Mellor v Jet Aviation Australia (Qld) Pty Ltd
[2024] FWC 3209
•20 NOVEMBER 2024
| [2024] FWC 3209 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
Mellor and Others
v
Jet Aviation Australia (Qld) Pty Ltd
(C2024/5284, C2024/5334, C2024/5360, C2024/5509, C2024/5579 & C2024/5697)
| COMMISSIONER SIMPSON | BRISBANE, 20 NOVEMBER 2024 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] – Enterprise Agreement ambiguous – Common intention
Between 5 August 2024 and 19 August 2024, Mrs Selena Mellor, Mr Paul Gilbert, Mr Joshua Burnham, Mr Troy Curtis, Mr George Lindsay-Smith and Mr Scott Patterson (collectively, the Applicants) made applications to the Fair Work Commission (the Commission) under s.739 of the Fair Work Act 2009 (Cth) (the Act) to deal with a dispute. Jet Aviation Australia (Qld) Pty Ltd is the Respondent in the matter (the Respondent).
The matter was listed for a private conference on 20 August 2024. The matter did not resolve at conference and the parties agreed for the Commission to move to the arbitration stage of the Dispute Resolution Procedure.
Directions were issued for the filing of evidence and submissions, and the matter was listed for hearing before me on Friday 4 October 2024.
The Applicants relied on their Outline of Submissions filed on 10 September 2024, their Outline of Submissions in Reply filed on 23 September 2024 and closing oral submissions. The Respondent relied on its Outline of Submissions and Witness Statement of Ms Fiona Hoffman filed on 17 September 2024 and its closing oral submissions. Following the hearing on 4 October 2024, I requested further material in relation to the third question for arbitration. The Respondent filed a further submission and statement on 11 October 2024 and the Applicant filed a further submission on 17 October 2024. No party requested a further hearing and I am satisfied it is appropriate to proceed to determine the dispute on the material now before the Commission.
The Applicants are self-represented. At the Hearing, Ms Mellor, Mr Gilbert, Mr Curtis and Mr Patterson appeared. The Respondent was represented by Ms Katie Sweatman of Kingston Reid Solicitors. Legal representation was granted on the basis that I was satisfied that it would enable the matter to be dealt with more efficiently, taking into account the complexity of the matter which involved the interpretation of an industrial instrument and the legal principles relevant to interpreting agreements.
The initial witness statement filed for the Respondent was that of Ms Fiona Hoffman, the Vice President Regional Human Resources at Jet Aviation Australia, a related entity of the Respondent. After some discussion at the hearing about the content of Ms Hoffman’s statement it was agreed that her statement[1] could come into evidence without the Applicants cross examining her.
The further statement filed on 11 October 2024 for the Respondent was from Mr Stephen Metcalfe, Director of Component Services, who provided some further background information concerning the third question for arbitration. Whilst the Applicants’ further submission of 17 October 2024 sets out the Applicants’ disagreement with Mr Metcalfe’s interpretation of the expressions “component types” and “types of release”, the Applicants did not otherwise dispute the factual content of the statement and on that basis I have concluded I can have regard to its contents and have determined it is unnecessary to list a further hearing.
The Dispute and Background
The current dispute arises under clause 14.4.1 of the Jet Aviation Component Services Enterprise Agreement 2022-2024 (the JA Agreement). The Agreement covers the employees of the Respondent employed within the Respondent’s Component Services facilities in the classifications set out in Schedule A of the Agreement. There is no issue about whether the Applicants are covered by the Agreement. The Agreement commenced on 6 December 2022 and reached its nominal expiry date on 31 March 2024. The bargaining is currently ongoing for a replacement agreement.
Clause 14.4.1 in the Agreement provided the employees’ allowances entitlements. The relevant items in the current dispute are ARC Payment 1 and ARC Payment 2, as follows:
| All purpose allowance | 2022 increase by 6% | 2023 increase by 4% | ||
| Hourly rate | Weekly rate | Hourly rate | Weekly rate | |
| [Other allowances not relevant to the dispute not replicated] | ||||
| ARC Payment 1 | $0.74388 | $28.27 | $0.77364 | $29.40 |
| ARC Payment 2 | $1.48747 | $56.53 | $1.54697 | $58.79 |
On 25 July 2022, Mr Lindsay-Smith received an additional payment to his base hourly rate, and it was referred to as the ARC 2 payment allowance. The Respondent told Mr Lindsay-Smith he would receive this additional payment in lieu of receiving an increase to his hourly rate of pay.
On 1 January 2024, Mr Gilbert, Ms Mellor, and Mr Curtis received an additional payment to their base hourly rate. This payment was referred to as the ARC payment allowance. The Respondent advised that the purpose of the allowance was to hold these employees accountable and minimise mistakes.
Mr Burnham was classified at level QM 4 and then QM 5 when he received ARC payment allowance in addition to his hourly rate of pay. The Respondent’s evidence is the payment allowance continued when he progressed to level QM 6 by way of error.
Mr Patterson commenced his employment at QM 5 because he did not hold an authorised release certificate (ARC). He was then reclassified to level QM 6 on 1 April 2024 because of his prior experience and good performance. Mr Patterson is not being paid an ARC payment allowance in addition to his hourly rate of pay. Mr Patterson attained his ARC on 29 May 2024.
The Applicants made an application to the Commission pursuant to clause 11 of the JA Agreement seeking assistance resolving the dispute about the ARC payments.
Parties consent to the Commission arbitrating the dispute. The parties filed an Agreed Statement of Facts, and Questions for arbitration as set out below:
“…
Statement of Agreed Facts and Agreed Questions for Arbitration
1 Introduction
1.1The Applicants have notified a dispute under clause 11 of the Jet Aviation Component Services Enterprise Agreement 2022 - 2024 (JA Agreement), in respect of which the Commission issued Directions for the determination of that dispute on 20 August 2024.
1.2Pursuant to item 1 of those Directions, this statement of agreed facts is made jointly by the Applicants and the Respondent and covers the following matters:
a) The enterprise agreement that is relevant to the matters in dispute and to the Applicants’ employment with the Respondent.
b) The relevant details regarding each of the Applicants’ employment with the Respondent;
c) The history of the ARC payment 1 and 2 in the Respondent’s enterprise agreements;
d) The payments that have been made to the Applicants; and
e) The dispute resolution process followed by the parties.
2 Agreed questions for arbitration
2.1 The parties agree the questions the Fair Work Commission is required to determine are as follows:
1.When is an ARC Payment Allowance “relevant” to an individual employee for the purposes of clause 14.4.1 of the JA Agreement and therefore required to be paid to an employee?
2.Are ARC payment allowances in the JA Agreement required to be paid in addition to the base hourly rate of pay for employees classified at QM Grade 6 and above?
3.When an ARC Payment allowance is required to be paid to an individual in accordance with the JA Agreement:
(a) to which employees is an ARC Payment 1 payable; and define the allowance criteria?
(b) to which employees is an ARC Payment 2 payable; and define the allowance criteria
3 The enterprise agreement
3.1 The JA Agreement is a single enterprise agreement that has applied to the Applicants’ employment with the Respondent since it commenced operation on 6 December 2022.
3.2 The JA Agreement reached its nominal expiry date on 31 March 2024 and bargaining is currently ongoing for a replacement agreement.
4 History of the ARC Payments
4.1 The JA Agreement, 2020 Agreement and 2017 Agreement each contain the ARC payment 1 and ARC payment 2 allowances.
4.2 The ARC payments are in clause 14.4.1 of the JA Agreement and appear as follows:
14.4 Allowances
14.4.1 The following standard allowances apply in respect of classifications under this Enterprise Agreement. These allowances are paid in addition to the base rate of pay where relevant to the individual employee.
Allowances will be increased annually as per the increases set out in the below tables from the first pay period commencing on or after 1 April of the relevant year.
All purpose allowance
2022 increase by 6%
2023 increase by 4%
Hourly rate
Weekly rate
Hourly rate
Weekly rate
[Other allowances not relevant to the dispute not replicated]
ARC Payment 1
$0.74388
$28.27
$0.77364
$29.40
ARC Payment 2
$1.48747
$56.53
$1.54697
$58.79
5 Payments to the Applicants
5.1 On 25 July 2022, the Respondent commenced paying Mr Lindsay-Smith an additional payment to his base hourly rate of pay and referred to this as the ARC 2 payment allowance. The Respondent told Mr Lindsay-Smith he would receive this additional payment in lieu of receiving an increase to his hourly rate of pay.
5.2 On 1 January 2024, the Respondent commenced paying Mr Gilbert, Ms Mellor, and Mr Curtis an additional payment to their base hourly rate of pay and referred to this as the ARC payment allowance. The Respondent advised that the purpose of the allowance was to hold these employees accountable and minimise mistakes.
5.3 Mr Burnham was previously classified at a level QM 4 and then QM 5 and was paid an ARC payment allowance in addition to his hourly rate of pay. The payment of an ARC payment allowance in addition to Mr Burnham’s base hourly rate of pay continued when he progressed to a level QM 6.
5.4 Mr Patterson was classified as a level QM 5 at the commencement of his employment because he did not hold an authorised release certificate (ARC). The Respondent reclassified Mr Patterson as a level QM 6 on 1 April 2024, notwithstanding that he did not hold his ARC at this time, as a way of giving Mr Patterson a pay rise having regard to his prior experience and good performance. Mr Patterson attained his ARC on 29 May 2024. Mr Patterson is not currently being paid an ARC payment allowance in addition to his hourly rate of pay.
6 Dispute resolution processes
6.1 The Applicants raised their concerns about the payment of the ARC payment allowance with the Respondent in or around May 2024.
6.2 There have been discussions between the parties since the concerns were raised by the Applicants, however, the parties have been unable to resolve the dispute at the workplace level.
6.3 Each of the Applicants made an application to the Fair Work Commission pursuant to the dispute resolution clause in the JA Agreement for assistance resolving the dispute about the ARC payments.
6.4 The parties consent to the Commission arbitrating the dispute.”
Submissions and Evidence
The Applicants, in their application, indicated there is no definition in terms of ARC Payment Allowance 1 and 2 and seeks for the definitions to be added in. They contend that the Respondent is uncertain about what the requirements of ARC payment allowance are and argue that they are entitled to ARC Payment Allowance 2.
The Respondent, in its response to the application, agrees to the extent that there is ambiguity regarding when the ARC payments are payable to employees. However, the Respondent disagrees that the Applicants are entitled to ARC Payment in addition to their base rate of pay.
The Respondent referred to the previous Jet Aviation enterprise agreements, with the ARC payments allowance first introduced in the Hawker Pacific Pty Ltd Component Services Enterprise Agreement 2017-2020 (2017 Agreement). They indicate the ARC Payments have been included in identical terms in three successive enterprise agreements. They referred to the bargaining for the 2017 Agreement to demonstrate that the ARC payments would only be payable to employees classified at a Grade QM 5 and below and conclude that Grade 6, 7, and 8 employees would receive a higher hourly rate of pay that incorporates ARC payments.
The Respondent includes its calculation in the hourly rate of pay and argues that the increase from a QM Grade 5 to QM Grade 6 has an increase of 5 percent due to the incorporation of the ARC payment into the Grade 6 hourly rate of pay. Therefore, ARC Payments are only ‘relevant to’ the employees classified between a Class TA3 and QM Grade 5.
On 20 August 2024, the Applicants, in submissions in response to the Respondent’s claims, argued the ARC payment allowance is an entitlement to any employee who has Release Note Signatory Authority, and there is inconsistency in the Respondent’s response. The Applicants say there are employees on QM level 6 or above who have been receiving the allowance since 1 January 2024.
Furthermore, the Applicants contend that instead of a larger increase from hourly rate of pay for QM Grade 5 and 6, they reduced the allowance in QM 4 and QM 5. With an employee who moves up from QM 5 to QM 6, they will lose their ARC allowance and will earn 0.35c per hour more. This is an increase of 1 percent, not 5 percent as argued by the Respondent.
As outlined in the Applicants’ submission on 10 September 2024, the Applicant submits that the two items in the dispute are in the single table along with other allowances and they should be treated in the same manner as the other allowances. If an employee performs the duty, they should receive the paid allowance.
The Applicants contend the Agreement requires a definition regarding ARC Payment 1 and ARC Payment 2 to be added to table 14.4.3 of the Agreement. Table 14.4.3 provides the definition of the allowance.
On 17 September 2024, the Respondent submitted that Clause 14.4.1 of the Agreement provides the entitlement to employees ‘where relevant to the individual employee’. Similar with the submission made on 19 August 2024, they referred to the 2017 Agreement, and the bargaining process for the 2017 Agreement to interpret the ‘relevant’ employee as the employees classified below a QM Level 6.
The Respondent referred to the decision of Gray J in terms of the concept of ambiguity in Printing & Kindred Industries Union v Davis Bros Ltd (1986) 18 IR 444 at [449] and Cannon Hill Services Pty Ltd v Australasian Meat Industry Employees Union[2016] FWC 7256 at [8] and submits that the ambiguity exists when a provision in an enterprise agreement is capable of more than one meaning and the ambiguity may be apparent on the face of the document or may become apparent only when extrinsic evidence is adduced.
The Respondent submits that the Commission can consider the evidence of surrounding circumstances to aid the interpretation of the clause and establish the objective facts known to the parties in interpreting the ambiguity of the clause. They contend that clause 14.4.1 should be interpreted such that the ARC payments are only “relevant to” the employees classified between a Class TA3 and QM Grade 5 in the Agreement.
On 23 September 2024, the Applicants provided a submission in reply setting out that there is no ambiguity as the allowances in dispute are in a single table along with the other standard allowances and contend that ARC Payment 1 & 2 allowances are relevant to all employees that sign Authorised Release Certificates under the Agreement clause 14.4.1.
The Applicants submit that the historical documents, draft enterprise agreements and emails should not be considered because the 2017 Agreement’s negotiations were concluded, and the Agreement was signed by all parties and approved by the Commission.
The Applicants submit that the Respondent is misleading and incorrect in indicating that there is a larger ‘jump’ from QM 5 to QM 6.
In conclusion, the Applicants submitted that all employees who hold Release Note Signatory Authority are entitled to receive the ARC payments under cl 14.4.1 of the JA Agreement in addition to their base hourly rate of pay. All employees who hold Release Note Signatory authority are entitled under the JA Agreement to be paid ARC Payment 1 when they perform up to three types of release and ARC Payment 2 when they perform four or more types of release.
The Applicants submit they have been underpaid by not receiving ARC allowances additional to their base rate and should be back paid from when ARC Payment 1 or ARC Payment 2 allowances were relevant to each employee.
Ms Hoffman’s statement that was admitted into evidence said each of the Applicants is classified at QM 6 or higher under the JA Agreement.
Ms Hoffman said prior to the JA Agreement the following single enterprise agreements applied to the Applicants’ employment:
(a)Hawker Pacific Pty Ltd Component Services Enterprise Agreement 2020 – 2022 (2020 Agreement) which commenced operation on 29 May 2020;
(b)Hawker Pacific Pty Ltd Component Services Enterprise Agreement 2017 – 2020 (2017 Agreement) which commenced operation on 9 August 2018;
(c)Hawker Pacific Pty Ltd Component Services Coopers Plains Enterprise Agreement 2014/2015 (2014 Agreement) which commenced operation on 4 April 2014.
Ms Hoffman said the Respondent was first made aware of the dispute about the ARC payments in the JA Agreement in May 2024. The Applicants did submit that they had raised the issue of how eligibility for ARC payments was determined before this time.
Ms Hoffman said she had reviewed the meeting minutes from bargaining meetings and understands that the dispute was raised by the employee bargaining representatives because the JA Agreement does not contain an explanation of the ARC Payments and to what grades they apply.
Ms Hoffman said the ARC payments are intended to compensate employees for holding an Authorised Release Certificate and being required to perform certifications for release of service, in line with relevant requirements of the National Aviation Authority and the Respondent’s internal processes.
Ms Hoffman said the Component Services classification structure in Schedule A of the JA Agreement states “must hold ARC” for an employee to be classified as a QM Level 6.
Ms Hoffman said as holding an ARC is a mandatory requirement for employees classified at QM Grade 6 and above under the JA Agreement, Jet Aviation incorporates the ARC Payments in clause 14.4.1 into the base hourly rate of pay for QM Grade 6 and above.
Ms Hoffman said the ARC Payments are payable in addition to an employee’s base rate of pay for QM Grade 5 and below when these employees are required to perform release duties, as these employees do not hold an ARC and performing release duties is not otherwise a requirement of their role for which they are compensated.
Ms Hoffman said the incorporation of the ARC Payments into the hourly rate for Grade 6 and above is the reason for there being a larger increase from the hourly rate of pay for QM Grade 5 to QM Grade 6 than there is relative to the increase between the other QM levels. There is a 5 percent jump in the pay rate for a QM Grade 5 to QM Grade 6 employee, due to the incorporation of the ARC Payments into the Grade 6 hourly rate of pay, compared to an increase of between 1 and 2 percent between the hourly rates of pay for the QM Grades 1 to 5 employees as set in the table below:
The Applicants submit that the actual pay increases were the differences between the April 2015 figure per week and the figure at commencement of the 2017 Agreement, and an AME/QM Level 5 had a pay decrease of $11.60. The Applicants provided the below tables to demonstrate that the relative jump from QM 5 to QM 6 is small if ARC Payments are lost:
The Applicants submitted that if an employee was classified at QM 5 with ARC Payment 2 allowance payable, they would earn $37.04258 hourly plus $1.54697 = $38.58955. They submitted if the employee is moved to QM 6, they would lose the ARC allowance and the increase would be less than 1 percent.
The Respondent submitted that the classifications moved from the 2014 Agreement from AME classifications (being classifications underpinned by the Ground Handling Award at that time) to QM classifications when it was determined through enterprise bargaining that the wrong underpinning award was being applied and the correct award was the Manufacturing Award.
The Respondent submitted that the rates being paid were preserved however the 5 percent jump from QM 5 to QM 6 was maintained. The fact that there was a change from the 2014 Agreement to the 2017 Agreement does not change the fact that there continues to be a jump of approximately 5 percent notwithstanding the reduction in the base rate of pay from AME 6 to QM 6 when the translation occurred.
Ms Hoffman said the ARC Payments were introduced into the Respondent’s enterprise agreements in the 2017 Agreement to replace the ‘Release Note Signatory’ Allowance that was provided for under previous enterprise agreements. The ARC Payments were to continue to be paid in the same way the Release Note Signatory Allowance had been paid, including in respect of the distinction between ARC Payment 1 and ARC Payment 2.
Ms Hoffman said the introduction of the ARC Payments formed part of broader changes to the enterprise agreement from the 2014 Agreement, including changes to the classification structure provided for in the 2014 Agreement. The 2014 Agreement contained the Release Note Signatory Allowance and states in clause 20.2, “… an employee at AME Grade 6 or 7 may be afforded the privileges of an internally appointed Release Note Signatory Authority for component maintenance. Payment for this authority is incorporated in and forms part of the Grade 6 and Grade 7 rate of pay”.
Ms Hoffman said the Release Note Signatory Allowance, including the description above, was removed from the Allowances clause in the 2017 Agreement and subsequent enterprise agreements. Ms Hoffman said, by way of error, the description for when the Release Note Signatory Allowance is payable to an employee remains in Schedule A of the 2017 Agreement, the 2020 Agreement and the current JA Agreement as follows:
Ms Hoffman said ARC Payments have been included in the 2020 Agreement and the JA Agreement in identical terms as the 2017 Agreement.
Ms Hoffman said that on 12 October 2017 she chaired a meeting for the proposed 2017 Agreement and provided a copy of the minutes of that meeting. The minutes of the meeting include a comment as an action item as follows:
“ARC payment – JA clarified that the previous Agreement detailed AME grade 6 and above to have RNS ability and the intention when ARC payment was introduced in the Agreement was for lower grades to receive payment for capabilities, and to provide room for growth within lower grades. JA also explained that, existing employees on AME Grade 6 at the time ARC payments were introduced, were grandfathered, as they were already paid the higher rate (Action item – JA to provide evidence of this after meeting).”
Ms Hoffman also referred to a discussion in the minutes about how allowances would be structured including that some allowances would be “all purpose” allowances that are rolled into the employee’s hourly rate and considered to form part of the base rate. Ms Hoffman referred to the Respondent telling the bargaining representatives that they need to understand the new structure for classifications and allowances before agreeing to the agreement.
The Applicants referred to the same minutes and the comment at point 8 as follows:
Ms Hoffman also referred to an email of 13 February 2018 from Mr Rac, an employee bargaining representative at the time, who sent a response to a request to review the draft 2017 Agreement that she attached to her evidence. In his response, Mr Rac stated, “ARC payment 1 & 2 are the same as Release Signatory payment, remove one and clearly define the differences”.
On 15 February 2018 Ms Hoffman said she received an email from another employee bargaining representative, Mr Metcalfe, that she attached to her evidence, which stated as follows:
Ms Hoffman provided other evidence setting out correspondence between herself and the two employee bargaining representatives to support her claim about the understanding between the Respondent and the employee bargaining representatives concerning the ARC Payments.
Ms Hoffman said on 16 March 2018 she sent an email to Mr Metcalfe and Mr Rac attaching the final version of the 2017 Agreement which included the ARC Payments in the table at clause 14.4.1 but did not include a definition or any explanation about when the ARC Payment allowances are payable which she said was an oversight in the agreement drafting process.
Ms Hoffman referred to the QM Level 6 classification stating “must hold ARC”, and that the 2017 Agreement retained the ‘RS Release Signatory’ description in the classifications table in Schedule A.
Ms Hoffman said the Respondent has not paid the ARC Payment Allowance in addition to an employee’s base rate of pay under the 2017 Agreement, 2020 Agreement or JA Agreement for employees classified as QM Level 6 and above, and it was therefore the established custom and practice for the Respondent not to pay ARC payment allowance in addition to an employee’s hourly rate at these classification levels.
Ms Hoffman said the dispute about the ARC Payment allowances being payable to employees classified at these levels only arose after the Respondent began making payments equivalent to the ARC Payment Allowance to employees and with corresponding reference to these payments as ARC Payment allowances on the payslips of such affected employees.
Ms Hoffman said, on 25 July 2022, the Respondent began paying Mr Lindsay-Smith an additional payment to his base hourly rate of pay and referred to this as the ARC 2 payment allowance under the 2020 Agreement. Ms Hoffman said the Respondent provided this payment to Mr Lindsay-Smith as a mechanism of providing him with a pay increase (referred to in the workplace as a “bump”).
Ms Hoffman said the payment was erroneously labelled as an ARC Payment in circumstances where Mr Lindsay-Smith was already receiving the ARC Payment rolled up into his hourly rate of pay and was therefore not entitled to be paid it as an additional allowance.
Ms Hoffman said on 1 January 2024, the Respondent began paying Mr Gilbert, Ms Mellor, and Mr Curtis an additional payment for the dual purpose of rewarding these employees with a pay ‘bump’ and holding them accountable for their satisfactory performance of release duties.
Ms Hoffman said these payments were also erroneously labelled as ARC Payments in circumstances where these employees were classified as a QM Level 7 or 8 employee and were therefore already receiving the ARC Payment rolled up into their hourly rate of pay and not entitled to be paid it as an additional allowance.
Ms Hoffman said Mr Burnham was previously classified at a level QM 4 and then QM 5 and was paid an ARC Payment allowance in addition to his hourly rate of pay. Ms Hoffman said the payment of an ARC Payment allowance in addition to Mr Burnham’s base hourly rate of pay continued when he progressed to a level QM 6 by way of error. Since progressing to a level QM 6, Mr Burnham has, in effect, been receiving payment of the ARC allowance twice, rolled up into his hourly rate of pay and in addition to his hourly rate of pay.
The Applicants advised during the hearing that there are no current employees who were involved in the 2017 Agreement negotiations.
The Applicants stated that Ms Hoffman’s evidence that employees can release documents without holding an ARC is incorrect. It was submitted that employees cannot release a document without the release certification that is in-house training. It was submitted Ms Hoffman is incorrect to say employees can release documents at classifications below QM 6 without holding an ARC. The Respondent said it does not contend that employees at QM 5 and below are performing release duties without an ARC.
The Respondent submitted that it is mandatory for an employee at QM 6 or above to hold an ARC as a requirement of their position. The Respondent submitted an employee at QM 5 and below will not necessarily hold an Authorised Release Certificate in respect of particular components, and that is why the allowance may or may not be payable, because some employees may hold authorised release certification in respect of a particular component in which case they would receive an ARC payment allowance, and if they did not hold the certification then they cannot certify release and they would not be entitled to an ARC payment.
The Respondent submitted that this dispute has arisen because of a poor decision on its part to award employees an increase (in pay) by giving them a “bump”, and the method by which to award them an additional benefit. The Respondent submitted the increases ought to have been made as individual agreed rates pursuant to clause 14.3 of the JA Agreement. The Respondent said, instead of doing that, additional payments were made by way of convenience as ARC Payments, which was not the proper way for those additional payments to have been made, and has therefore created a question as to whether the payments should have been paid all along.
The Respondent submitted the history of the payments is entirely relevant. The Respondent referred to the Full Bench decision in AMWU v Berri[2] where it was said that evidence of surrounding circumstances to establish objective background facts that are known to both parties to inform the subject matter of the agreement is relevant. The Full Bench, in providing a summary of principles relevant to construing a single enterprise agreement, stated at [114]:
“…
12. Evidence of objective background facts will include:
(i)evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(ii)notorious facts of which knowledge is to be presumed; and
(iii)evidence of matters in common contemplation and constituting a common assumption.
…”
The Respondent submitted that in the transition from the 2014 Agreement where it moved from a payment of a Release Signatory Note allowance to the ARC allowance in the 2017 Agreement, through error, the particular words around how that payment would be payable had fallen away, however notwithstanding that error, there has never been any question or dispute around how the payments were made, including by any employees who were part of the bargaining, until the most recent round of negotiations for a new agreement.
The Respondent submitted under the 2014 Agreement the Release Note Signatory allowance was not payable to employees who were at or above the AME 6 classification because it was an inherent part of their role. When the language around the performance of those duties changed, the evidence shows that the Release Note Signatory Allowance would be replaced with an ARC Payment allowance that would operate in the same way, and the correspondence between Ms Hoffman and the employee bargaining representatives shows that was the common intention.
In regard to the first agreed question, the Respondent says, having regard to the context about how the parties reached agreement on how the ARC payments would be made in the 2017 Agreement and that it has simply been rolled over since then, that the ARC payment is relevant to an employee who does not have the ARC payment wrapped up in their hourly rate of pay as a QM 6 or above.
In regard to the second question, the Respondent says the answer is no. The Respondent says it intends to continue to pay the amounts to existing employees at QM 6 and above who have been receiving those payments, however it intends, subject to the determination of this matter, to pay the amounts as individual agreed rates pursuant to clause 14.3 of the JA Agreement. The Respondent says the payments are not required to be paid to employees at QM 6 and above and should be paid in a different way.
Regarding question three, the Respondent submitted it believes the parties are on common ground with the Applicants, that being that where there is certification for up to three components, ARC Payment 1 is payable, and where there is certification for four components or more, the ARC Payment 2 is payable where relevant.
The Applicant submitted that while the JA Agreement states in Schedule A the number of types required, the parties cannot move forward as there is not specific information about what the component ‘types’ were and unless the parties can agree what ‘type’ is a component, then the parties cannot know what an ARC Payment 2 is for.
The Applicant submitted the correct interpretation is four or more components. The Respondent referred to email correspondence of 24 May 2024 from Mr Metcalfe containing suggested wording for the Allowance Description for ARC payments for the proposed new agreement to replace the JA Agreement. The email correspondence refers to the ‘CASA part 145, Maintenance Organisation Exposition Part 1 Management document’.
The Respondent submitted the proposal had regard to National Aviation Authority requirements. The Respondent said it understood the Applicants were proposing that a more informal document be used that provides for a broader range of components to also be subject to certification and be subject to the component types.
The Respondent submitted that what has been applied to the component type where it arises is the Maintenance Organisation Exposition Part 1 Management document (MOE). The Respondent submitted it understands the Applicants’ position is driven by the fact that an employee at QM 5 would, on the other document it proposes, being Book 2-2, CASA Capability List (under designation column), be able to release more components than they would under the MOE, and they want to specify the other document for the purposes of the new agreement.
The Respondent submits changing the document is something that can be clarified in the new agreement. The Respondent accepted that it has not filed evidence to support its assertion that the MOE is the correct document because, until the Applicant filed its reply submissions, it did not anticipate that the types of components matter was in dispute.
The Applicants submitted in response that the parties were currently using the MOE, which is not updated, whereas the CASA Capability list is an updated live document.
I determined toward the end of the hearing on 4 October 2024 that the Commission would be assisted by further material in order to be able to address question three of the Agreed Questions for Arbitration and directions were issued for the filing of further material. The Respondent filed a further submission and witness statement on 11 October 2024, and the Applicant filed its further submission on 17 October 2024.
The Respondent submitted the answer to question 3 should be answered as follows:
“(a) An ARC Payment 1 Allowance is paid to an employee who is performing up to three types of release, determined in accordance with the Maintenance Organisation Exposition (MOE); and
(b) An ARC Payment 2 allowance is paid to an employee who is performing four or more types of release, determined in accordance with the MOE.”
Mr Stephen Metcalfe, Director of Component Services, said in his statement among other things that the Civil Aviation Safety Authority (CASA) has authorised the Respondent to perform repair work and maintenance work on specific component types, and in turn the Respondent authorises its employees to perform “release to service” for aircraft maintenance completed by the Respondent. He said it is the Respondent’s responsibility to ensure individual employee authorisations to release components are within the confines of the work CASA has authorised the Respondent to perform.
Mr Metcalfe’s witness statement said to become an authorised organisation under Part 145 of the Civil Aviation Safety Authority Regulations 1998 (CASR), the Respondent must have an exposition, as set out in the Manual of Standards issued by CASA, and comply with the requirements of that exposition at all times.
Mr Metcalfe said the exposition may be likened to an operating manual. The provision of services that are not in accordance with the exposition exposes the Respondent to risk of a civil penalty in accordance with regulation 145.070 of the CASR.
The Respondent has created the MOE to comply with its requirement to have an exposition. The MOE is controlled by the Respondent’s internal quality department and is accessible to all of the Respondent’s employees. Among other things, the MOE sets out the component types that the Respondent is authorised by CASA to release.
Mr Metcalfe said the MOE maintained by the Respondent must be provided to, and is approved by, CASA. He said the Respondent authorises employees to issue certificates of release to service for aircraft maintenance performed by its employees by issuing the employees with a Company Authorisation (Authorisation) that specifies the component types the employee is authorised to release, in accordance with the MOE and the Respondent’s authorisations.
Mr Metcalfe said the Authorisation enables the employee to complete an Authorised Release Certificate for the specified component types. Mr Metcalfe provided an example of an Authorisation. In the case of this example ARC, the employee in question is certified to release four types of components, including wheels and brakes. He said under this certification, while there are many different types of wheels that may be serviced by the Respondent, the employee is certified to release any wheel component, and they do not require separate and distinct certification for each different type of wheel.
Mr Metcalfe said the “types of release” referred to in Schedule A of the JA Agreement refers to the component types that an employee is authorised to release, and the component types have always been determined by reference to the MOE, as this sets the list of component types that the Respondent is authorised to release.
Mr Metcalfe said in the course of bargaining for an enterprise agreement to replace the JA Agreement, the employee bargaining representatives have made a claim for the number of component types an employee is releasing to be determined in accordance with the CASA Capability List. Mr Metcalfe said this document contains all of the sub-categories of components that the Respondent has recorded capability assessments for outside of the IFS, the Respondent’s enterprise resource planning system. He said this list only first started to be created on 20 November 2022 and was not contemplated in bargaining for the JA Agreement or its predecessors. He said the list contains a broader range of components than the Respondent is authorised to release.
The Respondent submitted that as the JA Agreement does not define what constitutes a “type of release”, it is appropriate to consider evidence of surrounding circumstances to resolve the interpretation of the clause, including how the payments have been made during the life of the JA Agreement and its predecessors, internal reference documents that list component types and the industry context in which the Respondent operates.
The Respondent submitted that it issues Company Authorisations to its employees who are authorised to perform release to service on aircraft maintenance work completed by Jet Aviation (i.e. to complete an ARC). Each employee’s individual Company Authorisation sets out the component types for which they are authorised to complete the ARC. These are the “types of release” that are relevant for the purpose of determining if an employee is entitled to be paid the ARC Payment 1 or ARC Payment 2.
The Respondent submitted the Company Authorisation must be read in conjunction with Jet Aviation’s Maintenance Organisation Exposition (MOE), to determine the number of component types an employee can release, as the MOE comprehensively sets out the component types of commercial aircraft on which the Respondent is authorised by CASA to perform repair and maintenance services.
The Respondent submitted as an employee’s Company Authorisation to release a generic component type, such as a wheel, enables them to release any type of wheel without further training or certification, it is appropriate to consider an employee as performing one type of release in respect of their capability to release a wheel and not to further break this down into the employee’s ability to release different types of wheels.
The Respondent submitted the number of component types an employee can release cannot be determined in accordance with the QA 22 CASA Capability List (CASA List) requested by the Applicants, as this is a list of subcategories of components that the Respondent has conducted a capability assessment on and not a list of component types.
The Respondent submitted that the CASA List only first started to be created on 20 November 2022, it could not have been contemplated in the bargaining for the JA Agreement (which commenced operation on 6 December 2022) and could not have been contemplated in any of the enterprise agreements that preceded the JA Agreement and on which the ARC Payment Allowance provisions were based.
The Respondent accordingly submits that it cannot be taken to inform the intention of the parties in the proper application of the ARC Payment Allowance. The Respondent also submitted that reliance on the CASA List to determine component types is, in any event, impracticable, as the list may contain types of components for which the Respondent is not able to perform work and complete an ARC.
The Respondent submitted this could also produce inequitable outcomes if an employee who has the capability to only release one component type is entitled to be paid the ARC Payment 2 because there are more than four different component subcategories associated with that component, and is paid the same as an employee who has the capability to release more than four different component types.
The Respondent submitted the custom and practice in Jet Aviation’s organisation since the ARC Payments were introduced demonstrates that the two levels of the ARC Payments were intended to be paid to employees based on how many component types they were releasing in accordance with the MOE. Jet Aviation has not paid the ARC Payment 1 and ARC Payment 2 to employees based on the number of different types of component parts an employee is authorised to release in accordance with the CASA List.
In its further submissions, the Applicants submitted question 3 should be answered as follows:
“ (i) An ARC Payment 1 Allowance is paid to an employee who is performing up to three component types of release, determined in accordance with the Maintenance Organisation Exposition (MOE 1.9.5) limitation column and
[…]
(ii) An ARC Payment 2 allowance is paid to an employee who is performing four or more component types of release, determined in accordance with the (MOE 1.9.5) limitation column.”
The Applicants submitted a dictionary definition of component is “a part or element of a larger whole, especially a part of a machine or vehicle.” The Applicants submit the suggested CASA component capability lists are “parts” of an aircraft, and suggested this is a more appropriate reflection to use for determination of a “component type” than the MOE.
The Applicants submitted the MOE is not broad enough and provided the example of landing gears, brake master cylinders, and DHC-8 Door Linkages, which are three separate component types which require separate on-the-job training to release but under the MOE all fall under the One Limitation, Landing Gear and Landing Gear Components.
The Applicants submit the Respondent say “component types” are the same as “types of release” however it was put by the Applicants this is task-focused and not the “component types” able to be released.
Consideration
The Applicants argue the JA Agreement is not ambiguous as the two disputed allowances are in a single table along with ten other allowances and that if the employee performs the duty they should be paid the allowance. The Applicants say the word “relevant” refers directly to the allowances in the table and not to an employee’s grade level. The Applicants have submitted the historical documents should not be considered.
The Applicants submitted in their final submission on 17 October 2024 the answers to the questions for arbitration should be determined as follows:
(a) ARC payment 1 & 2 allowances are relevant to all employees that sign Authorised Release Certificates under JA Agreement Clause 14.4.1
(b) Yes, the ARC payment allowances are payable to all employees that sign Authorised Release Certificates under JA Agreement Clause 14.4.1
(c) (i) An ARC Payment 1 Allowance is paid to an employee who is performing up to three component types of release, determined in accordance with the Maintenance Organisation Exposition (MOE 1.9.5) limitation column; and
(ii) An ARC Payment 2 allowance is paid to an employee who is performing four or more component types of release, determined in accordance with the (MOE 1.9.5) limitation column.
The Respondent relies on the words “where relevant to the individual employee” as contained in clause 14.4.1. The Respondent submits the surrounding circumstances regarding the ARC Payments indicate that not all employees performing release duties are “relevant” employees.
The Respondent submits, in relation to the Applicants’ position that the ARC Payment allowances applies to everyone, that this is not the intention of what the bargaining parties contemplated in 2014 through to 2017 and has been carried on as the agreements have been negotiated and accepted until recently due to the practice of making ARC payments to employees at QM 6.
I accept that the JA Agreement is ambiguous as the clause provides no definitions for how the ARC payments are to be made and the use of language “where relevant to the individual employee” does little to assist in resolving the ambiguity.
In accordance with the principles in Berri, it is appropriate to have regard to the surrounding circumstances in resolving the dispute as to the correct interpretation of the JA Agreement.
In relation to question three, the parties were in agreement that Schedule A of the JA Agreement includes reference to one to three components, and the four or more components.
The Applicants in reply filed a submission advising that it believed it was an agreed position that employees who are entitled to an ARC Payment allowance will be paid ARC Payment 1 or 2 as follows:
· An employee performing up to three types of release is entitled to be paid ARC Payment 1; and
· An employee performing four or more types of release is entitled to be paid ARC Payment 2.
The Applicants submitted that the wording “type of release” is found in JA Agreement Schedule A under Release Signatory, which is why it was agreed by parties that this answered question C (the third question).
The surrounding circumstances establish that it was a common understanding between the parties bargaining for the 2017 Agreement that the transition from the AME structure to the QM structure and the implementation of the ARC payments in place of the Release Note Signatory payments, were intended to retain the preexisting arrangement that the payments were intended to be rolled into the base rate of pay for employees classified at levels QM 6 and above, as they had been for AME classifications previously. The error in drafting that failed to articulate this properly does not alter the intent of the parties in making the 2017 Agreement.
The fact of the existence of the higher relative jump from level 5 to level 6, and the fact of there having been no dispute about the custom and practice followed until the recent bargaining round, reinforces my view that the intention of the parties at the time is clear.
Regarding the third question, having considered the additional material, including the fact the Applicants’ preferred document, the CASA List, was only first created in November 2022, and having considered the surrounding circumstances, including that the custom and practice of the MOE document being the document used for the purpose of paying the allowances was accepted without controversy until recently, I am satisfied that it was the intention of the parties that the MOE document was the basis for determining ARC payments.
On that basis the answer to the questions for arbitration is as follows:
When is an ARC Payment Allowance “relevant” to an individual employee for the purposes of clause 14.4.1 of the JA Agreement and therefore required to be paid to an employee?
An ARC Payment Allowance is relevant to an employee who is performing release duties and who is not otherwise being compensated for the performance of these duties in their base hourly rate of pay. As such, the ARC payment allowances are only relevant to employees performing release duties who are classified between a Class TA 3 and QM Level 5 under the JA Agreement.
Are ARC payment allowances in the JA Agreement required to be paid in addition to the base hourly rate of pay for employees classified at QM Grade 6 and above?
No.
When an ARC Payment allowance is required to be paid to an individual in accordance with the JA Agreement:
(a)to which employees is an ARC Payment 1 payable; and define the allowance criteria?
An ARC Payment 1 Allowance is paid to an employee who is performing up to three types of release, determined in accordance with the Maintenance Organisation Exposition (MOE);
(b)to which employees is an ARC Payment 2 payable; and define the allowance criteria?
An ARC Payment 2 allowance is paid to an employee who is performing four or more types of release, determined in accordance with the MOE.
COMMISSIONER
Appearances:
S Mellor, T Curtis, S Patterson and P Gilbert, Applicants appearing for themselves and on behalf of J Burnham and G Lindsay-Smith
K Sweatman and K Bennett, of Kingston Reid, instructed by G Guang, S Metcalfe, and E Eljed of the Respondent
Hearing details:
2024
By video on Microsoft Teams
4 October.
Final written submissions:
Respondents: 11 October 2024; Applicants: 17 October 2024
[1] Exhibit 1
[2] Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Ltd (2017) 268 IR 285; [2017] FWCFB 3005.
Printed by authority of the Commonwealth Government Printer
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