The Australian Workers' Union v Bluescope Steel (AIS) Pty Ltd T/A Bluescope Steel

[2014] FWC 7978

[2014] FWC 7978

FAIR WORK COMMISSION

DECISION

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

The Australian Workers' Union
v
Bluescope Steel (AIS) Pty Ltd T/A Bluescope Steel
(C2014/2872)

COMMISSIONER RIORDAN SYDNEY, 19 DECEMBER 2014

Alleged dispute about any matters arising under the enterprise agreement and the NES

[1] This decision is in relation to the interpretation and operation of the Personal Leave provisions of the Bluescope Steel Port Kembla Steelworks Agreement 2012 (the Agreement) and the Bluescope Steel Springhill Workplace Agreement, 2012. I acknowledge that there are two different employer entities and Agreements involved in the dispute. For the sake of clarity and consistency in this decision, the Companies and Agreements will be identified as a single entity.

[2] The Australian Workers’ Union, Port Kembla Branch (AWU) is of the view that Bluescope Steel (Bluescope) has breached the Agreement by issuing letters to employees advising them that they had taken ten days sick leave during a rolling twelve month period rather than over a calendar year based on an employee’s anniversary date.

[3] The AWU was represented by its National Industrial Officer, Mr James Blaxland. Mr Ken Brotherson from Hall and Wilcox Lawyers sought leave to appear on behalf of Bluescope. On the basis that the AWU had failed to respond to my earlier email seeking the Union’s view on Mr Brotherson’s appearance, I granted Mr Brotherson leave to appear in accordance with section 596 of the Fair Work Act, 2009 (the Act).

[4] The AWU relied on witness statements from:

● Mr Wayne Phillips, Secretary of the AWU, who led the negotiations for the Agreement on behalf of the AWU;

● Mr Mark Ranzi, a Process Operator with 20 years of experience at Bluescope;

● Mr John McWilson, a level 5 Operator with 38 years experience at Bluescope; and

● Mr Jeff Rice, a Shift Fitter with 40 years experience at Bluescope.

[5] Mr Phillips was the only union witness who was cross examined by Bluescope. Bluescope relied on a witness statement from Mr Ray Peters. Mr Peters is employed by Bluescope as the Manager of its Springhill Operation. Mr Peters has been employed by Bluescope for 33 years in a variety of managerial roles in Australia and the USA. Mr Peters has worked for Bluescope in the Illawarra Region for 25 years. Mr Peters was part of the Management negotiating team for the 2012 Agreement.

Background

[6] The 2012 Agreement was the subject of lengthy negotiations. The taking of sick leave was an important issue for Bluescope throughout the negotiations. Absenteeism has continued to climb at Bluescope despite the introduction of a twelve hour shift, 4 on / 4 off roster, for a large proportion of the Port Kembla Operations, as well as the parties stated intention and focus on reducing the level of sick leave. Bluescope has projected that sick leave will cost the Port Kembla Operation more than $16 Million in 2013/14. 1

[7] Relevantly, Bluescope and the Unions agreed to a Terms of Settlement document in relation to the 2009 Agreement, which included the following provision:

“1. Sick Leave
The parties acknowledge that one of the responsibilities of employees in their employment is to attend work in accordance with their roster requirements. However, the parties also acknowledge that there will be times that an employee is unable to attend work as required because of illness or injury. In circumstances where an employee is unable to attend work because of a bona fide illness or injury then the employee is able to access their sick leave entitlement determined by their workplace agreement in a supportive environment.

The company maintains its position that Supervisors have a responsibility to ensure that all employees are fit for work and will therefore conduct a follow-up discussion with employees upon their return to work. While not attempting to anticipate the detail of each discussion, Supervisors should ensure that this discussion is of an informal nature and be conducted to genuinely check on the employee’s well-being. Any discussion should be conducted on-the-job BUT in a confidential and considerate manner.

The Company also maintains the right to raise issues of excessive absenteeism with employees once the current year’s entitlement is exhausted, or any patterned sick leave, or leave periods where an employee does not provide medical proof, or where the employee is found to have misused the entitlement. In these circumstances the Company may rely on its usual disciplinary processes.” 2

(my emphasis)

[8] The Bluescope sick leave provisions, which include extended and discretionary provisions, could only be described as generous, especially for employees who work a twelve hour shift roster.

[9] The 2012 Agreement contained the following sick leave provisions:

“24.1.4 Management of Absences - Supervisors will conduct informal discussions with employees following an absence. These discussions will be conducted on-the-job but in a confidential and considerate manner. Issues of excessive absenteeism will be raised with employees once the current year’s entitlement is exhausted. The company will manage via normal disciplinary processes, any patterned absences, or absences without appropriate proof of absence as per clause 24.1.3, or where an employee is found to have misused the entitlement.

24.6 Review of Personal Leave and Absenteeism

24.6.1 A significant increase in absence rates during the life of the 2009 Agreement has had a negative impact on productivity.

24.6.2 The parties agree that a review of the effectiveness in reducing absenteeism with respect to the operation of clause 24 will occur. Absenteeism will be monitored monthly with a formal review occurring twelve months from the date of approval of this Agreement (Review).

24.6.3 If, after the Review, the absence rate has not improved to the twelve month average experienced prior to the commencement of the 2009 Agreement the following will be enacted:

(a) Employees will be required to provide Doctor Certificates for all absences: or

(b) Leave granted in accordance with clause 24.3 will be paid in the same way as Personal Leave that is at ordinary time rates of pay and applicable bonus payment.

24.6.4 Any dispute over the operation of this clause, 24.6, will be dealt with in accordance with clause 35 Procedure for Resolving Claims, Issues and disputes. Where a matter is referred to FWC as part of the Procedure for Resolving Claims, Issues and Disputes, changes as per clauses 24.6.3(a) and 24.6.3(b) will not be implemented until the matter has been heard in the Fair Work Commission.”

Relevantly, Clause 24.1.4 is in similar terms to the 2009 Terms of Settlement provision.

[10] Clause 24.1.4 became a point of focus for the parties after the Agreement had been approved. Bluescope started issuing letters after an employee had taken 10 days Personal Leave (sick leave) in a rolling year.

Evidence

[11] On 6 September, 2013, Mr Jeff Rice received the following letter:

“Dear Jeff

RE: Exceeded Sick Leave Entitlement

This letter is being issued to you as a formal notification that you have exceeded the nominal annual personal/carer’s leave entitlements.

As detailed in the BlueScope Steel Port Kembla Steelworks Agreement2012 Award employees have been guaranteed conditions of employment part of which entitles employees to 10 paid shifts of personal/carer’s leave per (anniversary date to anniversary date). You have exceeded this entitlement.

BlueScope Steel is committed to supporting employees in maintaining a healthy balance between work and family life. BlueScope Steel delivers on this commitment for employees by acknowledging that there will be times that an employee is unable to attend work as required because of illness or injury. In circumstances where an employee is unable to attend work because of bona fide illness or injury then the employee is able to access sick leave.

Please be aware that the Company will review all sick leave greater than 10 shifts on a case by case basis. It is also important that you use the correct notification procedures for sick leave and get supporting evidence for such absences. For absences greater than 10 shifts you must produce a doctor’s certificate.

If you are aware of any ongoing situation that is going to require you to take further sick leave during the year (anniversary date to anniversary date) please raise the issue with your Shift Team Leader as soon as possible so a proactive plan can be developed.

Jeff, your behaviour must change and I want to assist you to achieving this. If there is any practical assistance you feel would be of benefit to you, please contact me or your team leader. Alternatively I also want you to be aware that the Employee Assistance Program is available. Should you wish to utilise this service, please contact Mentor Services on 4226 1099.

Finally, I want to take this opportunity to remind you that further abuse of the attendance policy could lead to disciplinary action including not being paid for the shift(s) in question and could also include dismissal from BlueScope Steel.

A copy of this letter will be placed in your personnel file.

Yours faithfully

Milco Stojanoski
HSM Operations Manager” 3

(my emphasis)

[12] Mr Rice’s witness statement, which was not challenged by Bluescope, stated that he has 41 years experience with Bluescope, that he has 935 hours of accrued sick leave and that his sick leave usage has always been assessed between his anniversary leave date i.e. 20 January. I note that this letter identifies the anniversary date as being the appropriate review date.

[13] Mr Rice’s statement also claimed that in the previous twelve months he had taken sick leave between 12 December 2012 and 24 January 2013 after suffering a heart attack. He took a further 4 days off in May and a single day in July 2013, to care for his wife who suffers from severe Parkinson’s disease. The letter is signed by Milco Stojanoski, HSM Operations Manager. I will return to this correspondence later in the decision.

[14] The offending form letter was the subject of a separate dispute notification in 2013. At that Conference, Bluescope agreed that the letters were for notification purposes and were not part of any disciplinary process.

[15] A meeting was subsequently held in mid November 2013 between the parties, in accordance with Clause 24.6.2, where the template of a more appropriate letter was tabled by Bluescope. Neither Mr Phillips nor Mr Peters can recall discussing the rolling twelve month issue at the meeting.

[16] It is worth noting that Ms Deanne Howard (Manager HR) sent an email to the attendees of the meeting in the following terms:

“Hi All

Issues were raised at last week’s meeting about our correspondence to employees regarding Personal/Carer’s Leave.

Please find a summary in the table below of some of the issues that were raised at the last meeting and changes made following your concerns.

I have attached the letters that we have updated as a result of your feedback.”

Regards,
Deanne” 4

Correspondence	Summary of concerns raised last meeting	Activity to address
10 day notification letter	● To be given to employees once the current year’s entitlement of 10 shifts is exhausted ● This letter is not intended as a form of disciplinary action.	● Letter template to indicate: ○ How many shifts in past 12 months employees have taken ○ That supervisors may start to manage any absenteeism issues that arise ○ To employees to proactively notify their Supervisor of any ongoing issues that need to be considered/managed.

(this table is not complete, there were also comments in relation to a 7 day courtesy letter and an Entitlement Exhausted letter which I have not included). 5

[17] Mr Phillips acknowledged that he did not attend the next monthly meeting, nor did he respond to Ms Howard’s email.

[18] On 28 July 2014, Mr Rice received a new letter in the following form:

“Dear Jeff Rice

Personal/Carer’s Leave Notification

This letter is being issued to you as a notification that over the past 12 month period you have had 11 shifts of Personal/Carer’s Leave

As detailed in the BlueScope Steel Port Kembla Steelworks Agreement 2012, employees accrue at a rate of 10 paid shifts of personal/carer’s leave per year.

BlueScope Steel is committed to supporting you in maintaining a healthy balance between work and family life. BlueScope Steel delivers on this commitment for employees by acknowledging that there will be times that an employee is unable to attend work as required because of illness or injury. In circumstances where you are unable to attend work because of a bona fide illness or injury you are able to access Personal/Carer’s Leave.

Please be aware that the Company will review all Personal/Carer’s leave taken in excess of the annual accrual of 10 shifts on a case by case basis.

If you are aware of any ongoing situation that is going to require you to take further Personal/Carer’s Leave during the year, please raise the issue with me as soon as possible so a proactive plan can be developed.

A copy of this letter will be placed in your personnel file.

Yours sincerely

Ken Baker
Team Leader” 6

[19] I note that the concept of the review between anniversary dates was not contained in this letter. Mr Rice claimed that he had only had 2 days off since his last anniversary date.

[20] It is also relevant that Mr Ranzi received the following letter on 25 July 2014, even though he had accrued an additional 10 days sick leave on his anniversary date just twelve days earlier:

“Dear Mark

RE: Sick Leave

BlueScope Steel would like to notify you that you have exceeded the nominal annual sick/Carer’s leave entitlements.

As detailed in the BlueScope Steel Limited - Springhill and CRM Employees Award employees have been guaranteed conditions of employment part of which entitles employees to paid Personal/Carer’s Leave. You have exceeded this entitlement.

BlueScope Steel is committed to supporting employees in maintaining a healthy balance between work and family life, BlueScope Steel delivers on this commitment for employees by acknowledging that there will be times that an employee is unable to attend work as required because of bona fide illness or injury.

In circumstances where an employee is unable to attend work because of a bona fide illness or injury then the employee is able to access sick leave.

Please be aware that the Company will review all sick leave on a case by case basis and may, in cases that are deemed to involve inappropriate or excessive usage, take the necessary disciplinary action which may involve up to and including termination of employment.

If you are aware of any ongoing situation that is going to require you to take further sick leave during the year (rolling 12 month period) please raise the issue with your Shift Team Leader ASAP so a proactive plan can be developed.

A copy of this letter will be placed in your personnel file.

Yours faithfully

Stephen Tilden

Shift Team Leader
Metal Coating Lines” 7

(my emphasis)

[21] Mr McWilson received a similar letter on 25 June 2014, even though he had only taken 4 sick days since his anniversary date:

“Dear John

RE: Sick Leave

This letter is being issued to you as a formal notification that you have exceeded the nominal annual sick/Carer’s leave entitlements.

As you are aware the BlueScope Steel Limited - Springhill and CRM Employees Award guarantees conditions of employment entitling employees to paid Personal/Carer’s Leave at a rate of 10 daysleave per year.

BlueScope Steel is committed to supporting employees in maintaining a healthy balance between work and family life, BlueScope Steel delivers on this commitment for employees by acknowledging that there will be times that an employee is unable to attend work as required because of bona fide illness or injury. In circumstances where an employee is unable to attend work because of a bona fide illness or injury then the employee is able to access sick leave.

Please be aware that the Company will review all sick leave greater than the allocated 10 days on a case by case basis will in cases that are deemed to involve inappropriate or excessive usage, take the necessary disciplinary action which may involve up to and including termination of employment.

If you are aware of any ongoing situation that is going to require you to take further sick leave during the year (anniversary date to anniversary date) please raise the issue with your Shift Team Leader ASAP so a proactive plan can be developed.

A copy of this letter will be placed in your personnel file.

Yours faithfully

Geoff Ingate
PFD Shift Team Leader” 8

(my emphasis)

[22] I have noted that Mr Ranzi, Mr McWilson and Mr Rice all believe that, in the past, sick leave absences were assessed between anniversary dates.

[23] Mr Phillips testified that he has never supported the principle of a rolling twelve month assessment of sick leave. Mr Phillips has been involved in the Steelworks as either an employee or union official for more than thirty years. He accepted that some departments may employ a different policy but he believed that the overwhelming practice is for any sick leave review to be conducted using an employee’s anniversary date.

[24] Mr Phillips agreed that he had committed to assist Bluescope in reducing the occurrence of sick leave. He stated that where employees were abusing the system by taking too much sick leave or if there was a pattern in their leave (such as every final night shift of a roster) then an AWU Official would talk to the employee. Mr Phillips consistently denied ever agreeing to the twelve month rolling review.

[25] Mr Phillips advised that there was no explanation given to the employees at any of the numerous mass meetings to discuss and vote on the proposed Enterprise Agreement in relation to the introduction of a rolling twelve month review of sick leave.

[26] Mr Peters testified that the rolling twelve month assessment of sick leave was discussed by the parties during the negotiations for the 2012 Enterprise Agreement.

[27] Mr Peters confirmed the conversation in Annexure RP10 of Exhibit 3 as being accurate. RP10 are not minutes of the negotiating meeting held on 21 August 2012 but just extensive notes of Mr Mark Davis, who is a Human Resources Officer of Bluescope and an advocate of the highest integrity who regularly appears in the FWC.

[28] Mr Peters claims that the negotiating team were of the view that Mr Phillips had agreed to the rolling twelve months review at this meeting. The notes do not identify any such agreement but I can understand the possible confused interpretation. I note, however, that the confirmation of an agreed position does not appear in any correspondence or settlement document between the parties. In my experience, such an omission is surprising.

[29] Mr Peters further testified that in his previous experience as a front line manager, the rolling twelve month review of sick leave was always used as the appropriate assessment tool.

[30] Under cross examination, Mr Peters agreed that employees are entitled to take 20 shifts of sick leave over a 2 year period 9. He also claimed that Mr Phillips and Mr Hattenfels (who is an Organiser with the Australian Manufacturing Workers Union, (AMWU)), both said that Bluescope “could do what they wanted to do now.”10 Mr Phillips confirmed that he had made that comment.

[31] Importantly, Mr Peters also confirmed that the letters that are given to employees are simply notification letters and are not part of a disciplinary process in any way.

[32] Mr Peters confirmed that the employees were advised about moving to the rolling twelve month review after the Enterprise Agreement had been approved by their Managers and Supervisors. 11 Mr Peters also testified that the Terms of Settlement document associated with the 2009 Agreement was the genesis of Clause 24.1.4 of the current Agreement.

Contentions

[33] The AWU submitted that the dispute is about Bluescope issuing letters to employees after they have taken ten days sick leave in a rolling year which, it claims, is in breach of the Agreement.

[34] The AWU claims that Bluescope can only issue letters in relation to sick leave in accordance with the Agreement. The AWU’s position is that the terms of the Agreement are quite clear and concise, namely:

“Issues of excessive absenteeism will be raised with employees once the current year’s entitlement is exhausted”

[35] The AWU referred me to the basic principles of interpretation of giving words their plain and ordinary meaning whilst being consistent with the intentions of the parties who made the Agreement.

[36] The AWU conceded that it was the intention of the parties to reduce absenteeism throughout the 2012 Agreement, but argued that was the reasoning behind the introduction of Clause 24.6, in particular Clause 24.6.3 and the need for an employee to provide proof of their illness. The AWU argued that clause 24.6 is totally separate from clause 24.1.4.

[37] Finally, the AWU argued that if Bluescope wanted to change the long standing practice and meaning of the Agreement provision, then it should have proffered different wording during the negotiations. The AWU contended that the wording is basically the same as the 2009 Agreement and therefore should operate consistent with the way that the 2009 Agreement operated.

[38] Bluescope rejected the narrow approach of the AWU in defining the personal leave provision of the 2012 Agreement. It claimed that the operation of the 2009 Agreement has resulted in an exponential increase in absenteeism, spiralling costs and a loss of productivity.

[39] Bluescope argued that clause 24.6 actually “dovetails” with clause 24.1.4 to provide the agreed position between the parties to combat absenteeism.

[40] Bluescope referred me to the decision of Kirby J in Amcor v CFMEU (2005) 222 CLR 241 and the concept of “a sensible industrial outcome”. Bluescope contended that such a pragmatic outcome is not possible if a narrow and restrictive approach is adopted, as proposed by the AWU.

[41] Bluescope argued that the Agreement does not restrict it from operating in the manner which is now challenged and has suggested that it has been operating in this manner for many years. Mr Brotherson took me to the decision of Connor C in Duggan v Bluescope Steel (AIS) Pty Limited 12 to substantiate this point.

[42] Mr Brotherson advised me that Mr Duggan had been dismissed for his poor work performance and poor sick leave record. Exhibit B1 identifies that Mr Duggan had been absent on 22 occasions between 5 January 2004 and 11 January 2005. Mr Brotherson was unaware of Mr Duggan’s anniversary date. I note the comments of the respected Commissioner where he said:

“...It is a case where the cumulative effect of his poor attendance and work performance produces a result which, if each incident were looked at in isolation, it may not have produced such an outcome...” 13

[43] Bluescope argued that the narrow interpretation suggested by the AWU would give an employee, such as Mr Duggan, a “clean slate” on every anniversary date, which was certainly not the intention, or even discussed, during the lengthy negotiations. I also note that Mr Duggan’s sick leave record on its own may not have been sufficient to justify his dismissal.

Precedent

[44] The jurisprudence in relation to Agreement/Award/Contract interpretation is regarded as being “settled law” in Australia. Lawler, VP provided an appropriate summary of these legal principles in Watson v ACT Department of Disability Housing: 14

“Legal Principles
[7] I think it appropriate to set out at some length the main principles governing the construction of industrial agreements.
[8] There are well established principles under the general law for the construction of contracts. Those principles are generally applicable in the construction of certified agreements. For example, in Community and Public Sector Union (CPSU)v Telstra Corporation Ltd  a Full Bench of the Commission was concerned with applications to vary a number of certified agreements and, in the course of its decision, summarised the principles governing the resolution of ambiguity in a certified agreement:
“[33] The judgment of the High Court in Codelfa Construction Pty Ltd v State Rail Authority of NSW established widely accepted principles for resolving ambiguity in contracts. In that case Mason J stated the rule thus:

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

[34] In BP Australia Pty Ltd v Nyran Pty Ltd, Nicholson J distilled, by reference to Codelfa, the following points of principle for resolving ambiguity in contracts:

● it is necessary firstly to determine whether the contract has a plain meaning or contains an ambiguity;

● if the contract has a plain meaning, evidence of surrounding circumstances will not be admissible to contradict the language of the contract;

● if the language of the contract is ambiguous or susceptible of more than one meaning evidence of surrounding circumstances is admissible to assist in the interpretation of the contract;

● the concept of surrounding circumstances is to be understood to be a reference to the objective framework of facts. It will include:

● evidence of prior negotiations so far as they tend to establish objective background facts known to both parties and the subject matter of the contract;

● facts so notorious that knowledge of them is to be presumed;

● evidence of a matter in common contemplation and constituting a common assumption.

[35] After referring to the foregoing points of principle Nicholson J continued as follows:

‘From the evidence of that setting the parties' presumed intention may be taken into account in determining which of two or more possible meanings is to be given to a contractual provision. What cannot be taken into account is evidence of statements and actions of the parties which are reflective of their actual intentions and expectations. Objective background facts can include statements and actions of the parties which reflect their mutual actual intentions. That is, evidence of the mutual subjective intention of the parties to a contract may be part of the objective framework of facts within which the contract came into existence. It is the mutuality which makes the evidence admissible’"

[9] In Kucks v CSR Limited Madgwick J held:

“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 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.”

[10] These remarks were made in the context of construing an award. However, Madgwick J’s approach has been adopted in relation to the construction of certified agreements. In Australasian Meat Industry Employees' Union v Coles Supermarkets Australia Pty Ltd  Northrop J observed:

“The increase in the number of certified agreements gives rise to an area of possibly greater dispute as to the construction of provisions contained in the agreements. The parties may adopt a multitude of different structures and methods of terminology. No common pattern may develop. Nevertheless certified agreements are to be construed adopting the same methodology as that used in construing awards. In Kucks v CSR Limited (1996) 66 IR 182 Madgwick J, sitting as a judge of the Industrial Relations Court of Australia, at 184 expressed his opinion on the legal principles to be applied in construing awards under the Act. I agree with that statement of principles. They have even stronger application to certified agreements.”

[11] This view was approved by the Full Court of the Federal Court in Ansett Australia Limited v Australian Licensed Aircraft Engineers’ Association. 
[12] In United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board  the Full Court of the Federal Court, in the context of construing a dispute resolution clause in a certified agreement, noted:

“The parties agree that the proper approach to the construction of industrial instruments was stated by Madgwick J in Kucks at 184. His Honour’s statement of the principles was followed by a Full Court in Ansett Australia Limited v Australian Licensed Aircraft Engineers’ Association [2003] FCAFC 209 at [8] and by two Justices of the High Court in Amcor Limited v Construction Forestry Mining & Energy Union [2005] HCA 10 at [96] per Kirby J and at [130] per Callinan J. That was the approach which was adopted by the learned primary judge.
A narrow or pedantic approach is not to be taken. The intention of the framers of the document is to be ascertained objectively, bearing in mind that they are likely to have been people of a practical bent of mind. Their intention may well have been expressed in ways likely to have been understood in the relevant industry, rather than in "legal niceties or jargon."; see Kucks at 184.
Clearly enough, the language of the instrument must be construed in its context, having regard to the subject matter and the wording of the entire agreement: Short v FW Hercus Pty Limited [1993] FCA 51; (1993) 40 FCR 511 at 518. The context will include the statutory context in which the agreement is made.” (emphasis added)

[13] In Short v FW Hercus Pty Ltd  Burchett J, with whom Drummond J agreed, considered whether inter alia, with whether it is legitimate, for the purpose of construing a clause of an award, to look at the history of the provision. After considering a number of authorities, Burchett J observed:

“No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use. It is in those circumstances that the author of the award has inserted this particular clause into it, and they may fairly be regarded as having shaped his decision to do so. The rules of construction, Mason and Wilson JJ. said in Cooper Brookes (Wollongong) Proprietary Limited v. The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297 at 320, are really rules of common sense. Common sense would be much offended by a refusal to look at the facts I have summarized. As Isaacs J. said in Australian Agricultural Company v. Federated Engine-Drivers and Firemen's Association of Australasia (1913) 17 CLR 261 at 272, citing Lord Halsbury L.C.: "The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it."
The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is a part, or to other documents with which there is an association. Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed. In literature, Milton and Joyce could not be read in ignorance of the source of their language, nor should a legal document, including an award, be so read.
...Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. "Sometimes", McHugh J. said in Saraswati v. R (1991) 172 CLR 1 at 21, the purpose of legislation "can be discerned only by reference to the history of the legislation and the state of the law when it was enacted". Awards must be in the same position.
But even if the language, read alone, appeared pellucidly clear, the tendency of recent decisions - and this is the other answer to the argument put - would seem to require the court to look at the full context. Only then will all the nuances of the language be perceived. The judgment of Mason J. (with which Stephen and Wilson JJ. expressed agreement) in Codelfa Construction Proprietary Limited v. State Rail Authority of New South Wales (1982) 149 CLR 337 at 347-353 contains an extended discussion of the principles upon which a court may take account, when construing a contract, of the circumstances surrounding the agreement of the parties upon those particular terms. In the course of that discussion, Mason J. suggested (at 350) that "perhaps ... the difference ... is more apparent than real" between the view that evidence is admissible only to resolve an ambiguity, not to raise it, and the view that extrinsic evidence is receivable both to raise and to resolve an ambiguity. He concluded (at 352):

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

The fact is that words are frequently susceptible of more than one meaning. Paradoxically, ambiguity may be born of the reader's clarity of thought which perceives a potentiality for an alternative meaning. But in many cases only evidence of extrinsic facts can show that the potentiality has substance. The old case Macdonald v. Longbottom (1859) 1 El and El 977 (120 ER 1177), to which Mason J. referred, is an example, since there is nothing necessarily ambiguous in the expression "your wool" (indeed Erle J. at 986 described it as "most explicit") - only evidence that at the time the vendor had both wool of his own growing, and also wool which he had bought in from others, could raise an ambiguity, while at the same time solving it once the other party was shown to have known the facts.
Mason J. returned to the subject in his dissenting judgment in K. and S. Lake City Freighters Proprietary Limited v. Gordon and Gotch Limited (1985) 157 CLR 309 at 315, when he said:

"Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasize the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise."

This is a broad proposition, applicable to problems of construction generally, although it was put forward in the context of statutory interpretation. ...”

[14] While Short v FW Hercus Pty Ltd was concerned with the proper construction of a clause in an award, it is clear it is equally applicable to the construction of certified agreements as illustrated by the reliance placed upon it by the Full Court in United Firefighters’ Union of Australia in the passage set out above.
[15] In summary, the general principles governing the construction of contracts laid down by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales  apply to the construction of industrial agreements. However, consistent with the approach in Kucks and Short v FW Hercus Pty Ltd, an industrial agreement must always be construed in context: the context of particular provisions within the agreement as a whole and the context in which the agreement was made including any relevant statutory or historical context. Extrinsic evidence as to the context in which the agreement was made, including the statutory and historical context, will be admissible to demonstrate the existence of ambiguity and or to resolve ambiguity.”

[45] The position was recently summarised by a Full Bench of the FWC in The Australian Meat Industry Employees Union v Golden Cockerel Pty Limited 15;

“Summary

[41] From the foregoing, the following principles may be distilled:

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

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

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

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

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

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

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(b) notorious facts of which knowledge is to be presumed;
(c) evidence of matters in common contemplation and constituting a common assumption.

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

8. Context might appear from:

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

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.”

Consideration

[46] In determining this matter, I have taken into consideration all of the evidence and submissions that have been submitted by the parties. I also note that the AMWU and the Communication Electrical and Plumbing Union (CEPU) did not appear in these proceedings.

[47] The use of sick leave at Bluescope has been growing at an unsustainable rate. There is also no doubt that the Unions have committed to assist Bluescope to arrest the exponential annual increase in sick leave being taken at the Port Kembla Operation. The increase in costs is proving to be an impediment to the financial viability of the plant.

[48] I am prepared to accept that an employee’s sick leave review and assessment is undertaken differently within different departments of Bluescope. I accept the evidence of both Mr Phillips and Mr Peters as being accurate in relation to this issue. I acknowledge the conflict of opinion between Mr Baraldi and Mr Hattenfels recorded in the meeting notes of Mr Davis 16. I have taken these issues into account.

[49] This dispute evolves around the interpretation of Clause 24.1.4. I do not accept the submission that this provision is interwoven with Clause 26. Clause 26 required monthly meetings between the parties and a formal Review after 12 months. This Review resulted in a Conference and Recommendation from the Fair Work Commission (FWC) which has been accepted by the parties and is now in operation. The following Recommendation was issued:

“Recommendation

Commissioner Riordan 18 August 2014

Clause 24.6 of the Bluescope Enterprise Agreement states:

“24.6.1 A significant increase in absence rates during the life of the 2009 Agreement has had a negative impact on productivity.

24.6.2 The parties agree that a review of the effectiveness in reducing absenteeism with respect to the operation of clause 24 will occur. Absenteeism will be monitored monthly with a formal review occurring twelve months from the date of approval of this Agreement (Review).

24.6.3 If after the Review, the absence rate has not improved to the twelve month average experienced prior to the commencement of the 2009 Agreement the following will be enacted:

a) Employees will be required to provide Doctor Certificates for all absences;

or

b) Leave granted in accordance with clause 24.3 will be paid in the same way as Personal Leave that is an ordinary time rates of pay and applicable bonus payment.

24.6.4 Any dispute over the operation of this clause, 24.6 will be dealt with in accordance with clause 35 Procedure for Resolving Claims, Issues and Disputes. Where a matter is referred to FWC as part of the Procedure for Resolving Claims, Issues and Disputes, changes as per Clauses 24.6.3(a) and 24.6.3(b) will not be implemented until the matter has been heard in the Fair Work Commission.”

Bluescope has advised that sick leave absenteeism has not improved to the appropriate level and is seeking to enforce the provisions of clause 24.6.3.

Bluescope has highlighted that the taking of excessive sick leave is proving to be a cost impediment in its drive to improve the efficiency of the Port Kembla mill. The terms of the Agreement are quite precise and Bluescope has a legitimate claim in seeking the operation/introduction of this provision. Bluescope has advised that it is enacting clause 24.6.3(a) of the Agreement.

Following discussions between the parties, it was agreed that the Unions’ would accept my recommendation in relation to the issue.

I recommend the following process be applied:

a) In applying clause 24.6.3(a) the Company will adopt a flexible approach, and subject to points (b) and (c) below, will accept statutory declarations for two single day absences within a one year period.

b) The acceptance of a statutory declaration in any case will be subject to an employee having otherwise complied with the requirements of clause 24 of the Agreement regarding notification of absences, and the right of the Company to further investigate any situation which it considers may not be genuine.

c) The Company will have the right that, in particular circumstances, it may still require an employee to provide Doctor Certificates for all absences.  In such cases an employee may seek the assistance of their union, and the Company may also look to the unions for co-operation in addressing any behaviours of concern.

The new process will apply from 1 September 2014.

I thank the parties for their co-operation and assistance in this dispute.

COMMISSIONER” 17

[50] I accept the evidence of Mr Phillips and Mr Peters that employees are entitled to access the full entitlement of their annual accrual of sick leave, but only if they are genuinely sick. Sick leave is for sick people. Any employee found to be abusing the policy is guilty of fraudulent activity and deserves to be disciplined.

[51] There is a degree of ambiguity in clause 24.1.4. The sentence “...Issues of excessive absenteeism will be raised with employees once the current year’s entitlement is exhausted...”has been identified by the AWU as the core issue of the dispute, however, this sentence does not mention letters being issued to employees or disciplinary action of any kind. The only mention of disciplinary action revolves around the practices of patterned absences, absences without appropriate proof or misuse of the entitlement.

[52] To assist in resolving this ambiguity, I refer to the 2009 Terms of Settlement which said:

“The Company also maintains the right to raise issues of excessive absenteeism with employees once the current year’s entitlement is exhausted, or any patterned sick leave, or leave periods where an employee does not provide medical proof, or where the employee is found to have misused the entitlement. In these circumstances the Company may rely on its usual disciplinary processes.”

[53] I find that this clause shows the intent of the parties to include incidents of excessive absenteeism in the disciplinary process.

[54] The operation of this clause in this manner correlates with the first letter given to Mr Rice, which also clearly states that the review occurs between anniversary dates.

[55] The phrase “once the current year’s entitlement is exhausted” is quite concise. I do not accept the proposition that a rolling twelve months fits into this provision. An employee’s annual sick leave accrual occurs on their anniversary date. That is when they receive their “current years entitlement.” To say otherwise is illogical. Also, if I were to accept the rolling twelve month proposition as advocated by Bluescope, then it would mean that Bluescope would be obligated to give an employee who had exhausted their 2014 entitlement, access to their 2015 entitlement, even if their anniversary date was not for many, many months. Such a scenario would render the Extended and Discretionary Sick Leave provisions of the Agreement superfluous. I do not believe that was the intent of the parties.

[56] I find that Bluescope can only raise the issue of excessive absenteeism after an employee has accessed more than ten shifts of sick leave between their anniversary dates.

[57] However, that does not mean that Bluescope cannot advise their employees as to their sick leave usuage based on a rolling monthly, quarterly, half yearly or annual basis. I accept the evidence of Mr Peters that the letters that are now being issued to employees are not in any way part of a disciplinary process but are merely notification letters. As such, I find that these letters fall outside Clause 24.1.4.

[58] The management of sick leave is a policy matter for Bluescope. The parties have agreed that the current trend of sick leave is placing an additional and unnecessary cost burden on the Port Kembla Operations. To their credit, the Unions’ have signed up to support the Company in its endeavour to wind back the use of sick leave, however, this support must be more than mere lip service.

[59] Bluescope is well within the confines of “managerial prerogative” to advise employees after every absence, if they so wish, of any previous sick day that they have taken. It is evidence that already exists on each employee’s attendance matrix. Moving forward, every employee should realise that their sick leave record is under active consideration by Bluescope. However, such letters cannot be used as a catalyst for any disciplinary process.

[60] The wording of past letters have been disappointing, misleading and offensive. The letter to Jeff Rice on 6 September 2013 18 is unacceptable. Appropriately, Mr Brotherson made a conscious and deliberate decision to not comment on this letter19. A long serving employee who has taken sick leave due to a heart attack or to care for his seriously ill wife should not be subjected to correspondence of this nature.

[61] Having found that the issuing of notification letters for sick leave, which is not regarded as excessive absenteeism, is a matter of company policy, the question remains as to the validity of the existing letters.

[62] Correspondence which contains inappropriate phrases such as “your behaviour must change”, “further abuse” or “disciplinary action” in relation to sick leave which has been reviewed on a rolling twelve month basis will need to be either replaced, modified or ignored.

[63] Bluescope is entitled to change its policy. When it pertains to an issue such as sick leave, I agree with the view of Mr Peters’ that appropriate consultation should occur with the employees and the Unions. Such consultation did not occur. There was no discussion at any of the report back meetings to members conducted by the AWU, nor was there any systematic roll-out of information to employees at meetings conducted by Management. It would appear, based on the evidence of Messers Rice, Ranzi and McWilson, that employees were advised of the new policy on a one on one basis after they had failed the rolling twelve month review.

Conclusion

[64] In summary, I find that Bluescope can only issue letters in relation to excessive absenteeism after an employee has been absent for ten shifts between their anniversary dates.

[65] I also find that non-disciplinary advisory letters can be issued to employees, at the discretion of Bluescope, following appropriate consultation in relation to the amended Policy.

[66] In his submissions, Mr Brotherson sought a further Conference / Hearing, if required, as to how any remedial action may be undertaken. I have relisted the matter for February 27 2015 for Conference. A notice of listing will be issued today.

[67] An Order will be issued.

COMMISSIONER

 1   Annexure RP1 to the witness statement of Raymond Peters - Exhibit B3

 2   Annexure RP16 to the witness statement of Raymond Peters - Exhibit B3

 3   Annexure JR1 to the witness statement of Jeff Rice - Exhibit AWU4

 4   Annexure WP2 to the witness statement of Wayne Phillips - Exhibit AWU6

 5   Annexure WP2 to the witness statement of Wayne Phillips - Exhibit AWU6

 6   Annexure JR4 to the witness statement of Wayne Phillips - Exhibit AWU4

 7   Annexure MR1 to the witness statement of Mark Ranzi - Exhibit AWU2

 8   Annexure JM2 to the witness statement of John McWilson - Exhibit AWU3

 9   Pn447

 10   Annexure RP10 to the witness statement of Raymond Peters - Exhibit B3

 11   Pn 711-715

 12   [2005] NSW IRC 1155

 13   [2005] NSW IRC 1155

 14   [2008] AIRC 291

 15   [2014] FWCFB 7447

 16   Annexure RP10 to the witness statement of Raymond Peters - Exhibit B3

 17   Matter number C2014/5684

 18   Annexure JR1 to the witness statement of Jeff Rice - Exhibit AWU4

 19   Annexure JR1 to the witness statement of Jeff Rice - Exhibit AWU4

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