George Weston Food Limited T/A Tip Top Bakeries v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU)

[2018] FWC 3297

[2018] FWC 3297

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

George Weston Food Limited T/A Tip Top Bakeries
v
“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
(C2017/4975)

COMMISSIONER MCKENNA SYDNEY, 10 JULY 2018

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)].

[1] George Weston Food Limited T/A Tip Top Bakeries (“the company”) has made an application pursuant to s.739 of the Fair Work Act 2009 (“the Act”) to deal with a dispute. The other parties to the dispute, as the 16 maintenance and electrical employees’ representatives, are:

•  the AMWU (“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)); and

•  the CEPU (Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia)

•  “the unions”).

[2] The company’s Form F10 (Application for the Commission to deal with a dispute in accordance with a dispute settlement procedure) described the dispute in the following terms:

“1. The Applicant has an enterprise agreement, the Tip Top Bakeries (NSW) Maintenance Agreement 2014 (the 2014 Agreement) which applies to its maintenance workforce (the Maintenance Employees) engaged at its Chullora site ...;

2. The Maintenance Employees are a mixture of mechanical and electrical tradespersons;

3. The Maintenance Employees currently work pursuant to a 42 hour per week roster, which includes 4 hours of rostered overtime per week;

4. In 8 August 2017, the Applicant notified the Maintenance Employees of its intention to alter the roster pattern such that the 4 hours of rostered overtime per week would no longer form part of the roster;

5. The change to the roster is as a result of:

a. an uncompetitive cost structure as a result of having overtime in-built into the roster pattern.

b. The need to improve cost efficiency to create a sustainable and competitive workforce and business.

6. The Applicant commenced a process of consultation with the Maintenance Employees and their representatives (the AMWU and CEPU) in relation to this proposed change in accordance with Clause 11 of the Agreement. The process of consultation is ongoing;

7. In the course of consulting with the AMWU and CEPU the unions have asserted that any decision to reduce the number of overtime hours which are rostered, cannot result in a reduction in the Maintenance Employees’ current remuneration. The unions have cited Clause 7.1 of the 2014 Agreement as the basis for their view;

8. The Applicant disputes that clause 7.1 operates to freeze the Maintenance Employees’ current rates of pay should it decide to alter their roster and reduce the number of overtime hours which the Maintenance Employees are presently working.”

(bold in original)

[3] The parties have made concerted endeavours, and on repeated occasions, to resolve the dispute - and are to be commended for that. For example, various dates which had been listed for hearing were vacated by consent application given the parties hoped to resolve the matter though further discussions. Ultimately, the matter remained unresolved.

[4] As to preliminary matters, it is common ground between the parties that the dispute resolution procedures set out in clause 13 of the Tip Top Bakeries (NSW) Maintenance Agreement 2014 (“the Agreement”) have been properly engaged. Clause 13 reads in part:

“13.5 The Fair Work Commission may deal with the dispute by mediation or conciliation.

13.6 If:

(a) the Fair Work Commission is unable to resolve the dispute under sub-clause 13.5 above; and

(b) either parties agree,

the Fair Work Commission may:

(i) arbitrate the dispute; and

(ii) make a determination that is binding on the parties.”

[5] To contextualise the parties’ agreed statement of facts and the submissions of the company and the unions in relation to the dispute, it is relevant first to reproduce two clauses from the Agreement to which reference was made, among other clauses, in the parties’ submissions:

“7. Contractual Transition Arrangements from the 2012 Agreement

7.1 For the duration of this agreement, an employee will remain entitled to receive the annual salary under his or her contract of employment, even where the employer introduces a reduction in the amount of rostered overtime for employees covered by this Agreement (at the commencement of the 2012 Agreement, employees worked 4 hours of rostered overtime each week, and were paid an annual salary under their contracts of employment which compensates them for a 42 hour week). To avoid doubt, this clause applies only to employees covered by this Agreement who were employed by the Company at the commencement of the 2012 Agreement (Tip Top Bakeries (NSW) Maintenance Agreement 2012).

7.2 The monetary obligations imposed on the Employer by this Agreement may be absorbed into and set off against any remuneration otherwise payable by the Employer to an employee under a contract of employment (however described). Nothing in this Agreement requires the Employer to maintain or increase any over-Agreement payment.

8. No Extra Claim

It is a term of the Agreement that neither party shall pursue any extra claims during the nominal life of the Agreement.”

Agreed statement of facts and evidence

[6] The parties tendered an agreed statement of facts, which read:

“1. The Applicant employs maintenance workers, including mechanical and electrical tradespersons at its site located at 9 Muir Road, Chullora NSW 2190 (Maintenance Employees).

2. The Maintenance Employees are covered by the Tip Top Bakeries (NSW) Maintenance Agreement 2014 (Enterprise Agreement).

3. The Enterprise Agreement was preceded by the Tip Top Bakeries (NSW) Maintenance Agreement 2012 (2012 Enterprise Agreement).

4. Amongst the Maintenance Employees include some employees who commenced their employment with the Applicant prior to the commencement of the 2012 Enterprise Agreement and have been employed continuously since then and throughout the life of the 2012 Enterprise Agreement and the Enterprise Agreement (Relevant Employees).

5. The Relevant Employees’ annual salaries have been increased each year during the life of and in accordance with the 2012 Enterprise Agreement and the Enterprise Agreement.

6. Prior to the commencement of the 2012 Enterprise Agreement, a written common law contract of employment stipulated the terms and conditions of employment applying to the Relevant Employees (collectively referred to as ‘Contracts’).

7. The 2012 Enterprise Agreement was the first enterprise agreement which covered the Relevant Employees in their employment with the Applicant. Prior to the commencement of the 2012 Enterprise Agreement, the Relevant Employees [sic] conditions were determined solely by the terms of the Contracts identified in paragraph 6 of this statement of agreed facts and underpinned by the Manufacturing and Associated Industries and Occupations Award 2010.

8. The Contracts for each Relevant Employee are attached as Annexures to this statement of agreed facts (Confidential Annexures 1 – 16).

9. The Contracts do not expressly incorporate the Enterprise Agreement or the 2012 Enterprise Agreement.

10. Prior to the commencement of the 2012 Enterprise Agreement Relevant Employees were remunerated pursuant to an annual salary.

11. Prior to the commencement of the 2012 Enterprise Agreement Relevant Employee salaries were reviewed annually however there was no guarantee of a wage increase and any increase was at the discretion of the Company based on individual performance, Company performance and prevailing market conditions.

12. The Relevant Employees are currently rostered to work 42 hours each roster week. This includes 4 hours of rostered overtime. From time to time Relevant Employees may work additional overtime. The remuneration for such overtime is based on average weekly hours, including both ordinary hours and rostered overtime.

13. On 8 August 2017, the Applicant notified the Relevant Employees of its intention to alter the roster pattern to an average 38 hour per week roster. (Roster Variation).

14. The Applicant also on or around the date identified in paragraph 13 of this statement of agreed facts, notified the Relevant Employees that their weekly pay would reflect their average hours worked once the Roster variation commenced.

15. As required by clause 11 of the Enterprise Agreement, the Applicant commenced a process of consultation with the Maintenance Employees and their representatives (i.e. the Respondents).

16. The Applicant, the Maintenance Employees and the Respondents first tried to resolve the dispute at the workplace level by holding discussions between the Applicant and its employees (including on 8 August 2017, 11 August 2017, 16 August 2017, 22 August 2017 and 31 August 2017). Discussions were also held between the Applicant and one or both Respondents including on 10 August 2017 and 26 September 2017.

17. Discussions at the workplace level did not resolve the dispute. Accordingly, pursuant to clause 13.4 of the Enterprise Agreement, the Applicant referred the matter to the Fair Work Commission on 8 September 2017.

18. On 20 September 2017 and 11 October 2017, the matter was listed for conference before the Fair Work Commission for the purposes of conciliation.

19. The dispute was not resolved through the conciliation process identified at paragraph 16 of this agreed statement of facts and as at the time of agreeing to this statement of facts, it remains unresolved.

20. Consistent with clause 13.6(b) of the Enterprise Agreement, the Applicant agrees that the Commission may arbitrate the dispute and make a determination that is binding on the parties.”

[7] In addition to the agreed statement of facts, the company adduced evidence from Andrew Lorenzini, the company’s People and Performance Business Partner. In the unions’ case, evidence was adduced from Raymund Shortill, an AMWU organiser. Nothing of any evidentiary contention seemingly arose from that evidence.

Outline of submissions for the company

[8] The Australian Industry Group, on behalf of the company, submitted the question to be determined by the Commission in this dispute is: “Can the Company reduce the Employees’ current remuneration, where the Company decides to reduce the amount of rostered overtime performed by the Employees?”. The company seek a determination answering that question in the affirmative.

[9] The company’s submissions noted matters by way of background of a type set-out above in the agreed statement of facts, which I do not reproduce. As to the company’s understanding that the unions placed reliance on clauses 7.1 and 8 of the Agreement in support of their contentions concerning any attempt to reduce employees’ current remuneration, the company submitted neither clause has any work do in this matter because: (a) when properly read, clause 7.1 has narrow application and the financial entitlements which the unions claim are being preserved by that sub-clause do not find protection under its terms; and (b) for the company’s proposed change to be regarded as an “extra claim” within the meaning of clause 8, it would need to be demonstrated that the terms of the Agreement and the parties when forming that enterprise agreement did not countenance the proposed change. The company contended that such a proposition was “patently false” and clause 7.1 itself ensures that the change proposed could not be regarded as an extra claim.In support of its contentions, the company referred to, and relied upon, Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) v Berri Limited [2017] FWCFB 3005 (“Berri”), including its summary of the principles at [114] relevant to the task of construing a single enterprise agreement.

[10] Drawing from the familiar principles in Berri and also the equally-familiar, related discussion in Kucks v CSR Limited (1996) 66 IR 182 at 184, the company contended that the words “contract of employment” in clause 7.1 of the Agreement have been used for a specific purpose and should be given a specific meaning. The ordinary meaning of the words, having regard to their context and purpose, make plain that the phrase “contract of employment” in clause 7.1 of the Agreement should not be conflated with benefits or remuneration which arise from the operation of the Agreement unless there is evidence that such entitlements are also contractual in nature. The task of interpreting an enterprise agreement does not involve re-writing the agreement to achieve what might be regarded as a fair or just outcome. Rather, the Commission’s task is to interpret the enterprise agreement produced by the parties. In so doing, the common intention of the parties is to be identified objectively by reference to that which a reasonable person would understand by the language the parties have used in the enterprise agreement, without regard to the subjective intentions or expectations of the parties. Here, the relevant terms of the Agreement have a plain meaning, which are not ambiguous or susceptible of more than one meaning. As such, evidence of the surrounding circumstances must not be admitted to contradict the plain language of the Agreement.

[11] The submissions for the company continued by references to matters relevant to the plain and ordinary meaning of the relevant words in clause 7.1 of the Agreement. Those submissions included that a number of relevant contextual features can be “readily distilled” as to clause 7.1, namely that it is anchored not in the terms of the Agreement (but instead has its origins in a predecessor agreement). Moreover, clause 7.1 has an express limitation that makes clear that it does not apply to an employee who was not employed by the company at the time of commencement of the predecessor enterprise agreement.

[12] The monetary obligations which arise as a result of the Agreement are, it was submitted by the company, to be regarded separately from those which arise under a contract of employment. It is clear that these obligations are not to be regarded as interchangeable concepts considering clause 7.2 provides a mechanism to absorb monetary obligations imposed by the Agreement against any remuneration otherwise payable to an employee under a contract of employment.

[13] More specifically, the company contended that clause 7.1 of the Agreement, properly read - and manifestly, it was contended on the basis of the analyses that were further-developed in the submissions - only does the following:

•  protects the annual salary of an employee, an annual salary which existed at some point prior to the commencement of the Agreement;

•  requires that the annual salary which is protected arises from a contractual agreement and is therefore under his or her contract of employment;

•  clarifies that the annual salary which is protected is based on a 42 hour week which comprises four hours of rostered overtime each week; and

•  does not apply to an employee who was not employed by the company as at 5 June 2012, being the date of commencement of the 2012 Agreement.

[14] The submissions for the company addressed matters further by reference to what was described as apposite to matters under a sub-heading concerning the importation of enterprise agreement terms into contracts of employment. As to this the company submitted, among other matters:

•  the Agreement entitles the employees to three annual increases, effective 5 June of each year, to the hourly rate payable for the relevant classification (the company also noted the arrangements under the predecessor enterprise agreement);

•  the contracts of employment applying to those employees who were employed at the commencement of the predecessor enterprise agreement do not incorporate:

•  clause 22.1 (Rosters) of the Agreement or 22.1 (Classifications) of the predecessor enterprise agreement, which requires the payment of the rates set out at Schedule A to the current and former agreements respectively; and/or

•  clause 32.1 of the Agreement or 32.1 of the predecessor enterprise agreement (each concerned with “Payment for working overtime”), which requires the payment of overtime rates for all work done outside ordinary hours on any day or shift; calculated by reference to the relevant hourly rate specified in Schedule A.

[15] As to the foregoing, the submissions continued that the employees’ contracts of employment do not expressly incorporate the Agreement or its predecessor; and the aforementioned terms of the current or former enterprise agreements are not implied or imported into the contracts of employment as a matter of fact or law - considering, particularly, the discussion of such matters in Byrne v Australian Airlines Ltd [2015] HCA 44 in the context of the present circumstances.

[16] Whilst the employees covered by the contracts of employment have received the benefit of the relevant wage increases under the Agreement and its predecessor, the right to that relevant hourly wage rate arises from s.51(2) and s.52 of the Act. The importation of the right to be paid the rates prescribed by the Agreements by statute into the employment relationship does not change the character of that right; specifically, it does not render the right a contractual one or one that arises from the employees’ contracts of employment. The submissions for the company were that once it is accepted the reference to “contract of employment” in clause 7.1 means the contract of employment that applied to an employee who was employed by the company at the commencement of the predecessor agreement, it then follows that there is no express or implied right that arises from those contracts of employment to the hourly wage rates prescribed by the Agreement and its predecessor. Rather, the employee “will remain entitled to receive the annual salary under his or her contract of employment”.

[17] The submissions for the company turned next to the operation of the no extra claim provision set out in clause 8 of the Agreement. The company submitted clause 8 “does not foreclose the argument here made” because it is not pursuing an extra claim; the company is seeking to give effect to a right to vary rostering that is bestowed under Part 6 (Hours of Work and Related Matters) of the Agreement and also expressly contemplated by clause 7.1 - albeit in particular circumstances (none of which is present here) where there is a limitation on reducing remuneration when a reduction in rostered overtime hours is implemented. Relevant too in the broader context, the company submitted, was clause 9 (Aims and objectives) of the Agreement including its reference to improving “organisational effectiveness, profitability and productivity”. The company submitted it would be anathema to these objectives to read the no extra claims provision in the manner contended by the unions.

Outline of submissions for the unions

[18] The unions noted the question that the company had postulated for determination by the Commission, and submitted “that the question being asked will not resolve the dispute without qualification” given it was “too broad and does not actually reflect the different entitlements that exist among employees” covered by the Agreement. Moreover, the unions submitted there is a threshold question that must be determined first, namely, whether the change to working hours as proposed by the company is consistent with the Agreement. The unions contended that the first question that needs to be determined to resolve the dispute is: “Does the proposed change to the overtime arrangements and/or the impact of the proposed change constitute an ‘extra claim’ as prohibited under Clause 8 of the 2014 Agreement?”, and that such question should be answered in the affirmative. By way of elaboration in the oral submissions, the unions submitted: “It is the unions’ view that it is an extra claim to say ‘Your overtime rate’s changing’. It is an extra claim to say ‘You’re going to be paid less for annual leave, long service leave and that you are going to be paid less for your superannuation’.” (It may be noted, in passing, that the financial impact was, on the parties’ submissions difficult to pinpoint given potential variables, but potentially in the order of approximately $300.00 a week).

[19] The unions submitted, in the alternative, that if the Commission concludes the proposed change is consistent with the terms of the Agreement, then an additional question is required to be determined – namely, whether the company has the ability to reduce the remuneration of relevant employees in conjunction with reducing the amount of rostered overtime performed.

[20] When read in its broadest terms, particularly if an employee's remuneration depends on the amount of hours worked, the answer to this question, the unions submitted, is “yes”. As to this, the unions submitted, however, that this dispute is properly classified as to an interpretation of clause 7.1 of the Agreement and not a generic question of remuneration. As such, the unions submitted that the additional question would be best framed as follows: “Can the company reduce the base remuneration of relevant Employees where the Company decides to reduce the amount of rostered overtime performed by Employees?”, and that question should be answered in the negative as to the employees to whom clause 7.1 of the Agreement applies.

[21] The unions, in their submissions, referred next to the no extra claims provision in clause 8 of the Agreement and to the fact the nominal expiry date of the Agreement is 26 January 2019. The unions submitted that a decision by the company to vary hours worked is not, of itself, an extra claim under the Agreement, with the proposed changes being the removal of four hours of overtime that had been worked under the existing rosters.

[22] The unions noted that the Agreement does not fix any amount of overtime that is to be included in the roster. As such, the unions did not argue that the reduction of overtime is, of itself, an extra claim that would be contrary to the Agreement. In oral submissions it was submitted for the unions “You can reduce hours. There’s nothing that says you can’t reduce hours. We read clause 7.1 and we would invite the Commission to also read clause 7.1 as if hours are reduced then for that group of employees, and that group of employees alone, the 42 hours is what was agreed and the 42 hours is what should be paid, and from that 42 hours flows every other monetary entitlement that is derived on the hours of work or the overtime rate.” The unions submitted that if there is an extra claim it derives from the financial impact of the reduction in overtime, namely, the proposed reduction in income to the relevant employees who are employed on an annual salary. This reduction of income proposed by the company is to pay no less that the rate contained in the contracts of employment as they stood prior to the commencement of the predecessor agreement.

[23] In referencing matters addressed in paragraphs 35-42 of the company’s outline of submissions, the unions submitted that the company’s submissions contend that the wage increases paid to the relevant employees during the term of the predecessor agreement and the Agreement do not form part of the employees’ annual salary under their contract of employment. The unions’ submissions continued that, based on this argument, the unions consider that the company would reduce the relevant employees’ current pay to that expressly written in their contracts of employment. The unions submitted that it is to be inferred from the company’s submissions that the pay increases made to the relevant employees under the predecessor agreement and the Agreement will no longer be paid to these employees; this is a claim that is contrary to the terms of the Agreement, as it is withdrawing salary increases that were due to employees under the Agreement. Even allowing for a reduction in overtime hours worked, the unions’ submissions continued, there is no scope within the terms of the Agreement for pay increases once given to then be withdrawn. (It may be noted, however, that consequent upon other matters arising in the proceedings in the company seeking to address the unions’ concerns about a “claw-back” of wage adjustments in such respects, the unions submitted that the weight to be given to the concerns in the relevant part of the submissions was much diminished.)

[24] The unions’ submission noted the effect of a reduction of the relevant employees’ base salary on other entitlements. The unions drew particular attention to the effect on superannuation given the operation of clause 28 (Superannuation), which reads in part:

“28. Superannuation

28.1 Subject to what is provided elsewhere in this clause a full-time employee shall have made by the company a weekly superannuation contribution of the Superannuation Guarantee Contribution (SGC) percentage of Ordinary Time Earnings as defined in the relevant Superannuation legislation. …”

[25] The unions submitted that the annual salary contained in the relevant employees’ contracts of employment is expressed as covering all work performed by the employee and, as such, there is no differentiation in the amount between ordinary hours and overtime for salary purposes. The unions consider that, in consequence, the proposed loss of income arising from the change to work hours will have an effect on the employees’ superannuation entitlement because:

•  if there is a reduction in remuneration to that rate contained in their contracts prior to the commencement of the predecessor agreement, the amount of superannuation paid is likely to be reduced accordingly;

•  if the employees are able to supplement their reduced incomes with other overtime, there is no obligation to pay superannuation on that overtime.

[26] In consequence, the unions submitted, the company’s proposal would have the result that there is a change whereby, effectively, superannuation was paid on the first four hours of overtime each week to superannuation being paid in accordance with the statutory minimum amount. In the unions’ view, this superannuation-related outcome is an extra claim by the company, and one in breach of clause 8 of the Agreement.

[27] The unions submitted that, for the most part, they agreed with and adopted the company’s description of the principles applicable to the interpretation of enterprise agreements - particularly in relation to the entitlement for relevant employees to be paid an annual salary even where there is a reduction of the amount of rostered overtime. A point of difference between the parties, however, is the company’s interpretation of whether the “annual salary” is what was agreed to prior to the commencement of the predecessor agreement, or what the relevant employees are being paid as their “annual salary” at the time of the dispute. The unions submitted that, if they understood the company’s submissions correctly, the company is asserting that the contracts of employment between itself and the relevant employees were fixed at some point prior to the commencement of the predecessor agreement. Further, it seemed to the unions, the company’s submission seems to be that because the contracts of employment contain no express reference to the predecessor agreement, or any enterprise agreement for that matter, then the pay increases made to the relevant employees do not form part of the contracts of employment. The unions disagreed with the company’s submissions in such respects. The unions submitted that the contracts of employment can be and have been varied to take account of the pay increases between 2012 and 2017. As such, the annual salary is not what was agreed in 2012 (or even earlier) but what is being received as the (contemporary) base salary.

[28] The unions noted that while the entitlement for relevant employees to maintain an annual salary is contained in clause 7.1 of the Agreement and its predecessor, the full transitional arrangements for those employees engaged on contracts must also take account of clause 7.2 of those agreements, including that part of the sub-clause which reads “Nothing in the Agreement requires the Employer to maintain or increase any over-Agreement payment.”

[29] The unions submitted that each of sub-clauses 7.1 and 7.2 of the Agreement is written in plain language and there is limited, if any, ambiguity. Clause 7.2 allows for increases required by the Agreement to be set-off against any remuneration paid under a contract of employment and does not require that the company maintain or increase any over-Agreement payment. As to this, the unions also drew attention to clause 22 (Classifications & Wages) of the Agreement, which reads in part:

“22. Classification & Wages

22.1 All employees covered by this Agreement will be classified according to the structure set out in Schedule A and paid the minimum wage in this Agreement.”

[30] In reading clause 22.1 together with clause 7.2, it is clear, the unions submitted, that there is nothing in the Agreement mandating the payment of a wage increase to an employee who is receiving an annual salary in excess of the minimum rate for their classification. The Agreement merely sets-out a minimum rate of pay and allows for any increases otherwise required to be absorbed into an annual salary.

[31] The unions’ submissions noted it is common ground that the relevant employees received increase/s in their base salaries during the operation of the predecessor agreement and the Agreement but that the consideration of those increases as terms of the Agreement which cannot be inserted into the contracts of employment is disputed. On the unions’ description of matters, the company “has exercised its discretion to make pay increases to all employees covered by the Agreement and that for “an employee who was receiving the minimum hourly wage for their classification, this pay increase was mandatory”. For others, the increase/s did not have to be paid, but the company decided to pay the increase rather than to set-off such increase against an existing above-Agreement salary

[32] The unions’ submissions went to other matters, including characterisations of the contracts of employment as to matters including discretionary increases, unilateral variation and other matters. The unions also noted the history of increases in contending, for example, that a realistic interpretation is that the “annual salary” would have been understood to mean the amount received immediately prior to the negotiation and/or commencement of the Agreement.

[33] In conclusion, the unions submitted that the impact of the change proposed by the company is an extra claim and in breach of clause 8 of the Agreement. Moreover, the company’s submissions infer that the company wished effectively to reduce salaries to 2012 levels for a group of employees, which is contrary to what is contained in the Agreement. The unions further submitted that the annual salary under the contracts of employment have, by the actions of the company, been varied to include annual salary increases. The company has acted with discretion to pay these increases when it was under no obligation under the Agreement to do so. As such, it is this payment that is protected by clause 7.1 of the Agreement.

[34] Based on the foregoing, the unions submitted that the Commission should reject the question posed by the company and substitute the questions posed by the unions; and answer the first question posed by the unions in the affirmative and, if necessary, answer the second question posed by the unions in the negative.

Outline of submissions in reply for the company

[35] In its submissions-in-reply, the company rejected matters advanced by the unions including that the question which has been proposed by the company could be in any way considered deficient (and, for the reasons developed in its reply submissions, also rejected the unions’ differently-formulated questions). The answering of a question, the company submitted, is not a jurisdictional prerequisite to the exercise of the Commission’s powers of dispute resolution under the terms of the Act or the Agreement. In submitting that the Commission is empowered to exercise its powers in resolution of this dispute and the manner in which the company is seeking that the Commission exercise its jurisdiction, the company traversed matters such as the nature of the dispute resolution clause, s.739(5) of the Act and a range of authorities including Metropolitan Fire and Emergency Services Board v United Firefighters Union [2016] FWCFB 8120 at [34]-[36] and [38]-[39]; CFMEU v Wagstaff Piling Pty Ltd [2012] FCAFC 87 at [58]; Re Cram; Ex parte The Newcastle Wallsend Coal Company Pty Ltd [1987] HCA 29.

[36] The company also rejected the unions’ proposition that there is a “threshold question”that must be determined first by the Commission concerning the operation of the no extra claims clause. In such respects, the company made submissions including that the no extra claims clause has no primacy over any other clause and must be interpreted in the context of the Agreement as a whole. In oral submissions, the company also submitted that giving consideration to whether there was an extra claim by the company “is putting the cart before the horse”. The question which has been articulated by the unions as the threshold question would, if determined by Commission in the manner contended by the unions, be a declaration of legal rights and an exercise of judicial not arbitral power CFMEU v Wagstaff Piling Pty Ltd [2012] FCAFC 87 at [22] and [48]-[50].

[37] The company noted the unions’ submissions that the decision to vary/reduce the amount of hours worked is not, of itself, an extra claim. The company submitted that, on the basis of these concessions, the unions’ reliance on clause 8 was misguided when considering, for example, what was said in Toyota Motor Corporation Australia Limited v Marmara [2014] FCAFC 84 at [37]).

[38] The company submitted there can be no assertion that what is being sought by it (a reduction in rostered overtime and a corresponding reduction in the remuneration commensurate with the removal of the overtime hours) was not in the contemplation of the parties to the Agreement when it was made; the fact of the clause 7.1 savings provision speaks to that. It was further submitted that not everything that is not explicitly written as a term of an enterprise agreement should be regarded as an extra claim and an enterprise agreement should not be construed as dealing comprehensively with all matters relating to the employment relationship: Ansett Transport Industries (Operations) Pty Ltd v Wardley (1980) 142 CLR 237 at [287]-[288].

[39] The genesis of what the company described as the unions’ “misconception about the relevance of the no extra claims provisions of the Agreement may arise from the erroneous inference which they have drawn” from the submissions of the company - as encapsulated in unions’ submission that “it is to be inferred from the [company’s] submission that the pay increases made to the relevant employees under the 2012 Agreement and the 2014 Agreement will no longer be paid to these employees.”The company is not proposing to withdraw the salary increases that were provided to employees under the Agreement. Rather, what the company has said is:

•  the contracts of employment of employees who were employed at the commencement of the predecessor agreement do not incorporate the predecessor agreement or the Agreement such that the conditions within those agreements become contractual rights;

•  clause 7.1 does not require the company to maintain an annual salary (inclusive of four hours of rostered overtime per week) which is derived from the application of increases which have been applied to comply with the terms under each enterprise agreement;

•  to do other than to continue to apply the wage increases which apply to employees from the terms of clause 22.1 of the predecessor agreement and the Agreement would contravene the obligations of s.51(2) and s.52 of the Act and, in such respects:

(a) the wage adjustments received by employees through application of the wage increase provisions in the Agreements were applied to an hourly rate which applied to the employee immediately prior to the relevant wage increase being made;

(b) the wages adjustments as described in (a) gave effect to the obligations which were agreed between the bargaining parties in making the Agreements;

(c) there have been no written agreements to vary employee’s contracts of employment to give effect to the wage increases referred to in (a) above which post-date the making of the predecessor agreement.

[40] The company also rejected the unions’ submissions as they concerned superannuation-related considerations in the context of no extra claims. In so doing, the company drew attention to the wording of clause 28.1, and emphasised the reference to the percentage contribution being one “as defined in the relevant Superannuation legislation”, such that to the extent that there is any reduction in the rate or incidences which superannuation is applied to (i.e. no longer on overtime hours) this is not an extra claim providing it is not inconsistent with the terms of the Agreement.

[41] The company’s submissions dealt in detail with seeking to rebut those parts of the unions’ submissions contending as to the variations of the employees’ contracts of employment which I have considered but do not summarise in this decision. I have, however, noted particularly the comments in the company’s submissions which were to the effect that the dispute between the company and the unions is not one about what clause 7.1 means, but instead how the facts of this matter apply to the preservation of contractual rights and how wage increases which have been paid to employees are to be characterised.

Consideration

[42] Prior to the reallocation of the file to me, directions had been issued by the member who previously had carriage of the matter. In consequence of those directions made on 8 November 2017, the company filed and served a document on 9 November 2017 which addressed the “QUESTIONS FOR DETERMINATION AND RELIEF” as follows:

“1. Pursuant to directions issued by the Fair Work Commission on 8 November 2017, the Applicant identifies the following questions for determination arising from the dispute notified pursuant to s.739 of the Fair Work Act 2009:

(a) What monetary entitlements are preserved by operation of clause 7.1 of the Tip Top Bakeries (NSW) Maintenance Agreement 2014 (Enterprise Agreement) in circumstances where the Company decides to reduce the amount of rostered overtime performed by employees covered by the Enterprise Agreement?

(b) Is the Company prevented as a result of the terms of the Enterprise Agreement from reducing the current remuneration of employees in circumstances where the Company decides to reduce the amount of rostered overtime performed by employees covered by the Enterprise Agreement?

2. Having regard to the questions identified in 1. Above, the Applicant seeks the following by way of relief in settlement of the dispute:

(a) A determination that the Company is not precluded by operation of clause 7.1 or any other term of the Enterprise Agreement from reducing the current remuneration of employees in circumstances where the company decides to reduce the amount of rostered overtime performed by employees covered by the Enterprise Agreement.”

[43] Following the allocation of the file to me on 10 November 2017, I listed the matter on 14 November 2017. In that initial proceeding, I expressed concern about what had been put forward for the company in those proposed questions and relief sought by way of the proposed determination. It suffices to say that I expressed my views that what was being sought was, for the want now of a better description, jurisdictionally ambitious.

[44] On 22 November 2017, the company’s representative sent correspondence to my Associate about scheduling-related matters, and in which reference was also made to the “various observations made and issues raised by the Commissioner during those proceedings [on 14 November 2017]” with the result “the Applicant has given further consideration to the questions that are presently posed by the Applicant for determination … and the evidence that it seeks to call in support of its contentions.” The correspondence indicated also that the company and the unions were seeking to reach consent as to the questions to be put for determination. As things transpired, the parties were not able to reach consent in such respects.

[45] I intend no criticism whatsoever of the representatives of the company and the unions when I say that the concerns of the type I expressed in the initial proceeding in relation to the questions and proposed determination initially proposed (but subsequently withdrawn) have not been allayed by the questions sought to be answered and/or the determination now sought. As noted elsewhere in the decision:

•  The company submitted the question to be determined by the Commission in this dispute is: Can the Company reduce the Employees’ current remuneration, where the Company decides to reduce the amount of rostered overtime performed by the Employees? The company seeks a determination answering that question in the affirmative.

•  The unions submitted that the Commission should:

(a) reject the question posed by the company (Can the Company reduce the Employees’ current remuneration, where the Company decides to reduce the amount of rostered overtime performed by the Employees) and substitute the questions posed by the unions;

(b) answer the first question posed by the unions (Does the proposed change to the overtime arrangements and/or the impact of the proposed change constitute an “extra claim” as prohibited under clause 8 of the 2014 Agreement?) in the affirmative; and

(c) if necessary, answer the second question (Can the company reduce the base remuneration of relevant employees where the company decides to reduce the amount of rostered overtime performed by employees?) in the negative.

[46] The question/s put forward and the determination sought are, in their essential elements, no different from what initially was put forward by the company in seeking to have the dispute resolved by arbitration - albeit now with the additional overlay of the answering of questions sought by the unions as to the no extra claims clause and also, in the alternative, involving questions concerning the contentions about purported variations of the common law contracts (largely in response, it seems, to the submissions of the company to the effect that what is the subject of saving arrangement was as set in a type of contractual aspic pre-2012). The unions in their oral submissions otherwise accepted that it had been “rightly pointed out” that there were jurisdictional queries about how far the Commission can go into what is in the contracts of employment, and in circumstances where the key area of dispute is the annual salary under those contracts of employment.

[47] I have set out in some of the detail of the scope of matters which the company and the unions contended in their written outlines of submissions that I should purport to answer and determine in relation to this dispute. It is accurate to say that the oral submissions elaborated significantly on matters in those written outlines, albeit I have not summarised in this decision those matters where elaboration was orally-developed. True it is that there is a dispute and it relates to matters including clauses in the Agreement, and the company and the unions have put forward matters which they contend the answers to which would resolve that dispute. It is of course open to parties to any s.739 application to deal with a dispute to put forward such questions they see fit and to submit that the Commission should make the determination for which they contend, but the Commission must be satisfied as to its own jurisdiction in relation to such matters.

[48] While the company and the unions agreed that the disoute resolution procedures had been properly engaged, here I am not satisfied that it would be jurisdictionally-apposite to purport to pass upon the particular question/s posed by the company or the unions and/or to make a determination of the type sought by the company. Shortly stated, it seems to me that much of what was persuasively advanced by the company in its reply submissions in opposing the answering of questions propounded by the unions apply - essentially - with equal force and effect in relation to what the company sought to have answered and be the subject of a determination. The outcome/s sought, respectively, by the company and the unions, would not constitute, for example, the familiar interpretation of an enterprise agreement of the type considered in Berri, but would instead travel impermissibly into some form of a purported quasi-declaration of legal rights or some form of a purported exercise of judicial rather than arbitral power. Approached another way, in circumstances where the unions have submitted that they do not consider that an alteration to hours of work is not a clause 8-conditioned extra claim, the issues raised by the parties include, more particularly, dispute as to the operation of the common law contracts as they dovetail with the bargain that was struck in the Agreement and the submissions now made in the proceedings about matters such as implied variations and financial advantage by mistake in the contest about the contractual-related issues concerning the remuneration rate. The unions submitted the “whole premise” of the arrangements that have been in place is around a 42 hour working week; and if that were to change, there is a “saving grace” contained in clause 7.1 that the relevant employees’ pay does not get affected.

[49] I do not consider it is jurisdictionally-apt or jurisdictionally-available to me to purport to determine matters concerning common law employment contracts made between individual employees and the company as to (implied, for example) contractual variations and the like, albeit those common law contracts are effectively referenced in the enterprise agreement. It would also be quite inappropriate for me to purport to determine, for example, whether there had been implied variations of common law contracts or that the employees may have received a financial advantage by mistake.

[50] To illustrate what is being proposed (or the effect of what is being proposed), the company seeks through the vehicle of the question it poses or the determination it seeks to have the Commission’s imprimatur to reduce relevant employees’ existing salaries by amounts potentially in the order of $300 a week (and, collaterally, affect other matters such as paid leave entitlements and superannuation at least in as much as those entitlements are based upon the employees’ existing salaries), in conjunction with the changes it wishes to implement. The oral submissions for the company put this beyond debate, in as much as it was said that “But at its core we say [what] this dispute is about is can the company reduce what it’s currently paying employees by way of rostered overtime if it ceases to require employees to work that overtime and thereby reduces their hours.”. For their part, the unions seek that I conclude the company is prohibited by the no extra claims clause from taking the steps it wishes to implement, at least as it concerns salary reductions in tandem with the roster changes or, in the alternative, otherwise to reach certain conclusions including those about variations submitted by the unions impliedly to have occurred to common law contracts between the company and certain of its employees.

[51] The matters sought to be the subject of answer and/or determination are beyond my proper remit in relation to an application of this type. I have determined to dismiss the application. The proceedings before the Commission in relation to this application are thereby concluded - and regrettably, I acknowledge, without a conciliated or arbitrated outcome such as to bring resolution to the dispute.

COMMISSIONER

Appearances:

M Mead of The Australian Industry Group for George Weston Foods Limited T/A Tip Top Bakeries.

K Presdee for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

S Robinson for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

Hearing details:

2018.

Sydney:

June 4.

Printed by authority of the Commonwealth Government Printer

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