Fair Work Act 2009
s.739—Dispute resolution

The Australian Workers’ Union
v
Coregas Pty Ltd
(C2021/6717)

Dispute over the meaning and effect of an enterprise agreement – superannuation – additional contributions – no extra claims – striking a new bargain – conditions of employment – contractual terms – implied contractual terms – post-contract – objective background facts – matters of administration and policy.

[1] In 1991, in the early days of award–based superannuation, Linde Gas offered to match voluntary superannuation contributions for certain employees. A group of employees took up the offer and began making voluntary superannuation payments of 5%, which Linde Gas matched by paying an additional 3%.

[2] In 2007 Coregas Pty Ltd (“Coregas”) took over the employment and continued making superannuation contributions that included an additional 3%.

[3] By 2019 a handful of the original employees were still employed by Coregas and were still making voluntary contributions matched by Coregas.

[4] In 2019 someone in Coregas learnt of these additional contributions and, not knowing of their origins, decided that were a payroll system error. By 2019 the originator of the scheme, Mr Peter Collins (HR Manager Linde Gas) had passed away and no one employed at Coregas in HR or payroll had any direct knowledge of the scheme.

[5] Coregas undertook an audit and found almost no original documents.

[6] By May 2020 Coregas was satisfied that the additional contributions were a payroll error and the matter was passed up the line to the Executive General Manager who decided that relevant employees would be given the chance to provide evidence of the basis of the additional contributions, otherwise employer contributions would reduce to 10%. None of the employees could provide any written proof of the arrangements from 1991. Since 1 July 2020 Coregas has made superannuation contributions at 10% rather than 13%.

[7] In 2020 and 2021 The Australian Workers’ Union (AWU) agitated on behalf of the affected employees to have the additional contributions restored, but no agreement was reached.

[8] The matter was referred to the Fair Work Commission in 2021 in accordance with the dispute resolution procedure within the Coregas Pty Ltd & AWU Coregas Operations Enterprise Agreement (Yennora) 2019 (“the Agreement”).

[9] The employees call in aid the No Extra Claims provision in the Agreement:

“5.7 Up to the nominal expiry date of this Agreement, the parties as specified in clause 3 will not pursue any extra claims relating to wages or changes to conditions of employment or any matters related to the employment of the employees, whether dealt with in this Agreement or not.”

[10] The AWU argues that the reduction in superannuation contributions is a “change to conditions of employment” and that Coregas is prevented from making extra claims to changed conditions of employment over the life of the Agreement. The Agreement’s nominal term expired on 30 September 2021 and the parties agree that from at least this date Coregas was entitled to reduce the superannuation contributions for the remaining group of employees. At stake therefore is 15 months of additional 3% superannuation contributions for 6-10 employees.

[11] There is no disagreement that the Commission is properly seized with authority to determine disputes “over the meaning and effect of [the] Agreement and in relation to the National Employment Standards” (per clause 21.1) including determining the matter by arbitration.

[12] The parties gave considerable attention to the question of whether or not the additional superannuation contributions were a contractual entitlement. It is not within the Commission’s remit to authoritatively determine that question or provide any remedy in contract.

[13] The parties have agreed on the question for determination, viz:

“Did any terms of the Coregas Pty Ltd & AWU Coregas Operations Enterprise Agreement (Yennora) 2019 prevent Coregas from reducing the superannuation contributions paid to some employees’ superannuation funds on or about 1 July 2020 from 13% to 10% of their ordinary time earnings?”

The Evidence

[14] The evidence of events 30 years ago is understandably thin. Mr Michael O’Connell, a team leader employed by Coregas, gave evidence of Linde Gas first paying additional superannuation contributions in approximately 1991 after its HR Manager, Mr Peter Collins, “tried to get all employees on board” the new government initiative.

[15] The offer made by Linde Gas was that it would pay an additional 3% superannuation contribution to each employee who agreed to make a voluntary contribution of 5%.

[16] Mr O’Connell said of the arrangement:

“Neither Peter [Collins] nor any other managers at Linde Gas or Coregas have ever stated to me (or, to my knowledge, any of my colleagues) that the company could remove the entitlement. It was an ongoing agreement reached as long as we remain employed by the company.”

[17] Mr O’Connell also gave evidence that:

“There are only a few of us left receiving the additional superannuation because the majority of those who accepted the agreement have since left the company…

I understand that Coregas’ HR department decided to throw out a large number of old files. The agreements we entered into with Peter may well have been contained in those files. This would explain why the company never claimed the payment was invalid up until very recently, after the files were thrown away.

I know I have continued to pay the additional superannuation from my wages, to hold up my end of the bargain. To the best of my knowledge, the other employees who lost the 3% in July 2020 were also continuing to make their additional payments.”

[18] Mr Buhler, an organiser and Senior Vice President of the AWU, gave evidence that he was the organiser for the Coregas site between 2012 and 2016 and again from 2021 onwards. He says that “no issues arose regarding the 13% contributions during my first stint as Organiser.” Mr Buhler gave evidence of his dealings with Coregas regarding superannuation in 2021 in his second stint as the organiser. It is not necessary to describe those dealings in detail.

[19] Mr Steven Abbott, National Operations Manager, gave evidence on behalf of Coregas. Mr Abbott commenced employment with Linde Gas in 2004 and his employment was transferred to Coregas in 2007. Mr Abbott says that from 2007 onwards he was aware that superannuation rates paid to some employees differed in some circumstances. Mr Abbott says he only became aware that relevant employees were receiving 13% superannuation in 2019.

[20] Mr Abbott said that he regularly participated in enterprise bargaining negotiations for Linde Gas and later Coregas, and that he cannot recall any employees or their bargaining representatives raising any issues about superannuation or asking for additional superannuation payments to be included in agreements.

[21] Mr Abbott also gave evidence of Coregas’ investigations and consultation with the AWU since 2019 regarding the present dispute.

Submissions – AWU

[22] The AWU says that the additional superannuation payments are not an error, nor are they an overpayment, but are an entitlement that Linde Gas agreed to pay and Coregas agreed to continue.

[23] The AWU argues that the payments are a contractual benefit that arose by way of a variation of the employment contracts of the relevant workers a long time ago, or alternatively are implied terms.

[24] The AWU argues that it is well-established that contracts can be varied orally, and that the words of the late Mr Collins on behalf of Linde Gas were effective to vary the respective employment contracts of those who took up Linde Gas’ offer.

[25] The AWU argue that history supports the conclusion that the payments were essential terms of the contract “as part of the wage/work bargain” and that if the additional payments were discretionary then one would expect clear documentation to reserve the employer’s discretion to stop or change the arrangement. Similarly the AWU argues that it is not consistent with the commercial reality of employment relationships to decide, after three decades, that the payments are purely elective.

[26] It was also said that there was “complete compliance” with the arrangements for almost 30 years, which reinforces the better view that the payments were contractual.

[27] Similarly, the AWU argues that the additional contributions are contractual because they were provided as a matter of custom and practice.

[28] Further, the AWU argues that the additional payments were a “recognised over-award entitlement” and is within the reach of the No Extra Claims clause. The AWU submitted that the Full Bench decision in CSL Ltd v NUW 1 (see below) can be distinguished because the words used in the respective agreements are materially different.

[29] The AWU also argues that clause 5.7 of the Agreement concerns itself with “any matters related to the employment of employees”, which is broad enough to capture the additional superannuation contributions.

Submissions – Coregas

[30] Coregas argued that the No Extra Claims clause needs to be considered alongside clause 17 of the Agreement, viz:

“17 Superannuation

17.1 The Company will pay superannuation contributions of 10% (or the minimum SCG requirement - whichever is the greater) based on each employee's ordinary time earnings in accordance with the minimum requirements of the Superannuation Guarantee (Administration) Act, 1992 (Cth) into an approved fund (that is a fund that includes a 'MySuper' Product) of the employee's choice on a monthly basis.

17.2 In the absence of an employee nominating an approved superannuation fund, contributions will be made to the Wesfarmers Group Super Plan (or the fund that may supersede this plan as nominated by Wesfarmers.). Employees shall have the choice to have contribution directed into this fund.

17.3 For the purposes of this agreement and the governing act, an employee's ordinary time earnings shall be total weekly earnings as per sub clause Appendix 1.

17.4 An employee may elect prospectively to sacrifice salary to superannuation contributions in accordance with Australian Taxation rulings and the prescribed reasonable benefit limits.”

[31] Coregas argued that reducing superannuation contributions is not a “claim” of the kind contemplated in the Agreement. Rather, it was said to be a change in relation to a policy (relying on the observations in CSL v NUW 2 that changes in policy are not ordinarily captured by a No Extra Claims provision) or a change in a pre-existing practice (relying on the finding in Melbourne Fire3 that the refusal to maintain a pre-existing practice was not an extra claim).

[32] Coregas argued that the fact that a benefit has been provided for a long time does not result in it being re-characterised as non-discretionary. Instead the change implemented in July 2020 was “simply the respondent aligning its superannuation payment practices to the terms of the 2019 Agreement, which ensured that all of the respondent’s employees would be treated equitably.”

[33] Coregas relies on the similarities between the present circumstances and those in CSL v NUW. Coregas says the differences between the clause considered by the Full Bench in CSL v NUW and clause 5.7 of the Agreement “are ultimately distinctions without any appreciable or substantive difference.”

[34] Coregas says that there is no basis to find that the additional contributions were an implied term of the respective contracts. 4 Coregas argued that the putative term is not necessary to give business efficacy to the contract, is not capable of clear expression (because of alleged uncertainty as to the duration), and the term would contradict the express terms of the contracts. Coregas asks the Commission to assume that each employee’s written contract, although not located by Coregas, is in the same’s terms as a 2002 contract that was recovered and includes the following:

“Company paid Superannuation, currently 8% of your nominal weekly wage paid into your account of our Superannuation Plan.”

[35] Similarly Coregas says the alleged implied term cannot be implied by custom and usage 5 because there is no evidence of the practice extending beyond a small group of employees, there is no evidence of it being communicated to relevant employees or otherwise being notorious and, as above, it is contrary to what Coregas says to be the express terms of the contract.

[36] Coregas says the Agreement “dealt comprehensively with superannuation in a manner that was clearly intended to ‘cover the field’ and inexorably leads to an inference that the payment of the Additional Superannuation was not a “recognised entitlement”, let alone a “recognised over-award payment”.”

Reply Submissions – AWU

[37] In reply the AWU submitted that an “absence of (documentary) evidence is not evidence of absence.” The AWU said that it was “well-established that a contract, or a contractual variation, may be demonstrated through the conduct of the parties.”

[38] In the face of the limited terms regarding superannuation in the Agreement, the AWU says the Commission “would not lightly draw an inference, in the absence of any documentary or oral evidence, that a payment made to an employee for work performed over a period of decades was binding ‘in honour’ only on the side of the employer.”

[39] The AWU says that there is no reason why a contractual term cannot provide a superior entitlement to that provided by an instrument, and that the Agreement does not impose a ceiling, only a floor.

[40] Finally, in response the AWU submitted that Coregas is estopped by representation from denying the existence of the payment obligations.

Interpretation Principles

[41] In AMWU v Berri Pty Limited 6 the Full Bench modified the earlier interpretation principles stated in Australian Meat Industry Employees Union v Golden Cockerel Pty Ltd7, viz:

1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

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

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

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

2. 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.

3. The common intention of the parties is sought to be 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, without regard to the subjective intentions or expectations of the parties.

4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.

5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.

6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.

7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.

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

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

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

11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjectiveintentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i) 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;

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

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

13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.

14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.

15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding

[42] In James Cook University v Ridd 8 the Full Court summarised the relevant principles applicable to the interpretation of an enterprise agreement:

(i) The starting point is the ordinary meaning of the words, read as a whole and in context (City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362, 378; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 [53]; WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 [197]).

(ii) A purposive approach is preferred to a narrow or pedantic approach — the framers of such documents were likely to be of a “practical bent of mind” (Kucks v CSR Limited [1996] 66 IR 182, 184; Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 [16]; WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 [197]). The interpretation “turns upon the language of the particular agreement, understood in the light of its industrial context and purpose” (Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10; 222 CLR 241 [2]).

(iii) Context is not confined to the words of the instrument surrounding the expression to be construed (City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 [53]). It may extend to “… the entire document of which it is a part, or to other documents with which there is an association” (Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511, 518; Australian Municipal, Administrative, Clerical and Services Union v Treasurer of the Commonwealth of Australia [1998] FCA 249; 82 FCR 175, 178).

(iv) Context may include “… ideas that gave rise to an expression in a document from which it has been taken” (Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511, 518).

(v) Recourse may be had to the history of a particular clause “Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form…” (Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511, 518).

(vi) A generous construction is preferred over a strictly literal approach (Geo A Bond and Co Ltd (in liq) v McKenzie [1929] AR 499, 503-4; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 [57]), but “Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties” (City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362, 380).

(vii) Words are not to be interpreted in a vacuum divorced from industrial realities but in the light of the customs and working conditions of the particular industry (City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362, 378-9; WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 [197]).

No Extra Claims Clauses

[43] In Toyota Motor Corporation Australia Ltd v Marmara 9 the Full Court provided a comprehensive history of the notion of “claims” in the industrial relations context (at [38]-[43]) and also “further claims” (at [44]-[54]), concluding at [55]:

“It is clear, therefore, that a prohibition on “further claims” (or “extra claims”) was not novel when the present parties made the Agreement in 2011: it had a long history in Australian industrial regulation. Originally, those words were the formula by which a union that was a party to an award which came up for a national wage adjustment was required to give an undertaking the object of which was to avoid a situation in which employees covered by the award would have the benefit of such an adjustment at the same time as being at liberty to pursue other claims for improvements in wages or conditions. The formula was then, for a time, used for a similar purpose at the point where agreements came to be certified under the 1988 Act. Within that context, to regard the assertion of a right or entitlement as a limiting criterion of what constituted a “claim” would not reflect the purpose for which the formula was employed. The purpose was to require the parties – usually the relevant union and its members – to foreswear any attempt to improve upon the wages, conditions and other benefits for which the relevant industrial instrument provided. At the time (ie until 1996), there was nothing in the legislation which prohibited the taking of industrial action by a party who sought to improve upon benefits obtained under a recently-made agreement or award, so the prohibition on further claims provided, quite probably, the only practical means of keeping such a party to his or her bargain (or, as appropriate, to the terms of the award which he or she had sought).”

[44] It is clear from the evidence and arguments from the parties that there is no requirement under a statute or under an industrial instrument to make the additional superannuation contributions. Putting aside the question of whether Coregas is contractually bound to make the contributions, the contributions are necessarily understood to be akin to an ‘over-award’ payment to a select group of employees.

[45] As the AWU correctly submitted, the Agreement provides a floor rather than a ceiling. That said, it is possible to include terms in an enterprise agreement that affect how an employer might deal with payments or benefits provided to employees over and above the minimum floor of the agreement itself. In AMWU v Toyota Motor Corporation Australia 10 Deputy President Gostencnik made the following observations in this regard:

“Further, not every matter touching on employment has contractual force or is enforceable under the Agreement with the effect that there must be agreement between relevant parties to change or alter that matter. Some matters are determined by employer policy or administrative practice. An employer should not be prevented from altering such matters unless there is a clear express provision in an enterprise agreement or contract preventing the alteration, or the prohibition arises, by necessary implication from an express term, for example if the proposed alteration is inconsistent with an express term of an enterprise agreement or contract.

For many years the parties covered by the Agreement, have been content to allow TMCA to determine the manner in which sick/carer’s leave is accrued and credited. The parties have chosen not to have the Agreement deal with that matter, and so in my view, TMCA is permitted to continue to determine that matter subject to meeting its obligation under the NES. It is not suggested by either the AMWU or the Intervener that the method by which sick/carer’s leave is accrued and credited is a term of the employment contract binding any employee and TMCA. I have already concluded that the method of sick/carer’s leave is accrual and credit is neither an express nor implied term of the Agreement. There is no provision in the Agreement nor has any term of a contract of employment that has been identified, which would prevent or prohibit the change proposed by TMCA. Similarly there is no provision in the Agreement nor has any term of a contract of employment been identified, which is inconsistent with the change proposed by TMCA. The proposal is also consistent with method of accrual under the NES.”

[46] In CSL v NUW 11 the applicable enterprise agreement allowed but did not require CSL to average shift penalties across the roster cycle. CSL had been averaging shift penalties for a long time prior to the making of the particular agreement and decided to cease averaging during the life of the agreement. The NUW argued that the relevant no extra claim provision prevented CSL from changing the practice. In this context, and by reference to Deputy President Gostencnik’s decision in AMWU v Toyota Motor Corporation Australia, the Full Bench in CSL v NUW found at [20]:

“We agree with the Commissioner’s conclusion that CSL’s decision to cease paying average shift penalties to the Employees is not an “extra claim” within the meaning of clause 3 of Part 1 of the Enterprise Agreement. CSL’s decision to no longer maintain a pre-existing arrangement to pay average shift penalties and instead to pay actual shift penalties is not an attempt to vary a right or obligation conferred or imposed by the Enterprise Agreement and there is no evidence before us of any other “conditions of employment” to which the decision to cease paying shift penalties may relate. The manner of payment of shift penalties is primarily a matter of administration of the terms of the Enterprise Agreement. Further, the very broad prohibition on parties to “not pursue any extra claims relating to … any other matters related to the employment of the employees” in clause 3 of Part 1 of the Enterprise Agreement does not, on its proper construction, prevent CSL from changing matters of administration or policy which are not governed by the Enterprise Agreement or a contract; a clear provision in an enterprise agreement or contract would be required to prevent the alteration of such a practice or policy.”

[Footnotes omitted]

[47] I take the references to “employer policy” in the above two decisions to be references to policies published or promulgated by employers from time to time that are generally subject to adjustment at the employer’s discretion. 12

[48] In short, it is possible for an enterprise agreement to prevent an employer from changing employment arrangements that are not specifically regulated by an agreement - the question in the present matter is whether the Agreement in fact does so.

Consideration

[49] Clause 5.7 of the Agreement is in the following terms:

“Up to the nominal expiry date of this Agreement, the parties as specified in clause 3 will not pursue any extra claims relating to wages or changes to conditions of employment or any matters related to the employment of the employees, whether dealt with in this Agreement or not.”

[50] The clause is specifically concerned with “extra claims” and contains a prohibition on the pursuit of “any extra claims” relating to certain matters “whether dealt with in this Agreement or not”. There are three different prohibitions contained within the clause:

a) the pursuit of “any extra claims relating to wages … whether dealt with in this Agreement or not”; and

b) the pursuit of “any extra claims relating to … changes to conditions of employment … whether dealt with in this Agreement or not”; and

c) the pursuit of “any extra claims relating to … any matters related to the employment of the employees, whether dealt with in this Agreement or not.”

[51] Read literally the prohibitions are potentially very broad, particularly the last prohibition on extra claims relating to any matters related to the employment of the employees.

[52] The parties each referred to the Full Bench decision in CSL v NUW 13. The No Extra Claims clause in the CSL v NUW matter was in the following terms:

“The parties agree that they will not pursue any extra claims relating to conditions of employment or any other matters related to the employment of the employees, whether dealt with in the agreement or not, over the life of the agreement.”

[53] By the same analysis the no extra claims clause in the CSL v NUW matter contains two prohibitions:

(a) the pursuit of “any extra claims relating to conditions of employment … whether dealt with in the agreement or not”; and

(b) the pursuit of “any extra claims relating to … any other matters related to the employment of the employees, whether dealt with in the agreement or not”.

[54] The Full Bench in CSL v NUW found at [20] that “there is no evidence before us of any other conditions of employment to which the decision to cease paying shift penalties may relate”, having already found at [16]:

“… We therefore agree with the Commissioner’s assessment that “the manner of payment of shift penalties, whether on an as earned basis or on an averaging basis, is primarily a matter of administration of the terms of the Agreement.”

[55] Equally, the Full Bench in CSL v NUW indicated at [20] that they did not regard the averaging arrangements to fall within the term “any other matter related to the employment of the employees”, reasoning that “a clear provision in an enterprise agreement or contract would be required to prevent the alteration of such a practice or policy”.

[56] In its terms the No Extra Claims clause in CSL v NUW is indistinguishable from clause 5.7 of the Agreement.

[57] However, payroll averaging is quite distinguishable from additional superannuation contributions.

[58] Coregas says the additional superannuation contributions are a payroll error. If the contributions are a payroll error then they would fit comfortably within the notion of an administrative matter and the no extra claims clause would not prevent Coregas from rectifying the error. I do not regard the additional payments to be a payroll error. I am satisfied that Coregas made the additional contributions for a very long time pursuant to the arrangement it inherited from Linde Gas. The fact that no current HR or payroll employees have first-hand knowledge of the origins of the payments, measured against the evidence of the arrangement introduced by Linde Gas, does not make the payment erroneous.

[59] Unlike the circumstances in CSL v NUW, I find that the reduction in superannuation contributions is a not a mere administrative matter outside of the reach of the no extra claims clause.
[60] I am prepared to accept for present purposes that if Coregas had a contractual obligation to continue the additional superannuation contributions then it would be a relevant “condition of employment”.

[61] I am also prepared to accept that, for the purposes of clause 5.7, if the employer decided to vary the respective contracts of employment to remove this contractual entitlement, then it would be pursuing an “extra claim” and would therefore be prohibited from doing so by clause 5.7.

[62] In Toyota Motor Corporation Australia Ltd v Marmara the Full Court agreed with the following passage from Bromberg J’s decision at first instance 14:

“In the context of the scheme for bargaining provided by the FW Act, where agreements are made in resolution of claims pursued through bargaining, a proposal by one party to vary the outcome arrived at in a way which advances its interests is apt to be regarded as a further claim. That is particularly so where the proposed variations are significant and suggest an attempt, as I consider is here the case, to strike a new bargain. Both the ordinary industrial meaning of “claim” and the scheme of the Agreement to which I have referred, are consistent with the construction of “further claims” in cl 4 as encompassing a proposal made by a party to the Agreement to materially change the terms and conditions of employment set out in the Agreement other than in a manner already provided for by the Agreement. Such a proposal is not merely a request or offer, it is also a “further claim” within the intended use of that expression in cl 4.”

[63] Contractual entitlements that arise outside of an enterprise agreement can be understood to be part of the intended “conditions of employment” referred to in no extra claims clauses, because they can be more readily understood to form part of the “bargain” that such clauses are designed to protect. 15 Contractual benefits, in the context of making and protecting of collective bargains, can be easily distinguished from discretionary benefits, or benefits provided pursuant to a policy that can be unilaterally varied by the employer. A decision/claim by an employer to alter or remove a discretionary benefit is less likely to threaten the original bargain.

[64] I will now deal with the specific arguments raised by the parties in relation to whether or not the additional superannuation contributions are a contractual entitlement.

[65] Firstly dealing with the question of whether the relevant contracts of employment were varied orally in 1991 when the arrangement was first put in place, the whole of the evidence of the discussions in 1991 are contained in the following two paragraphs of Mr O’Connell’s statement:

“Peter spoke to me and other employees about a new arrangement the company was putting in place in or about 1991. He said to us that the company would agree to make a top-up payment of 3% extra superannuation into our accounts if an employee would agree to make an additional contribution of 5%. The additional superannuation paid by the employer did not come out of our earnings, it was an extra payment.

Peter indicated that it was an agreement the company was offering its employees to promote the uptake of superannuation.”

[66] There is no evidence that either Linde Gas or Coregas ever indicated that the additional superannuation contributions were made on an ex-gratia basis. I note the decision of Hely J in Reynolds v Southcorp Wines Pty Ltd 16 where his Honour found that the fact that severance payments paid pursuant to a company redundancy policy “without any specification that they were made ex gratia” was a key factor in deciding that the redundancy policy formed part of the contract of employment (at [56]):

“Little attention was paid in evidence or argument in the present case as to whether the 'Termination of Employment' policy of the respondent, or the benefits payable pursuant to that policy, were terms of the applicant's contract of employment. Subject to one matter to which I will shortly refer, the submissions of both parties appeared to proceed on the assumption that this was so. Severance provisions contained in an employer's policies or procedures manual may become incorporated into a contract of employment: The Law of Employment p 190. Whether or not that has occurred is a question of fact. The only relevant facts established in this respect by the evidence in this case are the terms of the policy itself, and that it was available to employees on the intranet. In addition, there is the fact that severance payments were made to the applicant which were consistent with the policy, without any specification that they were made ex gratia. That may amount to an admission (by conduct) of an entitlement.”

[67] Appreciating that it is very difficult to give specific evidence in 2021 about conversations in 1991, the evidence is not very strong. The primary task is to try and ascertain the legal basis upon which Linde Gas commenced paying additional superannuation contributions. Linde Gas could have done so in a way that it was bound in contract to continue the arrangement, or it could have done so in a way that reserved for itself the capacity to alter or finish the arrangement at its own discretion. Mr O’Connell’s evidence of the events in 1991 is consistent with both possibilities. In this regard the evidence tendered is not conclusive.

[68] The arrangement continued after 2008 when the relevant employees were transferred to Coregas, which is consistent with Coregas taking on Linde Gas’ contractual obligations. This points in the favour of there being a contractual entitlement but is not a strong point.

[69] Perhaps more significantly, the AWU argued that the conduct of the parties during the life of the contract can be considered as evidence of a contractual term. The AWU relied on the decision of the WA Court of Appeal in 2003 in United Construction Pty Ltd v Birighitti 17 where the court found that the “content of the arrangement” may be inferred by examining post-contract conduct:

“[14] The Industrial Magistrate examined the conduct of the parties in order to reach a conclusion as to the terms and conditions on which they were contracting with one another. As the contract was not in writing and was entered into in circumstances of considerable informality and the evidence as to its formation was very vague the strict rule against the admission of extrinsic evidence and post-contract conduct in the interpretation of a written contract were not relevant. In the case of informal oral agreements the terms of which are not the subject of direct evidence the content of the arrangement may be inferred by examining events which succeeded the contract and from the course of dealing between the parties themselves, that is to say, their post-contract conduct: Haynes v McNeil (1906) 8 WALR 186; Glass v Pioneer Rubber Works of Australia Ltd [1906] VicLawRp 123; [1906] VLR 754. As it is put in Lindgren, Carter and Harland: Contract Law in Australia (Butterworths, 1986) at [205]:

"the formation of agreement will in many cases be inferred from the conduct of the parties. Sometimes there may be no identifiable offer and acceptance because the parties have not expressly discussed the formation of contract but have indicated by their conduct that they did in fact intend to contract. In many cases a more realistic explanation is that by the time a dispute arises, perhaps many years after the alleged contract was entered into, no direct evidence is available of what was said by the parties and yet their conduct is consistent only with the hypothesis that an agreement was in fact made by them.”

[15] I think it was permissible to examine the conduct of the parties, to see what their agreement was in its entirety…” 

[Emphasis added]

[70] In Birighitti the Court was considering whether a particular worker was an employee or independent contractor. I do not take the reference to the “content of the arrangement” to mean any more than determining the nature of the relationship (employee v independent contractor) by considering the whole of the circumstances of the relationship. The reference by the Court to “the strict rule against the admission of extrinsic evidence and post-contract conduct” not being relevant must be understood in this context.

[71] The AWU also argues that history supports the conclusion that the payments were essential terms of the contract and that, given the longevity of the arrangements, if the ongoing contributions were truly discretionary then one would expect clear documentation recording the arrangement. This submission is understandable from a fairness point of view because the longer the arrangement has been in place the more difficult it should be, as a matter of fairness, to undo it. However from a contractual point of view it may well be the case that the employment contracts continued for a long time without ever having been varied at law to include an obligation to pay the additional superannuation contributions.

[72] It is reasonable to assume, however, if Linde Gas’ intention was only ever to introduce a short-term or even medium term incentive for employees, then it would have concluded the arrangement long before the workers transferred out of Linde Gas’ employment in 2008. Once again this is a factor that points towards there being a long-term contractual obligation, but does not strongly point that way.

[73] The AWU argued that the additional contributions were contractual by way of a longstanding custom and practice. In Transport Workers Union of Australia v Linfox 18 (“Linfox”) the Full Bench identified 4 key propositions from the High Court’s decision in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance Pty Ltd19 (“Con-Stan”) to be applied in the industrial context:

“… In [Con-Stan], the High Court of Australia provided four propositions to consider when determining whether a “custom and practice” exists:

•  The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact;

•  There must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract. The custom must be so notorious that everybody in the trade enters into a contract with that usage as an implied term. It must be uniform as well as reasonable, and it must have quite as much certainty as the written contract itself;

•  A term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement; and

•  A person may be bound by a custom notwithstanding the fact that he or she had no knowledge of it.”

[74] The AWU’s case falls short of these marks in a number of ways. There is no evidence to establish the fact that the additional contributions were so well known that they were notorious. Although Mr O’Donnell’s evidence was that “Peter spoke to me and other employees about a new arrangement the company was putting in place” there was no substantial evidence about how well known the arrangement was at the relevant time. The notion of a custom or practice being incorporated into the terms of the contract requires examination of the circumstances at the time each contract commenced – the words “everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract” in the above summary in Linfox are central. Some if not all of the relevant Coregas employees were already employed before the alleged custom and practice commenced. On this basis the term could not have been “presumed to have imported the term into the contract” in the relevant sense.

[75] The AWU submits that the additional contributions are a recognised over-award payment. In the context of considering the terms of the bargain made by the parties in the Agreement, if the arrangement was recognised between the parties at the time the bargain was made then it may be part of the “objective background facts” referred to by the Full Bench in Berri 20:

“11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i) 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;

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

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

[76] In this matter there is no evidence to establish that the ongoing additional payments were known to both parties, let alone that they informed the subject matter of the agreement. In fact Coregas’ evidence, although not strong, is to the contrary. Mr Abbott’s evidence that during his involvement in various enterprise agreement negotiations with Linde Gas and Coregas that no parties have ever raised the additional superannuation contributions. This evidence is not strong because I am alert to the fact that Mr Abbott does not say that he attended every meeting about the negotiation of the relevant agreements, nor does he say that he was the only representative of the employer in such meetings. In the circumstances, the evidence does not rise so high as to establish the additional payments to be objective background facts that inform the subject matter of the agreement. Further, even if the payments were objective background facts known to both parties, it does not take the matter any further towards determining whether the additional contributions are a contractual term.

[77] The parties indicated at hearing that approximately one quarter of the employees currently covered by the agreement were receiving additional contributions in 2019, which I regard to be significant. The fact that the additional payments have never been dealt with in a series of enterprise agreements over a long period of time points against the notion that the contributions were a “recognised over-award payment” or an objective background fact known to both parties that informed the subject matter of the agreement.

[78] I cannot find in the circumstances that the additional contributions were an implied term of the respective employment contracts. I accept Coregas’ submission that the term is not necessary to give business efficacy to the contracts, although I do not accept that term is not capable of clear expression or that it is contrary to the express terms of the contract. For clarity, I do not accept Coregas’ invitation to assume that each employee’s contract is in the same terms as the recovered 2002 contract. There is a paucity of records and I am not prepared to fill the gaps by adopting this assumption, particularly if Mr O’Connell’s evidence is correct that Coregas’ HR department decided to throw out a large number of old files.

[79] Coregas submitted that the Agreement dealt with superannuation in a way that covered the field. I do not accept that submission. The words of the agreement do not preclude the employer from making additional superannuation contributions and does not cover the field in a way that leaves no room for other arrangements.

[80] Finally I do not accept that Coregas is estopped from denying the existence of the obligation to pay the additional payments. The AWU has not established the elements of an estoppel by representation. The AWU has not established that either party adopted the assumption that the additional contributions were contractually binding 21, nor that the parties conducted their relationship on that basis of that mutual assumption or new or intended that the other party act on that assumption.

[81] In weighing up all of these factors I cannot find that there is a sufficient evidentiary basis for me to be satisfied that Coregas had a contractual obligation to maintain the additional superannuation contributions. Of the limited documentation that has been found, none of it is consistent with an ongoing contractual obligation to make the additional contributions.

[82] In the context of considering the words of clause 5.7, which have at their root the purpose of protecting the bargain made between the parties, I cannot find that the ongoing maintenance of the additional superannuation contributions was a part of the bargain. To put it another way, Coregas’ actions to remove the additional contributions is not an attempt to “strike a new bargain”.

[83] The question put for determination was:

“Did any terms of the Coregas Pty Ltd & AWU Coregas Operations Enterprise Agreement (Yennora) 2019 prevent Coregas from reducing the superannuation contributions paid to some employees’ superannuation funds on or about 1 July 2020 from 13% to 10% of their ordinary time earnings?”

[84] For the above reasons the answer to the agreed question is no.

DEPUTY PRESIDENT

Appearances:

Mr A Sage, for the Applicant
Mr G Giorgi, for the Respondent

Hearing details:

2021.
Sydney (By Video using Microsoft Teams)
December 15.

Printed by authority of the Commonwealth Government Printer

<PR737764>

 1   [2017] FWCFB 6731.

 2   [2017] FWCFB 6731 at [20].

 3   Melbourne Fire and Emergency Services Board v United Firefighters' Union of Australia, PR950883 at [25]-[27].

 4   Relying on BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266.

 5   Rely on Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at [8]-[9].

 6   (2017) 268 IR 285 at 310, [2017] FWCFB 3005 at [114].

 7   (2014)245 IR 394, [2014] FWCFB 7447.

 8   (2020) 278 FCR 566; (2020) 382 ALR 8; (2020) 298 IR 50, [2020] FCAFC 123 at [65], (not relevantly disturbed on appeal in Ridd v James Cook University (2021) 310 IR 109, [2021] HCA 32).

 9   (2014) 222 FCR 152, [2014] FCAFC 84.

 10   [2013] FWC 8237 cited with approval in CSL v NUW [2017] FWCFB 6731 at [20].

 11   [2017] FWCFB 6731.

 12   See Westpac Banking Corporation v Wittenberg (2016) 256 IR 181, [2016] FCAFC 33 at [69]-[79].

 13   [2017] FWCFB 6731.

 14   (2014) 222 FCR 152, [2014] FCAFC 84 at [37].

 15   See also Australian Municipal, Administrative, Clerical and Services Union v North East Water [2014] FWC 6922 at [60]-[62] and [71]-[73].

 16   (2002) 122 FCR 301, [2002] FCA 712.

 17   (2003) WASCA 24.

 18   [2016] FWCFB 443 at [27].

 19   (1986) 160 CLR 226 at 236, 1986] HCA 14 at [8].

 20   (2017) 268 IR 285 at 310, [2017] FWCFB 3005 at [114].

 21   See Ryledar Pty Ltd v Euphoric (2007) 69 NSWLR 603 at 645 [200].