Linfox Australia Pty Ltd T/A Linfox
[2023] FWCA 2197
•18 SEPTEMBER 2023
| [2023] FWCA 2197 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.218A - application to vary an agreement to correct or amend errors, defects or irregularities
Linfox Australia Pty Ltd T/A Linfox
(AG2023/65)
LINFOX AUSTRALIA (BULK PETROLEUM) AGREEMENT 2021
| Road transport industry | |
| COMMISSIONER HUNT | BRISBANE, 18 SEPTEMBER 2023 |
Application for variation of the Linfox Australia (Bulk Petroleum) Agreement 2021 – defective drafting.
Linfox Australia Pty Ltd T/A Linfox (Linfox) has made an application pursuant to s.218A of the Fair Work Act 2009 (the Act) to vary the Linfox Australia (Bulk Petroleum) Agreement 2021 (the 2021 Agreement) to correct or amend an error, defect or irregularity in the Agreement.
The 2021 Agreement was made by employees on 2 December 2021, approved by the Commission on 23 December 2021 and commenced operation on 30 December 2021.[1] The Transport Workers’ Union of Australia (TWU) is an employee organisation covered by the Agreement.
Linfox submitted that the 2021 Agreement contains an error within clause 44 concerning CPI increases. Linfox seeks to vary the 2021 Agreement to ensure that the clause properly reflects what it states is the mutual intention of the bargaining parties.
Background
The 2021 Agreement is the fifth iteration of an enterprise agreement which covers fuel drivers employed by Linfox. The predecessor agreements are:
· Linfox Australia (Bulk Petroleum) Agreement 2007 (the 2007 Agreement);
· Linfox Australia (Bulk Petroleum) Agreement 2011 (the 2011 Agreement);
· Linfox Australia (Bulk Petroleum) Agreement 2014 (the 2014 Agreement); and
· Linfox Australia (Bulk Petroleum) Agreement 2018 (the 2018 Agreement).
The catalyst for this application was a s.739 dispute application made to the Fair Work Commission (Commission) by Mr Alan Taylor, an employee covered by the Agreement. Mr Taylor’s application contended that he was underpaid pursuant to the 2021 Agreement (and the 2018 Agreement). Mr Taylor’s employment came to an end with Linfox in or around November 2022 and he withdrew his s.739 application.
Linfox denied that Mr Taylor had been underpaid, however it acknowledged that the way in which the relevant clause was drafted has the capacity to be ambiguous or misleading. Accordingly, Linfox seeks to have the 2021 Agreement varied.
Clause 44 of the 2021 Agreement is as follows:
“44. WAGE INCREASES
44.1The weekly wage rates for Employees employed at a site from the commencement date are the rates in clause 86.1 as increased by:
(a) Clause 45 of the 2011 Agreement;
(b) Clause 45 of the 2014 Agreement; and
(c) Clause 44 of the 2018 Agreement
44.2Subject to clause 44.3 the following increases will apply to the weekly wage rates:
(a)effective from the beginning of the first full pay period on or after 31 December 2021 the weekly wage rates for each Site shall be increased by 0.7%;
(b)effective from the beginning of the first full pay period on or after 31 December 2022 the weekly wage rates for each Site shall be increased by 3% or the CPI movement, whichever is the greater; and
44.3Thereafter, if this agreement is not replaced by a new agreement, the wages shall be adjusted each year in line with the CPI movement. These adjustments shall take effect for the first pay period commencing on or after 31 December of each year.
44.4One-Off Payments –one-off payments (gross) as set out below, will be paid to employees who are engaged at the date the Agreement is made (voted up). For clarity, employees engaged after the Agreement is made will not receive the one-off payments.
•First‘one-off’payment-A ‘one-off’ payment based on 3.5% of January 2021 to October 2021 individual employee gross earnings will be paid in the FFPPOA the Agreement is made.
•Second‘one-off’payment-A ‘one-off’ payment based on 3.5% of November 2021 to December 2021 individual employee gross earnings will be paid in the SFPPOA 1 Jan 2022.
44.5The parties agree that, in the event of a Global Economic Crisis, Linfox may consult with the TWU about reducing, deferring or cancelling any increase payable under this Agreement. Any reduction, deferral or cancellation must be agreed to by Linfox, the Employees and the TWU.”
Clause 86.1 of the 2021 Agreement is as follows:
“86. INCORPORATED TERMS FROM THE 2007 AGREEMENT
86.1The following terms from the 2007 Agreement are incorporated into this Agreement for all employees:
(a) Appendix 1 – Rates of pay at commencement of Agreement;
(b) Clause 4.2.1 Wages Increases.”
The effect of the two clauses is that the actual pay rates to be paid to employees under the 2021 Agreement are not contained within the 2021 Agreement. The rates to be paid to employees is cumulative and compounding having regard to increases within earlier agreements. A mathematical exercise would need to be undertaken to calculate the 2021 rates having regard to the 2007 rates and increases within the 2007 Agreement, and the increases in the 2011, 2014 and 2018 Agreements, and then application of clause 44.2 of the 2021 Agreement.
Mr Taylor had contended the following in his s.739 application:
“1.Linfox did not adjust pay rates as per the 2018 EA Clause 44.3, which provides a wage increase in line with CPI should the agreement not be replaced by a new agreement. As the 2018 agreement expired on 30 June 2020 and was not replaced until the 2021 EA took effect, seven days after being approved on 23 December 2021, an adjustment was to take effect the first full period after December 31 2020.
2.The 2021 EA states in Clause 44.1(c) that the starting rates include the increases of Clause 44 of the 2018 EA. However, as described above, the rate increase of the 2018 EA Clause 44.3 was withheld.”
Clause 44 of the 2018 Agreement is as follows:
“44. WAGE INCREASES
44.1The weekly wage rates for Employees employed at a site from the commencement date are in the Incorporated Terms.
44.2Subject to clause 44.3 the following increases will apply to the weekly wage rates:
(a)effective from the beginning of the first full pay period on or after 31 December 2018 the weekly wage rates for each Site shall be increased by 1.75% or the CPI movement, whichever is the greater;
(b)effective from the beginning of the first full pay period on or after 31 December 2019 the weekly wage rates for each Site shall be increased by 2.5% or the CPI movement, whichever is the greater; and
44.3Thereafter, if this agreement is not replaced by a new agreement, the wages shall be adjusted each year in line with the CPI movement. These adjustments shall take effect for the first pay period commencing on or after 31 December of each year.
44.4The parties agree that, in the event of a Global Economic Crisis, Linfox may consult with the TWU about reducing, deferring or cancelling any increase payable under this Agreement. Any reduction, deferral or cancellation must be agreed to by Linfox, the Employees and the TWU.”
The thrust of Mr Taylor’s assertions was that Linfox was bound, by clause 44.3 of the 2018 Agreement to increase rates by 0.7% from the first full pay period commencing on or after 31 December 2020, with 0.7% being the prevailing CPI at the time. That increased rate then became the starting rate at 44.1(c) within the 2021 Agreement. Linfox did not make a payment to employees at or around 31 December 2020, and Linfox has not used the 31 December 2019 rate with an improvement of a 0.7% increase as the amount on which to apply the 2021 Agreement increases.
Relevant Legislation
Section 218A came into effect on 7 December 2022 following the enactment of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (the Amending Act). It provides as follows:
“218A Variation of enterprise agreements to correct or amend errors, defects or irregularities
(1) The FWC may vary an enterprise agreement to correct or amend an obvious error, defect or irregularity (whether in substance or form).
(2) The FWC may vary an enterprise agreement under subsection (1):
(a)on its own initiative; or
(b)on application by any of the following:
(i)one or more of the employers covered by the agreement;
(ii)an employee covered by the agreement;
(iii)an employee organisation covered by the agreement.
(3) If the FWC varies an enterprise agreement under subsection (1), the variation operates from the day specified in the decision to vary the agreement.”
Amendment sought
Linfox requests the 2021 Agreement be amended as follows, with the underlined words at clauses 44.1(c) and 44.4 to be inserted:
“44. WAGE INCREASES
44.1. The weekly wage rates for Employees employed at a site from the commencement date are the rates in clause 86.1 as increased by:
(a) Clause 45 of the 2011 Agreement;
(b) Clause 45 of the 2014 Agreement; and
(c) Clause 44 of the 2018 Agreement excluding clause 44.3.
44.2. Subject to clause 44.3 the following increases will apply to the weekly wage rates:
(a) effective from the beginning of the first full pay period on or after 31 December 2021 the weekly wage rates for each Site shall be increased by 0.7%;
(b) effective from the beginning of the first full pay period on or after 31 December 2022 the weekly wage rates for each Site shall be increased by 3% or the CPI movement, whichever is the greater; and
44.3. Thereafter, if this agreement is not replaced by a new agreement, the wages shall
be adjusted each year in line with the CPI movement. These adjustments shall take effect for the first pay period commencing on or after 31 December of each year.
44.4. One-Off Payments – one-off payments (gross) as set out below, will be paid to
employees who are engaged at the date the Agreement is made (voted up). For clarity,
employees engaged after the Agreement is made will not receive the one-off payments. These payments compensate employees for and are paid in satisfaction of any pay rise otherwise payable to them but unpaid in respect of the period from 1 January 2021 to 31 December 2021 (including under the predecessor enterprise agreement) and any such pay rise is absorbed in full into these payments.
• First ‘one-off’ payment - A ‘one-off’ payment based on 3.5% of January 2021 to October 2021 individual employee gross earnings will be paid in the FFPPOA the Agreement is made.
• Second ‘one-off’ payment - A ‘one-off’ payment based on 3.5% of November 2021 to December 2021 individual employee gross earnings will be paid in the SFPPOA 1 Jan 2022.
44.5. The parties agree that, in the event of a Global Economic Crisis, Linfox may consult with the TWU about reducing, deferring or cancelling any increase payable under this Agreement. Any reduction, deferral or cancellation must be agreed to by Linfox, the Employees and the TWU.”
LINFOX EVIDENCE AND SUBMISSIONS
Witness Statement of Darren Jones
Mr Jones is the General Manager – Workplace Relations for Linfox. He has held this position since January 2017. In this role, Mr Jones is responsible for all of Linfox’s industrial relations matters nationally, including enterprise bargaining and dealing with local matters and disputes.
Mr Jones commenced employment with Linfox in March 2009 as the Workplace Relations Manager. He was promoted to the role of National Workplace Relations Manager on 1 July 2012 and then was appointed to Group Manager Workplace Relations on 1 May 2015.
Catalyst for this application
Mr Jones stated that the current application was originally filed by Linfox in response to a dispute filed by a former employee, Mr Taylor. Mr Taylor in that dispute had, in summary, suggested that clause 44 of the 2021 Agreement had a different legal effect in relation to the start point for wages and back-pay compared with how Linfox intended and understood the clause to work, and how it had been explained to employees when the 2021 Agreement was made with employees and supported by the TWU.
Noting that Mr Taylor had withdrawn his application, Mr Jones stated that Linfox was of the view that Mr Taylor’s interpretation of clause 44 was not unreasonable. Accordingly, Linfox has made this application to resolve the issue and provide certainty to all parties going forward, including employees who have or may become employed after the 2021 Agreement was approved and who therefore did not have an opportunity to participate in bargaining and did not have the benefit of the explanation given to employees prior to approval.
Linfox Bulk Petroleum Enterprise Agreement Negotiations
Mr Jones noted that the 2021 Agreement is the fifth iteration of an enterprise agreement which covers fuel drivers by Linfox. The table below outlines the operative dates and nominal expiry dates of the various agreements:
| Enterprise Agreement | Operative Date | Nominal Expiry Date |
| 2007 Agreement | 9 January 2008 | 30 June 2011 |
| 2011 Agreement | 17 February 2012 | 30 June 2014 |
| 2014 Agreement | 24 October 2014 | 30 June 2018 |
| 2018 Agreement | 4 March 2019 | 30 June 2020 |
| 2021 Agreement | 30 December 2021 | 30 June 2023 |
The TWU has been covered by each of the above agreements and was the bargaining representative for the majority of fuel drivers covered by each of the agreements.
Mr Jones was not involved in the negotiations for the 2007 Agreement or the 2011 Agreement. Following his appointment as National Workplace Relations Manager in 2012, Mr Jones oversaw and was actively involved in negotiations on behalf of Linfox with the TWU for the 2014 Agreement, the 2018 Agreement and the 2021 Agreement.
Linfox and the TWU have generally conducted bargaining negotiations for each new Agreement:
· with the previous enterprise agreement as the starting point, including in relation to the pay rates;
· with relatively few substantive changes overall between the terms of one agreement to the next (with some exceptions, such as in relation to shift patterns); and
· primarily through meetings and discussions with TWU delegates and officials, both in person at formal meeting sessions, by telephone and in 2021 via Microsoft Teams.
Linfox has not kept detailed records of negotiations (including the 2021 Agreement negotiation). However, Mr Jones understood that the TWU may have kept more comprehensive records.
Wage increases in the agreements
Each agreement contains a clause detailing wage increases for the duration of the agreement. These generally:
· included specific percentage wage increases payable on certain dates throughout the life of the agreement; and
· included a default clause which provided for a CPI increase to wages payable on or after 31 December in the year the relevant agreement passes its nominal expiry date.
Mr Jones stated that pay rises were always set on a calendar year basis, with a pay rise each year commencing in the first pay period of each new calendar year and intended to be the pay rise applicable for the next 12 months. The nominal expiry dates were always set at 30 June.
Mr Jones’ view is that this meant that employees covered by the agreements had received a pay rise six months earlier, to cover them for the entire 12 months.
Negotiations for a replacement enterprise agreement typically concluded after an enterprise agreement passed its nominal expiry date of 30 June. However as long as the negotiation was concluded and the new agreement approved within the six-month period prior to the end of the calendar year, there would be a seamless sequence of pay rises and the issue of back pay would not arise. In those circumstances, Mr Jones said the ‘CPI’ clause would have no relevance.
Mr Jones stated that the ‘CPI’ clause was intended to apply only if the expired agreement was not replaced. It was never Linfox's intention (or, Mr Jones believed, the TWU's intention) that employees would be left only with a CPI increase for any 'gap' between the end of the calendar year following the nominal expiry of one agreement and the first pay rise provided by the replacement. On the two occasions where Mr Jones was involved that there was such a ‘gap’ (the 2018 Agreement and the 2021 Agreement), Linfox dealt with the ‘gap’ by agreeing to pay back pay, which in both cases was in excess of CPI.
Mr Jones identified there was a gap of about 12 months between the last pay rise in the 2018 Agreement and the commencement of the 2021 Agreement. That occurred because the 2021 Agreement was negotiated in extraordinary circumstance which are discussed below.
There was also a much shorter gap in relation to the 2018 Agreement which did not come into operation until 4 March 2019.
In relation to the commencement of the 2018 Agreement, Mr Jones stated that Linfox and the TWU proceeded on the basis that any payments relating to the period after 1 January 2019 would be resolved by way of a back-payment under the 2018 Agreement after it came into operation.
It was agreed that the pay rise identified in the 2018 Agreement had a retrospective date (i.e. it would be paid from the first full pay period on or after 31 December 2018). Mr Jones stated that the payment for the gap was well in excess of CPI. Neither Linfox or the TWU gave any attention to the operation of the CPI clause because there was a firm commitment on both sides that the agreement would be replaced, and that there would be a negotiated pay rise (not a CPI pay rise) for every relevant period.
The 2018 Memorandum of Understanding
Mr Jones explained that during negotiations for the 2018 Agreement, the TWU's preference was for the new enterprise agreement to have a nominal term of only two years rather than three years. This would result in alignment of agreement expiry dates between all major transport companies in Australia and would assist the TWU with its industry ‘2020 campaign’.
In exchange for its agreement to the TWU's proposal, Mr Jones recalled that Linfox negotiated with the TWU a Memorandum of Understanding that outlined an agreement for the key terms of the enterprise agreement to follow the 2018 Agreement (the 2018 MOU). A copy of the 2018 MOU is extracted in full below:
“PARTIES:
a) Linfox Australia Pty Ltd … (“Linfox”)
b) Transport Workers Union of Australia (the “TWU”)
RECITALS
1,This is an agreement between Linfox and the TWU concerning the making of the Linfox Australia (Bulk Petroleum) Agreement 2018 (2018 Agreement).
IT IS AGREED AS FOLLOWS:
That Linfox has agreed to a reduced nominal term (2 years) NED 30 June 2020 for the Linfox Australia (Bulk Petroleum) Agreement 2018 based on the following undertakings given by the TWU:
1. The first subsequent agreement will be for a minimum duration of 3 years expiring 30 June 2023.
2. Effective from the bargaining of the first full pay period on or after 31 December 2020 the weekly wage rates for each Site shall be increased by 3% or the CPI movement, whichever is the greater.
3. Effective from the beginning of the first full pay period on or after 31 December 2021 the weekly wage rates for each Site shall be increased by 2.75% or the CPI movement, whichever is the greater.
4. Effective from the beginning of the first full pay period on or after 31 December 2022 the weekly wage rates for each Site shall be increased by 2.75% or the CPI movement, whichever is the greater.
5. In relation to points 2 to 4 above where wage rate outcomes achieved by the TWU with Linfox’s competitors is higher, then the TWU’s claim will be adjusted accordingly.
6. All other terms and condition will remain unchanged in the subsequent agreement.
7. Linfox in agreeing to a reduced nominal term for the 2018 Agreement provided the TWU with alignment of agreement expiry dates of all major transport companies
Linfox undertakes as follows:
1. Linfox will not withhold agreement to the making of a local matters agreement in accordance with clause 24, where the majority of site based Employees vote to apply clause 23.2(d)(iii) from the 2018 Agreement as follows:
(iii) “last on, first off based on ‘fuel contract seniority;”.”
COVID-19 Pandemic
Mr Jones stated that the COVID-19 pandemic which commenced in or around March 2020 had significant detrimental impacts on Linfox's business. Linfox's fuel transportation business (which is covered by the Agreements) was severely impacted by an approximate 40-50% reduction in consumer fuel demand as a result of various lockdowns and other restrictions.
This resulted in Linfox having to take quick and drastic steps to significantly reorganise its business, including the redeployment of drivers and other steps required to ensure the continued viability of the business.
Given the state of uncertainty, Linfox was not in a position to commence bargaining for a replacement enterprise agreement for the 2018 Agreement which passed its nominal expiry date on 30 June 2020.
Negotiations relating to the 2021 Agreement
Mr Jones recalled that negotiations ultimately commenced for the 2021 Agreement in May 2021 when bargaining could occur initially face-to-face as far as was practicable. However, the majority of meetings occurred via Microsoft Teams.
Eight bargaining sessions took place with the TWU in respect of the proposed 2021 Agreement on the following dates:
· 12 May 2021 and 13 May 2021;
· 16 July 2021;
· 30 July 2021;
· 8 September 2021;
· 29 September 2021;
· 18 October 2021;
· 28 October 2021; and
· 11 November 2021.
The TWU's log of claims initially sought pay increases in line with the 2018 MOU with back-pay to the end of December 2020. The TWU's log of claims was provided on or around 16 July 2021, outlining the TWU's position on wages.
Mr Jones stated that from Linfox's perspective, the impacts of the pandemic and some emerging competitive issues had significantly changed the position relating to wage increases payable under the new enterprise agreement than what had been projected during the bargaining for the 2018 Agreement and the making of the 2018 MOU. This meant that Linfox was not in a position to provide pay rises to employees in line with the 2018 MOU.
Linfox's initial position was that wage rates should not be increased at all because Linfox was pitching for a significant tender, and the inclusion of extra wage increases in what would become the 2021 Agreement would have likely impacted on Linfox's competitiveness in the tender process.
Ultimately, Linfox and the TWU agreed the following in relation to wages for the 2021 Agreement:
· The weekly wage rates then being paid (which was the rate applicable under the 2018 Agreement from 1 January 2020) would be increased by 0.7%, and that would be the rate which applied from the beginning of the first full pay period on or after 31 December 2021.
· From the beginning of the first full pay period on or after 31 December 2022, the weekly wage rates would be increased by 3% or the CPI movement (whichever is greater); and
· Employees would receive a ‘one off’ payment equivalent to 3.5% of their 2021 calendar year gross earnings in two instalments following approval of the proposed agreement by the employees. This payment was specifically intended to be the pay rise (and the only pay rise) employees would receive for the 'gap' in pay rises caused by the deferral of the negotiation, which ‘gap’ coincided with calendar year 2021. It was based specifically on their 2021 rate of pay with a negotiated percentage uplift on those rates.
Mr Jones stated that at no time did Linfox or the TWU suggest during bargaining that the appropriate 'starting wage' for the 2021 Agreement included the 0.7% default CPI increase which would have applied from 1 January 2021 if the 2018 Agreement had not been replaced.
Linfox proceeded on the basis that the default CPI increase would never be relevant, because the 2018 Agreement would be replaced, and that any 'gap' would be addressed in the replacement agreement – which in fact is exactly what occurred.
Mr Jones said that all negotiations relating to wages proceeded on the basis that the wages which were actually being paid to employees at the time the 2021 Agreement commenced set the starting point for future wages.
Linfox and the TWU also proceeded through bargaining on the basis that the ‘one-off’ payments to be paid to employees under clause 44.4 of the 2021 Agreement was to be regarded as back-pay for the 2021 calendar year because Linfox had not, up to that point passed on a pay increase for that year.
Access period and lead up to vote
Mr Jones was not directly involved in discussions with employees during the access period leading up to the vote on the 2021 Agreement.
However, Mr Jones was advised by Mr Blake Byrne, Linfox Workplace Relations Manager, and believe to be true that an Excel spreadsheet document (which was attached to Mr Jones’ statement and marked DJ-3) was made available to Linfox's site managers who distributed it to employees during the access period by displaying it in lunch rooms and notifying employees during toolbox talks that the relevant materials were available for consideration ahead of the employee ballot.
Noting that employees had not received a pay increase since 31 December 2019, the following table was distributed to employees in consideration of the impending vote.
31/12/2019 31/12/2021 Current 0.70% 12SPW CHR Rates Grade 4 $45.7245 $46.0446 Grade 5 $46.8678 $47.1959 Grade 6 $48.0112 $48.3473 Grade 7 $49.1503 $49.4944 Grade 8 $50.2917 $50.643 Grade 9 $51.4332 $51.7932 Grade 10 $52.5751 $52.9431
In addition, the employees received the one-off payments (in two tranches) amounting to an increase of 3.5% for all of the 2021 calendar year pursuant to clause 44.4 of the 2021 Agreement.
Witness Statement of Blake Byrne
Mr Byrne is the Linfox Workplace Relations Manager, having held that role since 1 September 2021. In this role, Mr Byrne is responsible for management of workplace investigations, advocacy in courts and tribunals, enterprise agreement negotiations, union stakeholder engagement, new business tenders and advising management on industrial and workplace relations to align with the company strategy.
Mr Byrne commenced with Linfox in 2012 as a recruiter. He then became a Workplace Relations Advisor, then Workplace Relations Officer, then Workplace Relations Manager.
Access period and leave up to vote
After an in-principle agreement had been reached between Linfox and the TWU in relation to the terms of the 2021 Agreement, Mr Byrne was responsible for ensuring that Linfox’s site managers made information available to employees during the access period preceding the vote.
The material made available in the workplaces included an Excel spreadsheet explaining the pay rises under the 2021 Agreement from 31 December 2021, detailed at [50].
Mr Byrne stated that the relevant material was to be displayed in lunch rooms or on noticeboards and the site managers were instructed to notify employees during toolbox talks that the relevant materials were available for consideration ahead of the employee ballot. Mr Byrne understood that this did in fact take place during the access period.
For employees on leave during the entirety of the access period (being seven employees), an email including attachments was sent by the relevant Operations Supervisor for each state. Mr Byrne has discovered that this material did not include the excel spreadsheet at [50], however it did include:
· A copy of the 2021 Agreement;
· The explanatory document;
· A copy of the 2007 Agreement with incorporated terms from the historical Oil Award;
· A copy of the Road Transport and Distribution Award 2020; and
· The Comcare MOU.
Mr Byrne was nominated as the key contact for employees if they had queries in relation to the 2021 Agreement. He does not recall any employees contacting him querying wages which would be payable under the 2021 Agreement or requesting personal copies of the access period material. Mr Byrne does not recall any manager contacting him with a query on behalf of any fuel drivers in respect of the wages under the 2021 Agreement.
Linfox’s Submissions
Linfox submitted that its primary position is that clause 44 of the 2021 Agreement, properly construed, results in a conclusion that:
· The starting wage rates under the 2021 Agreement were the rates which were actually being paid by Linfox to employees at that time, i.e. without the inclusion of the 0.7% CPI increase from 31 December 2020; and
· The back-pay amount provided for in clause 44.4 of the 2021 Agreement fully compensated employees who had not received the CPI pay increase for the 2021 calendar year up to the time the 2021 Agreement was made.
However, Linfox acknowledged (but does not accept to be correct) that clause 44 could be interpreted in another way. That alternative constructions does not align with the intention of the bargaining parties. As such, to the extent it might be construed in that way, which would be misleading for employees, Linfox submitted that the drafting contains an obvious error which should, in fairness to all stakeholders including in particular employees, be corrected.
Linfox submitted that it in the circumstances, it is appropriate for the Commission to exercise its power under s.218A of the Act to vary clause 44 of the 2021 Agreement to give effect to the common understanding of the authors of the document.
Linfox noted that the Explanatory Memorandum to support the Bill of the Amending Act, relevantly states as follows:
“772. This part would remove unnecessary complexity in the agreement-making process by amending the FW Act to:
· simplify the process for correcting any obvious errors, defects or irregularities in enterprise agreements; and
· provide a simple remedy to address the situation where the wrong version of an enterprise agreement or variation has been inadvertently submitted to, and approved by, the FWC.”
Given the recency of the provision, Linfox noted there are only a handful of decisions dealing with it and none (as far as Linfox is aware) involving opposition to the proposed variation being made.
Linfox submitted:
· Section 218A is intended to overcome particular limits in the Act and that it confers an additional discretion for the Commission to amend an error, defect or irregularity in an agreement, be that in form or substance. This is broader than the power in s.217 of the Act because it does not require the error, defect or uncertainty to create uncertainty or ambiguity in order to enliven the Commission’s powers.[2]
· The remedial nature of s.218A is intended to overcome the obstacle presented by the decision of the Full Bench in Advantaged Care Pty Ltd v Health Services Union [2021] FWCFB 453 to applications under s.602, that is, that s.602 does not confer a power to correct an obvious error in an enterprise agreement.[3]
· It confers a discretion on the Commission to correct or amend “unintentional errors, mistakes arising from inadvertence, clerical mistakes or errors arising from accidental slips or omissions” that have arisen in an enterprise agreement.[4]
Linfox submitted that these remarks in the few reported decisions to-date do not describe the limit of the power, which is a very broad discretion conferred on the Commission to vary enterprise agreements to ensure that enterprise agreements contain terms and conditions which are clear and readily understood, which are consistent with the intention of the parties so far as that can be reasonably ascertained and which contain workable terms and conditions which can be applied in a practical way in the context in which they apply.
The words “obvious error, defect and irregularity” are also used in s.602 of the Act. In BHP Coal Pty Ltd [2023] FWCA 115, Deputy President Asbury (as she was then) found that:
“[4] … The terms of s.218A are substantially similar to those in s.602 of the Act and the Explanatory Memorandum to the Bill states that s.218A is intended to fill a regulatory gap by extending the operation of the ‘slip rule’ to correct or amend obvious errors, defects or irregularities, whether in substance or form, in enterprise agreements. The provision addresses a regulatory gap, as the existing ‘slip rule’ in section 602 enables the FWC’s decisions, but not enterprise agreements, to be corrected.
[5] Accordingly, the principles that apply to s.602 of the Act are analogous in the context of s.218A of the Act and that the section confers a discretion on the Commission to correct or amend ‘unintentional errors, mistakes arising from inadvertence, clerical mistakes or errors arising from accidental slips or omissions’ that have arisen in an enterprise agreement.”
The explanatory memorandum of the Fair Work Bill 2008 referred to a decision of Justice Munro in Re Timber and Allied Industries Award 1999, in which his Honour dealt with the equivalent provision to s.602 in the Workplace Relations Act 1996 and stated:
“[29] This matter effectively turns upon the application of the colloquially known, ‘slip and error rule’. The ‘slip and error rule’ enables a Court to make amendments where unintentional errors have occurred. Neither the applicant nor respondent parties directed my attention to this rule, although with paragraph 111(1)(q) it is the foundation of the Commission’s power to use a Correction Order. The merits of the matter may properly be confined to application or non-application of the rule to the exercise of determinative power called for in this Commission proceeding.
[30] As stated by Einstein J. in a recent judgement:
‘A Court possesses an inherent power to correct mistakes in its orders arising from inadvertence: Milson v Carter [1863] UKLawRpAC 44; [1893] AC 638 at 640 per Lord Hobhouse, approved in L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) HCA 59; (1982) 151 CLR 590 at 594. A power to a like effect is to be found in Part 20, Rule 10(1) of the Supreme Court Rules, which reads—
Where there is a clerical mistake or an error arising from an accidental slip or omission in a minute of a judgement or order or in a certificate, the Court on the application or any party or of its own motion, may, at any time, correct the mistake or omission.’
Paragraph 111(1)(q) of the Act may be taken to be the counterpart of that power in the Commission.”
Linfox submitted that s.602 of the Act could be used in relatively broad circumstances, including by reference to the decision in Currabubula & Paola v State Bank NSW.[5] That case outlined that the ‘slip rule’ could be employed to include the amendment of unintentional errors, mistakes arising from inadvertence, clerical mistakes or errors arising from accidental slips or omissions.[6]
It was submitted that the particular decisions referenced above do not set the limits of the power conferred by the wording, which has to be read and given effect in accordance with its terms. It is a power which is broader than the ‘slip rule’, and also broader than the existing ability to amend an enterprise agreement to cure an ambiguity, although it would be available in each of those circumstances.
Linfox contended that it applies in three separate circumstances; an ‘error’, a ‘defect’ and an ‘irregularity’. They are not three ways of saying the same thing. Each has to be given a separate meaning. An ‘error’ is different from a ‘defect’ which is different from an ‘irregularity’.
Linfox submitted that an error includes “a deviation from accuracy or correctness; a mistake, as in action, speech, etc.”[7] So, for example, an ‘error’ might cover a slip in drafting or an infelicitous articulation of an agreed term which has unintended meaning.
A ‘defect’ includes “a falling short; a fault or imperfection”[8] or “want or lack, especially of something essential to perfection or completeness; deficiency.”[9] Linfox asserted that a ‘defect’ might include a circumstance where an agreement term has obviously unworkable application, perhaps as a product of inattention by the negotiators or drafters to the practical operation of a term in the context in which the agreement is intended to operate.
Linfox further submitted that an ‘irregularity’ is something irregular, or something:
· “not according to rule, or to the accepted principle, method, course, order, etc”; or
· “not conformed or conforming to the rules of justice or morality, as conduct, transactions, mode of life, etc., or persons.”
An irregularity might include an obvious inconsistency between one term and another term.
Linfox asserted that a particular issue might be able to be accurately described as more than one or a combination of the terms.
In none of the cases does the power require the identification of ambiguity, although Linfox argued that ambiguous terms will commonly be correctly described as involving an error, defect or irregularity.
The obvious error, defect or irregularity
Linfox claimed that Mr Jones’ evidence is very clear as to what was intended by Linfox:
· The first increase under the 2021 Agreement was to be paid on top of the rates of pay which Linfox were in fact paying its employees prior to the 2021 Agreement being made; and
· The backpay payment at clause 44.4 was intended to compensate employees for not having received an increase in wages in the 2021 calendar year.
To the extent clause 44 of the 2021 Agreement provides a different result, Linfox submitted that this constitutes an obvious error, defect or irregularity which arises solely due to an unintentional drafting error. In particular, it constitutes:
· an error, because it deviates from accuracy or correctness by failing to accurately or correctly reflect the intentions of the authors of the 2021 Agreement; and/or
· a defect, because:
· it falls short of accurately reflecting the intentions of the authors of the 2021 Agreement; and/or
· it wants of or lacks a perfect or complete reflection of the intentions of the authors of the 2021 Agreement.
Linfox submitted that the obviousness of the error, defect or irregularity of substance is clear, being that:
· Wage rates and backpay were the subject of negotiation by the parties. On the evidence provided by Mr Jones, it appears that the offer ultimately put forward by Linfox was understood by the TWU to be as set out in paragraph [77] above.
· The material made available to employees on-site during the access period prior to the vote to approve the 2021 Agreement included a wage comparison table at [50]. That table clearly articulated a ‘current rate’ and a ‘proposed rate’, neither of which took into account the CPI increase within the 2018 Agreement. There was no information issued to employees which suggested that a different rate of pay would be payable.
· It is almost certain that the TWU would have agitated the issue if it was of the view that Linfox was not paying its employees in accordance with the TWU’s understanding of wage rates after the 2021 Agreement came into operation.
If the alternative interpretation of clause 44 of the 2021 Agreement is preferred by a relevant court or tribunal, Linfox noted that employees covered by the 2021 Agreement may be entitled to additional backpay and a higher rate of pay moving forward. Linfox submitted that this was plainly never intended.
Linfox submitted that the correction of the error, defect or irregularity in clause 44 would maintain the status quo upon which it says Linfox and the TWU have been proceeding since 30 December 2021.
Error, defect or irregularity is one of substance and amendment would not disadvantage employees
Linfox cited Victorian Hospitals’ Industrial Association[10] and Technical and Further Education Commission T/A TAFE NSW,[11] in which the Commission, in deciding to exercise its discretion to correct an obvious error, was satisfied that the errors in each case:
· were errors of substance; and
· significantly disadvantaged employees in respect of the relevant entitlements.
In each case, Linfox submitted it was correctly noted that the above matters were not prerequisites for the Commission’s exercise of its discretion under s.218A of the Act. Disadvantage is not a relevant issue in determining whether jurisdiction exists under s.218A, however it might appropriately be a factor to be considered in determining whether the discretion should be exercised, or how it should be exercised.
Similarly, in Peanut Company of Australia Pty Ltd,[12] Commissioner Yilmaz was satisfied that making the requested amendment would “not disadvantage any of the employees”.
Linfox submitted that the error in the 2021 Agreement is one of substance because it does not reflect the agreement of the parties. It submitted that an amendment of the 2021 Agreement would not disadvantage employees in respect of their entitlements as it would merely maintain the status quo upon which the parties had been proceeding since 30 December 2021.
For the reasons outlined above, Linfox submitted that the Commission should exercise its discretion to vary the 2021 Agreement on the terms set out in the application made by Linfox.
TWU EVIDENCE AND SUBMISSIONS
Witness Statement of Therese Walton
Ms Walton is employed as the National Industrial Officer for TWU, having held the role since October 2010. She is responsible for industrial matters nationally, including enterprise bargaining.
History of Negotiations
Ms Walton stated that she has been involved in negotiations for the 2011, 2014, 2018 and 2021 Agreements (collectively, referred to as the Linfox Fuel Agreements).
As the lead negotiator, Ms Walton was responsible for providing information and updates to TWU branch officials and delegates on the bargaining committee for the purpose of report back meetings with the broader membership to keep members accurately informed of bargaining updates and/or outcomes.
Ms Walton is aware that the 2021 Agreement, and its predecessor Agreement, the 2018 Agreement, make contingency for CPI increases to be afforded to employees should the operative agreement not be replaced by the nominal expiry date. This has been the case with the Linfox Fuel Agreements in which Ms Walton has been involved in.
According to Ms Walton, it has been a common understanding and practice when negotiating the Linfox Fuel Agreements that any increases or cash payments will have retrospective application to the date which is 12 months from the date of the last scheduled rate increase. This practice negates the contingency payment of 0.7%, contained at clause 44.3 of the 2018 Agreement.
Negotiations for the 2021 Agreement
Ms Walton noted that the 2018 Agreement had a nominal expiry date of 30 June 2020. At that time all business activity had been significantly impacted by the COVID-19 pandemic. As the parties were unable to travel and meet face to face, both Linfox and the TWU agreed to defer bargaining.
As a consequence of deferring bargaining due to the COVID-19 pandemic, negotiations did not commence until 12 May 2021. At that time the last rate increase passed on to employees was from the first full pay period on or after 31 December 2019.
Ms Walton noted that the first bargaining meeting was a two-day meeting held on 12 and 13 May 2021. A further eight single day meetings between the parties concluded with an in-principle agreement on 12 November 2021.
On 8 November 2021, Ms Walton sent an email to TWU officials with responsibility for Linfox fuel membership and attached to that email were the ‘Speaking Notes’. The Speaking Notes are extracted below:
“Please ensure you have with you a copy of the updated list of claims. You will need to concentrate on claims #1 and #23 and be in a position to report the view of members at our caucus meeting on Thursday 11th November prior to our next bargaining meeting.
FLEXIBLE START TIMES:
Linfox tabled the following proposal for TWU consideration:
50. START TIMES
50.1 Linfox shall fix a regular stating time for each full-time Employee.
50.2 Subject to clause 50.3, for full-time Employees, the start time shall, with respect to each affected Employee, be the same time on each day of the week.
50.3 Linfox may vary an Employee’s starting time on either a permanent or temporary basis subject to clause 21.Flexible start times
50.4 Early Start Time – Where agreed to by an Employee and Linfox, an Employee may commence work up to one (1) hour prior to their regular starting time.
50.5 Delay to regular starting time – Where Linfox requires an Employee to commence work later than their regular starting time, Linfox can alter than regular starting time subject to the following:I.The new start time must not be greater than one hour past the regular starting start time;
II.The Employee must be notified of the change no less than 2 hours’ prior to their regular starting time;
III.An Employee may only have their regular starting time altered once per week; and
IV.Clause 50.5 applies only to Employees working on the night (pm) shift.
RATES PROPOSALS:
TWU claim:
è 0.7% increase to wages, with back pay, for the 2020 calendar year payable from 1 January 2021;
è 3% increase to wages from 1 January 2022;
è 3% increase to wages from 1 January 2023.
Linfox Counter Offer:
è One-off lump sum payment calculated at 3% of gross earnings for the 2021 calendar year payable on and from the second full pay period commencing after 1 January 2022;
è N.B.: Employees who have not worked a full year in 2021 will receive payment based on their gross earnings.
è 0.7% increase to wages commencing from the first full pay period commencing after 1 January 2022;
è 3% increase to wages payable from the first full pay period commencing after 1 January 2023.
The average earnings for employees during the 2021 calendar year are $110,000. For some employees the amount will be higher; for some employees the amount will be lower.
Linfox has provided the following rationale for its counter claim:
1. The BP contract has gone out to tender and Linfox has to submit its tender in early December. The BP contract is 60% of the work currently performed.
2. If the contract is maintained, it will have a life span of five years (which takes us beyond the expiry of this EA) and will provide a stable environment for renegotiations in 2023.
3. Linfox wants to limit wage increases prior to tender to enhance its chances of success.
4. With the one-off cash payment, Linfox has the potential to recoup some of that cost from its clients.
5. Linfox is the most expensive fuel distributor and is under extreme competitive pressure in the fuel sector. Linfox clients readily acknowledge you are the best in the business but are the most expensive.
6. If employees pursue greater increases to wages prior to the BP tender it will jeopardise job security. If the BP tender is not successful there will be significant job losses.
ANALYSIS OF COMPETING CLAIMS (based on annual gross earnings of $110k p.a.):
TWU claim:
0.7% for 2020 = $770 year 1 = $110,777 average annual wage
3% for 2021 = $3323 year 2 = $114,100 average annual wage
3% for 2022 = $3423 year 3 = $117,523 average annual wage
Linfox counter claim
3% (cash payment mid Jan 2022) = $3300 = $110,000 average annual wage
0.7% from Jan 2022 = $3323 year 2 = $770 = $110,777 average annual wage
3% from Jan 2023 = $3323 = $114,100 average annual wage”
Ms Walton explained that the Speaking Notes were provided for the benefit of the relevant TWU officials who would then convey that information to TWU members in attendance at report back meetings in their respective depots.
Ms Walton clarified that the Speaking Notes above sets out the TWU rates proposal clearly contemplated the 0.7% CPI for the 2020 calendar year. That document also sets out the counterclaim proposed by Linfox and the rationale for the counterclaim. The counterclaim met the initial TWU claim for rate increases but reconfigured the package because of its concerns over the BP tender. Ms Walton stated that the rationale is clearly set out in the Speaking Notes.
The Speaking Notes further sets out an analysis of the competing rates claims so that TWU members could see the effect of the counterclaim.
At a TWU caucus meeting on 11 November 2021, the feedback that Ms Walton received from participating TWU officials and delegates was that if the first payment under the 2021 Agreement was to be a cash payment and not an increase to wages, then further negotiations on rates was required.
Following the caucus meeting on 11 November, the TWU met with Linfox. At that meeting, the parties finalised all claims except rate increases. The TWU sought a higher increase than the 3% cash bonus being offered by Linfox. The parties were unable to reach agreement on that day, but arrangements were made for a zoom meeting the following day, 12 November 2021, for Linfox to provide a formal response to the TWU claim in relation to the proposed cash bonus.
Ms Walton recalled that on 12 November 2021, the parties reached agreement on all terms via a zoom meeting. Present at the meeting were TWU representatives including TWU officials and delegates who were part of the negotiating committee.
On Friday 12 November 2021, Ms Walton emailed Linfox seeking confirmation of the final rate offer which was set out in the email. She received confirmation that the offer set out in her email was correct. The email between Ms Walton and Mr Jones is relevantly extracted below:
Ms Walton: Darren
Can you please confirm that the below represents the rate offer and the timetabling for ballot.
The final rate offer is set out below:
· 3.5% of 2021 calendar year gross earnings paid as a cash payment. The first instalment will be for Jan-Oct 2021 and will be paid following acceptance of the EA by employees. The Nov-Dec component will be paid in the second full pay period after 1 Jan 22.
· 0.7% increase to wages payable from the first full pay period after 1 Jan 22.
· 3.0% or CPI, whichever is greater, increase to wages payable from the first full pay period after 1 Jan 2023.
The timetable set is: Access period will commence on Monday 22 November. Ballot will open on 30 November and close on 2 December.
Mr Jones:Hi Therese – I confirm what you have set out below to be the offer and timetabling for the ballot.
I will provide you with a draft EA on Monday 15/11/2021 – all changes tracked.
Ms Walton: Okay. Thanks.
On 29 November 2021, Ms Walton received a list of claims/concerns from a member of the bargaining committee who was on annual leave at the time the in-principle agreement was reached. Ms Walton prepared a comprehensive response to all of the concerns raised.
In respect of clause 44 of the proposed 2021 Agreement, Ms Walton responded to the concerned member as follows:
“44.2 The cash payments conferred in clause 44.4 were to serve as compensation for not receiving the 2020 increase. The rationale for the increases being arranged, as identified in the proposed EA, was because of concern over the BP contract tender. There was unanimous support by TWU delegates to accept that offer.”
Ms Walton then shared both the list of concerns and her response with the TWU officials involved in the negotiations.
In addition to the documents attached to her statement, Ms Walton stated that she has a very clear recollection of the negotiations and the competing rate claims for the 2021 Agreement. She confirmed that the TWU had raised the CPI increase of 0.7% with Linfox from the commencement of bargaining in the context of ensuring TWU members were remunerated for that missed increase for the 2020 year.
Ms Walton stated that the final agreed remuneration package was considered and recognised by the TWU bargaining committee as incorporating compensation for the CPI increase conferred in clause 44.3 of the 2018 Agreement.
Submissions by the TWU
The TWU does not raise any objection to the submissions made by Linfox in respect of the interpretation of s.218A of the Act and the Commission’s power to amend or vary an enterprise agreement in circumstances where has been an obvious error, defect or irregularity.
The TWU submitted that on the proper interpretation of cl 44.1 of the 2021 Agreement that no such obvious error, defect or irregularity necessarily exists and that the terms of clause 44.1 of the 2021 Agreement properly reflect the agreed outcome between the parties during the course of negotiations.
Evidence of Mr Jones
The TWU noted that Mr Jones’ evidence is that the parties did not expressly discuss the 0.7% CPI increase on the basis that “…the default CPI increase would never be relevant because the 2018 agreement would be replaced and that any ‘gap’ would be addressed in the replacement agreement…”. This proposition was not accepted by the TWU.
The TWU submitted that it participated in negotiations both for the 2021 Agreement and its predecessor agreements. Ms Walton has participated in the negotiations of all the predecessor agreements, excluding the 2007 Agreement.
In respect of the 2021 Agreement, Ms Walton’s evidence is that the TWU log of claims clearly contemplates the 0.7% CPI increase for the 2021 calendar year. Ms Walton had, during the course of the conduct of negotiations, considered the 0.7% CPI increase and pursued a wage outcome that necessarily compensated TWU members for the 0.7% CPI wage increase prescribed in the 2018 Agreement for the 2021 calendar year. At completion of the negotiations, the TWU considered that the final wage outcome set out in the 2021 Agreement was intended to contemplate any increase for the 2021 calendar year and this was expressly set out and discussed between the parties during the course of negotiations for the 2021 Agreement in the period between 12 May 2021 and 12 November 2021.
The TWU then took steps to inform its members and delegates about the wage proposal prior to the agreement being put to a vote.
The TWU stated that it is relevant to clarify that the 0.7% CPI increase was at all times considered by Ms Walton during the course of the negotiations and that it is, and was, the intention of the TWU to ensure that any wage outcome was adjusted to provide for the 0.7% increase.
The TWU does not know what, if any, oral communications took place between Linfox and its employees in respect to the 0.7% CPI increase and the ultimate wage outcome in the 2021 Agreement. Therefore, the TWU is not in a position to contemplate whether it would have been properly understood by all employees engaged by Linfox that the wage outcome at clause 44.1 of the 2021 Agreement was intended to compensate for the CPI increase based solely on any communications Linfox may have had with its employees.
The TWU neither supports or objects to the variation sought by Linfox and is in the hands of the Commission in its determination as to whether any variation or amendment to the 2021 Agreement is necessary to correct any supposed error, defect or irregularity in respect of clause 44.1 of the 2021 Agreement as submitted by Linfox.
EMPLOYEE VIEWS
In consideration of this application, I issued Directions to the parties, requiring Linfox to communicate in writing to each of the employees covered by the 2021 Agreement. I required the employees to be provided with a copy of my Directions, a copy of the application made to the Commission, and any other relevant material.
The Direction invited the employees to correspond to my chambers in the event they wished to provide their views relevant to the application. For employees who did not have an email, such communication was to be placed on the staff notice board in the meal rooms (or another accessible place) with my chambers’ email and telephone contacts.
The employees covered by the Agreement were to provide their views, if any, by 17 February 2023. No views were provided.
The matter was listed for a two-day hearing commencing 3 April 2023. Linfox wrote to my chambers on 14 March 2023 requesting that the matter be determined on the papers. On 15 March 2023, I directed Linfox to forward chamber’s email by 20 March 2023 to all current employees covered by the Agreement, which I invited the employees as follows:
“…If any employees covered by the agreement wishes to be provided with the application, witness statements and submissions of the Applicant or TWU, contact should be made with chambers by emailing… If any employee covered by the Agreement wishes to cross-examine any of the Applicant’s witnesses or those of the TWU, the hearing listed for 3 April 2023 will proceed. In the absence of any request for the hearing to proceed, by no later than 4:00pm (AEST) on Thursday, 23 March 2023, the Commissioner will likely vacate the hearing scheduled for 3 April 2023 and thereafter determine the application on the papers.”
On 20 March 2023, Linfox confirmed that the above email was distributed to employees covered by the 2021 Agreement. The following emails were sent by concerned employees to my chambers:
· Employee 1: “As per the attached email re the Application for variation of the Linfox Australia (Bulk Petroleum) Agreement 2021, I would like to see the application as mentioned. The email says as an employee that I can view it…”
· Employee 2: “Hello I’ve received the email this morning I have not been informed prior to this email on this subject. I would like information and time to go over as subject is new to me and management has not informed employees of case. Thank you.”
· Employee 3: “Hello, I have received email early this morning when going to work, I have not been informed prior to this email in regards to subject, I would like information and time to go over as subject is new to me and management has not informed employees about case.”
· Employee 4: “1st I’ve heard of this work up to this email this morning”
I caused my chambers to send the material directly to each of the employees as requested, and provided them until 23 March 2023 to provide a response, if any.
I raised my concerns with Linfox that based on the four employees’ email, it is unclear as to whether Linfox had complied with the Directions. I requested Linfox provide information as to what action it had taken to comply with the Directions, noting the Directions required the action to be taken by 10 February 2023.
On 22 March 2023, Linfox wrote to my chambers advising that it had taken the following steps to comply with the Directions:
An email was sent to the personal email addresses for all employees covered by the 2021 Agreement on 10 February 2023. Each employee was blind copied into the email and the email was sent to their personal email addresses (being the same email address that their payslips are sent to). Linfox confirmed that the relevant employees do not have a Linfox email address.
Linfox noted that the most recent email sent by it in respect of the application (sent on 19 March 2023) was sent in the same manner with the distribution list updated to reflect changes to the employee cohort.
A toolbox talk also took place with fuel drivers covered by the 2021 Agreement across the various locations (NSW, Victoria and Queensland).
Linfox posted my Directions, the application, the Statement of Mr Jones and the submissions in support of the application on the notice boards in NSW, Victoria and Queensland on or around 10 February 2023.
I am satisfied that based on Linfox’s response, it complied with my Directions in respect to the communication with all employees covered by the 2021 Agreement.
By 23 March 2023, no employees had contacted my chambers with their views. The only views provided by any employee who had been covered by the 2021 Agreement was Mr Taylor, detailed below.
The views of Mr Alan Taylor
Mr Taylor sent the following correspondence on 22 March 2023. It is noted that Minter Ellison is the firm representing Linfox in this application:
“I won't be cross examining anyone. I've invested enough time and effort into this matter over the last couple of years. Besides, there's enough to gather from the Statements of Darren Jones and Therese Walton without the need for cross examination.
The Statements tell of their executive decision to disregard the pay increase of the 2018 Agreement subclause 44.3, which forms the basis of Linfox's 218A Application.
As described by MinterEllison, 'Linfox's position is that clause 44 of the Linfox Australia (Bulk Petroleum) Agreement 2021 (2021 Agreement), properly construed, results in a conclusion that (t)he starting wage rates under the 2021 Agreement were the rates which were actually being paid by Linfox to employees at that time i.e. without the inclusion of the 0.7% CPI increase from 31 December 2020'.
Mr Jones and Ms Walton had no right to decide against honouring the rate increase of subclause 44.3. In doing so, Fair Work Act Section 50 - Contravention of an Enterprise Agreement, was breached.
A breach of FWA S.50 is no basis for a 218A Application. Linfox's 218A Application should be rejected for this reason alone.
Ms Walton makes the claim that contravention of an Enterprise Agreement can be legitimised by becoming customary; 'It has been a common understanding and practice when renegotiating the Linfox fuel Agreements that any increases or cash payments will have retrospective application to the date which is 12 months from the date of the last scheduled rate increase. This negates the contingency payment described in paragraph 6 above and clause 44.3 of the 2018 Agreement."
This claim merely testifies to institutionalised Enterprise Agreement contravention during Ms Walton's reign as lead negotiator.
Mr Jones claims that the intention to replace the Agreement is reason to waive the employee's right to the increase of subclause 44.3. Mr Jones states in point 38 of his statement, 'We proceeded on the basis that the default CPI increase would never be relevant, because the 2018 Agreement would be replaced, and that any 'gap' would be addressed in the replacement agreement – which in fact is exactly what occurred.'
However, subclause 44.3 is totally relevant and makes no provision for intentions.
Note the plain meaning of subclause 44.
Thereafter, if this agreement is not replaced by a new agreement, the wages shall be adjusted each year in line with the CPI movement. These adjustments shall take effect for the first pay period commencing on or after 31 December of each year.
If subclause 44.3 has another meaning, as is claimed by Mr Jones and Ms Walton, subclause 44.3 also needs to be subject to variation via FWA S.218A.
But the way it stands, the plain meaning of subclause 44.3 applies.
Approval of Linfox's 218A Application would be to condone the contravention of subclause 44.3 and as such, the breaching of FWA S.50.
...
MinterEllison go on to say, 'The back-pay amount provided for in clause 44.4 of the 2021 Agreement fully compensated employees who had not received the CPI pay increase for the 2021 calendar year up to the time the 2021 Agreement was made.'
If we are to accept that the one-off payment was backpay for withheld wages, we see a fundamental conceptual flaw in relation to any employees who departed Linfox throughout 2021. That is, those who left after the increase of subclause 44.3 fell due at year's commencement and before the one-off payment was made at year's end.
These employees received neither their workplace right to the Enterprise Agreement prescribed increase, or the payment that was purportedly in lieu of it.
Hence, the approval of Linfox's 218A Application would introduce an irregularity (contrary to the purpose of FWA S.218A, which is to rectify any obvious errors, defects or irregularities).
Furthermore, to approve Linfox's 218A application would be, in regards to employees who left Linfox's employ throughout 2021, endorsement of Wage Theft.
...
Then we come to whether the 'in lieu' aspect of the one-off payment was communicated to employees as required by FWA S.180.
In Point 9 of their submission, the TWU admits that, 'the TWU is not in a position to contemplate whether it would have been properly understood by all employees engaged by Linfox that the wage outcome at clause 44.1 of the 2021 was intended to compensate for the CPI increase based solely on any communications Linfox may have had with its employees'.
The statement of Mr Jones does not directly testify to communication with all employees. Rather, Mr Jones trusts in advice given by his colleague, Mr Byrne, that all employees were advised that the one-off payment was in lieu of the withheld increase:
'I was not directly involved in discussions with employees during the access period leading up to the vote on the 2021 Agreement.
42. However, I am advised by Blake Byrne, Linfox Workplace Relations Manager, and believe to be true that an Excel spreadsheet document attached and marked DJ-3 was made available to Linfox's site managers who distributed it to employees during the access period by displaying it in lunch rooms and notifying employees during toolbox talks that the relevant materials were available for consideration ahead of the employee ballot.'
It would be appropriate in such circumstances for such a claim to be substantiated; firstly, with a statement by Mr Byrne; secondly, by requiring Linfox to produce the email of 22 November 2021 to employees on leave or in remote areas containing the access material.
Failing substantiation that all employees were informed about the Agreement on which they were to vote, the FWA S.188 requirement for the Agreement to be genuinely agreed to was not met.
As such, approval of this 218A Application is to circumvent FWA S.180 & 188.
...
Again, if we are to accept that the one-off payment was backpay for withheld wages, there is a further breach of the Fair Work Act that approval of this 218A Application would condone - Section 343:
'A person must not organise or take, or threaten to organise or take, any action against another person with intent to coerce the other person, or a third person, to:
exercise or not exercise, or propose to exercise or not exercise, a workplace right; or
exercise, or propose to exercise, a workplace right in a particular way.'
There are two counts of coercion.
Firstly, employees were forced to exercise the workplace right of an Enterprise Agreement pay increase in a particular way that differed from the manner prescribed by subclause 44.3. Exercising the workplace right as an increase to pay rates was never an option.
This workplace right (the pay increase) was then held to ransom in order to influence a second workplace right - the vote for the 2021 Enterprise Agreement.
The one-off payment, purportedly in lieu of the subclause 44.3 pay increase, would be made available ONLY if employees 'voted up' the 2021 Agreement. In this way, force was used to persuade employees to vote a particular way.
(Of course, coercion during the vote for the 2021 Agreement gives rise to a second count of the Agreement not being genuinely agreed to as required by FWA S.188.)
...
In all, approval of Linfox's 218A Application would be to endorse breaches of:
- Fair Work Act Section 50 - Contravention of an Enterprise Agreement; namely, the 2018 Agreement subclause 44.3.;
- Fair Work Act Section 180;
- Fair Work Act Section 188; as well as condoning,
- Wage Theft &
- Coercion.
...
Further to the meaning of subclause 44.3, the Statement of Craig Robinson (previously submitted to the FWC) provides evidence of the origins of the passage.
Mr Robinson's time at Linfox predates any involvement by Mr Jones or Ms Walton.
Mr Robinson states the purpose of the passage was to protect employees from delays to pay rate increases.
Mr Robinson tells of when the passage came into effect due to a delay of 16 months from the expiry of an Agreement (less than the 18-month delay from the expiry of the 2018 Agreement to the approval of the 2021 Agreement).
If the FWC were to include evidence to determine the intent behind meaning of subclause 44.3, the Statement of Craig Robinson would be most appropriate.”
In respect of Mr Byrne’s statement, Mr Taylor noted that for seven employees on leave during the access period, they were not provided with the excel spreadsheet detailing the pay increase.
Consideration
What is clear is that as a result of the COVID-19 pandemic, bargaining for a new enterprise agreement between Linfox and the TWU, being the only employee bargaining representative, was interrupted in late 2020 and into 2021.
Despite clause 44.3 of the 2018 Agreement providing for an automatic CPI increase to rates effective from the first full pay period on or after 31 December 2020, this was ignored by Linfox and, it seems, temporarily forgiven by the TWU.
Incredibly, Linfox chose not to meet its obligations in respect of clause 44.3 of the 2018 Agreement at the time that it needed to and throughout 2021. Having regard to the evidence given by Mr Jones, it appears that there was an intention by Linfox to simply make it up to employees in the next bargaining and provide some sort of back payment to employees who were employed at the time a new agreement was made.
Employees employed pursuant to the 2018 Agreement, which was operative right up until 29 December 2021, were denied the increase provided at clause 44.3 of the 2018 Agreement. Any employee who worked in the period from 31 December 2020 and who ceased employment prior to 2 December 2021, when the trigger for the first one-off payment was enlivened, was denied the CPI increase and eligibility for the one-off payment.
Those employees, in my view, would continue to hold a right to seek payment of monies owed to them under the 2018 Agreement and inappropriately withheld from them by Linfox. Any such claim would be exercisable in a relevant court or competent tribunal empowered to determine such matters.
What is clear is that the 2021 Agreement negotiations resulted in the TWU successfully negotiating an attractive back payment of sorts to cover employees employed as of 2 December 2021. The relevant payment to each of those employees was the amount of 3.5% of their individual earnings throughout 2021.
Those employees, through bargaining in late 2021, and when recovery was underway from the pandemic, secured a very beneficial 3.5% back payment instead of the 0.7% increase, stated by the parties to have been the relevant CPI increase relevant to the period in late 2020.
Clearly, the agreement reached between Linfox and the TWU provided an additional benefit for those employees employed on 2 December 2021 and covered by the proposed 2021 Agreement. Ms Walton’s evidence is clear on this matter; the TWU successfully bargained for the back payment to the start of 2021 to be an amount of 3.5%, a better result than the legacy 0.7% increase.
The in-principle agreement was struck by 12 November 2021, as evidenced by Ms Walton’s email to Mr Jones at [102]. Ms Walton repeated the TWU’s position to a concerned member at [104] and to TWU officials. The 3.5% 2021 payment was coined by Ms Walton as ‘compensation’ for not receiving the 2020 increase.
The evidence from Linfox does not declare who from Linfox drafted clause 44 of the 2021 Agreement. Presumably the author of the clause would be familiar with the fact that the actual rates paid to employees are not inserted into the agreement; rather, they are called upon through referencing much earlier agreement rates and factoring generational increases.
The author of the clause failed to have regard to the one year ‘gap’ and the CPI increase benefitting employees on account of the 2018 Agreement not being replaced by 31 December 2020. How that drafting defect could be made is baffling, but then, presumably the same individual(s) have had knowledge that the CPI increase from the first full pay period on or after 31 December 2020 had knowingly been refused to be paid by Linfox to employees entitled to the payment.
On account of Mr Taylor bringing his concern to the Commission, Linfox now seeks the clause to be re-written in the form of an amendment.
The primary position of Linfox at [59] is that it considers the 2021 Agreement reads to the effect that the starting wage rates were the rates which were actually being paid by Linfox to employees at the time, that is, without the inclusion of the 0.7% CPI increase. If Linfox truly believed that is how the clause is to be read, there would be no need to have made this application as there is no obvious error, defect or irregularity (whether in substance or form).
The reason this application has been made is because there is a very large problem for Linfox because the clause does, in fact, read that the CPI increase (which amounts to 0.7%) does form the starting wage for the 2021 Agreement increases to be added. There can be no reasonable denial of that, and it was in the minds and mouths of Linfox and the TWU to ensure that the missed 0.7% payment was at least squared off.
The poor drafting of clause 44 within the 2021 Agreement was not identified until Mr Taylor raised the issue with Linfox.
I am satisfied that the bargain struck between Linfox and the TWU was that the 3.5% 2021 payment compensated employees employed at the time for at least the 0.7% CPI increase they had missed out on. Employees, including Mr Taylor benefitted from the deal struck. The only employees who did not benefit from the deal reached were those employees whose employment with Linfox ended prior to 2 December 2021.
Of course, an agreement is made between an employer and its employees. I am satisfied that the communication to employees, demonstrating their December 2019 pay rates and the proposed December 2021 pay rates provided sufficient information to employees that there was no pay increase relevant to December 2020. The mathematical calculation evidences that.
The employees were informed within clause 44 that they would be entitled to a 3.5% payment against their 2021 earnings, in two tranches. The payment had a direct correlation to Linfox’s failure to have paid any increase to employees in 2021. The fact that the payments would not apply to future employees reinforces that the bargain was struck to compensate employees for having missed out on a 2021 increase.
I am not satisfied that the poor drafting by Linfox constitutes an obvious error. An error is a mistake. An error might typically be a typographical error or an inadvertent slip.
I am not satisfied the drafting by Linfox is an irregularity. It was Linfox’s clause to draft, and it had, it seems, the internal expertise to prepare it for consideration.
Relevant to the three considerations available in s.218A of the Act, that then only leaves ‘defect’ available for consideration. Having satisfied myself that Linfox and the TWU had bargained and reached a strong in-principle agreement to provide the 2021 payments as compensation for the employees having missed out on the 0.7% increase in 2021, I consider that Linfox neglectfully and defectively drafted clause 44 of the 2021 Agreement.
As I have said earlier, the drafter ought to have known the CPI increase within the 2018 Agreement constituted part of the rates within clause 44 of the 2018 Agreement, which then would flow on to the 2021 Agreement at clause 44.1(c). What the author failed to do was to call out the cumulative rates not including clause 44.3 of the 2018 Agreement. It was not an error to fail to do so; it was a defect. It was defective drafting.
In the recent decision of Doctors in Training (Victorian Public Health Sector) (AMA Victoria/ASMOF) (Single Interest Employers) Enterprise Agreement 2022-2026,[13] Deputy President Masson observed as follows:
“[9] It is apparent from the text of s. 218A and the supporting EM that s. 218A is intended to overcome the statutory limitation imposed by s.602 of the Act that was most recently identified by the Full Bench in Advantaged Care Pty Ltd v Health Services Union (Advantaged Care). In that decision the Full Bench confirmed that the Commission could not amend the text of an agreement to correct an obvious error, defect or irregularity pursuant to s.602 of the Act and that other provisions within the Act, ss.201 or 217, might be used to rectify such error, defect or irregularity.
[10] There are limitations to the use of ss. 210 and 217 of the Act in varying an agreement to address an obvious error, defect or irregularity. For example, it may be considered costly and impractical to conduct a ballot of employees for the purpose of obtaining approval for the variation of an agreement pursuant to s. 210 of the Act, where the variation sought is not substantive. Section 217 might also not be amenable to correcting an obvious error, defect or irregularity where the error does not create uncertainty or ambiguity. It is accepted that s. 218A confers an additional discretion for the Commission to amend an error, defect, or irregularity in an agreement, be that in form or substance.” (footnotes omitted).
To cure the defect, I am satisfied it is necessary to exercise my discretion to insert “excluding clause 44.3” at the end of clause 44.1(c). The effect of this is that the starting rate for the 2021 Agreement will not include the CPI increase contained within the 2018 Agreement at clause 44.3. I am satisfied that the bargain reached with the TWU and more importantly, with the employees when the 2021 Agreement was made included appropriate compensation for the CPI increase missed out on by employees by Linfox’s failure to make the payment.
I am not, however, satisfied that it is necessary or appropriate to insert the following clause into the one-off payment clause within the 2021 Agreement:
“These payments compensate employees for and are paid in satisfaction of any pay rise otherwise payable to them but unpaid in respect of the period from 1 January 2021 to 31 December 2021 (including under the predecessor enterprise agreement) and any such pay rise is absorbed in full into these payments.”
The potential exposure Linfox has in respect of not meeting its obligations within the 2018 Agreement cannot be attempted to be removed or reduced by any wording now introduced into the 2021 Agreement by way of amendment or variation. If former or existing employees who were covered by the 2018 Agreement seek redress in respect of Linfox’s failure to make the payment at clause 44.3 of the 2018 Agreement, reliance cannot be made on any words inserted into the 2021 Agreement. In my view, there are no words or clauses within the 2021 Agreement which can protect Linfox in respect of its failure to meet its obligations under the 2018 Agreement, and it would be inappropriate to attempt to do so.
If it is a matter to be argued in equity that Linfox ultimately paid a 3.5% increase to employees who would otherwise only be entitled to a 0.7% increase under the 2018 Agreement, that is a matter that could be considered in a relevant court or tribunal at that time.
I consider it appropriate for the variation to clause 44.1(c) to take effect from the date the 2021 Agreement became operative, being 30 December 2021.
An order reflecting my decision will be published.
COMMISSIONER
[1] Application by Linfox Australia Pty Ltd [2021] FWCA 7295.
[2] Application by Victorian Hospitals’ Industrial Association (289V) [2022] FWCA 4390, [9]-[10].
[3] Application by Workzone Traffic Control Pty Ltd [2022] FWC 3357, [15].
[4] BMA Enterprise Agreement 2022 [2023] FWCA 115, [5], referencing Snyder v Helena College Council Inc T/A Helena College[2019] FWCFB 8340, [8].
[5] [2000] NSWSC 232.
[6] Aged Care Award 2010 [2022] FWCFB 154, [4].
[7] Macquarie Dictionary Online, definition of “error”.
[8] Macquarie Dictionary Online, definition of “defect”.
[9] Ibid.
[10] [2022] FWCA 4390, [13].
[11] [2023] FWCA 155, [15].
[12] [2023] FWCA 77, [8].
[13] [2022] FWCA 4390.
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