1
Fair Work Act 2009
s.604 - Appeal of decisions
Essential Energy
v
Australian Municipal, Administrative, Clerical and Services Union;
Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia; The Association of
Professional Engineers, Scientists and Managers, Australia
(C2014/6919 and C2014/6920)
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT SAMS
COMMISSIONER MCKENNA
SYDNEY, 4 MAY 2015
Appeal against decision [2014 FWC 5601] of Senior Deputy President Hamberger at Sydney
on 2 October 2014 in matter numbers C2014/1048 and C2014/1458.
Introduction and background
[1] Essential Energy, a corporation owned by the NSW Government which distributes
electricity, has applied for permission to appeal and appeals a decision issued by Senior
Deputy President Hamberger on 2 October 20141 (Decision). The Decision was made in the
exercise of arbitration powers conferred by the dispute resolution procedures in two enterprise
agreements - the Essential Energy Enterprise Agreement 2011 (2011 Agreement) and the
Essential Energy Enterprise Agreement 2013 (2013 Agreement). It arose out of two
applications made by the Australian Municipal, Administrative, Clerical and Services Union
(ASU) for the Commission to deal with a dispute under s.739 of the Fair Work Act 2009 (Act)
- the first having been lodged on 16 June 2014, when the 2011 Agreement remained in effect,
and the second on 12 August 2014, by which time the 2013 Agreement had come into
operation. The Decision involved the interpretation of the coverage provision in the two
agreements (which were in virtually identical terms). Essential Energy contends that the
interpretation preferred by the Senior Deputy President was incorrect, and seeks that
permission to appeal be granted, the appeal be upheld, the Decision be set aside, and the
ASU’s dispute resolution applications be dismissed.
[2] The underlying dispute between Essential Energy and the ASU concerns the extent to
which Essential Energy is able to employ its more senior and higher paid employees on
individual contracts. This is affected by the scope of the coverage of the two agreements.
Clause 1.3 of the 2011 Agreement provided as follows:
1 [2014] FWC 5601
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DECISION
E AUSTRALIA FairWork Commission
[2015] FWCFB 1981
2
“1.3 COVERAGE
This Agreement applies to Essential Energy and its employees who are paid a base
weekly rate of pay up to and including Pay Point 44 as contained in Section 6 Clause
6.13 (Table 1: Essential Energy Rates of Pay) of this Agreement. Employees whose
base weekly rate of pay is above Pay Point 44 will not be covered by the terms of this
Agreement and shall instead be in accordance with a Total Remuneration Package
(TRP) contract of employment.
Under the terms of this Agreement, Essential Energy will not offer Total
Remuneration Package (TRP) contracts to any new employees whose base weekly rate
of pay is up to and including Pay Point 44 as contained in Section 6 Clause 6.13
(Table 1: Essential Energy Rates of Pay) of this Agreement.
This Agreement otherwise governs all employment, wages and conditions of the
employees to whom this Agreement applies.”
[3] The nominal term of the 2011 Agreement expired on 30 June 2013. During
negotiations prior to that date for a replacement enterprise agreement, Essential Energy
refused to bargain in relation to some higher paid categories of employees who were, at that
time, treated by the parties as covered by the 2011 Agreement. This led to a bargaining
dispute about the scope of the replacement enterprise agreement. On 11 December 2013 an
application was made by the ASU, the Communications, Electrical, Electronic, Energy,
Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), and The
Association of Professional Engineers, Scientists and Managers, Australia (APESMA)
pursuant to s.240(1) of the Act for the Commission to deal with the bargaining dispute. By
this time, all the provisions of the replacement enterprise agreement had been agreed except
the coverage clause. Essential Energy consented with the three unions to the Commission
arbitrating the bargaining dispute pursuant to s.240(4).
[4] The position adopted by Essential Energy in the arbitration was that the cut-off for
coverage for the new agreement should be at pay point 41, except that all Area Managers,
who were paid less than pay point 41, would also be excluded from the coverage of the new
agreement, but that Senior Network Operators, who were at pay point 42, would be included.
The three unions took the position that the coverage of the new agreement should be the same
as the 2011 Agreement.
[5] The arbitration was conducted by the Senior Deputy President. The hearing was
lengthy, and an extensive amount of evidence was adduced by the parties. In a decision issued
on 9 May 20142, the Senior Deputy President determined that he was not satisfied that a case
for change to the coverage of the enterprise agreement had been made out, and that the
coverage for the new agreement should be the same as in the 2011 Agreement.3
[6] It is relevant that in the Senior Deputy President’s decision of 9 May 2014, the
competing positions of the parties were described in the following terms:
2 [2014] FWC 3065
3 Ibid at [78], [84]
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“[62] For Essential Energy, approximately 4% of employees are not covered by the
2011 Agreement and are currently employed under individual contracts. The current
agreement applies to employees up to pay point 44 which is $2455.37 per week or
$127,679 per annum before including allowances and other additional payments or is
up to about 163,609.40 per annum on a total remuneration package (TRP) basis. The
scope proposed by Essential Energy would have the proposed agreement only apply to
pay point 40 (other than for Network Operators, where the pay point would extend to
pay point 42). Pay point 40 is $2137.56 per week or $111,580 per annum before
including allowances and other additional payments, or is up to about $147,511 on a
TRP basis...”
[7] In accordance with the arbitration agreement reached between Essential Energy and
the unions, Essential Energy made arrangements for the new agreement, with the same
coverage clause as the 2011 Agreement, to be put to a vote of its employees. The ballot for
this was to commence on 10 June 2014. In a document distributed to employees in May 2014,
Essential Energy described the effective coverage of the new agreement in the terms agreed as
encompassing all employees with a total remuneration of up to $173,000. However, about a
week before the ballot opened, Essential Energy wrote to the unions expressing an altered
position as to the effect of the coverage clause. It now contended that staff with a total
remuneration of $148,027 could be employed on individual contracts and outside the
coverage of the new agreement (as well as the 2011 Agreement). The unions contested this
approach, and this caused the first dispute resolution application to be lodged on 16 June 2014
pursuant to the dispute resolution procedure in the 2011 Agreement. The new agreement (the
2013 Agreement) was approved in the ballot of employees, and on 9 July 2014 was approved
by the Commission with an operative date of 16 July 2014. On that basis the second dispute
resolution application was lodged pursuant to the dispute resolution procedure in the 2013
Agreement on 12 August 2014.
The Decision
[8] In his decision, after reciting the parties’ submissions, the Senior Deputy President
concluded he was satisfied that he had jurisdiction to arbitrate the dispute concerning the
scope of coverage of the 2011 Agreement and the 2013 Agreement, but noted that his
jurisdiction in this respect was limited by s.739(5) of the Act, which prevented him from
determining the dispute in a manner inconsistent with the terms of the agreements. Following
from that conclusion, the Senior Deputy President identified the issue to be determined in the
following way:
“[9] The agreements deal quite explicitly with the issue of coverage, in clause 1.3.
Given s.739 (5) of the Act, I consider that the Commission cannot resolve the dispute
by deciding that the agreements should have coverage other than that provided by the
agreements themselves. The key issue for the Commission therefore is to decide on the
proper interpretation of Clause 1.3.”
[9] The Senior Deputy President then referred to a number of decisions concerning the
principles for the proper interpretation of industrial instruments, including enterprise
agreements under the Act4 and, in doing so, quoted the following summary of those principles
4 Decision at [10]-[12]
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stated by the Federal Court in Australian Nursing and Midwifery Federation v Eastern
Health5:
“* construction begins with a consideration of the ordinary meaning of the words used;
* regard should be had to the industrial purpose sought to be achieved; and
* to determine context and general purpose, it is appropriate to have regard to the
history of the relevant provision and by examining its antecedents.”
[10] In accordance with the above principles, the Senior Deputy President first considered
the ordinary meaning of the words used in clause 1.3 of the two agreements. His analysis on
this issue was as follows:
“[13] As was stated in Eastern Health ‘construction begins with a consideration of the
ordinary meaning of the words used’. A literal reading of Clause 1.3 suggests that all
one needs to know to determine whether an employee of Essential Energy is covered
by the agreement is the employee’s ‘base weekly rate of pay.’ If this rate is at or below
the amount that applies at Pay Point 44 (currently $2,589.75) then the employee is
covered by the agreement.
[14] Employees covered by the agreement are entitled to a number of benefits
provided by the agreement. This includes a 15% employer contribution to
superannuation. Managers and Specialists who are covered by the agreement receive
an additional 11% in return for working a 40 hour week and 10 day fortnight. An
employee covered by the agreement may also be entitled to the Electrical Safety Rules
allowance (ESRA) worth up to $120 per week. On the other hand, a literal reading of
Clause 1.3 provides that if an employee has a base weekly rate of pay of more than
applies at Pay Point 44 he or she is not covered by the agreement, and is not
necessarily entitled to the benefits contained in the agreement. Such employees are
employed under a ‘Total Remuneration Package (TRP) contract of employment’. It
would therefore - at least in principle - be possible for an employee employed under
such a contract to receive less in total remuneration than an employee under the
agreement - as long as their ‘base weekly rate of pay’ was more than that $2,589.75.
[15] That much is clear. The issue that arises in this case is whether there is anything
in the surrounding context, including the history of the 2011 and 2013 agreements, and
their antecedents, and the industrial purpose of the clause to displace this literal
construction. This includes the question of whether there was a ‘common
understanding’ at the time the agreements were made along the lines asserted by the
unions.”
[11] On the question of whether there was a “common understanding”, the Senior Deputy
President then referred at length to evidence which had been received at the hearing of the
matter concerning the “industrial history”, which included written and verbal communications
between the parties in the course of the negotiations for the 2011 Agreement and the 2013
Agreement - in particular communications between Mr Brock, an official of the APESMA,
and Mr Smith, Essential Energy’s Industrial Relations Manager. In relation to the industrial
history prior to the 2011 Agreement, the Senior Deputy President found:
5 [2013] FCAFC 137 at [11]
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“[57] Having regard to all the evidence I am satisfied that prior to the 2011 agreement,
Essential Energy adopted a standard practice whereby TRP contracts would only be
offered to employees whose remuneration was above the total amount they would
receive under the award or enterprise agreement. All employees whose remuneration
fell below that level were treated as being covered by the award or enterprise
agreement. This reflected the resolution of the dispute in the State commission about
coverage reached in 2009. It was also a logical approach as it created a clear horizontal
line, with more senior (and the most highly paid) employees on contract. There were a
small number of exceptions but these were essentially anomalous.”
[12] The Senior Deputy President then identified the critical question as being whether the
coverage clause in the 2011 Agreement had the effect of changing that previous approach. In
answering that question, the Senior Deputy President made a number of findings based on the
evidence on the industrial history that had been received:
“[59] There is no doubt, as I have already discussed, that on a literal reading the
coverage clause could be read as allowing Essential Energy to offer TRP contracts to
employees who - if they were covered by the award - would receive a greater level of
remuneration. That is the interpretation now given by Essential Energy to the clause. I
do note however that there would be no clear industrial logic behind such an approach
as it would mean that less well paid employees (and therefore presumably less senior
employees) could be on contract compared to those on the agreement.
[60] During the negotiations for the 2011 agreement the unions were concerned that -
despite its lack of obvious logic - the new coverage clause proposed by Essential
Energy could be read this way. Mr Brock in particular sought an assurance from Mr
Smith that this is not how the clause would be applied. Despite his denials I am
satisfied that Mr Smith did indeed provide Mr Brock with that assurance. It is true that
he did not agree to vary the drafting of the clause, at this late stage in the negotiations.
Mr Brock accepted this (even though he would have preferred the drafting of the
clause to have been altered) on the basis that Mr Smith had assured him that only
employees whose remuneration would be higher than they would have received under
the agreement (taking into account matters such as the 11% loading for a 40 hour
week, additional superannuation, and where applicable ESRA) would be treated as
outside the agreement and offered TRP contracts.
[61] I have reached the conclusion that Mr Smith gave the assurance to Mr Brock for a
number of reasons. First, I found Mr Brock a more convincing witness than Mr Smith,
and I have preferred his evidence over that of Mr Smith, where it is in conflict. Mr
Brock’s evidence was detailed, clear and consistent. Mr Smith, on the other hand,
contradicted himself a number of times, and his replies during cross examination were
often vague and unconvincing. Mr Brock’s version of what occurred is also more
consistent with the contemporaneous written evidence. Mr Brock’s email of 23 August
explicitly referred to his recent discussions with Mr Smith ‘regarding the intention that
all Agreement-based benefits, including payment of the ESRA, the 11% loading for
working a 10 day fortnight and the additional 6% employer superannuation
contribution etc are paid in addition to the salary point 44 base rate of pay when
determining the Agreement threshold.’ At no time did Mr Smith seek to disabuse Mr
Brock that there was any such intention. Nor is there any evidence that Essential
Energy told its employees at the time of the 2011 agreement that the agreement
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involved a significant change in coverage when compared to the existing situation
(which would have been the case if the clause had the meaning Essential Energy now
claims.) Indeed employees covered by the Managers & Specialists Agreement were
explicitly told that they would remain covered by the enterprise agreement - something
that would not necessarily be the case if the coverage had changed in the way
Essential Energy now asserts.
[62] Indeed the evidence of what occurred after the implementation of the 2011
agreement is that Essential Energy did indeed have the same understanding of the
coverage clause as the unions. Mr Smith contended that the practice Essential
continued to apply concerning agreement coverage was only done so as a matter of
discretion. However none of the contemporaneous evidence supports this. Indeed right
through the proceedings that led to the scope decision, up until May 2014 (when the
document compiled by Essential Energy to provide answers to common questions
from staff about the proposed 2013 agreement was prepared), it is clear that Essential
Energy accepted the proposition that only those employees in receipt of total
remuneration above the amount that would be paid to an employee on Pay Point 44
were considered to be not covered by the agreement. Despite Mr Smith’s denials, I
find that it was only in June 2014 that Essential Energy changed its view about how to
interpret the coverage clause.”
[13] The Senior Deputy President then stated the following conclusions:
“[63] Based on the evidence, I find the parties, at the time of the making of the 2011
agreement, had a common understanding of the way in which Clause 1.3 operated. In
relation to the 2013 agreement, the parties agreed to accept the scope decision, which
was that the 2013 agreement should have the same scope as the 2011 agreement.
[64] In these circumstances, the literal construction of Clause 1.3 in both agreements
must give way to this common understanding. As a consequence this means that, for
the life of the 2013 agreement, Essential Energy must only offer TRP contracts to
employees which have a total remuneration greater than the employee would have
received if they were employed at Pay Point 44 under the agreement. Other employees
must be employed under the terms of the agreement.”
Submissions
[14] Essential Energy submitted that the Senior Deputy President erred in the conclusion he
reached concerning the meaning and effect of the coverage clause in the 2011 Agreement and
the 2013 Agreement for the following reasons:
the Senior Deputy President failed to give effect to what he correctly identified as
the plain and literal meaning of the coverage clause;
in circumstances where it was common ground between the parties that the
coverage clause was not ambiguous, evidence of the surrounding circumstances
should not have been admitted to contradict the plain language of the agreements;
in reaching a conclusion which contradicted the express terms of the coverage
clause, the Senior Deputy President determined the matter contrary to the
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requirement in s.739(5) of the Act that he not make a decision inconsistent with
the 2013 Agreement;
the negotiations for the 2011 Agreement made it clear that coverage was intended
to be changed from a classification basis to one based on pay points, and Essential
Energy had rejected any change to the coverage clause which it had proposed and
which ultimately became clause 1.3 of the 2011 Agreement;
any acceptance of the coverage clause by Mr Brock on the basis of an assurance
said to have been given by Mr Smith could not ground a finding of common
intention, since there was no evidence that Mr Brock was acting for any other
union or its members;
that Essential Energy, as a matter of managerial discretion, continued to offer
individual contracts to the same class of persons after the 2011 Agreement came
into operation as it had before that time was not relevant to the proper
interpretation of the coverage clause;
the Senior Deputy President erroneously relied on evidence concerning the
subjective intention and understanding of some of the bargaining representatives,
and the conduct of Essential Energy after the 2011 Agreement had come into
effect, in reaching his determination;
any finding as to a common understanding or common intention could only be
used to aid the interpretation of the words used in the coverage clause, not to
displace them;
the objective background facts demonstrated that it was intended that coverage by
reference to pay point be adopted in the 2011 Agreement, since this was directed
towards establishing a clear and easy line of demarcation between those who were
covered by the 2011 Agreement and those who were not;
explanatory documents filed with the application for approval of the 2011
Agreement further demonstrated objectively that it was intended that the coverage
of the 2013 Agreement operate by reference to the base weekly rate of pay up to
pay point 44; and
the Senior Deputy President erred in preferring the evidence of Mr Brock over
that of Mr Smith, and the evidence of Mr Smith that there was a difference
between the meaning of the coverage clause in the 2011 Agreement and the
exercise of Essential Energy’s discretion in offering individual contracts should
have been accepted.
[15] Essential Energy submitted that permission to appeal should be granted in the public
interest because the Decision was inconsistent with the terms of the 2011 Agreement and the
2013 Agreement and was consequently made contrary to the requirement in s.793(5) of the
Act, which amounted to jurisdictional error. The appeal also raised important questions about
the principles of interpretation of enterprise agreements, including the applicability of the
concept of “common understanding” and the meaning of the expression “base weekly rate of
pay”.
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[16] The ASU, CEPU and the APESMA, which appeared in the proceedings in opposition
to the appeal, submitted that permission to appeal should be refused, or in the alternative that
the appeal should be dismissed, because:
Essential Energy was attempting, in substance, to re-litigate the s.240 matter
concerning coverage in which it had been unsuccessful;
it would be contrary to the principles of interpretation and perverse to adopt a
meaning of the coverage clause based upon a literal reading of it in circumstances
where the evidence demonstrated that that meaning was not the intention of the
parties;
the coverage clause was ambiguous, and its meaning could only be determined by
a careful analysis of the history, from which it could be found that there was a
common intended effect;
the industrial history demonstrated, as the Senior Deputy President found, that the
coverage clause of the 2011 Agreement had not been intended to change the pre-
existing arrangements as to coverage;
the manifest purpose of the industrial parties who negotiated the 2011 Agreement
was to create a clear line between those to be covered by the agreement and those
at a higher level, which was achieved by ensuring that those above the line had a
higher total remuneration than those below it;
as the Senior Deputy President correctly recognised, the interpretation advanced
by Essential Energy under which the coverage line was drawn by reference to
base weekly pay only led to the absurd consequence that an employee could fall
outside of the coverage of the 2013 Agreement and be placed on an individual
contract even though that employee had a significantly lower total remuneration
than an employee who was covered by the 2013 Agreement and enjoyed all of its
additional benefits simply because the first employee had a slightly higher base
weekly rate of pay than the second employee;
the common understanding of the parties before and after the 2011 Agreement as
demonstrated by actual practice (until the opportunistic “bolt from the blue” in
June 2014 when Essential Energy adopted a different approach) was that the
coverage line for the application of collective agreements was based on the
employee’s total remuneration;
the position taken by Essential Energy in the s.240 proceedings was consistent
with that joint intention and longstanding practice;
the Senior Deputy President was correct in preferring the evidence of Mr Brock
over that of Mr Smith, which supported the existence of this common
understanding; and
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the assurance found to have been given by Mr Smith to Mr Brock could be relied
upon because it was consistent with what all the parties commonly understood to
be the case based on past history and current practice.
[17] The ASU, CEPU and the APESMA submitted additionally, or in alternative, that the
reference in the coverage clause to “Employees whose base weekly rate of pay is above Pay
Point 44” being outside coverage was, read in the context of the agreements as a whole,
referring to employees who received a rate of pay for 40 hours of work in excess of pay point
44.
[18] Subsequent to the hearing of the appeal on 17 February 2015, we invited the parties to
provide further submissions in relation to three questions:
(1) Is the “base weekly rate of pay” referred to in clause 1.3 of the 2011
Agreement and the 2013 Agreement a rate payable for an average 36 hours of
work per week?
(2) Is an employee who receives a weekly salary in excess of the “base weekly rate
of pay” for Pay Point 44 as prescribed in clause 6.12, “Table 1, Essential
Energy Rates of Pay” excluded from the coverage of the 2013 Agreement in
circumstances where the employee is required to work more than an average of
36 hours per week and has a lower hourly rate than that prescribed in clause
6.12 for Pay Point 44?
(3) Is the 2013 Agreement read as a whole to be interpreted so that all persons who
fall within any of the classifications in clause 8.2 of the 2013 Agreement are
covered by the 2013 Agreement and are entitled to its benefits?
[19] Essential Energy answered the first question in the negative and submitted that the
base weekly rates of pay are payable irrespective of hours worked. On the second question,
Essential Energy submitted that coverage was determined solely by reference to whether an
employee’s base weekly rate of pay was in excess of pay point 44; if it was, the employee was
excluded from coverage. On the third question, Essential Energy answered in the negative. It
reiterated that coverage was determined solely by reference to pay point 44. Essential Energy
also submitted that clause 8.2 was only concerned with progression between pay points and
had nothing to do with coverage.
[20] The ASU, CEPU and the APESMA answered the first question in the affirmative
consistent with the alternative submission it had earlier advanced. In relation to the second
question, the unions submitted that the answer was “no”, consistent with the proposition that
the base weekly rate of pay represented an amount payable for 36 ordinary hours of work. On
the third question, the unions submitted that the answer was “yes”. They pointed to clause
1.18 of the 2013 Agreement as requiring that the weekly rates of pay in clause 6.12 “shall
apply” to the employees in the respective classifications, and submitted that the 2013
Agreement should not be interpreted in a way which would permit the progression guidelines
to be subverted.
Consideration
Whether appealable error
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[21] The principles applying to the interpretation of enterprise agreements were
comprehensively summarised in the recent Full Bench decision in The Australasian Meat
Industry Employees Union v Golden Cockerel Pty Limited6 as follows:
“1. The [Acts Interpretation Act 1901 (Cth)] 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
6 [2014] FWCFB 7447 at [41]
[2015] FWCFB 1981
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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.”
[22] Propositions 4, 9 and 10 above, which we consider to be of particular relevance to the
determination of this appeal, were the subject of earlier discussion in the Full Bench decision
in Shop, Distributive and Allied Employees Association (Queensland Branch) Union of
Employees v Woolworths Limited T/A Woolworths7 as follows:
“[12] It is undoubtedly the case that, in resolving a dispute as to the interpretation of a
provision of an enterprise agreement approved under the Fair Work Act 2009, it is
permissible to take into account the industrial context and purpose of the agreement.
However, there are two important limitations upon this approach relevant to the
determination of this appeal. The first is that the process of interpretative analysis must
focus, first and foremost, upon the language of the agreement itself. For example, in
Amcor Limited v CFMEU, the process was described by Gleeson CJ and McHugh J in
the following terms: “The resolution of the issue turns upon the language of the
particular agreement, understood in the light of its industrial context and purpose ...”.
Or, as Kirby J put it in the same case, “Interpretation is always a text-based activity”.
Admissible extrinsic material may be used to aid the interpretation of a provision in an
enterprise agreement with a disputed meaning, but it cannot be used to disregard or re-
write the provision in order to give effect to an externally derived conception of what
the parties’ intention or purpose was. The oft-quoted statement of Madgwick J in
Kucks v CSR Limited makes this clear:
‘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.’
[13] The second limitation is that regard cannot be had to the respective subjective
intentions and expectations of the parties as demonstrated by their “statements and
actions” in negotiating the agreement. Rather, the task is to identify the common
intention of the parties as they have expressed it in the terms of their agreement. In the
context of commercial contracts, this task was described by the High Court in Toll
(FGCT) Pty Ltd v Alphapharm Pty Ltd in the following way:
‘It is not the subjective beliefs or understandings of the parties about their
rights and liabilities that govern their contractual relations. What matters is
what each party by words and conduct would have led a reasonable person in
the position of the other party to believe. References to the common intention
of the parties to a contract are to be understood as referring to what a
7 [2013] FWCFB 2814
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reasonable person would understand by the language in which the parties have
expressed their agreement. The meaning of the terms of a contractual document
is to be determined by what a reasonable person would have understood them
to mean. That, normally, requires consideration not only of the text, but also of
the surrounding circumstances known to the parties, and the purpose and object
of the transaction.’”
[23] In addition, there is one well-established further principle relevant to the interpretation
of industrial instruments, including enterprise agreements, which we consider to be relevant,
namely that it is not permissible to take into account the conduct of parties which occurs after
an industrial instrument is made as an aid to interpret that industrial instrument.8
[24] We do not consider, with respect, that the approach taken to the interpretation of the
coverage clause in the 2011 Agreement and the 2013 Agreement in the Decision accorded
with these principles. It is apparent that the reasoning process by which the Senior Deputy
President reached the conclusion that he did involved the following steps: first, stating the
literal meaning of the coverage clause; second, identifying an anomalous consequence of the
literal meaning; third, posing the question whether there was anything in the surrounding
context, including the industrial history, to displace the literal meaning; fourth, making
findings based on the evidence concerning the industrial history; fifth, identifying a common
understanding from that industrial history; and sixth, reaching a conclusion in which the
literal meaning of the coverage clause was displaced by the identified common understanding.
[25] That approach involved a number of errors. As earlier identified, resort may be had to
extrinsic matters in order to identify and resolve ambiguity in the language of a provision of
an enterprise agreement. However, the extrinsic material was not used in this way in the
Decision. No ambiguity in the coverage clause was ever identified, let alone resolved, by the
use of that material. Instead, the extrinsic material was used to reach a conclusion that had no
foundation in the text of the coverage clause but rather simply displaced what the clause said.
The conclusion reached by the Senior Deputy President in paragraph [64] of the Decision
referred to the common understanding he had identified as limiting Essential Energy’s
capacity to offer individual or TRP contracts to employees with “a total remuneration greater
than the employee would have received if they were employed at Pay Point 44 under the
agreement”. Nothing in the Decision related that conclusion to the text of the coverage clause
or of any other part of the 2011 Agreement or the 2013 Agreement. The line between those
covered by the agreements and those not covered and to whom individual contracts could be
offered was expressly drawn by reference to the “base weekly rate of pay” at pay point 44.
The meaning of that expression in the context of the agreements as a whole is dealt with later
in this decision, but there is no available reading of that expression which could equate it with
total remuneration, nor was one suggested. For these reasons, the conclusion in the Decision
was not one arrived at through a process of interpretation of the words used in the agreements,
but was rather an exteriorly-derived view as to what the agreements should have said.
[26] Further, in considering the surrounding circumstances and industrial history of the
coverage clause in the agreements, and in attempting to ascertain the common intention of the
parties, the Senior Deputy President had regard to matters which went beyond what
legitimately could be taken into account. It was appropriate to analyse the history of coverage
8 Seamen’s Union of Australia v Adelaide Steamship Co Ltd (1976) 46 FLR 444 at 446; City of Wanneroo v Holmes (1989)
30 IR 362 at 378; AWU v Pasminco Australia Ltd (2003) 131 IR 1 at [39]
[2015] FWCFB 1981
13
of predecessor collective industrial instruments in Essential Energy’s workforce and compare
that to the coverage clause in the 2011 Agreement and the 2013 Agreement. This was part of
the objective framework of facts in which the 2011 Agreement was made. However, the
extensive reliance upon communications between parties during the course of the negotiations
for the 2011 Agreement - in particular the discussions between Mr Brock and Mr Smith - we
consider to have been misplaced. These constituted what was described by Mason J in
Codelfa Construction Pty Ltd v State Rail Authority of NSW9 as “statements and actions of the
parties which are reflective of their actual intentions and expectations” which should be
excluded from consideration in the construction of agreements. Further, the Senior Deputy
President had regard to conduct of Essential Energy occurring after the 2011 Agreement was
made and approved in forming the view that he did concerning the common understanding of
the parties. This was impermissible as earlier stated.
[27] The result of these errors was that the Senior Deputy President did not decide what he
described as the “key issue”, being the proper interpretation of clause 1.3. Consequently we
consider that permission to appeal should be granted, the appeal should be upheld, and the
Decision should be quashed.
Re-hearing - interpretation of the coverage provisions of the 2011 Agreement and the 2013
Agreement
[28] Because of our conclusion, it is necessary to re-hear the matter and ascertain the
correct interpretation of the coverage clause in the 2011 Agreement and the 2013 Agreement.
Given that we have had the benefit of extensive written and oral submissions from the parties
on this interpretation of the coverage clause, and any evidence of possible relevance is before
us, we consider that it is appropriate to re-hear the matter ourselves on the material before us.
As earlier noted, we also invited additional written submissions on a number of discrete
questions following the hearing of the appeal. We are satisfied from the parties’ responses that
the questions we posed have been properly understood and addressed. In those circumstances
we do not, notwithstanding Essential Energy’s request for a further oral hearing in relation to
those questions, propose to list the appeal for any further hearing concerning the interpretation
of the coverage provisions of the agreements.
[29] We will address the interpretation question by reference to the 2013 Agreement,
although in all relevant respects the provisions of the 2011 Agreement are virtually identical
in their terms and effect, so that our interpretation of the coverage clause of the 2013
Agreement will supply the answer to the question of the proper interpretation of the coverage
clause of the 2011 Agreement.
[30] We have already set out the coverage provision in clause 1.3. In order to properly
construe clause 1.3 it is necessary to examine other provisions of the 2013 Agreement which
provide its context. Clause 1.3 refers to “employees who are paid a base weekly rate of pay up
to and including Pay Point 44 as contained in Section 6 Clause 6.13 (Table 1: Essential
Energy Rates of Pay) ...”. It was common ground that the cross-reference to clause 6.13 was
in error and that the table referred to was contained in clause 6.12 (the equivalent table was in
clause 6.13 in the 2011 Agreement; the cross-reference in clause 1.3 was not adjusted in the
2013 Agreement when this changed to clause 6.12). Clause 6.12 is entirely comprised of
“Table 1: Essential Energy Rates of Pay”. The table sets out pay rates for each pay point from
9 (1982) 149 CLR 337 at 352
[2015] FWCFB 1981
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C1-C3 (which a note explains are for Cadet Engineers only), and then from 1 to 44. For each
pay point, as the headings to the columns in the table identify, are set out amounts for “Weekly
$ 1.7.12”, “Hourly rate $ 1.7.12”, “Weekly $ 1.7.13 2.7%”, “Hourly rate $ 1.7.13”, “Weekly $
1.7.14 2.7%”, “Hourly rate $ 1.7.14”. It is apparent, when comparing Table 1 to the
equivalent table in the 2011 Agreement, that the wage rates for 1 July 2012 were those
achieved under the previous 2011 Agreement - that is, they are the starting point wage rates -
and the rates for 1 July 2013 and 1 July 2014 represent increases of 2.7% per annum to be
implemented under the 2013 Agreement. Although the 2013 Agreement did not actually take
effect until 16 July 2014 (a delay substantially caused by the dispute about its coverage and
the s.240 proceedings), the inference to be drawn from Table 1 in the 2013 Agreement, the
nominal expiry date of 30 June 2013 in the 2011 Agreement and the nominal expiry date of
30 June 2015 in clause 1.5 of the 2013 Agreement is that the 2013 Agreement was intended to
provide for wage rates and wage increases over a two-year period from 1 July 2013 until 30
June 2015.
[31] The weekly rates specified in Table 1 are equal to the hourly rates multiplied by 36.
This is consistent with clause 2.1.3 of the 2013 Agreement, which specifies methods of
working ordinary hours which are based on an average of 36 ordinary hours per week. It may
therefore be concluded that the weekly rates specified in Table 1 are payable for the working
of an average of 36 ordinary hours per week.
[32] There are additional amounts and benefits payable under the 2013 Agreement. Table 2
in clause 6.13 specifies shift allowances payable for afternoon, night and early morning shift
respectively. Table 3 in clause 6.14 identifies the amounts payable for allowances which are
provided for in specified provisions of the 2013 Agreement. Table 4 in clause 6.15 specifies
the amounts of the “Essential Energy Electrical Safety Rules Allowance”. Clause 1.24.1
provides that employees covered by the 2013 Agreement will receive a 15% employer
contribution to superannuation, with any increases to the Commonwealth Government
Superannuation Guarantee during the term of the agreement to be absorbed into this amount.
[33] The 2013 Agreement elsewhere provides for some additional payments for particular
classifications of employees. Clause 7.2.1 provides that “Divisional Assistants” are required
to be available to work a 10 day fortnight for a minimum of 40 hours per week, and are to be
paid an additional superable amount of 11%. And of particular relevance to the underlying
dispute in this matter is clause 7.3, which is entitled “Schedule 2 - Managers & Specialists”.
Clause 7.3.1 provides:
“7.3.1 Hours of Work & Additional Loading
Employees under this Schedule shall devote their attention, time and skill during
normal business hours, and at other times as necessary, to fulfil the requirements of
their duties. The nominal hours of work will be 72 hours, to be performed over a 10
day fortnight, worked Monday to Friday, unless otherwise agreed.
Employees shall be remunerated at the appropriate rate of pay for their classification
plus any relevant allowance that is required for the employee to perform their role. An
additional eleven percent (11%) is paid in addition to the appropriate evaluated rate of
pay in return for a forty (40) hour week and working a 10 day fortnight.”
[2015] FWCFB 1981
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[34] It may be noted that the additional 11% amount payable under clause 7.3.1 for
Managers and Specialists who work a 40 hour week correlates closely with the percentage
difference between 36 and 40 hours (which is 11.11%)10. Clause 7.3.2 supplements this
provision by providing that the “normal overtime provisions of this Agreement do not apply to
employees under this schedule” (that is, Managers and Specialists). The clause goes on to
provide that such employees are not intended to work excessive hours, and those who find
themselves working excessive hours may, with the agreement of their manager (which is not
to be unreasonably withheld), have those excessive hours paid at the “ordinary single rate of
pay” or be granted “time-in-lieu for the actual hours worked”.
[35] Clause 1.20 of the 2013 Agreement provides:
“1.20 APPOINTMENTS AND PROGRESSION
Appointments will be made at the base classification rate for each applicable role.
Appointments may be made above the entry level for the classification for an
applicable role within the appropriate evaluated band subject to approval by executive
level management.
Progression within each classification will be as described for each role in Section
8 - Progression Guidelines.
In addition to the progression criteria as mentioned above, all progression will be
subject to satisfactory performance determined from performance review.”
[36] Section 8, referred to in clause 1.20 above, is headed “Progression Guidelines”, and in
general terms assigns particular classifications to pay points and specifies the appointment
and progression arrangements for each classification. Clause 1.18 creates an obligation upon
Essential Energy to pay persons in each classification the rate of pay for the assigned pay
point. It provides:
“1.18 CLASSIFICATION AND RATES OF PAY
The classification of all roles shall be determined by the major and substantial
functions and duties of a position in accordance with the position description.
The corresponding weekly rates of pay in Section 6 Clause 6.12 (Table 1: Essential
Energy Rates of Pay) of this Agreement shall apply to employees in their respective
classifications. The rates are inclusive of annual leave loading. The rates are inclusive
of a loading for work performed in the following circumstances: confined spaces,
underground work, working at heights, wet and dirty places, and use of power tools.”
[37] The specific appointment and progression requirements are set out in clause 8.1 as
follows:
“Appointments
10 The same conclusion applies in relation to the 11% additional payment to Divisional Assistants under cl.7.2.1.
[2015] FWCFB 1981
16
(i) All appointments will be made at the entry level for the classification
established for the position.
(ii) All new appointments should hold a relevant qualification for the position.
(iii) If an appointment is made where the employee does not hold the relevant
qualification, they will remain at the entry level until such time as they achieve
the required qualification.
(iv) Where an appointment has been made to a position which spans two
classification bands the appointment will be made at the entry level of the
lower classification band.
(v) Where an appointment has been made without the required qualification, the
employee will be provided the opportunity to complete the qualification and be
provided with study assistance as per the relevant Essential Energy policy.
(vi) Appointments may be made above the entry level classification for an
applicable role within the appropriate evaluated band subject to approval by
executive level management.
Progression
(i) Progression within the evaluated classification band shall be based on
documented satisfactory performance review on an annual basis.
(ii) Where the evaluated classification of a position spans more than one
classification band, progression to the higher classification band will only
occur where the employee obtains the higher relevant qualification.
(iii) Employees employed prior to 01 January 2010 who remain in the same
position will continue to progress annually to the top of the AQF evaluated
classification band whilst occupying that position without the need to obtain
the required qualification, subject to satisfactory performance.
(iv) Where Essential Energy initiates structural change and employees are
redeployed to an alternate position, they will not be disadvantaged in relation
to annual progression to the top of the AQF evaluated classification band of
their original role (as at displacement date) subject to satisfactory performance.
(v) Where an employee is required to undertake training relevant to the attainment
of AQF qualifications for the appointed position, training will be undertaken in
the employees’ own time unless otherwise agreed.
(vi) Where an employee is required to obtain a qualification or relevant training
outcome and Essential Energy has not provided the required training or
support, the employee will not be disadvantaged with regard to progression
except in circumstances of unsatisfactory performance.
[2015] FWCFB 1981
17
(vii) Managers/Team Leaders are required to conduct annual performance reviews
with all direct reports and are encouraged to provide six (6) monthly
documented reviews with regard to progress. Employees are required to
participate in the performance review process.”
[38] The 2013 Agreement thereafter in clause 8.2 sets out the progression arrangements
and pay points for various categories of employees. By way of an example which, again, is of
particular relevance to the underlying dispute between the parties is clause 8.2.17, which
applies to “Managers & Specialists”. It provides as follows:
“8.2.17 MANAGERS & SPECIALISTS
MANAGERS & SPECIALISTS (BAND 1)
Level Pay Point Requirements
1 37
By appointment only
Relevant degree qualification or equivalent
2 38
Progression will be determined by achievement of agreed key
result areas/targets as per the terms of an individual
performance agreement
3 39
Progression will be determined by achievement of agreed key
result areas/targets as per the terms of an individual
performance agreement
4 40
Progression will be determined by achievement of agreed key
result areas/targets as per the terms of an individual
performance agreement
Notes:
A loading of 11% is paid in addition to the above pay points in return for a 40 hour week.
MANAGERS & SPECIALISTS (BAND 2)
Level Pay Point Requirements
5 41
By appointment only
Relevant degree qualification or equivalent
6 42
Progression will be determined by achievement of agreed key
result areas/targets as per the terms of an individual
performance agreement
7 43
Progression will be determined by achievement of agreed key
result areas/targets as per the terms of an individual
performance agreement
8 44
Progression will be determined by achievement of agreed key
result areas/targets as per the terms of an individual
performance agreement
Notes:
A loading of 11% is paid in addition to the above pay points in return for a 40 hour week.
[39] Apart from the top level of Managers and Specialists, the other categories of
employees entitled to pay point 44 in clause 8.2 are the top level of Administration Officer,
Technical Officer, Network Operator and Engineering Manager. In relation to the Engineering
Manager only, an asterisked note provides “Employees appointed at this level will be
[2015] FWCFB 1981
18
employed under Schedule 2 - Managers & Specialists of the Enterprise Agreement”. This has
the effect of applying the 40 hour week and the additional 11% loading to them.
[40] There are no definitional provisions in the 2013 Agreement which give further
information about the classification descriptors in clause 8.2, a number of which (such as
“Managers & Specialists”) are described in somewhat generic terms. Nor is there in relation
to clause 8.2.17 any further information about the meaning of the requirement for “Relevant
degree qualification or equivalent”.
[41] We consider that the provisions identified above provide contextual assistance to the
proper interpretation of clause 1.3. The first sentence of clause 1.3 describes the class of
employees to whom the 2013 Agreement applies by reference to the “base weekly rate of pay”
which they are paid. It is clear, from the cross-reference to the rates of pay in Table 1, that the
base weekly rate of pay referred to is the weekly rate of pay referred to for pay point 44 in
Table 1. That rate is, at the current time, $2,589.75. That this is a rate payable for base hours
of an average of 36 hours per week is demonstrated by, first, the specified hourly rates in
Table 1 (being the weekly rate divided by 36); second, by the fact that the basic working
hours obligation for which these weekly rates are payable is an average of 36 per week; and,
third, by the fact that provision is made for additional wage payments (to Divisional
Assistants, Managers and Supervisors, and Engineering Managers) where a 40 hour week is
required to be worked.
[42] There is no textual support in the 2013 Agreement for the proposition that clause 1.3
operates by reference to an employee’s total remuneration. Clause 1.3 specifically refers to
the base weekly rate of pay, not total remuneration, and nowhere in the 2013 Agreement,
apart from the reference in clause 1.3 itself to “Total Remuneration Package (TRP) contracts”
for employees not covered by the 2013 Agreement, is there reference to the concept of total
remuneration. In the hearing at first instance and on appeal, total remuneration figures for
employees on pay point 44 were referred to by the unions as representing the cut-off point for
the coverage of the 2013 Agreement, but those figures do not appear in the 2013 Agreement;
they are an external calculation of the specified separate remuneration elements for Managers
and Specialists and Engineering Managers on pay point 44. Further, there is no consistent
total remuneration amount calculable for employees at pay point 44, since Managers and
Specialists and Engineering Managers at that pay point receive the additional 11% loading for
working a 40 hour week, but Administration Officers, Technical Officers and Network
Operators at the same pay point do not. The lack of a consistent total remuneration amount for
employees at pay point 44 confirms that total remuneration was not the discriminator of
coverage. Therefore, no interpretation alternative to the plain meaning of clause 1.3 is
discernible in the text of the 2013 Agreement.
[43] The prior industrial history does not assist in discerning any alternative interpretation.
The current Essential Energy business was formerly a part of the Country Energy business
before the retail arm and brand name of the Country Energy business was privatised in 2011.
Country Energy was formed in 2001 from a number of separate State-owned electricity
businesses. The first industrial instrument applicable to it was the Country Energy Enterprise
Award 2001, an award of the Industrial Relations Commission of New South Wales (NSW
Commission). Clause 1(i) of that award provided that it applied to the classifications set out in
the award. However, clause 1(ii) provided that “for the avoidance of doubt” the award did not
apply to any employee within a specified classification if the employee “is receiving a Total
Remuneration Package which exceeds $80,500 per annum”, with “Total Remuneration
[2015] FWCFB 1981
19
Package” being defined to mean “base salary plus superannuation”. Clause 1(iii) then
provided that any employee in a professional classification whose pay rate was Professional
Grade 3 or above who was not employed on an “individual employment agreement” would,
notwithstanding clause 1(ii), “continue to have their terms and conditions of employment
prescribed by the Award”. Table 2 of the Award specified weekly rates of pay for particular
classifications. The classification with the highest weekly pay rate was the Professional Grade
3. This award therefore limited coverage in a dual way: firstly by reference to the
classifications set out in the award, but secondly by reference to an overall cap of total
remuneration subject to an exception pertaining to professional employees not on individual
employment contracts.
[44] The position as to coverage changed in the next award, the Country Energy Enterprise
Award 2004 (also an award of the NSW Commission). Clause 1(i) continued to provide that
the award applied to employees employed in the classification in the award, but Table 2 of the
award did not set out classifications and pay rates as in the previous award; instead it set out
pay points (from 1 to 44) with weekly wage rates for each pay point and, in some cases,
assigned Australian Qualification Framework (AQF) levels. Clause 1(ii) then provided:
“Existing employees employed in a Professional capacity whose rate of pay exceeds
Professional Engineer Grade 8 who is not employed under an individual employment
agreement shall continue to have their terms and conditions of employment prescribed
by this Award.”
[45] This position remained the same in the subsequent Country Energy Enterprise Award
2005 and Country Energy Enterprise Award 2007, which were also awards of the NSW
Commission; and the Country Energy Enterprise Agreement 2009, an enterprise agreement
entered into under the Industrial Relations Act 1996 (NSW). These instruments appear to
have operated in conjunction with internal business documents which assigned particular
classification to pay points. In evidence was a document entitled “Country Energy Agreement:
Progression Guidelines” dated 8 December 2009, which, we infer from its contents, was an
updated version of a document which had existed for some time. It set out a range of
classifications and the pay point and progression criteria for each classification in a manner
very similar to clause 8.2 of the 2013 Agreement (and the 2011 Agreement). The
classification of Professional Engineer Grade 8 was assigned pay point 44.
[46] Therefore in the 2004, 2005, 2007 and 2009 Country Energy instruments, although
coverage was nominally determined by classification, in fact it operated by reference to an
upper limit of pay point 44. There was an exception to this, namely for existing Professional
Engineers paid above pay point 44 who continued to be covered by the instruments if not
already subject to an individual employment contract. We conclude therefore that the concept
of total remuneration as a discriminator of coverage was abandoned after the 2001 Award,
and that thereafter coverage was effectively limited to the base weekly wage rate for pay point
44, subject to a grandparenting provision applying to Professional Engineers not on individual
contracts and paid above pay point 44.
[47] The Country Energy Agreement: Progression Guidelines did not include Managers
and Specialists. They were covered by separate enterprise agreements, the Country Energy
Managers & Specialists Enterprise Agreement 2005 and subsequently the Country Energy
Managers and Specialists Enterprise Agreement 2009. The latter of these two agreements
covered “Employees who are covered by the Country Energy Award 2007, and successor
[2015] FWCFB 1981
20
instruments, and whose evaluated range falls within the following classification spread may
be offered access to this Agreement where it is agreed between the parties to the Agreement
that such an offer is warranted”. The “evaluated range” set out immediately thereafter refers
to classification levels which, when read with the “Country Energy Agreement: Progression
Guidelines”, align with pay points up to a maximum of 44. A significant feature of the
Country Energy Managers and Specialists Enterprise Agreement 2009 is that it makes
provision for managers and specialists covered by it to work a 40 hour week in return for an
additional 11% loading.
[48] In addition to the Country Energy Managers and Specialists Enterprise Agreement
2009 a number of other occupation-specific groups including Personal and Executive
Assistants and Human Resources Advisers were covered by separate enterprise agreements.
[49] When the terms of these earlier instruments we have referred to are compared to those
of the 2011 Agreement, the intended coverage of the 2011 Agreement, and the successor 2013
Agreement, is clear. The 2011 Agreement, although it nominally no longer referred to
coverage by reference to classifications, continued to operate on the basis that it covered
employees paid a base weekly wage up to pay point 44. It did however exclude the previous
grandparenting provision applicable to Professional Engineers paid above pay point 44. It also
drew together conditions that were covered in a number of previous instruments and
documents, including the Country Energy Agreement: Progression Guidelines and the
Country Energy Managers and Specialists Enterprise Agreement 2009, into a single industrial
instrument. In doing so, it established a clean limit of coverage at the base weekly wage rate
of pay point 44, which except for the removal of the grandparenting provision was completely
consistent with the position as to coverage which had operated since the Country Energy
Enterprise Award 2004.
[50] The plain meaning of clause 1.3 is therefore confirmed by the industrial history.
[51] We have earlier referred to the unions’ submission that an interpretation of clause 1.3
consistent with its plain meaning cannot be correct because it leads to an anomalous outcome,
namely that an employee whose total remuneration is below that of an employee covered by
the 2013 Agreement may be placed outside the coverage of that agreement and engaged on an
individual contract simply by increasing the employee’s weekly wage to a level slightly above
the base weekly wage rate for pay point 44 prescribed in Table 1. We do not accept this
submission, for two reasons.
[52] The first, as earlier stated, is that the base weekly pay rate at pay point 44 which serves
as the limit of coverage of the 2013 Agreement is for the working of an average 36 ordinary
hours per week. In relation to an employee required by Essential Energy to work a 40 hour
week, it cannot be the case, as the unions suggested, that simply by paying a few dollars per
week more than the current $2,589.75 weekly rate for pay point 44, the person thereby falls
outside of the coverage of the 2013 Agreement. That person would clearly not be receiving,
for the working of 36 hours per week, a base weekly pay rate in excess of pay point 44. In the
case of Managers, Specialists and Engineering Managers, who under the 2013 Agreement are
required to work a 40 hour week, the additional loading of 11% to them is, as earlier stated,
roughly equal to the payment to them of an additional four hours at the hourly rate for pay
point 44 prescribed in Table 1. That approach ensures that such employees, although working
a 40 hour week, properly receive the base weekly wage for an average 36 hour week
prescribed by Table 1. We do not consider that an employee required to work a 40 hour week
[2015] FWCFB 1981
21
would be receiving more than the base weekly rate for pay point 44 unless that employee’s
hourly rate, multiplied by 36, exceeded that base weekly rate. Any other approach would fail
to give proper effect to the fact that the coverage line in clause 1.3 is drawn by reference to a
base weekly wage that is payable for an average 36 hour week.
[53] The second reason is that we do not consider that the 2013 Agreement contemplates
persons in classifications covered by that agreement being moved outside its coverage by an
alteration to their pay arrangements. Clause 1.3 expressly sets the limit of coverage of the
2013 Agreement at pay point 44, but equally clauses 1.18 and 8.2 expressly require that
employees in the identified classifications be paid at specified pay points which are up to but
not in excess of pay point 44. The effect of these provisions, read together, is clear: a
coverage line at pay point 44 was drawn on the basis that any employees in the classifications
in clause 8.2 were to be paid at pay point 44 or below, and were thus covered by the 2013
Agreement and entitled to its benefits. For example, clause 8.2.6 expressly refers to a
Network Operator Level 8, who performs a Team Leader/Coordinator role, being paid at pay
point 44. The clause, when read with clause 1.3, evinces an intention for the Network
Operator Level 8 to be covered by the 2013 Agreement and to be entitled to its benefits,
including 15% superannuation contributions. It would do violence to that intention if
Essential Energy, by the expedient of the payment of a small amount in addition to the base
weekly wage rate for pay point 44, could move a person properly classified as a Network
Operator Level 8 and performing the work of that role out of the coverage of the 2013
Agreement and thus disentitle that person to the 5.5% superannuation contribution benefit
additional to the current statutory superannuation contribution requirement of 9.5% for which
the 2013 Agreement provides. The provisions of the 2013 Agreement we have identified,
including in particular clause 1.18, do not contemplate this occurring or otherwise permit this
to occur. Such a scenario would therefore be, we consider, a breach of the 2013 Agreement.
Conclusion
[54] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The Decision is quashed.
[55] On the re-hearing of the matter, we interpret the coverage provisions of the 2011
Agreement and the 2013 Agreement in accordance with our earlier reasons for decision. It is
presently unclear to us whether this interpretation will resolve to finality the disputes between
the parties and whether any further orders need to be made. Therefore we grant liberty to
apply to any party which considers that the exercise of further dispute resolution functions by
the Commission is required.
VICE PRESIDENT
THE $ SEAL OF THE SION THE FAIR WORK
[2015] FWCFB 1981
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Appearances:
R. Kenzie QC and Y. Shariff of counsel, for the appellant.
I. Taylor SC and L. Doust of counsel, for the respondent unions.
Hearing details:
2015.
Sydney:
17 February.
Final written submissions:
14 April 2015.
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Price code C, PR562303
