Transport Workers' Union of Australia v Linfox Australia Pty Ltd

[2014] FWC 4188

[2014] FWC 4188 [Note: An appeal pursuant to s.604 (C2014/6944) was lodged against this decision - refer to Full Bench decision dated 19 December 2014 [[2014] FWCFB 9302] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Transport Workers’ Union of Australia
v
Linfox Australia Pty Ltd
(C2013/7309)

COMMISSIONER ROBERTS SYDNEY, 3 OCTOBER 2014

Application pursuant to s.739 - determination of the correct application of shift work provisions - jurisdictional objection dismissed - determination made.

[1] This decision concerns an application made by the Transport Workers’ Union of Australia (the TWU or the Union) on 20 November 2013, pursuant to s.739 of the Fair Work Act 2009 (the Act) for the Fair Work Commission to deal with a dispute between it and Linfox Australia Pty Ltd (Linfox or the Company). The dispute was referred to the Commission pursuant to clause 22 (Settlement of Disputes Procedure) of the Linfox Road Transport and Distribution Centres National Enterprise Agreement 2011 (the 2011 Agreement). Since the dispute was lodged, the 2011 Agreement has been superseded by the Linfox and Transport Workers Union Road Transport and Distribution Centres Agreement 2014 (the 2014 Agreement). Clause 22 of the 2011 Agreement provides the steps to be followed when a dispute arises as to matters covered by the Agreement. The clause ultimately provides at subclause (e) that where a dispute cannot be resolved between the parties by conciliation conducted by the Commission, then the Commission “may proceed to arbitrate the dispute and/or otherwise determine the rights and/or obligations of the parties to the dispute.” The parties to the 2011 Agreement were Linfox and the TWU.

[2] Clause 6 (Relationship With Other Agreements) of the 2011 Agreement states: “This Agreement operates in place of any other award (including a modern award) or agreement (whether certified, or approved, or not).” The relevant modern award is the Road Transport and Distribution Award 2010 (the Award).

[3] Unsuccessful conciliation was conducted before Commissioner Cargill and the case then came to me for arbitration at the request of the TWU. A mention and programming hearing was held on 16 April 2014 and directions were issued on the same day for the filing and service of outlines of submissions, witness statements and other materials. The matter then proceeded to hearing in Sydney on 29 May 2014. At the hearing before me, the TWU was represented by Mr T Warnes with Mr G Rodger. Linfox was represented, by permission, by Mr M Baroni of McCabes Lawyers.

What is the dispute about?

[4] The TWU submits that Linfox is not correctly applying the terms of clause 51 (Shift Work) of the 2011 Agreement, specifically subclause 51.3 (Shift Work - Allowances). That subclause reads as follows:

“For ordinary hours of shift work, shift workers shall be paid the following extra percentages of the rates prescribed for their respective classifications:

(a) Early Morning Shift: 12.5%

(b) Afternoon Shift: 17.5%

(c) Night Shift: 30%”

[5] Clause 49.3 of the 2014 Agreement has the same provision as clause 51.3 of the 2011 Agreement.

[6] In its form F10, the TWU characterised the dispute in the following terms:

“Linfox employs a number of drivers in depots in Sydney and Newcastle to perform driving duties delivering dairy products for Parmalat.

In servicing the Parmalat contract, drivers are rostered to perform work on a regular and systematic basis outside the span of hours. Attendance at the rostered time is compulsory. The Applicant contends rostered work of this nature attracts a shift penalty.

The Respondent, nonsensically in the Applicant’s view, appears to rely on letters of employment that state a start time within the span of hours and based on this letter, that does not reflect the reality of their start time, pays overtime for hours worked outside the span of hours. The effect of this is essentially nugatory as drivers are generally performing shifts in excess of 10 hours i.e. overtime is simply paid at the start of the shift rather than at hours after 7.6 or 8 hours have elapsed.

The effect therefore of the failure to pay the shift allowance is to reduce earnings on the driver’s ordinary hours by the shift allowance that the Applicant alleges is owed. Further some corresponding entitlements for shift work, such as a paid crib break, are also lost. The underpayments are substantial with ordinary earnings being underpaid by between 12.5% and 17.5%.”

[7] The Union asserts that the allegedly incorrect application of clause 51 of the 2011 Agreement by Linfox has occurred over a period of some years.

[8] The questions posed by the TWU for determination are:

“In what circumstances does clause 51 of the 2011 Agreement apply? Are drivers that begin their shift within the specifications set out in clause 51 of the 2011 Agreement entitled to a shift allowance and other benefits that flow from work of that nature?”

Jurisdictional Objection

[9] Linfox raised a jurisdictional objection prior to the hearing on 29 May 2014. In brief, Linfox argued that the TWU application was beyond jurisdiction as it sought that the Commission make a ‘declaration’ as to the rights and obligations of the parties under the Agreement and this would involve the exercise of judicial power. Linfox submitted that “posing a question to the FWC to answer is akin [to] seeking a declaration which only a court can do”.

[10] In supporting oral submissions, Mr Baroni characterised the dispute between the parties as being about alleged underpayments. 1 Mr Baroni went on to say that it meant that the Commission would be unable to resolve the dispute between the parties in totality as the Commission lacks jurisdiction to deal with underpayments.

[11] The TWU opposed the jurisdictional objection and I have paid regard to the arguments put by Mr Warnes.

[12] All in all, I am unable to agree with Mr Baroni as to the power the Commission possesses in this matter. Section 739 of the Act is clearly enlivened by the terms of the Agreement and there is no doubt that a dispute exists between the parties as to the proper application of clause 51.3 of the 2011 Agreement. I find that it is within my power to determine the correct application of clause 51.3 of the 2011 Agreement. As I noted during the hearing:

“My jurisdiction is quite clear and I will tell you what I think it is and people can tell me if they think I am wrong. I have jurisdiction enlivened by the agreement and pursuant to section 739 to determine what I believe to be the correct application of the agreement. I possess no power to make any consequential orders in relation to that determination. The usual practice is that a member of the Commission determines what the correct application is and unless the loser, so to speak, appeals the matter then it’s in that way. That is the usual practice. I mean, it’s an order when you don’t have an order.” 2

[13] In my view, to adopt Mr Baroni’s argument that the Commission is only empowered to deal with disputes when it is able to resolve a dispute ‘in totality’, and is not so empowered when it cannot do so, is fundamentally flawed. To adopt the argument put forward by Linfox would make the operation of s.739 of the Act nugatory. My role is to determine the correct application of the Agreement and that is what I propose to do.

[14] I will now move on to consider the merits of the TWU’s application.

Written submissions

The TWU

[15] The TWU filed a written outline of submissions 3. In those submissions it argued that:

“To become entitled to a shift allowance, a worker must first be classified as a ‘shiftworker’. Clause 51.2(d) of the Agreement defines shiftwork as: ‘work extending for at least four weeks and performed either in daily recurrent periods or in regular rotating periods within the limits defined for “Early Morning Shift” or “Afternoon Shift” or “Night Shift”.’ The effect of the 2011 Agreement on the incorporated Award terms of the Award is that clauses 24.1 and 24.3 do not apply and clauses 51.2 and 51.3 apply in lieu. The words used in the 2011 Agreement in this respect are uncontroversial and unambiguous. Therefore if work is performed for 4 weeks or longer within the times specified in Clause 51.2 (a), (b), or (c) then it is shiftwork and attracts the allowances contained in clause 51.3 for time worked on that shift. What is sought from the Commission is a determination of the circumstances in which shift allowances are payable to workers covered by the 2011 Agreement.”

[16] “The wording of clause 51 is abundantly clear. If work:

i. extends for at least four weeks;
ii. is in a daily recurrent period or in a regular rotating period; and
iii. falls within any definition of shift in clause 51.2; then
it is shiftwork. It logically follows that any worker that performs shiftwork is a shiftworker. … it is therefore not permissible to classify work performed before the commencement of ordinary hours as ‘pre-shift’ overtime if that work falls within the ambit of clause 51 of the Agreement. In this case, the work is not overtime but rather shiftwork as it clearly falls within the definition the 2011 Agreement and attracts the applicable shift allowance.”

[17] In its submissions, the TWU sought the following determinations from the Commission:

“i. The wording of clause 51 of the 2011 Agreement is unambiguous and only capable of the meaning conveyed by the TWU.

ii. That work performed within the bounds of clause 51 of the 2011 Agreement is shiftwork and is payable at the relevant allowance in clause 51.3.

iii. It is not permissible under the 2011 Agreement to avoid paying shift allowances by simply paying for time worked before the start of ordinary hours as overtime in accordance with clause 27 of the Award as incorporated into the 2011 Agreement.”

Linfox

[18] Linfox also filed a written outline of submissions prior to the hearing 4. In those submissions, Linfox provided a detailed analysis of its view of the relevant provisions in the 2011 Agreement and their correlation with the Award and vice versa:

“… the Respondent submits that where the Award and 2011 Agreement contains a span of hours, the employees cannot be said to work shift work where there are fixed start times and they commence work within the fixed start times in the span of hours. Further, any additional work outside the ordinary hours is paid at overtime rates. There appears to be no precedent for treating a group of employees as shift workers where the groups hours of work are fixed within a defined spread of ordinary hours for day work, are not part of an integrated roster of shifts and attract no shift loading. For all practical purposes, the day worker provision in the Award and 2011 Agreement would be rendered superfluous on the Applicant’s interpretation.”

[19] The submissions went on to argue that the Award and the 2011 Agreement “contemplated that there would be some employees working day shifts, or day work, and some performing shift work.”

Oral submissions

The TWU

[20] In supporting oral submissions, Mr Warnes said that the terms of the Award “are majorly incorporated into the enterprise agreement”. 5 “If something is not catered for in this enterprise agreement, the Award applies.”6 He went on to say that the 2011 Agreement provides “absolutely no guidance as to what the meaning of day worker is for the purposes of the enterprise agreement.”7 In part of a discussion with me, Mr Warnes agreed that “Despite the lack of definition of day worker … it could be assumed that a day worker works during the ordinary hours.”8 However, there is “a clear and unambiguous definition of shift worker, which is clause 51.2(d) of the agreement. On our submission the only conclusion that can be drawn is that when a worker is not a shift worker, then they're a day worker.”9

[21] I asked Mr Warnes the following question: “So what your argument is that consistent rostered overtime pre or post shift, which fits in with the four-week provision, changes the status of an employee from a day worker to a shift worker and attracts a penalty?” and he replied: “It makes the work shift work, absolutely, Commissioner. If the work is going for four weeks and it falls within one of the definitions of the shift, then it is shift work under agreement. The nature of the work has fundamentally changed.” 10

[22] Mr Warnes went on to say that clause 27 (Overtime) of the Award is incorporated into the enterprise agreement but “doesn't apply when a common term of the agreement does, which the shift allowance term is.” 11

[23] Mr Warnes maintained “that overtime is time paid for after the end of ordinary hours.” 12 It cannot be worked before the commencement of ordinary hours. In this regard, I asked Mr Warnes: “You're saying the fundamental core of your position appears to be that you can't work pre-shift overtime over a period as defined in the agreement for at least four weeks, without turning into a shift worker for the entire shift.” and Mr Warnes said: “Absolutely, Commissioner, yes.”13

Linfox

[24] Mr Baroni also made supporting oral submissions. He said that “we readily concede that a shift worker is entitled to be paid a shift allowance, irrespective of what shift they're working on. In other words, depending on what shift they work, they will be entitled to be paid a shift allowance.” 14 He continued: “Can I then say that if somebody works overtime, be it in the context of they being a shift worker or a day worker, they are entitled to be paid overtime at the applicable rates.”15

[25] Mr Baroni went on to say that: “You become a shift worker because you are asked to become a shift worker and the employer gives you notice in accordance with the relevant provisions of the award or the agreement, that he wants you to become a shift worker.” 16 If an employee is not given such notice, then overtime is payable.

[26] “… there is nothing in this award which is incorporated into the agreement which prohibits the working of overtime pre or post ordinary hours, it’s just simply not the case. Further, if one has a look at clause 24.5 of the award, and that is the shift work provisions, it actually contemplates overtime. Again, it contemplates overtime which are worked outside of the ordinary shift hours. So each of these concepts are based on ordinary hours being your 38 hours per week. A concept which is nothing novel about it, nothing remarkable about it, whether you’re a shift worker or a day worker and you’re a full-time equivalent, you are entitled to a minimum of 38 hours per week.” 17

[27] Mr Baroni went on to say that there is nothing to prohibit Linfox from asking an employee to come in before the commencement of his or her ordinary hours and/or work beyond the finish of his or her ordinary hours. It acquires an obligation to pay overtime in such cases. He went on to say that an employee can decline overtime. 18

Conclusions and Determination

[28] In reaching my conclusions and determination, I have paid full regard to all the submissions, materials and case law put before me during the proceedings together with subsequent written submissions.

[29] The 2011 Agreement is not, in my view, a masterpiece of clear drafting. By virtue of part C (Incorporated terms), a large range of provisions from other instruments are incorporated into the agreement with a significant number of changes, caveats, exclusions and variations. This is despite the provisions of clause 6 (see paragraph 2 above). There are also references back to the Award in several clauses of the 2011 Agreement. Clause 80 (Application) at subclause 2(l) is specifically relevant to this decision. It reads as follows:

“(l) the terms of the Modern Awards (including allowances), except for the following provisions (which relate to certain allowances and expenses) which are not incorporated into this Agreement:
(i) subclause 16.1(b)(ii) of the Road Transport Award, which is only not incorporated for Employees covered by the Linfox New South Wales (BOC) Agreement 2009;
(ii) subclause 16.1(b)(v) of the Road Transport Award, which is not incorporated for all Employees;
(iii) subclause 16.1(d) of the Road Transport Award, which is only not incorporated for Employees covered by the Linfox New South Wales (BOC) Agreement 2009;
(iv) subclause 16.1(f)(i) of the Road Transport Award, which is not incorporated for all Employees;
(v) subclause 16.3(a) of the Road Transport Award, which is not incorporated for all Employees; and
(vi) subclause 14.1(d) of the Road Transport Long Distance Award, which is only not incorporated for Employees covered by the Linfox New South Wales (BOC) Agreement 2009; and
(vii) subclause 14.2(a) of the Road Transport Long Distance Award, which is not incorporated for all Employees, and subclause 12.6 of the Road Transport Award is amended as provided in clause 36 of this Agreement for all Employees.”

[30] In the case before me, it is apparent that clause 27 of the Award is imported into the 2011 Agreement. Clause 27.1 reads as follows:

“27.1 For all work done outside ordinary hours the rate of pay will be time and a half for the first two hours and double time thereafter, such double time to continue until the completion of the overtime work.”

[31] The TWU maintained that overtime can only be worked at the end of ordinary hours and not before those ordinary hours commence (see paragraph 23 above). It is my determination that nothing in clause 27 of the Award, or elsewhere, precludes the working of pre-shift overtime.

[32] The Union further argued that there is no clear definition of ‘day work’ or ‘day worker’ in the 2011 Agreement. Typically, the labyrinthine structure of the Agreement does not provide such a definition in and of itself. However, clause 50 (Hours of employment) incorporates clause 22 of the Award except to provide “that the ordinary hours of work must be worked between the hours of 5 am and 6 pm.” Clause 22 of the Award provides for a slightly different spread of hours. The difference between the Award and the 2011 Agreement in this regard is not relevant to my decision making.

[33] Given the terms of clause 50 of the 2011 Agreement, it is logical to deduce that there is a class of persons, who can be regarded as ‘day workers’ who work all of their ordinary hours between 5 am and 6 pm. Clause 51 (Shift Work) of the 2011 Agreement does provide at subclause 51.2 (Definitions) a clear definition of what constitutes shift work. It says:

“51.2 Definitions

(a) ‘Early Morning Shift’ shall mean a shift which commences at or after 4.00 am and before 5.00 am.
(b) ‘Afternoon Shift’ shall mean a shift which commences after 10.00 am and at or before 4.00 p.m.
(c) ‘Night Shift’ shall mean a shift which commences after 4.00 p.m. and before 4.00 am.
(d) ‘Shift Work’ shall mean work extending for at least four weeks and performed either in daily recurrent periods or in regular rotating periods within the limits defined for ‘Early Morning Shift’ or ‘Afternoon Shift’ or ‘Night Shift’.”

[34] Clause 51 goes on to set shift allowance loadings for the three types of shift work (see paragraph 4 above).

[35] I therefore consider that there are two classes of employee: ‘day worker’ and ‘shift worker’. The TWU claims that a day worker who works pre-shift overtime becomes a shift worker, and is therefore entitled to a shift allowance, because the overtime hours meet the definition in clause 51.2(d).

[36] I am unable to agree with the TWU’s position. In my view, a day worker who works pre-shift, or post-shift, overtime, remains a day worker and is properly compensated by the payment of overtime rates. Such a worker commences his ‘shift’ when his or her ordinary hours commence not when commencing pre-shift overtime. Similarly, a shift worker who performs either pre-shift or post-shift overtime outside his ordinary rostered hours would be entitled to payment at overtime rates.

[37] Accordingly, I determine that Linfox is correctly applying the relevant terms of the Agreement and the TWU’s application is dismissed.

[38] In making my decision, I have not needed to have recourse to the decision of Justice Tracey published on 8 August 2014 in Transport Workers’ Union of Australia v Linfox Australia Pty Ltd 19, which decision was referred to by the parties after proceedings had concluded on 29 May 2014.

COMMISSIONER

Appearances:

T Warnes with R Burke for the Transport Workers’ Union of Australia.

M Baroni for Linfox Australia Pty Ltd.

Hearing details:

2014.

Sydney:

May 29.

Final written submissions:

13 August 2014.

 1   Transcript PN48 and following.

 2   Transcript PN14.

 3   Exhibit TWU 1.

 4   Exhibit Linfox 1.

 5   Transcript PN191.

 6   Transcript PN205.

 7   Transcript PN224.

 8   Transcript PN242.

 9   Ibid.

 10   Transcript PNs266-267.

 11   Transcript PN296.

 12   Transcript PN309.

 13   Transcript PNs378-379.

 14   Transcript PN417.

 15   Transcript PN419.

 16   Transcript PN421.

 17   Transcript PN441.

 18   Transcript PNs463-465.

 19 [2014] FCA 829.

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