Simplot Australia Pty Ltd v "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)

[2016] FWC 4128

[2016] FWC 4128

FAIR WORK COMMISSION

DECISION

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

Simplot Australia Pty Ltd
v
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
(C2015/4180)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 28 JUNE 2016

Alleged dispute about any matters arising under the enterprise agreement and the NES.;[s186(6)].

[1] On 2 June 2015 Simplot Australia Pty Ltd (Simplot) lodged an application for the Fair Work Commission (the Commission) to deal with a dispute in accordance with the dispute settlement procedure in an agreement pursuant to s.739 of the Fair Work Act 2009 (the Act).

[2] The Respondent is the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

[3] The relevant agreement is the AMWU, CEPU and Simplot Australia Pty Ltd National Collective Agreement 2014 – 2017 [AE412434] (the 2014 Agreement). That agreement applies to a number of Simplot’s food manufacturing sites around Australia and has specific sections/appendices for various sites.

[4] This dispute relates to the Kelso site near Bathurst, New South Wales. This factory produces fish products for Birds Eye and I & J.

[5] The dispute is in relation to whether meal allowance is payable to employees who worked the 12 hour shift arrangements when it operated from mid-2006 to 2012. The statutory award limit means the claim goes back to 2008. In fact, because of this, the predecessor agreements are most relevant, namely:

● AMWU and Simplot Australia Pty Limited National Collective Agreement 2011-2014 [AE887944] (the 2011 Agreement);

● Simplot Australia Pty Ltd (National Framework) Certified Agreement 2008 [AG865696] (the 2008 Agreement);

● The Food Preservers Award 2000 [AP781106CRV] (the predecessor of the modern award) (the Award), was also incorporated by reference in these agreements.

[6] Simplot’s application stated that the back-pay would amount to in excess of $300,000. However, the statutory limit means that the claim goes back to 2008. Its position is that the meal allowance provisions in the 2008 and 2011 Agreements do not apply to 12 hour shift workers at Kelso.

Commission Proceedings

[7] The dispute has had a long history. The claim was first raised by the AMWU in August 2009.

[8] There were proceedings in conference before Deputy President Sams on 14 February 2012. The matter was not resolved.

[9] This application came before me initially in a conference on 1 July 2015 and then 14 December 2016.

[10] Simplot was represented by Michael Mead of AI Group and its Workplace Relations Manager, Surene King. The AMWU was represented by Joseph Lavelle-Wilson. This representation continued in later proceedings.

[11] In early February 2016 directions were issued and the matter set down for hearing on 5 May. Final submissions were made at a further hearing on 24 March.

Agreement about the issue to be decided

[12] At the 14 December conference the parties agreed on a formulation of the issues to be determined by the Commission. They also agreed to accept the jurisdiction of the Commission.

[13] On 17 December 2015 I issued the following agreed statement:

“STATEMENT

This matter was dealt with in conference by the Commission on 14 December 2015.

In order to resolve the dispute as to the entitlement of employees of Simplot Australia Pty Ltd at the Kelso site to the payment of meal allowance when working 12 hour shifts, the Commission will arbitrate, pursuant to the dispute settlement clause of the AMWU, CEPU and Simplot Australia Pty Limited National Collective Agreement 2014 – 2017 [AE412434] (the Agreement).

In order to reach a decision, the Commission will need to consider the following questions:

1. Are Simplot workers who were employed at Kelso under the Simplot Australia Pty Ltd (National Framework) Certified Agreement 2008 entitled to the benefit of a meal allowance in accordance with clause 19.3.1 of the Food Preservers Award 2000 on occasions when they worked 12 hour shifts on and from 1 September 2009;

2. Are Simplot workers who were employed at Kelso under the AMWU and Simplot Australia Pty Limited National Collective Agreement 2011–2014 entitled to the benefit of a meal allowance under that agreement on occasions when they worked 12 hours shifts?

The parties accept the Commission’s jurisdiction to arbitrate but reserve their rights to appeal any decision as to its merits.

If the Commission determines that employees were entitled to the benefit of a meal allowance, then Simplot will make the appropriate payments to those employees, dated back to 1 September 2009. ”

[14] The application was lodged utilising Clause 44 “Dispute Resolution” of the 2014 Agreement. That clause provides for arbitration about “matters pertaining”. Therefore it would have provided jurisdiction for the Commission to arbitrate a dispute such as this. However, the alleged breaches took place in the past and this would have created jurisdictional difficulties, in my view. Therefore the agreement was to accept jurisdiction was necessary.

Relevant Agreement Clauses

[15] The 2008 Agreement operated until 28 February 2011. It incorporated the 2000 Award in Clause 3.3.1. It has a range of appendices for specific sites. The Kelso Site Agreement (which is an attachment to the 2008 Agreement) contains the following relevant clauses:

● Clause 2 provides for a 9 day fortnight;

● Clause 11 provides:

“11.0 Morning and Afternoon Tea Breaks

11.1 Employees who work full time ordinary hours daily shall be provided with a paid ten (10) minute morning and afternoon tea break at such times and in such a manner as shall not interfere with the continuous running of production.

11.2 Employees who work less than full time ordinary hours, but more than four (4) hours daily shall be provided with a paid ten (10) minute tea break at such time and such a manner as shall not interfere with the continuous running of production.

11.3 Where employees work one and a half (1½) hours overtime or more prior to commencement of ordinary day work hours, a ten (1) minute paid tea break shall be provided, by arrangements, within the first four (4) hours after commencement.”

[16] Attachment 1 is the “Kelso 12 Hour Shift Arrangement”. It includes Clause 3 which seeks to minimise overtime, outside of the 12 hour roster and Clause 10, which distinguishes between “the base rate of pay” and the 12 hour rostered rate of pay.

[17] Appendix 3 contains the wages for various sites. For Kelso, there are “Food” and “Metals” hourly rates and “tea money” which at 1 March 2008 was “$10.49” for “Metals” and “$9.55” for Food”.

[18] The 2011 Agreement is in the same format. Clause 9 makes it clear that the site specific provisions override any general agreement or award provision to the extent of any inconsistency.

[19] Relevant clauses are:

● Clause 21 provides:

“21. Allowances

21. Allowances are provided for in the relevant Awards and Appendix 5.

21.2 Meal allowance – Food Employees

a) Where a day work employee is required and does in fact work for more than nine and one half hours on any day such employee shall either be supplied by the employer consisting of two courses or be paid an appropriate meal allowance. Provided, however that a further meal allowance of the same amount shall not be paid unless such employee performs an additional four hours work after the nine and one half hours as aforesaid.

b) The provisions of Clause 21.2(a) also apply to shiftworkers, if the employee is required to and does in fact work for more than nine and one half hours on any day or such employee performs an additional four hours of work after the nine and one half hours aforesaid.”

● Clause 25.2 provides

“25.2 Special Provisions for Food Shiftworkers

a) Shift definitions

i. The Company may require any employee to perform a week’s work on shift work of five shifts of up to eight hours each. Such shifts shall be between 11.00 p.m. on a Sunday and 8.00 a.m. on the following Saturday. Conditions and entitlements relating to 12-hour shifts are contained in the relevant site-specific Appendices.

ii.
Day shift shall not commence before 6.00 a.m.
Afternoon shift means any shift finishing at 6.00 p.m. and at or before midnight.
Night shift means any shift finishing after midnight and at or before 8.00 a.m.

iii. To avoid doubt, shiftwork provisions of the Food, Beverage and Tobacco Manufacturing Award 2010 will not apply to food employees. In addition, an early morning shift will only be implemented on any site by agreement and prior genuine consultation between the parties covered by this Agreement.

b) Shift loading

A shift loading of 15% shall be paid for any afternoon shift and 30% for any night shift.

c) Meal breaks for shiftworkers

i. A meal break of 30 minutes shall be allowed to shiftworkers on all shifts.

ii. Where work is currently performed pursuant to a three-shift production arrangement, the time of such meal break will be counted and paid for as time worked. At the time of signing this Agreement only the Bathurst and Devonport sites had three-shift production arrangements and these current arrangements will continue to apply.

iii. Should the Company introduce a three-shift production arrangement at any site within the life of this Agreement, then the meal breaks will be counted and paid for as time worked. Such an arrangement shall not be introduced unless the notification and consultation provisions of Clause 13 – Introduction of Change are satisfied.”

[20] The 12 hour shift arrangement for Kelso is contained in Appendix 3 which was a more detailed provision than the previous agreement.

● Clause 2.9 provided:

“BASE RATE OF PAY

a) Where we refer to the base rate of pay, it is the base hourly rates for production and maintenance and engineering employees as indicated in Clause 14 of Appendix 3, not the rostered rate of pay as worked out on a 12-hour shift.

b) Base rates will apply when calculating the following:

i. Overtime – for all permanent employees who work overtime in addition to their roster, these employees will be paid a double time of their base rate plus appropriate shift penalty (30% night shift) and meal breaks must be included in this time.

ii. Payment to casuals (30% night shift) and meal breaks must be included in this time.

ii. Future wage increases – any wage increases will be applied to the base rate.

An updated 12-hour roster will be done to reflect any increase in wages. For all Wage rates see Appendix 5 of the Agreement.”

[21] Relevant clauses of the Award which are incorporated are:

“19.3.1
Where a day work or day shift employee is required and does in fact work for more than 9½ hours on any day such employee shall either be supplied by the employer with a meal consisting of two courses, one of which shall be hot meat (or fish) and vegetables, or be paid $10.10 meal allowance.

23.1.6
In the case of shift workers other than day shift workers, when working overtime including a Saturday, Sunday or public holiday shift, a further meal break of 30 minutes shall be allowed at the end of such shift where more than 1½ hours’ further work is to be performed. Such further meal break shall be paid for as time worked.

In the case of day shift workers, when working overtime including Saturday, Sunday or public holiday shift, a further meal break of 30 minutes shall be allowed at the end of shift where more than 1½ hour’s further work is to be performed. Such further meal breaks shall not be paid for as time worked except where work is performed pursuant to a three shift (day, afternoon and night) arrangement, the time of such meal breaks shall be counted and paid for as time worked.

23.1.11
Should such an employee refuse to work a minimum of two hours overtime or additional overtime (as the case may be) if so required by the employer, the employee shall forfeit any right to payment of meal allowance”

“26.3 Meal or meal allowance

26.3.1
The provisions of 19.3.1 and 19.3.2 of this award shall also apply to a shift worker other than a day shift worker, if required to and does in fact work for more than 9½ hours on any day or such employee performs an additional four hours of work after the 9½ hours as aforesaid.

26.3.2

Notwithstanding the provision of 23.1 of this award and 26.3 hereof, an employer may depart from the provisions of 23.1 of this award and 26.3 hereof subject to agreement reached pursuant to the provisions of Clause 10 of this award.”

Overview of the Evidence

[22] At the initial conference, Mr Mead tabled a folder containing the various agreements and variations of the Food Preservers Award going back to the 1940’s. A further folder was tabled at the hearing that took the Award history back to the 1920’s.

[23] Exhibit S1 was the statement of David McAloney, currently Interim General Manager Manufacturing – Tasmania for Simplot. From 2007 to 2011 he was the Kelso Plant Manager.

[24] Michael Hedley swore two statements (Exhibits S2 and S3). Mr Hedley is currently General Manager, Human Resources for a Simplot subsidiary, Top Cut Foods Pty Ltd. Mr Hedley commenced with Simplot in October 1998. In 2005 when the Kelso 12 hour shift arrangements were negotiated he was National HR Manager for Simplot. Attached to Exhibit S2 were 79 attachments of relevant documents, meeting notes etc. Mr Mead also tendered a further folder which grouped some of these attachments in chronological order.

[25] The AMWU’s first witness was Mr Daniel Stapleton (Exhibit A1) who was the AMWU delegate at Kelso from 2005 until 2014 when he left. Evidence was also given by Mr Tom Hale, the National Food Division Secretary (Exhibit A2).

Simplot’s Case

[26] The 12 hour shift system at Kelso was introduced on 10 July 2006 as a trial. It was confirmed on 10 October 2006 and operated for the next six years. It was part of an overall restructuring and was proceeded by negotiations between Simplot and the AMWU which commenced in November 2005.

[27] “The Kelso Roster Changes Agreement” governed the operation of the 12 hour shift. It was not certified by the Commission because the then operative Simplot Agreement was mid-term. It was reflected, to an extent, in the 2008 Agreement, but not reproduced.

[28] The 12 hour shift system operated on the following basis:

● “4 on 4 off” shift roster;

● Average hours of 42 per week;

● 3 meal breaks of 30 minutes each per shift;

● A “rostered rate of pay” for each hour worked but a “base rate of pay” was used to calculate other entitlements.

[29] The above summary was not contested by the AMWU. The dispute was whether the “rostered rate of pay” covered other entitlements.

[30] Simplot submits that there is no entitlement to meal allowance under the 2008 Agreement or the Award. It says that the rostered rate of pay was a comprehensive rate intended to cover all monetary entitlements. The 2011 Agreement, Simplot says, has the same application. The specific Kelso provisions override the general agreement and the Award. In any event, it is submitted that insufficient daily overtime is worked under the 12 hour shift to attract the meal allowance clause.

[31] Simplot submits that the Appendix to the 2008 Agreement which deals with the Kelso 12 hour shift prevails over the more generic provisions in the Agreement.

[32] Simplot submits that in interpreting the Kelso 12 hour attachment, the Commission should have regard to the process of negotiations.

[33] Simplot submits that the claim for the allowance derives from incorporation of the Award. Payment of meal allowance, is inconsistent with the concept of a loaded rate which purports to cover the field.

[34] The impact of the 12 hour shift arrangement is that 4 hours overtime per week are rostered. This equates to 1 hour and 9 minutes overtime per day which is insufficient to attract the meal allowance clause, as contained in Clauses 19.3.1 and 26.3.1.

[35] Simplot provided a detailed analysis of the history of the Award provision to show that it required the working of 1½ hours overtime before a meal allowance would be paid.

[36] Clause 21.2 of the 2011 Agreement is in the same terms and provides for 1½ hours of overtime to be worked before meal allowance is paid.

[37] Michael Hedley’s statement provides a detailed history of the negotiations for the 12 hour shift agreement. His main assertion is that the parties intended to negotiate one rate which would “cover the field”. Exhibit S2 attaches all of the meeting notes, negotiating documents etc. that Simplot could find. It includes various drafts of the final 12 hour shift agreement. For example on 28 November 2006 (MH-75) the AMWU set out the outstanding issues but this does include meal allowance. Meeting notes from December 2005 (MH-4) make it clear that Simplot rejected the AMWU claim for “tea money to be paid for all overtime worked”.

[38] All of the drafts of the proposal contain an annexure which contains the 12 hour shift roster and the way in which the rostered rate or “loaded annualised rate” is calculated, including penalty rates, shift penalties, overtime etc. The final agreement dated 19 June 2006 is particularly concerned with implementation of redundancies – 46 permanent and 60 casuals. It appears that the roster calculation became an annexure to the Agreement.

[39] Mr Hedley’s evidence was that it was intended to translate “the Kelso Roster Changes Agreement” into the next certified agreement, negotiations for which commenced in February 2008. This occurred in the 2008 Agreement, with a range of irrelevant amendments.

[40] In Mr Hedley’s second statement (Exhibit S3) he disagrees with the statement of the AMWU’s witness, Mr Stapleton. Mr Hedley denies ever saying that the meal allowance was included in the hourly rate during negotiations. He denies that the AMWU made it an issue.

[41] David McAloney’s statement (Exhbit S1) related mainly to the negotiations of the 2011 Agreement. He says that the intention was to continue the same provisions with respect to Kelso 12 hour shifts. Clause 21.2 was inserted but that was not a result of a claim by the AMWU for meal allowance for 12 hour shift workers. That issue was not raised.

[42] In summary, Simplot submits that there was no entitlement to meal allowance for Kelso 12 hour shift workers because:

● The rostered rate was intended to cover all monetary entitlements for 12 hour shift workers;


● The award provision only operates when 9½ hours are worked and at least 1½ hours are overtime;

● It submits that both the history of the Award and the history of the negotiations for the Kelso 12 hour shift arrangement support its interpretation.

AMWU’s Case

[43] The AMWU submits that there is no ambiguity in the 2008 or 2011 Agreements. When employees work longer than 9½ hours they are entitled to meal allowance, including when they work a 12 hour shift roster.

[44] It is submitted that the extensive evidence of Simplot about the 2005/2006 negotiations should not be admitted because it is not directly relevant to the 2008 Agreement. The objective fact when the 2008 Agreement was made was that there was a meal allowance entitlement because of the operation of the Award.

[45] “Rostered rate” for the purposes of the 12 hour shift arrangements was not defined. In contrast the meal allowance entitlement is quite clear. Meal allowance is not included in the rostered rate for 12 hour shift.

[46] The AMWU rejects Simplot’s argument that payment of meal allowance is dependent on the working of 1½ hours overtime. It points out that the Award was varied in 1986 to provide for the possibility of working a 12 hour shift. This did not disentitle employees who worked longer than 9½ hours to the payment of meal allowance.

[47] Unfortunately the best evidence for the AMWU about the 12 hour shift negotiations was not available because Jenni Dowell, the official who led the negotiations has passed away.

[48] David Stapleton’s evidence was that the explanation of Simplot in the negotiations was that meal allowance was included in the rostered rate. He says that the issue arose in 2008 when a member Bernie Auld was doing his tax and could not find the allowance. He then raised it with the union. Mr Stapleton says that it was raised in negotiations for the 2008 Agreement but Simplot “fobbed it off”. The issue was unresolved.

[49] Mr Hale’s evidence (Exhibit A2) was post 2013. He says that the issue had been consistently pursued by the AMWU with Simplot. For example, he attached an extensive document dated 4 August 2009, sent to Mr McAloney, which sets out the AMWU’s position in some detail.

[50] In summary, the AMWU contends that Simplot has not established that the meal allowance is included in the 12 hour shift rostered rate, nor that it was excluded from the Kelso 12 hour agreement. It is pointed out that the rostered rate is not directly included in the Kelso 12 hour agreement or the 2008 Agreement. Specific provision could have been made by the parties but was not.

Approach of the Commission

[51] The parties’ agreement about jurisdiction to arbitrate has been noted. However, I should proceed as if arbitrating by virtue of the combination of the Disputes Settlement clause and ss.595, 738 and 739 of the Act. The Commission has a broad power to settle a dispute by making orders it considers appropriate. It is important to characterise the dispute. See Vice President Watson’s summary of the approach in Maritime Union of Australia v ASP Shipping Management Pty Ltd[2015] FWC 4523. Fortunately in this case, the parties at least agreed on the questions to be asked.

[52] The 2014 Full Bench decision in Australian Meat Industry Employees Union v Golden Cockerel Pty Ltd (2014) FWCFB 7447 (Golden Cockerel) sets out the Commission’s approach to the interpretation of agreements. I set out below the relevant passages which refer to the relevant authorities:

“General Approach

19. The general approach to the construction of instruments of the kind at issue here is set out in the judgment of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426 (Wanneroo):

‘The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘...the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘... ideas that gave rise to an expression in a document from which it has been taken’ - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services union v Treasurer of the Commonwealth of Australia (1998)80 IR 345 (Marshall J). ’ (Wanneroo)

20. To this we add the oft-quoted observations of Madgwick J in Kucks v CSR Limited (1996) 66 IR 182 (Kucks) that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, but:

‘. . . the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’    (Kucks)

21. Although their Honours were each dealing with the proper interpretation of an award, the same principles are apt to apply to the interpretation of enterprise agreements. See: Swire Cold Storage Pty Ltd v TWU [2008] AIRCFB 397 at [29] and AMWU v Silcar Pty Ltd[2011] FWAFB 2555 at [11] For example, similar observations were made in Amcor Limited v CFMEU.(2005) 222 CLR 241 (Amcor):

‘Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.” (Amcor) at 253 per Gummow, Hayne and Heydon JJ.’

22. The fact that the instrument being construed is an enterprise agreement is itself an important contextual consideration. As French J observed in Wanneroo:

‘It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities - City of Wanneroo v Holmes (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned - see eg GeorgeA Bond and Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503-504 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):

“Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.” (2006) 153 IR 426 at 440.”’

Use of extrinsic material as an aide to interpretation

23. As is often the case in disputes that involve the construction of an enterprise agreement, parties will seek to place reliance of a variety of extrinsic material as an aide to interpreting the provisions of an agreement in issue. The use to which extrinsic material of the surrounding circumstances may be put to assist in the interpretation of an instrument is set out in the judgement of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337(Codelfa). In Codelfa his Honour said:

‘The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently 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 the contract, except in so far 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. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.’ (Codelfa) at 352”

[53] The Full Bench then dealt in some detail with subsequent cases which took varying approaches to the determination of an ambiguity. It went on to conclude as follows:

“30. Regard may therefore be had to evidence of the surrounding circumstances before the existence of ambiguity in an agreement is identified as an aide to interpreting the agreement for the purposes of determining whether an ambiguity exists. If thereafter ambiguity is not identified extrinsic material cannot be used to contradict the language of the instrument. If ambiguity is identified the material may be used as contextual material to aide in the interpretation of the instrument. In this context we would make the observation that the law in relation to the interpretation of commercial contracts (Codelfa; Metcash and Stratton) has now aligned with the approach to the construction of awards and enterprise agreements as espoused by Burchett J in Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 and confirmed by French J, as he then was, in Wanneroo.

Application of the Acts Interpretation Act 1901 to enterprise agreements approved under the Act

31. Both at first instance and before us the Appellant maintained that the Agreement must be interpreted in accordance with the Acts Interpretation Act 1901 (AI Act). (AB268-AB271 and Transcript PN271-PN280) That proposition is made on the basis that an enterprise agreement is an agreement that is made by the Commission pursuant to a power conferred by the Act to make the agreement. (See Section 46 of the AI Act) To make good the proposition the Appellant at first instance relied on the following passage from the judgement of French J in Wanneroo:

‘The interpretation of legislative instruments is dealt with in the Legislative Instruments Act 2003 (Cth). Awards and agreements made under the Act are declared, by s 7(1) of the Legislative Instruments Act, not to be legislative instruments – see Item 18 in the table set out in s 7(1). This leaves such awards and agreements within s 46 of the Acts Interpretation Act 1901 (Cth) which provides, inter alia:

‘(1) If a provision confers on an authority the power to make an instrument that is neither a legislative instrument within the meaning of the Legislative Instruments Act 2003 nor a rule of court, then, unless the contrary intention appears:

(a) this Act applies to any instrument so made as if it were an Act and as if each provision of the instrument were a section of an Act; and

(b) expressions used in any instrument so made have the same meaning as in the enabling legislation; and

(c) any instrument so made is to be read and construed subject to the enabling legislation, and so as not to exceed the power of the authority.’

An award is an instrument made by an authority, in this case the Australian Industrial Relations Commission, and so attracts the application of the Acts Interpretation Act for the purposes of its interpretation.” (2006) 153 IR 426 at 438 [52]

32. The decision in Wanneroo does not support the proposition contended by the Appellant. In Wanneroo Justice French was concerned with the construction of an award under the Workplace Relations Act 1996 (WR Act) and not an enterprise agreement made under the Act. Relevantly, the award in question was an instrument that was not a legislative instrument but was an instrument made by the Australian Industrial Relations Commission pursuant to a power under the WR Act to make the instrument. Consequently French J concluded that the award was “an instrument made by an authority, in this case the Australian Industrial Relations Commission, and so attracts the application of the Acts Interpretation Act (AI Act) for the purposes of its interpretation.”

[54] The Full Bench, having dealt with s.172 of the Act, which contains the requirement for an agreement to be made about permitted matters (pertaining to the relationship between the employer and the employer’s employees) summarised its conclusions as follows:

“Summary

41. From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aid the interpretation of the agreement.

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) 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;
(b) notorious facts of which knowledge is to be presumed;
(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;
(b) the disputed provision’s place and arrangement in the agreement;
(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is 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.

10. 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.”

[55] I have applied the principles summarised above in this decision.

Conclusion

[56] My answer to the two questions set out at paragraph 13 above is “no” to both.

[57] Providing the answer is not without some difficulty because the drafting of the agreement documents was not as careful or comprehensive as it might have been. It is surprising, given the amount of effort that went into it, that the 2006 “Kelso Roster Changes Agreement” was not drafted in a way that clearly explains how the twelve hour shift system worked. Reliance is placed on the roster attachment to explain how the rate is made up. In addition, the respective role of the two agreements and the incorporated Award need to be considered.

[58] There is no document which says that the meal allowance was incorporated into the rostered hourly rate. Nor is there an exclusion of meal allowance from the conditions that nominally applied to Kelso 12 hour shift workers. The Award provision continued to have general application, subject to the more specific provisions. Moreover, the Award meal allowance provision was inserted into the 2011 Agreement, hence the variation in wording in the two questions to be answered.

[59] Because of the inadequacies of drafting of the specific agreements and the uncertainty created by the intersection of the Agreement with the Award, I am satisfied that there is an ambiguity that needs to be resolved by applying the principles of Golden Cockerel.

[60] Mr Mead characterised his submission as having two aspects:

● “inconsistency” – that the evidence showed that the intention of the parties was that the “rostered rate of pay” was all-inclusive of all payments.

● “insufficiency” – that the meaning of the award clause, given its overall context and history, did not provide for a meal allowance entitlement for 12 hour shift workers.

[61] He submitted that Simplot only needed to succeed in one of these aspects to win the argument.

[62] I prefer to characterise the task as deciding whether there was a prima-facie entitlement to meal allowance for 12 hour shift workers under the Award and the 2008 and 2011 Agreements. If the answer is yes, the AMWU still needs to show that this position was not displaced by the specific Kelso 12 hour arrangements. I might add that I see no difference between the 2008 and 2011 Agreements. The 2011 Agreement contained an express provision based on the Award. The question is: did the Award provide an entitlement?

[63] I am satisfied that the proper interpretation of the Award provision is that 1½ hours overtime had to be worked, not just 9½ hours.

[64] The history of the Award provision demonstrates that the meal allowance payment was predicated on an eight hour day and the performance of work on overtime. It is consistent with the meal break provisions in the Award. The insertion of a facilitative provision which allowed the negotiation of 12 hour shift arrangements did not change that. The operation of the 12 hour shift roster necessarily did not allow sufficient overtime to be worked.

[65] Even if I am wrong about this there is still an ambiguity in the 2008 Agreement. This issue took up most attention in the case. The 2008 Agreement annexed the 2006 Kelso 12 hour shift arrangement agreement. It had been operating for two years. Mr Lavelle-Wilson resisted too much attention being given to what occurred in the 2005/2006 negotiations, but he had to concede that the 2006 Agreement was part of “the objective framework of fact” (see Transcript PN1202).

[66] In my view, the evidence of the 2005/2006 negotiations is crucial to understanding the meaning of the 2008 and 2011 Agreements. As I have already mentioned, the drafting of the 2006 settlement document was inadequate. Perhaps this was because it was known that it could not be certified at that time. It is more like a “working document” which does not relate back to the existing agreement and this was not remedied when the 2008 Agreement was negotiated.

[67] In my view, the evidence clearly establishes that the parties agreed on a total rostered rate of pay for 12 hour shift workers which covered all matters and was in lieu of all payments including meal allowance.

[68] Mr Hedley’s evidence was clear and I accept it:

“[258] So when this 12 hour shift agreement was made it didn't displace the Food Award, did it?---The 12 hour agreement was a negotiated agreement for all employees working the 12 hour shift roster.  So that formed part of, I suppose, the 12 hour shift roster payment for working the 12 hour shift roster.

[259] What formed part of that payment, sir?---This document, the negotiations that we had for the previous eight months with the union, we came up with an agreed rostered rate and conditions for working the 12 hour shift roster.

[260] Right, but the NFA still continued to apply for those employees' employment?---The NFA continued to apply for people who were working dayshift because there were some employees working dayshift, as well.  So employees who were casuals, there was also some dayshift forklift drivers and there were some dayshift maintenance people, so yes, that still applied to people.”

. . .

“[310] THE DEPUTY PRESIDENT:  I think that's true.  Can I though just try and clarify the position.  As I understand it your evidence is that – I understand your evidence that there was negotiated the one rate for the total – for employees working the 12 hour shift.  It appears to be the case that there's no document that explicitly says that the meal allowance was incorporated in the calculation of that rate, unlike other allowances.  Is that correct?---Yes, your Honour.  There is no documentation that I can see.  The only reference to the meal allowances was on these MH4 and 5 where the union have put it forward and we've rejected that proposal.

[311] Yes.  I mean, I think what Mr Lavelle-Wilson is trying to get you to concede is that there's no explicit incorporation of the meal allowance in the rate, in the sense that there's not a – you know, a dollar value that was attached to that explicitly.  But nevertheless it's your evidence that the intention was that the meal allowance not be paid, is that right?---If there was the one rostered rate, yes.  Yes, your Honour.”

[69] Mr Stapleton’s evidence was consistent on the “all up rate” point. It was just that the inclusion of the meal allowance was queried by another employee, essentially “after the event”. The following exchange is illustrative:

“[893] Thank you, Mr Stapleton.  Nothing further, your Honour.

[894] THE DEPUTY PRESIDENT:  Mr Stapleton, I want to be clear about exactly what your evidence is as to what happened in 2005 and about what happened afterwards.  If you just go to your statement at paragraph 7, and you quoted some words there that are allegedly said by Mr Hedley, all right?---Yes.

[895] I'd suggest to you that that's subject to possible interpretation in a couple of ways.  So was it your understanding, and for that matter the understanding of other employees, that the meal allowance was incorporated into the total payments for the 12-hour shift, or was it your understanding that you would receive a meal allowance payment when you worked overtime as a separate payment?---No, it was incorporated in - I had a list of things I wrote down - the 30 per cent loading, the 15 per cent loading, the meal allowance, the Saturday penalty, the Sunday penalty; because when Bernie came up and said we're not getting paid the meal allowance, I went back to my notes and I had a list of all the things that were supposed to go into the hourly rate, and that was one of them.

[896] So you weren't expecting that you'd get a separate payment of a meal allowance when you worked overtime - as a separate payment?---No, but we were working 12 hour shifts so no one worked overtime, like, no one worked 12-and-a-half hours or anything; they only worked 12 hours.

[897] No, well I mean you were working the shift - yes, all right.  So the issue then arose when one member who was doing their tax a couple of years later had it pointed out to them that they didn't have the meal allowance as a separate component?---Yes.

[898] But there was no expectation that they would, was there, based on your evidence?---Well we thought it was already in the hourly rate, the meal allowance was in the hourly rate with the 15 per cent loading and the 30 per cent loading and the Saturday penalty and the Sunday penalty.  When we were on the 12-hour shift we were presuming that the meal allowance was part of the - because we worked over 9.5 or 10 hours or whatever it was, we were presuming that because of what was said at the meeting that the meal allowance was in it.  I had no idea that it came up as a separate thing on the payslip, and neither did anybody else I don't think, until Bernie went to his accountant and said about the meal allowance and the accountant said no, you're not getting paid the meal allowance because it'd be a separate thing on your - - -

[899] So it's a reimbursement of expenses, yes?---Yes, because it wouldn't be a taxable thing.”

[70] My conclusion is that although the “Kelso 12 Hour Shift Arrangement” attachment to the 2008 Agreement does not define the loaded rate or set out the basis of its calculations, the one page document referred to in paragraph 38 above contains the common understanding of the parties.

[71] The AMWU raised the payment of a separate meal allowance, but this was rejected by Simplot. I am satisfied that Simplot had a consistent position that there was an all-up rate. This might have been translated as saying the meal allowance was “included” but this is not inconsistent with Simplot’s position. Nothing changed in the 2011 Agreement. It is unfortunate that Simplot did not clarify the drafting but this was probably because it was not a major issue and claim by the AMWU. I accept that the inclusion of the Award meal allowance provision into the 2011 Agreement did not result from this dispute or change anything about how the 12 hour shift was worked at Kelso.

[72] Attached to Simplot’s written submission of 19 May 2016 was a sample review of the hours/earnings of two employees who worked the 12 hour shift roster at Kelso between 2006 and 2012. This spread-sheet shows how the rostered rate of pay was calculated in detail. It is consistent with Simplot’s initial submission and was not contested.

Summary

[73] Accordingly, I decide that there is no entitlement to the payment of meal allowance for any worker employed at Kelso under the 12 hour shift arrangement between 2006 and 2012 under the 2008 Agreement or the 2011 Agreement. The claim for the payment of meal allowance by the AMWU is therefore dismissed.

DEPUTY PRESIDENT

Appearances:

M. Mead with V. Perry with S. King for Simplot;

J. Lavelle-Wilson for the AMWU.

Hearing details:

2015

Sydney:

(Conferences)

July 1;

December 14.

2016

(Hearings)

Sydney:

May 5, 24.

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<Price code C, PR581992>