The Australian Workers' Union v Alcoa World Alumina Australia Limited

[2012] FWA 4685

[2012] FWA 4685

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.739—Dispute resolution

The Australian Workers’ Union
v
Alcoa World Alumina Australia Limited
(C2011/7059)

Aluminium industry
COMMISSIONER WILLIAMS	PERTH, 14 JUNE 2012

s.739 - Application to deal with a dispute.

[1] This matter involves an application made by the Australian Workers’ Union (the AWU) under section 739 of the Fair Work Act 2009 (the Act). The respondent is Alcoa World Alumina Australia Ltd (the Respondent). The matter was brought via Clause 18 - Dispute Resolution Procedure of the Alcoa World Alumina Australia Pinjarra Refinery AWU Enterprise Agreement 2011 [AE884264] (the Agreement).

[2] The dispute was the subject of a conciliation conference but the matter was not resolved and the AWU has sought that the matter be determined by the Tribunal.

[3] I am satisfied that the matter has been properly processed through the dispute resolution procedure and that Fair Work Australia is empowered to now determine the dispute.

The dispute

[4] The matter in dispute concerns clause 6.15 of the Agreement,

“6.15 Conversion to permanent

Where a job has been performed by a casual or limited term employee, including Labour Hire for a continuous period of 18 months the Company shall recruit a permanent employee to perform this task.”

[5] The clause is a new clause in the Agreement. The Agreement’s operative date was 8 March 2011.

[6] The dispute is whether the period of 18 months referred to in the clause is “prospective”, meaning it only includes periods that began on or after 8 March 2011 or whether the period of 18 months is “retrospective”, meaning it also includes periods that began before 8 March 2011.

[7] The AWU argues the continuous 18 month period is retrospective but the Respondent argues it is prospective.

The AWU’s submissions

[8] The AWU provides the following submissions in support of the relevant clause’s retrospective operation.

Section 54 of the Act states:

“When an enterprise agreement is in operation

(1) An enterprise agreement approved by FWA operates from:

(a) 7 days after the agreement is approved; or

(b) if a later day is specified in the agreement—that later day.

(2) An enterprise agreement ceases to operate on the earlier of the following days:

(a) the day on which a termination of the agreement comes into

operation under section 224 or 227;

(b) the day on which section 58 first has the effect that there is

no employee to whom the agreement applies.

Note: Section 58 deals with when an enterprise agreement ceases to apply to an employee.

(3) An enterprise agreement that has ceased to operate can never operate again.”

[9] Section 54 is not clear about when specific clauses take effect such as the conversion requirement of clause 6.15. To that end, clause 196 of the Fair Work Explanatory Memoranda (the Explanatory Memoranda) provides further guidance to the Tribunal in this regard, namely:

“The terms of an agreement can only have any effect when an agreement commences operation. However, this does not preclude an agreement from including a term that has retrospective effect (e.g., a backdated wage increase).”

[10] The AWU submits that, at the date of making this application, the jobs forming the factual basis for this dispute have been performed by labour hire employees for a continuous period of more than 18 months because the commencement date of these jobs occurred prior to 8 March 2011.

[11] The Respondent’s position is that the 18 month continuous period under clause 6.15 can only begin to accrue from the day that the Agreement comes into operation. Consequently, the Respondent’s submits that clause 6.15 can only impose an obligation to convert employees under these circumstances on or around 8 September 2012.

[12] The AWU says that during the long negotiations that occurred between the parties for this Agreement, the intent behind clause 6.15 was for it to capture casual, fixed-term and labour hire jobs that had commenced being performed prior to approval of the Agreement.

[13] The concept of the retrospective operation of clauses in legislation has been the subject of much debate, and was referred to in Attorney General Of New South Wales v World Best Holdings Ltd 1(World Best Holdings), at paragraph [48]:

“[48] The common law presumption against retrospectivity, and the operation of the particular subrules set out in s 30 of the Interpretation Act, are not spent when it is clear that parliament intended a statute to operate retrospectively. Such a statute will only be given retrospective operation to the extent necessitated by the words of the statute, construed in their full context and in accordance with the legislative purpose, but no greater extent: see Reid v Reid (1886) 31 Ch D 402 at 408–9; Lauri v Renad [1892] 3 Ch 402 at 421.”

[14] In World Best Holdings, parliamentary intention was discussed as a relevant consideration, regarding not only the express inclusion of terms regarding retrospective operation, but also implied terms. The AWU submits that clause 196 of the Explanatory Memoranda implies the possibility of the inclusion of terms in an agreement that have retrospective effect, prior to the technical operation of an agreement approved pursuant to section 54 of the Act.

[15] This approach the AWU says is reasonable and consistent with other non-contentious clauses in the Agreement, such as:

• retrospective recognition of previously-accrued annual leave;



• retrospective recognition of previously-accrued personal leave;



• retrospective recognition of previously-accrued long service leave;



• retrospective recognition of salary and allowance increases.

[16] The decision of Gerrard and Another v Mayne Nickless Ltd 2 also referenced the important consideration of any contrary indication in the particular legislation:

“There is a general principle of statutory construction that legislation should be construed in such a way as to avoid its having retrospective operation: see Pearce and Geddes, Statutory Interpretation in Australia (3rd ed), pp 180-95. However, this general principle may be qualified or negated by an indication of a contrary intention in the particular legislation. As the cases cited in Pearce and Geddes demonstrate, the general principle is directed, primarily at least, to the situation that occurs when a statute changes the law. That is not what is claimed in this case...”

[17] Whilst these decisions referred to retrospectivity in legislation, the AWU submits that such findings and considerations are also persuasive when considering retrospectivity over the operation of clause 6.15.

[18] It is the AWU’s submission that the intent of section 54 of the Act, read in conjunction with clause 196 of the Explanatory Memoranda, is for enterprise agreements to commence overall operation 7 days after their approval, whilst still having regard to certain terms having retrospective effect prior to the operative date, particularly in circumstances where:

• the effect of the clause is not unreasonably onerous or burdensome on the parties; and



• there are no exclusionary provisos or variations that preclude the recognition of the said term (in this case, clause 6.15) from being applied retrospectively.

[19] That being the case the AWU argues the Tribunal should determine that the clause here applies in a retrospective manner.

[20] The AWU did not call any witnesses.

The Respondent’s submissions

[21] The Respondent has been negotiating collective agreements with its workforce since 1992.

[22] The first agreement negotiated in respect of the Pinjarra Refinery was in 1994, with a subsequent and almost identical agreement registered in 1996. In 2005 a new agreement, still largely based on the 1996 agreement, was negotiated between the AWU and the Respondent which contained clause 7(g)(vi) which provided the following benefit to the Respondent’s employees who had been hired on a limited term basis:

“Upon completion of 30 months continuous service, the employee will attain permanent status.”

[23] Right at the end of the negotiations for the current Agreement a meeting between the AWU and the Respondent’s representatives took place. It was at this meeting that the proposal for what became clause 6.15 was first raised by the AWU.

[24] It is to be noted that this claim arose so late in the negotiations that it was not included in the WA Operations Agreement which applies to the rest of the Respondent’s WA operations. That agreement was put to a ballot of employees in December 2010.

[25] The disputed clause was negotiated and agreed with limited discussion between the parties and with no discussion as regards the issue now in dispute, namely whether the “period” referred to in clause 6.15 was intended to operate with retrospective or prospective effect.

Relevant principles in interpreting certified agreements

[26] The Full Bench of the Tribunal in Australian Municipal, Administrative, Clerical and Services Union v Australian Taxation Office 3 affirmed the principles in interpreting industrial instruments commencing at paragraph [55]:

“The first is that the accepted approach to interpreting an industrial instrument was explained by Madgwick J in Kucks v CSR Ltd:

‘It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which may have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand. 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.’ ” [emphasis added]

[27] This approach was approved by a Full Court of the Federal Court in Ansett Australia
Ltd v Australian Licensed Aircraft Engineers’ Association 4, and was cited with approval by the High Court of Australia in Amcor Ltd v Construction, Forestry, Mining and Energy Union5.

Use of extrinsic material in interpretation

[28] Where the true meaning of a clause cannot be determined, regard may be had to extrinsic materials to assist in resolving any ambiguity as per the High Court decision in the Royal Botanic Gardens and Domain Trust v South Sydney City Council 6.

Implication of a Term

[29] Where the true meaning of a clause cannot be ascertained, it may be open to imply a term which clarifies the meaning and effect.

[30] The decision of the Federal Court of Australia (Madgwick J) in H & H Security Pty Ltd v James Toliopoulos 7 provides guidance. In those supplementary reasons, Madgwick J states:

“There are 5 conditions for the implication of a term to fill a gap the parties have not expressed themselves upon and they are set out in BP Refinery (Western Port) Pty Ltd v Hastings Shire (1994) 180 CLR 266: the supposed term must be reasonable and equitable; it must be necessary to give business efficacy to the contract; it must be so obvious that it goes without saying; it must be capable of clear expression; and it must not contradict an expressed term of the contract.”

The proper application of the Agreement

[31] The Respondent contends that the proper construction of clause 6.15, which states:

“Where a job has been performed by a casual or limited term employee, including Labour Hire for a continuous period of 18 months the Company shall recruit a permanent employee to perform this task.”

is that job has to have been performed for 18 months following the commencement of the Agreement.

[32] This interpretation is consistent with the natural and ordinary meaning of the words, read in the context of the Agreement as a whole and having regard to the nature and purpose of enterprise agreements under the Act.

[33] As a result it is unnecessary to have regard to extrinsic materials. However, even if the clause is susceptible of more than one meaning, extrinsic material does not displace the ordinary meaning and only fortifies the contended interpretation.

Application of the Principles of Interpretation to the Agreement

[34] The Respondent does not dispute that the Act permits enterprise agreements to include clauses which have retrospective effect. However retrospective effect is the exception not the rule and an intention to have such an effect should be express. Clause 6.15 has no such express effect.

[35] There was no actual intention by the parties for the clause to operate in the way the AWU contends which is to be contrasted with the wages clause of the Agreement which was applied retrospectively, as a result of express agreement between the parties.

[36] The decision in Attorney-General Of New South Wales v World Best Holdings Ltd 8, supports these contentions:

“[48] ... a statute will only be given retrospective operation to the extent necessitated by the words of the statute, construed in their full context and in accordance with the legislative purpose, but no greater extent ...”

[37] There is no necessity for clause 6.15 to be interpreted in the manner claimed by the AWU.

[38] There is no support in the Agreement for clause 6.15 to operate in the way claimed by the AWU.

[39] The phrase “has been” is used descriptively rather than as signifying contemporaneity as per Gaudron J in Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at paragraph 362-363.

[40] Attempts to equate the operation of clause 6.15 with clauses which recognise previously accrued leave entitlements are misleading. Accrued entitlements are just that; they are already held by the employee and their recognition is guaranteed under the National Employment Standards. These are entitlements which relate to service with an employer, not the passage of industrial agreements.

[41] References to continuous service are not analogous to the situation in clause 6.15. Continuous service is a phrase with a well established meaning. Its use by parties within an industrial context is well understood to mean all service, whether historic or to occur in the future.

[42] The claim is inconsistent with the objectives of efficiency achieved during the negotiation of the Agreement and incorporated into the Agreement (eg clause 4.1 to 4.3) and the removal of restrictions relating to use of contractors and supplementary shifts.

[43] One of the principal outcomes of the Agreement was the agreement by the parties to contract out at least 75 positions, a number which actually increased to over 90.

[44] The interpretation advanced by the AWU would generate an obligation to create 3 new permanent positions within the business immediately at the time the Agreement came into effect; even before the redundancies had been effected, which is fundamentally inconsistent with the industrial relations environment created by the Agreement of reduced direct employment and would not lead to a sensible industrial outcome.

[45] The claim by the AWU would impose an obligation based on a set of circumstances, namely a job which is already being performed by nonpermanent Alcoa personnel - which have already occurred.

[46] Clause 6.15 represented a new claim and a new entitlement.

[47] The entitlement granted by clause 6.15 is to be contrasted with the entitlement granted by clause 6.12(f).

[48] Clause 6.12(f) grants an individual right to an Alcoa employee and does so by reference to the previously discussed concept of ‘continuous service’.

[49] In contrast, clause 6.15 does not provide a direct benefit to any particular person.

[50] Significantly the effect of the claim by the AWU will be to increase the number of permanently appointed employees, given that the 2 employees who are currently allocated to the Vessel Turnaround Crew are entitled to return to their substantive positions and, were it not for this dispute and the decision by the Respondent to apply a conservative approach to the status quo, would have returned to those roles months ago.

[51] The effect of the AWU claim will be to create at least two roles which are superfluous to the Respondent’s needs. This is not a sensible industrial outcome and militates against the interpretation sought by the AWU.

[52] The above principles have equal application to the interpretation of clause 6.15 in the event that extrinsic materials are relied upon to assist in arriving at the true meaning of the clause.

[53] Given the exceptionally limited negotiations between the parties in relation to clause 6.15 and the absence of any written document recording the parties combined intentions, the only extrinsic material which can be taken into account is the framework of facts know to the parties at the time the agreement was reached.

[54] Relevantly, those facts were:

a) The Respondent’s desire to reduce permanent employee numbers across the Pinjarra Refinery, not just in the 3 areas referred to in Appendix 5; and

b) the AWU’s desire to protect the permanent positions of its members and in doing so, to protect its membership.

[55] The presumed intentions of the parties is that which give rise to an interpretation which gives greatest effect to what it is accepted are the inconsistent objectives of the parties. It is the interpretation proposed by the Respondent that achieves this.

[56] The contention advanced by the Respondent is consistent with the framework of facts above, being the reduction of direct employment, by not creating an instant revolving door for permanent positions at the Pinjarra Refinery (given the more than 90 redundancies which took effect) whilst guaranteeing to the AWU, that if the Respondent was not able to identify, within 18 months of the commencement of the Agreement, how it could conduct its operation without the roles being performed by labour hire, casual and limited term employees, it would see an increase in the permanent workforce and in all likelihood, an increase in its membership.

Conclusion

[57] The dispute is simply one relating to the proper interpretation of clause 6.15.

[58] It involves a search for the meaning intended by the framer(s) of the document, which avoids inconvenience or injustice that contributes to a sensible industrial outcome based upon the language of the Agreement, understood in the light of its industrial context and purpose.

[59] The AWU claims that the Tribunal should consider the clause to include all work done by casual, labour hire or fixed term employees prior to the commencement of the Agreement, such as to impose on the Respondent an obligation to have appointed new permanent employees into the jobs that they had been performing on the day this Agreement commenced.

[60] In the circumstances the alternate interpretation of the Agreement, as contended by the Respondent, namely that the clause should be read as though it said:

“Where a job has been performed by a casual or limited term employee, including Labour Hire for a continuous period of 18 months, following the commencement of this Agreement, the Company shall recruit a permanent employee to perform this task.” [emphasis added]

is both more consistent with the industrial context of the Agreement and does not lead to the inconvenience or injustice which arises from the AWU’s claim.

Consideration

[61] The Respondent called two witnesses Mr Briggs, who is currently the Manager for Mines for the Respondent’s WA operations but who at the time leading up to the making of the Agreement was the Employee Relations Manager for the Respondent’s Australian operations and Mr Gleeson, the Human Resources Manager for the Pinjarra Refinery. Both witnesses gave evidence regarding the negotiations leading up to the making of the Agreement and the AWU’s claim to have the disputed provision included in the Agreement

[62] Both parties to this application acknowledged the principle which I accept is correct that retrospective effect both in legislation and in the interpretation of agreements is the exception and not the rule.

[63] In this case the AWU is not able to point to any express provision in the Agreement that demonstrates the parties intended that the disputed provision would be retrospective.

[64] Neither has it been shown that it is necessary for the disputed clause to operate in a retrospective manner. The clause can quite properly operate as the Respondent suggests in a prospective manner.

[65] The AWU has sought to make a comparison between the disputed provision and those provisions in the Agreement which both parties agree are applied in a retrospective manner. In particular the AWU has referred to those clauses to do with accruing various leave entitlements. These clauses correctly interpreted I accept do apply retrospectively in this Agreement in that an employee’s service completed prior to this Agreement being made does count for the purposes of determining their leave entitlements under the terms of this Agreement.

[66] However I agree with the Respondent that the comparison drawn here between these leave clauses in the Agreement and the disputed clause is not a valid one.

[67] The phrase continuous service used in the leave clauses in this Agreement as in many others has a well understood industrial meaning. Continuous service used in this context includes service by an employee both in the past and the future. Such provisions are standard provisions in agreements and in this case the leave provisions included in this Agreement have been included in very similar terms in all previous agreements these parties have entered into.

[68] That can be distinguished from the circumstances with regard to the clause in dispute in this matter. This clause is a new clause and it did not appear in previous agreements negotiated by the parties. Separately this clause is not a common provision and it cannot be said to have some commonly understood industrial meaning.

[69] With respect to the practical effect of the AWU’s interpretation I accept the evidence is that applied retrospectively the clause would mean that immediately upon commencement of the Agreement two additional permanent positions would be created which are ones that the evidence demonstrates are superfluous to the Respondent’s needs.

[70] The disputed clause by its very nature in some circumstances has significant and unusual implications for the Respondent. Where the job that has been performed for a continuous period of 18 months was performed by a labour hire employee the clause has the effect of bringing this work that was being done by other employers into the Respondent’s business so that in future that work is done by the Respondent’s direct employees.

[71] In my view the provision is not ambiguous. There is no intention expressed in the clause that the provision is to have retrospective effect and accordingly the natural meaning of that provision is that it is to have prospective effect only.

[72] If however it can be said to be a provision that is ambiguous then the extrinsic materials available to assist the Tribunal arrive at the true meaning of the clause as the Respondent submits point to a conclusion that the disputed clause has prospective effect only.

[73] Neither party was able to provide any written documentation that demonstrates the mutual objective intention of the parties.

[74] The evidence of the witnesses is that the relevant factual matrix which existed at the time is that the Respondent wished to reduce the number of permanent employees engaged at the Pinjarra Refinery and at the same time the AWU wished to protect the number of permanent positions of its members engaged at the Pinjarra Refinery.

[75] The relative positions of the parties in that sense were diametrically opposed.

[76] The Respondent argues that its interpretation is more consistent with this framework of facts. It argues that at the time the employer was undertaking a program of redundancies it would not have agreed to this provision having retrospective effect which would potentially see additional employees immediately added to its workforce. However the Respondent’s interpretation means the AWU achieved the benefit that if after the commencement of the Agreement it can be shown that the employer could not run its operations without some of the redundant roles effectively being performed by labour hire, casual or limited term employees for a period of 18 months then it would reap the benefit of those positions being reintroduced as part of the Respondent’s permanent workforce however the Respondent’s redundancy program was not undermined if its assessment of the number of employees it needed for the future was correct.

[77] In this situation I accept that the Respondent’s interpretation meets the needs of both parties whilst the AWU’s interpretation would meet the needs only of the AWU and not of the Respondent. Consequently this supports the conclusion that the disputed provision does not have retrospective effect.

[78] In conclusion the plain words of clause 6.15 are correctly interpreted as it having prospective effect only. This interpretation does in my view contribute to a sensible industrial outcome, and this interpretation is consistent with the context of the Agreement as a whole and is supported by the known objective factual matrix surrounding the making of the clause.

[79] The period of 18 months referred to in clause 6.15 only includes periods that began on or after 8 March 2011.

COMMISSIONER

Appearances:

S Banovich of Counsel for the Australian Workers’ Union.

W Millward of Counsel for Alcoa World Alumina Australia Ltd.

Hearing details:

2012.
Perth:
April 26.

 1 (2005) 223 ALR 346.

 2 2 (VI1052 of 1994) - (1996) 135 ALR 494.

 3   PR961315.

 4 [2003] FCAFC 209.

 5 (2005) 222 CLR 241.

 6 (2002) 240 CLR 45.

 7 [1997] FCA 838 (18 August 1997).

 8 (2005) 223 ALR 346.

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