The Australasian Meat Industry Employees Union v Wingham Beef Exports Pty Ltd T/A Wingham Beef Exports

[2021] FWC 4641

[2021] FWC 4641

The attached document replaces the document previously issued with the above code on Friday, 6 August 2021.

Inserting a paragraph number at paragraph [43] and adjusting the numbering for the paragraphs that follow accordingly.

Lidia Susac
Associate to Commissioner Cambridge

Friday, 6 August 2021.

[2021] FWC 4641

FAIR WORK COMMISSION

DECISION

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

The Australasian Meat Industry Employees Union
v
Wingham Beef Exports Pty Ltd T/A Wingham Beef Exports
(C2021/270)

COMMISSIONER CAMBRIDGE SYDNEY, 6 AUGUST 2021

Dispute settlement procedure - dispute about interpretation of clause providing for stand down - stand down of employees due to unavailability of suitable livestock - interpretation made - application dismissed.

[1] This Decision is made in respect of an application that was taken under s. 739 of the Fair Work Act 2009 (the Act) for the Fair Work Commission (the Commission) to deal with a dispute in accordance with a Dispute Settlement Procedure (DSP). The application was lodged at Sydney on 18 January 2021, and it was made by The Australasian Meat Industry Employees Union (the AMIEU). The application was taken against Wingham Beef Exports Pty Ltd T/A Wingham Beef Exports ABN:19 002 954 789 (WBE or the employer).

[2] The application was advanced pursuant to a DSP which can be found at clause 10 of the Wingham Beef Exports Pty Limited Enterprise Agreement 2019 (the 2019 EA). The matter in dispute was the subject of an earlier application (C2020/5433) that had been taken by the AMIEU under s. 526 of the Act (the s. 526 application). The s. 526 application was the subject of several conciliation conferences which were not successful in resolving the dispute. The AMIEU discontinued the s. 526 application and in lieu of that matter, filed the application in this matter.

[3] On 19 January 2021, the Commission issued amended Directions which required the Parties to file evidence and submissions in accordance with a timetable and to subsequently advise whether a formal Hearing was sought. The Parties requested that the dispute be the subject of a formal Hearing, and the Commission continued the permission that was granted pursuant to s. 596 of the Act, during proceedings in the s. 526 application, for the Parties to be represented by lawyers or paid agents. The Hearing was fixed for 9 June 2021.

[4] At the Hearing held on 9 June 2021, Mr A Oehme appeared for the AMIEU, and WBE was represented by Mr A Herbert, barrister, instructed by Mr F McMahon from McMahon and Associates. Mr Oehme appeared in person at the proceedings that were conducted in Sydney, while Mr Herbert, his instructors, and the witnesses for WBE, appeared via video link.

[5] Mr Oehme called one witness, Mr Jason Rowe who provided evidence for the AMIEU and he was cross-examined by Mr Herbert. Mr Herbert adduced evidence from two witnesses, WBE’s Human Resource Manager, Ms Leanne Margaret Yarnold, and WBE’s Acting General Manager, Mr Christopher Leonard Black. The evidence from Ms Yarnold and Mr Black was provided remotely as they each appeared as witnesses via video link, and they were cross-examined by Mr Oehme. Mr Herbert introduced further evidence in the form of two witness statements from individuals that were not required for cross-examination, although the Parties reached an understanding that the absence of those witnesses for the purposes of cross-examination did not imply any concession in respect to the contests that the AMIEU had identified from the questioning of Ms Yarnold and Mr Black.

[6] Mr Oehme and Mr Herbert both made oral submissions in elaboration of documentary material that each had filed on behalf of the respective Parties.

Background

[7] There was little factual contest between the Parties about the circumstances which gave rise to the dispute in this matter. The dispute arose from a decision taken by WBE to stand down a significant number of its employees on six days during March 2020.

[8] WBE operates a fully integrated abattoir that specialises in processing British breed, grain fed, and grass fed cattle. The abattoir is located in the New South Wales mid north coast town of Wingham, and it produces specialised quality beef products primarily for export markets. WBE operates a unique business model whereby approximately 90% of the cattle that it purchases for processing are acquired through a system called “Weight at Works (WAW)”.

[9] The Weight at Works system involves cattle producers arranging the delivery of their cattle directly to the WBE abattoir. The producer is paid a price for each animal that is determined by WBE and based upon various factors such as the weight, fat thickness, and other aspects of the particular animal. Producers therefore seek to maximise the price that they are paid for each animal by endeavouring to provide very heavy animals of the specialised quality that WBE determines as being suitable for what is essentially its niche export markets. Under the Weight at Works system, producers communicate with WBE to make arrangements to book in advance the numbers of cattle and the days on which those animals will be delivered to the abattoir.

[10] To supplement the stock supplied through the Weight at Works system, WBE also purchases suitable cattle from saleyards. WBE engages livestock buyers who compete with other livestock buyers to purchase cattle at saleyard auctions. The specialist, niche export markets that WBE services means that there are a limited number of livestock that are suitable for purchase through the saleyard auctions. Consequently, cattle purchased at saleyard auctions represent less than 10% of the total number of animals processed by WBE.

[11] As with almost all primary industries, the meat processing industry experiences notorious seasonal fluctuations. In late 2019 and early 2020, the combination of local bushfires and extended severe drought conditions, caused many of the cattle producers in the areas surrounding Wingham to reduce their stock numbers significantly. At around this time, December 2019 to January 2020, many producers decided to sell their cattle to WBE through the Weight at Works system. This meant that there was an excess of supply of cattle from producers, and the Weight at Works processing was booked out for up to 12 to 16 weeks. Consequently, WBE processing was extremely busy and operating at about its daily capacity of about 500 animals.

[12] In late January early February 2020, the onset of significant rainfall dramatically altered the supply of cattle to WBE. The improved climatic conditions meant that the producers decided to retain their stock, and many cancelled their scheduled bookings for the sale of cattle to WBE through the Weight at Works system, whilst others simply did not arrive at the abattoir on a booked date, a “no show”.

[13] The dramatic and sudden reduction in the supply of cattle to the WBE abattoir was initially addressed by two measures. Firstly, the WBE livestock buyers sought to increase the number of animals obtained through purchase at saleyard auctions. Although there has been some challenge to the efforts made by WBE to increase its cattle supply from saleyard auctions, this avenue of supply was clearly supplementary to the primary cattle supply that were purchased through the Weight at Works system. Secondly, WBE commenced to rearrange the Weight at Works bookings by bringing forward scheduled bookings to effectively substitute the numbers that were lost due to cancellations. The rearrangement or shuffling of what was referred to as daily kill numbers, provided only a short term alleviation of the significant reduction in cattle supply to the abattoir.

[14] During February and March 2020, WBE continued to experience significant cattle supply problems. Some supplementary saleyard supply, and the shuffling of daily kill numbers, continued to be impacted by no shows and ongoing reductions in Weight at Works bookings. The abattoir optimally operates on a daily number of 500 cattle, and as the cattle supply problems continued, WBE found it increasingly difficult to have daily numbers of around 500 cattle ready for processing.

[15] Eventually, in late February and early March 2020, WBE identified that it had insufficient numbers of cattle to enable the abattoir to operate efficiently over all five days of the following week. Consequently, WBE shuffled the daily kill numbers so that on one or more days of the following week the abattoir would not process any cattle at all. WBE then advised its employees who worked on the slaughter floor and boning room of the abattoir, that they would be stood down on a day or days of the following week when there would be no processing of any cattle at all.

[16] WBE stood down its slaughter floor employees on 11, 12, 13, 16 and 20 March 2020, and it stood down its boning room employees on 16 and 17 March 2020. WBE has asserted that the stand down of these employees at these times (the stand downs) was permitted by and complied with, the relevant provisions of clause 50 of the 2019 EA.

[17] The relevant provisions of the 2019 EA relating to what is described as “STAND DOWN CONDITIONS” are found at clause 50, and the specific terms of clause 50.1, which are the focus of the dispute, are in the following terms as contained in an Undertaking to the 2019 EA that was made pursuant to s. 190 of the Act:

“Notwithstanding anything elsewhere contained in this clause, the employer shall have the right to deduct payment for any day on which an employee cannot be usefully employed , because of any strike other than in the plant, or through any breakdown of machinery or any stoppage of work in the meat industry by any cause (including the availability of suitable livestock) for which the employer cannot reasonably be held responsible (including the availability of suitable livestock), or for any day or part of a day on which an employee cannot be usefully employed because of any strike in the meat industry.”

[18] The AMIEU, on behalf of its members employed by WBE, has raised challenge to the stand downs. Initially the challenge to the stand downs was agitated by the AMIEU in the s. 526 application, and subsequently it was raised as a dispute in these proceedings on the basis that the stand downs did not comply with the relevant terms of clause 50.1 of the 2019 EA.

The Case for the AMIEU

[19] Mr Oehme, who appeared for the AMIEU, made oral submissions in amplification of a written outline of submissions document dated 13 April 2021. The submissions made by Mr Oehme commenced by stating that the Parties had agreed that it was the employer who bears an evidentiary onus to satisfy the Commission that there was a lawful basis for the stand downs. According to the submissions made by Mr Oehme, it had been well established that in most cases involving stand down of employees, it was only the employer that had the knowledge about the factual circumstances that surrounded the decision to stand down the employees. Therefore, Mr Oehme submitted that the employer, in this case WBE, had to provide the evidentiary basis upon which to satisfy the Commission that the stand downs were lawful.

[20] Mr Oehme submitted that in this case, the legal power for the stand downs was derived from clause 50 of the 2019 EA. Mr Oehme further submitted that there were two fundamental elements that needed to be established to satisfy compliance with the stand down clause. Firstly, it was necessary to establish that the employee or employees could not be usefully employed, and in this instance, Mr Oehme said that there was no challenge to this question. Mr Oehme said that it was accepted that there was an absence of useful employment in respect to the stand downs.

[21] However, Mr Oehme submitted that the second element for the stand downs, which required that the absence of useful employment must arise from a stoppage of work for which the employer cannot reasonably be held responsible, was the aspect upon which the AMIEU challenge was advanced. Mr Oehme submitted that this meant that there needed to be a stoppage of work and that stoppage had to have been caused by something outside of the employer’s responsibility. According to Mr Oehme, this required an examination as to whether there was a causal nexus between the stoppage and factors which caused that stoppage which were outside of the control of the employer.

[22] The submissions made by Mr Oehme acknowledged that the purported cause of the stand downs arose from the reduction in incoming work through the Weight at Works program, as a consequence of the change of seasons, in late January and early February 2020. However, according to the submissions made by Mr Oehme, the reduction in incoming work did not result in a stoppage of work but instead it was WBE’s commercial reaction to those circumstances which bought about the stoppage of work. Therefore, what Mr Oehme referred to as the causal chain, had been broken.

[23] Mr Oehme also made alternative submissions which asserted that even if the Commission was satisfied that there was sufficient causal linkage between the reduction in incoming work and the stoppage of work, there was nevertheless a number of reasonable actions that could have been taken by WBE to prevent the stoppage. Therefore, according to Mr Oehme, the stoppage was not something that was outside of the responsibility of WBE. In such circumstances, Mr Oehme submitted that the requirements of clause 50.1 of the 2019 EA had not been satisfied and the challenge to the stand downs would succeed.

[24] The further submissions of Mr Oehme provided detailed support for the challenge to the causal link between the reduction in work through the Weight at Works program which he said resulted in a reduction in trade, but it did not result in a stoppage of work. Mr Oehme stated that whether there was a sufficient causal connection between the purported cause of the stoppage, in this case, the reduction of work through the Weight at Works program, and the stoppage of work, was a question of fact and degree. In this regard, Mr Oehme submitted that in this case, the evidence disclosed that although there was a reduction in the number of cattle to be killed on any day, it was WBE’s actions in re-arranging the available cattle such that on particular days all cattle were moved for slaughter on other days, which actually caused the stoppage of work. In this regard, Mr Oehme accepted that if the volume of work was so trivial on a particular day that the decision to cancel production would have been foisted upon WBE, he said that the evidence did not support such circumstances.

[25] The submissions made by Mr Oehme referred to a number of decided cases which had established that the mere fact that an employer may operate unprofitably did not, of its own, provide proper basis for a stand down of employees. Mr Oehme made submissions which translated this established principle into the terminology contained in clause 50.1 of the 2019 EA. In particular, it was submitted that the terminology “including the availability of suitable livestock” had to be carefully considered and did not translate into an unfettered right for WBE to invoke stand downs simply to provide for the most efficient and profitable means of operating the business.

[26] Mr Oehme stated that it was clear that the availability of suitable livestock could be a valid basis for a stand down. Mr Oehme referred to circumstances where severe floods in the Wingham area had resulted in the plant being effectively cut off from its supply of suitable cattle. In those circumstances, employees were stood down, and Mr Oehme said there was no issue taken with the legitimate basis for those stand downs as the availability of cattle was clearly outside of the control of WBE, and the chain of causation was clearly established. However, Mr Oehme submitted that in respect to the stand downs in March 2020, there was a break in the causal chain because the reductions in the bookings through the Weight at Works program did not actually result in a stoppage of work but instead a reduction in work.

[27] In further submissions, Mr Oehme asserted that the stoppage was actually caused by the decision taken by WBE to respond to the reduction in cattle numbers by reorganising its business operation to improve efficiency and profit margin. Mr Oehme asserted that the stoppage of work was caused by the commercial decision of WBE, and although it was entitled to reorganise its business, it could not rely upon the stand down provisions because its commercial decision was clearly something for which it held responsibility.

[28] Mr Oehme also made submissions which asserted that there were further actions and business practices of WBE which contributed to the circumstances surrounding the stand downs and for which WBE was clearly responsible. Therefore, according to the submissions of Mr Oehme, circumstances which gave rise to the stand downs would not satisfy that aspect of clause 50.1 of the 2019 EA which required that the employer could not reasonably be held responsible for the stoppage of work. Mr Oehme mentioned that the stand downs may have been avoided or mitigated if WBE had implemented a more widespread practice of engagement by daily hire rather than permanent employment. Further, Mr Oehme asserted that it was unreasonable for WBE not to have taken a series of steps to increase the amount of saleyard cattle that they could have purchased in order to maintain higher daily kill numbers. In addition, Mr Oehme also made criticism that WBE had not established enforceable contracts with the producers that participated in the Weight at Works program to ensure supply in circumstances where they operated in a niche, premium, export market.

[29] In summary, Mr Oehme stated that having regard to both legal principles and the evidence, the Commission could not be satisfied that the employer had discharged its evidentiary onus to establish that the stand downs satisfied the requirements of clause 50.1 of the 2019 EA. Mr Oehme reiterated that the causal link between the reduction in available livestock and the stoppage of work had not been established. Additionally, Mr Oehme submitted that the evidence did not establish that the cause of the stoppage of work was something for which the employer could not reasonably be held responsible. Consequently, Mr Oehme urged that the Commission determine that the stand downs were not compliant with clause 50.1 of the 2019 EA, and therefore those employees who were stood down were entitled to their ordinary wage for the period of the stand downs.

The Employer’s Case

[30] Mr Herbert appeared for WBE, and he made oral submissions in amplification of written submissions dated 4 March and 1 June 2021.

[31] The submissions made by Mr Herbert firstly confirmed that the dispute that required resolution was the question of whether the employer was entitled to invoke the terms of clause 50.1 of the 2019 EA, and was therefore entitled to deduct pay for the days on which employees were stood down from their employment in March 2020. Mr Herbert submitted that both the text of clause 50.1 and the context of the industry and circumstances surrounding the industrial instrument, established identification of the evident industrial purpose of the clause under examination. Mr Herbert said that the evident industrial purpose of the clause was to relieve the employer of the incredible disability associated with volatile supply lines of product in the meat processing industry.

[32] Mr Herbert submitted that it was important to consider the text of clause 50.1 in the particular industrial context, as it represented a stand down clause for permanent employees as an alternative to daily hire arrangements that were common in the meat processing industry. Mr Herbert submitted that clause 50.1 of the 2019 EA was nowhere near as Draconian as the daily hire model of employment but its evident industrial purpose was to allow the employer to escape the most serious consequences of supply related difficulties.

[33] Mr Herbert made submissions which emphasised that the terms of clause 50.1 of the 2019 EA were different from the terminology used in s. 524 of the Act. Mr Herbert asserted that the provisions in the clause envisaged that individual days and very short periods of time would apply to stand downs that were relevant to the particular circumstances of supply difficulties in the meat processing industry. Mr Herbert stressed that the use of the words “availability of suitable livestock” actually referred to circumstances involving an unavailability in sufficient numbers to allow production to continue in the normal way. Mr Herbert stated that unavailability of sufficient numbers should be distinguished from the concept of there being an absence of supply of any livestock.

[34] The submissions made by Mr Herbert referred to the evidence of the reduction in livestock numbers that occurred during the relevant weeks up to and including the days on which the stand downs occurred. Mr Herbert said that the deficiencies in livestock numbers established that there was a dramatic failure in the Weight at Works system and the employer was suddenly presented with a very big problem relating to availability of cattle. According to the submissions made by Mr Herbert, these circumstances established the unavailability of cattle as would be contemplated by the terminology used in clause 50.1 of the 2019 EA.

[35] In his further submissions, Mr Herbert rebutted the criticisms made by the AMIEU of the rearrangements of the reduced number of cattle that were undertaken by the employer. Mr Herbert said that it was perfectly reasonable and sensible that if the employer had 800 cattle in a week when it would normally process 2,500, it would rearrange those cattle to arrive in sufficient numbers in order to make the most efficient use of opening the plant for production rather than having the plant open and process perhaps only 50 cattle and then have to shut.

[36] Mr Herbert submitted that clause 50.1 of the 2019 EA involved terms that were agreed between the Parties, which was quite a different thing from the terminology used in s. 524 of the Act. Mr Herbert submitted that the terminology of clause 50.1 clearly contemplated circumstances involving unavailability of suitable cattle and it was incorrect for the AMIEU to assert that the circumstances involved simply a reduction in work rather than the stoppage.

[37] Mr Herbert referred to various authorities which he said required there to be an examination of the underlying cause which led to the stoppage of work. In this regard, Mr Herbert asserted that it was incorrect for the AMIEU to assert that it was the employer’s decision to shuffle the cattle numbers which was the basis for the stoppage. Mr Herbert submitted that the underlying cause of the stoppage had to be identified, and it was clearly the case that there were insufficient numbers of suitable cattle to permit the plant to operate on all days of the week. Mr Herbert submitted that the employer was entitled to make economically rational decisions in response to circumstances over which it had no control, and therefore it was entitled to utilise clause 50.1 of the 2019 EA.

[38] The submissions made by Mr Herbert also rejected that the employer had not taken sufficient action to avoid the stoppage of work. Mr Herbert submitted that the evidence established that the employer had attempted to purchase saleyard cattle to supplement the loss of supply through the Weight at Works program but there were simply insufficient numbers of suitable cattle available for purchase. Mr Herbert also rejected criticism that was made by the AMIEU of the employer’s business model involving the absence of binding contractual relationships between the employer and the cattle producers that participated in the Weight at Works program.

[39] Mr Herbert also submitted that circumstances involving shortages of stock had occurred in the past and there was evidence that there were 30 occasions in 2016 when the employer invoked stand downs because of shortage of stock. Mr Herbert submitted that the Parties well understood shortage of stock clauses that had been agreed to in the current enterprise agreement and in previous agreements. Mr Herbert said that the terms in clause 50.1 of the 2019 EA reflected a well understood and well-trodden pathway that the Parties had applied in the past.

[40] In summary, Mr Herbert asserted that the terms of clause 50.1 of the 2019 EA made it clear that the Parties had elected in the agreement to include reference to availability of suitable cattle as being a potential cause of a stoppage. Further, it was clear that there was nothing that would prohibit the employer from marshalling up their reduced cattle numbers into particular times and places and thereby leave a day or days where no production would occur, and the stand down would apply. Mr Herbert submitted that when the terms of clause 50.1 were viewed in context, its evident industrial purpose was clear, and the employer was entitled to utilise the clause and stand down the employees as had occurred in March 2020.

Consideration

[41] The dispute in this instance has arisen from the decision of WBE to stand down its slaughter floor employees on 11, 12, 13, 16 and 20 March 2020, and its boning room employees on 16 and 17 March 2020 (the stand downs). The Commission is empowered to determine the dispute about the stand downs by virtue of the Dispute Settlement Procedure (DSP) found at clause 10 of the 2019 EA which is in the following terms:

“10 DISPUTES PROCEDURES

10.1 If a dispute relates to:

10.1.1 a matter arising under the agreement; or

10.1.2 the National Employment Standards;

this term sets out procedures to settle the dispute.

10.2 An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.

10.3 In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management.

10.4 If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Commission.

10.5 The Fair Work Commission may deal with the dispute in 2 stages:

10.5.1 the Fair Work Commission will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

10.5.2 if the Fair Work Commission is unable to resolve the dispute at the first stage, the Fair Work Commission may then:

10.5.2.l arbitrate the dispute; and

10.5.2.2 make a determination that is binding on the parties.

Note: If Fair Work Commission arbitrates the dispute, it may also use the powers that are available to it under

the Act.

A decision that Fair Work Commission makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.

10.6 While the parties are trying to resolve the dispute using the procedures in this

term:

10.6.1 an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and

10.6.2 an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

10.6.2.1 the work is not safe; or

10.6.2.2 applicable occupational health and safety legislation would not permit the work to be performed; or

10.6.2.3 the work is not appropriate for the employee to perform; or

10.6.2.4 there are other reasonable grounds for the employee to refuse to comply with the direction.

10.7 The parties to the dispute agree to be bound by a decision made by Fair Work Commission in accordance with this term.”

[42] The Parties agreed that the relevant procedural steps contained in the DSP had been followed, and during the Hearing, evidence was provided which confirmed that the procedural and other requirements of the DSP had been satisfied. Therefore, the jurisdiction of the Commission to exercise the powers of private arbitration contained in the DSP was properly established.

[43] The Parties also confirmed that the determination of the dispute involved an analysis of the words contained in clause 50.1 of the 2019 EA in order to provide the correct construction or interpretation that should you be given to those terms. The specific construction contest was whether the terms of clause 50.1 permitted or authorised the stand downs. The task for the Commission has therefore involved a reasonably straightforward contested construction determination. Any determination of a contested construction question should appropriately attract, with necessary modification, the application of the principles relevant to the task of construing the terms of an enterprise agreement. Those principles are conveniently set out at paragraph [114] of the Full Bench Decision in AMWU v Berri 1 (the Berri principles) and are in the following terms:

“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.”

[44] Consideration of the contested construction for clause 50.1 of the 2019 EA has involved the application of the Berri principles and therefore, the approach commences with a consideration of the ordinary meaning of the relevant words, involving what is primarily a text-based analysis. At the outset of such an analysis, it is important to recognise that although clause 50.1 of the 2019 EA is titled “STAND DOWN CONDITIONS”, by virtue of subsection 524 (2) of the Act, it operates in lieu of the statutory stand down powers provided by subsection 524 (1) of the Act. Consequently, the clause represents agreed terms that deal with WBE’s capacity to stand down its employees in particular circumstances that are relevant to its business operation, as opposed to the broad, general application covering all employment contexts which would be captured by the provisions of subsection 524 (1) of the Act. In this regard, in construing the terms of clause 50.1 care must be exercised to avoid contemplating its operation to be supplementary to or conjunctive with, any operation of the statutory stand down powers provided by subsection 524 (1) of the Act.

[45] In order to undertake the approach contemplated by the Berri principles involving an initial analysis of the ordinary meaning to be given to the relevant text, it is helpful to again reproduce clause 50.1 as varied by the s. 190 Undertaking, and then, having guarded against any potential rewriting of the terms to achieve what might be regarded as a fair and just outcome, identification is made of any objectively determined common intention of the Parties. This approach is assisted by examination of the key operative words contained within clause 50.1, and when the detailed examination of the text is considered in context, any objective common intention can be properly discerned.

[46] To assist with this analysis, it is helpful to repeat the text of clause 50.1 as varied by the Undertaking, which is in the following terms:

“Notwithstanding anything elsewhere contained in this clause, the employer shall have the right to deduct payment for any day on which an employee cannot be usefully employed , because of any strike other than in the plant, or through any breakdown of machinery or any stoppage of work in the meat industry by any cause (including the availability of suitable livestock) for which the employer cannot reasonably be held responsible (including the availability of suitable livestock), or for any day or part of a day on which an employee cannot be usefully employed because of any strike in the meat industry.”

Time Period of Stand Down - A Day or Part of a Day

[47] There is some significance that can be identified with the use of the words “any day” appearing on the second line of clause 50.1, which can be contrasted with the use of the words “any day or part of a day” in the antepenultimate and penultimate lines of the clause. Further, the use of a time period of any day or part of the day, can be contrasted with the terminology of s. 524 of the Act which does not refer to a day at all, but instead “a period”.

[48] The initial use of the words “any day” when contrasted with the latter use of the words “any day or part of a day” would logically limit the shortest period of time for any stand down in respect of the circumstances that are first described, namely “any strike other than in the plant, or through any breakdown of machinery or any stoppage of work in the meat industry by any cause (including the availability of suitable livestock), to be a day. The corollary being that there would be no capacity for the employer to stand down employees for a period of less than a day in respect of those circumstances that are first described in the clause. Consistently, in the circumstances that are those second described in the clause, namely, “any strike in the meat industry” the employer would be permitted to stand down employees for a period of time of less than a day.

[49] The circumstances of the stand downs involved a cause identified in what is first described in clause 50.1, specifically, a stoppage that was asserted to be accommodated by the terminology “the availability of suitable livestock”. This terminology could be described as clumsy, as it was immediately apparent that the cause of the stoppage would not actually be the availability of suitable livestock but rather the unavailability of suitable livestock. Despite this clumsy misdescription, the stand downs were said to be caused by an unavailability of suitable livestock, being one of the circumstances first described in the clause, and therefore they could only be implemented on a minimum period of a day and could not be invoked for a lesser period of a part of a day.

[50] The corollary of this aspect of the analysis of the terminology of clause 50.1 has meant that in instances where there was an unavailability of suitable livestock, WBE could not stand down employees at a point in time during a day when the available number of livestock for processing had been completed. Any stand down for reason of unavailability of suitable livestock had to involve a complete day and could not be implemented for a part of a day.

Linkage with Clause 12

[51] Consideration has next turned to the basis for which a daily stand down for reason of unavailability of suitable livestock might be construed to operate in respect to the ordinarily understood notions that apply to the various categories of employment. Clause 11 of the 2019 EA is titled TYPES OF EMPLOYMENT and it specifies four categories of employment: full-time, part-time, casual, and regular daily hire. Clauses 12, 13, 14, and 15 then respectively deal with, full-time employment, part-time employment, regular daily or part-time daily hire, and casual employment.

[52] Casual and daily hire employment, by virtue of their very nature, can be excluded from any potential operation of a stand down implemented under clause 50.1. Significantly, clause 12 of the 2019 EA has required examination for the purposes of consideration of the construction that should be provided to the terms of clause 50.1. Clause 12 of the 2019 EA is in the following terms:

“12 FULL-TIME EMPLOYMENT

A full-time Employee is an employee who is engaged to work an average 38 hours per week, subject to stand downs and/or shortage of stock provisions.” [emphasis added]

[53] Clause 12 of the 2019 EA introduces a caveat to the ordinary configuration that applies to full-time employment. The ordinary configuration for full-time employment is established by s. 62 of the Act which inter alia, stipulates that full-time employment involves a maximum of ordinary weekly hours of 38. In the absence of any expressed terms to the contrary, full-time employment is established on a weekly basis, whereby an employee would be entitled to receive payment for 38 hours and ordinarily provided with work in respect of that payment.

[54] Therefore, ordinarily, a full-time employee is engaged on a weekly basis for which they are entitled to receive payment for 38 hours and if an employer is unable to provide useful work for a full-time employee for whatever reason, the employee is nevertheless entitled to receive payment in respect of the weekly engagement of 38 hours. Consequently, in the ordinary course of any implementation of a stand down under s. 524 of the Act at least one weeks’ notice of the stand down would be required. The weekly basis for engagement of full-time employees would ordinarily mean that at least a week’s notice would be needed to implement a stand down even if the circumstances involved an immediate inability to provide the employee with useful employment.

[55] Clause 12 of the 2019 EA clearly stipulates that the weekly engagement of full-time employees and the consequent requirement for the employer to provide payment of 38 hours in any week, is altered by the words, “subject to stand downs and/or shortage of stock provisions.” There is no shortage of stock provisions in the 2019 EA, the only relevant clause is clause 50 STAND DOWN CONDITIONS, which contains only clause 50.1 as amended by the Undertaking. Consequently there is an important linkage between clause 12 and clause 50.1, and that linkage specifically relates to “shortage of stock” as expressed in clause 12 or “availability of suitable livestock” as expressed in clause 50.1, but which really should read as unavailability of suitable livestock.

Evidence of Historical Context

[56] The important linkage between clauses 12 and 50.1 in the 2019 EA discloses the underlying intended operation of the clauses in relation to circumstances where there is an unavailability of suitable livestock such that a stand down of a minimum of a day would be implemented by WBE. The linkage between the two clauses and their intended purpose is more easily understood when one has regard for the historical development of clause 50.1 of the 2019 EA. In this regard, the following evidence provided by Ms Yarnold was important:

“…: was the standdowns in 2020 the first time that Wingham ever stood workers down like this? --- No, your Honour, no – we’ve been doing it over many years that I’ve been involved in Wingham Beef Exports.

Just looking at, for instance, the - you mentioned this, this shortage of stock conditions; the terms that were in the 2014 agreement which were at clause 51, they seem to have been replaced by what now is clause 50. Is that right? --- That is correct, yes.

So if we go back to the operation of, say, the 2014 agreement, there were occasions when there were shortages of stock and people was stood down in the same way they were stood down in March 2020? Is that right? --- That is correct, yes.” 2

[57] The affidavit of Ms Yarnold (Exhibit 4) attached extracts from various industrial instruments that preceded the 2019 EA, and it relevantly included the following provisions of clause 51 of the Wingham Beef Exports Pty Ltd Enterprise Agreement 2014 (the 2014 EA):

“51. SHORTAGE OF STOCK CONDITIONS

51.1 Parties to this Agreement agree that stand down provisions shall apply under shortage of stock conditions when sufficient cattle is not available on any day or days due to seasonal factors and/or shortages of stock.

51.2 The Company will advise the Core Consultative Committee, wherever possible with 24 hours, that there will be no productions due to shortage of stock. Notices will be placed to advise employees, so affected.

51.3 Work will resume after these shortage of stock days in the normal manner and the normal shift times.”

[58] Shortage of stock provisions similar to those contained in clause 51 of the 2014 EA, appeared at clause 13 of the WBE & AMIEU Enterprise Agreement 2010, clause 13 of the Wingham Beef Exports & AMIEU Collective Agreement 2008, clause 13 of the Wingham Beef Exports Agreement 2005, and clause 8 of the Wingham Beef Exports Enterprise Agreement 1998-1999 contained an abbreviated text of a shortages of livestock provision. The evidence provided by Ms Yarnold confirmed that the long history of shortage of stock provisions in the relevant antecedent industrial instruments ultimately manifested in the inclusion of the words “availability of suitable livestock” appearing in clause 50.1 of the 2019 EA. There was no evidentiary challenge to the proposition that the inclusion of these clumsy words sought to encompass and perpetuate the shortage of stock stand down arrangements that were more fulsomely expressed in clauses 51.1 and 51.2 of the 2014 EA.

[59] Consequently, the detailed analysis of the words that are contained in clause 50.1, when considered in conjunction with the important linkage that those terms have with the caveat contained in clause 12, and, having regard for the historical development of the terminology under examination, has meant that the objective common intention of the Parties has been established. That objective common intention can be most clearly identified in the following words found in clause 51.1 of the 2014 EA: “Parties to this Agreement agree that stand down provisions shall apply under shortage of stock conditions when sufficient cattle is not available on any day or days due to seasonal factors and/or shortages of stock.”

Principles of Statutory Stand Downs Displaced

[60] From this analysis, it follows that much of the established approach to the interpretation of statutory stand down provisions such as s. 524 of the Act, has in this instance, been supplanted by the proper construction that must be given to the words of clause 50.1 of the 2019 EA. The principles that have been established in relation to statutory stand down provisions regarding issues such as direct causal connection and distinction between a downturn in business operation as opposed to a stoppage of work, are not necessarily applicable to the stand downs that were implemented under the terms of an enterprise agreement. The Parties to the enterprise agreement have established their own particular arrangements for stand down of employees. The terms of clause 50.1 of the 2019 EA operate in place of s. 524 (1) of the Act.

[61] Consequently, in order to justify its activation of clause 50.1 of the 2019 EA, WBE has needed to provide evidence that there was an unavailability of suitable livestock in sufficient numbers to cause a stoppage of work. That position was self-evidently obtained when the reduction in the number of cattle available for processing had decreased to the point that the total number available in a following week could be redistributed to enable there to be no processing on one or more days. These were the circumstances that had historically applied under the shortage of stock provisions of predecessor industrial instruments, and which, upon proper analysis, continue to apply from the correct construction to be given to clause 50.1 of the 2019 EA.

[62] Further, there was no evidence that established that the actions of WBE could be held responsible for the unavailability of suitable livestock. WBE endeavoured to offset the reduction in supply of livestock through the Weight at Works program by purchases of suitable cattle at saleyard auctions. However, the predominant reliance upon supply via the Weight at Works program meant that any saleyard auction purchases provided little mitigation. In addition, the absence of binding contractual relationships with its producer suppliers was an understandable aspect of the business relationships that WBE needed to maintain for the ongoing operation of the Weight at Works program.

[63] Finally, in respect to the application of other aspects of the Berri Principles, the construction that has emerged from the identification of the objective common intention of the Parties does not lead to an interpretation made by way of an overly technical approach. Indeed, the outcome could be described as an approach that involved clear identification of a common sense industrial purpose that had historically operated to address particular industry circumstances. Further, the other aspects identified in the Berri principles have, to the extent that they are applicable, provided further support for the contested construction question to be resolved in accordance with the objective common intention of the Parties that has been identified in respect to the construction provided for clause 50.1 of the 2019 EA.

Conclusion

[64] In this case, the Commission has been required to determine a contested construction question regarding the terms contained in clause 50.1 of the 2019 EA. Specifically, the Parties have recognised that the primary question for determination was whether the stand downs were implemented in accordance with or contrary to, the relevant terms of the 2019 EA.

[65] In respect to this primary question, having regard for all of the evidence that was presented, and by application of the principles relevant to the task of construing contested terms such as those under examination in this instance, the Commission has determined that the stand downs were implemented in accordance with the terms of clause 50.1 of the 2019 EA as properly construed.

[66] The determination of the contested construction question has primarily resulted from an analysis that identified the objective common intention of clause 50.1. In particular, the terminology of that clause, when examined and properly considered in the context of its linkage to the terminology contained in clause 12, has established that the shortage of stock circumstances that arose in March 2020, permitted WBE to activate the provisions of clause 50.1 and implement the stand downs. The terms of clause 50.1 of the 2019 EA operate in lieu of the statutory stand down provisions of s. 524 (1) of the Act, and therefore principles that have been established in respect to the operation of statutory stand down provisions have not necessarily required satisfaction.

[67] Consequently, the dispute has been determined broadly in accordance with the position advanced on behalf of WBE and contrary to the case that was agitated by the AMIEU. Therefore, the application is dismissed accordingly.

COMMISSIONER

Appearances:

Mr A Oehme, appeared for The Australasian Meat Industry Employees Union.

Mr A Herbert, Counsel instructed by Mr F McMahon from McMahon and Associates appeared for the employer.

Hearing details:

2021.
Sydney:
June, 9 (video hearing).

Printed by authority of the Commonwealth Government Printer

<PR732326>

 1   Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005, Ross P, Gooley DP and Hunt C.

 2   Transcript @ PN298 – PN300.