Maritime Union of Australia, The

[2013] FWC 5453

[2013] FWC 5453 Note: An appeal pursuant to s.604 (C2013/6071) was lodged against this decision - refer to Full Bench decision dated 23 December 2013 for result of appeal.

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Maritime Union of Australia, The
(C2012/5044)

DP WORLD BRISBANE ENTERPRISE AGREEMENT 2011

Stevedoring industry
COMMISSIONER BOOTH	BRISBANE, 27 AUGUST 2013

Dispute relates to clause 26 - consolidated allowance.

[1] The Maritime Union of Australia (MUA) brought an application under s. 739 of the Fair Work Act 2009 (Act) to deal with the dispute under an enterprise agreement. DP World Brisbane Pty Ltd (DP World) is the DP World.

[2] The dispute concerns the payment of the consolidated allowance that was provided for under the DP World Brisbane Workplace Agreement 2008 1 (the 2008 Agreement), now replaced by the DP World Brisbane Enterprise Agreement 20112 (the 2011 Agreement).

Issue

[3] The issue in dispute is the entitlement of Supplementary Employees to payment of the consolidated allowance for the period from 1 July 2011, the nominal expiry date of the 2008 agreement, to 23 May 2012, the commencement of 2011 agreement (dispute period).

[4] The consolidated allowance was an allowance of $31.75 payable each shift, under clause 2.10 Part B of the 2008 Agreement, to three classes of employees, Variable Salary Employees, Guaranteed Wage Earners and Supplementary Employees. It was abolished in 2011 Agreement for Supplementary Employees, and the casual loading increased from 20% to 25%. Clause 26 of the 2011 Agreement sets out the entitlements of Supplementary Employees as follows:

26.2.2 Supplementaries shall be entitled to an hourly rate equivalent to 1/35th of the weekly rate as specified in clause 11.0 plus a loading of 25%, shift and holiday premiums, overtime, casual engagement and meal allowances where applicable in accordance with the Stevedoring Award. Supplementary Employees are not entitled to receive the consolidated allowance.

[5] The pay rates expressed in clause 11 are stated as “Weekly rate from first full pay period on or after 1 July 2011” and annually adjusted thereafter from 1 July 2012 and 2013.

Allowances (where they are payable) are expressed to commence from “First full pay period on or after the commencement of this Agreement” and thereafter adjusted annually on 1 July 2012 and 2013.

[6] The parties’ agreed positions are as follows for the dispute period:

MUA	DP World
Salaries (parties are in agreement)	as per 2011 agreement, backdated to 1 July 2011 in accordance with clause 11.2
Consolidated allowance	Pay as per 2008 Agreement	Not paid as per 2011 Agreement
Casual loading	20% (2008)	25% (2011)

[7] In essence, the MUA says that the changes to salaries commenced on 1 July 2011 but the casual loading and consolidated allowance changes commenced on 23 May 2012 in accordance with the words of the 2011 Agreement, while DP World says that the intention of the bargaining parties was for all three elements (the new salaries, the increased casual loading and cessation of the consolidated allowance) to commence from the "back pay" date, 1 July 2011.

Jurisdictional issues

[8] DP World argues that the Fair Work Commission (the Commission) has no jurisdiction to hear this dispute.

(a) No issue in dispute

[9] First, DP World says that the MUA through its Assistant National Secretary, Warren Smith, under cross-examination accepted DP World’s position and there is therefore no dispute. The passage called in aid by the DP World is as follows:

So that employees would be put - insofar as their earnings were concerned - in the position they would have been had the agreement commenced on 1 July 2011? ---That's correct. 3

[10] Then followed this exchange:

That was the union's position?---That was the company's position too.

And that is the union's position now? ---Quite clearly the union's position is we object to the way that the consolidated allowance was removed and the 25 per cent applied, knowing full well that it would be a reduction in earnings for supplementary employees, and yet back-pay on that reduction, which was never to apply retrospectively. 4

[11] The following exchange took place under re-examination:

MR QUINN: Mr Smith, my friend asked you a series of questions relating to the changes in earnings sought by the union in the negotiations. The question was asked in different ways, but as I understand your answers, you gave two forms of answers: that all earnings were intended to have a retrospective application back to 1 July 2011; and secondly that there was no intention to be backdating of the issues concerning the consolidated allowance or casual loading. Is that correct? ---That's correct, along with the rest of the other issues that were negotiated and were not retrospectively applied either. 5

[12] The MUA in final submissions in reply say of Mr Smith’s evidence:

… he consistently identified throughout his evidence the two issues that remain the core of the dispute – that there was never any position put by any negotiating party that the consolidated allowance and casual loading changes would be backdated to 1 July 2011 and the 2011 Agreement provides no basis for a retrospective application of those changes. 6

[13] I do not accept the first jurisdictional objection: there is clearly a matter in dispute between the parties about the treatment of the consolidated allowance and the casual loading during the dispute period for Supplementary Employees, and that was not conceded by Mr Smith under cross-examination.

(b) Dispute not about 2011 Agreement

[14] Second, DP World claims that the dispute does not fall within the ambit of arbitration under s.739 because it is not one under the 2011 Agreement, but under the 2008 Agreement that “cannot be raised by this application”. While the position is not explained, it seems DP World argues that the 2008 Agreement cannot be arbitrated because it has been replaced and it therefore cannot include a dispute resolution term for s.738 of the Act.

[15] Sections 738 and 739 are in Div. 2 of Pt. 6-2 of the Act, headed “Dealing with disputes”, and provide as follows:

738 Application of this Division

This Division applies if …

(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); ….

739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute. ….

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.

[16] The 2011 Agreement provides for dispute resolution relevantly in Clause 24:

24.0 DISPUTE RESOLUTION

In the event of a dispute arising in the workplace in regard to the application of this Agreement or the National Employment Standards (other than under s65(5) and 76(4) of the Act), the procedure to be followed to resolve the matter shall be as follows:

24.1 The parties shall attempt to resolve the matter at the workplace level including but not limited to.

24.1.1 The Employee, the Employee's delegate (if requested), and his or her supervisor, meeting and conferring on the matter; and

(a) If the matter is not resolved at such meeting, the parties arranging further discussions involving more senior levels of management, Employee Representatives and Union officials (as appropriate).

(b) If the matter is not resolved at such a meeting the parties arranging further discussions involving more senior levels of management (as appropriate).

(c) If the matter cannot be resolved at workplace level, the matter may be referred by either party to National level for discussion between the parties, after which time either party may refer the matter to FWA for conciliation.

(d) If the matter is referred for conciliation, both parties will participate in the process in good faith.

(e) Where the dispute has not been resolved despite the foregoing procedures being followed and subject to there being no stoppage of work in relation to the issue at hand, either party may refer the matter to FWA for arbitration if necessary in which case the decision will be accepted by the parties subject to any appeal rights.

(f) During the time when the parties attempt to resolve the matter, either at the workplace level, or through conciliation or arbitration, the parties shall continue to work in accordance with their contract of employment.

24.1.2 The parties must co-operate to ensure that the dispute resolution procedures are carried out as quickly as is reasonably possible.

[17] This Clause conforms with s.739(1). The application, brought by the MUA as a party to a workplace dispute, conforms with s.739(6). It has not been argued, and it is clear that resolution of the dispute would not require, a decision inconsistent with s.739(5), (jurisdictional contests aside).

[18] The Statement of Facts and Issues agreed by the parties and tendered on 9 July 2013 states the issue in dispute as follows:

11. The Union says that the intentions of the parties, and the correct construction of the 2011 Agreement, were that changes to salary commenced on 1 July 2011 but casual loading and consolidated allowance changes commenced on 23 May 2012 in accordance with the words of the agreement.

12. DPW says that the intention of the parties, and the correct construction of the 2011 Agreement, was for all three elements to commence from the "back pay" date (1 July 2011): salaries, the increased casual loading and cessation of the consolidated allowance.

[19] The issue in dispute is contained entirely in the 2011 Agreement. It is true that if the MUA’s position is correct, calculating any amounts payable to individual employees will be done by reference to both the 2008 Agreement and the 2011 Agreement. However, the calculation of individual entitlements (if any) is not before the Commission and would be a matter for the parties.

[20] I am satisfied the application is within the private arbitration power of the Commission because it is a dispute about the 2011 Agreement and invokes Clause 24 of that Agreement.

(c) Impermissible exercise of judicial power

[21] The DP World argues that the Commission cannot “make an order for payment of money or to declare and enforce the legal rights of the parties”, that being a function of courts, and not within the power of the Fair Work Commission, an entity that cannot constitutionally exercise judicial power.

[22] The judicial-arbitral question has a large and complicated jurisprudence which I reviewed recently in MUA v Bechtel Construction (Australia) Pty Ltd 7. Permission to appeal was refused: Bechtel Construction (Australia) Pty Ltd v MUA8. A decade ago, a Full Bench of Ross VP, SDP Watson and Grainger C considered this issue under the Workplace Relations Act 1996 in Police and Nurses Credit Society Limited re Finance Sector Union of Australia v Police and Nurses Credit Society Limited9.

[23] I will not repeat the legal analysis here, but it is clear to me that this dispute is not a prohibited exercise of judicial power, but arbitration of a dispute about an enterprise agreement. The issue is not one of declaring or enforcing the rights and obligations of the parties, a matter that rightly belongs in a court. No order I make would “determine what amounts of back pay are to be provided to employees” as argued by the DP World.

[24] At the heart of this dispute is the fact that the parties had not explicitly turned their minds to the proper treatment of the consolidated allowance during the dispute period. Resolution of the dispute will ascertain and declare (but not enforce) what ought to be the respective rights and liabilities of the parties in relation to each other, in my opinion as arbitrator: compare Isaacs and Rich JJ in Waterside Workers’ Federation of Australia v J.W. Alexander Limited. 10

[25] I do not accept the DP World’s objection asserting that the dispute involves improper exercise of judicial power.

Evidence

[26] DP World’s lead negotiator for the 2011 Agreement was Mark Hulme, who gave evidence by way of statement and orally. The MUA’s evidence comprised two statements of Warren Smith and a statement each by John Coutts and Trevor Munday. An agreed statement of facts and issues, a table showing calculations and the Form F17 seeking approval of the 2011 Agreement were tendered. Oral evidence was also given by Messrs Munday and Smith.

[27] There is general agreement about the nature and progress of negotiations for the 2011 Agreement, including agreement that timing issues about the consolidated allowance and casual loading were not specifically discussed. DP World’s final submissions summarise it thus:

The parties did not discuss the timing of the implementation of the other changes for the supplementary employees… In relation to the changes to the consolidated allowance and the casual loading, there was no specific discussion or agreement about timing.

[28] Mr Smith for the MUA stated that:

“at no stage was there any discussion regarding the methodology to be applied to the reduction of the supplementary allowance other than applicability of back pay being effective from 1 July 2011.”

[29] DP World argues that the Commission should “seek to identify the real mutual intention of parties”, and then submits:

the mutual intention of the parties was that the payment would be calculated on the basis that employees receive an amount that would put them in the same position they would have been had the 2011 Agreement commenced operation on 1 July 2011.

[30] Further, DP World submits that its position is supported by past practice and that the consolidated allowance and casual loading should in any case be treated as part and parcel of wages, so that retrospectivity should be applied to all elements of earnings.

[31] The MUA notes there are four classes of clauses in the 2011 Agreement by date of commencement, summarised as follows:

1. Retrospective commencement	2. Commencement from approval date	3. Specified future date of operation	4. No specified date of operation
Before 23 May 2012	from 23 May 2012	Specified date after 23 May 2012	--
e.g. clause 11.2	e.g. clauses 11.5.1 11.5.2	e.g. clauses 10.5.2, 11.2 and 11.5.1	e.g. clauses 4.1, 5.1, 5.2, 8.8, 8.16.1, 11.4 and 12.5

[32] The MUA points out that various clauses under column 4 establish new or improved conditions and there is no evidence of intent for them to apply prior to commencement. The MUA argues that clauses in this category all operate from commencement, namely 23 May 2012. As to intent, the MUA argues as follows in its final submissions in reply:

25. In any event, the relevant "real mutual intention" must assess the "real" intention of the employees who are party to the agreement. The only evidence available to identify what intention could possibly be ascribed to the employees is:

(a) the documents supplied to them to explain the proposed Agreement, most particularly that supplied by the DP World which, as discussed in the MUA's previous submissions and not disputed by the DP World, unequivocally identified the application of the consolidated allowance and casual loading changes would be prospective;

(b) the evidence of Mr Coutts that when the question of the possibility of retrospectivity was raised in the meeting of employees to vote on approving the Agreement, they were informed that was not possible under the Agreement as negotiated.

[33] The brief explanation of the relevant clause was attached to the Form F17, the Employer’s declaration in support of the 2011 Agreement, tendered at the hearing. In relation to Clause 26, that document says that the clause:

● Sets out the terms on which a supplementary employees engaged, including supplementary employees:

● shall not be placed on roster panels and will work on an irregular basis.

● who have worked for more than 12 months and has earnings for the previous 12 months exceed the minimum VSE guarantee, will be appointed to the position of VSE, subject to their performance.

● will be engaged as Grade 2 employees.

● will receive a 25% loading (this is an increase from 20% under the 2008 Agreement).

● are not entitled to receive the Consolidated Allowance. This is a new provision.

● The Company will consult with the MUA and the Site Committee prior to any recruitment of supplementary employees.

[34] The same document in explaining rates of pay specifies the applicable date, including the retrospective commencement from 1 July 2011, and provision for trainers and meal allowances (with no date specified), but makes no other mention of the consolidated allowance.

[35] The MUA argues that DP World's position would operate to the detriment of employees:

32. Finally, as a matter of equity, consistency and clarity, the DP World's proposed approach leaves no room for consideration of the understanding of the employees who are party to the Agreement, who voted on the Agreement relying upon the material supplied by the DP World explaining the effects of the Agreement and who were never told that if they approved the Agreement they would be agreeing to their pay being retrospectively reduced for every day shift and every evening shift that they worked from July 2011 to May 2012 and that money previously paid to them for each and every one of those shifts would be taken away.

Consideration

[36] If one was restricted to the words of the 2011 Agreement itself, the position proposed by the MUA appears to be the only reading open. That is, in the absence of an express date or reference to an event, or explicit integration of the wages with the loading and allowance, a provision in the 2011 Agreement takes effect from the commencement of the Agreement.

[37] There is no basis on the evidence before me to conclude a mutual intention as argued by DP World whether in the Agreement itself, the documents tendered, or other evidence before the Commission.

[38] In the absence of other evidence, it is reasonable to conclude that changes to the increase in the casual loading and the abolition of the consolidated allowance take effect from commencement of the Agreement. These elements are not integrated with wages on the evidence before the Commission, and accordingly there is no other date from which one might otherwise rationally commence the changes. This view is fortified by the evidence that the changes operate to the detriment of the employees and several other non-salary related benefits that might off-set the detriment also fall into the same category of clauses. Further, other allowances expressly commence from the date of commencement.

[39] I find that Supplementary Employees are entitled to payment of the consolidated allowance and a 20% casual loading during the dispute period. It is a matter for the parties to ascertain the implications for individual employees. Orders will issue accordingly.

COMMISSIONER

Appearances:

D Quinn, Carne Reidy Herd Lawyers on behalf of The Maritime Union of Australia.

D Perry, Minter Ellison on behalf of DP World.

Hearing details:

2013.

Brisbane:

9 July.

Final written submissions:

The Maritime Union of Australia, 16 July 2013 and 19 July 2013.

DP World, 18 July 2013.

 1   AC320024

 2   AE894187

 3   Transcript dated 9 July 2013 at PN416.

 4   Transcript dated 9 July 2013 at PN417 to PN418.

 5   Transcript dated 9 July 2013 at PN424.

 6   MUA’s final submissions of 19/7/13 at paragraph 3.

 7   [2013] FWC 2039

 8   [2013] FWCFB 4250

 9   [2003] AIRC 1340

 10 [1918] HCA 56; (1918) 25 CLR 434, 463

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