Transport Workers' Union of Australia v Flemington Fields Pty Ltd T/A GKR Transport

[2011] FWA 4718

[2011] FWA 4718

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Transport Workers’ Union of Australia
v
Flemington Fields Pty Ltd T/A GKR Transport
(C2011/3193)

COMMISSIONER WILLIAMS PERTH, 29 JULY 2011

Application to deal with a dispute.

[1] This matter is an application made under section 739 of the Fair Work Act 2009 (the Act) by the Transport Workers’ Union of Australia (the Applicant). The Respondent is Flemington Fields Pty Ltd trading as GKR Transport.

[2] The dispute was referred to Fair Work Australia pursuant to the dispute settlement procedure in the Transport Workers’ Union and GKR Transport Union Collective Agreement 2010 [AE 880794] (the “Agreement”).

[3] This clause is as follows:

6 DISPUTE RESOLUTION

Employee-Employer Dispute Settlement Procedure

Any dispute or grievance that arises at the workplace between an employee(s) and the Company about the interpretation or application of this Agreement or in relation to any matters pertaining to the relationship of employer and employee must be dealt with in the following manner:

The matter must first be discussed by the aggrieved employee(s) directly with his or her or their immediate supervisor;

If the matter remains in dispute, it must next be discussed with the supervisor’s

immediate superior or another representative of the Company appointed for the purpose of this procedure. The TWU delegate for the worksite has the right to attend at and participate in this discussion as the representative of an employee provided that the TWU delegate is the representative of the employee’s choice;

If the matter remains in dispute, it must next be discussed with the relevant manager of the Company. The relevant TWU State Secretary (or his/her nominee) has the right to attend at and participate in this discussion as the representative of an employee provided that the relevant TWU State Secretary is the representative of the employee’s choice;

If the matter remains in dispute, it must next be submitted to the Australian Industrial Relations Commission (AIRC) for conciliation.

Until the matter is resolved by agreement, conciliation or arbitration, work will continue in accordance with the status quo. No party is to be prejudiced as to the final settlement by the continuance of work in accordance with this procedure.

The parties must co-operate to ensure that these procedures are carried out expeditiously. The parties undertake to resolve any disputes in a timely manner in accordance with the Disputes Procedure.

[4] The application dealt with three matters, the rate of payment whilst on annual leave, inductions for new employees and income protection insurance.

[5] These matters were the subject of a conciliation conference. At the conclusion of the conference the issue of the rate of pay for employees whilst on annual leave remained in dispute. The Applicant has subsequently requested that this matter be resolved by arbitration.

[6] Specifically the Applicant has sought that the tribunal determine by arbitration the answer to the following questions:

1. Are the annual leave entitlements of the employees covered by the Agreement, determined by reference to the provisions of clause 23.2 of the Road Transport (Long Distance Operations) Award 2010 (the “Award”):

a. at the time the Agreement was made; or

b. at the date the Agreement was certified?

2. If the answer to question 1 is that the Annual Leave entitlements are determined by reference to the provisions clause 23.2 of the Award at the time the Agreement was certified, is the employer required to pay an employee for any period of annual leave on the basis of the rates of pay in the Award, or the rates of pay in the Agreement.

Background

[7] The background to this matter in chronological order is as follows.

[8] As at 26 March 2010 the Award’s annual leave clause was:

23. Annual Leave

23.1 Annual leave is provided by the NES. Annual leave does not apply to casual employees.

23.2 Payment for period of annual leave

(a) Before going on annual leave, an employee must be paid the wages they would have received in respect of the hours the employee would have worked had the employee not been on leave during the relevant period.

(b) In addition to the payment referred to in clause 23.2(a) each employee must receive a loading at the rate of 30% calculated on the relevant minimum weekly rate in clause 13.1. The loading prescribed by this subclause will not apply to proportionate leave on termination.

......

[9] On 26 March 2010 the Agreement was endorsed by a majority of employees and so was made within the meaning of s.182. The Agreement’s annual leave clause is as follows:

5 LEAVE

Annual Leave

An employee (other than a casual employee) is entitled for each year of service, to 5 weeks annual leave to be paid as per section 23.2(a} and 23.2(b} of the Road Transport (Long Distance Operations) Award 2010.

Any time in respect of which an employee is absent from work, except on paid leave as prescribed by this Agreement, shall not count for the purpose of determining their right to annual leave. Annual leave credits do not accrue whilst receiving workers compensation payments.

An employee whose employment terminates and they have not been allowed the leave prescribed under this clause they shall be given payment in lieu of that leave.

[10] On 29 July 2010 the Award was varied by a Determination of Fair Work Australia and the annual leave provision, clause 23, from that date on was as follows:

23. Annual Leave

23.1 Annual leave is provided by the NES. Annual leave does not apply to casual employees.

23.2 Payment for period of annual leave

(a) Before going on annual leave, an employee must be paid wages calculated in accordance with subclause (b) for the period of leave the employee takes.

(b) The wages referred to subclause (a) will be calculated to include the following:

(i) A proportion of the applicable minimum weekly rate prescribed by clause 13.1 which corresponds to the amount of leave taken, and

(ii) An additional loading of 30%. The loading prescribed by this subclause will not apply to proportionate leave on termination.

………………

[11] On 14 September 2010 the Agreement was approved (certified) by Fair Work Australia 1. The lodgment of the Agreement for approval was delayed because of internal administrative issues within the Applicant.

Submissions of the Applicant

Question 1

[12] There was a delay of some six (6) months between the date on which the Agreement was made by the employees who were to be covered by it, and the date on which the Agreement was certified (approved) by Fair Work Australia;

[13] During this period, clause 23.2 of the Award was varied by Fair Work Australia; and

[14] The Applicant is of the view that clause 5 of the Agreement must be read in conjunction with clause 23.2 of the Award as it was at the time that the Agreement was made. However, the Respondent has adopted the position that clause 23.2 of the Award as it is presently worded applies.

[15] Pursuant to section 182(1) of the Act, the Agreement was made on 26 March 2010, that being the date on which a majority of employees who were to be covered by the Agreement, and who cast a valid vote, approved the Agreement.

[16] The Agreement was certified by Fair Work Australia, pursuant to the provisions of the Act, on 14 September 2010.

[17] The reason for the delay in the Agreement being certified was a misunderstanding between the Federal Office of the Transport Workers’ Union of Australia and the Western Australia Branch as to whom would lodge the Application to certify the Agreement.

[18] The effect of the 29 July 2010 variation to the Award is that it results in employees proceeding on annual leave being paid less than they would be paid if their payment was calculated in accordance with the provisions of clause 23.2 of the Award as it was prior to the amendment.

[19] The Applicant submits that the reference in clause 5 of the Agreement to clause 23.2 of the Award is a reference to 23.2 as it was worded at the date the Agreement was made on 26 March 2010.

[20] Any other application of clause 5 of the Agreement would, in the Applicant’s submission, be contrary to the intent of the Act as it would in effect allow for a significant variation to an enterprise agreement after it had been made, and without having to obtain the approval of the affected employees.

[21] If the Respondent’s interpretation of the Agreement was accepted, then this would mean that enterprise agreements could be varied between the time that they had been made by the employees affected by the enterprise agreement and the time that the agreement was certified by Fair Work Australia.

[22] If the parties had intended that clause 23.2 of the Award as presently worded would apply to the Agreement, then they would have stated this in the Agreement. That is, the parties would have included the words “as varied from time to time” at the end of the first paragraph of clause 5, after the words “Road Transport (Long Distance Operations) Award 2010”.

Question 2

[23] In the Statement of Mark Cunningham, the Respondent’s Human Resources Manager, the Respondent states that it presently pays employees covered by the Agreement 38 hours pay for each week of annual leave at the applicable rate of pay under the Transport Workers Union and GKR Transport Union Collective Agreement 2010 (“the Agreement”). That is, the Respondent does not pay the employees any leave loading on the rate of pay in the Agreement.

[24] The Respondent appears to have adopted this following position concerning the calculation of the amount that employees are entitled to be paid for periods of annual leave pursuant to the Agreement:

• The Agreement provides (in clause 5) that when an employee goes on annual leave the amount the employee is to be paid for the period of annual leave is in accordance with Clause 23.2 of the Road Transport (Long Distance Operations) Award 2010 (“the Award”).



• This reference is to clause 23.2 of the Award as it is presently worded;



• Clause 23.2 of the Award (as at is presently worded) provides that an employee on annual leave is paid for the period of leave calculated on the basis of a proportion of the applicable minimum weekly rate prescribed by the Award together with an additional loading of 30%.



• The amount that the employees are being paid in relation to a period of annual leave is (allegedly) more than the hourly rate of pay prescribed by the Award plus 30%, and therefore, the Respondent considers that it is paying the employees more than the amount that the employees are entitled to pursuant to the Award.

[25] The Applicant submits that, even if the Respondent was correct in its argument that Clause 23.3, as it was at the time the Agreement was approved applies, which is not conceded, the Respondent’s position, that the rate of pay as set out in the Award applies for the purposes of calculating the amount that the employees are required to be paid for periods of annual leave, cannot be correct.

[26] The Applicant submits that the effect of clause 5 of the Agreement is that the terms of clause 23.2 of the Award are incorporated into the Agreement, and that therefore, the rates of pay set out in the Agreement apply in relation to the calculation of the amount that an employee is required to be paid for a period of annual leave.

[27] Any other interpretation of clause 5 of the Agreement would defeat the purpose of the having a leave loading, which is to compensate workers for extra payments, such as overtime and special allowances, which they would not normally expect to get over and above their ordinary pay if they were at work instead of taking holidays 2.

[28] The effect of the Respondent’s interpretation of clause 5 of the Agreement is that it substantially diminishes the annual leave benefit that the employees are entitled to pursuant to the Agreement.

[29] The employees covered by the Agreement work long hours, including working on weekends and public holidays. Presently those employees are paid the sum of $893.00 for each week of annual leave (38 hours at $23.50) which is significantly less than what they would have earned if they did not proceed on annual leave.

[30] With a loading of 30%, these employees would receive the sum of $1,160.90 for a week’s annual leave, which is still considerably less than what they would have earned if they had not proceeded on annual leave.

[31] The fact that long distance truck drivers earn significantly more than the “base” weekly wage under the Award is recognised by the inclusion of a 30% leave loading in the Award, which is higher than the “standard” leave loading of 17.5%. This higher loading is included in the Award to try to place these truck drivers as close as possible, financially, to the position that they would have been had they not proceed on annual leave.

[32] Having regard for all of the matters set out above, the Applicant submits that the correct answer to the second question is that if the Annual Leave entitlements of the employees covered by the Agreement are determined by reference to the provisions clause 23.2 of the Award at the time the Agreement was approved, then the Respondent must pay the employee at the applicable rate of pay in the Agreement plus a loading of 30%.

Respondent’s submissions

[33] The Respondent says the Applicant has not accurately reflected the Respondent’s position. It is not correct to say the Respondent has adopted the position that clause 23.2 of the Award as it is currently worded now applies to the annual leave payment calculation.

[34] The Respondent agrees that during the bargaining process for the Agreement, the parties disagreed in relation to the correct interpretation of sub-clause 23.2 of the Award as that clause stood at that time.

[35] Critically, this disagreement led to the parties agreeing to draft the annual leave clause of the Agreement to make reference to the Award rather than including specific words in the Agreement.

[36] It is the Respondent’s position that it has at all relevant times interpreted sub-clause 23.2 of the Award to mean that employees are entitled to annual leave calculated on applicable minimum hourly rates of 38 hours per week, plus a 30% loading. As such, the statement by the Applicant misstates the Respondent’s position because it suggests that the variation of the Award on 29 July 2010 led to the Respondent changing its position. This is not the case.

[37] The Respondent’s position is that the determination dated 29 July 2010 did not result in a reduced entitlement, it simply removed an ambiguity in the Award which made the entitlement clearer.

[38] The Award, as it currently applies, clarifies and confirms that the Respondent’s interpretation of sub-clause 23.2 of the Award that it held as at the date the Agreement was made was the correct interpretation, namely, that annual leave is paid at applicable minimum hourly rates.

[39] No explanation has been provided by the Applicant as to why it proceeded to seek the approval of the Agreement in circumstances where it now alleges it had been “varied” at the time it lodged the Agreement and supported its approval.

[40] It is well known and understood that enterprise agreements made under the Act can make
reference to and incorporate provisions of awards.

[41] The very nature of allowances and entitlements contained in awards is that they are designed to change and for those changes to flow on by way of reference to awards in agreements. For example, where allowances are increased in awards and an agreement references the “award entitlement” rather than a specific dollar amount, it is done with the intention that increases to the allowances in the award will flow on. If it is intended for a dollar figure to remain, then that figure is specifically included.

[42] For example, clause 4 of the Agreement contains various allowances that are paid in accordance with the Award. If it is the Applicant’s contention that the Award is to be read in conjunction with the Agreement as at the date of the Agreement being made, then the employees of the Respondent will be only entitled to the allowances as they stood under the Award as at the date the Agreement was made.

[43] If the Applicant is correct, then when an enterprise agreement references an award entitlement and that award entitlement was increased during the life of that agreement, then the only way to flow on any increased entitlement would be via a formal variation approved by the workforce in accordance with the variation provisions of the Act.

[44] If the Applicant is correct in its submission that the specific terms of an Award are incorporated and award changes do not flow through to agreements unless the words “as varied from time to time” appear (which is opposed for the foregoing reasons), then as a matter of law the words that operated as at the date of the approval of the Agreement are those that are incorporated. Those words are contained in the Determination and in the Award as currently in force.

[45] The Respondent further submits that if the parties had intended for the exact words contained in sub-clause 23.2 of the Award to be included, they would have included them. The only reason the Award was referred to was because the parties had a disagreement as to how the Award operated and the Respondent foreshadowed to the Applicant and the Respondent’s employees that an application would be made to FWA to clarify the meaning of the annual leave clause in the Award because the Applicant and the Respondent could not agree on how the annual leave entitlement under the Award ought to be interpreted.

[46] The Award Variation Application was heard by Senior Deputy President Harrison on 19 July 2010. At PN 38 of the transcript there is reference to the Applicant not opposing the Award Variation Application in toto and it appears from the transcript that a submission to that effect was filed by the Applicant.

[47] In summary:

• the Respondent and the Applicant (on behalf of the Applicant’s members) agreed to reference the annual leave entitlements in the Award in the annual leave clause of the Agreement during the negotiations for that Agreement;



• the Respondent informed the Applicant during the course of the negotiations for the Agreement that it was intended that an application would be made to FWA to clarify the meaning of the annual leave clause in the Award;



• the purpose of the Award Variation Application was to seek a determination from FWA concerning the annual leave entitlement under the Award given there existed a difference of opinion as between the Applicant and the Respondent as to the meaning of the annual leave entitlements following the making of the Award; and



• the Applicant did not oppose the Award Variation Application.

[48] FWA should not find that annual leave entitlements of the employees covered by the Agreement be determined by reference to the provisions of clause 23.2 of the Award at the time the Agreement was made.

[49] Further, FWA should not find that annual leave entitlements of the employees covered by the Agreement be determined by reference to the provisions of clause 23.2 of the Award at the time the Agreement was certified (approved).

[50] Rather, FWA should find that annual leave entitlements of the employees covered by the Agreement are determined by reference to the provisions of clause 23.2 of the Award, as varied from time to time.

Consideration

[51] The dispute between the parties in this matter is over the interpretation of the following words in the Agreement.

“An employee (other than a casual employee) is entitled for each year of service, to 5 weeks annual leave to be paid as per section 23.2(a) and 23.2(b) of the Road Transport (Long Distance Operations) Award 2010”

[52] The Applicant argues that the words “to be paid as per section 23.2(a) and 23.2(b) of the Road Transport (Long Distance Operations) Award 2010” should be interpreted as if they were immediately followed by the words “..as in force at 26 March 2010.”

[53] Conversely the Respondent argues those same words should be interpreted as if they were immediately followed by the words “ ..as in force from time to time.”

[54] The potential for an enterprise agreement to adopt either of these alternative approaches when referring to the words incorporated from another document is expressly envisaged by section 257 of the Act.

257 Enterprise agreements may incorporate material in force from time to time etc.

Despite section 46AA of the Acts Interpretation Act 1901, an enterprise agreement may incorporate material contained in an instrument or other writing:

(a) as in force at a particular time; or

(b) as in force from time to time.

[55] Clearly then both interpretations are permissible ones.

[56] The principles of interpretation of agreements are well established 3.

[57] In this instance the words in dispute are ambiguous or susceptible of more than one meaning.

[58] Both parties called evidence regarding their respective understandings of the wording in dispute and about the background to the negotiations leading up to the Agreement being made. There is in my view no mutual actual intention than can be identified from this evidence that assists in determining the correct meaning from the two possible meanings here.

[59] Support for the Applicant’s interpretation is found in one previous decision of FWA, [2009] FWA 276, where Senior Deputy President Richards interpreted the words “..the relevant or designated award..” used in an agreement to mean a reference to the award as it was at the date of certification of that agreement and not as amended from time to time 4. The agreement in that case was one made under the Workplace Relations Act 1996 and that decision involved some different considerations peculiar to that matter.

[60] Considering the context of the balance of the Agreement here I note that the Agreement does in other clauses refer to the “award” as follows:

4 ALLOWANCES AND FACILITIES

Dangerous Goods Allowance

All drivers shall receive a dangerous goods allowance as per the award, only when dangerous goods are carted.

Travel Allowance

All trip rates include nights away allowance, to be paid in relation to the Award and Australian Taxation Office guidelines, for every night that the driver is away from home, where accommodation has not been provided.

.....

5 LEAVE

....

Sick Leave

An employee who is unable to attend or remain at their place of employment during the ordinary hours of work by reason of personal ill health or injury shall be entitled to payment during such absence in accordance with the provisions of this clause.

An employee with be entitled to 76 hours sick leave per year (10 days at 7.6 hours per day) and the un-used portion will accumulate as per the award.

Entitlement to payment shall accrue at the rate of 1.46 hours pay for each completed week of service.

The employee shall notify the Company of their inability to attend for work due to sickness, the nature of their illness and the estimated duration of the absence prior to the commencement for the normal days work.

Carer’s Leave

An employee is entitled to carer’s leave, as per the award and NES provisions, for 10 days of the employee’s entitlement under Sick Leave for that year to be the primary caregiver of a member of the employee’s family or household who is ill or injured and in need of immediate care and attention.

“Member of the employee’s family” means any of the following persons:

The employee’s spouse or de facto partner;

A child for whom the employee has parental responsibility as defined by the Family Court Act 1997;

An adult child of the employee;

A parent, sibling or grandparent of the employee.

Public Holidays

Public holidays will only be paid (7.6hrs) when the trip includes a public holiday in the state where the driver is normally based. As per awardNES provisions.

(underlining added)

[61] The use in Clause 5 of the Agreement of the words “per section 23.2(a) and 23.2(b) of the Road Transport (Long Distance Operations) Award 2010” can be distinguished from these other references to the Award throughout the Agreement which are “..per Award..” or “..per the Award..”.

[62] The significant difference is that the reference to “..section 23.2(a) and 23.2(b) of the Road Transport (Long Distance Operations) Award 2010..” is not to the Award at large but rather to two particularly numbered sub clauses of the Award.

[63] The disputed wording, with this specificity of subclause, is problematic if the clause is to be interpreted as meaning “to be paid as per section 23.2(a) and 23.2(b) of the Road Transport (Long Distance Operations) Award 2010 as in force from time to time.” This is because there is the potential at some point in the future for the Award to be varied such that the numbering of the various clauses changes. Consequently if the Respondent’s interpretation is correct the words “..section 23.2(a) and 23.2(b)...”could in future possibly refer to subject matters other than annual leave. This can come about because of the insertion or the deletion of a clause that comes before the existing clause 23 in the Award. Under the Respondent’s construction such a consequential renumbering of the Award clauses would render these words in the Agreement meaningless in the context of a provision dealing with payment for periods of annual leave.

[64] Even amendments to Clause 23 itself, by either re-ordering the sub-clauses or introducing a new sub-clause could have the same effect of rendering the Agreement’s provisions non-sensical.

[65] The Applicant’s interpretation does not have this potential problem and provides certainty to the parties.

[66] The Respondent’s approach does not lead to a sensible industrial outcome. The Applicant’s approach gives the clause substantive operation.

[67] My conclusion then is that the correct interpretation of the words “..to be paid as per section 23.2(a) and 23.2(b) of the Road Transport (Long Distance Operations) Award 2010” is to read those words as if they were immediately followed by the words “.. as in force on 26 March 2010” as the Applicant has argued.

[68] This interpretation does not determine how the remaining references to the award (see paragraph [60]) in the Agreement should be interpreted.

[69] The answer to Question 1 is that the annual leave entitlements of the employees covered by the Agreement is determined by reference to the provisions of clause 23.2 of the Road Transport (Long Distance Operations) Award 2010 (the “Award”) that were in force at the time the Agreement was made on 26 March 2010.

COMMISSIONER

Appearances:

Ms M Papa for the Applicant.

Mr S Harben of Counsel for the Respondent.

Hearing details:

2011

Perth

15 June

 1   [2010] FWAA 7170

 2   CCH Labour Law Reporter at para 37-305

 3   2010 FWAFB 4801 para [10] to [14]

 4   FWA 276 at para [19]

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