1
Fair Work Act 2009
s.739 - Application to deal with a dispute
United Voice
v
ISS Security Pty Limited T/A ISS Security
(C2013/1057)
Security services
COMMISSIONER SPENCER BRISBANE, 18 DECEMBER 2013
Alleged dispute regarding Clause 13.
Introduction
[1] This Decision relates to an application made by United Voice (the Union/Applicant)
pursuant to s.739 of the Fair Work Act 2009 (Cth) (the Act), for the Fair Work Commission
(the Commission) to deal with a dispute. The dispute has been notified pursuant to the ISS
Security Pty Ltd and United Voice Secure Future Enterprise Agreement 2012-2016i (the 2012
Agreement); Applicant and ISS Security Pty Limited trading as ISS Security (the Respondent)
are both parties to the Agreement.
[2] A conciliation conference was held to resolve the dispute but the matter was not
resolved between the parties. The parties, by consent, requested that the matter proceed to
Arbitration.
[3] Directions by consent were set for the filing of an agreed statement of facts, question
for Arbitration, and for each party to file submissions and evidence in the matter.
[4] This dispute relates to the interaction of various clauses in the Group 4 Securitas (Qld.
Enterprise Bargaining) Certified Agreement 2005 (the 2005 Agreement) and the Group 4
Securitas (Qld. Enterprise Bargaining) Certified Agreement 2005 (As Varied and Extended
2009)ii (the 2009 Agreement). The parties are in dispute concerning the proper calculation of
the aggregated rate, provided for in both Agreements, and the application of the “Transport
Allowance (Previously known as “Aviation Allowance”)” (the Transport Allowance) in the
calculation of the aggregated rate.
[5] The parties agreed the question for Arbitration as follows:
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DECISION
E AUSTRALIA FairWork Commission
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“Upon the proper construction of the 2005 EBA and the 2009 Extension, should the
Transport allowance have been applied to the base rates of pay before the penalties
prescribed by clauses 6.3 (“shiftwork”), 6.4 (“Weekend Penalty Rates”) and 7.2
(“Statutory holidays”) of the 2005 EBA and of the 2009 Extension were applied to
calculate the aggregated weekly or hourly rates?”
[6] As becomes apparent from the question for Arbitration this matter relates to various
historical agreements. Each will be referred to in turn and the necessary clauses are extracted
below.
[7] The Applicant was represented by Mr J Merrell, of Counsel, instructed by Hall Payne
Lawyers. The Respondent was represented by Mr Herbert, of Counsel.
[8] While not all of the submissions and evidence in this matter are referred to in this
Decision, all of such have been taken into account.
Relevant legislation and Agreement clauses
[9] The dispute was notified to the Commission pursuant to s.739 of the Act which
provides so far as is relevant to this matter:
“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.
...
(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...”
[10] Section 738 of the Act relevantly provides:
“738 Application of this Division
This Division applies if:
...
(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
...”
[11] The relevant procedure for dealing with disputes in the 2012 Agreement is clause 13
which provides, in part, as follows:
“13. Grievance and dispute settling procedure
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13.1 The matters to be dealt with in this procedure include all grievances or
disputes or any matter likely to create a dispute between an Employee and the
Employer and/or the Union and the Employer in respect to any industrial matter and
all other matters that the parties agree on and are specified herein. This includes a
matter arising under this Agreement or the NES. These procedures will apply to a
single Employee or to any number of Employees.
...
13.6 If the grievance or dispute is still unresolved after discussions mentioned in
Clause 13.5, then a member of the Union may refer the matter to the Queensland
Branch Secretary or such nominee for action including notification of the dispute to
FWA.
13.7 In the circumstances as set out in Clause 13.6 FWA may deal with a dispute
about a matter described in Clause 13.1 in two stages:
(a) FWA 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 FWA is unable to resolve the dispute at the first stage, FWA may then:
(i) arbitrate the dispute; and
(ii) make a determination that is binding on the Parties.
Where a dispute is referred to FWA under Clause 23.6, FWA will have the
power to do all such things as are necessary for the resolution or
determination of the matter in dispute. This includes the exercising of
procedural powers in relation to directions, hearings, witnesses, evidence and
submissions which are necessary to make the arbitration effective.”
[12] The parties agreed that the disputes procedure allows for the arbitration of this dispute
and that the procedure has been complied with.
[13] The parties filed a “Statement of Agreed Facts” which stated:
“Statement of Agreed Facts
1. ISS Security Pty Ltd (“ISS”) (formerly known as Group 4 Securitas Pty Ltd) and United
Voice (“UV”) are a parties to the ISS Security Pty Ltd and United Voice Secure Future
Enterprise Agreement 2012-2016 (the “2012 EBA”).
2. ISS provides security staff to the Brisbane Airport Corporation and other regional airports.
Some of those employees worked a roster which provided for twelve hour rotational shifts
(the “Employees”).
3. The CA/2004/296 Group 4 Securitas (Qld. Enterprise Bargaining) Certified Agreement
2005 (“the 2005 EBA”) and subsequently the Group 4 Securitas (Qld, Enterprise Bargaining)
Certified Agreement 2005 (As Varied and Extended 2009) (AG870823) (“the 2009
Extension”) applied to the Employees.
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4. Clause 5.2.2 (“Aggregated Rate”) of the 2005 EBA and clause 5.2.2 (“Aggregated Rate”)
of the 2009 Extension relevantly provided:
“Permanent employees working on a system of 12 hour rotational shifts, or other rosters by
agreement, shall receive an aggregated rate of pay that is set out in the table in this clause
which is calculated to include the penalties prescribed by Clauses 6.3, 6.4 and 7.2 of this
Agreement. All hours worked are to be averaged out per fortnight and paid at the aggregated
(ie: 168 hr roster over a 4 week cycle will equate to 84 hrs paid at the aggregated (normal)
rate of pay for each hour worked) hours rate of pay. Such loaded rate shall be calculated in
accordance with the roster worked at the site in question.”
5. Clause 5.2.2 of the 2005 EBA and clause 5.2.2 of the 2009 Extension contained a table that
provided the weekly and hourly rates of pay, from specified dates, in respect of the particular
classification of security officer.
6. Clauses 5.6 of the 2005 EBA and clause 5.6 of the 2009 Extension provided for certain
allowances to be paid to the employees to whom those agreements applied. Clause 5.6(1) of
the 2005 EBA (“Transport Allowance (Previously known as “Aviation Allowance”)) and
clause 5.6(1) of the 2009 Extension (“Transport Allowance (Previously known as
“Aviation Allowance”)) relevantly provided:
“This All Purpose Allowance is payable to all employees engaged in the performance of
duties at an airport provided that where the employee is to perform passenger and checked
bag screening duties they maintain their qualifications in a current state.” (“the Transport
Allowance”)
7. A dispute has arisen between the Applicant and the Respondent as to the proper calculation
of the applicable aggregated rate for the Employees who were entitled to the Transport
Allowance pursuant to clause 5.6(1) the 2005 EBA and clause 5.6(1) of the 2009 Extension.
8. The Respondent:
(a) has paid the Employees the hourly rate specified in the clause 5.2.2 of the 2005 EBA and
then applied the Transport Allowance; and
(b) has paid the Employees the hourly rate specified in the clause 5.2.2 of the 2009 Extension
and then applied the Transport Allowance.”
[14] The dispute also relates to three other clauses of the 2005 and 2009 Agreements,
namely, clause 6.3, Shiftwork, which stated as follows:
“6.3 Shiftwork
(1) Except in the case of employees to whom Clause 6.5 hereof applies, an
employee rostered to work on a shift shall be paid, in additional to the ordinary hourly
rate of pay, the following shift allowance:
%
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Day Shift Nil
Afternoon shift 15
Night Shift (Rotating with Day or Afternoon Shifts) 15
Permanent Night Work (Non-Rotating Night Shifts) 20”
[15] And clause 6.4 of the 2005 and 2009 Agreements, which provided as follows:
“6.4 Weekend Penalty Rates
1) Excepting in the case of employees to whom Clause 6.5 hereof applies, all
ordinary time worked by permanent employees, between midnight Friday and
midnight Saturday, shall be paid for at the rate of time and a-half. All time worked
between midnight Saturday and midnight Sunday shall be paid for at the rate of
double time.
2) When the operating hours at an Airport Operator Searcher’s designated
airport are extended to 24 hours, 7 days per week and employees are rostered to work
on a twelve hour roster system the relevant employees shall be paid the aggregated
rates set out in clause 5.1.”
[16] And clause 7.2 of the 2005 and 2009 Agreements, which provided as follows:
“7.2 Statutory Holidays
7.2.2 Employees Receiving and Aggregated Rate under clause 6.5
(1) If you are receiving an aggregated rate under clause 6.5 and work on any of
the holidays mentioned in sub-clause 7.2.1(1) you will be paid at your aggregated
rate.”
Summary of Applicant Submissions
[17] The Applicant submitted that the dispute concerns the correct calculation of the
aggregated rate, applicable to employees, who were otherwise entitled to the Transport
Allowance pursuant to clause 5.6(1) of both the 2005 and 2009 Agreements. The Applicant
stated, and the agreed statement of facts reflects, that the Respondent, in paying the Transport
Allowance, has added the hourly rate, of the Transport Allowance, to the aggregated hourly
rates otherwise prescribed by clause 5.2.2 of the 2005 and 2009 Agreements.
[18] The Applicant explained that the dispute related to the order in which the Respondent
has applied the Travel Allowance and the relevant penalties (for shiftwork and/or weekend
work and statutory holidays).
[19] The Applicant submitted that the Travel Allowance, being an “All Purpose
Allowance”, should be applied to the base rate of pay prior to penalties, pursuant to clauses
6.3 (Shiftwork), 6.4(Weekend Penalty Rates) and 7.2 (Statutory Holidays) of the 2005 and
2009 Agreements, being applied.
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[20] The Applicant submitted that the relevant principles of construction of an industrial
instrument were summarised by Marshall, Tracey and Flick JJ in Shop, Distributive and
Allied Employees Association v Woolworths SA Pty Ltd (SDAE),iii where it was stated at [14]:
“Support for the position that the industrial context and the intention or purpose of the
makers of an industrial instrument should be paramount notwithstanding the strict
wording of the document is found in the judgments of members of the High Court in
Amcor Limited v Construction, Forestry, Mining and Energy Union...“
[21] The Court in SDAE referred to the well known decision in Amcoriv (cited above)
where their Honours Gleeson CJ and McHugh J stated, at [2]:
“The resolution of the issue turns upon the language of the particular agreement,
understood in the light of its industrial context and purpose, and the nature of the
particular reorganisation.”
[22] And further, the Court referred to Kirby J in Amcor, where his Honour cited with
approval, the well known authority of Kucks v CSR Ltd,v stated, at [96]:
“The nature of the document, the manner of its expression, the context in which it
operated and the industrial purpose it served combine to suggest that the construction
to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible
industrial outcome such as should be attributed to the parties who negotiated and
executed the Agreement. Approaching the interpretation of the clause in that way
accords with the proper way, adopted by this Court, of interpreting industrial
instruments and especially certified agreements. I agree with the following passage in
the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed:
"It is trite that narrow or pedantic approaches to the interpretation of an award
are misplaced. The search is for the meaning intended by the framer(s) of the
document, bearing in mind that such framer(s) were likely of a practical bent
of mind: they may well have been more concerned with expressing an intention
in ways likely to have been understood in the context of the relevant industry
and industrial relations environment than with legal niceties or jargon. Thus,
for example, it is justifiable to read the award to give effect to its evident
purposes, having regard to such context, despite mere inconsistencies or
infelicities of expression which might tend to some other reading. And
meanings which avoid inconvenience or injustice may reasonably be strained
for. For reasons such as these, expressions which have been held in the case of
other instruments to have been used to mean particular things may sensibly
and properly be held to mean something else in the document at hand."”
[23] The Applicant submitted however, that the process of construction is limited in two
respects. First, the interpretive analysis must focus upon the language of the Agreement in
question.vi Secondly, the task is to identify the “common intentions” of the parties, as they
have expressed in the terms of the Agreement.vii
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[24] Importantly to the specific context of this matter, the Applicant submitted that two
further principles of construction are relevant. The Applicant submitted that where a drafting
error is identified, the Commission may cure the mistake, through interpreting the Agreement,
if it is possible to state with certainty the parties’ intentions.viii And further, the Applicant
submitted that the words in the Agreement should be given their ordinary meaning unless
some well founded basis is established for doing otherwise.ix
[25] As to the interpretation contended for by the Applicant, the Applicant submitted that
clause 5.6 of the 2005 and 2009 Agreements provided that the Transport Allowance is an “All
Purpose Allowance”. The Applicant submitted that it was “expressly agreed” between the
parties that the Transport Allowance was to be an “All Purpose Allowance”.
[26] The Applicant submitted that, because the Transport Allowance is an “All Purpose
Allowance”, the Transport Allowance is to be payable “for all purposes of the two
agreements where calculations are prescribed by the agreements and forms part of the
Employees’ base rate of pay”x.
[27] The Applicant submitted that the way in which the Respondent has paid the Transport
Allowance (by adding to the aggregated hourly rate) is not one that “promotes an objective
interpretation” of the two Agreements, taking into account the intentions of the parties,
revealed by the words of the 2005 and 2009 Agreements.
[28] The Applicant accepts that the aggregated rates, in clause 5.2.2 of the 2005 and 2009
Agreements, are calculated to include the appropriate penalties contained in clauses 6.3
(Shiftwork), 6.4(Weekend Penalty Rates) and 7.2 (Statutory Holidays) of the 2005 and 2009
Agreements. However, the Applicant submitted that prior to those penalties being applied, the
Transport Allowance must be added to the ordinary rates of pay. The Applicant based this
submission upon the method of calculation referred to in clause 5.2.2 of the Agreements
combined with the identification of the Transport Allowance in clause 5.6(1) as an “All
Purpose Allowance”.
[29] The Applicant considered the aggregated rates, set out in clause 5.2.2 of the 2005 an
2009 Agreements, and submitted that they are a “clear drafting error”. This drafting error
arose, so it was submitted, as a result of a failure of the parties to take into account the
Transport Allowance, despite the clear intention of the parties to do so, taking into account the
words of the Agreements.\, and its delineation as an ‘All Purpose Allowance’.
[30] The Applicant contended that the question for Arbitration should be answered in the
affirmative.
Summary of Respondent Submissions
[31] The Respondent submitted that the application alleges that the Respondent has
incorrectly applied the aggregate rate provisions of the 2005 and 2009 Agreements. Although,
the Applicant submitted that the Agreement itself is incorrect and that the parties misapplied
the provisions at the time of drafting.
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[32] The Respondent submitted that the Applicant’s dispute is fundamentally flawed for
several reasons. Firstly, the Respondent submitted that the Applicant’s position is contrary to
the plain and ordinary meaning of the words of the 2005 and 2009 Agreements. Secondly, the
construction pressed would be contrary to relevant principles of construing an industrial
instrument. And thirdly, it would be contrary to the undisputed application of the provisions
since the introduction of an all purpose allowance, in relation to aviation, in 2002.
[33] The Respondent submitted that the “Aggregated Rate” is defined by clause 1.7 of the
2005 and 2009 Agreements as follows:
“(11) “Aggregated Rate” shall be the rate of pay prescribed for employees in
accordance with Clause 5.1 of this Agreement. Such rate shall have application to
permanent employees who are engaged on rational twelve hour shifts or as Airport
Operator Searchers while working on a roster system of 12 hours per shift in
accordance with rosters agree with the union.”
[34] The Respondent also submitted that the 2005 and 2009 Agreements contained a
drafting error. The Respondent submitted however that the error is contained in the definition
of “Aggregated Rate” (extracted above) and the reference to clause 5.1, and submitted that
this should be a reference to clause 5.2.2, the clause in which the Aggregated Rates appear.
[35] The Respondent submitted that the plain and ordinary meaning of the term
“Aggregated Rate” is that the aggregated rates are prescribed by clause 5.2.2 and apply to the
relevant employees. Following this, the Transport Allowance is an additional entitlement that
applies separately to the aggregated rates.
[36] The Respondent submitted that the definition of “Aggregated Rate” has not materially
altered since the Group 4 Securitas (Qld. Enterprise Bargaining) Certified Agreement 2000)
(the 2000 Agreement) (excluding a presently irrelevant inclusion to the definition in the
Group 4 Securitas (Qld. Enterprise Bargaining) Certified Agreement 2002 (the 2002
Agreement)). The Respondent submitted that the inclusion of the allowance, now called the
Transport Allowance, occurred with the introduction of the 2002 Agreement.
[37] The Respondent submitted that had it been the intention of the parties that a different
aggregated rate was to apply to the group of employees to whom this dispute had application,
then the definition of aggregated rate would have had to have been amended to remove the
reference to “airport”. To effect this intention would have also required the inclusion of a
second table (similar to that that appears in the dispute clause 5.2.2) which set out the
aggregated rates for those airport employees (to whom the current dispute affects). To this end
the Respondent submitted that there is no indication, from the express words of the
Agreement, which indicates such an intention existed.
[38] The Respondent emphasised that clause 5.2.2 of the 2005 and 2009 Agreements
expressly provided that the relevant employees shall receive the aggregated rate of pay “that
is set out in the table” in clause 5.2.2.
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[39] Should the Commission not be satisfied that this construction, as pressed by the
Respondent, did not satisfactorily resolve the matter, the Respondent submitted, in the
alternative, that the principles of construction support the same result.
[40] The Respondent submitted that, in referring to the case of Amcor, the industrial
context and purpose of the aggregated rate can be traced from the 2000 Agreement, in which
the aggregated rate provision originated.
[41] The Respondent set out clause 6.5 of the 2000 Agreement as follows:
“1) Permanent employees working on a system of 12 hour rotational shifts, or other
rosters by agreement, shall receive an aggregated rate of pay that is calculated to
include the penalties prescribed by Clause 6.3, 6.4 and 7.2 of this Agreement. Such
loaded rate shall be calculated in accordance with the roster worked at the site in
question.
2) When the operating hours at an Airport Operator Searcher’s designated airport are
extended to 24 hours, 7 days per week and employees are rostered to work on a twelve
hour roster system the relevant employees shall be paid the aggregated rates set out in
clause 5.1.”
[42] Again, the Respondent submitted that the plain and ordinary meaning of clause 6.5(2)
of the 2000 Agreement supports that the aggregated rate stipulated, in that Agreement, in
clause 5.1.
[43] The origin of the Travel Allowance (previously the Aviation Allowance) arises from
the 2002 Agreement. Clause 5.5 of the 2002 Agreement stated:
“(1) Aviation Security Allowance
An all-purpose allowance of 97c per hour will apply to employees working at an
airport performing the following functions: passenger screening, checked bag
screening including by x-ray and or trace element detection equipment (i.e Barringer
machine or similar), freight screening, operation of control room and any other
functions to which the Aviation Security Allowance in the Security Employees
(Victoria) Award 1998 applies.”
[44] The Respondent submitted that the Security Employee (Victoria) Award 1998 (the
Award) was varied by decision of Commissioner Holmes in 2002 to include the all-purpose
Aviation Security Allowance.xi
[45] The paragraph, extracted in [40] above, specifically subparagraph (2), was retained in
the 2002 Agreement. The Respondent submitted that the retention of this clause “makes it
clear” that despite the introduction of the aviation security allowance, employees were to be
paid the aggregated rate specified plus the aviation security allowance. That is, the
Respondent submitted that this evidenced the intention that the introduction of the aviation
security allowance would not affect the aggregated rates set out in, clause 5.2. The
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Respondent also submitted that the aviation security allowance could have been “rolled into”
the aggregated rate, but that it was not.
[46] The Respondent submitted that the drafting error, to which they had previously
referred, originated in the transfer from the 2002 Agreement to the 2005 Agreement when the
clauses were moved. The Respondent submitted that the reference to clause 5.1 in clause
6.4(2) of the 2005 Agreement should be a reference to 5.2.2 of the 2005 Agreement.
[47] Again, the Respondent submitted that the retention of this clause indicated an intention
that the allowance was to be paid in addition to the aggregated rate of pay.
[48] The Respondent submitted that the Applicant’s contention as to the process of
calculating the aggregated rate is simplistic. Whereas, the Respondent stated that this
calculation is complicated and involves utilising assumptions regarding predicted roster
patters including number of public holidays etc.
[49] The Respondent submitted that the Agreements do not contain an agreed method of
calculating the aggregated rate, rather the Agreements express an agreed result from those
calculations arrived at from the bargaining. To disaggregate (the rate based on those specified
matters to be included in the rate) and include a new aggregated rate is, it was submitted,
neither appropriate nor practical.
[50] The Respondent included an 8 week, 12 hour rotational roster which it was submitted
showed that an employee paid the aggregate rate plus the Transport Allowance would receive
2% more, over that 8 week period, than an equivalent employee who received the “ordinary
rate” (that is, not the aggregated rate) with the Transport Allowance applied to the “ordinary
rate” prior to penalties (as is submitted by the Applicant).
[51] The Respondent referred the Commission to, the definition of “all purpose allowance”
published by the Fair Work Ombudsman (the Ombudsman) which stated, in part:
“All purpose allowances may be part of base rates of pay in some limited
circumstances.”
[52] The Respondent particularly emphasised the use of the word “limited” in the definition
provided for by the Ombudsman.
[53] The Respondent submitted that the Travel Allowance and the aggregated rates of pay
have been treated in the same manner by the Respondent throughout the 2002, 2005 and 2009
Agreements, to all of which the Applicant was a party. The Respondent stated that this
dispute has not been raised throughout that history.
[54] As to the current Agreement, the 2012 Agreement, the Respondent submitted that the
Agreement was negotiated and subsequently approved with the following description for the
Transport Allowance (in schedule B - Minimum Wages and Allowances):
“A Transport Allowance is paid for all purposes of this Agreement when an Employee is
performing Security Work at a security regulated Airport or Maritime Port. Provided
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that in relation to qualifying aggregate rate Employees the Transport Allowance will
be paid in addition to the aggregate rate for all purposes.” (emphasis added by
Respondent)
[55] This description, it was submitted, was not disputed or debated by the Applicant,
presumably the Respondent refers to during bargaining for the 2012 Agreement.
[56] The Respondent submitted that the question for Arbitration should be answered in the
negative.
Consideration
[57] Clause 5.2.2, by providing an exact dollar figure for the aggregated rates, overrides the
application of clause 5.6(1) of the Agreement that the Transport Allowance be for “all
purposes”. The parties have agreed upon the aggregated rates in clause 5.2.2; this sets out the
agreed basis upon which the aggregated rate, was to be applied. The parties agree that the
Employer has complied with clause 5.2.2, but the Applicant submits that clause 5.2.2 is
incorrect, in that clause 5.2.2 does not include the all purpose allowance in the aggregate rate
calculation, to which penalties are applied. The Agreement however, does not provide the
specific, mathematical methodology for the calculation of the aggregate rates that appear in
clause 5.2.2. For instance, there is no indication in the Agreement as to the assumptions
underlying the aggregated rates (ie number of public holidays, amount of overtime etc). The
Respondent submitted that these components were all attributed amounts in the negotiations
and cannot now, be arbitrarily unpacked and repacked in an expressly new calculation to, in
some unspecified way, include the allowance.
[58] If the Applicant’s submissions were accepted, the Respondent would have to
“disaggregate” the rate (in some way not described by the Agreement) and then apply the
Transport Allowance and re-aggregate the rate. The Respondent submitted that to do such
may put them in breach of the Agreements; given that the provisions of the Agreements do
not deal with such a process.
[59] This is consistent with simply the final amount being included in the Agreement,
indicating the outcome of the negotiation, in relation to an agreed amount, rather than an
agreed calculation that can be utilised to include other allowances, such as the Transport
Allowance. Such a process of calculation was not contemplated by the table’s prescriptive
presentation of the nominated figures, as “set out” in the tables.
[60] The “Aggregated Rate” is defined by clause 1.7 and it “shall be the rate of pay
prescribed” (emphasis added) by clause 5.1; it is noted that the Agreements stipulates that the
aggregated rate is “prescribed”; rather than calculated. Clause 5.2.2 says that employees
(working the relevant roster) “shall receive an aggregated rate of pay that is set out in the
table in this clause”. Again clause 5.2.2 doesn’t say a rate “calculated” it says the rate is “set
out”. Further, clause 5.2.2 says that the rate “set out” “is” calculated to include penalties. The
language in the clause doesn’t refer to any further calculation to achieve the aggregated rate;
the aggregated rate is set out.
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[61] The Applicant emphasised the phrase ‘[S]uch loaded rate shall be calculated in
accordance with the roster worked at the site in question” which appears at the end of clause
5.2.2, arguing that the clause operates by reference to the “roster” which indicated an
intention that the Transport Allowance was not to be included in the calculation because the
transport allowance does not operate by reference to the roster but by the “place” of work. On
this argument the aggregate rate would be unpacked for those employees working at an
airport or maritime port, and recalculated to include the Transport Allowance. Whereas the
Respondent, argued that to do so would be the Commission placing itself in the position of
the parties. As to redo the exercise of arriving at the new aggregate rate would be to
renegotiate the bargain, that had occurred between the parties with a separate outcome. To do
this, the Respondent stated, and to answer the question for Arbitration affirmatively, presumes
that the calculation as to the aggregate rate is known with some certainty. There is no such
clarity of the calculation for the aggregate rate included in the Agreements; as to how the ‘mix
was done’. The Respondent stated that for the Commission to recast the aggregate rate with
the Transport Allowance included would be akin to bargain making, not bargain
interpretation.
[62] It was submitted, on behalf of the Applicant, that the Agreement does, clearly, provide
for the calculation of the aggregate rate. In this respect the Applicant relied upon the
paragraph appearing below clause 5.2.2 of the Agreements. For ease the clause is set out
again as follows:
“Permanent employees working on a system of 12 hour rotational shifts, or other
rosters by agreement, shall receive an aggregated rate of pay that is set out in the
table in this clause which is calculated to include the penalties prescribed by Clauses
6.3, 6.4 and 7.2 of this Agreement. All hours worked are to be averaged out per
fortnight and paid at the aggregated (ie: 168 hr roster over a 4 week cycle will equate
to 84 hrs paid at the aggregated (normal) rate of pay for each hour worked) hours rate
of pay. Such loaded rate shall be calculated in accordance with the roster worked at
the site in question.” (underline added)
[63] The Applicant relied upon the underlined passage as providing the calculation for the
purposes of the aggregate rate. However, the clause, as a whole, does not support the
contention made by the Applicant in this regard. The clause consistently refers to the
aggregate rate and the calculation of such in terms that support the contention that the
aggregated rate has been calculated and agreed between the parties, and subsequently written
into the Agreements as a dollar figure, rather than a calculation, and states that the rate “is
calculated” to include. The reference to which the Applicant refers is a calculation as to the
payment of the aggregated rate, rather than the calculation of the rate itself.
[64] The Applicant did not submit that the calculation of the aggregate rate is to be found
elsewhere in the Agreements. The Respondent submitted that the terms of the Agreements
themselves do not provide for the calculation of the aggregate rate. This submission is correct.
To come to an aggregate rate, as that term is commonly applied, is to make assumptions an
employee’s work pattern and the components of such. These assumptions are then applied to
come up with a standard, consistent rate, that applies to employees regardless of whether they
are working a standard shift, that does not attract penalties or overtime, and a shift that
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includes rostered overtime and penalty work. These assumptions, used to calculate the
aggregate rate, have not been included in the Agreements.
Drafting error
[65] The Applicant argued that the omission of the ‘All Purpose’ Transport Allowance
from the aggregate rate had arisen by way of an inadvertent drafting error. The Respondent
refuted such a submission by submitting that there was no common understanding between
the parties of an inadvertent drafting error. On the contrary, the Respondent submitted that the
past conduct of both parties was that the Transport Allowance had been paid in this exact
form for a significant period (since approximately 2000) and had, in fact, remained unchanged
in three successive Agreements without challenge by the Applicant.
[66] The Applicant argued that the facts and circumstances of this matter were analogous to
those as dealt with by Gray ACJ in Shop, Distributive and Allied Employees Association v
Woolworths Ltdxii where the Court described the dispute as follows:
“The dispute at the heart of this proceeding is about the correct calculation of the rate
of pay for a part-time employee entitled to long service leave. A collective agreement
between the parties to the proceeding incorporates by reference legislative provisions
governing entitlements to long service leave in Victoria. Those provisions entitle an
employee to long service leave on ‘ordinary pay’. They include a definition of
‘ordinary pay’ for the purposes of the legislative provisions. The problem is that the
collective agreement also includes a definition of ‘ordinary pay’ for the purposes of
the agreement. The two definitions differ. The parties are at odds as to which should
apply, and as to the meaning of the legislative definition, if it is the applicable one.
Among other arguments, the applicant contends that the question of which definition
applies should be resolved by reference to settled practice under earlier collective
agreements between the parties in similar form.”xiii
[67] And further, the Court considered the construction of that Agreement, with the aid of
past conduct, as it was relevant to the current matter where successive Agreement have
retained the same clause. The Court stated:
“Counsel for the applicant contended that the past conduct of the parties could be relied
upon as an aid in the construction of the Certified Agreement. There is authority that,
if a provision has appeared in a series of agreements between the same parties, and if
they can be shown to have conducted themselves according to a common
understanding of the meaning of that provision, then it can be taken that they have
agreed that the term should continue to have the commonly understood meaning in the
current agreement. See Merchant Service Guild of Australia v Sydney Steam Collier
Owners & Coal Stevedores Association (1958) 1 FLR 248 at 251 per Spicer CJ, 254
per Dunphy J and 257 per Morgan J, and Printing & Kindred Industries Union v
Davies Bros Ltd (1986) 18 IR 444 at 452-453. It is necessary to take great care in the
application of this limited principle, to avoid infringing the general principle that the
conduct of parties to an agreement cannot be taken into account in construing the
agreement. For the limited principle to operate, there must be clear evidence that the
parties have acted upon a common understanding as to the meaning of the relevant
[2013] FWC 9306
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provision and not for other reasons, such as common inadvertence as to its true
meaning. See Australian Liquor, Hospitality and Miscellaneous Workers Union v
Prestige Property Services Pty Ltd [2006] FCA 11 at [44].
In the present case, there is no evidence to indicate that there was any common
understanding between the applicant and the respondent about the meaning of the
relevant clauses in preceding agreements. All that has been established is that, until
2004, the respondent had a practice of paying employees entitled to long service leave
at a rate of pay inclusive of penalties and shift premiums, if applicable. There is no
evidence as to why it did this. The reason might have been inadvertence on the part of
those responsible for making the payments as to the presence of the definition in the
LSL Act. It may have been an act of generosity on the part of the respondent, from
which it has now resiled. There is no evidence that any relevant person on the
applicant’s side was aware of the respondent’s practice of making payments at the
higher rate, much less of any belief on the part of any relevant officer of the applicant
that payment at the higher rate represented the appropriate construction of the
relevant provisions. There is therefore no evidence of a settled interpretation, of which
the parties had a common understanding.” xiv
[68] In the current matter, the Respondent stated that it was ‘crystal clear’ on the evidence
of the wording of the relevant provisions of the past Agreements, to which the Applicant was
also a party, and the associated consistent past conduct, as to the manner in which the
aggregate rate and the Transport Allowance has been dealt with.
[69] Whilst the Respondent noted that there had been a change in Woolworths’ conduct in
the matter considered by Gray ACJ, which gave rise to the dispute in that case, there had been
no such change in approach or conduct by the parties to the current matter.
[70] The decision in Woolworths is distinguishable from the current circumstances. The
matter in Woolworths involved a calculation of a rate of pay. The parties in this matter have
agreed on the calculation during bargaining for the Agreements, and have only reflected the
result of that calculation in the Agreement. The history of this conduct has been uniform and
consistently applied during the course of the Agreements. The parties have not included the
specific calculation method as a term of the Agreement.
[71] The Respondent submitted that there was ‘coherence’ between the two parallel
payment schemes in the Agreements, both contained in clause 5.2, which set out the wage
rates, in terms of the ‘Ordinary Rate’ (at clause 5.2.1) and the ‘Aggregated Rate” (at clause
5.2.2). The Respondent stated that their interpretation of the Agreement and practice had been
to apply the Transport Allowance, where relevant for employees working at a prescribed site,
to either set of rates. It was noted by the Applicant that, on their submission, there were some
60 employees, past and present, where a recalculated aggregate rate, including the Transport
Allowance, was required. The Respondent noted that this would require a third table setting
out the aggregated rate calculation, including the Transport Allowance, in circumstances
where, the Respondent submitted, that the Agreement provided no such payment
methodology to produce such.
[2013] FWC 9306
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[72] The Respondent pointed to the ‘plain and ordinary meaning’ in clause 5.2.2 wherein
the clause specifically sets out the matters included in the calculation. The Respondent argued
that to now include a further item, being the Transport Allowance, would be to invoke a re-
negotiation of the rates, in circumstances where they do not agree that a drafting error
occurred.
[73] The Applicant submitted that the principles of interpretation allow the Commission to
correct a drafting error where it was possible to state with certainty the parties’ intentions
otherwise.xv The parties have not lead further evidence in this matter, beyond that in the
agreed statement of facts. On the material and evidence before the Commission, it cannot be
stated with any certainty, that the way in which the Agreements reflect the aggregated rate
was other than was intended by the parties. The Applicant has not filed any evidence that the
Applicant pressed for the aggregated rate to be calculated in the fashion now described; nor
any evidence of some common understanding or intention of the parties to that effect, that has
in some way been incorrectly reflected in the Agreement.
[74] The Applicant relies heavily upon the wording of the Transport Allowance as an “All
Purpose Allowance”. The Applicant is correct to submit that the term ‘all purpose allowance’
may have the common meaning for which it contends; that the allowance applies for all
purposes of the Agreement. That general understanding is however, subject to the specific
words of the Agreement, including the industrial purpose and context, and also taking into
account the past practice and conduct of the parties. Given the clear description of the
aggregated rates as being “set out”, and that the aggregated rate “is” indicates that the parties
did not intend that the all purpose allowance would apply in the way submitted by the
Applicant. If it were, as the Applicant submitted, the common intention, then the parties
would have specifically included the allowance in the calculation of the aggregated rates.
[75] The Commission is not satisfied that the matter, on the material presented, gives rise to
a drafting error.
Conclusion
[76] The question for Arbitration is:
“Upon the proper construction of the 2005 EBA and the 2009 Extension, should the
Transport allowance have been applied to the base rates of pay before the penalties
prescribed by clauses 6.3 (“shiftwork”), 6.4 (“Weekend Penalty Rates”) and 7.2
(“Statutory holidays”) of the 2005 EBA and of the 2009 Extension were applied to
calculate the aggregated weekly or hourly rates?”
[77] The wording of the Agreement clauses is as they appear having been agreed and
approved by the parties for successive Agreements. The conduct of the parties has been to
apply these Agreement provisions in the manner as currently presented. Further, there is no
apparent agreed mechanism for the Commission to order, in practical terms, how to break
down the aggregated rate in order for the Transport Allowance and penalties to be applied, in
the manner submitted by the Applicant. At best, the process would require the Commission to
assume how the aggregated rates were developed by the parties. In addition there was no
evidence of a drafting error as to these terms of the Agreement that would cause the
[2013] FWC 9306
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Commission to seek to remedy such and to effectively place itself in the place of the parties
and rework the aggregated rates. This is beyond the appropriate role required for
interpretation.
[78] The current provisions in question, before the Commission, have been agreed between
the parties. The parties have interpreted these provisions on a consistent basis for a significant
period of time. The parties have had a number of opportunities to alter the situation, through
negotiation of subsequent Agreements, and there is no evidence, that they were alert to an
issue in this regard or that they chose to alter the words. In fact these clauses appear
consistently through the various Agreements.
[79] The Applicant cannot now cure what it considers to be a detriment to its members. The
appropriate time to do so was during the negotiation of the Agreements and, specifically, the
negotiation of the aggregated rates of pay. There is no evidence put before the Commission as
to the bargaining process or that this issue was raised or discussed during the subsequent
rounds of enterprise bargaining.
[80] Therefore, for the aforementioned reasons, the application, made pursuant to s.739 of
the Act, is answered in the negative, and the application of the words of the Agreements is not
disturbed and continues, commensurate with the past conduct.
[81] I Order accordingly.
COMMISSIONER
Printed by authority of the Commonwealth Government Printer
Price code C, AE896448 PR545028
i AE896488.
ii AG870823.
iii [2011] FCAFC 67.
iv (2005) 222 CLR 241.
v (1996) 66 IR 182 at 184.
vi Amcor v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [2] per Gleeson CJ and McHugh J; and
at [67] per Kirby J.
FAIR WORK CO 1 SSION AUSTRALIA THE SEAS
[2013] FWC 9306
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vii Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40].
viii In this regard the Applicant cited Construction, Forestry, Mining and Energy Union v Amcor Limited (2002) IR 112 at
[18] per Finkelstein J.
ix In this regard the Applicant cited Amezdroz & Son Pty Ltd trading as Wettenhalls Group v Transport Workers’ Union of
Australia [2012] FWAFB 8951 at [31] per Watson SDP, Smith DP and Jones C.
x Applicant outline of submissions at paragraph 21.
xi PR918644.
xii [2006] FCA 616.
xiii Ibid at [1].
xiv Ibid at [31] to [32].
xv In this regard the Applicant cited Construction, Forestry, Mining and Energy Union v Amcor Limited (2002) IR 112 at [18]
per Finkelstein J.
