Fonterra Brands (Australia) Pty Ltd v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU)
[2015] FWCFB 3423
•27 MAY 2015
| [2015] FWCFB 3423 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
v
“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
(C2015/490)
JUSTICE BOULTON, SENIOR DEPUTY PRESIDENT | SYDNEY, 27 MAY 2015 |
Appeal against decision [2015] FWC 911 of Commissioner Ryan at Melbourne on 13 February 2015 in matter number C2014/1876 - meaning of ‘ordinary pay’ in an enterprise agreement.
[1] On 13 February 2015 a decision was given by Commissioner Ryan in a dispute which was referred to the Commission by the Australian Manufacturing Workers’ Union (AMWU) under section 739 of the Fair Work Act 2009 (the Act). The dispute concerned the redundancy pay entitlements of 34 workers employed by Fonterra Brands (Australia) Pty Ltd (Fonterra) at its Echuca factory under the Fonterra (Echuca) Agreement 2013 Part II (the Agreement).
[2] The matter in dispute between the parties concerned the meaning of ‘ordinary pay’ as it is used in clause 22.8 of the Agreement which deals with redundancy payments. Clause 22.8.1 provides as follows:
“Each redundant employee shall receive a redundancy payment of four (4) weeks ordinary pay, and service payment of four (4) weeks for each completed twelve (12) months service or pro rata part thereof.”
[3] The Commissioner found that there was ambiguity and uncertainty in the Agreement in relation to the meaning of the term ‘ordinary pay’ and, after considering a range of matters, decided that clause 22.8.1 provided a redundancy pay entitlement calculated by reference to “the pay an employee would receive for working the employee’s ordinary hours of work … including where relevant shift loadings and penalties.” 1
[4] An appeal under s.604 of the Act against the decision was lodged by Fonterra on 6 March 2015. In accordance with directions issued by the Commission, both Fonterra and the AMWU filed written outlines of their submissions. A hearing was conducted before the Full Bench on 15 April 2015 in which Mr C. O’Grady of counsel appeared for Fonterra and Mr D. Vroland, industrial officer, appeared for the AMWU.
[5] In the course of the Full Bench proceedings, a conciliation conference was held at the request of the parties by a member of the Full Bench. As the matter was not able to be resolved in the conference, the hearing before the Full Bench resumed and the parties were given the opportunity to supplement the written submissions which had been filed.
[6] Two main issues arise for consideration in the appeal. These relate to:
(i) the jurisdiction of the Commissioner to deal with the dispute; and
(ii) the proper interpretation of the term ‘ordinary pay’ as it is used in clause 22.8.1 of the Agreement.
[7] The disputes resolution process in the Agreement is set out in clause 6 and provides a five step process for settling disputes. The first three steps involve discussion between the parties with different levels of management participation. The fourth and fifth steps refer to the involvement of the Commission as follows:
“6.4 Step 4
If the matter remains unresolved (including disputes between a union(s) and the employer) the parties may, jointly or individually, refer it to the FWC for conciliation.
6.5 Step 5
If conciliation fails to resolve a dispute, the FWC is empowered to resolve the matter by arbitration provided the arbitration is limited to the specific:
i. Interpretation; and/or
ii. Application; and/or
iii. Process of implementation of.
a. a term or terms of this Collective Agreement, including the incorporated Award provisions, any other incorporated provisions and any other provisions or arrangements recognized in this Agreement; and/or
b. the National Employment Standards; and/or
c. if the matter is not limited to these matters the FWC may only arbitrate if the parties agree to binding arbitration.”
[8] As explained in the decision of the Commissioner, the present matter was not subject to any conciliation by him as “there was consent of the parties to the dispute that it proceed straight to arbitration.” 2 On this basis the Commissioner directly proceeded with the arbitration of the dispute, heard the evidence and submissions of the parties and made his decision.
[9] Having regard to clause 6.5 of the Agreement and s.739 (3) and (4) of the Act, we have reservations as to whether the Commissioner was empowered to arbitrate the matter before him. The Agreement envisages that there must be a failed endeavour to resolve a dispute by conciliation before the Commission is empowered to resolve a matter by arbitration. We return to this issue later in our decision.
[10] In the appeal proceedings, we were taken to several authorities dealing with the proper approach to be adopted in the interpretation of industrial agreements. We were also taken to other provisions of the Agreement which provide entitlements for employees and to the provisions of earlier industrial agreements which applied to the Echuca factory. Most of these authorities and agreement provisions were provided to the Commissioner and are dealt with in his decision.
[11] We do not need to canvass all this material in detail as we consider that the main issue which arises for decision in the appeal is relatively straightforward. In appeals involving a question as to the proper construction of an industrial agreement, the appeal bench is concerned with the correctness of the conclusion in the original decision and not with whether that conclusion was reasonably open to the decision maker. 3
[12] In construing an industrial agreement, the enquiry is directed towards discerning the meaning intended by the parties who made the agreement. As the Full Bench said in Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd4 (Golden Cockerel), 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.” 5
[13] The general approach to be adopted in the construction of industrial agreements was considered in Golden Cockerel as follows:
“Principles of construction of agreements
General approach
[19] The general approach to the construction of instruments of the kind at issue here is set out in the judgment of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (Wanneroo):
‘The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘...the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘... ideas that gave rise to an expression in a document from which it has been taken’ - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services union v Treasurer of the Commonwealth of Australia (1998)80 IR 345 (Marshall J).’
[20] To this we add the oft-quoted observations of Madgwick J in Kucks v CSR Limited that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, but:
‘. . . the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’
[21] Although their Honours were each dealing with the proper interpretation of an award, the same principles are apt to apply to the interpretation of enterprise agreements. For example, similar observations were made in Amcor Limited v CFMEU (Amcor):
‘Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.’
[22] The fact that the instrument being construed is an enterprise agreement is itself an important contextual consideration. As French J observed in Wanneroo:
‘It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities - City of Wanneroo v Holmes (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned - see eg GeorgeA Bond and Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503-504 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):
‘Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.’”
[14] The authorities make it clear that the words in industrial agreements are to be given their ordinary or well understood meaning in industrial usage and that there should only be regard to extrinsic material to identify the existence of any ambiguity or as an aide to interpretation where the words do not have a plain meaning and there is ambiguity or uncertainty as to their meaning. Therefore the first step in construing an industrial agreement is to determine whether the agreement has a plain meaning or contains an ambiguity. 6
[15] In the present matter, the Commissioner found that there was ambiguity or uncertainty in relation to the meaning of ‘ordinary pay’ in clause 22.8.1 of the Agreement. However we consider that the meaning of the term is clear both from a plain reading of the clause and from a consideration of the clause in the context of the Agreement.
[16] The term ‘ordinary pay’ has a well-established and common industrial meaning and usage, namely remuneration for an employee’s weekly hours but excluding any amount paid for shift work, overtime or other penalty. Giving the words of the Agreement their ordinary and ‘industrial context’ meaning, we consider there is no room for a conclusion such as that which was reached by the Commissioner.
[17] The meaning of ‘ordinary pay’ in an award context was considered by Madgwick J in Kucks v CSR Ltd 7 where it was held, having regard to the High Court decision in Scott v Sun Alliance,8 that terms like “ordinary rate of pay” and “standard hours” have well-known meanings in the sphere of industrial relations in this country.9 His Honour also referred to the definition in the Macquarie Dictionary:
“In Australia, the term “ordinary pay” has, according to the Macquarie Dictionary, 2nd edn, entered the language, as meaning:
“ordinary pay .... remuneration for an employee’s normal weekly number of hours fixed under the terms of his employment but excluding any amount payable to him for shift work, overtime, or other penalty.” 10
[18] The award provision in that case dealt with the payment to be made to employees on termination of employment in respect of untaken long service leave. His Honour said that the adoption of the generally accepted meaning of ‘ordinary pay’ in the provision was even more apt in the context of the award that was before the Court. In this regard reference was made to other provisions of the award dealing with matters such as annual leave and sick leave where it was provided that such leave shall be granted “on full pay”. It was said that when “the framer(s) of the award wished to indicate that full, usual pay should be paid, they had no difficulty in making their meaning plain.” 11
[19] The term ‘ordinary pay’ is not defined in the Agreement. In these circumstances, and unless there are strong contextual or other reasons for adopting a different approach, we consider that ‘ordinary pay’ as it is used in the Agreement should be given its generally understood and accepted meaning in industrial usage. This is also the meaning which can be construed from a consideration of the Agreement as a whole and which is generally in line with the purpose of providing redundancy entitlements.
[20] There is no consistent use of the term ‘ordinary pay’ in the Agreement that suggests that the term is to have anything other than its common industrial meaning. Indeed several provisions of the Agreement specifically identify whether or not various loadings, penalties and allowances are to be included in calculations for certain entitlements. For example, clause 5.1.4 of the Agreement provides that changes made in order to improve productivity “will not reduce an employee’s average ordinary weekly wages exclusive of any shift allowance.” Clause 18.1 provides that compassionate leave will be paid “at the full rostered shift wage rate, including shift penalties incorporated in the roster.”
[21] In its submissions the AMWU placed considerable reliance on the provisions of Appendix 1 to the Agreement which provides for Extended Shift Arrangements. It was said that clause 22.8.1 of the Agreement must be read having regard to the appendix and that the appendix establishes that extended shifts are to be considered “ordinary hours” and that these arrangements constitute an “ordinary time working week”. 12 It was therefore submitted that the pay received by employees who work these ordinary hours on extended shifts constitutes their ordinary pay. However we note that there are special provisions included in Appendix 1 regarding a range of employee entitlements for workers on extended shift arrangements, including personal leave,13 compassionate leave14 and jury service,15 and that these provisions make clear that shift and/or weekend penalties are to be included in payments for such entitlements.
[22] There is no such specific provision in Appendix 1 dealing with redundancy pay. The entitlement to redundancy pay in the Agreement is found in clause 22.8.1 and is to be calculated by reference to an employee’s ‘ordinary pay’. There is no indication in the provision that such pay is to include shift allowances or the like. If the parties had intended that the redundancy pay entitlements were to include shift allowances it might be expected that they would have so provided in the Agreement or the appendix as in the case of other entitlements.
[23] On our reading of the Agreement, it is clear that, for the purposes of clause 22.8.1 and the calculation of redundancy pay entitlements, the term ‘ordinary pay’ both in its generally understood meaning and its meaning in the context of the Agreement, does not include amounts payable for shift work, overtime or other penalties.
Disposition of the appeal
[24] We have given consideration to the appropriate way in which we should determine the appeal having regard to the provisions of ss.604 and 607 of the Act and the material and submissions before us.
[25] For all the reasons given, we have decided to grant permission to appeal in this matter, to allow the appeal and to set aside the decision of the Commissioner.
[26] In the course of the appeal proceedings, and with the consent of the parties, a member of the Full Bench participated in a conciliation conference of the parties. In the course of their submissions in the appeal, the parties acknowledged that this conciliation would satisfy the requirements of Step 4 of the Disputes Resolution Process in clause 6.4 of the Agreement. In these circumstances, the Full Bench is in a position to determine the dispute between the parties having regard to the evidence and submissions presented in the Commission proceedings and in accordance with Step 5 of the disputes process. We determine that the term ‘ordinary pay’ in clause 22.8.1 of the Agreement is to be given its accepted meaning in industrial usage and does not include payments in respect of shift work, overtime or other penalties.
SENIOR DEPUTY PRESIDENT
Appearances:
C. O’Grady of counsel for the appellant Fonterra Brands (Australia) Pty Ltd.
D. Vroland for the respondent AMWU.
Hearing details:
2015:
Melbourne.
April 15.
1 [2015] FWC 911 at [66].
2 Ibid at [5].
3 See CPSU, the Community and Public Sector Union v National Tertiary Education Industry Union [Print S9084] 11 August 2000 at [10]-[11].
4 [2014] FWCFB 7447.
5 Ibid at [41].
6 Ibid.
7 (1996) 66 IR 182.
8 (1993) 178 CLR 1.
9 (1996) 66 IR 182 at 185-186.
10 Ibid at 186.
11 Ibid at 187.
12 See clause 4 of Appendix 1 of the Agreement.
13 See clause 17 of the Agreement and clause 21 of Appendix 1 of the Agreement.
14 See clause 18 of the Agreement and clause 22 of Appendix 1 of the Agreement.
15 See clause 58 of the Agreement and clause 23 of Appendix 1 of the Agreement.
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