Hospira Australia Pty Ltd v National Union of Workers
[2010] FWA 1199
•24 MARCH 2010
[2010] FWA 1199 |
|
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
Hospira Australia Pty Ltd
v
National Union of Workers
(C2009/10009)
Hospira Australia Pty Ltd
v
AMWU
(C2009/10010)
VICE PRESIDENT LAWLER | SYDNEY, 24 MARCH 2010 |
Dispute – accrual of RDOs – proper construction of agreements.
[1] Fair Work Australia has before it two applications made by Hospira Australia Pty Ltd (Company), each of which is for FWA to conduct a dispute resolution process in accordance with the dispute resolution procedure in a statutory collective agreement.
[2] The first relates to a dispute under the Mayne Pharma (Mulgrave) & NUW Enterprise Agreement 2005 (Production Agreement). The second to a dispute under the Mayne Pharma (Mulgrave Maintenance & Laboratory) AMWU/CEPU Enterprise Agreement 2006 (Lab and Maintenance Agreement). Those two agreements (the current agreements) relate to employee’s at the Company’s Mulgrave facility.
[3] In relation to the dispute under the Production Agreement, FWA exercises jurisdiction pursuant to s.170LW of Workplace Relations Act 1996 (WR Act) as it stood prior to the WorkChoices amendments. Transitional provisions preserved the operation of s.170LW and associated provisions in relation to workplace agreements made before the commencement of the WorkChoices reforms. 1
[4] In relation to the dispute under the Lab and Maintenance Agreement, FWA exercises jurisdiction pursuant to Part 5 of Division 13 of the post-WorkChoices WR Act.
[5] The WR Act has now been replaced by the Fair Work Act 2009. Transitional provisions meant that FWA determines each of the applications by reference to the applicable provisions of the WR Act. 2
[6] Nothing particularly turns on the applicable legislation. The parties were agreed that the dispute resolution procedure in the Agreement provides for arbitration by Fair Work Australia and that the all prior steps in the dispute resolution procedure have been followed and that Fair Work Australia is to arbitrate the disputes.
[7] These disputes relate to the proper application of clauses of the current agreements relating to the accrual of rostered days off (RDOs) and, in particular, whether days spent on annual leave or sick (personal) leave count towards the accrual of rostered days off. Notwithstanding that the two disputes relate to different agreements, it is common ground that the matters for determination are for practical purposes identical and involve the proper construction of hours of work provisions, RDO provisions and leave provisions and the interaction of those provisions.
[8] Oral argument proceeded by reference to the provisions in the Lab and Maintenance Agreement on the basis that the outcome in relation to that agreement would, for practical purposes, determine the outcome in relation to the Production Agreement. I will adopt the same approach in these reasons.
[9] The Lab and Maintenance Agreement is structured into a number of divisions. The provisions in Division A apply to all employees. The provisions in Division B apply only to maintenance workers and the provisions in Division C apply only to Laboratory staff.
[10] Clause 7(a) of Division A provides a definition as follows:
“(a) Ordinary Weekly Rate, Ordinary Time Rate, Ordinary Pay: Except as provided for in clause 19.3.7, reference in this Agreement to Ordinary Weekly Rate, Ordinary Time Rate, Ordinary Pay means the amount prescribed by the relevant clause 32 or clause 38 of this Agreement for the performance of work during ordinary hours for the relevant classification plus allowances incorporated or included in such rate, but excluding attendance bonus payment, shift premium, overtime payment, special rates, fares and travel allowances or other similar payments.”
(emphasis added)
[11] Division B (applying only to maintenance workers) relevantly includes the following:
“31. HOURS OF WORK
The hours of work for a full time Employee are 36 ordinary hours per week. However, employees actually work 40 ordinary hours per week with 4 hours per week accruing towards a paid RDO per fortnight. These provisions and RDOs are subject to and will be in accordance with clause 34.
32. RATES OF PAY
The Employer will pay a full time Employee in accordance with the applicable classification level at the ordinary rate of pay set out as follows:
34. ROSTERED DAYS OFF (RDOS)
34.1 Rostered days off will be rostered by the Employer in consultation with the relevant employees and may be rostered on any of the 5 days, Monday to Friday.
34.2 The Employer may bank 5 RDOs per year. The Employer will nominate the RDOs, following consultation with the affected employees and may bank each RDO upon 4.”
(emphasis added)
[12] Division C (applying only to laboratory staff) relevantly includes the following:
“38. RATES OF PAY
The Employer will pay a full time Employee in accordance with the applicable classification level at the ordinary rates of pay set out as follows:
[table omitted]
39. ROSTERED DAYS OFF (RDOs) & FLEXI-TIME LEAVE (FTL)
39.1 Employees will be eligible for no more than one RDO per calendar month, provided an additional 7 hours and 36 minutes to standard working hours per month is worked.
39.2 Two systems currently exist for RDOs and FTL within the Laboratories and the operation of these systems will be unchanged by this Agreement.
39.3 Guidelines for the operation of the two systems mentioned in clause 39.2 are attached as Appendix 1 and Appendix 2 to this agreement.
39.4 Where RDOs apply, three RDOs may be banked by mutual agreement between an employee and the Company.
39.5 Employees agree to use the time recording system provided by the Company for recording hours worked each day.
39.6 One additional RDO per annum shall be provided to all employees covered by this Division of this Agreement.”
(emphasis added)
[13] Appendices 3 and 4 contain respectively, provisions from the “Metal Engineering Industries Award 1998” and the “Draughting, Production Planners and Technical Workers Award 1998”. Clause 5.2 deals with the relationship between those appendices and the main body of the agreement:
“5.2 The Appendices form part of this Agreement. Where there is any inconsistency between the terms in Appendix 3, or Appendix 4, and any of the provisions in the body of this Agreement, the terms in the body of this Agreement shall prevail to the extent of any inconsistency.”
[14] Clause 7.1 of Appendix 3 sets out the annual leave entitlement and relevantly includes the following:
“7.1.1 Period of Leave
7.1.1(a) (i) A full time or part time employee under this Appendix is entitled to a period of 28 consecutive days leave, including non-working days, (i.e 4 weeks) for each 12 months of service (less the period of annual leave) with an employer.
(ii) An employer may reach agreement with the majority of employees concerned to convert the entitlements in 7.1.1(a)(i) or 7.1.2 to an hourly entitlement (ie. 152 hours or 190 hours respectively for a full time employee) for administrative ease.
7.1.1(b) The annual leave for full time and part time employees accrues at a rate of 2.923 hours for each 38 ordinary hours worked and will be credited to the employee each month.
…
7.1.3 Payment for Period of Annual Leave
Subject to subclause 7.1.12 employees, before going on leave, are to be paid the wages they would have received in respect of the ordinary time they would have worked had they not been on leave during the relevant period. This amount shall be calculated as follows:
7.1.3(a) Time Workers
The wages to be paid must be worked out on the basis of what the employee would have been paid under this Appendix for working ordinary hours during the period of leave, including allowances, loadings and penalties paid for all purposes of this Appendix, first aid allowance and any other wages payable under the employee's contract of employment including any payments established in this Agreement.
The employee is not entitled to payments in respect of overtime, special rates or any other payment which might have been payable to the employee as a reimbursement for expenses incurred.”
(emphasis added)
[15] There are relevantly identical provisions in Appendix 4.
[16] Clause 5.11.6 of Appendix 3 provides:
"5.11.6 Absences from Duty Under an Averaging System
Where an employee's ordinary hours in a week are greater or less than 38 hours and such employee's pay is averaged to avoid fluctuating wage payments, the following shall apply:
5.11.6(a) The employee will accrue a "credit" for each day he or she works ordinary hours in excess of the daily average.
5.11.6(b) The employee will not accrue a "credit" for each day of absence from duty (other than on annual leave, long service leave, public holidays, paid sick leave, workers' compensation, paid bereavement leave, paid carers' leave, paid training leave in accordance with 5.2.3(a) herein, or jury service).
5.11.6(c) An employee absent for part of a day (other than on annual leave, long service leave, public holidays, paid sick leave, workers' compensation, paid bereavement leave, paid carers' leave, paid training leave in accordance with 5.2.3(a) herein or jury service shall accrue a proportion of the "credit" for the day, based upon the proportion of the working day that the employee was in attendance.”
(emphasis added)
[17] Clause 5.6.6 in Appendix 4 is in effectively identical terms.
[18] The maintenance employees work a 36 hour week on a roster cycle of 4 weeks. They work 9 days a fortnight with 8 hours of work on each of those days. The employees are paid for only 7.2 hours on each day they work. The additional time worked each day accumulates towards the rostered day off (the 10th day each fortnight). [The same regime applies to production employees.]
[19] The laboratory employees work a 38 hour week on a roster cycle of 4 weeks. They work 8 hours per day but are paid for only 7.6 hours. The remaining 0.4 of an hour worked accumulates towards one rostered day off for each 4 week cycle.
[20] Until now there has been a custom and practice pursuant to which time taken as annual leave and personal leave is counted towards the accrual of rostered days off. Thus, maintenance employees have been accruing 26 RDOs each year and laboratory employees have been accruing 13 RDOs each year notwithstanding employees taking 4 weeks annual leave a year.
[21] The Company has changed ownership several times over the years. The current owners have been reviewing various aspects of the administration of the Company. One task has been has been the implementation of a new payroll system. A review conducted in conjunction with that pay roll project led to a conclusion that the custom and practice was not supported by the terms of the Lab and Maintenance Agreement and that on the proper construction of that agreement no time accrues towards rostered days off during periods of annual leave or personal leave. The Company seeks to correct what it perceives as an error and has notified the present dispute to seek vindication for its position. The Company contends that, putting aside any further reduction on account of personal leave, on the proper construction of the two agreements, production and maintenance employees should only accrue 24 RDOs each year and laboratory staff should only accrue 12 RDOs each year because there should be no accrual of RDOs during the month of annual leave that is taken by the employees.
[22] The Company contends that on the proper construction of the Lab and Maintenance Agreement an employee’s entitlement to pay during periods of leave is referrable to the full ordinary hours of the employee for each day of leave and, accordingly, no rostered day off should accrue because this would result in a double-dipping: the employee is paid an amount for their annual leave that is referrable to the full ordinary hours that they would have worked if no leave had been taken. Viewed another way, the employee on annual or personal leave is not providing the additional period of 0.8 hours (in the case or production and maintenance employees) or 0.4 hours (in the case of laboratory employees) of ‘unpaid’ work they provide on each day they attend for work so that, during a period of leave, there is nothing to accumulate towards a rostered day off in respect of a day on which leave is taken.
Consideration
[23] The principles governing the construction of industrial agreements are well-settled. I have previously collated the main principles 3 and I do not propose to repeat them all here. I approach this matter on the basis of those principles.
[24] The Company relied on several decisions of the AIRC and FWA in which clauses of awards and collective agreements with wording similar to clauses in the current agreements have been considered. In each of those cases the approach for which the Company contends has been accepted; that is, time towards rostered days off does not accrue during a period of relevant leave.
[25] The general law recognises that a particular word, expression or clause may, through long custom or usage in a particular industry, market or trade, become a term of art and acquire a meaning that persons in that industry or trade are presumed to know and contract upon. Extrinsic evidence is admissible to prove that a word, expression or clause has such an established meaning albeit that this is recognised as a difficult matter to prove. 4 When an agreement in that industry or trade comes to be construed there is what amounts to a rebuttable presumption that the parties to the agreement intended such words, expressions or clauses to have that established meaning. I am not persuaded that any of the words, clauses or expressions on which this case turns have that status and there was no submission on behalf of the Company to that effect.
[26] Accordingly, the task of FWA is to ascertain what the particular parties to the particular agreements in this case intended by the words of those agreements albeit that such intention is to be objectively determined in accordance with the established principles. It is entirely possible that, upon a proper application of principle, the parties to the current agreements intended them to have an effect in relation to the accrual of RDOs that is different to that which has been decided in other cases that where similar or even identical language has been construed in the way for which the Company contends. 5
[27] It is for this reason that the authorities relied upon by the Company cannot be determinative. That said, I note that if I were construing the current agreements as Greenfields agreements I would likely have had little difficulty in adopting the construction for which the Company contends and those authorities would provide a sound basis for reaching that conclusion.
[28] However, the agreements in this case are not Greenfields agreements: they are the latest in a series of collective agreements that have covered employees at the Company’s Mulgrave facility for many years.
[29] In this case the relevant provisions are not unambiguously clear and evidence of the objective framework of facts in which the current agreements were made is certainly admissible on the construction of those agreements. The fact referred to in the preceding paragraph is one of several important facts that are within the surrounding circumstances, the “objective framework of facts” 6, in which the current agreements were made and to which I must have regard. Other important facts that form part of that objective framework of facts are:
- The accrual of RDOs during periods of annual and personal leave is a custom and practice that has been observed at the Mulgrave facility for some 20 years.
- It is not in dispute that the agreements that were replaced by the current agreements contained provisions relating to hours of work, annual and sick leave and rostered days off that, in so far as the key language on which this case turns is concerned, are not materially different to the provisions of the current agreements. That is, the current agreements relevantly replicate provisions that were current when the existing agreements were negotiated and under which the production and maintenance employees accrued 26 RDOs per year and the laboratory staff accrued 13 RDOs per year.
- A reduction in the number of RDOs would, on any view, have been a significant industrial issue in the context of bargaining for the current agreements. There was no claim for a reduction in the number of RDOs that were, as a matter of long custom and practice, provided to the relevant classes of employees.
[30] Avoiding a “narrow or pedantic approach” and “bearing in mind that [the] framers [of the current agreements] 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” 7, I am satisfied that the parties to the current agreements did not intend the provisions relevant to the accrual of RDO’s to have the effect for which the Company contends. I find that, on the proper construction of the current agreements, RDOs accrue during periods of annual leave and personal leave. I note that in relation to laboratory employees, clause 39.2 of Appendix C makes it explicit that no change was intended to the status quo ante in relation to the accrual of RDOs. However, in my view that clause merely makes explicit what I regard as intended by the parties to the agreements more generally when such intention is ascertained objectively in accordance with principle.
VICE PRESIDENT
Appearances:
Mr S Pill for Hospira Australia Pty Ltd.
Mr G Maas for the NUW.
Mr D Vroland for the AMWU.
Hearing details:
2009.
Sydney:
August 5.
1 Item 2 of Schedule 7 to the WR Act.
2 Schedule 19 and item 2 of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.
3 See Watson v ACT Department of Disability Housing and Community Services (2008) 171 IR 392 at para [7]ff.
4 Cheshire & Fifoot ‘s Law of Contract (9th Aust edn) at para 10.14 and see, for example, Dovuro Pty Ltd v Wilkins (2000) 182 ALR 418 at para [149]ff.
5 See Kucks v CSR Limited (1996) 66 IR 182 at 184 for an express recognition of that phenomenon.
6 Telstra v CEPU (2005) 139 IR 141 at para [34]
7 Kucks v CSR Limited (1996) 66 IR 182 at 184 per Madgwick J
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