United Workers Union
[2022] FWC 754
| [2022] FWC 754 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.217—Enterprise agreement
United Workers Union
(AG2022/360; AG2022/361; AG2022/362; AG2022/363; AG2022/364)
Nestle (Broadford) – United Workers Union Enterprise Agreement 2021
Nestle Australia Ltd – Northern Distribution Centre (NUW) Agreement 2019 – 2022
Nestle Australia Ltd - National Union of Workers - Merchandisers Enterprise Agreement 2018-2021
Nestle Australia Ltd (Uncle Tobys Wahgunyah) & United Workers' Union Agreement 2020
Nestle Purina Petcare, Blayney Enterprise Agreement 2021-2023
| Food, beverages and tobacco manufacturing industry | |
| DEPUTY PRESIDENT COLMAN | MELBOURNE, 6 APRIL 2022 |
Application to vary enterprise agreements to remove ambiguity or uncertainty
The United Workers Union (UWU) has made applications under s 217 of the Fair Work Act 2009 (FW Act) to vary five enterprise agreements to remove ambiguity or uncertainty: the Nestle (Broadford) – United Workers Union Enterprise Agreement 2021 (Broadford Agreement); the Nestle Australia Ltd – Northern Distribution Centre (NUW) Agreement 2019 –2022 (NDC Agreement); the Nestle Australia Ltd – National Union of Workers – Merchandisers Enterprise Agreement 2018 – 2021 (Merchandisers Agreement); the Nestle Australia Ltd (Uncle Tobys Wahgunyah) & United Workers’ Union Agreement 2020 (Uncle Tobys Agreement); and the Nestle Purina Petcare, Blayney Enterprise Agreement 2021 – 2023 (Blayney Agreement) (collectively ‘the agreements’). Each agreement covers Nestle Australia Limited (Nestle), certain employees of Nestle, and the UWU.
The agreements contain various provisions pertaining to the obligations of Nestle to make superannuation contributions on behalf of the employees. These provisions identify the superannuation funds into which Nestle must make superannuation contributions on behalf of relevant employees, either at the election of an employee or, in the absence of any election, by default. Each agreement identifies the ‘Labour Union Co-Operative Retirement Fund’, or its acronym ‘LUCRF’, as a superannuation fund for these purposes. Clause 23 of the Broadford Agreement requires Nestle to make superannuation contributions either to LUCRF or the Nestle Division of the Russell SuperSolution Master Trust (Nestle Fund), the latter being the default fund. Clause 38.1 of the NDC Agreement requires Nestle to make contributions to a fund nominated by the employee and provides that the default funds are LUCRF and the Nestle Fund. Clause 21 of the Merchandisers Agreement requires Nestle to contribute either to LUCRF or the Nestle Fund in accordance with the election of a permanent employee, and to LUCRF for all casual employees. Clause 25 of the Uncle Tobys Agreement states that Nestle must make contributions into a fund chosen by an employee, and that LUCRF is the default fund. And clause 23 of the Blayney Agreement requires the company to make contributions to one of five funds chosen by an employee, one of which is LUCRF, and another of which is AustralianSuper.
The applications ask the Commission to vary the agreements to remove an ambiguity or uncertainty said to arise from the fact that LUCRF will merge with another superannuation fund, AustralianSuper, on 3 June 2022, with the consequence that it will no longer be possible for Nestle to make superannuation contributions to LUCRF. The UWU contends that the presence in the agreements of provisions requiring Nestle to make superannuation contributions to a fund that cannot receive contributions will create ambiguity or uncertainty, and that the Commission should vary each of the agreements to remove this ambiguity or uncertainty by inserting after references to LUCRF the words ‘or any successor fund’. Nestle supports the UWU’s applications.
In a joint written submission, the UWU and Nestle stated that the amalgamation of LUCRF with AustralianSuper will take place in accordance with the provisions of the Superannuation Industry (Supervision) Act 1993, and that the approach of the trustees of the two funds to the merger would accord with the Prudential Practice Guide SPG 227 – Successor Fund Transfers and Wind-ups issued by the Australian Prudential Regulation Authority (APRA) in July 2017. The parties contended that, in a manner broadly analogous with mergers of corporations and member-based organisations, the amalgamation of the funds would result in LUCRF ceasing to operate and AustralianSuper acting as the host of the merger pursuant to a successor fund transfer (SFT) agreement, which will provide for a bulk transfer of members and member benefits and assets from LUCRF to AustralianSuper. LUCRF, as the outgoing fund, would likely be wound up once the transfer has been completed. The transfer arrangements between the trustees of the funds are also expected to determine arrangements for the transfer of other assets and liabilities, including the continuation, novation, or cessation of commercial arrangements of LUCRF that will cease or be assumed by AustralianSuper.
Mr Paul Richardson, the UWU’s director of finance, governance and administration, advised the Commission that he is a director of the trustee of LUCRF, namely L.U.C.R.F. Pty Ltd, and that he was authorised to advise the Commission on behalf of the trustee that it supports the UWU’s applications. The trustee holds a registrable superannuation entity (RSE) licence from APRA, as well as an Australian Financial Services Licence (AFSL) issued by the Australian Securities and Investment Commission which allows the trustee to provide financial product advice to members. Upon the merger, the trustee will be required to surrender its AFSL, and will cease to be an RSE. The trustee will however continue to operate for a period of time in order to attend to residual matters ordinarily associated with the wind up and voluntary liquidation of an entity.
The UWU and Nestle submitted a letter of support for the application from AustralianSuper, in which AustralianSuper confirmed that LUCRF was scheduled to merge with AustralianSuper on 3 June 2022 and that in its view, from this time, provisions in enterprise agreements referring to LUCRF could be regarded as ambiguous or uncertain as to whether the relevant employer could make superannuation contributions to AustralianSuper as the successor fund to LUCRF, and that the UWU’s present applications would remove any such ambiguity or uncertainty from the agreements.
The UWU and Nestle submitted that, although the text of the relevant provisions in the agreements may not be ambiguous or uncertain on its face, the circumstance of the merger of the two funds gives rise to ambiguity, or at least uncertainty, in the application of the relevant provisions of the agreements from 3 June 2022, because Nestle will be required by the agreements to make superannuation contributions to a fund that will no longer be able to receive or manage such contributions and will ultimately cease to exist. The UWU and Nestle contended that the Commission should be satisfied that there exists an ambiguity or uncertainty, that the power under s 217 is therefore enlivened, and that it is appropriate for the Commission to exercise its discretion to vary the agreements, and to do so in the manner proposed by the applications.
As to the exercise of discretion, the UWU and Nestle submitted that, although the possibility of a merger between LUCRF and another superannuation fund was not specifically foreseen at the time that the five agreements were made, the proposed variations are nevertheless consistent with the intention of the parties, by which I understand the parties to contend that the making of contributions to a successor fund in the event of a merger would have been the ordinary and logical expectation of the UWU and Nestle, and it is reasonable to assume that employees would also have had such an expectation. The parties further contended that no employees would be disadvantaged if the applications were granted, as the variations would simply ensure that employer contributions would or could continue to be made to AustralianSuper in the same manner as they had previously been made to LUCRF. The parties further contended that the proposed variations were consistent with the underpinning award: clause 22.4 of the Food, Beverage and Tobacco Manufacturing Award 2020 requires employers to make superannuation contributions into any one of the listed funds ‘or its successor’.
Consideration
Section 217 of the FW Act provides that the Commission ‘may vary an enterprise agreement to remove an ambiguity or uncertainty’. The principles that apply to the Commission’s consideration of such applications are well established (see Bianco Walling Pty Ltd v CFMMEU [2020] FCAFC 50 (Bianco); see also United Voice v MSS Security Pty Ltd[2016] FWCFB 4979 at [19] to [24], and Bradnam’s Windows and Doors Pty Ltd [2019] FWCA 979 at [11]). The presence of ambiguity or uncertainty is a jurisdictional prerequisite to the exercise of the discretion to vary an enterprise agreement under s 217. The Commission is required to make a positive finding as to the existence of ambiguity or uncertainty. The consideration of this question involves an objective assessment of the words in question, considered in their context. The task of the Commission is not to interpret the enterprise agreement definitively (see Bianco at [66] to [72]), and it is important that the Commission bear in mind the distinction between ambiguity and uncertainty (see Bianco at [73] to [83]).
I am not persuaded that the relevant provisions of the agreements are ambiguous. The relevant text of each of the provisions of the agreements is clear. ‘Ambiguity’ means open to more than one interpretation. The etymological notes found in major dictionaries explain that the word derives from roots that connote driving in two directions. I have considered whether it is possible to read the relevant provisions of the agreements as meaning that contributions to LUCRF can also be made to a successor fund. If there were a plausible contention to this effect that might be raised against the more obvious literal meaning, one might conclude that the provisions were ambiguous. However, one cannot manufacture ambiguity by conjuring an unavailable alternative interpretation. The provisions simply require Nestle to make superannuation contributions on behalf of relevant employees to LUCRF. That meaning will remain clear when LUCRF merges with AustralianSuper, despite the fact that LUCRF will not be able to receive such contributions. That may be a confounding result. But it is not ambiguous.
However, as the Full Court observed in Bianco, there may be uncertainty in an enterprise agreement arising from the application of unambiguous terms to a particular set of circumstances (at [75]). An ‘uncertainty’ is an ‘uncertain’ state, and the meaning of ‘uncertain’ includes ‘not definitely or surely known’ and ‘doubtful’. In my assessment, the merger will give rise to uncertainty in the application of the relevant provisions of the five agreements. Each of them requires Nestle to make superannuation contributions to LUCRF, either pursuant to employee choice or on a default basis. From 3 June 2022, the company will be compelled by the agreements to do something that is not possible. Nestle will not be able to comply with its obligations to make contributions to LUCRF (in respect of casual employees covered by the Merchandisers Agreement and in respect of employees covered by other agreements on a default basis), nor will it be able to give effect to employees’ choice of LUCRF as their preferred superannuation fund. Nestle will therefore be in breach of certain obligations under the agreements, even though compliance is impossible. The prospect of a claim for breach of agreement may seem unlikely, and the imposition by a court of penalties in respect of such breaches even less likely. But Nestle will nevertheless be in a state of legal uncertainty. Employees who have chosen LUCRF as their fund may or may not make a new choice of fund before the merger date. If they do not, there will also be uncertainty as to what Nestle is supposed to do with the ongoing regular payments that were previously made into the LUCRF fund on behalf of those employees.
In relation to the Blayney Agreement, the fact that the relevant provision allows superannuation contributions to be made to AustralianSuper as an alternative to LUCRF does not mean that there is no uncertainty, because employees who have chosen LUCRF as their fund might not make another selection prior to the merger date. Although there is a possibility that employees may simply elect AustraliaSuper, there is no certainty about this matter. If they do not do so, Nestle would be required by the agreement to do something which is not possible, namely to make contributions to LUCRF in respect of those employees.
Although the merger will not occur until 3 June 2022, I consider that the relevant uncertainty already exists. I note that when the applications were filed in February 2022, the merger date was provisional, such that the uncertainty was a contingent one. However on 5 April 2022, the UWU advised my chambers that the successor fund transfer agreement had been executed on 1 April 2022 and that the merger would proceed.
Because I am satisfied that there exists uncertainty in the application of the five agreements to the circumstances that will obtain from 3 June 2022, the Commission’s jurisdiction to vary the agreements under s 217 is engaged. The next question is whether the Commission should exercise its discretion to vary the agreements, and if so, in what way. I have concluded that it is appropriate to exercise my discretion in favour of varying the enterprise agreements, and to do so in the manner sought by the UWU. In reaching this conclusion, I have had regard to the following matters.
First, under the Superannuation Industry (Supervision) regulations 1994 (SIS Regulations), an RSE can only be considered to be a successor fund if the receiving RSE confers on the member equivalent rights in respect of member benefits that the member had in the transferring RSE. Further, before the transfer, the receiving RSE licensee must have agreed with the transferring RSE licensee that the receiving RSE will confer on the member such equivalent rights (see r 1.03(1) of the SIS Regulations). Should any member of the outgoing fund be dissatisfied with the proposed arrangements, they will be free to amend their retirement benefit profile with the incoming fund or elect to roll over to an alternative approved superannuation fund. In my view, employees will not be disadvantaged by the proposed variations.
Secondly, the two merging superannuation entities support the UWU’s applications. Ordinarily, little weight might be given in a proceeding under s 217 to the views of a person or entity that is not covered by the relevant enterprise agreement. However in the present case, the views of LUCRF and AustralianSuper are relevant to the exercise of the Commission’s discretion, because they provide additional grounds for the Commission to be confident that the merger of the funds will in fact take place in accordance with the merger framework described above. Although the two merging funds have their own interests, I consider these to be aligned with the interests of employees covered by the five agreements.
Thirdly, I note that mergers of superannuation funds are presently being driven by a variety of dynamics including public policy, the encouragement of APRA, and the requirement that individual funds serve the best financial interests of their members. In my view it is desirable that the Commission’s discretion in the present matters be exercised in a manner that is harmonious with these dynamics, and that to vary the agreements in the manner proposed by the UWU would be consistent with this consideration.
Fourthly, in support of their contentions that the Commission should exercise its discretion to vary the agreements, the parties referred to a number of recent decisions in which the Commission has varied modern awards under s 160 of the FW Act to remove ambiguity or uncertainty associated with the pending merger of superannuation funds by inserting the name of the host fund. The wording of ss 160 and 217 is relevantly the same, and in principle one ascribes the same meaning to the same words used in the one enactment, however the context of s 217 is different from that of s 160: the former pertains to the variation of enterprise agreements made by others, the latter relates to the maintenance of awards created by the Commission. It is appropriate that the Commission exercise its discretion under s 217 with an awareness of this different context, and I do so in the present case. However, I do not regard this as a factor telling against the granting of the applications. The proposed variations are of a technical nature, do not disadvantage employees, and by removing uncertainty are of benefit to all concerned. Further, it is reasonable in my view to assume that employees covered by the agreements are likely to have expected that in the event of a merger of funds, contributions to an outgoing fund would be directed to the successor fund.
On one view, the UWU and Nestle could address the subject of their concern directly by varying the enterprise agreements under s 210, following employees’ approval of the variation by vote. In this regard, the UWU and Nestle contended in their joint submission that only one of the five enterprise agreements had reached its nominal expiry date, and it was doubtful whether bargaining for a replacement agreement would commence before the expected merger date. But there is no reason why the parties would need to wait for the agreements to reach their nominal expiry dates. An enterprise agreement can be varied by vote at any time. The variation provisions in the FW Act are commonly used to introduce a single-issue amendment to an enterprise agreement. However, the fact that the parties’ objective could be achieved by another means is not a consideration telling against the exercise of the Commission’s discretion to vary the agreements under s 217.
Finally, as the Full Court noted in Bianco, the requirement of s 578 that the Commission exercise its powers in a manner that takes into account ‘equity, good conscience and the merits of the matter’ applies to all proceedings before it, including applications made under s 217. Having regard to s 578, it is clear to me that the appropriate manner in which my discretion should be exercised in this case is to vary the agreements as proposed by the UWU. In this regard, I am mindful that another way in which the agreements could be varied so as to remove the uncertainty would simply be to have the relevant provisions state that from 3 June 2022 Nestle will not be required to make superannuation contributions to LUCRF and that employees are to advise the company before this date of their choice of fund. However, the considerations I have referred to above weigh in favour of exercising the discretion in the manner proposed by the UWU. It is fair and reasonable in all the circumstances to do so.
Conclusion
I find that there is an uncertainty in or in connection with the Broadford Agreement, the NDC Agreement, the Maintenance Agreement, the Uncle Tobys Agreement and the Blayney Agreement, and that this uncertainty can be removed by varying the five agreements to insert after the references to LUCRF in those agreement the words ‘or any successor fund’. I consider that it is appropriate to exercise my discretion to do so. I will issue separate decisions varying each agreement.
DEPUTY PRESIDENT
Determined on the papers
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