Transport Workers' Union of Australia v Milbrae Quarries

[2016] FWC 6100

[2016] FWC 6100

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Transport Workers’ Union of Australia
v
Milbrae Quarries
(C2016/3483)

DEPUTY PRESIDENT DEAN SYDNEY, 10 OCTOBER 2016

Dispute regarding alleged failure to consult on change to superannuation payments.

[1] On 22 April 2016 the Transport Workers’ Union of Australia (TWU) filed an application pursuant to s.739 of the Fair Work Act 2009 (the Act) for the Fair Work Commission (the Commission) to deal with a dispute in accordance with clause 28 (Dispute Resolution) of the Milbrae Quarries Pty Ltd Enterprise Agreement 2013 (the 2013 Agreement).

[2] The nominal expiry date of the Agreement is 30 June 2017.

[3] The dispute relates to a change made by Milbrae Quarries Pty Ltd (Milbrae) to the making of superannuation contributions for its employees covered by the 2013 Agreement. The 2013 Agreement does not have a term that deals with superannuation.

[4] In summary, and for the reasons set out below, I find that:

a. There was no obligation for Milbrae to consult pursuant to clause 9 or 27 of the Agreement, and

b. There is no jurisdiction for the Commission to grant the relief sought by the TWU to require Milbrae to make superannuation contributions based on 47 hours per week.

Background

[5] Milbrae operates four fixed blue-metal quarry sites and contracts mobile quarry services to clients in various states. It employs approximately 100 employees. Following the downturn in the mining industry, Milbrae commenced a review of its operations to curtail expenditure. A subsequent review of its payroll revealed that Milbrae had been making superannuation contributions on its employees’ rostered hours of 47 per week, rather than the employee’s ordinary hours of 38 hours per week as required by the relevant superannuation legislation.

[6] Milbrae wrote to all employees on 10 September 2015 (the advice letter) in the following terms:

RE: SUPERANNUATION GUARANTEE CONTRIBUTIONS

An external audit of Milbrae’s payroll data has identified that the Company has been over paying the required superannuation guarantee contributions to employees.

From 1 July 2015 superannuation guarantee payments will be paid as per legislative requirements (9.5% on your ordinary time earnings). The Company will adjust the superannuation payment advice that has been provided this current financial year and will advise you of the correct amounts.

The Company does not intend to seek reimbursement for any superannuation overpayments made prior to 1 July 2015. Should you have any queries, or require further information, please contact me on xx xxxx xxxx.

[7] Milbrae claims that the payment of superannuation contributions on 47 hours per week was a mistake and an oversight by it, which it was entitled to correct.

[8] The TWU argued that Milbrae failed to adhere to its obligations under clauses 9 (Workplace Consultation) and 27 (Consultation Regarding Major Workplace Change) of the 2013 Agreement when it effected the changes to superannuation contributions, and initiated a dispute in accordance with clause 28 on this basis.

[9] In its application the TWU sought the following relief:

1. A determination of the Commission that the Company failed to consult with its employees or the TWU prior to reducing superannuation payments;

2. A determination that, in accordance with the Agreement, the Company ought to have consulted with the TWU and affected employees prior to reducing superannuation; and

3. A declaration that the reduction in superannuation, insofar as it was effected outside the Company’s obligations under the Agreement, is reversed.

[10] Milbrae’s response, in summary, was that it has not breached the clauses identified by the TWU in its submissions relating to consultation, and that the Commission does not have the power to require Milbrae to make superannuation contributions on 47 hours per week.

[11] Conciliation conducted before Senior Deputy President Hamberger on 19 May 2016 did not resolve the dispute and the matter was subsequently referred to me for arbitration. The hearing before me was held in Sydney on 16 August 2016. Mr H Arjonilla appeared for the TWU and Mr G Fredericks, of Counsel, appeared for Milbrae.

The issues for determination

[12] The two issues that I need to deal with in this decision can be summarised as follows:

a. Did Milbrae have an obligation to consult in relation to the change to superannuation contributions and if so, did it meet that obligation; and

b. Is there jurisdiction for the Commission to grant the relief sought by the TWU, the effect of which is to require Milbrae to continue to make superannuation contributions on 47 hours per week.

[13] In doing so, I have had consideration to the principles applicable to the construction of an enterprise agreement which were canvassed in detail in Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd 1.

Relevant provisions in the Agreement

[14] Clause 28 of the Agreement sets out the steps to be followed when a dispute arises:

28 DISPUTE RESOLUTION

28.1 In the event a dispute arises relating to a matter under this Agreement or the NES the parties, in the first instance, must attempt to resolve the matter through workplace discussions between the employee and their immediate supervisor.

28.2 If the dispute remains unresolved the supervisor should defer he matter to their operational manager, the Business Services Manager or General Manger. The employee who is party to the dispute may, at this time, appoint a representative.

28.3 All reasonable steps will be taken to resolve the dispute in a timely, fair, transparent and sensitive manner. However, if the dispute remains unresolved either the Company or employee may refer the matter to the Fair Work Commission.

28.4 The Fair Work Commission will attempt to resolve the dispute through mediation, conciliation, expressing an opinion or making a recommendation. If the dispute remains unresolved the Fair Work Commission may then:

• Arbitrate the dispute; and



• Make a determination that is binding on the parties.

28.5 The employee or Company may appoint another person, organisation or association to accompany and/or represent them for the purposes of 28.4.

28.6 A decision that Fair Work Commission makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act and can therefore be subject to an appeal against the decision.

28.7 While the parties are trying to resolve the dispute as described:

28.7.1 An employee must continue to perform his/her work as he/she would normally unless he/she has a reasonable concern about an imminent risk to his/her health or safety.

28.7.2 An employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

• The work is not safe, or



• Applicable occupational health and safety legislation would not permit the work to be performed, or



• The work is not appropriate for the employee to perform, or



• There are other reasonable grounds for the employee to refuse to comply with the direction.

[15] Clauses 9 and 27 of the Agreement relevantly provides:

9 WORKPLACE CONSULTATION

The making of this Agreement reinforces the Consultative ethos that encourages discussion between the Company, its employees and Union representatives to promote matters of mutual interest that pertain to the wellbeing of the Company and its employees.
…

27 CONSULTATION REGARDING MAJOR WORKPLACE CHANGE

27.1 Employer to notify

27.1.1 Where the Company has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the Company must notify the employees who may be affected by the proposed changes and their representatives, if any.

27.1.2 Significant effects include termination of employment; major changes in the composition, operation or size of the employer's workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of employees to other work or locations; and the restructuring of jobs. Provided that where this Agreement makes provision for alteration of any of these matters an alteration is deemed not to have significant effect.

27.2 Employer to discuss change

27.2.1 The Company must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in 27.1, the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.

27.2.2 The discussions must commence as early as practicable after a definite decision has been made by the Company to make the changes referred to in 27.1.

27.2.3 For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that no employer is required to disclose confidential information the disclosure of which would be contrary to Company’s interests.

The evidence on behalf of the TWU

[16] The TWU’s evidence consisted of a witness statement of Mr Klaus Pinkas, the Canberra Sub-branch Secretary of the TWU, and a statement and oral evidence of Mr Bradley Gibson, a TWU Organiser.

[17] Mr Pinkas was not available for cross-examination. Parts of his statement were objected to by Milbrae, and accordingly I accepted the non-contentious parts of the statement only. What remained related to Mr Pinkas’ role in negotiating a previous enterprise agreement with Milbrae in 2009 (the 2009 Agreement), and annexed a copy of an enterprise agreement that applied to Milbrae in 2005 (the 2005 Agreement).

[18] Mr Gibson’s evidence can be summarised as follows:

a. Milbrae employees covered by the 2013 Agreement worked up to 72 hours per week but on a base assumption of 47 hours plus overtime;
b. on around 10 September 2015 employees received a letter 2 which informed employees that from 1 July 2015 they would be paid the minimum rate of superannuation;

c. there was no opportunity for employees to put their views or to be represented before the 10 September letter was sent;

d. on 22 April 2016 the TWU filed this dispute notification which was conciliated in May 2016 but not resolved;

e. there was some correspondence between Mr Gibson and Ms Tracey Cotter, Milbrae’s Business Services Manager, regarding access to certain documents;

f. Milbrae employees had previously been covered by older collective agreements, including the 2005 and 2009 Agreements, copies of which were annexed to Mr Gibson’s statement;

g. Mr Gibson was involved in the negotiations of the 2013 Agreement which was largely a roll-over of the 2009 Agreement; and

h. There were no changes agreed to by the parties in respect of superannuation during the negotiations for the 2013 Agreement.

[19] During cross-examination, Mr Gibson acknowledged that there was communication between the TWU and Milbrae regarding the change to superannuation contributions between 10 September 2015 and 22 April 2016, which were not dealt with in Mr Gibson’s witness statement 3.

[20] Mr Gibson also conceded in cross-examination that the obligation to pay superannuation is normally based on 38 hours per week. 4

The evidence on behalf of Milbrae

[21] Milbrae’s evidence consisted of witness statements and oral evidence from two Milbrae employees, Ms Tracey Cotter (Business Services Manager) and Mr Michael Pygram (General Manager).

[22] Mr Pygram’s evidence outlined the process by which Milbrae reviewed its operations to curtail expenditure, including the payroll review in which it discovered it was making superannuation contributions on behalf of employees in excess of its statutory obligations. He gave evidence that he did not know how or why Milbrae had made incorrect superannuation contributions, and that it was only as a result of the payroll review that this error came to light. He further stated that it was always Milbrae’s intention to comply with legislative requirements (ie superannuation contributions based on 38 hours per week).

[23] Mr Pygram gave evidence regarding his involvement in the negotiation of the 2009 Agreement which had commenced shortly before he started working with Milbrae.

[24] I note here that the 2005 Agreement provided for the payment of superannuation in the following terms:

“21. Superannuation:

The employer shall pay on the employee’s account, to one of either of the Australian Public Superannuation Fund or such other fund by agreement between the employee and the employer, an amount representing an amount of superannuation as required by law.”

[25] Mr Pygram stated that during the negotiations there were a number of drafts of the proposed 2009 Agreement exchanged by the parties. In an early draft, the clause relating to superannuation was removed because it was understood that Milbrae was to make superannuation contributions in accordance with its legal obligations only.

[26] Neither the 2009 Agreement nor the 2013 Agreement contain a term with respect to superannuation.

[27] Mr Pygram also gave evidence about the negotiations of the 2013 Agreement with which he was involved. Annexed to Mr Pygram’s witness statement was a copy of the minutes of a meeting held during the negotiations of the 2013 Agreement, dated 12 April 2013. Mr Pygram’s evidence was that there was a claim by the TWU to increase the superannuation contribution, however this claim was rejected by Milbrae. This is confirmed by the minutes which list the claims and Milbrae’s response, in the following terms:

“12. Increase Super Contributions

Agree to remain as per legislation”

[28] Ms Cotter’s evidence also explained the process by which the ‘mistake’ regarding the overpayment of superannuation was discovered and how this was communicated to affected employees. She gave evidence that after the advice letter was sent to employees, she was contacted by two employees who wished to discuss the issue. She said she met with each of the two employees separately and explained in further detail the nature of the mistake. She was not contacted by any other employees.

[29] Ms Cotter gave evidence that she was contacted by Mr Gibson of the TWU in October 2015 and a meeting was arranged for late October, however Mr Gibson cancelled the meeting at the last minute and did not reschedule until January 2016, when a meeting was held at Milbrae’s office in Leeton. During this meeting she stated that Mr Gibson asked that Milbrae continue to make superannuation contributions on 47 hours per week, and if this was not agreed to then he would lodge a complaint with the Commission.

[30] Ms Cotter’s statement sets out the subsequent discussion and email exchange that occurred between the parties between January 2016 and 22 April 2016, being the date that this dispute notification was filed. In summary, she gave evidence regarding an email exchange between her and Mr Gibson on or around 3 February 2016 regarding a further meeting to discuss the issue of superannuation contributions. A discussion occurred on 10 February 2016 in which Mr Gibson told Ms Cotter that if Milbrae continued to make superannuation contributions on 47 hours per week, then the employees could agree to forego a pay rise in the first year of the next enterprise agreement. Ms Cotter rejected this position on the basis that the drivers represented 20 out of the 100 employees covered by the 2013 Agreement, and it would not be fair to start negotiations now with one group and not the other employees. Mr Gibson responded with words to the effect of: ‘well, if the Company doesn’t agree to the compromise, I’ll file in the Commission.’ Ms Cotter gave evidence that Mr Gibson did not contact her again.

[31] Ms Cotter was not cross-examined about her conversation with Mr Gibson, and so I accept her version as set out in her witness statement.

Did Milbrae have an obligation to consult in relation to the change to superannuation contributions and if so, did it meet that obligation?

[32] The TWU submitted that there was no genuine consultation in relation to the change to superannuation contributions which was required by clauses 9 and 27 of the 2013 Agreement, and which are set out earlier in this decision.

[33] In relation to clause 9, the TWU argued that it was more than an aspirational clause. It submitted that the clause should be read “as a broad, overarching obligation on the parties to generally engage in however a manner that that manifests.’ 5 However the TWU conceded, appropriately in my view, that the clause did not require consultation at any particular point in time, and went on to submit that it did not rest much weight on clause 9, ‘other than to say it’s indicative of the general ethos as its termed in that agreement, which is to consult .’6

[34] I agree with the submissions made by Milbrae, and so find, that clause 9 is aspirational only and does not impose any specific obligations on Milbrae.

[35] The TWU’s written submissions in relation to clause 27 of the 2013 Agreement were that ‘it is clear that an almost halving of the number of hours on which superannuation would be paid has a significant effect on employees, as would any change of remuneration structures. It is also clearly a major change to the program of the Company.’ No evidence was led as to why this change would constitute a ‘major change to the program of the Company’, and the submissions were not expanded on during the hearing.

[36] The TWU acknowledged during the hearing that clause 27 is a relatively standard consultation clause. 7

[37] In my view, for this clause to be enlivened, there are three prerequisites that must be satisfied which are as follows:

1. the employer must have made a definite decision;

2. to introduce major change in production, program, organisation, structure or technology;

3. that are likely to have significant effects on employees.

[38] Once these three prerequisites are satisfied, the employer must then notify the employees who may be affected by the proposed changes, and their representatives, if any.

[39] Examples of situations which will be considered to have ‘significant effects’ on employees are set out in clause 27.1.2.

[40] In my view, the correcting of an error, in the form of an overpayment of superannuation contributions, does not enliven clause 27. In particular, I find that this is not a ‘decision’ that relates to the introduction of major change. As mentioned earlier, the TWU submitted that this was a major change to the program of Milbrae however no evidence was led or submissions made to support this assertion.

[41] In relation to clause 27, I accept and agree with the submissions of Milbrae that the payment of superannuation contributions cannot be regarded as a change to Milbrae’s program. The contributions were not made as a result of any plan or policy of Milbrae. Rather, they were made on the basis of Milbrae’s understanding of its legal obligations.

[42] Accordingly, I find that there was no obligation on Milbrae to consult in accordance with clause 27.

[43] Had there been a requirement to consult, I would have found that the process undertaken by Milbrae to effect the change to superannuation contributions was reasonable and would satisfy the requirements of clause 27, based on the evidence of Ms Cotter.

[44] There was a further submission made by the TWU regarding the ‘core nature of the ordinary hours of work as they’re ordinarily understood by an employee in that workplace’. 8 In short, the argument of the TWU was that the change to superannuation contributions was a ‘major change’ as contemplated by clause 27 because there is a dispute about the proper characterisation of ordinary hours (ie. whether ordinary hours were 38 or 47 per week). This was not identified in the application lodged by the TWU, and was first raised in the opening submissions of the TWU during the hearing.

[45] During closing submissions, the TWU agreed with the proposition that ordinary hours are generally considered to be 38 per week. The TWU further agreed that ‘rostered’ hours may well be different to ‘ordinary’ hours because it is not unusual that rostered hours may include regular overtime or additional hours.  9

[46] Milbrae submitted that this matter was not properly before the Commission, as it was not raised in the dispute notification.

[47] I accept that this matter regarding what constitutes ordinary hours is not properly before me. If it were, I would not accept the TWU submission. The submission is contrary to clause 12.1.2 of the 2013 Agreement which provides that:

“Regular rostered hours which are determined by operational requirements shall be up to 47 per week, comprising 38 ordinary hours and up to nine additional hours …”

Is there jurisdiction for the Commission to grant the relief sought by the TWU to require Milbrae to continue to make superannuation contributions on 47 hours per week?

[48] The TWU argued that the practice of the payment of superannuation on 47 hours per week as opposed to 38 hours per week is a matter that can be dealt with by the Commission because a) it is a matter that can be incorporated into the employment contract, and b) it can be implied by way of custom and usage.

[49] There was no evidence led to support the argument of incorporation into the employment contract. In any event, it is not a matter that I could determine under section 739 of the Act. I therefore reject this submission.

[50] The TWU’s written submissions asserted that during bargaining for the 2009 Agreement ‘the TWU had a claim that additional hours would be paid over and above the legislative requirements for superannuation.’ 10 These submissions were filed in advance of the hearing, and relied on paragraphs of Mr Pinkas’ witness statement which were not ultimately admitted into evidence as he was not available for cross-examination.

[51] The TWU agreed in its written submissions that the 2009 and 2013 Agreements did not contain a term dealing with superannuation. It argued, however, that Milbrae started making superannuation contributions on 47 hours per week in 2009, and accordingly, it had become a ‘usage’ and as such remained payable by Milbrae to its employees.

[52] On the evidence before me, it is clear that this characterisation of the negotiations is not accurate. The evidence of Mr Pygram and the annexures to his witness statement demonstrate that the claim by the TWU was for an increase in the percentage (e.g. 9% to 10%) of superannuation contributions for employees, not an increase in the hours upon which superannuation was calculated (ie. 38 hours to 47 hours per week). It is also clear from the evidence that this claim was rejected by Milbrae, and accepted by the TWU by virtue of the making of the 2009 Agreement with no clause dealing with superannuation.

[53] I find that the argument that a provision dealing with superannuation could be implied into the Agreement by way of usage has no merit for a number of reasons.

[54] First, the TWU submitted that while the payment was not written into a workplace agreement, it was certain and had gained notoriety. There was no evidence led by the TWU that supported this argument.

[55] Second, the evidence of Milbrae, unchallenged by the TWU, and which I accept, is that Milbrae was not aware of additional superannuation contributions until it was discovered during its payroll review. I accept that the payment of superannuation on 47 hours per week was a mistake, which it was entitled to rectify. It is not appropriate to regard a practice as a usage where that practice arose from a ‘failure or oversight’ by one party. 11

[56] In addition, Milbrae argued that the Dispute Resolution clause (clause 28) does not allow the Commission to deal with all workplace issues or disputes. Rather, the Commission can only deal with matters arising ‘under this Agreement or the NES’. It is clear that superannuation does not arise under the Agreement or the NES. Accordingly, I accept the Milbrae’s submissions in this regard.

[57] Further, both the 2009 and 2013 Agreements contain a clause in the following terms:

“4. Scope

4.1 This Agreement will operate as a stand alone Agreement to the exclusion of all other agreements and awards. It is a full and complete statement of the terms and conditions of employment of all employees covered by this Agreement” (my emphasis)

[58] There is no ambiguity in the provisions of the Agreement. 12 There is no clause dealing with superannuation and clause 4 makes it clear that the Agreement is a full and complete statement of the terms and conditions that apply to those employees.

[59] In my view, it is clear that there is no jurisdiction for the Commission to provide the relief sought by the TWU regarding the making of superannuation contributions on 47 hours per week.

Conclusion

[60] For the reasons set out above, the relief sought by the TWU is refused and the application is dismissed.

DEPUTY PRESIDENT

Appearances:

H Arjonilla for the Transport Workers’ Union of Australia.

G Fredericks of Counsel for Milbrae Quarries Pty Ltd.

Hearing details:

2016.

Sydney:

August 16.

 1   [2014] FWCFB 7447.

 2   See annexure BJG-2 to Exhibit 2.

 3   Transcript PN123.

 4   Transcript PN147.

 5   Transcript PN377.

 6   Transcript PN381.

 7   Transcript PN383.

 8   Transcript PN384.

 9   Transcript PNs384-391.

 10   Paragraph 8 of written submissions filed by TWU dated 30 June 2016.

 11   See CEPU and Allied Services Union of Australia v Siemens Ltd Australia[2016] FWC 2041 at 57.

 12   [2014] FWCFB 7447.

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