"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v McCain Foods (Aust) Pty Ltd [2016] FWC 743 (4 February 2016) [2016] FWC 743 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.739 —Dispute resolution “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v McCain Foods (Aust) Pty Ltd (C2015/677, C2015/2710) DEPUTY PRESIDENT KOVACIC MELBOURNE, 4 FEBRUARY 2016 Applications to deal with disputes under the applicable enterprise agreement concerning the payment of overtime to casual employees and whether employees who work 12 hour shifts are entitled to shift penalties when they work overtime – casual employees engaged to work 12 hour shifts to be paid overtime once they have worked in excess of the fixed ordinary hours on shift in any week and 12 hour shift employees not entitled to be paid shift allowances when working overtime. [1] On 1 April 2015 the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) lodged an application (C2015/677) regarding a dispute concerning the payment of overtime to casual employees engaged by McCain Foods (Aust) Pty Ltd (McCain - the Respondent) to work a 12 hour shift. On 30 April 2015 the AMWU lodged a further application (C2015/2710) concerning a dispute as to whether employees who work 12 hour shifts are entitled to shift penalties when they work overtime. [2] The applications were made under s.739 of the Fair Work Act 2009 (the Act) and in accordance with the dispute resolution process of the McCain Foods (Aust) Pty. Ltd. Ballarat Production Enterprise Agreement 2014 1 (the Agreement). [3] The Fair Work Commission (the Commission) convened a conference on 14 April 2015 in respect of C2015/677 and conferences on 1 and 24 June 2015 in respect C2015/2710. Those conferences failed to resolve the disputes, with the AMWU indicating that it wished to have the disputes determined by the Commission in accordance with the Agreement’s dispute resolution process. Directions for the filing of submissions and evidentiary material were issued on 9 July 2015 and 25 June 2015 respectively, with both matters listed for hearing on 14 August 2015. The hearing date was vacated on 12 August 2015 in the light of a request from the parties for the disputes to be dealt with on the papers. It was not disputed that the Commission had the jurisdiction to determine the dispute under clause 9 – Dispute Resolution Process of the Agreement. [4] For the reasons set out below, I find that casual employees engaged to work 12 hour shifts are only entitled to be paid overtime once they have worked in excess of the fixed ordinary hours on shift in any week, i.e. in excess of 38 hours in any week, and that employees working 12 hour shifts under the 7 day/12 hour continuous shift roster are not entitled to be paid shift allowances when working additional hours beyond their ordinary rostered hours of work. Statement of Agreed Facts [5] The parties provided a Statement of Agreed Facts (the Statement) which set out the history regarding the implementation of the 7 day/12 hour continuous shift roster worked in a number of parts of McCain’s Ballarat facility. In short, the Statement indicated that McCain initiated discussions with the AMWU regarding its intention to introduce a 7 day/12 hour shift roster in some areas of the Ballarat facility in November 2013. Employees in affected areas subsequently endorsed the proposal put forward by McCain in March 2014. [6] The Statement also indicated that negotiations for the Agreement commenced in May 2014, with the Agreement endorsed by employees incorporating an appendix dealing with the “7-Day Continuous Shift Arrangement”. The appendix involved a number of modifications to the arrangement agreed to by employees in March 2014. The Agreement was approved by the Commission on 8 January 2015 and commenced operation on 15 January 2015. Overtime for casuals [7] The 7 day/12 hour continuous shift roster arrangement operates over an eight week cycle, with permanent employees who work this cycle paid a regular average weekly amount (equal to 59.5 hours per week) in order to smooth the variations in pay which may otherwise occur. [8] The Statement indicated that: from the time the 7 day/12 hour continuous shift roster was implemented up until March 2015 affected casuals were paid eight hours at ordinary time rates (including 25% casual loading) and four hours at overtime rates together with other applicable shift penalties; on 18 March 2015, McCain advised the AMWU that it considered that this payment was being made in error and that instead affected casuals should be paid for 12 hours at ordinary time rates, consistent with the rate of pay for all non-casual employees working 12 hour shifts but with a 25% casual loading, plus a 30% night shift loading where applicable, except on shifts attracting a higher penalty; and on 26 June 2015, McCain wrote to the AMWU outlining its intention to commence paying affected casuals in accordance with the above position. [9] The Statement set out the dispute to be determined by the Commission as concerning the narrow question as to the correct payment to be made to affected casuals in accordance with the terms of the Agreement. 12 Hour Shiftworkers – payment of shift penalties when working overtime [10] The Statement indicated that from the time that the 7 day/12 hour continuous shift roster was implemented under the predecessor agreement, i.e. McCain Foods (Aust) Pty. Ltd., Ballarat Production Enterprise Agreement 2011 2 (the 2011 Agreement), up until when the 2011 Agreement ceased to operate, permanent employees who worked beyond their set rostered hours were paid overtime which included applicable shift penalties, calculated on the basis of the employees’ ordinary time rate of pay. Further, McCain continued to pay some affected employees on this basis for a period of time after the Agreement came into operation, with McCain contending that this was done in error. [11] The Statement summarised the dispute to be determined by the Commission as concerning the narrow question as to the correct payment to be made to affected employees in accordance with the terms of the Agreement. The AMWU’s case Overtime for casuals [12] The AMWU submitted that the fact that casual employees were asked to work in areas which work a 12 hour shift did not make those casual employees 12 hour shift workers, contending that they are entitled to overtime for any hours worked beyond eight hours on any given day. [13] In support of its contention, the AMWU drew the Commission’s attention to the following provisions of the Agreement: clause 29 which deals with casual employment; clause 19.8 which deals with overtime; clause 7 which operates to incorporate the Food Beverage and Tobacco Manufacturing Award 2010 3 (the Award); clause 7.6 which the AMWU submitted served to preserve the pre-existing custom and practice as to the mode of remuneration for casual employees when asked to work in relevant areas; and Appendix 1 which deals with the 7-Day Continuous Shift Arrangement. [14] More particularly, the AMWU submitted that clause 19.8 of the Agreement applied to casual employees if for no other reason than by virtue of the fact that the provision does not exclude casual employees. [15] As to the Award, the AMWU highlighted clause 30 of the Award which deals with ordinary hours of work and rostering, submitting that it is inherent in the Award that actual ordinary hours may be different for different employees. [16] In respect of Appendix 1, the AMWU submitted that the Appendix does not deal with casual employment. Further, the AMWU contended that a review of clause 4 of Appendix 1 is elucidating as the remuneration arrangement set out in the table at clause 4 was designed to appropriately compensate employees who work in accordance with the hours of work set out in the clause, adding that casual employees by their nature were not engaged to perform work according to these arrangements. [17] In its submissions in reply, the AMWU submitted that there was a clearly understood and applied mode of payment for casual employees up until and beyond the commencement of the Agreement, adding that Ms McCarthy’s and Mr Lavery’s evidence (discussed below) in this regard was not challenged by McCain. Accordingly, the AMWU submitted that this mode of payment constituted a “notorious fact of which knowledge is to be presumed” as per principle 6(b) in the Full Bench decision in The Australian Meat Industry Employees Union v Golden Cockerel Pty Ltd 4 (Golden Cockerel) . 12 Hour Shiftworkers – payment of shift penalties when working overtime [18] The AMWU pointed to clause 19.8 of the Agreement, submitting that subclause 19.8.2 was unambiguous in its language and applied to the affected employees if for no other reason than that there is nothing in the Agreement which excludes them from the provision. [19] Beyond that, the AMWU acknowledged that: the issue of shift penalties for employees who work in accordance with the 7 day/12 hour continuous shift roster is dealt with by clauses 4 to 6 of Appendix 1; and while clause 7 of Appendix 1 deals with overtime for affected employees it does not make any reference to shift penalties. [20] Against that background, the AMWU contended that it would be wrong to conflate the concept of remuneration for overtime with the question of whether shift penalties are additionally payable when the overtime is worked. The AMWU added that, while it was beyond question that the parties to the Agreement intended for subclause 19.8.1 of the Agreement to be overridden by clause 7 of Appendix 1, there was no evidence of any such intent in respect of subclause 19.8.2. [21] Finally, the AMWU contended that clause 7.6 of the Agreement operates to preserve existing custom and practice as to the remuneration for affected employees. [22] In its submissions in reply, the AMWU disputed McCain’s submission that clause 7 of Appendix 1 described the complete entitlement for overtime worked under the 7 day/12 hour continuous shift roster. The AMWU submitted that the Agreement does not contain any provisions setting out the relationship between the main body of the Agreement and Appendix 1, contending that as such there is nothing to indicate that Appendix 1 should be read to the exclusion of the main body of the Agreement. The AMWU, relying on the principles set out in Golden Cockerel , submitted that the practice of paying shift penalties in addition to overtime prior to McCain identifying the alleged error constitutes a “notorious fact of which knowledge is presumed”. This, the AMWU submitted, supported its interpretation of the Agreement’s provisions on this issue. Other aspects of the AMWU’s case [23] In support of its submissions the AMWU relied on the decision in Golden Cockerel and the decision in SCA Hygiene Australasia v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and another 5 (SCA) which, among other things, canvassed the specific role of custom and practice in interpreting agreements. [24] The AMWU provided witness statements by Ms Angela McCarthy, an Organiser with the AMWU, and Mr Paul Lavery, and a senior AMWU delegate at McCain’s Ballarat facility. In short, both deposed that: at no stage in the negotiations for the Agreement did McCain indicate that the proposed agreement (as the Agreement was at that stage) would result in changes to the basis on which casual employees working a 12 hour shift were paid or that shift penalties would not be paid in respect of overtime worked by 7 day/12 hour continuous shift workers; and McCain, in putting the proposed agreement to employees for consideration, never explained the effect of the agreement in respect of these issues. [25] Ms McCarthy also deposed that she was aware that between the time McCain implemented the 7 day/12 hour continuous shift roster in March 2014 and January 2015, McCain continued to pay applicable shift penalties to 12 hour shiftworkers where such workers worked hours beyond their regular rostered hours. [26] Finally, on 24 December 2015, the AMWU forwarded the Commission a copy of correspondence from McCain to its casual employees regarding changes to casual employees’ shift times/duration. In short, the correspondence advised casual employees that effective from 4 January 2016 casual employees’ shifts will be for eight hours duration only with overtime payable on time worked over eight hours. McCain also indicated in that correspondence that its decision will be reviewed following the Commission’s decision on this issue. McCain’s case Overtime for casuals [27] McCain submitted that casual employees were covered by the Agreement and that the standard employment contract for casual employees at McCain’s Ballarat facility contains the following term regarding hours of work: “Your hours of work will be as determined by the work area or function you are engaged to work in.” 6 [28] McCain further submitted that subclause 19.8.1 of the Agreement provides that overtime is only payable in the following situations: for all time worked before the fix starting time of an employee’s shift; or after the fix finishing time of an employee’s shift; or in excess of eight hours on any day for 8 hour shifts; or in excess of the fixed ordinary hours on shift in any week. [29] McCain stated in its submissions that employees at the Ballarat site work either a 12 or 8 hour shift arrangement, with over 70% of employees employed on 12 hour shift arrangements. In addition, McCain contended that casual employees should be paid at the same ordinary time as the weekly employees working 12 hour shifts, adding that there are no distinct or special provisions in the Agreement regarding overtime for casual employees. McCain also highlighted that the Agreement does not explicitly set out a maximum number of daily hours, but submitted that there were a number of clauses in the Agreement which indicated that an employee can work up to 12 ordinary hours on any given day. Those provisions included clauses 19.1, 19.3 and 19.10. [30] McCain further submitted that all employees, including casual employees, are paid at overtime rates once they have worked more than 38 hours in a week. [31] McCain also stated that it wrote to the AMWU on 18 March 2015 indicating its intention to correct an error it had made in calculating casual employees’ wage entitlements to reflect the terms of the Agreement, with casual employees engaged to work 12 hour shifts in future to be paid at ordinary time for the 12 hours plus casual loading and the appropriate applicable shift allowance. McCain described its error as casuals previously having been paid eight hours at ordinary time, three hours at time and a half and one hour at double time, indicating that the error was detected in early 2015 and was found to have applied from the time 12 hour shifts first commenced operation at the plant in early 2014. [32] McCain contended that clause 7.6 of the Agreement did not apply in this case because no agreement ever existed to pay casual employees overtime rates when engaged to work a 12 hour shift, adding that clauses 19.1 and 19.8 provide proper clarity in this regard. 12 Hour Shiftworkers – payment of shift penalties when working overtime [33] McCain submitted that the arrangement under which 12 hour shifts were introduced in 2014 did not provide any additional benefit in terms of overtime entitlements when working 12 hour shifts, but simply reflected the Award entitlement of double time pay. [34] McCain further submitted that upon the commencement of 12 hour shifts in early 2014 its payroll system defaulted to add the payment of shift penalties because the provision existed in the system at the time for eight hour shifts, adding that this was only detected when the terms of the Agreement regarding 12 hour shifts were uploaded into its payroll system. McCain also contended that Appendix 1 provides generous terms of employment for those employees who work under the 7 day/12 hour continuous shift roster and that it was careful throughout the negotiations to ensure that no additional benefits beyond those that were specifically agreed to would be presumed to be an entitlement. [35] More specifically, McCain submitted that clause 7 of Appendix 1 describes the complete entitlement when working overtime for employees employed under the 7 day/12 hour continuous shift roster, contending that the provision takes precedence over subclause 19.8 of the Agreement in its entirety. McCain also contended that because clause 7 of Appendix 1 provides specific, definitive terms to address overtime for 7 day/12 hour continuous shift roster workers, clause 7.6 of the Agreement does not apply. [36] Finally, McCain submitted that from the time the 7 day/12 hour continuous shift roster was implemented under the Agreement, with the exception of one or two instances where errors in pays were made, it had not paid shift penalties in addition to overtime for employees working 12 hour shifts under the 7 day/12 hour continuous shift roster. The Relevant clauses of the Agreement [37] The parties’ submissions referred to a number of provisions in the Agreement. For ease of reference the relevant provisions are set out below. “ 4. PARTIES AND SCOPE OF AGREEMENT 4.1 The Agreement covers all permanent, part-time or casual hourly or weekly employees employed at McCain Foods (Australia) Pty Ltd’s Ballarat site within the production areas, covered by the Food, Beverage and Tobacco Manufacturing Award 2010 whether they be members of the union or not. 7. RELATIONSHIP BETWEEN AGREEMENT AND AWARD, AND OTHER INSTRUMENTS 7.1 The terms of the Food, Beverage and Tobacco Manufacturing Award 2010 (as varied from time to time) or its successor Award/s, are incorporated into this Agreement, however the Company is committed to maintaining applicable Award and above-Award conditions enjoyed by the employees covered by this Agreement. 7.2 If an incorporated Award term (to the extent that the incorporated Award applies to a particular employee covered by this Agreement) is inconsistent with an express term of this Agreement, the express term of the Agreement shall prevail over the incorporated Award term, to the extent of the inconsistency. 7.3 Unless expressly provided for in this Agreement, any Facilitative Provisions (refer Clause 8 of the Award) or Award Flexibility terms (refer Clause 7 of the Award) shall not be used. 7.4 In this Agreement references to the Award shall mean ‘Award as incorporated into the Agreement’ unless context requires otherwise. 7.5 Upon incorporating Award terms into the Agreement, the incorporated Award terms are to be read as altered with the appropriate changes, to make them provisions of the Agreement rather than provisions of the Award, eg. the loading, penalties and allowances in the Award applies to the rates of pay due under the Agreement, not the Award rate. 7.6 Existing custom and practice payments and conditions of employment will continue to apply unless varied by this Agreement. Further, there will be no reduction in wages or conditions for the life of this Agreement. 19. HOURS OF WORK 19.1 Shifts In broad terms, shifts will be defined according to the start and/or finishing times: Day Shift – commencing at or after 6:00am; Afternoon Shift – finishing after 6:00pm and before midnight; Night Shift – finishing after midnight and before 8:00am; 12-Hour Day Shift – 7:00am to 7:00pm; 12-Hour Night Shift – 7:00pm to 7:00am. 19.2 7-Day (Continuous) Roster Prior to the implementation of any 7-day continuous roster (which may either replace, or run in conjunction with current roster arrangements), the Company shall obtain the agreement of a majority of the employees in the part of the enterprise concerned, for the roster to be implemented. 19.3 Shift Loadings 19.3.1 The following loadings shall be payable for work performed on shifts: Day Shift – no loading; Afternoon Shift – 15% loading; Night Shift – 30% loading; 12-Hour Rotating Shift – 15% 19.3.2 Early morning shift allowances (refer Award clause 31.3) shall not be applied or used to diminish or replace the 30% night shift loading. … 19.8 Overtime 19.8.1 For: a) all time worked before the fixed starting time of an employee’s shift; or b) after the fixed finishing time of an employee’s shift; or c) in excess of eight (8) hours on any day for 8-hour shifts ; or d) in excess of the fixed ordinary hours on shift in any week ; an employee shall be entitled to be paid time and a half (x 1.5) for the first three (3) hours, and double time (x 2) for all hours thereafter. 19.8.2 In addition to 19.8.1, the relevant shift loading (of the employee’s shift) shall be payable, calculated on the ordinary time rate. … 19.10 Standard Work Breaks (12-hour shifts) 19.10.1 Two paid meal breaks of 35 minutes will be provided on each shift, to be taken, as far as reasonably practicable, at evenly spaced times throughout the shift, however it is recognized that under certain circumstances related to production or other workload priorities, flexibility in observing meal times may be required. 19.10.2 In addition to 19.10.1 three (3) paid 15-minute sustenance breaks shall also be provided in each 12-hour shift. 29. CASUAL EMPLOYMENT Casual employment will not be used to displace full time weekly (permanent) employment. 29.1 Ordinary Hours 29.1.1 For work performed during ordinary hours, a casual employee shall be paid the hourly rate prescribed by Schedule 1 hereto, for work of the class performed by them, plus a 25% casual loading . 29.1.2 The casual loading is paid in lieu of the employee’s entitlement to paid Annual leave, aid Personal/Carer’s Leave, notice of termination and redundancy, and recognises the lesser security of employment for casual employees. 29.1.3 The loading forms part of the casual employee’s all purpose rate. 29.2 Shift Allowances Where a casual employee is engaged to work on a shift that attracts a shift allowance, he/she shall be entitled to payment of the ordinary rate of pay prescribed by Schedule 1 hereto, plus the relevant shift allowance . … 29.4 Minimum Engagement 29.4.1 A casual employee is employed and paid on an hourly basis, with a minimum of eight (8) hours’ pay for each engagement unless otherwise agreed before commencing work . … APPENDIX 1 – 7-DAY CONTINUOUS SHIFT ARRANGEMENT 4. 7-Day Continuous Shift Roster – Summary of Terms a) 28 days of work in each shift cycle, as follows: - 20 days to be worked on weekdays, ie. Mondays to Fridays - 4 Saturdays to be worked - 4 Sundays to be worked b) 12-hour shifts, with a spread of ordinary hours as follows: - Dayshift - 7:00am to 7:00pm - Nightshift – 7:00pm to 7:00am c) 336 working hours in each shift cycle, comprising: - 304 ordinary hours (38 ordinary hours per week) plus - 32 overtime hours (4 hours (average) per week) rostered overtime. The penalty loadings contained in the table below will apply to this seven day roster arrangement. Details Penalty/Rate Hours Worked Hours Paid 20 x 12-hour shifts (all shifts) X 1.0 240 304 Rostered Overtime component (32 hours) 64 Saturday shifts (4 x 12 hour shifts) X 1.5 48 24 Sunday Shifts (4 x 12 hour shifts) X 2.0 48 48 336 440 Plus Averaged Shift Penalty (240 hrs) 15% 36 336 476 5. Shift Commencement Times 5.1 Dayshift commences at 7:00am. Nightshift commences at 7:00pm. 5.2 The start times of each shift may be altered by mutual agreement between the parties. 6. Shift Penalties 6.1 Calculation of Shift Penalties Penalty entitlement shall be calculated as follows: a) Between 7:00am and 7:00pm (Dayshift) – no shift penalty entitlement; b) Between 7:00pm and 7:00am the following day (Nightshift) – 30% shift penalty for all nightshifts worked, that do not attract a higher penalty, ie. Saturday (50%) or Sunday (100%); c) There are four (4) 12-hour Saturday shifts over the 8-week cycle. These shifts attract a 50% penalty when part of an employee’s ordinary hours. The 50% penalty is in substitution for, and not cumulative on, the shift loading. d) There are four (4) 12-hour Sunday shifts over the 8-week cycle. These shifts attract a 100% penalty when part of an employee’s ordinary hours. The 100% penalty is in substitution for, and not cumulative on, the shift loading. 6.2 Payment of Shift Penalties Shift penalty payments will be paid at an averaged rate of 15% for all shifts that do not attract a higher Saturday (50%) or Sunday (100%) weekend penalty . 7. Overtime All overtime, whether included in the roster, or in addition to the hours worked in the roster, shall be paid at double time .” (Underlining added) Consideration of the issues [38] The principles relating to the interpretation of enterprise agreements are, as alluded to in the AMWU’s submissions, set out in Golden Cockerel . Below is the passage which sets out the key principles in this regard. “[41] From the foregoing, the following principles may be distilled: 1. The AI [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 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.” Overtime for casuals [39] Drawing on the second principle in Golden Cockerel, the Commission must first determine “whether an agreement has a plain meaning or contains an ambiguity.” [40] It is clear from clause 4.1 of the Agreement that the Agreement applies to casual employees. Further, in respect of overtime, subclause 19.8.1 of the Agreement sets out the circumstances in which overtime is payable under the Agreement. More specifically, and with particular regard to the circumstances in this case, subclause 19.8.1 provides that overtime is payable for work “in excess of eight (8) hours on any day for 8-hour shifts or in excess of the fixed ordinary hours on shift in any week”. The clause on any reading has a plain meaning and is unambiguous. [41] Under subclause 19.8.1d), employees who work a 12 hour shift are entitled to overtime for work “in excess of the fixed ordinary hours on shift in any week.” In other words, casual employees who work 12 hour shifts only become entitled to overtime once they have worked 38 hours in any week. Subclause 19.8.1c) does not apply to employees who work a 12 hour shift, whether a casual employee or not, as they do not work an 8 hour shift. [42] Appendix 1 of the Agreement does not deal with casual employment or when overtime becomes payable, nor did the proposal put to employees by McCain in March 2014 deal with these issues. As set out in the Statement, Appendix 1 involved a number of modifications to the arrangement agreed to by employees in March 2014. [43] As noted above, the AMWU submitted that clause 7.6 of the Agreement served to preserve the pre-existing custom and practice as to the mode of remuneration for casual employees when asked to work in relevant areas. Clause 7.6 of the Agreement provides that “Existing custom and practice payments and conditions of employment will continue to apply unless varied by this Agreement …” (underlining added). In determining whether clause 7.6 of the Agreement operates as submitted by the AMWU, I therefore need to consider whether the Agreement varied existing conditions of employment as to when overtime is payable. To that end, a comparison of the overtime provisions of the 2011 Agreement with those of the Agreement is set out below. 2011 Agreement The Agreement Clause 19 – Shift Work Shift workers overtime ( new 2011 ) For all time worked before the fixed starting time of any shift or after the fixed finishing time of any shift or in excess of eight hours on any shift , or in excess of 38 ordinary hours on shift in any week – time and a half for the first three hours and double time thereafter plus for all such overtime 15% of ordinary time if on afternoon shift or 30% of ordinary time if a night shift. Such entitlements shall continue until the completion of overtime work. Where work commences on a Saturday until noon – time and a half for the first three hours and double time thereafter up to noon, plus for all such work 15% of ordinary time if on afternoon shift and after noon, double time, plus15% of ordinary time if on afternoon shift or 30% of ordinary time if on night shift. 19.8 Overtime 19.8.1 For: a) all time worked before the fixed starting time of an employee’s shift; or b) after the fixed finishing time of an employee’s shift; or c) in excess of eight (8) hours on any day for 8-hour shifts ; or d) in excess of the fixed ordinary hours on shift in any week; an employee shall be entitled to be paid time and a half (x 1.5) for the first three (3) hours, and double time (x 2) for all hours thereafter. 19.8.2 In addition to 19.8.1, the relevant shift loading (of the employee’s shift) shall be payable, calculated on the ordinary time rate. [44] Putting aside the obvious formatting changes, there are a number of changes reflected in clause 19.8 of the Agreement regarding when overtime is payable. Two key changes are highlighted by the underlining in the above table. Specifically, the words “any shift” in the 2011 Agreement are replaced in the Agreement by the words “any day for 8-hour shifts” and the words “38 ordinary hours” in the 2011 Agreement are replaced by the words “the fixed ordinary hours” in the Agreement. This supports a finding that the Agreement varied existing conditions of employment to reflect the 7 day/12 hour continuous shift roster, which in turn supports a finding that clause 7.6 of the Agreement does not operate to preserve McCain’s pre-existing approach to the payment of overtime for casual employees working 12 hour shifts. [45] For all the above reasons, I find that consistent with subclause 19.8.1d) of the Agreement casual employees engaged to work 12 hour shifts are only entitled to be paid overtime once they have worked in excess of the fixed ordinary hours on shift in any week, i.e. in excess of 38 hours in any week. [46] While I acknowledge that there is a degree of unfairness involved in that interpretation given that casual employees engaged to work 12 hour shifts do not benefit from the averaging arrangement which applies to permanent employees who work the eight week roster cycle under which the 7 day/12 hour continuous shift roster is worked, I would highlight principle 10 in Golden Cockerel which provides that “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” (underlining added). 12 Hour Shiftworkers – payment of shift penalties when working overtime [47] The key issue to be determined is whether clause 7 of Appendix 1 overrides clause 19.8 of the body of the Agreement in its entirety. While it was not disputed that subclause 19.8.1 of the Agreement was overridden by clause 7 of Appendix 1, the AMWU contended that there was no evidence to support such a finding in respect of subclause 19.8.2 of the Agreement. McCain, on the other hand, submitted that clause 7 of Appendix 1 takes precedence over subclause 19.8 of the Agreement in its entirety. [48] Clause 7 of Appendix 1 provides that “ All overtime, whether included in the roster, or in addition to the hours worked in the roster, shall be paid at double time” (underling added). What is obvious from the provision is that it makes no explicit reference to shift penalties. The use of the word “all” in the clause supports a finding that the provision determines the level of overtime payment to the exclusion of clause 19.8 of the body of the Agreement. [49] Further, a close examination of clause 4 of Appendix 1 is instructive given that the 7 day/12 hour continuous shift roster incorporates 32 hours of rostered overtime over the 8 week roster cycle, i.e. an average of 4 hours per week. Based on the table in Clause 4 of Appendix 1, those overtime hours are paid at double time (as per clause 7 of the Appendix) and do not attract a penalty loading. This does not support a finding that subclause 19.8.2 of the Agreement continues to apply despite the terms of clause 7 of Appendix 1. [50] With regard to clause 7.6 of the Agreement, the AMWU contended that the provision operates to preserve existing custom and practice as to the remuneration for affected employees while McCain contended that the provision did not apply because clause 7 of Appendix 1 provided specific, definitive terms to address overtime for 7 day/12 hour continuous shift roster workers. [51] In SCA Deputy President Watson canvassed the role of custom and practice in interpreting agreements as follows: “[39] In relation to the specific role of custom and practice in interpreting agreements, in Health Services Union v Ballarat Health Services Gray J held that: ". . . There have been cases in which it has been held that a common understanding of a term used in an industrial agreement can be used to aid in the interpretation of that term. In those cases, the parties to such agreements have acted on a common understanding as to the meaning of terms in those agreements, and the terms have been repeated in successive instruments, so that it can be said that the parties have entered into the successive agreements on the basis of their common understanding of those terms . Care is needed in approaching any suggestion of a common understanding as to terms used. In the first place, there must be positive evidence of a common understanding . Ordinarily, a failure to advance an argument as to the effect of a particular provision will not constitute such evidence. A failure to advance an argument is consistent with inadvertence, and common inadvertence is not common understanding ." (Citations not included, underling added). [52] Based on the material before the Commission and drawing on the language in SCA , it is clear that there is no common understanding regarding the application of subclause 19.8.2 to 7 day/12 hour continuous shift roster workers and hence an absence of custom and practice in this regard. The absence of custom and practice in this area is reinforced by McCain’s submission that from the time the 7 day/12 hour continuous shift roster was implemented under the Agreement in early 2015, with the exception of one or two instances where errors in pays were made, it had not paid shift penalties in addition to overtime for employees working 12 hour shifts under the 7 day/12 hour continuous shift roster. [53] The above analysis does not support a finding that employees working 12 hour shifts under the 7 day/12 hour continuous shift roster are entitled to be paid shift allowances when working additional hours beyond their ordinary rostered hours of work. Conclusion [54] For the reasons outlined above, I find that: (i) consistent with subclause 19.8.1d) of the Agreement casual employees engaged to work 12 hour shifts are only entitled to be paid overtime once they have worked in excess of the fixed ordinary hours on shift in any week, i.e. in excess of 38 hours in any week; and (ii) employees working 12 hour shifts under the 7 day/12 hour continuous shift roster are not entitled to be paid shift allowances when working additional hours beyond their ordinary rostered hours of work. 1 AE412101 2 AE889842 3 MA000073 4 [2014] FWCFB 7447 5 [2014] FWC 249 6 Outline of Submissions of McCain Foods (Aust) Pty Ltd at paragraph 5 Printed by authority of the Commonwealth Government Printer <Price code C, PR576726>