United Workers' Union v Hazeldenes Chicken Farm Pty Ltd
[2024] FWC 958
•12 APRIL 2024
| [2024] FWC 958 |
| FAIR WORK COMMISSION |
| OPINION |
Fair Work Act 2009
s.739—Dispute resolution
United Workers' Union
v
Hazeldenes Chicken Farm Pty Ltd
(C2023/7529)
| DEPUTY PRESIDENT GOSTENCNIK | MELBOURNE, 12 APRIL 2024 |
Application to deal with a dispute – Hazeldenes Chicken Farm Pty Ltd Processing Enterprise Agreement 2022
The United Workers’ Union (UWU) applies under s 739 of the Fair Work Act 2009 (Cth) (Act) for the Commission to deal with a dispute in accordance with a dispute settlement procedure in the Hazeldenes Chicken Farm Pty Ltd Processing Enterprise Agreement 2022 (Agreement). Schedule 2 of the Agreement sets out the wage increases and rate that will apply, inter alia, from the first full pay period following variously specified dates and relevantly provides as follows:
“Wage rates shall be increased by a further 3% operative from the first full pay period following 31 October 2023.
[Classifications and wage rates not reproduced]
. . .
Note: Should the cost of living (for Australia) be higher than 3.6% (which is the average of the wage increases over the life of the Agreement), Hazeldenes will pay the higher rate of either the set annual rate in the Agreement, or, the rate of the Consumer Price Index (CPI) averaged over the 12 months prior to the applicable increase. The Australian Bureau of Statistics (ABS) being the source of this information and the parties acknowledge that the availability of ABS information will be considered up to the end of the June quarter of the same year of the effective date of the Increase. Any additional percentage increases will be applied in accordance with the above increase dates.”
The UWU and Hazeldenes Chicken Farm Pty Ltd (Hazeldenes) are in dispute about the applicable rate of Consumer Price Index (CPI) to be applied as a wage increase from the first full pay period following 31 October 2023. The parties agree that “the cost of living (for Australia) [was relevantly] higher than 3.6%” and that the rate of the wage increase should be taken from the 12 months’ CPI specified in the Australian Bureau of Statistics’ (ABS) Quarterly CPI release. But they disagree on whether the rate of wage increase should be derived from the ABS’ Consumer Price Index, Australia, June Quarter 2023, which was released on 26 July 2023 or the Consumer Price Index, Australia, September Quarter 2023, which was released on 25 October 2023. Over the 12 months to the June 2023 quarter, the CPI rose 6.0%, while over the 12 months to the September 2023 quarter, the CPI rose 5.4%.
The UWU contends that the Note in Schedule 2 of the Agreement (Note) plainly references the June Quarter and so the wage rates in Schedule 2 of the Agreement should be increased by 6% as the 12-month CPI rate reported as at the June 2023 quarter, from the first full pay period following 31 October 2023. Hazeldenes contends that the UWU’s construction ought not be adopted as it does not consider the Note in its entirety – specifically, the interaction of the remaining two sentences: “Hazeldenes will pay the higher rate of either the set annual rate in the Agreement, or the rate of the Consumer Price Index (CPI) averaged over the 12 months prior to the applicable increase”; and “Any additional percentage increases will be applied in accordance with the above increase dates.” Hazeldenes contends that the first sentence of the Note requires consideration of the September dataset as this is the most current quarter within “the 12 months prior to the applicable increase” to be implemented in the first pay cycle after 31 October. It says that it is the September ABS CPI dataset and not its June dataset that best reflects the rate of CPI “averaged over the 12 months prior to the applicable increase”. It says that considering the CPI over 12 months up to the end of the September quarter year-on-year means that Hazeldenes’ analysis is of the most recent available data, and so it most accurately reflects any change in the cost of living to which the Note is directed.
To resolve the dispute, the parties have agreed to accept my recommendation or opinion about the proper construction and effect of the Note. This involves properly construing the Agreement. The principles pertaining to the construction of an enterprise agreement are not in dispute and may be shortly stated. The task of construing an enterprise agreement begins with a consideration of the ordinary meaning of the words, read in context, and taking into account the evident purpose of the provisions or expressions being construed. Relevant context will include other provisions of the instrument, read as a whole, and the disputed provision’s place and arrangement in the instrument. The statutory framework under which the instrument is made, or in which it operates may also provide relevant context, as might an antecedent instrument or instruments from which a particular provision has been derived. Regard may be had to relevant context and surrounding circumstances to determine whether there is any ambiguity in a provision of the instrument. The language of the instrument is to be understood in the light of its industrial context and purpose, not in a vacuum or divorced from industrial realities. But context is not itself an end, and a consideration of the language contained in the text of the relevant parts of the instrument remains the starting point and the end point in the task of construction. A purposive approach to interpretation is appropriate, not a narrow or pedantic approach.[1]
The Note contains several propositions which should be broken down.
First, is the contingent operation of the obligation in the Note. For any obligation to arise, “the cost of living (for Australia) [must] be higher than 3.6%”.
Second, there is the obligation that Hazeldenes pay wage increases at the designated time, which are the higher of the annual rate of increase specified in the Agreement, or the rate of CPI averaged over the 12 months prior to the applicable increase.
Third, the ABS is to be the source of the CPI information required to determine the obligation.
Fourth, ABS information will be considered up to the end of the June quarter of the same year of the effective date of the increase.
Fifth, any additional percentage increases will be applied in accordance with the dates that the Agreement specifies wages are to be increased.
There are apparent internal contradictions in the Note, which must be resolved. The time for payment of the increased wage rates is the first full pay period following 31 October 2023. The requirement to apply a higher rate of wage increase than the Agreement specified percentage is when the “cost of living” is higher than 3.6%. That percentage reflects the “average of the wage increases over the life of the Agreement”. ABS quarterly CPI datasets are prepared for the quarters ending in March, June, September and December in each year and are released approximately 4 weeks after the end of each quarter. Thus, the September quarter CPI dataset was available before the wage increase at issue was due to be paid. But the parties have acknowledged “that the availability of ABS information will be considered up to the end of the June quarter of the same year of the effective date of the increase”.
Quarterly ABS CPI datasets do not record a CPI rate “averaged over the 12 months”. Instead, the ABS datasets relevantly record the rate the CPI rose in each quarter (1.2% in the September quarter; 0.8% in the June quarter) and the rate at which CPI rose over the 12 months to the end of each quarter to which the dataset relates (5.4% to the end of the September quarter; 6.0% to the end of the June quarter). The annual rate of CPI at the end of each quarter is the accumulated rate at which CPI rose in that quarter and the preceding three quarters. Averaging the CPI rate over a 12-month period requires the adding of the 12-month CPI rate in each of the four quarters and dividing the sum by four. For example, the rate at which CPI rose in the 12 months to the end of each quarter for the quarters June and March of 2023 and December and September 2022 was 6%, 7%, 7.8% and 7.3% respectively, resulting in an average CPI over that 12-month period of 7.02%. Similarly, the rate at which CPI rose in the 12 months to the end of each quarter for the quarters September, June and March of 2023 and December of 2022 was 5.4%, 6%, 7% and 7.8% respectively, resulting in an average CPI over that 12-month period of 6.55%.
The parties are not in dispute about this, but I raise it because it highlights what may be an example of infelicitous drafting – an unfortunate reference to “CPI averaged over the 12 months prior to the applicable increase”, rather than the annual rate of CPI as disclosed in a particular ABS quarterly CPI dataset. Neither the June nor September quarter datasets at issue here reflect the rate of CPI “averaged over the 12 months prior to the applicable increase”. Rather, each reflects the annual rate of CPI to the end of that quarter, which reflects the quarterly increases in CPI in that quarter and the three which preceded it.
That the parties appear to consider that each quarterly CPI dataset discloses CPI averaged over the preceding 12-month period is apparent in Hazeldenes’ submissions. It contends that the parties diverge “on the question of the magnitude of the pay increase payable to employees as a result – and specifically, which CPI dataset is to be used for this purpose: the average CPI increase over the 12 months to the end of June (June Dataset) or to the end of September (being the most current financial quarter that relates to the 12 month period prior to applicable wage increases) (September Dataset)”.[2] But it is also clear that the parties consider that only one dataset determines the outcome of any wage increase – for Hazeldenes, it is the September 2023 quarter; and for the UWU, it is the June 2023 quarter. My opinion will therefore be so confined.
Returning then to the issue in dispute, I consider the UWU’s construction to be correct. The quarterly dataset that is to be used to assess both whether the “cost of living” exceeds the threshold specified (3.6%) and the quantum of the increase is the June 2023 quarter dataset. The relevant 12-month period “prior to the applicable increase” in the first sentence of the Note is not a reference to the 12-month period “immediately prior” to the increase. Indeed, that would be impossible by reference only to the ABS quarterly CPI datasets since the only available proximate dataset is for the September quarter and the increase was payable over a month later. The phrase “12 months prior to the applicable increase” must be read in context. Relevant context is provided in the second sentence. The CPI figure for the 12 months prior to the applicable increase will be derived from “the end of the June quarter of the same year of the effective date”. The June 2023 quarter dataset shows that in the 12 months to the June 2023 quarter, “the CPI rose 6.0%”. Thus, reading the two sentences of the Note harmoniously results in the June 2023 quarter dataset being used to establish whether the 3.8% threshold has been exceeded, and, if so, the percentage of the wages increase. The June quarter contains the CPI rate for the 12 months prior to the applicable increase (although not immediately prior) and gives effect to the parties’ express acknowledgement that “the availability of ABS information will be considered up to the end of the June quarter of the same year of the effective date of the increase”.
Hazeldenes’ contention that the June dataset is confined to the threshold assessment (whether “cost of living” has exceeded 3.6%) is rejected because neither a textual nor contextual analysis supports such a conclusion. The evident purpose of the Note is to align a wage increase payable under the Agreement with any cost-of-living increase over a 12-month period which exceeds 3.6%. It makes no sense that one 12-month period would be used to ascertain whether the cost of living threshold determined by reference to the CPI in that period has been exceeded, but a different 12-month period would be used to determine the actual cost of living payment by reference to the CPI in that different period. The 12-month period of measurement for both is the same. The question is which 12-month period? The answer is the 12-month period disclosed in the June 2023 quarter dataset. Accordingly, from the first full pay period following 31 October 2023, Hazeldenes was required to pay a 6% increase in wages, not 5.4% as it had done.
DEPUTY PRESIDENT
Written submissions:
Applicant, 29 January 2024 and 23 February 2024
Respondent, 19 February 2024
[1] Australian Workers’ Union v Orica Australia Pty Ltd[2022] FWCFB 90 at [18] and the authorities cited therein; See also James Cook University v Ridd [2020] FCAFC 123 at [65] and the authorities cited therein; Workpac Pty Ltd v Skene (2018) 264 FCR 536 at [197] and the authorities cited therein
[2] Submissions of the Respondent at [2]
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