National Union of Workers v Inghams Enterprises Pty Limited

[2019] FWC 2738

[2019] FWC 2738

FAIR WORK COMMISSION

DECISION

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

National Union of Workers
v
Inghams Enterprises Pty Limited
(C2018/7086)

DEPUTY PRESIDENT ANDERSON ADELAIDE, 26 APRIL 2019

Alleged dispute about matters arising under enterprise agreement and the NES [s186(6)] – agreement interpretation – rate of pay for overtime work when Saturdays are worked in substitution for public holidays – concept of ‘short week’ – principles of interpretation - dispute resolved

[1] On 14 December 2018 the National Union of Workers (NUW) filed a dispute notification in the Fair Work Commission (the Commission) under section 739 of the Fair Work Act 2009 (the FW Act). The application was made by the General Branch Secretary of the Union.

[2] The Respondent to the dispute is Inghams Enterprises Pty Ltd (Inghams or the employer).

[3] The dispute concerns the Inghams Enterprises (South Australia Processing and Distribution) Enterprise Agreement 2016 (the Agreement) and in particular the application of clause 6.4(4) in circumstances where two public holidays fall in the same week and Saturday overtime is worked in substitution of both days.

[4] The NUW is an employee organisation covered by the Agreement. The application was made to the Commission under clause 3.1 of the Agreement (Dispute Resolution Procedure).

[5] The application was the subject of conciliation on 29 January 2019 but did not resolve.

[6] On 30 January 2019 I issued directions setting the matter down for arbitration on 16 April 2019.

[7] In advance of arbitration, written submissions were filed both by the NUW and by the employer. A witness statement of Mark Whenan was filed by the NUW and a witness statement of David Story filed by the employer

[8] Hearing by private arbitration was conducted on 16 April 2019, at the conclusion of which my decision was reserved.

The Facts

[9] Written and oral evidence was received from both Mr Whenan and Mr Story. The evidence of each was clearly given and can be relied upon.

[10] A statement of agreed facts (with attachments) was also filed. 1 The evidence of the witnesses and the content of written submissions provide a relatively straightforward factual matrix for the determination of this matter.

[11] Inghams operate poultry processing operations in various states and territories of Australia including South Australia. Amongst its workforce it employs persons who are members of the NUW.

The Agreement

[12] Employees performing production work in its South Australian operations are covered by the Inghams Enterprises (South Australia Processing and Distribution) Enterprise Agreement 2016.

[13] The Agreement was made (‘voted up’) on 1 June 2016, approved by the Commission on 20 July 2016, commenced operation from 27 July 2016 and has a nominal expiry date of 31 December 2019. 2

[14] There had been a predecessor agreement made in 2012 covering the same production work. 3

The ‘short Saturday’ shifts

[15] In 2018, under the South Australian Holidays Act 2010, Christmas Day was a public holiday falling on Tuesday 25 December 2018. Proclamation Day was a public holiday falling on Wednesday 26 December 2018.

[16] Inghams made a business decision not to operate its production facilities in South Australia on either of these days.

[17] Inghams decided, in lieu of production on 25 and 26 December 2018 to operate its facilities on Saturday 22 December 2018 (in lieu of the 25 December public holiday) and on Saturday 29 December 2018 (in lieu of the 26 December public holiday).

[18] In doing so, Inghams invoked the provisions of clause 6.3 and 6.4 of the Agreement. It required employees to work overtime on both Saturday 22 December and on Saturday 29 December (clause 6.3). It considered that the relevant week was a “short week” within the meaning of clause 6.4(4) of the Agreement. It invoked that clause with respect to the rate of payment of overtime on both of the substitute Saturdays.

The dispute

[19] Clause 6.4(4) (a) and (c) of the Agreement provides a concessional overtime rate of time and a quarter for Saturday work by certain employees in the event of a “short week”.

[20] The general (non-concessional) overtime rate for work performed under the Agreement is time and a half for the first three hours and double time thereafter (clause 6.2(6)).

[21] Inghams paid employees on both Saturday 22 December 2018 and on Saturday 29 December 2018 at the concessional overtime rate.

[22] The NUW disputed this position. It contended at the time, and maintains the view, that only 29 December 2018 should have been paid at the concessional overtime rate. It says that in a “short week” clause 6.4(4) only allows one public holiday to be substituted by a Saturday of work at the concessional overtime rate, irrespective of whether more than one public holiday falls in that week.

[23] The matter remained unresolved between the parties and a dispute was notified by the NUW in accordance with clause 3.1 of the Agreement.

[24] The issue was discussed between relevant personnel in accordance with clause 3.1.2.

[25] No agreement was reached and the matter was then referred to the Commission for conciliation and arbitration pursuant to clause 3.1.2(b). Following unsuccessful conciliation, both the NUW and Inghams consented to arbitration by the Commission under clause 3.1.2(b) of the Agreement.

The issue to be determined

[26] The issue requiring determination is narrowly framed.

[27] It does not concern whether Inghams exercised a lawful right to operate production on Saturday 22 or Saturday 29 December 2018. Nor does it concern whether employees were lawfully required to work overtime on those Saturdays.

[28] It concerns the rate of payment for the overtime that was worked on those days.

[29] More particularly, it concerns whether the concessional overtime rate in clause 6.4(4) of the Agreement is payable for only one Saturday that is substituted for a public holiday or public holidays (plural) in a “short week” (the NUW position) or whether it is payable for two Saturdays substituted either side of two public holidays falling in a short week (the Inghams position).

[30] The parties agreed the following formulation of the question to be determined:

“Under the lnghams Enterprises (South Australia Processing and Distribution) Enterprise Agreement 2016, where no work is performed on two or more public holidays that occur in the one week can lnghams:

•  pay employees the rates in clause 6.4(4) for only one Saturday; or

•  pay employees the rates in clause 6.4(4) for both the Saturday immediately

•  before and the Saturday immediately after the public holiday?”

[31] It should be noted that the NUW does not dispute that overtime worked on the Saturday (singular) following a public holiday in a “short week” can be paid at the concessional overtime rate. Rather, it disputes that two Saturdays can be designated by the employer to be worked at the concessional rate.

[32] In short, the NUW contends that clause 6.4(4) only allows one Saturday to be so designated irrespective of whether two public holidays occur in a “short week”. The employer contends that the clause allows two Saturdays to be so designated if two public holidays fall in a short week.

[33] It should also be noted that the NUW indicated during proceedings that it may also be in dispute with the employer as to whether clause 6.4 permits (only) the designation of work (at concessional rates) on the Saturday following the public holiday in the “short week” (the possible NUW position) rather than permitting the designation of any Saturday (such as the Saturday preceding the public holiday or the ‘banking’ of Saturdays). However this was not a matter on which the parties sought a determination by the Commission.

[34] In practice, there is no dispute that a concessional overtime rate was lawfully applied by Inghams for overtime worked on Saturday 29 December 2018. The dispute is whether Inghams was permitted by the Agreement to also do so in relation to the overtime that was worked on Saturday 22 December 2018.

Consideration

[35] The appropriate principles that should be applied to the construction of an enterprise agreement are well established. Interpretation of the instrument should be founded on the language used in light of the Agreement read as a whole and its industrial, commercial and legislative context and purpose. 4

[36] Surrounding circumstances (drawn from objective background facts including the industrial context known to the ‘parties’) can inform the interpretation of an Agreement where its meaning is not plain; for example, where there are equally open alternate interpretations of its terms or where the language used is ambiguous. 5

[37] The task of the Commission is not to frame the policy intent of an industrial instrument. 6 It is a narrower task: to interpret an Agreement and do so according to established canons of construction.

Language of the Agreement

[38] I now consider the language of the Agreement.

[39] Clause 6.4(4) of the Agreement provides as follows:

“(4) In the event of a “short week”, where one or more public holidays fall in a week leading to fewer production days, or where technological installations lead to disruptions to ordinary production, employees may be requested to work overtime on a Saturday in accordance with the following conditions:

(a) Where a permanent employee was entitled to the public holiday (due to having ordinary hours of work on the public holiday), the Saturday overtime shall be paid for at the rate of time and a quarter. Provided that, in the case of shift workers performing an overtime Saturday shift at times that would fall within the shift work span of hours defined in clause 6.2(1), the shift allowances in clause 6.2(5) shall apply in addition to the rate of time and a quarter, to a maximum combined rate of time plus 40%.

(b) Where a permanent employee was not entitled to the public holiday (due to not having ordinary hours of work on the public holiday), the Saturday overtime shall be paid for at the rate of time and a half.

(c) Where a casual employee works in accordance with this clause, the Saturday overtime shall be paid for at the rate of time and a quarter.

(d) The overtime rates in this subclause shall only apply to one Saturday per public holiday where the "short week" is due to a public holiday falling.”

[40] The precondition for the operation of the concessional overtime rates in sub-clauses (a), (b) and (c) of clause 6.4(4) is (in the opening words of the clause) “in the event of a “short week”. The term “short week” is not defined. It is not in dispute that the words that follow this opening phrase are descriptive and provide meaning to the concept of a “short week”:

“where one or more public holidays fall in a week leading to fewer production days, or where technological installations lead to disruptions to ordinary production”

[41] The word “week” as used in clause 6.4(4) or more generally in the Agreement is not defined. The general usage of the word, accepted for industrial purposes, is a 7-day period Sunday to Saturday (inclusive). 7 I see no reason not to apply that general usage in the context of this Agreement (though, as requested by the parties, I make no finding as to whether a substitute Saturday under the clause must be worked in the short week on Saturdays prior or following, or both).

[42] It was not disputed, and I conclude, that in the 7-day period Sunday 23 December 2018 to Saturday 29 December 2018 (inclusive) two public holidays fell which led to “fewer production days” being worked at the Inghams plant.

[43] I am therefore satisfied that this period of 7-days in December 2018 was a “short week” within the meaning of clause 6.4(4) of the Agreement, and that this precondition for the application of the clause arose.

[44] Does the language of clause 6.4(4) permit two public holidays in the short week to be substituted by overtime work at concessional rates on two substituted Saturdays, or only on one such Saturday?

[45] Both the NUW and Inghams place emphasis on clause 6.4(4)(d). Each say that the sub-clause has a plain meaning which supports their interpretation. It reads:

“The overtime rates in this sub-clause shall only apply to one Saturday per public holiday where the “short week” is due to a public holiday falling.”

[46] The NUW place emphasis on the words “one Saturday” to advance its position that only one Saturday can be substituted. There would be force in this submission if the sub-clause simply went on to provide ‘one Saturday where the short week is due to a public holiday’. However, it does not. The Agreement uses the phrase “one Saturday per public holiday”, not just “one Saturday”. The Agreement must be interpreted by reference to the words used. Further, as a general rule, all words used must be given utility and purpose. This includes the phrase “per public holiday”.

[47] In this phrase the word “per” acts as a preposition. Its dictionary meaning includes “for each”. 8 It is a word commonly found in industrial instruments and legislation in phrases such as ‘per year’, ‘per day, ‘per week’ or ‘per shift’. In such contexts, the preposition “per” informs the noun immediately following so as to apply an entitlement to each occasion arising. The preposition “per” contemplates that the entitlement may occur more than singularly. It permits the entitlement to operate on self-recurring basis as multiple years/days/weeks/shifts (in the above examples) arise.

[48] Applying this construction, in sub-clause 6.4(4)(d) of the Agreement the ordinary meaning of the phrase “per public holiday” means as applicable to each public holiday occurring. Its ordinary meaning provides for the application of the sub-clause to more than one public holiday occurring. To conclude otherwise would be to fail to apply the ordinary meaning of the phrase “per public holiday”.

[49] Given that the sub-clause applies to more than one public holiday, it follows that more than one public holiday can be designated to “one Saturday” if more than one public holiday falls within a “short week”. The use of the word “one” is given purpose because only one Saturday (singular) can be a substitute for one public holiday (singular). If two public holidays fall within a short week, and if two Saturdays are then designated as substitute days of production and paid at concessional overtime rates, then the word “one” continues to have application because only one Saturday per public holiday has been so designated.

[50] I find, applying the principles of construction to its terms, that clause 6.4(4) has a plain meaning. It permits multiple Saturdays to be worked at the overtime rates set out in that sub-clause where multiple public holidays fall in a short week so long as only one Saturday is worked at the overtime rates for each of the public holidays occurring.

[51] On this construction, given that only one Saturday falls in any given week, it necessarily follows that at least one of the Saturdays designated where multiple public holidays occur in a short week will be a Saturday falling outside of the short week. This is not inconsistent with the operation of the clause or its proper construction. It is a consequence of applying its plain meaning.

[52] As noted, beyond this (and at the request of the parties) I make no finding on whether Saturdays following or preceding the short week (or both) or which of the Saturdays following or preceding can be utilised for these purposes.

Surrounding circumstances

[53] The NUW and Inghams advanced evidence of surrounding circumstances relating to the negotiation of the Agreement. Inghams in particular led evidence of the company’s understanding of the intent of clause 6.4(4) and submitted that is interpretation of clause 6.4(4) is consistent with its understanding as well as the surrounding circumstances.

[54] I do not make my decision in this matter by reference to surrounding circumstances or the evidence of extrinsic events led by either the NUW or Inghams.

[55] Firstly, given that I have found clause 6.4(4) to have a plain textual meaning and not be ambiguous or susceptible to alternate meanings it is unnecessary to do so.

[56] The fact that parties are in dispute over the interpretation of an agreement does not necessarily mean that the disputed provision does not have a plain meaning or that it is ambiguous or susceptible to equally valid alternate meanings. 9

[57] Secondly, consistent with authority 10 I apply a cautious approach to the use of background facts and surrounding circumstances in interpreting the Agreement particularly as the background facts put before me relate to pre-Agreement conduct.

[58] Thirdly, I agree with the NUW’s submission that if the agreement was ambiguous or open to alternate meanings, the evidence before me concerning pre-Agreement conduct does not establish a common intention.

[59] At its highest, the employer’s evidence establishes that Inghams sought during negotiations for the 2016 agreement the right to concessional overtime for Saturday work in the event of a short week and believed that it had secured agreement to that course.

[60] However, it does not follow that a common intention for the employer’s interpretation was, in an objective sense, reached.

[61] The employer’s evidence before me refers to a document entitled “Heads of Agreement’ provided by the employer to the NUW following a bargaining meeting in 2016. 11 That document was drafted by the employer. I am satisfied that the employer did so in good faith in an attempt to reflect the outcome of a bargaining committee meeting. That document included the following:

“4. Saturday Overtime Changes for Disrupted Production

(a) The penalty rate applying to Saturday overtime to be amended in the following circumstances:

◦  When a public holiday leads to a “short production week”, employees may be requested to work an overtime shift on the Saturday before or after the public holiday (one Saturday shift per public holiday).

◦  When technological installations lead to disruptions to ordinary production, employees may be requested to work an overtime shift on a Saturday.”

[62] The evidence before me is that the NUW did not respond favourably or unfavourably to the Heads of Agreement. It remained silent on that document. It was not executed as a side agreement or common understanding. It was marked ‘without prejudice’ and ‘draft’ and whilst the employer reasonably considered it to reflect the position arising from a bargaining meeting, it was not adopted by the Union in that form. A joint position between the NUW and Inghams was expressed more briefly in a summary put to employees as being “the best win-win outcome that the NUW and Inghams put together”. That summary provided: 12

“To be more competitive:

◦  If public holidays or technological installations cause disruptions to production, Saturday overtime may be required. The loading will be 25%, or up to 40% for shift workers. A 50% loading will apply if a worker was not entitled to the public holiday.”

[63] Unlike the draft Heads of Agreement, this joint position made no reference to “one Saturday shift per public holiday”.

[64] Even more relevantly, the Heads of Agreement was not made between Inghams and its employees. An agreement under the FW Act is made by those who vote on it; not those who negotiate it. 13 The evidence before me is that the employees rejected the joint summary put by Inghams and the NUW. Further negotiations occurred. Only after those further negotiations was the Agreement voted up. Whilst I accept the evidence that the further negotiations did not concern the short Saturday issue or vary any prior bargaining position on that matter, it is not possible to conclude that the employees had any particular common intention on that issue with Inghams beyond that reflected in the terms of clause 6.4(4) as voted on.

[65] The evidence does establish that clause 6.4(4) had not been a feature of the 2012 Agreement, but was agreed by majority vote of employees in 2016. I accept that Inghams had grounds to believe it had secured a work practice change to its potential operational benefit in return for other concessions it made during negotiation (such as wage increases). However, the NUW’s interpretation of clause 6.4(4), whilst not its plain meaning, is also consistent with a conclusion that a benefit was secured by the employer in the 2016 Agreement that was not provided for in the 2012 Agreement (that benefit being, on the NUW’s interpretation, one Saturday work at concessional overtime rates for a short week in which one or more public holidays fall).

[66] It cannot be concluded that a common intention was achieved as to the meaning or application of clause 6.4(4) so as to aid its construction.

Conclusion

[67] The answer to the question posed by the parties for determination is that under the Inghams Enterprises (South Australia Processing and Distribution) Enterprise Agreement 2016 where no work is performed on two or more public holidays that occur in the one week then ‘yes’ Inghams can pay employees the rates in clause 6.4(4) for both the Saturday immediately before and the Saturday immediately after the public holiday.

[68] The dispute as notified is resolved in accordance with this decision.

DEPUTY PRESIDENT

Appearances:

E. Barrett, for the National Union of Workers

M. Skinner, for Inghams Enterprises Pty Limited

Hearing details:

2019.

Adelaide.

16 April.

Printed by authority of the Commonwealth Government Printer

<PR707268>

 1   A2

 2   [2016] FWCA 4869

 3   Inghams Enterprises (South Australia Processing and Distribution) Enterprise Agreement 2012

 4   AMWU v Berri Pty Ltd[2017] FWCFB 3005 (Berri); AMIEU v Golden Cockerel Pty Ltd[2014] FWCFB 7447; Kucks v CSR Limited (1996) 66 IR 182; Short v Hercus (1993) 40 FCR 511

 5   Berri at [114] principles 10, 11 and 12; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35]

 6   Berri at [114] principle 2

 7   RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union[2015] FWCFB 2881 at [30]

 8   Macquarie Dictionary 3rd edition

 9   National Union of Workers v CHEP Australia Limited[2018] FWC 3797 at [44]; Bianco Walling Pty Ltd v CFMMEU[2019] FWCFB 161 at [43]

 10   Berri at [114] principle 13

 11 R1 Statement of David Story Annexure 1

 12 R1 Statement of David Story Annexure 2

 13 Section 182 FW Act; CFMMEU v Griffiths Cranes Pty Ltd[2019] FWCFB 1717 at [28]