United Workers' Union v Probiotec Pharma Pty Ltd

[2024] FWC 2210

[2024] FWC 2210

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.739—Dispute resolution

United Workers’ Union
v

Probiotec Pharma Pty Ltd

(C2024/2437)

DEPUTY PRESIDENT MASSON MELBOURNE, 20 AUGUST 2024

Application to deal with a dispute under an enterprise agreement.

1. On 18 April 2024, the United Workers’ Union applied to the Fair Work Commission (the Commission) to deal with a dispute pursuant to s 739 of the Fair Work Act 2009 (the Act) under the dispute resolution procedure at clause 9 of the Probiotec Pharma Pty Ltd Enterprise Agreement 2022[1] (the 2022 Agreement). The Respondent in the matter is Probiotec Pharma Pty Ltd (Probiotec).

1. The dispute may be shortly summarised as follows. It is in relation to the meaning and effect of clause 15.2(e) which specifies that the wage increases to be applied on 1 July 2023, 2024, and 2025 are to be the greater of 3% or the amount set by the Fair Work Commission in its annual wage review. The UWU contend that the word amount should be taken to mean the percentage increase determined by the Commission in its annual wage review while Probiotec argue that the term should be taken to mean the resultant dollar increase arising from the application of the annual wage review decision to the relevant classification rate in the Pharmaceutical Industry Award 2020[2] (the Award).

Jurisdiction of the Commission

1. Section 739 of the Act empowers the Commission to deal with certain disputes under enterprise agreement dispute settlement terms. The 2022 Agreement contains such a term which is set out at clause 9 of the 2022 Agreement which relevantly provides as follows;

“9. DISPUTE RESOLUTION

9.1 Disputes between an Employee or Employees and Probiotec about this Agreement or the NES will be resolved in accordance with the following procedure:

(a)the Employee or Employees will discuss the dispute with their immediate supervisor;

(b)if the dispute is not resolved, a meeting will be arranged for the Employee or Employees to discuss the dispute with more senior levels of management;

(c)if the dispute remains unresolved, a party to the dispute may refer the dispute to the Fair Work Commission;

(d) the Fair Work Commission may:

(i)deal with the dispute using any of its powers including conciliation, and, if necessary, arbitration: and

(ii)give all such directions, orders and/or recommendations, and do all such things as the Fair Work Commission deems necessary or expedient for the speedy and just healing and resolution of the dispute;

(e)all parties to the dispute agree to abide by any decisions or orders made by the Fair Work Commission, subject to exercising any right of appeal to the Full Bench.

9.2 Probiotec may appoint another person, organisation, or association to accompany and/or represent it in respect of the dispute.

9.3 An Employee or Employees may appoint an Employee Representative to accompany and/or represent them in respect of the dispute.

9.4 The status quo shall remain until the dispute is resolved, and work must continue in accordance with the Agreement unless there is a reasonable concern about an imminent risk to health or safety held by an Employee or Employees. Subject to applicable Occupational Health and Safety legislation, an Employee must not unreasonably fail to comply with a direction by Probiotec to perform work, whether at the same or another workplace, where the work is safe and appropriate for the Employee or Employees to perform.”

1. It was not contested that the question to be determined by the Commission, which is set out below, is a dispute about a matter dealt with in the 2022 Agreement, as required by clause 9.1 of the 2022 Agreement. Nor was it in dispute that the steps taken by the parties to resolve the dispute constituted compliance with the dispute resolution procedures of the 2022 Agreement. Having regard to the information in the Form F10 application filed by the UWU and the views of the parties, I am satisfied that the Commission has jurisdiction to deal with the dispute, including by arbitration as provided by clause 9.1(d)(i) of the 2022 Agreement. 

2. The matter was subject to conciliation before the Commission in conferences conducted on 14 & 21 May 2024 but remained unresolved. The UWU subsequently requested the matter be programmed for arbitration pursuant to clause 9.1(d)(i) of the 2022 Agreement. The parties subsequently agreed on and submitted the questions to be determined by the Commission which are set below.

1. The matter was listed for hearing on 23 July 2024 in advance of which the parties filed material on which they intended to rely in accordance with the directions issued. At the hearing, Ms Abbey Sultan (Industrial Officer) appeared for the UWU, gave evidence in the matter and also called the following persons to give evidence;

• Stephen Dudley – UWU delegate

• Pande Talevski – Machine Operator

• Suyra Nagulapalli – UWU Organiser

1. Mr Nick Duggal of Moray & Agnew Lawyers who was granted permission to appear on behalf of Probiotec pursuant to s 596(2)(a) of the Act called the following persons to give evidence;

·    Jared Stringer – Chief Financial Officer (CFO)

·   Elma Omeragic – Operations Manager

·   Charlie Cutajar – former machine operator with Probiotec

Issues for determination

1. The following question arises for determination by the Commission;

“Does clause 15.2(e) of the Probiotec Pharma Pty Ltd Enterprise Agreement 2022 (Agreement) require the application of wage rate increases as:

(a)a percentage increase to the actual hourly rates of pay of the relevant employee equivalent to the percentage increase ordered in the Annual Wage Review; or

(b) a dollar amount applied to the actual hourly rate of the relevant employee equivalent to the Commission’s wage increases applied to the relevant classification of the employee as per the Pharmaceutical Industry Award 2020 (as based on the Annual Wage Review).”

Agreement provisions

1. It is useful to set out the history of the current clause 15.2 which in various forms has been included in several previous agreements. The clause in its predecessor forms is set out below.

1. Clause 14 of the Probiotec Pharma Collective Agreement 2009 (2009 Agreement) provided as follows;

“During the nominal life of this Agreement, employees’ wages are guaranteed to increase by the greater of 2% or the amount awarded as a federal minimum wage increase by the Australian Fair Pay Commission (or equivalent authority). The date of effect of this increase will be the date of effect of the federal minimum wage increase by the Australian Fair Pay Commission on 1 July 2009, 1 July 2010, 1 July 2011, 1 July 2012 and 1 July 2013.

In addition, or inclusive of such wage increases, Probiotec rewards employees who perform well by additional wage increases over and above the minimum guaranteed wage increase. These performance wage rise assessments are at Probiotec’s sole discretion. Currently, the performance wage rise assessments are conducted on a 12 monthly basis.”[3]

1. Clause 14.3 of the Probiotec Pharma Pty Ltd Enterprise Agreement 2014 (2014 Agreement) provided as follows;

“During the nominal life of this Agreement, employees’ wages are guaranteed to increase by the greater of 2.25% or the amount awarded as a federal minimum wage increase by the Fair Work Commission. The table below sets out when wage increases will occur and the amount of the wage increase:

……………”[4]

1. Clause 15.3 of the Probiotec Pharma Pty Ltd Enterprise Agreement 2018 (2018 Agreement) provided as follows;

“15.3 Employee Remuneration

(a)   On first full pay period after commencement of Agreement (as defined in clause 2), current Permanent Employees will receive a 2.25% increase on their existing hourly rate;

(b) Existing employees will work a 38 hour week and will not be required to work a 40 hour week (i.e. the extra 2 hours per week) to earn one RDO per month (i.e. Permanent Employees will be scheduled a free RDO each month);

(c)   New Permanent Employees hired after the Commencement Date (as defined in clause 2.1) will work a 38 hour week and not be entitled to an RDO

(d) The new arrangements will be effective from the Commencement Date (as defined in clause 2.1).

(e) On the first full pay period on or after 1 July 2019, 1 July 2020 and 1 July 2021 all Permanent Employees will be guaranteed a minimum wage increase of 2.25% on their current standard hourly (not the award rate) rate of pay

(f)  No employee will receive less than the minimum wages prescribed in the Award.

(g) Casuals will be paid as per the Award.”[5]

1. Clause 15.2 of the 2022 Agreement relevantly provides as follows;

“15.2 Employee Remuneration - full time Employees

(a) After a successful vote, those Employees (excluding casual Employees) employed before the vote and who remain employed on the first full pay period after commencement of the Agreement (as defined in clause 2), will receive a 4.6% increase to the hourly rate that applied to the Employee on 30 June 2022. This rate increase will be backdated to apply from 1 July 2022.

…………….

(e)     On the first full pay period on or after 1 July 2023, 1 July 2024 and 1 July 2025 all Employees other than casual Employees will be guaranteed a minimum wage increase of the greater of 3%, or the amount set by the Fair Work Commission annual wage review on their standard hourly rate as of 30 June 2023, 30 June 2024, and 30 June 2025 (not the Award rate).

(h) No Employee will receive less than the minimum wages prescribed in the Award.”[6]

Background and evidence

1. As can be seen from above, the origins of the current clause 15.2(e) may be firstly seen in the 2009 Agreement which used similar language to the 2014 Agreement in specifying the wage rate adjustment mechanism for each year of that agreement. The guaranteed wage increase provided by clause 14 of the 2009 Agreement was stated to be the greater of 2% or the ‘amount awarded as a federal minimum wage increase by the Australian Fair Pay Commission’. That language was also used in the 2014 Agreement when it stated at clause 14.3 that the guaranteed wage increase was to be the greater of ‘2.25% or the amount awarded as a federal minimum wage increase by the Fair Work Commission’.

1. A dispute[7] was filed by the UWU in October 2017 (the 2017 Dispute) over the same issue currently before the Commission, that being a dispute over the meaning of the term ‘amount’ where it appeared in clause 14.3 and whether that term was to be read as requiring an increase to be applied to employees’ wages by the percentage increase determined by the FWC or the resultant dollar increase arising from the application of the FWC’s annual wage review determination to relevant Award rates of pay. It is noted that the dispute settlement term in the 2014 Agreement only allowed for arbitration of disputes where both parties agreed (clause 9.3) and Probiotec declined to agree to arbitration of the dispute by the Commission. The matter remained unresolved at the conclusion of the conciliation proceedings and the file was closed.

1. The 2018 Agreement saw the removal of the disputed wage increase term (from the 2014 Agreement) and simply provided for a specified wage increase of 2.25% on employees’ current standard hourly rate in each year of the 2018 Agreement’s nominal term. Mr Stringer stated that the removal of the dollar amount increase mechanism previously provided for in the 2009 and 2014 Agreements resulted in some employees being worse off under the 2018 Agreement as greater increases (than the guaranteed 2.25%) determined by the FWC in its annual wage review eroded the Agreement wage rate margin above the Award[8].

1. Against the above background, bargaining was initiated for the 2022 Agreement on 11 May 2022 and the Notice of Employee Representational Rights (NERR) was issued to employees between 11-24 June 2022. Bargaining then proceeded with the first meeting held on 22 June 2022. The UWU tabled its Log of Claims[9] (LOC) on 24 June 2024 which included a claim for adjustment of wages and backdating of the first increase to 1 July 2022 and for subsequent wage increases of 5% from 1 July 2023 and 1 July 2024. Various wage proposals were then canvassed at and between subsequent bargaining meetings. A formal response to the UWU’s LOC wage claim was provided by Probiotec on 15 July 2022[10] in which the company proposed wage increases of 4.6% from 1 July 2022 and 2.5% on 1 July 2023 and 1 July 2024.

1. Mr Nagulapalli gave evidence that the UWU maintained its claim for percentage wage increases throughout bargaining and he could only recall a dollar figure wage increase having been raised in the first bargaining meeting [11]. When cross examined on this evidence, he accepted that dollar increases were raised by Probiotec during bargaining but was consistently rejected by the UWU.

1. On 4 August 2022, Mr Nagulapalli emailed[12] Probiotec representative Oriana Kleyman foreshadowing what the UWU would raise at the following week’s bargaining meeting and also requested that Probiotec respond on any potential improvements to its second and third year wage increase offer. Following a further bargaining meeting on 17 August 2022, Ms Kleyman sent a revised offer to Mr Nagulapalli on 2 September 2022[13] in relation to future wage increases that proposed the reprisal of the annual wage increase methodology that had been a feature of the 2009 and 2014 Agreements.

1. The above-referred wages offer by Probiotec was a for a 4.6% increase from 30 June 2022 and an increase in subsequent years of ‘the greater of 3.0% or the amount determined under the Fair Work Commission National Wage case pay rise per year paid on 1 July 2023 and 1 July 2024 and 1 July 2025’. According to Mr Stringer, the proposal avoided the issue that arose under the 2018 Agreement where employees’ rates of pay were at risk of falling relative to Award rates of pay if the annual wage review decision of the FWC resulted in increases to minimum award rates of pay that were greater than the guaranteed minimum wage increase provided for under the agreement[14].

1. A further bargaining meeting was held on 9 September 2022 during which Mr Stringer states that he explained Probiotec’s wage increase proposal of either the annual guaranteed increases of 3% or alternatively increases equivalent to the dollar amount increases to the minimum award rates flowing from the FWC’s annual wage review. In explaining the alternative wage increase proposal he says he used words to the effect of ‘if you’re $1 above the Award, the worst case is that you will stay $1 above the Award.’[15]

1. Mr Dudley gave evidence that to his recollection there was never any discussion during bargaining of reverting to the wage increase methodology used under the 2009 and 2014 Agreements. He did however recall Mr Stringer raising a proposal during one of the bargaining meetings about applying dollar wage increases although he states that proposal was categorically rejected by himself and Mr Nagulapalli. He further states that he recalled the discussion because he understood that the proposal would diminish his pay over time. He also states that not only was Mr Stringer’s dollar amount increase proposal never discussed again, but it was also not explained to employees in meetings held to explain the agreement[16]. For his part, Mr Nagulapalli when cross-examined on Mr Stringer’s evidence on the 9 September 2022 meeting, responded that he recalled Mr Stringer talking about the guaranteed 3% wage increase but could not recall if there was a dollar amount discussed during the meeting despite Mr Dudley’s evidence confirming it was raised by Mr Stringer.

1. On 13 September 2022, Mr Nagulapalli sent an email[17] to Mr Stringer in which Mr Nagulapalli asked Probiotec to provide an updated point 4 which related to the first wage increase that would take effect from 1 July 2022. There was no reference in the email to the wage increase mechanism for the second and subsequent years of the agreement save for the comment that ‘All employees will receive a 4.6% wage increase from 01 July 2022 and will increase as per wage offer for year 2, year 3 and year 4.’ Mr Stringer responded by email[18] to Mr Nagulapalli on 13 September 2022 and provided Probiotec’s final offer which stated as follows in respect of future wage increases;

‘7. For subsequent years, all employees rates of pay, along with the table in clause 4, will increase by the greater of 3.0% or the amount determined under the Fair Work Commission National Wage case pay rise per year paid on 1 July 2023 and 1 July 2024 and 1 July 2025.’

1. Mr Nagulapalli was cross-examined on Probiotec’s offer of 13 September 2022. He accepted that the UWU had received it, that it was in the same terms as previously provided by Probiotec on 2 September 2022 and that Mr Stringer had spoken to it during the 9 September 2022 bargaining meeting including by explaining the dollar amount increase element[19]. Mr Nagulapalli further agreed that he subsequently confirmed on 15 September 2022 that in principle agreement had been reached[20]. Mr Dudley also agreed that the wording of Probiotec’s wage offer on 13 September 2022 was the same as proposed in the 2 September 2022 correspondence from Probiotec and which Mr Stringer explained in the 9 September 2022 meeting as providing for an alternate wage increase mechanism linked to the FWC annual wage review decision as it flowed through to award rates of pay in dollar amounts[21]. Mr Dudley rejected however that the UWU had agreed to the proposal as explained by Mr Stringer at the 9 September 2022 meeting. Rather, he claimed that the proposal had been argued and rejected. Mr Dudley could not however explain why the UWU did not challenge Probiotec on the wording of its 13 September 2022 offer which was in the same terms as the 2 September 2022 offer and which Mr Dudley states was rejected in the 9 September 2022 meeting[22].

1. When cross-examined on the 9 September 2022 meeting and subsequent correspondence, Mr Stringer could not recall whether Mr Dudley and Mr Nagulapalli agreed or disagreed with the dollar amount wage increase mechanism during the 9 September 2022 meeting proposed but denied it was ‘categorically rejected’ during the meeting. He restated that he went through some examples in the meeting following which discussion moved on to other topics. Mr Stringer made the point that several days after the 9 September 2022 meeting, he sent a further wages proposal to the UWU with identical wording to that Mr Dudley claimed to have categorically rejected during the 9 September 2022 meeting. He noted that the proposal (dated 13 September 2022) was not challenged or rejected by the UWU and rhetorically asked the question why he would have resent on 13 September 2022 a previously ‘rejected’ proposal[23].

1. A further email[24] was received by Mr Stringer from Mr Nagulapalli on 14 September 2022 in which some wording changes were proposed in relation to the wage increase that would take effect on commencement of the 2022 Agreement. Mr Nagulapalli stated as follows in his email, ‘Thank you for going through us the offer. Please see attached changes in the wording of what we have agreed in the meeting.’ Further emails[25] were then exchanged between Mr Stringer and Mr Nagulapalli on 15 September 2022 which in part clarified the operation of the initial 4.6% wage increase but did not otherwise deal with the mechanism of wage increases for the second and subsequent years of the agreement. Mr Nagulapalli relevantly stated the following in an email sent at 8.46am on 15 September 2022

“Yap in principal we are in agreement. If you believe that the wording will cover all scenarios I am happy with it any way, if anything come up happy to work with you while drafting.

Please send through the offer and material company are using for meetings tomorrow”

1. Mr Stringer states he prepared and circulated to Mr Nagulapalli on or about the 15 September 2022 a copy of a presentation which was to be used during meetings with employees that had been scheduled to occur the following day. There were two separate meetings held with employees, day and afternoon shift, at which Mr Stringer states key provisions of the 2022 Agreement were explained. The relevant slide in the presentation pack that dealt with wage increases stated as follows;

‘FUTURE PAY RISES

ü Pay rise for ALL EMPLOYEES on 1 July each year

ü Greater of:

ü 3% (guaranteed) or

ü The Fair Work Commission National Wage Case decision

ü Best of both world for the employees as you have a strong guaranteed increase and protection if wage inflation exceeds 3% via the Fair Work Commission National Wage Case decision’[26]

1. In talking to the above slide at the employee meetings, Mr Stringer states that he addressed how wage increases would operate in the second and subsequent years of the 2022 Agreement. He says he used the same illustration he had given in the bargaining meeting on 9 September 2022 that being words to the effect that, ‘if you’re $1 above the Award, the worst case is that you will stay $1 above the Award.’ He further states after he spoke to the PowerPoint presentation, he left the meetings to allow UWU representatives to speak with employees[27]. A ballot for approval of the 2022 Agreement was subsequently notified on 27 October 2022 and conducted on 8 November 2022, resulting in a valid majority of employees voting in support of the agreement which was subsequently approved by the Commission on 13 December 2022[28].

1. Ms Omeragic and Mr Cutajar both gave evidence that Mr Stringer explained the wage rate increase mechanism for the proposed 2022 Agreement in employee meetings. Both recalled Mr Stringer explaining that if the dollar increase applied to Award rates that arose from the FWC annual wage review decision was greater than the guaranteed 3% wage increase, employees will receive the higher dollar amount increase applied to their rates of pay[29].

1. When Ms Omeragic was cross-examined on Mr Stringer’s explanation of the wage increase methodology under the 2022 Agreement to employees, she initially stated that Mr Stringer provided an example of the dollar amount wage increase methodology in the PowerPoint presentation. When pressed however, she agreed that there were no worked examples provided in the presentation and that the explanation by way of an example was provided orally[30]. She could not recall the actual figures provided and agreed that Mr Stringer did not explain to employees that the amount of increase they would receive as a result of the Commission’s annual wage review would vary according to their classification level. When further questioned on the classifications under the 2022 Agreement she was unclear on the actual number of classifications, and how employees would have known which Award classification their agreement classification aligned with for the purpose of wage increases[31].

1. Mr Nagulapalli was cross-examined on the meetings held with employees to which he attended. He recalled that Mr Stringer used the phrase ‘you will have the best of both worlds’ and that employees would receive the greater of either the agreement guaranteed minimum percentage wage increase or the outcome from the FWC’s annual wage case decision. He could not recall Mr Stringer making a statement to the effect of if you earn a dollar above the award now, you’ll get at least a dollar above the award but stated he could clearly recall Mr Stringer explaining that employees would receive either 3% or a percentage wage increase, whichever is the highest[32].

1. Mr Talevski states that he could not recall there being a PowerPoint presentation when the 2022 Agreement was explained to employees. He further states the explanation provided was very basic and that he voted on the 2022 Agreement on the basis of the written material which he says he understood to mean he would get either 3% or the FWC annual wage case decision percentage increase if it was higher[33]. When cross-examined on the briefings provided to employees about the agreement, Mr Talevski states he had no recollection of award classifications being discussed or any discussion of a dollar amount increase and could not recall the detail of Mr Stringer’s explanation[34].

1. Mr Dudley similarly could not recall Mr Stringer providing an explanation to employees about the wage increase methodology in the terms Mr Stringer claims to have provided. Mr Dudley further states that had Mr Stringer provided such an explanation he (Mr Dudley) would have recalled that as Mr Stringer’s claimed explanation directly contradicted his understanding of the clause and what he had argued against in the 9 September 2022 meeting[35]. When cross-examined on this point, both Mr Nagulapalli and Mr Dudley responded that had Mr Stringer provided such an explanation to employees, they would have instructed employees to vote against approval of the agreement[36]. They both maintained that their understanding of clause 15.2(e) was that where ‘amount’ appeared in the clause, it referred to the percentage increase determined by the FWC in its annual wages review decision.

1. Mr Nagulapalli and Mr Dudley also gave evidence during cross-examination that it was not explained during bargaining meetings or in the agreement explanation sessions with employees that the alternative wage rate mechanism linked to the FWC annual wage review argued by Probiotec would result in different dollar amount increases being applied to employees’ wages depending on their classification level. Nor was the relationship between the 2022 Agreement classifications and award classifications explained to employees such that employees would have known which award classification their agreement classification aligned to for the purpose of award wage rate increases that would be applied to their agreement classification[37].

1. When cross-examined on the explanation provided to employees, Mr Stringer strongly disagreed with the assertion of UWU witnesses that he did not include an explanation of the dollar amount wage increase mechanism. While unable to recall the specific detail, he confirmed that he provided a worked example to employees. He accepted that he did not explain that the dollar amount increase would vary depending on employees’ classification level but maintained he explained that the wage increase was that of the Award rate increase[38]. When further questioned on the adequacy of the agreement explanation Mr Stringer agreed that the disputed language in the 2022 Agreement referred to amount whereas the outcome of the application of the FWC annual wage review decision to increase award rates by a percentage would result in different amounts being applied to employees’ wages depending on their classification. He also could not recall any specific discussion with employees about the link between specific agreement and Award classifications for the purpose of wage increases. He also conceded in light of the present dispute that the language of the clause could have been drafted more clearly and that a more detailed explanation of the link between agreement and Award classifications for the purpose of wage increases could have been provided.[39].

1. At the request of the Commission, Probiotec supplied a summary of historical wage increases applied under previous agreements. It was unnecessary to provide information for the 2018-2021 years as the 2018 Agreement adopted the methodology of applying a specified percentage wage increase in each year of the agreement and made no reference to the annual wage review outcome. Data was not able to be retrieved for the years prior to 2012. What follows is a summary of the wage increases applied in the 2012-2017 period which captures periods covered by the operation of both the 2009 and 2014 Agreements;

• For the 2012/2013 year, the 2009 Agreement provided for a wage increase of the greater of either 2% or the amount awarded as a federal minimum wage increase by the Australian Fair Pay Commission. The increase determined by the FWC in its annual wage review for the NMW was $0.45 per hour. All but 2 of the 22 employees received the NMW increase applied to their rates of pay as it exceeded the value of a 2% increase. The remaining two employees received an increase of at least 2% as it exceeded the NMW increase determined by the FWC.

• For the 2013/2014 year, the 2009 Agreement provided for a wage increase of the greater of either 2% or the amount awarded as a federal minimum wage increase by the Australian Fair Pay Commission. The increase determined by the FWC in its annual wage review for the NMW was $0.41 per hour. Of the 22 employees, 11 employees received the NMW increase applied to their rates of pay as it exceeded the value of a 2% increase. The remaining employees received an increase of at least 2% as it exceeded NMW increase determined by the FWC.

• For the 2014/2015 year, the 2014 Agreement provided for a wage increase of the greater of 2.25% or the amount awarded as a federal minimum wage increase by the Fair Work Commission. The increase determined by the FWC in its annual wage review for the NMW was $0.50 per hour. Of the 23 employees, 17 employees received the NMW increase as it exceeded the value of a 2.25% increase. The remaining employees received an increase of at least 2.25% as it exceeded the NMW increase determined by the FWC.

• For the 2015/2016 year, the 2014 Agreement provided for a wage increase of the greater of 2.25% or the amount awarded as a federal minimum wage increase by the Fair Work Commission. The increase determined by the FWC in its annual wage review for the NMW was $0.42 per hour. All employees received an increase of at least 2.25% on their rate of pay as this exceeded the NMW increase determined by the FWC.

• For the 2016/2017 year, the 2014 Agreement provided for a wage increase of the greater of 2.25% or the amount awarded as a federal minimum wage increase by the Fair Work Commission. The increase determined by the FWC in its annual wage review for the NMW was $0.41 per hour. All 22 employees received an increase of at least 2.25% on their rate of pay as this exceeded the NMW increase determined by the FWC.

• For the 2017/2018 year, the 2017 Agreement provided for a wage increase of the greater of 2.25% or the amount awarded as a federal minimum wage increase by the Fair Work Commission. The increase determined by the FWC in its annual wage review for the NMW was $0.59 per hour. Probiotec departed from its previous wage adjustment approach and passed on increases to employees’ rates of pay of at least the amount of the increase applied to equivalent Award classification rates of pay flowing from the FWC’s annual wage review, where such increases were greater than 2.25%.

Case for the UWU

1. The UWU submit that the relevant background to the dispute can be seen in the following. The first wage increase applied on commencement of the 2022 Agreement was 4.6%, and that increases for the subsequent years require the application of the higher of 3% or the ‘amount’ set by the FWC in its annual wage review. Relevantly in its 2023 annual wage review decision, the FWC determined to increase wage rates by 5.75% from 1 July 2023 and there is no dispute between the parties that the FWC decision provided for a greater increase than 3%. The UWU contends that on a proper construction of clause 15.2(e) employees covered by the 2022 Agreement are entitled to receive a 5.75% increase from 1 July 2023 applied on their actual wage rates and that the two questions for determination (a) and (b), should be answered respectively “Yes” and “No”.

1. In applying the well settled principles of construction of enterprise agreements to the present matter, the UWU submit that the task begins with a consideration of the ordinary meaning of the words, read in context. The dispute turns on the meaning of the word ‘amount’ which has several definitions within the Macquarie Dictionary; including that it can refer to a dollar figure, a percentage, degree or magnitude with the primary meaning being ‘quantity’ or ‘extent.’ Support for the broader meaning of the word than just a dollar figure may also be found in the Federal Court decision in Changshu Longte Grinding Ball Co. Ltd v Parliamentary Secretary to the Minister for Industry, Innovation and Science (No. 2)[40] (Changshu) where in a judicial review of a decision to impose dumping duties, Griffiths J rejected that ‘amount’ had a strict definition in a legislative instrument and saw no reason why the word ‘amount’ in that case could not be read as percentage in arriving at an amount of profit.

1. The UWU also submits that the FWC in its 2021/2022 annual wage review decision used the word ‘amount’ in several ways but importantly used the word ‘amount’ on a number of occasions in the decision to refer to a ‘percentage’ increase. This the UWU argues supports its contention that the word ‘amount’ cannot be presumed to exclusively refer to a ‘dollar figure’ and that the text and structure of the 2022 Agreement, the legislative background and the surrounding circumstances and facts notoriously known to the parties will demonstrate that the UWU’s interpretation is plainly correct.

1. As to the industrial context, the UWU points to the history of the annual wage review which in the period since 2011 has seen the FWC award percentage increases to minimum award rates of pay. This as the Full Bench observed in its Annual Wage Review 2021–22 decision[41] may be contrasted with the approach between 1993-2009 when the annual wage reviews generally resulted in flat dollar increases awarded to all award minimum rates, this approach sometimes favoured as it had the benefit of providing a greater relative benefit to low-paid employees[42]. The UWU also argues that the overwhelming majority of agreements describe pay increases as percentage increases and that to derogate from that norm would require express language. There has also never been increases to modern award rates decided by the FWC in the manner advanced by Probiotec. Rather, the FWC applied a common flat dollar increase for all classifications. The UWU also observe that the approach of the FWC in its pre-2009 annual wage review decisions did not award separate ‘amounts’ depending on classification but generally determined a single flat dollar amount to be applied to all minimum award rates. That is to be contrasted with the approach now argued by Probiotec which would result in different dollar ‘amounts’ being applied to different classification levels.

1. Turning to the 2022 Agreement context, the UWU argue the surrounding text and structure of clause 15.2(e) supports its construction that a percentage increase should be applied. That is because firstly, the first pay rise provided for at clause 15.2(a) of the 2022 Agreement provides for a 4.6% increase and secondly, clause 15.2(e) provides for a 3% increase where the FWC annual wage review ‘amount’ does not exceed that percentage increase. The absence of express language tells against the argument that the FWC annual wage review percentage pay rise would be applied differently to the percentage increase applied in the first year of the agreement. Finally, the exclusion of the Award classification structure means that there is no proper basis to apply wage rate increases under the 2022 Agreement by reference to the Award classification structure. This is supported by the express language in clause 15.2(e) where it says ‘(not the Award rate).’

1. In responding to Probiotec’s submissions, the UWU submit as follows;

• Mr Stringer’s evidence of prior agreement negotiations should be approached with considerable caution and does not in the UWU’s submission establish objective background facts known to all parties.

• Mr Stringer’s assertion of what he said in the bargaining meeting on 9 September 2022 on the meaning of the proposed wage increase mechanism and Probiotec’s intended reprisal of the approach taken in the 2009 and 2014 Agreements is no more than his subjective opinion of the offer only and does not rise to the level of objective evidence of a common intention.

• The UWU point to changes to made to the clause between 9 September 2022 and the clause in its final form. In particular, the words ‘(not the Award rate)’ were inserted into the clause after the exchange of various emails between the parties on 14-15 September 2022.

• Probiotec’s reliance on historical practice of applying wage increases under predecessor agreements does not rise to the level of either ‘notorious facts of which knowledge is to be presumed’ or ‘evidence of matters in common contemplation and constituting a common assumption.’ In any event it cannot displace or override the plain and ordinary meaning of the words of the 2022 Agreement on the authority of both Transport Workers’ Union of Australia v Linfox Pty Ltd[43] (Linfox) and Shop Distributive and Allied Employees’ Association v Woolworths[44] (Woolworths).

• The UWU also argue that contrary to Probiotec’s reliance on past practice, clause 15.2(e) is unambiguous in its terms and the fact that there is and has been a dispute about the meaning of the clause does not indicate the clause is ambiguous. The 2017 Dispute which dealt with similar wording in the 2014 Agreement also tells against Probiotec’s argument that there was a ‘common understanding’.

• The fact that Mr Dudley has not since he commenced employment in 2017 had a pay rise in the FWC annual wage increase manner Probiotec advocates in this matter should be given weight by the Commission. That is because it demonstrates that the historical wage increase adjustment practice of Probiotec should not be taken to be a notorious fact of which knowledge is presumed.

• Probiotec’s assertion that their construction is supported by the fact that annual changes to the minimum wage rates in awards are expressed as amounts in the Award and not as percentages is plainly wrong according to the UWU. That is because Award minimum rates are increased by the percentage amount awarded by the FWC in its annual wage review which of course results in an increase to the award rates by dollar amounts.

Case for Probiotec

1. Probiotec contend that its construction of clause 15.2(e) is derived from its plain, unambiguous and ordinary meaning. While conceding the clause does not include an example of how the wage increase is to be applied, an example is not needed to determine the intended meaning. That is because it is clear from the text that the wage increases are calculated by either applying 3% or the amount of the increase, whichever is the greater. If it had been the intention that the increase in wages was to be either 3% or the FWC annual wage review decided percentage increase, clause 15.2(e) would have explicitly stated this. The further submission is made that the FWC’s annual wage review decisions apply percentage increases to minimum wage rates. The 2022 Agreement does not prescribe minimum wage rates and it does not logically follow that percentage increases applied to minimum Award rates of pay need to be wholly passed on to employees in receipt of rates of pay above the Award.

1. Probiotec also refer to the history of the provision which appeared in the 2009 and 2014 Agreements in similar terms. The construction of the provision is not new and has been historically applied to the calculation of annual wage increases in those agreements. While the disputed provision and wage increase calculation methodology were removed in the 2018 Agreement, Probiotec submit that the parties agreed to revert to that methodology in the 2022 Agreement and which was clearly explained to employees. Probiotec further argue that the disputed wage increase methodology restored in the 2022 Agreement is also consistent with the position Probiotec articulated in the 2017 Dispute proceedings.

1. On the experience of Mr Dudley and other employees, that of only receiving percentage wage increases during their employment, that may be explained by their having commenced employment in the period after the 2014 Agreement ceased to operate. Their lack of knowledge should be given no weight. As also previously noted, the 2018 Agreement only provided for specified percentage wage increases to be applied annually which may be contrasted with the preceding agreements and the 2022 Agreement.

1. Probiotec also refer to the bargaining conduct of the parties. Specifically, that it put a wage offer to the UWU on 2 September 2022 which included the now disputed wage adjustment methodology and then explained the proposed term at the 9 September 2022 meeting. It put a further offer in the same terms on 13 September 2022 despite claims by Mr Dudley that he categorically rejected the proposed methodology in the 9 September 2022 meeting and then similar wording appeared in the final agreement. The methodology of the wage increase mechanism was also according to Probiotec clearly explained to employees in meetings held for the purpose of explaining the 2022 Agreement, that explanation being consistent with the explanation provided by Mr Stringer at the 9 September 2022 meeting.

1. Probiotec reject the UWU’s submission that the Award classifications are irrelevant as the Award rates of pay continue to be relevant for the purpose of calculating and applying wage increases to Agreement rates of pay. It is further contended that the Award rates of pay change annually by dollar ‘amounts,’ not by the prescription of percentage changes.

Consideration

1. In resolving the dispute over the construction of clause 15.2(e) of the 2022 Agreement it is necessary for me to apply the normal principles of construction of enterprise agreement terms. Those principles are well established and were considered at length in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Ltd[45] (Berri) and need not be re-stated, save for summarising what I understand the key principles enunciated by the Full Bench in that matter to be;

·     construction of the disputed clause begins with a consideration of the ordinary meaning of the relevant words, having regard to its context and purpose;

·     it is first necessary to determine whether the agreement has a plain meaning or if it is ambiguous;

·     if the agreement has a plain meaning, evidence of surrounding circumstances will not be admitted to contradict the plain meaning;

·     if the language is ambiguous or susceptible of more than one meaning, evidence of surrounding circumstances will be admissible to aid interpretation;

·     evidence of surrounding circumstances is limited to that establishing objective background facts which were known to both parties and may include;

§  evidence of prior negotiations;

§  notorious facts known to both parties; and

§  evidence of matters in common contemplation and constituting a common assumption;

·     admissible extrinsic material may not be used to disregard or re-write the provision to give effect to an externally derived conception of what the parties’ intention or purpose was; and

·     in some circumstances, subsequent conduct may be relevant.[46]

1. More recently, the Full Court of the Federal Court set out the relevant principles applicable to the interpretation of an enterprise agreement in James Cook University v Ridd[47] (Ridd) when they said as follows;

   “[65]      The relevant principles applicable to the interpretation of an enterprise agreement may be stated as follows:

   (i)   The starting point is the ordinary meaning of the words, read as a whole and in context (City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362, 378; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 [53]; WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 [197]).

   (ii)A purposive approach is preferred to a narrow or pedantic approach — the framers of such documents were likely to be of a “practical bent of mind” (Kucks v CSR Limited [1996] 66 IR 182, 184; Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 [16]; WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 [197]). The interpretation “turns upon the language of the particular agreement, understood in the light of its industrial context and purpose” (Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10; 222 CLR 241 [2]).

   (iii)   Context is not confined to the words of the instrument surrounding the expression to be construed (City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 [53]). It may extend to “… the entire document of which it is a part, or to other documents with which there is an association” (Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511, 518; Australian Municipal, Administrative, Clerical and Services Union v Treasurer of the Commonwealth of Australia [1998] FCA 249; 82 FCR 175, 178).

   (iv)   Context may include “… ideas that gave rise to an expression in a document from which it has been taken” (Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511, 518).

   (v) Recourse may be had to the history of a particular clause “Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form…” (Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511, 518).

   (vi)   A generous construction is preferred over a strictly literal approach (Geo A Bond and Co Ltd (in liq) v McKenzie [1929] AR 499, 503-4; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 [57]), but “Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties” (City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362, 380).

   (vii)     Words are not to be interpreted in a vacuum divorced from industrial realities but in the light of the customs and working conditions of the particular industry (City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362, 378-9; WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 [197]).”

2. The competing positions advanced by the UWU and Probiotec may be shortly summarised in the context of determining the required increase to wage rates under the 2022 Agreement from 1 July 2023. The UWU contend that the amount employees are entitled to receive arising from the AWR 2023 Decision is 5.75% applied to their actual rate of pay. That is because the amount (5.75%) exceeds the guaranteed minimum increase of 3% provided for in clause 15.2(e). Probiotec argue that employees are entitled to receive a dollar amount increase to their actual base rate of pay equivalent to the dollar increase applied to the relevant Award classification that aligns to an employee’s classification under the 2022 Agreement. A consequence of the competing arguments is that under the UWU’s construction, there would be a common increase of a percentage amount, that being 5.75%. Under Probiotec’s construction there would be different dollar amounts applied according to employees’ classification levels under the 2022 Agreement and which Award classification those agreement classifications aligned to.

1. The UWU contend that the word amount has a plain ordinary meaning based on the meanings attributed to the word in the Macquarie dictionary. I readily accept that shorn of context the term amount can have different meanings including that it can refer to both a percentage and dollar amount. While the ordinary meaning of the words is important, it is however necessary to construe the clause having regard to its purpose and read in context. In considering the context it is necessary to consider the clause both within the 2022 Agreement and also as the Federal Court observed in Ridd, more broadly.

1. The disputed clause 15.2(e) is found in Part 4, clause 15 of the 2022 Agreement which is headed ‘Minimum Wages and Related Matters’. Clause 15 initially refers to the classification descriptors that are set out in Schedule A to the Agreement. Relevantly, neither clause 15 or Schedule A refers to the Award classifications or provides any indication as to how the Agreement classifications align with the Award classifications for the purpose of wage rate adjustments that Probiotec argue is required under clause 15.2(e).

1. Clause 15.1 then deals with casual employee rates of pay and provides that casual employees will receive rates of pay no less than the Award. It then sets out a table with minimum casual wage rates that will apply from 1 July 2022 and goes on to set out the wage increase adjustment mechanism as follows; ‘A casual Employee’s wage rate will increase in accordance with the Fair Work Commission’s annual wage review as applicable from 1 July 2023, 1 July 2024 and 1 July 2025.’ No reference is made to what amount casual employees’ wage rates will increase save for reference to the annual wage review decision. It necessarily follows that regardless of whether the minimum rates in the Award are increased by a specified percentage or a flat dollar figure, casual employees engaged under the 2022 Agreement would receive the increase determined by the Commission. From 1 July 2023 casual employees would have been entitled to receive a 5.75% increase ‘in accordance with the…annual wage review’.

1. Clause 15.2 then sets out the remuneration arrangements for full time employees by firstly stating at clause 15.2(a) that after a successful vote, employees employed before the vote and who remained employed when the 2022 Agreement commences operation are entitled to receive a 4.6% increase applied to the hourly rate of pay they were in receipt of on 30 June 2022. Clause 15.2(b) then specifies minimum classification rates for full time employees at Grades 2, 3 & 4 that operate from 1 July 2022 which clause 15.2(a) is subject to. Clauses 15.2(c) & (d) then deal with accrued RDOs which are not relevant to the present matter.

1. Turning to the disputed sub-clause 15.2(e), it states as follows;

(e) On the first full pay period on or after 1 July 2023, 1 July 2024 and 1 July 2025 all Employees other than casual Employees will be guaranteed a minimum wage increase of the greater of 3%, or the amount set by the Fair Work Commission annual wage review on their standard hourly rate as of 30 June 2023, 30 June 2024, and 30 June 2025 (not the Award rate).

1. Clause 15.3 then includes a table that includes the ‘minimum hourly rate on commencement of employment’ for each of the 4 classifications that would apply to full-time employees that commence employment after the first full pay period following a successful ballot for the 2022 Agreement. The rates provided are, in respect of some classifications, less than the rates set out in clause 15.2(b) which applied to full time employees employed at the time of the ballot. Clause 15.4 then provides for performance based wage increases that may, at Probiotec’s discretion, be paid to employees in addition to the guaranteed minimum wage increases. As a consequence of clause 15.4, employees may over time achieve actual rates of pay that are in excess of the minimum rates of pay provided by the 2022 Agreement.

1. Clause 15.2(e) requires the application of either the 3% or higher amount determined by the Commission in its annual wage review to employees’ ‘standard hourly rate’. While not defined in the 2022 Agreement, the term ‘standard hourly rate’ has a different meaning to the ‘minimum hourly rate’ set out in clause 15.2 or ‘minimum hourly rate on commencement of employment’ at clause 15.3. It is clear that an employee’s actual rate of pay may be higher than either the ‘minimum hourly rate’ or ‘minimum hourly rate on commencement of employment’ depending on performance based increases they may have received. In these circumstances, the meaning of the term ‘standard hourly rate’ is taken to be the actual hourly rate of pay an employee is in receipt of. This of course may be equivalent to the either the ‘minimum hourly rate’ provided for in clause 15.2 or the ‘minimum hourly rate on commencement of employment’ under clause 15.3 in the case of a new employee. Alternatively, it may be a significantly higher rate in the case of an experienced employee that has received performance based pay increases during their employment with Probiotec. That the increase is to be applied to an employee’s actual rate of pay is reinforced by the clarifying bracketed phrase ‘(not the Award rate)’ that appears at the end of the clause.

1. I discern from the foregoing that the wage increase mechanism provided by the 2022 Agreement has in part a purpose of maintaining the wage rate relativity of employees to the Award minimum rates of pay and also between employees. It does so by requiring the application of wage increases to the actual rates of pay that employees are in receipt of, thus preserving the wage rate relativity of employees in circumstances where some employees may be on higher (than the 2022 Agreement) rates of pay due to the effects of additional performance based wage increases. It is also the case that clause 15 provides for an increase to actual rates by a specified percentage increase in the case of both the first increase of 4.6% payable under the agreement on 1 July 2022 and in subsequent years by 3% where the Commission’s annual wage review does not exceed 3%.

1. It follows from the foregoing that the increase to be applied to employees’ rates of pay in 2023, 2024 & 2025 will be either 3% or higher amount as determined by the Commission in its annual wage review, with such amount to be applied on employees’ actual rates of pay. As the increase is to be applied to employees’ actual rates of pay, a dollar amount increase as contended by Probiotec would result in the preservation of dollar wage rate relativities of employees’ actual rates of pay both with the Award and between employees. The UWU’s construction would maintain percentage relativities with both the Award rates of pay and between employees in circumstances where employees may be on different rates of pay, even if classified at the same level under the 2022 Agreement. Significantly, the percentage relativity maintenance is delivered by the default wage adjustment mechanism of applying the 3% increase guaranteed by clause 15.2(e) and also under clause 15.1 which provided for a 4.6% increase from 1 July 2022. In both of these circumstances, the percentage relativity between employees is preserved.

1. As stated, clause 15(2)(e) has the purpose in part of ensuring that employees’ wage rates do not fall backwards relative to the Award in circumstances where the Commission’s annual wage review decision results in an increase greater than 3%. Both constructions of the clause would seem to achieve that purpose. Probiotec’s construction would achieve the preservation of the dollar margin of an employee’s actual rate of pay above the relevant Award rate while UWU’s construction would preserve the relative percentage margin of an employee’s rate of pay above the equivalent award rate of pay in circumstances where the Commission’s annual wage review determined a percentage increase to the National Minimum Wage (NMW) and minimum award rates.

1. The UWU’s construction of the clause can however be read more harmoniously with the purpose I have described as it would result in a consistent approach to the maintenance of relativities. That is, in circumstances where the Commission’s annual wage review provides for a percentage increase to the NMW and award minimum rates of above 3%, employees would receive that percentage increase applied to their actual rates. This was the case with the 4.6% increase paid on 1 July 2022 and would be the case if employees’ rates of pay were increased by the default 3% provided for at clause 15.2(e). I agree with the UWU submission that the absence of express language in the clause tells against the argument that an FWC annual wage review percentage pay rise would be applied differently to the percentage increase applied in the first year of the agreement and as would be otherwise provided under clause 15.2(e) if the annual wage review decision provided for less than 3%, that is the default 3% increase would apply.

1. Turning next to Probiotec’s submission that clause 15.2(e) has a plain and ordinary meaning in that amount where it appears in the clause means a dollar amount increase determined by the Commission in its annual wage review. That construction cannot be reconciled with a plain reading of the clause in my view. That is because firstly, the construction would lead to different amounts being applied to employees’ wage rates depending on their classification levels in circumstances where the annual wage review produces a percentage increase above 3%. That is despite the clause requiring an increase of an amount, not amounts as would be required under Probiotec’s construction. Secondly, Probiotec’s construction is silent on how the Commission’s annual wage review translates to dollar amount increases to employees’ actual rates of pay depending on their classification.

1. To construe the clause as contended by Probiotec would require one to read words into the clause that are simply not present. Specifically, it would require one to read words into the clause to the following effect; that employees would be entitled to receive the greater of either 3% or the dollar amount an employee’s relevant award classification was increased by as a consequence of the Fair Work Commission annual wage review, such increase to be applied on an employee’s actual rate of rate. Alternatively, the clause could remain as is and be supplemented by a clarifying note to make clear that the dollar wage increase amount an employee would receive under clause 15.2(e) was to be based on the relevant award classification minimum wage rate increase. Self-evidently, words of clarification or examples are not included in the clause.

1. A further difficulty is that the Agreement as earlier noted is entirely silent on how agreement classifications align to Award classifications for the purpose of any wage increases that may flow from an annual wage review decision that provides for a percentage increase. There is no warrant to read into the clause the words that would be necessary to give effect to Probiotec’s argued construction of clause 15.2(e). Probiotec’s contention that the Award classifications are relevant must therefore be rejected because of the absence of any reference to the Award classifications, either in clause 15.1, Schedule A or clause 15.2(e). Even if the Agreement classifications directly align to classification levels in the Award, it takes Probiotec’s submission no further because of the absence of any reference in clause 15 or elsewhere in the 2022 Agreement to the relevance of the Award classifications for the purpose of applying wage increases under the 2022 Agreement.

1. A further important contextual consideration is that of the Fair Work Commission’s annual wage review to which clause 15.2(e) explicitly refers. The annual wage review was stated by the Full Bench in the Annual Wage Review 2023-24 decision[48] (the AWR 2024 Decision) to have two main functions. Firstly, to review and make the NMW Order and secondly and more significantly, to review modern award minimum wage rates and consider whether they should be adjusted[49]. The AWR 2024 Decision resulted in an increase to the NMW and all modern award minimum wages by 3.75%. This increase followed the 5.75% NMW and minimum award rate increase determined by the Commission in the Annual Wage Review 2022–23[50] decision (AWR 2023 Decision).

1. The above-referred approach of the Commission, that of increasing the NMW and minimum award rates of pay by a specified percentage, is consistent with the approach adopted by the Commission in each annual wage review since 2011. The only minor exception to that approach is seen in the Annual Wage Review 2021-22 decision[51] (AWR 2022 Decision) where the Commission increased the NMW by 4.6% subject to applying a minimum increase to adult award classification of $40 per week. This had the practical effect of increasing the NMW by $40 and increasing minimum award rates of pay above $869.60 per week by 4.6%.

1. The Commission’s approach to adjusting the NMW and minimum award rates of pay in the period since 2011 by increasing the NMW and award minimum rates by a specified percentage stands in contrast to the approach taken in the period between 2000 and 2011. In that 10 year period the NMW and minimum award rates of pay were consistently increased by a flat dollar figure or by ‘stepped’ dollar amounts depending on the level of the minimum award rates. For example, in the 2008 annual wage review the NMW and minimum award rates were increased by $21.66 per week[52]. In the 2007 annual wage review, the NMW and award rates of pay up to $700 per week were increased by $10.26 per week, while award rates above $700 per week were increased by $5.32 per week[53]. The latter ‘stepped’ approach was similarly applied in 2001[54] and 2003[55] while in each of the other years in that period a flat dollar figure increase was applied to both the NMW and minimum award rates of pay.

1. What the above serves to show is that over the past 25 years there has not been a single consistent approach applied by the Commission in adjusting the NMW and minimum award rates of pay. If one goes back even further to the extent that it may be relevant, it is clear that the Commission in its various forms has applied a mix of percentage and flat dollar increases to the NMW and minimum award rates of pay[56].

1. Dealing briefly with Probiotec’s submission that in circumstances where the Commission determines to increase minimum award rates by a percentage increase, that the minimum wage rates in modern awards are not increased by a percentage amount but rather by a dollar amount, the submission has no merit. Self-evidently, annual wage reviews result in dollar amount increases to modern award rates. The key point however is that the dollar amount increases arise from the application of the specified percentage increase that may have been determined by the Commission and that different amounts will then flow to the various award classifications, not a single dollar amount.

1. Turning then to how the Commission has described the increase to be applied to the NMW and minimum award rates it can be seen in the AWR 2023 Decision that the Commission used the word amount when referring to the percentage increase. See the following for example;

“[9] All modern award minimum wage rates will be increased by 5.75 per cent effective from 1 July 2023. In determining this amount, we have placed significant weight on the impact of the current rate of inflation on the ability of modern award-reliant employees……”

and further in the decision;

“[117] A consequence of the disproportionality of women in the modern award-reliant workforce is that, as found in the 2015-16 Review decision103 (see paragraph [43] above), if Review decisions increase modern award minimum wage rates of pay relative to median wage rates produced by the labour market, then this is likely to reduce the gender pay gap to some degree. In this Review, the consideration in s 284(1)(aa) concerning the need to achieve gender equality including by, relevantly, addressing gender pay gaps would therefore weigh in favour of increasing modern award minimum wage rates by a percentage amount in excess of the WPI.”

and further on in the decision;

“[178] Taking into account and balancing the matters we are required to take into account under ss 134(1)166 and 284(1), the object of the FW Act in s 3, and the rate of the NMW we have set, we have decided that all minimum wage rates in modern awards shall be increased by 5.75 per cent. Consistent with s 286, the variations to modern awards to increase minimum wage rates by this amount will come into operation on 1 July 2023.……”[57]

1. It is also the case however that the Full Bench in its decision also used the term amount to describe dollar figures rather than a percentage. See for example where the Full Bench said as follows;

   “[108] …………. A comprehensive review of the NMW should be undertaken by reference to the budget standards research and other relevant material to arrive at a NMW amount which is set having proper regard to the needs of the low paid and the other considerations in s 284. That is beyond the scope of the current Review, but we discuss later the interim measure we intend to take in this Review having regard to all the mandatory considerations in the minimum wages objective.”[58]

2. The above demonstrates that the Commission has used the term amount in an interchangeable manner to describe both percentage and dollar figures. This lends weight to the UWU’s submission that the term amount cannot be read exclusively as a dollar figure but may also be used to describe a percentage figure. The fact that the Commission uses the word in an interchangeable manner is relevant as the outcomes of the annual wage review decisions of the Commission for 2023, 2024 and 2025 are specifically referenced in clause 15.2(e). Contextually, this tells in favour of the construction advanced by the UWU.

1. From the foregoing I find that read in context and having regard to its purpose, the word amount where it appears in clause 15.2(e) has a plain and ordinary meaning. The word amount can be read so as to allow for a dollar amount increase or as a percentage increase in accordance with the Commission’s annual wage review. In the circumstances of the AWR 2023 Decision for example, it requires Probiotec to increase employees’ actual wage rates by the percentage amount determined by the Commission in its annual wage review, that of 5.75% as that percentage exceeds the guaranteed minimum increase of 3%.

1. Having found that clause 15.2(e) has a plain and ordinary meaning and is not ambiguous it follows that evidence going to the surrounding circumstances cannot be admitted to contradict the plain and ordinary meaning of the clause. I do however for the sake of completeness make the following observations about the surrounding circumstances on which Probiotec seeks to rely.

1. Probiotec relies on the history of the clause and its historical practice in applying the clause in calculating pay increases. The clause linking pay increases under Probiotec agreements to the annual wage review appeared in the 2009 and 2014 Agreements in essentially the same terms, was removed from the 2018 Agreement and re-appeared in a different form in the 2022 Agreement. The material filed by Probiotec on the application of the 2009 and 2014 Agreement confirms that in passing on wage increases under those two earlier agreements, it applied either the guaranteed minimum percentage wage increase provided by those agreements or the NMW increase determined by the Commission, whichever was greater. That history of the clause and wage increases applied pursuant to the clauses in the 2009 and 2014 Agreement does not however assist Probiotec. That is because the language of the clause in the 2009 and 2014 Agreements is significantly different to the terms of the disputed clause in the 2022 Agreement. That can be seen in the clause from the 2014 Agreement where it says;

“During the nominal life of this Agreement, employees’ wages are guaranteed to increase by the greater of 2.25% or the amount awarded as a federal minimum wage increase by the Fair Work Commission”

1. The clauses in the 2009 and 2014 Agreements link the increase that may be passed on to employees under the agreements to the ‘federal minimum wage’, a term which has an accepted and specific meaning and as explained above at [65] is dealt with by the Commission in its annual wage review along with its review and adjustment of minimum award rates of pay. The wage increases under those two earlier agreements were clearly linked to what is now referred to in the Commission’s annual wage review decision as the NMW. As summarised above at [36], Probiotec’s practice in adjusting wages under the 2009 and 2014 Agreements was generally to apply either the NMW increase as a flat dollar increase to employee rates of pay or by at least the guaranteed minimum percentage increase, whichever was greater. In any given year this resulted in some employees getting a flat increase to their rates of pay that equated to the flat NMW increase determined by the Commission while other employees on higher rates of pay received at least the guaranteed minimum percentage increase.

1. The reliance of Probiotec on the 2009 and 2014 Agreements and the 2017 Dispute is misplaced in circumstances where the language in the 2009 and 2014 Agreements in referring to the ‘federal minimum wage’ may be contrasted with the 2022 Agreement which simply refers to the ‘amount set by the Fair Work Commission annual wage review’. Plainly, the wage increase clause in those two earlier agreements expressed the link to the annual wage review in different terms to the 2022 Agreement. It follows that reliance cannot be placed on either of those earlier agreements, Probiotec’s practice in implementing wage increases under those agreements or on the 2017 Dispute. It follows that even if it were found that the prior agreements and practice ought to be taken as notorious facts of which knowledge is assumed and be taken into account for the purpose of construing the clause, it still does not assist Probiotec because of the significant change made to the clause that now appears in the 2022 Agreement.

1. Turning finally to the bargaining conduct of the parties and the explanation of the agreement terms to employees, it must be said that the recollection of different witnesses on what was stated during bargaining and what was explained to employees varied on significant points. For example, Mr Stringer was adamant that he explained the operation of the proposed clause in the 9 September 2022 meeting which Mr Dudley confirmed. Mr Dudley says however that he categorically rejected that explanation in the meeting, while Mr Stringer had no recollection of Mr Dudley’s opposition to the clause. It is noted that the UWU’s original claim was for percentage increases to be applied to employees actual rates of pay throughout the term of the agreement and there is no evidence that prior to the 9 September 2022 meeting that the UWU had relented on that claim. For the UWU to have mutely accepted Mr Stringer’s explanation in these circumstances seems unlikely and lends credibility to Mr Dudley’s version of events at the 9 September 2022 meeting. I am more inclined to accept that Mr Dudley resisted the methodology that was proposed and explained by Mr Stringer.

1. What was not satisfactorily explained however by the UWU was why if they opposed the draft clause as provided to them on 2 September 2022 and then as explained by Mr Stringer on 9 September 2022 meeting, why they did not object or seek amendments to the clause when it was presented to them in essentially the same terms on 13 September 2022. The fact that they did not challenge or reject the clause at that point assists explain Probiotec’s belief that the clause had been accepted as explained by Mr Stringer in the 9 September 2022 meeting.

1. Turning to the meetings held to explain the terms of the 2022 Agreement to employees, the recollection of witnesses as to what was said at the employee meetings about the wage increase methodology also varied. Mr Nagulapalli recalled that in explaining the wage increase mechanism in clause 15.2(e) Mr Stringer told employees ‘you will have the best of both worlds’ but could not recall a more detailed explanation or a worked example. Mr Dudley and Mr Talevski also gave evidence that they could not recall an explanation in the terms claimed by Mr Stringer including a worked example. As to the evidence of Probiotec’s witnesses, Mr Stringer was adamant he gave an explanation with a worked example although he could not recall the actual figures. Mr Cutajar’s recollection supported Mr Stringer’s evidence however Ms Omeragic’s evidence was less impressive for reasons of her vagueness and lack of clarity around the agreement classification structure and how it aligned to Award classifications.

1. Put at its highest, Probiotec’s evidence which I am inclined to accept indicates that Mr Stringer gave a brief example of how the wage increase clause would operate in circumstances where the Commission’s annual wage review led to an increase greater than the guaranteed 3% increase under the agreement. There was no detailed explanation to the effect that employees could expect to receive different dollar amount increases depending on their classification level or how their classifications aligned with the Award classifications for the purpose of calculating wage increases under the agreement. While the question of whether the agreement was genuinely agreed is not before me, the evidence reveals a wholly inadequate explanation of a new and significant term in the 2022 Agreement. The quality of the explanation also raises serious doubts about whether UWU representatives understood and agreed to the term as explained by Mr Stringer.

1. Based on the above I am not persuaded that Mr Stringer’s view of what was offered and accepted is more than his subjective opinion of the offer and does not rise to the level of objective evidence of a common intention. However, as earlier stated, even if it were to rise to the level of evidencing a common intention, that could not displace what I have found to be the plain and ordinary meaning of the clause.

1. I have earlier found that the word amount where it appears in clause 15.2(e) has a plain and ordinary meaning, in that it provides for a percentage increase to employees’ actual rates of pay in circumstances where the Commission in its annual wage review determines a percentage increase greater than the guaranteed minimum 3% wage increase. A purpose of the clause is to preserve the relativity of employees’ rates of pay with the Award and with each other in circumstances where the Commission determines an increase that is greater than the guaranteed 3% increase. Where the Commission decides through the annual wage review to increase award rates of pay by a specified percentage amount, the UWU’s construction would meet this purpose in a more harmonious manner given it would maintain wage relativities consistent with the application of the 4.6% increase provided by clause 15.2(a) and also with the guaranteed minimum 3% increase under 15.2(a).

1. I am fortified in my view on the proper construction of clause 15.2(e) by the Commission’s historical approach to its annual wage review which has delivered both flat and percentage increases to the NMW and minimum award rates of pay and has adopted both approaches at various times during the period from 2000-2022. I also note that the Commission uses the term amount in in its annual wage review decision in referring interchangeably to both dollar and percentage amounts. The Commission’s approach provides an important context in circumstances where clause 15.2(e) refers specifically to the Commission’s annual wage review.

1. The alternative construction of the clause advanced by Probiotec requires words to be read into the clause for which there is no warrant. As regards the surrounding circumstances advanced and relied on by Probiotec, these are not to be admitted to displace the plain and ordinary meaning of the clause that I have found. In any case those surrounding circumstances do not contradict the plain and ordinary meaning of the clause I have found for the reasons set out above.

Conclusion

1. It follows from the foregoing that the answers to the questions posed for determination are as follows;

“Does clause 15.2(e) of the Probiotec Pharma Pty Ltd Enterprise Agreement 2022 (Agreement) require the application of wage rate increases as:

(b)a percentage increase to the actual hourly rates of pay of the relevant employee equivalent to the percentage increase ordered in the Annual Wage Review; or

The answer is “Yes.”

(c)a dollar amount applied to the actual hourly rate of the relevant employee equivalent to the Commission’s wage increases applied to the relevant classification of the employee as per the Pharmaceutical Industry Award 2020 (as based on the Annual Wage Review).

The answer is “No” in circumstances where the Commission orders a percentage increase in the annual wage review.

1. The matter is determined accordingly.

DEPUTY PRESIDENT

Appearances:

A Sultan for the Applicant.
N Duggal for the Respondent.

Hearing details:

2024.
Melbourne:
July 23.

Final written submissions:

Applicant, 14 August 2024.
Respondent, 14 August 2024.

[1]AE518520.

[2] MA000069.

[3] Exhibit R3, Witness Statement of Jared Stringer, dated 11 July 2024, Annexure JS-1, Probiotec Pharma Collective Agreement 2009, clause 14

[4] Exhibit R3, Annexure JS-2, Probiotec Pharma Pty Ltd Enterprise Agreement 2014, clause 14

[5] Exhibit R3, Annexure JS-4, Probiotec Pharma Pty Ltd Enterprise Agreement 2018, clause 15.3

[6] UWU Form F10, Annexure 4, Probiotec Pharma Pty Ltd Enterprise Agreement 2022, clause 15.2

[7] Krajina, Ivka v Probiotec Pty Ltd T/A Probiotec, C2017/5717

[8] Exhibit R3, at [20]

[9] Exhibit R3, Annexure JS-7

[10] Exhibit R3, Annexure JS-9, Email from Annalinde Nickisch, dated 15 July 2024, titled ‘Probiotec Pharma EBA Offer’ 

[11] Exhibit A2, Witness Statement of Surya Nagulapalli, at [4]-[5]

[12] Exhibit R3, Annexure JS-10, Email from Surya Nagulapalli to Oriana Kleyman, dated 4 August 2022, titled ‘RE: LOC for PROBIOTEC PHARMA PTY LTD’ 

[13] Exhibit R3, Annexure JS-11, Email from Oriana Kleyman to Surya Nagulapalli, dated 2 September 2022, titled ‘RE: ENTERPISE NEGOTIATIONS (EMPLOYER OFFER)’

[14] Exhibit R3, at [39]

[15] Exhibit R3, at [41]

[16] Exhibit A5, Second Witness Statement of Stephen Dudley, dated 18 July 2024, at [7]-[12]

[17] Exhibit R3, Annexure JS-13, Email from Surya Nagulapalli to Jared Stringer and Oriana Kleyman, dated 13 September 2022, titled ‘RE: LOC for PROBIOTEC PHARMA PTY LTD’

[18] Exhibit R3, Annexure JS-14, Email from Jared Stringer to Surya Nagulapalli, dated 13 September 2022, titled ‘RE: LOC for PROBIOTEC PHARMA PTY LTD’

[19] Transcript at PN269-PN281

[20] Ibid at PN285

[21] Transcript at PN546-PN555

[22] Transcript at PN613-PN618

[23] Transcript at PN934, PN945-PN949

[24] Exhibit R3, Annexure JS-15, Email from Surya Nagulapalli to Jared Stringer, dated 14 September 2022, titled ‘RE: LOC for PROBIOTEC PHARMA PTY LTD’

[25] Exhibit R3, Annexure JS-16, Emails exchanged between Surya Nagulapalli and Jared Stringer, dated 15 September 2022

[26] Exhibit A4, Witness Statement of Stephen Dudley, Annexure SD-1, Probiotec EBA Presentation

[27] Exhibit R3, at [48]-[49]

[28] Exhibit R3, at [50]-[51]

[29] Exhibit R1, Witness Statement of Elma Omeragic, dated 19 July 2024, at [3]-[6], Exhibit R2, Witness Statement of Charlie Cutajar, dated 19 July 2024, at [5]-[7]

[30] Transcript at PN802-PN818

[31] Transcript at PN828-PN849

[32] Transcript at PN311-PN315

[33] Exhibit A6, Witness Statement of Pande Talevski, dated 18 July 2022, at [13]-[14]

[34] Transcript at PN703-PN721, PN747-PN751

[35] Exhibit A5, at [12]-[13]

[36] Transcript at PN470, PN604

[37] Transcript at PN411-PN418, PN644-PN652

[38] Transcript at PN1005-PN1007

[39] Transcript at PN1042-PN1058, PN1078

[40] [2018] FCA 1135

[41] [2022] FWCFB 3500

[42] Ibid, at [184]

[43] [2014] FCA 829

[44] (2006) 151 FCR 513

[45] [2017] FWCFB 3005

[46] Ibid at [114]

[47] [2020] FCAFC 123

[48] [2024] FWCFB 3500

[49] Ibid at [2]-[3]

[50] [2023] FWCFB 3500

[51] [2022] FWCFB 113

[52] (2008) 172 IR 119

[53] (2007) 164 IR 1

[54] (2001) 104 IR 314

[55] (2003) 121 IR 367

[56] See the summary provided in ‘The history of the Australian Minimum Wage,’ The Hon. Reg Hamilton, at pp 68-77

[57] [2023] FWCFB 3500 at [9], [117], [178]

[58] Ibid at [108]

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