The Maritime Union of Australia v Northern Stevedoring Services Pty Ltd

[2016] FWCFB 1926

[2015] FWC 7342 [Note: An appeal pursuant to s.604 (C2016/2069) was lodged against this decision - refer to Full Bench decision dated 5 April 2016 [[2016] FWCFB 1926] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Maritime Union of Australia, The
v
Northern Stevedoring Services Pty Ltd (NSS)
(C2015/85)

COMMISSIONER SIMPSON BRISBANE, 18 DECEMBER 2015

Alleged dispute about matters arising under The NSS Pty Ltd Enterprise Agreement 2012.

[1] On 13 January 2015 the Maritime Union of Australia (MUA) made an application on behalf of members of the MUA for the Fair Work Commission (FWC) to deal with a dispute in accordance with the dispute settlement procedure at Clause 3.3 of the NSS Pty Ltd Agreement 2012. Northern Stevedoring Services Pty Ltd (NSS) is the employer Respondent to the application.

[2] Conciliation conferences were conducted before the FWC that were unsuccessful in resolving the matters in dispute. At a directions hearing on 4 June 2015 the matter was listed for hearing and directions were issued for the filing of an agreed statement of facts, a question for arbitration and statements and submissions from both parties. Amended directions were issued as agreed between the parties on 7 July 2015. A number of extensions of time for filing material were granted to both the MUA and NSS.

[3] The agreed statement of facts as filed on 10 July 2015 reads as follows:

AGREED STATEMENT OF FACTS

1. This Agreed Statement of Facts is made jointly by the Maritime Union of Australia (the Applicant) and Northern Stevedoring Services Pty Ltd (the Respondent).

Background

2. The Respondent is a stevedoring company with facilities in the Ports of Cairns, Gladstone and Townsville (the Ports).

3. The dispute concerns the allocation of work to approximately 35 permanent stevedore employees (the Employees) who perform stevedoring work at the Port of Townsville.

4. The Employees subject to the dispute are covered by the NSS Pty Ltd Agreement 2012 (the Agreement) and are engaged in the classifications pursuant to clause 4.5 of the Agreement.

5. The Applicant was a bargaining representative during the negotiations for the Agreement in accordance with s 178 of the Fair Work Act 2009 (FW Act), and is covered by the Agreement.

The Agreement

6. Clause 4.1.1.1, 4.1.2.1 and 4.1.3.1 of the Agreement specify the annual hours the Employees are required to work depending on their engagement;

a. Clause 4.1.1.1 – 1970 hours per annum;
b. Clause 4.1.2.1 – 1820 hours per annum; and
c. Clause 4.1.3.1 – 2050 hours per annum,

inclusive of public holidays and annual leave hours.

1. In the event the Employees do not work the above mentioned hours, subject to the Respondent demonstrating it has taken all reasonable steps to exhaust annual hours, the Respondent may carry forward a maximum of 50 unused hours from the current year for use in the next year or use 50 in the current year from the next year. This is stipulated in clause 4.1.3.5 of the Agreement.

2. The way in which work is allocated to the Employees and how the Employees are rostered is described in Clause 4.2 of the Agreement.

3. The Applicant formally raised the dispute with the Respondent in August 2013.

4. The Parties agree that the Dispute Settlement Procedure in the Agreement at clause 3.3 has been followed, and there have been no stoppages of work in relation to the dispute.

5. On 8 January 2015 the Applicant filed an application pursuant to s.739 of the FW Act

6. For the Commission to deal with a dispute in accordance with the Dispute Settlement Procedure at clause 3.3 of the Agreement.

THE DISPUTE
[4] The MUA filed three witness statements on 31 July 2015 from Warren Smith, Peter Downey 1 and Warren Dafforn. The MUA filed an outline of submissions on 3 August 2015.

[5] On 26 August the Respondent filed its outline of submissions, a witness statement from David King 2 and from Damien Scott.3

[6] On 3 September 2015 CRH Law notified the FWC that it had commenced to act on behalf of the MUA. Subsequent to this CRH Law wrote to the FWC seeking an extension of time until 7 September to file reply material. On 8 September Australian Business Lawyers & Advisors wrote to the FWC raising the issue that the MUA’s reply material had not been filed and that it will be prejudiced by the delay. On 10 September the MUA filed an outline of submissions in reply, and statements in reply from Douglas Jepsen 4, Peter Downey5, Warren Tunaley6, Martin Lawlor7.

[7] An application was made by the MUA for an order requiring production of documents however CRH Law subsequently advised chambers this application was not pressed.

[8] On 15 September the FWC was advised that the parties had reached agreement on a proposed adjournment of the scheduled hearing dates. At a directions hearing on 16 September both parties were granted leave to be represented, and the matter was relisted for hearing on 15 October, with NSS to file further material by 30 September including a spreadsheet in response to factual assertions in the Applicants reply material.

[9] On 30 September NSS filed a further statement from David King 8 attaching a spreadsheet.

[10] On 1 October CRH Law advised the Commission that it may seek to file further statements on assertions of fact in NSS material filed on 30 September.

[11] On 14 October, the day before the hearing the MUA filed three further statements in reply to the further statement of Mr Damien Scott. These further statements were from Peter Downey 9, Warren Tunaley10, and Martin Lawlor11.

[12] At the commencement of the hearing on 15 October it was confirmed following discussions between the parties that the statements of Mr Smith and Mr Daphron filed by the MUA would not be relied upon, and the statement of Mr King in NSS’s case would still be tendered, however in a much reduced form.

[13] The parties did not file an agreed question, or questions for arbitration as directed and this was raised with the parties at the commencement of the hearing on 15 October. Both parties were invited to address this issue. 12

[14] Mr Quinn submitted among other things that the substance (of the dispute) is reasonably clear. 13 Mr Quinn submitted the dispute was about whether the Respondent had complied with its obligations under the Agreement in relation to the manner in which it manages the hours of its permanent employees. Mr Quinn drew particular attention to clause 4.2.23.14 15 In its outline of submissions filed on 3 August under the heading ‘Issues for Arbitration’ the Applicant described the issue for consideration in the context of the dispute as being “..whether the Respondent took all reasonable steps to exhaust annual hours for PSWE’s.”

[15] Mr Dwyer for the Respondent referred to clause 4.10 of the Form 10 dispute application which included the following:

“Given the Company failed to follow the Order of Pick, the Company did not take all reasonable steps to exhaust the Permanent employees annual hours, and should not have carried the hours into the following year.”

[16] Mr Dwyer submitted that the particulars of the assertion about NSS not having taken all reasonable steps is that the company had failed to follow the order of pick. Mr Dwyer went on to state as follows:

“So in a sense, this dispute has two elements to it, if you like: a consideration about whether all reasonable steps were taken to exhaust the hours and the construction of the clause 4.2.23 in the full context of 4.2, and the EBA generally. I might add that there are no other particulars or assertions made about things that might be evidence of a lack of reasonable steps being taken, so the focus is keenly on the failure to follow the order of the pick.”  16

[17] The Respondent in its outline of submissions filed on 26 August contended that the dispute should be articulated as follows:

“(a) what is the proper construction of, and weight to be afforded to, clause 4.2.23 (“Order of the Pick”) of the Agreement when considered within the context of:

(i) Clause 4.2 of the Agreement; as well as
(ii) The entire Agreement;

and when this question has been determined:

(b) has the Applicant discharged its onus in demonstrating that the Respondent failed to take all reasonable steps to exhaust permanent employees’ annual hours.”

[18] All witness evidence was concluded in the course of the hearing on 15 October and it was agreed closing submissions would be made on 23 October 2015.

[19] An issue regarding the proper characterisation of the dispute before the FWC arose in the course of closing submissions. Mr Quinn in closing on behalf of the MUA 17 placed considerable emphasis on the words “Subject to the Company demonstrating…” [emphasis added] that appear in each of clauses 4.1.1.5, 4.1.2.5 and 4.1.3.5.

[20] Mr Quinn described this issue as a third element to the matter, the first two elements being whether the company took all reasonable steps to exhaust annual hours of its permanent shiftwork employees, and whether as part of that issue, it had failed to apply the correct meaning to the order of pick and whether doing so amounts to a failure to take all reasonable steps. 18 Mr Quinn addressed the issue of NSS’s failure to ‘demonstrate’ it had taken all reasonable steps at considerable length.19

[21] Mr Dwyer submitted in his closing that the submissions regarding the matter of ‘demonstrating’ was never run, or flagged or articulated before closing submissions. Mr Dwyer referred to the notice of dispute, the agreed statement of facts, and the outline of submissions filed by the MUA and specifically what the MUA described as the issue for arbitration. It was submitted that the MUA never placed emphasis on the issue of ‘demonstrating’.

[22] Mr Dwyer said that the MUA submission in reply refers to the issue at paragraphs 11 and 12 however NSS was still not on notice that it was a significant basis for the dispute, as the reply submission after paragraph 11 and 12 returns to focus on the matter of ‘reasonable steps’. 20 Mr Dwyer also emphasised that in opening submissions when the MUA had an opportunity to particularise the issue in dispute it did not place emphasis on the issue of demonstrating. Mr Dwyer stated that when he articulated his understanding of the matter in dispute (as set out at paragraph 103 of the transcript) Mr Quinn did not seek to correct that characterisation of the dispute.21

[23] It was submitted by NSS that submissions in regard to the particular issue of ‘demonstrating’ should be disregarded, as it raises a matter of natural justice and whether NSS had been given a fair opportunity to meet the case. NSS submitted it would be prejudiced by consideration of that issue; however there would be no prejudice to the MUA as it would be open for the MUA to file a separate Notice of Dispute regarding that issue.

[24] Mr Quinn accepted that the application as originally filed did focus on the order of pick issue, and the agreed facts were of limited assistance, however from the time of the MUA submissions in reply on 10 September (which corresponds with the point when the MUA’s representative took carriage of the matter) NSS was on notice of the issue of ‘demonstrating’. It was put that to the extent that prejudice arises to NSS, it could be addressed by providing an opportunity for NSS to file further evidence on how it now understands the case has been put. 22

[25] Mr Dwyer highlighted that neither of the witnesses for NSS were ever confronted with the proposition that they failed to demonstrate the discharge of their apparent or alleged obligation. 23 Both the MUA and NSS filed brief further written submissions on this issue.

[26] In the circumstances of this case the parties did not file an agreed question for arbitration as had been sort in the directions. To the point of closing submissions I had proceeded on the basis, having read the material filed before the hearing, and after inviting the parties to make submissions on the issue of the question for arbitration at the commencement of the hearing on 15 October, that the issue was broadly as described by Mr Dwyer at paragraph 103 of the transcript.

[27] I accept that, having heard the MUA’s closing submissions that the MUA’s representative held, in good faith, a different appreciation of the breadth of the dispute. I also accept a reference was made to the issue in paragraph 11 and 12 of the submission filed in reply. However, when the totality of the material is viewed objectively it was never made clear by the MUA that the words “Subject to the Company demonstrating…” was the focus of the issue in dispute, and part of the case that NSS had to meet. The originating application places no emphasis on the issue. The MUA outline of submissions filed on 3 August under the heading ‘Issues for Arbitration’ at paragraph 6 actually excluded the words from a sentence describing the issue in dispute.

[28] The focus of the material filed up to the point of the hearing itself had always been on the matter of the proper construction of clause 4.2.23 in the broader context of Clause 4.2 and the Agreement as a whole, and whether the Respondent had taken all reasonable steps to exhaust permanent employees annual hours.

[29] That being the case it would be prejudicial to NSS given the way the matter has proceeded to make a finding in the course of this matter on the ‘demonstrating’ issue. The MUA is entitled to bring a dispute in regard to that particular matter and in all of the circumstances if the MUA elected to do so that is the preferred course to reopening this matter after the respective evidentiary cases had been closed.

[30] Having made the finding above I will deal with the part of the matter that was agreed as being in dispute.

[31] Both parties to the dispute accepted that when a dispute arises in respect of ambiguity or uncertainty regarding a term or clause of an enterprise agreement, the Commission’s general approach, is as recently reconfirmed in the decision in Golden Cockerel 24. The ten key principles set out in that decision are as follows:

(a) The Acts Interpretation Act 1901 (Cth) does not apply to the construction of an enterprise agreement made under the Fair Work Act 2009.

(b) In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity;

(c) Regard may be had to evidence of surrounding circumstances to assist in determining whether ambiguity exists;

(d) If the Agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement;

(e) If the language in the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstances will be admissible to aid interpretation of the agreement;

(f) Admissible evidence of the surrounding circumstances is evidence of the objective framework of facts and will include:

(i) Evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(ii) Notorious facts of which knowledge is presumed;

(iii) Evidence of matters in common contemplation and constituting a common assumption

(g) The resolution of the disputed construction of an agreement will turn on the language of the agreement understood having regard to its context and purpose;

(h) Context might appear from:

(i) The text of the agreement viewed as a whole as a whole;

(ii) The disputed provision’s place and arrangement in the agreement;

(iii) The legislative context under which the agreement was made and in which it operates.

(i) Where the common intention of the parties is sought to be identified, regard is not to be hard 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;

(j) The task of interpreting an agreement does not involve re-writing the agreement to achieve what might be regarded as a fair our just outcome. The task is always one interpreting the agreement produced by the parties.

[32] It is helpful to set out the relevant parts of the Agreement.

[33] According to the types of employment, employees fall into one of five categories as set out in Clause 4.1 of the Agreement, which are:

(a) Permanent Shift Work Employees 1970 (PSWE’s 1970 hours),
(b) Permanent Shift Work Employees (1820) (PSWE’s 1820 hours),
(c) Permanent Day Work Employees who work 2050 hours per annum (PDWE 2050),
(d) Guaranteed Minimum Income Supplementary Employees (GMISE) who are guaranteed a minimum payment of $2,000 per fortnight; or
(e) Supplementary Employees who receive a 25% loading in lieu of any entitlements they may have otherwise had to redundancy, personal/carer’s leave, annual leave, long service leave or public holidays.

[34] NSS pays each permanent employee the number of hours allotted to each class of employee (i.e. 1970, 1820 or 2050), whether they work the hours or not.

[35] In the event that permanent employees do not work the above mentioned hours, subject to NSS demonstrating it has taken all reasonable steps to exhaust annual hours, NSS may carry forward a maximum of 50 unused hours from the current year for use in the next year. This applies to PSWE’s (1970) in clause 4.1.1.5 and PSWE’s (1820) in clause 4.1.2.5 of the Agreement, and PDWE’s (2050) in clause 4.1.3.5.

[36] The work year means “EBA year” as defined in clause 2.2.7 of the Agreement. The way in which work is allocated to the employees and how the employees are allocated for work is described in clause 4.2 of the Agreement.

[37] Between 16 February 2013 and 15 February 2014 approximately 36 PSWE’s in Townsville did not reach their accumulated annual hours, and NSS carried a varying number of hours forward for those employees (up to a maximum of 50 hours) into the following year being 16 February 2014 to 15 February 2015. The PSWE’s were required to make up those hours in the following year.

[38] Clause 4.1.1.1 of the Agreement provides:

“A Permanent Shift Work Employee (1970) is engaged to work nineteen hundred and seventy (1970) hours per annum, inclusive of public holidays and annual leave hours. This shall consist of a maximum of four hundred (400) weekend hours. This will comprise two hundred (200) Saturday hours and two hundred (200) Sunday hours.”

[39] Clause 4.1.1.5 provides:

“Subject to the Company demonstrating that it has taken all reasonable steps to exhaust annual hours it may carry forward a maximum of fifty (50) unused hours from the current year for use in the next year or use fifty (50) in the current year from the next year. This has no application in the last year of the agreement.”

[40] Clause 4.1.2.1 of the Agreement provides:

“A Permanent Shift Work Employee (1820) is engaged to work eighteen hundred and twenty (1820) hours per annum, inclusive of public holidays and annual leave hours. This shall consist of a maximum of two hundred and eighty-eight (288) weekend hours. This will comprise of one hundred forty-four (144) Saturday hours and one hundred forty-four (144) Sunday hours.”

[41] Clause 4.1.2.5 of the Agreement provides:

“Subject to the Company demonstrating that it has taken all reasonable steps to exhaust annual hours it may carry forward a maximum of fifty (50) unused hours from the current year for use in the next year or use fifty (50) in the current year from the next year. This has no application in the last year of the agreement.”

[42] Clause 4.2 of the Agreement describes the way in which work is allocated to employees, and how employees are allocated to work. It is appropriate to set out the clause in full.

“4.2 Allocation of Work

4.2.1 Employees shall be individually rostered and the allocation and cancellation and all related circumstances shall be effected on the basis of the individual Employees at the Company’s discretion.

4.2.2 All Employees have a responsibility to consult the established work allocation listing daily for details of their working roster.

4.2.3 The Company shall provide a general equity in relation to the mix of shifts for Permanent Shift Employees. The Company will ensure that there is fair and equitable opportunity for Supplementary Employees in relation to their skills, competencies and availability.

4.2.4 Allocations for Monday to Saturday will be notified by 15:00 on the day prior to the requirement. Allocation for Sunday and Monday Public Holidays will be notified by 15:00 of the previous Friday. However where required, due to operational circumstances, such notification can be extended to 18:00.

4.2.5 The Company shall allocate work to meet operational requirements and such allocation may require various start times and work durations from seven (7) to twelve (12) hours.

4.2.6 Four (4) hour shifts may be allocated for all Employees for car vessels and Supplementary Employees only for work as outlined in Clause 5.2.5. Hours worked in excess of (4) may be increased in increments of one (1) hour, subject to Clause 4.2.10.

4.2.7 Minimum shifts of four (4) hours may also be allocated for all Employees utilised for lashing, cleaning, heavy lifts, AQIS washing, train loading/unloading (excluding zinc concentrate)), and fodder. Extensions beyond 4 hours for these tasks will be for a minimum of 7 hour shift.

4.2.8 Hours of work, inclusive of maximum shift lengths, start and finish times are included in the table hereunder.

Shift	Normal Commencement	Advance Start	Delay Start	Extension
Day	08:00	1,2,3*	1,2,3	1,2,3,4,5
Evening	16:00	1,2,3	1,2,3,4	1,2,3,4,5
Night	24:00	1,2,3	1	1,2,3,**

* Advance start at 05:00 is only utilised for initial Shift on vessel or point of work on a vessel.

** Midnight Shift completions between 08:00 and 10:00 to complete a point of work or complete a vessel.

4.2.9 The Company may list a shift as “subject to confirmation”. For the purpose of this clause confirmation shall be either cancellation or variation of the shift and apply for the following reasons:

● for the start of the vessel

● completion of a vessel

● train unload

● tidal birth window

● long weekends

The company will advise Employees via the established work allocation listing by 10:00 of the same day for evening and night shifts or by 10:00 the preceding day for Sunday and Public Holiday day shifts. “Subject to confirmation” shift start times may be advanced or delayed by up to two (2) hours. At least 4 hours notice must be provided prior to the new start time being applicable.

4.2.10 Any increase to a allocated shift length will be advised to the team leader or individual Employees as required within two (2) hours of shift commencement for a shift length originally allocated as a seven (7) hour shift.

4.2.11 Any increase to a allocated shift length will be advised to the team leader or individual Employees as required within four and a half (4.5) hours of shift commencement for a shift length originally allocated as a four (4) hour shift.

4.2.12 Extensions of normal seven (7) hour Shifts shall be worked for the following reasons:

(i) To complete a vessel or point of work

(ii) To align shift start times

(iii) Where adequately skilled labour is not available

(iv) Where Permanent Employees fall significantly behind on annualised hours

4.2.13 The Company may alter any advised extension period by advising either the team leader or Employees as required within six (6) hours of the shift start time only for outside the direct control of the Company e.g. weather, machinery breakdowns.

4.2.14 Employees may be required to commence work one half (1/2) hour early and to continue one half (1/2) hour later for the purposes of preparatory and closing work. In addition to provide continuity between shifts to ensure safe operation or vessel/cargo. The maximum Shift length is 12 hours.

4.2.15 Employees shall not be required to work more than twelve (12) consecutive days, of any allowable shift duration or combination.

4.2.16 Employees will not be required to work more than (3) consecutive twelve (12) hour day or evening shifts or seven (7) consecutive midnight shifts.

4.2.17 Where an employee has worked the maximum allowed shifts as per 4.2.1.5 or 4.2.1.6, the Company will grant the Employee a day off immediately thereafter.

4.2.18 Employees shall not be required to report for duty at any time earlier than (9) hours after the time he/she ceased working on any shift except where operationally required an eight(8) hour turnaround may be required. Employees engaged on evening shift shall be the last Employee allocated to the following day shift, subject to no available Employee having the skill required.

4.2.19 Notwithstanding the above, an Employee who finishes work between 01:59 and 09:59 shall have a minimum twelve (12) hour break before recommencing work.

4.2.20 It is the intention of the Company that Employees only be required to work one (1) shift per day notwithstanding that this may be affected by the capacity to advance and retard starts and through shift extensions up to twelve (12) hours as provided for in this Agreement.

4.2.21 The maximum number of permanent Employees to be off at any given time shall not exceed 25% of the permanent workforce at any given time. There will be flexibility to enable more than these numbers if it can be accommodated operationally.

4.2.22 The maximum number of supplementary Employees to be off at any given time shall not exceed 25% of the supplementary workforce at any given time. There will be flexibility to enable more than these numbers if it can be accommodated operationally.

4.2.23 The order of pick up shall be as follows:

i. Permanent employees with available hours

ii. GMIS’s

iii. Supplementary employees and Permanent employees (who have exhausted annual hours), who are subject to supplementary point system and skills.

[43] The MUA asserts that, on the proper application of clauses 4.1.1.5 and 4.1.2.5 that:

(a) NSS is required to take all reasonable steps to exhaust annual hours for PSWE’s 1970, and PWSE’s 1820’s.

(b) All reasonable steps includes following the order of pick as described in clause 4.2.23.

(c) If NSS did not take all reasonable steps to exhaust annual hours NSS should not have carried the PSWE’s hours over to the following year.

(d) If PSWE’s worked in excess of their annual hours they were entitled to be paid in accordance with clause 5.1.9 of the Agreement.

[44] It was argued by the MUA that the sub-clauses within clause 4.2 fall into three distinct categories of procedural, mandatory and discretionary. Procedural sub clauses were described as those that identify the process for how employees are to be notified about shifts (4.2.2, 4.2.4, 4.2.10, 4.2.11 and 4.2.13), as well as the types of shifts that can be worked (4.2.5, 4.2.6, 4.2.7, 4.2.8, 4.2.9, 4.2.12 and 4.2.14).

[45] The MUA said sub clauses 4.2.21 and 4.2.22 identify employees who have already, with prior approval of NSS, removed themselves from being able to work on a particular day and so are no longer on the list as being potentially allocated by the allocator on a particular day. 25

[46] The MUA said the next group of sub clauses, 4.2.15, 4.2.16, 4.2.17, 4.2.18, 4.2.19 and 4.2.20 are mandatory, and the mandatory criteria determine the pool from which employees are able to be chosen for work on a particular day in light of the employees recent work allocations. Once the mandatory exclusionary criteria have determined who is available to work then a further mandatory criteria applies to determining how work is to be prioritised amongst the pool of employees that being the order of pick in sub clause 4.2.23. 26

[47] The MUA emphasised that sub clause 4.2.23 required permanent employees with available hours (not employees who are behind or in front of their hours) must be given priority over GMIS’s and supplementary employees, and permanent employees who have exhausted their hours.

[48] The MUA described clause 4.2.3 as a discretionary sub clause. Sub clause 4.2.3 is said to require a general equity in relation to the mix of shifts for Permanent Shift Employees. It was said a separately required equitable opportunity is described to apply amongst and within supplementary employees. Sub clause 4.2.1 is said to be the other discretionary clause, however the discretion within it is not at large and cannot override the mandatory clauses within clause 4.2, including sub clause 4.2.23.

[49] The MUA referred to a number of authorities dealing the exercise of discretion, and that it does not permit a party to act unreasonably.  27 28The MUA asserts that the mandatory nature of the order of pick at 4.2.23 is no different to the mandatory nature of the exclusionary criteria in sub clauses 4.2.15, 4.2.17, 4.2.18, 4.2.19 or 4.2.20. The order of pick in sub clause 4.2.23 cannot be reduced to a mere consideration amongst many competing priorities by reliance on clause 4.2.1.

[50] The MUA said information about what steps NSS took to exhaust the hours of employees is peculiarly within its knowledge. The Applicant said there is no evidence of a policy or procedure which identifies the application of the Agreement obligations and any discretionary considerations in the allocation process.

[51] The MUA states that NSS hasn’t supplied any evidence about what steps it took to exhaust employee’s hours in 2013 and 2014, and the FWC only has available to it the evidence itself, and the evidence shows not all reasonable steps were taken.

[52] The MUA pointed to the example of Mr Downey, 29 and said that NSS had Mr Downey’s leave arrangements for about 10 months in advance. It was said that NSS knew he would be absent for much of December and January, and knew he would fall behind in his hours during that period while he was not at work and NSS knew there was no possible way that he could make up those hours if he was behind in the two weeks between his return to work and the end of the EBA year.30 The MUA said Mr Downey was unreasonably affected in comparison to employees who take leave in June for example.

[53] The MUA said that the evidence concerning the supplementary employees confirmed that without exception they were engaged in significant hours and obtained significant earnings across the year and virtually all of the 60 odd supplementary employees worked and were paid for around 2000 base hours in the 2014 year, compared to many of the permanents who didn’t get their minimum hours. 31

[54] The MUA contends that NSS has failed to take reasonable steps by not complying with its obligations under the Agreement, and failure to take other reasonable steps consistent with the particular circumstances of individual employees is a failure to comply with the Agreement and disentitles NSS from being able to carry over hours between the two EBA years. In closing submissions the Applicants representatives described what was sought as follows:

“There is evidence that various employees have been disadvantaged by this failure to comply and consistent with our previous submissions, we respectfully submit to the Commission that it should make orders in this matter requiring the – determining that the Respondent has breached its obligations under the EBA but the Respondent review its records in relation to those issues and identify those deficits and compensate the employees in relation to the additional hours beyond their hours that they worked and because of the improper carry over of the deficit between the years and to remunerate the employees for those hours worked consistent with the requirements of the Agreement. That is the supplementary rate.

Or, if it’s necessary or appropriate, such deficit be re-credited to employees’ current balance of hours for those, for example, who remain in a negative balance and the respondent should be made to confer with the applicant with a view to confirming a mechanism to ensure that the respondent complies with its obligations under the agreement and the parties be entitled to revert to the Commission in relation to any dispute arising as part of the process.”

[55] NSS described the primary emphasis of the case has been whether the employer has taken all reasonable steps to exhaust hours of permanent employees in accordance with the provisions of 4.1.1.5 and its related sub clauses 4.1.2.5 and 4.1.3.5, and the case run by the Applicant that the failure to take all reasonable steps is the failure to follow the order of pick at sub clause 4.2.23. The two questions to be considered are:

(i) To what extent was the employer required to strictly apply the order of pick in the context of the EBA generally, and

(ii) Is the failure to strictly comply sufficient to support the assertion that all reasonable steps were not taken.

[56] NSS made the point that any disadvantage borne by an employee being required to work additional hours, above their allocated hours is overcome by the fact that they are paid for those hours in the year before. NSS described it as a ‘swings and roundabouts’ system where employees are paid for hours they didn’t work, but they make them up in the following year. 32

[57] NSS rejects the Applicant’s contentions as erroneous and misguided and provided the following reasons:

(a) The “Order of Pick” is merely one of a number of competing considerations that must be taken into account in both clause 4.2 and the Agreement more broadly when determining which employees should be allocated work;

(b) When NSS’s actions are viewed within the context of clause 4.2 (as well as the wider Agreement), it is clear that it has met its obligations in taking all reasonable steps to exhaust annual hours; and

(c) In light of the above, NSS was entitled to carry over a maximum of 50 unused hours for permanent employees who had not exhausted their annual hours in EBA year into the following EBA year.

[58] NSS noted that it is entirely in its interest to attempt to exhaust annual hours as much as it can because it is only permitted to carry over a maximum of 50 hours and any other pre-paid unused hours are “thrown away”, which is obviously costly and financially undesirable.

[59] NSS contends that the onus of proof rests with the MUA to prove its case and submits that the MUA:

(a) Has not discharged this onus by failing to demonstrate through any of its evidence filed that NSS did not take all reasonable steps to exhaust the annual hours of some of its permanent staff;

(b) Cannot simply maintain that:

(i) Staff had availability to work certain days (as set out in the Downey Statement and Dafforn Statement), when they were not allocated work; and

(ii) That therefore this somehow demonstrates that NSS consequently failed to take all reasonable steps to utilise these hours; and

(c) Cannot allege that the Order of Pick was not followed, and that this also therefore means the Respondent failed to take all reasonable steps, without paying attention to the large number of other considerations for determining allocation as prescribed in clause 4.2 of the Agreement.

[60] NSS noted the often quoted principle set out by his Honour Justice Madgwick in Kucks v CSR Ltd 33 that narrow or pedantic approaches to interpretation are misplaced and an industrial instrument must be read so as to give effect to its evident purpose, despite inconsistencies or infelicities of expression which might tend to some other reading.

[61] Applying the principles in Golden Cockerel and Kucks to the circumstances of the present case, NSS submits that:

(a) The interpretation of, and weight to be afforded to, clause 4.2.23 of the Agreement begins with the consideration of its natural and ordinary meaning within its particular context;

(b) If the agreement has a plain meaning (which NSS contends that it does), evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement;

(c) The construction of the instrument requires discernment of the objective intention of the parties by reference to that which a reasonable person would understand by the language they have used to express their agreement;

(d) The subjective intention of the MUA and its representatives is irrelevant; and

(e) Narrow or pedantic approaches to interpretation are misplaced.

[62] NSS submits that clause 4.2.23 is uncontroversial and sets out the order of pick. NSS further submits that the clause needs to be considered within its broader context.

[63] NSS pointed to the “Key Objectives” and broad aims and intention of the instrument, which include among other matters:

“(a) To ensure NSS remains a profitable business, where employees can ensure they have a safe workplace and sustainable jobs, where customers are confident they receive productive and efficient service and shareholders gain a fair return to justify on going investment in the business”; and
“(b) the Parties recognise that it is essential to achieve a spirit of trust and co-operation between the Employer, Employees and Employee representatives as required within the overall objectives of enterprise-based Employment and that consideration of the business needs of the Company shall take priority.” [NSS’s emphasis added]

[64] NSS further submits that clause 4.2 prescribes a total of 23 different considerations that are to be taken into account when determining how and when employees are to be allocated work, of which the particular provision in question (clause 4.2.23) is contextually listed as last. NSS contends that the range of contextual considerations exist within clause 4.2 and include, but are not limited to, the clauses 4.2.1, 4.2.3, 4.2.15, 4.2.16, 4.2.17, 4.2.18, 4.2.19, 4.2.20, 4.2.21, 4.2.22.

[65] NSS submits that the statement of Mr Scott sets out the various matters that are considered by the person performing the allocator’s responsibilities. 34 Additionally, NSS submits that Mr Scott’s statement also provides evidence that the allocator also needs to take into account not simply immediate demand for work but also the anticipated upcoming schedule to ensure that employees will be available to perform the required work.

[66] NSS submits that it cannot be that, although clause 4.2.23 is a consideration, this provision is necessarily more important that the other matters in clause 4.2 somehow automatically supersedes or trumps all of the other clauses.

[67] NSS surmises that the intent of the clause, when considered within clause 4.2, is that the Order of the Pick is one of a large number of factors that are to be considered when determining which employees should be allocated particular shifts to work.

CONSIDERATION

[68] There has been some difficulty between the parties in establishing a clear characterisation of the dispute in this application. This difficulty has largely been a result of the failure to agree on, and provide the Commission with, an agreed question, or questions for arbitration. For clarity, I have determined that the questions to be determined in this dispute are as follows:

• What is the proper construction of clause 4.2.23?; and

2. Did the company fail to take all reasonable steps to exhaust annual hours of permanent shiftworkers?

Proper Construction of Clause 4.2.23

[69] Clause 4.2.23 of the Agreement reads as follows:

The order of pick up shall be as follows:

i. Permanent employees with available hours

ii. GMIS’s

iii. Supplementary employees and Permanent employees (who have exhausted annual hours), who are subject to supplementary point system and skills.

[70] Both parties agreed that the principles set out in Golden Cockerel 35are relevant to and are to be applied when determining the proper construction of enterprise agreements, and the principle in Kucks v CSR Ltd, thatthat narrow or pedantic approaches to interpretation are misplaced and an industrial instrument must be read so as to give effect to its evident purpose, despite inconsistencies or infelicities of expression which might tend to some other reading.

I accept that these principles are to be applied in determining the proper construction of clause 4.2.23.

[71] The parties agree that clause 4.2.23 is not controversial, however each have a different view on its construction.

[72] The MUA submits that clause 4.2 and its sub-clauses consist of a mix of procedural, mandatory and discretionary clauses relevant to employee’s allocation to work. 36 The MUA submits that clause 4.2.3 is a mandatory clause that applies to the employer when determining how work is to be prioritised amongst the pool of employees.37

[73] NSS contends that clause 4.2.23 needs to be considered within its broader context and that the order of pick is one of many considerations relevant to determining the allocation of work. NSS further contends that clause 4.2.23 was never intended to be given greater weight than other factors in clause 4.2.

[74] The principles set out in Golden Cockerel provide that evidence of surrounding circumstances is to be used to determine if an ambiguity exists. If the Agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain meaning of the Agreement.

[75] As there is a dispute about the construction of clause 4.2.23, it becomes necessary to consider whether clause 4.2.23 contains an ambiguity. Of particular contextual importance is that clause 4.2.23 is one of 23 sub-clauses contained within clause ‘4.2 – Allocation to Work’. NSS submits that clause 4.2 sets out a total of 23 considerations that are to be taken into account when determining how and when employees are to be allocated to work.

[76] The use of language in clause 4.2.23 in comparison to language used throughout the rest of clause 4.2 and its sub-clauses assists in determining whether ambiguity exists.

Clause 4.2.23 relevantly states:

“The order of pick up shall be as follows:”

…

…”

(emphasis added)

[77] The use of the word ‘shall’, whilst on its own may not be particularly ambiguous, in context of the totality of clause 4.2 the word assists in establishing that ambiguity may exist in clause 4.2.23. I note that ‘shall’ appears in clause 4.2 in the following clauses: 4.2.1, 4.2.3, 4.2.5, 4.2.12, 4.2.15, 4.2.18, 4.2.19, 4.2.21, 4.2.22.

[78] The Macquarie dictionary defines the word ‘shall’ as follows:

1. (indicating future likelihood): all this shall be yours.

2. (expressing intention or expectation, in the first person): I shall take a taxi; without treatment I shall die; what shall we do?

3. (expressing resolve, in the second and third person): you shall do as I say; the owner shall notify the tenant of any proposed inspection.

4. (used in suggestions): shall we dance?; shall I open the window?

[79] It is clear that the word ‘shall’ can be used to ‘express resolve’, which would support the MUA’s contentions in relation to the construction of clause 4.2.23. In the alternative, the word can ‘express intention or expectation’, ‘indicate future likelihood’ or be ‘used in suggestions’, which would favour NSS’s contentions on the construction of the clause.

[80] Clause 4.2 as a whole has significance to both the employer and the employees as it sets out the way in which employees are to be rostered each day.

[81] NSS submits that clause 1(a) and (b) of the Agreement titled “Key Objectives” sets the broad aims of the Agreements and highlights that “…consideration of the business needs of the Company shall take priority”. NSS submits that clause 1(a) and (b) of the Agreement provides context to the interpretation of clause 4.2.23.

[82] As previously noted, clause 4.2.23 is one of 23 sub-clauses relating to the allocation of work. Whilst not a conclusive factor, it is noteworthy that clause 2.2.23 is listed as the last of the 23 sub-clauses that relate to the allocation of work. It is also of note that the clause is a new addition to the Agreement.

[83] NSS submits that there are a range of considerations that assist in the proper construction of clause 4.2.23. For example:

(a) 4.2.1 Employees shall be individually rostered and the allocation and cancellation and all related circumstances shall be effected on the basis of the individual Employees at the Company’s discretion.

(b) 4.2.3 The Company shall provide a general equity in relation to the mix of shifts for Permanent Shift Employees. The Company will ensure that there is fair and equitable opportunity for Supplementary Employees in relation to their skills, competencies and availability.

(c) 4.2.21 The maximum number of permanent Employees to be off at any given time shall not exceed 25% of the permanent workforce at any given time. There will be flexibility to enable more than these numbers if it can be accommodated operationally.

(d) 4.2.22 The maximum number of supplementary Employees to be off at any given time shall not exceed 25% of the supplementary workforce at any given time. There will be flexibility to enable more than these numbers if it can be accommodated operationally. [Respondent’s emphasis added]

[84] Furthermore, it is important to consider that there are competing obligations imposed on the employer by the individual provisions within clause 4.2 and that the strict application of clause 4.2.23 may lead to issues with the proper application of other sub-clauses of 4.2.

[85] The meaning of the word ‘shall’ may be susceptible to more than one meaning and therefore may create ambiguity. However, in the present circumstances, when clause 4.2.23 is considered in its surrounding circumstances and in context, and when the competing obligations imposed on the employer by clause 4.2 as a whole are factored in, the meaning of the word ‘shall’ in clause 4.2.23 as a whole is clear and unambiguous.

[86] I am satisfied clause 4.2.23 has a plain meaning and that the proper construction of the clause favours NSS’s position. Clause 4.2.23 provides for the order of pick, and the order of pick is but one of a number of factors to be considered when determining which employees should be allocated particular shifts for work. It follows that a failure to follow the order of pick does not automatically go to a failure to comply with the Agreement.

Did the company fail to take all reasonable steps to exhaust annual hours of permanent shiftworkers?

[87] NSS argued that the key to determining whether the company has taken all reasonable steps to exhausts annual hours of permanent shiftworkers is the extent to which the order of pick is to be applied in respect to the allocation of work. NSS acknowledges from the outset that they do not contest that on every occasion in rostering their 80 employees that they followed the order of pick on every occasion on every roster in every shift. NSS further submits that they did not follow it on every occasion or apply it exclusively because it sat within a broader provision of the Agreement that contained competing obligations which had to be balanced and measured every time somebody was being rostered on or off. 38

[88] As the proper construction of clause 4.2.23 is settled, whether the employer failed to take all reasonable steps to exhaust annual hours will depend on the specific circumstances for a particular employee.

[89] At the Hearing, the MUA called four witnesses in relation to the exhaustion of annual hours. The MUA’s witnesses were as follows:

• Mr Douglas Jepsen



• Mr Peter Downey



• Mr Warren Tunaley



• Mr Martin Lawlor

[90] All of the witnesses called by the MUA are permanent shiftworkers engaged to work 1970 hours annually.

Jepsen

[91] Mr Jepsen agreed that he would ordinarily work approximately 240 shifts throughout the year. 39 Of those 240 shifts, Mr Jepsen identified 20 occasions in which he was free to work but was not allocated shifts and alleged on these occasions that there was a misapplication by NSS of their obligations under the Agreement.40

[92] In cross examination, it was not disputed that, of the 20 occasions that Mr Jepsen had complained about not being allocated shifts, NSS had identified that 13 of those occasions were as a result of Mr Jepsen being ahead of his annual hours at the time of shift allocation. 41

[93] Furthermore, Mr Jepsen agreed that NSS’s primary consideration and obligation when allocating shifts is equitable distribution of work amongst all workers. 42 Mr Jepsen also agreed that it would be equitable to give preference to and allocate shifts to an employee who was behind in their annual hours over an employee who was ahead of their annual hours.43 44

[94] With respect to casual employees, Mr Jepsen agreed that there are certain casual employees in the workforce that have a guaranteed minimum income. Mr Jepsen also agreed that NSS has an obligation to roster those casuals on from time to time and in an equitable way to ensure that they are meeting their obligations under the Agreement.

[95] Mr Jepsen also identified 6 June 2013 as an occasion in which he should have been allocated work. Mr Jepsen accepted that there were two reasons that he was not allocated shifts on 6 June, being that the only jobs that were available on that day were at a lower grade than his own, and that he worked eight consecutive shifts commencing on the next day 7 June 2013. 45

[96] Mr Jepsen agreed that, from time to time throughout the year he can be rostered on to work at a lower grade than his own. 46 Mr Jepsen also agreed that is a more equitable and better use of his allocated hours for NSS to allocate shifts according to his grade, rather than working him at a lower grade, particularly where there are employees at that lower grade who are available to work.47

Downey

[97] Mr Downey is employed at the grade 6 classification, which is the highest classification under the Agreement. Mr Downey estimated that 30 percent of the work he performs is at a lower grade than grade six. 48 Mr Downey agreed that, from a business perspective it’s a better use of a grade six employee to engage them on duties that require a grade six rather than at a lower level whenever possible.49

[98] Mr Downey identified 27 occasions in which he says he was available to work but was not rostered on to work. Of those 27 occasions, Mr Downey conceded that there were 14 occasions where he was ahead in his annual allocated hours. 50

[99] Mr Downey agreed that the allocation of work for a particular roster requires considering, first of all, who’s available in the pool of permanent workers, of guaranteed supplementary workers, supplementary workers, the relevant skillsets of each employee and what type of work NSS has available. 51

[100] Mr Downey agreed in cross examination that a fundamental tenet of the Agreement is the equitable distribution of work. 52 Mr Downey also agreed that, in most cases, it would be equitable to allocate shifts to someone who is behind in their annual hours over someone who was ahead.53

[101] Mr Downey agreed that the competing interests of minimum income supplementary employees also need to be given appropriate consideration to ensure that their minimum income was reached. 54

[102] With respect to Mr Downey’s complaint that he was not rostered on 6 or 7 August, Mr Downey conceded in cross examination he was not rostered on those dates as he was about to commence a period of 12 consecutive shifts. Mr Downey noted that whilst he had worked those shifts, he was not notified in advance that he would be doing so. 55

[103] Mr Downey agreed that it is the very nature of the work that he performs that there is an element of unpredictability, and that unpredictability makes it difficult for NSS to notify employees in advance of their future roster allocations. 56

Tunaley

[104] Mr Tunaley identified 25 instances in which he was not allocated shifts. Mr Tunaley agreed that 7 of those occasions were as a result of being ahead on his allocated hours at the time of rostering. 57 58

[105] Mr Tunaley agreed that the equitable and fair distribution of work to employees was the fundamental consideration for the allocation of work. 59

[106] Mr Tunaley also agreed that in relation to Saturday and Sunday work, employees are allocated a maximum number of hours to be allocated. As an example, employees are to be allocated a maximum of 200 hours for Sundays. Mr Tunaley agreed that the amount of Saturdays and Sundays that have been worked is a relevant factor to be considered for rostering and that employees generally can’t exceed that rostering limit. 60

[107] Mr Tunaley, is a grade six employee, and agreed that it was not uncommon for someone at that level to work below their grade level when necessary. 61 In response to whether it was ideal for NSS to have him working below grade six, Mr Tunaley agreed that, depending on the specific circumstances, it is more appropriate to allocate shifts to employees at their grade rather than to allocate lower grade shifts to grade level employees.62

Lawlor

[108] Mr Lawlor identified 12 occasions in which he alleged he was not allocated work in contravention of the company’s obligations under the Agreement. 63 Mr Lawlor conceded that there were 10 occasions, out of the 12 he had identified, in which he was not allocated shifts due to being ahead on his annual hours for that particular period. Mr Lawlor agreed that the primary concern for all parties is that the allocation of work is done in an equitable fashion, in a fair way, so that’s a proper spread of work amongst everybody who’s available to work.64

[109] In response to the application of the principle of equity in relation to roster allocations, Mr Lawlor agreed that priority in the order of pick should be to allocate shifts to employees with the lowest hours first. 65 With respect to the remaining two shifts in dispute, Mr Lawlor conceded that on the proceeding day he was allocated for 12 consecutive shifts in a row.

Conclusion

[110] The evidentiary case before the Commission in relation to the issue of the exhaustion of annual hours is not sufficient to determine in favour of the MUA.

[111] The evidence provided by the MUA’s witnesses tended to show that NSS has had regard to and applied the rostering principles set out in clause 4.2 and there is no other evidence to suggest that NSS has failed to take all reasonable steps to exhaust employees annual hours.

[112] On the basis of these findings, the answer to the second question as to whether the company failed to take all reasonable steps to exhaust annual hours of permanent shiftworkers is no.

COMMISSIONER

 1   Exhibit 2

 2   Exhibit 9

 3   Exhibit 10

 4   Exhibit 1

 5   Exhibit 3

 6   Exhibit 5

 7   Exhibit 7

 8   Exhibit 11

 9   Exhibit 4

 10   Exhibit 6

 11   Exhibit 8

 12   PN39

 13   PN42

 14   PN43

 15   PN52

 16   PN104

 17   PN1033-1087

 18   PN1034

 19   PN1035-1055

 20   PN1110

 21   PN1135

 22   PN1226

 23   PN1239

 24   [2014] FWCFB 7447 at p41

 25   PN1058

 26   PN1059

 27   Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357

 28   William Sindall plc v Cambridgeshire County Council [1993] EWCA Civ 14

 29   PN1074

 30   PN1080

 31   PN1078

 32   PN1144

 33 (1996) 66 IR 182

 34   Exhibit 10, p9

 35   [2014] FWCFB 7447 at p41

 36   PN1058

 37   PN1059

 38   PN1145

 39   PN185

 40   PN186 –PN187

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 65   PN655

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