The Australasian Meat Industry Employees Union v Diamond Valley Pork Pty Ltd

[2020] FWC 5286

[2020] FWC 5286

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

The Australasian Meat Industry Employees Union
v
Diamond Valley Pork Pty Ltd
(C2020/4387)

DEPUTY PRESIDENT COLMAN MELBOURNE, 1 OCTOBER 2020

Dispute arising under an enterprise agreement – part-time weekly hire – specified number of hours each week – when overtime payable – interpretation of agreement – dispute determined

[1] This decision concerns an application made by the Australasian Meat Industry Employees Union (union) under s 739 of the Fair Work Act 2009 (Cth) (Act) and the dispute resolution procedure in clause 39 of the Diamond Valley Pork Pty Ltd and Australasian Meat Industry Employees’ Union (Victorian Branch) Meat Processing Enterprise Agreement 2019 (Agreement).

[2] The dispute concerns certain casual employees of Diamond Valley Pork Pty Ltd (company) who are eligible to be converted to part-time weekly hire positions, and the conditions that would apply to them upon conversion. The union contends firstly that the company has failed to convert the employees, contrary to the requirements of the Agreement. Secondly, the union submits that, when they are converted to part-time, employees must, under clause 5.2 of the Agreement, be provided with a fixed minimum number of weekly hours, and that overtime is payable for all hours worked above this set number each week.

[3] The company says that it is willing to convert relevant employees, but that it wishes first to resolve its disagreement with the union about the overtime payments to which part-time weekly hire employees will be entitled. It contends that, under the Agreement, the minimum weekly hours for part-time weekly hire employees is not fixed, but set from week to week, and that overtime is payable above the numbers specified for any particular week.

[4] The union’s application was listed for conciliation however the matter did not resolve. The parties agree that the Commission is authorised under clause 39 of the Agreement to resolve the dispute. It is common ground that the present dispute is one ‘about a matter under this Agreement’ (clause 39.1), and that the steps in the dispute resolution procedure required to bring the dispute to the Commission have been taken. Clause 39.3 states that the parties may agree on the process to be utilised by the Commission, including mediation, conciliation and arbitration. The parties confirmed at the hearing that they agreed to the Commission arbitrating the dispute. Clause 39.4 provides that where the matter in dispute remains unresolved, the Commission may exercise any method of dispute resolution permitted by the Act that it considers appropriate to ensure the settlement of the dispute. In light of the parties’ agreement that I resolve the dispute by arbitration, I consider that it is appropriate to do so.

Background

[5] The company operates a meat processing facility at Laverton North in Melbourne. Many of its employees are casuals. The company and the union agree that a number of these employees are, in principle, eligible to convert to part-time positions, pursuant to the arrangements in clause 5.4 of the Agreement.

[6] The evidence of Mr Jarrod Jones, AMIEU organiser, was that following the approval of the Agreement, the company sought expressions of interest from casual employees to convert to permanent positions. Mr Jones said that on or about 3 February 2020 the company sent a letter to all casual employees who had expressed an interest in converting to part-time weekly hire positions, explaining the proposed conditions of employment. Mr Jones said that he obtained a copy of the company’s letter and that he was concerned that it made no mention of a fixed minimum number of weekly hours for part-time employees. Mr Jones contacted the company to raise his concern. Certain discussions and correspondence then took place between Mr Jones and representatives of the company. The company’s position was that the Agreement did not require part-time weekly hire employees to have a fixed minimum number of weekly hours of work, and that the minimum number of hours is determined from week to week.

[7] The union and the company could not resolve their disagreement. By letter dated 6 February 2020, Mr Peter Christian, the company’s operations manager, advised casual employees and the union that the company would not be proceeding with the ‘transition to permanent’ that had been planned for that week. In his letter, Mr Christian stated that ‘unfortunately we have been unable to reach agreement with your union representatives on how we will apply these provisions and will continue discussions so that everything is clear before we go further.’ The letter further stated: ‘Sorry for any inconvenience that may arise and I assure you that we will make every effort to resolve this issue as soon as we can.’ None of the casuals in question have yet to be converted to part-time weekly hire employment.

[8] The union subsequently lodged its application under s 739, which led to further discussions, both in conciliation before the Commission, and directly between the parties, but these did not lead to a resolution.

The terms of the Agreement

[9] Clause 5.2 of the Agreement deals with part-time weekly hire employees. It provides as follows:

“5.2. Part Time Employment

a) An employee with part time employment is known as a Part Time Employee.

b) A Part Time Employee is engaged by the week as a part time weekly hire employee to work on a regular basis less than 38 Ordinary Hours of Work and with a specified minimum number of hours each week.

c) A Part Time Employee will accrue leave on a pro-rata basis based on the specified number of hours worked each week.

d) A Part Time Employee will be provided with a minimum of four hours work or be paid for a minimum of four hours on any day they are required to work.

e) The Company will advise a Part Time Employee by the Friday before the next working week of the pattern of work to be worked by the Part Time Employee.

f) All time worked in excess of the hours as mutually agreed will be overtime.”

[10] Clause 5.4 deals with the possibility of casual employees converting to part-time or full-time employment. Among other things, the clause provides that, after 12 months’ continuous employment, a casual employee is eligible to request that their employment be converted to permanent part-time or full-time employment (clause 5.4(a)). To be eligible, a casual must during the 12 month period have been working a pattern of hours which could, ‘without significant adjustment’, be performed by a full-time or part-time employee. The request must be in writing, and the company can only refuse ‘on reasonable business grounds’ (clause 5.4(c), (d) and (e)). Any grounds of refusal must be ‘based on facts that are known or reasonably foreseeable’ (clause 5.4(g)). Where it is agreed that a casual employee will convert, the company and the employee must discuss and record in writing the form of employment to which the employee will convert (clause 5.4(j)).

Submissions of the parties

[11] The union’s position is as follows. First, it contends that the company has failed to comply with clause 5.4 of the Agreement by not considering eligible casual employees for conversion to part-time employment. It says that the company is not excused from its obligations under that provision by the fact that the overtime arrangements for part-time employees are the subject of a disagreement between the company and the union.

[12] Secondly, the union contends that clause 5.2(b) makes it clear that part-time employees are engaged by the week to work on a regular basis, working less than 38 ordinary hours per week, and with a specified minimum number of hours each week. The union submits that the specified minimum number of hours is a fixed number that does not vary from week to week. It also says that the average hours worked by a casual employee over the preceding 12 months forms the basis for the employee and the employer to agree on what the fixed minimum number of weekly hours should be.

[13] The union contends that clause 5.2(e), which states that the company will advise a part-time employee by the Friday before the next working week of the ‘pattern of work’ for that week, is not concerned with the number of hours that will be worked the following week. The company can roster as it sees fit, provided it observes the fixed minimum number of hours, and complies with clause 5.2(d), which provides that an employee must be provided with a minimum of four hours work on any day that they are required to work.

[14] The union further submits that, as a consequence of its interpretation that the ‘specified minimum number of hours each week’ is fixed, it follows that all hours worked by part-time employees beyond this set number must be paid at overtime rates. In this regard, clause 5.2(f) provides that ‘all time worked in excess of the hours as mutually agreed will be overtime’. The union says that the ‘mutually agreed’ hours are the fixed minimum weekly hours that employees are contracted to work, which is determined when the employee commences part-time employment. The union contends that clause 5.2(f) of the Agreement was taken from the Meat Industry Award 2010 (2010 Award) and was initially given as an undertaking in support of the application for approval of the enterprise agreement that preceded the current Agreement, after the Commission raised a concern that the agreement might not otherwise pass the ‘better off overall test’ (BOOT).

[15] To resolve the dispute, the union asks the Commission to determine that the company must convert relevant casuals to part-time positions; that it must provide part-time weekly hire employees with a fixed minimum number of hours of work each week (the fixed number applying to all weeks); and that the company must pay overtime to an employee who works in excess of that fixed minimum number of hours in any week.

[16] The company contends firstly that it has not failed to meet its obligations to consider and reasonably respond to requests from eligible employees to convert to weekly-hire positions. It says that it is more than willing to convert casual employees to part-time weekly hire status but wishes to do so on terms that are agreed with the union.

[17] Secondly, the company submits that clause 5.2 of the Agreement requires a minimum number of hours to be set for employees from week to week, consistent with the status of a part-time weekly-hire employee. It says that the only fixed minimum hours requirement is that specified in clause 5.2(d), which states that employees must be provided with four hours of work on any day that they are required to work. The company submits that, under clause 5.2, the company and part-time weekly hire employees agree on the hours of work from week to week, and where in a particular week the hours worked are more than those agreed, the additional hours are paid at overtime rates.

Requirement to convert casuals to part-time

[18] First, as to the question of whether the company has failed to meet its obligations under clause 5.4 to consider requests and convert casuals to part-time employment, I do not consider that there is sufficient evidence before the Commission for me to conclude that the company has not met its obligations. The company’s letter of 6 February 2020 to casual employees withdrew the proposal to convert them to permanent part-time status the following week. However, accepting for the moment that the letter of 6 February 2020 constituted a refusal to consider requests from eligible casual employees, there is no evidence about which employees requested to be converted to part-time employment, why they are eligible to be so converted, or whether any constructive refusal by the company to convert them was unreasonable.

[19] I appreciate that the union contends that the withdrawal of the company’s proposal in February has resulted in a situation where casuals who might otherwise by now have converted to part-time employment have not done so. That may be so, but it does not necessarily mean that the company has failed to observe its obligations under the Agreement.

[20] I note however that the union is quite correct to say that the absence of an agreed position between the company and union would not of itself be an acceptable reason for the company not to convert eligible employees to part-time weekly hire employment.

[21] The union contended that the company’s failure to convert eligible casual employees to part-time employment, or at least to consider their requests, also amounted to a failure to meet its obligations under s 65 of the Act to consider requests for flexible working arrangements. But again, there is insufficient evidence of the relevant requests or the satisfaction of the relevant circumstances referred to in that section to enable me to form any conclusions about this contention.

Specified weekly hours and overtime for part-time weekly hire employees

[22] The fundamental point of disagreement between the parties concerning the working arrangements for part-time weekly hire employees under the Agreement is that the union considers the ‘specified minimum number of hours each week’ referred to in clause 5.2(b) to be a fixed minimum number for all weeks, agreed with employees upon the commencement of their part-time employment. The company’s interpretation is that the minimum number is set from week to week. In my opinion, the company’s interpretation of the clause is correct.

[23] Clause 5.2 concerns part-time weekly hire employees, not part-time employees generally. Clause 5.2(b) clearly states that a part-time employee is ‘engaged by the week as a part-time weekly hire employee’. These words must be given meaning. The union acknowledged that its interpretation did not give these words any particular work to do. The proper meaning of ‘engaged by the week as a weekly hire employee’ is that each week there is a new engagement, and that an employee is hired for that week. The working arrangements for a new week are agreed afresh. An employee might reject the proposed arrangements for a particular week, in which case there may or may not be an alternative offer from the company. Whatever is proposed and agreed for a given week however, clause 5.2(d) requires that an employee be provided with a minimum of four hours work or be paid for a minimum of four hours on any day they are required to work. The words ‘specified minimum number of hours each week’ referred to in clause 5.2(b) means ‘from week to week’, not a fixed weekly number of hours that applies to all weeks.

[24] If it had been intended that the company and the employee agree, on the commencement of part-time employment, to a fixed number of minimum hours of work for all weeks, the Agreement could simply have said so. It is common to find such provisions in awards and enterprise agreements. But clause 5.2 of the Agreement makes no reference to the company and the employee agreeing, on commencement of part-time weekly hire employment, on standing working arrangements. That is because the clause is concerned with weekly hire part-time employment. The purpose of weekly-hire employment is to be responsive to variability in volumes of work. It would be inconsistent with this purpose for weekly minimum hours to be fixed. The company explained at the hearing that it is a ‘toll’ facility, processing its customers’ product, and that its labour requirements depend upon its customers’ orders. The union contended that the company has a large amount of work and that its business has been expanding in recent times. But it did not dispute the nature of the company’s business. In my view, it is not surprising that a toll meat processing facility would have, as part of its employment framework, a weekly hire employment arrangement.

[25] The union contended that it is necessary to consider the casual conversion provision in clause 5.4, which states that an employee will only be eligible for conversion if during the 12 month period they have been working a pattern of hours which could, ‘without significant adjustment’, be performed by a full-time or part-time employee. The union said that this presupposes that it will indeed be possible to fix standard hours, and for these to be set on a standing basis pursuant to clause 5.2(b). I do not accept this contention. Clause 5.4 makes no assumption that it will be possible to fix standard hours. It concerns conversion to part-time employment ‘without significant adjustment’. The ‘pattern’ of work referred to in clause 5.4 might be one of variability. It might show low hours in some weeks and high numbers in others, but nevertheless a sufficient volume over the long term to justify conversion. A pattern will not necessarily be born out over a week, or from week to week. It might only be apparent over months. There is nothing in clause 5.4 to suggest that conversion to part-time employment will warrant a fixed and unchanging number of minimum weekly hours under clause 5.2.

[26] The union submitted that the 12 month period leading up to conversion to part-time would provide the starting point for the company and the employee to determine the fixed weekly hours, and that they could simply ascertain the average hours over the preceding year. But this would almost inevitably involve a departure from any pattern that had established itself over the 12 month period and remove from the company the variability in weekly rostering it had previously possessed, thereby resulting in the need for a ‘significant adjustment’ (see clause 5.4(b)). It would in my view tend to result in the casual employee not being eligible for conversion. Of course, in a particular case, it is possible that an employee might work a weekly pattern over 12 months, and that this pattern could indeed be reflected in a part-time arrangement that was very regular. But that would not mean that the company was required to enter into a standing arrangement. The meaning of clause 5.2(b) is not determined by this hypothetical situation.

[27] In my opinion, the words ‘specified minimum number of hours each week’ in clause 5.2(b) mean a specified number for each week, from week to week. These hours are agreed between the employer and the employee each week. The employer offers them and the employees either accept or reject them. If in any week a part-time employee works hours in excess of the minimum number specified for that week, which are the ‘hours as mutually agreed’ for the purpose of clause 5.2(f), overtime is payable for those additional hours.

[28] Mr Jones gave evidence that, if the company had made clear its position in negotiations for the Agreement that there would be no fixed minimum number of weekly hours for part-time employees, there would have been no agreement at all and the union would have proceeded with its plans at that time to engage in protected industrial action in support of its bargaining claims. However, a party’s subjective belief about the meaning of a particular provision is not relevant to the interpretation of that provision. It is the objective meaning of the clause that must be ascertained.

[29] Mr Jones said that the company’s interpretation results in part-time employment conditions under the Agreement being less favourable than those of the previous agreement. I do not see how this is relevant to the interpretation of the Agreement because enterprise bargaining often involves trade-offs. It is not the case that every provision must stay the same or bring about improvements for employees. But in any event, the union’s argument does not appear to be correct. The Enterprise Agreement Diamond Valley Pork Pty Ltd Meat Processing 2017 (2017 Agreement) contained a provision stating that a ‘part-time weekly hire’ employee is ‘engaged by the week to work on a regular basis less than the ordinary hours of work and on a specified minimum number of days each week’ (5.3(a)). There was no mention of specified weekly hours. The only minimum hours requirement was that an employee be provided with at least four hours of work on any day the employee was required to work (clause 5.3(c)), and that clause is also found in the Agreement.

[30] The union contended that, on the company’s interpretation of the part-time clause, the Agreement would not have passed the BOOT in respect of part-time employees, measured against the 2010 Award which applied at the time. The BOOT is a global test undertaken by a Commission member at the ‘test time’ (when the application for approval of the agreement was lodged), and a proceeding under s 739 cannot properly entail a reconsideration of the BOOT or any of the other approval requirements for an application under s 185. But I accept for the moment the proposition that one might not favour an interpretation that would appear to result in a class of employees demonstrably being worse off under an enterprise agreement than the award that was applicable for the purpose of the BOOT.

[31] Clause 13.3 of the 2010 Award stated that a part-time employee would agree with the employer on a regular pattern of work specifying at least the hours worked each day, the days of the week the employee will work, the actual starting and finishing times of each day, and with a minimum daily engagement of four hours. However, clause 13.4 stated that these arrangements did not apply to a ‘meat processing establishment’, such as the company’s, except in respect of sales employees. Clause 13.3 therefore had no application to the employees who are the subject of the present application. Clause 14 of the 2010 Award made arrangements for ‘daily hire’ and ‘part-time daily hire’ employees. There was no provision for part-time weekly hire employees, or for any minimum weekly hours of work for part-time employees. I do not see any basis for the union’s contention that, on the company’s interpretation, the Agreement would have failed the BOOT against the 2010 Award in respect of weekly hire part-time employees.

Conclusion

[32] In relation to the first matter raised for determination, I have concluded that there is insufficient evidence to conclude that the company had not met its obligations to convert eligible casual employees to part-time weekly hire positions. However, the union is correct to say that the absence of an agreed position between the company and the union would not of itself be an acceptable reason not to consider requests and make conversions where appropriate.

[33] Secondly, in my opinion the words ‘specified minimum number of hours each week’ in clause 5.2(b) mean a specified number for each week, not a fixed number for all weeks. The specified hours are agreed between the company and part-time employees each week, consistent with the weekly hire nature of their employment. The company offers the specified hours and employees either accept or reject them. If in any week a part-time employee works hours in excess of the minimum number specified for that week, which are the ‘hours as mutually agreed’ for the purpose of clause 5.2(f), overtime is payable for those additional hours.

DEPUTY PRESIDENT

Appearances:

J. Jones for the Australasian Meat Industry Employees Union

P. Christian for Diamond Valley Pork Pty Ltd

Hearing details:

2020

Melbourne (by telephone)

25 September

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