William Moffat v Air Liquide Australia Limited

[2017] FWC 2437

[2017] FWC 2437

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

William Moffat
v
Air Liquide Australia Limited
(C2016/7025)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 8 MAY 2017

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)].

Introduction

[1] On 29 November 2016 Mr William Moffat (the Applicant) lodged an application for the Fair Work Commission (the Commission) to deal with a dispute in accordance with the dispute settlement procedure in an agreement pursuant to s.739 of the Fair Work Act 2009 (the Act).

[2] The application was lodged on the Applicant’s behalf by his union The Australian Workers’ Union (AWU).

[3] The respondent employer is Air Liquide Australia Pty Ltd (the Respondent).

[4] The relevant agreement is the Air Liquide Australia Limited / Botany Plant Enterprise Agreement 2012[AE899128] (the Agreement). The Agreement applies to the Respondent’s industrial gas plant at Botany in southern Sydney.

[5] The Applicant covers the AWU. Its nominal expiry date was 2 September 2015. The Agreement is expressed to incorporate the Manufacturing and Associated Industries and Occupations Award 2010 (MA000010) (the Award).

[6] The dispute arose from the Respondent’s announcement in September 2016 to implement redundancies. This involved four people, including the Applicant who had some 30 years’ service, having commenced on 19 January 1987.

[7] The Applicant was paid an annualised salary of $102,484 in accordance with the Agreement for a 42 hour per week roster. The Applicant received a pay-out estimate from the Respondent in early October. Two weeks later he received a revised estimate which reduced the redundancy component by around $27,000.

Commission Proceedings

[8] The matter was dealt with in conference on 21 December. The Applicant was represented by Mr S. Bean and the Respondent by Mr R. Olsen.

[9] The Respondent’s explanation for the difference in the two estimates was that the first had been the result of a payroll error. The first involved division of the salary under the Agreement by 1976 hours (38 hours x 52) to obtain the hourly rate. The second involved a divisor of 2,560 hours (being the hours under the Agreement) which gives a lower (and correct, according to the Respondent) hourly rate. There was no dispute that the redundancy payment under the Agreement was 60 weeks’ pay.

[10] The hourly rate dispute also affected the annual leave and long service leave calculation but the Respondent said it would waive this error. No agreement could be reached on the redundancy pay issue.

[11] Accordingly, directions were issued for the filing of submissions and evidence and the matter set down for hearing.

[12] Mr G. Beard now represented the AWU and Ms F. Rodriguez of the AIGroup represented the Respondent.

[13] Unfortunately the hearing on 7 March could not proceed to finality because there was a disagreement as to what issues were in dispute.

[14] Further submissions were lodged and the substantive hearing took place on 22 March 2017.

[15] Both parties relied on written and oral submissions. The Applicant provided a witness statement, as did Ms M. Dudgeon, the Respondent’s Production Manager. Neither was required for cross-examination.

Relevant Agreement Clauses

[16] The dispute settlement clause provides:

“18. DISPUTE RESOLUTION PROCEDURE

18.1 In the event of a dispute about a matter arising under the terms of this Agreement, or the National Employment Standards (except for disputes related to reasonable grounds for refusal of requests for flexible working arrangements or additional unpaid parental leave), the following procedure shall apply:

18.2 A party to the dispute may appoint another person, organisation or association to accompany or represent them in relation to the dispute.

18.3 In the first instance the parties to the dispute will attempt to resolve the matter at the workplace by discussions between the employee/s concerned and the relevant supervisor. If discussions do not resolve the dispute, discussions should be held between the employee’s representative and the local site management and/or company nominee.

18.4 If a dispute in relation to a matter arising under the terms of this Agreement is unable to be resolved at the workplace, and the above step for resolving the dispute has been taken, the dispute may be referred, by either party, to Fair Work Australia (FWA) for mediation and/or conciliation.

18.5 If the dispute is not resolved by mediation and/or conciliation, the parties can elect to have the dispute arbitrated by FWA. In such circumstances FWA may exercise the procedural powers in relation to hearings, witnesses, evidence and submissions, which are necessary to make the arbitration effective. The decision of FWA will bind the parties, subject to either party exercising the right to appeal against the decision to a Full Bench.

18.6 While the parties are attempting to resolve the matter in dispute, the employee/s will continue to work in accordance with this Agreement and their respective contracts of employment unless an employee/s has a reasonable concern about an imminent risk to his or her health and safety. Subject to the relevant provisions of any State or Territory, occupational health and safety law, even if the employee/s has a reasonable concern about an imminent risk to his or her health or safety, the employee/s must not unreasonably fail to comply with a direction by the company to perform other available work, whether at the same enterprise or another enterprise, that is safe and appropriate for the employee/s to perform.”

[17] I note also that the following undertaking was given by the Respondent upon certification:

“4. Concerning the operation of sub-clause 18.5, of the Dispute Resolution Procedure, the term ‘the parties can elect to have the dispute arbitrated by FWA’, is clarified, that the meaning of this term is that either party to the dispute can request, with or without the consent of the other party, that FWA arbitrate the unresolved dispute.”

[18] The other relevant clauses are:

“7.4 The term "Annualised Salary" incorporates a 38 hour week average plus an extra four (4) hours overtime built in. It also includes an additional 376 hours per annum to provide for short term (up to five consecutive shifts) sick leave and annual leave coverage. The additional 376 hours will be recorded in two six month periods each consisting of 188 hours.

10. HOURS OF WORK

10.1 The hours of work will be determined mutually between the parties, taking due account of the needs of the business provided that a minimum average of 2,184 hours plus 376 hours overtime per annum will be worked each calendar year.

• Rostered hours – 2,184 hours per annum.



• Overtime built in - 188 hours between 1 Mar and 31 Aug.



• -188 hours between 1 Sep and 28 Feb.

- TOTAL HOURS 2560 HOURS PER ANNUM

10.2 The work group will continue to maintain their own rosters and will cover any absence in their work group ensuring an agreed complement to safely meet the needs of the business and the workforce.

10.3 Overtime is built into the salary package for each work group, and as such will be worked as required by the business and managed by the work group. The overtime mentioned is also to cover absences due to short-term sick leave and annual leave. In the event that absences due to sick leave extend beyond five consecutive shifts, overtime will be paid for each consecutive shift after and including the sixth shift.

10.4 Shift workers:

10.4.1 All continuous and seven day shift workers are also expected and required to work other additional time outside their normal shift roster, as and when necessary, to fully and effectively carry out their whole job on a day to day basis. Such additional time will not attract any payment and will be undertaken consistent with the guideline set out in clause 7 titled “Definition” – Annualised Salary.

10.4.2 The hourly rate as specified in clause 20 will apply when employees are required to:

• attend additional training,



• attend call-outs,



• or work overtime after they have exceeded the built in component of 188 hours per six month period,



• cover for employees on jury duty.

10.5 Overtime payments will be made for any overtime that is in excess of 188 hours between September 1 and February 28 and again where overtime exceeds 188 hours between March 1 and August 31, to commence from September 1 2003.

10.6 No changes to the current manning levels of ten operators are planned and, if there were to be, would only be made following consultation with the Leading Hand Operators and Operators.

20.2 Annualised salaries include payment for built in overtime, public holidays, shift work and allowances, except the meal allowance and the overtime and callout allowance.

. . .

29. REDUNDANCY

29.1 Other than as specified in this clause the entitlement to Annual Leave will be as specified in the NES and the incorporated award.

29.2 Years of service redundancy payment

• 0 - 8 years service: 3 weeks pay per completed year of service



• 9 - 16 years service: 2.5 weeks pay per completed year of service



• 17 years service plus: 2 weeks pay per completed year of service

(The retrenchment payment is capped at a maximum of 60 weeks).

• 4 weeks (5 for employees of the age of 45) pay in lieu of notice for monthly paid employees;



• Payment of accrued and pro rata annual leave and annual leave loading. Payment of pro rata long service leave for employees with more than seven years of completed service.



• Air Liquide will arrange for outplacement services if required to assist in the search for a new position. Air Liquide will pay up to a maximum of $2,500 for this service which will include general counselling, interview techniques and writing of CV's. It will not include payment for financial advice.



• Outplacement providers will be determined by mutual agreement.

* Redundancy pay is to be calculated on the basis of "ordinary time earnings". For the purposes of this agreement, "ordinary time earnings" means an employee's Agreement annualised salary rate.”

[19] I note also that the following undertaking was given by the Respondent upon certification:

“1. Concerning clause 10 – Hours of Work, the company undertakes that hours of work are managed by a roster that provides that employees work on the basis of 79.8 hours a fortnight, being 34.2 hours one week and 45.6 hours the next week. This is an average of 39.9 hours a week. This does not include any overtime that the employees may be required to work from time to time as the situation requires.”

[20] A further undertaking was given:

“Concerning clause 11.1 re Annual Leave, an employee whilst on annual leave will be paid the same monthly annualised rate of pay that is applicable during working periods.”

The Applicant’s Case

[21] The Applicant says Clause 29 makes it clear that redundancy is to be calculated on the basis of “ordinary time earnings” which means the employee’s “Agreement annualised salary rate.” Therefore, no ambiguity exists.

[22] The correct calculation is to divide the annual salary of $102,484 by 52 to get the weekly pay ($1970.85). He is above the cap of 60 weeks. Therefore, his payment should be $118,250.76 (60 X $1970.85). The first estimate given was close to this figure. The same calculation was used for the purposes of superannuation, annual leave, and personal leave.

[23] The Applicant finished on 31 January 2017. He received $143,829.77 gross for redundancy, annual leave and long service. The original claim was that the Respondent pay him a further $42,396.17 to cover the alleged deficiency in redundancy, annual lave and long service leave.

[24] The Applicant relied on the annual leave undertaking quoted above by analogy.

[25] Each of the matters that were originally in dispute – redundancy, annual leave and long service leave – provide entitlements based on years of service, e.g. s.4(2)(a) of the New South Wales Long Service Leave Act 1955, (NSW LSL Act) rather than an hourly rate.

[26] Mr Beard also referred in support of his case to a rescinded Workchoices regulation 2.7.5 which provided the following conversion formula:

“Conversion of annualised salary

(3) If an employee’s remuneration is expressed as an annualised rate of pay, the equivalent monetary hourly rate is taken to be the rate calculated:

(a) in accordance with, or by reference to, any provision of the pre-reform wage instrument that provided for the conversion of annualised rates of pay; or

(b) if the conversion is not provided for in that way –by:

(i) multiplying the employee’s annualised rate of pay by 6; and

(ii) dividing the result by 313; and

(iii) dividing the result by the employee’s specified hours of work per week calculated in accordance with subregulation (2).”

The Respondent’s Case

[27] The Respondent says that the Applicant’s argument is a narrow and incomplete reading of the Agreement.

[28] The Respondent says that to calculate a “weeks” pay the hourly rate “which is based on the annualised salary” is multiplied by 38 hours which is the basis of calculating a week.

[29] The Respondent submits that the proper interpretation of the Agreement requires an initial finding as to the meaning of “a week’s pay”. It says this means “38 ordinary hours a week”.

[30] The Respondent relies on the Award’s incorporation to support the argument that the ordinary hours are 38 per week. The Respondent also refers to the NES in support of its argument that redundancy pay is to be calculated on the basis of 38 ordinary hours per week.

[31] The Respondent submits that the Applicant’s interpretation would mean that overtime is included in the calculation and this is inconsistent with “the true purpose of redundancy pay”. The annualised salary must be divided by 2560 hours to get the hourly rate which is then multiplied by 38 to get the weekly rate.

[32] Michelle Dudgeon’s statement explains how the confusion arose from the payroll system. She says the hourly rate should be $40.03 (annual salary divided by 2560). The payslip stated it was $51.86. More significantly, in my view, the rate of $59.20 per hour is used for the payment of overtime in addition to the rostered overtime (that is not incorporated into the annualised salary). It appears that employees were in fact paid on a monthly basis by dividing the annualised salary by 12.

[33] The Respondent relies on the references to ordinary remuneration in the NSW LSL Act:

“3(2)(b) paragraph (a) of that definition, “ordinary remuneration”, in relation to a worker, means the remuneration for that worker’s normal weekly number of hours of work calculated at the time rate of pay fixed by the terms of that worker’s employment for his or her work under the terms of that worker’s employment reduced by any amount payable to that worker in respect of shift work, overtime or other penalty rates or, where 2 or more time rates of pay are so fixed, the amount of remuneration for the worker’s normal weekly number of hours of work calculated at the higher or highest of those rates and so reduced, . . .

Jurisdiction of the Commission

[34] By the time of the hearing the areas of dispute had been narrowed to redundancy and long service leave. The Applicant’s position with respect to annual leave, based on the original estimate, was accepted by the Respondent.

[35] It was agreed that the Commission has jurisdiction to arbitrate the dispute and interpret the Agreement.

[36] The Commission’s jurisdiction to arbitrate arises from a combination of the Dispute Settlement Clause 18 and ss.738, 739 and 595 of the Act. Clause 18 is drafted in broad terms. Consistent with that clause, the Commission has a broad power, pursuant to s.595 to settle the dispute by making orders it considers appropriate.

[37] Relevant sections provide:

“595 FWC’s power to deal with disputes

(1) The FWC may deal with a dispute only if the FWC is expresslyauthorised to do so under or in accordance with another provision of this Act.
(2) The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:

(a) by mediation or conciliation;
(b) by making a recommendation or expressing an opinion.

(3) The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expresslyauthorised to do so under or in accordance with another provision of this Act.
(4) In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.
(5) To avoid doubt, the FWC must not exercise the power referred to in subsection (3) in relation to a matter before the FWC except as authorised by this section.

738 Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or
(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or
(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or
(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.

739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.
(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or
(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.
(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.
(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.
(6) The FWC may deal with a dispute only on application by a party to the dispute.”

[38] A number of cases have emphasized the importance of properly characterising the dispute. This is a dispute about whether the Agreement has been properly applied and employees have been correctly paid for redundancy and long service leave.

The Approach of the Commission to Interpretation of Agreements

[39] The 2014 Full Bench decision in Australian Meat Industry Employees Union v Golden Cockerel Pty Ltd (2014) FWCFB 7447 (Golden Cockerel) sets out the Commission’s approach to the interpretation of agreements. I set out below the relevant passages which refer to the relevant authorities:

“General Approach

19. The general approach to the construction of instruments of the kind at issue here is set out in the judgment of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426 (Wanneroo):

‘The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘...the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘... ideas that gave rise to an expression in a document from which it has been taken’ - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services union v Treasurer of the Commonwealth of Australia (1998)80 IR 345 (Marshall J). ’ (Wanneroo)

20. To this we add the oft-quoted observations of Madgwick J in Kucks v CSR Limited (1996) 66 IR 182 (Kucks) that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, but:

‘. . . the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’    (Kucks)

21. Although their Honours were each dealing with the proper interpretation of an award, the same principles are apt to apply to the interpretation of enterprise agreements. See: Swire Cold Storage Pty Ltd v TWU [2008] AIRCFB 397 at [29] and AMWU v Silcar Pty Ltd[2011] FWAFB 2555 at [11] For example, similar observations were made in Amcor Limited v CFMEU.(2005) 222 CLR 241 (Amcor):

‘Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.” (Amcor) at 253 per Gummow, Hayne and Heydon JJ.’

22. The fact that the instrument being construed is an enterprise agreement is itself an important contextual consideration. As French J observed in Wanneroo:

‘It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities - City of Wanneroo v Holmes (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned - see eg GeorgeA Bond and Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503-504 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):

“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.” (2006) 153 IR 426 at 440.”’

Use of extrinsic material as an aide to interpretation

23. As is often the case in disputes that involve the construction of an enterprise agreement, parties will seek to place reliance of a variety of extrinsic material as an aide to interpreting the provisions of an agreement in issue. The use to which extrinsic material of the surrounding circumstances may be put to assist in the interpretation of an instrument is set out in the judgement of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337(Codelfa). In Codelfa his Honour said:

‘The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.’ (Codelfa) at 352”

[40] The Full Bench then dealt in some detail with subsequent cases which took varying approaches to the determination of an ambiguity. It went on to conclude as follows:

“30. Regard may therefore be had to evidence of the surrounding circumstances before the existence of ambiguity in an agreement is identified as an aide to interpreting the agreement for the purposes of determining whether an ambiguity exists. If thereafter ambiguity is not identified extrinsic material cannot be used to contradict the language of the instrument. If ambiguity is identified the material may be used as contextual material to aide in the interpretation of the instrument. In this context we would make the observation that the law in relation to the interpretation of commercial contracts (Codelfa; Metcash and Stratton) has now aligned with the approach to the construction of awards and enterprise agreements as espoused by Burchett J in Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 and confirmed by French J, as he then was, in Wanneroo.

Application of the Acts Interpretation Act 1901 to enterprise agreements approved under the Act

31. Both at first instance and before us the Appellant maintained that the Agreement must be interpreted in accordance with the Acts Interpretation Act 1901 (AI Act). (AB268-AB271 and Transcript PN271-PN280) That proposition is made on the basis that an enterprise agreement is an agreement that is made by the Commission pursuant to a power conferred by the Act to make the agreement. (See Section 46 of the AI Act) To make good the proposition the Appellant at first instance relied on the following passage from the judgement of French J in Wanneroo:

‘The interpretation of legislative instruments is dealt with in the Legislative Instruments Act 2003 (Cth). Awards and agreements made under the Act are declared, by s 7(1) of the Legislative Instruments Act, not to be legislative instruments – see Item 18 in the table set out in s 7(1). This leaves such awards and agreements within s 46 of the Acts Interpretation Act 1901 (Cth) which provides, inter alia:

‘(1) If a provision confers on an authority the power to make an instrument that is neither a legislative instrument within the meaning of the Legislative Instruments Act 2003 nor a rule of court, then, unless the contrary intention appears:

(a) this Act applies to any instrument so made as if it were an Act and as if each provision of the instrument were a section of an Act; and

(b) expressions used in any instrument so made have the same meaning as in the enabling legislation; and

(c) any instrument so made is to be read and construed subject to the enabling legislation, and so as not to exceed the power of the authority.’

An award is an instrument made by an authority, in this case the Australian Industrial Relations Commission, and so attracts the application of the Acts Interpretation Act for the purposes of its interpretation.” (2006) 153 IR 426 at 438 [52]

32. The decision in Wanneroo does not support the proposition contended by the Appellant. In Wanneroo Justice French was concerned with the construction of an award under the Workplace Relations Act 1996 (WR Act) and not an enterprise agreement made under the Act. Relevantly, the award in question was an instrument that was not a legislative instrument but was an instrument made by the Australian Industrial Relations Commission pursuant to a power under the WR Act to make the instrument. Consequently French J concluded that the award was “an instrument made by an authority, in this case the Australian Industrial Relations Commission, and so attracts the application of the Acts Interpretation Act (AI Act) for the purposes of its interpretation.”

[41] The Full Bench, having dealt with s.172 of the Act, which contains the requirement for an agreement to be made about permitted matters (pertaining to the relationship between the employer and the employer’s employees) summarised its conclusions as follows:

“Summary

41. From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.

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

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

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

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

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(b) notorious facts of which knowledge is to be presumed;
(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;
(b) the disputed provision’s place and arrangement in the agreement;
(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.”

[42] I have applied the principles summarised above in this decision

Consideration

[43] The provisions of the Agreement relevant to the redundancy issue are set above. Clause 13 “Long Service Leave” of the Agreement simply incorporates the NSW LSL Act. Therefore, it is a question of interpreting that Act in order to determine the long service leave entitlement.

[44] The amount in dispute is approximately $34,000 with $7359 of that relating to long service leave.

[45] With respect to redundancy, I believe the meaning of the Agreement is clear. It is true that some tension is created between the concept of an annualised salary and “ordinary hours” as contained in the NES and the Award. However, the crucial provision is Clause 29 which says that redundancy pay is based on “weeks” pay for completed years of service. It is to be calculated on the “basis of ordinary time earnings” which means the annualised salary rate.

[46] Therefore, in my view, the appropriate way of calculating the redundancy pay entitlement is that proposed by the Applicant. That is, dividing the annual salary by 52 and then multiplying the weekly figure by years of service and then the severance pay scale. Then the cap is applied.

[47] I appreciate that the annualised salary has an overtime component, but it is not separated out and is described as “built-in overtime” in clause 20.2. The fact that the Respondent’s pay-roll system produced an hourly rate, which was not used on a regular basis for payment of employees, cannot contradict the plain meaning of the Agreement.

[48] I agree with the Respondent’s submission that the NES and the Award are based on the principle of 38 ordinary hours being used. However, this Agreement clearly provides for the annualised salary to be used. A “week’s pay” in this Agreement does not mean 38 ordinary hours a week. Rather, it means the annualised salary divided by 52.

[49] I am fortified in my view by the following additional provisions in the Agreement:

● Clause 10.4.2 refers to the hourly rate for different purposes, including training, call-outs and additional overtime. Clause 20.1 says that is $59.20. Refer also to paragraph 32 above.

● The undertaking quoted in paragraph 20 above provides for annual leave to be paid at “the same monthly annualised rate of pay that is applicable during working hours.”

[50] As well, it is clear from Ms Dudgeon’s evidence that the regular monthly pay figure was obtained by dividing the annualised salary by 12. In my view, this is consistent with the overall practice of dividing the annualised salary by either 52 to get the weekly rate and 12 to get the monthly rate.

[51] The question of long service leave is more difficult because the Act is effectively being interpreted, and it has a specific exclusion for overtime.

[52] On balance, I believe the proper interpretation of the Agreement is to apply the same calculation as for redundancy. This view is based on consideration of the overall context of the Agreement and the way in which the annualised salary has operated. I accept that there is no specific provision dealing with the payment of long service leave in the same way as there is for redundancy. I am also not making a finding as to the meaning of the NSW LSL Act in a global sense.

[53] Given my finding about redundancy and the practice in respect of annual leave, it would be inconsistent to apply a different approach for long service leave.

Conclusion

[54] Accordingly, I grant the Applicant’s claim.

[55] I am satisfied that redundancy and long service leave should be calculated in the manner claimed by the Applicant. This means that the annualised salary shall be divided by 52 to obtain a week’s pay. The appropriate redundancy and long service leave formula are then to be applied to obtain the correct pay-out figure.

DEPUTY PRESIDENT

Appearances:

G. Beard with S. Bean, of the AWU for the Applicant;

F. Rodriguez and R. Olsen for the Respondent.

Hearing details:

2017

Sydney:

December 21 (conference);

March 7, 22.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR592615>