MSS Security Pty Limited T/A MSS Security
[2024] FWCA 1684
•8 MAY 2024
| [2024] FWCA 1684 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.217 - Application to vary an agreement to remove an ambiguity or uncertainty
MSS Security Pty Limited T/A MSS Security
(AG2023/4538)
MSS SECURITY VICTORIAN ENTERPRISE AGREEMENT 2021
| Security services | |
| COMMISSIONER JOHNS | MELBOURNE, 8 MAY 2024 |
Application for variation of the MSS Security Victorian Enterprise Agreement 2021
Introduction
This decision is about whether the Fair Work Commission (Commission) should grant an application made by MSS Security Pty Limited T/A MSS Security (Applicant/MSS) pursuant to s.217 of the Fair Work Act 2009 (Cth) (FW Act) to vary the MSS Security Victorian Enterprise agreement 2021 (2021 Agreement) to remove ambiguity and/or uncertainty.
The United Workers’ Union (Respondent/UWU/Union) is covered by the Agreement and opposes the application.
In short, the Applicant seeks a variation of clauses 21.1.3 and 21.2.2. Both clauses refer to “the Fair Work Commission minimum wage increase” (Disputed Phrase).
The Applicant contends that the Disputed Phrase is ambiguous or uncertain because it is not clear whether the Disputed Phrase means:
a) the Fair Work Commission Modern Award minimum wage increase; or
b) the Fair Work Commission National minimum wage increase.
Up until 2022 the uncertainty did not matter because the Commission’s annual wage increase for both Modern Awards and the National Minimum Wage were the same. However, in May 2022 the Commission made a decision to increase:
a) Modern Awards by 4.6%; and
b) The National Minimum Wage by 5.2%.
By reason of the different award of increases the meaning of the Dispute Phrase took on some import that it did not previously have.
The Applicant urges the Commission to insert the words ‘modern award’ into both clauses to remove the ambiguity and/or uncertainty.
For the reasons that follows, I have decided to grant the variations sought.
Background
The parties agreed on the following facts. Consequently, I find that (footnotes omitted),[1]
a) The 2021 Agreement came into operation on 28 April 2023 and will reach its nominal expiry date on 30 June 2025.
b) The 2021 Agreement is underpinned by the Security Services Industry Award 2020 (‘SSI Award’).
c) The 2021 Agreement replaced the MSS Security Victorian Enterprise Agreement 2017 (‘2017 Agreement’), which came into operation of 26 February 2018 and reached its nominal expiry date on 30 June 2021.
d) The Applicant is a large provider of security services across Victoria, holding contracts to provide security services at (amongst other places), the following worksites which are covered by the Agreement:
i.La Trobe University;
ii.Melbourne University;
iii.Monash University;
iv.Thales Defence Sites in Regional Victoria; and
v.State Government of Victoria - Department of Families, Fairness and Housing.
e) The 2021 Agreement covers about 1362 employees, who break down as follows:
i.894 permanent employees; and
ii.468 casual employees.
f) The Respondent is a registered industrial association with national membership coverage of, inter alia, employees in the security services industry. A significant number of the Applicant’s employees are members of the Respondent.
g) The Respondent is covered by the 2021 Agreement, pursuant to s 201(2) of the FW Act.
Bargaining for the Agreement
h) Bargaining for the 2021 Agreement occurred in two stages between about-April 2021 and late-December 2021 and again between about March 2022 and late-January 2023. However, the Applicant and the Respondent did not at any stage reach in-principle Agreement on any proposed Agreement.
i) Between 12 and 16 December 2021, a ballot for a proposed 2021 Agreement was conducted by the Applicant, with a majority of 4 employees endorsing the proposed Agreement.
j) On 23 December 2021, the Applicant filed the proposed 2021 Agreement for approval by the Fair Work Commission.
k) The Respondent subsequently advised the Fair Work Commission that it objected to approval of the proposed Agreement on the basis it alleged there was not genuine agreement. The Respondent alleged that employees had been sent various misleading text messages during the ballot.
l) On 1 March 2022, without making any admissions with respect to the Respondent’s allegations, the Applicant withdrew its application for approval of the 2021 Agreement.
m) On 9 March 2022, the Applicant advised its employees of its intention to re-commence bargaining for the 2021 Agreement.
n) Further bargaining meetings were then held between the Applicant and the Respondent between March 2022 and January 2023 on the following dates:
i.1 April 2022;
ii.29 April 2022;
iii.25 May 2022;
iv.30 June 2022;
v.14 July 2023; and
vi.2 December 2022.
o) On 26 April 2022, the Respondent provided the Applicant with its new Log of Claims, which included the following claim in relation to wages:
3. Wages and penalty rates
3.1.1. All wage tiers to be removed and wages to be aligned to the Safegaurd.
(sic) wage standards
3.2. Annual minimum wage increases and allowance increase.
3.3: Payslips to include accrual of paid personal/carers leave.
p) In addition to the Log of Claims, the Respondent also provided a PDF of minimum rates. The document provided for wage and allowance increases and how the increases would be calculated. At clause 1.2.1.1, it provided the following:
“The rates of pay contained in 1.1 and allowances contained in clause [insert relevant clause] will be increased by the greater of the: percentage increase of increase in modern award minimum wages ordered by the Fair Work Commission as a result of an Annual Wage Review…”
q) In late May 2022, the Fair Work Commission announced that the National Minimum Wage would increase by 5.2% and Modern Awards would increase by 4.6% from 1 July 2022.
r) As a result of the 1 July 2022 Modern Award increase, the base rates referred to in the Agreement were below the relevant base rates under the Award (noting that the 2017 Agreement expired on 30 June 2021).
s) At the bargaining meeting held on 14 July 2022, there was a discussion between the Applicant and the Respondent on the issue of whether the Applicant intended to increase employees’ base rates to be in line with recently increased Award rates.
t) On 21 July 2022, the Respondent sent the Applicant a “Written Notice of Concerns” setting out its concerns that the Respondent was failing to pay employees at least the Award base rate of pay, pursuant to s 206 of the FW Act, and its concerns that this constituted capricious conduct and a failure to bargain in good faith.
u) On 22 July 2022, the Applicant wrote to the Respondent refuting claims it was not bargaining good faith, advising that it had received guidance from the Fair Work Commission that, in the context of enterprise agreement negotiations, increases could be applied retrospectively after the enterprise agreement had been ratified by the Fair Work Commission. Regardless, the Applicant agreed to apply the increases by the first full pay cycle in July 2022, and that such increase would be back paid the following week.
v) On 3 August 2022, the Applicant sent an email to the Respondent formally rejecting the Respondent’s wages proposal on the basis that the numbers proposed “mostly worked off assumptions and not the real amount paid”.
w) On 25 October 2022, the Respondent put a revised wages proposal to the Applicant as follows:
We propose a pay raise schedule for ‘new employees’ that sees a gradual increase in the award premium on base rates for ‘new employees’ as follows:
Year 1: (July 2021) award +0.5%
Year 2: (from the date of a successful yes vote) award + 0.75%
Year 3: (July 2023) award + 1.25%
Year 4: (July 2024) award + 2%Agreement expiry June 30 2025.
x) At the bargaining meeting held on 2 December 2023, Bhoomika Bharti of the Applicant advised the Respondent, inter alia, that the Applicant rejected the Respondent’s revised wages proposal, intended to proceed with its proposal to increase wage rates in line with “the Fair Work minimum wage increase” and did not support changing the wording already used in the existing clause 21.
y) On 23 January 2023, the Applicant provided the Respondent with a final draft copy of the proposed Agreement requesting feedback on clauses that needed updating.
z) On 23 January 2023, the Respondent circulated a Union Bulletin titled, “MSS EBA UPDATE”, which relevantly stated:
MSS are putting out an agreement that does not meet the Safeguard standard and does not match the conditions agreed to by G4S and Wilson Security.
These are some of the changes that have been won so far but MSS needs to do better by its guards:
…
Wage increases
MSS is maintaining the split system wage system. So called new employees (employed after 2012) will be paid minimum wage increases for 2022, 2023 and 2024 from 2021 rates that are 0.05% above the award. So called existing employees will be paid minimum wage increases for 2022, 2023 and 2024 but from base rates at least 3.5% higher than the award.
aa) On 24 January 2023, the Applicant commenced the access period with respect to an employee ballot in relation to the proposed 2021 Agreement.
bb) On 30 January 2023, Ms Bharti of the Applicant contacted Mr Richardson of the Respondent by telephone to raise her concerns that the Respondent’s Union Bulletin contained an error, being that it stated its proposed wage rates be “0.05% above the Award” when they were in fact “around 0.5% above the Award”. Mr Richardson agreed this was an error and agreed to re-issue the bulletin.
cc) On 30 January 2023, the Respondent circulated a revised Union Bulletin titled, “MSS EBA UPDATE – Re-issue”, which relevantly stated:
MSS are putting out an agreement that does not meet the Safeguard standard and does not match the conditions agreed to by G4S and Wilson Security.
These are some of the changes that have been won so far but MSS needs to do better by its guards:
Wage increases
MSS is maintaining the split system wage system. So called new employees (employed after 2012) will be paid minimum wage increases for 2022, 2023 and 2024 from the 2021 rates that are around 0.5% above the award (not 0.05% as previously reported). So called existing employees will be paid minimum wage increases for 2022, 2023 and 2024 but from base rates at least 3.5% higher than the award.
dd) Between 2 and 6 February 2023, the employee approval ballot for the Agreement was held and was conducted by Democratic Outcomes Pty Ltd T/A CiVS.
ee) In the lead-up to, and during, the approval ballot, the Applicant recommended its employees vote “Yes” to the Agreement.
ff) In the lead-up to, and during, the approval ballot, the Respondent publicly recommended its members vote “No” to the proposed Agreement.
gg) During the approval ballot, 389 employees out of a total of 647 employees who were entitled to vote, voted in favour of the Agreement, constituting a 60.12% “yes” vote.
hh) On 10 February 2023, the proposed Agreement was lodged for approval by the Fair Work Commission.
ii) On 21 April 2023, the proposed Agreement was approved by the Fair Work Commission, subject to various undertakings.
jj) On 21 April 2023, the Respondent circulated a Union Bulletin titled, “MSS Agreement Approved by Fairwork – 21 April 2023”, which relevantly stated:
The Agreement provides for increases to 2020-21 rates of equal to the Fair
Work minimum wage increase of 2.5% in 2021 and 5.2% in 2022.
(DFFH guards should have received the Safeguard rates from February 1.)
The Union Bulletin also set out various relevant hourly wage wages which the Respondent asserted were “the rates with those increases applied for the relevant sites/guards”.
Wage increases and Back-pay
kk) Since the Agreement came into operation on 28 April 2023, the Applicant has generally increased wages for new and existing employees as follows:
i.First Full Pay Period from 1 July 2021: 2.5% increase to wage rates and allowances;
ii.First Full Pay Period from 1 July 2022: 4.6% increase to wage rates and allowances; and
iii.First Full Pay Period from 1 July 2023: 5.75% increase to wage rates and allowances.
ll) The above formulations were also used to calculate the “back-pay” which was paid to employees upon the Agreement’s approval. However, there were a number of exceptions including the increase to wage rates for employees working at the Victorian Department of Families Fairness and Housing, who are instead paid “Safeguard” rates, paid at 6% above-Award rates, pursuant to clauses 21.5 and 21.6 of the Agreement and increased funding from the State Government of Victoria.
Dispute and Correspondence
mm) On 15 June 2023, the Respondent sent the Applicant a letter setting out:
i.its concern that new and existing employees had received a wage increase of only 4.6% from the first full pay period after 1 July 2022, in line with the wage increase in Security Services Industry Award 2020 (‘the Award’);
ii.its belief that, properly constructed, under clause 21 of the Agreement, new and existing employees should have instead received a wage increase of 5.2% from the first full pay period after 1 July 2022, in line with the increase to the National Minimum Wage.
nn) On 7 July 2023, the Applicant sent a letter to the Respondent denying allegations it has contravened clause 21 of the Agreement, asserting that the 4.6% wage increase it had paid employees with respect to July 2022 was consistent with the terms of the Agreement, and asserting that it was expressly communicated during negotiations that the Applicant would honour the 2022 award wage increase of 4.6%. The Applicant further asserted that the Respondent’s claim was vexatious and inappropriate in circumstances where the 5.2% increase the Respondent suggested in its communications was not discussed nor agreed upon.
oo) On 11 July 2023, the Respondent sent a further letter to the Applicant reaffirming its position that the employees were entitled to a 5.2% wage increase in July 2022 and denying the assertions its claim was vexatious.
pp) On 28 August 2023, the Applicant sent a further letter to the Respondent, again rejecting the Respondent’s interpretation of clause 21 of the Agreement and further alleging that the Respondent was attempting to interpret the clause in a manner completely inconsistent with the parties’ intentions, conduct, understanding and acceptance of bargaining terms that ultimately became the final Agreement.
Section 739 Application
qq) On 20 October 2023, the Respondent filed a s 739 dispute application in the Fair Work Commission (C2023/6380).
rr) On Thursday, 2 November 2023 the parties participated in conference before me and I programmed the matter for hearing on 15 and 18 December 2023.
Section 217 Application
ss) On 23 November 2023, the Applicant filed the present s 217 application and advised the Commission that it sought to the have the s 739 application stayed until its s 217 application was determined. The stay was heard and granted on 28 November 2023.
The proceedings
The hearing in the present matter was conducted on 13 and 14 February 2024. At the hearing,
a)the Applicant was represented by Ms Natalie Campbell of Counsel who was instructed by Ms Olivia Henderson-Inkster, lawyer, from Mills Oakley,
b)the Respondent was represented by Mr Tom Whiteside, Industrial Officer at the UWU.
In advance of the hearing the parties filed materials which were compiled in a Digital Tribunal Book (DTB). For completeness I set out below the documents relied upon by the parties:
| Exhibit | Document title | Date |
| 1 | Form F1 | 23-11-2023 |
| 2 | The Applicant's outline of submissions | 07-12-2023 |
| 2.1 | Witness statement of Bhoomika Bharti | 07-12-2023 |
| 2.2 | Attachments BB1 to BB-7 | various |
| 2.3 | Attachments BB-8 to BB-22 | various |
| 2.4 | Attachments BB-23 to BB-30 | various |
| 2.5 | Witness statement of Jamie Adams | 07-12-2023 |
| 2.6 | Attachments JA-1 to JA-13 | various |
| 2.7 | Attachments JA-14 | various |
| 2.8 | VIC EA - Meeting Notes FINAL Log of Claims Summary - 25.05.2022 | 25-05-2022 |
| 3 | The UWU's outline of submissions | 21-12-2023 |
| 3.1 | Witness statement of Peter Watkinson | 21-12-2023 |
| 3.2 | Witness statement of Nicholas Richardson | 21-12-2023 |
| 3.3 | Annexure NR-1 | various |
| 3.4 | Annexure NR-2 | various |
| 3.5 | Annexure NR-3 | various |
| 3.6 | Annexure NR-4 | various |
| 3.7 | Annexure NR-5 | various |
| 4 | Witness Statement of Nelson Meechan | 18-01-2024 |
| 4.1 | MSS Annexure to Nelson Meechan's witness statement | various |
| 5 | Agreed Statement of Facts | 25-01-2024 |
The clauses
The relevant clauses in dispute provide as follows:
‘21.1. Existing Employees
21.1.1. Effective from the first full pay period starting on or after 1 July 2021 the wage rates contained in Schedule B apply to existing employees and any employee engaged at an existing site.
21.1.2. The wage rates contained in Schedule B reflect an increase in line with the 2021 Fair Work Commission minimum wage increase of 2.5%.
21.1.3. The hourly wage rates in Schedule B for each classification level and each allowance in this Agreement will be increased by the Fair Work Commission minimum wage increase from the first full pay period on or after;
21.1.3.1. 1 July 2021; and
21.1.3.2. 1 July 2022; and
21.1.3.3. 1 July 2023; and
21.1.3.4. 1 July 2024
21.1.4. An updated Schedule A and B will be made available to employees within fourteen (14) days of the Fair Work Commission minimum wage decision.
21.1.5. Existing employees and any employee engaged at an existing site are guaranteed a minimum increase to wages of 8% over the life of the Agreement.
21.2. New Employees on New Sites
21.2.1. Effective from the first full pay period starting on or after 1 July 2021 the wage rates in Schedule C apply to new employees on new sites.
21.2.2. The hourly wage rates in Schedule C for each classification level and each allowance in this Agreement will be increased by the Fair Work Commission minimum wage increase from the first full pay period on or after;
21.2.2.1. 1 July 2021; and
21.2.2.2. 1 July 2022; and
21.2.2.3. 1 July 2023; and
21.2.2.4. 1 July 2024
21.2.3. An updated Schedule A and C will be made available to employees within fourteen (14) days of the Fair Work Commission minimum wage decision.
21.3. No existing permanent employee, as of 8 March 2013, will be assigned to a site that is subject to clause 21.2 without their agreement. If an employee agrees to the assignment, then the wage rates contained in Schedule C will apply.
21.4. If the Company requires an existing permanent employee to be assigned to a site that is subject to clause 21.2 without their agreement, the employee will continue to receive the wage rates in Schedule B.’
The variation
The variations sought by the Applicant is to insert ‘modern award’ into clauses 21.1.3 and 21.2.2 so that they read as follows:
‘21.1.3. The hourly wage rates in Schedule B for each classification level and each allowance in this Agreement will be increased by the Fair Work Commission modern award minimum wage increase from the first full pay period on or after;…’
‘21.2.2. The hourly wage rates in Schedule C for each classification level and each allowance in this Agreement will be increased by the Fair Work Commission modern award minimum wage increase from the first full pay period on or after;…’
(variation underlined)
The Applicant seeks that the variation has a retrospective effect from the date that the Agreement commenced (noting that it would not affect any individual because the increases have been in line with the modern award increase which in consistent with the variation sought).
The Applicant’s submissions
On 7 December 2023, the Applicant submitted (footnotes omitted),[2]
Legal principles
8. Section 217 of the FW Act gives the Commission a discretion to vary an enterprise agreement to remove any ambiguity or uncertainty on application by an employer covered by the enterprise agreement. It provides as follows:
“Variation of an enterprise agreement to remove an ambiguity or uncertainty
(1) The FWC may vary an enterprise agreement to remove an ambiguity or uncertainty on application by any of the following:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.
(2) If the FWC varies the enterprise agreement, the variation operates from the day specified in the decision to vary the agreement.”
9. The principles that apply to s 217 of the FW Act and its statutory predecessors, are well established. The Commission’s task is to:
(a) first, determine whether the agreement contains ambiguity and/or uncertainty within the meaning of s 217; and
(b) second, if that condition is met, the Commission may exercise its discretion to decide whether or not the agreement should be varied to remove the ambiguity or uncertainty, from a date determined by the Commission. In exercising such a discretion, the Commission is to have regard to the mutual intention of the parties at the time the Agreement was made.
10. The principles to be applied in consideration of the first stage under s 217 of the FW Act were considered by the Full Court of the Federal Court in Bianco Walling Pty Ltd v CFMMEU (Bianco Walling). The Full Court held that (at [67]):
“…Ambiguity exists when a provision in an enterprise agreement is capable of more than one meaning. … The ambiguity may be apparent on the face of the document or may become apparent when extrinsic evidence is adduced. A provision may be ambiguous even though it is capable of interpretation…”.
11. It is not necessary for the Commission to interpret the Agreement to find that it is ambiguous. The Commission need not be “constrained in the matters to which it may have regard by the principles developed for the interpretation of enterprise agreements.” The Commission is not bound by the rules of evidence and procedure in relation to a proceeding.
12. The Commission is “obliged, in performing its functions or in exercising its powers in relation to a matter under the FW Act, to take into account, amongst other things, ‘equity, good conscience and the merits of the matter’” in accordance with s 578 of the FW Act.
13. The Commission is to consider the matter objectively. In that objective consideration, the Commission may have regard to the evidence that the parties to the Agreement had a common understanding as to the meaning of the terms used in their Agreement. In doing so, a reading of the Agreement as a whole may indicate ambiguity or uncertainty in one or more of its clauses. The Commission should err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention.
Ambiguity and or uncertainty
14. The Commission ought be satisfied that the Agreement is ambiguous, or in the alternative, uncertain.
15. There is an ambiguity or uncertainty in the Agreement as to whether the phrase “will be increased by the Fair Work Commission minimum wage increase” (the phrase in issue) refers to an increase by reference to the Modern Award minimum wage or the National Minimum Wage Order. The Commission need not construe the meaning of this phrase to determine that it is ambiguous or uncertain.
16. The Phrase itself is capable of multiple meanings. That is, it could either mean increase to the National Minimum Wage Order, or the Modern Award minimum wage. The FW Act empowers the Commission to increase the Modern Award minimum wage and the National Minimum Wage Order. There is ambiguity and uncertainty as to which decision of the Commission is being referred to by the words “Fair Work Commission minimum wage increase” within the terms of clause 21. The term used is an amalgam of both the National Minimum Wage Order and the Modern Award minimum wage.
17. The phrase “minimum wage increase” references the powers of the Commission in s 285 of the FW Act in conducting an s annual wage review. The provision provides:
Annual wage reviews to be conducted
(1) The FWC must conduct and complete an annual wage review in each financial year.
Note 1: The FWC must be constituted by an Expert Panel to conduct annual wage reviews, and to make determinations and orders in those reviews (See section 617).
Note 2: The President may give directions about the conduct of annual wage reviews (See section 582).
(2) In an annual wage review, the FWC:
(a) must review:
(i) modern award minimum wages; and
(ii) the national minimum wage order; and
(b) may make one or more determinations varying modern awards to set, vary or revoke modern award minimum wages; and
(c) must make a national minimum wage order.
Note: For provisions about national minimum wage orders, See Division 4.
(3) In exercising its power in an annual wage review to make determinations referred to in paragraph (2)(b), the FWC must take into account the rate of the national minimum wage that it proposes to set in the review.
15. Under this section, the Commission must review “modern award minimum wages” and “the national minimum wage order”. The relevant phrase in the enterprise agreement is “the minimum wage increase”. The phase in issue is an amalgam of these two concepts.
The objects of the FW Act are somewhat different in relation to the review of each. The approach taken by the Commission in relation to reviewing each differs because of these purposes which is reflected in the nature of their statutory tasks. A minimum wage order dealing with 0.7% of the lowest paid employees, compared with the modern award minimum wages which deal with 20.5% of employees who are paid at amounts above the minimum wage. It is beyond contention that the employees affected by this Agreement where “award covered” employees.
18. Under the system provided by the FW Act the employer is the only one that can put an offer to employees for a vote. In considering the intentions of the employees, the Commission can take notice of the fact that these would have been Award covered employees (but for the Agreements that applied to them). At the time of the vote, it is much more likely that they considered the increases to have been related to the Award increases, rather than the National Minimum Wage Order which did not apply to them.
19. There are textual indicators within the Agreement of the ambiguity and uncertainty. MSS and the employees intended that the increase be by reference to Modern Award increases. Clause 21.1.2 refers to an increase of 2.5% in 2021, which in that year, was the increase to both the National Minimum Wage , and to the Modern Award minimum wage. Ambiguity is also apparent on the basis that the wage increases referred to in the Schedules to the Agreement reflect the Award increases.
20. The Agreement provides for increases on 1 July 2021, 1 July 2022 1 July 2023 and 1 July 2024. It was effectively a retrospective agreement for two years, because of the length of time of the negotiations. It was voted up in February 2023, approved by the Commission in April 2023, with a nominal expiry date of 30 June 2025. The Agreement has a schedule which sets out rates as at 1 July 2021. Increases thereafter from 1 July 2022 onwards are then based on the wording in contention.
21. There is also an ambiguity or uncertainty that arises from the determination to increase the National Minimum Wage and the Modern Award minimum wage. Prior to 2022 the Fair Work Commission National Minimum Wage increase and the Modern Award minimum wage were at the same percentage. On or around the end of May 2022, there was an announcement by the FWC that the minimum wage was to increase. It was not apparent at first how the increase would occur or be applied. In June 2022, it was clarified by the Commission that a distinction would be made between the increase to the National Minimum Wage and the Modern Award minimum wage increase. This bespeaks of the ambiguity or uncertainty that affects the clauses of the Agreement.
The agreement should be varied
22. MSS Seeks the Commission exercise its discretion enlivened by the ambiguity or uncertainty to vary the Agreement. The ambiguity or uncertainty could be removed by the Agreement being varied to include the words “will be increased by the Fair Work Commission’s modern award minimum wage increase” in each of clauses 21.1.3 and 21.2.2.
23. The Commission can be guided by the mutual intention of the parties to the Agreement. That is, what it is that the employer and the employees intended the words to mean. They clearly intended that the increases were to be by reference to the Modern Award increase. The extrinsic documentation, objectively assessed, supports such a variation.
24. The discretion to vary the Agreement in this way should be exercised because the proposed variation reflects the objectively discernible intentions of the parties. The clauses themselves reflected that intention in light of the fact that the Agreement anticipated a 2.5% (as indicated by in clause 21.1.2 and the Schedules). This indicated that the increases would reflect the Modern Award minimum wage increase. The purpose of the clauses was to not only provide an increase to employees in their hourly wage rates, but also to ensure that the better off overall test was met for the life of the Agreement. The variation proposed by the Applicant reflect the intention of the parties and the purpose of the clauses.
25. The variation sought reflects the intentions of the employer and the employees who bargained for the Agreement. There was also a number of communications from the employer to the Union and employees over the life of the bargaining and the approval process. They indicate that the increases were to be by reference to the Award increase or the figure of 4.6%. This was not disputed by the Union in any direct fashion. Ms Bharti and Mr Adam’s statements annex these communications. The approval process filed by MSS (and there were two attempted approvals) contained supporting material that referred to the increase by reference to the Award. This included rates in rate comparison tables. There were SMS messages sent by MSS to the employees using a platform for sending group SMS. The SMS messages were tailored to certain groups of employees. They referred to Award base increases.
26. Variously, the Union made references to Award rates in its communications with the MSS and the employees. This also included references referred to in the Union’s own bulletins that it published and circulated. There was a dispute in the Commission in 2022 concerning the rates of pay, filed by the Union. That dispute proceeded in relation to Award rates. The 26 April 2022 log of claims by the Union referred to minimum rates by reference to the Award.
27. Mr Adams and Ms Bharti were both acutely aware of the need that the Agreement would need to pass the better off overall test for as long as it endured. They therefore intended increases in line with the Modern Award increases. Neither considered that the National Minimum Wage Order was something that affected the employees under the Agreement. By contrast, the only employees who could have theoretically been affected by the National Minimum Wage Order were Level 1 employees, however, there were no such employees.
28. This was reflected in the bargaining discussions which were focused on references to annual Award increases rather than national minimum wage increases. The National Minimum Wage was not discussed at the bargaining table. The bargaining for the Agreement happened over a lengthy time period with more than 16 meetings. There were express references to the Award increases in the bargaining. No references were made to the National Minimum Wage Order around the bargaining table. At the 16 June 2021 meeting, wages and allowances were discussed. The Union proposed an increase that was “greater than CPI” or the Modern Award increase. This shows that in the bargaining the words in question were understood to mean the Modern Award increase.
29. MSS’ intention is abundantly clear because of the offer that it made in the notice to employees on 12 July 2022, posted to them online to them on 13 July 2022. This communication post-dated the 2022/23 wage review decisions of the Commission.
30. It specifically made it clear that it was offering wages to go up by the amount that Award wages go up. That is what MSS increased the wages by from 1 July 2022 (during the bargaining), and it stated that this is the approach it would be taking under the Agreement when it said in its notice.
“ENTERPRISE AGREEMENT UPDATE
12 July 2022
“Our offer to employees is this: “…
Wages to increase in line with the Fair Work Decision affecting awards from July 2023.”
31. MSS never communicated any contrary intention and there is no reason for the voting employees to think that the employer was offering something different. The objective material supports the offer having been intended to be that the annual increase would be the amount of the Modern Award increase.
32. As noted above, in 2022, the amount of the increase of the National Minimum Wage Order was higher than the amount of the increase in Modern Award minimum rates increase. Yet there was no communication from the employees or the Union saying that they were bargaining for the annual increases to be based on increases to the National Minimum Wage Order.
33. There is a history where at times the amount of a national increase is a dollar amount rather than a percentage amount. The National Minimum Wage Order is, in a monetary sense, far more likely to be a lower monetary amount than the monetary amount of the increase of the Award. Had the National Minimum Wage Order been less than the Modern Award increase, then there would be the possibility of the Agreement falling behind the Award.
34. It Seems unlikely that employees, with no knowledge otherwise than what had been communicated to them throughout the bargaining, and in the offer of the Agreement, would think that the national wage increase referred to was the increase of the National Minimum Wage Order. This is something that applies to less than 0.7% of employees. Yet 20.5 % of employees are paid in accordance with minimum wage rates in Modern Awards.
35. Employees in the security industry are covered by the Award. That is the award that they know of, and which is always applied as their safety net award, including prior to the introduction of Modern Awards. Some employees would have been employed with other companies that apply that award and would have received that annual award increase. Accordingly, when they saw the Agreement offered to them in February 2023 by their employer, that references their hourly rate rates increasing by “the Fair Work Commission minimum wage increase”, it was far more objectively likely that what they were intending to agree to when they voted, was to the amount that the Award would go up by each year. This is even more objectively likely to be what the employees knew they were voting on regarding wage increases, in light of the Enterprise Bargaining Update communication they had received from the employer on this question on 13 July 2022 (prepared on and dated 12 July 2022) of what the annual increases would be.
36. It is reasonable to take judicial notice of the fact that the National Minimum Wage Order applies to a much smaller population of employees and is therefore lesser known and less likely to be understood by those voting.
37. The evidence reveals limited references whatsoever to the National Minimum Wage Order, and no references to that actual phrase. There was a notice from the UWU dated 21 July 2022 that referred to a 5.2% increase. However, that dealt with a much more narrow issue than the amount of the increase. It was directed at the timing of the increase to be given to employees from 1 July 2022 and what the Union described as “wage discrimination” between various employees. The Union had written to MSS earlier that day requesting that it pass on the increase effective from 1 July 2022 immediately. The alternative would have been to pass on the increase at a future time, when the Agreement was voted up at some future date (with the provision of back pay). That is what was agreed by MSS in the 21 July 2022 communication, set out below.
38. Neither the Union’s email nor MSS’s 21 July 2022 update touched on the question of future annual increases including the increase on 1 July 2023 or 1 July 2024.
39. The MSS update addressing the 1 July 2022 pay increase, expressly referred the employees to the award:
ENTERPRISE AGREEMENT UPDATE
21 July 2022
Dear colleagues,
further to the communication issued on 12 July 2022, please read below:
…
MSS Security will implement increases which will align all wage rates to the award minimum, effective from the first full pay period in July 2022”
40. It is telling that nowhere in the Union’s email of 21 July 2022, did they take issue with the 12 July 2022 statement by MSS Security that the next increase would be “in line with the Fair Work decision affecting awards from July 2023”. There is an absence of objective evidence that the subjective intent of the Union was to assert that the 2023 increase should be based on the National Minimum Wage Order. After the decisions of the Commission in June 2022, there were no discussions about which rate was to be applied in the remaining bargaining meetings.
41. Finally, as soon as the dispute was raised by the Union about which increase it was that applied, Ms Bharti (with the supervision of Mr Adams) swiftly advised that it was her understanding that the Agreement was to increase by reference to the Modern Award and not the National Minimum Wage Order. This reaction confirms MSS’s stated intention.
42. In light of the objective evidence, the amendments proposed by MSS represent the intentions of the employer and also the employees who voted on the Agreement at the time that the Agreement was made. They also appropriately address the ambiguity or uncertainty.
Conclusion
43. The Commission ought be satisfied that the Agreement is uncertain and/or ambiguous. It should, therefore, exercise its discretion to vary the Agreement to reflect the objectively ascertainable intentions of the parties at the time that the Agreement was made from the point in time that the Agreement was made.
The Respondent’s submissions
On 21 December 2023, the Respondent submitted (footnotes omitted),[3]
Principles
10. It is well-established that s 217 requires consideration of three steps (sometimes referred to as two steps) prior to the exercise of the power to vary an enterprise agreement to remove an ambiguity or uncertainty.
11. In the recent decision of Monash University T/A Monash University (Monash) [2023] FWC 1148, Deputy President Bell summarised the three steps as follows:
• The first step, which is a jurisdictional prerequisite, is the finding of an ambiguity or uncertainty in an enterprise agreement.
• The second step, which is also a jurisdictional prerequisite is that there is an application by one of the persons listed in s.217(1)(a) – (c).
• The third step addresses a question of discretion, signified by the fact that the Commission “may” exercise the power to vary an enterprise agreement.
12. Section 217, and the appropriate test for determining whether there is ambiguity or uncertainty, was recently considered by the Full Court of the Federal Court in Bianco Walling Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union [2020]
(‘Bianco Walling’). In Bianco Walling, the Full Court held that in determining ambiguity or uncertainty under s 217, the Commission is not constrained by the usual principles of interpretations, as set out in AMWU v Berri Pty Ltd, meaning it is not necessary to first find ambiguity exists in an Agreement in order to have regard to evidence of surrounding circumstances.
13. With respect to the First Step, in Monash University, Deputy President Bell summarised the relevant considerations at follows:
[85] As to the ‘first step’, the following principles are discernible from the authorities:
1) The process of ascertaining ambiguity or uncertainty in an enterprise agreement is “distinct” from the process of construction, the latter of which involves determining the “true meaning” of a provision: Bianco Walling, [66] – [67].
2) Ambiguity exists when a provision in an enterprise agreement is capable of more than one meaning: Bianco Walling, [67].
3) Ambiguity may be apparent on the face of the document or may only become apparent when extrinsic evidence is adduced: Bianco Walling, [67].
4) A provision may be ambiguous even though capable of interpretation: Bianco Walling, [67].
5) Evidence of the parties “common intention” and the history of the impugned provisions are matters the Commission is permitted to have regard to in ascertaining whether ambiguity or uncertainty exists: Bianco Walling, [68].
6) The mere existence of rival contentions as to the meaning or application of a provision or provisions in an enterprise agreement is unlikely to be sufficient to indicate ambiguity or uncertainty for the purposes of s 217: Bianco Walling, [70].
7) And while the mere existence of rival contentions is insufficient to permit a finding of ambiguity or uncertainty, the Commission “will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention” (original emphasis): Bianco Walling, [70].12
8) The words “ambiguity” and “uncertainty” are not synonymous: Bianco Walling, [75]. “There may, for example, be uncertainty in an enterprise agreement even when its terms are not ambiguous. The uncertainty may arise from the application of the unambiguous terms to a given set of circumstances. The distinction between patent ambiguity (linguistic ambiguity) and latent ambiguity (ambiguity in application) provides an illustration by analogy” (citations omitted).
9) A form of “uncertainty” can extend to the common law analogy of uncertainty, where a provision might be found to be void, because no definite meaning can be put on that provision. However, “uncertainty” in s.217 is not so limited: Bianco Walling, [77].
[86] Bianco Walling makes clear, if clarity was required, that the task of identifying an ambiguity or uncertainty is not an especially onerous step.
14. The Second Step concerns the standing of an application to make an application.
15. With respect to the Third Step, in Monash University, Deputy Bell summarised the relevant considerations as follows (footnotes removed):
[155] Without limiting what might be appropriate in all the circumstances of a particular matter, the factors guiding the discretion to vary an enterprise agreement to remove and ambiguity or uncertainty might include, as appropriate:
• The absence of an antecedent “common intention” or “substantive agreement”. The presence of this factor would ordinarily be a matter of significant weight in favour of variation and, equally, its absence a significant factor for refusal.
• The variation would not “give effect to a new and substantive change to the agreement”. This is a significant factor for refusal, if not satisfied;
• The exercise of the power of variation granted by s.217 is only for the purpose of removing “an ambiguity or uncertainty”. A variation extending beyond that required to remove an ambiguity or uncertainty would be beyond the jurisdiction conferred by s.217;
• The views of the employer and employees (and, for the latter, including the views expressed on their behalf by an applicable union);
• The utility of the amendments;
• The stage of bargaining between the parties, where relevant. Where an enterprise agreement has expired, it would be generally preferrable for the parties to endeavour to reach an agreed position rather than having the Commission determine a variation for the expired agreement;
• The timing of an application for variation, including delay;
• The specified date in which the variation is sought to be effective; and
• The power under s.217 “does not give rise to a general discretion to determine a matter based on industrial fairness”.
16. Further, the Commission has held a retrospective variation involves heightened considerations, examples of which might include the retrospective variation resulting in a person being exposed to a pecuniary penalty not being ruled out and the effect of the passage of time on new employees following the commencement of the Agreement.
17. These principles of construction should be applied in the present matter before the Commission.
The Agreement
18. UWU agrees with MSS’ outline of the relevant clauses of the Agreement, set out at paragraph [7] of its Outline of Submissions.
19. UWU also considers the following Schedules of the Agreement to be relevant to the application:
Schedule A of the Agreement which sets out various Allowances for employees. Schedule A states that, “Schedule A will be updated and distributed within fourteen (14) days of FWC minimum wage decisions”.
Schedule B which sets out Rates at July 2021 for Existing Employees or Employees at Existing Sites. Schedule B states that, “Schedule B will be updated and distributed within fourteen (14) days of FWC minimum wage decisions”.
Schedule C which sets out Rates at July 2021 for New Employees on new Sites”. Schedule C states that, “Schedule C will be updated and distributed within fourteen (14) days of FWC minimum wage decisions”.
The Variation Sought by MSS Security
20. In its application, MSS seeks to vary 21.1.3 so that the clause would now read as follows:
21.1.3. The hourly wage rates in Schedule B for each classification level and each allowance in this Agreement will be increased by the Fair Work Commission modern award minimum wage increase from the first full pay period on or after; …
21. Similarly, MSS seeks to vary clause 21.2.2 so that the clause would now read as follows:
21.2.2. The hourly wage rates in Schedule C for each classification level and each allowance in this Agreement will be increased by the Fair Work Commission modern award minimum wage increase from the first full pay period on or after; …
22. The variation sought by MSS would have retrospective effect from the date that the Agreement commenced, being 28 April 2023.
UWU Submissions on the variation
First Step – Whether there is an ambiguity or uncertainty in the Agreement
23. With respect to the First Step, the presence of an ambiguity or uncertainty is a jurisdictional prerequisite for exercising the power to vary. If the Commission does not find ambiguity or uncertainty in clause 21.1 and 21.2 of the Agreement, the variation sought by MSS cannot be made.
24. Against MSS’ submissions, UWU submits that the words “the Fair Work Minimum wage increase” in clause 21 is plainly a reference to the Fair Work Commission’s annual national minimum wage increase and cannot be understood as referring to the various increases to the minimum wages contained in the modern awards implemented through the Fair Work Commission’s Annual Wage Review. Further, while UWU accepts that MSS puts forward a rival contention as to the meaning of clause 21, the mere existence of rival contentions as to the meaning or application of a provision in an enterprise agreement is unlikely to be sufficient to indicate ambiguity or uncertainty for the purposes of s 217.
25. With respect to MSS’ submission that the term “the Fair Work Commission minimum wage increase” is an amalgam of both the national minimum wage order and the increases to the modern award minimum wages, UWU submits that an amalgam must surely include the word “Award” or, at the very least, the plural “increases”. Further, while it may be true that the phrase “the Fair Work Commission minimum wage increase” omits the word “national”, that plainly does not render the phrase the amalgam MSS asserts, particularly in light of the definite article ‘the’ at the commencement of the phrase, and the singular ‘minimum wage increase’, as opposed to the plural Award minimum wage ‘increases’ implemented pursuant to the Annual Wage Review.
26. With respect to MSS’ submission that the Commission can take notice of the fact that the employees would otherwise have been Award covered employees (but for the Agreements that applied to them), UWU submits that the fact the employees would otherwise be Award-covered employees is an irrelevant consideration and, in circumstances where the vast majority of Australia’s national system employees are Award-covered employees, the fact the employees would otherwise be Award- covered employees does not assist in establishing ambiguity or uncertainty of the phrase.
27. Further, in circumstances where MSS has not tendered any evidence from the employees as to their understanding of clause 21, UWU submits MSS’ speculation as to the thoughts of the employees must be rejected.
28. With respect to MSS’ submissions that there are textual indicators within the Agreement of the ambiguity and uncertainty, being that Clause 21.1.2 refers to an increase of 2.5% in 2021, which in that year, was the increase to both the national minimum wage, and to the Modern Award minimum wages, and also that the wage increases referred to in the Schedules to the Agreement reflect the Award increases, UWU submits nothing turns on either of these, because again because the words “Modern Awards” are not found in clause 21, while Schedules B and C deal only with wage and allowances increases from 1 July 2021, meaning the Schedules shed no light on the intended wage increases for July 2022 and 2023.
29. Keeping to the text of the Agreement, a review of the Agreement’s predecessor agreements establishes that the approach of linking the Agreement’s annual wage increases to the “Fair Work Commission minimum wage increase” was first adopted in the MSS Security Victorian Enterprise Agreement 2017 (AE427315) (‘the 2017 Agreement’), which came into operation on 26 February 2018. Prior to this, the MSS Security Victorian Agreements provided for discrete percentage increases from the first full pay period after 30 June in each year, untethered to any decision of the Fair Work Commission. UWU has obtained a copy of the Form F17 which was filed in support of the 2017 Agreement. In the Form F17, MSS refers to clause 21 as a term which is more beneficial than, or not conferred by the reference instruments. MSS goes on to describe clause 21 as follows:
Clause 21 – Wages and related matters – rates are higher than Award.
UWU therefore submits that the evidence of the history of clause 21 is that it was intended to provide terms which were more beneficial than – or different to – those contained in the Award, which is consistent with UWU’s submissions that the phrase should be understood as being a reference to the National Minimum Wage increase and not the Modern Award increase.
30. UWU further submits that there is actually very minimal interaction between the Award and the Agreement. Clause 3.2 of the Agreement provides, “The Security Services Industry Award 2020 (“the Award”) does not apply to employees covered by this Agreement” while the only other references made to the Award are found in clauses 21.5 and 21.6, which relate to “excess supplementary payments” and circumstances where a client may potentially require the Respondent to pay employees a certain level of pay above the Award (for example, as part of UWU’s “Safeguard” campaign, which includes a standard union claim of pay rates set at 6% above-Award, subject to additional client funding).
31. With respect to MSS’ submissions that ambiguity and uncertainty arises from the May 2022 Annual Wage Review, to the extent that the national minimum wage and Modern Award wage rates have, in practice, generally been increased by the same percentage in Annual Wage Review decisions since June 2017 (and in prior years), it is common ground that this practice was not adopted by the Commission during the Annual Wage Review 2021-22, a decision which was issued on 15 June 2022, over 7 months prior to the date the approval ballot for the Agreement commenced. Accordingly, and despite the evidence given by Mr Adams and Ms Bharti about their subjective intentions, at the time the Agreement was made, it should have been abundantly clear to MSS from June 2022 that an increase to the national minimum wage would not necessarily be equivalent to any increases ordered with respect to the Modern Award minimum wages, and yet, new words linking the Agreement’s annual wage increases to increases to the Modern Award wage increases were not inserted by the time the Agreement went out to ballot in January 2023.
32. For the aforementioned reasons, when considered objectively, the Commission should not find there is ambiguity or uncertainty with respect to clause 21 of the Agreement.
Second Step - Is the application made by one of the persons listed in s.217(1)(a) – (c)?
33. With respect to the “second step”, UWU accepts that MSS has standing to make the application pursuant to s 217(1)(a) and also accepts that the application concerns an enterprise agreement which is in operation and that the Commission has jurisdiction to consider the application.
Third Step – Should the Commission exercise its discretion to vary the Agreement?
34. It is well-established that the finding of ambiguity or uncertainty in an Agreement does not necessarily mean it is appropriate for a proposed variation to be made. For example, in the recent decision of Monash University, Deputy President Bell held there was ambiguity in the relevant Agreement but was not satisfied it was appropriate to make variations in the nature sought because common intention as to the operation of the relevant Schedule could not be demonstrated, and in the absence of common intention, the variation risked “having the effect of improving (or harming) the legal position of either the employees or employer unanchored by any principled assessment of how those legal rights would or should be affected”.
35. Deputy President Bell further declined to make the variation sought on the basis that, were the variation made, there was a possibility the legal rights of the relevant employees (who opposed the variation) would be adversely affected, finding that there was not any unreasonable barrier or difficulty in obtaining substantial resolution of the disputed terms – either by Court determination or through the bargaining process – outside of the s 217 application.
Mutual or common intention
36. On a general level, UWU submits that the Agreement was endorsed by a rather modest majority (about 60%), and this endorsement occurred in circumstances where MSS and UWU circulated communications which put forward rival contentions as to the meaning and operation of clause 21 with respect to new wage rates. Accordingly, UWU submits there is not enough evidence before the Commission to establish a common intention between MSS and its employees with respect to clause 21, meaning the Commission should be very cautious in exercising its discretion to make the variation sought. The Commission can be sure on the evidence that, as between MSS and UWU (and the some 250 members represented by UWU in the bargain), there was no common intention as to the meaning of clause 21.
Text of the Agreement
37. MSS submits that the clauses themselves reflected that intention because of the 2.5% increase provided for from 1 July 2021 (found in clause 21 and the Schedules), arguing this indicated that the increases would reflect the Modern Award minimum wage increases. Against this, UWU submits that the reference to 2.5% in clause 21 and the Schedules could equally be said to evidence a common intention to increases wages in line with the increase to the national minimum wage.
MSS’ communications with employees
38. MSS submits that the variation sought would reflect the intentions of the employer and the employees who bargained for the Agreement, pointing to two text messages it sent to employees in mid-December 2021, and nine text messages it says it sent employees in early December 2023 (of which only four actually concern wage increases). MSS also points to two documents circulated to employees during the bargaining and to approval process documents.
39. UWU submits that little regard should be given to the text messages sent in December 2021 or the bulletin sent in July 2022 as both concern offers that were not ultimately put to the employees. UWU further submits that the text messages and FAQ document sent during the access period are too vague and “high-level” to be of any assistance to the Commission, and at their highest, are consistent with Ms Bharti having an incorrect understanding of clause 21 of the Agreement. Here, UWU notes that it has previously raised concerns that MSS’ employee communications have not always properly set out the terms of the Agreement. With respect to the Form F17 filed, UWU notes that with respect to the meaning of clause 21, the comment simply reads, “the rates and penalties are higher than the Award”, which does not lend any support to the notion that future increases to wages would be measured (or not) by the national minimum wage increases.
40. More broadly, UWU submits that despite MSS’ exclusive focus on the discussions and communications which occurred during bargaining for the 2021 Agreement, the wording of clause which MSS now seeks to vary was developed in 2017, prior to Ms Bharti’s commencement with MSS. Similarly, while Mr Adams commenced with MSS in 2004, becoming the Executive General Manager for Victoria and Tasmania in July 2017, there is no evidence Mr Adams was involved in the bargaining for the 2017 Agreement, when the words of clause 21 were first established. Accordingly, the evidence of Ms Bharti and Mr Adams’ subjective understandings of how clause 21 operates provides no real assistance to the Commission in understanding the original common intention with respect to the meaning and operation of clause 21 and falls well short of establishing any common intention.
UWU’s Communications with MSS and Employees
41. MSS submits that UWU also made references to Award rates in its communications with the MSS and the employees, including in its own bulletins. MSS also points to a dispute in the Commission in 2022 concerning the rates of pay, filed by the Union, which related to Award rates. MSS also contends UWU’s Log of Claims dated 26 April 2022 referred to minimum rates by reference to the Award. Against this, UWU submits these submissions are misconceived in several important ways.
42. First, the better off overall test at s 193 of the FW Act always requires a comparison of Agreement rates with the relevant comparator Award, as does s 206, regardless of the wage increase mechanism in the Agreement (a number of mechanisms for wage increases are commonly used, for example, a set number percentage might be used, Award wages increases might be used, the national minimum wage increases might be used, CPI or WPI might be used). That UWU was concerned with how the Agreement’s wages compared to the Award in the context of bargaining, and when the protracted nature of the bargaining had meant some employees’ wages had fallen below Award rates, meaning it made various “references to Award rates in its communications with MSS and the employees”, should not be surprising, but it does not assist in establishing a common intention as to the meaning of clause 21. This is especially true with respect to any communications made prior to May 2022 when UWU had not yet turned its mind to the practical effect of clause 21’s reference to the “Fair Work Minimum wage increase” rather than the “Fair Work Award Increase”.
43. Second, with respect to the “dispute in the Commission in 2022 concerning the rates of pay, filed by the Union, which related to Award rates”, again, this is not strictly correct. UWU did not file a dispute over rates on pay in 2022. Rather, what is referred to is UWU’s Form F18 filed on 24 December 2021, filed by UWU in response to MSS’ first application for the approval of the 2021 Agreement, UWU’s materials objecting to the approval dated 28 February 2022, and the approval process generally. In the Form F18, UWU set out its concerns about misrepresentation and the ballot process, while it was Deputy President Masson who identified issues, and invited undertakings, with respect to below-Award rates of pay, though the application was ultimately discontinued on 1 March 2022. The reason for the various references to rates being above or below Award were because of the test in s 193 and do not assist the Commission with respect to establishing a common intention on the meaning and operation of clause 21. In any event, the Form F18 and aborted approval process occurred prior to May 2022, when the practical difference between a wage increase tied to National Minimum Wage and the Award increases became material.
44. Third, with respect to MSS’ contention that “UWU’s Log of Claims dated 26 April 2022 referred to minimum rates by reference to the Award”, UWU’s Log of Claims dated 26 April 2022 included a claim for “All wage tiers to be removed and wages to be aligned to the Safeguard wage standards (set at 6% above Award)” and “Annual minimum wage increases and allowance increase”, these claims (which were ultimately rejected by MSS) were clearly motivated by the requirements of s 193 and UWU’s broader industry-wide “Safeguard” campaign. Accordingly, while UWU’s language in the Log of Claims was not precise, UWU was also not using the language as that found in clause 21, the Log of Claims referred to therefore does not assist in establishing a common intention with respect to the meaning of clause 21. Again, UWU also notes the Log of Claims pre-dates May 2022 when the practical difference between a wage increase tied to the National Minimum Wage increase and the Award increases became material.
45. Taking a step back, with respect to UWU’s understanding of clause 21 at the time the 2021 Agreement was made, UWU submits that while UWU did not endorse the Agreement, and instead encouraged its members to vote “No” to the Agreement, it is quite clear from UWU’s Member Bulletins of 23 and 30 January 2023 and 21 April 2023 that at the time the Agreement was made (and in its aftermath), UWU had come to view clause 21 as referring to the National Minimum Wage increase rather than the Award increases. The consequence of this is that UWU and MSS plainly held rival contentions as to the meaning and operation of clause 21 when the Agreement was made. Given UWU’s role as the default employee bargaining representative, UWU submits the lack of common ground between MSS and UWU on the meaning of clause 21 weighs against a finding that there was a common intention with respect to the clause, the absence of which is a significant factor for refusal of the variation.
Discussions during Bargaining
46. MSS submits that the National Minimum Wage was not discussed at the bargaining table over the course of 16 meetings.
47. Against this, UWU accepts that the National Minimum Wage was not discussed over the course of the 16 meetings. However, this is not surprising as only 3 of these meetings occurred after 30 May 2022 when the different increases between the National Minimum Wage increase and the Award wages increases were announced. Further, it is not surprising the meaning of clause 21 was not discussed as MSS was not proposing to change the existing clause, while by late 2022, UWU’s attentions were on its claims to significantly change the entire wage regime, first by removing the distinction between “existing” and “new employees” and increasing wages to 6% above-Award ”Safeguard rates” over the life of the Agreement, and later by seeking a 2% above-Award wage increase for “new employees”.
48. UWU submits it is helpful to look at what the actual discussions which did occur with respect to the wage increases. On 26 April 2022, UWU put its Log of Claims to MSS, which included a claim for the introduction of “Safeguard” wages set at 6% above- Award for all employees. On 1 July 2022, Award wages were increased by 4.6%, meaning many of MSS’ employees pay rates fell below the Award, contravening s 206 of the FW Act. At a meeting of 14 July 2022, UWU asked if MSS would raise wages to meet Award rates and MSS advised it would not. On 21 July 2022, UWU sent a concerns notice to MSS on this issue, citing its concerns with respect to s 206 and also s 228 of the FW Act. On 22 July 2022, MSS advised UWU that it would increase wages to Award levels after all.
49. On 3 August 2022, MSS sent an email to UWU officially rejecting UWU’s claim for Safeguard rates. On 25 October 2022, UWU put a revised wages claim to MSS, seeking to have the two-tiered system removed and wages for “new employees” increased to 2% above-Award over the course of the Agreement. At the meeting on 2 December 2022, MSS rejected UWU’s revised wages claim. MSS then commenced the access period for its proposed Agreement on 24 January 2023, UWU encouraged its members to vote “No”, and the Agreement was endorsed by a modest majority in the ballot held between 2 and 6 February 2023.
50. UWU therefore submits the extent to which the National Minimum Wage increase was not discussed in the 16 bargaining meetings does not assist in the Commission in establishing a common intention with respect to clause 21 (which was itself created in 2017), because it’s clear the focus of UWU and MSS was on UWU’s claims for Safeguard rates.
51. Further, with respect to the wage increase claim put forward by UWU at the 16 June 2021, the claim was in fact as follows, “The percentage increase in modern award minimum wages ordered by the Fair Work Commission as a result of an Annual Wage Review (or it’s successor) that is conducted after the commencement of the Agreement”. It should therefore be clear that UWU’s proposed words – which were rejected entirely by MSS - differed significantly from those found in clause 21. Again, UWU submits the discussions which occurred during the 16 bargaining meetings and the claims put forward by UWU do not demonstrate a common intention with respect to clause 21.
52. MSS also complains that in 2022, there was no communication from the employees or the Union saying that they were bargaining for the annual increases to be based on the increase to the National Minimum Wage. This is because UWU was not bargaining for an increase in line with the National Minimum Wage (clause 21 already existed) and was instead bargaining for maintaining Safeguard rates of 6% above the Award and an end to the two-tiered wages system.
53. MSS submits that the National Minimum Wage Order is, in a monetary sense, far more likely to be a lower monetary amount than the monetary amount of the increases of the Awards. Given the current linkage of the national minimum wage to classification C13 of the Awards (and the lower C14 Award rates), this argument is difficult to sensibly follow.
54. MSS refers to correspondence from UWU to MSS Security requesting that it pass on the increase effective from 1 July 2022 immediately and submits that, “it is telling that nowhere in the Union’s email of 21 July 2022, did they take issue with the 12 July
2022 statement by MSS Security that the next increase would be “in line with the Fair Work decision affecting awards from July 2023”. Against this, UWU submits that its correspondence of 21 July 2023 related to MSS’ wage rates falling below the Award from 1 July 2022 (despite the terms of ss 206 and 323 of the FW Act). UWU was concerned was MSS withholding pay in the context of bargaining and therefore was not consistent with the good faith bargaining requirements. The correspondence primarily concerned ss 206 and 228 and did not consider the meaning and operation of clause 21 of the Agreement for July 2022 as no such term was in effect at the time (clause 21 the 2017 Agreement only provided for wage increases up to 1 July 2020). Again, UWU submits its correspondence of 21 July 2022 does not demonstrate common intention with respect to clause 21.
55. UWU accepts that it was not until about January 2023 that it publicly expressed its view that the July 2022 increase should be line with the National Minimum Wage increase of 5.2% rather than the Award increases of 4.6%, however, UWU again submits that it did not draft or endorse the clause and campaigned for MSS’ unilateral agreement to be rejected by the employees , while its later conduct suggests it did not ultimately share MSS’ interpretation of the clause.
56. Finally, UWU submits that Ms Bharti’s reaction to UWU raising the dispute simply suggests is that she had not closely considered the words used in the existing clause 21 until UWU raised the issue with her. In any event Ms Bharti’s post-facto reaction would appear to be an irrelevant consideration.
Other Factors Weighing Against Variation
57. Moving beyond the question of whether there is a demonstrable common intention between MSS and its employees which is consistent with the variation sought, UWU argues a number of other factors weigh against the variation made. These factors are set out below.
Variation would give effect to a new and substantive change to the Agreement
58. For the reasons set out at paragraphs [34] to [57] above, UWU contends that a clear common intention in relation to the meaning and operation of clause 21 has not been demonstrated. In these circumstances, UWU contends that if flows from this that the variation sought would instead give effect to a new and substantive change to the Agreement, the effect being to deny the employee’s a 5.2% wage increase from 1 July 2023. This weights against the variation sough being made.
Views of the Employees (including the views expressed on their behalf by an applicable union)
59. MSS has not provided any evidence with respect to the views of the affected employees on either their subjective understanding of the clause, nor their views on the proposed variation. In contrast, the evidence of employee Mr Watkinson is that he considers the phrase to be a reference to the national minimum wage increase and that he does not support the variation. Similarly, the evidence of Mr Nicholas Richardson, UWU’s Lead Organiser is that UWU considers clause 21 to be a reference to the National Minimum Wage increase and that UWU opposes the variation sought. This weighs against the making of the proposed variation.
Stage of bargaining between the parties
60. UWU accepts the parties are not currently engaged in bargaining. However, the Agreement will expire on 30 June 2025, which is in approximately 18 months’ time. UWU submits this is not a long time in the scheme of things, and submits it would be more appropriate for MSS, its employees, and UWU to address their differing views on the operation of clause 21 in the next round of bargaining. This weighs against the making of the proposed variation.
Timing of an application for variation, including delay
61. The timing of an application for variation is a relevant factor with respect to the appropriateness of a proposed variation. In this application, UWU first articulated its views with respect to the proper operation of clause 21 in its recommendation that employees note “No”, in January 2023, just prior to the ballot, by referring to the Agreement’s “minimum wage increases” (rather than “Award increases”). A Union member issued after the Agreement approval in April 2023 more explicitly referred to the 5.2% minimum wage increase applying. UWU then verbally discussed its position with MSS in May 2023 and wrote to MSS setting outs its position on 15 June 2023 and again on 11 July 2023, ultimately filing a s 739 dispute on 20 October 2023. Despite all this, MSS did not apply for the variation until 23 November 2023. The timing of the application, and its delay, was quite clearly motivated by UWU’s s 739 application and so weights against the making of the proposed variation.
Effect on the legal rights of employees
62. Finally, as in Monash University, UWU submits that the making of the variation sought by MSS would adversely affect the legal rights of the relevant employees (whose Union opposes the variation), who currently may be able to bring a claim for underpayment in a court of relevant jurisdiction (and associated claim pursuant to s 50 of the FW Act of contravention of the Agreement), a claim which would could be made with little difficulty and which would likely result in the substantial resolution of the disputed term. This again weighs against the making the proposed variation.
Conclusions
63. For the reasons set out at paragraphs [24] to [33] above, UWU submits that there is no ambiguity or uncertainty in the Agreement and that the variation sought by MSS Security cannot be made by the Commission.
64. In the alternative to the above, if the Commissions is against UWU and does find there is an ambiguity or uncertainty in clause 21 of the Agreement, UWU submits that for the reasons set out at paragraphs [34] to [62] above, the Commission should nonetheless decline to make the variation sought.
65. In the alternative to the above, if the Commissions is against UWU with respect to its submissions at both paragraphs [24] to [33] and paragraphs [34] to [62] above and is minded to make the variation sought, UWU submits that any variation clause 21 made should not act retrospectively and should instead operate only from the date of the decision.’
The Applicant’s reply submissions
On 18 January 2024, the Applicant filed the witness statement of Nelson Meechan by way of reply.[4]
The witness evidence
Bhoomika Bharti is the Respondent’s State Manager of Operations Performance. Between July 2021 and October 2022, Ms Bharti was the Respondent’s People, Culture and IR Manager. In that role she was involved in the negotiations for the 2021 Agreement. Ms Bharti gave evidence about:
a) The Respondent’s business,
b) Bargaining for the 2021 Agreement that occurred in two parts:
i.April 2021 – December 2021; and then, again
ii.April 2022 – December 2022.
c) Bargaining meetings and the fact that, on 16 June 2021, “the union proposed EA wording … that … referred to the percentage increase in modern award minimum wages ordered by the Fair Work Commission as a result of an Annual Wage Review (or its successor that is conducted after the commencement of the Agreement.”[5]
d) Communication to employees and the Union. Ms Bharti was able to point to and attach to her witness statement 19[6] examples of where (between December 2021 and January 2023) either the Union or MSS corresponded with each other or employees and referred to the SSI Award or Award rates. Ten examples occurred before the Commission decision in May 2022 that made a distinction between increases to Modern Awards and the National Minimum Wage. More importantly, 9 examples occurred after the Commission’s May 2022 decision when the parties were on notice about the distinction. In none of the correspondence to its employees did MSS refer to the National Minimum Wage.
e) The minimum wage increase. Ms Bharti gave evidence that clause 21 in the 2021 Agreement was the same as it had been in the 2017 Agreement. Even after the Commission’s May 2022 decision no changes were made to clause 21. She gave evidence that after the 2021-2022 wage decision became effective (in July 2022) there were no discussions about clause 21.
f) The dispute about wages raised by the Union from May 2023 and filed in October 2023.
Under cross-examination Ms Bharti confirmed her understanding that clause 21 in the 2021 Agreement derived from the 2017 Agreement.[7] Ms Bharti was not involved in the negotiations for the 2017 Agreement.[8] She conceded that she could not give evidence “about the original intended meaning of the [Dispute Phrase].”[9] In relation to the National Minimum Wage increase Ms Bharti explained that she was aware it applied to Level 1 employees, but that MSS does not employ at that level.[10] I am not convinced anything turns on that concession. Ms Bharti confirmed that after the 2021-2022 wage decision became effective (in July 2022) there were no discussions about clause 21.[11] Ms Bharti confirmed her understanding of the matters being bargained for by the Union (including ending the distinction between new and existing employees and the application of the “Safeguard Rates”) and that clause 21 was not settled in May 2022.[12] Ms Bharti further conceded that after the distinction between the National Minimum Wage and Award wages became known (following the Commission’s May 2022 decision) MSS did nothing to clarify the wording in clause 21.[13] It was necessary to make a correction to her witness statement at paragraph 46.[14]
Overall Ms Bharti was an impressive witness. Her testimony about communications made by MSS to the Union and to its employees (referencing the SSI Award or Award rates) remained unchallenged. Consequently, I find that history of correspondence from MSS to the Union and to its employees concerned only references to Award rates. No one receiving correspondence from MSS could be under any doubt that in negotiations for the 2021 Agreement MSS was referring to the SSI Award.
Jamie Adams is the Respondent’s Executive General Manager for Victoria and Tasmania. He has held that role since October 2022. Mr Adams gave evidence about:
a) His professional background including involvement in the negotiation of several enterprise agreements across a range of businesses.
b) MSS’ business.
c) Negotiations for the 2021 Agreement. Mr Adams was the lead negotiator.
d) His concern that the 2012 Agreement pass the Better Off Overall Test when compared with the SSI Award, and that his “understanding was that discussions around wage increases were had by reference to the Award increases.”
e) The two rounds of negotiations.
f) The Union first raising the clause 21 claim for 5.2% on 15 June 2023.[15]
Under cross-examination Mr Adams also confirmed his understanding that clause 21 in the 2021 Agreement derived from the 2017 Agreement,[16] that he was not involved in the negotiations of the 2017 Agreement[17], and, consequently, could not give evidence about “the original intended meaning of the [Dispute Phrase]”.[18] Mr Adams was then cross-examined about the contents of other enterprise agreements that he had referred to in his witness statement. I am not convinced that the original evidence was relevant to the task before me. Neither was the cross-examination on that evidence. Mr Adams confirmed that “to the best of his recollection [he didn’t] believe that there was any discussion around what was meant from either party in terms of the rates impact to wage rates.”[19] Mr Adams made concessions about his understanding of the Union’s wage claims during bargaining, but that the status quo (the carried forward wording from the 2017 Agreement) prevailed in the 2021 Agreement.[20] Mr Adams conceded that the present application was motivated by the Union having filed a s.739 Application.[21]
Nelson Meechan is a Security Guard employed by the Respondent. Mr Meechan gave evidence about:
a) His professional background.
b) His role as an employee bargaining representative for the 2021 Agreement.
c) The wage increase and bargaining timeline (i.e. the two rounds of bargaining).
d) A file note that he took during a meeting on 14 July 2022 of “the proposed wage increase of 4.6%”.[22] No challenge was made to the filenote.
e) Him communicating to other employees “the 4.6% increase that MSS had offered in respect of the FY22/23 Pay Period.”
f) His understanding that “throughout bargaining, [he] always understood that the EA wage increase in respect of the FY22/23 Pay Period was proposed to be 4.6%.”
g) Reference to the Award rates in various correspondence between MSS and its employees.[23] That correspondence remained unchallenged.
Under cross-examination Mr Meechan confirmed he was not appointed by other employees as their bargaining representative;[24] he was only appointed formally for himself.[25] Mr Meechan conceded that there was no discussion during bargaining about the meaning of the Dispute Phrase.[26] In answer to a question from me concerning Mr Meechan’s evidence about the National Minimum Wage, Mr Meechan conceded that he had “no idea” about the difference between it and the Modern Award minimum wage.[27] I attribute little weight to Mr Meechan’s evidence.
The Union called evidence from:
a) Peter Watkinson, a MSS Security Officer since October 2010. Mr Watkinson gave evidence about:
i.His professional background, personal information and qualifications.
ii.The fact that he was involved bargaining for the 2017 Agreement. Although he did not give any evidence in his Witness Statement about what happened during that bargaining.
iii.The fact that “the 2017 Agreement was the first agreement to provide for annual wage increases in line with ‘the Fair Work Minimum Wage Increase.”
iv.2021-2023 bargaining, which he was again involved in. He said he “played a leading role in discussing the bargaining with [his] colleagues and circulating UWU member updates and memos.”
v.The two rounds of bargaining.
vi.The UWU bargaining for “Safeguard wage standards” in the second round of bargaining in 2022.
vii.MSS’ rejection of the UWU wage offer on 3 August 2022.
viii.The UWU revised wage offer made on 25 October 2022. It is to be noted that the wage offer referred to “award +” in all years.
ix.The fact that, “during the entire course of the bargaining, [he did not] recall there being any discussion about the meaning of clause 21.
x.The rejection of the UWU’s revised wage proposal.
xi.The second ballot and approval of the 2021 Agreement.
xii.The effect on current wage rates. Mr Watkinson notes that “for the first full pay period after 1 July 2022, employees received a pay increase of 4.6%, in line with the 1 July 2022 increase to the Award.
xiii.His views on variation. Not surprisingly he does not support variation, is confident other colleagues do not support variation and thinks the matter should be dealt with in bargaining in 19 months’ time. For obvious reasons, these views are not material to the matter before me.
xiv.Under cross-examination Mr Watkinson further explained that in bargaining for the 2021 Agreement the Union wanted to do away with the tiered system of pay increases; it wanted Safeguard rates.[28] He then made concessions about the Union claim. Ms Campbell put it to Mr Richardson that the “offer was made with reference to a 6 per cent increase on the award.” He agreed.[29] Mr Watkinson said he could not recall MSS communication during bargaining referring to 4.6%.[30] However, he ultimately conceded that at no point prior to 21 April 2023 did any correspondence from any party refer to 5.2%.[31] He conceded that, at the bargaining table, there was no discussion of 5.2%.[32] He conceded that all MSS communications referred to award increases.[33] In answer to a question from me, Mr Watkinson gave unconvincing evidence that in 2017 the Disputed Phrase meant “the national minimum wage.” Having regard to the fact that both the NWM and Award wage increases had traditionally been the same, it is unlikely anyone turned their mind to it in the negotiation of the 2017 Agreement. Mr Watkinson’s evidence had all the hallmarks of recent invention.
b) Nicholas Richardson is an official with the Union. Mr Richardsons gave evidence about,
i.His role at the UWU as a lead organiser.
ii.The UWU campaign for “Safeguard” standards.
iii.The 2017 Agreement. He was not involved in bargaining for the 2017 Agreement.
iv.Bargaining for the 2021 Agreement. He gave evidence that he recalls “Mr Adams saying, words to the effect of, ‘MSS does not want to change the wage structure under the [existing] Agreement.”
v.The two rounds of bargaining.
vi.The UWU log of claims.
vii.The dispute over the July 2022 Award increase and the Union’s request on 14 July 2022 that MSS at least pay Award rates.
viii.The UWU’s wages offers (including the 25 October 2022 offer) and rejection of it.
ix.The Second ballot and the reissuing of an Union EBA Update (that referred to the Award).
x.The vote to approve the 2021 Agreement.
xi.The s.739 dispute.
xii.The subjective views of the Union.
xiii.Under cross examination Mr Richardson confirmed he was not involved in the 2017 Agreement negotiation,[34] and, further that, a search of the Union’s records did not produce anything relevant to the negotiation of the 2017 Agreement.[35] Mr Richardson accepted that “multiple communications came from MSS referring to percentage increases above the awards”[36] and that “the discussions around the bargaining table were framed by reference to increases on the award.”[37] Mr Richardson further agreed “that the 5.2% increase was not something that was the subject of express discussion at the bargaining table.”[38] Mr Richardson tried to maintain that he spoke to employees about the 5.2%, but there was nothing in his witness statement about that. Mr Richardson conceded that MSS was always referring to their offer being higher than the Award.[39] Mr Richardson conceded that the first time the Union put 5.2% in writing was around 21 April 2023 (in a Union bulletin).[40]
Overall, the evidence of the Union’s witnesses did not assist me. In particular Mr Watkinson was unimpressive. To his credit, in final submissions, Mr Whiteside accepted that “the evidence of Mr Watkinson was admittedly vague, it was a bit confusing at times.”[41]
Consideration
Is there ambiguity or uncertainty in the 2021 Agreement?
The presence of an ambiguity or uncertainty is a jurisdictional prerequisite before I can consider whether to exercise any discretion to vary the 2021 Agreement.[42] It is not intended that section 217 operates like a “slip rule” to correct typographical errors if there is no ambiguity or uncertainty.[43] Nor am I entitled to rewrite the 2021 Agreement “to install something that was not inherent to the agreement when it was made.”[44]
The relevant clauses containing the Disputed Phrase are clauses 21.1.3 and 21.2.2. Both clauses refer to “the Fair Work Commission minimum wage increase”.
What is clear in this matter is the Dispute Phrase is susceptible to more than one meaning. The Disputed Phrase can mean either:
c) the Fair Work Commission Modern Award minimum wage increase; or
d) the Fair Work Commission National minimum wage increase.
This is more than the mere existence of rival contentions. There is an arguable case for both constructions. Objectively, the Disputed Phrase is capable of more than one meaning.[45] As it is presently drafted the meaning of the Disputed Phrase is “not definitely or surely known”. I should therefore err on the side of finding ambiguity or uncertainty.
For these reasons I reject the Union’s contention that the Dispute Phrase is not ambiguous nor uncertain and that it can objectively have only one meaning (that, on its face, it means the National Minimum Wage). In the present matter, it does not assist the Union to contend that in the industrial landscape, the phrase “minimum wage” is routinely used as shorthand for the National Minimum Wage Order. That might be the case, but that does not assist me. A rival contention can be argued for.
Mr Whiteside submitted that the reference to the singular “the” and “increase” assists in the matter. It assists to support one of the competing contentions. It does not resolve the matter. The use of the plural “increases” in the schedule adds to an argument that the Disputed Phrase is uncertain.
Consequently, I am satisfied that the jurisdictional prerequisite has been established. That is to say, the 2021 Agreement is ambiguous or uncertain – out of the two possibilities, the stronger of the two is that it is uncertain. Before me Ms Campbell agreed “that uncertainty in this particular case is something that looms large.”[46]
I am therefore empowered to exercise a discretion whether to vary the 2021 Agreement.
Has the Application been brought in accordance with the FW Act
It is common ground between the parties that MSS was entitled to bring the present application and has done so. It is a person listed in s.217(1)(a)-(c) of the FW Act. The FW Act requirements have been complied with.
Consequently, the second jurisdiction pre-condition is made out.
Having regard to the mutual intention of the parties as the time that the 2021 Agreement was made, should the 2021 Agreement be varied?
With respect I adopt the reasoning of Deputy President Bell in Monash University.[47] In that matter the Deputy President usefully sets out a range of matters that are relevant to the exercise of my discretion. In this stage of the consideration, it is also relevant to have regard to the principles in Berri,[48] and I have done so.
The first point to observe is that the “objectively determined mutual intention of the parties” refers to MSS and its employees. More precisely it must be MSS and the employees who voted “Yes” to approve the 2021 Agreement. It is the 60% of employees who voted “Yes” who matter. They made the 2021 Agreement with MSS on 6 February 2023. It was then approved by the Commission with undertakings on 21 April 2023 (commencing operation on 28 April 2023).
The Union is not a party to the 2021 Agreement. It is covered by it by operation of the FW Act, but it is not a party. Consequently, the intention of the Union is not relevant in the present matter. Mr Whiteside contended that as a default bargaining representative for MSS employees the views of the Union go to establish the intention of the employees. I do not agree. Other than one witness each, both sides decided not to call substantial evidence from the employees who voted on the 2021 Agreement. There is no evidence that employees were confused about what was on offer to them (as Mr Whiteside suggested[49] they might have been). Consequently, I am left to discern their understanding from the materials that were filed.
As stated above, I note that 60% of eligible employees voted on the 2021 Agreement and that 60% of them voted to approve it. This is relevant industrial context. The following exchange[50] occurred with Mr Whiteside:
The Commissioner: Mr Whiteside, 389 employees out of 647 voted in this ballot, 60.12 per cent voted yes; that's 230 employees. Not one of those employees who voted yes who made the agreement with the employer comes before me and says, 'No, I always thought it was 5.2[%].' Not one warm body out of 233 employees. Isn't that compelling?
Mr Whiteside: The evidence is what it is, Commissioner.
It is also relevant to have regard to what was before the employees in the time leading up to the vote. The extrinsic documentation, objectively assessed, is of assistance. It is also material that weighs in favour of granting the variation.
I have had regard to all of the communications attached to witness statements in this matter. It all refers to the Award in some way. Sometimes it refers to 4.6%. The material was not, as the Union contended, “too vague and high-level to be of any assistance to the Commission.”
Significantly, none of the material refers to the National Minimum Wage. None of it refers to 5.2%. In answer to this inconvenient fact for the Union, Mr Whiteside submitted that “we … argue that these materials do not provide sufficient evidence to demonstrate an actual common intention between the Applicant and its employees that the wage increases were to be in line with the award and not the minimum wage increase.”[51] The submission (boldly made) was not otherwise explained. Therefore, I am not satisfied that I should put out of my mind the clear communications made by MSS to its employees. The materials weigh in favour of making the variation.
Mr Watkinson’s evidence that he had in mind (and other employees had in mind) the NMW is wholeheartedly unconvincing. There is no reason why, in 2017, anyone would have turned their mind to it. I reject his evidence.
Noting the communications there is an evidentiary basis to conclude that employees who voted on the 2021 Agreement could have or should have understood the Disputed Phrase to mean “Modern Award minimum wage increase.” This includes material written by the Union that is not limited to its Log of Claims and its MSS EBA Updates (including the re-Issued Update). This weighs in favour of granting the variation. It is for me, clear and convincing proof of common intention.
It is also relevant industrial context that the 2021 Agreement is underpinned by the SSI Award. But for the 2021 Agreement (and predecessor agreements), MSS employees would have been covered by the SSI Award. MSS was mindful that it had to pass the BOOT by reference to the SSI Award. The National Minimum Wage would not have applied to MSS employees. Had MSS employed Level 1 employees, the NMW may have applied, but it does not. Both Ms Bharti and Mr Adams were impressive witnesses. It is very clear they had only the Award in mind. Further, it is clear this is what they consistently communicated to the Union and employees. For these reasons, I reject the Union’s contention “that the fact the employees would otherwise be Award-covered employees is an irrelevant consideration.”
In any case, the Union is unable to point to extrinsic material that supports its contention that it was always taking about the National Minimum Wage increase. The Union’s correspondence consistently refers to the Award. It cannot walk away from the pen it put to paper during bargaining for the 2021 Agreement now that it is more convenient for it to say or contend for something different. It is not enough for the Union to contend that the
“UWU’s language in the Log of Claims was not precise.”
When faced with material from MSS referring to 4.6% it was incumbent on the Union or employees to take issue with it and write or raise in bargaining their belief that it should be 5.2%. I accept that the Union was focussed on “Safeguard rates”. However, after they were put on notice about the Commission’s May 2022 decision the Union and the employees were silent about 5.2%. 5.2% was only raised after the Agreement was approved (some might argue expediently). This weighs in favour of making the variation.
What is clear from the materials and evidence is that MSS only every referred to the SSI Award or Award increases. On numerous occasions MSS expressly referred to 4.6%. There is nothing in any of the documents that it provided to its employees that could remotely suggest that it was concerned with the National Minimum Wage. At no time during bargaining was 5.2% mentioned in correspondence or during the bargaining meetings.
Part of the Unions’ case centred on the 2017 Agreement. It seemed to be contending that:
a) clause 21 in the 2021 Agreement was a carry over from the 2017 Agreement (there was no change),
b) there was no discussion about clause 21 during the negotiation for the 2021 Agreement, and therefore,
c) whatever happened in relation to the negotiation for the 2017 Agreement dictates how clause 21 should be interpreted in the 2021 Agreement.
I am not satisfied that is a logical conclusion. Even if the same words are used in one agreement to another, they can have different meanings. What I am concerned with is what happened around the negotiation of the 2021 Agreement. In any case, as I observed during the hearing “the evidence of the union in relation to the 2017 bargaining is pretty skinny.”[52] I was not assisted by it.
One matter that weighs against the exercise of my discretion is that after the Commission’s May 2022 decision (when the distinction between the NMW and the Award wage increase became important and MSS became alive to it), MSS could have amended clause 21 before it was put to a vote. It could have removed the uncertainty when it became necessary to do so by reason of the Commission’s May 2022 decision. Apparently, no one at the bargaining turned their mind to fixing the problem. Someone should have. The fact that MSS did not, weighs against granting the variation.
This is an example of the parties’ failure needing to be fixed by the Commission. The fact that the parties can fix the matter when they recommence bargaining in 19 months’ time is a neutral factor. The Commission is properly invested with jurisdiction to fix the mess created by the parties.
Another matter that weighs against the exercise of my discretion is that, through mechanisms of the FW Act, MSS and its employees could remedy the uncertainty by voting to amend the 2021 Agreement. It seems to me that, if, as MSS contends, it and its employees always intended that the 2021 Agreement refer to the Award, it could put that proposition to a vote rather than require the Commission to exercise the discretion invested in me. Initially, Ms Campbell did not accept that this was a relevant consideration,[53] however, in closing submissions she said it was “a more nuanced approach.”[54] Mr Whiteside agreed it was a relevant consideration. I too continue to believe it is. It is a matter that weighs against the exercise of the discretion.
I accept that the present application is a reaction to a pre-existing (by one month) industrial dispute in the Commission. Mr Whiteside contended that this was relevant to my discretion. However, I am not convinced that anything turns on that. It is a neutral consideration.
Finally, I reject the Union’s contention that the variation would give effect to a new and substantive change to the 2021 Agreement. Employees have always been paid the Award increase. Admittedly, up until 2022 that was the same as the NMW increase. Since the Commission’s May 2022 decision, the employees have received the 4.6%. It would seem that no employee has commenced court proceedings to allege that they have been underpaid. The variation does not result in a reduction in the 2022 increase. It was always intended to be the Award increase. That much is apparent on the materials before me.
Conclusion
For these reasons the 2021 Agreement is varied to insert ‘modern award’ into clauses 21.1.3 and 21.2.2 so that they read as follows:[55]
‘21.1.3. The hourly wage rates in Schedule B for each classification level and each allowance in this Agreement will be increased by the Fair Work Commission modern award minimum wage increase from the first full pay period on or after;…’
‘21.2.2. The hourly wage rates in Schedule C for each classification level and each allowance in this Agreement will be increased by the Fair Work Commission modern award minimum wage increase from the first full pay period on or after;…’
(variation underlined)
The variation applies from 28 April 2023 (i.e. it operates retrospectively from when the 2021 Agreement commenced operation). The Union urged me not to make any variation retrospective. However, that is the purpose behind the present application. To correct an uncertainty relating to how the 2021 Agreement is to operate in respect of a past entitlement. Not to make the variation retrospective would defeat the purpose of the present application.
Having made the variation, the Respondent is now invited to discontinue C2023/6380.
COMMISSIONER
Appearances:
Ms N Campbell of Counsel for the Applicant
Mr T Whiteside for the Respondent
Hearing details:
2024
Melbourne (Hybrid)
13 and 14 February.
[1] The Digital Tribunal Book (DTB), Exhibit 5.
[2] DTB, Exhibit 2.
[3] DTB, Exhibit 3.
[4] DTB, Exhibit 4.
[5] Attachment BB-10 to Exhibit 2.1, Witness Statement of Bhoomika Bharti.
[6] Attachments BB-12 – BB-23 to Exhibit 2.1, Witness Statement of Bhoomika Bharti.
[7] Transcript PN102.
[8] Transcript PN112.
[9] Transcript PN113.
[10] Transcript PN122-123.
[11] Transcript PN140-143.
[12] Transcript PN151-196.
[13] Transcript PN199.
[14] Transcript PN221-225.
[15] Attachment JA-12 to Exhibit 2.5 the Witness Statement of Jamie Adams.
[16] Transcript PN333-335.
[17] Transcript PN336.
[18] Transcript PN337.
[19] Transcript PN410.
[20] Transcript PN419.
[21] Transcript PN453.
[22] Attachment NM-1 to Exhibit 4 the Witness Statement of Nelson Meechan.
[23] Attachments NM-2 – NM-7 to Exhibit 4 the Witness Statement of Nelson Meechan.
[24] Transcript PN487.
[25] Transcript PN491.
[26] Transcript PN507.
[27] Transcript PN510.
[28] Transcript PN608.
[29] Transcript PN622.
[30] Transcript PN629.
[31] Transcript PN633.
[32] Transcript PN638.
[33] Transcript PN655.
[34] Transcript PN744.
[35] Transcript PN746-750.
[36] Transcript PN760.
[37] Transcript PN761.
[38] Transcript PN776.
[39] Transcript PN806.
[40] Transcript PN807-813.
[41] Transcript PN972.
[42] Re Tenix Defense Systems Pty Ltd Certified Agreement 2001-2004 (unreported, AIRC(FB) PR917548m 9 May 2000 at [26]-[36] and [49].
[43] ANF v Health Care Australia Pty Ltd [2011] FWA 2430; and Re Victoria Police Force Certified Agreement 2001[2002] AIRC 643 PR918756.
[44] CFMEU v Linfox Transport (Aust) Pty Ltd (unreported, Print Q2603, 30 June 1998.
[45] Bianco Walling Pty Ltd v CFMMEU [2020] FCAFC 50.
[46] Transcript PN46.
[47] [2023] FWC 1148.
[48] [2017] FWCFB 3005.
[49] Transcript PN996.
[50] Transcript PN1001-1002.
[51] Transcript PN982.
[52] Transcript PN556.
[53] Transcript PN64.
[54] Transcript PN895.
[55] PR774616.
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