Employee Representative Committee of Asahi Premium Beverages v Asahi Premium Beverages Pty Ltd

[2016] FWC 2346

DECISION

Fair Work Act 2009

s.739—Dispute resolution

Employee Representative Committee of Asahi Premium Beverages

Asahi Premium Beverages Pty Ltd

(C2015/1891)

DEPUTY PRESIDENT KOVACIC	MELBOURNE, 13 APRIL 2016
Alleged dispute concerning the interpretation of cashing out terms.

[1] On 27 February 2015 the Employee Representative Committee of Asahi Premium

Beverages (ERC – the Applicant) lodged an application made under s.739 of the Fair Work

Act 2009 (the Act) and in accordance with the dispute resolution process of the Independent

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Distillers Employment Agreement 2011

(the 2011 Agreement). The dispute concerned the

interpretation of clause 41.1 of the 2011 Agreement which deals with the cashing out of

personal/carer’s leave.

[2] The ERC contended in its application that custom and practice regarding the

application of clause 41.1 of the 2011 Agreement had been since the inception of the clause

for an employee to cash out any hours over and above an accrual of 15 days. The ERC further

contended that Asahi Premium Beverages Pty Ltd (Asahi – the Respondent) now took a

different view. By way of background, Asahi purchased Independent Distillers in September

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2011 , i.e. after the 2011 Agreement commenced operation.
[3] At the time the dispute was notified, the parties were bargaining for an enterprise

agreement to replace the 2011 Agreement which had a nominal expiry date of 28 February

2014.

[4] The dispute was the subject of a number of conferences convened by the Fair Work

Commission (the Commission). During the course of those conferences, the Commission

encouraged the parties, inter alia, to seek to reach a common understanding on the issue of

cashing out personal/carer’s leave in the context of settling a new agreement.

[5] On 26 June 2015, Mr Troy Eden on behalf of the ERC advised the Commission that a

negotiated outcome had not been achieved and asked that the Commission now determine the

matter. On 2 July 2015 Ms Kelly Pinsent, an Employee Relations Consultant with Asahi,

advised the Commission that, while the 2011 Agreement did not specifically provide
[2016] FWC 2346

jurisdiction for the Commission to determine the matter, Asahi nevertheless consented to the

Commission arbitrating the dispute.

[6] Directions were subsequently issued by the Commission on 23 July 2015, with the

dispute heard on 6 October 2015. Mr Eric Toro Carrasco appeared with Mr Troy Eden for the

ERC, while Ms Katherine Aistrope appeared with permission for Asahi, together with

Ms Pinsent.

[7] Mr Clive Smith, a former Group Employee Relations Director for the Independent

Liquor Group; Mr Marco Luise, a former employee of Independent Distillers and Asahi who

was involved in the negotiations for the 2011 Agreement; and Mr Carrasco all gave evidence

on behalf of the ERC. Only Mr Carrasco was required for cross examination. Asahi did not

lead any evidence in support of its submissions.

[8] On 5 October 2015, Ms Aistrope advised the Commission that the Asahi Premium

Beverages Laverton Enterprise Agreement 2015

(the 2015 Agreement) had been approved by

the Commission on 25 September 2015 and had commenced operation on 2 October 2015.

Against that background, at the hearing on 6 October 2015 the parties submitted that the

dispute to be determined now related to clause 21.6 of the 2015 Agreement which dealt with

the cashing out of personal/carer’s leave. That clause is in almost identical terms to the

equivalent clause of the 2011 Agreement. More specifically, the ERC sought to amend its

application to reflect this. The Commission agreed to do so in the absence of any objection

from Asahi.

[9] For the reasons set out below, I have found that clause 21.6 of the 2015 Agreement

requires Asahi and the employee to agree in writing to the cashing out of personal/carer’s

leave, i.e. the cashing out of personal carer’s leave is not automatic at the request of an

employee as Asahi has the discretion to agree or not to agree to any such request.

The agreement provisions

[10] Clause 41 of the 2011 Agreement provided as follows:

“41. Cashing out terms

41.1 Paid personal/carer's leave must not be cashed out if or unless:

(a) The cashing out would result in the employee's remaining accrued
entitlement to paid personal/carer's leave being less than 15 days; and

(b) Each cashing out of a particular amount of paid personal/carer's leave
must be by a separate agreement in writing between the Company and
the employee; and

(c) The employee must be paid at least the full amount that would have
been payable to the employee had the employee taken the leave that the
employee has forgone.”

[11] Clause 21.6 of the 2015 Agreement provides as follows:

[2016] FWC 2346

“21.6. Cashing Out Personal/Carer's Leave
Paid personal/carer's leave must not be cashed out if or unless:

(a) The cashing out would result in the employee's remaining accrued
entitlement to paid personal/carer's leave being less than 15 days; and

(b) Each cashing out of a particular amount of paid personal/carer's leave
must be by a separate agreement in writing between the Company and
the employee; and

(c) The employee must be paid at least the full amount that would have
been payable to the employee had the employee taken the leave that the
employee has forgone.”

The Applicant’s case

[12] The ERC submitted that the clause should continue to be applied as it had been

between March 2011 and February 2014, which was consistent with the intent of the parties

when they negotiated the clause.

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[13]

Mr Smith in his witness statement

set out the background to the negotiation of clause

41.1 in the 2011 Agreement. More specifically, Mr Smith deposed that the clause was

inserted in the 2011 Agreement to allow employees to tell the company that they wanted to

cash up, adding that it was not intended at the time that the clause would provide the company

with an opportunity to refuse an employee’s request application to cash out some of their

personal/carer’s leave. Mr Smith further deposed that to interpret the clause as giving the

company the right to refuse payment to an employee if he/she had the required balance of

personal leave was a total misinterpretation of the intention of the clause.

[14]

Mr Luise deposed in his witness statement

that with regard to clause 41.1 of the 2011

agreement there was never any intention that the employer would have any discretionary

power regarding the cashing out of personal/carer’s leave, adding that if that had been the

case the clause would have required “mutual agreement”.

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[15]

Mr Carrasco in his witness statement

also set out the background to the inclusion of

clause 41.1 in the 2011 Agreement. Among other things, Mr Carrasco deposed that:

 the wording of the clause was taken directly from the Act;
 employee representatives were authorised to reach in-principle agreement with the
company on the understanding that the company would have no ability to reject an
application for the cashing out of personal/carer’s leave if the employee’s request
was for hours in excess of 15 days;
 at no stage in the negotiations for the 2011 Agreement was there any discussion
which sought to give the company any discretionary power in regards to the cashing
out of personal/carer’s leave, other than to advise that there would not be any
discretion; and
 the company had never rejected an application for the cashing out of personal/carer’s
leave.

[2016] FWC 2346

[16] In his oral evidence, Mr Carrasco attested that, inter alia, the clause only entailed

minor changes to the equivalent provision in the 2011 Agreement and had been included in

the 2015 Agreement on the basis that the provision was still in dispute.

[17] At the hearing, the ERC agreed that there had been no ambiguity regarding the clause

and its predecessor for a period of three years, reiterating that Asahi had admitted that it had

never rejected an application to cash out personal/carer’s leave. Further, if Asahi had a policy

regarding the cashing out of personal/carer’s leave, it had not shared that policy with the ERC.

Finally, the ERC agreed that there was no ambiguity in the clause but not for the reasons

stated by Asahi.

The Respondent’s case

[18] Asahi submitted that the clause merely facilitates the ability for an employee to cash

out personal/carer’s leave. Asahi further submitted that the clause does not entitle employees

to cash out personal cash/carer’s leave by right and that cashing out can only occur by

agreement, contending that Asahi could decline a request to cash out personal/carer’s leave at

its discretion.

[19] With regard to the issue to be determined by the Commission, Asahi characterised the

question as being whether Asahi has discretion under the clause in relation to requests from

employees to cash out a portion of their personal/carer’s leave (i.e. can Asahi choose to

decline a request to cash out)? Asahi contended that the answer to that question should be yes.

[20] Drawing on the principles elaborated by the Full Bench in Australasian Meat Industry

Employees Union v Golden Cockerel Pty Limited

(Golden Cockerel), Asahi submitted that:

 the fact that the parties disagree about the meaning of the clause does not render the
provision ambiguous: Maritime Union of Australia v Patrick Stevedores Holdings
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Pty Limited (Patricks);
 the clause does no more than replicate the requirements of s.101(2) of the Act;
 the clause requires a separate agreement in writing between the employer and the
employee;
 there is nothing in the clause or the 2015 Agreement that expressly obliges Asahi to
agree to the cashing out of personal cash/carer’s leave;
 the subjective intention of the parties at the time of the negotiations is not a matter
that the Commission may take into account in interpreting the clause because there is
no ambiguity in the clause;
 the Respondent’s conduct regarding the clause is not a matter which is permissible
for the Commission to take into account in determining the interpretation of the
clause: Essential Energy v Australian Municipal, Administrative, Clerical and
9

Services Union and others ; and
 it is entitled to change its policy in respect of how it applies its discretion under the
clause.

[2016] FWC 2346

[21] Asahi also relied on the decision of Vice President Watson in Transport Workers’

Union of Australia v Qantas Airways Limited

(Qantas) in which the Vice President

considered whether the employer in that case was entitled to decline requests to cash out

annual leave.

[22] At the hearing, Asahi essentially reiterated its written submissions, adding that under

the Act an enterprise agreement must not exclude the National Employment Standards (NES)

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or any provision of the NES	.
The issue to be determined

[23] The principles relating to the interpretation of enterprise agreements were, as alluded

to in Asahi’s submissions, set out in Golden Cockerel. Below is the passage which sets out the

key principles in this regard.

“[41] From the foregoing, the following principles may be distilled:
1.          The AI Act does not apply to the construction of an enterprise agreement made
under the Act.
2.          In construing an enterprise agreement it is first necessary to determine whether
an agreement has a plain meaning or contains an ambiguity.
3.          Regard may be had to evidence of surrounding circumstances to assist in
determining whether an ambiguity exists.
4.          If the agreement has a plain meaning, evidence of the surrounding
circumstances will not be admitted to contradict the plain language of the
agreement.
5.          If the language of the agreement is ambiguous or susceptible to more than one
meaning then evidence of the surrounding circumstance will be admissible to
aide the interpretation of the agreement.
6.          Admissible evidence of the surrounding circumstances is evidence of the
objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to
establish objective background facts known to all parties and the
subject matter of the agreement;

(b) notorious facts of which knowledge is to be presumed;
(c) evidence of matters in common contemplation and constituting a
common assumption.

7. The resolution of a disputed construction of an agreement will turn on the
language of the Agreement understood having regard to its context and
purpose.

[2016] FWC 2346

8. Context might appear from:

(a) the text of the agreement viewed as a whole;
(b) the disputed provision's place and arrangement in the agreement;
(c) the legislative context under which the agreement was made and in
which it operates.

9. Where the common intention of the parties is sought to be identified, regard is
not to be had to the subjective intentions or expectations of the parties. A
common intention is identified objectively, that is by reference to that which a
reasonable person would understand by the language the parties have used to
express their agreement.
10. The task of interpreting an agreement does not involve rewriting the agreement
to achieve what might be regarded as a fair or just outcome. The task is always
one of interpreting the agreement produced by parties.”

[24] I adopt those principles in this case.
[25] Drawing on the second principle in Golden Cockerel, the Commission must first

determine “whether an agreement has a plain meaning or contains an ambiguity.” As noted

above, Asahi, relying on the decision in Patricks, submitted that the fact that the parties

disagree about the meaning of the clause does not render the provision ambiguous.

Specifically, the Full Bench in Patricks stated that:

“[7] That two parties disagree about the meaning of a term of an agreement does
not render it ambiguous.”
[26] A close examination of the clause indicates that it has the following three essential

requirements:

(i)         any cashing out must not result in an employee’s accrued personal/carer’s
leave entitlements falling below 15 days;
(ii)        each cashing out must be by separate written agreement between the Company
and the employee (underlining added); and
(iii)       the employee must be paid what they would have been paid had they taken
leave.

[27] On any reading of the clause it is clear that for each cashing out it requires a separate

agreement in writing between Asahi and the employee making the request before the cashing

out of personal/carer’s leave can occur. The clause is in my view unambiguous as to its

requirement in this regard. Further, no inference can be drawn from the clause that the cashing

out of personal/carer’s leave is automatic in circumstances where an employee requests makes

a request.

[28] Accordingly, drawing on principle 4 in Golden Cockerel, there is no basis for the

Commission to draw on the evidence of the surrounding circumstances to contradict the plain

language of the 2015 Agreement. To that end, I note that much of the ERC’s submissions

related to the parties’ intent when the provision was first negotiated as part of the 2011
[2016] FWC 2346

Agreement. In circumstances where the clause has a plain meaning, as per Golden Cockerel,

no weight can be attached to that intent.

[29] As previously mentioned, Vice President Watson in Qantas was required to determine

the meaning of a clause in the the Qantas Airways Limited and QCatering Limited -

Transport Workers Workplace Determination 2012 dealing with the cashing out of annual

leave. Specifically, the Vice President stated as follows in his decision:

“[7] … It appears to me that the key provision is clause 31.10.1. It provides for annual
leave to be cashed out subject to a proviso. In my view, the key task in resolving the
dispute is to determine what that proviso actually requires. As I say that involves
looking at the words in that clause and identifying the particular elements that form
part of that proviso.
[8] In my view, there are three elements of the proviso. First, there must be

agreement of the employee. Secondly, there must be agreement of the employer.
Thirdly, the agreement must be made by way of a separate agreement in writing.
Unless all three of those elements are present then, in my view, the proviso does not
operate. If general agreement exists in some way, that would not satisfy the
requirement of the clause because there needs to be a separate agreement in writing. If
the employee does not agree to the cashing out then the proviso would not be satisfied.
Equally if the employer does not agree to the cashing out then the proviso would not
be satisfied. In my view, that is the plain meaning of the clause and it is not affected
by other provisions of the clause. Clause 31.10.1 is not to be read down by the use of
the word, “election,” in sub clause 3 which is essentially a clause relating to the
amount of payment to be made in the case of cashing out.
[9] For those reasons and based on what I consider to be the ordinary meaning of

the words of the clause, I consider that this dispute should be determined by answering
the question, as follows: Is Qantas bound to cash out annual leave at the election of the
employee? The question should be answered in the negative. Qantas has the right to
decline a request.”
[30] The above analysis supports a finding that the clause requires Asahi and the employee

to agree in writing to each cashing out of personal/carer’s leave, subject to the other

requirements of the clause being satisfied and that, as a result, Asahi has the discretion not to

agree to any such request.

Conclusion

[31] For all the above reasons, I have found that clause 21.6 of the 2015 Agreement

requires Asahi and the employee to agree in writing to the cashing out of personal/carer’s

leave, i.e. the cashing out of personal carer’s leave is not automatic at the request of an

employee as Asahi has the discretion to agree or not to agree to any such request.

[2016] FWC 2346

Appearances:

E. Carrasco with T. Eden for the Employee Representative Committee of Asahi Premium

Beverages.

K. Aistrope with K. Pinsent for Asahi Premium Beverages Pty Ltd.

Hearing details:

Melbourne.

2015:

October 8.

Printed by authority of the Commonwealth Government Printer

AE886124

AE415867

Exhibit ERC1

Exhibit ERC2

Exhibit ERC3

[2014] FWCFB 7447

[2015] FWCFB 4994 at paragraph 7

[2015] FWCFB 1981 at paragraph 23

[2014] FWC 8362

s.55(1) of the Act

(b)	notorious facts of which knowledge is to be presumed;
(c)	evidence of matters in common contemplation and constituting a

(a)	the text of the agreement viewed as a whole;
(b)	the disputed provision's place and arrangement in the agreement;
(c)	the legislative context under which the agreement was made and in

[2016] FWC 2346

13 April 2016