United Workers' Union v Lactalis Australia Pty Ltd
[2024] FWC 1164
•7 MAY 2024
| [2024] FWC 1164 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
United Workers' Union
v
Lactalis Australia Pty Ltd
(C2023/7920)
| DEPUTY PRESIDENT GOSTENCNIK | MELBOURNE, 7 MAY 2024 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)]
The United Workers’ Union (UWU) and Lactalis Australia Pty Ltd (Lactalis) are in dispute about the proper construction and application of clause 5.5 of the Lactalis Australia Pty Ltd – Bendigo – AMWU/ETU/TWU/UWU Enterprise Agreement 2020 (2020 Agreement). Lactalis relevantly operates a dairy processing facility in Bendigo, Victoria (Site). The 2020 Agreement no longer operates after being wholly replaced by the:
Lactalis Australia Pty Ltd – Bendigo TWU/UWU Enterprise Agreement 2023 (2023 Production Agreement), which commenced operation on 22 January 2024 and applies to production employees at the Site; and
Lactalis Australia Pty Ltd – Bendigo AMWU/ETU Enterprise Agreement 2023 (2023 Maintenance Agreement), which commenced operation on 18 October 2023 and applies to maintenance employees at the Site.
On 18 December 2023, the UWU applied under s 739 of the Fair Work Act 2009 (Cth) (Act) for the Commission to deal with the dispute in accordance with the dispute settling term of the 2020 Agreement.
Clause 5.5 of the 2020 Agreement provides:
“5.5 Casual Loading for all Casuals except for Trades
A casual employee shall be paid for each hour worked at the rate of one thirty-eighth of the full-time weekly base rate plus 28.5 per cent payment in lieu of entitlements to paid annual leave, paid personal/carer's or compassionate leave, payment for public holidays not worked, notice of termination or redundancy pay. Provided that, where work is performed by a casual employee in circumstances where a weekly employee on rostered ordinary hours performing the same work would be paid more than the ordinary hourly base rate plus 28.5 per cent, then the casual employee shall be paid the rates applying to a weekly employee on rostered ordinary hours for such work, including the relevant minimum number of hours' pay”
Clause 4.7.1 of the 2023 Production Agreement is in largely identical terms, with minor amendments that do not change its meaning.
Lactalis says it accepts there is nothing in the terms of the 2020 Agreement that would displace the jurisdiction of the Commission to deal with the dispute following the approval and commencement of the 2023 Production or Maintenance Agreements. For this contention, Lactalis relies on what is said by a Full Bench in Construction, Forestry, Mining, Maritime and Energy Union v Falcon Mining Pty Ltd.[1] For the reasons explained by another Full Bench in Tracey v BP Refinery (Kwinana) Pty Ltd,[2] the proposition in Falcon Mining – that the Commission has jurisdiction to deal with a dispute and the power to arbitrate it, because that power is conferred by the Act itself, not the relevant instrument in which the dispute resolution procedure is contained – is not universally accepted. However, since the parties proceeded on the basis that Falcon Mining was correctly decided, this is not the occasion to further traverse the issue. But to be clear, for the reasons explained in Simplot v Australian Manufacturing Workers’ Union,[3] I do not consider there is power to deal with the dispute under the 2020 Agreement which no longer operates. I consider the power to arbitrate is derived not from the statute but from the terms of the instrument, as s 739(4) of the Act makes clear.
The central issue in dispute appears to be whether out-of-hours shift penalties provided for in clause 5.2 of the 2020 Agreement are captured by clause 5.5. The UWU contends that clause 5.5, correctly interpreted, results in casual employees being entitled to any provisions of the Agreement that affect the rate of pay of weekly employees, including the out-of-hours shift penalties provided for in clause 5.2. Lactalis contends that the UWU’s construction cannot be accepted and clause 5.5 clearly prescribes that a casual employee (except for Trades) is entitled to be paid for each hour worked at the ordinary hourly rate of one thirty-eighth of the full-time weekly base rate plus 28.5% or the rate that would apply to a weekly employee on rostered ordinary hours performing the same work, whichever is greater.
The resolution of the dispute turns on the proper construction of the 2020 Agreement. The principles applicable to construing an enterprise agreement are not in dispute and may be briefly stated. The task of construing an industrial instrument 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 industrial instrument, read as a whole, and the disputed provision’s place and arrangement in the instrument. The statutory framework under which the industrial 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 an industrial instrument. The language of an industrial 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.[4]
Clause 4 of the 2020 Agreement sets out categories of employment and relevantly provides:
“4.1.1 Weekly Employees refers to Full-Time Employees and Part-Time Employees, and does not include persons engaged as Casual Employees.
4.1.2 Full-Time Employees refers to employees who work weekly rostered hours averaging 38 ordinary hours per week.
4.1.3 Part-Time Employees refers to employees who work a regular pattern or number of hours less than 38 hours per week as agreed between the company and the part-time employees. Part-Time Employees shall not be rostered for less than two days per week.
Part Time Employees may request to have their hours of work averaged over the work cycle in accordance with Clause 6.1 of the Agreement. All hours worked outside of the agreed average rostered hours, will be paid at overtime rates.
. . .
4.1.6 Direct and indirect casual workers
. . .
(b) If a casual employee commences duty or is required to attend for duty any one day or night and actually attends for duty for the period required will be paid at the appropriate rate provided in this subclause for a minimum as (sic) of 4 hours and in the case of an employee employed on shift work, the further addition of the all relevant allowances shall also apply.
. . .”
Clause 5 of the 2020 Agreement deals with wages, penalty payments and extra duty payments and relevantly provides:
“5.2 Out of Hours and Shift Penalties
One of the following two options will apply to employees in relation to Out of Hours/Shift Penalties entitlements in line with Clause 5.2:
5.2.1 Out of Hours
5.2.1.1 Unless clause 5.2.2 (Shift Penalties) applies to an employee, the terms of clause 5.2.1.2 will apply.
5.2.1.2 Penalty payments for Out of Hours shall be paid at the hourly rate below for each ordinary hour of work which is outside the hours 6.00am to 6.00pm, Monday to Friday (other than a public holiday) subject to a maximum payment of 4.5 hours per day. One additional Out of Hours payment per day will be paid for each day Monday to Friday that the employee works one ordinary time hour or more between midnight and 6.00am.
[Table and note not reproduced]
. . .
5.5 Casual Loading for all Casuals except for Trades
[The text of 5.5 is earlier set out]
5.6 Casual Loading for Trades
(a) For working ordinary time, a casual employee shall be paid
(i) The ordinary hourly rate for the work being performed; plus
(ii) A loading of 25% of the ordinary hourly rate.
(b) The casual loading constitutes part of the casual employee’s all-purpose rate.
(c) The resulting rate is the casual ordinary hourly rate.
(d) Where this Agreement refers to a penalty rate or shift loading then that penalty rate/shift loading will be applied to the casual ordinary hourly rate. This includes where employees have an entitlement to a 15% or 30% shift loading, that loading will be applied to the casual ordinary hourly rate. This also includes where a 1.75 times, double time or higher overtime or public holiday penalty rate is applicable, that penalty rate will be applied to the casual ordinary hourly rate.”
Clause 6 of the 2020 Agreement deals with ordinary hours of work and relevantly provides:
“6. Ordinary hours of work
6.1 The ordinary hours of work shall be the hours rostered over a 2 to 10 week work cycle relevant to each area between Monday to Sunday inclusive and shall include:
• For full-time employees - an average of 38 ordinary hours per week over the rostered work cycle; and
• For part-time employees - the rostered ordinary working hours.
6.2 The rostered ordinary hours for full-time employees (excluding banked days off) shall be within the following limits:
• in any roster week the ordinary hours shall be spread over not less than three and not more than six days; and
• on any day the ordinary hours shall be not less than six and not more than twelve hours.
6.3 Ordinary hours of work shall be included in a general roster which:
• shall be prepared after consultation with the employee representative(s) in the section(s) affected on the general format of the roster - if there is any disagreement then the matter shall be quickly referred for advice to the Consultative Committee set up pursuant to clause 24.3.1 of this Agreement and, if the matter remains unresolved, the arbitration processes set out in clause 24.2 shall apply;
• the Company shall ensure employees have a minimum of 2 consecutive days off within a roster cycle. This may not occur within a 7 day period. This clause does not apply to casual employees.
• shall be notified by management to employees at least seven days in advance; and
• may be varied at any time where the employee and the company agree, or in the case of an emergency (such as a plant or equipment breakdown) where the company provides 12 hours’ notice. In the instance of an emergency shutdown, employees shall have the option of: A) changing rosters; B) taking paid leave; C) taking leave without pay.
There may be times throughout the year when one or more production lines move to 7 day operation. The minimum duration of such a roster change shall be 16 weeks, unless by agreement with the affected employees.
An employee who is called in to work outside the rostered ordinary hours set out above shall be paid overtime rates in accordance with clause 9 of this Agreement.
. . .”
Clause 5.5 of the 2020 Agreement is a pay equalising provision intended to ensure that a casual employee is not paid less for work performed than a weekly employee for work performed in circumstances where a weekly employee rostered for ordinary hours performing the same work would be paid more for performing that work than that the casual employee’s hourly rate of pay.
The first sentence of clause 5.5 of the 2020 Agreement is uncontroversial. It establishes the hourly rate of pay for a non-trades casual employee. That rate of pay is one thirty-eighth of the full-time weekly base rate plus 28.5 per cent. The loading is said to be in lieu of entitlements to paid annual leave, paid personal/carer's or compassionate leave, payment for public holidays not worked, notice of termination or redundancy pay. The weekly base rates of pay for full-time employees for each classification are set out in clause 5.1(b) and need not be reproduced.
The second sentence of clause 5.5 of the 2020 Agreement is a proviso to the first. It operates so that a casual employee will receive the hourly rate of pay fixed by the first sentence unless the condition in the second sentence is met. That condition is that:
·work is performed by a casual employee;
·in circumstances where a weekly employee on rostered ordinary hours performing the same work would be paid more than the ordinary hourly base rate plus 28.5 per cent.
If the condition is met, then the casual employee is to be paid the rates applying to a weekly employee on rostered ordinary hours for such work. This appears to apply to payment for the minimum period of engagement specified in clause 4.1.6(b) of the 2020 Agreement.
What then are the “circumstances where a weekly employee on rostered ordinary hours performing the same work would be paid more than the ordinary hourly base rate plus 28.5 per cent” (emphasis added)? Plainly, a weekly employee in the same classification and performing the same work as a casual employee during ordinary hours being paid only the ordinary hourly rate of pay would never be paid more than the casual employees’ hourly rate of pay, which is the weekly employees ordinary hourly base rate plus 28.5%.
The reference to “in circumstances” self-evidently requires a consideration of the fact(s) or condition(s) connected with or relevant to an event or action. The relevant event here is that the weekly employee performing the same work during ordinary hours is or would be paid more than the casual employee’s rates of pay for that work during those hours. The relevant circumstances are the circumstances under which the weekly employee is performing the same work during ordinary hours. These circumstances include at least the following:
the weekly employee performing the same work during ordinary hours is in the same classification as the casual employee;
the day of the week on which the weekly employee is performing the same work during ordinary hours; and
the time of the day during which the weekly employee is performing the same work during ordinary hours.
For the condition to be satisfied, the circumstances under which the work is performed as between the casual employee and the weekly employee must be the same.
Thus, if:
a)a casual employee is performing work outside of the hours of 6:00am to 6:00pm, Monday to Friday, on a day that is not a public holiday;
b)a weekly employee in the same classification is performing ordinary hours at the same time and under the same circumstances; and
c)the weekly employee would be paid more than the casual employee’s hourly rate of pay (ordinary hourly base rate plus 28.5 per cent) because the weekly employee is paid the out-of-hours payment in clause 5.2.1.2 of the 2020 Agreement,
the proviso is engaged, and the consequence set out follows. Namely, the casual employee is to be paid the rates applying to a weekly employee on rostered ordinary hours for such work.
In the result, in assessing whether the condition in the provision is engaged, the out of hours payment is to be included in the assessment. If, once included, the weekly employee performing the same work, in the same classification during ordinary hours as the casual employee is or would be paid more than the hourly rate of pay received by the casual employee, that employee will be paid the same rate payable to the weekly employee.
Lactalis contended that a broader reading of clause 5.5 of the 2020 Agreement than the one it advanced would mean that the loading of 28.5% on the ordinary hourly base rate paid to a casual employee would become an all-purpose rate. That is not correct. An all-purpose rate is found in clause 5.6, which expressly provides that the casual loading constitutes part of the casual employee’s all-purpose rate.
Clause 5.5 of the 2020 Agreement is not so expressed. As I have earlier indicated, clause 5.5 is intended to ensure that a casual employee is paid no less than a weekly employee performing the same work during ordinary hours in the same circumstances. An all-purpose rate found in clause 5.6 has a different purpose and effect. Such a provision ensures that a casual employee performing the same work as a weekly employee in the same circumstances will always be paid more than the weekly employee. This is because the all-purpose rate, which includes the casual loading, is used as the base to calculate other pay entitlements - for example, shift penalties.
Clause 5.5 of the 2020 Agreement does not entitle an employee to the out of hours payment or shift penalties as such. Much less are these payments calculated by reference to a percentage of the casual employee’s ordinary hourly base rate plus 28.5%.
To give an example:
a casual employee is a production employee classified as an SFP02;
that employee worked a shift of 12 hours duration when the 2020 Agreement commenced operation;
the shift finished at 9:00 pm;
the ordinary casual rate of pay per hour for that classification at that time was $38.69 ($30.0846 x 1.285);
a weekly employee classified as a SFP02 had an hourly rate of pay of $30.0846;
clause 5.2.2.2 applied to the shift; and
the weekly employee worked ordinary hours on the same shift and perform the same work as the casual employee.
Under this example, the weekly employee would have earned (12 x $30.0846) x 1.15 for the shift. That is $415.17. The casual employee would have earned 12 x $38.69, which is $467.28. The condition in the proviso would not be engaged because the casual employee received higher pay for the same work in the same circumstances. There might be a different result if the shift finished after midnight having commenced before midnight because the shift penalty is 30%. Similarly, a different result may ensue depending on the number of hours worked that were “out of hours” for the purposes of clause 5.2 of the 2020 Agreement.
If clause 5.5 of the 2020 Agreement operated to make the casual premium an all-purpose premium, which it does not, then the result in the above example would be different. Operating as an all-purpose rate, the casual employee would be paid for the shift worked in the example $533.92 ((12 x $38.69) x 1.15).
Thus, although I agree with Lactalis that clause 5.6 of the 2020 Agreement provides context, for the reasons explained above, it is not context which aids the construction for which Lactalis contends. In any event, as already explained, context is not itself an end. A consideration of the language contained in the text of the relevant parts of the 2020 Agreement remains the starting point and the end point in the task of construction.
Lactalis also contended that the distinction between casual trades and non-trades employees in clause 5 of the 2020 Agreement was first introduced by the 2020 Agreement to align with the “award structured methodology of casual loading” and the change in clause 5.6 was explained to relevant employees. For this Lactalis relies on the statement of its Human Resources Manager, Janelle Bricknell in which Ms Bricknell sets out a written explanation given for the 'casual loading payment’ as follows:[5]
“Casual loading payment: · Trades casuals to move to the award structured methodology of casual loading:
hourly rate (in $) × 25% x penalty loadings (both shift and weekend).
· Production casuals - no change to current loading of 28.5% and out of hours (OOH) payment structure.”
Lactalis says that this explanation is intended to refer to the application of the casual loading reflected in the Manufacturing and Associated Industries and Occupations Award 2020 and is objective evidence relevant to what employees covered by the 2020 Agreement were told during explanations given pursuant to s 180(5) of the Act. It says that before the commencement of the 2020 Agreement, the casual loading methodology reflected in clause 5.5 applied to both trades and non-trades employees, as reflected in the Parmalat Australia Pty Ltd – Bendigo – NUW/TWU/AMWU/ETU Enterprise Agreement 2017 – 2020.
That may be so, but it adds nothing to the proper construction of clause 5.5 of the 2020 Agreement. The explanation above is consistent with the trades casual rate being an all-purpose rate, and the production casual rate not being so. For the reasons explained earlier that is correct. Beyond that the explanation does not assist Lactalis’ construction. Clauses 5.5 and 5.6 operate differently on the rate of pay paid to a casual employee working in the same circumstances.
Clause 5.5 of the 2020 Agreement is to be applied in the manner describe in this decision. The dispute is determined accordingly.
DEPUTY PRESIDENT
Hearing details:
Matter determined on the papers
Written submissions:
Applicant, 6 March 2024 and 12 April 2024
Respondent, 5 April 2024
Printed by authority of the Commonwealth Government Printer
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[1] For this, it relies on what was said by a Full Bench in Construction, Forestry, Mining, Maritime and Energy Union v Falcon Mining Pty Ltd[2022] FWCFB 93, (2022) 317 IR 367 at [74]
[2] [2022] FWCFB 210 at [45]
[3] [2020] FWCFB 5054, (2020) 300 IR 1
[4] Australian Workers’ Union v Orica Australia Pty Ltd[2022] FWCFB 90 at [18] and the authorities referred to therein; see also James Cook University v Ridd [2020] FCAFC 123, (2020) 278 FCR 566 at [65] and the authorities referred to therein; Workpac Pty Ltd v Skene (2018) 264 FCR 536, (2018) 264 FCR 536 at [197]
[5] Witness Statement of Janelle Bricknell dated 5 April 2024 at [11] and JB-4 (p. 204)
Printed by authority of the Commonwealth Government Printer
<PR774517>
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