Note: An appeal pursuant to s.604 (C2011/3311) was lodged against this decision - refer to Full Bench decision dated 27 April 2011 [[2011] FWAFB 2386] for result of appeal.
[2011] FWA 316 |
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DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 10 - Application to vary transitional instrument to remove ambiguity
Fosterville Gold Mine Pty Ltd
(AG2010/10818)
COMMISSIONER LEWIN |
MELBOURNE, 24 JANUARY 2011 |
Application to vary transitional instrument—Superannuation—contribution amount—ambiguity or uncertainty—approach of Tribunal—“gross earnings”—ordinary meaning—context—mutual intention.
[1] This matter is an application to vary the Fosterville Employee Collective Agreement 2009 (AC325930) (the Agreement). The application is made by Fosterville Gold Mine Pty Ltd (Fosterville) under the provisions of Schedule 3, Item 10, Paragraph 1(a) of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the TPCA Act).
[2] The Agreement is an employee collective Agreement made under s.327 of the Workplace Relations Act 1996, which was approved by the Workplace Authority on 29 June 2009 and a collective-based transitional instrument for the purposes of Part 2 of Schedule 3 of the TPCA Act. Part 3 of Schedule 3 of the TPCA Act, by item 10, provides that Fair Work Australia (the Tribunal) may vary such an Agreement in certain circumstances. Those provisions are set out below:
“10 All kinds of transitional instrument: variation to remove ambiguities etc.
(1) On application by a person covered by a transitional instrument, FWA may make a determination varying the instrument:
(a) to remove an ambiguity or uncertainty in the instrument; or
(b) to resolve an uncertainty or difficulty relating to the interaction between the instrument and a modern award; or
(c) to remove terms that are inconsistent with Part 3-1 of the FW Act (which deals with general protections), or to vary terms to make them consistent with that Part.
Note: For variation of a transitional instrument to resolve an uncertainty or difficulty relating to the interaction between the instrument and the National Employment Standards, see item 26.
(2) A variation of a transitional instrument operates from the day specified in the determination, which may be a day before the determination is made.”
[3] The application seeks to vary the Agreement to remove an alleged ambiguity or uncertainty said to arise under clause 3.6 of the Agreement which is set out below:
“3.6 Superannuation
The Company shall contribute an amount equal to 9 per cent of an Employee’s gross earnings into a complying superannuation fund nominated by the Employee. In the event that an Employee does not nominate a superannuation fund, superannuation contributions will be paid into the Company’s default fund, currently Asgard. The conditions applying to superannuation will be determined by Company policy, the Superannuation Guarantee Act and the rules of the fund.”
[4] The application is opposed by the Australian Workers’ Union (the AWU) which has sought and been granted leave to intervene in the matter.
[5] At the Hearing of the application Mr G Bull and Ms C Pollard appeared on behalf of Fosterville and Mr K Farouque, a solicitor with Mr M Borowick appeared, with permission, for the AWU. In the course of the proceedings both parties filed written submissions. Mr Farouque’s submission included a succinct and useful summary of the proper approach to the determination of the application, which I consider correct, as follows:
“a. The Tribunal should approach the matter by way of two stages. Firstly, as a jurisdictional pre-requisite, identify whether there is an uncertainty or ambiguity. Secondly, if an ambiguity or uncertainty has been identified, FWA has discretion whether or not to vary the agreement. Re Tenix Defence Systems Pty Ltd Certified Agreement 2001 - 2004 (Full Bench, 9 May 2002, PR917548) at [28], [32] & [35].
b. The first part of the process (ie identifying ambiguity or uncertainty) involves an objective assessment of the words used in the provisions under examination. The words used are construed having regard to their context. See Re Tenix at [29].
c. The Tribunal will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and arguable case is made out for more than one contention. See Re Tenix at [31].
d. However, the Tribunal must make a positive finding that the agreement is uncertain or ambiguous. Being satisfied of ambiguity or uncertainty on a prima facie basis is not sufficient. See Colnvest Ltd v Visionstream Pty Ltd (2004) 134 IR 43 at [57].
e. It is not sufficient that there are rival contentions as to the proper construction of the terms of the agreement. Such contentions may be self serving. The Tribunal’s task is to mark an objective judgment as to whether the wording of a provision is susceptible to more than one meaning. See Re Civil Construction Corporation Enterprise Agreement (Ross VP, 13 October 2002, PR939346); SJ Higgins v CFMEU (Williams SDP, 2 May 2001, PR903843); RE CFMEU Appeal (Full Bench, 25 February 1999, Print R2431).
f. In terms of the second stage of the process, once an ambiguity or uncertainty has been identified, in exercising the discretion of the Tribunal whether or not to vary the agreement, the Tribunal is to have regard to the mutual intention of the parties at the time the agreement was made. See Re Tenix at [32].”
[6] Following the order of this submission, I turn to examine the provisions of clause 3.6 of the Agreement.
[7] Clause 3.6 establishes an obligation upon Fosterville to make superannuation contributions of an amount, stated as “equal to 9 percent of an Employee’s ordinary gross earnings”, to a complying superannuation fund. The clause then directs that in the event that an employee does not nominate a complying superannuation fund to which such payments are to be made then they are to be made to “Asgard”. The clause then provides that the “conditions applying to superannuation” will be “determined” by “Company policy, nominated Commonwealth legislation governing employer superannuation obligations” and “the rules of the fund”.
[8] What has prompted the application is the emergence of differing interpretations of clause 3.6 at the workplace between Fosterville and employees of Fosterville and between Fosterville and the AWU. In essence, the differing interpretations concern the amount of superannuation contributions to be made by Fosterville, in particular the basis of the calculations of the amount, which the words of clause 3.6 require must be contributed to an employee’s superannuation fund.
[9] It is useful to commence with consideration of the words “an employee’s gross earnings”. In my view, what is meant by 9 per cent is unambiguous and certain. In order to determine the amount of which 9 per cent must be contributed to an employee’s superannuation fund, it is necessary to be able to know, with certainty, the following:
[10] The Agreement contains a clause 1.6, definitions, which is in the following terms:
“Unless the context otherwise requires, in this agreement:
Act means the Workplace Relations Act (Cth) and from 1 July 2009 the Fair Work Act 2009 (Cth).
Apprentice is an apprentice that is/was under the age of 21 years of age and over when she or he commenced their recognised trade training program.
Adult apprentice is an apprentice that is/was 21 years of age and over when she or he commenced their recognised trade training program.
Base Rate means the base rate of pay for the Employee’s current grade/level as set out in Schedule 1 “Wage Rates” of this Agreement.
Full shift means 95% or greater length of any single rostered shift.
Hourly Rate of Pay means the normal rate of pay an employee is paid per hour worked on a shift in the employees’ scheduled roster pattern.
Weeks’ Pay - for the purpose of this Agreement, “weeks pay” means:
Hours
The employee’s average rostered hours per week over a 6 month period. Examples include:
Dayworker
Monday to Friday - Weekly Hours: 40
5 days on/2 days off/4days on/3 days off (12 Hr/Shift) - Weekly hours: 54
Non-Continuous Shiftworker
4 days on/4 days off (12 Hr/Shift) - Weekly Hours: 42
5 days on/5 days off (12 Hr/Shift) - Weekly Hours: 42
7 days on/7 days off (12 Hr/Shift) - Weekly Hours: 42
8 days on/6 days off (10 Hr/Shift) - Weekly Hours: 42
Continuous Shiftworker
4 days on/4 days off/4 nights on/4 days off (12 Hr/Shift) - Weekly Hours: 42
5 days on/5 days off/5 nights on/5 days off (12 Hr/Shift) - Weekly Hours: 42
7 days on/7 days off/7 nights on/7 days off (12 Hr/Shift) - Weekly Hours: 42
Rate of Payment
The employee will be paid at the employee’s current Hourly Rate of Pay at the time of the relevant event (i.e. payment of long service leave, redundancy or termination).
For employees who are entitled to a variable incentive component, this will be included in the calculation of the employee’s currently Hourly Rate of Pay. The average variable incentive component paid for the previous 12 months will be used in the calculation of the employee’s currently Hourly Rate of Pay at the time of the relevant event.
Standard means the Australian Fair Pay and Conditions Standard and on and after 1 January 2010 the National Employment Standards.”
[11] It is clear that “gross earnings” is a term not defined by the definitions contained within the Agreement.
[12] It is therefore appropriate to first give those words their ordinary meaning and then to ascertain whether or not, in the context in which those words appear in the Agreement, the ordinary meaning of such words gives rise to any ambiguity or uncertainty as to the amount of money of which an amount equal to 9 per cent must be contributed to an employee’s superannuation fund by Fosterville.
[13] I will first consider the ordinary meaning of each of these words discretely and then the compound meaning of both words used in conjunction. I reproduce the Macquarie Dictionary entries for the words “gross” and “earnings” below:
“Gross 1. Whole, entire, or total, especially without having been subjected to deduction, as for charges, loss, etc, gross profits.
Earning 1. The act of one who earns. 2. (plural) money earned; wages; profits.”
[14] In my view, the common everyday usage of the word “gross” in Australia is consistent with the dictionary entry when considered in the context of employment, particularly to denote, for example, an employee’s wages, weekly pay or annual salary. That usage denotes all that an employee is paid or to be paid before any deduction is made.
[15] The common everyday usage of the word “earnings” is money accrued; as money, wages or profits. In the context of the Agreement, “profits earned” is not a relevant meaning. Money earned as wages therefore is the meaning in everyday usage to be attributed to the word “earnings” in clause 3.6.
[16] The compound ordinary meaning of the words “gross earnings” in everyday usage is therefore the whole of the amount of money wages earned by an employee without deduction.
[17] In my judgment the meaning of the words “an amount equal to 9 per cent of an employee’s “gross earnings” are unambiguous and certain in the context of the first sentence of clause 3.6 of the Agreement.
[18] In Fosterville’s written submissions the alleged ambiguity to which the application to vary is directed is address as follows:
“THE UNCERTAINTY OR AMBIGUITY
55. The term “earnings” is not defined in the Agreement. Applying its ordinary meaning, “earnings” are simply salary or wages, which is the basis for an argument that superannuation be calculated on all paid work, including additional shifts.
56. An assessment of the wording of the entirety of subclause 3.6 of the Agreement raises a plausible and competing interpretation in that it provides that”
“..the conditions applying to the superannuation will be determined by Company policy, the Superannuation Guarantee Act and the rules of the fund”.
57. In particular, the Superannuation Guarantee Act requires the payment of superannuation on “ordinary time earnings” only and the Applicant’s policy and practice is consistent with only paying superannuation in respect of ordinary hours of work and not additional shifts. As a result, there is a tension between the ordinary meaning of the term “earnings” and conditions applying to superannuation “being determined” elsewhere so that the parties intended that either:
• “earnings” had its ordinary meaning and all other conditions applying to superannuation were determined elsewhere; or
• “earnings” meant in effect “ordinary time earnings” and there was to be no change to the standard superannuation position.
58. As there are arguable competing interpretations of clause 3.6, Fair Work Australia should find that the clause is uncertain and/or ambiguous. As a result it is permissible to look at extrinsic material to determine the meaning of the clause, including the objective intention of the parties at the time the Agreement was made.”
[19] In effect, Fosterville submit that there is a potential conflict of meaning in Clause 3.6 when the final sentence of the clause is considered as part of the context in which the words “gross earnings” appear, which gives rise to ambiguity and uncertainty.
[20] As stated above I consider the correct approach to the determination of the application by the Tribunal is to first ascertain whether or not there exists an ambiguity or uncertainty having regard to the ordinary meaning of the relevant words of clause 3.6, as they appear in the context of the clause itself and any relevant terms of the Agreement.
[21] Without the inclusion of the final sentence of clause 3.6 there could be no doubt about the meaning of the words “gross earnings” and the effect of the Agreement on the amount of money required by its terms to be contributed to an employee’s superannuation fund by Fosterville.
[22] The question which must therefore be determined is: does the meaning and effect of the final sentence of clause 3.6 create any ambiguity or uncertainty concerning the calculation of the amount of contributions to be made by Fosterville to an employee’s superannuation fund? I think it does. While Fosterville have drawn attention to an employer’s obligations to make contributions, the amount of such contributions and the method of calculation of such contributions under the Superannuation Guarantee Act, I think there is an even more fundamental and direct aspect of the terms of clause 3.6 which is more proximate to the employment relationships governed by the terms of the Agreement, that gives rise to uncertainty. In my view, the conditioning of “superannuation” as a general subject to “determination” by “company policy” is a source of some considerable uncertainty in very broad terms.
[23] It seems to me that what may be meant by “conditions” of “superannuation” is a matter which may be unilaterally determined by company policy. This could mean that what will constitute “gross earnings” where there is an extant company policy on that subject, particularly one in existence at the time the Agreement was made, is determined by that policy.
[24] As a matter of fact, on the evidence before me, there was at the relevant time and is a company policy on that subject. Moreover, that policy is contrary to the interpretation of the Agreement advanced by the AWU in relation to the meaning of the words “gross earnings” where they appear in clause 3.6.
[25] For these reasons, I find that the meaning of clause 3.6 in relation to the company’s obligations in respect of superannuation and, in particular, what constitutes “gross earnings” for the purposes of the clause is uncertain. I conclude that the combination of the first and last sentences of clause 3.6 create competing plausible interpretations of the meaning of the terms of the Agreement prescribing Fosterville’s obligations in relation to the amount of superannuation contributions to be made an employee’s superannuation fund.
[26] I now turn to determine how the uncertainty I have found to arise from the words of clause 3.6 should be resolved.
[27] In my view, the correct approach is to give effect to the mutual intentions of the parties to the Agreement at the time the Agreement was made, as far as that can be ascertained on the evidence before the Tribunal. Having considered that evidence I conclude that the mutual intentions of the parties, although not necessarily recorded in writing or given verbal expression, was that the gross earnings to which the superannuation provisions of the Agreement applied would be those as comprehended by company policy, which at the relevant time meant all of the earnings which accrue to an employee in respect of hours worked as part of a projected shift roster or a roster of that kind in accordance with the terms of the Agreement, which may have been varied to another projected shift roster likewise in accordance with the terms of the Agreement.
[28] Such earnings are not ordinary time earnings within the meaning of the Superannuation Guarantee Act. Rather, they are earnings as prescribed by the terms of the Agreement for the working of shifts according to a projected roster and any such changed roster, in accordance with the terms of the Agreement. In accordance with the company policy as I have found to have existed at the time the Agreement was made, where a shift or hours are worked in addition to rostered shifts or hours earnings arising from that additional shift or hours are not taken into account for the purpose of calculating an employee’s “gross earnings” for the purposes of clause 3.6 of the Agreement. This results, however, in contributions in excess of the amounts which would be required under the Superannuation Guarantee Act, because rostered shifts encompass work which is remunerated at a loaded rate of pay which includes compensation for shift allowances and hours of work which would, if worked under the terms of the Act and any relevant industrial instrument, be categorised as overtime.
[29] I have decided that the terms of the Agreement should be varied to reflect this. I reject the AWU’s submission that the terms of the Agreement should be varied to expressly provide that an employee’s earnings from the working of additional shifts or hours to those which they are rostered to work in accordance with the terms of the Agreement should form part of the calculation of the amount of superannuation contributions to be made by Fosterville. I do so because I do not consider that an Agreement of that kind was arrived at as the mutual intention of Fosterville and its employees with whom the Agreement was made, at the time the Agreement was made.
[30] I intend to hear the parties further on the form of an order to give effect to this decision. In particular, I am concerned to address any outstanding issues of uncertainty arising from the terms of the last sentence of clause 3.6 in addition to resolving a clear and unvarying obligation in relation to the amount of superannuation contributions which the terms of the Agreement requires that Fosterville must make to an employee’s superannuation fund.
COMMISSIONER
Appearances:
Mr G Bull and Ms C Pollard, Fosterville Gold Mine Pty Ltd
Mr K Farouque, solicitor, and Mr M Borowick, The Australian Workers’ Union
Hearing details:
2010
13 August, 9 September, 13 October
Melbourne
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