Shire of Mundaring
[2018] FWCA 1241
•2 MARCH 2018
| [2018] FWCA 1241 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Shire of Mundaring
(AG2017/1850)
APPLICATION FOR THE SHIRE OF MUNDARING (LOCAL GOVERNMENT ADMINISTRATIVE EMPLOYEES) ENTERPRISE AGREEMENT 2017
Local government administration | |
COMMISSIONER GREGORY | MELBOURNE, 2 MARCH 2018 |
Application for the Shire of Mundaring (Local Government Administrative Employees) Enterprise Agreement 2017.
[1] The Shire of Mundaring (“the Shire”) commenced bargaining for a new enterprise agreement in late 2016, and on 17 May last year made an application under s.185 of the Fair Work Act 2009 (“the Act”) for approval of an enterprise agreement known as the Shire of Mundaring (Local Government Administrative Employees) Enterprise Agreement 2017 (“the Agreement”). The Australian Municipal, Administrative, Clerical and Services Union (“the ASU”) participated in the negotiations as a Union Bargaining Representative and initially filed an F18 Statutory Declaration, dated 24 May 2017, indicating it supported the application and wanted to be covered by the Agreement.
[2] However, the ASU then filed a further F18 Statutory Declaration, dated 14 July 2017, giving notice of certain grounds of objection to approval. It provided some details about those objections, but indicated that further details would be provided shortly. These further “grounds of objection” were filed on 19 July, but were then amended again in a document received by the Commission on 23 August 2017.
[3] In the meantime the Commission also sought further clarification from the Shire about various matters concerning the proposed Agreement and on 28 July it responded by providing various undertakings for the Commission to consider.
[4] However, the ASU continued to object to the application and the matter was therefore set down for hearing, with directions issued for the filing and service of evidence and submissions. Mr D. Scaife appeared on behalf of the ASU. Mr N. Douglas appeared on behalf of the Shire. Both were given permission to appear under s.596(2)(a) of the Act as the matter involved a degree of complexity and their involvement might enable it to be dealt with more efficiently. The hearing was conducted by way of video conference with the parties appearing from Perth and the Commission sitting in Melbourne.
The Evidence and Submissions
The ASU
[5] The ASU set out its grounds of objection in its written submission in the following terms.
“(a) Clause 3.3.2 is an unlawful term in that it provides a method by which an employee or employer may elect (unilaterally or otherwise) not to be covered by the Proposed Agreement.
(b) Clause 3.3.2 defines a group of employees covered by the Proposed Agreement that was not fairly chosen given that the clause undermines the legislative objective of the FW Act in relation to collective bargaining, and furthermore, is insufficiently defined.
(c) The Proposed Agreement has not been genuinely agreed to because the Shire did not take all reasonable steps to give notice of the right to be represented by a bargaining representative (NERR) to each employee who will be covered by the Proposed Agreement.
(d) The Proposed Agreement has not been genuinely agreed to because the Shire failed to take all reasonable steps to ensure that the employees covered had access to material incorporated in the Proposed Agreement by reference during the access period.” 1
[6] It continued to provide the following submissions in regard to each of these grounds.
[7] Clause 3.3.2 – the unlawful term – the ASU first makes reference to s.186(4) of the Act, which provides that the Commission must be satisfied that an Agreement does not include any unlawful terms. It then refers to s.194(ba), which provides that a term of an enterprise agreement is an unlawful term if it is:
“a term that provides a method by which an employee or employer may elect (unilaterally or otherwise) not to be covered by the agreement.” 2
[8] The ASU submits this has broad operation and extends to terms that allow an employee to choose not to be covered by an Agreement, whether that choice can be made by the employee, or is contingent on some action by the employer. 3
[9] The ASU then refers to sub clause 3.3.2, which acts as the coverage clause. It relevantly provides:
“The parties to this Agreement shall be:
….
3.3.2 Employees of the Shire of Mundaring previously covered by the terms and conditions of the Local Government Officers Award (WA) 1999 or its successor including Apprentices and excluding:
● employees employed under a Director or Service Manager contract,
● a maximum term contract,
● early childhood teachers,
● early childhood educators,
● swim teachers,
● umpires
● or unless otherwise advised under an individual contract or agreement.”
[10] The ASU then refers to the recent Full Bench Decision in AMWU v Berri Pty Limited 4 (“Berri”) in terms of the principles to be applied in interpreting the clause. It continues to submit that the sub clause, firstly, defines the employees covered by the Agreement by reference to coverage of the previous Award and its successor, being the Local Government Industry Award 2010 (“the Award”).5 It then acts to exclude employees, who would otherwise be covered, by providing that certain types of contracts can be used to enable those employees to opt out. The ASU submits that this can occur by an employee accepting either a Director or Service Manager contract, a maximum term contract, or another form of individual contract or agreement.6 In its submission these exclusions are not limited to the named classifications, but also enable other employees to opt out by accepting individual or fixed term contracts. It makes this submission, in particular, in regard to the first two dot points and the last dot point in sub clause 3.3.2. It submits, in conclusion, that the sub clause is an unlawful term within the meaning of s.194(ba), and therefore the Commission cannot be satisfied in terms of what s.186(4) requires.7
[11] The ASU also notes there are other references in the Agreement, which suggest that senior managers are intended to be covered and in this context it refers, in particular, to the pay scales Level 1 to Level 9 at pages 11 and 12 of the Agreement, and the various definitions at each Level, which encompass work performed by employees in senior management positions. 8
[12] The ASU also makes reference to what it describes as the “Coverage Undertaking” that has since been provided by the Shire. It states:
“The Shire undertakes that the only individual or maximum term contract that will exclude employees from the coverage of the Enterprise Agreement 2017 will be those for senior leadership roles such as manager level and above which will result in a maintenance of the status quo and reflect the long standing legacy of separation through former Award coverage.” 9
[13] In its submission there are four issues associated with this proposed undertaking.
[14] Firstly, it expressly contemplates that individual or maximum term contracts can be used to allow employees, who would otherwise be covered by the Agreement, to opt out. It should therefore be viewed as an opt out clause, rather than a term which excludes by classification, because it expressly links the use of individual and maximum term contracts for Directors and/or Service Managers to excluding them from coverage. 10 In addition, if they can be excluded in this way then they must have been covered by the Agreement in the first place.11 It is therefore an unlawful term given “section 194 was drafted to capture a very wide variety of opt out clauses.”12 It also notes that the provisions in the Act are the result of a recent amendment, and did not apply to Agreements approved prior to 1 January 2013.13
[15] Secondly, there is ambiguity in the words used in the undertaking as there is no definition of the words “senior leadership roles” and “manager level.” In addition, these descriptions do not align with those used within the Shire. 14
[16] Thirdly, it effectively purports to alter the coverage of the Agreement, and therefore constitutes a “substantial change” to its terms, and accordingly cannot be accepted. In its submission the undertaking provides scope for the coverage of the Agreement to be “…expanded and contracted at any time according to what the applicant deems to be at any particular time, a manager level or above position ..” 15
[17] The ASU also submits that senior staff should have been provided with a Notice of Employee Representational Rights. 16 It also rejects any suggestion that an undertaking, which specified the exact positions to be excluded, might be acceptable as previous Full Bench decisions have made clear that proposed changes to a coverage clause represent a “substantial change” and are not capable of being dealt with by way of an undertaking.17
[18] It finally submits that the undertaking has no bearing on the use of Director or Service Manager contracts to exclude employees who would otherwise be covered. 18
[19] The Indeterminacy of the Coverage – the ASU next submits that the proposed undertaking is ambiguous and uncertain in its language, and therefore the Commission cannot be satisfied the group of employees to be covered by the Agreement are fairly chosen, given the group is ultimately indeterminate and “can be expanded and contracted at the discretion of the employer.” 19
[20] Failure to provide NERR to all employees who will be covered – the ASU submits the Notice of Employee Representational Rights should have been given to all employees that would have been covered when it was given out, because the exclusion in sub clause 3.3.2 was not in effect at the time. However, this was not done. Therefore, the Commission cannot be satisfied the Agreement was genuinely agreed to, as required by s.186(3). 20
[21] Failure to provide access to incorporated materials – this objection concerns the alleged failure by the Shire to comply with s.180 and s.180(2), in particular, which provides that during the access period for the Agreement the employer “must take all reasonable steps to ensure that” the employees are given:
“(i) the written text of the agreement;
(ii) any other material incorporated by reference in the agreement.” 21
[22] The employees must also have access to these materials throughout the access period. 22
[23] This issue relates to “material incorporated by reference” and the ASU refers, in particular, in this context to the Local Government Award, the Australian Taxation Office Guide for Car Expenses (ATO Guide) and the Local Government Act 1995 (WA), which are all intended to be incorporated into the Agreement. It continues to submit that there is no evidence indicating the Shire took steps to make these materials available to the employees during the access period. 23 It also relies on the Full Bench decision in Construction, Forestry, Mining and Energy Union v Sparta Mining Services Pty Ltd24 (“Sparta”) in support of this submission.25
Ms Danielle Eveline Courtin
[24] Ms Courtin is employed by the Shire in the position of Governance Coordinator and is also a member of the ASU. She was an employee representative for the Union during the negotiations for the new Agreement and attended all bargaining meetings. 26
[25] She was not aware of the term “senior leadership roles” previously being used to describe Shire employees, and understood that it is only the CEO and Director positions that are generally considered to be “senior” in that they are part of the executive leadership team. 27 There are then a series of Manager positions, which are part of what is described as the “Leadership Team,” with each reporting to a Director.28 In her view these positions would not be described as being part of the senior leadership team.29 There are also other positions in the organisation that involve some exercise of management responsibility.30 In addition, employees will often act up in management positions when Managers are on leave.31
[26] Ms Courtin also said she was not aware of a folder of materials being made available to employees at any of the sites during the access period in May 2017, as referred to in the Statutory Declaration of Ms Gerlach, and she could not recall any other documents being made available at this time. 32 However, in cross-examination she acknowledged that she had not attempted to use the intranet search function to view any of the documents.33
Shire of Mundaring
[27] The submissions provided on behalf of the Shire confirm the chronology of events set out in the introduction to this decision. It notes that the ASU, after initially providing a F18 Statutory Declaration in support of approval of the Agreement, then filed a further F18 declaration claiming the Shire had removed a clause in the final copy of the Agreement without notifying employees or their bargaining representative. The Shire submits, in response, that this claim has no substance, and has not been pursued since that time. 34 The ASU then filed further grounds of objection in July, which again included the claim the Shire had deliberately misled employees in relation to the content of clause 9. It again submits there is no substance to this allegation and it has not since been pursued by the ASU.35
[28] It continues to submit that the negotiations for the Agreement were conducted in good faith and with goodwill on all sides, and it wasn’t until sometime after the application for approval had been filed that the ASU raised the allegations about the Shire’s behaviour. It subsequently filed three statutory declarations with the Commission rejecting these allegations. In its submission they make clear the allegations have no substance and this is borne out by the fact they have not been pursued since that time. 36 The ASU has instead now sought to oppose the application on other grounds. The Shire submits in response that these objections are again without substance, and should be rejected.37
[29] It makes the following submissions about each of the grounds of objection.
[30] Clause 3.3.2 and the coverage undertaking – the Shire submits that substantially identical terms have been included, without objection, in the series of preceding enterprise agreements approved by the Commission. 38 It continues to submit that the so-called “coverage undertaking” now proposed is consistent with the underlying purpose or object of sub clause 3.3.2 of the Agreement.39 It accordingly submits that it is open to the Commission to accept the undertaking on the basis that it will not cause financial detriment to any employee, or result in substantial changes to the Agreement. Its effect would be to confirm that the coverage of the Agreement only excludes those employees in senior leadership positions which, in turn, acts to “continue the Shire’s historical practice.”40 It also notes that there is no evidence that similar provisions in preceding Agreements have ever been used to facilitate employees to opt out of those Agreements. It also submits that similar arrangements are common practice in the local government sector, and are contained in many other local government agreements.41
[31] It also submits that the witness statements of Ms Danielle Courtin and Ms Maureen Gerlach both make clear who the exclusions from coverage are intended to apply to, and this is made clear in terms of both the substance as well as the form of the relevant wording. 42
[32] Accordingly, the Shire rejects the submission by the ASU that the contracts referred to can be used to enable employees to opt out of the Agreement. The sub clause simply acts instead to exclude from coverage senior employees of the Shire, who occupy senior management roles. It does not enable an employee to opt out of the Agreement, but instead acts to exclude an employee from coverage if they are now in, or are promoted to a senior leadership position. It does not provide a method by which an employee, or the employer, may elect unilaterally or otherwise to not be covered by the Agreement. 43
[33] It also rejects the submission that individual or maximum term contracts can be a vehicle to allow employees, who would otherwise be covered by the Agreement, to opt out, except in the context referred to above. 44 In the same way Director or senior management contracts are not going to be used for this purpose. They are instead the contractual arrangements that apply to employees occupying the positions of Director or Service Manager who are, and continue to be, excluded from coverage of the Agreement.45 It also submits that there is no ambiguity in the proposed undertaking about the senior leadership or manager level positions that are excluded, and this is confirmed by the fact these positions have been clearly identified in the witness statements of both Ms Courtin and Ms Gerlach.46
[34] It also indicated in response to a question from the Commission that the last dot point in sub clause 3.3.2, which refers to individual contracts or fixed term agreements, was intended to cover circumstances existing at the time the Agreement was approved, rather than enabling individual contracts or fixed term arrangements to be used as a mechanism after approval to shift employees from the coverage of the Agreement. 47
[35] The Shire also notes in this context that it is only the CEO and the Directors and Service Managers who have employment contracts with the Shire, and the exclusion from coverage only applies to these particular classifications. In its submission if the Agreement is viewed in this light then any claims about reference to contracts, rather than positions and classifications, fall away. This was never intended to be the case and was clear throughout the negotiations. 48 It submits, in summary, in regard to the relevant classifications that it is not a matter of opting out, but is instead a situation where “They’ve never been in.”49 In addition, the only way an existing employee can no longer be covered by the Agreement is if they leave the organisation, or accept a promotion to one of the three senior classifications. These are not circumstances that s.194(ba) of the Act is intended to apply to.50
[36] Claimed indeterminacy of coverage – the Shire submits that throughout the bargaining process the parties understood that the group of employees to be covered by the proposed Agreement were determined in accordance with clause 3.3.2, and this was consistent with long-standing practice. It meant the only employees not covered were the CEO and the Directors and Service Managers. The group of employees who were covered were accordingly operationally and organisationally distinct because the coverage excluded those employees in senior leadership roles at manager level and above. 51
[37] In its submission the evidence does not support the claim that the coverage of the sub clause is indeterminate. It is instead clear that it applies only to the position of CEO, Director and Service Manager, and there are clear operational and organisational reasons to support these specific exclusions. 52 It acknowledges that the provisions in the Agreement detailing the classifications and responsibilities make reference to some responsibilities associated with the senior management positions, however, this overlap does not mean the positions can be equated. The Service Managers and Directors have leadership and managerial responsibilities that extend beyond those classifications detailed at level 9. They are also paid at a significantly higher level than the rates applicable at level 9 as a consequence of these additional responsibilities.53
[38] Claimed failure to provide the NERR to all employees who will be covered – the Shire rejects this submission and submits that it was only required to take “all reasonable steps” to give the Notice to employees to be covered by the Agreement. This did not include those excluded by sub clause 3.3.2. It concludes by stating:
“The undisputed evidence is that the Shire complied with this requirement.” 54
[39] Claimed failure to provide access to incorporated materials – the Shire makes reference to s.180(2) of the Act and submits that in each case it provided access to the relevant materials through its intranet site. These actions satisfied the requirement in the Act to take reasonable steps. 55
[40] It also emphasises that all of the circumstances involved should be taken into account, including the ongoing use of the intranet site, the access provided to employees to obtain further information from members of the HR team, including inquiries about access to the incorporated documents, as well as the question and answer session that took place during the access period. These were all part of the processes adopted by the Shire to ensure appropriate access was provided to the relevant documentation. 56 In its submission these circumstances are very different to those involved in the decisions referred to by the ASU, where the relevant documentation was not clearly identified.57
[41] The Shire also notes that the reference to the Local Government Act 1995 (WA) only involved one section of that legislation, and a copy of the relevant section was contained in the folder of documents made available to employees during the access period. The remaining documents, being the Award and the ATO guide, were clearly identified in the Agreement itself, and were readily accessible on the intranet site. 58
Ms Maureen Barbara Gerlach
[42] Ms Gerlach is the Manager, Human Resources, with the Shire of Mundaring and has been in this position since August 2008. During this time she has been involved as an advisor and has provided advisory support during previous enterprise bargaining rounds. 59
[43] She indicated in her statement that the senior executives and Service Managers at the Shire have traditionally been excluded from coverage by the enterprise agreements. She also agreed that the list set out in Ms Courtin’s witness statement identified those employees who are part of the Shire’s leadership team. 60 In addition, they are the only employees to her knowledge who have ever been employed under an individual employment contract.61 As they were not intended to be covered by the Agreement they were not provided with the Notice of Employee Representational Rights.62 She also indicated in her evidence in chief that the Shire’s intranet site contained links to the Award and the Local Government Act 1995 (WA) during the access period, and it was also possible to gain access to the ATO site from where the travel allowance details could be accessed.63 There was also a search function on the intranet, and when relevant search terms were entered the corresponding documents could be opened and readily accessed by means of this “search this site” facility.64
[44] Ms Gerlach also indicated that prior to the ballot on 11 and 12 May last year employees were provided with copies of the proposed Agreement and supporting information via the intranet. Further information was also contained in a folder that was prepared and made available for employees to inspect. 65 However, Ms Gerlach did acknowledge in cross-examination that none of the documents referred to by the ASU were contained in the folder, apart from the relevant section from the Local Government Act 1995 (WA).66
Consideration
[45] The circumstances involved in this matter are obviously somewhat unusual. After what appears to have been a relatively constructive bargaining round, ending with a significant majority of the employees voting to approve the Agreement, the Shire made application to have the Agreement approved by the Commission. The F17 Employer’s Statutory Declaration provided on behalf of the Shire indicates that 138 employees out of a total of 187 voted in the ballot to approve the Agreement, with an overwhelming majority of 116 voting in favour. 67 The ASU, who were a Union Bargaining Representative for the Agreement, then provided a F18 Statutory Declaration indicating its support for approval of the Agreement.
[46] However, the ASU subsequently forwarded a further F18 Statutory Declaration indicating it no longer supported approval, and further particulars would be provided shortly. I now turn to consider the submissions and evidence of the parties in the context of the relevant statutory requirements.
[47] The first issue concerns the content of sub clause 3.3.2 of the Agreement which is effectively the coverage clause. It is contained within sub clause 3.3, and it is useful to set out the sub clause in full:
“3.3 The parties to this Agreement shall be:
3.3.1 Shire of Mundaring of 7000 Great Eastern Highway, Mundaring in the State of Western Australia
And:
3.3.2 Employees of the Shire of Mundaring previously covered by the terms and conditions of the Local Government Offices Award (WA) 1999 or its successor includingApprentices and excluding:
• employees employed under a Director or Service Manager contract,
• a maximum term contract,
• early childhood teachers
• early childhood educators,
• swim teachers,
• umpires
• or unless otherwise advised under an individual contract or agreement.
And:
3.3.3 The Australian Municipal Administrative Clerical and Services Union.”
[48] In terms of the respective submissions about the intent of the sub clause the ASU contends, in summary, that it effectively enables employees to opt out of the Agreement at their initiative, or that of the employer, and it is therefore an unlawful term by virtue of s.194(ba) of the Act. 68 It also makes reference to the proposed undertaking provided by the Shire in an endeavour to clarify the intent of the sub clause. It submits that the wording of the undertaking is ambiguous and, in any case, as it deals with the coverage clause any deficiency is incapable of being rectified by an undertaking as it represents a “substantial change” to the Agreement voted on and approved by a majority of the employees. This is made clear by s.190(3)(b) of the Act.69
[49] The Shire submits, in response, that there is no ambiguity, and the wording is instead clear and simply reflects what has been understood and acknowledged by the parties in a series of enterprise agreements entered into and approved by the Commission. The clear intention and understanding is that senior staff in the organisation, who are covered by individual contracts, are not covered by the Agreement by virtue of their managerial responsibilities. 70
[50] However, the Shire submits it has nevertheless provided the undertaking to make this intention clear in the face of the claims by the ASU.
[51] It is therefore necessary at the outset to have regard to the relevant words in sub clause 3.3.2, and how they are to be interpreted. As the ASU makes clear the principles set out in the recent Full Bench decision in Berri 71are to be applied in interpreting the terms of an enterprise agreement. It is appropriate at this point to refer to those principles and the approach to be adopted in applying them to the interpretation of an enterprise agreement.
[52] The Full Bench in Berri 72commenced its review of those principles by noting:
“The construction of an enterprise agreement, like that of a statute or a contract, begins with a consideration of the ordinary meaning of the relevant words. The disputed words must be construed in the context of the agreement as a whole.” 73
[53] In this context, it referred to the decision in Amcor Limited v CFMEU. 74
[54] It also noted that, as a general principle, all of the words contained in an enterprise agreement must, prima facie, be given some meaning and effect and:
“Such an approach accords with the principles of statutory construction, and, as a general proposition, the principles developed in the general law in the context of the interpretation of statutes are applicable to the interpretation of enterprise agreements.” 75
[55] The Full Bench also noted that:
“There is a long line of authority in support of the proposition that a ‘narrow or pedantic’ approach to the interpretation of industrial instruments (such as enterprise agreements) is to be avoided, and that “fractured and illogical prose may be met by a generous and liberal approach to construction.” 76
[56] It continued:
“A consequence of such an approach may be that some principles of statutory construction have less force in the context of construing an enterprise agreement.” 77
[57] In this context, it referred to the decision in Shop, Distributive and Allied Employees’ Association v Woolworths Limited, 78 which observed that the processes of bargaining and agreement making can mean that consistency of wording is often absent, and the same words can be used in different provisions with different meanings.
[58] The Full Bench finally concluded that the Agreement before it was ambiguous. It was accordingly permissible to consider the evidence of surrounding circumstances as an aid to the task of interpreting the Agreement. However, the Full Bench noted that:
“[62] The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties and the subject matter of the contract. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations. As Mason J observed in Codelfa:
‘… when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of contract, except insofar as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting.’ ” 79
[59] It then referred to the matters identified in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited (“Golden Cockerel”) 80 as evidence of relevance to the objective framework of facts including:
“(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(ii) notorious facts of which knowledge is to be presumed; and
(iii) evidence of matters in common contemplation and constituting a common assumption.” 81
[60] It continued:
“Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.” 82
[61] In this context, it referred to the often cited decision in Kucks v CSR Limited. 83
[62] The Full Bench also made reference to the different structure of agreement making that now exists under the current legislation noting that the parties to agreements are no longer simply an employer and an employee organisation. An Agreement is instead now “made” 84 when the majority of employees to be covered, have been asked to approve the Agreement and the majority of these employees vote in favour. This accordingly makes it more difficult to distil a common understanding among all of the employees that are covered by a particular Agreement at the time it is made. It follows that:
“The diversity of interests involved in the negotiation and making of enterprise agreements warrants the adoption of a cautious approach to the admission and reliance upon evidence of positions advanced during the negotiation process.” 85
[63] It also noted that:
“The admissibility of the post-contractual conduct as an aid to the construction of a contract is a somewhat vexed issue, in respect of which no clear line of authority has emerged.” 86
[64] It concluded in response at [106]:
“In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But, consistent with the view expressed by Santow J in Spunwill, the post-contractual conduct must be such as to found a common understanding – a settled interpretation accepted by the parties.” 87
[65] In conclusion, the Full Bench indicated at [111]:
“We have given consideration to the resolution of the ambiguity in the 2014 Agreement, having regard to the evidence before us. We have not been persuaded by the arguments advanced by either the AMWU or Berri. The admissible extrinsic evidence of the surrounding circumstances is of limited assistance. There is a paucity of evidence regarding the negotiation of the 2014 Agreement and what, if anything, the employees covered by the agreement were told about the laundry allowance. In particular, there is no evidence of the explanation provided to the relevant employees, (pursuant to s.180(5)), of the terms of the 2014 Agreement and the effect of those terms.” 88
[66] It also decided to modify the principles set out in Golden Cockerel 89 as a consequence of its observations. It concluded:
“[114] The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:
1. The construction 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 disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:
(i) the text of the agreement viewed as a whole;
(ii) the disputed provision’s place and arrangement in the agreement;
(iii) the legislative context under which the agreement was made and in which it operates.
2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.
3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.
4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.
5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.
6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.
7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.
8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.
11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.
12. Evidence of objective background facts will include:
(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(ii) notorious facts of which knowledge is to be presumed; and
(iii) evidence of matters in common contemplation and constituting a common assumption.
13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.
14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.
15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-Agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-Agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.” 90
[67] I now turn to consider the present circumstances based on the principles in Berri. 91 The first task is to consider whether the words in sub clause 3.3.2 have a plain and ordinary meaning, and are to be interpreted in that way, or whether they are instead ambiguous and capable of more than one meaning, in which case the relevant principles in Berri92 are to be applied. I also note in this context that the Commission needs to be careful to avoid rewriting the Agreement in order to achieve what it considers to be a fair and reasonable outcome.
[68] The sub clause on one reading can be said to intend to exclude several different categories of employee, i.e. those under a Director or Service Manager contract, those under a maximum term contract, and those under an individual contract or agreement. However, it could also be read as excluding Directors or Service Managers employed under any of the various forms of contract referred to in the sub clause. The Shire seeks to clarify this intention in the so-called “coverage undertaking” by indicating that the only individual or maximum term contracts that exclude employees from coverage are those covering “senior leadership roles such as manager level and above.” The ASU submits, in response, that this only adds to the confusion and ambiguity by using terms such as “senior leadership roles” and “manager level and above,” which are not terms in common usage or commonly understood within the Shire.
[69] It is also noted that the Shire provided further amplification in answer to a question from the Commission during the proceedings about what was intended by the meaning of the sub clause, when it indicated that the reference to maximum term or individual contracts only referred to arrangements in place at the time the Agreement was made and approved by the Commission. It was not intended to be a device or mechanism to enable employees to opt out or be removed from coverage after the Agreement had been approved and was in operation.
[70] I am satisfied, in response, that the relevant words in sub clause 3.3.2 do not have a plain and ordinary meaning and there is instead some ambiguity in terms of what is intended. This involves, in particular, the uncertainty about whether those employees, who can be excluded by use of individual contracts, can only be the Directors and Service Managers, or whether other employees can also be excluded by means of the “maximum term contract” or “an individual contract or agreement” referred to.
[71] Having come to the conclusion that the words are ambiguous, or are capable of having more than one meaning, the principles in Berri 93 make clear that evidence of the surrounding circumstances can be admissible to aide interpretation. This is obviously limited to evidence tending to establish objective background facts, which are known to both parties, and which inform the subject matter of the Agreement. It can include evidence of prior negotiations to the extent they establish objective background facts known to both parties, and notorious facts of which knowledge is to be presumed, or evidence of matters in common contemplation.
[72] In this context I note, firstly, the witness statements of both Ms Courtin and Ms Gerlach, who were both participants in the bargaining round. Each statement makes reference to the group of employees to be excluded from coverage, and these positions are set out specifically in the witness statement of Ms Courtin. She continued to indicate that she considered these positions to be part of either the “Executive Leadership Team” or the “leadership team,” and acknowledged that she would consider these latter positions to be “manager level.” The evidence also indicates that this understanding was clear to both parties throughout the entire process of the negotiations. It was also a common understanding that was consistent with the long standing practice in regard to the preceding enterprise agreements at the Shire. It was also consistent with what applies more broadly in the local government sector in Western Australia. I am satisfied, in response, that these understandings can be said to be objective background facts known to all parties, and are evidence of matters in common contemplation.
[73] I am satisfied, in conclusion, based on the application of the principles in Berri 94 that sub clause 3.3.2 should be interpreted on the basis that it intends to exclude from coverage of the Agreement those employees in the positions of Service Manager and above, including the Directors and the CEO, who are engaged on maximum term or some other form of individual employment contract. I am also satisfied that the group of employees to be covered by the Agreement can be said to be fairly chosen, in that they are an operationally distinct group. The remaining employees, being the CEO, the Directors, and the Service Managers, are separate and distinct from the employees covered by the Agreement by virtue of their leadership and managerial responsibilities.
[74] As indicated, the ASU submits that the exclusions can enable employees to opt out of coverage by means of individual contracts being offered. I am satisfied that the decision I have come to, in large part, deals with this issue by making clear that the individual contractual arrangements are only associated with those employees in the senior management group being, the CEO, the Directors and the Service Managers. They were never covered by the Agreement by virtue of them being in a distinct operational group. The terms in the Agreement are accordingly not to be interpreted as enabling employees, who are already covered by the Agreement, to opt out. It is instead a situation where those senior level employees were not covered in the first place.
[75] This is obviously not to suggest that the group of employees who are covered by the Agreement will always remain static. Some employees will obviously be employed after the Agreement is approved, and will then become covered. Others will retire or leave the organisation and no longer be covered. In addition, employees who are covered by the Agreement will from time to time be promoted to managerial positions, taking them out of its coverage. In some cases employees in the management team might even leave those positions, for whatever reason, and move back into positions covered by the Agreement. It can also be assumed that employees acting up in managerial positions will also move from coverage of the Agreement on those occasions. These are obviously normal interactions that occur in any workplace, and clearly fall outside what is contemplated by s.194(ba) of the Act.
[76] The decision I have come to about the interpretation of the Agreement also means the ASU’s submissions about the Notice of Employee Representational Rights falls away. The CEO, the Directors, and the Service Managers are not covered by the Agreement, and were never intended to be. Therefore, they were never required to be provided with a copy of the Notice.
[77] The final objection raised by the ASU concerns the ability of employees to access the materials incorporated by reference in the Agreement during the access period. It refers in particular, to the Local Government Award, the Local Government Act 1995 (WA), and the travel allowance entitlements promulgated by the ATO, which are relevant in terms of employees being able to understand the travel reimbursement entitlements under the Agreement. The Shire submits, in response, that these documents could be accessed at all relevant times through the internal intranet site, and access was easily available by use of the specific search function. It also refers to the question and answer session held during the access period, which all employees were invited to attend, and which was part of the process put in place to enable employees to seek further clarification about the Agreement.
[78] It is also noted that there is no evidence of any employee actually claiming to have been disadvantaged by not being able to access the relevant documents during the access period. The objection by the ASU appears instead to be raised in the context of strict compliance with s.180(2). It, of course, requires the employer to take all reasonable steps to ensure employees are given access to the relevant documents, and the ASU submits in response that it is not sufficient to simply indicate that the materials can be found on the intranet. There must instead have been “…some steps taken by the employer to actually make the documents available during the access period.” 95
[79] I am satisfied, in response, that the following circumstances are relevant in the context of this consideration. Firstly, the materials were readily identified in terms of what was being referred to. Secondly, the relevant section of the Local Government Act 1995 (WA) was contained in the bundle of documents made available to employees. Thirdly, it was made clear that all documents could be accessed through the intranet, and called up specifically by means of the search function. I am satisfied that this option would now be generally recognised and understood by most, if not all, employees as a reasonable means of gaining access to the relevant materials.
[80] In terms of considering whether the Shire took reasonable steps I am also satisfied that it is of particular relevance that there is no evidence before the Commission highlighting any complaint by any employee that they were not able to access the documents, or that they were somehow disadvantaged in deciding whether to approve the Agreement by not having access. For example, there is no reference to any complaint by any employee in the grounds of objection provided to the Commission by the ASU. There is also no reference to any complaint or concern by any employee in the evidence of Ms Courtin. She simply indicates that she doesn’t recall certain documents being made available to employees during the access period, but makes no reference to whether she attempted to discover whether some or any of those documents were available. These circumstances lend weight to a conclusion, without necessarily of themselves being conclusive, that any employee who wanted to gain access to the relevant documents was able to do so, and as a consequence all reasonable steps have been taken.
[81] The ASU also relies on the Full Bench decision in Sparta 96 in support of its submissions. I have also had regard to this decision. The Full Bench noted at the outset that to be incorporated the relevant materials must be described in a way that permits them to be identified. It continued to indicate that there is no hard and fast rule as to how this is to occur, and incorporation could be achieved in some cases by means of general description. However, in Sparta the relevant materials involved internal policy documents which the employer claimed had been provided to the employees at the time of their induction when they commenced work at the mine site. It accordingly submitted that there was therefore no requirement to provide the employees with those documents again as they had already been given to them at an earlier point in time.
[82] However, the Full Bench was not satisfied that this provided a complete answer in terms of s.180(2), because it did not specifically address whether the relevant policies were actually able to be accessed by employees during the access period, or whether there was any evidence of a further step taken by the employer to ensure this occurred. It accordingly found that the requirements in s.180(2) had not been met.
[83] However, the circumstances involved in Sparta 97 are different from those in the present matter. The evidence of Ms Gerlach indicates that the Shire did take steps to make clear the relevant documents could be accessed via the intranet. The F17 Statutory Declaration she completed indicates this occurred from at least 2 May 2017, and continued during the following access period. In addition, Exhibit E to her witness statement attached screenshots from the intranet referring to the links to these materials.98 The relevant extract from the Local Government Act 1995 (WA) was also included in the bundle of documents made available for employees to inspect during the access period. It concerned a brief reference to s.5.38 of the Act, and the requirement that the performance of each employee, who is employed for a term of more than one year, be reviewed at least once in relation to every year of employment.
[84] However, there is also one other important difference. The materials to be incorporated in Sparta 99 involved internal policy documents that were amended and updated from time to time. They were not documents that are publicly available. In those circumstances it is clearly incumbent on the employer, who has generated the materials internally, to ensure the updated versions are made available to the employees at the particular point in time. However, in the present matter the relevant materials are documents that are freely available in the public domain. This important distinction was also made in the Full Bench decision in Re McDonald’s Australia Pty Ltd.100The Shire has also taken steps by means of the intranet to assist in gaining access during the access period. The relevant obligation is only to take reasonable steps to provide the materials. I am satisfied, in conclusion, that the Shire has complied with its obligations under s.180(2) of the Act.
[85] The Shire has also provided various undertakings. Copies have also been provided to the ASU, and to the employee bargaining representatives. I am satisfied that they will not cause financial detriment to any employee to be covered by the proposed Agreement, or result in substantial changes to the Agreement. The undertakings are accordingly accepted and in accordance with s.191 of the Act will now be taken to be a term of the Agreement.
[86] Subject to the undertakings referred to above I am otherwise satisfied that each of the requirements of ss.186, 187, 188 and 190 of the Act, as are relevant to this application, have been met.
[87] The ASU, being a bargaining representative for the Agreement, has given notice under s.183 of the Act that it wants the Agreement to cover it. In accordance with s.201(2) I note that the Agreement covers the organisation.
[88] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 9 March 2018. The nominal expiry date of the Agreement is 30 June 2020.
COMMISSIONER
Appearances:
N Douglas of McLeods Lawyers for the applicant.
D Scaife of Eureka Lawyersfor the Australian Municipal, Administrative, Clerical and Services Union.
Hearing details:
2017.
Melbourne and Perth (by video):
November 8.
Annexure A
1 Submissions of ASU, dated 20 October 2017, at [8].
2 Ibid at [17].
3 Ibid at [18].
4 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited[2017] FWCFB 3005.
5 Submissions of ASU, dated 20 October 2017, at [21].
6 Ibid at [22].
7 Submissions of ASU, dated 20 October 2017, at [23].
8 Transcript at PN250 – PN254.
9 Submissions of ASU, dated 20 October 2017, at [26].
10 Ibid at [28].
11 Transcript at PN266.
12 Ibid.
13 Transcript at PN267.
14 Transcript at PN271.
15 Transcript at PN277.
16 Submissions of ASU, dated 20 October 2017, at [46].
17 Transcript at PN282.
18 Submissions of ASU, dated 20 October 2017, at [29].
19 Ibid at [33], Transcript at PN303.
20 Submissions of ASU, dated 20 October 2017, at [47].
21 Section 180(2) Fair Work Act 2009 (Cth).
22 Section 180(2)(b) Fair Work Act 2009 (Cth).
23 Submissions of ASU, dated 20 October 2017, at [55].
24 Construction, Forestry, Mining and Energy Union v Sparta Mining Services Pty Ltd [2016] FWCFB 7057.
25 Transcript at PN285.
26 Witness statement of Danielle Eveline Courtin, dated 18 October 2017, at [1] – [6].
27 Ibid at [8] – [9].
28 Ibid at [10] – [11].
29 Ibid at [11].
30 Ibid at [12].
31 Ibid at [14].
32 Ibid at [26].
33 Transcript at PN47 – PN48.
34 Submissions of the Shire of Mundaring (the Shire), dated 3 November 2017, at [4].
35 Ibid at [5].
36 Transcript at PN292 – PN293.
37 Ibid at PN294.
38 Submissions of the Shire of Mundaring (the Shire), dated 3 November 2017, at [11].
39 Ibid at [13].
40 Ibid at [14] – [16].
41 Transcript at PN295 – PN297.
42 Transcript at PN296.
43 Submissions of the Shire of Mundaring (the Shire), dated 3 November 2017, at [20].
44 Ibid at [21](a).
45 Ibid at [21](b).
46 Ibid at [21](c).
47 Transcript at PN299.
48 Transcript at PN300.
49 Transcript at PN301.
50 Ibid.
51 Submissions of the Shire of Mundaring (the Shire), dated 3 November 2017, at [27].
52 Ibid at [28].
53 Transcript at PN304.
54 Submissions of the Shire of Mundaring (the Shire), dated 3 November 2017, at [31].
55 Ibid at [34].
56 Transcript at PN311, Statutory Declaration of Maureen Barbara Gerlach, dated 1 August 2017, at [13] – [16].
57 Transcript at PN313.
58 Transcript at PN312.
59 Statutory Declaration of Maureen Barbara Gerlach, dated 1 August 2017, at [2] and [6].
60 Witness statement of Maureen Barbara Gerlach, dated 3 November 2017, at [16].
61 Ibid at [17].
62 Ibid at [18].
63 Transcript at PN104 – PN109.
64 Transcript at PN110.
65 Statutory Declaration of Maureen Barbara Gerlach, dated 1 August 2017, at [58] – [64].
66 Transcript at PN158 –160.
67 Form F17 – Employer’s statutory declaration in support of an application for approval of an enterprise agreement (other than a greenfields agreement), q 2.10.
68 Submissions of ASU, dated 20 October 2017, at [22] – [23].
69 Ibid at [24] – [31].
70 Submissions of the Shire of Mundaring (the Shire), dated 3 November 2017, at [27](b), transcript at PN300 – PN304.
71 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited[2017] FWCFB 3005.
72 Ibid.
73 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005, at [41].
74 Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241.
75 Ibid at [44].
76 Ibid at [46].
77 Ibid.
78 Shop, Distributive and Allied Employees’ Association v Woolworths Limited [2006] FCA 616.
79 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited[2017] FWCFB 3005, at [62].
80 The Australasian Meat Industry Employees Union vGolden CockerelPty Limited [2014]FWCFB 7447.
81 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited[2017] FWCFB 3005, at [63].
82 Ibid at [65].
83 Kucks v CSR Limited (1996) 66 IR 182.
84 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited[2017] FWCFB 3005, at [86].
85 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005, at [88].
86 Ibid at [101].
87 Ibid at [106].
88 Ibid at [111].
89 The Australasian Meat Industry Employees Union vGolden CockerelPty Limited [2014]FWCFB 7447.
90 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005, at [114].
91 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005.
92 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005.
93 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005.
94 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005.
95 Transcript at PN287.
96 Construction, Forestry, Mining and Energy Union v Sparta Mining ServicesPty Ltd [2016] FWCFB 7057.
97 Ibid.
98 Witness statement of Maureen Barbara Gerlach. dated 3 November 2017, Exhibit E.
99 Construction, Forestry, Mining and Energy Union v Sparta Mining ServicesPty Ltd [2016] FWCFB 7057.
100 Re McDonald’s Australia Pty Ltd (2010) 196 IR 155.
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