The Australian Workers' Union v John Holland Pty Ltd

[2013] FWC 3365

[2013] FWC 3365 [Note: Reference amended from [2013] FWC 6962 on 19 September 2013.]

FAIR WORK COMMISSION

DECISION

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

The Australian Workers' Union
v
John Holland Pty Ltd
(C2012/1344)

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
v
John Holland Pty Ltd
(C2012/5846)

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
John Holland Pty Ltd
(C2012/5856)

Building, metal and civil construction industries
COMMISSIONER SPENCER	BRISBANE, 13 SEPTEMBER 2013

Alleged dispute regarding hours of work, shiftwork and rosters - John Holland LNG Projects Union Greenfield Agreement

Introduction

[1] This decision concerns the applications lodged by the Australian Workers' Union (the AWU), the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (the AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the ETU/CEPU), collectively the Applicants, against John Holland Pty Ltd (John Holland/the Respondent).

[2] The dispute concerns shiftwork and rostering provisions in the John Holland LNG Projects Union Greenfield Agreement (JH Agreement). 1

[3] The agreement was made for work being undertaken in the development of a liquefied natural gas project on Curtis Island. The project is the Gladstone Liquefied Natural Gas Project (GLNG project).

[4] The applications were originally listed before Senior Deputy President Richards for multiple dispute conferences. At the final conference, the parties requested that his Honour make a recommendation in the matter. His Honour provided the parties with a final opportunity to file submissions. A statement was issued by his Honour.

[5] The Statement provided:

“...the construction I have advanced above of clause 8.3 of the Agreement represents my initial inquiry into the issue only. If any of the parties find the Recommendation to be at odds fundamentally with their construction such that its acceptance is inimical to their interests, they may seek a formal determination of the matter under the dispute resolution procedure (and given the circumstances, by another Member of Fair Work Australia if that is their preference).” 2

[6] The AWU, CEPU and AMWU all sought, in writing, to have the matter formally arbitrated by a Member of the Commission.

[7] The AWU was represented by Mr Troy McKernan, the CEPU by Ms Pat Rogers and the AMWU by Ms Lisa Butler. The Respondent was Represented by Mr Ian Humphreys of Ashurst Australia.

[8] The matter was listed for arbitration in Brisbane. During the course of proceedings an issue arose with the continuation of the evidence which required that the matter be stood down for a period. Further Directions were set. A further day of hearing was listed.

[9] Whilst not all of the evidence and submissions in this matter are referred to all of such have been considered.

Background

[10] The principal contractor for the Curtis Island project is Bechtel Australia Pty Ltd (Bechtel). There was a collective agreement developed by Bechtel for the project in 2009 the Bechtel Queensland LNG Projects Union Greenfield Agreement (Bechtel Agreement). 3

[11] It was submitted that Bechtel have sub-contracted work to other companies including, the Respondent, John Holland.

[12] Each of the sub-contractors has developed their own greenfields agreement to undertake work on the Curtis Island project. The JH Agreement is one such greenfields agreement.

[13] The three applicants and the Respondent were signatories to the JH Agreement when it was made in 2011.

[14] The JH agreement was approved by Senior Deputy President Richards on 21 April 2011 and has a term of 4 years.

[15] The current dispute arose following the introduction of a new rostering category referred to as a ‘non-rotating permanent afternoon shift’.

[16] Currently, Employees covered by the John Holland Agreement work either Monday to Friday day work or Monday to Friday from 5:20 pm to 3:50 am and 1:30 pm to 9:30 pm on Saturday. It is the Monday to Friday 5:20pm to 3:50am shift, the non-rotating afternoon shift, which forms the subject of this dispute.

[17] When the applicant unions became aware of this new shift they commenced a dispute process with the Respondent, in accordance with the dispute settlement procedure, in the JH Agreement.

[18] The dispute centred around the contention that the new shift constituted a new employment category, that was not contemplated by the parties when the JH Agreement was signed.

[19] It was contended by the Unions that if there is to be a new shift category, appropriate remuneration, including penalty rates, may need to be confirmed or established.

[20] The matter was referred for Arbitration to the Commission, as currently constituted, and Directions were issued to the parties for the filing of material and evidence in the matter.

[21] The Directions confirmed the following questions for arbitration:

‘Upon a proper construction of the John Holland LNG Projects Union Greenfield Agreement, is the employer entitled to introduce a non-rotating afternoon shift? If the answer is yes, is an employee who works a non-rotating afternoon shift entitled to be paid:

(a) Base Hourly Rate plus a flat shift loading of 30% of the employee's Base Hourly Rate for all hours worked on the shift (see clause 8.3(c)(i)); or

(b) Base Hourly Rate plus a flat shift loading of 15% of the employee's Base Hourly Rate for all hours worked on the shift (see clause 8.3(b)(2)); or

If the employer is not entitled to introduce a non-rotating afternoon shift, should employees who have worked this shift be classified as day workers and receive relevant over time rates in accordance with clause 11.4 (b) for work which has been performed’

[22] Submissions were received from the four parties involved. The submissions will be considered in turn.

Relevant legislation

[23] Section 739 of the Fair Work Act 2009 (Cth) (the Act) provides:

‘739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.’

[24] The following excerpt is from the JH Agreement and prescribes the dispute resolution procedure to be followed:

‘...16.2 Steps in the Dispute Resolution Process

Any disagreement or dispute about the application or operation of this Agreement or the National Employment Standards (in accordance with the Act) will be dealt with as follows:

(a) The employee concerned shall raise the matter with the appropriate team leader for resolution.

(b) If not resolved, the employee will raise the matter with the supervisor/

superintendent of the Employer for resolution.

(c) If the matter remains unresolved, either the employee or their supervisor/superintendent is entitled to request a formal meeting with the Employer's Project Superintendent (as nominated by the Employer for this purpose).

(d) If the matter still remains unresolved, the matter may be raised by either party with the next level of management. (such as a State Manager) and a senior Union official (such as a District Secretary or Assistant State Secretary)

(e) If still not resolved, the matter may be referred to Fair Work Australia (FWA) by the Company, one or more employee covered by the Agreement, or one or more of the Unions covered by the Agreement for conciliation or arbitration....’

[emphasis added]

[25] It was not in dispute that the parties have followed the prescribed process of dispute resolution set out in the JH Agreement. The Commission is satisfied that there is jurisdiction to arbitrate the dispute in accordance with the dispute settlement procedures outlined in clause 16.2(e) of the JH Agreement.

Relevant agreement/award provisions

[26] The following is an excerpt from clause 3–Application, in the JH Agreement:

‘(d) This Agreement is stand alone and insular in nature and has been developed by the Parties to reflect and accommodate the specific circumstances of the Projects. While this Agreement operates it will, to the extent allowed under the Act, apply to the exclusion of all other State or federal industrial awards, agreements, preserved State agreements, notional agreements preserving State awards or other industrial instruments.’

[emphasis added]

[27] Clause 8.1(b)(3) of the JH Agreement provides:

“8. Hours of Work and Rosters
8.1 Setting Ordinary Working Hours
…
(b) All Parties and employees covered by this Agreement commit to:

(1) flexibility in any way that ordinary hours are organised and worked to meet operational requirements;

…
(3) working shifwork as required;
…”

[28] The following excerpt from the JH Agreement is the subject of the current dispute:

‘8.3 Shiftwork

(a) The nominal ordinary hours of shift work (whether continuous or not) will be an average of 36 hours per week from Monday to Sunday inclusive over a work roster cycle.

(b) Shift Penalties - Monday to Friday:

(1) Day shift (not day work) - Base Hourly Rate

(2) Afternoon/night shift - Base Hourly Rate plus a flat shift loading of 15% of the employee's Base Hourly Rate, for all hours that the employee is engaged on an afternoon/nightshift

(c) Shift Penalties- Monday to Friday- Non-Rotating:

(1) Permanent non-rotating shift (night shift) - Base Hourly Rate plus a flat shift loading of 30% of the employee's Base Hourly Rate, for all hours that the employee is engaged on a permanent non-rotating shift (night shift)

(d) Shift Penalties - Weekends:

(1) All ordinary shifts worked by shift workers between midnight Friday and midnight on Saturday shall be paid Base Hourly Rate plus a flat shift loading of 50% of the employee's Base Hourly Rate.

(2) All ordinary shifts worked by shift workers between midnight Saturday and midnight on Sunday shall be paid Base Hourly Rate plus a flat shift loading of 100% of the employee's Base Hourly Rate.

(e) Majority Hours

(1) Where the majority of ordinary hours fall on a particular day determines the shift penalty payment for the ordinary hours of a particular shift. To avoid confusion, a 10 hour nightshift, commencing at 6:00pm on Friday and finishing at 4:00am on Saturday would be deemed to be a "Friday" shift for determining ordinary time shift penalty with the overtime paid in accordance with subclause 11.4 (e).

(f) Afternoon shift means any shift commencing after 2.00pm.

(g) Night shift means any shift commencing at or after 6.00pm.

(h) The arrangements for non rotating night shift work will be:...’

[29] On these categories the John Holland shift, commencing after 2pm and before 6pm, falls as an afternoon shift.

[30] Clause 11.4 of the JH Agreement provides:

“11.4 Overtime Rates

(a) Employees may be required to work reasonable overtime at overtime rates.

(b) For day workers, time worked outside of, or in excess of the ordinary working hours prescribed in clause 8.1 shall be paid for at the rate of time and a half for the first two (2) hours on any one day Monday to Friday and double time thereafter at the Base Hourly Rates outlined in sub-clause 11.1 (a), (as escalated in accordance with 14.1 (b)).

(c) Overtime worked on the weekend by day workers shall attract the following penalties:

Saturday: time and a half for the first two hours and double time thereafter with a minimum of four hours paid or worked.

Sunday: double time for all hours worked, with a minimum of four hours paid or worked.

(d) An employee other than a shift worker who works on a Saturday, Sunday or holiday shall be paid for at least four (4) hours at the applicable overtime rate.

(e) For shift workers all time worked in excess of ordinary hours shall be paid at the rate of double time.

(f) The Employer may withdraw overtime on the Project without notice in the case of any industrial action which affects the Project. Industrial action shall include strikes, bans, limitations or any other form of industrial restriction.

(g) Subject to the Act, an employee, who because of any unauthorised absence, has not worked in accordance with their roster in any given week, will not be entitled to work weekend overtime hours in that week.”

[31] Clause 17 of the JH Agreement provides:

“17. Employee Consultation

(a) This clause will apply where:

(1) the Employer has made a definite decision to introduce a major change to production, program, organization, structure or technology in relation to its enterprise; and

(2) the change is likely to have a significant effect on the employees.

(b) The Employer will notify the employees of a decision of a kind referred to in 17(a).

(c) As soon as practicable after the decision in 17(a) has been made, the Employer will discuss, and provide the affected employees with information about, the nature of the change and the effect the change is likely to have on employees.

(d) For the purposes of 17(c), the affected employees may have an employee representative in attendance.

(e) Nothing in 17(a) to (c) requires the Employer to disclose confidential or commercially sensitive information to the employees or their representatives.”

[32] The following excerpt from the Building and Construction General On-site Award 2010 4 (modern award) demonstrates the shift provisions which may apply to employees covered by the JH Agreement if the provisions of the applicable modern award were applied:

‘34.1 General building and construction and metal and engineering construction sectors

(a) Definitions

For the purposes of this clause:

afternoon shift means a shift finishing at or after 9.00 pm and at or before 11.00 pm

night shift means a shift finishing after 11.00 pm and at or before 7.00 am

morning shift means a shift finishing after 12.30 pm and at or before 2.00 pm

early afternoon shift means a shift finishing after 7.00 pm and before 9.00 pm.

(b) When an employee is employed continuously (inclusive of public holidays) for five shifts Monday to Friday, the following rates will apply:

(i) afternoon and night shift—ordinary time plus 50%;

(ii) morning and early afternoon shifts—ordinary time plus 25%...

[emphasis added]

...34.2 Civil construction sector

(a) Definitions

For the purpose of this clause:

shiftwork means any system of work in which operations are being continued by the employment of a group of employees upon work on which another group had been engaged previously

day shift means any shift starting on or after 6.00 am and before 10.00 am

afternoon shift means any shift starting at or after 10.00 am and before 8.00 pm

night shift means any shift starting at or after 8.00 pm and before 6.00 am

rostered shift means a shift of which the employee concerned has had at least 48 hours notice...’

[emphasis added]

Summary of Applicants’ submissions and evidence

[33] For convenience it is repeated that the JH Agreement shift falls within the definition of Afternoon Shift within the meaning of the Award and JH Agreement.

[34] The submissions of each applicant are similar in content and contention however I will consider each applicant’s submissions separately.

AWU application

[35] The AWU was involved in the negotiations for the JH Agreement in 2011 and was ultimately one of the signatories to the final agreement.

[36] This application was in response to the Respondent’s action of introducing a ‘non-rotating permanent afternoon shift’.

[37] The AWU submitted that the introduction of a non-rotating afternoon shift constitutes a new class of employee which was not contemplated when the parties drafted the JH Agreement.

[38] The AWU referred to the Decision of Collier J in Australian Workers' Union v John Holland Pty Ltd 5where His Honour did not accept

‘...that parties with the industrial experience and resources of these parties would leave to chance for the purposes of the Agreement such important issues as definition of a class of workers, including... contemplation of a third class of workers not identified by the Agreement...’ 6

[39] The AWU contended that clause 3(d) (as set out above) of the JH Agreement means that it is a stand-alone agreement specifically excluding other industrial instruments. As such the provisions of the JH Agreement should be interpreted without reference to any other instrument.

[40] The AWU made reference to the penalty rates of 30% for a non-rotating shift and 15% for a rotating shift. They submitted that the terms of the JH Agreement are to mean that the penalty for a non-rotating shift is for all non-rotating shifts and is not limited to night shifts. As such, they contended that the penalty for a non-rotating afternoon shift should be paid in accordance with clause 8.3(c) at 30%.

[41] The AWU asserted that no possible construction of the Agreement that would allow it to be interpreted as providing for the ability to introduce a non-rotating afternoon shift.

[42] The written submission of the AWU discussed the recommendations of Senior Deputy President Richards following the attempt to conciliate the dispute.

[43] The written submissions of the AWU were supplemented by statutory declarations from Mr Anthony Beers, Mr Luke Graber and Mr Troy Spence.

[44] Mr Beers is an organiser for the AWU. His declaration discussed how Bechtel and another sub-contractor have been paying penalties for non-rotating night shift workers on each day of the week. The penalty ranges from 30% Monday to Friday to 100% on a Sunday.

[45] Mr. Graber was an employee of another sub-contractor working on Curtis Island. His declaration provided details of the sub-contractor’s non-rotating night shift which attracts a 30% penalty.

[46] Mr. Spence is an elected AWU Official. His declaration provides details of his involvement in the making of the JH Agreement in 2011.

[47] Mr. Spence’s declaration explained that the JH Agreement was not an exact replica of the Bechtel Agreement. Three additional clauses were added to the JH Agreement, in part, because of the requirements introduced by the Act. These clauses included Dispute resolution training, consultation and employee representatives. The addition of these clauses also resulted in renumbering throughout the Agreement.

[48] Mr. Spence’s declaration suggested that John Holland’s representative, Mr. Patten, did not indicate that they would not follow the implementation and intent of the Bechtel Agreement. During the negotiations there was no discussion about implementing a ‘non-rotating afternoon shift’ with a 15% penalty.

[49] Mr. Spence provided details of email correspondence between the AWU and a Ms. Johnstone, Project HR Manager for the GLNG Project. The correspondence identified inconsistent interpretations of penalty rates for the non-rotating afternoon shift.

[50] Mr. Spence explained that the only non-rotating shift that was contemplated by the parties to the Bechtel Agreement was a ‘non-rotating night shift’ which attracted a 30% penalty.

[51] There have been inconsistent accounts between the parties about how Bechtel interpret the shift penalties and whether they do, in fact, support the interpretation of the applicants.

[52] Mr. Spence explained that the parties had sought to resolve the matter for two months before lodging an application to Fair Work Australia; however the inconsistent interpretation of shift penalties could not be settled.

[53] The findings sought by the AWU are as follows:

a. Employees employed on the non-rotating afternoon shift should receive the penalty rate of 30% contained in clause 8.3(c) of the Agreement; or

b. Employees employed on the non-rotating afternoon shift should be treated as day workers working outside the spread of ordinary hours and should receive the relevant overtime rates; or

c. If it is determined that the modern award is relevant then the employees employed on a non-rotating afternoon shift should receive the penalty rate of 50% in accordance with the provisions of clause 34.l(b) of the modem award.

AMWU application

[54] The content of the AMWU’s application reflected that of the AWU application.

[55] The AMWU was one of the signatories to the JH Agreement.

[56] The AMWU supported the assertion that the only non-rotating shift that was contemplated by the parties was a permanent non-rotating night shift and not an afternoon shift.

[57] The AMWU also submitted that John Holland failed to comply with clause 17 of the JH Agreement which requires consultation with employees and their representatives prior to implementing such a shift change.

[58] The AMWU did not lodge additional written submissions however they supplemented their application with a statement from Mr. Terry Bradley.

[59] Mr. Bradley is a state organiser for the AMWU and was involved in the negotiations for the JH Agreement and the Bechtel Agreement.

[60] Mr. Bradley stated that because Bechtel was the principal contractor their agreement would form the foundation of prospective agreements on that project.

[61] The award considered when drafting the Bechtel Agreement was the Metal and Engineering On-site Construction Industry Award 7.

[62] Mr. Bradley did not recall the parties contemplating a permanent non-rotating afternoon shift; they had only discussed permanent non-rotating day and night shifts.

[63] Mr. Bradley stated that he agreed to sign the JH Agreement at the request of the AWU on the basis that it was substantially the same as the Bechtel Agreement, save for the few additional clauses discussed in the AWU submissions.

[64] Mr. Bradley suggested that a 30% penalty would be appropriate and consistent with the rates paid by other sub-contractors.

[65] The AMWU also submitted that the parties have tried to resolve this dispute for a number of months unsuccessfully.

[66] The finding sought by the AMWU is that all employees who have been required to work the non-rotating afternoon shift should be paid at the applicable overtime rate provided by clause 11.4 of the JH Agreement.

ETU application

[67] The content of the ETU’s application also reflected that of the AWU and AMWU applications.

[68] The ETU was one of the signatories to the JH Agreement.

[69] The ETU also asserted the only non-rotating shift that was contemplated by the parties when the agreement was finalised was a permanent non-rotating night shift and not an afternoon shift.

[70] The ETU also submitted that John Holland failed to comply with clause 17—Employee Consultation, of the JH Agreement.

[71] The ETU lodged written submissions supplemented with a statement from Mr. Peter Ong.

[72] Mr. Ong is an organiser for the ETU and was involved in the negotiations for the Bechtel Agreement in 2009. He signed the JH Agreement in 2011.

[73] Mr. Ong stated that he signed the JH Agreement on the understanding that the only deviation from the Bechtel Agreement was the addition of three clauses and the required renumbering.

[74] The ETU’s submission discussed the principles of construction as they relate to clause 8.3 of the JH Agreement. The ETU submit that one should not adopt a narrow or pedantic view of interpretation.

[75] The ETU submitted that when considering an agreement the aim is to determine the meaning intended by the people who negotiated and wrote the agreement having regard to the context.

[76] The ETU made a number of references to case law including Short v F W Hercus Pty Ltd (1993) 8 which discussed the relevance of considering the historical context of terms in agreements when trying to construct the meaning of provisions in new agreements.

[77] The ETU suggested that the additional clauses and renumbering in the JH Agreement are an indication that deviations from the Bechtel agreement were discussed. With that in mind there was no discussion about changing shiftwork provisions.

[78] The ETU also submitted that the JH Agreeemnt should be read without reference to other industrial instruments.

[79] The ETU’s submission explained the shift provisions in the JH Agreement, highlighting that there are express day and night shift provisions, but not non-rotating afternoon shift provisions. On that basis, the ETU submitted that the JH Agreement does not allow for the employment of employees on a permanent non-rotating afternoon shift.

[80] The ETU submitted that there was an understanding between the parties that employees can and do work a day shift, can and do work between different shifts and can and do work non-rotating night shift. However, they cannot, and do not, work a non-rotating afternoon shift.

[81] Mr. Ong’s statement explained that no ETU members have been affected by the introduction of the new afternoon shift; however the ETU is interested in protecting the integrity of the agreement.

[82] The ETU contended that the introduction of a non-rotating afternoon shift introduces a new class of employees which had not been considered by the parties when the JH Agreement was negotiated.

[83] The ETU has sought the findings explained in the AWU submission and a determination that:

‘Upon the proper construction of clause 8.3 of the John Holland Agreement employees cannot be employed to work a non-rotating afternoon shift.’

Summary of Respondent’s submissions and evidence

[84] The Respondent submitted written submissions supplemented by a statement from Mr. Stephen Patten.

[85] Mr. Patten is the Employee Relations Manager - Northern region, for the Respondent. Mr. Patten was involved in the negotiations for the JH Agreement.

[86] Mr. Patten stated that the intention of the JH Agreement was to cover the current project and other future projects in Gladstone.

[87] Mr. Patten stated that he used the Thiess Curtis Island LNG Project Agreement 9 (Thiess Agreement) as the basis for the JH Agreement. He did so because the Bechtel Agreement was made prior to the introduction of the Act.

[88] The JH Agreement was, in most parts, the same as the Thiess Agreement, but contained some additional provisions in relation to dispute resolution training, the rights of employee representatives, a flexibility clause and a consultation clause.

[89] Mr. Patten stated that negotiations were between him and the AWU but the AMWU and ETU also agreed to sign the agreement.

[90] Mr. Patten agreed that the terms of the JH Agreement do generally reflect the terms of the Bechtel Agreement.

[91] The Respondent submitted that employees are currently working day work or non-rotating afternoon shift.

[92] The Respondent does not agree that the JH Agreement prohibits the introduction of a non-rotating afternoon shift and disputes the interpretation advanced by the applicants.

[93] The Respondent sought to rely on clause 8.1(b)(3) of the JH Agreement which states the following in relation to setting ordinary working hours:

‘(b) All Parties and employees covered by this Agreement commit to:

(3) working shiftwork as required’

[94] In applying the natural and ordinary meaning to the relevant clauses in the JH Agreement, the Respondent submitted that it believed it could implement any roster, shift or hours or work that met its operational needs.

[95] The terms of the JH Agreement do not contain any express restriction or prohibition on implementing a non-rotating afternoon shift. The Respondent submitted that the reference to an afternoon shift in clause 8.3(b) included both rotating and non-rotating afternoon shifts.

[96] As such the Respondent submitted that it was empowered to implement the shift and pay the prescribed penalty rate in clause 8.3(b)(2).

[97] The Respondent submitted that the applicants’ submissions indicated that non-rotating afternoon shifts are worked by Bechtel and another sub-contractor, but they paid at the rate applicable to non-rotating night shifts under their agreements.

[98] The Respondent considered the case law discussed by the applicants including Professional Radio and Electronics Institute of Australasia v Qantas Airways Ltd 10 which considered a history of consistent conduct by the parties when determining how provisions of a particular instrument could be interpreted.

[99] The Respondent stated that it is not a party to the Bechtel agreement and therefore the actions of Bechtel cannot be considered past actions of the Respondent.

[100] The Respondent concurred with the applicants’ submissions that clause 8.3 was not discussed prior to the making of the JH Agreement.

[101] As such the Respondent submitted that there could not have been an objective intention in relation to clause 8.3 because it was not discussed and the Respondent was not aware of the practices of Bechtel and other sub-contractors to pay a 30% loading for relevant afternoon shifts.

[102] The Respondent has disputed the relevance of the intention of the parties to the Bechtel Agreement in the interpretation of the JH Agreement.

[103] The Respondent has disputed the assertion of the applicants that the non-rotating afternoon shift is a new class of worker, and claimed it is simply a type of shift worked by a shiftworker.

[104] The Respondent submitted that the decision to implement the new shift was the prerogative of management in meeting the requirements of the business.

[105] The Respondent cited the decision of Commissioner Smith in CEPU v Telstra Corporation Ltd 11 where the Commissioner stated:

‘[11] The arrangement of hours of work, consistent with the industrial instruments, is clearly a matter which falls within the prerogative of management’

[106] The Respondent has submitted the relevant penalty that should apply to employees working the non-rotating afternoon shift should be 15%. This is consistent with the other afternoon shifts rather than the non-rotating night shift which attracts a 30% penalty.

[107] Mr. Patten stated that when the JH Agreement was made he was not aware of Bechtel’s practice of paying a 30% loading to employees working a non-rotating afternoon shift.

[108] Mr. Patten stated that he did not believe the terms of the JH Agreement imposed any substantive restrictions on implementing rosters and shifts. He stated that given the intention of using the JH Agreement for current and future work, he would not have agreed to it if he had known about the substantive restrictions suggested by the applicants.

[109] Mr. Patten‘s statement explained that since the commencement of work on Curtis Island project an operational need for a shift hand-over between day and night shift became apparent.

[110] Mr. Patten stated that the new shift commenced at 5.10pm which the Respondent defined as an afternoon shift rather than a night shift and as such the penalty was reduced from 30% to 15%.

[111] The Respondent has submitted that the practice of Bechtel and another sub-contractor to pay a 30% penalty constitutes an over-agreement penalty and is not binding on John Holland.

[112] Mr. Patten explained that in order for a sub-contractor to be reimbursed for the cost of an over-agreement payment it must have the consent of Bechtel.

[113] Mr. Patten stated that during the course of the dispute he contacted Bechtel to confirm the penalty and was advised that 30% would be an over-agreement payment and the cost would not be covered by Bechtel.

[114] Mr. Patten stated that he has had discussions with another sub-contractor, Thiess, and they are paying a 15% penalty for a non-rotating afternoon shift.

[115] Mr. Patten stated that Thiess had also had a dispute about the introduction of the non-rotating afternoon shift and the applicable penalty. It was settled that the shift would remain and a 15% penalty would apply.

[116] Mr. Patten re-iterated in his statement that the terms of the JH Agreement are identical to the Bechtel and Thiess agreements in relation to shiftwork.

[117] Mr. Patten’s statement also provided details of work undertaken by the Respondent on another project under the John Holland Pty Ltd – Abbots Point Coal Terminal Expansion Workplace Agreement 2008 12where, for a non-rotating afternoon shift, the employees are paid the regular afternoon shift provisions not night shift provisions.

[118] The Respondent submitted that there is no logical basis for the applicants to submit that the employees should have been paid at overtime rates. The employees working the non-rotating afternoon shift are not day-workers and as such would not be entitled to overtime; they would only be entitled to a shift penalty.

[119] The Respondent has considered the relevance of the modern award and submitted that because the JH Agreement is a stand-alone agreement the terms of the modern award will not apply to employees.

[120] The findings sought by the Respondent are that the employer is entitled to introduce a non-rotating afternoon shift which attracts a 15% penalty.

Considerations

[121] This determination concerns two interrelated questions. Primarily it is a determination of whether, upon a proper construction of the JH Agreement, the Respondent was entitled to introduce a non-rotating afternoon shift. This question will be dealt with first as it will affect the subsequent matters required for determination.

[122] The construction of industrial instruments was a matter considered by the High Court in Amcor Ltd v Construction, Forestry, Mining and Energy Union 13 (Amcor). In that decision Gleeson CJ and McHugh J said:

“The resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose, and the nature of the particular reorganisation.” 14

[123] And further Kirby J said:

“The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court, of interpreting industrial instruments and especially certified agreements. I agree with the following passage in the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed:

“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.”” 15

[124] All parties identified the relevant authorities applicable in construing industrial instruments. Of importance is the general acceptance between the parties that the interpretation should not be narrow, pedantic or based upon legal niceties. The authorities submitted by all parties agree that interpretation is not done in a vacuum and should be done, objectively, with the knowledge of the industrial context.

Introduction of non-rotating afternoon shift

[125] In respect of this aspect of the dispute, the argument of the parties revolved around clause 8.3 “Shiftwork” (set out above).

[126] The terminology used in the heading of the sub clause and the text of the sub clause itself are not consistent. The heading of clause 8.3(c) is “Shift Penalties- Monday to Friday- Non-Rotating”. If the heading alone were to be viewed it would be clear that the clause 8.3(c) was to apply, and provide the appropriate shift penalty for, any shift, on Monday to Friday, that was non-rotating.

[127] The text of sub clause 8.3(c) introduces a new term being “non-rotating shift (night shift)” (emphasis added). The remainder of the clause then refers to a loading of 30% applying “for all hours that the employee is engaged on a permanent non-rotating shift (night shift)”. This term is not defined in the agreement. Nor is the term non-rotating shift.

[128] The CEPU submitted that this lack of definition meant that the Agreement should be construed so as not to provide for non-rotating afternoon shifts. The AWU contended, and was supported by the AMWU, that the inclusion of “(night shift)” after the phrase “permanent non-rotating shift” was for the purpose of defining “all non-rotating shifts, and have them treated as a night shift”. 16 The AWU also submitted, somewhat contradictorily, that the JH Agreement did not contemplate the existence of a non-rotating afternoon shift.

[129] The JH Agreement includes operational provisions clearly contemplating that flexibility was agreed in the organisation of ordinary hours and included shiftwork as required. 17 The parties agreed that employees would be required to work “shiftwork” as required.

[130] The Respondent relied on the JH Agreement provisions to use the non-rotating afternoon shift as per clause 8.1 ‘Setting Ordinary Working Hours’ and emphasised the agreed commitment between the parties to “flexibility in any way that ordinary hours are organised and worked, to meet operational requirements” and “working shiftwork as required”.

[131] Clause 8.1, as reflected by the JH Agreement agreed to between the parties, is wide enough to encompass flexibility “in any way”. The Agreement cannot be read in that context as limiting the Respondent’s ability to introduce a non-rotating afternoon shift.

Penalty Entitlements

[132] The Respondent discounted the Applicant’s argument that the introduction of the new shift was a night shift and that they could not introduce the shift as is apparent in the cross-examination of Mr Spence, of the AWU:

“Can I take you to (f)?  Afternoon shift means any shift commencing after 2 pm.  There is nothing there in the plain language of that clause to support your position, is there?  Would you agree with that?---That's your argument, sir, not mine.

That's fine.  So your evidence is, is it, that where it says "afternoon shift means any shift commencing after 2 pm" is to be read as meaning afternoon shift means any shift commencing after 2 pm except the rotating shift?  Is that your evidence?

---No, that's not my evidence.

What's your definition then?---My evidence is that when there are non-rotating shifts that are worked, permanent non-rotating shifts, the relevant definition of "night shift" applies. Mr Watson's email relates to a non-rotating night shift with start and finish times as interpreted by Bechtel.

So is it the union's position that a shift which commences at 4.45, despite the definition in (f), is to be properly regarded as a night shift?---If it's a permanent non-rotating night shift, absolutely.” 18

[133] The AWU evidence was that the relevant applicable definition to a permanent non-rotating shift was the definition of a ‘night shift’. In that regard the Respondent cross-examination of Mr Spence highlight the position of the AWU.

[134] It is acknowledged that other Contractor agreements on site contain a 30% shift allowance to the non-rotating afternoon shift and that this has caused frustration for the Applicants’ members, in terms of comparative entitlements. However the dispute requires an examination of the words in the Agreement between the parties.

[135] During the course of the proceedings it was raised that this was a commercial matter between the principal contractor, Bechtel, and John Holland, as subcontractor that was the subject of contemporaneous exchanges of correspondence between the parties.. A direction was provided whereby the parties were requested to provide further particulars on this issue. However no concluded outcome between the two commercial entities was reported at that time.

[136] Mr Patten’s evidence commented on the Respondent’s view of the criticisms of the introduction of the new shift and the applicable penalty, as follows:

“You might want to just refer to the email just for your own purposes.  I think the evidence of both Mr Grantham and Mr Pryor was that they do not believe a non-rotating shift comes in under the definition of an afternoon shift.  Are you aware of that evidence?---My understanding is that at various times Bechtel have said that “you can’t work that shift" and at other times they’ve said "that shift is a night shift and gets a 30 per cent penalty", but they haven’t been consistent.” 19

[137] Mr Patten of the Respondent argued that the Applicants claim for a 30% loading for the non-rotating afternoon shift would be an over agreement payment under the JH Agreement. Mr Patten also stated that Bechtel would not cover the cost of this over-agreement payment.

[138] The interpretation of the words of the JH Agreement, taking into account clause 8.3(c)(1) (as distinct from 8.3(b)(2)), affords the Respondent the ability, under the Agreement, to implement a permanent non-rotating afternoon shift (in conjunction with clause 8.1(b) with the applicable 15% shift loading. Whilst the heading to clause 8.3(c) reads “Shift Penalties - Monday-Friday - Non-Rotating” the 30% shift allowance is applicable on the specific wording of the Agreement that follows the provision; that is, to a non-rotating night shift only. There is no suggestion that the 30% shift allowance is applicable to any other non-rotating roster, on the wording of the clause.

[139] Clause 8.3(b)(2) of the JH Agreement deals with afternoon and night shifts being rotating and/or non-rotating shifts. Whereas clause 8.3(c)(1) deals with the permanent, non-rotating night shift.

[140] It is noted for completeness that there is evidence between the parties with reference to various documents regarding the nature of the negotiations. There was also evidence of the email exchanges between the corporate entities (Bechtel and John Holland) after the approval of the JH Agreement, on the interpretation of the provisions and the issue at hand. This evidence has been considered, however the starting point must be a consideration of the wording in the relevant clauses of the JH Agreement.

[141] It has not been necessary to attribute significant weight to this evidence in the interpretation of the words of the clauses as the clauses in question are clear and defensible. It is also noted that the relevant Modern Award, the Building and Construction General On-Site Award 2010, clause 34, supports this interpretation. That is, it provides (whilst setting different hours) for the working of a non-rotating afternoon shift, given the nature of operational needs in the construction industry. Again no great weight has been attributed to this for the same reason.

Conclusion

[142] Therefore, for the aforementioned reasons the questions for arbitration are answered as follows:

Upon a proper construction of the John Holland LNG Projects Union Greenfield Agreement, is the employer entitled to introduce a non-rotating afternoon shift?

ANSWER: Yes.

If the answer is yes, is an employee who works a non-rotating afternoon shift entitled to be paid:

(a) Base Hourly Rate plus a flat shift loading of 30% of the employee's Base Hourly Rate for all hours worked on the shift (see clause 8.3(c)(i)); or

ANSWER: No.

(b) Base Hourly Rate plus a flat shift loading of 15% of the employee's Base Hourly Rate for all hours worked on the shift (see clause 8.3(b)(2)); or

ANSWER: Yes.

If the employer is not entitled to introduce a non-rotating afternoon shift, should employees who have worked this shift be classified as day workers and receive relevant over time rates in accordance with clause 11.4 (b) for work which has been performed

ANSWER: does not arise.

[143] I Order accordingly.

COMMISSIONER

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 1   AE885240

 2 Ibid at [18].

 3AC329245

 4   MA000020

 5 [2010] FCA 1432

 6 Ibid at [21].

 7   AP816828.

 8 40 FCR 511

 9   AE882323

 10 [1984[ 10 IR 1

 11   PR958009

 12AC314182

 13 (2005) 222 CLR 241.

 14 Ibid at [2].

 15 Ibid at [96].

 16   AWU submissions at paragraph 10.

 17   John Holland LNG Projects Union Greenfield Agreement.

 18   PN65 - PN68.

 19   PN1116.