Mr Rudy Wendt v Iplex Pipelines Australia Pty Ltd T/A Iplex Pipelines

[2015] FWC 7706

[2015] FWC 7706

FAIR WORK COMMISSION

DECISION

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

Mr Rudy Wendt
v
Iplex Pipelines Australia Pty Ltd T/A Iplex Pipelines
(C2015/2911)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 11 NOVEMBER 2015

Summary: whether jurisdiction to deal with a notification of dispute – private arbitration power distinguishable from judicial power – characterisation of dispute.

[1] This decision concerns a jurisdictional question that has arisen in respect of a dispute notification by Mr Rudy Wendt in relation to his employment with Iplex Pipelines Australia Pty Ltd trading as Iplex Pipelines (“the employer”). Mr Wendt is employed under the Iplex Pipelines Australia Pty Ltd Enterprise Agreement 2013 - Toowoomba (“the Agreement”).

[2] Mr Wendt continues to be employed by the employer under the terms of the Agreement.

[3] The jurisdictional issue in contest concerns whether the Commission has a power under s.586 of the Fair Work Act 2009 (“the Act”) to do certain things in respect of the dispute, such as make a recommendation or issue an opinion. Mr Wendt does not agitate the Commission’s powers of arbitration currently.

[4] The dispute proper concerns the interpretation of the clauses of the Agreement that relate to payment of hours of work. The parties have been unable to resolve their different perspectives on the Agreement by way of a number of conciliation conferences.

The Dispute

[5] Mr Wendt contends that for the period of 6 September 2013 - 30 November 2014, he performed duties as a 12 hour shift worker on regular rostered hours, which was an average of 42 hours per week or 168 hours in 28 days. During that period, Mr Wendt was paid at loaded rates set out in the Agreement for hours worked over and above 38 hours per week.

[6] Mr Wendt argues that that the Agreement should be construed so that the hours of work he performed over and above 38 hours per week should be paid at the overtime rate (not the loaded rate).

[7] The employer contends to the contrary, and argues that any hours of work performed by Mr Wendt over and above 38 hours per week were payable at the loaded rate.

The Agreement

[8] Clause 5 of the Agreement sets out the Dispute Resolution Procedure as follows:

“5. Service to our customers (Dispute Avoidance Procedure)

Iplex and its employees are committed to resolving issues in accordance with the following procedure and continue providing service to our customers without interruption or delay.

Procedure

5.1 In the event of a dispute or claim whether or not any dispute or claim arises directly out of the operation of this agreement as to the wages or conditions of employment of any of the Employees covered by this agreement it shall be settled in the following manner.

5.2 In the first instance Iplex and employees will attempt to resolve the matter at the workplace by discussions between the Employee/s concerned and the relevant supervisor and, if such discussions do not resolve the dispute, by discussions between the Employee/s concerned and more senior levels of management as appropriate.

5.2.1 Any employee involved in a dispute may appoint a representative to assist them in relation to the dispute at any time

5.2.2 If a dispute in relation to a matter arising under the agreement is unable to be resolved at the workplace, and all agreed steps for resolving it have been taken, the dispute may be referred to the Fair Work Australia (“FWA”) for resolution by mediation and/or conciliation and, where the matter in dispute remains unresolved, arbitration. If arbitration is necessary, FWA may exercise the procedural powers in relation to hearings, witnesses, evidence and submissions that are necessary to make the arbitration effective.

5.3 It is a term of the agreement that while the dispute resolution procedure is being conducted work shall continue normally unless an Employee has a reasonable concern about an imminent risk to his or her health or safety.

5.4 The decision of the FWA will bind the parties, subject to either party exercising a right of appeal against the decision to a Full Bench.

5.5 Any decision of the FWA must be consistent with the requirements of the National Code of Practice for the Construction Industry as varied from time to time; the Implementation Guidelines for the National Code of Practice for the Construction Industry as varied from time to time; and all applicable legislation.”

The Legislation

[9] Section 739 and s.586 of the Act have application where a term of an enterprise agreement purports to empower the Fair Work Commission to deal with a dispute.

[10] The relevant subdivisions of s.739 of the Act being as follows:

(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.

[11] The relevant subdivisions of s.595 of the Act provide as follows:

FWC’s power to deal with disputes

(1) the FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in accordance with another provision of this act.

(2) The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:

(a) By mediation or conciliation;

(b) By making a recommendation or expressing an opinion.

The Approach

[12] The employer contends in effect that the dispute can only be characterised as a dispute requiring an order to pay an amount in retrospective rectification. It is therefore a dispute that requires the Commission to utilise judicial power as if it were a claim for back pay (which is a matter consequential to the Agreement and not itself a matter arising under the Agreement).

[13] The powers of the Commission under s170LW of the Workplace Relations Act 1996 were discussed by Lacy SDP in his decision in Maritime Union of Australia and Australian Plant Services [PR908236]. That discussion was in the context of the High Court judgment in Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (and Ors) (known as “the Private Arbitration Case”). His Honour’s discussion was as follows:

"[56] Section 170LW is essentially a replication of s 170MH of the Industrial Relations Act 1988 (IR Act) as inserted by the Industrial Relations Act Reform Act 1993. It authorises the Commission to `settle disputes over the application of [an] agreement'. [Private Arbitration Case, par. 22] And, like its IR Act predecessor, it authorises the Commission, under agreed dispute resolution provisions that have been incorporated into a certified agreement, to exercise a power of private arbitration and make decisions as to the legal rights and liabilities of the parties to the agreement. [Private Arbitration Case , par.32] There is an important distinction between a power of private arbitration to make decisions as to the legal rights and liabilities of parties to an agreement and judicial power to determine rights and liabilities. In making decisions as to the legal rights and liabilities of the parties, where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. The High Court emphasised this distinction in the Private Arbitration Case in the following way:

`Where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. Of its nature, judicial power is a power that is exercised independently of the consent of the person against whom the proceedings are brought and results in a judgment or order that is binding of its own force. In the case of private arbitration, however, the arbitrator's powers depend on the agreement of the parties, usually embodied in a contract, and the arbitrator's award is not binding of its own force. Rather, its effect, if any, depends on the law which operates with respect to it.' [Private Arbitration Case, par31]

[57] An important limitation on the Commission's powers under s 170LW is the kind of disputes that may be subject to resolution by the Commission. Parliament has authorised the Commission to exercise powers under an agreement `to settle disputes over the application of the agreement' and, accordingly, its powers are limited to disputes of that kind. Therefore it is necessary for the Commission, in each case where it is asked to deal with a matter arising under the dispute settling procedure in an agreement, to ascertain the character of the dispute that is before it in order determine whether the matter is a dispute over the application of the agreement. [Qantas Airways Limited v Australian Municipal, Administrative, Clerical and Services Union, Print T0301, par.24] And, importantly, the character of the dispute is distinguishable from the orders that may be made in settlement of the dispute. [ibid, par.25, see also the Private Arbitration Case at par 36.]

[58] In exercising its powers under s 170LW as authorised by an agreement, the Commission is performing a function that is conferred on it by the Act. As such it falls within the functions identified in s 89(b) of the Act and described as `such other functions as are conferred on the Commission by this or any other Act'. This is in contrast to the functions of the Commission under s 89(a)(i) and (ii), namely `to prevent and settle industrial disputes ... by conciliation and ... arbitration.' The procedures encompassed by s 170LW, in conjunction with appropriate relevant grievance procedures, are designed to ensure that the agreement made in settlement of the dispute is effective and enduring [see R v Hegarty; Ex parte City of Salisbury (1981) 147 CLR 617, 629; and the Private Arbitration Case, at par 32]." [My emphasis]

[14] His Honour’s comments in summary remain apt in respect of the approach to the characterisation of the dispute and have been reflected in other decisions of the Commission. In a recent decision, Vice President Watson - in citing the above extract, observed:

“[11] These observations have been approved by Full Bench decisions of the Commission including Goodman Fielder Consumer Foods Limited v CEPU, 3 Seven Network (Operations) Limited v CPSU,4 and United Firefighters' Union v Metropolitan Fire and Emergency Services Board.5 It is therefore necessary to have regard to the nature of a dispute said to arise under the terms of the agreement having regard to the original notification and the relevant factual circumstances as they evolve through the process of conciliation and arbitration of the dispute. Such a broad approach was endorsed by a Full Bench of the Australian Industrial Relations Commission in the case of Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Holden Limited where the following is stated:

"[45] A dispute referred to the Commission must be properly characterised before powers conferred by a dispute settlement provision in a certified agreement are exercised. This is necessary in order to determine whether the dispute is 'over the application of the agreement' within the meaning of s.170LW of the WR Act. As noted by a majority of the Full Bench in Automated Reading Services (AMRS) v ASU, this expression has not been judicially considered. The majority went on to observe that:

"A relationship between the provisions of the relevant agreement and the subject matters in dispute would appear to be an essential element in the identification of any dispute over the application of the agreement. ..."

[46] We adopt these observations. Further, in our view the expression should not be narrowly construed. In this context we agree with the observation of the Full Bench in Shop, Distributive and Allied Employees Association v Big W Discount Department Stores that:

"...what comprises a dispute over the application of the agreement should not be narrowly construed; to do so would be contrary to the notion that certified agreements are intended to facilitate the harmonious working relationship of the parties during the operation of the agreement."

[47] In characterising the nature of the dispute in this matter the Commission is not confined to the dispute notification document. The entire factual background is relevant, including matters such as the submissions advanced. In this context we note that in TWU v Mayne Nickless Ltd the Full Court of the Federal Court held that in determining whether an application calls on the Commission to exercise judicial, as opposed to arbitral, power 'a court should review the entire factual background to properly characterise the claim and the power sought to be invoked'" 1

(references omitted)

Characterisation of the dispute

[15] The Agreement, through its disputes procedure set out above, vests a power of dispute resolution in the Commission by way of private arbitration.

[16] The power is not one that goes beyond the constitutional limitations on the power of an administrative tribunal for the purposes of the current dispute.

[17] The dispute in question can reasonably be characterised as a dispute by a current employee in respect of the application of the industrial instrument to some prior circumstances. The dispute may have arisen in prior circumstances, in 2013 and 2014, but the underlying issue that gave rise to the dispute remains unresolved.

[18] That dispute - set out in detail above - is essentially characterised as, and reducible to, a dispute about how the Agreement applies to hours of work performed by an employer working a 12 hour roster, when the employee performs more than 38 hours a week on average. That is, the subject matter of the dispute has a nexus with the content of the Agreement.

[19] It may be true that the order that may be made in settlement of the dispute - and as may be sought by Mr Wendt ultimately - will require the exercise of judicial power. Mr Wendt may agitate that a past entitlement is due to him. But the order in that regard is distinguishable from the character of the dispute as it arises under the Agreement.

[20] The dispute before me is confined under the terms of the Agreement to a controversy between about the proper application of the Agreement (its overtime provisions and loaded rate payments mechanism) in certain circumstances (relating to the rostered hours of an employee), and does not require me to rectify a past breach of the Agreement itself, by imposing a penalty order.

[21] In my view I am empowered through the Agreement to do the things that the Agreement prescribes in relation to the dispute clause. Those powers extend to the exercise of conciliation, which include making a recommendation or issuing a statement of opinion as to the dispute as I have characterised it. That opinion or statement will reflect my preliminary view as to how the Agreement applies in the context of the hours worked by Mr Wendt

[22] Having so found, I ask the parties whether they wish to place anything further before me prior to me so acting, noting the matter has been well ventilated by way of prior conferences and the tabling of written materials. I would appreciate any supplementary materials being filed no later than 4.00 pm Friday, 13 November 2015.

SENIOR DEPUTY PRESIDENT

Final written submissions:

Applicant – 23 October 2015.

Respondent – 2 November 2015.

 1   Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Zinfra Group[2015] FWC 5025.

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