United VoicevSerco Australia Pty Ltd

[2014] FWC 9090

[2014] FWC 9090[Note: An appeal pursuant to s.604 (C2014/8378) was lodged against this decision - refer to Full Bench decision dated 10 February 2015 [[2015] FWCFB 841] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

United Voice
v
Serco Australia Pty Ltd
(C2014/3275 & C2014/3276)

COMMISSIONER BOOTH BRISBANE, 19 DECEMBER 2014

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] - Meal Breaks Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] - Overtime, Annual Leave and Personal Leave.

[1] This decision concerns two separate applications brought by United Voice seeking interpretations of the Serco Southern Queensland Correctional Centre Agreement 2013-2016 (Agreement). The Applicant was a bargaining representative for the Agreement and represents the industrial interests of custodial officers engaged at the centre operated by the Respondent, Serco Australia Pty Ltd.

[2] The issues in dispute are whether ‘back pay’ applies to overtime worked, annual and personal leave taken (the back pay dispute); and whether chefs are entitled to a paid meal break (chefs entitlements dispute).

[3] Serco raised a jurisdictional objection that the matters that are the subject of the dispute are outside the jurisdiction of the Fair Work Commission.

[4] This decision deals with the jurisdictional objection and both applications. The parties consented to the matter being decided on the papers.

[5] After final submissions, a Full Bench of the Fair Work Commission handed down the decision in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd 1 which considered andreviewed the significant case law on interpretation of agreements.

Both parties were invited to make further submissions and did so. These further submissions are referred to in the decision and have been considered in making these decisions.

Interpreting Agreements - the Principles

[6] In the Golden Cockerel casethe Full Bench reviewed the significant case law on interpretation of agreements. Relevant for the purposes of interpreting this agreement, it clarified the circumstances in which the Commission can take into account bargaining negotiations.

[7] At paragraph 41, the Full Bench distilled the following relevant principles:

...

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

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.

[8] It follows that for each dispute, including the jurisdictional dispute the starting point is to determine whether the agreement has a plain meaning or contains an ambiguity.

A. Jurisdictional issue

[9] Serco objects to the applications on jurisdictional grounds, submitting that the dispute resolution clause in the Agreement does not extend to the two disputes in question. The clause reads as follows:

43. Grievance and disputes resolution procedure

(a) In the event that a grievance or dispute arises about the National Employment Standards or matters in this Agreement, every effort shall be made by the parties to resolve the grievance or dispute at the workplace level in accordance with the process set out in this clause.

In relation to disputes about other matters pertaining to the relationship between the company and employees, they will also be subject to the process set out in this clause, however such matters may only proceed to arbitration by consent of the parties. ...

{e) If discussions at workplace level do not resolve the dispute, a party to the dispute or their representative may refer the matter to the Commission. ....

[10] Serco says the disputes do not fall within any of the three categories in paragraph 43(a), namely grievances or disputes:

1. about the National Employment Standards; or
2. about matters in the Agreement; or
3. Disputes about other matters pertaining to the relationship between the company and employees, proceeding to arbitration by consent.

[11] Serco submits that support for its interpretation is provided for in the Golden Cockerel case. That is, that in construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity. In the submissions of Serco there was no ambiguity in clause 43. It has a plain meaning and clear language.

[12] Further, the dispute is not about National employment standards, or about matters in the agreement but matters arising under the agreement. 2

[13] Further Serco submits that the plain meaning of the words in the third ‘other disputes’ category quite clearly were not to be arbitrated without consent. Further regard should not be had to the subjective intention of expectation of the applicant.

[14] United Voice submits that the Golden Cockerel decision, as it relates to the jurisdictional question is that the Commission should apply the surrounding circumstances to assist in determining whether an ambiguity exists with consideration of context as an aid to resolving the disputed construction of the agreement. 3

[15] It is clear the disputes do not concern the National Employment Standards and that Serco has not consented to arbitration of a dispute of the type in (c) above. The issue then falls to whether the disputes are about “matters in the Agreement”.

[16] On the matter of interpretation of clause 43, I agree with the submissions of Serco that there was no ambiguity in the clause. However I do not agree that the dispute resolution clause should be read down as proposed by Serco. 4

[17] This is because the disputes as filed are about matters in the Agreement. This is because each refers to the proper interpretation of the Agreement, and more particularly, the applicability of clauses in the Agreement to particular circumstances being:

(i) the applicability of the wage rates stated in Appendix 2 to certain classes of remuneration; and
(ii) how clause 29 applies to a certain class of employees.

[18] Determination of each issue necessarily relates to the content of the Agreement and its application to particular circumstances and is therefore directly relevant to matters in the Agreement.

[19] The jurisdictional objection is dismissed.

B. The Agreement
[20] The Agreement operates from 27 September 2013. 5 Clauses 14 and 16 of the Agreement provide for coverage of custodial officers and chefs (among other classifications).

[21] The two disputes are about payment of back pay; and whether meal breaks for chefs are paid or unpaid breaks.

C. The Back pay issue
[22] There is no dispute that the parties agreed to back pay being paid for the period from 1 April 2013 to the commencement of the Agreement. The table of wage rates in Appendix 2 of the Agreement specify, for each classification, rates applicable from 1 April 2013. Those rates are identical to those set out in clause 14 applying from commencement of the Agreement.

[23] The relief sought by United Voice is:
a recommendation that backpay be applied ... to overtime worked and annual leave and personal leave taken.

[24] United Voice submits that:
backpay was only paid on ordinary time worked, and that periods of overtime and annual leave, sick leave and other absences were not paid at the higher rates of pay. … United Voice contends that this is contrary to the agreement that was reached by the parties throughout the course of negotiations.

[25] Serco submits that the agreed back pay applies to "ordinary time wages and allowances" and that that expression excludes overtime and annual and personal leave.

[26] In deciding how to interpret the nature of back pay to be paid to employees, that is, whether it includes as the union asserts - overtime worked, annual leave and personal leave taken; or whether back pay applies to the exclusion of overtime, annual and personal leave and is only payable on ordinary time wages and allowances, the principles to be followed are described above in the Golden Cockerel decision.

[27] United Voice submits that the Golden Cockerel decision is supportive of their submissions that both context surrounding circumstances can and should provide assistance to the Commission resolving the matter.

[28] Serco did not directly address the relevance of Golden Cockerel to each of the substantive disputes having pressed an interpretation that the Commission did not have jurisdiction to arbitrate the dispute. For reasons outlined above this argument has not been accepted.

[29] On the authority of Golden Cockerel it is firstly necessary to determine whether the agreement to pay back pay as contained in the Agreement has a plain meaning or contains an ambiguity.

[30] In doing so regard may be had to evidence of the surrounding circumstances to assist in determining whether such ambiguity exists.

[31] It is Serco’s evidence 6 that the final offer document7 states that the first increase of 2.2% is “back pay to 1 April 2013 (ordinary time wages and allowances)”.

[32] The statements filed by United Voice of Mr Ong, Ms Warren and Ms Hall all say that discussion of back pay was limited to the operative date and did not canvass inclusions or exclusions. This is consistent with the statement of Mr Walters for Serco.

[33] Mr Smith in his statement filed by Serco says that during a teleconference Ms Duncan advised Mr Ong that back pay would be paid “on ordinary time wages and allowances”. Mr Ong did not seek clarification of inclusions or exclusions. This was followed by an email from Mr Smith 8 stating:
I confirm that backpay will be made to all employee classifications in the Agreement from the first full pay period on or after 1 April 2013 on ordinary time wages and allowances.

[34] Ms Duncan’s evidence was that the details of back pay were not agreed by the time she became involved in negotiations. She also exhibits Mr Smith’s email exchange with Mr Ong. On the terminology used and past practice, Ms Duncan says:
28. The terminology used to confirm the payment of the back pay, that is, that it would be paid on ordinary time wages and allowances is the common terminology used by the Respondent, and it is meant to specifically exclude overtime. If it had been our intention to include overtime, then it would have been referenced. Instead, it was excluded by referencing ordinary time only, plus allowances.
29. For the Agreements that I have negotiated whilst working for the Respondent, and where back pay was agreed, none of those agreements included the application of back pay to overtime.

[35] In contrast to the statements filed by United Voice where the understanding of the ‘backpay’ did not canvas inclusions or exclusions, Ms Duncan’s evidence about overtime appears consistent with the ordinary meaning of the word. 9

[36] As a result, the Table of Wage Rates in Appendix 2 is susceptible to more than one meaning.

[37] However while the differing views on interpretation allow consideration of the context, there is no common intention of the parties which can be relied on.

[38] Its interpretation and meaning will turn on the language of the Agreement itself. These matters are set out below.

What are ordinary time wages?

[39] The Agreement does not define ordinary time. It does however define the following: “hours of work” in clause 21 (full-time employees: "ordinary working hours"), clause 22 (part-time employees: "ordinary hours of work") and clause 23 (casual employees: "time actually worked"; "ordinary hours"; and "each hour of work performed").

[40] Other remuneration matters included in the Agreement include: overtime; 10 allowances for public holidays;11 personal and carers leave;12 compassionate, parental and long service leave;13 and severance payments in the event of redundancy.14 Clause 27 refers to overtime rates by reference to employees’ working extra hours.

[41] The meaning of ordinary time wages can be found from its context as an agreement made under the provisions of the Fair Work Act 2009 (Cth) (Act). The Act does not define “wages” or “ordinary time” or like terms. The Act does provide some guidance for various purposes including payment of annual and carer’s leave for the National Employment Standards (NES) in ss.90 and 99 as follows.

90. Payment for annual leave

(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.
(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.

99. Payment for paid personal/carer's leave

If, in accordance with this Subdivision, an employee takes a period of paid personal/carer's leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.

[42] The Act defines “earnings” for the purposes of calculating the high income threshold to include wages but excluding overtime (other than guaranteed overtime). 15

[43] The Agreement provides expressly that certain matters including annual and personal leave are provided for in the NES. 16 Sections 90 and 99 each refer to the entitlement to paid leave being referable to the employee’s ordinary hours of work. The Agreement provides for accrual and payment at the ordinary rate of pay. Clause 39(d) for example provides for compassionate leave to be paid as follows:
The rate of pay for compassionate leave is the amount that an employee would reasonably have been expected to be paid had he/she worked during the period (ie. ordinary rostered hours at their respective classification).

[44] Similar language is used for personal/carer’s leave 17 and annual leave payment is stated as follows:18
All employees covered under this Agreement shall be paid annual leave at the consolidated rate. The pay rate for annual leave is at the consolidated rate only, that would have applied if the employee had been at work for that period
[45] From the above, I conclude that overtime is not included in ordinary time pay and allowances, and therefore not included in the agreement made by the parties for back pay.

[46] The other entitlements, specifically annual and personal leave, as governed by the NES and the Agreement contemplate payment at the rate the employee was entitled to be paid had she or he worked ordinary hours. The prescribed back pay rates in the Agreement are the ordinary time rates.

[47] Accordingly the back pay as agreed in Appendix 2 of the Agreement includes payment for annual and personal leave taken during the period 1 April 2013 to the commencement of the Agreement.

D. Meal break issue

[48] Clause 29 of the Agreement provides:

29. Meal breaks

Employees working 12 hour shifts are entitled to two 30 minute paid meal breaks during each shift. Meal breaks are to be taken in working time subject to the security requirements of the Centre. All employees working in a position where they are required to respond during meal breaks will be paid for meal breaks.

All other employees are entitled to a 30 minute unpaid meal break. Such breaks will be taken at a time that is convenient to the company and as near as possible to the middle of the shift.

[49] United Voice argues that the clause describes three classes of employees:

4. employees working 12 hour shifts, who are entitled to two paid meal breaks;
5. employees required to respond, who are paid for meal breaks; and
6. others, entitled to a 30 minute unpaid meal break.

[50] While expressing the interpretation slightly differently, Serco agrees in substance.

[51] It is common ground that chefs do not work 12 hour shifts. Resolution of the meal break issue therefore turns on whether chefs are “required to respond”. If not, they fall with the class of others, entitled to an unpaid 30 minute break.

[52] United Voice submits that chefs are entitled to a paid meal break because they are required to respond.

[53] Serco submits that chefs have no entitlement to paid meal breaks as there is “no standing policy requiring chefs to respond.” 19

[54] The Agreement does not define “required to respond” (or indeed what is meant by respond). It seems fair to assume that the term refers to employees responding to disturbances, emergencies and the like. The issue is whether chefs as a class of employee are required to respond.

[55] In interpreting the disputed clause I have applied the principles outlined above in Golden Cockerel.

[56] United Voice presses the same argument outlined above, that the context and purpose can and should provide assistance in resolving the matter. Serco rejects the argument.

[57] This clause is plainly susceptible to more than one meaning. In particular, the ‘requirement to respond’ is susceptible to more than one meaning. It is Serco's argument that chefs are not required to respond and are therefore not entitled to paid meal breaks under clause 29. However it is also Serco’s evidence that, in exceptional cases, and in the appropriate circumstances that the chef on a meal break would be required to respond and they would be paid a ‘one-off payment’ for that particular meal break. United Voice contends that chefs are required to respond because they are qualified and able to do so and that the employer would expect them to do so. They are therefore in a class of employees entitled to all paid meal breaks.

[58] Having concluded that the clause is susceptible to more than one meaning, evidence of the surrounding circumstances is admissible to aid the interpretation of the Agreement.

[59] Admissible evidence of the surrounding circumstances can include evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties.

[60] The union refers to the negotiations leading to the Agreement, submitting evidence of Ms Hall, Mr Nolan and Ms Warren that an in-principle agreement had been reached during negotiations to include chefs.

[61] Ms Warren’s statement ( and accompanying annexures) provide significant details -these include:

● Negotiation meeting 19th February 2013
14. I recall that Mr Mark Walters of the respondent agreed in principle to the idea that there should be parity for chefs covered by the Agreement.
15. Further, I recall that Mr Walters indicated that he was not opposed to the chefs having a paid meal break.
16. I recall that Mr Walters wanted to further discussions around the operational requirements and effectively, how the paid meal break would operate.

● Ms Warren's recollection was supported by some handwritten notes which stated as follows
“Meal breaks- kitchen staff , operation(al) 20

● Negotiation meeting 5 March 2013
18. At the negotiation meeting on 5 March 2013, there was further discussion on the issue of paid meal breaks for chefs
19. I recall that Mr Walters indicated there was in principle agreement to this claim

● The handwritten notes of this meeting state as follows:

13. Meal breaks ‘Agreed’ Adrian will go back (members)

[62] Mr Mark Walters for Serco in his statement notes as follows:

Following a request by a (named) chef for payment from meal breaks as a result of being unable to take an uninterrupted meal break due to operational requirements he advised as follows:

“At no stage did I agree to at all to the request by the chef...”

“I did consider the request and determined that the chefs are able to stagger their lunch breaks to have uninterrupted break. Therefore was not necessary to pay them their meal break and they were subsequently advised by Mr Jeff Ticehurst that they were not entitled to a meal break.”

[63] Serco submits that while Ms Warren considered there was an in principle agreement she was unable to point to any concluded or unconditional agreement suggesting that Mr Walters was prepared to look at rostering to avoid chefs meal breaks being interrupted.

[64] Serco submits this is consistent with Ms Warren's notes which incorporate references to going back to the members and roster details being considered.

[65] In my view, the notes are consistent with the interpretation preferred by Serco. That is, in principle support for parity for chefs covered by the Agreement does not necessarily mean paid meal breaks. This is because it is only in certain circumstances that employees get paid meal breaks and an alternative could be that parity could also be lunch breaks that were uninterrupted - which would also then be consistent with the Agreement.

[66] For the same reason, meal breaks ‘agreed’ do not necessarily lead to a conclusion of paid meal breaks.

[67] I have therefore concluded there was no agreement to pay chefs for their meal breaks based on prior negotiations.

[68] However this does not conclude the matter, because if chefs are required to respond then they are employees who, under the agreement, are entitled to a paid meal break.

Are chefs required to respond?

[69] Serco seeks to rely on a document dated 19 December 2011, "Procedure - Southern Queensland Correctional Centre - Officer Response Model to Contingencies" (response model). That document is said by Serco to describe the requirement to respond.

[70] Such a document is extrinsic material to the Agreement. Having identified that the Agreement is susceptible to more than one meaning such a document may be used as contextual material to aid the interpretation of the Agreement. 21

[71] For Area 3 (including the kitchen), primary response is the Operations Supervisor and a specified number of Security Patrol Officers. Chefs are not listed. Secondary response for Area 3 includes a range of other officers. The document does not mention chefs as being required to respond.

[72] United Voice submits that chefs have the requisite training and are able to respond. It says the company benefits because it is relieved from rostering security staff in the kitchen area, knowing that chefs are skilled and able to respond.

[73 The company submits that, as a matter of fact, shown by the response model, chefs are not required to respond. However, the company also submits that:

in the (unlikely) event a chef was called on to respond during his/her meal break, that unique event would most likely attract a unique payment for that meal break only. 22

[74] Mr Nolan's evidence for United Voice was to the effect that chefs are trained to respond, would respond, and the company would sanction failure to respond. United Voice submits that chefs are therefore in the class of officers required to respond.

[75] The difference between the parties comes down to this:

(i) Chefs are not required by the response model to respond and are therefore not entitled to paid meal breaks under cl.29 of the Agreement (Serco’s position).
(ii) Chefs are required to respond as a matter of practicality because they are they qualified and able to respond and they would be expected by the employer to respond. They therefore are in the class of employees entitled to paid meal breaks (United Voice position).

[76] But Serco’s submissions are that the company may (as an exception) “call on” chefs to respond. The company says that in such an event the responding chefs would be paid one-off for that particular meal break. Such a position appears to be inconsistent with the Agreement’s intent which seems to me to be that responders receive paid meal breaks whether or not they are required to respond in a particular meal break.

[77] Does this therefore mean that chefs are in reality required to respond and therefore entitled to paid meal breaks, which is the position submitted by United Voice?

78] I have concluded chefs are not required to respond and are therefore not entitled to paid meal breaks.

[79] Meal break pay compensates responders because their freedom during meal breaks is curtailed by the obligation to respond. Non-responding officers are not so curtailed notwithstanding that they may have the skills to respond. They may use their 30 minute break as they see fit including in ways incompatible with being available to respond.

[80] The entitlement under the Agreement is not relative to capacity to respond but whether the officer is required to respond. The response model does not require chefs to respond. In Serco’s submission: 23
Chefs neither work a 12 hour shift, nor are they required to respond. Consequently, they have no entitlement to paid meal breaks.

[81] I find, the Agreement, supported by the surrounding circumstances including the ‘response model’ that chefs are not required to respond and are not entitled to paid meal breaks.

82] However Serco’s submission about the possibility of chefs being required to respond on an exceptional basis does not address the capacity of chefs to respond and that in fact on one-off occasions may do so.

[83] I therefore recommend that the parties jointly review the response model to clarify what is expected of chefs and the remuneration payable in the event of an incident in or near the kitchen.

COMMISSIONER

 1   [2014]FWCFB 7447

 2   Further Submissions of the Respondent on the Matter of Jurisdiction Para 3 (2).

 3   Further Submissions of the Applicant paragraph 3

 4   Serco refers to the decision of Ponczek v Serco Australia Pty Ltd [2014] FWC 246. The phase referred to is not relevant and the ratio of the case does not assist Serco's arguments, and in fact the arguments set out in paragraphs 39 -50 confirm that dispute resolution procedures in enterprise agreements should not be read down as proposed by Serco.

 5   approved 20 September 2014: see [2013] FWCA 7247

 6   for Serco dated 8 August 2013, headed “Message to Employees”: Statement of Brendan Smith, exhibit BS4; Statement of Julieann Duncan exhibit JD4; for United Voice: Statement of Melissa Warren exhibit MW3 (dated 4 June 2013) and MW4 (dated 29 July 2013 but being the document of 8 August 2013)

 7   for example exhibit BS4

 8   exhibit BS2

 9   eg Oxford Dictionary: time in addition to what is normal

 10   cl.26(c), 27, 21(g)

 11   cl .7(d); 37(c)

 12   cl.38

 13   cl.39, 40 and 41 respectively

 14   cl.12(c) referable against a number of weeks of ordinary time pay

 15   s.332(1)(a); (2)(a) and note to ss.(2)

 16   eg cl.35, 37, 38 and 39

 17   cl38(f)

 18   cl.35(j)

 19   Submissions of the Respondent at [37]

 20   The last word in this handwritten note is unclear - it appears to be ‘operational ‘ - whether the word is operation, operational or operationalise does not in my view affect the conclusion reached in this matter

 21   Golden Cockerel at[30]

 22   Submission of the Respondent at [38]

 23   Submissions of the Respondent at [40]

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