Application by MSS Security Pty Ltd T/A MSS Security - [2016] FWCA 2774

Fair Work Act 2009
s 217 - Application to vary an agreement to remove an ambiguity or uncertainty

MSS Security Pty Ltd t/as MSS Security
(AG2015/6555)

MSS SECURITY AVIATION QLD ENTERPRISE AGREEMENT 2014-

2017

Security services

DEPUTY PRESIDENT SAMS SYDNEY, 23 MAY 2016

Application to remove an ambiguity or an uncertainty in an enterprise agreement – Aviation
Allowance – all purpose allowance – method of calculation – history of provision – whether
allowance is paid for each hour worked or compounded for the purposes of calculating
overtime and other penalties – principles of interpretation – ambiguity established – mutual
intention considered – allowance never paid on a compounded basis –variation appropriate –
whether Commission has power to vary expired enterprise agreement – two enterprise
agreements varied – orders made.

BACKGROUND

[1] On 4 November 2015, MSS Security Pty Ltd t/as MSS Security (‘MSS’) made an

application, pursuant to s 217 of the Fair Work Act 2009 (the ‘Act’) seeking to have the Fair

Work Commission (the ‘Commission’) remove an ambiguity or uncertainty by varying the

terms of both the MSS Security Aviation QLD Enterprise Agreement, 2014–2017 (the ‘2014

Agreement’) and the MSS Security Enterprise Agreement (QLD) 2011–2014 (the ‘2011

Agreement’). MSS Security provides security and emergency response services with offices in

all States and Territories. MSS employs around 5,000 employees nationwide; 870 of these in

Queensland and 220 who work in aviation security. The 2011 Agreement was approved by

Asbury C (as Her Honour then was) on 1 November 2011; See: MSS Security Pty Ltd [2011]

FWAA 5060. The 2014 Agreement was approved by Gregory C on 21 November 2014; See:

MSS Security Pty Ltd [2014] FWCA 8229.

[2] The ambiguity or uncertainty is said to arise in respect to a common clause in both

Agreements dealing with the payment of an Aviation Allowance (the ‘Allowance’) for

[2016] FWCA 2774 [Note: An appeal pursuant to s.604 (C2016/1353) was
lodged against this decision - refer to Full Bench decision dated 3 August
2016 [[2016] FWCFB 4979] for result of appeal.]

DECISION

E AUSTRALIA FairWork Commission

http://www.fwc.gov.au/decisionssigned/html/2016FWCFB4979.htm

[2016] FWCA 2774

security employees at Queensland airports (namely, Brisbane and regional airports in Mackay,

Prosperine, Hamilton Island, Rockhampton and Harvey Bay) and seaports. The Aviation

Allowance is paid to security employees who work in the airport precinct and who are

required to hold a Red Aviation Security Identity Card. It applies to all areas, including

catering and freight centres.

[3] For present purposes, the two clauses in both Agreements are identical and are

expressed as follows:

‘The following all purpose allowance will apply per hour to employees working at an
airport or seaport performing the following functions: passenger screening, checked
bag screening including x-ray and or trace element detection equipment (i.e. Barringer
machine or similar), kerbside management, freight screening, operation of control
room and other functions within the airport or seaport precinct.’

Both Agreements cover United Voice (the ‘Union’). The Union is opposed to the application.

For completeness, I note that this application is related to a s 739 application seeking to have

the Commission deal with a dispute in accordance with a disputes resolution procedure, which

was filed by MSS on 26 October 2015 and in which it was claimed that the Union had failed

to follow the Grievance Procedure under the two MSS Agreements, by pursuing an alleged

breach of the Agreements in the Federal Circuit Court of Australia (FCC) in relation to the

Aviation Allowance. Proceedings were commenced in the FCC on 2 November 2015 (BRG

929/2015), but were stayed; presumably pending the outcome of this matter before the

Commission.

[4] Shortly stated, the dispute between the parties concerns the concept of ‘all purpose’

and whether the Aviation Allowance is paid for each hour worked (and for paid leave) as a

flat hourly allowance, (‘MSS’s position’) or whether the allowance forms part of the base

ordinary rate of pay for the purposes of calculating payments for overtime and all forms of

paid leave (the ‘Union’s position’).

[5] MSS submitted that if an ambiguity or uncertainty is found by the Commission in the

two Agreements, then for clarity, the following variations should be made:

‘1. The MSS Security Aviation QLD Enterprise Agreement 2014-2017 is varied by
inserting an additional sentence at the end of the description of the Aviation Allowance
in clause 5 of Schedule A as follows:

[2016] FWCA 2774

‘To avoid doubt, this allowance is paid separately for each hour worked and
each hour of annual leave and will not be added to the base rate of pay for the
purpose of calculating overtime, shift loadings or penalties for work on
weekends and public holidays.’

2. The MSS Security Enterprise Agreement (Qld) 2011-2014 is varied by inserting an
additional sentence at the end of the description of the Aviation and Sea Ports Security
Allowance in clause 3.4.6 as follows:

3. Order 1 is to take effect on 28 November 2014.

4. Order 2 is to take effect on 9 June 2011.’

[6] Unsurprisingly, the Union’s interpretation results in a higher calculation than

contended for by MSS. It is not disputed that the allowance has been paid according to MSS’s

interpretation, since the approval of the 2014 Agreement and during the life of the 2011

Agreement. Hence, the application and the relief proposed is to be applied to employees

relevantly employed under the two Agreements. Conversely, it may be assumed that if the

Union’s position prevails, a significant amount of backpay may be liable to be paid to a large

number of existing (and possibly former) employees of MSS. It is also not in contention that

the disagreement between the parties over the correct interpretation of the calculation of the

Aviation Allowance was a ‘live’ and controversial issue in the negotiations leading up to the

approval of the 2014 Agreement. This may be relevant to the intentions of the parties should

an ambiguity or uncertainty be found to exist in the disputed clause.

[7] Given the circumstances, a number of attempts were made by the Commission (myself

and Spencer C) to engage with the parties over a possible settlement of the competing

contentions. Such an outcome remained elusive and ultimately the Commission issued

directions for the filing and service of evidence and outlines of submissions. The matter was

heard in Brisbane on 22 March 2016. Mr R Dalton, of counsel appeared for the applicant and

Mr R Reed of counsel, appeared for the Union, with permission being granted to both parties

to be represented by lawyers, pursuant to s 596 of the Act.

History of the relevant industrial instruments

[2016] FWCA 2774

[8] At this point, it is helpful to set out the history of the Aviation Allowance in iterations

of various industrial instruments applying to security employees working at airports in

Queensland. Given that a notorious feature of the security industry generally is the winning

and losing of contracts, it is unsurprising that these instruments have covered different

employers. The Travel Allowance (previously the Aviation Allowance) first appeared in the

Group 4 Securitas (Qld Enterprise Bargaining) Certified Agreement 2005 (the ‘2005

Agreement’). Cl 5.5 sets out its terms as follows:

‘(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.’

[9] Clause 5.6 of the 2002 Agreement deals with Allowances and 5.6.1 specifically with

the then named Transport Allowance. It reads as follows:

‘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.’

[10] On 21 May 2009, the expiry date of the 2005 Agreement was extended by order of the

Australian Industrial Relations Commission (AIRC) to 30 June 2010 [PR987020] and became

the Group 4 Securitas (Qld Enterprise Bargaining) Certified Agreement 2005 (as Varied and

Extended) (the ‘2009 Agreement’).

[11] Both of those Agreements contain provisions applying to Aggregated Rates

employees. This inclusion will become relevant later. Group 4 Securitas Pty Ltd became ISS

Security Pty Ltd (‘ISS’) and were a party to the ISS Security Pty Ltd & United Voice Secure

Future Enterprise Agreement 2012 – 2016 [AE896448] (the ‘ISS Agreement’), which also

covered the Union. At the time, ISS provided security staff to Brisbane and regional

Queensland airports and this Agreement applied throughout Queensland. It commenced on 3

September 2012 and had a nominal expiry date of 30 June 2016. The Transport Allowance

appeared in Schedule B – Wages and Allowances and was expressed as follows:

[2016] FWCA 2774

Allowances Description Frequency First full Pay Period on or
After

01
July
2012

01
July
2013

01
July
2014

01
July
2015

… … … … …
Transport
Allowance

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 that
in relation to qualifying
Aggregated Rate Employees
the Transport Allowance
will be paid in addition to
the Aggregated Rate for all
purposes.

Per hour $1.30 $1.37 $1.44 $1.50

[12] The ISS Agreement referred to the Modern Award (no doubt for the purposes of the

BOOT). The Modern Award is the Security Services Industry Award 2010 [MA000016]. It

has a provision for Aviation Allowance at cl 15(1)(a) – Wage related allowances as follows:

15.1 Allowance rates
Employers must pay to an employee such allowances as the employee is entitled to
under this clause at the following rates (which are expressed as a percentage of the
standard rate being the minimum weekly wage for the Security Officer Level 3
classification):

(a) Wage related allowances
Allowance
…

Payable % of standard rate

Aviation Per hour 0.187

No reference is to be found in the Modern Award as to how the allowance is calculated.

[13] MSS’s involvement in airport and seaport security in Queensland commenced in 2010,

when it won a contract at the Port of Gladstone and employees were covered by the Paton’s

Security Pty Ltd Security Officers Collective Agreement 2006–2009 [AC303106] (the

‘Paton’s Agreement’), a collective agreement certified under the Workplace Relations Act

1996. Cl 21.5.8 dealt with the Aviation and Sea Ports Security Allowance as follows:

[2016] FWCA 2774

The following flat hourly allowance will apply to employees working at an airport or
seaport performing the following functions: passenger screening, checked bag
screening including x-ray and or trace element detection equipment (i.e. Barringer
machine or similar), kerbside management, freight screening, operation of control
room and other functions within the airport or seaport precinct.

*2006 2007 2008
Airport and Seaport $1.13 $1.18 $1.23

*Currently being paid.

This allowance shall only be payable to employees:

 During work at an airport or seaport
 Following the expiry of any current contract existing between the employer and its

client.
 Is not compounded for casuals, or by any form of Penalty payment.

[14] In 2011, the Paton’s Agreement (and a Chubb Queensland Agreement) were replaced

by the 2011 Agreement. It had a nominal expiry date of 1 July 2014. Clause 3.4.6 expressed

the Aviation Allowance as:

3.4.6 Aviation and Sea Ports Security Allowance
The following all purpose allowance will apply per hour to employees working at an
airport or seaport performing the following functions: passenger screening. checked
bag screening including x-ray and or trace element detection eqUipment (I.e.
Barringer machine or similar). Kerbside management. freight screening. operation of
control room and other functions within the airport or seaport precinct.

First Aid Allowance 2011

$21.76 per week.

[15] The 2011 Agreement was replaced by the 2014 Agreement and the Aviation

Allowance appeared in a Table under Schedule A as follows:

5. Allowances

a) All allowances shall apply from the date of a successful yes vote and payable from
the seventh day after approval of this Agreement by Fair Work Commission.

b) All Allowances from July 2016 are subject to the Fair Work Commission annual
national minimum wage increase (the percentage equivalent).

c) All allowances are paid per week or part thereof worked unless otherwise specified.

[2016] FWCA 2774

Allowances Description First full Pay Period on or
After

July
2014

July
2015

July
2016

… … … … …
Aviation The following all purpose

allowance will apply per hour to
employees working at an airport
or seaport performing the
following functions: passenger
screening, checked bag
screening including x-ray and or
trace element detection
equipment (i.e. Barringer
machine or similar), kerbside
management freight screening,
operation of control room and
other functions within the airport
or seaport precinct.

$1.44 $1.50

[16] MSS also has enterprise agreements in Victoria and Western Australia. However, the

disputed words ‘all purpose’ are not in either of these enterprise agreements’ Aviation

Allowance clauses.

WITNESS EVIDENCE

[17] The following persons gave written and/or oral evidence in the proceeding:

 Mr Claudio Grasso, Aviation Contract Manager for MSS from June 2011 to August

2015;

 Ms Margaret Stinson, HR/IR Manager Queensland and National Training Manager

for MSS;

 Ms Rebecca Jansen, HR Manager, Northern Territory and South Australia for MSS;

 Mr Damien Davie, a Coordinator for the Union representing workers in the security

industry, not required for cross examination; and

 Mr David Conn, a Security Officer for MSS and member of the Union.

For the applicant

Mr Claudio Grasso

[18] Mr Grasso has extensive experience in the aviation industry, including 24 years with

Qantas and in a position as MSS’s Aviation Contract Manager from June 2011 to August

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2015. His responsibilities in this role were to manage the aviation security contracts for MSS,

which included the transitioning between November 2012 and 1 February 2013 of the MSS

contract for Brisbane Airport, previously held by ISS. As part of the transition, MSS offered

employment to most of the ISS employees on terms and conditions they had enjoyed under

the ISS Agreement. Mr Grasso said that MSS maintained the Transport Allowance (as the

Aviation Allowance was then known) set out at Schedule B of the ISS Agreement. It was also

expressed as to be paid for ‘all purpose’.

[19] However, Mr Grasso deposed that the allowance had always been calculated

throughout the MSS business in other States and Territories, on a ‘stand alone’ basis; that it is

not included in the base rate of pay, but is added separately on an hourly basis. It was his

understanding that MSS had never paid the allowance on a compounding basis. Mr Grasso

added that MSS enterprise agreements contain Aggregated Rates, which are expressed to

include penalties that would otherwise be applicable for work at night, weekends and public

holidays.

[20] In February 2014, MSS announced it was commencing negotiations for a separate

aviation agreement to cover MSS employees at airports in Queensland. Mr Grasso and Ms

Stinson were members of the MSS negotiating team. In late May 2014, the Union raised

concerns about the application of the Aviation Allowance under the 2011 Agreement, sought

copies of pay records and foreshadowed underpayment proceedings. Ms Stinson responded by

indicating that the former ISS employees were at that time covered by the 2011 Agreement

and that the Aviation Allowance was correctly calculated on a ‘stand alone’ basis.

[21] Mr Grasso said that in the ongoing negotiations which were conducted over 11

meetings, the Aviation Allowance issue was raised and MSS sought to clarify its meaning by

removing the words ‘all purpose’ from the clause. However, other more significant issues,

according to the Union, had priority, such as pay increases and the recovery of historic

overpayments. An employee vote on the first MSS offer was rejected 104 – 41 on 20 June

2014. A subsequent survey of employees disclosed that the key factor in the ‘No’ vote was

the pay increase. Negotiations continued over July and August 2014.

[22] A revised offer was made by MSS on 31 July 2014 which included reinstating the

same wording in the 2011 Agreement in respect of the Aviation Allowance, i.e. restoring the

[2016] FWCA 2774

words ‘all purpose’ to the clause. Mr Grasso recalled a meeting in early August in which the

Union negotiator sought to further clarify the wording by making it clear the Aviation

Allowance was calculated on a compounding basis. Mr Grasso had replied with words to the

effect of:

‘Call it what you will but the way that the Aviation Allowance has been applied, and
will continue to be applied, by MSS will be on a stand alone basis and that the words
“all purpose” mean that the allowance will be applied for all purposes of the aviation
work that is conducted under the EA.

MSS would be prepared to contest the meaning of “all purpose” in the Fair Work
Commission and if that is the way United Voice want to take it, then the Union can
lodge their submission and MSS will be happy to be called to account.’

[23] The revised offer, with the current wording in the Aviation Allowance provision, was

voted up by a majority of employees on 19 September 2014. Mr Grasso was not aware of any

employee complaints as to how the allowance was calculated, as MSS had continued to apply

it on a ‘stand alone’ basis after the 2014 Agreement’s approval.

[24] In cross examination, Mr Grasso said that he was aware during the negotiations for

the transfer of ISS employees to MSS in 2013, that an ‘all purpose’ Aviation Allowance

applied to the employees and that MSS had agreed to maintain all ISS rates and conditions.

Mr Grasso conceded he did not have an industrial relations background. Nevertheless, he

knew the Aviation Allowance in the Modern Award was not ‘all purpose’ and MSS applied

its understanding of the relevant clause across all its sites as a ‘stand alone’ allowance. It was

Mr Grasso’s responsibility after June 2011 to ensure that the Aviation Allowance was

correctly paid on a ‘stand alone’ basis. MSS and its officers had never wavered from that

view.

[25] Mr Grasso was asked about the representations by the Union in May 2013 in respect to

the correct calculation of the allowance. He agreed he had told Mr M McKeown of United

Voice that he would seek clarification of what he was being asked. Clarification was sought

from the General Manager, Mr Mark Casher and the HR Manager, Ms Stinson. Mr Grasso

insisted that these inquiries were made, not because he was unsure, but rather because he was

seeking a firm response to provide to Mr McKeown. Mr Grasso agreed that the Aviation

Allowance was paid on annual leave, sick leave and public holidays.

[2016] FWCA 2774

[26] Mr Grasso acknowledged that the issue was raised again in September 2013 when Mr

McKeown referred to material from the Fair Work Ombudsman website. He accepted that the

parties continued to have different views. Mr Grasso agreed that during the negotiations for

the 2014 Agreement, MSS had proposed to delete ‘all purpose’ from the clause. However,

this was not a recognition that the Union’s view was correct; rather, it was intended to make

clear that the Company’s interpretation had always applied across all of its sites. Mr Grasso

accepted the draft agreement was rejected by the employees in a vote, in circumstances where

the Union had run a ‘No’ campaign based on MSS’s desire to remove these words and other

matters. Mr Grasso acknowledged that the words ‘all purpose’ were restored and the next vote

of employees was in favour of the Agreement.

Ms Margaret Stinson

[27] Ms Stinson has extensive HR and Training experience gained since 2002. She has

been MSS’s HR/IR manager since March 2008 and was involved in negotiations for the 2011

and 2014 Agreements.

[28] Ms Stinson set out the contract arrangements when MSS took over the Qantas aviation

security contract from ISS in February 2013. Much of this evidence was not disputed and was

generally similar to Mr Grasso’s evidence. Accordingly, I will not repeat it here. However,

Ms Stinson added that when the former ISS employees were offered the same terms and

conditions they were then employed under, they were also offered:

 a day shift allowance of 15% to employees who commence a rostered shift before

5:30am or conclude after 6:30pm.

 five days of personal leave accrual after the first month of employment provided

staff had already accumulated this amount of personal leave with ISS.

 recognition of pre-approved annual leave for the first 12 months.

 recognition of years of service for the purpose of maternity and paternity leave.

 recognition of years of service for the purposes of calculating when the entitlement

to Long Service Leave falls due.

[29] Ms Stinson explained that MSS first paid the Aviation Allowance in Queensland in

2010 under a separate Agreement when it took over security work at the Port of Gladstone.

This was in accordance with the Paton’s Agreement. It was paid as a ‘stand alone’ allowance

for hours worked. It was Ms Stinson’s belief that this had been the practice of MSS in

[2016] FWCA 2774

Queensland up to the present day. She had also been informed by Ms Jansen that this has been

the Company national practice since 1998.

[30] Ms Stinson described the working of the aggregated ‘rolled up’ rate payable to

permanent employees (less than 20 in Queensland) who work 12 hour shifts in a pattern of

two days on, two nights on, followed by four days off for at least eight consecutive weeks.

The rate is calculated by taking account of public holidays, penalties and loadings, but not the

Aviation Allowance. This was consistent with the nature of the ‘stand alone’ allowance, as it

was never intended to be applied to penalty rates.

[31] Ms Stinson said that the Aviation Allowance calculation was never an issue in the

negotiations conducted over two years, for the 2011 Agreement. She also set out relevant

details of the negotiations for the 2014 Agreement, which largely replicated Mr Grasso’s

evidence. I do not repeat it here. She noted that of the four main concerns of the employees

when they voted ‘no’ in the first vote, the Aviation Allowance was fourth in priority. Ms

Stinson also corroborated Mr Grasso’s evidence as to why MSS reverted to the original

wording of the clause and to the conversation he had with the Union officials (see para [22]).

[32] It was Ms Stinson’s further evidence that during the negotiations for the 2014

Agreement (including during the ‘No’ campaign prior to the first vote) the Union had

repeatedly asserted that its interpretation of calculating the Aviation Allowance was applied

by the former employer, ISS. However, after the approval of the 2014 Agreement, Ms Stinson

became aware of a 2013 decision of Spencer C in which this very issue had been the subject

of dispute between the Union and ISS. Spencer C had ruled that the allowance should be paid

on a ‘stand alone’ basis; See: United Voice v ISS Security Pty Limited [2013] FWC 9306

(‘United Voice v ISS Security’).

[33] Ms Stinson deposed that she was unaware of any employee complaint or enquiry made

to payroll about the Company’s continued calculation of the allowance on a ‘stand alone’

basis. The first time the matter was raised was when MSS was served with a right of entry

notice by the Union in April 2015 and when the Union later filed proceedings in the FCC on 8

October 2015, concerning underpayment of the Aviation Allowance.

[2016] FWCA 2774

[34] In further oral evidence Ms Stinson gave details about the Aggregated Rates and the

employees who are paid it. They tend to be employees who work in areas of the airport which

require 24/7 security (security screening) and associated tasks in areas where passengers do

not frequent. Ms Stinson confirmed from a payslip of Mr Conn, in November 2015, that the

Aviation Allowance is a separate entry on the employees’ payslips.

[35] In cross examination, Ms Stinson set out the manner in which an employee would be

able to work out from this payslip, the basis of the calculation of the Aviation Allowance. The

payslip shows the hours worked or annual leave taken, divided into the total amount paid

under the Aviation Allowance entry.

[36] Ms Stinson agreed she was involved in the negotiations of the 2011 Agreement which

replaced the Paton’s Agreement. The Paton’s Agreement did not express the Aviation

Allowance as ‘all purpose’. It was expressed as a flat hourly allowance (see para [13]). She

accepted that the wording in the Paton’s Agreement was not reproduced in the 2011

Agreement.

[37] Ms Stinson said that in a document provided to employees during the 2014 Agreement

negotiations, reference was made to the Modern Award and the fact that the Aviation

Allowance was not an ‘all purpose’ allowance in the Modern Award.

Ms Rebecca Jansen

[38] Ms Jansen has been employed in two roles with MSS since 14 November 2012. She is

the HR Manager for South Australia and the Northern Territory and lead HR person across

the business responsible for aviation sites in the Northern Territory, Victoria, Queensland and

Tasmania. Her evidence dealt with the industrial coverage and application of the Aviation

Allowance across these jurisdictions. She said that to the best of her knowledge, the Aviation

Allowance has always been calculated on a ‘stand alone’ basis in MSS agreements for

aviation services in Queensland, Western Australia and Victoria. She attached a spreadsheet

showing various 2012 – 2015 payslips of employees in each of these States to demonstrate

how MSS has always calculated the Aviation Allowance.

[39] In cross examination, Ms Jansen explained that she had established her understanding

of the calculation of the Aviation Allowance by reviewing past and present agreements and

[2016] FWCA 2774

payroll records from MSS sources in each State. Ms Jansen confirmed that in the Western

Australia and Victorian agreements the allowance is not expressed as ‘all purpose’, while it is

in Queensland. Ms Jansen acknowledged that the data in the spreadsheet referred to above

was not the same data the employees would see on their pay slip. However, employees have

separate entries for the Aviation Allowance on their pay slips.

For the Union

Mr Damien Davie

[40] Mr Davie is the Union’s Queensland Branch Coordinator representing workers in the

security industry, including those employed by MSS. Mr Davie was the Union’s lead

negotiator for the 2014 Agreement. These negotiations commenced in about March 2014 and

Mr Davie attended 10 negotiation meetings during that time. Mr Davie said that in the third,

fourth and fifth meetings there was discussion around MSS’s proposal to remove the words

‘all purpose’ from the Aviation Allowance clause. Mr Davie believed this was contrary to the

assurance, given to the Union when MSS took over ISS contracts, that it would continue

paying airport security employees, the same pay and allowances provided for in the ISS

Agreement. Mr Davie said that in early 2014 he had been informed by Mr McKeown, the

Union Organiser, that MSS had not been paying the Aviation Allowance as an ‘all purpose’

allowance since taking over the ISS contract. Mr Davie referred to a Union Bulletin dated

June 2013, which explained to members how the allowances should operate:

‘Recently there has been some confusion about the transport allowance. The transport
allowance is an “all purpose allowance” which means it is paid on top of your hourly
rate of pay for all purposes such as annual leave, personal leave, weekends, public
holidays worked or not worked, and so on.

The allowance should be applied before you calculate things like penalty rates or shift
allowances.’

[41] Mr Davie claimed that when he put the Union’s view that MSS’s interpretation was

incorrect during the 2014 meetings, no one from MSS responded. Mr Davie also provided

MSS negotiators with a fact sheet which set out the definition of ‘all purpose’ as follows:

‘An all-purpose allowance is distinct from ‘other allowances’ because it applies for all
purposes of the Award. This effectively means that an all-purpose allowance forms
part of the employee’s base rate of pay, and other Award entitlements, such as
overtime and weekend penalties, are calculated on the compounded rate of pay.’

[2016] FWCA 2774

[42] Mr Davie believed that the draft 2014 Agreement was rejected by employees due to

three key issues, one being MSS’s proposal to remove the words ‘all purpose’ from the

clause. At the time, Mr Davie held discussions with the bargaining team about the issue and

instructed them to discuss it with members, so that they could make an informed decision.

[43] Mr Davie said that in negotiations following the ‘No’ vote, MSS changed the key

three issues and restored the phrase ‘all purpose’ to the Aviation Allowance clause. Mr Davie

agreed that Mr Grasso had said what he set out in his statement (see para [22] above).

However, Mr Davie had responded with words to the effect of:

‘If MSS continue to pay it incorrectly, even after dropping your claim, we will definitely
challenge it in Fair Work.’

[44] It was Mr Davie’s evidence that the calculation of the Aviation Allowance was not

disputed in the negotiations for the 2011 Agreement, because the wording was clear and, in

any event, the Aviation Allowance was not relevant, because MSS did not hold any aviation

contracts in Queensland at the time. Mr Davie noted that as the MSS Agreements in Western

Australia and Victoria do not express the Aviation Allowance as being ‘all purpose’, MSS’s

reliance on them was irrelevant.

Mr David Anthony Conn

[45] Mr Conn commenced employment with ISS Security at Gold Coast Airport around

February 2006. He was relocated to Brisbane’s Qantas Domestic Airport in or around January

2012. Mr Conn is a Union delegate. Mr Conn claimed that during his period of employment

with ISS, he was paid the Transport (Aviation) Allowance as an ‘all purpose’ allowance. It

was added to the base rate of pay and included in leave, penalty rates and other payments. It

appeared in Schedule B to the ISS Agreement and was expressed as an ‘all purpose’

allowance.

[46] Mr Conn said that when he transferred to MSS in November 2012, he had a meeting

with Mr Grasso. Mr Grasso had told him:

‘You will not take a pay cut. You will get exactly the same as ISS’.

[2016] FWCA 2774

Shortly after commencing employment with MSS, Mr Conn noticed differences to his actual

pay in his payslip and that there were issues around the Transitional Allowance and the

Aviation Allowance. The Union Organiser, Mr McKeown told him that MSS had advised him

that: ‘The Transitional Allowance was a 15% loading plus the difference between ISS Security

and MSS Security rates.’ Mr Conn said he was confused at the time. In May 2013, there were

a number of meetings with Management concerning pay and the two allowances. It turned out

that in respect to the Transitional Allowance, employees had been overpaid. However, in

respect to the Aviation Allowance, Mr Conn relied on an email from Mr Grasso to Mr

McKeown on 17 May 2013 which read as follows:

‘Confirming that payment of the “Transport Allowance” will be made on Annual
Leave/Sick leave and Public Holidays in order to satisfy the “all purpose” provision
within the Agreement.’

[47] Mr Conn referred to another email exchange between Mr Grasso and Mr McKeown in

August 2013 with extracts as follows:

Mr McKeown: On another note while checking your “dummy” pay slip I think
there is a problem with how MSS are applying the transport
(aviation) allowance. It is supposed to be all purpose. This
means it gets added to the base rate and penalties are then paid
on it. Could you have a look at this for us? I can arrange to get a
couple of ISS pay slips early next week if it will help.

Mr Grasso: As discussed, I wish to summarise the content of our discussion
as it relates to the “All purpose allowance”. For the purpose of
application, MSS Security applies the Aviation allowance (or
transport allowance as identified by ISS) as an all purpose
allowance meaning it is applied per hour paid, including
Overtime and Annual Leave, however it is not added to the base
rate. I understand you are of the view that the Aviation
allowance should be added to the base rate then penalties
applied. As agreed you will provide further information in this
regard however I also understand this may not be forthcoming
for a week or two due to your other competing commitments. I
will await further advice and supporting information from you.

Mr Conn added that later in 2013, during a meeting with Mr Grasso and Ms Stinson MSS’s

response was, ‘You can take it to Fair Work’.

[2016] FWCA 2774

[48] Mr Conn described his understanding of the negotiations for the 2014 Agreement. His

evidence is similar to that of Mr Davie. I will not repeat it here. However, Mr Conn described

the discussion of the Airport Allowance issue between Mr Davie and Mr Grasso as ‘robust’.

Mr Conn said that in the negotiations after the ‘No’ vote, MSS put out an ‘update’ which

stated in part:

‘Re wording of Schedule ‘A’ 5 (c) Allowances; Aviation. The clause has remained in its
current form as stated in the MSS Security Enterprise Agreement QLD 2011 – 2014’.

[49] It was Mr Conn’s evidence that from November 2014 to March 2015, when the Union

was seeking authorisation from its members for access to their pay records to prepare for an

application to the Commission, it drew a distinction between two groups of employees –

being Aggregated Rates and Non-Aggregated Rates employees. It was the Union’s consistent

position that Aggregated Rates employees were not entitled to the Aviation Allowance on an

‘all purpose’ basis.

[50] In cross examination, Mr Conn was asked to recall the discussions in 2012, when

MSS took over the ISS contract. He acknowledged that Mr Grasso gave an assurance at the

time that MSS had agreed with the Union to pay the same rates of pay and allowances that

ISS had paid its employees.

[51] Mr Conn accepted that from February 2013 he could see from his payslip that the

Aviation Allowance appeared as a ‘stand alone’ allowance and this continued to be the case.

He conceded that when he voted for the 2014 Agreement, he knew MSS was applying the

allowance on a non-compounded basis. However, because of issues with the Transitional

Allowance, he was confused as to what his overall pay included. However, he was not

confused as to how MSS was applying the Aviation Allowance in 2014, because it was based

upon the same words as appeared in the 2011 Agreement.

[52] Mr Conn accepted that after the first ‘No’ vote for the 2014 Agreement, it was MSS’s

position that the Aviation Allowance was paid on a non-compounded basis and it would

continue to do so. This was despite the Union’s continued opposition to MSS’s interpretation.

[53] In reply statements Mr Grasso denied having said during briefings with the Union

when MSS won the Queensland contract, that ‘you will not take a pay cut. You will get

[2016] FWCA 2774

exactly the same as ISS’. What he did say was that MSS was committed to paying the same

rates and allowances as prescribed by the ISS Agreement. He did not discuss how rates were

calculated and, at no time, did he confirm that the Aviation Allowance would be subject to

compounding. This was also Ms Stinson’s evidence in reply.

[54] Mr Grasso said the email he had sent to Mr McKeown on 29 August 2013, confirmed

MSS’s position and practice of paying the Aviation Allowance on paid leave. It made clear

that it was calculated on a per hour ‘stand alone’ basis. This was reiterated in a meeting with

the Union in November 2013. Mr Grasso insisted that MSS had never told employees it was

changing the method of calculating the allowance. The only method employees ever saw was

how MSS had always calculated it on a ‘stand alone’ basis.

[55] In her reply statement Ms Stinson referred to Mr Conn’s payslip which disclosed

how the allowance was calculated when he was on annual leave. For the fortnight ended 15

November 2015, Mr Conn was on annual leave for 32.25 hours and worked 37.5 hours at

ordinary time and 20.75 hours of overtime. The payslip showed that the Aviation Allowance

of $143.25 was based on his hours worked and the annual leave hours (95.5 hours at $1.50 =

$143.25).

[56] Ms Stinson said that the Union did not make a distinction between ‘Aggregated Rates’

employees and ‘non Aggregated Rates’ employees during the negotiations for the 2014

Agreement. This was the first occasion (during this case) the Union had sought to do so. MSS

had always calculated the Aviation Allowance on a ‘stand alone’ basis for both groups of

employees and this was reflected on the employees’ payslips. Ms Stinson reiterated that she

and Mr Grasso had always maintained that the Aviation Allowance is paid on a ‘stand alone’

basis. Despite reinstating the words ‘all purpose’ after the first failed vote for the 2014

Agreement, and the Union pressing for its interpretation to be accepted, she and Mr Grasso

insisted the inclusion of the words did not alter MSS’s calculation of the Aviation Allowance,

including when the same words were reproduced from the 2011 Agreement.

[57] Ms Stinson denied that MSS had no aviation security contracts in Queensland during

the negotiations for the 2011 Agreement. MSS obtained the contract for Bundaberg Airport in

July 2012 and the security employees under the 2011 Agreement were paid the Aviation

Allowance on a ‘stand alone’ basis. Ms Stinson supplied sample payslips from July to

[2016] FWCA 2774

December 2012 for two of the Bundaberg Airport officers to demonstrate her evidence on this

point. These employees were eligible to vote for, and are now covered by the 2014

Agreement.

SUBMISSIONS

For the applicant

[58] In opening submissions, MSS set out the crux of the issue in this arbitration as being

whether there was an ambiguity or uncertainty in respect to the calculation of the Aviation

Allowance under the 2011 and 2014 Agreements. It was MSS’s contention that the Aviation

Allowance is applied for each hour worked on a ‘stand alone’ basis, whereas the Union

contends the Allowance is added to the base rate of pay before calculating penalty and

overtime loadings, ie. on a compounding basis. Under s 217 of the Act, the Commission has

the discretionary power to remove an ambiguity or uncertainty based on the parties’

respective arguments. This exercise should have regard to the mutual intention of the parties

at the time the Agreements were made. MSS submitted that the parties’ mutual intention can

be discerned from:

‘The longstanding practice of the applicant both in Queensland and nationally to apply
the Aviation Allowance on a ‘stand alone’ basis, as was known by the employees
who voted.

 In Queensland, MSS Security first commenced paying the Aviation Allowance
(previously known as the Aviation and Seaports Security Allowance) in 2010 when
it took over security work at the port of Gladstone. MSS Security paid the allowance
on a stand alone basis (albeit under the Paton’s Security (Security Officers)
Collective Agreement 20116-2009).

 The provision for Aggregated Rates in both Agreements.
 The underpinning Modern Award (Security Services Industry Award 2010) which

provides for an Aviation Allowance that is calculated on a stand alone basis.
 MSS Security’s specific rejection of United Voice’s demand during negotiations for

the 2014 Aviation Agreement for the wording of the relevant clauses to be amended
so as to make clear that the Aviation Allowance would apply on a compounding
basis.

 The intention of MSS Security in its calculation method of this allowance:
 As made clear in the wording of the relevant clauses in its June 4 Employee

Update; and
 As was orally communicated to United Voice and other bargaining

representatives prior to putting forward the revised 2014 Aviation Agreement
up for a second vote.

 The absence of any communication from United Voice at any time to employees or
MSS Security, to the effect of what they now allege was the meaning of the offer of
MSS Security that was voted by the employees.’

[2016] FWCA 2774

[59] MSS dealt with the industrial and historical context of the Aviation Allowance. When

MSS commenced work at Queensland airports in February 2013, the Modern Award’s

approach to the Aviation Allowance was on a ‘stand alone’ basis. Since that time MSS has

continued to apply that approach. At no time, has MSS indicated it intended to adopt a

different approach; let alone agree to a different approach.

[60] MSS observed that its method of calculation was the same that ISS had applied, prior

to it losing the Queensland contracts. Employees would have well understood that one

calculation had always applied. Moreover, in 2012, the Union had attempted and failed to

have the Commission decide the same case it had run in this matter; See: United Voice v ISS

Security. MSS submitted that it was ‘spurious’ for the Union to argue that the employees

believed they were voting for a different method of calculation to that which had historically

applied when the wording in the 2011 and 2014 Agreements was the same. MSS had only

sought to remove the words ‘all purpose’ during the 2014 negotiations to make it absolutely

clear what was the proper method of calculation. In addition, there was never any

communication or words that suggested that MSS had changed its position.

[61] MSS submitted (correctly) that the Commission’s first task in the interpretive exercise

under s 217 of the Act, is to establish whether an ambiguity or uncertainty exists. Only then is

the Commission empowered to remove the uncertainty or ambiguity by varying the clause in

the Agreements. The first task involves an objective assessment of the words ‘all purpose

allowance will apply per hour’, given the context and purpose of the clause.

[62] MSS rejected the Union’s contention that the words ‘all purpose’ have a well

understood meaning and there is nothing in the text of the Agreements to contradict that

ordinary meaning. MSS noted that the Aviation Allowance is payable, and has been payable

while employees are on annual leave, but it refutes the contention that the Aviation Allowance

forms part of the base rate for the purpose of calculating payments for overtime and penalty

payments. The well established and favoured approach when interpreting an enterprise

agreement is not to take a pedantic or narrow view as to interpretation; See: The Australasian

Meat Industry Employees Union v Golden Cockerel Pty Limited [2014] FWCFB 7447

(‘Golden Cockerel’). It was submitted that the contentious words ‘all-purpose allowance will

apply per hour’ are open to different interpretations. Moreover, when read in context, it

[2016] FWCA 2774

becomes apparent that the words were never intended to have the effect argued for by the

Union.

[63] Attention was directed by MSS to the concept of the Aggregated Rates uniformly

applying in both Agreements. The Aggregated Rates applied to full time employees who

worked 12 hour shifts in a pattern of two days on, followed by two nights on, followed by

four days off for at least eight consecutive weeks. The Aggregated Rates is defined to include

‘penalties that would otherwise be applicable for work at night, on weekends and public

holidays…’ The Aviation Allowance is an additional and separate entitlement paid to

Aggregated Rates employees on an hour by hour basis. This is a compelling explanation for

the correct interpretation contended for by MSS. Had it been the intention to apply the

Aviation Allowance in the manner contended for by the Union, it would have required the

‘unscrambling’ of the Aggregated Rates and then the inclusion of the Aviation Allowance.

This would not make sense. It would result in ‘double dipping’ and be inconsistent with what

the parties had intended.

[64] MSS relied on the decision of Spencer C in United Voice v ISS Security in which the

Union had argued and lost the same argument that it had advanced in this case. Spencer C was

asked to determine whether the then ‘all purpose’ Transport Allowance should have been

added to the base rate of pay before the calculation of the aggregated weekly hourly rates ie.

on a compounded basis. The Commissioner found that:

(a) the rates were Aggregated Rates, inclusive of additional unspecified amounts for

loadings and penalties;

(b) the conduct of the parties in applying the enterprise agreements was to apply the

Transport Allowance separate to the Aggregated Rates;

Commission to break down the Aggregated Rates and it was not appropriate for the

Commission to ‘place itself in the shoes of the parties’ and rework the Aggregated

Rates to separate out what was ordinary base rates and what was the aggregated rates

on top;

(d) the practice of calculation of the allowance had been applied on a consistent basis

for a significant period of time (i.e. not compounded);

[2016] FWCA 2774

(e) the parties have had a number of opportunities to alter the situation through

negotiations of subsequent enterprise agreements and there was no evidence that they

chose to alter the words to the effect contended for by United Voice; and

(f) the wording of the relevant clauses is consistent through various enterprise

agreements.

[65] MSS submitted that in the present case, the evidence was that MSS had always paid

the Aviation Allowance on a ‘stand alone’ basis in Queensland and nationally. The two

agreements contain provisions for Aggregated Rates and there is no mechanism to break

down Aggregated Rates of pay. MSS agreed that it did seek to remove the words ‘all purpose’

during the 2014 negotiations. Nevertheless, the employees voted down the proposed

agreement based on issues more important to them, such as wage increases and repayments of

overpayments. At no time, despite the Union’s opposing view, did MSS express a different

approach to how it always had, and intended to apply the Aviation Allowance. The words of

the Aviation Allowance clause had not changed since the 2011 Agreement and the Union had

never suggested wording to make the words clearer. It was plainly never the objective

intention of the parties to apply the Aviation Allowance any differently to how it had always

been applied. MSS submitted that the mere fact there are competing constructions of the

Aviation Allowance demonstrates ambiguity or uncertainty, which should be rectified in

terms of the proposed draft variation to the clause (see para [5] above).

[66] In oral submissions, Mr Dalton examined a number of well-known authorities

concerning the interpretive process of enterprise agreements, including the Full Bench

decision in Tenix Defence Systems Pty Limited [PR917548], 9 May 2002 per Ross VP,

O’Callaghan SDP and Foggo C (‘Tenix’). In that case, the Full Bench held that a disputed

provision needs to be considered by reference to the other provisions of the agreement which

interact with it. Mr Dalton submitted that in this case the threshold or ambiguity for

uncertainty was easily reached, not only for Aggregated Rate employees where the position is

obvious, but also for Non-Aggregated Rate employees, where it might be said that the

position is less clear. Mr Dalton proceeded to demonstrate that the Aggregated Rates do not

include a component for Aviation Allowance because of the definition. This was plainly

consistent with the analysis of Spencer C in United Voice v ISS Security in which the

Commissioner said at para [74]:

[2016] FWCA 2774

‘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.’

[67] Mr Dalton put that the Union’s case went ‘perilously close’ to conceding that MSS’

contention applied to Aggregated Rates employees. As to the Non-Aggregated Rates

employees, Mr Dalton also relied on Spencer C’s decision and added that while the Union

claims ‘all purpose’ has a generalised and well understood meaning, one needs to look at

other entitlements, such as loadings, penalties and overtime and ask whether the language

used in these provisions, picks up the Aviation Allowance in a way which indicates it is to be

compounded. Mr Dalton said that inconsistent terminology and undefined terms emphasise

the ambiguity. Mr Dalton also relied on the Full Bench Decision in Four Yearly Review of

Modern Awards [2015] FWCFB 4658 (‘Modern Award Review Decision’), which recognised,

that despite some general understanding of the meaning of ‘all purpose’, the Bench left it

open for a party to make an application to depart from the general understanding in specific

circumstances.

[68] Mr Dalton relied on the evidence of Mr Grasso and Ms Stinson to support the

existence of the mutual intention of the parties when negotiating the 2011 and 2014

Agreements and of a historical context in which MSS had never applied the Aviation

Allowance in Queensland, Western Australia and Victoria in the manner contended for by the

Union. Mr Dalton referred specifically to the words in Schedule A, para 4(c) of the 2011

Agreement which sets out that for Aggregated Rates employees, overtime is paid after 84

hours per fortnight. This means that any hours worked after 84 hours are paid at double time

with the Aviation Allowance added, not compounded and for Non-Aggregated Rates

employees, any overtime after ordinary hours is also paid double time. Mr Dalton opined that

there is no reason why overtime would be treated differently for the two groups of employees

in respect to the Aviation Allowance.

[2016] FWCA 2774

[69] Mr Dalton submitted that the mutual intention was clear when the employees voted for

the 2014 Agreement in circumstances where MSS’s position was unambiguously the status

quo. Mr Dalton relied on Mr Conn’s evidence that he well understood, from day one, that the

Aviation Allowance was not paid on a compounded basis and that the Company’s position,

right up to the 2014 Agreement, was that its interpretation was correct. The employees were

never left in any doubt. The fact the Union disagreed at the time and kept its own counsel in

order to worry about it later, was its choice. The revised offer was a package. It was clear that

the employees knew MSS would continue to apply the Aviation Allowance on a ‘stand alone’

basis.

[70] Mr Dalton rejected any suggestion that the proposed removal of the words ‘all

purpose’ was an implied acknowledgement that the Union’s interpretation was correct. The

Union did not say anything to the employees to indicate that MSS had changed its view or

accepted the Union’s interpretation. There was always a risk that MSS would seek to have the

Commission make the interpretation clear beyond doubt. Mr Dalton noted that the annual

leave clause makes it plain that the Aviation Allowance is paid on annual leave. This is to be

contrasted to other provisions of the Agreement such as overtime and penalties.

[71] As to question of whether the Commission has the power to vary an expired and

replaced Agreement Mr Dalton relied on a decision of Watson VP in Qantas Airways Limited

[PR550766], 16 June 2014 (the ‘Qantas Short Haul Pilots Case’). In that case, His Honour

made orders of retrospectivity, which were subsequently upheld by the Full Bench on appeal;

See: Australian and International Pilots Association v Qantas Airways Limited [2014]

FWCFB 8199. His Honour was persuaded that the Agreement needed to be varied to reflect

the mutual intention of the parties. The Order was made retrospectively for seven years; See:

[PR552082]. Mr Dalton submitted that while s 58 of the Act states that an agreement ceases

operation if another agreement replaces it if it covers the same persons, s 58 is there for other

purposes and is not applicable under s 217 of the Act. He claimed that the legislature could

not have intended to deny an applicant on opportunity to pursue its legal rights going back at

least six years, if an agreement expired only a year before the claim is made.

[72] Mr Dalton said that the purpose of s 217 of the Act was to equip the industrial

specialist tribunal with the armoury to vary agreements in appropriate circumstances, so as to

avoid litigation in the Courts which are ‘stuck’ with the words and which have limited tools

[2016] FWCA 2774

for interpreting agreements. Mr Dalton also relied on a High Court Judgement in Re Brack &

Ors; Ex parte Operative Painters & Decorators Union of Australia (1984) 7 IR 117 which

found that the Federal Court and the Commission may make different findings about the same

subject matter. This was because, in that case, the Commission examined the actual intention

and industrial merit to decide whether a particular allowance was limited to the construction

industry.

For the Union

[73] Mr Reed opposed the application to vary the two agreements. Firstly, he submitted that

the Commission has no power to make an order of variation in respect to the 2011 Agreement

as that Agreement had expired and was replaced and was therefore no longer operative. The

language of s 217 is in the present tense and applies only in relation to an agreement which is

in operation at the time that the order is made. Mr Reed submitted that the effect of ss 53, 54

and 58 of the Act is that:

(a) the 2011 Agreement ceased to cover any aviation employees from 28 November

2014;

(b) the 2011 Agreement ceased to cover MSS from 1 December 2015.

To allow the Commission to retrospectively vary an agreement after it ceased to operate

would be an illogical and absurd result which had the potential to ‘wreak havoc’ with rights

and liabilities when the agreement was in force.

[74] Mr Reed set out the three steps in the interpretive exercise.

 To determine whether the words have a plain, ordinary meaning.

 If an ambiguity or uncertainty is identified, the Commission must consider whether

to exercise a discretion to vary the Agreement.

 In exercising a discretion to vary the agreement, the Commission must consider the

content of the variation.

Mr Reed relied on the authorities dealing with the interpretation of industrial instruments, in

particular Golden Cockerel. He added in particular, that it is not permissible to have regard to

the conduct of the parties, subsequent to the making of the agreement: See: Australian

Municipal, Administrative, Clerical & Services Union v Treasurer (Cth) (1998) 82 FCR 175;

[1998] FCA 249 and Silcar Pty Ltd v "Automotive, Food, Metals, Engineering, Printing and

Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)

[2011] FWA 1083.

[2016] FWCA 2774

[75] Mr Reed submitted that there is no ambiguity or uncertainty in the words ‘all purpose

allowance will apply per hour’. The concept is well understood in an industrial relations

context and MSS could point to no authority which contradicted this obvious understanding.

There is no qualifying language and the words used are plain and have the usual meaning;

namely, that the Aviation Allowance is part of the base or ordinary rate of pay for the

purposes of calculating penalties and other forms of leave; See: The Australasian Meat

Industry Employees Union v Woolworths Limited trading as Brismeat [2015] FWCFB 1004

(‘AMIEU v Brismeat’) at [25]; Mechanical Maintenance Solutions Pty Ltd v Communications,

Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of

Australia & Ors [2014] FWC 9163 (‘MMS v CEPU’) at para [17]; Communications,

Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of

Australia & Ors v Mechanical Maintenance Solutions Pty Ltd [2015] FWCFB 1769 (‘CEPU

v MMS’) at paras [7]–[8]; and United Voice v ISS Security.

[76] Mr Reed said that the reliance on the awareness of the employees of the method used

by MSS to calculate the Aviation Allowance merely demonstrated the subjective intentions or

expectations of MSS. Such considerations are irrelevant to the objective construction of the

words. Mr Reed said that the evidence of surrounding circumstances was that:

‘(a) MSS agreed to the Aviation and Sea Ports Security Allowance in cl. 3.4.6 of the
2011 Agreement as being an all purpose allowance;
(b) other relevant workplace agreements or enterprise agreements to which MSS is, or
has been, a party do not, or did not, provide for an Aviation allowance as an all
purpose allowance;
(c) during negotiation for the Aviation Agreement, MSS sought to secure a variation to
the Aviation allowance provision which would have remove the words ‘all purpose’;
(d) the proposed Aviation Agreement containing the proposed variation to the
Aviation allowance was rejected by an overwhelming majority of employees
following a ‘No’ vote campaign run by the Union;
(e) the ‘No’ campaign run by the respondent identified the removal of the words ‘all
purpose’ from the Aviation allowance provision as a reason for rejecting the proposed
agreement put forward by MSS;
(f) a survey by MSS of employees revealed that the proposed removal of the all
purpose nature of the Aviation allowance was a significant factor in employees voting
to reject the MSS proposal; and
(g) MSS subsequently agreed to the restoration of the words ‘all purpose’ to the
Aviation Allowance provision and the proposed agreement was then approved by
majority of employees.’

[2016] FWCA 2774

[77] Mr Reed put that since MSS had been required to pay the Aviation Allowance, it had

adopted a ‘perverse or idiosyncratic interpretation’, that it is paid on a ‘stand alone’ basis,

even though it is applied to annual leave and public holidays. Mr Reed emphasised that the

Union had never accepted MSS’s interpretation, nor was there any evidence that the

interpretation had been accepted as the intention of the parties.

[78] Mr Reed rejected MSS’s reliance on the Aggregated Rates in the Agreement and the

decision in United Voice v ISS Security in circumstances where only 12 of the 220 employees

to whom the Aviation Allowance applies, are paid Aggregated Rates. It was highly unlikely

that the Aggregated Rates was within the contemplation of parties negotiating the Aviation

Allowance. However, Mr Reed conceded that the reach of the ‘all purpose’ nature of the

Aviation Allowance would not apply to 5% of the workforce. Mr Reed submitted that the

decision in United Voice v ISS Security had no application to the issues in this case, as it dealt

with a different matter, in circumstances where the Aggregated Rates had been the subject of

prior agreement.

[79] Mr Reed put that even if an ambiguity was established, the Commission would not

exercise its discretion to vary the clause. Moreover, MSS seeks to vary the clause to reflect its

subjective intention or to validate its practice, which is contrary to authority. The application

should be dismissed. Alternatively, if the Commission was minded to vary the Agreements it

should make clear that Aggregated Rates employees receive the Aviation Allowance in

addition to the Aggregated Rates of pay.

[80] In oral submissions Mr Reed put that the only sensible construction of s 217 of the

Act was that the power ‘to vary an enterprise agreement’ must be an enterprise agreement in

operation. Even Watson VP in Re Australian and International Pilots Association (2007) 162

IR 121; [2007] AIRC 303 (‘Re AIPA’) observed that s 170MD of the Workplace Relations Act

1996 (the equivalent of s 217 under the present Act) was a limited power because the process

of otherwise varying a collective agreement, requires a majority of employees approving the

variation. Moreover, if the Parliament had intended to expand the limited power to non-

operative agreements, then one would expect the section would have said so. Nor was it a

logical or sensible proposition for an application to be made many years after an agreement

has ceased to operate.

[2016] FWCA 2774

[81] Mr Reed put that, in any event, the Commission would dismiss MSS’s application

because the phrase ‘all purpose allowance will apply per hour’ is neither ambiguous nor

uncertain. Mr Reed relied on a number of other authorities not previously referred to,

including CoINVEST Limited, Re Visionstream Certified Agreement 2011 (2004) 134 IR 43;

Print PR947076, 25 May 2004, to support the proposition that the Commission must be

positively satisfied of the existence of an ambiguity before moving to the next step; See also:

Tenix, SJ Higgins Pty Ltd and Others v Construction, Forestry, Mining and Energy Union,

Print PR903843, 2 May 2001 (‘SJ Higgins’) and Re Victorian Public Transport Corporation,

Dec 1253/95 M Print M2454, 7 June 1995. Mr Reed emphasised the following passage from

SJ Higgins at para 49:

‘In my view, it is not enough that there are or may be rival contentions as to the proper
construction of the terms of an award or agreement. Nor is it enough that claims may
have been made in the field for the application of a particular provision in
circumstances and its applicability of the provision is disputed. Such contentions and
claims may well be self serving. The correct approach, as applied by the Full Bench,
requires the making of an objective judgment as to whether, on the proper construction
of the relevant provision of an agreement, the wording of that provision is susceptible
to more than on meaning.’

[82] Mr Reed submitted that while MSS was fixated on its own subjective views as to what

the words meant, this had not been the mutual intention of the parties. After referring to Re

AIPA, Mr Reed emphasised the difference in process between agreement and award making.

Objective intention was the relevant starting point. See: Teys Australia Beenleigh Pty Ltd v

Australasian Meat Industry Employees Union (No 2) [2016] FCA 2, citing Toll (FGCT) Pty

Ltd v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52.

[83] Mr Reed put that the use of the words ‘per hour’ in the Aviation Allowance is merely

to differentiate it from a weekly allowance; the real focus should be on the concept of ‘all

purpose’ allowance which has a plain and well accepted meaning. Mr Reed referred to the

authorities set out at para [75] above and submitted:

‘An all-purpose allowance, as is exemplified in those decisions, is one that forms part of
the base rate of pay upon which those particular penalties, overtime rates, et cetera,
are calculated in the normal course. That is an accepted industrial meaning in the
industrial context as exemplified, in my respectful submission, by those decisions.
There is no suggestion, as I understand it, that that is not the ordinary accepted
meaning.’

[2016] FWCA 2774

[84] Mr Reed rejected Mr Dalton’s reliance on a number of contextual and extrinsic

matters to take the words out of their ordinary meaning. Mr Reed said that there was never

any understanding by the Union and MSS as to what was meant by the term ‘all purpose’. Mr

Reed put that asking what the employees understood they were offered, was the wrong

question. Mr Reed argued that despite Mr Conn’s concessions, he was but one person on the

Negotiating Committee. His evidence does not prove that there was some accepted

understanding of what the clause meant. It was, in any event, a subjective view.

[85] As to the Union’s reliance on the Aggregated Rates employees, Mr Reed conceded

that Aggregated Rates were set by agreement to include some penalties. Spencer C’s decision

does no more than confirm that arrangement. In any event, for the bulk of the workforce

(95%) the term ‘all purpose’ allowance has a common meaning. Mr Reed noted that reliance

on the other MSS Agreements, was misplaced, given they do not express the Aviation

Allowance as ‘all purpose’. Mr Reed suggested that when MSS sought to remove the words

‘all purpose’ during the negotiations for the 2014 Agreement it clearly knew it had a problem.

The removal of the words was a major factor in the ‘No’ vote for the proposed agreement. Mr

Reed accepted that the subjective views of both sides are not relevant.

[86] In summary, Mr Reed put that what MSS is trying to do is to rewrite the Agreements

to reflect its subjective intention or to validate a practice it adopted in its own self-interest; a

position which was never accepted by the Union or its members. The application should be

dismissed. In the alternative, the Commission might see merit in making it clear that for

Aggregated Rates employees, the Aviation Allowance is paid in addition to the Aggregated

Rates, for all purposes.

[87] In reply, Mr Dalton relied on a Full Bench decision in "Automotive, Food, Metals,

Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing

Workers' Union (AMWU) v Toyota Motor Corporation Australia [2011] FWAFB 2132 where

the Commission upheld the making of a respective variation order to the commencement of

the Agreement. (As a result of a question from me, Mr Dalton subsequently supplied me with

a note in which he advised he had been unable to find any authority for varying an Agreement

which was no longer operative. He added that, on the other hand, he could not find any

authority which said that the Commission could not do so).

[2016] FWCA 2774

[88] Mr Dalton submitted that such power would be consistent with the potential for civil

legal proceedings in a Court where liability can go back six years. Mr Dalton observed that

the 2014 Agreement had a very broad description of a dispute and it was how Spencer C in

United Voice v ISS Security dealt with a similarly broad disputes procedure; to determine the

interpretation of the terms in two expired predecessor agreements (the 2005 and 2009 ISS

Agreements). He noted that, similarly, MSS had filed a s 739 dispute related to this matter

(see earlier para [3]).

CONSIDERATION

Statutory provisions and principles of enterprise agreement interpretation

[89] Section 217 of the Act deals with the powers of the Commission to vary the provisions

of an enterprise agreement to remove an ambiguity or uncertainty. I set out the terms of the

section below:

217 Variation of an enterprise agreement to remove an ambiguity or uncertainty

(1) The FWC may vary an enterprise agreement to remove an ambiguity or uncertainty
on application by any of the following:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(2) If the FWC varies the enterprise agreement, the variation operates from the day
specified in the decision to vary the agreement.

[90] Both parties are ad idem as to the legal principles the Commission is to apply in

respect to the interpretation of an enterprise agreement. These principles have evolved from a

long line of authorities dealing with the interpretation of industrial instruments generally and

specifically, in respect to enterprise agreements; See: Short v FW Hercus (1993) 40 FCR 511;

[1993] FCA 72, Kucks v CSR Ltd (1996) 66 IR 182; Codelfa Construction Pty Ltd v State Rail

Authority of NSW [1982] HCA 24 and Amcor Limited v Construction, Forestry, Mining and

Energy Union (2005) 222 CLR 241; [2005] HCA 10. A more contemporary authority which

has distilled these principles is found in Golden Cockerel, a recent decision of the Full Bench

in which it was said at par 41:

[2016] FWCA 2774

‘From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement
made under the Act.
2. In construing an enterprise agreement it is first necessary to determine
whether an agreement has a plain meaning or contains an ambiguity.
3. Regard may be had to evidence of surrounding circumstances to assist in
determining whether an ambiguity exists.
4. If the agreement has a plain meaning, evidence of the surrounding
circumstances will not be admitted to contradict the plain language of the
agreement.
5. If the language of the agreement is ambiguous or susceptible to more than
one meaning then evidence of the surrounding circumstance will be admissible
to aide the interpretation of the agreement.
6. Admissible evidence of the surrounding circumstances is evidence of the
objective framework of fact and will include:

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

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

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

9. Where the common intention of the parties is sought to be identified, regard
is not to be had to the subjective intentions or expectations of the parties. A
common intention is identified objectively, that is by reference to that which a
reasonable person would understand by the language the parties have used to
express their agreement.
10. The task of interpreting an agreement does not involve rewriting the
agreement to achieve what might be regarded as a fair or just outcome. The
task is always one of interpreting the agreement produced by parties.’

[91] As Mr Dalton and Mr Reed correctly submitted, Golden Cockerel makes clear that the

interpretative exercise is a three stage process. Firstly, the task begins with an objective

determination of whether the disputed terms have a plain and ordinary meaning or are

ambiguous, uncertain or susceptible to more than one meaning. If the terms have a plain and

ordinary meaning, evidence of surrounding circumstances will not be permitted to contradict

the plain meaning. The Union in this case, contends that the Commission need not look to the

surrounding circumstances or the common intention of the parties’, viewed objectively,

[2016] FWCA 2774

because the words ‘all purpose’ have a traditional, common sense and well understood

industrial meaning and that ends the matter - MSS’s application must be dismissed. For

reasons which I will develop shortly, I do not agree. Secondly, in considering the surrounding

circumstances, the Commission is obliged to have regard for the context and purpose of the

disputed terms, given the text of the agreement as a whole, and the placement (interaction)

and arrangement of the terms in the agreement. Thirdly, if ambiguity or uncertainty is

established, the Commission may vary the clause to correct the ambiguity or uncertainty. This

is an exercise of discretion. However, this does not mean the Commission can rewrite the

clause, adding words or deleting them, merely to achieve what might be said to be a fair or

just outcome. This is impermissible under the principles. I intend to adopt the Golden

Cockerel principles to the interpretive task ahead. However, I will firstly discuss the other

jurisdictional issue in this case.

Does the Commission have the power to vary an enterprise agreement which has been

replaced and is no longer in operation?

[92] This is a unique and relatively novel question. Answering it is not without some

difficulty. There is no authority – Full Bench or otherwise – which has addressed this issue.

Mr Dalton conceded as much, although he conversely submitted that there is apparently no

authority to prevent the Commission from answering the question in the affirmative. Mr

Dalton relied on a decision of the Commission, under Schedule 3, Items 10 and 11 of the Fair

Work (Transitional Provisions and Consequential Amendments) Act 2009 and s 218 of the

Act, which dealt with whether a variation to an existing agreement arising from a finding of

an ambiguity or uncertainty should be made; See: Qantas Short Haul Pilots Case. Obviously,

the distinguishing feature between the Qantas Short Haul Pilots Case and this case, is that

Watson VP varied an industrial instrument which was within its nominal term. His Honour

made the variation retrospectively to the commencement of the Agreement which the affected

employees were covered by at the relevant time. His Honour’s decision was subject to an

appeal and the appeal was unsuccessful. In the result, it must be accepted that there is no

jurisdictional impediment to the Commission, when exercising its powers under s 217 of the

Act, to give retrospective effect to a variation to the terms of a non-expired enterprise

agreement, including to its commencement date. Plainly, that is not the circumstance here.

MSS proposes the Commission vary the 2011 Agreement which expired on 1 July 2014 and

which was then replaced by the 2014 Agreement. Unsurprisingly, Mr Reed relied on ss 53, 54

and 58 of the Act to argue that there is no power for the Commission to vary a replaced

[2016] FWCA 2774

agreement. These provisions deal with the coverage of an enterprise agreement, when an

enterprise agreement is in operation and only one enterprise agreement can apply to an

employee at a particular time. I set out the terms of ss 53, 54 and 58 of the Act as follows:

53 When an enterprise agreement covers an employer, employee or employee
organisation

Employees and employers
(1) An enterprise agreement covers an employee or employer if the agreement is
expressed to cover (however described) the employee or the employer.

Employee organisations
(2) An enterprise agreement covers an employee organisation:

(a) for an enterprise agreement that is not a greenfields agreement—if the FWC
has noted in its decision to approve the agreement that the agreement covers
the organisation (see subsection 201(2)); or

(b) for a greenfields agreement—if the agreement is made by the organisation.

Effect of provisions of this Act, FWC orders and court orders on coverage
(3) An enterprise agreement also covers an employee, employer or employee
organisation if any of the following provides, or has the effect, that the agreement
covers the employee, employer or organisation:

(a) a provision of this Act or of the Registered Organisations Act;

(b) an FWC order made under a provision of this Act;

(4) Despite subsections (1), (2) and (3), an enterprise agreement does not cover an
employee, employer or employee organisation if any of the following provides, or has
the effect, that the agreement does not cover the employee, employer or organisation:

(a) another provision of this Act;

(b) an FWC order made under another provision of this Act;

Enterprise agreements that have ceased to operate
(5) Despite subsections (1), (2) and (3), an enterprise agreement that has ceased to
operate does not cover an employee, employer or employee organisation.

Enterprise agreements cover employees in relation to particular employment
(6) A reference in this Act to an enterprise agreement covering an employee is a
reference to the agreement covering the employee in relation to particular
employment.

[2016] FWCA 2774

54 When an enterprise agreement is in operation

(1) An enterprise agreement approved by the FWC operates from:

(a) 7 days after the agreement is approved; or

(b) if a later day is specified in the agreement—that later day.

(2) An enterprise agreement ceases to operate on the earlier of the following days:

(a) the day on which a termination of the agreement comes into operation
under section 224 or 227;

(b) the day on which section 58 first has the effect that there is no employee to
whom the agreement applies.

(3) An enterprise agreement that has ceased to operate can never operate again.

…

58 Only one enterprise agreement can apply to an employee

Only one enterprise agreement can apply to an employee
(1) Only one enterprise agreement can apply to an employee at a particular time.

General rule—later agreement does not apply until earlier agreement passes its
nominal expiry date
(2) If:

(a) an enterprise agreement (the earlier agreement) applies to an employee in
relation to particular employment; and

(b) another enterprise agreement (the later agreement) that covers the
employee in relation to the same employment comes into operation; and

(c) subsection (3) (which deals with a single-enterprise agreement replacing a
multi-enterprise agreement) does not apply;

then:

(d) if the earlier agreement has not passed its nominal expiry date:

(i) the later agreement cannot apply to the employee in relation to that
employment until the earlier agreement passes its nominal expiry date;
and

(ii) the earlier agreement ceases to apply to the employee in relation to
that employment when the earlier agreement passes its nominal expiry
date, and can never so apply again; or

[2016] FWCA 2774

(e) if the earlier agreement has passed its nominal expiry date—the earlier
agreement ceases to apply to the employee when the later agreement comes
into operation, and can never so apply again.

Special rule—single-enterprise agreement replaces multi-enterprise agreement
(3) Despite subsection (2), if:

(a) a multi-enterprise agreement applies to an employee in relation to particular
employment; and

(b) a single-enterprise agreement that covers the employee in relation to the
same employment comes into operation;
the multi-enterprise agreement ceases to apply to the employee in relation to
that employment when the single-enterprise agreement comes into operation,
and can never so apply again.

[93] It seems to me that the Commission is assisted in answering this jurisdictional issue,

by posing a different question. Do any of the terms of the Fair Work Act 2009, and s 58 in

particular, prevent a person from pursuing rights, such as unpaid entitlements, which may

have arisen under an expired and replaced agreement? Of course the answer to that question is

unequivocally no. Viewed from this perspective it seems to me that there is a certain

inconsistency with the Union’s submissions and its own actions, remembering that the Union

has an adjourned application before the FCC to do precisely what it says MSS cannot do in

this case. Put another way, the Union relies on the terms of the expired 2011 Agreement to

pursue claims for underpayment for its members, while arguing in this case that the 2011

Agreement cannot be varied to remove an ambiguity or uncertainty.

[94] In addition, there is a sense of irony (if not a bit of cheekiness) that the Union sought

in 2013 to have the Commission interpret the corresponding Aviation Allowance provisions

in the expired 2005 and 2009 ISS Agreements for the same employees later covered by the

2011 Agreement and now by the 2014 Agreement; See: United Voice v ISS Security. Both the

2005 and 2009 Agreements had ceased to operate. The relevant clauses under these two

Agreements are set out at para [8] of this decision. I accept that this case was brought under s

739 of the Act; but to my mind, the underlying objective in that and this case is the same; the

interpretation of an expired and replaced agreement.

[95] It is worth noting that there is some controversy about whether a person can bring a

dispute under a dispute settlement procedure about matters arising under an expired

[2016] FWCA 2774

agreement. This question was considered in Stephenson v Abetz, Print PR952743, 28 October

2014 (‘Stephenson’) where the Full Bench concluded it was not open to do so. However,

Lawler VP noted in Grabovsky v United Protestant Association of NSW Ltd T/A UPA [2015]

FWC 2504 that a person’s rights or entitlements continue beyond cessation of a contract. At

paras [52]-[55] His Honour expressed concern with the ratio in Stephenson as follows:

‘The decision of the Full Bench of the AIRC in Stephenson v Abetz (28 October 2014,
PR952743) is authority for the proposition that when an workplace agreement made
under Workplace Relations Act 1996 was replaced by a subsequent agreement made
under that Act, the earlier agreement ceases to operate such that the Commission has
no jurisdiction to deal with a dispute arising under the earlier agreement. As a single
member of the Commission I consider myself bound to follow decisions of a Full
Bench of the Commission or its predecessors that is properly applicable in the instant
case unless that decision is per incuriam - a decision that overlooks obviously
applicable statutory provisions or earlier applicable and of a Court binding the Full
Bench.

With great respect to the Full Bench that decided Stephenson, its reasoning overlooks
fundamental principles established by binding decisions of the courts, including the
High Court, in relation to the operation of arbitration provisions in contracts. On every
working day in this country there are commercial arbitrations being conducted
pursuant to arbitration clauses in contracts that have been terminated for breach.
Although the contract comes to an end in the sense that it cannot give rise to new
obligations or liabilities, the operation of an arbitration clause survives the termination
of the contract. The decision in Stephenson takes no account of that fundamental
feature of the general law of contract and the numerous binding authorities that
establish it.

Moreover, the interpretation adopted by the Full Bench in Stephenson has the effect of
extinguishing accrued rights. Applied rigorously, the decision in Stephenson would
oblige the Commission to refuse to continue dealing with a dispute properly notified
pursuant to a dispute resolution procedure. It is a fundamental principle of statutory
construction that the parliament is presumed, when enacting legislation, not to deprive
people or citizens of their accrued rights other than by express words. In the case of
Commonwealth legislation there is the further consideration of the operation of
s.51(xxxi) of the Constitution. These matters were not considered by the Full Bench in
Stephenson when it construed s.170LX of the then Workplace Relations Act 1996.

I find that I do have jurisdiction to deal with the present dispute under each of the
succession of enterprise agreements that applied to Mrs Grabovsky and the
Respondent during the whole period of her employment. However, there is no
suggestion that the classification description for Care Service Employee Grade 2 has
changed over that succession of agreements and, accordingly, the reasoning set out
above in relation to the current Agreement is equally applicable in relation to the
dispute to the extent that it arises under any of the predecessor agreements.’

[2016] FWCA 2774

[96] Having been slightly diverted, I return to the question I postulated earlier. It seems to

me that there is no reason – let alone a compelling one – why the Commission would be

prevented from varying an agreement to give clarity or certainty to unpaid entitlements said to

have accrued under a non-operative agreement. As I said earlier, this is exactly what the

Union is seeking in the FCC proceedings. It would be a curious result indeed, if the

Commission could give clarity to the payment of entitlements arising under a non-operative

agreement, that the same power could not conversely extend to giving clarity to whether an

entitlement did not arise under the same agreement.

[97] I raise another matter concerning the express wording of s 217 of the Act. Without

necessarily referring to the principles of statutory construction, I would observe that the words

of s 217 ‘Fair Work Commission may vary an enterprise agreement’ do not distinguish

between an expired and replaced enterprise agreement, an agreement within time and in

operation, a greenfields agreement or a multi-enterprise agreement. There are no words of

limitation or qualification. Accordingly, on this view, there is no impediment to the exercise

of the Commission’s powers to vary an enterprise agreement (subject to an application under

sub-sections (a), (b) and (c)), whether the agreement has ceased to operate or is in operation.

In any event, I also observe that an expired agreement remains in operation until it is replaced.

Thus, an expired agreement may remain in operation for many years after the end of its

nominal term. In these circumstances, there would appear to be no doubt that an expired, but

continuing agreement is able to be varied, under s 217 of the Act. This tells in favour of the

proposition that the express language of s 217 applies generally to any enterprise agreement,

whether replaced or not.

[98] Lastly, I note that the 2014 Agreement has been replaced by the MSS Security QLD

Enterprise Agreement 2014 – 2018 [AE416905], operative from 8 December 2015 to 31

October 2018. This Agreement contains the same wording in respect to the Aviation and Sea

Port Allowance found in the 2011 and 2014 Agreements. Seemingly, applying the same logic

for which the Union contends, the Commission would have no power to even vary the 2014

Agreement, under s 217 of the Act, because it has expired and been replaced. I do not

understand there to have been any submission by the Union to that effect. For the above

reasons, I find that the Commission has the power under s 217 of the Act, to vary an

enterprise agreement which has expired and been replaced.

[2016] FWCA 2774

Is there ambiguity or uncertainty with the words ‘all purpose’ in the Aviation Allowance

clauses in the 2011 and 2014 Agreements?

[99] While I acknowledge the general industrial understanding of the words ‘all purpose’ is

as the Union contends, it does not follow that it is a universal understanding in that there may

be exceptions to that general understanding. For the following reasons, I consider the words

‘all purpose allowance’ used in the 2011 and 2014 Agreements’ Aviation Allowance clauses

are examples of this exception.

[100] Firstly, the Union accepts that the current wording in the Agreements does not address

the Aggregated Rates arrangement so as to easily accommodate the generally understood ‘all

purpose’ Aviation Allowance. Indeed, the Union proposed that if any variation was

considered necessary, it should only be to make clear that the Aviation Allowance applying to

the Aggregated Rates employees is paid according to how MSS has been applying it since

2011. Mr Reed’s final submission was:

‘It would be contrary to authority to exercise a discretion in that way, in my respectful
submission. For those reasons, the application ought to be dismissed. In the
alternative, if there is any variation which might be proposed, the Commission might
see some merit in inserting a proviso which made clear that the Aggregated Rate
employees are to be treated differently and that they are to receive the aviation
allowance in addition to the Aggregated Rate for all purposes.’

[101] In my view, there is no compelling reason why Aggregated Rates employees should be

treated differently, let alone detrimentally, as demonstrated by Mr Dalton (see para [68]

above). In my view, the small number of employees paid the Aggregated Rate is irrelevant.

What is relevant is that both ‘non aggregate’ and ‘aggregate’ arrangements are provided for in

both Agreements and this gives rise to an ambiguity or uncertainty as to why one approach to

interpretation should be preferred over another. This is especially so when I think the better

view is that the words in one clause of an agreement have the same meaning where they

appear in another clause, except where the contrary intention is made clear.

[102] Secondly, in the Modern Award Review Decision, the Full Bench acknowledged that

despite the general understanding of the meaning of ‘all purpose’, it was open to a party to

make an application to depart from the general understanding in particular circumstances.

[103] Thirdly, I do not agree that the decision in United Voice v ISS Security is irrelevant to

the present case. The Commissioner described the nature of the dispute in that case as

[2016] FWCA 2774

‘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’ and the

question the Commissioner was asked to answer was (at para [5]):

‘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?’

[104] With respect to Mr Reed, in my opinion, the Union in this case, argued for the same

result it had failed to achieve in the dispute it lodged in 2013. It is plainly apparent that what

it sought in 2013 is not substantively different to what was argued here, albeit that the

mechanism the Union used to seek that result was through the interpretation of the terms of

the then Agreement under the Disputes Procedure of the Agreement and s 739 of the Act.

Spencer C referred specifically to the authorities and principles of interpreting enterprise

agreements. In other words, the Union had lodged a dispute in 2013 to clarify the meaning of

the same words which are in dispute in this case. It is difficult to reconcile that initiative with

an argument that the United Voice v ISS Security is irrelevant in this case. More significantly

however, by seeking clarity of the meaning of the same words in 2013 to those in the 2011

and 2014 Agreements it appears to me to be a plain demonstration that the Union accepts

there is an ambiguity or uncertainty with the words. Thus, while it is understandable that the

Union would seek to distance itself from the United Voice v ISS Security case, it really had no

other choice. However, in my judgment this case is on ‘all fours’ with the arguments that

were put in this case.

[105] Fourthly, Mr Reed relied on MMS v CEPU in support of the Union’s contentions. In

my view, the issue before Gostencnik DP in MMS v CEPU was essentially the same as here. It

does not assist the Union in this case. In simple terms, the contention of the Union in MMS v

CEPU was that the shutdown/outage/flat allowance payable to casual employees should be

calculated by adding the allowance to the ordinary rate of pay and then adding the casual

loading. His Honour rejected this contention and adopted the approach of applying the 25%

loading to the ordinary rate and then adding the allowance. An appeal Bench upheld His

Honour’s conclusions. This is little different to what is being sought in this case, albeit by a

different mechanism. It is akin to adding a penalty on top of another penalty. On one view,

[2016] FWCA 2774

this case and United Voice v ISS Security should provide a complete answer to the Union’s

contentions and a compelling basis for rejecting that Union’s submissions. But there are other

reasons for doing so.

[106] Fifthly, I agree with Mr Dalton that within the two Agreements, there is inconsistent

terminology and undefined terms which support the contention that ambiguity is created when

interrelated clauses are to be applied and operate together.

[107] Sixthly, the contested issue is relatively straightforward. It is whether ‘all purpose’

means the Aviation Allowance is applied to the base rate of pay, before or after the inclusion

of overtime or other penalty factors. In my view, the Union’s interpretation ultimately results

in a penalty being paid on another penalty; See: "Automotive, Food, Metals, Engineering,

Printing and Kindred Industries Union" known as the Australian Manufacturing Workers'

Union (AMWU) v RACV Services Pty Ltd [2016] FWC 2845. While I accept the interpretative

exercise is not about fairness, this produces a distorted outcome, no better demonstrated by

the fact that the Aviation Allowance and the Union’s view would actually have a greater value

for Non-Aggregated Rates employees to Aggregated Rates employees (see para [68]). In the

absence of any evidence to the contrary I do not accept that this was the intended result of the

parties negotiating the Agreements or the intention of the employees who voted for approval

of the Agreements.

[108] It follows that I conclude that there is an ambiguity or uncertainty in the words used in

the Aviation Allowance clause in the 2011 and 2014 Agreements. I turn then to the nature of

the ambiguity and the competing contentions of the parties.

Mutual intentions

[109] In considering the surrounding circumstances to establish what the words ‘all purpose’

mean in the Aviation Allowance, I am persuaded that the intentions of the parties to the

Agreements, namely the employees and the employer, point to the interpretation of the clause

for which MSS contends. Mr Reed submitted that there was never any agreement or

understanding from the Union as to the acceptance of the meaning of the Aviation Allowance,

as contended for by MSS. That submission is obvious and undoubted. That said, I think Mr

Reed elevated the Union’s standing in the enterprise agreement processes under Part 2-4, Div

3 of the Act to a level which it does not have through statutory fiat. It is not the Union’s

[2016] FWCA 2774

agreement or otherwise which determines whether an agreement is submitted to the

Commission for approval; it is a vote of the employees (s 182) in which the employees have

genuinely agreed to the agreement. Indeed, there are many examples, where a bargaining

agent (being the Union) is vigorously opposed to the approval of an Agreement, but it is

nevertheless approved by the employees.

[110] It hardly needs stating that mutual intention does not mean agreement. This is the

whole premise of bargaining – one side may give up something they would rather retain in

exchange for something else. In other words, mutual intention can often mean accepting

something to which you are opposed. When viewed in that light, the Union’s non-acceptance

of MSS’s interpretation of the means of calculating the Aviation Allowance does not trump or

override a mutual intention of what is intended to apply by historical practice.

[111] That is not to ignore the Union’s strenuous opposition to the MSS view or that the

Union does not have the right to express its view and to have its intentions taken into account

in its statutory capacity as an employee bargaining representative. However, what is important

to understand is that under the scheme of the Act, Unions are no longer parties to enterprise

agreements, as that notion had been understood for many years (save for greenfields

agreements). This is not to demean or reduce the importance of the unions as direct

bargaining representatives or default bargaining representatives for employees and for unions

to be covered by the Agreement (s 201(2)), but the scheme of Part 2-4 of the Act, makes it

plain that the emphasis in bargaining is on agreements reached between employers and

employees. In my view, the distinction between being ‘covered’ by an enterprise agreement to

being a ‘party’ to an agreement is not merely a distinction without a difference. It is why I

consider the views and understanding of the employees as disclosed by their actions (what

they understood they were voting for) as imperative to understanding their intention. These

are not subjective views, but objective intentions. This discourse plainly demonstrates to me

that mutual intention is not to be exclusively found in the intentions of the Union. Rather, it is

the mutual intention of the employees to be covered by the agreement and the employer to

which the prime focus should be directed.

[112] The undisputed evidence of Mr Grasso and Ms Stinson, which I accept, makes clear

that since its first contracts at Queensland airports in 2010, MSS had never given any

impression or suggestion, let alone commitment, to alter its view as to how the Aviation

[2016] FWCA 2774

Allowance is calculated. Moreover, its view is reflected by its own conduct and actions over a

number of years. Seeking to remove the words and restoring them during negotiations for the

2014 Agreement, is not an indicator that it believed it had a problem. Rather, it was to make

the prevailing, longstanding and ongoing position crystal clear in the face of sporadic claims

to the contrary by the Union. MSS never did or say anything which would have left an

impression with the employees, who ultimately voted to approve the 2014 Agreement, that

they were voting on something different in respect to the Aviation Allowance that had always

been applied by MSS. I am reminded by what Lord Wilberforce said in Prenn v Simmonds

[1971] 1 WLR 1381, at 1385:

‘The words used may, and often do, represent a formula which means different things to
each side, yet may be accepted because this is the only way to get ‘agreement’ and in
the hope that disputes will not arise.’

[113] The evidence is that employees voted four times in favour of agreements which

contained the words ‘all purpose’, but was not applied by the employer in the manner

contended for by the Union (once where the former employer was ISS and three times where

MSS was the employer in 2011, 2014 and 2015). It may be assumed that the Commission in

approving the four Agreements was satisfied the employees had ‘genuinely’ agreed to the

agreements (s188).

[114] It stretches credulity and is naïve to submit that the employees did not know or were

confused as to how the Aviation Allowance had always been calculated and how MSS

intended to do so in the future. There was certainly no evidence to that effect, rather the

evidence of Mr Conn was to the contrary, as was the evidence as to how the Aviation

Allowance appeared and what the amount was, on the employees’ payslip. These are

objective, not subjective factors.

[115] Accordingly, I am satisfied that the intention of the parties, being the employees and

MSS, as to the calculation of the Aviation Allowance was as contended for by MSS. At this

juncture, I refer to the Full Bench decision in Re Telstra Corporation Ltd (2005) 139 IR 141

and the following passage at paras 48–49:

‘However, having ascertained the mutual intention of the parties, it would be unusual
for other considerations to weigh in favour of a variation that was inconsistent with the
intention of the parties.

[2016] FWCA 2774

In our view the objects of the WR Act generally and Pt VIB in particular are relevant
to the exercise of the discretion to vary an agreement to remove ambiguity or
uncertainty. The subsequent action and words of the parties would also be relevant. So
much is consistent with the approach taken in Tenix.’

[116] In the Qantas Short Haul Pilots Case cited by MSS, Watson VP said at paras [37]–

[38]:

‘The final question that arises for determination is whether a change in the agreement
should be made. It has been observed that having ascertained the mutual intention of
the parties it would be unusual for other factors to weigh in favour of not making a
variation that reflected that interpretation. Other considerations include the objects of
the relevant legislation and overall fairness considerations.

In my view all of the circumstances suggest that a variation that reflects the mutual
intention of the parties and the long-standing practice of the employer should be
reflected in the agreement. I therefore grant the application. An order reflecting the
changes sought in the application is issued in conjunction with this decision [my
emphasis].’

[117] Consequently, I propose to exercise my discretion to vary the Agreements to give

effect to the mutual intention of the parties. I do not accept the submission that the proposed

variation will result in the Commission rewriting the clause to reflect MSS’s subjective

assessment or to validate MSS’s past practice. Correcting the ambiguity by variation will not

rewrite the provision. It will do no more than clarify existing, longstanding and well

understood arrangements. While not entirely relevant, I note that no employee will suffer any

detriment or any reduction in current entitlements. Given the history of the matter, I am of the

view that ongoing litigation and controversy as to calculation of the Aviation Allowance, is in

no-one’s interest and should be resolved once and for all. Resolving the controversy is

harmonious with the objectives of the Act.

[118] For the reasons herein expressed, I find as follows:

1. There is an ambiguity or uncertainty in the Aviation Allowance at Clause 3.4.6 of

the 2011 Agreement and Clause 5(c) of the 2014 Agreement.

2. In the exercise of my discretion, I intend to vary both Agreements in terms of the

variation at par [5] of this decision.

3. In respect of the 2011 Agreement the variation shall take effect on and from 9 June

2011.

[2016] FWCA 2774

4. In respect to the 2014 Agreement the variation shall take effect on and from 28

November 2014.

[119] Orders giving effect to these findings will be published contemporaneously with this

Decision.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

Price code G, AE411222 PR579960

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Application by MSS Security Pty Ltd T/A MSS Security - [2016] FWCA 2774

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