National Union of Workers v Chep Australia Limited

[2018] FWC 4891

[2018] FWC 4891

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

National Union of Workers
v
CHEP Australia Limited
(C2018/483)

DEPUTY PRESIDENT COLMAN MELBOURNE, 16 OCTOBER 2018

Application to deal with a dispute – interpretation – ‘appropriate shift rate’ for shift workers undertaking overtime on day work – rate reference is to the shift worked, not the shift the employee usually works – dispute determined accordingly

[1] This decision concerns an application made by the National Union of Workers (NUW) under s 739 of the Fair Work Act 2009 (Act) for the Commission to deal with a dispute in accordance with the dispute settlement procedure in clause 13 of the CHEP Altona (Vic) Service Centre Enterprise Agreement 2015 (Agreement). 1

[2] CHEPAustralia Limited (CHEP) operates a pallet service centre in Altona, Victoria. It employs workers whose employment is covered by the Agreement. The present dispute concerns the interpretation and application of clause 4 of Appendix C of the Agreement, which provides for overtime payments for shift workers. The question is whether, pursuant to this clause, a shift worker who undertakes day work overtime on a Saturday should receive their usual shift loading in addition to the overtime penalty.

[3] The Altona site operates a non-rotating day, afternoon and night shift as a 5 day operation. Each employee works one of these shifts on a permanent basis. Previously, overtime would be scheduled to align with employees’ ordinary working hours. However, in mid-2017, the company announced changes to the scheduling of overtime. Employees would be required to perform overtime on Saturday mornings as day work. Permanent afternoon and night shift workers would not be paid shift penalties for working overtime on Saturday mornings. The union considers that shift workers must be paid their usual shift penalties when they work such overtime. The company disagrees.

[4] The application was listed before me for conference, and thereafter for mediation pursuant to the steps in the dispute settlement procedure. The matter remained unresolved, and the NUW sought to have its application proceed to arbitration. It was common ground, and I agree, that the Commission is authorised to arbitrate the dispute under clause 13 of the Agreement.

[5] I issued directions for the filing and service of submissions and any evidentiary material. The parties complied with these directions. They requested that I determine the matter on the papers, and after reviewing the materials filed, I considered that it was appropriate for me to do so.

[6] The parties agreed that the dispute could be resolved by the Commission determining the following question:

‘How is the rate of pay to be determined for a shift worker (other than a continuous shift worker) who undertakes overtime during day work hours on a Saturday, where such overtime is not continuous with night shift or afternoon shift work?’

[7] Appendix C to the Agreement is entitled ‘CHEP Altona Service Centre Custom and Practice Policy 2006’ (the Policy). It sets out certain custom and practice arrangements at the Altona Service Centre that will continue to apply for the duration of the Agreement. Clause 25.2 of the Agreement states that the provisions of the Policy will prevail over other clauses in the Agreement to the extent of any inconsistency.

[8] Clause 4 of Appendix C of the Agreement provides as follows:

‘Overtime shall be paid on the appropriate shift rate e.g. an afternoon shift employee who works overtime shall be paid 125% x time and a half for the first three hours and 125% x double time thereafter.’

[9] The dispute between the parties centres on the words ‘appropriate shift rate’. The union contends that, when an afternoon shift employee undertakes day work overtime, the appropriate shift rate is the employee’s normal afternoon shift penalty. The company’s position is that the ‘appropriate shift rate’ is the one that applies to the shift in connection with which the employee works overtime. It says that for overtime undertaken as day work on a Saturday, there is no ‘appropriate shift rate’.

NUW’s interpretations

[10] The union’s submission addresses clause 4 of Appendix C in the context of the Agreement as a whole. It notes that clauses 18.6 and 18.7 of the Agreement provides for a loading of 25 percent for non-rotating afternoon shift and 30 percent for non-rotating night shift. Clause 18.8 states that ‘overtime worked while on shift work shall be paid in accordance with the overtime provision’.

[11] Saturday day work cannot be regarded as shift work. Further, clause 21.2 provides that ‘overtime rates will be calculated on the base rate of pay (exclusive of shift loadings or casual loadings)’. However, clause 4 of Appendix C states that ‘overtime shall be paid on the appropriate shift rate’. It then provides an example of an afternoon shift worker who works overtime being entitled to ‘125% x time and a half for the first three hours and 125% x double time thereafter.’

[12] The union submits that clause 21.2 is inconsistent with clause 4 of Appendix C and that, in accordance with clause 25.2, clause 4 of the Appendix prevails. This submission is clearly correct. However, it is necessary to ascertain the meaning of ‘appropriate shift rate’ and how it applies to the present circumstances.

[13] The union contends that the words ‘appropriate shift rate’ have two possible meanings: the rate applicable to the hours in which the overtime is worked; or the rate applicable to the employee’s permanent shift. The union says that the latter interpretation is correct. It says that, as shown by the example provided in clause 4 of Appendix C, an afternoon shift worker deployed on day work overtime would receive the 125 percent shift loading.

[14] The NUW says that the words of clause 4 of Appendix C do not provide any basis to link the expression ‘appropriate shift rate’ with the hours during which the overtime is undertaken. The clause does not refer to the hours worked, and in the context of the permanent shift arrangements at Altona, the ‘appropriate shift rate’ means an employee’s normal shift rate. The union submits that the example given in clause 4 is consistent with this construction. The example simply states that an afternoon shift worker who performs overtime shall be paid the 25 percent loading; it is silent on when the overtime might be worked.

[15] The union notes that employees at Altona are permanently assigned to non-rotating day, afternoon and night shifts as non-continuous shift workers. Seven days’ notice is required to alter such an employee’s shift, once their hours are ‘fixed’ as per clause 18.5. Accordingly, employees can fairly be described as ‘afternoon’ or ‘night shift employees’. The relevant loading is simply part of their normal pay, which applies also, in the union’s view, to the performance of overtime, even on day work. The union says that clause 4 of Appendix C ensures that the normal shift loading for a shift worker will follow that employee whenever he or she performs overtime.

[16] The NUW further contends that it would be unworkable to read the words ‘appropriate shift rate’ as referring to the hours in which overtime is undertaken. It says that this would be incompatible with the Agreement’s definition of ‘day shift’, which is stipulated as starting and finishing between 7.00am and 3.00pm Monday to Friday. I understand the contention to be that work performed on a Saturday is not a ‘day shift’ for the purposes of clause 18.2. However, this is still day work, even if it is not a day shift, and in any event it is work for which no shift loading is prescribed by the Agreement.

[17] Finally, the union contends that clause 4 of Appendix C is part of a policy that preserves custom and practice and departs from what might be regarded as normal industrial standards whereby overtime is calculated exclusive of other loadings. It says that clause 4 is clearly designed to ‘protect’ the shift loading of non-rotating afternoon and night shift workers regardless of when overtime is undertaken. However, I would note that clause 4 can still have this protective function if ‘appropriate shift rate’ refers to the shift rate applying to the hours when overtime is worked. The afternoon shift loading of an afternoon shift worker performing overtime on an afternoon shift is protected by clause 4 of Appendix C, whereas clause 21.2 would have excluded it. On this construction, clause 4 will add a penalty to a penalty (shift to overtime), but only where the employee actually works overtime on a shift attracting a loading.

CHEP’s submissions

[18] CHEP submits that neither of the constructions referred to by the union is correct. It contends that the ‘appropriate shift rate’ is determined by reference to the shift in connection with which the overtime is worked. For the company, when the overtime worked is continuous or otherwise connected with a shift of ordinary hours, then the overtime rate is determined by reference to the shift rate applicable to that ordinary shift. However, if the overtime worked is not in connection with a shift of ordinary hours worked by the employee - such as a stand-alone overtime shift starting during the day on a Saturday - there is no ‘appropriate shift rate’ that can be applied.

[19] I note at this point that I cannot see any basis for the contention that the appropriate shift rate is the rate that applies to the shift in connection with which the employee works overtime, rather than simply the shift on which the employee works overtime. Further, there is nothing in clause 4 of Appendix C that would confine its operation to overtime that is worked in connection with a shift of ordinary hours for a particular employee. The plain meaning of ‘overtime’ is not confined to the working of additional hours in connection with an established shift or pattern of work, although often it is worked in this way. The company’s own scheduling arrangements since mid-2017 demonstrate that overtime can be worked in a configuration that is not associated with any ‘normal’ working arrangements.

[20] CHEP advances several arguments to support its construction of clause 4 of Appendix C. I note that these arguments also support the construction that ‘appropriate shift rate’ is a reference to the shift rate (if any) that applies to the hours of work when the overtime is undertaken.

[21] First, the company relies on the dictionary definition of the word ‘appropriate’ (suitable or proper in the circumstances) and says that there must be some relationship between the overtime worked and the relevant shift rate. It says that the fact that an employee receives a shift loading for his or her ordinary hours of work does not make it ‘suitable or proper in the circumstances’ for that employee to receive a shift loading for overtime worked as day work on a Saturday.

[22] However, ‘appropriate’ in clause 4 does not in my view invite an evaluation of what might be a suitable loading. When the clause speaks of ‘the appropriate shift rate’, it plainly means ‘applicable’ or ‘relevant’ shift rate. The definite article shows that the rate is ascertainable; the clause does not refer to ‘an appropriate’ rate that might be warranted. The question then is whether the appropriate (applicable) rate refers to the shift worker’s usual shift rate, or the shift rate (if any) which applies to the overtime worked.

[23] Secondly, the company submits that there is simply no ‘appropriate shift rate’ prescribed by the Agreement for day work. It points to clause 18.6 of the Agreement which states that the 25 percent afternoon shift loading ‘shall apply for any non-rotating afternoon shift.’ The clause does not affix a shift loading to a shift worker; it applies a loading to a non-rotating shift. The company contends that the shift penalty only applies when the afternoon shift worker is actually undertaking work on an afternoon shift. The same analysis applies to clause 18.7 which applies to the night shift loading.

[24] The company therefore contends that the Agreement only prescribes an ‘appropriate shift rate’ for work that is actually undertaken on an afternoon shift or night shift, and that there is no ‘appropriate shift rate’ for a shift or work that occurs other than on these two shifts. A stand-alone overtime shift that occurs on a Saturday cannot be either an afternoon shift or a night shift. The company further submits that work performed by an employee at any time on a Saturday can never constitute shift work. However, these arguments do not negate the union’s contention that clause 4 of Appendix C is a special provision that preserves custom and practice and on its own terms applies a shift worker’s usual shift penalty to any overtime worked. As noted earlier, the Policy in Appendix C prevails over the other provisions of the Agreement to the extent of any inconsistency.

[25] Thirdly, CHEP contends that its preferred construction is consistent with what it says is the well-established ‘industrial context and purpose’ of shift loadings, namely to provide special remuneration for the social and domestic inconvenience involved in working shift work. It refers to various test cases and other tribunal decisions. It says the union’s interpretation would have employees receive payment in compensation for the inconvenience of performing shift work in circumstances where no shift work is undertaken. But again, the union contends that clause 4 is a special arrangement. Further, in my view references to historical decisions dealing with the rationale for arbitrated award provisions relating to shift penalties are of limited assistance in ascertaining the meaning of clause 4 of Appendix C.

[26] As to the example provided for in clause 4 of Appendix C, CHEP submits that it does not reveal what assumptions are to be made (although it is apparent that the example does not have in mind Sunday work, which would be paid at the rate of double time for all hours worked and not at the rate of ‘time and a half for the first three hours’). CHEP says that the example might assume that the employee is working the overtime continuously with the employee’s shift work, in which case it would be compatible with the company’s interpretation. However, there is no basis to speculate about assumptions that might underpin the example.

[27] Finally, CHEP acknowledges that clause 4 of Appendix C prevails over clause 21.2 to the extent of any inconsistency, but contends that the union’s interpretation renders the shift penalty exclusion in clause 21.2 of no effect at all. An afternoon or night shift worker would, in every case, be entitled to a shift penalty when working any overtime. However on the company’s interpretation, the exclusion of shift loadings from overtime calculations in clause 21.2 would have some work to do, namely in the scenario presently at issue. When an afternoon or night shift worker undertakes overtime on day work on a Saturday they do not receive a shift loading; but where overtime is worked during hours attracting a shift penalty, the relevant shift rate is applied. The company notes that clause 21.2 of the Agreement was first inserted into an enterprise agreement for the Altona site in the CHEP Altona (Vic) Service Centre Enterprise Agreement 2009 (2009 Agreement), whereas the Policy has formed part of each agreement since the CHEP Altona Service Centre (Vic) Union Collective Agreement 2006 (2006 Agreement). CHEP contends that if the parties did not intend clause 21.2 to have any operative effect in relation to excluding shift loading from the calculation of overtime, then it would not have been inserted into the 2009 Agreement.

NUW’s submissions in reply

[28] In its submissions in reply, the union contends that the question put to the Commission for determination can only be answered with regard to the proper construction of clause 4 of Appendix C. It says that the clause simply requires overtime to be paid on the ‘appropriate’ shift rate and provides a plain example of that calculation, which is not qualified by reference to the hours when overtime is worked.

[29] The union submits that employees at the Altona site are accustomed to working shift work in their usual hours. They construct their social and family obligations around these hours. For example, night shift workers begin their working week at 11.00pm on a Sunday night. Saturday is their only full day to spend with their family. Further, the union says that afternoon and night shift workers suffer disruption to sleep patterns, and become accustomed to resting during the mornings. Asking employees who would normally work during non-daylight hours to work a ‘normal’ daytime shift is equally as disruptive as requiring a daytime worker to do a night shift.

[30] I accept these arguments. They are an answer to the company’s contention that there would be no justification in the employees receiving a shift rate for overtime undertaken as day work. However, they are not determinative of the proper interpretation of clause 4 in Appendix C.

[31] Finally, the union contends that the custom and practice on the site was previously to roster overtime to ‘mimic’ the ordinary shift hours of the workers but that, in an attempt to cut costs, the company has rostered afternoon and night shift workers on Saturday morning overtime and has refused to pay their appropriate shift rate.

Consideration

[32] The principles that apply to the interpretation of an enterprise agreement were summarised by a Full Bench of the Commission in AMWU v Berri Pty Ltd, 2 drawing on the earlier Full Bench decision in AMIEU v Golden Cockerel Pty Ltd.3 The interpretation of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a dispute over the interpretation of an enterprise agreement will turn on the language of the agreement, having regard to its context and purpose.4 Context might appear from the text of the agreement as a whole, the disputed provision’s place and arrangement in the agreement, and the legislative framework under which the agreement was made.5 Further, the task of interpreting an enterprise agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome.

[33] Clause 4 of Appendix C of the Agreement states that overtime will be paid at the ‘appropriate shift rate’. It provides an example of an afternoon shift worker who works overtime, and receives the 25 percent afternoon shift loading, together with the overtime penalties. The example is merely an illustration of how a shift rate and the overtime penalties combine. In my view it is of little assistance in resolving the present dispute.

[34] The ‘appropriate shift rate’ is a reference to the applicable shift rate, not a suitable rate. Is the applicable rate the employee’s normal shift rate or the rate that applies to the shift when the overtime is worked? In my view, the ordinary meaning of ‘shift rate’ is the rate for a shift. It is the rate for the shift that is in focus, not the shift normally worked by the employee. Had it been intended to apply an employee’s normal shift rate to any overtime that the employee might work, it would have been logical to make the particular employee the reference point, such as by referring to the ‘employee’s shift rate’ or the ‘employee’s applicable shift rate’. In my view, the appropriate shift rate is the rate applicable to a shift on which overtime is worked. Where an employee works overtime on day work on a Saturday, there is no appropriate shift rate under the terms of the Agreement.

[35] This construction is consistent with the ordinary meaning of ‘appropriate shift rate’ in clause 4 of Appendix C and other clauses in the Agreement, including clause 18 of the Agreement which states that the afternoon shift loading applies to ‘any non-rotating afternoon shift,’ rather than to any permanent afternoon shift worker or employee.

[36] I note the union’s contention that clause 4 of Appendix C is intended to preserve custom and practice, and that it is therefore not surprising for it to oust the operation of clause 21.2, which says overtime is calculated exclusive of shift loadings. However, the scheduling of overtime shifts on Saturdays commenced only in 2017. It is not the subject of any custom and practice that existed at the time the Agreement was made.

[37] Further, clause 21.2 was introduced into the predecessor agreements in 2009, after the Policy, which was inserted in 2006. It seems unlikely that a redundant provision would have been inserted into an enterprise agreement. If ‘the appropriate shift rate’ refers to the penalty that applies to the shift on which overtime is performed, clause 21.2 has some work to do in relation to shift penalties – they do not apply unless the employee in question works overtime on a shift that attracts a shift penalty.

[38] Finally, the effect of the union’s interpretation would be that a day worker, afternoon shift worker and night shift worker who perform overtime on the same Saturday would be paid at different rates for the same hours of work. This would be an anomalous situation. The union says that this is the scheme of the provision: shift workers are assigned permanent shifts and they take their shift premiums with them. Thus an afternoon shift worker performing overtime into the night shift would receive overtime plus afternoon shift rate. However, this too seems anomalous to me. An afternoon shift worker who performed overtime into the night shift would in my view be entitled to night shift rates together with overtime penalties in respect of the overtime hours.

[39] In my view, the ‘appropriate shift rate’ is the rate that applies to the shift on which overtime is worked. Under the Agreement, shift penalties only apply to afternoon and night shifts. Although I have rejected the union’s construction of clause 4 in Appendix C, I agree with the union that the alternative construction is the one identified in its submission. I do not accept the company’s contention that the appropriate shift rate is the rate that applies ‘in connection with a shift of ordinary hours worked by the employee’. I do not see any textual basis for importing either of the two qualifiers that this construction entails: ‘in connection with’ (which might be something other than the actual hours of the relevant shift on which the overtime is worked); or the notion that, in order for clause 4 of Appendix C to apply, the overtime must be worked in connection with a shift of ordinary hours worked by a particular employee. The ‘appropriate shift rate’ is simply the penalty (if any) that applies to a shift on which overtime is worked.

Conclusion

[40] I consider that clause 4 of Appendix C has a plain meaning. Taking into account the ordinary meaning of the text of the provision, in the context of Appendix C and the Agreement as a whole, it is clear that the words ‘appropriate shift rate’ mean the rate (if any) that applies to the shift on which overtime is worked.

[41] Accordingly, the answer to the question posed by the parties for determination by the Commission is as follows: where a shift worker (other than a continuous shift worker) undertakes overtime during day work hours on a Saturday, where such overtime is not continuous with night shift or afternoon shift work, the rate of pay is to be determined without reference to the night shift or afternoon shift penalty.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR610310>

Written submissions:

National Union of Workers: 31 July 2018

CHEP Australia Limited: 31 August 2018

National Union of Workers in reply: 6 September 2018

 1   AE417450

 2   [2017] FWCFB 3005

 3   [2014] FWCFB 7447

 4   See also WorkPac Pty Ltd v Skene [2018] FCAFC 131 at [197]

 5   See point 1 in paragraph 114 of Berri; and point 8 of paragraph 41 of Golden Cockerel