Note: Appeals pursuant to s.604 (C2012/3688, C2012/3715) were lodged against this decision.

[2012] FWA 2946

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FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.739—Dispute resolution

SCA Hygiene Australasia Pty Limited
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU); and the Construction, Forestry, Mining and Energy Union
(C2011/6521 and C2011/6522)

Timber and paper products industry

COMMISSIONER BLAIR

MELBOURNE, 17 APRIL 2012

Alleged dispute concerning annual leave loading.

[1] This is a decision in C2011/6522 and C2011/6521. Both applications were lodged with Fair Work Australia (the Tribunal) by SCA Hygiene Australasia (the Applicant). C2011/6521 involves the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) as Respondents. C2011/6522 involves the Construction, Forestry, Mining and Energy Union (CFMEU) (together, the Respondents).

[2] Both applications relate to the application of the annual leave loading clauses in the agreements covering the Respondents. C2011/6521 relates to the SCA Hygiene Australasia (Maintenance Employees) Personal Care, Springvale Site Agreement 2009 1 (Maintenance Agreement), binds the AMWU and the Applicant. The CEPU is not covered by the Maintenance Agreement however the CEPU did, in conjunction with the AMWU, present submissions to the Tribunal. C2011/6522 relates to the SCA Hygiene Australasia Pty Limited Springvale Site (Production and Warehouse) Agreement 20092 (Production Agreement) (together, the Agreements). The Production Agreement binds the CFMEU and the Applicant.

[3] The applications relates to the interpretation of the annual leave loading clauses that arise under 26.11 to 26.14 of the Production Agreement and clauses 33.15 to 33.18 of the Maintenance Agreement. As a matter of convenience this one decision will cover both applications for the same questions relating to the application of those agreements to leave loading apply, although the arguments by the Respondents are somewhat different.

[4] A number of conciliation conferences occurred in an effort to try and resolve this matter. Arising from those conferences an offer that the Tribunal thought was reasonable was put forward to the Respondents by the Applicant. The Respondents took the offer back to their members to seek their members’ views. The offer was rejected.

[5] The matter was set down for arbitration on 14 February 2012. At that time the Tribunal expressed the view that the Respondents should take the offer back to their members again because the Tribunal felt that the offer was reasonable in all the circumstances. Again the members of the Respondents rejected the offer, despite a recommendation from the Tribunal.

[6] The matter was then set down for 18 March 2012 for hearing.

[7] The CEPU, with the support of the AMWU, raised three jurisdictional issues which the Tribunal will first deal with. The first issue related to the failure of the Applicant to follow the dispute settlement procedure of the Maintenance Agreement which sets out at clause 45 “Settlement of Disputes or Claims”. Clause 45.2.1 states:

[8] The CEPU, with the support of the AMWU, say that the first step was not taken; therefore, the Applicant has not complied with the disputes procedure and therefore the matter should be referred back so that the parties can follow the steps identified in clause 45.2.1 of the Maintenance Agreement.

[9] The Tribunal has noted the chronology of the events from the Applicant and, for convenience, the Tribunal will list the chronology:

29 August 2011

Company informs employees of proposed corrections to payment of annual leave loading

Michelle Yates first witness statement - attachment 1, page 1

29 August 2011

Each union notified of proposed changes

Michelle Yates first witness statement - attachment 1, pages 2 to 4

29 August 2011

Meeting between Company (Trevor Rowland, Operations Manager - Springvale) and employee representatives.

Form F10, para 2

2 September 2011

Meeting between Company and CFMEU

Form F10, para 3

6 September 2011

Company sends memo to all employees updating them on the communication process re proposed changes

Michelle Yates first witness statement - attachment 2

12 September 2011

Company confirms with unions by e-mail that it remains its intention to “apply the Agreement as it is written

Michelle Yates first witness statement - attachment 3

13 September 2011

Meeting between Company (Trevor Rowland, Operations Manager - Springvale, and Brendan Heath) and CEPU (Colin Williams) to discuss matter in dispute

Michelle Yates first witness statement - para 13

14 September 2011

Company (Trevor Rowland) advised by AMWU (Dinh Nguyen) that they would be talking to the members about the issue and that they disputed the Company’s interpretation

Michelle Yates first witness statement - para 14

14 September 2011

CFMEU provides response, rejecting company position, and invoking clause 37 of Production Agreement [Settlement of Disputes of Claims] and 37.10 [preserving status quo]

Michelle Yates first witness statement - attachment 4

26 September 2011

Company (Trevor Rowland), AMWU (Dinh Nguyen) and Maintenance Agreement employee representative (David McGregor) meet to hold discussions on the matter

Michelle Yates first witness statement - para 15

7 October 2011

Letter from Company to CFMEU providing details of company interpretation of leave loading entitlements, and agreeing “to maintain status quo while the matter is in the dispute resolution process

Michelle Yates first witness statement - attachment 5

7 October 2011

Copy of 7 October letter provided to CEPU and AMWU. E-mail notes that “Whilst neither the AMWU or ETU responded formally to in in writing...it has never been verbally expressed to us the intent to put the matter into dispute

Michelle Yates first witness statement - paragraph 16, and attachment 8, 3rd e-mail

14 October 2011

CEPU (copy to AMWU) formally notify dispute with company, and invoke clause 45.5 of Maintenance Agreement re Settlement of Disputes or Claims, and seek that status quo be maintained. Oral evidence of Ms Yates was that no indication was given that the matter needed to be discussed further at the site level.

Michelle Yates first witness statement - attachment 7

17 October 2011

Letter from CFMEU outlining disagreement on interpretation

Michelle Yates first witness statement - attachment 6

17 October 2011

Company (Michelle Yates) e-mail to CEPU (copy to AMWU) noting that “all unions have expressed that this matter is in dispute”, undertaking to maintain status quo, and seeking feedback from unions on “where we are in dispute.

Michelle Yates first witness statement - attachment 8

26 October 2011

Meeting between Company (Trevor Rowland, Michelle Yates and Brendan Heath) and CEPU (Colin Williams) to discuss dispute

Michelle Yates first witness statement - para 18

18 November 2011

Company files F10 Applications in FWA

 

[10] What can be seen from the chronology of events is that there has been substantive communications in the discussions between the respective parties and although technically the Tribunal has to concede that clause 45.2.1 may not have been complied with, the Tribunal is not prepared to uphold the jurisdictional objection. The Tribunal is of the view that even if the first step had been complied with it would not alter the course of events that gives rise to this arbitrated outcome.

[11] The matter is so significant and has such a wide application to the site that any meeting between the departmental supervisor and the employees concerned would not settle the matter and could be seen to be a stalling tactic on the part of the Respondents. The Tribunal will therefore reject the jurisdictional argument based on non-compliance with the dispute settlement procedure.

[12] The second argument raised by the CEPU, with the support of the AMWU, is that they considered the claim made by the Applicant as one that seeks to remove an existing entitlement and therefore infringes the terms of the no extra claims clause of the Maintenance Agreement.

[13] The Tribunal rejects the argument that what the Applicant seeks is in fact an extra claim. What the Applicant seeks to do is completely in line with clause 45.1 of the dispute settlement procedure. Clause 45.1 states:

[14] The Applicant seeks to resolve a matter regarding application of the Maintenance and Production Agreements. The Applicant has made no attempt to lower the percentages which apply to the annual leave loading clauses they simply seek to have the Tribunal endorse their view as to the application of those clauses relating to loading. That in the Tribunals view does not constitute a new claim, therefore the jurisdictional issue is rejected.

[15] The third issue relates to clause 53 “Workplace Flexibility”. It is said that members of the CEPU and AMWU voted on the Maintenance Agreement on the understanding that the entitlement was not and would not be altered during the life of the Agreement. It is said in considering the significant diminution in the annual leave loading entitlement (i.e. from 68.75 percent to 20 percent which represents a difference of several thousand dollars per a year), which the Applicant now seeks, they would have expected the matter to have been raised in the negotiations for a new EBA.

[16] The CEPU and AMWU state that, instead, the Applicant did not take these steps and instead the entitlement acknowledgment and recognition of the Applicant was reaffirmed and protected by the terms of the Maintenance Agreement.

[17] What is protected by the Maintenance Agreement, is the percentages that apply and conditions that apply to the annual leave loading. The entitlement to the percentages of the annual leave loading is not being altered. What is being sought, as stated above, is an interpretation of the application of those entitlements. It does not seek to reduce them, it simply states, from the Applicant’s submissions, that they had been applying them wrongly, albeit for almost three decades, and they now seek to apply them correctly.

[18] Therefore the third issue raised by the CEPU, with the support of the AMWU, is rejected.

The Substance of the Application

[19] The Applicant states the entitlement to annual leave loading arises under clauses 26.11 to 26.14 of the Production Agreement and clauses 33.15 to 33.18 of the Maintenance Agreement. Those clauses are as follows:

[20] A similar scheme, albeit with different rates, operates under the Maintenance Agreement:

[21] The Applicant states that it is the contention of the CFMEU that all leave under the Production Agreement be paid at either the rate of 60% or 38.75% (reference is made to the letter dated 17 October 2011).

[22] The Applicant further states that, similarly, the CEPU and AMWU maintain that all annual leave under the Maintenance Agreement attracts the full 68.75 percent loading.

[23] The Applicant’s argument is that the Agreements mean what they say: that the top rates are only paid to employees directed by the Applicant to take leave outside of the traditional Christmas period. Leave taken at a time of the employee’s choosing, unless the employee is refused leave at Christmas only attracts an entitlement to 20 percent loading. Leave taken as directed by the Applicant over the traditional Christmas period attracts 38.75 percent.

[24] The Applicant states that there is no ambiguity or uncertainty in the meaning of the Agreements. There is nothing that would compel reference to extraneous documents to other evidence to determine whether what is actually meant by the relevant terms.

Maintenance Agreement

[25] In the Applicant’s original outline of submissions, the Applicant posed six questions which they say relate to the Maintenance Agreement and gave answers to those six questions:

Production Agreement

[26] The Applicant stated that the six questions in relation to the Production Agreement are more limited, relating only to the flexibility loading. However, arising from the hearing, it was conceded by the Applicant that the same six questions would apply to the Production Agreement.

[27] At the request of the Tribunal those six questions, as they would apply to the Production Agreement, were provided to all parties, including the Tribunal, by the Applicant in correspondence dated the 14 March 2012.

[28] The letter dated 14 March 2012, from the Applicant states in part:

[29] In relation to the Production Agreement the answers provided by the Applicant to the questions they posed are as follows:

[30] In response to the letter from the Applicant, dated 14 March 2012, the CFMEU submitted the following answers to the questions posed in relation to the Production Agreement:

[31] The CFMEU provided detailed submissions in response to the application. In substance they state the proper application of the annual leave loading provisions is as follows:

[32] The CFMEU submissions also go to the principles of interpretation, the role of custom and practice and the identification of ambiguity are all detailed in their submissions.

[33] A witness statement was provided by Mr Alex Millar, Secretary of the CFMEU, PPW District. A witness statement was also provided by Mr Michael Obradovic, who has been employed by SCA Hygiene Australasia’s Springvale site for some sixteen years and has been a CFMEU delegate for some fourteen years.

[34] Witness statements were also provided for the CEPU by Mr Simon Cannatelli, who has been employed at the Springvale site since 2001 and by Mr Neil Jacobs, from the CEPU, a maintenance electrician employed at the Springvale site for approximately twenty-five years.

[35] For the Applicant, a witness statement was provided by Ms Michelle Yates, Human Resources Manager Supply, who commenced employment with the Applicant in May 2010 as a Senior Human Resources Consultant and has been in her current role since 1 May 2011.

[36] All parties gave sworn statements and were examined in chief and cross-examined by the relevant parties. The Tribunal does not intend to go into each and every detail put forward by the respective parties in terms of their witness statements. The parties are well aware of what they said and were heavily involved in the proceedings held on 8 March 2012. In examination in chief and cross-examination all the parties are well aware of the details of their respective arguments.

Determination

[37] The argument that the Tribunal has to determine is whether the words in the Agreements mean what they say when given their simple meaning. Was the Tribunal entitled to read something into the words which would give the employees an entitlement that was not intended? It is accepted that what has been occurring, has been occurring for some decades. That is the alleged wrongful payment of the leave loading entitlement to both Production and Maintenance Agreement covered employees.

[38] If it is determined that the leave loading provisions have been applied incorrectly as stated above, albeit for some decades, it does not follow in the Tribunal’s view, that there is an ongoing entitlement to that mispayment, albeit that the employees may argue that it is custom and practice and tradition.

[39] The words of the Agreements must be given their true meaning. One cannot read into the words of an agreement something that is not there, particularly when it gives the employees a benefit, when putting the words together that was not intended.

[40] The Tribunal is satisfied that the six questions posed and the answers provided by the Applicant very clearly confirm the wording in clauses 33.15 to 33.18 of the Maintenance Agreement and clauses 26.11 to 26.14 of the Production Agreement; that is, that each clause stands on their own and does not have a cumulative effect until certain conditions are met. If it were intended that the full loading was to be paid on each occasion, there would only be one clause. There is not. Only the base loading applies, then when certain steps are taken, concerning when annual leave can be taken, the other clauses take effect.

[41] There has been no evidence put that has indicated to the Tribunal that the Applicant’s interpretation is not correct. Even the witness statements and oral evidence of the CEPU’s witnesses confirmed the Applicant’s interpretation. There appeared to be an interpretation that the words “as requested” meant the same as “you were expected”. Such an interpretation is not correct.

[42] After considering the response of the CFMEU, in relation to the Production Agreement, the Tribunal is of the view that the answers provided by the Applicant are the same as the answers given in response to the six questions posed in the Maintenance Agreement, where each of the relevant clauses has the same meaning when given their proper interpretation.

[43] The Tribunal, after considering all the material, rejects the arguments and explanation by the Respondents in both applications.

[44] The Tribunal is satisfied that the Respondents are misinterpreting the clauses in question in both the Maintenance and Production Agreements in order to maintain what has been a custom and practice over several decades, due to an initial misinterpretation of the relevant clauses by the Applicant.

[45] Therefore, the Tribunal determines that the interpretation by the Applicant of the relevant clauses, when given their simple meaning, is correct.

COMMISSIONER

Appearances:

R Millar, of counsel, on behalf of SCA Hygiene Australasia Pty Limited

R Read for the Construction, Forestry, Mining and Energy Union

K Reidy for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

J Maloney for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)

Hearing details:

2011
Melbourne
December 13, 19

2012
Melbourne
February 14
March 8

 1   AE884416

 2   AE878676

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