ThyssenKrupp Elevators Australia Pty Limited

[2010] FWA 8732

[2010] FWA 8732

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009

s.217 - Application to vary an agreement to remove an ambiguity or uncertainty

ThyssenKrupp Elevators Australia Pty Limited

(AG2010/17546)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 26 NOVEMBER 2010

Application to vary the ThyssenKrupp Elevator Queensland Union Collective Agreement 2008 on the grounds of uncertainty or ambiguity - transfer of business - transferrable instrument - whether application clause can give rise to uncertainty - transitional provisions.

[1] This matter concerns an application made by ThyssenKrupp Elevators Australia Pty Limited (“the new Employer”) under s.217 of the Fair Work Act 2009 (“the Act”). The application seeks for Fair Work Australia (“FWA”) to remove an ambiguity or uncertainty in the relevant collective agreement by varying the offending clauses.

[2] The application is supported by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, which is the employee organisation that is covered by the relevant enterprise agreement.

[3] The relevant enterprise agreement which is sought to be varied is the ThyssenKrupp Elevator Queensland Union Collective Agreement 2008 (“the Agreement”).

[4] Section 217 of the Act reads as follows:

217 Variation of an enterprise agreement to remove an ambiguity or uncertainty

(1) FWA may vary an enterprise agreement to remove an ambiguity or uncertainty on application by any of the following:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.

(2) If FWA varies the enterprise agreement, the variation operates from the day specified in the decision to vary the agreement.

[5] The background to the current application is as follows.

[6] In July 2010, a transfer of business is said to have occurred when ThyssenKrupp Elevators Queensland Pty Limited (“the old employer”) transferred its business and its employees (“the transferred employees”) to what is said to be an associated entity, which is the new Employer. It appears the old employer was a wholly owned subsidiary of the new Employer.

[7] As a consequence of the transfer of business, it was put to me that the new Employer became bound by the Agreement.

[8] The issue (at least as initially put to me) that arises and that provides the reason for the application is that the new Employer “is concerned that its customers and the [transferred employees] may be confused about the Agreement’s application given that it does not refer to the [new Employer]”.

[9] Consequently, the new Employer seeks to make the following variations to the Agreement:

• The Agreement title be varied so to remove the word “Queensland” and to substitute the work “Australia”; and



• All references to the same effect in the text of the Agreement be varied in the same manner.

[10] The application initially raised concerns as to jurisdiction which I communicated in writing to the new Employer. Subsequently, when the matter was pressed by the new Employer, I conducted a hearing and further scoped some concerns as they appeared to me to be. The new Employer thereafter provided further written submissions in support of the application and invited me to determine the application on the basis of the totality of the materials before me. I now do so.

[11] The rationale for the application came to be somewhat more complex than I have set out above. There are sound business reasons for the application. The new Employer has set out to consolidate its employment within a single national entity and is in the process of de-registering the Queensland business (the old employer) as a company.

[12] The ambiguity or confusion arises, it is said, from the fact that the employer of the transferred employees is no longer the old employer but the new Employer. Because of this, ambiguity or uncertainty arises as to the application of the Agreement. It is said that the ambiguity or uncertainty of the application of the Agreement is exacerbated by the fact the old employer is no longer an employer of any employees and, at a point in the future, may not exist as a registered company.

[13] The new Employer also contends that ambiguity or uncertainty arises for reason that third parties may be confused by the reference in the Agreement to the old employer (or specifically to the reference to ‘Queensland’ in the title of the Agreement and to the existence of a Queensland corporate entity in the application clause therein). The new Employer, it is said, is required to attach copies of the industrial instruments to which it is bound to its tender documentation. I will discuss this in more detail below.

CONSIDERATION

[14] At the outset, I need to determine whether FWA has the jurisdiction to remove an ambiguity or uncertainty in relation to an agreement approved in 2008 by the Workplace Authority under the terms of the Workplace Relations Act 1996 (“WR Act”).

[15] Item 2 of Part 2 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“TPCA Act”) relevantly reads as follows:

Schedule 3—Continued existence of awards, workplace agreements and certain other WR Act instruments

[...]

2 WR Act instruments that continue in existence as transitional instruments

(1) Each WR Act instrument (see subitem (2)) that becomes a transitional instrument (see subitems (3) to (4A)) continues in existence in accordance with this Schedule from when it becomes a transitional instrument, despite the WR Act repeal.

[...]

(2) Each of the following instruments is a WR Act instrument:

[...]

(c) a workplace agreement;

[...]

Note 1: Workplace agreements are either collective agreements or ITEAs. [...]

[16] At the commencement of the Act, the Agreement (as made under the WR Act) became a collective agreement based transitional instrument and continued in operation as a consequence.

[17] Item 10 of Part 3 of the TPCA Act reads as follows:

10 All kinds of transitional instrument: variation to remove ambiguities etc.

(1) On application by a person covered by a transitional instrument, FWA may make a determination varying the instrument:

(a) to remove an ambiguity or uncertainty in the instrument; or

(b) to resolve an uncertainty or difficulty relating to the interaction between the instrument and a modern award; or

(c) to remove terms that are inconsistent with Part 3-1 of the FW Act (which deals with general protections), or to vary terms to make them consistent with that Part.

Note: For variation of a transitional instrument to resolve an uncertainty or difficulty relating to the interaction between the instrument and the National Employment Standards, see item 26.

(2) A variation of a transitional instrument operates from the day specified in the determination, which may be a day before the determination is made.

[18] Because of the above provisions, it follows, FWA has jurisdiction to vary a collective agreement based transitional instrument to remove an ambiguity or uncertainty. Because of this, I will amend the Applicant’s application and accept the application as an application made pursuant to Item 10 of Schedule 3 of the TPCA Act.

[19] In effect, there is little difference between the jurisdiction vested in FWA in this regard and the jurisdiction vested in its predecessor, the Australian Industrial Relations Commission, in respect of s.170MD(6) of the WR Act. There is a line authorities arising from the operation of s.170MD(6) of the WR Act.

[20] The relevant authorities¹ provide guidance as to the appropriate approach to exercising jurisdiction of the kind contemplated by this application.

[21] The appropriate approach necessitates identification within the terms of the agreement of a discernable ambiguity or uncertainty. The process of identification is not a subjective one. The process of identification of an ambiguity or uncertainty “involves an objective assessment of the words used in the provision under examination” in their context.²

[22] It is only after the jurisdictional fact (of the existence of an ambiguity or uncertainty being objectively apparent in the terms of the agreement) is established that FWA may then turn to consider whether to exercise its discretion to vary the agreement to remove the ambiguous and uncertain provisions (and to consider at the same time the appropriateness of the manner of the variation).

[23] It appears to me that this application arises in a particular context. That is, the concerns over the application clause only arise as a consequence of their having been a transfer of business within the meaning of s.311 of the Act, as the business of the old employer has been transferred to a related corporate entity (which appears to be the parent company).

[24] The argument put to me is that the application clause and title and other consequential references to a transferable instrument as defined in Item 2 of Part 2 of Schedule 3 of the TPCA Act gives rise to inherent uncertainty or ambiguity when the title of the transferable instrument and its application clause does not align with the corporate identity of the new Employer.

[25] In my view, there are likely to be very few circumstances in which the title and application circumstances in the transferrable instrument will have perfect alignment with the corporate identity of the new Employer in circumstances of a transfer of business.

[26] This is one such case.

[27] But despite there being such disjunction of such a kind it does not follow that the application of the transferrable instrument itself is inherently disposed to being ambiguous or uncertain as to the application of the transferable instrument.

[28] If this were the case, the transfer of business provisions in the Act would be said to operate so as to give rise, by necessity, to ambiguous or uncertain outcomes in respect of the application of transferrable instruments.

[29] I very much doubt that could be the case. The transfer of business provisions of the Act operate so as to make the new Employer bound by the transferable instrument, regardless of the title of the transferable instrument and its applications clause. The Act, by its operation, has created legal obligations to which the new Employer is bound in relation to the transferrable instrument. The corporate and legal status of the old employer is not relevant to the obligations.

[30] What is here in question is the residual reference in the transferrable instrument to the old employer for purposes of the application clause as it was prior to the transfer of business or by continued references elsewhere to the old employer (in the title of the transferrable instrument and elsewhere in the text of the instrument).

[31] Such clauses are essentially made redundant by operation of the s.311 of the Act and the scope and application clauses are displaced by the Act’s direction (given effect by FWA’s consequent orders).

[32] There was a further contention put to me that there is:

“uncertainty [...] for employees covered by the Agreement, but more importantly, for new employees who are engaged by [the new Employer] and who perform work within the scope of the Agreement, given that those employees will be bound by the Agreement pursuant to s.313 of the Act (and by virtue of Items 7 and 8 of Schedule 11 of the TCPA Act).”

[33] The ambiguity or uncertainty here said to exist is that:

“[t]hose employees will be directed by [the new Employer] to the Agreement as being the instrument which governs the terms and conditions of their employment, even though the agreement refers to [the old employer] an entity which does not employ them and which no longer exists. ”

[34] As I have suggested above, there cannot be said to be any objectively identifiable ambiguity in relation to the legal obligation of the (new) employer or the legal entitlements of the employee inherent to the application clause of a transferrable instrument. The Act operates to provide legal certainty in these very respects.

[35] The new Employer contends that the retained references to the old employer cause “uncertainty for third parties dealing with” the new Employer:

“Having an agreement which refers to a de-registered company, in respect of the company tendering for work, creates confusion and uncertainty to the extent that it may adversely affect [the new Employer’s ability to win tenders].”

[36] I should note at this point that notwithstanding the content of paragraph 33 above, it was not been put to me that the old employer has ceased to exist as a registered company at the time of this application. As best as I know, it may cease to so exist as a registered company in the future.

[37] That said, the new Employer claims, in any event, that FWA should have regard to the perceptions or considerations of such “third party interests of an agreement”. Putting aside whether such perfections might be adverse to the new Employer, the issue again is whether the residual references in the application clause are susceptible to more than one meaning. The views of any third party might not be determinative of this, but they might assist in forming the relevant conclusion.

[38] In my view, arguably such clauses are susceptible to more than one meaning, but only as a consequence of the business transfer. That is, prior to the business transfer the words in the Agreement were uncontroversial and reflected the mutual intention of the parties. But now because the application clause has been rendered obsolete by the operation of s.311 of the Act, the meaning of the clauses has become controversial.

[39] It appears to me that it might be unduly restrictive if I were to require that any controversy in relation to the meaning of a clause or clauses in an agreement was contingent only upon the mutual intention of the parties and reflected in the drafting at the relevant time, and not upon the impact of subsequent changed corporate (or external) circumstances upon the meaning of those same clauses.

[40] Though not without some measure of anxiety on my part, I conclude that the impact of s.311 of the Act has been to make the residual application clause susceptible to uncertain meaning (in so far as it has a redundant meaning). Accordingly, I find that FWA has jurisdiction to vary the Agreement.

[41] Given that I have discretion now to vary the Agreement, I will exercise that discretion in favour of the Applicant. But in so undertaking, I make two points:

• Where the transferring employees do not include all the employees covered by the agreement, scope to vary the agreement under s.217 might not be available (as a matter of discretion and\or jurisdiction); and



• The decision to vary this Agreement will only come into effect when the Applicant provides a draft of the varied Agreement for approval or else identifies all the clauses in the Agreement that are to be varied along with the proposed variation in each case (and does not rely upon FWA on its behalf to identify all variations in the Agreement which it seeks). This is a requirement of Form F25 of FWA’s Forms (noting that the Agreement is a transitional instrument).

SENIOR DEPUTY PRESIDENT

Appearances:

Ms P Salewicz of the Australian Industry Group for the Applicant

Ms K Inglis for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

Hearing details:

2010.

Brisbane.

October 1.

Final written submissions:

3 November 2010.

¹ See particularly Appeal by Tenix Defence Pty Limited against decision of Hingley C of 11 January 2002[PR913098] – Tenix Defence Pty Limited - Tenix Defence Systems Pty Limited Certified Agreement 2001-2004 (C2002/861) (9 May 2002) [PR917548]

² Appeal by Tenix Defence Pty Limited against decision of Hingley C of 11 January 2002[PR913098] – Tenix Defence Pty Limited - Tenix Defence Systems Pty Limited Certified Agreement 2001-2004 (C2002/861) (9 May 2002) [PR917548] at PN 29

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