, as evidenced by a statement made by Ms Keating in another proceeding and her sworn evidence in that proceeding that she holds a Bachelor of Laws. Ms Keating also gave evidence in that proceeding to the effect that she is experienced in the process of making comparisons between enterprise agreements and awards.

The CFMEU contends that WorkPac’s submission that the Form F17 should be disregarded is absurd. The Form F17 was the key document that WorkPac relied upon in support of its application for approval of the Agreement and to demonstrate to the Commission that the necessary pre-approval requirements of the Act had been satisfied. The comparison between the Dispute Settlement Procedure in the Agreement and the Dispute Resolution Provision in the Black Coal Award is misconceived. The Award Modernisation Decision which resulted in the operation of the Black Coal Award confirmed that the dispute resolution procedure in the Black Coal Award did not provide for compulsory arbitration.

Noting that Ms Keating is a legally trained and experienced industrial relations advisor, the Commission can safely infer that the Dispute Settlement Procedure in the Agreement does provide for compulsory or mandatory arbitration, and this is an objective background fact to the Agreement. It should also be noted that Mr Smythe and Mr Thompson provided Form F18 Declarations of Employee Organisation in relation to an Application for Approval of an Enterprise Agreement, which supported the F17 Declaration made by Ms Keating. Consistent with authority in relation to the construction of enterprise agreements, the Commission can have regard to objective background facts. There is no ambiguity in the terms of the Agreement, so resort can properly be had to extrinsic material to confirm that the Dispute Settlement Procedure in the Agreement has a plain and ordinary meaning.

I also note that Mr Brodsky tendered a document that he states was prepared by persons negotiating the previous WorkPac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 (the 2007 Agreement) which summarises the provisions of the 2007 Agreement and changes proposed for inclusion in the current 2012 Agreement. The summary in relation to the item entitled “Grievance” states: “voluntary not the mandatory process” and that CB (who I take to be Mr Brodsky) stated in response: “Arbitration – we have our views on that”.[13] It is also notable that the Dispute Settlement Procedure then found in clause 6 of the 2007 Agreement did not appear to provide for disputes to be referred to the Commission at all. The Procedure in clause 6 of the 2007 Agreement stopped at Stage 4, when it was referred to the Company’s HR Director.

Consideration – jurisdictional objection

In Cook Colliery, a Full Bench of the Commission held that the dispute settlement term in the CC Pty Ltd Enterprise Agreement 2012 (the CC Agreement) did not empower the Commission to arbitrate a dispute without the agreement of the parties. The Full Bench held that the Commission can only arbitrate a dispute with the express agreement of the parties and that the terms of the dispute settlement provision did not represent such an agreement.

The decision of the Full Bench in the Cook Colliery Case does not state some generally applicable principle to the effect that regardless of the terms of a dispute settlement procedure in an enterprise agreement, the Commission cannot arbitrate a dispute unless the parties expressly agree on each occasion that a dispute arises. The Decision of the Full Bench in the Cook Colliery Case turned on the particular terms of the dispute settlement procedure in the CC Colliery Agreement. The Decision makes it clear that express agreement by the parties for the Commission to arbitrate disputes may be found in the terms of the Agreement itself. The Full Bench in the Cook Colliery Case held that the dispute settlement procedure did not contain express agreement to submit disputes to arbitration, and accordingly such agreement was required on each occasion that a dispute arose and in the absence of agreement the Commission did not have power to arbitrate a dispute.

A dispute settlement procedure in an enterprise agreement generally provides for a number of stages or steps through which a dispute may be progressed. The procedure may allow for steps to be skipped in certain circumstances or provide that a dispute cannot progress until some or all of the steps are exhausted. A dispute procedure may provide that the final step or stage is a non-binding process such as conciliation, mediation, recommendation or a statement of opinion by the Commission (or some person or entity empowered to deal with the dispute). Where a dispute settlement procedure empowers the Commission to arbitrate it may do so by:

· Providing for a process whereby the parties must expressly agree to the Commission arbitrating a dispute within the scope of the dispute settlement procedure on a case by case basis in respect of each matter that is raised under the dispute settlement procedure; or
· Expressing the agreement of the parties within the terms of the dispute settlement procedure to the Commission arbitrating disputes within the scope of the procedure on a general basis without the need for agreement to be reached on each occasion that arbitration is sought by one or other of the parties.

The first kind of dispute settlement procedure gives either party the right to refuse to submit to arbitration on a case by case basis. In other words the parties have reserved the right to refuse to submit to arbitration which can be exercised in relation to any dispute. The second kind of dispute settlement procedure by its own terms constitutes an express agreement by both parties to submit to arbitration where the other party wishes to have the dispute determined in that manner. Some dispute settlement procedures provide for a hybrid approach where disputes of a particular kind (for example disputes arising under the agreement or in relation to the NES) are subject of express agreement to arbitration and may be arbitrated where the other party does not agree, and where agreement to arbitration on a case by case basis is required for disputes of other kinds (for example disputes in relation to any employment related matter).

The question for determination in the present case is whether the terms of the Dispute Settlement Procedure constitute an express agreement to arbitration on any dispute within the scope of the Procedure, regardless of whether both parties expressly agree to the particular dispute being arbitrated.

In my view clause 7 of the Agreement at Stage 5, constitutes express agreement by the parties for the Commission to arbitrate a dispute that is within the scope of the Dispute Settlement Procedure and that has been referred to the Commission following the earlier Stages. The first paragraph of Stage 5 of Disputes Settlement Procedure provides that either party to a dispute that is unresolved following Stage 4 of the Procedure may refer the matter to the Commission for conciliation and/or arbitration. The plain meaning of the term “conciliation and/or arbitration” is that the Commission may conciliate and arbitrate or conciliate or arbitrate at the request of the notifying party, regardless of whether the other party agrees.

The only restrictions on the Commission arbitrating a dispute within the scope of the Dispute Settlement Procedure (as set out in the second and third paragraphs of Stage 5) are that:

·   The Commission is not authorised to deal with a dispute by either conciliation or arbitration if the dispute is about whether the Company had reasonable business grounds in relation to requests from an FTM for flexible work arrangements or an extension of their parental of up to 12 months in addition to the available parental leave period; and
·   The Commission is not permitted to arbitrate the dispute unless each of the preceding stages from Stage 1 to Stage 4 have been completed or there is agreement to bypass stages; and
·   The Commission is permitted to arbitrate a dispute where Stages have been bypassed without agreement to bypass Stages, if the dispute relates to the NES or the interpretation or application of the Agreement.

I do not accept the submission on behalf of WorkPac that the use of the term “may” in the first paragraph of Stage 5 of the Procedure means that the express agreement of both parties to arbitrate each dispute must be obtained before the Commission is empowered to arbitrate. The term “may” gives the FTM or the Company an option to decide whether or not to refer a dispute to the Commission that has not been resolved in earlier Stages of the Procedure. It does not import a requirement that both parties agree to arbitration on each occasion a dispute is escalated to Stage 5 of the Procedure. The right of either party to refer a dispute to the Commission is not conditional upon the agreement of the other party.

Accordingly, the plain meaning of the provisions in Stage 5 of the Disputes Settlement Procedure is that the parties have expressly agreed, subject to the exceptions in the second and third paragraphs of Stage 5, that the Commission is empowered to arbitrate a dispute that either of them chooses to escalate to Stage 5. Where the parties intend to restrict the power of the Commission to arbitrate a dispute, they have done so by including the second and third paragraphs under the heading Stage 5. Had the parties intended to restrict the power of the Commission to arbitrate disputes only where they expressly agreed on each occasion or on a dispute-by-dispute basis, then such a restriction could easily have been included in the paragraphs setting out the other restrictions on the power of the Commission to arbitrate.

The dispute subject of the present application is not a dispute about whether WorkPac had reasonable business grounds in relation to requests from an FTM for flexible work arrangements or an extension of their parental leave of up to 12 months in addition to the available parental leave period. Further, for reasons set out in my earlier decision, WorkPac has agreed to bypass earlier stages and allow the dispute to be escalated to Stage 5. If I am wrong in relation to that conclusion, the dispute subject of the present application specifically relates to an interpretation of the Agreement, and by virtue of paragraph 2 of Stage 5 of the Dispute Settlement Procedure, does not require agreement to bypass earlier stages, before the Commission is empowered to arbitrate the dispute.

The clear and unambiguous terms of the Agreement are supported by the context and purpose of the Dispute Settlement Procedure. The Agreement operates to the exclusion of all other Awards and agreements. The preamble to clause 7 which sets out the Dispute Settlement Procedure commits the parties to dealing with disputes at the local level “to the maximum extent possible”. The fact that there are four stages of the process before it is referred to the Commission is consistent with this commitment as is the requirement that all stages are exhausted other than in limited circumstances, before the Commission is permitted to arbitrate a dispute.

The fact that the Black Coal Mining Industry Award 2010 does not provide for mandatory or compulsory arbitration of disputes, is not of itself a basis for finding that a dispute resolution procedure in an agreement does not provide for compulsory or mandatory arbitration. The terms of the relevant award for the purposes of the BOOT are part of the context in which an agreement is made. Absent some clear intent of the parties expressed in the text of the Agreement to mirror the Black Coal Award provision, the terms of the Black Coal Award do not support the proposition that the parties intended to have a dispute settlement procedure that did not provide for mandatory arbitration.

This is evident from the other contextual material in the present case, the Form F17 Declaration made on behalf of WorkPac in support of the approval of the Agreement. That Declaration clearly states that the Agreement provides for mandatory arbitration and that this is a benefit when the terms of the Agreement are compared with those of the relevant Award. I do not accept the submission of WorkPac that I should not have regard to the Form F17 on the basis that the deponent did not understand the import of the declaration that was being made.

The Form F17 is a Statutory Declaration. The Commission relies on such declarations to decide whether an agreement meets the requirements of the Act for approval, including whether it passes the BOOT. The Form F17, signed and sworn by WorkPac’s Senior Industrial Relations Advisor deposes to the fact that there are two terms and conditions in the Agreement that are more beneficial to equivalent provisions in the Award. One of those more beneficial provisions identified in the statutory declaration is that the Dispute Settlement Procedure in clause 7 of the Agreement provides for “mandatory arbitration”. Implicit in this declaration is that this is a benefit to employees because the Black Coal Award does not provide for mandatory arbitration. Accordingly, that employees can submit disputes to the Commission and seek a legally binding outcome, is a benefit in comparison with the Black Coal Award where the dispute settlement term does not allow this to occur.

It is surprising that a large employer such as WorkPac would make a submission to the effect that an employee in the position of Senior Industrial Relations Advisor, who has made a statutory declaration that the Commission relied on in approving an enterprise agreement, did not understand the terms of the declaration. I do not accept that submission. The Statutory Declaration is required to be made by a person with authority to make it – an officer or employee of the employer. The person who makes the declaration is required by the form of the declaration to state that he or she understands that a person who intentionally makes a false statement in a statutory declaration is guilty of an offence under s.11 of the Statutory Declarations Act and that he or she believes the statements made in the declaration are true in every particular.

The F17 Declaration is consistent with a construction of the Agreement whereby Stage 5 of the Disputes Settlement Procedure contains an express agreement to arbitration, in circumstances where a dispute has not been resolved at earlier stages, and confirms the plain meaning of the words in the Agreement.

I am also of the view that the fact that there is a significant change between the Disputes Settlement Procedure in the 2007 Agreement and the Procedure in the 2012 Agreement and that the parties were negotiating about whether the Procedure in the 2012 Agreement would provide for arbitration, confirms the plain meaning of the words in Stage 5 of the Procedure and is not inconsistent with the construction I have determined.

I do not accept the argument advanced on behalf of WorkPac that Stage 5 of the Disputes Settlement Procedure in the present case is similar to the provision considered by the Full Bench in the Cook Colliery Case. The dispute settlement procedure in that case stated as follows in relation to arbitration:

“Process: The parties may agree on the process to be utilised by FWA including mediation, conciliation and arbitration.
Power of FWA: Where the matter in dispute remains unresolved, FWA may exercise any method of dispute resolution permitted that it considers appropriate to ensure the settlement of the dispute.”

The Full Bench held that on a proper construction of the dispute settling clause in the CC Agreement the express permission of the parties to the Commission arbitrating a dispute was not given within the terms of the Agreement. Accordingly the Commission could not arbitrate a dispute unless and until the parties permitted it to do so, on a case by case basis. The Disputes Settlement Clause in the present case is not similar to the clause considered by the Full Bench in the Cook Colliery Case.

The Disputes Settlement Clause in the present case provides that when a dispute is referred to the Commission the Commission is empowered to conciliate and/or arbitrate the dispute, subject to the limitations in the second and third paragraphs of Stage 5. None of those limitations apply to the dispute subject of the CFMEU’s application. In short, under the Agreement in the present case, the parties have expressly agreed in the Disputes Settlement Procedure to arbitration of disputes when they have reached Stage 5 and subject to the exclusions in the second and third paragraphs of that part of the Dispute Settlement Procedure.

Conclusion – Jurisdictional Objection

For these reasons I find that the Disputes Settlement Procedure in clause 7 of the Agreement constitutes an express agreement of the parties that the Commission can arbitrate the present dispute and that the jurisdictional objection should be dismissed.

SUBSTANTIVE DISPUTE

Relevant Agreement Provisions

As previously noted, employees covered by the Agreement are referred to as FTMs or Field Team Members. FTMs can be employed on a full-time, part-time or casual basis or for a limited term or assignment – see clause 6.4.1. By virtue of clause 6.4.2 FTMs engaged in those categories are engaged as either a Base Rate FTM or a Flat Rate FTM. Clause 8 of the Agreement provides as follows:

“8. Classifications
8.1 at the commencement of each assignment by way of a notice of offer, an FTM will be assigned to a classification level based on skills, qualifications and experience and in consideration of the substance of the duties to be carried out on the site or workplace. The FTMs classification level, applicable to the assignment will be specified in the notice of offer made by the Company to the FTM.
8.2 Classifications will be determined on skills required for the particular role and not skills attained.
8.3 The classification structure is set out in Schedule 1.”

Clause 9 deals with the subject of Wage Rates and relevantly provides:

“9.1 Ordinary hourly wage rate
9.1.1 At the election of the Company an FTM will be paid either:
Base Rate FTMs
(a) The base rate as prescribed in Schedule 2 for each classification. Base rate FTMs are also entitled to allowances (except as specifically incorporated), overtime and any other entitlements as set out in this Agreement.

Flat Rate FTMs
(b) The flat rate of pay as prescribed in Schedules 3, 4, 5, 6, and 7 for each classification. Flat rates are provided as compensation for all work (including overtime, weekend penalties, public holiday loadings, shift penalties, annual leave loading (where applicable), casual loading (where applicable), any industry and special allowances that apply to all FTMs covered by this Agreement and any industry and special allowances specifically incorporated that may not apply to all FTMs covered by this Agreement. Flat rate FTMs shall also be entitled to any applicable allowances (which have not already been specifically incorporated) provided for by this agreement unless such allowance is identified as applying only to Base Rate FTMs.
9.1.2 Where a flat rate FTM works hours in excess of the flat rate scenarios as outlined in Schedules 3, 4, 5, 6 and 7 the FTM will be paid at the next highest flat rate hourly scenario for all hours worked.
Example: An FTM who works an average of 47 hours per week over the roster cycle) will be paid the flat rate for a 50 hour week for all hours worked instead of the 45 hour flat rate.
9.1.3 In no case will an FTM be paid less than the applicable ordinary hourly rate, from the relevant pay and classification scale, as amended from time to time. The pay and classification scale is amended in accordance with the relevant legislation.”

Clause 14 of the Agreement deals with Hours of work for Flat Rate FTMs and provides as follows:

“14. Hours of Work – Flat Rate FTM
14.1 The provisions of clause 14 shall apply only to FTMs in receipt of the flat rate of pay as prescribed in Schedules 3, 4, 5, 6 and 7 for the classification of work being performed.
14.2 The ordinary hours of work for flat rate FTMs shall be a standard work week. FTMs will be required to work reasonable additional hours prescribed in Schedules 3, 4, 5, 6 and 7 averaged over the particular work cycle being worked.
14.3 A flat rate FTM shall be employed on either day work or shift work and work hours as rostered by the Company to meet business operational needs. The shift work definitions in clause 15.4 shall be applied to determine if work is shift work.
14.4 Ordinary hours of work for FTMs will be a maximum of ten (10) per day and can be worked on any day Monday to Sunday inclusive.
14.5 Work shall be performed in accordance with the following work patterns:
(a)   5 days on, 2 days off; or
(b)   4 days on, 4 days off; or
(c)   5 days on, 5 days off; or
(d)   7 days on, 7 days off; or
(e)   10 days on, 4 days off; or
(f)     11 days on, 3 days off; or
(g)   14 days on 7, days off; or
(h)   21 days on, 7 days off; or
(i)     Any other reasonable combination as determined by the Company.

14.6 All hours worked by a flat rate FTM are paid at the rate as prescribed by Schedules 3, 4, 5, 6 and 7 irrespective of when the hours are worked. This includes overtime hours. However, where a flat rate FTM works, over a roster period, in excess the flat rate hours, they shall be paid for all time worked in the roster period at the higher relevant pay rate. For example, a flat rate FTM who is engaged to work 55 hours over a roster period and who works in excess of an average of 55 hours (eg. 56 hours) over the roster period, will be paid for all time worked in the roster period at the 60 hour rate of pay.
14.7 FTMs are required to work reasonable additional hours (beyond rostered hours) where the Company deems it necessary.
14.8 For flat rate FTM shift workers, the provisions of clause 14.6 shall apply where an FTM works in excess of the specified hours for the flat rate over a roster period.
14.9 Flat rate FTMs do not receive any additional payment for overtime loadings, weekend penalty rates, shift penalties, annual leave loading, casual loading (where applicable), public holiday rates or time worked outside the spread of hours as these have been incorporated into the flat rate.”

Clause 15 of the Agreement provides for hours of work for Base Rate FTMs. Relevantly clause 15.2 is headed “Hours of Work – Day Work” and provides for ordinary hours of work of 35 per week (or an average of 35 hours per week over the roster period) for full time Base Rate FTMs working day work. Clause 15.3 stipulates the entitlements of Base Rate FTMs to overtime. Clause 15.3.4 provides that approved overtime hours worked by “Shift Workers” who work weekends (6/7 day rosters) are paid for at the rate of double time.

Provisions dealing with shift work are found in clause 15.4.1. which contains the following definitions:
“15.4.1 Definitions
Afternoon shift means any shift, the ordinary hours of which finish after 6.00 pm and at or before midnight.
Night shift means any shift, the ordinary hours of which finish after midnight and at or before 8.00 am
Permanent night shift FTM is an FTM who:
(a)   Works on night shift only; or
(b)   Stays on night shift for a longer period than four (4) consecutive weeks; or
(c)   Works on a roster that does not give at least one-third of the FTMs working time off night shift in each roster cycle.”
In relation to shift work rates, clause 15.4.2 provides rates for “Day Shift” being “ordinary rates”; “Afternoon and Rotating Night Shifts” and “Permanent Night Shift”. Clause 15.4.3 of the Agreement provides for notice of change of shift for “Permanent Day Shift FTMs”. Clause 15.4.4 provides for overtime rates for Base Rate FTMs who normally only work day shift and are requested to work night shift.
Schedules 3, 4, 5, 6 and 7 of the Agreement set out Flat Rates from 1 July each year from lodgement of the Agreement. The Schedules prescribe rates for 45 hour week; 50 hour week; 55 hour week; 60 hour week; 65 hour week and 70 hour week. The Schedules also prescribe for each of those working weeks, rates for five days worked Monday – Friday; five days worked Monday to Sunday; and more than five days worked from Monday to Sunday. There are three rates for each of the specified work week periods, designated: “Day”; “Afternoon & Night”; and “Non Rotating”.

Evidence

Each of the Applicants provided statements of evidence to the Commission. The statements were tendered into evidence without objection and none of the Applicants were required for cross-examination. It is not in dispute that the Agreement applies to the Applicants and that they are classified under the Agreement as Level 3 Mineworkers in accordance with Schedule 1. WorkPac states that the Applicants are casual employees. During the respective periods of employment subject of the dispute, the Applicants worked at the Hail Creek Mine. The Applicants state that they worked a roster that alternates between day and night shift and that they are shift workers. Each of them gave evidence about the roster. Their evidence is that they work consecutive day shifts, and have days off and then work consecutive nights followed by days off. The duration of each shift is 12.5 hours with day shifts starting at 6.45 am and finishing at 7.15 pm and night shifts starting at 6.45 pm and finishing at 7.15 am. The roster is worked over a 45 hour week, on five days between Monday to Sunday, as provided in the Schedules of the Agreement.

Various letters in the form of notices of offer of casual employment were tendered by the Applicants. A common feature of the notices is that in relation to shift structure, there are boxes which can be checked stating “Day Shift”, “Afternoon Shift”, “Night Shift” and “Alternating Shift”. There is also a box to check indicating whether or not meal breaks are paid.

Mr Sheldrick[14] commenced employment with WorkPac on 15 April 2013. Mr Sheldrick’s original Notice of Offer of Casual Employment – Flat Rate[15] states that he is employed on an alternating shift structure and that he is entitled to be paid for meal breaks. The rate of pay is stated as $41 per hour and the following statement appears underneath the rate of pay:

“Your flat rate of pay includes the payment of overtime, weekend penalties, public holiday loadings, shift penalties, casual loading (refer to schedule 2 for more information on you casual loading) and any industry and special allowance that may apply.”

The Notice states that if a performance incentive is payable, the amounts are listed below (and is included in the above rates). An amount of $2.36 is set out below this statement and the following then appears:

“Note that this performance incentive bonus is paid in full satisfaction of any allowances or other entitlements that would otherwise be payable in accordance with that Agreement.”

On 3 July 2015 Mr Sheldrick received a further letter increasing his hourly rate to a flat rate of $43.05 per hour. Ms Schwede[16] commenced employment with WorkPac on 3 March 2014. Ms Schwede’s letter of offer[17] indicates that she is a casual employee working alternating shifts with paid meal breaks. Ms Schwede’s rate of pay is stated to be a Flat Rate of $43 per hour which includes the payment of overtime, weekend penalties, public holiday loadings, shift penalties, casual loading and any industry or special allowances that might apply. Ms Schwede states that from the commencement of her employment with the mine until January 2016, she was paid an hourly rate of $43.05, regardless of the hours she worked and whether she worked a day or a night shift.

Ms Rigby[18] commenced employment with WorkPac on 14 January 2015. Ms Rigby’s offer of employment dated 9 January 2015, does not indicate the shift structure under which she is working. The pay rate is stated as $43.00 per hour and is said to include a performance incentive of $0.40 per hour. Ms Rigby said that she was paid $43.05 per hour irrespective of when the hours were worked and whether she was working a night or a day shift. Ms Dorsa[19] said that since commencing work at the Mine on 18 January 2016, she was paid an hourly rate under the Agreement of $43.05 per hour regardless of when the hours were worked or whether the hours were worked on night shift or day shift. Ms Dorsa’s offer of employment dated 19 March 2015 indicates that the shift structure under which she is working is an alternating shift and that she is paid for meal breaks. The pay rate is stated as $43.00 per hour and is said to include a performance incentive of $0.40 per hour.

Mr Sheldrick and Ms Rigby tendered a document received by them on 6 January 2016 entitled “Rio Tinto Hail Creek Site Memo”.[20] The Memo states that Rio Tinto has conducted a commercial review of the viability of the Hail Creek Mine and that it has been assessed that there must be a reduction in costs to keep the Mine operating. The email goes on to state that WorkPac has no choice but to reduce the hourly rate paid to FTMs on site and that consistent with the terms of the Agreement, this reduction will be implemented from 18 January 2016.

Ms Dorsa tendered an email received by her on 12 January 2016 from Mr Nathan Weygood, WorkPac’s Central Queensland Regional Business Manager, the subject of which was “Change of Hourly Rates – Rio Tinto Hail Creek Mine Site (Client).” The letter states that due to tough economic conditions in the coal industry, for WorkPac to remain a viable option for ongoing engagement by its client Rio Tinto, and provide ongoing employment for FTMs, WorkPac must reduce its current cost to the client as an alternative to losing its commercial contract.

The letter goes on to advise that:

“…WorkPac and our Client Rio Tinto have conducted a review of cost saving measures and have identified potential options, such as the reduction of rates paid to contractors on site. WorkPac post this commercial review, has the understanding that we have no other choice but to reduce the hourly rate paid to our FTMs to maintain our presence on site. Please be assured that WorkPac has not made this decision lightly and have tried to consider less impacting measures prior to adopting this means, but in reflection this method appeared to be the only viable alternative that could keep you in employment at the moment. WorkPac via this correspondence is informing you as it is legally required to under the consultative provisions in your industrial instrument as to the reasons for implementing these measures.

Accordingly, as per the above understanding and consistent with your Enterprise Agreement, the basis of your current flat pay rate will have to reduce.
As previously explained to you, WorkPac has traditionally paid its FTMs well above what is required under our Enterprise Agreement (WorkPac Pty Ltd Mining (Coal) Industry WorkPlace Agreement 2012) as the market and commercial environment were then able to sustain and determine those rates, which unfortunately have disappeared in today’s climate.
By exercising the Flexible Reward Scheme provisions of our Enterprise Agreement your current hourly rate of $43.05 includes both the minimum rate we are required to pay you and an additional over award component (“Flex Up”). In line with the Flexible Reward Scheme payment provisions of the Enterprise Agreement, the additional payment may be reduced or withdrawn by WorkPac at its discretion.
Following the rate reduction and the re-classification process, the hourly rate that will be paid to you from Monday, 18^th January 2016 is $40.95 for day shift and $43.05 for night shift. We want to leave the decision in your hands as to whether you wish to remain in employment with WorkPac at Rio Tinto. We appreciate this is not welcome news however, we are also mindful that it may be more important to you that you retain employment onsite, even if it is on lower rates than you received previously.
If you wish to remain in employment at the Rio Tinto and therefore on the reduced rate of $40.95 for day shift and $43.05 for night shift you will provided with a new Letter of Offer setting out the revised rate.
WorkPac recognises that the decision is yours as to whether you wish to remain in employment with us under the new offer of employment. We appreciate this is not welcomed news for you, however we are also mindful that given the tough economic climate it may be more important to you that you retain employment on site.”[21]

On 28 January 2016 Ms Dorsa received a document headed: “Notice of Offer of Casual Employment – Flat Rate WorkPac Mining Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012”.[22] That letter states that listed below are details of Ms Dorsa’s assignment with Hail Creek Coal – Haul Operations and that whilst on the assignment subject of the letter, Ms Dorsa is employed under the “WorkPac Mining (Coal) Industry Agreement – FLAT Rates Rio Tinto Hail Creek (Rates as at 1 July 2015) a copy of which will be provided to Ms Dorsa upon request.

The letter further states that in the Notice of Offer the term “Industrial Instrument” means “the Enterprise Agreement mentioned above …. and the terms and conditions of employment which are applicable to this assignment”. The position offered is Mining/Haul Operator – B Crew. In relation to shift structure, there are boxes which can be checked stating “Day Shift”, “Afternoon Shift”, “Night Shift” and “Alternating Shift”. There is also a box to check indicating whether or not meal breaks are paid. The letter of offer to Ms Dorsa has the boxes for “Alternating Shift” and “paid meal breaks” checked. The hours of work are said to be variable and the letter states that WorkPac will not pay for hours worked over 12 hours in a shift; shift worked over 13 consecutive shifts; or rest periods of less than ten hours between shifts. The pay rate is said to be effective from 18 January 2016 and is set out in the letter as follows:

“Your Day Work pay rate is a Flat Rate: $40.95
In accordance with Clause 14.3 of the Industrial Agreement you shall be employed on either a ‘day work’ or ‘shift work’ rate of pay. When you are required to work day work you will be paid the above rate of pay for that shift.
Your base rate of pay includes the payment of overtime, weekend penalties, public holiday loadings, shift penalties, casual loading (refer to your Industrial Agreement for more information regarding your casual loading) and any industry and special allowances that may apply.
If the Flexible Reward Scheme is payable, the amounts are as listed below (and is included in the above rates):
This rate includes a Performance Incentive Bonus of $0.02.
Note (rate shown only if applicable) that this Flexible Reward Scheme is paid in full satisfaction of any allowances or other entitlements that would otherwise be payable in accordance with that Agreement.
Your Shift Work (Afternoon/Night) pay rate is a Flat Rate of: $43.05
In accordance with clause 1.43 of the Industrial Agreement you shall be employed on either a ‘day work’ or ‘shift work’ rate of pay. When you are required to work shift work (afternoon/night) in accordance with Clause 15.4 of the Industrial Agreement then you will be paid the above rate of pay for that shift.
Your base rate of pay includes the payment of overtime, weekend penalties, public holiday loadings, shift penalties, casual loading (refer to your Industrial Agreement for more information regarding your casual loading) and any industry and special allowances that may apply.
If the Flexible Reward Scheme is payable, the amounts are as listed below (and is included in the above rates):
Note that this Flexible Reward Scheme is paid in full satisfaction of any allowances or other entitlements that would otherwise be payable in accordance with that Agreement.”

Letters in substantially the same terms were received by Mr Sheldrick dated 14 January 2016[23]; Ms Rigby dated 15 January 2016[24]; and Ms Schwede dated 15 January 2016.[25] From 18 January 2016 the Applicants were paid $40.95 per hour for working day shift and $43.05 per hour for night shift. The Applicants continued to be paid in this manner until various dates from which they were paid $44 per hour for both day shifts and night shifts, as follows:

·   Mr Sheldrick until 20 February 2017;
·   Ms Schwede until 21 December 2016;
·   Ms Rigby until 15 December 2016; and
·   Ms Dorsa until 7 February 2017.

At or around the time that they commenced to be paid $44 per hour for day work and night shifts, the employees received further letters headed “Notice of Offer of Casual Employment – Flat Rate WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012. The shift structure in each of the Offer letters was said to be alternating shift with payment for meal breaks. The letters of offer also contain the same wording with respect to Day Work pay rate and Shift Work (Afternoon/Night) pay rate as the previous letters except that the rate is stated as $44 per hour for Day Work and Shift Work. Each of the Applicants state that the effect is that they are now once again paid the same rate for day shift and night shift work.

Mr Brodsky, District Vice President of the Queensland District Branch of the Mining and Energy Division of the CFMEU gave evidence about the negotiations for the Agreement. Mr Brodsky said that the Agreement was negotiated over a course of about five meetings held on 8 May, 17 May, 24 May, 31 May and 7 June 2012. According to Mr Brodsky, the parties used the then current WorkPac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 (the 2007 Agreement) as a base and if either party sought to change a clause in the 2007 Agreement they would be required to discuss the clause and the reasons for the proposed change. There were also discussions about a number of clauses which were to be included in the then proposed agreement and how those clauses were intended to apply.

Mr Brodsky also tendered a comparison document provided to him by WorkPac on 31 May 2012. That document does not include any change to the provisions of the 2007 Agreement relevant to the substantive issues in dispute in the present case. Mr Brodsky said that at a bargaining meeting on 8 May 2012, attended by Mr Brodsky and Mr Thompson on behalf of the CFMEU, there was a discussion about wage rates in the Agreement that related to the flat rate and base rate concepts. Mr Weygood said on behalf of WorkPac that all of the possible roster scenarios had been taken into account to work up the flat rate payments. Mr Brodsky said that he then asked how a worker would be paid for working a 7 day on/7 day off roster and whether there was any other roster than day work Monday to Friday, classified as shift work.

According to Mr Brodsky, Shannon Richards responded to that question on behalf of WorkPac and stated that under clause 14.3 of the Agreement, an FTM is either a day worker or a shift worker and that the day work rate for a flat rate FTM is the first rate in the Schedules to the Agreement. Shannon Richards went on to state that the flat rate for an FTM who works a roster that rotates between day, afternoon and night shift, or day and night shift, or any other rotating roster, is the second rate in the Schedules. Mr Brodsky said that he told Shannon Richards that: “We are happy with that.” Later that afternoon, Mr Brodsky received minutes taken by WorkPac of the meeting on 8 May 2012. Mr Brodsky tendered those minutes. The minutes record that Mr Brodsky asked: “What do you pay 7 day, day shift. Anything more than M-F is classed as shift.” The minutes further record that in response, SR (who I take to be Shannon Richards) on behalf of WorkPac said: “Our agreement is geared to that” and that Mr Brodsky said: “Satisfied”. Mr Brodsky said that a handwritten note on the minutes was added by him contemporaneously with receiving them, and clarifies what he had been told at the meeting by Shannon Richards.

Also before the Commission is the F17 Declaration, filed with the Agreement when the application for approval was made. As previously noted, the F17 Declaration was made by WorkPac’s then Senior Industrial Relations Advisor. Appended to the Form F17 is a document headed “Proposed WorkPac Coal Agreement 2012 Frequently Asked Questions and Answers”. This document was said to be one of the steps taken by WorkPac to explain the terms of the Agreement and the effect of those terms, to the relevant employees. Included in the information contained in that document is a question: “Who is a shift worker?” The response to that question is as follows:

“The Agreement defines two different types of shifts:
1.Afternoon shift (ie. shift finishes between 6.00 pm and 12.00 am midnight)
2.Night shift (ie. shift finishing between 12.00 am midnight and 8.00 am)

Shift workers does not include those FTMs who work permanent Day Shift. Therefore if you work permanent afternoon or night shift, or a combination of these shifts, you will be considered a shift worker and be entitled to 15% loading on your hourly rate when working either afternoon or night shift. Permanent night shift workers receive a 25% loading.”

Evidence on behalf of WorkPac was given by its National Employee Relations Manager, Mr Howard Powell, and General Manager Group Operations, Mr Cameron Hockaday. Mr Powell said that the Applicants are employed as casual employees and are paid a flat hourly rate for all hours worked on each shift. Mr Powell describes the Applicants as casual Flat Rate FTMs under the Agreement. It is the practice of WorkPac to negotiate agreements like the Agreement in the present case, to include flat rates which incorporate components for overtime and shift payments to ensure employees are better off and to enable agreements to be approved. This provides WorkPac with an administrative advantage in paying and forecasting wage rates.

Mr Powell said that the Agreement subject of the present proceedings contains rates that are built up to ensure that employees receive sufficient remuneration to accommodate shift loadings under the Black Coal Award. The fact that the flat rates in the Agreement incorporate overtime can also be seen from the fact that the Schedules to the Agreement provide for the rates to increase as the number of hours required to be worked by employees increases – 45 hours, 50 hours, 55 hours and so on.

In late December 2015, Mr Powell spoke with Mr Hockaday about minimum rates of pay for casual FTMs at Hail Creek Mine. Mr Powell said that he advised Mr Hockaday that “WorkPac could offer employment to casual FTMs at the minimum hourly rates in the 2012 Agreement, which for casual FTMs at Hail Creek was $40.93 for day shift and $43.04 for night shift, however we would need to go through a process of consulting with casual FTMs and offering them new terms of employment on the basis of the minimum rates.” Mr Powell said that before providing this advice he:

·   Reviewed the notices of offer for various casual FTMs;
·   Reviewed the Agreement as it related to pay rates for casual FTMs working the Hail Creek mine roster;
·   Read clause 15.4 of the Agreement which provides definitions for shifts and further provides for day shift to be paid at ordinary time; and
·   Read clause 14.6 of the Agreement which provided at the relevant time for FTMs to be paid for day shift at the rate of $40.93 and $43.04 for non-permanent night shift.

On 6 January 2016, Mr Powell instructed Ms Keating to send out a memorandum to all staff regarding the rate change, to comply with consultation obligations under the Agreement and to allow FTMs to seek alternative employment should they wish to do so. On about 12 January 2016, Mr Powell instructed Mr Weygood to send letters to relevant FTMs regarding new offers of employment and new rates of pay. The letters were in template form and addressed to each affected FTM. Mr Powell annexed time sheets for the Applicants in this matter, showing rates they were paid during various periods.

Mr Hockaday said that in about December 2015, Rio Tinto advised that competitors of WorkPac were offering lower hourly rates to supply labour to the Hail Creek Mine Site and that if WorkPac did not reduce its contracted rates with Rio Tinto at Hail Creek, it risked losing the contract. Mr Hockaday took advice from Mr Powell as to the minimum hourly rates payable under the Agreement. Mr Powell advised that WorkPac was paying casual FTMs above the minimum rates in the 2012 Agreement and that the Company could offer employment to casual FTMs at the minimum hourly rate in the Agreement which was $40.93 for day shift and $43.04 for night shift.

In late December 2015, Mr Hockaday asked Mr Powell to offer employment to casual FTMs at Hail Creek at the minimum rates in the Agreement to commence as soon as practicable in January 2016. Mr Hockaday subsequently advised Rio Tinto that WorkPac would pay minimum rates under the 2012 Agreement. Mr Hockaday said that he made this decision so that WorkPac could remain competitive and the Company secured the contract at the Mine. Until this point, WorkPac had always paid FTMs above the Agreement rates.

Submissions

The CFMEU’s argument centres on clause 14.3 of the Agreement which it submits has a plain and ordinary meaning. According to the CFMEU, the first sentence of the clause does two things:

a. Provides that a flat rate FTM will be employed as either a day worker or a shift worker; and
b. Provides that a flat rate FTM (irrespective of whether they are a day worker or a shift worker) will work hours as rostered by WorkPac.

A flat rate FTM that has been employed as a shift worker is described by the Agreement as a “flat rate FTM shift worker”. The shifts that are expressly defined in the Agreement at clause 15.4.1 are Afternoon Shift, Night Shift and Permanent Night Shift. It follows that a flat rate FTM that works a roster including any of those shifts is a flat rate FTM shift worker. It is evident that the “Afternoon & Night” flat rate in the Schedules of the Agreement prescribes the flat rate for a flat rate FTM who does not work a permanent night shift. The plain and ordinary words of clause 14.6 support such a construction:

“All hours worked by a flat rate FTM are paid at the rate as prescribed by Schedules 3, 4, 5, 6 and 7 irrespective of when the hours are worked” (emphasis added).

The CFMEU contends that clause 14.6 of the Agreement clearly indicates that the Schedules prescribe only one rate for a flat rate FTM irrespective of whether the flat rate FTM is a day worker or shift worker. Critically, clause 14.6 clearly provides that the rate is to be paid, irrespective of when the hours are worked. It follows that the concept of a “split rate” whereby a flat rate FTM is paid the day flat rate when working day work and the afternoon and night shift flat rate when working either afternoon or night shift is clearly inconsistent with clause 14.6. Fundamental to the “split rate” concept is when the hours are worked, which is contrary to clause 14.6 which requires that the rate is paid irrespective of when the hours are worked.

Clearly, the flat rate prescribed for the flat rate FTM day worker is the day work flat rate. Likewise, the rate prescribed for a flat rate FTM shift worker who works Permanent Night Shift is the Non Rotating flat rate. The result is that the rate prescribed for a flat rate FTM shift worker who works day shifts rotating with afternoon or night shifts and who does not work permanent night shift, is the Afternoon and Night Shift flat rate.

The CFMEU submits that such a construction is consistent with the distinction drawn in clause 14.3 between a day worker and a shift worker. The purpose of drawing a distinction is to ensure that the flat rate FTM shift worker receives a higher rate than a flat rate FTM day worker. The second part of the first sentence of clause 14.3 provides WorkPac with maximum flexibility in rostering (both flat rate FTM day workers and flat rate FTM shift workers). Absent a finding that the purpose of the distinction is as stated above, the second part of the sentence would render the provision in clause 14.3 that “a flat rate FTM shall be employed on either day work or shift work”, meaningless. The Commission should adopt a construction of the clause which gives substantive operation to all the words in clause 14.3 over the respondent’s construction, which renders the distinction in clause 14.3 as meaningless.

The CFMEU also contends that its construction of clause 14 is consistent with the discussions during negotiations for the Agreement, evidence of which was given by Mr Brodsky. Mr Brodsky’s evidence is that in response to a question, WorkPac’s principal negotiator Shannon Richards said that under the Agreement an FTM is either a day worker or a shift worker and the day work rate for a flat rate FTM is the first rate in the schedules in the Agreement, while the flat rate for an FTM that works a roster that rotates between day, afternoon and night shift, or day and night shift, or any other rotating roster, is the second rate in the Schedules – ie. the “Afternoon & Night” rate.

The CFMEU submits that WorkPac’s construction of the Agreement, the Company relies on the fact that the flat rate in dispute is entitled “Afternoon & Night”. According to the CFMEU, the plain and ordinary words of clause 14.3 and its evident purpose, as well as the plain and ordinary words of clause 14.6 and the evidence of the negotiations demonstrate that the Afternoon & Night flat rate has been drafted in “ordinary industrial English”. The approach urged by WorkPac is narrow and strictly literal and the authorities make clear that a narrow or pedantic approach or a strictly literal approach to construction is impermissible.[26] The construction contended for by WorkPac impermissibly ignores:

·   The plain and ordinary words of clause 14.3;
·   The purpose of clause 14.3;
·   The plain and ordinary words of clause 14.6; and
·   Evidence of the negotiations.

The effect of clause 14 is that a flat rate FTM shift worker (other than on permanent night shift) must be paid the applicable Afternoon & Night Shift flat rate for all rostered shifts. The Applicants are flat rate FTM shift workers. This is because all of the Applicants were employed as flat rate FTM shift workers and continue to work a roster that includes night shift. The prescribed flat rate for a flat rate FTM shift worker (other than on permanent night shift) is the Afternoon & Night flat rate. That rate must be paid to each of the Applicants for each rostered shift. It follows that the Commission should resolve the dispute by answering the question in the affirmative.

In oral submissions, Mr Walkaden for the CFMEU said that the relevance of the definitions of shift work in clause 15.4 of the Agreement is that they are appropriated for the purposes of clause 14.3 in discovering whether a Flat Rate FTM is a day worker or a shift worker. An employee is either paid as a Base Rate or a Flat Rate FTM and there is a further distinction between an employee who is a Flat Rate day worker and a Flat Rate shift worker. According to the CFMEU, the critical clause to resolve the present dispute, is clause 14.6 and in particular the first sentence, which states that all hours worked by a Flat Rate FTM are paid at the rate as prescribed in the relevant Schedule (3, 4, 5, 6, and 7) irrespective of when the hours are worked. The use of the words “at the rate” indicates that there is only one flat rate for an FTM shift worker and one flat rate for an FTM day worker. The concept of a split rate is inconsistent with the terms of clause 14.6

In relation to the effect of the letters given to each of the Applicants in or around January 2016, Mr Walkaden submitted that WorkPac did not exercise any right it may have had under clause 14.3 of the Agreement to convert the FTMs from being Flat Rate FTM shift workers to Flat Rate FTM day workers. Rather, WorkPac confirmed that the Applicants were on an alternating shift arrangement and changed their hourly rates depending on whether they were working day or night shifts.

WorkPac submits that the Notices of Offer provided to each of the Applicants designate them as casual Flat Rate FTMs pursuant to clause 9.1.1 of the Agreement. Clause 14.3 relevantly observes that:

Flat rate FTMs work hours as rostered by the Company to meet business and operational needs; and
The shift work definitions in clause 15.4 are applied to determine if work is shift work.

In relation to clause 15.4 of the Agreement, WorkPac points to the absence of a definition for day shift and submits that this is consistent with the Black Coal Award. There are definitions for “Afternoon Shift”, “Night Shift” and “Permanent Night Shift” – also consistent with the Black Coal Award. Clause 15.4.2 relevantly provides that:

Day shift is an ordinary time shift rate; and
Afternoon and Night (that is non-permanent night) shift attract penalty rates.

Even though the Agreement (and Award) definitions leave out “day shift” it is a logical consequence that day shift must be a shift other than those defined “Afternoon shift” or “Night shift”. Ms Dorsa’s witness statement names shifts and sets out the hours worked in those shifts as follows:

Day shift starts at 6.45 am and finishes at 7.15 pm;
Night shift starts at 6.45 pm and finishes at 7.15 am.

The ordinary hours for the Applicants as casual flat rate FTMs are ten hours per day. Therefore the Applicant’s ordinary hours of work are as set out in Ms Dorsa’s statement. Applying those hours and shifts to the definitions in clause 15.4 of the Agreement:

Day shift is not afternoon shift (as the ordinary hours finish before 6.00 pm, is not (non-permanent) night shift as the ordinary hours finish before 6.00 pm and is not permanent night shift. It must therefore be day shift; and
Night shift is night shift (ie. not permanent night shift).

For completeness it follows that there is no “Afternoon shift” with the meaning of the Agreement on the roster worked by the Applicants. In relation to Schedule 7, WorkPac contends that applying the shifts worked by the Applicants to the classification, designation and hours worked as set out in the Schedule, the minimum rate of pay is $40.93 for Day shift and $43.04 for Night shift.

The period to which the dispute relates was the first time that WorkPac paid minimum rates under the Agreement and it did so for commercial reasons. Previously WorkPac had paid all FTMs above agreement rates in response to market conditions. It is irrelevant how FTMs were being paid during these periods because they were not being paid the minimum rates under the Agreement. WorkPac advised employees that it would be reverting to minimum rates under the Agreement to remain competitive in the market. Employees were advised that they would be offered employment on different terms which they were free to decline. Each of the Applicants accepted employment with WorkPac on the new terms set out in each of their respective notices of offer.

WorkPac submits that the Agreement is clear on its face. WorkPac is required (at the minimum) to pay the Applicant’s the day shift rate when working day shift and the night shift rate (that is non-permanent night shift) rate when working night shift. Therefore the question for arbitration should be answered:

“WorkPac are not required to pay the Applicants the night shift rates when performing day shift.”

In oral submissions, Mr Proctor for WorkPac contended that the letters of offer to the Applicants, as casual employees, was a “standing arrangement” under which they were engaged as day workers when working days and shift workers when working nights. Mr Proctor also submitted that casual employees may be day workers when working days and shift workers when working nights and work hours as rostered by the Company. There is no distinction with respect to Flat Rate FTMs in relation to whether they are day workers or shift workers, other than they get different rates for each type of work. This can be contrasted with the situation with respect to Base Rate FTMs where it is an important distinction. The reference to the shift work definitions in clause 15.4 is to determine whether a Flat Rate FTM is entitled to a higher rate because of working particular shifts. There is nothing in the Agreement requiring that a flat rate be designated for all purposes. Regard has to be had to the work that is being performed to identify the applicable rate of pay.

In response to questions from the Commission about the effect of the letters received by the Applicants on their contracts of employment, Mr Proctor said that the employment of the Applicants was not terminated but rather, they agreed to change the terms and conditions under which they were working and to be engaged on a different basis to that on which they had originally been engaged.

In relation to extrinsic material relied on by the CFMEU, Mr Proctor submitted that:

“…it ought to be open for an industrial participant to read the terms of their enterprise agreement, understand those terms absent an ambiguity, and respond to a commercial issue without necessarily dragging up unconfirmed minutes of prior meetings of actors who have long since left the organisation and that is what Mr Powell’s evidence goes to in that he read the agreement and he acted upon it.”[27]

Consideration – Substantive dispute

The construction of the Agreement must begin with consideration of the ordinary meaning of the relevant words. The provisions identified by the parties as being central to the dispute are clauses 14.3 and 14.6 of the Agreement. Clause 14.3 states that a Flat Rate FTM shall be employed on either “day work or shift work”. Read literally, clause 14.3 appears to require that a Flat Rate FTM must be employed on one of those bases. Read literally, clause 14.6 appears to require that Flat Rate FTMs are paid “at the rate as prescribed in the relevant Schedule, irrespective of when the hours are worked” with reference to “the rate” being to reinforce that there is only one rate payable to Flat Rate FTMs once they are designated as day workers or shift workers.

The CFMEU contends that on a literal reading of these provisions, their ordinary meaning is that a Flat Rate shift worker who works any roster where there is a day shift alternating with an afternoon or night shift, is entitled to be paid the rate for afternoon and night shift for all shifts worked including day shifts. However, in determining the proper construction of the terms of an enterprise agreement, the ordinary meaning of the relevant words is not the end of the consideration. Regard must also be had to context to either confirm that the ordinary meaning of the relevant words is the basis upon which the Agreement is to be properly construed, or to contradict what appears to be the plain meaning of the words in the Agreement.

A consideration of context begins with the text of the Agreement and the place of the disputed provisions in the Agreement. Such consideration is broader than simply having regard to the disputed provisions. Clause 6.4.1 provides that FTMs under the Agreement will be employed in one or more of the following categories being full time, part time, casual, limited term or assignment or for a specific project/site or work related task. By virtue of clause 6.4.2, FTMs engaged in each of the above categories will be engaged as either Base Rate FTMs or Flat Rate FTMs. Clause 6.4.5 of the Agreement provides that a Flat Rate casual employee does not receive an additional casual loading, on the basis that casual loading is incorporated into the flat rate of pay. The components making up the 25% loading are set out in clause 6.4.6 of the Agreement. The method of remuneration for Base Rate and Flat Rate FTMs is set out in clause 9.1.1.

By virtue of clause 9.1.1, at the election of the Company, an FTM is to be paid as a Flat Rate or a Base Rate FTM. Clause 9.1.1(b) provides that the flat rate of pay as set out in the relevant Schedule to the Agreement is in compensation for all work including: overtime; weekend penalties; public holiday loadings; shift penalties; annual leave loading (where applicable); casual loading (where applicable); and any industry or special allowances specifically incorporated. Flat Rate FTMs are also entitled to allowances in addition to the flat rate where those allowances have not been specifically incorporated, unless such allowances are identified as applying only to Base Rate FTMs. Where a Flat Rate FTM works in excess of the flat rate scenarios outlined in the Schedules setting out the flat rates, they are entitled to be paid at the “next highest flat rate hourly scenario for all hours worked”.

The hourly rates for Base Rate FTMs are set out in Schedule 2 which is headed: “Ordinary Hourly Rate – Base Rate FTMs”. The rates of pay for Flat Rate FTMs are set out in Schedules 3 to 7. Schedules 3 to 7 are identical other than that they provide for annual increases in relevant rates throughout the course of the Agreement from 1 July each for the term of the Agreement. Schedule 7 is relevant to the present dispute as it prescribes flat rates from 1 July 2017.

The Schedules prescribe wage rates for classification levels from Level 1A to Level 5. The classification definitions relating to the Levels are found in Schedule 1 to the Agreement. For each Level, rates of pay are set out for “permanent” and “casual” employees and are then divided into rates for “Day”; “Afternoon & Night” and “Non Rotating”. The rates for each of these work patterns are expressed as hourly rates for a 45 hour, 50 hour, 55 hour, 60 hour, 65 hour and 70 hour week. The rates are further categorised under each of the working week options as being for five days Monday to Friday; five days Monday to Sunday or more than five days Monday to Sunday.

It is not in dispute that for the period relevant to the dispute, the Applicants were casual Flat Rate FTMs classified at Level 3 and working a roster scenario of a 45 hour week, with five shifts worked between Monday and Sunday and that the roster provided for 12.5 hour shifts and for employees to rotate between periods of work rostered from 6.45 am to 7.15 pm and 6.45 pm to 7.15 am. It is also not in dispute that prior to January 2016 the Applicants were working the same or a similar roster and were being paid for all time worked on that roster at the hourly rate for Level 3 for “Afternoon & Night” in Schedule 7 for a 45 hour week roster scenario where five shifts are worked between Monday and Sunday – ie. $43.04 per hour. After January 2016 the Applicants were paid the rate specified as “Day” for the rostered hours that they worked between 6.45 am to 7.15 pm and at the “Afternoon & Night” rate for hours between 6.45 pm and 7.15 am.

The CFMEU’s argument is that this “split rate” is not permitted by the terms of the Agreement because the Applicants are shift workers and the rate specified as “Day” is a day work rate only. This argument is based on the words in clause 4.3 which are said to require that a Flat Rate FTM be employed on either “day work” or “shift work”.

When the terms relied on by the CFMEU are considered in the context of the Agreement as a whole, the ordinary meaning that the CFMEU contends for is not apparent. In particular, it is not apparent that the rate specified as “Day” in the wages Schedules for Flat Rate FTMs is for day work only. What is apparent is that the Agreement deals separately with the matters of what constitutes day work and shift work and the rates that Flat Rate FTMs are entitled to be paid for working at particular times.

There is no provision defining “day work” in the part of the Agreement dealing with hours of work for Flat Rate FTMs. Clause 14.3 provides that: “The shift work definitions in clause 15.4 shall be used to determine if work is shift work.” Clause 15 is headed “Hours of Work – Base Rate FTM”. The shift work definitions are in clause 15.4.1 and cover “Afternoon shift”, “Night Shift” and “Permanent night shift”. The table in clause 15.4.2 is headed “Shift Work Rates” and includes a rate for “Day shift” which is specified as “Ordinary time”.

There is a definition for “day work” for Base Rate FTMs in clause 15.2 of the Agreement. That definition is not referred to in clause 14.3 as being applicable to Flat Rate FTMs or as a basis for determining if work is day work. As previously noted, clause 14.3 refers only to the shift work definitions in clause 15.4.

There also is no definition of what constitutes “day shift”. However, clause 14.3 of the Agreement which provides for the hours of work for Flat Rate FTMs refers to the definitions in clause 15.4 that apply to Base Rate FTMs in order: “to determine whether work is shift work”. The reference in clause 14.3 is to all of clause 15.4 which includes the shift penalties for Base Rate FTMs working “Afternoon and Rotating Night Shift” and “Permanent Night Shift” and also states that “Day Shift” is paid for at the rate of ordinary time. This provision makes apparent that Day Shift is a shift that is not otherwise defined in clause 15.4.

The purpose for a determination about whether work is shift work, is to identify the rate at which Flat Rate FTMs are required to be paid for work at particular times by defining when a work period is an afternoon or night shift so that the employee is entitled to the higher rate for such shifts. There are no additional leave entitlements based on whether an FTM is working day shift or night shift or a combination of both. Additional leave entitlements in clause 19.2(ii) are based on working a roster which requires ordinary shifts on public holidays and a specified number of shifts on Sundays.

I accept that Flat Rate FTMs who work a sequence of days (ie. at times that are not Afternoon or Night Shift as defined in clause 15.4.1) and then rotate and work a sequence of Afternoon or Night Shifts that meet the definitions in clause 15.4.1, are shift workers and that when they work during the day in such a sequence, they are working a Day Shift. I also accept that employees who work Non Rotating Night Shifts are shift workers. Further, I accept that Flat Rate FTMs who work all of their hours during the day and are not required to work a pattern of hours which includes hours that meet the definition of Afternoon or Night Shift are day workers and not shift workers.

I do not accept that an employee who works a pattern whereby day shifts alternate with afternoon or night shifts is a day worker during the day and a shift worker at night.

However, the fact that a Flat Rate FTM is a shift worker by virtue of working a sequence of Day Shifts rotating with a sequence of Afternoon or Night Shifts, is not determinative of the rate that such an employee is required to be paid for work at particular times. The Flat Rates set out in Schedule 3 to 7 of the Agreement are specified as being payable on the basis of whether employees are working “Day”, “Afternoon or Night” or “Non Rotating” shift.

There is some inconsistency between the terminology used in the shift work definitions in clause 15.4.1 and that used in the Schedules of Flat Rates. However, in the context of the Agreement as a whole, the rates for “Afternoon & Night” or “Non Rotating” in the Schedules can only relate to Afternoon or night shift and Permanent Night Shift respectively as defined in clause 15.4.1. This can be contrasted with the use of the term “Day” in the Schedules, which could apply to Day Shift and day work. To construe the Agreement as requiring the rate specified in the Flat Rate Schedules for “Afternoon & Night” to be paid to employees working Day Shift would require the addition of words to that effect in the Flat Rate Schedules to clarify that the term “Day” refers to day work, and that Day Shifts where rosters provide for employees to rotate between Day Shifts and Afternoon or Night Shifts are paid for at the Afternoon & Night rate. There are no such words in the Agreement.

When clause 14.3 of the Agreement is read in the context of the Schedules of Flat Rates, it is clear that the fact that Flat Rate FTMs are required to be employed on either day work or shift work does not establish an entitlement for Flat Rate FTMs who are shift workers to be paid for Day Shifts at the rate specified for Afternoon & Night Shifts in the Schedules of Flat Rates.

Similarly, the reference in clause 14.6 to Flat Rate FTMs being paid “at the rate as prescribed in Schedules 3, 4, 5, 6 and 7 irrespective of when the hours are worked” does not require that Flat Rate FTMs working Day Shifts and Afternoon & Night Shifts are entitled to be paid at the Afternoon & Night Shift rate for all shifts worked. The phrase “at the rate” does not mean that there can only ever be one rate payable to employees working a roster that rotates between Day Shift and Afternoon or Night Shift. That phrase simply means that the relevant or applicable rate for the time at which the hours are worked, is required to be paid.

The phrase “irrespective of when the hours are worked” read in the context of the Agreement as a whole, simply reflects that the Flat Rate paid to Flat Rate FTMs includes all loadings, penalties and other payments relating to when hours are worked. For example, the flat rate applies to weekends and public holidays and there is no entitlement to an additional amount for working at those times.

It is also relevant that the loadings for Base Rate FTMs working shift work do not apply to day shift. For Base Rate FTMs the hourly rate is the same for Day Shift as it is for day work. Given that the flat rates are paid in lieu of the loadings and penalty payments for Base Rate FTMs there is no basis for paying a higher flat rate to FTMs working Day Shift than is payable to them for day work. To construe the Agreement in the manner contended by the CFMEU would result in the Flat Rate for Day Shift payable to Flat Rate FTMs having a component for an afternoon and night shift allowance loaded into it, in circumstances where such allowance is not payable to Base Rate FTMs for working day shifts which rotate with Afternoon or Night Shifts. Given the relationship between the Base Rates and the Flat Rates and that the former are the basis for the latter, this outcome would be illogical.

I do not accept the submission that this construction tenders the distinction between Day Workers and Shift Workers in clause 14.3 of the Agreement meaningless. As previously noted, the purpose of clause 14.3 is to define when a period of work is an afternoon or night shift for which a Flat Rate FTM is entitled to be paid at the Afternoon and Night rate. Absent the provision there would be no limitations on the spread of hours in which a Flat Rate Day Work FTM could be required to work his or her ordinary hours for the purpose of the roster scenarios as the Agreement does not define day work.

To the extent that the Agreement is ambiguous, I turn now to consider whether there is extrinsic material or evidence of objective background facts, to aid the interpretation of the Agreement. The extrinsic evidence comprises the minutes of a negotiation meeting tendered by Mr Brodsky, with notations of a conversation at the meeting added in his handwriting. Those minutes do not in my view establish objective background facts, which inform the subject matter of the Agreement. The minutes simply reflect that employees working rosters from Monday to Sunday are considered to be shift workers, without indicating what the rate of pay for various shifts is.

As a Full Bench of the Commission observed in Berri a cautious approach should be taken to the admission of evidence of prior negotiations and the positions advanced during the negotiation process. The minutes are not sufficiently clear to be considered as a basis for the construction of the Agreement advanced by the CFMEU. The additional notes by Mr Brodsky reflect his understanding of the provisions but do not establish mutual intention in relation to how they will operate. While I do not doubt the veracity of Mr Brodsky’s evidence about what Shannon Richards said at the relevant meeting, that comment is not reflected in the minutes or in the terms of the Agreement itself.

The Question and Answer document appended to the Form F17 is evidence as to what employees were told about the Agreement. The Full Bench in Berri observed that such material may be of more assistance in the construction of an agreement than evidence of the negotiations. In the present case, the question and answer deals with shift work provisions for Base Rate FTMs and states that shift loading is only payable when Base Rate FTMs work an afternoon or night shift. Employees were not told at the time the Agreement was made that they would be paid the Afternoon & Night rate for day shifts in a roster where they were also working afternoon or night shifts. It would be surprising if the Flat Rates incorporated an Afternoon and Night Shift loading for Flat Rate FTMs working Day Shifts alternating with Afternoon and Night Shifts, which is not payable to Base Rate FTMs who are working the same or similar rosters.

CONCLUSION

For the reasons set out above, I have determined that the Applicants were not entitled to be paid $43.04 per hour for each shift worked during the relevant period, and were only entitled to be paid at that rate for Afternoon or Night Shifts as defined in clause 15.4.1 of the Agreement. Accordingly the answer to the question for arbitration is No.

DEPUTY PRESIDENT

Appearances:

Mr A. Walkaden on behalf of the CFMEU.
Mr M. Procter and Ms A. Miller of ClarkeKann Lawyers for the Respondent.

Hearing details:

2016.
25 November.
Brisbane.

2017.
28 August.
Brisbane.

[1] [2017] FWC 1735..

[2] [2017] FWCFB 3005 at [14].

[3] [2017] FWCFB 4487.

[4] [2014] NSWCA 184 at [71] – [85].

[5] Manufacturers’ Mutual Insurance Ltd v Withers (1988) 5 ANZ Ins Cas 60-853 at 75-343.

[6] Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2004] UKPC 6; [2005] 1 All ER 667 at [64].

[7] Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [78].

[8] Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 391 per Lord Hoffman, approved in Campbell v R [2008] NSWCCA 214; 73 NSWLR 272 at [48] (Spiegelman CJ, Weinberg AJA and Simpson J agreeing) and Dale v The Queen [2012] VSCA 324 at [73].

[9] Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; 76 NSWLR 603 at [17] cited in Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 310 ALR at [71] – [85].

[10] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at [40].

[11] [2015] FWCFB 5619.

[12] [2017] FWCFB 2749.

[13] Witness Statement of Christopher Iain Brodsky Exhibit 1 Annexure CB-3.

[14] Exhibit 3 Statement of Simon Sheldrick dated 6 June 2017.

[15] Exhibit 3 Annexure “SS-1”.

[16] Exhibit 2 Statement of Katrina Schwede dated 6 June 2016.

[17] Exhibit 2 Annexure KS-1.

[18] Exhibit 4 – Statement of Kathy Rigby.

[19] Exhibit 5 Statement of Natalie Dorsa dated 7 June 2017.

[20] Exhibit 3 Annexure SS-3; Exhibit 4 Annexure KR-2.

[21] Exhibit 5 Annexure ND-2.

[22] Exhibit 5 Annexure ND-3.

[23] Exhibit 3 Annexure SS-5.

[24] Exhibit 4 Annexure KR-4.

[25] Exhibit 2 Annexure KS-2.

[26] Kucks v CSR Limited (1996) 66 IR 182 and City of Wanneroo v Australian, Municipal, Clerical and Services Union (2006) 153 IR 426 cited with approval in Golden Cockerel.

[27]Transcript PN307.

Printed by authority of the Commonwealth Government Printer

[2017] FWC 6340

1 DECEMBER 2017