Australian Institute of Marine and Power Engineers, The v Van Oord Australia Pty Ltd [2015] FWC 316 (9 February 2015) [2015] FWC 316 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.739 - Application to deal with a dispute Australian Institute of Marine and Power Engineers, The v Van Oord Australia Pty Ltd (C2013/3670) COMMISSIONER BOOTH BRISBANE, 9 FEBRUARY 2015 Dispute regarding payment of shorthand money. [1] The Australian Institute of Marine and Power Engineers ( AIMPE ) brought a dispute under s.739 of the Fair Work Act 2009 ( the Act ) seeking arbitration of certain matters relating to payments to its members who are engineers and electricians operating dredges for Van Oord Australia Pty Ltd ( Van Oord ). AIMPE was represented by Mr Martin Byrne. [2] Van Oord is the Australian subsidiary of a major Dutch company that contracts internationally for dredging, marine engineering and offshore energy projects. It operates some 27 vessels in Australia. Van Oord was represented by Mr Kimber SC and Mr Fagir of Counsel. [3] AIMPE brought an application under s.739 for this Commission to deal with a dispute arising under relevant enterprise agreements. [4] The dispute in question concerns interpretation of shorthand money clauses in 4 Agreements, that is, additional remuneration to be shared among crew when a vessel is operated with less than its normal or agreed complement of engineers. It is the AIMPE’s contention that shorthand payments should be made to Australian engineers including their members that operated on the Gladstone and Darwin dredging projects. 1 [5] Van Oord maintains that an entitlement to shorthand money to AIMPE engineers discriminates between employees on the basis of the union membership and being an objectionable term has no effect under the Act. Further disputes about manning levels should be settled via the dispute settlement procedure not by way of shorthand payments. 2 [6] The parties do however agree that shorthand money is payable to employees under all 4 agreements. It is the circumstances of those payments that is the issue in dispute. Enterprise agreements [7] The enterprise agreements the subject of AIMPE’s application are: ● Van Oord Australia Contract Dredging (Non-Propelled Dredges) AIMPE Enterprise Agreement 2010 3 (2010 Non-Propelled Dredge Agreement); Van Oord Australia Contract Dredging (Non-Propelled Dredges AIMPE Enterprise Agreement 2011 4 ( 2011 Non-Propelled Dredge Agreement) 5 ; Van Oord Australia Pty Ltd and The Australian Institute of Marine & Power Engineers Contract Propelled Dredging Union Collective Agreement 2009 6 ( 2009 Propelled Dredge Agreement ); and Van Oord Australia Contract Propelled Dredging AIMPE Enterprise Agreement 2011 7 ( 2011 Propelled Dredge Agreement ). Arbitration Questions [8] AIMPE’s Application nominates the dispute is about: Refusal of Van Oord Australia to pay Engineers employed by Van Oord Australia shorthand money as per the agreement when Van Oord vessels operate with crewing below the minimum manning requirements. [9] The questions for arbitration proposed by AIMPE 8 were:- A. In what circumstances should shorthand payments be paid to Australian Marine Engineers [including Electricians/Electrical Engineers] working for Van Oord? B. If there is no private agreement between Van Oord and AIMPE about particular manning levels, is the normal operational manning the appropriate benchmark against which to assess whether the vessels are shorthanded? C. Can foreign employees be taken into consideration when assessing if there is a situation of shorthandedness for the purposes of the clauses in the respective Enterprise Agreements? [10] Van Oord initially, in written submissions, resisted the jurisdiction of the Fair Work Commission (the Commission) to deal with the dispute on the basis that (1) there is in fact no dispute enlivening the jurisdiction; alternatively, (2) the relevant clauses are either (a) not operative or (b) unlawful. [11] However, at the hearing of the matter, counsel for Van Oord indicated that they accepted that for the purpose of these proceedings the dispute resolution provision in the 2 current agreements can be utilised to resolve all claims for shorthand payments arising under the 2 superseded agreements. Further that this Commission can determine by private arbitration interpretation of the shorthand provisions in all 4 agreements. It continued to resist the jurisdiction on the second ground, that is, the relevant clauses are either not operative or unlawful. [12] Outlined below are my reasons why the dispute can be dealt with by this Commission in the terms of the 2011 Agreements but is not so limited to them. [13] In Ponczek v Serco Australia Pty Ltd , 9 (Ponczek) the applicant’s dispute related to entitlements accrued under a 2009 enterprise agreement that by the time the dispute was raised had been replaced by a 2011 agreement. Serco argued that the Commission could not arbitrate matters that arose under the 2009 agreement under the 2011 agreement dispute clause. The employer also argued that the applicant’s rights under the 2009 agreement were extinguished, in effect by s.58. The dispute clause in the 2011 agreement provided: In the event that any grievance or dispute arises including disputes about the National Employment Standards or matters in this Agreement then the procedure in the clause will be utilized to resolve the dispute. (underlining added) [14] Commissioner Bissett found that these words, specifically the inclusive wording, did not limit the matters that may be raised under the clause. She said the clause: … makes clear that the dispute or grievance can be about matters broader than those encapsulated by the NES or the content of the 2001 Agreement. 10 [15] The Commissioner declined to read down the wording in the way urged by Serco, noting: If it had been the intent of the parties to limit the reach of the dispute settling procedures of the agreement such that it should only apply to matters arising under the NES or in the Agreement itself it would be expected that the words of the clause would say so. They do not. They are purposefully broad. 11 [16] The words “ or any matter arising in the course of employment ” in clause 9.1 of the 2011 Propelled Dredge Agreement are in the same class as the words considered in Ponczek . In my view, those words are wide enough to encompass claims for shorthand money arising under either the 2009 or the 2011 Propelled Dredge Agreement. [17] Although the application also included the 2 non-propelled agreements , the AIMPE conceded that there are no current claims being pursued under these agreements. 12 The relevant clauses from the Propelled Agreements [18] The following clauses from the agreements are relevant to the dispute. While the parties disagree as to the emphasis to be put on the clauses, both parties in their submissions, sought to rely on these clauses. The relevant clauses are appended in Appendix A and include: 2009 Propelled Dredge Agreement - clause 17 Manning and mobilisation and clause 42 Manning scale and shorthand money; 2011 Propelled Dredge Agreement - clause 17 Manning and mobilisation and clause 40 Manning scale and shorthand money. Interpreting the Agreements - what should be considered? [19] After the hearing, a Full Bench of the Commission handed down the decision in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd 13 (the Golden Cockerel case) which considered and reviewed the significant case law on interpretation of agreements. [20] Both parties were invited to make further written submissions and did so. These further submissions are referred to in the decision and have been considered in making these decisions. Interpreting Agreements - the Principles [21] In the Golden Cockerel case, the Full Bench clarified the circumstances in which the Commission can take into account the surrounding circumstances and when it may have regard to context and purpose in deciding the meaning of a clause in an enterprise agreement. [22] At paragraph 41, the Full Bench distilled the following relevant principles: ... 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. [23] It follows that the starting point, including determining the jurisdiction dispute raised by Van Oord, is whether the agreement has a plain meaning or contains an ambiguity. Jurisdiction: Objectionable term [24] Van Oord, submitted at the hearing that clause 40 of the 2011 Propelled Dredge Agreement is objectionable and has no effect. [25] Clause 40 of 2011 Propelled Dredge Agreement is unlike the other 3 agreements in that it identifies “ Australian Engineers” and “ AIMPE engineers” whereas the other agreements simply provide that in various forms shorthand will be paid to other “crew members” 14 : Clause 40: Manning scale and shorthand money 40.1 It is recognised by the parties that the agreed compliment [sic] of Australian Engineers are to be engaged onboard vessels in order to maintain efficiency and productivity, whilst at the same time providing for the proper management of the avoidance of fatigue. However, the parties recognise that short term absences may occur in unforeseen circumstances and where this occurs the vessel shall continue to operate with the remaining Engineers on board with each AIMPE Engineer being entitled to a payment of short hand money. Such payment shall only be made to the employees (engineers/electricians equally) as defined and covered by this Agreement . 15 40.2 If the employee’s absence is anticipated or extends for a period of greater than seven (7) days, Van Oord will as soon as practicable take steps to fill the absent position in accordance with the manning agreement applicable to the project 40.3 No short hand money payment would be made to an employee who is filling a position that is above his/her AMSA or company required qualification level as the employee is already in receipt of higher than otherwise due remuneration. 40.4 No short hand money payment shall apply in the event the absent employee is on paid compassionate or bereavement leave. (Emphasis added) [26] The employees covered by the 2011 Propelled Dredge Agreement are described as follows: 3. DEFINITIONS "Engineer" Employee engaged as Engineer and that holds appropriate Marine Engineering qualifications who is employed by Van Oord and covered by this agreement. "Employee" means an employee who is employed by Van Oord Australia Pty Ltd to work on or in connection with a dredging project in the classifications contained in clause 14. Employees are typically employed for the duration of dredging project. “Employer” means Van Oord Australia Pty Ltd. 4. PARTIES TO THE AGREEMENT The Agreement applies to the following parties … 4.3 Employees of the employer who are members or who are eligible to be members of the said union in relation to work on vessels owned or operated by the employer. … 5.1 This Agreement is binding on the parties to this agreement and employees engaged in the classifications set out in the Agreement in or in connection with dredging in Australia including travelling to or from a dumping area, or whilst moving from port to port. [27] The objectionable character of the clause is said to arise from the reference in the clause 40 to AIMPE Engineers, which Van Oord submits “self-evidently means an engineer who is a member of AIMPE”, giving rise to ‘discrimination’ against employees who are not members of that union. 16 Application of the principles in Golden Cockerel case [28] In interpreting this clause the AIMPE’s primary submission was that the agreement under consideration has a plain meaning. However it did concede that each of the 4 agreements’ shorthand provisions use different wording. In those circumstances clauses may give rise to an uncertainty or ambiguity about construction. However, this should not result in the terms of an agreement being read down and a construction that should be accepted should be one that delivers a benefit to Australian engineers. [29] Van Oord argues that ambiguity is plain on the face of these proceedings, submitting the terms “Australian engineer” and “AIMPE engineer” are ambiguous. [30] In my view the clauses are ambiguous for the reasons outlined below. As a result the resolution will turn on the language of the agreement having regard to its context and purpose. This includes the legislative context under which the agreement was made in which it operates. Obviously the legislative context will require compliance with the Act. [31] In other words, a construction of the relevant clauses that is consistent with legislative framework will decide whether the jurisdiction argument of Van Oord will be upheld or whether a construction that delivers a benefit to Australian engineers is preferred. Consideration of the jurisdictional question [32] Objectionable terms are governed by s.356 and the definitions in s.12 of the Act: 356 Objectionable terms A term of a workplace instrument, or an agreement or arrangement (whether written or unwritten), has no effect to the extent that it is an objectionable term. 12 The Dictionary In this Act: … objectionable term means a term that: (a) requires, has the effect of requiring, or purports to require or have the effect of requiring; or (b) permits, has the effect of permitting, or purports to permit or have the effect of permitting; either of the following: (c) a contravention of Part 3 - 1 (which deals with general protections); (d) the payment of a bargaining services fee. [33] Definitions in s.12 of “workplace instrument” and “workplace law” make it clear that the expression “workplace instrument” in s.356 includes an enterprise agreement. [34] In response to Van Oord’s submissions that the clauses discriminate on the basis of membership of AIMPE is an objectionable term and of no effect, the AIMPE submits that:- ● Van Oord’s submission misconstrues the terms of s.356 ; ● that protections provided by the Act are to protect employees from adverse action by an employer; and ● it is perverse for an employer to argue that it is freed from its obligations to its employees under an enterprise agreement because of the presence of an objectionable term. [35] Additionally , the interpretation argued that Van Oord ignores the final words of the section ‘to the extent that it is an objectionable term’. [36] The AIMPE submits that subclause 40.1 has 3 sentences the first referring to ‘Australian engineers', the second sentence referring to ‘each AIMPE engineer’ and the third sentence referring to ‘the employees’ (electricians /engineers equally) as defined and covered by this Agreement. [37] The AIMPE acknowledges some inconsistency in the drafting but submits the Commission should decline to give effect to provisions only to the extent to which it contains an objectionable term. If there was a finding that each ‘AIMPE engineer’ is an objectionable term because it is potentially discriminatory, the Commission should look to the remainder of the clause to ascertain whether it is capable of application without discrimination. [38] The AIMPE submits that the clause can have a non-discriminatory application if payments are made as specified in the third sentence: that is employees defined by the Agreement. What do the clauses governing payment of shorthand money provide? [39] The 2011 Propelled Dredge Agreement clause governing payment of shorthand money is subclause 40.1. It has the following elements: 1. Agreed complement of “Australian Engineers” to be engaged onboard vessels. 2. Stated purposes of: a. efficiency and productivity; and b. fatigue avoidance. 3. Recognition that unforeseen circumstances mean shorthand operation is a possibility. 4. Vessels may still be operated shorthanded; in which case there is an entitlement to shorthand money: a. for each “AIMPE Engineer”; and b. “such payment” is only payable to employees as defined and covered by the Agreement. [40] Clause 40.2 provides: If the employee’s absence is anticipated or extends for a period of greater than seven (7) days, Van Oord will as soon as practicable take steps to fill the absent position in accordance with the manning agreement applicable to the project. [41] Subclause 40.3 and 40.4 provide exceptions to paying shorthand money if the engineer is being paid for performing higher duties or if the absent engineer is on paid bereavement or compassionate leave. 17 [42] The predecessor provision, clause 42 of the 2009 Propelled Dredge Agreement, is differently worded: Where a vessel is required to operate with less than the normal complement of Australian-domiciled Engineers/Electricians the vessel will operate on the understanding that the current wage for the absent Engineers/Electricians shall be divided amongst the remaining Engineers/Electricians for the period of short handedness. The payment of shorthand moneys shall not apply, however, where the short handedness results from the granting of leave to an employee on compassionate grounds. [43] That clause provides for shorthand money to be divided among the engineers and electricians working the vessel. It does not expressly reserve shorthand money to Australian-domiciled employees or to AIMPE members. [44] Discrimination by an employer against an employee is adverse action by the effect of Item 1(d) of the table to s.342. The item reads ‘(d) discriminates between the employee and other employees of the employer.’ In CFMEU v Pilbara Iron Company (Services) Pty Ltd (No 3) 18 Katzmann J noted the discrimination in s.342 , Item 1(d) was between employees , not against an employee. In that case the parties accepted that the term means ‘treat less favourably’. Her Honour held the term had its ordinary meaning and “imports the concept of discriminating against the employee”. 19 [45] In United Firefighters’ Union of Australia 20 ( UFU ) Senior Deputy President Acton and Deputy President Hamilton held that clauses in an enterprise agreement that provided enhanced benefits to employees participating in consultation were not discriminatory. To be so, the terms must ‘ require or permit etc a contravention of Pt.3-1’ by way of the employer taking adverse action. “The provision of enhanced benefits is not adverse action.” 21 [46] The shorthand payment clause appears to be in the same category as the clause in UFU . It provides a benefit, shorthand payment, to eligible employees. It does not authorise expressly or by necessary implication adverse action in regard to expatriate engineers. On that basis, it is not offensive. Who is an AIMPE engineer? [47] In UFU the Senior Deputy President and Deputy President went on to say: [35] While it is not strictly necessary for us to do so in light of our reasoning above, we add that we do not accept that the term “CFA employees” in sub-clauses 17.3 or 17.4 of the OS Agreement must be taken as meaning or “invariably” meaning union members. The terms of sub-clauses 17.3 and 17.4 refer to “CFA employees” not “union members” or “UFU members” or the like, both as a matter of express text and as a matter of construction. [48] The 2011 Propelled Dredge Agreement does not define the term “AIMPE engineer”. The phrase appears only in clause 40. The Agreement defines “engineer” in clause 3 as follows: “Engineer”: Employee engaged as Engineer and that holds appropriate Marine Engineering qualifications [and who] is employed by Van Oord and covered by this agreement. [49] Employee is defined in clause 3 by reference to the classifications in clause 14, each of which is an engineering designation. [50] AIMPE’s registered rules provide for eligibility in rule 4 as follows (underlining added): The Union shall consist of - (i) An unlimited number of marine engineers - Marine Engineers, shall mean and include Chief Engineers, First Engineers, Second Engineers, Third Engineers, Fourth Engineers, Fifth Engineers, Electrical Engineers, Junior Engineers, Assistant Engineers, Cryogenic Engineers, Refrigeration Engineers, Trainee Engineers, Engineers in Training, Cadet Engineers, Marine Surveyors, Senior Marine Surveyors, Chief Marine Surveyors, Engineers Pilot Vessels, Engineers Dredging Plant, 1st Assistant Engineer, 2nd Assistant Engineer, Engineer Managers, Engineer Superintendents, Assistant Engineer Superintendent, Works Managers, Work Superintendent, Planning Officers. (ii) Persons eligible for engagement as engineers or electricians on ships ("ships" as defined as at the date of registration of this rule by clause 6(1) of the Commonwealth Navigation Act 1912 - 1984 or similar State Legislation). (iii) Persons who are pursuing a course of training in the marine engineering industry or a similar training ashore with the object of becoming a qualified marine engineer. (iv) (a) Elected officers of the AIMPE, and (b) industrial officers or research officers employed by the AIMPE who are qualified to be employed in or in connection with the industrial organisation pursuant to the provisions of the Industrial Relations Act (1988). (v) An unlimited number of power plant engineers- Power plant engineers shall mean Charge Engineers, Assistant Charge Engineers, Shift Engineers, Foremen (other than general station foremen), Mechanical Foremen, Electrical Foremen, Technical Officers, Training Officers, Mechanical Inspectors, and other power plant engineers who are employed by the Electricity Commission of New South Wales in the generation of electricity provided that such persons hold one or more of the qualifications specified in sub-rule (vii) of this rule. (vi) Power plant engineer shall also mean Charge Engineers and Assistant Charge Engineers employed in New South Wales by Caltex Refining Co. Pty. Limited provided that such persons hold one or more of the qualifications specified in sub-clause (vii) of this rule. (vii) Persons employed or usually employed in the callings specified in (v) & (vi) above shall be the holders of one or more of the following qualifications:- ● Any marine engineers' certificate issued or recognised by the Commonwealth in accordance with the Navigation Act 1912 as amended, or by any State or Territory in accordance with the relevant legislation; ● Engineers' Certificate (Machinery Department) Queensland; ● Mechanical or Electrical Diploma - issued by an Australian University or Technical College; ● Marine Engineers' Certificate - issued by the Department of Technical and Further Education of NSW or any other State or Territory; ● A Mechanical Engineering or Electrical Engineering Certificate, Degree or Diploma; and/or ● Any other Certificate, Degree, Diploma or Qualification similar to the above which the AIMPE may accept . (viii) without limiting the foregoing, the union shall also consist of independent contractors who, if they were employees performing work of the kind which they usually perform as independent contractors, would be employees eligible for membership of the union. [51] Foreign engineers lawfully working for Van Oord are covered by the 2011 Propelled Dredge Agreement and eligible for union membership under the AIMPE Rules. They could not lawfully be denied membership on the basis of their national origin. 22 Further they are not supernumeraries as defined in subclause 17.3(a) because they are employed by the employer party. [52] I do not agree with Van Oord’s submission that AIMPE engineer in subclause 40.1 “self-evidently means an engineer who is a member of AIMPE”. On a fair reading of the document the term could equally encompass: (a) engineers entitled to be members of AIMPE; or (b) engineers covered by the agreement between AIMPE and Van Oord (i.e. the 2011 Propelled Dredge Agreement). [53] To the extent that the AIMPE acknowledges that there is some inconsistency in the drafting of the sentences, then it is submitted that the Commission should decline to give effect to the provisions only to the extent it contains an objectionable term . [54] In my view, the clause has its work to do as the term, so described is not objectionable. [55] If I am wrong however, and the term is objectionable, then I agree in part with the AIMPE’s submissions. That is deletion of the word AIMPE as the objectionable term leaves open the remainder of the clause which is capable of application without discrimination. [56] It leaves in its entirety all of the third sentence: that is shorthand payments will be made to those employees - engineers and electricians equally, as defined and covered by the 2011 Propelled Dredge Agreement . Who then is entitled to shorthand payments? [57] The relevant evidence does not point to an intention of the parties to create a payment regime that discriminated between employees on the basis of national origin, notwithstanding some AIMPE members disquiet about the use of expatriate engineers. Indeed, Van Oord’s evidence was explicit in that it negotiated the 2011 Propelled Dredge Agreement with a view to enhancing participation of expatriate engineers and was explicit about that fact. There is clearly no common intention at the time the 2011 Propelled Dredge Agreement was made. [58] I would add that my view is not changed by some evidence of the making of payments to AIMPE engineers in circumstances where expatriate engineers were working. This is evidence of an adhoc practice of payment of shorthand monies (which is not disputed was paid) but not of a matter in common contemplation and constituting a common assumption 23 . Such evidence would need to have demonstrated not just payment but that it was common assumption from the parties that payments would be made in circumstances as proposed by the AIMPE. [59] In my view the proper interpretation of subclause 40.1 is that shorthand money is payable to engineers covered by the 2011 Propelled Dredge Agreement , to the exclusion of other crew who are covered by other instruments. The reference to AIMPE Engineers is properly construed as meaning engineers so covered and not operating to the exclusion of engineers who are not members of that union. 24 [60] The proper question to be answered about whether a vessel is shorthanded is as follows:- Is the on-board complement of engineering crew covered by the Agreement less than the proper or agreed complement of engineering crew? [61] The answer does not depend on union membership or whether or not engineers are citizens or residents or working on a visa. A qualified foreign engineer covered by the 2011 Propelled Dredge Agreement fulfils complement just as a qualified Australian engineer employee does. [62] I have concluded that it is not the nationality or national origins of engineering crew, but whether the crew members covered by the 2011 Propelled Dredge Agreement collectively fulfil the agreed, accepted or implied complement of engineers and electricians. [63] Dredges include crew other than engineers and electricians, and those employees are covered by other agreements and trade unions. Shorthand provisions exist in many other agreements covering those crew. 25 . [64] Having concluded that the entitlement will be as described above, the second question is answered below. When do the circumstances arise that payment is required under the Agreement? [65] The evidence is that shorthand provisions: (a) ensure a dredge can undertake a full sweep in the interests of efficiency and productivity even if the full complement of engineering crew is not available; 26 (b) assist proper management of fatigue; 27 (c) act as a disincentive against deliberate shorthanding; 28 and (d) compensate for the additional workload. 29 [66] Shorthand provisions are designed to achieve practical outcomes in the real world. Despite best efforts, a dredge may have to start or complete a sweep with less than its full crew. That has workload and fatigue implications, addressed in part by additional compensation in the form of sharing absent crews’ remuneration among those on-board of the same classifications or under the same enterprise agreement. 30 [67] The AIMPE also relied on clause 17. It is also relevant and was the subject of significant submissions by the AIMPE and cross examination of Mr Kemps and Mr Rensch of Van Oord and Mr Matthey of AIMPE. It provides as follows: Clause 17: Manning and mobilization (extracts) 17.3 Where the Flag State or other agreed operational circumstances determined that a foreign Chief Engineer (Flag State certified) is required to be the vessels’ Chief Engineer, then an Australian Chief Engineer will also be employed to gain the experience and or legal requirement required to command the vessel. a) where an owner or operator who was not party to this Agreement requires a number of the employees (Engineers and Electrician) to remain on the vessel they will be classed as supernumerary is and will be in addition to the agreed Manning has prescribed. b) in the event there is an ongoing shortage of qualified Chief Engineers and or 2 nd Engineers or other Engineers available within Australia, expatriate engineers, may be engaged by the Australian employer, employed on the terms of this Agreement and being in possession of an Australian 457 working visa or legally recognised equivalent. 17.4 Where an agreement cannot be reached on manning for new vessels and a manning has not been set in the dredging industry for that category of vessel the settlement of disputes procedure shall be followed. This procedure shall also be implemented when a review, for any reason, of existing manning levels takes place and agreement cannot be reached. All vessels on a project shall have an agreed minimum manning level. 17.5 Where an employee/employees are required to continue operations with less than the normal complement covered by this Agreement, such operations shall not continue if they are in contravention of the provisions of National/International Legislation or applicable flag state requirements. … 17.7 On projects with more than three (3) Group 1 and Group 2 Vessels are deployed, the Employer will employ one floater (Relief Engineer) per shift on each swing, which shall in such event be addressed in the Project MOU. The floater shall be primarily used for a range of duties including to cover employees who have left the project due to short term personal leave arrangements where an employee is on leave for a period of less than five weeks. The Employer and the Union will consult on the appropriate mix of floaters and suitable personnel for this position prior to the engagement of each respective floater. Relief Engineers win be at the Relief Engineers applicable rate of pay unless they are engaged in a higher paying position. 17.8 The Employer and the AIMPE will consult as to the availability of Engineers prior to and when a vacancy exists during projects are to be undertaken [sic]. The Employer has the responsibility to select and offer employment to qualify Engineers. The AIMPE will on a regular basis provide a list of qualified members who are seeking work. The Employer and the Union agree to the fundamental principle that vessels coming to work in Australia will be manned by Australian Engineers. The Employer agrees to the principle of utilizing such Australian crew when vessels are departing from and are removed from Australian waters to a foreign port. The Employer shall only engage contractors and employees of contractors, to do work that would be covered by this Agreement if it was performed by the Employees, who apply wages and conditions that are no less favourable then that provided for in this Agreement. … 17.9 The fundamental principle underpinning the operation of the dredging industry in Australia since the 1970's is that any vessel coming into Australia will be operated by a 100% Australian- domiciled crew and that reasonable arrangements will generally be agreed by the relevant union in relation to the presence of expatriate foreign advisers. No one is seeking to depart from that agreement and while there may be some flag-state requirements as to acceptable certificates of competency for Chief Engineer or some other positions this does not set aside that principle in any way. Regardless of who holds the certificate required by the flag-state, there are a host of Australian laws and regulations which the Australian Chief Engineer will have to ensure are, complied with as he takes the decisions {having consulted with the appropriate adviser} that are required for the operation of the vessel. These include Marine Orders 28 (operation Standards) which if not complied with could lead to the revoking of certificates pursuant to Marine Orders 3 (qualifications), the Federal Occupational Health and Safety( Maritime Industry) Act, the State workplace health and safety Acts, and the new strict liability environmental legislation now in force in all states of Australia which goes far beyond the dictates of the Marpol Convention. 31 [68] Mr Byrne for the AIMPE submitted in both written submissions and final oral submissions that the 2011 Propelled Dredge Agreement included additional words in subclause 17.1 which were not in the 2009 Propelled Dredge Agreement which state that the employer will give preference to Australian labour in its Manning agreements. [69] The AIMPE sought to rely on evidence given at the recent Trade Union Royal Commission by Van Oord’s Managing Director, Mr Meijers where he identified as a fundamental principle that preference be given to Australian labour in its agreements. Further, that Mr Meijers was a signatory to the 2011 Propelled Dredge Agreement . His very recent demonstration that there is a clear and continuing basis for concluding that the parties intend to use the maximum number of Australian domiciled personnel and the minimum number of foreign personnel who should be in advisory roles. [70] Van Oord referred to the Golden Cockerel principles that only evidence of objective background facts is admissible in construction and that this evidence given approximately 2 years after the making of the agreement is therefore not admissible. [71] On the question of prohibition of employment of expatriates as opposed to the preference to Australian labour, both in submissions and in Mr Matthey's cross examination, the AIMPE rejected that there was a prohibition on the employment of expatriate labour, but simply that shorthand payments was a disincentive to sailing shorthanded. 32 [72] Mr Rensch’s evidence about Van Oord’s crewing policy was consistent with that. Additionally, he gave evidence that supernumerary engineers are expressly excluded from agreed complement. 33 [73] In my view, the evidence of Mr Meijers (who confirmed his view about preference of Australian labour) represents evidence of prior negotiation establishing objective background facts. Those facts point to a conclusion that what the parties agreed is exactly what is provided for in clause 17. [74] That is, clause 17 sets out the clear intent of the parties to prioritise use of Australian crew, and to facilitate skills development where foreign engineers are required. 34 It also differentiates between employees of Van Oord (who will be covered by the 2011 Propelled Dredge Agreement ) and those who are supernumerary, being employees not employed by Van Oord. [75] It is open to the parties to agree on a complement that includes a commitment to specified numbers or classifications of Australian engineers, consistently with the explicit statements in the 2011 Propelled Dredge Agreement preferencing local over expatriate employees and inclusion of Australian chief engineers in addition to expatriate ones when that is required, in order to upskill locals. What if there is no ‘agreed’ complement? [76] A problem then arises where the parties have not agreed a complement for a particular vessel or class of vessel whether expressly or by implication. [77] Van Oord submits: 51. It is obviously not open for the Commission to determine, ex post facto, that the manning levels should have been on each of the vessels operated by the respondent in each of the project already undertaken. Similarly it is not open to the Commission as a matter of jurisdiction to investigate the question of whether any agreements have been breached insofar as shorthand monies were due but not paid. 35 [78] The Commission cannot determine that monies were owing and not paid or that agreements were breached. Those are matters for other tribunals. Van Oord goes on to suggest what the Commission may arbitrate on: 2. (b) … arbitration … must necessarily be confined to an assessment of manning levels prospectively to particular vessels in respect of particular work. … 50. If an arbitration is to proceed, its nature and scope must be confined to the question(s) of interpretation. Then, with respect to each vessel used on each project undertaken under the agreements, it will then be possible for the parties to determine whether the manning agreement in each case was express , inferred or implied. … 52. Beyond the construction issue, the legitimate ambit of any arbitration may extend to the manning levels to apply in future – that is, the arbitration would be of the kind contemplated by the various agreements whereby manning levels are (in the absence of agreement) set prospectively. [79] The dispute is not, though, of that character, and arbitration question B is abstract: it does not anticipate specification of any complement by the Commission in this dispute. There is no evidence before me that would allow a vessel-by-vessel or project-by-project complement to be established whether prospectively or referable to the past. [80] In order to resolve the dispute, to the extent that questions of agreed complement are part of it, I recommend that the parties pursue the procedure required in subclause 17.4. I add that, in my view, the agreed complement may include specification of complement in terms of Australian engineers as provided by subclause 40.1. Failure to reach agreement is then a matter for the dispute resolution process under the Agreement. Opinion [81] In my opinion the arbitration questions are answered as follows: A. In what circumstances should shorthand payments be paid to Australian Marine Engineers [including Electricians/Electrical Engineers] working for Van Oord? Shorthand money is payable to engineer employees of Van Oord under the 2011 Propelled Dredge Agreement and other agreements when the vessel is crewed by fewer than the complement of engineers that is proper or agreed for that vessel. Australian engineers are entitled to shorthand money as are any other engineer employees. B. If there is no private agreement between Van Oord and AIMPE about particular manning levels, is the normal operational manning the appropriate benchmark against which to assess whether the vessels are shorthanded? Yes, the normal operational manning is the appropriate benchmark. However, it is recommended the parties use the procedure in subclause 17.4 of the 2011 Propelled Dredge Agreement to resolve any dispute about normal operational manning. C. Can foreign employees be taken into consideration when assessing if there is a situation of shorthandedness for the purposes of the clauses in the respective Enterprise Agreements? Foreign employees of Van Oord can be taken into account for the purposes of assessing shorthandedness under subclause 40.1 of the 2011 Propelled Dredge Agreement. COMMISSIONER Appearances : Mr M Byrne for The Australian Institute of Marine and Power Engineers. Mr Kimber SC with Mr Fagir of Counsel for Van Oord Australia Pty Ltd. Hearing details: 2014. Sydney: 7, 8 and 9 October. Further written Submissions : Applicant, 10 December 2014; Respondent, 12 December 2014. 1 AIMPE interpretation of shorthand payments circumstances 2 Outline of Submissions for the Respondent 3 AE879896 4 AE404847 5 At the hearing AIMPE amended its application to include the Van Oord Australia Contract Dredging Non-Propelled Dredges AMPIE Enterprise Agreement 2011. Transcript dated 7 October 2014 at PN12. 6 AE874014 7 AE898006 8 Van Oord agreed that the 3 questions were the ones that were before the Commission. Transcript dated 7 October 2014 at PN82. 9 [2014] FWC 246 10 at paragraph [37]. 11 at paragraph [40]. 12 Further submissions of AIMPE on matters pertaining to jurisdiction issues raised by Van Oord at paragraph 25. 13 [2014] FWCFB 7447 14 For example: clause 25.2 of the 2010 Non-Propelled Dredges Agreement . 15 Emphasis added 16 What is in fact protected under the Act in protection from adverse action see s.346. 17 As to which see clause 36. 18 [2012] FCA 697 19 at paragraph [40]-[41]. 20 [2014] FWCFB 410 21 at paragraph [31]. 22 Racial Discrimination Act 1975 (Cth) s.9(1): “(1) It is unlawful for a person to do any act involving a distinction, exclusion, restriction or preference based on race, colour, descent or national or ethnic origin which has the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise, on an equal footing, of any human right or fundamental freedom in the political, economic, social, cultural or any other field of public life.” See De Silva v Ruddock [1998] FCA 95 and cases discussed therein, approved, Full Court: De Silva v Minister for Immigration and Multicultural Affairs (1998) 159 ALR 355 ; Commonwealth of Australia v Stamatov [1999] FCA 105 ; Henderson v NBL Management Ltd & the Australian Basketball Federation Inc [199 of the permit or have the 2] HREOCA. 23 Golden Cockerel at paragraph [41]. 24 but consistently with subclause 17.3(a), not supernumerary engineers (who are not so covered anyway) and consistent with the limitation of payments to employees under the Agreement. 25 The parties did not present an analysis of those other enterprise agreements, but a casual scan indicates that national origin is not a consideration in many, if any of those agreements. 26 Subclause 40.1. 27 Subclause 40.1; Statement of Mr Kemps. 28 Statement of Mr Kemps. 29 Statement of Mr Kemps; Submissions of Van Oord. 30 Other provisions are designed to ensure speedy return to full complement: eg subclause 40.2. 31 This clause is identically worded to subclause 17.6 of the 2009 Propelled Dredge Agreement. 32 Transcript dated 9 October 2014 at PN1429. 33 Subclause17.3(a). 34 For example subclause 17.3. 35 Outline of Submissions for the Respondent dated 30 September 2014. 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