Woolworths Ltd trading as Produce and Recycling Distribution Centre
[2010] FWA 30
•21 JANUARY 2010
Note: An appeal pursuant to s.604 (C2010/2647) was lodged against this decision - refer to Full Bench decision dated 26 February 2010 [[2010] FWAFB 1464] for result of appeal.
[2010] FWA 30
The attached document replaces the document previously issued with the above code on 21 January 2010.
1. At paragraphs 32 and 33 of the decision the words “pre-workchoices” should read “pre-WorkChoices”.
2. In the final sentence of paragraph 36 the word “know” should be “known”.
Cathy Bartlett
Associate to Commissioner Smith
Dated: 3 February 2010
[2010] FWA 30 |
|
DECISION |
Fair Work Act 2009
s.185—Application for approval of enterprise agreement
(AG2009/14435)
Storage services | |
COMMISSIONER SMITH | MELBOURNE, 21 JANUARY 2010 |
Application for approval of the Woolworths Limited SDAEA Mulgrave Produce and Recycling Enterprise Agreement 2009-2012; dispute settlement procedures; construction of s.186; approval refused.
[1] This is an application by Woolworths Ltd trading as Produce and Recycling Distribution Centre (Woolworths) for the approval of an agreement titled “SDAEA Mulgrave Produce and Recycling Enterprise Agreement 2009 – 2012 (the Agreement) made between it and its employees.
[2] The Shop Distributive and Allied Employees Association (SDA) purport to be bound by the Agreement 1 notwithstanding that this is not a greenfields agreement2. There is, however, an application made pursuant to s.183 of the Fair Work Act 2009 (the Act).
[3] Except for one matter, I am satisfied that the agreement meets all the relevant statutory tests to permit it to be approved by Fair Work Australia (FWA). The one matter relates to the Dispute Resolution Procedure in clause 30 of the Agreement.
[4] Clause 30 deals extensively with the resolution of disputes about matters contained in, or arising under, the Agreement as well as disputes about the National Employment Standards (NES). 3
[5] The process under the agreement permits either party to refer the matter to FWA for conciliation. In the event that the matter is still not resolved the employee, or if represented by the SDA, the National Secretary of the SDA and the Director of Human Resources will attempt to resolve the matter. If that fails, they may agree to have the matter arbitrated by Fair Work Australia. Similarly, if the employee is not represented then agreement must be reached with the Director of Human Resources before the matter could proceed to arbitration.
[6] Importantly, if either the Human Resources Manager, the employee or the National Secretary of the SDA do not agree, then the matter may not, under the Agreement, come to Fair Work Australia for arbitration. In short, there is a power of veto to the matter being settled. The matter is either a matter contained in, or arising under, the agreement or the application of the NES.
[7] Relevantly, clause 30.6 states:
“If after 30.5, there is still no resolution and the employer’s Director of Human Resources and the employee agree or, in instances where the employee elects to be represented by the union, the employer’s Director of Human Resources and the National Secretary of the union agree, the matter may proceed to arbitration by Fair Work Australia.”
[8] By letter dated 11 December 2009, I raised with the Woolworths Ltd and the SDA whether or not the proposed clause in the Agreement complied with s.186 (6) of the Act. By letter dated 18 December 2009, Woolworths Ltd responded and advised both it and the SDA would undertake to not unreasonably oppose a matter going to arbitration. I pause to note that this relates to both a grievance arising in, or under, the Agreement and the NES. Nothing is said on behalf of employees who may not be members of the SDA. Although, in practice, it would seem to me unlikely that an unrepresented employee, who had a grievance about the Agreement or the NES, would decline to have that grievance settled.
[9] It appeared to me that this proposed undertaking did not address the core issues as to the nature of the prerequisite contained in s.186 (6) of the Act. A hearing was then scheduled for 7 January to permit arguments to be advanced.
[10] During that hearing, Counsel representing Woolworths Ltd submitted that if Fair Work Australia was minded to refuse to approve the Agreement based upon s.186(6) of the Act, then it wanted the opportunity to consider giving a further undertaking. Subsequently, I advised both Woolworths Ltd and the SDA that I was not persuaded by the arguments presented and would refuse to approve the agreement. A period of time was given for consideration by Woolworths Ltd but it responded that it did not propose to give any further undertakings.
[11] I now turn to review the proceedings and arguments raised and my reasons for the decision I informally announced to both Woolworths Ltd and the SDA. These are my reasons and decision.
[12] Section 186 provides:
“Requirement for a term about settling disputes
(6) FWA must be satisfied that the agreement includes a term:
(a) that provides a procedure that requires or allows FWA, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:
(i) about any matters arising under the agreement; and
(ii) in relation to the National Employment Standards; and
(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure.
Note 1: FWA or a person must not settle a dispute about whether an employer had reasonable business grounds under subsection 65(5) or 76(4) (see subsections 739(2) and 740(2)).
Note 2: However, this does not prevent FWA from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4).”
[13] This is a mandatory requirement for approval of an agreement
[14] To begin, Woolworths argued that terms of s.186(6)(a) do not envisage that Fair Work Australia or any independent person will be empowered to undertake any particular role. This, it is submitted, can be seen by the use of the language “that requires or allows”. It submits that the section does not say requires and allows, but rather the use of the word “or” is important.
[15] Woolworths submit that its view is further supported by s.739(4) which provides:
“(4) If, in accordance with the term, the parties have agreed that FWA may arbitrate (however described) the dispute, FWA may do so.
Note: FWA may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).”
[16] Woolworths argue that this clause makes it clear that the parties need to agree to Fair Work Australia arbitrating and this reinforces the view that access to arbitration is not a requirement of the clause.
[17] I am unable to agree. If this construction was correct and that the use of the word “or” renders the section voluntary in character then there would be no need to have a dispute settlement provision at all in an agreement. Because, if settlement was read down so as not to include arbitration, or any process, then such a reading would provide a discretion not to include a clause at all. It must be read as creating an obligation to include a procedure that either requires or allows Fair Work Australia or another independent person to settle disputes. The second argument, in my view, does two things. Firstly, it seeks to distinguish between Fair Work Australia and an independent person. But secondly, if Fair Work Australia is chosen then there can be no doubt about the power to arbitrate. If an independent person was chosen, the power to arbitrate may well be derived from another source. In my view this adds weight to the view that access to arbitration is a perquisite to the approval of an agreement.
[18] The SDA put forward the view that the dispute settlement clause had worked very well at the site and “don’t try to fix it if it ain’t broke”. 4
[19] However, the gravamen of the argument raised by Woolworths is whether or not the requirement to have a procedure to settle a dispute about a matter that is contained in, or arising under, the agreement or the application of the NES, includes the requirement to settle, or can a dispute be left unsettled in circumstances where one person to the process refuses to consent to arbitration? (emphasis added).
[20] In this connection attention was drawn to the decision in Ampol Refineries (NSW Pty Ltd and Australian Institute of Marine and Power Engineers (1998) (Ampol) 5 and other decisions which followed that decision. Woolworths also drew attention a decision in SEMA Group Pty Limited (SEMA).6 I shall return to the decision in SEMA later, but I turn now to consider Ampol.
[21] The decision in Ampol was an appeal against His Honour Senior Deputy President Polites where his Honour considered the requirement under s.170LT(8) of the Workplace Relations Act 1996 (the pre-workchoices Act) and concluded that:
“In my view, the statutory expression “procedures for preventing and settling disputes between the employer and the employees whose employment will be subject to the agreement about matters arising under the agreement” necessarily means that at the end of the day the sub-section requires that the application of those procedures referred to in it will result in a dispute the subject of the sub-section being prevented or settled. This is the ordinary and natural meaning of the sub-section. In my view, the legislative scheme contemplates not only that the parties must agree on the procedures but that those procedures have the result of preventing and settling the disputes as aforesaid. This is particularly so having regard to the limitations on the power of the Commission to varying a certified agreement during its currency. Moreover and with great respect to those who have expressed a contrary view, it seems to me impossible to comprehend why the legislature would require insertion into the agreement of a clause which at the end of the day does not give effect to the purpose for which the clause is to be inserted i.e. preventing and settling disputes which arise under the agreement. Nor do I think emphasis on the word "procedures" assists in arriving at a different conclusion. Reading the sub-section as a whole the procedures must be of a definite character namely for "preventing and settling disputes arising under the agreement". If the procedures do not in effect operate to guarantee the achievement of that purpose then in my view they are not consistent with the sub-section.
I am unable to form the view that clause X of the agreement before me has that result. Without traversing the detail of the clause it provides that the final step in the procedures is that the matter be referred to the Commission. But the clause makes no provision as to what the Commission ought to do with the reference in the sense of preventing or settling the dispute giving rise to the reference. Varying the clause or accepting an undertaking, as proposed in the submissions of Ampol, so that the Commission is empowered by the clause to deal with the matter by way of conciliation does not in my view carry the implication that that conciliation will necessarily prevent or resolve the dispute. If at the end of the conciliation process the dispute remains unresolved, I do not consider the clause amounts to a procedure for preventing and settling industrial disputes. It may achieve that end in some cases but it does not necessarily do so.” 7
[22] Section 178LT(8) was in the following terms:
“170LT(8) [Dispute settlement procedures] The agreement must include procedures for preventing and settling disputes between:
(a) the employer; and
(b) the employees whose employment will be subject to the agreement;
about matters arising under the agreement.”
[23] In Ampol, the Full Bench examined closely the language used in the statute and made a number of findings on its construction which were pivotal to its conclusion.
[24] The first was the existence of the then s.91 which provided:
“In dealing with an industrial dispute, the Commission shall, where it appears practicable and appropriate, encourage the parties to agree on procedures for preventing and settling, by discussion and agreement, further disputes between the parties or any of them, with a view to the agreed procedures being included in an award.”
[25] Section 91 was directed towards the resolution of industrial disputes (as then defined) and in the context of procedures being included in an award. The bench considered that the language was important in the context of agreement making with constitutional corporations. The Bench concluded:
“We draw attention to the words “by discussion and agreement” which follow the words “for preventing and settling”. Section 91, we think, envisages that a process based solely on discussion and agreement constitutes a procedure for preventing and settling disputes. If the legislature had intended that arbitration should be an indispensable element of such procedures it could have so specified. The fact that the only words included are “by discussion and agreement” suggests strongly that arbitration is not an indispensable element of the procedures envisaged by s.91. While there are differences between the wording of s.91 and the wording of s.170LT(8), they are not material to the construction of the common words “procedures for preventing and settling ... disputes”. In particular, there is no reason to conclude that arbitration is an indispensable element of the procedures referred to in s.170LT(8) when it is not an indispensable element of the procedures referred to in s.91.” 8
[26] The second important aspect of the reasoning of the Bench was the use of the word “for” in the phase; procedures for the preventing and settling.
[27] The Bench concluded:
“Second, we are of the view that the word “for” in “procedures for preventing and settling” means “with the object or purpose of”. While the word “for” can have various meanings, an examination of dictionary definitions (e.g. The Macquarie Dictionary, 3rd edition, p. 825) indicates to us that the primary and most common meaning of the word is “with the object or purpose of”.” 9
[28] The Bench also observed that disputes procedures varied greatly and had not been regarded as guaranteeing the prevention and settlement of industrial disputes.
[29] The Bench also stated that:
“Fourth, we doubt that, as a practical matter, it is possible to guarantee the preventing or settling of a dispute. Does a provision in an agreement that disputes be arbitrated operate to guarantee a settlement? In our view, it probably does not. Take, for example, a provision that the matter be referred to the Commission for arbitration. If such a matter is so referred, the Commission may be of the view that it does not have power to arbitrate. Even if the parties have, having regard to s.170LW1, empowered the Commission to settle disputes, the empowerment is effective only “if the Commission so approves”, and if the dispute is “over the application of the agreement”. (Not necessarily the same thing as a dispute “about matters arising under this agreement” (s.170LT(8)); see generally the Full Bench decision in Gordonstone Coal, 24 July 1997, Print P3415.) Or, take, as another example, a provision that the matter be referred to a person or body other than the Commission (for instance, a State industrial relations tribunal) for arbitration. That person or body might decline to arbitrate for any number of reasons.” 10
[30] Finally, the Bench noted that the model disputes procedure for an Australian Workplace Agreement in the regulations did not involve a guarantee that the dispute would be resolved.
[31] However, in the present statutory regime there are significant differences. To begin, the Act is no longer set against the backdrop of s.51xxxv of the Australian Constitution where there was access (as then limited by the Act) to compulsory arbitration. Historically, dispute settlement procedures in awards were framed having regard to the power to make and vary awards.
[32] If the provisions in the Act were identical to those contained in the pre-WorkChoices Act when Ampol was decided, then the proper approach would be to assume that the Parliament passed legislation against the background of decided cases. However, there are material and significant differences to which I now turn.
[33] To begin, there is no directly comparable section in the Act to match s.91 of the pre-WorkChoices Act.
[34] Secondly, the provisions of s.186(6) are significantly different from s.170LT(8). It is clear that reference to preventing and settling disputes has been replaced with much more direct language, namely, a procedure that requires or allows FWA to settle disputes. As discussed earlier, in my view, the use of the language “requires or allows” does not create discretion with the makers of an agreement whether or not to have a disputes procedure at all. The use of the term “to settle” indicates a direction or motion to an action. “Settle” is defined in the Macquarie Dictionary as to “appoint or fix definitely”. In my view, it would be difficult to place a construction upon this language which read into the meaning of settle as including not to settle.
[35] I pause to note that the provision relating to dispute settlement terms in modern awards in s.146, is cast in terms which are different from those relating to agreements. Section 146 uses the phrase “procedures for settling disputes” (emphasis added). The difference in language between s.146 and s.186(6) may well be important.
[36] The next matter which was addressed by the bench in Ampol was the possibility of a matter not settling in circumstances where the Commission may not have had the power to arbitrate a matter or the Commission may not have approved of itself exercising such a power. No such possibility arises under the current Act. In the approval of agreements the parliament has placed certain constraints upon what the parties can agree upon, and what they must agree upon, to have their agreement approved. The concept of alternative dispute resolution which uses processes of conciliation mediation and arbitration, appear to great extent in the Act. Arbitration is a well known ADR process and is common in commercial contracts.
[37] Before leaving a consideration of the terms of the Act it is appropriate to examine the Explanatory Memorandum (EM) to see if this assists further in construction. In this connection I was referred to a decision of Larkin C in SEMA. From paragraphs 29 to 33 of her judgment, the Commissioner sets out relevant parts of the EM. I don’t repeat them here.
[38] At the conclusion, the Commissioner observes that the EM suggests that FWA’s powers may be limited to the terms of a dispute resolution provision as agreed to by the parties to the enterprise agreement. Woolworths relied upon this decision to supports its contention.
[39] It is important to note that the Commissioner did not decide this issue, as it was not necessary in the circumstances of the matter before her. I have examined the EM in the context of the issue before me and it appears to me that it goes no further than say that parties may use the model disputes procedure or construct their own. Against the background of the issues raised in this decision, I do not see that alternative as one which undermines the ingredients necessary to have a genuine dispute resolution procedure.
[40] Returning to the consideration by the Bench in Ampol, it noted that there was a model dispute settlement clause contained in the then regulations which was referable to Australian Workplace Agreements.
[41] Again, a clear distinction exists. Regulations under the present Act 11 contain a model dispute settlement provision which is directly referable to agreement making. The model clause contains the following:
“5) Fair Work Australia may deal with the dispute in 2 stages:
(a) Fair Work Australia will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and
(b) if Fair Work Australia is unable to resolve the dispute at the first stage, Fair Work Australia may then:
(i) arbitrate the dispute; and
(ii) make a determination that is binding on the parties.
Note If Fair Work Australia arbitrates the dispute, it may also use the powers that are available to it under the Act.
A decision that Fair Work Australia makes when arbitrating a dispute is a decision for the purpose of Division 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.”
[42] This reinforces, in my view, the construction I prefer as to the meaning and operation of s.186(6). Again, whilst it is not necessary to use the model clause nonetheless, there are, in my view, essential ingredients.
[43] Finally, and to add weight to what are essential ingredients, I am further fortified in my conclusion by a document issued by the Department of Education, Employment and Workplace Relations in January 2010 entitled “Fair Work Principles”. In this document there is a review on the subject of dispute resolution procedures. Under the heading Policy Requirement the following is recorded:
“5.2.5 For a procedure to be considered a "genuine dispute resolution procedure" it must include as a minimum:
• the ability for employees to appoint a representative in relation to the dispute;
• in the first instance procedures to resolve the dispute at the workplace level;
• if a dispute is not resolved at the workplace level, the capacity for a party to the dispute to refer the matter to an independent third party for mediation or conciliation; and
• if the dispute is still not resolved, the capacity for an independent third party to settle the dispute via a decision binding on the parties.”
[44] It was for these reasons that I advised the parties that:
- it was a pre-requisite of the Act that there be a procedure to settle disputes about matters arising under the agreement and the NES; and
- the procedure contained in the agreement did not meet the requirement of the Act to enable approval.
[45] I decline to approve the agreement.
COMMISSIONER
Appearances:
P Flynn of Counsel on behalf of Woolworths Limited.
G Todd for the Shop, Distributive and Allied Employees Association.
Hearing details:
2010.
Melbourne:
January, 7.
1 See clause 1.
2 See s.172(2).
3 Except issues arising under subsection 65(5) of the Fair Work Act 2009.
4 Transcript PN162
5 Print P8620 per Giudice J, McIntrye VP and Raffaelli C.
6 [2009] FWA 1153 per Larkin C.
7 Print P6777 per Polites SDP, 19 November 1997.
8 Print P8620 per Giudice J, McIntrye VP and Raffaelli C.
9 Ibid.
10 Ibid.
11 Schedule 6.1.
Printed by authority of the Commonwealth Government Printer
<Price code C, PR992318>
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