Sydney Water Corporation T/A Sydney Water Corporation
[2018] FWCA 6241
•9 OCTOBER 2018
| [2018] FWCA 6241 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.217—Enterprise agreement
Sydney Water Corporation T/A Sydney Water Corporation
(AG2018/3714)
SYDNEY WATER ENTERPRISE AGREEMENT 2017
Water, sewerage and drainage services | |
DEPUTY PRESIDENT BULL | SYDNEY, 9 OCTOBER 2018 |
S.217 Application to vary agreement where ambiguity or uncertainty exists; mutual intention of the parties. Order made to vary agreement.
[1] Sydney Water Corporation T/A Sydney Water have made an application under s.217 of the Fair Work Act 2009 (the Act) to vary a number of clauses of the Sydney Water Enterprise Agreement 2017 (the Agreement). The Agreement was approved by Fair Work Commission (the Commission) on 18 September 2017. The application seeks to have the variations operate retrospectively from 25 September 2017, being the date the Agreement began to operate.
[2] Section 217 of the Act states:
“(1) FWC may vary an enterprise agreement to remove an ambiguity or uncertainty on application by any of the following:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.
(2) If FWC varies the enterprise agreement, the variation operates from the day specified in the decision to vary the agreement.”
(My emphasis)
[3] The variations sought relate to an alleged ambiguity/uncertainty concerning the Agreement wording when used to provide paid leave entitlements particularly where employees are engaged in acting or temporary arrangements on a higher pay level.
[4] Sydney Water states that it has consulted and discussed their application with the Australian, Municipal, Administrative, Clerical and Services Union and the Association of Professional Engineers, Scientists and Managers Australia who have signed off on the proposed Agreement variations. Sydney Water state they have also received consent from the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia to “correct the error’. 1
[5] For all intents and purposes the application proceeds with the consent all unions covered by the Agreement.
[6] The application was subject to a telephone conference held on 28 September 2018, and further written submissions were received from Sydney Water on 3 October 2018.
[7] There are numerous decisions concerning the meaning of an ambiguity or uncertainty in a document. See for example Re Victorian Public Transport Enterprise Agreement 1994 (Re Victorian) 2, Re Construction, Forestry, Mining and Energy Union (Re CFMEU)3, Corporation of the City of Enfield v Development Assessment Commission4, Telstra v CPSU and Ors5, Construction, Forestry, Mining and Energy Union v SCA Hygiene Australasia Pty Limited6, Short v FW Hercus Pty Ltd.7
[8] In Re. Public Service (Non Executive Staff – Victoria) (Section 170MX) Award 2000 8 SDP Polities adopted the following definition of ‘uncertainty’:
‘… I respectfully adopt the submission made by the State of Victoria that the term “uncertainty” means the quality of being uncertain in respect of duration, continuance, occurrence, liability to chance or accident or the state of not being definitely known or perfectly clear, doubtfulness or vagueness. Those are extracts for the Concise Oxford Dictionary adopted by Commissioner Whelan in Re: Shop Distributive and Allied Employees Association v. Coles Myer [Print R0368].’
[9] In Re Tenix Defence Systems Pty Limited 9a Full Bench of the Australian Industrial Relations Commission outlined what was considered to be the proper approach to be taken when determining an application to remove an ambiguity/uncertainty pursuant to s.170MD(6) of the Workplace Relations Act 1996, a provision whose terms are similar to s.217 of the 2009 Act. The Full Bench held that:
“[28] Before the Commission exercises its discretion to vary an agreement pursuant to s.170MD(6)(a) it must first identify an ambiguity or uncertainty. It may then exercise the discretion to remove that ambiguity or uncertainty by varying the agreement.
[29] The first part of the process - identifying an ambiguity or uncertainty - involves an objective assessment of the words used in the provision under examination. The words used are construed having regard to their context, including where appropriate the relevant parts of a related award. As Munro J observed in Re Linfox - CFMEU (CSR Timber) Enterprise Agreement 1997:
"The identification of whether or not a provision in an instrument can be said to contain an `ambiguity' requires a judgment to be made of whether, on its proper construction, the wording of the relevant provision is susceptible to more than one meaning. Essentially the task requires that the words used in the provision be construed in their context, including where appropriate the relevant parts of the `parent' award with which a complimentary provision is to be read."
[30] We agree that context is important. Section 170MD(6)(a) is not confined to the identification of a word or words of a clause which give rise to an ambiguity or uncertainty. A combination of clauses may have that effect.
[31] The Commission will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention.
[32] Once an ambiguity or uncertainty has been identified it is a matter of discretion as to whether or not the agreement should be varied to remove the ambiguity or uncertainty. In exercising such a discretion the Commission is to have regard to the mutual intention of the parties at the time the agreement was made.”
(References removed.)
Sydney Water submissions
[10] Sydney Water states that up until 1 July 2009, it was governed within the jurisdiction of the State of New South Wales and covered by State awards made by the New South Wales Industrial Relations Commission: the Water Board Award 1994 and the Sydney Water Award 2004.
[11] The two State awards contained ‘pay points’ under which employees were paid.
[12] On 1 July 2009 Sydney Water moved under the jurisdiction of the Fair Work Act 2009 and negotiated the Sydney Water Agreement 2009. Despite some wording changes which were made, the 2009 agreement was not intended to change the way that paid leave entitlements operated including annual and sick leave. The language and wording was drafted to align with the Act, to be in plain English, to maintain the underlying pay structure and to apply to senior managers. The changes are set out in the table below:
Clause | 2004 Award clause | 2009 Enterprise Agreement clause |
Annual leave | Clause 18.3 (c) Recreation leave will be paid at the pay point most paid during the period in which the leave accrued. No employee will receive pay at less than their appointed rate. | Clause 21.5.4 When taken, annual leave will be paid at the greater of: (a) the rate of pay most paid to an employee during the 12 months immediately prior to the employee commencing such leave, or (b) at the employee’s base rate of pay at the time of commencing the leave. |
Sick leave | Clause 21.11(a) Sick leave shall be paid at the pay point most paid during the twelve months immediately prior to commencing such leave or in any case nor less than their substantive rate | Clause 23.6.1 Sick leave will be paid at the greater of: (a) the rate of pay most paid to an employee during the 12 months immediately prior to commencing such leave, or. (b) at the employee’s base rate of pay at the time of commencing the leave. |
[13] As the senior managers did not have a ‘pay point,’ the phrase ‘rate of pay’ was used in the 2009 Agreement. The entitlements to and the way paid leave was administered did not change under the 2009 Agreement. The relevant wording has remained unchanged with the negotiating of replacement agreements in 2012, 2015 and the current 2017 Agreement.
[14] Sydney Water now submits following a recent audit that a literal interpretation of the current wording could lead to an interpretation never intended by the parties which is contrary to the existing practice in respect of the administration of paid leave entitlements. This issue arises when employees are temporarily acting up at a higher pay level and there has been a pay increase in the preceding 12 months. The existing practice has been to adopt the practice which applied to the old State awards.
[15] It is said that a literal interpretation produces an ambiguity or uncertainty in a number of different scenarios.
Scenario 1
An employee’s substantive rate is $57.85 per hour which they receive for 4 months of the year which is then increased to $59.01 per hour under the 2017 Agreement which they receive for 3 months of the year also acts in a higher role for 5 months of the year at the rate of $64.91 per hour and then takes annual leave at the end of the 12 month period.
2017 Agreement
A literal reading results in the employee being paid their annual leave at $64.91 per hour this rate being the rate of pay most paid (5 months) during the 12 months immediately preceding the taking of the annual leave and being higher than the employees base rate of $59.01 per hour at the time of commencing the annual leave.
NSW State Awards
Under the wording of the previous State awards the employee would receive their annual leave at $59.01 being no less than the employee’s appointed rate and the pay point most paid (7 months) in the last 12 months.
Scenario 2
An employee’s whose substantive rate is $59.01 per hour paid for 5 months of the year and acts in a higher role for 4 months at the rate of $64.91 an hour which is increased to $66.20 per hour under the Agreement for 3 months of the year
2017 Agreement
A literal reading results in the employee being paid their annual leave at $59.01 per hour as this is the rate of pay most paid (5 months) during the 12 months immediately preceding the taking of the annual leave and being the employee’s base rate of pay is not less than the employee’s base rate of pay at the time of commencing the leave.
NSW State Awards
Under the wording of the previous State awards the employee would receive their annual leave at $66.20 being no less than the employee’s appointed rate and the pay point most paid (7 months) in the last 12 months.
[16] Sydney Water contends that an uncertainty arises due to the use of the words ‘rate of pay’ which has meant different periods exist when there is a wage increase, whereas an employee’s ‘pay point’ may remain unchanged.
[17] The same uncertainty is said to arise in respect of other leave provisions in the 2017 Agreement.
Conclusion
[18] The parties have been adopting without any issue the meaning ascribed to the now varied wording sought since 1994, and it was not until raised in a recent audit was another interpretation put forward. It appears only in an attempt to cater for senior managers in the 2009 negotiations that the use of the term ‘pay points’ was substituted for ‘rate of pay’.
[19] Noting the consent of all the 2017 Agreement covered unions and there being no contradicter, I am prepared to accept that the current phrase ‘rate of pay’ creates uncertainty as to its meaning where a wage increase is applied during the relevant 12 month period when read in conjunction with the balance of the relevant existing clauses and taking into consideration the history of under which the Agreement was made.
[20] The variations to the Agreement sought by Sydney Water are said to reflect the intention of all the parties when the replacement words were introduced.
[21] Accordingly I will issue an Order [PR701145] varying the 2017 Agreement in terms proposed by Sydney Water which will operate from 25 September 2017, being the operative date of the 2017 Agreement.
DEPUTY PRESIDENT
Final written submissions
3 October 2018
1 It is noted that the application is to the remove an uncertainty under s.217 not to correct an error which would be dealt with elsewhere under the Act.
2 Print M2454
3 Print R2431
4 199 CLR 135
5 PR954989
6 PR522105
7 [1993] FCA 51
8 T3721, 24 November 2000
9 PR917548
Printed by authority of the Commonwealth Government Printer
<AE425487 PR701144>
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