DECISION

Fair Work Act 2009
s 739 - Application to deal with a dispute

Transport Workers' Union of Australia
v
Jetstar Services Pty Limited
(C2016/7317)

Dispute about a matter arising under an enterprise agreement – entitlement to overtime – interpretation of cl 17 of the Jetstar Services Agreement 2016 – dispute settlement procedure – principles of agreement interpretation – ordinary meaning of words used – incorrect and inconsistent application over 10 years – ‘work’ does not mean period of time when the employee is on leave – impermissible to examine surrounding circumstances – dispute resolved accordingly.

INTRODUCTION

[1] This decision will determine an application to deal with a dispute, pursuant to s 739 of the Fair Work Act 2009 (‘the Act’) filed by the Transport Workers’ Union of Australia (‘the Union’) on 13 December 2016. The dispute is with Jetstar Services Pty Ltd (‘Jetstar’ or ‘the respondent’). It concerns a question of whether Jetstar ground crew employees are entitled to have periods of personal and other leave, which fall during a pay week or roster cycle, taken into account when calculating overtime payments, under cl 17 of the Jetstar Services Agreement 2016 (the ‘2016 Agreement’). Clause 17 of the Agreement reads as follows:

‘17. OVERTIME

17.1. Where a full time employee works for:

17.1.1 a longer period than his or her rostered shift period; or

17.1.2 an average of more than 38 hours per week, averaged over a roster cycle (and taking into account RDO entitlements);

the additional time worked will be treated as overtime.

17.2. Where a part-time employee works more than 8 hours per day or 38 hours in a pay week

the additional time worked over 8 hours per day or 38 hours per week will be treated as overtime.

17.3. Where an employee works on 7 consecutive days they will be paid overtime for all hours worked on the 7th day.

17.4. Where a casual employee works for more than 7.6 hours on any day, the time over 7.6

hours will be treated as overtime.

17.5. Overtime rates are as follows:

17.4.1 day worker – time and a half for the first 2 hours and then double time; and

17.4.2 shift-worker – double time.’

BACKGROUND

[2] The dispute is brought pursuant to the Dispute Settlement Procedure (DSP) found at cl 10 of the Agreement and, in particular, the function of the Fair Work Commission (the ‘Commission’) to ‘take any or all of the following actions as it considers appropriate to resolve the dispute’ and ‘where the matter, or matters, in dispute cannot be resolved (including by conciliation) arbitrate or otherwise determine the matter, or matters, in dispute’ (cl 10.3). The subsequent sub clauses in the DSP read as follows:

‘10.4. The FWC must follow due process and allow each party a fair and adequate opportunity to present their case.

10.5. Any determination by the FWC under clause 10.3 must be in writing if either party so requests, and must give reasons for the determination.

10.6. Any determination made by the FWC under clause 10.3 must be consistent with applicable law and must not require a party to act in contravention of an applicable industrial instrument or law.

10.7. Where relevant, and circumstances warrant, the FWC will consider previous relevant decisions of the FWC and the Courts.

10.8. The FWC must not issue interim orders, 'status quo' orders or interim determinations.

10.9. The parties are entitled to be represented including by legal representatives, in proceedings pursuant to this dispute resolution procedure.’

[3] While Jetstar had initially raised a jurisdictional objection concerning a claim the Union had not followed the steps set out in the DSP of the Agreement, that objection was not ultimately pressed at the hearing. As there are no other jurisdictional impediments to the Commission hearing and determining the matter in dispute, I will proceed on that basis. Before doing so, I note a conciliation conference was convened by the Commission on 9 January 2017; however, settlement of the dispute proved elusive. Accordingly, the Commission issued directions for the filing and service of evidence and short outlines of submissions. The matter was listed for arbitration on 11 April 2017.

[4] At the hearing, Mr M Gibian of Counsel appeared for the Union and Mr N Ogilvie, Solicitor, appeared for Jetstar. Given the unusual terms of cl 10.9 above, there appears to be no requirement for the Commission to consider s 596 of the Act, in respect of permission for the parties to be represented by legal practitioners. However, for abundant caution and given no issues of unfairness arise where both parties are legally represented and do not object to the other side being legally represented, I am satisfied that the matter would proceed more efficiently if the parties are legally represented. As I said at the conclusion of the hearing, this last observation was borne out in that none of the three witnesses were required for cross-examination, the relevant issue for determination was property focussed and addressed and, as a result, an estimated day’s hearing was completed within one and a half hours. I am grateful for Mr Gibian’s and Mr Ogilvie’s efficient and effective contributions to the proceeding.

THE EVIDENCE

[5] The following persons provided uncontested statements of evidence in the proceeding:

● Mr Shane O’Brien, Director of Aviation Campaigns for the Transport Workers’ Union of Australia;

● Mr Dissio Markos, Branch Organisation/Aviation at the Victorian/Tasmanian Branch of the Transport Workers’ Union of Australia; and

● Mr Mohammed Ramahi, Leading Hand GC4 at Jetstar Services Pty Ltd.

● Mr Maciek Zielinksi, Employment Relations Advisor Jetstar Airways Pty Ltd

[6] The four witness statements provided the historical and contextual framework to the dispute. Should it become necessary for the purposes of construing the words in cl 17, this evidence may become relevant. Accordingly, I set out the statement evidence in summary below.

Mr Shane O’Brien

[7] Mr O’Brien is the Union’s official responsible for representing members in the aviation industry. Since December 2014, he has been involved in bargaining for the current 2016 Agreement. The 2016 Agreement replaced the Express Ground Handling Agreement 2010 (the ‘EGH Agreement’). It was Mr O’Brien’s evidence that the majority of the clauses in the EGH Agreement were simply rolled over into the 2016 Agreement. At the time, Jetstar had not proposed any changes to the payment of overtime under that clause. Discussions had been initiated by the Union about the payment of overtime to part time employees when they were required to work on their sixth or seventh consecutive day. This resulted in a new cl 17.3 of the 2016 Agreement; otherwise cl 17 is identical in the EGH Agreement.

[8] Mr O’Brien said that in early February 2016 he had been advised by Victorian Branch Organiser, Mr Markos that Jetstar had notified employees that the Company had been incorrectly paying overtime for 10 years. The notification relevantly said:

‘Overtime - There have been some examples of leave hours being counted towards overtime, contrary to the EBA. We won't recover any previous overpayments that may have been made, however, the system has been set up in line with the correct EBA interpretation so only time physically worked counts towards overtime. This will ensure consistency moving forward, but may result in some team members noticing a change compared to previous pay runs.’

[9] It was Mr O’Brien’s understanding that at the Sydney, Melbourne and Brisbane airports the practice had always been that annual leave and sick leave were taken into account as hours worked, for the purposes of calculating the entitlement to overtime payments. The practice had existed for at least 10 years. Mr O’Brien was not aware of any question being raised during that time about the correctness of this approach in calculating overtime payments. Mr O’Brien made subsequent inquiries of delegates at Cairns and Adelaide airports and was informed of a different practice, in that the Company had not counted leave hours when calculating overtime.

[10] Mr O’Brien believed that Qantas Companies, including Jetstar, were beginning to adopt the new interpretation of the overtime clause in September 2016, during negotiations for the Qantas Ground Services Pty Limited Ground Handling Agreement 2015. He said the change of approach had a particular effect on the large number of part time employees, who while being guaranteed 20 hours a week, regularly work additional shifts up to 38 hours a week. Under the new approach, an employee working 38 hours a week will be deprived of overtime, simply because the employee accesses authorised leave. Mr O’Brien had discussed the matter with Mr Zielinski, but no agreement could be reached about the correct interpretation of cl 17 of the 2016 Agreement.

Mr Dissio Markos

[11] Mr Markos described how he had dealt with a complaint from one of his delegates, Mr Mohammed Ramahi, that members in Melbourne were being incorrectly paid when they were sick and called in to work overtime on another day. Mr Markos had raised the issue with Airport Services Manager, Mr Marc Jamieson, who confirmed that the Company’s position was that the payments for overtime had been incorrectly calculated and he would be posting a notice to employees advising of the mistake. Mr Markos disputed Jetstar’s interpretation of cl 17. Mr Jamieson told him that if he Union did not agree, then it should lodge a dispute with the Commission.

Mr Mohammed Ramahi

[12] Mr Ramahi has been employed by Jetstar for about five years. He confirmed the evidence of Mr Markos about when and how the dispute had been raised and handled by the Union.

Mr Maciek Zielinski

[13] In his role with Jetstar, Mr Zielinski was involved in bargaining for the 2016 Agreement. He confirmed Mr O’Brien’s evidence about the origins of cl 17.3 during negotiations for the 2016 Agreement. Mr Zielinski added that at the time, Mr O’Brien had welcomed the payment for overtime for work performed on the seventh consecutive day, but requested it be extended to the sixth day. Before the vote for approval of the 2016 Agreement, the Company wrote to employees and provided a summary of key changes. The summary indicated that if an employee was required to work on seven consecutive days, overtime would be paid for hours worked on the seventh day.

SUBMISSIONS

[14] Both parties dealt with the principles to be applied by the Commission when interpreting the provisions of an enterprise agreement and the authorities pertaining thereto; Most notably The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited [2014] FWCFB 7447 (‘Golden Cockerel’.) I will come back to those principles and authorities later, suffice to observe at this point that the parties are ad idem as to the relevant principles to be applied in this case. Unsurprisingly, they strenuously disagree as to the outcome of the application of those principles to the subject matter of this dispute.

For the Union

[15] In written submissions it was said that in the 2016 Agreement, cl 17 confers an entitlement on a full time employee to be paid overtime when the employee works for a longer period than his or her rostered shift or an average of more than 38 hours per week over a roster cycle; and for a part time employee who works more than eight hours per day or 38 hours in a pay week. Overtime should be payable, irrespective of any leave entitlements accessed during the pay week or roster period. In determining whether the employee has worked more than 38 hours, authorised leave entitlements should be taken into account.

[16] The Union submitted that a number of factors support this interpretation of cl 17:

(a) The ordinary common sense understanding of the words used supports a proposition that any permitted or authorised leave is part of an employee’s work time;

(b) Section 62 of the Act prescribes maximum hours of work and s 62(4) defines hours of work as including ‘any hours of leave, or absence, whether paid or unpaid, that the employee takes in the week and that are authorised...’. It may be assumed the parties intended ‘work time’ to have the same meaning as in s 62 of the Act;

(c) The circumstances at the time the 2016 Agreement was made; namely, the long standing practice in Sydney, Melbourne and Brisbane, to include periods of leave when calculating overtime. Past practice supports the conclusion for which the Union contends. This is further supported by the fact that:

i. Jetstar did not seek to alter the long standing practice during the negotiations for the 2016 Agreement; and

ii. The equivalent provision in the EGH Agreement was simply rolled over.

(d) Jetstar’s interpretation gives rise to the provision being considered an ‘objectionable term’ and therefore, ‘unlawful’ under s 194 of the Act. Moreover, it might be said that cl 17 involves the exercise of a ‘workplace right’ being for employees to take personal or other leave under the Agreement and the NES. Adverse action would arise if an employee was dismissed for exercising that ‘workplace right’; and

(e) Jetstar’s interpretation would be contrary to the rationale for the payment of overtime, being to compensate an employee for working outside their usual pattern of hours and to act as a disincentive for employers to require employees to work excessive hours; see: Re Glass Workers Award (1953) 76 CAR 17.

[17] In oral submissions, Mr Gibian stressed that Jetstar had only altered its interpretation and application of c 17 shortly after the 2016 Agreement had been approved and after many years of a long standing practice to the contrary. Mr Gibian emphasised that one of the important approaches to agreement interpretation is that an overly literal and/or technical approach is to be eschewed. The interpretive task is to have regard to industrial reality, context and history, particularly where the same wording has been used in successive agreements.

[18] Counsel put that there is no definition of what constitutes ‘work time’, in a general sense, in the 2016 Agreement and in that context, it is capable of having different meanings. The task of interpreting words is to give them a sensible operation, consistent with the meaning of the words and their context when views as a whole. He relied on a recent decision of the Full Bench in Construction, Forestry, Mining and Energy Union v Broadspectrum Australia Pty Ltd [2017] FWCFB 269 (Broadspectrum) which held that compulsory training, required to be undertaken by employees, constituted ‘work’ for the purposes of cl 19 of the Broadspectrum Agreement. Mr Gibian put that the same approach should be applied in this case, where the word ‘work’ is capable of different meanings in different contexts.

[19] In analysing the words of cl 17, Mr Gibian used an example of a part time employee who is ordinarily rostered on Monday to Thursday shifts, but is sick from Monday to Wednesday and is called in on the Friday to work an additional shift. On Jetstar’s interpretation, the employee would not receive overtime for that shift. If the employee had not been sick and the 38 hour threshold was reached, he/she would have been entitled to receive overtime pay. Similarly, if a full time employee takes two weeks leave in the first half of the roster period, then in the successive two weeks, the employee may be forced to work very long hours, without any overtime entitlement arising. Counsel also gave the example of a part time employee who is guaranteed 20 hours a week under cl 12.4, and the employee would have to work 20 hours a week, in addition to any authorised leave in that week, to avoid Jetstar being in breach of the 2016 Agreement.

[20] It was argued that these examples demonstrate an absurd outcome if Jetstar’s interpretation of c 17 was to prevail. Mr Gibian noted that cl 14.4, in respect to a downturn in labour requirements, provides a note which states, ‘work and leave hours will be included when calculating the average hours’. This squarely answered the Company’s argument that there is no other specific provision which deal with the interpretation for which the Union contends. In addition, Jetstar’s submissions adopt the very approach which is generally discouraged - that is to adopt an overly literal or technical interpretation. Nevertheless, Mr Gibian acknowledged that while cl 17 could have been better drafted, the Commission must do its best to ensure a logical and sensible outcome.

[21] Mr Gibian also relied on the rostered days off (‘RDO’) provision in the Agreement. One RDO is accrued every month, which includes periods when the employee is on authorised leave. On Jetstar’s approach, one RDO a month might actually require six weeks to accrue, if the employee takes two weeks leave in the relevant period.

[22] Mr Gibian reiterated the Union’s submissions concerning s 62 of the Act dealing with maximum weekly hours. He said that while the statutory context is not determinative, it is relevant. Counsel conceded that s 62 did not expressly deal with overtime.

[23] Mr Gibian dealt with the past history by reference to the evidence of Mr O’Brien and the longstanding practice which was altered by Jetstar in October/November 2016. Indeed, the terms of the cl 17 were rolled over from predecessor agreements. This longstanding practice was a clear indication of the intentions of the parties as to the interpretation of cl 17. Mr Gibian added that there is nothing in the new cl 17.3, which suggests a change to the traditional approach. He emphasised this new subclause had been at the Union’s initiative - not Jetstar’s.

For Jetstar

[24] In written submissions it was put that the central question to be determined by the Commission is whether paid leave or other paid absences constitute ‘work’ in the sense that it counts towards the weekly hours threshold for calculating whether an entitlement to overtime arises.

[25] It was submitted that:

a) the clear and unambiguous meaning of ‘work’, discernible from the 2016 Agreement, does not require reference to extrinsic materials; and

b) even if any ambiguity exists, the recent conduct of the parties demonstrates a clear understanding of ‘work’, within cl 17, which is against the Union’s construction.

[26] It was further put that ‘work’ means the actual performance of duties and is a different concept to ‘ordinary time’, ‘ordinary hours of work’ or ‘rostered hours’. It can also be distinguished from paid authorised absences. Section 62 of the Act is not relevant because the definition of ‘work’ is referable to its usage throughout the 2016 Agreement. These references include:

(a) Clause 10.10 provides for the maintenance of the ‘status quo’ in the way work is performed whilst a dispute is on foot;

(b) Clause 16.2 provides for the payment of higher duties where an employee works higher duties for part or all of a shift;

(c) Clause 18.3.1 provides that an overtime meal allowance is payable to an employee who works more than 1 hour of overtime, and then after each subsequent 4 hours of overtime worked;

(d) Clause 20.2 provides for the payment of double time where an employee works a shift whose start and/or finish time is changed by more than 30 minutes with less than 48 hours’ notice;

(e) Clause 23 provides for meal breaks according to time actually worked;

(f) Clause 28 provides for public holiday penalties to be paid for time actually worked on a public holiday; and

(g) Clause 31 provides for the provision of notice on termination, and allows the period to be worked, or for a payment to be made in lieu of it being worked.

[27] Jetstar added that cl 17.1 expressly takes into account ‘RDO entitlements’, but includes no mention of paid leave or authorised absences. The manner in which RDOs are accrued, recognising actual performance of work, is necessary before an RDO is paid. This is identical to the requirement to perform actual work before overtime is paid. Clause 14.4 also expressly distinguishes between ‘work’ and ‘leave hours’.

[28] In addition, cl 17.4 provides for casuals to be paid overtime where they work more than 7.6 hours a day. As casuals do not accrue, nor are they entitled to paid leave, ‘work’ in cl 17.4 cannot logically be intended to include periods of paid leave or authorised absences.

[29] Even if ambiguity is found to exist, the new cl 17.3 prescribes for overtime payments where an employee works on seven consecutive days. This was understood by both parties to mean that payment of overtime on the seventh consecutive day required work to be actually performed on the seventh consecutive day. This is consistent with the correct interpretation of cl 17.

[30] The Company rejected the Union’s reliance on s 62(4) of the Act, as the 2016 Agreement does not incorporate the definition of ‘work’ from that section of the Act. The absence of any specific inclusion of leave in cl 17 demonstrates the word has its plain, common sense meaning. In addition, the Act does not require penalties for performing overtime; penalties are set by the relevant industrial instrument.

[31] Finally, it was said that the Union’s submission concerning adverse action was misplaced as it assumes a workplace right exists when that very question turns upon the proper construction of cl 17. It is a ‘cart before the horse’ argument.

[32] In oral submissions, Mr Ogilvie acknowledged the 2016 Agreement contains no definition of ‘work’ or ‘work time’ and is used in a wide array of contexts throughout the 2016 Agreement, including within cl 17 itself. He stressed that the entitlement to overtime only arises in circumstances where an employee is physically at work for more than 8 hours per day or 38 hours in a pay week.

[33] As to the principles of interpretation, Mr Ogilvie put that the Commission is not free to give effect to some anteriorly derived notion of what would be fair and just, regardless of the plain and ordinary meaning of the words in the Agreement.

[34] Mr Ogilvie advised that the Company employs 350 to 360 employees; the vast majority of whom are part time and who will be impacted more than full time employees. Mr Ogilvie said that there is no inconsistent approach to cl 14.4 and 12.4, because the clauses do different things in respect to minimum work hours. Clause 12.4 deals with a guarantee of 20 hours per week and cl 14.4 deals with a rolling three month average. Predicted leave is rostered during that longer period. Mr Ogilvie said it should always be borne in mind that overtime entitlements only arise by virtue of the employees having undertaken more hours of work than their roster and beyond 38 hours a week.

[35] Mr Ogilvie said that s 62(4) of the Act has no application because that provision is for the specific purpose of calculating maximum hours; not for any other purpose.

[36] As to the Union’s submissions going to the long standing practice at Sydney, Brisbane and Melbourne, Mr Ogilvie noted that Adelaide has a long standing practice which reflects Jetstar’s interpretation and there was no evidence of what applies at Cairns. It followed, there was no consistency in approach. Other of Jetstar’s ports use third party providers for their ground handling services.

[37] Mr Ogilvie put that whether a workplace right actually exists ultimately depends on a proper construction of the clause. If there is no entitlement to overtime, it cannot be said that denying the right to overtime is an adverse action.

[38] Mr Ogilvie distinguished the decision in Broadspectrum by observing that the case concerned different circumstances; namely, compulsory training. That case is not authority for the proposition that ‘work’ includes personal leave or any other form of leave.

[39] In reply, Mr Gibian gave a further example of an employee who works for five or six 10 hour shifts, or even 12 hour shifts, without reaching the threshold and then has two weeks leave within that roster period. This is a practical outcome which would be inconvenient and unjust. Mr Gibian also said that the concept of 20 hours of ‘guaranteed’ part time work cannot be reconciled, if an employee takes three days of leave and then has to be ‘guaranteed’ 20 hours of actual physical work.

[40] Mr Gibian referred again to the purpose of overtime to compensate employees for working outside of their usual pattern of hours and serves as a disincentive to employers requiring employees to work excessive hours. He stressed that Jetstar’s approach, particularly for part time employees who work outside the usual pattern of hours, would result in them not receiving any compensation by way of overtime payments.

CONSIDERATION

[41] Stripped to its fundamental essence, the question for the Commission to determine is whether the words ‘works’ or ‘worked’ in cl 17 should be read to include periods of all forms of approved leave (not only personal/carer’s leave) for the purposes of calculating overtime. It is apparent from the submissions of the parties, that this is the crux of their dispute. Accordingly, I intend to approach the matter from that standpoint, which begins with the principles to be applied by the Commission when interpreting the words in an industrial agreement; in this case an enterprise agreement.

[42] In Cape Australia Holdings Pty Ltd T/A Total Corrosion Control Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 3994 the Full Bench of Fair Work Australia (as the Commission was then styled) said at paras 7-9:

‘[7] As to the general approach to the construction of enterprise agreements the observations of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (Wanneroo)are apposite:

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

[8] While his Honour’s observations were made in the context of interpreting an award the same principles apply to the interpretation of enterprise agreements. For example, similar observations were made by their Honours Gummow, Hayne and Heydon JJ in Amcor v CFMEU:

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

[9] The fact that the instrument being construed is an enterprise agreement is itself an important contextual consideration. As French J observed in Wanneroo, at paragraph [57]:

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

“Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.”’

[43] In Australian Workers’ Union, West Australia Branch v Co-operative Bulk Handling Limited [2010] FWAFB 4801, the Full Bench of FWA reemphasised the first principle of agreement interpretation – that a finding should first be made as to whether the word/s are ambiguous, uncertain or capable of more than one meaning. It is only after making such a finding that the Commission may look to ‘surrounding circumstances’ to establish the meaning of the words. At paras 12-13, the Full Bench observed:

‘[12] Neither Swire nor Watson is authority for the proposition that in resolving the question of whether terms of an agreement are ambiguous and susceptible of more than one meaning, regard may not be held to extrinsic material. In so holding the commissioner erred. Because the manner in which agreements should be construed is in issue in this appeal, it is worthwhile extracting, in full but omitting footnotes, the distillation of the law by Vice President Lawler in Watson:

“[8] There are well established principles under the general law for the construction of contracts. Those principles are generally applicable in the construction of certified agreements. For example, in Telstra Corporation Ltd v CEPU a Full Bench of the Commission was concerned with applications to vary a number of certified agreements and, in the course of its decision, summarised the principles governing the resolution of ambiguity in a certified agreement:

“[33] The judgment of the High Court in Codelfa Construction Pty Ltd v State Rail Authority of NSW established widely accepted principles for resolving ambiguity in contracts. In that case Mason J stated the rule thus:

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

[34] In BP Australia Pty Ltd v Nyran Pty Ltd, Nicholson J distilled, by reference to Codelfa, the following points of principle for resolving ambiguity in contracts:

• it is necessary firstly to determine whether the contract has a plain meaning or contains an ambiguity;
• if the contract has a plain meaning, evidence of surrounding circumstances will not be admissible to contradict the language of the contract;
• if the language of the contract is ambiguous or susceptible of more than one meaning evidence of surrounding circumstances is admissible to assist in the interpretation of the contract;
• the concept of surrounding circumstances is to be understood to be a reference to the objective framework of facts. It will include:
• evidence of prior negotiations so far as they tend to establish objective background facts known to both parties and the subject matter of the contract;
• facts so notorious that knowledge of them is to be presumed;
• evidence of a matter in common contemplation and constituting a common assumption. (my emphasis)

[35] After referring to the foregoing points of principle Nicholson J continued as follows:

‘From the evidence of that setting the parties’ presumed intention may be taken into account in determining which of two or more possible meanings is to be given to a contractual provision. What cannot be taken into account is evidence of statements and actions of the parties which are reflective of their actual intentions and expectations. Objective background facts can include statements and actions of the parties which reflect their mutual actual intentions. That is, evidence of the mutual subjective intention of the parties to a contract may be part of the objective framework of facts within which the contract came into existence. It is the mutuality which makes the evidence admissible’”

[9] In Kucks v CSR Limited Madgwick J held:

“It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.

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

[10] These remarks were made in the context of construing an award. However, Madgwick J’s approach has been adopted in relation to the construction of certified agreements. In Australasian Meat Industry Employees’ Union v Coles Supermarkets Australia Pty Ltd Northrop J observed:

“The increase in the number of certified agreements gives rise to an area of possibly greater dispute as to the construction of provisions contained in the agreements. The parties may adopt a multitude of different structures and methods of terminology. No common pattern may develop. Nevertheless certified agreements are to be construed adopting the same methodology as that used in construing awards. In Kucks v CSR Limited(1996) 66 IR 182 Madgwick J, sitting as a judge of the Industrial Relations Court of Australia, at 184 expressed his opinion on the legal principles to be applied in construing awards under the Act. I agree with that statement of principles. They have even stronger application to certified agreements.”

[11] This view was approved by the Full Court of the Federal Court in Ansett Australia Limited v Australian Licensed Aircraft Engineers’ Association.

[12] In United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board the Full Court of the Federal Court, in the context of construing a dispute resolution clause in a certified agreement, noted:

“The parties agree that the proper approach to the construction of industrial instruments was stated by Madgwick J in Kucks at 184. His Honour’s statement of the principles was followed by a Full Court in Ansett Australia Limited v Australian Licensed Aircraft Engineers’ Association [2003] FCAFC 209 at [8] and by two Justices of the High Court in Amcor Limited v Construction Forestry Mining & Energy Union [2005] HCA 10 at[96] per Kirby J and at [130] per Callinan J. That was the approach which was adopted by the learned primary judge.

A narrow or pedantic approach is not to be taken. The intention of the framers of the document is to be ascertained objectively, bearing in mind that they are likely to have been people of a practical bent of mind. Their intention may well have been expressed in ways likely to have been understood in the relevant industry, rather than in “legal niceties or jargon.”; see Kucks at 184.

Clearly enough, the language of the instrument must be construed in its context, having regard to the subject matter and the wording of the entire agreement: Short v FW Hercus Pty Limited [1993] FCA 51; (1993) 40 FCR 511 at 518. The context will include the statutory context in which the agreement is made.” (emphasis added)

[13] In Short v FW Hercus Pty Ltd Burchett J, with whom Drummond J agreed, considered whether inter alia, with whether it is legitimate, for the purpose of construing a clause of an award, to look at the history of the provision. After considering a number of authorities, Burchett J observed:

“No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use. It is in those circumstances that the author of the award has inserted this particular clause into it, and they may fairly be regarded as having shaped his decision to do so. The rules of construction, Mason and Wilson JJ. said in Cooper Brookes (Wollongong) Proprietary Limited v. The Commissioner of Taxation of the Commonwealth of Australia [1981] HCA 26; (1981) 147 CLR 297 at 320, are really rules of common sense. Common sense would be much offended by a refusal to look at the facts I have summarized. As Isaacs J. said in Australian Agricultural Company v. Federated Engine-Drivers and Firemen’s Association of Australasia [1913] HCA 41; (1913) 17 CLR 261 at 272, citing Lord Halsbury L.C.: “The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it.” 

The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is a part, or to other documents with which there is an association. Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed. In literature, Milton and Joyce could not be read in ignorance of the source of their language, nor should a legal document, including an award, be so read.

...Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. “Sometimes”, McHugh J. said in Saraswati v. R [1991] HCA 21; (1991) 172 CLR 1 at 21, the purpose of legislation “can be discerned only by reference to the history of the legislation and the state of the law when it was enacted”. Awards must be in the same position.
But even if the language, read alone, appeared pellucidly clear, the tendency of recent decisions - and this is the other answer to the argument put - would seem to require the court to look at the full context. Only then will all the nuances of the language be perceived. The judgment of Mason J. (with which Stephen and Wilson JJ. expressed agreement) in Codelfa Construction Proprietary Limited v. State Rail Authority of New South Wales(1982) 149 CLR 337 at 347-353 contains an extended discussion of the principles upon which a court may take account, when construing a contract, of the circumstances surrounding the agreement of the parties upon those particular terms. In the course of that discussion, Mason J. suggested (at 350) that “perhaps ... the difference ... is more apparent than real” between the view that evidence is admissible only to resolve an ambiguity, not to raise it, and the view that extrinsic evidence is receivable both to raise and to resolve an ambiguity. He concluded (at 352):

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

The fact is that words are frequently susceptible of more than one meaning. Paradoxically, ambiguity may be born of the reader’s clarity of thought which perceives a potentiality for an alternative meaning. But in many cases only evidence of extrinsic facts can show that the potentiality has substance. The old case Macdonald v. Longbottom (1859) 1 El and El 977 [1859] EngR 635; (120 ER 1177), to which Mason J. referred, is an example, since there is nothing necessarily ambiguous in the expression “your wool” (indeed Erle J. at 986 described it as “most explicit”) - only evidence that at the time the vendor had both wool of his own growing, and also wool which he had bought in from others, could raise an ambiguity, while at the same time solving it once the other party was shown to have known the facts.

Mason J. returned to the subject in his dissenting judgment in K. and S. Lake City Freighters Proprietary Limited v. Gordon and Gotch Limited [1985] HCA 48; (1985) 157 CLR 309 at 315, when he said:

“Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasize the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise.”

This is a broad proposition, applicable to problems of construction generally, although it was put forward in the context of statutory interpretation. ...”

[14] While Short v FW Hercus Pty Ltd was concerned with the proper construction of a clause in an award, it is clear it is equally applicable to the construction of certified agreements as illustrated by the reliance placed upon it by the Full Court in United Firefighters’ Union of Australia in the passage set out above.

[15] In summary, the general principles governing the construction of contracts laid down by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales apply to the construction of industrial agreements. However, consistent with the approach in Kucks and Short v FW Hercus Pty Ltd, an industrial agreement must always be construed in context: the context of particular provisions within the agreement as a whole and the context in which the agreement was made including any relevant statutory or historical context. Extrinsic evidence as to the context in which the agreement was made, including the statutory and historical context, will be admissible to demonstrate the existence of ambiguity and or to resolve ambiguity.”

[13] Recently, Logan, J, after citing the passage from Kucks succinctly stated:

“The starting point must always be the language employed by the parties to an industrial agreement but industrial context and purpose are always relevant when construing that language...”’ (my emphasis)

[44] Of course, in the quaintly titled and oft quoted decision of Golden Cockerel, the Full Bench of the Commission summarised the relevant principles at paragraph [41] as follows:

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

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

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

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

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

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

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(b) notorious facts of which knowledge is to be presumed;

(c) evidence of matters in common contemplation and constituting a common assumption.

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

8. Context might appear from:

(a) the text of the agreement viewed as a whole;

(b) the disputed provision’s place and arrangement in the agreement;

(c) the legislative context under which the agreement was made and in which it operates.

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

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

[45] A recent Full Bench of the Commission neatly set out the first step in the interpretive process. In Thiess Pty Ltd v Construction, Forestry, Mining and Energy Union [2017] FWCFB 2459 the Full Bench said at para 21:

‘[21] Without reciting at length the principles applicable to the construction of an enterprise agreement, much like the approach to construing a statute, the construction of an enterprise agreement begins with a consideration of the ordinary meaning of the words used, having regard to the context and evident purpose of the provision or expression being construed. Context may be found in the provisions of the agreement taken as a whole, or in their arrangement and place in the agreement being considered. The statutory framework under which the agreement is made may also provide context, as might an antecedent instrument or instruments from which particular provisions might have been derived.’ (my emphasis)

[46] In my view, with these principles steadily borne in mind, the words ‘works’ or ‘worked’ in the context of cl 17 of the Agreement are not ambiguous, uncertain or capable of more than one meaning. The word ‘works’ or ‘worked’ must mean being physically at work and performing work or other functions associated with work, at the employer’s direction. This conclusion accords with what the Full Court of the Federal Court said in Warramunda Village Inc v Pryde [2002] FCA 250 where Lee, Finkelstein and Gyles JJ said at para [17]:

‘It cannot be said that, in rendering a "sleep-over shift", an employee is "on call" within the meaning of cl 32. For the purpose of cl 32 an employee who is off duty but "on call" is free to conduct his, or her, private life subject to the employer being able to direct the employee to report for duty, and to the employee organizing his or her affairs to be able to respond to that direction if given. (See: Suffolk County Council v Secretary of State for the Environment [1984] ICR 822 (House of Lords)). An employee who attends at the place of employment pursuant to the employer's direction to be at the employer's premises for a period of time and be available to provide service at the premises as required by the employer, is not carrying on private activities but is providing service to the employer. Such an employee is at "work" for the purposes of the 1995 Award and is entitled to be remunerated according to the terms of the Award. (See: Hospital Employees' Industrial Union of Workers, WA v Proprietors of Lee-Downs Nursing Home (1977) 51 WAIG 455 per Burt CJ at 456).’ (My emphasis)

[47] Moreover, this result is entirely consistent with what a reasonable lay observer would understand to be the meaning of the words and their purpose and the usual and logical definition of the word ‘work’. The Macquarie Dictionary defines work as meaning:

‘ 1. Exertion directed to produce or accomplish something; labour; toil.

2. That on which exertion or labour is expended; something to be made or done; a task or undertaking.

3. Productive or operative activity…’

[48] Further, as was said by Madgwick J, in Kucks  v CSR Ltd (1996) 66 IR 182 (‘Kucks’):

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

[49] When viewed in this way, I cannot see how it is possible or logical that ‘work’ includes periods where no tasks are undertaken and nothing is made or done for the benefit of the employer. Axiomatically, this must include periods of annual leave, personal leave and other leave.

[50] I am also satisfied that this conclusion is consistent with how the word is used in the context of the Agreement as a whole. For example:

(a) Clause 10.10 provides for the maintenance of the ‘status quo’ in the way work is performed whilst a dispute is on foot;
(b) Clause 16.2 provides for the payment of higher duties where an employee works higher duties for part or all of a shift;
(c) Clause 17.3 requires work to be actually performed on a seventh consecutive day before overtime is payable.
(d) Clause 18.3.1 provides that an overtime meal allowance is payable to an employee who works more than 1 hour of overtime, and then after each subsequent 4 hours of overtime worked;
(e) Clause 20.2 provides for the payment of double time where an employee works a shift whose start and/or finish time is changed by more than 30 minutes with less than 48 hours’ notice;
(f) Clause 23 provides for meal breaks according to time actually worked;
(g) Clause 28 provides for public holiday penalties to be paid for time actually worked on a public holiday; and
(h) Clause 31 provides for the provision of notice on termination, and allows the period to be worked, or for a payment to be made in lieu of it being worked.

[51] Support for Jetstar’s interpretation can also be found by how overtime is treated within cl 17 itself. Subsection (4) of cl 17 provides for overtime for casual employees. As casual employees do not receive annual leave or sick leave, the interpretation for which the Union contends cannot possibly apply to them. This is entirely consistent with how the clause should be properly interpreted as it applies to all categories of employment. In addition, this consistent approach within the clause itself is also reflected in the new cl 17.3 which requires overtime to be paid for actual work to be performed on a seventh consecutive day. It would be nonsensical to suggest that overtime was to be paid if the seventh day was a leave day.

[52] Moreover, when viewed in the context of the underlying beneficial purpose or social intent (jury service, blood donor leave, community service etc.) underpinning various forms of leave, the meaning of ‘works’ or ‘worked’ is manifest and obvious. Let me further explain.

[53] The origin and evolutionary extension of annual and long service leave was to recognise that workers require reasonable periods of time away from work to recover from the physical and/or psychological impacts of work and be able to spend quality time at leisure or on holidays with family or friends; in other words, activities undertaken in a private capacity. To my mind, this is the very antitheses to being ‘at work’, using ‘exertion to produce or accomplish something’.

[54] Similarly, a worker’s entitlement to access personal leave for sickness or injury or to care for a sick or injured family member, is respectively because the worker has no capacity for ‘work’ or to be ‘at work’. In my opinion, it is difficult to reconcile the notion of ‘work’ with the very opposite notion of incapacity to work or an inability to attend for work because of carer’s responsibilities.

[55] Further, in my judgement, the Union can take little comfort from the decision in Broadspectrum. This is so because that decision can be readily distinguished from the present case on a number of bases. The question in Broadspectrum concerned whether the time taken by employees when undertaking compulsory training constituted ‘work’ for the purposes of the applicable agreement. This is an entirely different concept, with a different industrial purpose, to paid leave.

[56] Training which is compulsory (that is a requirement of the employer), has as its purpose, the enhancement of the skills or abilities of the employee. This is undoubtedly a prospective benefit for both the employer’s business and the employee’s future employability. It could hardly be said that the accessing of an entitlement to annual leave, personal leave, long service leave, community service or other leave, results in a beneficial outcome for the employer. The reasonable lay observer’s understanding of an entitlement to leave, arising in an employment context, would clearly be different to a requirement of the employer that an employee, do or undertake something which results in a benefit to the employer’s business or enterprise. In addition, in Broadspectrum, the Full Bench said any distinction between work and training depends, in a particular case, on the principles to be applied to the construction of enterprise agreements (Golden Cockerel), rather than by a preliminary assumption that parties seek to distinguish between work and training (see paragraph [96]).

CONCLUSION

[57] Having found no ambiguity or uncertainty with words ‘works’ and ‘worked’ in cl 17, it is impermissible according to the principles of agreement interpretation, to look to ‘surrounding circumstances’ to seek an outcome incompatible with the plain, ordinary English understanding of the words, or look to history or other circumstances to produce a fairer or more just outcome. As was said by Katzmann J in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Excelior Pty Ltd [2013] FCA 638 at para [77]:

The consequences for Mr Butterworth are unfortunate. In the 21st century it is hard to see why an employee who is required by the terms of his contract of employment to attend training far from his accustomed workplace should have to shoulder the lion’s share of the costs of travel and accommodation to enable him to do so. But the Court’s task is to interpret the award, not to remake it. It would be “wrong to strain the words of the award to achieve a result that might be considered fair or desirable according to some a priori standard of fairness or proper employment practice” (ACX Ltd v DCT at [115]). The remedy lies elsewhere. (My emphasis)

See also: Kucks supra above.
In any event, I consider the interpretation I prefer, does not produce an unjust, unfair or unreasonable outcome.

[58] For these reasons, I reject the interpretation of cl 17 in the 2016 Agreement pressed upon the Commission by the Union. The dispute is determined accordingly and the application is dismissed.

DEPUTY PRESIDENT

Appearances:

Mr M Gibian of Counsel for the Transport Workers’ Union of Australia.

Mr N Ogilvie, Solicitor, for Jetstar Services Pty Ltd.

Hearing details:

Sydney.

2017.

April 11.

Final written submissions:

Printed by authority of the Commonwealth Government Printer

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