Transport Workers' Union of Australia v Linfox Australia Pty Ltd

[2015] FWC 8135

[2015] FWC 8135

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Transport Workers’ Union of Australia
v
Linfox Australia Pty Ltd
(C2015/1139)

COMMISSIONER GREGORY MELBOURNE, 23 DECEMBER 2015

Alleged dispute concerning allocation of overtime.

Introduction

[1] Linfox Australia Pty Ltd (“Linfox”) operates a large Regional Distribution Centre at Truganina in Melbourne’s West. In recent times a number of changes have been made to the work arrangements in an endeavour to limit the operating costs and increase productivity and efficiency levels.

[2] One of these changes involves a requirement that employees achieve certain productivity targets before they can be eligible to work additional overtime shifts at weekends. The Transport Workers’ Union of Australia (“the TWU”) is concerned about the fairness of this policy. It submits it seeks to deal with employee performance by financially penalising some employees by denying them access to additional overtime hours.

[3] It also submits the policy is in breach of the Linfox and Transport Workers’ Union Road Transport and Distribution Centres Agreement 2014 1 that covers the parties. In this context it refers, in particular, to Clause 16 “Obligations of Linfox,” which makes reference to Linfox using its best endeavours to maximise “the full time proportion of its workforce.”2

[4] The dispute was dealt with in conference on several occasions but was unable to be resolved. The TWU now seeks to have the matter arbitrated. Mr Bill Baarini, the in-house Counsel for the TWU and Mr Luke McCrone, an Organiser with the Union, appeared on behalf of the TWU. Mr D. Williams from Minter Ellison was granted permission to appear on behalf of Linfox under s.596(2)(a) of the Fair Work Act 2009 (“the Act”).

[5] Neither party took issue with the dispute being dealt with in accordance with the Settlement of Disputes Procedure in Clause 33 of the Agreement, or with the Commission’s ability to deal with the dispute under s.739 of the Act, including the provisions in s.739(4) which enable the Commission to arbitrate in appropriate circumstances.

The Issue to be Determined

[6] Clause 16 of the Agreement states as follows:

“16. OBLIGATIONS OF LINFOX

16.1 Linfox shall use its best endeavours to achieve the following:

(a) maximisation of the full time proportion of its workforce, including utilisation of full time Employees to their full capacity before casual, part time, labour hire employees or contract carriers are engaged or work is contracted out to other companies or businesses; and

(b) the training of its transport workers in OHS and other professional training as provided by a licensed Blue Card Provider.” 3

[7] Linfox has recently introduced an overtime policy at the Distribution Centre which requires full-time employees to meet the specific productivity targets before they can be eligible for weekend overtime shifts. Additional casual or agency staff are engaged to perform this work when there are not enough full-time employees available. The TWU submits this policy is in breach of Clause 16 because sub clause 16.1(a) extends to include an obligation requiring Linfox to offer available overtime work to full-time employees before it is offered to others.

[8] Therefore, is the overtime policy that Linfox has introduced at the Regional Distribution Centre in Truganina in breach of Clause 16.1 of the Agreement?

The Evidence and Submissions

[9] The TWU submits Linfox has introduced a policy that requires employees at the Distribution Centre to achieve certain levels of productivity and performance as a pre-requisite to being offered weekend overtime work. This means casual and agency employees are being utilised at the weekends, when full-time employees are willing and available to work these additional overtime shifts. The TWU submits this policy is not consistent with the obligation imposed on Linfox by clause 16 to ensure “maximisation of the full-time proportion of its workforce.”

[10] The TWU also submits it is concerned about the fairness of the policy. In its submission it is not appropriate to deal with performance issues by penalising some employees financially by denying them access to overtime work. In this context it submits it is not opposed to the introduction of initiatives designed to improve performance and productivity at the Distribution Centre. However, it submits performance and productivity outcomes should not be linked to the available allocation of overtime, and in its submission Linfox has gone one step too far in this instance in seeking to tie productivity outcomes, or more specifically pick rates, to the availability of overtime.

[11] It makes the following points, in summary, in support of its submissions.

• Clause 16 clearly intends to create an obligation for Linfox to maximise the use of its full-time employees.



• It is a stand-alone provision that is not interrupted by other provisions.



• Its’ intent is clear and unambiguous.



• It is intended to provide protection and security for full-time employees.



• It contains no reference to employee performance or conduct.



• It does not seek to limit “full capacity” by reference only to ordinary hours and, accordingly, should be read to include reference to overtime entitlements. In this context it submits it would be an “absurd outcome” to read Clause 16 as creating an obligation to the utilisation of full-time employees only during their ordinary 38 hour working week. It continues to submit this position is supported by the reference in the Clause to “full capacity.”



• The Clause prevents Linfox from introducing a policy that restricts the ability of full-time employees to be utilised to their full capacity.



• The policy is being used to discipline and penalise employees.

[12] It continues to submit the provisions in the Agreement, read in their plain meaning, support the construction it seeks to place upon Clause 16.1. It makes reference to the Full Bench decision in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd 4(“Golden Cockerel”) in this context, and submits the principles set out in that decision are consistent with the approach it has adopted in this matter. It submits there is no ambiguity in the Clause and it is not susceptible to more than one meaning. Therefore, there is no need to rely on any extrinsic material or reference to past history as an aid to interpretation of the Clause, and the ordinary and well understood words in Clause 16 should instead be given their ordinary and usual meaning.

[13] It continues to submit the references to “best endeavours,” “to their full capacity,” and “contract drivers” in the Clause should not be highlighted in an attempt to suggest their lack of specific intent creates some ambiguity.

[14] The TWU also submits the obligations in the Clause cannot be said to be limited to drivers in the way Linfox now maintains. It submits instead that regardless of the genesis of the Clause it is intended now to apply to all employees covered by the Agreement, whether they be drivers or warehouse employees.

[15] The TWU also submits the obligations in the Clause are not simply limited to the present issue to do with the allocation of overtime, but potentially create other obligations for Linfox such as, for example, requirements to provide necessary training or the maintenance of job security for full-time employees in preference to others.

[16] Mr Jamie Taplin has been employed by Linfox at the Distribution Centre for the past nine years. He describes his current occupation as “picker/packer, forklift driver, store person.” His evidence indicates he currently works an overtime shift on most weekends, and sometimes works on both Saturday and Sunday. He said if he was unable to work two overtime shifts at the weekend he would stand to lose up to $500 per week, and the availability of this work was one of the main attractions about working at the Distribution Centre.

[17] Mr Warren Vassallo has also been employed at the Distribution Centre as a picker/forklift operator for the past nine years. His evidence indicates he is currently subject to what he describes as an “action plan” to improve his pick rate, however, he is still picking at approximately 85% of the target rate and, as a result, is often ineligible for weekend overtime shifts. He said he does not believe he is capable of picking at the 100% target rate and his inability to obtain overtime shifts “will make life a lot harder.” 5 He indicated in his examination in chief that being ineligible for weekend overtime work meant he was missing out on additional earnings of between $400 and $500 a week. He also denied there had been a long-standing cultural and behavioural practice at the Distribution Centre of not carrying out required work during the week, so that weekend overtime work was maximised.

[18] He also agreed in cross-examination that the management team at the Distribution Centre was trying to help to improve his pick rate, and he had attained the required target figure in some weeks. He also said he is now subject to another action plan to assist him improve, and acknowledged if he reached the target figure during the action plan period he would be eligible to work weekend overtime shifts.

[19] Mr Luke McCrone is an Organiser with the Transport Workers’ Union. His evidence indicated he has been representing members at the Distribution Centre in the dispute about pick rates for around 12 months. He said there have been a number of meetings to discuss the proposed new approach, but the Union was still not satisfied with the methodology and standard of information provided to it by Linfox.

[20] His evidence indicated it was suggested at one point that proposed changes to work arrangements be put to a vote of employees, following a period of consultation about what was proposed. However, he said this proposal was rejected by an overwhelming majority of those who voted in the subsequent ballots. The TWU then continued to try and resolve the dispute in negotiations with Linfox management at the Distribution Centre, and subsequently by notifying a dispute to the Commission.

[21] Mr McCrone’s evidence indicated that following the vote of employees Linfox proceeded to introduce the requirement that employees would need to meet a minimum standard pick rate before they would be allowed to work additional overtime shifts. This figure was initially set at 64% of the proposed target rate, but has since increased to 85% with the ultimate objective of finally getting to the optimum target rate.

[22] Mr McCrone also said that following further negotiations Linfox indicated it was prepared to offer a bonus for employees who exceeded the target, and in further negotiations the development of a productivity incentive program was proposed. However, this was again rejected by a majority vote of TWU members.

[23] Mr McCrone’s evidence also indicated he was involved in the negotiations for the present Agreement, and the wording of Clause 16 was an issue in those negotiations. He said Linfox sought to include words that would have removed the obligation to provide additional overtime work to full-time employees, before it was offered to casual employees. However, the Union rejected these changes and it was finally agreed in the negotiations that the wording in Clause 16 would remain unchanged.

[24] He also indicated in his examination in chief that he understood Linfox had sought to have the additional words added because it did not want an obligation imposed on it to be required to utilise full-time employees before casual or agency staff were engaged. He also said he understood Linfox was seeking these changes specifically in relation to the circumstances existing at the Distribution Centre at Truganina.

[25] Mr Michael Aird is the State Secretary of the Transport Workers’ Union of New South Wales and Branch Secretary of the New South Wales Branch of the Transport Workers’ Union of Australia. His evidence indicated he was involved in drafting the Linfox Victoria (Transport & Warehousing) Agreement 2007, 6 and was the lead negotiator on behalf of the TWU and its members in regard to the last two Linfox National Workplace Agreements.

[26] He said the wording of Clause 16 is “substantially consistent” with a template claim pursued by the Union since at least 2004 in respect of drivers and distribution centre employees. He described the suggestion that the clause was not intended to cover distribution centre employees as being “wrong and frankly absurd.” 7 He said it was made clear at all times in the negotiations that the provisions of the Agreement covered all employees, and he was not aware of any claim by anyone from Linfox that the Clause should be limited to drivers.

[27] His evidence also indicated the Clause was drafted to provide job security beyond ordinary hours of work, and was clearly intended to apply to overtime hours. He rejected any suggestion that the provision was not intended to apply to overtime for warehouse/distribution centre employees. He also said Linfox had sought in the negotiations for the existing Agreement to further qualify the provisions in Clause 16 by adding a reference to “operational requirements,” but it was eventually agreed to retain the existing provisions from the 2011 Agreement, with “best endeavours” agreed to as the test for maximum utilisation.

[28] Mr Aird denied in cross-examination that the TWU had never suggested to Linfox that Clause 16 had anything to do with overtime. He also denied the suggestion that if Clause 16 required overtime to be offered to full-time employees, in preference to others, the Union would have suggested an amendment to make that clear. He indicated, in part, in response:

“I think the clause is very clear.  I mean I think the clause is crystal clear that - you know, that overtime is offered to full-time employees in preference.” 8

[29] Linfox confirmed in its submissions that it has recently introduced an overtime policy at the Distribution Centre at Truganina, which requires full-time employees to achieve certain performance levels before being eligible for weekend overtime work. It also provided some background to explain the rationale for the introduction of the policy.

[30] It submits that when the present General Manager, Mr Kris Talevski, took on his current role in June last year pick rates and absenteeism at the Distribution Centre compared unfavourably with industry standards. Its’ subsequent analysis demonstrated that poor productivity and high absenteeism were contributing to an increase in the requirement for overtime shifts at the weekend, with some suggestion these outcomes were being orchestrated to ensure sufficient weekend overtime work was available.

[31] In its submission the implementation of the overtime policy has been highly successful and employees now have an incentive to work to their full capacity during the normal working week in order to be eligible for weekend overtime shifts. It submits productivity associated with pick rates has improved dramatically and absenteeism has diminished to the same extent. It submits a consequence of these changes is that the requirement for overtime and weekend work to now be carried out by casual employees and agency staff has reduced because less weekend work is now required and, as a consequence, permanent employees represent a larger proportion of the employees engaged in weekend overtime work. Linfox submits in this context the impact of the overtime policy has been entirely consistent with the objective of Clause 16.1.

[32] In its submission Clause 16.1 contains no reference to overtime in connection with an employee’s “capacity,” and given overtime is not a right employees have their capacity cannot be considered as a function of their ability to be directed to work overtime. In its submission:

“It would be a remarkable result, destructive of Linfox’s business and one which would threaten the job security of permanent employees at the RDC, if clause 16 was interpreted in a way which prevented Linfox from continuing with its highly successful intervention at the RDC. The reasons set out below, clause 16 could not be interpreted in such a way and the application should be dismissed.” 9

[33] In terms of the “history of the Clause 16.1” Linfox submits a Clause in the same terms was included in the predecessor to the existing Agreement (the 2011 Agreement). It also submits a clause in similar terms has been included in a number of enterprise agreements entered into by Linfox since 1994 although, in its submission, it was “commonly a standard template provision pertaining to drivers, and not distribution centre employees.” 10

[34] It continues to submit that despite the current wording now contained in the National Agreement there is no basis to conclude the parties intended to change the commonly understood meaning of the Clause as being related to the drivers and company vehicles. In this context it points to the continuing reference to “contract carriers” in the Clause as strong evidence of the fact there was no such intention.

[35] Linfox also makes reference in its submissions to the decision in Golden Cockerel and submits it provides a relevant summary of the principles to be applied when interpreting enterprise agreements. It also submits the words in an Agreement must not be interpreted in a vacuum divorced from industrial realities, and relies on the decision in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union 11 in support of this submission.

[36] In dealing with the application of Clause 16.1 Linfox submits the Commission has first to decide whether it is relevant to the operation of the Distribution Centre, or whether it remains limited to the work of the drivers. It continues to submit that to the extent it is found to have application to the business of the Distribution Centre the Commission is then required to ascertain the meaning of the words “best endeavours,” “maximisation of the full-time proportion of its workforce,” and “full capacity” in the sub clause. It makes the following submissions about each of these terms.

[37] “Maximisation of the full-time proportion of its workforce” – Linfox submits this is a straightforward concept and confirms its commitment to use its “best endeavours” to maximise the proportion of its workforce who are both directly employed and full-time. It submits it is an obligation to ensure its full-time workforce is used to its full capacity, so as to reduce the need to engage casuals, part-time, labour hire or contract carriers or, alternatively, to contract work out to other businesses.

[38] “Best endeavours” – Linfox submits this phrase has been considered in a number of decisions, and the emphasis is on the reasonableness of the obligation. It also submits it requires a person “to do what is reasonable in the circumstances to achieve the contractual object, but no more.” 12

[39] “Full capacity” – Linfox submits it is implicit in the TWU’s submissions that “full capacity” must mean the maximum number of hours an employee could theoretically work, including whatever overtime hours they are prepared to accept or be directed to work. It submits in response that “capacity” cannot extend to include both an employee’s ordinary full-time hours, and whatever additional component of overtime hours they may be prepared to accept.

[40] In its submission the words in the Clause can readily be given meaning when applied to the work of drivers, in that they were intended to ensure drivers are engaged in driving duties for the maximum period possible each day. It also submits the current overtime policy is consistent with the purpose and intent of Clause 16, because if full-time employees work to their full capacity they will be rewarded by being eligible for weekend overtime, (although it notes this requirement will be reduced by the impact of the policy which will reduce the need to engage casual or agency employees.)

[41] It submits, in the alternative, that the TWU’s approach to the interpretation of the Clause would divorce an employee’s capacity from their work output, and simply link it to the number of hours they are prepared to work, including overtime hours. In its submission it follows from that approach that an employee with poor productivity levels, but prepared to work additional hours, would therefore have a higher capacity than an employee with high productivity. In its submission there is no suggestion that Clause 16 is directed towards guaranteeing access to overtime for full-time employees, who are unable to demonstrate a reasonable capacity to work productively.

[42] Linfox also submits that the Commission is required to determine the matter in a manner consistent with the overall scheme of the Agreement. In this context it notes the Agreement does not deal specifically with overtime entitlements; they are instead regulated by the terms contained in the incorporated Road Transport and Distribution Award 2010 13. It also notes there is no positive obligation to offer overtime to employees, and a consequence of the approach advocated by the TWU would be that overtime would be required to be offered to employees who, for very good reason, it was not now being offered to. It also submits that to accept the approach now being proposed by the Union would mean Clause 16 would override those provisions in the Agreement supporting the emphasis on enhanced productivity and efficiency outcomes.

[43] It submits instead that the proper approach is to determine the matter in a manner consistent with the totality of the Agreement. In this context it makes particular reference to clauses 15 and 17, as well as to the provisions contained in sub clause 22.2, which make clear performance standards can be put in place from time to time.

[44] Linfox continues to submit that it is clear from the evidence that Clause 16 was not negotiated with employees working in a distribution centre in contemplation, and it was first included in an agreement covering the parties at a time when Linfox did not have employees working in a warehouse or distribution centre. It also submits it is clear it was not drafted with the intention of dealing with entitlements to overtime.

[45] However, Linfox does now acknowledge that the Clause has application to its employees working in distribution centres, but it continues to take issue with the TWU as to how it is to be applied in that context. In its submission it was clearly derived with the work of drivers in mind, and does not have logical or sensible application in the context of a distribution centre. However, it submits that if the Clause is to be considered in conjunction with work in a distribution centre, then its intent is to ensure employees are being best utilised in the most efficient and productive way so as to maximise their full capacity. In its submission this is what has occurred in recent times at the Distribution Centre at Truganina as a consequence of the changes introduced, and it has used its “best endeavours” to engage employees at their full capacity, thereby avoiding the need to consider other more punitive options.

[46] Linfox again emphasises that Clause 16 makes no mention of overtime, and it has no obligation to offer overtime work to employees under the Agreement, or under the the terms contained in the incorporated Award. In its submission it is not possible to contemplate in these circumstances that “full capacity” can be said to extend beyond the 38 hour working week that employees have contracted to work. It submits this is not an interpretation that follows from an objectively ascertained view of the intention of the parties.

[47] Linfox also refers to various authorities in support of its submissions. These include the decision in Newey v Westpac Banking Corporation 14, which acknowledged previous authorities indicating that a contextual approach to the construction of commercial contracts is required, and any ambiguity is to be resolved having regard to the surrounding circumstances, and the commercial purposes or objects. It also notes that Clause 16 is located next to Clauses 15 and 17, which deal with the “Objectives of This Agreement” and “Continuous Employment.” It also makes reference to the decision in Re Andrew John Short v F Hercus Pty Ltd15 and the following passage, in particular:

“Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language.” 16

[48] It also makes reference to the decisions in the Amcor 17and Maritime Union18 cases in support of the submission that context is to be approached broadly and may appear from the terms contained in the agreement when taken as a whole, as well as the arrangement of the provisions being construed. It also refers to the decision of Justice Madgwick in Kucks v CSR Limited, 19 and the following often cited passage:

“It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.

But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.” 20

[49] Mr Kris Talevski is the General Manager Coles Retail at Linfox with responsibility for the overall management of its distribution centre business with Coles Supermarkets. His evidence indicated a number of changes were introduced at the Distribution Centre in response to its analysis, which indicated the workforce was working significantly below its capacity. The pick rates were critical to this, and in conjunction with customer requirements fed into the demand for overtime, both during the week and at weekends. The extent to which the workforce has operated to full capacity during the week was clearly a significant factor affecting the volume of work required on weekends.

[50] Mr Talevski said it was decided to deal with these issues by creating an incentive for employees to lift performance, rather than dealing with the issue in a punitive way. It was therefore decided to introduce a system whereby employees are required to attain certain pick rate levels and have an acceptable absenteeism record in order to qualify for the more highly paid weekend work. Prior to the implementation of this policy employees simply volunteered for overtime shifts by putting their name on a list, which meant the allocation of weekend overtime work was almost entirely within the control of the employees. However, with the current system Team Leaders review the employees eligible for overtime each week, and then consult with them to determine their availability.

[51] Mr Talevski’s evidence also set out the improvements achieved since the implementation of the overtime policy, and detailed the productivity gains and cost savings that have resulted.

[52] Ms Gaylynne Neill is employed by Linfox as its General Manager, Human Resources Asia Pacific, and has been in that role since 2012. She was previously employed by Linfox as Group Manager Corporate Human Resources and Workplace Relations, and her evidence indicated she has been involved in negotiating enterprise agreements on behalf of the business since 1999.

[53] Ms Neill said the genesis of Clause 16 was from enterprise agreements covering drivers, and she described it as a “Utilisation Clause.” It derived from an objective in the business to endeavour to directly employ its drivers, wherever possible. However, drivers are subject to mandatory requirements in relation to the number of hours they can drive in a day, as well as the requirement for breaks to be taken during the day and between shifts. The Clause was therefore intended to encourage good scheduling and allocation so drivers can be fully utilised during each working day, and can carry out the maximum number of assignments. The objective was, in part, to ensure fatigue guidelines did not prevent permanent drivers from completing assignments, thereby requiring casual employees or an agency driver to be engaged.

[54] Ms Neill continued to state the Clause was primarily related to scheduling of the permanent fleet and driver utilisation during ordinary hours, and until the TWU raised the issue at the Truganina Distribution Centre she had never heard it suggested the Clause had any relevance to overtime.

[55] Her evidence also indicated the 2011 Agreement was the first National Enterprise Agreement entered into by Linfox. Stand-alone agreements had previously covered each Distribution Centre but Linfox wanted to have all of its business covered by a single national agreement, and because the 2011 Agreement applied to both drivers and Distribution Centre employees a version of the so-called “utilisation clause” was included as Clause 14 of the 2011 National Agreement.

[56] She also indicated that as an outcome from those negotiations the wording of the Clause changed from “Linfox wishes to maximise the utilisation…” 21 to “Linfox shall use its best endeavours to achieve the maximisation.”22 However, there was no discussion about any intention to change the commonly understood meaning of the Clause.

[57] Ms Neill said she also participated as a bargaining representative for Linfox in the negotiations for the current Agreement. She said Linfox sought in those negotiations to reword what was then Clause 14 to remove any capacity for the TWU to argue the Clause acted to restrict the allocation of overtime. However, despite seeking this change Linfox did not acknowledge at any time that the Clause actually placed an obligation on it to offer overtime to full-time employees before it could engage any other employees. However, the proposal to reword the Clause was not progressed. Despite this she could not recall any concerns that the Clause in any way restricted Linfox’s ability to allocate overtime.

[58] Ms Neill also said the recent introduction of the overtime policy is fully consistent with the intent of Clause 16. She said Linfox continues to take all reasonable steps to fully utilise its permanent staff in order to reduce the need to rely on external labour.

Consideration

[59] The submissions and evidence in this matter make clear that all parties have contributed to an outcome which has seen significant improvement in recent times to the productivity and performance levels of the Distribution Centre at Truganina. Various initiatives have contributed to this outcome. Enhanced training and supervision, the introduction of the ATR’s, and specific “action plans” for employees who are not achieving identified targets, have all been referred to in the evidence and submissions as some of the measures that have contributed to the overall improvement.

[60] Linking the availability of working additional overtime shifts to the achievement of performance targets has also been one of the initiatives introduced, and since identified as contributing to productivity and performance improvements. However, as the evidence of Mr Taplin and Mr Vassallo also highlights, the impact of not being able to work additional overtime shifts is significant for employees who have previously worked these shifts on a regular basis, with the additional penalty rate entitlements meaning employees can earn in the order of $500 each week, over and above their normal weekly earnings.

[61] The TWU, to its credit, has made clear its support for the improvements in productivity and efficiency that have been achieved, particularly in the context of working to maintain on-going employment opportunities and job security for its members at the Distribution Centre. However, it is obviously also concerned about the impact of the changes on those members now being denied access to additional weekend overtime shifts that were previously available to them.

[62] In its submission Linfox should not be restricting access to overtime for full-time employees because Clause 16 of the Agreement prevents it from restricting access to available overtime work to the full-time proportion of its workforce in this way. It continues to submit that the words in the Clause are clear and unambiguous, and should be read in their plain and ordinary meaning, in accordance with the principles recently consolidated in the Full Bench decision in Golden Cockerel.

[63] In its submission Clause 16 is intended to provide protection and security for full-time employees, and the reference in the Clause to maximising the full-time proportion of its workforce, and utilisation of them to their full capacity, is not limited by reference only to work performed as part of their ordinary hours.

[64] Linfox has a different view. It submits the Clause contains no reference to overtime, or even to hours of work in terms of the employees’ “full capacity.” It also points out that overtime entitlements are not dealt with in the Agreement at all, with the relevant provisions instead being derived from the incorporated Road Transport and Distribution Award 2010. It also submits the plain meaning of the words cannot be construed in the way the TWU contends because there is nothing in the Agreement, or in the incorporated Award provisions, that obliges it to make overtime available to any of its employees.

[65] I have considered the submissions and evidence in relation to this issue. I am not satisfied the intent of the words in Clause 16 is so clear and unambiguous that the plain meaning leads to an obvious conclusion that “maximisation of the full-time proportion of its workforce, including utilisation of full-time employees to their full capacity” extends to mean full-time employees have an entitlement to any available overtime work before any “casual, part time, labour hire employees or contract carriers are engaged or work is contracted out to other companies or businesses.” 23

[66] In coming to this conclusion I have had particular regard to the fact the Clause contains no reference to hours of work or overtime. In addition, there is nothing in the Agreement, or the incorporated Award, that obliges Linfox to offer overtime to any employee. It is also unclear as to the meaning of an employee’s “full capacity” in the context of working overtime. The capacity of an employee to work overtime will vary from employee to employee and, indeed, from time to time. Some employees may have other commitments away from work that limit their ability to take on additional hours. Other employees may have no desire to work additional hours over and above their ordinary time hours. Other employees again might be prepared to work as many overtime hours as the business is prepared to make available. Again, employee preferences in each case may change from time to time, from week to week, even from day to day, as their individual circumstances change.

[67] For all the reasons indicated I am not satisfied that it can be concluded Clause 16 has a plain meaning that can be said to be clear and unambiguous in creating an entitlement for overtime to be required to be offered to full-time employees before other options are considered, in a way that precludes Linfox from making the availability of overtime for full-time employees contingent on the achievement of certain performance targets.

[68] Having come to this conclusion it does not necessarily follow that the Clause is not to be applied in this way. It simply means I am not satisfied that its plain and ordinary meaning leads to this conclusion. I now turn again to the decision in Golden Cockerel in terms of the principles to be applied in interpreting the Clause, given the initial conclusion I have come to.

[69] It follows from the Full Bench decision, and the principles set out in that decision at [41], that in circumstances where the language of an Agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstances will be admissible to aid the interpretation of the Agreement. The Full Bench relevantly continued to indicate in terms of the applicable principles:

“6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) 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;

(b) notorious facts of which knowledge is to be presumed;

(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

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

(b) the disputed provision's place and arrangement in the agreement;

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

9. Where the common intention of the parties is sought to be identified, regard is not to be had 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.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.” 24

[70] When these principles are applied in the circumstances of the present matter I am satisfied, at the outset, that the evidence of the surrounding circumstances indicates that what now appears as Clause 16 in the current National Agreement was originally established for a purpose other than dealing with entitlements to overtime. Linfox submits and points to the evidence of Ms Neill, in particular, in this context that the wording in the Clause originally derived from circumstances impacting on drivers, rather than employees working in a distribution centre. It was, firstly, related to the objective of the business to directly employ its drivers as far as possible. However, drivers are also subject to various requirements to do with the number of hours they can drive in a day, and about breaks to be taken during the day and between shifts. The Clause was therefore intended to place an obligation upon Linfox to have in place effective scheduling and allocation arrangements so that full-time employees, working as drivers, were fully utilised during their working day in order to carry out the maximum number of assignments during each day, rather than having other casual employees or contract drivers engaged.

[71] I am also satisfied that there is no real contest in this matter about how the wording of the Clause was originally derived and the circumstances it was based upon. However, in expressing this view I clearly acknowledge that the TWU has a very different view at this time about its intended application.

[72] In this context I refer, firstly, to the evidence of Mr McCrone, who was involved in the negotiations for the present Agreement. His evidence is that the wording in Clause 16 was an issue in those negotiations, and Linfox sought to include other wording because it was concerned to remove the obligation to be required to offer overtime work to full-time employees before it could be offered to others. He also said he understood Linfox was particularly concerned about this issue because of the circumstances at the Distribution Centre at Truganina. His evidence is that the TWU rejected the proposals to amend the wording in the Clause, and it was finally agreed it would remain unchanged.

[73] The evidence of Mr Aird supports this view. His evidence indicated the wording in Clause 16 is consistent with a claim pursued by the Union since at least 2004 for both drivers and distribution centre employees. His evidence is that there was a common view among the parties that the Clause did require overtime work opportunities to be offered to full-time employees in preference to others.

[74] However, the evidence of Ms Neill is very different. In her view the Clause has only ever been related to scheduling of drivers and driver utilisation during ordinary hours, and it is only in the context of the present dispute that it has been suggested the Clause has any relevance to overtime entitlements. She indicated that, as a consequence, there was some consideration in the negotiations for the new Agreement to amend the wording to remove any capacity for the TWU to argue the Clause acted to restrict the allocation of overtime. However, Linfox did not at any stage acknowledge that it placed an obligation on it to offer overtime work to full-time employees before it could engage others. However, ultimately this change was not pressed.

[75] In the light of this conflicting evidence I am not satisfied that it can be concluded that the evidence about the recent negotiations for the current Agreement establishes objective background facts that can be said to be known to all parties, or otherwise provides evidence of matters in common contemplation and constituting a common assumption.

[76] I have next had regard to the language of the Agreement. In this context I have first considered the wording of Clause 16 itself. As indicated already it makes no reference to hours of work, and contains no reference to the regulation of overtime entitlements. However, it does place an obligation on Linfox, as the TWU emphasises in its submissions, to use its “best endeavours” to maximise the full-time proportion of its workforce, including by utilisation of those employees to their full capacity before others are engaged or work is contracted out to others.

[77] As the parties’ submissions emphasise Clause 24 “Employee Ratio” is also of some relevance in this context in explaining what “the full-time proportion of its workforce” means. It provides that:

“The ratio of full time Employees to non-full time Employees (including casual and permanent part time Employees), shall remain 4:1.” 25

[78] The key objective in Clause 16 then is to maximise the full-time workforce with specific reference to utilisation of full-time employees to their full capacity. The TWU obviously submits this extends to requiring the full-time proportion of the workforce to have the first option on any available overtime work. Linfox rejects this submission and, while now acknowledging that the Clause does have application to employees at its Distribution Centres, submits it only extends to them being fully utilised to their full capacity during normal working hours.

[79] Linfox continues to reject any suggestion that the Clause can be applied in the way the TWU contends because it submits it has no obligation to offer overtime work to employees. It also submits it is not possible to determine what an individual employee’s “full capacity” to work overtime is. Whilst acknowledging these submissions I am also satisfied in appropriate cases an Agreement could make explicit provision for overtime hours to be offered to one group of employees, before being required to be offered to others.

[80] I have also had regard to the construction of the Agreement as a whole and where Clause 16 sits in that context. It is contained within Part B of the Agreement, which is headed “Commitment and Obligations.” The provisions in this part of the Agreement are on the one hand concerned with broad statements of intent and an expression of desired objectives, rather than dealing with specific conditions and entitlements. It also contains what might be described as some machinery matters, such as provisions about the negotiation of the next Agreement, and requirements to do with new employees and access to the Agreement. This examination appears to provide limited assistance to the determination of this matter. On the one hand the Clause is contained in a part of the Agreement that is not dealing with specific conditions and entitlements. However, the TWU contends that the obligations upon Linfox arising from Clause 16 extend in broad terms in the way it proposes.

[81] The decision in Golden Cockerel also makes clear that the common intention of the parties is to be identified objectively, and by reference to that which a reasonable person would understand by the language the parties have used. It also confirms the task does not involve rewriting the Agreement to achieve what might be regarded as a fair or just outcome. These considerations have led me to finally conclude that Clause 16 is not to be applied in the way the TWU contends. In coming to this decision I have had particular regard to the fact that the wording in the Clause does not contain any reference to the regulation of hours of work or overtime. I have also had particular regard to the derivation of the Clause, which I am satisfied was based on the working arrangements applicable to drivers. I am not satisfied its terms can now be extended to encompass an entitlement to overtime in the way that is being suggested. It follows as a consequence that the present application is rejected.

[82] I also note that in coming to this decision I have not dealt at any length with much of the evidence in the proceedings about the new performance targets that have been introduced, and the other initiatives designed to assist employees achieve these targets. Clearly these changes have had a significant impact in the Distribution Centre and have led, on the one hand, to significance improvements in performance and productivity. However, it is also clear they have had a significant impact on some employees at least, apart from the obvious disadvantage suffered by those now being denied access to overtime work that was previously available to them. However, I have not dealt with these matters at any length, not because they are not important, but because I am satisfied they are not directly relevant to the matters to be determined and resolved in the context of the present application.

COMMISSIONER

Appearances:

Mr B. Baarini and Mr L. McCrone appeared on behalf of the TWU.

Mr D. Williams of Minter Ellison appeared on behalf of Linfox.

Hearing details:

2015.

Melbourne.

24-25 September.

 1   AE406887

 2   Ibid at cl.16

 3   Ibid

 4   [2014] FWCFB 7447

 5   Exhibit TWU3 at para 6

 6   AC314767

 7   Exhibit TWU1 at para 8

 8   Transcript at PN119

 9   Submissions of the Respondent at para 18

 10   Ibid at para 21

 11 (2006) 156 IR 426 at 440

 12   Above n.ix at para 35

 13   MA000038

 14 [2014] NSWCA 319

 15 [1993] FCA 51; (1993) 40 FCR 511

 16   Ibid, Decision of Burchett J at [8]

 17   Amcor Ltd v Construction, Forestry, Mining and Energy Union and Others [2005] HCA 10

 18   Maritime Union of Australia v Cal Dive International (Australia) Pty Limited [2012] FWA 9833

 19 (1996) 66 IR 182

 20   Ibid at page 184

 21   Exhibit LF1 at para 23

 22   Ibid

 23   Above n.i at cl.16.1(a)

 24   Above n.iv at [41]

 25   Above n.i at cl.24

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