Australian Workers' Union, The v TAD Pty Ltd [2016] FWC 1794 (31 March 2016) [2016] FWC 1794 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.739 - Application to deal with a dispute Australian Workers’ Union, The v TAD Pty Ltd T/A Tad Industrial (C2015/7364) SENIOR DEPUTY PRESIDENT WATSON MELBOURNE, 31 MARCH 2016 Alleged dispute about any matters arising under the enterprise agreement and the NES; [s186(6)] – agreement provided clear terms as to entitlement to timing of rates of pay – result of the operation of ss.52 and 54 of the Act did not apply to employees whose employment ended prior to operation of new agreement – rates of pay payable to employees who were employed at the time agreement came into operation. PREAMBLE [1] On 18 November 2015, The Australian Workers’ Union (AWU) notified a dispute, pursuant to s.739 of the Fair Work Act 2009 (the Act), with TAD Pty Ltd T/A TAD Industrial (TAD) concerning the application and operation of the TAD Industrial Pty Ltd (Victoria) OneSteel Reinforcing Supplementary Labour Agreement 2013-2016 1 (the TAD Agreement). [2] The dispute concerned employee classifications, associated rates of pay, wage increases and skill points. [3] The TAD Agreement covers and applies to “TAD Industrial Pty Ltd and all of its employees, in all OneSteel Reinforcing branch and city locations throughout the State of Victoria, who are employed in the classifications provided for in Part 5 of the incorporated OneSteel Reinforcing Products Award 2003 ” 2 (contained at Attachment 4 to the TAD Agreement). 3 The TAD Agreement specifically states that it “applies to TAD Industrial Pty Ltd employees who would perform work within the scope (relevant duties and skills) of the aforementioned Award.” 4 [4] The TAD Agreement was approved by the Fair Work Commission (the Commission) on 11 August 2015. 5 It operates from 18 August 2015. 6 [5] The dispute was put before the Commission pursuant to clause 24.1—Dispute Resolution Procedure – of the TAD Agreement. The dispute resolution procedure is broad in its scope, going to “the resolution of disputes and grievances”, which clearly covers disputes about the TAD Agreement. In clause 24.1(d), the parties to the agreement authorise the Commission to conciliate and arbitrate disputes. Neither TAD nor the AWU suggested that there was any jurisdictional impediment to the Commission conciliating and/or arbitrating the dispute. I am satisfied that the Commission has jurisdiction to arbitrate. [6] The dispute was dealt with in conferences, initially directed to the provision of information relevant to the dispute by TAD and its client OneSteel Reinforcing Pty Ltd and an assessment of that information by the AWU and TAD. [7] At a Report Back conference on 15 January 2016, the AWU and TAD advised that they had reached agreement that the following questions be determined by the Commission in resolution of the dispute: 1. “Do the terms of the TAD Agreement provide for the retrospective application of the rates of pay specified in Appendix 2?” 2. “Do the terms of the TAD Agreement provide for the payment of an allowance to employees based on the number of ‘skill points’ that each employee has obtained (the Skill Allowance)?” 3. “Do the terms of the TAD Agreement provide for the retrospective application of the Skill Allowance?” 7 [8] The questions were narrower in compass than the dispute as intially advised in that they did not emcompass the issue of employee classifications. [9] The AWU and TAD further agreed that the determination by the Commission be made on the basis of written submissions, subject of the right of TAD to request a hearing if required. Written submissions were filed by the AWU on 15 February 2016 and 17 March 2016 (in reply) and by TAD on 4 March 2016. [10] On 17 March 2016, the AWU advised that the dispute in relation to questions 2 and 3 (above) had been settled between the parties, such that the only matter remaining in dispute and requiring determination by the Commission was question 1 (above). [11] On 16 and 17 March 2016, TAD requested an opportunity to make oral submissions in reply, which were provided in a hearing on 18 March 2016. At that hearing the AWU and TAD confirmed that questions 2 and 3 had been resolved between them and that only question 1 remained for determination. [12] Accordingly, this decision deals with and determines the outstanding question – “Do the terms of the TAD Agreement provide for the retrospective application of the rates of pay specified in Appendix 2?” [13] The AWU contended that the queston should be answered “Yes”. TAD contended that the queston should be answered “No”. Relevant provisions of the TAD Agreement and associated industrial instruments [14] Clause 10.1 of the TAD Agreement provides: “10.1 Having regard to the commitments and understandings outlined in clause 9.1 above, the base wage rate (award and over award component of the rates of pay set out in Attachment 2) will be increased as per the OneSteel Reinforcing Agreement 2013-2016. Attachment 2 sets out the rates of pay arising from the application of these increases.” [15] The OneSteel Reinforcing Agreement 2013-2016 8 (the OSR Agreement), at clause 11.1, provides: “11.1. Having regard to the commitments and understandings outlined in clause 9.1 above, the base wage rate (award and over award component of the rates of pay set out in Attachment 2) will be increased as follows: a) 3.0% on the NSW rate of pay for Operators and Technicians from 1 December 2013; b) 3.0% on the NSW rate of pay for Operators and Technicians from first full pay period on or after 1 September 2014; and c) 3.0% on the NSW rate of pay for Operators and Technicians from first full pay period on or after 1 September 2015. Attachment 2 sets out the rates of pay arising from the application of these increases.” [16] Attachment 2 to the TAD Agreement, referred to in clause 10 of the TAD Agreement, provides: “ RATES OF PAY RATES OF PAY- VICTORIA Site: Applicable to all sites in Victoria Date Effective: From first full pay period on or after 1st December 2013 Classification Award Over Award Total Trainee $762.18 $119.13 $881.30 Operator $804.93 $123.58 $928.51 Technician $958.21 $244.20 $1202.41 Site: Applicable to all sites in Victoria Date Effective: From first full pay period on or after 1st September 2014 Classification Award Over Award Total Trainee $762.18 $119.13 $881.30 Operator $829.35 $127.33 $956.68 Technician $987.83 $251.75 $1239.57 Site: Applicable to all sites in Victoria Date Effective: At first pay period after 1 September 2015 Classification Award Over Award Total Trainee $762.18 $119.13 $881.30 Operator $854.51 $131.19 $985.70 Technician $1018.33 $259.52 $1277.85” [17] Clause 9.1 of the TAD Agreement, referenced in clause 10.1, provides for parity with the terms and conditions of the OSR Agreement: “9.1. Where the Client’s (OneSteel Reinforcing) Enterprise Agreement provides for better wages and allowances; typically intended to mean rates of pay, penalties, breaks and hours of work (Conditions), the company agrees to apply the higher wages and Conditions contained in that Agreement.” Principles of construction of agreements [18] The AWU and TAD agreed that the principles to be applied in the construction of industrial agreements are accurately set out in the following summation by the Full Bench in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited ( Golden Cockerel ): “1. The [ Acts Interpretation Act 1901 ] 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. [sic] 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.” 9 Submissions of the AWU and TAD in relation to question 1 The AWU [19] The AWU submitted that the TAD Agreement has a plain meaning in relation to the provisions relevant to the dispute: ● Appendix 2 “expressly provides for particular weekly rates of pay, to take effect across all relevant sites” from the first full pay period on or after the dates specified: 1 December 2013, 1 September 2014 and 1 September 2015; ● Clause 10 of the TAD Agreement confirms that award and over award rates of pay will increase as per the OSR Agreement and that the rates of pay set out in Attachment 2 to the TAD Agreement are the rates arising from the application of those increases; ● Clause 11 of the OSR Agreement provides for specified pay increases, from the first full pay period on or after 1 December 2013, 1 September 2014 and 1 September 2015, and the rates of pay in Attachment 2. Attachment 2 to the OSR Agreement sets out rates of pay for Victoria applicable from the first full pay period on or after 1 December 2013, 1 September 2014 and 1 September 2015 in the same terms as Attachment 2 to the TAD Agreement. [20] The AWU submitted that the terms of the TAD Agreement dealing with wage increases have a plain and unambiguous meaning, which requires the retrospective application of the wage increases from the dates specified in Attachment 2. It contended that the surrounding circumstances regarding the application of the OSR Agreement, with evidence that the OSR increases took effect from the dates specified in the OSR Agreement, confirm that plain and unambiguous meaning. The AWU submitted that no other meaning of the terms of the TAD Agreement is available without contradicting their plain meaning. TAD [21] TAD submitted that the AWU’s claim of retrospectivity of pay rates cannot be sustained, as doing so would result in: a) “a scenario that is contrary to the sections 52, 54, and 182 of the FW Act;” and b) “the Respondent inadvertently having underpaid employees to whom the TAD Agreement never applied, as their employment ended prior to the Operation Date.” [22] In this respect, TAD submitted that: ● “Section 52(1) provides, inter alia, that an enterprise agreement applies to an employee, employer or employee organisation if: a. the agreement is in operation; and b. the agreement covers the employee, employer or organisation.” ● “Section 54(1)(a) provides that an ‘enterprise agreement approved by FWA operates from 7 days after the agreement is approved’;” and ● “Section 182(1) provides, inter alia, that an ‘agreement is made when a majority of those employees who cast a valid vote approve the agreement’.” [23] TAD submitted that the TAD Agreement was made after a vote by the employees on 7 July 2015 and came into operation in accordance with clause 4.1, seven days after it was approved on 18 August 2015. [24] TAD submitted that consistent with Golden Cockerel that the plain meaning must be determined when construing an enterprise agreement. It contended that there is no express term in the TAD Agreement which provides for a calculation of back pay retrospectively. [25] It submitted that, “in the absence of express terms or wording that could have been included in the TAD Agreement” providing for retrospective pay, no inference can or should be drawn by the reference to rates of pay that are payable from the first full pay periods on or after 1 December 2013 and 1 September 2014 in the TAD Agreement. [26] TAD relied on the decision in “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Jobsforce Employment Services Pty Ltd ( Jobsforce ) where the Commission: “. . . accepts the principle as outlined in the Full Bench of the Commonwealth Conciliation and Arbitration Commission in Ship Painters and Dockers [94 CAR 609] at 619–20, which states: ‘There is a just ground for the disinclination on the part of the Court to give retroactive force and operations to its orders unless some very special reason exists for doing so. . . . The well established and firmly entrenched principle is that retrospective application will not be approved except where there is agreement between the parties; where there is no agreement between the parties the principle is to make the order prospective and not retrospective unless there have been some delays by the Tribunal or the Commissioner dealing with the matter’.” 10 [Citations omitted] [27] TAD submitted that there are no special circumstances for the retrospective application of the rates of pay referred to in the TAD Agreement; and there have been no delays by the Commission which would give rise to a retrospective application of the rates contained within the TAD Agreement. The AWU in Reply [28] The AWU submitted that TAD’s submission, that retrospective application of the wage increases is contrary to ss.52, 54 and 182 of the Act and would result in TAD inadvertently having underpaid employees to whom the TAD Agreement never applied, was misguided. It submitted that none of the sections of the Act relied on by TAD prohibit one or more terms of an enterprise agreement from applying retrospectively and relied on item 196 of the Explanatory Memorandum to the Fair Work Bill 2008 to submit that Parliament’s intent was not to preclude the retrospective operation of one or more terms of an enterprise agreement. It noted that Full Benches of the Commission have previously awarded retrospective wage increases in workplace determinations, providing, as an example, the Full Bench decision in Australian and International Pilots Association v Qantas Airways Limited ( Qantas Pilots Determination ). 11 [29] The AWU submitted that ss.52, 54 and 182 of the Act would prevent the inadvertent payment of persons to whom the TAD Agreement never applied. Quite properly, it conceded that if the “TAD Agreement does not apply to a person, then that person has no entitlement arising from the retrospective operation of the TAD Agreement”. [30] The AWU distinguished the decision in Jobsforce from this matter because it was clear that the parties to that dispute had not agreed to retrospectivity, as evidenced by the terms of the relevant agreement which expressly qualified the wage rates table by the preamble that “the Agreement provides for the following wage increases from the first full pay week after the agreement becomes operative” and the materials provided to employees in the approval process expressly informed employees that the wage increases would become operative from the first full pay week after the agreement becomes operative. DETERMINATION [31] Principles 2 and 4 of the Golden Cockerel Full Bench summary provide that: “2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity. . . . 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.” [32] Clause 10.1 of the TAD Agreement provides: “10.1 Having regard to the commitments and understandings outlined in clause 9.1 above, the base wage rate (award and over award component of the rates of pay set out in Attachment 2) will be increased as per the OneSteel Reinforcing Agreement 2013-2016. Attachment 2 sets out the rates of pay arising from the application of these increases.” [33] Clause 11 of the OSR Agreement, which is referenced in clause 10.1 of the TAD Agreement, clearly provides for wage increases to apply from 1 December 2013 and the first full pay periods on or after 1 September 2014 and 1 September 2015 and references a table of rates of pay in Attachment 2, which is in exactly the same terms as Attachment 2 to the TAD Agreement. [34] Attachment 2 of the TAD Agreement (and the OSR Agreement) specifies effective dates of specified rates of pay from the first full pay period on or after 1 December 2013, the first pay period after 1 September 2014 and the first pay period after 1 September 2015. [35] The TAD Agreement has a plain and clear meaning in respect of the date on which rates of pay prescribed will have effect. There is no ambiguity or uncertainty. The rates of pay set out in Attachment 2 have effect in relation to an employee to whom the TAD Agreement applies from the first full pay period on or after 1 December 2013, the first pay period after 1 September 2014 and the pay period after 1 September 2015. There is nothing to be drawn from the broader context of the TAD Agreement to contradict that plain meaning and evidence of the surrounding circumstances would not be admitted to contradict the plain language of the TAD Agreement. [36] TAD submitted that there is no express term in the TAD Agreement which provides for a calculation of back pay retrospectively. Whilst there is no term within the TAD Agreement which expressly refers to “retrospective” or a derivative of it, Attachment 2 of the TAD Agreement, referenced in clause 10.1 expressly and plainly prescribes effective dates of specified rates of pay from the first full pay period on or after 1 December 2013, the first pay period after 1 September 2014 and the first pay period after 1 September 2015, the effect of which is to provide for the retrospective operation of increases which were effective prior to the TAD Agreement commencing operation on 18 August 2015. [37] The proposition advanced by TAD that the dates from which rates of pay specified within the TAD Agreement, which preceded the operative date of the Agreement, is contrary to ss.52, 54, and 182 of the Act is unsustainable. [38] Those provisions of the Act deal in turn with the legal application, operation and making of an enterprise agreement, in respect of an agreement made between the parties. As noted in Golden Cockerel , the Commission’s role is in approving, subject to satisfaction of the statutory criteria, the enterprise agreement already made and there is no power conferred on the Commission by the Act to make an enterprise agreement. 12 An agreement is made by the parties in accordance with s.182 of the Act, operates in accordance with s.52 and applies the terms and conditions agreed between the parties in accordance with s.54. Sections 52, 54, and 182 do not deal with prohibitions or restrictions on the content of an agreement or the dates from which terms and conditions within an agreement have effect in accordance with the agreement of the parties. [39] As noted by the AWU, this was made clear in Item 196 of the Fair Work Bill 2008 Explanatory Memorandum : “196. The terms of an agreement can only have any effect when an agreement commences operation. However, this does not preclude an agreement from including a term that has retrospective effect (e.g., a backdated wage increase).” [40] A similar position arises under the Act in respect of workplace determinations. Whilst, under s.276(1) of the Act, there is an express provision stating that the workplace determination commences operation from the date it is made this does not preclude the inclusion within a workplace determination of a requirement to give effect to a wage increase from an earlier date, which has legal effect once a workplace determination comes into operation. In this respect the Full Bench in the s.266 workplace determination matter in the Qantas Pilots Determination 13 made the following observation, noting a similar position as between s.54 and s.276 in respect of enterprise agreements and workplace determinations respectively: “ [329] We do not accept the proposition advanced by Qantas that there is no power for the Fair Work Commission to include in a workplace determination a provision requiring the payment of a wage rate from a time earlier than the date on which the workplace determination operates. Under s.276(1) of the Act, there is an express provision stating that the workplace determination commences operation from the date it is made. However, this does not preclude the inclusion within a workplace determination of a requirement to give effect to a wage increase from an earlier date, which has legal effect once a workplace determination comes into operation. In this sense, s.276(1) is no different in effect than s.54(1) of the Act which specifies the date from which an enterprise agreement operates from.” [Citations omitted] [41] It may be noted that the Commonwealth Conciliation and Arbitration Commission authority in The Federated Ship Painters and Dockers Union of Australia v The Adelaide Steamship Co. Ltd and Others 14 relied upon by Commissioner Blair in Jobsforce deals with the approach to retrospectivity of orders of the Commission, rather than the date of effect of agreed terms of enterprise agreements (and notes, in any case) that retrospective application of orders where there is agreement between the parties is an exception to the general approach. It may also be noted that whereas the Act currently contains a provision specifying when determinations setting, varying or revoking modern award minimum wages come into operation in Part 2 – 3 (s. 166 ) and the setting, varying or revoking modern award minimum wages made in an annual wage review in Part 2 – 6 (s. 286 ), the Act contains no provisions limiting or prescribing the effective date of the terms and conditions agreed between the parties in an enterprise agreement. [42] In Jobsforce , Commissioner Blair’s decision was based on the specific “clear and unambiguous” terms of the agreement in question that “[t]he Agreement provides for the following wage increases from the first full pay week after the agreement becomes operative” and the terms of a letter sent to each employee outlining the process for conducting and participating in a postal ballot and seeking support for the approval of the proposed agreement which Commissioner Blair found made it “very clear” that any wage increases that would flow from the approval process of the agreement would only flow in the first full pay week after the agreement becomes operative. 15 [43] Those circumstances may be contrasted to the clear terms of the TAD Agreement in respect of the operative date of rates of pay and the absence within the TAD Agreement of an express term providing that wage increases will have effect after the agreement becomes operative. There is no qualification of the type found by Commissioner Blair in relation to the agreement he was considering. Nor is there any evidence that employees were advised, during the approval process, that wage increases would apply after the TAD Agreement became operative, as occurred in the circumstances of Jobsforce . Such a proposition would have been, in any case, inconsistent with the clear terms of the TAD Agreement in respect of the operative date of rates of pay. [44] TAD also contended that the operative dates of the rates of pay specified in clause 10 and Attachment 2 of the TAD Agreement would lead to TAD inadvertently having underpaid employees to whom the TAD Agreement never applied, as their employment ended prior to the operation date of the TAD Agreement. Such an inadvertent result does not arise, given the operation of ss.52 and 54 of the Act. [45] Section 54 provides that an enterprise agreement approved by the Commission operates from seven days after the agreement is approved; or if a later day is specified in the agreement—that later day: 18 August 2015 in the case of the TAD Agreement. Section 52 of the Act provides that one condition for an enterprise agreement to apply to an employee or the employer (or an employee organisation) is that the agreement is in operation (s.52(1)(a)). As such, the TAD Agreement did not apply to a person whose employment with TAD ended prior to the operation date of the agreement: 18 August 2015. [46] It follows that if the TAD Agreement, once approved, did not afford a right to the rates of pay in the agreement from December 2013 and September 2014 to employees whose employment with TAD ended prior to 18 August 2015 because the TAD Agreement did not apply to them. [47] However, in plain terms, the TAD Agreement does provide, by the agreement of the parties, an entitlement to the rates of pay from December 2013 and September 2014 to employees who were employed at the time the TAD Agreement commenced operation – 18 August 2015 – in respect of work performed by them between December 2013 and 17 August 2015 in relation to the rates of pay prescribed. Determination in respect of Operative Date of Rates of Pay [48] Question 1 – Do the terms of the TAD Agreement provide for the retrospective application of the rates of pay specified in Appendix 2? – is answered as follows: 1. On 18 August 2015 – seven days after its approval – the TAD Agreement operated and, in clear terms, provided for employees to whom the TAD Agreement applied an entitlement to the rates of pay prescribed in clause 10 and Attachment 2 from December 2013 and September 2014. 2. As a result of the operation of ss.52 and 54 of the Act, the TAD Agreement did not apply to persons whose employment with TAD ended prior to 18 August 2015 and its provisions, including an entitlement to the rates of pay from December 2013 and September 2014 did not apply to such employees. 3. The TAD Agreement provides an entitlement to the rates of pay from December 2013 and September 2014 to employees who were employed at the time the TAD Agreement commenced operation – 18 August 2015 – in respect of work performed by them between December 2013 and 17 August 2015. SENIOR DEPUTY PRESIDENT Appearances : P Reilly with L O’Brien for The Australian Workers’ Union. C Turner with C Issa for TAD Pty Ltd T/A TAD Industrial. Hearing details: 2016. Melbourne: March 18. 1 AE415167. 2 AW824810. 3 AE415167, clause 3.1. 4 ibid., clause 3.2. 5 [2015] FWCA 5461 . 6 [2015] FWCA 5461 , at para 6. 7 The Australian Workers’ Union Outline of Submissions, 15 February 2016. See also TAD Industrial Response Submissions, 4 March 2016. 8 AE406225. 9 [2014] FWCFB 7447 , at para 41. 10 [2013] FWC 2108 , at para 32. 11 [2013] FWCFB 317 . 12 [2014] FWCFB 7447 , at para 37. 13 [2013] FWCFB 317 . 14 (1960) 94 CAR 579, at 609, 619–620. 15 [2013] FWC 2108 , at paras 30 and 31. Printed by authority of the Commonwealth Government Printer <Price code C, AE415167 PR578234>