G&K O’Connor Pty Ltd

[2014] FWCA 1286

[2014] FWCA 1286

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.217—Enterprise agreement

G&K O’Connor Pty Ltd
(AG2014/218)

G&K O’CONNOR PTY LTD ENTERPRISE AGREEMENT 2013

Meat Industry
COMMISSIONER LEWIN	MELBOURNE, 18 MARCH 2014

Application for variation of an enterprise agreement — alleged ambiguity or uncertainty — terms of Undertakings — terms taken to form part of Agreement — nature of approval process — better off overall test — Commission concerns — employer’s Undertakings — effect of Undertakings to be considered in statutory context — terms of Undertakings arising in context of approval processes — uncertainty of Undertaking in relevant context — variation to give effect to Undertakings required for approval of Agreement.

Introduction

[1] This decision concerns an application under s.217 of the Fair Work Act 2009 (the Act) to vary the G&K O’Connor Pty Ltd Enterprise Agreement 2013 (the Agreement) to remove an ambiguity or uncertainty said to have arisen during the process for approval of the Agreement and the giving of Undertakings for that purpose.

[2] The application is made by G&K O’Connor Pty Ltd (G&K O’Connor).

[3] The Agreement was made on 21 November 2013 and approved with Undertakings pursuant to s.190(2) of the Act on 20 January 2014. 1

[4] The variation sought is to the terms of the Undertakings, which form part of the Agreement by force of s.191(2)(b) of the Act.

[5] Section 217 of the Act is as follows:

217 Variation of an enterprise agreement to remove an ambiguity or uncertainty

(1) The FWC may vary an enterprise agreement to remove an ambiguity or uncertainty on application by any of the following:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.

(2) If the FWC varies the enterprise agreement, the variation operates from the day specified in the decision to vary the agreement.

[6] Section 217 of the Act is a source of jurisdiction and power whereby the Fair Work Commission (the Commission) may vary an enterprise agreement, which is given legal effect by reason of being approved by the Commission under the relevant provisions of the Act.

[7] The power to make the variation sought by G&K O’Connor under s.217 only arises where the Commission finds that a term or terms of the Agreement are ambiguous or uncertain. 2

[8] The Australian Meat Industry Employees Union (AMIEU) submits that no ambiguity or uncertainty exists in relation to the terms of the Agreement which the application seeks to vary.

[9] The Undertakings, which now form part of the Agreement by virtue of the Commission’s approval of the Agreement and s.191(2)(b) of the Act, are set out in full below:

[10] The variation sought is in relation to subparagraph (c) of the Undertaking. In place of subparagraph (c), as shown above, the application seeks that the Agreement be varied to the following:

(c) Pay employees, other than casual employees, employed under classifications 4 and 5 at clause 10.1 of the Agreement (Knife Hands, Labouring Tasks as specified in Schedule A and Labouring tasks as specified in Schedule B respectively) a meal allowance of $12.98 if they are required to work overtime for 1.5 hours or more after their rostered finishing time.

(variation emphasised by underlining)

[11] The grounds upon which the application is made are as follows:

1. The G&K O’Connor Pty Ltd Enterprise Agreement 2013 (Agreement) was approved on 20 January 2014.

2. G&K O’Connor Pty Ltd (G&K O’Connor) is covered by the Agreement and the employer of the employees covered by the Agreement.

3. Annexure A to the Agreement provides for a number of undertakings made on behalf of G&K O’Connor.

4. The undertakings at Annexure A were provided in response to a report prepared by the Enterprise Agreement Unit at the Fair Work Commission (Report) and provided to G&K O’Connor by the office of Commissioner Lewin on 16 December 2013.

5. The Report stated that “Modelling based on the terms of the agreement indicate the Schedule A and B Labourer classifications may not be better off overall.” Schedule A Labourer tasks related to classification 4 employees under the Agreement and Schedule B Labourer tasks related to classification 5 employees.

6. In response to this finding in the Report, G&K O’Connor, following its own modelling of those classifications undertook, amongst other things to pay Labourer A and B (classification 4 and 5) employees a higher rate and a meal allowance if they worked overtime of 1.5 hours or more.

7. The undertaking relevantly provided was:

(a) pay employees, other than casual employees, employed under classifications 4 and 5 at clause 10.1 of the Agreement (Knife Hands, Labouring Tasks as specified in Schedule A and Labouring tasks as specified in Schedule B respectively) an ordinary hourly rate of $19.60.

...

(c) pay employees a meal allowance of $12.98 if they are required to work overtime for 1.5 hours or more after their rostered finishing time.

8. The undertaking provided in subparagraph (c) was ambiguous or uncertain as the words “pay employees” may be interpreted as pay all employees as opposed to the Labourer A and B (classification 4 and 5) employees, which had been specifically raised in the correspondence and who, on this issue, were intended to be covered by subparagraph (c) of the undertaking.

9. The other classifications of employees, classifications 1, 2 and 3, were not specifically subject of the Report and, other than on operational issues, the undertakings. This was because classification 1, 2 and 3 employees were already better off under the Agreement by $190.52, 106.55 and 89.53 per week respectively. Taking into account the full possible entitlement to the nominal meal allowance, classification 1 employees were still paid $125.62 per week above the Award, classification 2 employees were paid $41.65 per week above the Award and classification 3 employees $24.63 per week above the Award.

10. The Applicant contends that the intended effect of the undertaking at subparagraph (c) of Annexure A is that the meal allowance is only required to be paid, when applicable, to Labourer A and 8 (classification 4 and 5) employees. This is reflected in the correspondence between the Commission and G&K O’Connor- in particular the Report, and response dated 20 December 2013.

11. The effect of the ambiguity or uncertainty contained in the drafting of the undertaking at subparagraph (c) means that G&K O’Connor has to potentially pay each classification 1, 2 and 3 employee an additional $64.90 per week, which is a significant and completely unintended consequence of subparagraph (c) of the undertaking being read in a particular way.

Background

[12] At the outset it is necessary to observe that the terms of the Agreement which G&K O’Connor’s application seeks to vary do not arise as a result of negotiation and agreement between the persons who made the Agreement.

[13] Rather, the terms of the Undertakings were proposed by G&K O’Connor to the Commission, because the Commission had concerns that the Agreement, as lodged for approval, may not have been capable of approval having regard to the better of overall test prescribed by s.193 of the Act. 3

[14] In this respect the situation may be distinguished from circumstances where a court or tribunal is required to construe the certainty/uncertainty or ambiguity of terms of an agreement which have been determined by the persons who have made the agreement. In such cases the ultimate task of the court or tribunal is to arrive at an objective construction of the intention of the agreement makers. In the particular circumstances of this matter, those intentions are irrelevant, for reasons which arise from the nature of the powers exercised by the Commission for approval of the Agreement, which will become clearer below. Rather, in so far as intention is concerned it would seem that the intention of G&K O’Connor to meet the Commission’s concerns that in certain respects the Agreement did not pass the better off overall test is the relevant intention.

Approach to the Application

[15] Recent authority emanating from the Federal Court of Australia in relation to the consideration of the terms of industrial instruments is informative for my purposes.

[16] In the case of Australian National Pilots Association v Qantas Airways Ltd Rares J stated the following: 4

[51] A certified agreement, like all similar instruments made under industrial laws, such as awards, must be construed in light of its industrial context, having regard to the problem at hand: Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at 246 [2] per Gleeson CJ and McHugh J, 258 [50] per Gummow, Hayne and Heydon JJ, 261-262 [64]-[66] per Kirby J, 282-283 [129]-[131] per Callinan J. Such an agreement is a hybrid between a contract, usually between an employer or employer organisation and a union or organisation of employees, and a piece of delegated legislation given force of law by a statutory process of approval by the Commission or a similar independent body. Ordinarily, its terms will have been arrived at through long negotiation against a background of, first, a superseded industrial instrument that made some similar and other different provisions and, secondly, legislation that in light of the experience of the last 20 or so years, is likely to have changed substantively since the superseded instrument. The instrument will regulate the industrial employment conditions of employees who, however, are not directly parties to it, although, ordinarily, their views will have been expressed about its terms.

[52] So, in construing such an instrument, a court must have regard to more than the words of the text because the drafters wrote those words in the matrix of facts in which it had been negotiated in order to achieve certainty in the respects it addressed. The court will need to appreciate the industrial purpose of the agreement, and that of the particular term(s) in issue, against the industrial relations background of the employers, employees and employee organisations involved in its creation. That matrix of facts will provide the context to inform how an objective person, in the position of those in the relevant industry or sector, would understand the language in issue…

[53] The agreement must be construed so that individual clauses such as… are read coherently in the context of the agreement as a whole.

[17] The approach to the determination of ambiguity or uncertainty said to arise from a certified agreement made pursuant to the Workplace Relations Act 1996 was considered in a similar statutory context by a Full Bench of the Australian Industrial Relations Commission in the case of Re Tenix Defence Systems Pty Limited Certified Agreement 2001-2004 [PR917548]. In the course of the decision in that matter the Full Bench laid emphasis on a contextual construction of the terms of an agreement. The Full Bench also observed, at paragraph 29, as shown in the extract from that decision below, that the provenance of the terms of an agreement and the relationship of the relevant terms to the regulatory arrangements within which the agreement was made, form part of the context to be considered when construing the meaning and intention of the parties to the agreement and the process by which the agreement was made.

[18] The Full Bench made the following observations:

[28] Before the Commission exercises its discretion to vary an agreement pursuant to s.170MD(6)(a) it must first identify an ambiguity or uncertainty. It may then exercise the discretion to remove that ambiguity or uncertainty by varying the agreement.

[29] The first part of the process - identifying an ambiguity or uncertainty - involves an objective assessment of the words used in the provision under examination. The words used are construed having regard to their context, including where appropriate the relevant parts of a related award. As Munro J observed in Re Linfox - CFMEU (CSR Timber) Enterprise Agreement 1997:

“The identification of whether or not a provision in an instrument can be said to contain an `ambiguity’ requires a judgment to be made of whether, on its proper construction, the wording of the relevant provision is susceptible to more than one meaning. Essentially the task requires that the words used in the provision be construed in their context, including where appropriate the relevant parts of the `parent’ award with which a complimentary provision is to be read.”

[30] We agree that context is important. Section 170MD(6)(a) is not confined to the identification of a word or words of a clause which give rise to an ambiguity or uncertainty. A combination of clauses may have that effect.

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

[32] Once an ambiguity or uncertainty has been identified it is a matter of discretion as to whether or not the agreement should be varied to remove the ambiguity or uncertainty. In exercising such a discretion the Commission is to have regard to the mutual intention of the parties at the time the agreement was made.

[19] Adapting the guidance indicated in these decisions, I think it appropriate to consider the particular circumstances in which the Undertakings were proposed to and accepted by the Commission as the context in which the Agreement was approved as opposed to the context in which it was made. 5

[20] Relevant authority governing the approach to the construction and interpretation of the terms of enterprise agreements also includes the decision of Madgwick J in Kucks v CSR Ltd (Kucks) which, 6 while determined for the purposes of interpreting industrial awards, has been considered appropriate to the construction of the terms of enterprise agreements and has been followed accordingly with widespread approval by the Commission and its predecessors in that respect:7

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

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] In my view, while it is true that in this case the Undertakings where drafted and submitted by G&K O’Connor’s Lawyers, Ashurst, nevertheless the context in which the Undertakings were developed was the impetus for such Undertakings. The Undertakings were provided unilaterally by G&K O’Connor rather than as a term of the Agreement made by them with their employees as a result of bargaining for an enterprise agreement undertaken in accordance with the Act. The Undertakings were provided in order to gain the Commission’s approval of the Agreement and to deal with the concerns of the Commission in relation to the Agreement meeting the better off overall test. Accordingly, having regard to the context from which the Undertakings arose and the factors referred to in the decisions quoted above, it is appropriate to consider whether the text of the Undertakings subject to G&K O’Connor’s application give effect to the evident purposes of the relevant Undertaking (subparagraph c), which emerged during the process for the approval of the Agreement, as between the Commission and G&K O’Connor.

[22] Moreover, it is pertinent to observe that the effect of the variation sought by G&K O’Connor, for reasons which will be explained below, will not change any of the terms of the Agreement which were settled upon by employees of G&K O’Connor, whose employment will be covered by the Agreement, except to confine the advantage of the relevant Undertaking to those employees whose employment will be covered by the Agreement in respect of whom the Commission expressed concerns in relation to the proper application of the better off overall test.

[23] I will shortly turn to a detailed consideration of the circumstances surrounding the giving of the Undertaking in subparagraph (c) of Appendix A. Before doing so, it may be noted that the Undertakings appended to the Agreement are various and particular in nature.

[24] Each subparagraph of the Undertakings deals with discrete concerns raised with G&K O’Connor for the purposes of the determination of the application for approval of the Agreement by the Commission. In this context it is of note that the Commission was exercising a statutory function necessary to give legal effect to the terms of the Agreement, independently of the Agreement making procedures of the parties and the substantive terms of the Agreement previously settled upon mutually by them.

[25] It is therefore appropriate to refer to the process whereby the Commission’s concerns were raised and the circumstances which gave rise to the various components of Appendix A to the Agreement, in particular subparagraph (c) thereof.

The Commission’s Concerns

[26] The concerns of the Commission arose from particular features of the terms of the Agreement. The Agreement prescribes what are sometimes referred to as “rolled up” or “all up” rates of pay. The meaning of this terminology is that the rates of pay prescribed by an enterprise agreement compensate for various incidents of the employment beyond the ordinary hours of work.

[27] When considering whether employees whose employment will be covered by an Enterprise Agreement are better off overall than they would be if employed under a relevant Modern Award applicable to the employment the Commission is required to investigate the effects of the terms of the Agreement on each Award covered employee who will be covered by its terms. 8

[28] The effects of “rolled up” or “all up” rates of pay on the circumstances of employees will vary. This will depend upon the level of the “rolled up” or “all up” rate of pay for the classification of work in the Agreement and the comparable terms of the Award. Embedded in the required investigation will be consideration of how the Agreement and the Modern Award regulate and remunerate the number of hours and the pattern and incidence of hours of work of the employees. Considerations such as penalty rates, overtime rates and allowances prescribed by an Award will often be included in a “rolled up” or “all up” rate of pay for prescribed hours of work and additional hours to the ordinary hours prescribed by the Agreement.

[29] The task of applying the better off overall test to an Agreement with these characteristics is to analyse the two instruments and to disaggregate the “rolled up” or “all up” rates and model the application of the terms of the Agreement for each employee, as classified respectively by the Modern Award and the Agreement.

[30] Preliminary consideration of the terms of the Agreement by the Commission gave rise to various concerns about the interaction of a number of terms of the Agreement when compared to the operation of the terms of the Award, which were ultimately addressed by the different components of the Undertakings forming Appendix A of the Agreement.

[31] The Agreement was therefore subject to an investigation and the Commission expressed concerns in the form of a report on the application of the “rolled up” or “all up” rates of pay to the circumstances of employees whose employment would be covered by the Agreement, according to modelling which compared the application of the terms of the relevant Modern Award to the terms of the Agreement. The report was provided to G&K O’Connor for consideration of the need for Undertakings to address the Commission’s concerns. From this process, Annexure A ultimately arose and became terms of the Agreement.

[32] The consequences arising from the Undertakings given to address the Commission’s concerns, other than in subparagraph (c), were; the prescription of a higher hourly rate for certain employees, of $19.60 per hour, than had been provided for in the Agreement at lodgement, the terms on which employees could be rostered to work ordinary hours at particular times of day by agreement, the terms upon which employees could be required to work afternoon shifts and a minimum engagement of 7.6 hours for employees designated as daily hire employees under the Agreement.

[33] All of these aspects of the Commission’s concerns were identified to G & K O’Connor arising from the analysis referred to in the report produced by the Commission for G&K O’Connor, and provided to the bargaining representatives for the Agreement, the AMIEU, for comment. The Commission’s concerns were highly particular and arose from close consideration of the operation of the terms of the Agreement upon employees in certain circumstances and had regard to the “rolled up” or “all up” rates of pay prescribed by the Agreement, as well as various provisions of the Award applicable to the working of ordinary hours of work as well as overtime at particular times and shift work.

[34] The context in which the issue of meal allowance arose in the Commission’s analysis of the operation of the Agreement was not general in nature. Rather, modelling of certain classifications of work, but not all, indicated that if the “rolled up” or “all up” rate applied to those classifications for the hours of work of those employees as modelled the total payment for those hours would be less than the amounts payable if the employee were employed under the terms of the relevant Modern Award. In particular, if those employees were required to work a certain amount of overtime, which would attract payment of a meal allowance under the terms of the Award.

[35] Separately to the Commission’s concerns and analysis of the effects of the terms of the Agreement upon the relevant classifications in the situation modelled and contained in the report, the AMIEU submitted a form F18 which proposed that the Agreement should not be approved without a general provision prescribing a meal allowance of $12.98 to be applicable where any employee was required to work overtime for one and a half hours or more after their rostered finishing time.

[36] It seems to me that some confusion arose in the case of the Commission’s communication with G&K O’Connor concerning Undertakings to address the Commission’s concerns about the Agreement passing the “better off overall” test in respect of the inclusion of a meal allowance of $12.98 as a term of the Agreement in particular circumstances.

[37] In Ashurst’s letter to the Commission of 20 December 2013 reference was made to the F18 filed by the AMIEU as follows:

3.3 Clause 10.7 of the Agreement should include a meal allowance of $12.98 per clause 26.2 of the Award.

Any concern regarding the payment of a meal allowance is rectified by the undertaking provided at subparagraph (c) of Annexure A.

The reference to “3.3” is a reference to paragraph 5.3 of the AMIEU’s F18.

[38] In my view, the concerns referred to by Ashurst should be understood to be the concerns of the Commission, rather than the independent and interest based views of the AMIEU. The concerns of the Commission related to whether in relation to each employee whose employment would be covered by the terms of the Agreement they would be better off overall that if employed under the Award.

[39] The Commission’s concerns in relation to the remuneration of employees whose employment would be covered by the Agreement, as opposed to the arrangement of the hours of work, were about employees performing work under particular classifications of the Agreement. Those classifications are at the lower and in fact lowest level of remuneration prescribed by the Agreement — Schedule A Labourer and Schedule B Labourer. The Commission’s modelling identified deficits in the remuneration for employees in the classifications including the following:

Model A

Schedule A Labourer

38 hours averaged Monday to Saturday plus two reasonable additional hours and annual leave loading

Agreement Ordinary Rate	$19.49	Award Ordinary Rate	$18.88
Hours	Loading	weekly total	Hours	Loading	weekly total
Ordinary Time	31.67	100%	$617.25	Ordinary Time	31.67	100%	$597.93
Saturday	6.33	100%	$123.37	Saturday	6.33	150%	$179.27
Reasonable additional	2	100%	$38.98	Reasonable additional	2	150%	$56.64
Leave Loading	No	$0.00	Leave Loading	Yes	$9.66
Totals	40.00	Hrs	$779.60	Totals	40.00	Hrs	$843.49
Agreement Total Weekly Rate			$779.60	Model Summary
Award Total Weekly Rate			$843.49
Dollar / Actual Percentage Difference			-$63.89	The Dollar / Actual Percentage Difference identifies the modelled difference between the agreement and the award in dollar terms and as a percentage.
			7.57%

Model B

Schedule A Labourer

Rotating day/afternoon shift plus two reasonable additional hours and annual leave loading

Agreement Ordinary Rate	$19.49	Award Ordinary Rate	$18.88
Hours	Loading	weekly total	Hours	Loading	weekly total
Ordinary Time	19	100%	$370.31	Ordinary Time	19	100%	$358.72
Reasonable additional	19	100%	$370.31	Reasonable additional	19	115%	$412.53
Reasonable additional	2	100%	$38.98	Reasonable additional	2	150%	$56.64
Leave Loading	No	$0.00	Leave Loading	Yes	$9.66
Totals	40.00	Hrs	$779.60	Totals	40.00	Hrs	$837.55
Agreement Total Weekly Rate			$799.09	Model Summary
Award Total Weekly Rate			$837.55
Dollar / Actual Percentage Difference			-$57.95	The Dollar / Actual Percentage Difference identifies the modelled difference between the agreement and the award in dollar terms and as a percentage.
			6.92%
Agreement Percentage Increase Required			7.43%	The Agreement Percentage Increase Required is the amount the agreement rate would need to be increased by to satisfy the BOOT under this modelling.

Model C
38 hours Monday to Friday plus two reasonable additional and 5 hours overtime Saturday

Agreement Ordinary Rate	$19.49	Award Ordinary Rate	$18.88
Hours	Loading	weekly total	Hours	Loading	weekly total
Ordinary Time	38	100%	$740.62	Ordinary Time	38	100%	$717.44
Reasonable additional	2	100%	$38.98	Reasonable additional	2	150%	$56.64
OT Saturday	5	150%	$146.18	OT Saturday	5	150%	$141.60
Allowances	Amount	Value	Allowances	Amount	Value
Allowance	$0.00	Meal allowance	1	$12.98	$12.98
Leave Loading	No	$0.00	Leave Loading	Yes	$9.66
Totals	45.00	Hrs	$925.78	Totals	45.00	Hrs	$938.32
Agreement Total Weekly Rate			$925.78	Model Summary
Award Total Weekly Rate			$938.32
Dollar / Actual Percentage Difference			-$12.54	The Dollar / Actual Percentage Difference identifies the modelled difference between the agreement and the award in dollar terms and as a percentage.
			1.34%
Agreement Percentage Increase Required			1.35%	The Agreement Percentage Increase Required is the amount the agreement rate would need to be increased by to satisfy the BOOT under this modelling.

[40] It will be observed that Model C included consideration of overtime in respect of which the Award operated so as to prescribe a meal allowance of $12.98, which was not applicable under the terms of the “rolled up” or “all up” rates of pay prescribed by the Agreement. It will be observed further below that if the employees in the labourer classification were to be entitled to the meal allowance under the terms of the Agreement; the result of the comparison in Model C would result in those employees being very marginally better off than would be the case than if employed under the terms of the Award.

[41] In relation to the two classifications at the lower levels of remuneration under the terms of the Agreement it should also be noted that the Undertaking in subparagraph (a) of Appendix A, as attached to the Agreement, increased the rate of pay applicable to $19.60 from $18.76 and $19.49, respectively. In conjunction with the Undertaking to apply the meal allowance to such employees, the Undertakings offered by G&K O’Connor effectively addressed the range of concerns identified in the Commission’s analysis in relation to those classifications.

[42] In summary, and in particular, the Commission’s concerns in respect of which G&K O’Connor gave Undertakings relevantly included a concern that employees at the two lowest levels in the classification structure would not be better off overall than employees working under the terms of the Award when required to work 1.5 hours overtime or more, among various other concerns, including the applicable hourly rates under the Agreement to those two classifications.

[43] Independently, the AMIEU were proposing that all employees should be entitled to a meal allowance where an employee is required to work overtime for one and a half hours or more after their rostered finishing time as provided for by the Award. It is essential to my discussion of the context in which the Undertakings were given to therefore distinguish the concerns of the Commission from the interests of the AMIEU.

[44] On the Commission’s modelling of the Agreement for the better off overall test, it was only in respect of the two lowest classifications — Schedule A and B Labourers — that the issue of “rolled up” or “all up rates of pay and the meal allowance gave rise to concern. All other employees as classified by the terms of the Agreement were clearly and in some cases significantly better off overall under the terms of the Agreement without the need for an increase in the hourly rate of pay or an undertaking for payment of meal allowance when working 1.5 hours or more of overtime. Therefore, the focus of the Commission in relation to the meal allowance paid when working overtime of 1.5 hours or more and the hourly rate of pay prescribed by the Agreement was exclusively related to the two classifications in question of Schedule A and B Labourers.

Consideration

[45] In my view the Undertakings in relation to Schedule A and B Labourers, as identified in the Commission’s modelling, are twofold and both were necessary to ensure that employees in these classifications would be better off overall if employed under the terms of the Agreement rather than the Award. First, that the minimum hourly rate for both be $19.60 and when required to work 1.5 hours or more hours overtime such employees should be paid the amount of meal allowance prescribed by the Award.

[46] To illustrate the issues under consideration a number of tables can be provided which are informative.

[47] The first is a table of hourly rates of pay for Labourer Schedule A and B as provided for in the Agreement. The tables compare rates of pay under the Agreement at lodgement and as increased by the Undertaking that the hourly rate for both scheduled classifications would be increased to $19.60.

Daily hire rate of pay comparison with undertaking

Agreement Classification Clause 10.1 of the agreement	Award Classification	Agreement rate of pay ($)	Award rate of pay plus 10% Daily hire loading ($)	% difference
On Lodgement
Knife hands - labouring tasks specified in Schedule A	M 3	19.49	18.88	3.23%
Labouring tasks specified in Schedule B	M 3	18.76	18.88	-0.64%
Labouring tasks specified in Schedule B	M 2	18.76	18.65	0.59%
Undertaking
Knife hands - laboring tasks specified in Schedule A	M 3	19.60	18.88	3.81%
Labouring tasks specified in Schedule B	M 3	19.60	18.88	3.81%

[48] The second table models the effect of the inclusion of the meal allowance of $12.98 for the Labourer classifications. It will thus be seen that when overtime work is required it is necessary for the meal allowance to be payable in order for the Labourer to be better off overall than if employed under the Award, by an amount of $5.66. If the meal allowance were not payable (as per the Agreement at lodgement) employees in the Labourer classification paid at $19.60 per hour would be $7.32 worse off than if employed under the Agreement.

The Labourer classification with meal allowance

Agreement Ordinary Rate	$19.60	Award Ordinary Rate	$18.88
Hours	Loading	weekly total	Hours	Loading	weekly total
Ordinary Time	38	100%	$744.80	Ordinary Time	38	100%	$717.44
Reasonable additional	2	100%	$39.20	Reasonable additional	2	150%	$56.64
OT Saturday	5	150%	$147.00	OT Saturday	5	150%	$141.60
Allowances	Amount	Value	Allowances	Amount	Value
Meal allowance	1	$12.98	$12.98	Meal allowance	1	$12.98	$12.98
Leave Loading	No	$0.00	Leave Loading	Yes	$9.66
Totals	45.00	Hrs	$943.98	Totals	45.00	Hrs	$938.32
Agreement Total Weekly Rate			$943.98	Model Summary
Award Total Weekly Rate			$938.32
Dollar / Actual Percentage Difference			$5.66	The Dollar / Actual Percentage Difference identifies the modelled difference between the agreement and the award in dollar terms and as a percentage.

[49] The following table demonstrates that for the higher paid classification of Slaughterman modelling, without the inclusion of the $12.98 meal allowance for the same pattern and hours of work, shows the employee so classified to be $99.13 or 9.78% better off overall under the Agreement than if employed under the terms of the Award.

Slaughterman - without meal allowance

Agreement Ordinary Rate	$23.43	Award Ordinary Rate	$20.42
Hours	Loading	weekly total	Hours	Loading	weekly total
Ordinary Time	38	100%	$890.34	Ordinary Time	38	100%	$775.96
Reasonable additional	2	100%	$46.86	Reasonable additional	2	150%	$61.26
OT Saturday	5	150%	$175.73	OT Saturday	5	150%	$153.15
Allowances	Amount	Value	Allowances	Amount	Value
Allowance	$0.00	Meal allowance	1	$12.98	$12.98
Leave Loading	No	$0.00	Leave Loading	Yes	$10.45
Totals	45.00	Hrs	$1,112.93	Totals	45.00	Hrs	$1,013.80
Agreement Total Weekly Rate			$1,112.93	Model Summary
Award Total Weekly Rate			$1,013.80
Dollar / Actual Percentage Difference			$99.13	The Dollar / Actual Percentage Difference identifies the modelled difference between the agreement and the award in dollar terms and as a percentage.

Ambiguity and uncertainty

[50] I consider that the Undertakings can be construed as extending to all other employees, an entitlement to be paid the $12.98 meal allowance when required to work 1.5 hours or more overtime. This was not within the meaning or evident purpose of the Undertakings of G&K O’Connor to address the Commission’s concerns. No such broader Undertaking was required or relevant to the application of the better off overall test or the Commission’s concerns and modelling of the Agreement for the purposes of the approval of the Agreement.

[51] Accordingly, in the context which the Undertakings were given, the meaning of subparagraph (c) of the Undertaking is ambiguous and uncertain as it can be construed as prescribing an entitlement to all employees whose employment is covered by the Agreement to be paid a meal allowance of $12.98 when working 1.5 hours or more of overtime, rather than providing an entitlement for the Schedule A and Schedule B labourer classification as required in order for the terms of the Agreement to pass the better off overall test.

Decision

[52] In my view, it would not be appropriate to construe the Undertakings so as to extend the entitlement to the meal allowance of $12.98 to other employees in classifications where the terms of the Agreement at lodgement resulted in those employees being better off overall, in respect of whom the Commission had no concerns which would have prevented approval of the terms of the Agreement made between G&K O’Connor and its employees.

[53] In the context of the Addendum document provided as an Undertaking for the purposes of s.190 of the Act, the certain and intended meaning should be derived by reading subparagraph (c) of the Undertaking as if part of subparagraph (a) or referable to employees as identified in subparagraph (a).

[54] I should therefore exercise the discretionary power to vary the terms of the Undertakings to give certain effect to the evident intentions of the Commission and G&K O’Connor in providing Undertakings which the Commission considered necessary to meet its concerns to ensure that employees in Labourer Schedule A and B classification were in fact better off overall under the terms of the Agreement than if employed under the terms of the Award, by increasing the hourly rates of pay for such employees to $19.60 and providing for payment of meal allowance when required to work 1.5 hours or more of overtime.

[55] An order will issue accordingly. The order will operate on and from 20 January 2014.

COMMISSIONER

 1   PR546849.

 2   Re Tenix Defence Systems Pty Limited Certified Agreement 2001-2004 [PR917548].

 3   Lewin C letter.

 4 [2014] FCA 32.

 5 Section 172, Fair Work Act 2009.

 6 (1996) 66 IR 182.

 7   AMWU v Silcar Pty Ltd [2011] FWAFB 2555.

 8 Section 193(1), Fair Work Act 2009.

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