[2016] FWCA 2774 [Note: An appeal pursuant to s.604 (C2016/1353) was lodged against this decision - refer to Full Bench decision dated 3 August 2016 [[2016] FWCFB 4979] for result of appeal.]
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s 217 - Application to vary an agreement to remove an ambiguity or uncertainty

MSS Security Pty Ltd t/as MSS Security
(AG2015/6555)

MSS SECURITY AVIATION QLD ENTERPRISE AGREEMENT 2014-2017

Security services

DEPUTY PRESIDENT SAMS

SYDNEY, 23 MAY 2016

Application to remove an ambiguity or an uncertainty in an enterprise agreement – Aviation Allowance – all purpose allowance – method of calculation – history of provision – whether allowance is paid for each hour worked or compounded for the purposes of calculating overtime and other penalties – principles of interpretation – ambiguity established – mutual intention considered – allowance never paid on a compounded basis –variation appropriate – whether Commission has power to vary expired enterprise agreement – two enterprise agreements varied – orders made.

BACKGROUND

[1] On 4 November 2015, MSS Security Pty Ltd t/as MSS Security (‘MSS’) made an application, pursuant to s 217 of the Fair Work Act 2009 (the ‘Act’) seeking to have the Fair Work Commission (the ‘Commission’) remove an ambiguity or uncertainty by varying the terms of both the MSS Security Aviation QLD Enterprise Agreement, 2014–2017 (the ‘2014 Agreement’) and the MSS Security Enterprise Agreement (QLD) 2011–2014 (the ‘2011 Agreement’). MSS Security provides security and emergency response services with offices in all States and Territories. MSS employs around 5,000 employees nationwide; 870 of these in Queensland and 220 who work in aviation security. The 2011 Agreement was approved by Asbury C (as Her Honour then was) on 1 November 2011; See: MSS Security Pty Ltd [2011] FWAA 5060. The 2014 Agreement was approved by Gregory C on 21 November 2014; See: MSS Security Pty Ltd [2014] FWCA 8229.

[2] The ambiguity or uncertainty is said to arise in respect to a common clause in both Agreements dealing with the payment of an Aviation Allowance (the ‘Allowance’) for security employees at Queensland airports (namely, Brisbane and regional airports in Mackay, Prosperine, Hamilton Island, Rockhampton and Harvey Bay) and seaports. The Aviation Allowance is paid to security employees who work in the airport precinct and who are required to hold a Red Aviation Security Identity Card. It applies to all areas, including catering and freight centres.

[3] For present purposes, the two clauses in both Agreements are identical and are expressed as follows:

Both Agreements cover United Voice (the ‘Union’). The Union is opposed to the application. For completeness, I note that this application is related to a s 739 application seeking to have the Commission deal with a dispute in accordance with a disputes resolution procedure, which was filed by MSS on 26 October 2015 and in which it was claimed that the Union had failed to follow the Grievance Procedure under the two MSS Agreements, by pursuing an alleged breach of the Agreements in the Federal Circuit Court of Australia (FCC) in relation to the Aviation Allowance. Proceedings were commenced in the FCC on 2 November 2015 (BRG 929/2015), but were stayed; presumably pending the outcome of this matter before the Commission.

[4] Shortly stated, the dispute between the parties concerns the concept of ‘all purpose’ and whether the Aviation Allowance is paid for each hour worked (and for paid leave) as a flat hourly allowance, (‘MSS’s position’) or whether the allowance forms part of the base ordinary rate of pay for the purposes of calculating payments for overtime and all forms of paid leave (the ‘Union’s position’).

[5] MSS submitted that if an ambiguity or uncertainty is found by the Commission in the two Agreements, then for clarity, the following variations should be made:

[6] Unsurprisingly, the Union’s interpretation results in a higher calculation than contended for by MSS. It is not disputed that the allowance has been paid according to MSS’s interpretation, since the approval of the 2014 Agreement and during the life of the 2011 Agreement. Hence, the application and the relief proposed is to be applied to employees relevantly employed under the two Agreements. Conversely, it may be assumed that if the Union’s position prevails, a significant amount of backpay may be liable to be paid to a large number of existing (and possibly former) employees of MSS. It is also not in contention that the disagreement between the parties over the correct interpretation of the calculation of the Aviation Allowance was a ‘live’ and controversial issue in the negotiations leading up to the approval of the 2014 Agreement. This may be relevant to the intentions of the parties should an ambiguity or uncertainty be found to exist in the disputed clause.

[7] Given the circumstances, a number of attempts were made by the Commission (myself and Spencer C) to engage with the parties over a possible settlement of the competing contentions. Such an outcome remained elusive and ultimately the Commission issued directions for the filing and service of evidence and outlines of submissions. The matter was heard in Brisbane on 22 March 2016. Mr R Dalton, of counsel appeared for the applicant and Mr R Reed of counsel, appeared for the Union, with permission being granted to both parties to be represented by lawyers, pursuant to s 596 of the Act.

History of the relevant industrial instruments

[8] At this point, it is helpful to set out the history of the Aviation Allowance in iterations of various industrial instruments applying to security employees working at airports in Queensland. Given that a notorious feature of the security industry generally is the winning and losing of contracts, it is unsurprising that these instruments have covered different employers. The Travel Allowance (previously the Aviation Allowance) first appeared in the Group 4 Securitas (Qld Enterprise Bargaining) Certified Agreement 2005 (the ‘2005 Agreement’). Cl 5.5 sets out its terms as follows:

[9] Clause 5.6 of the 2002 Agreement deals with Allowances and 5.6.1 specifically with the then named Transport Allowance. It reads as follows:

[10] On 21 May 2009, the expiry date of the 2005 Agreement was extended by order of the Australian Industrial Relations Commission (AIRC) to 30 June 2010 [PR987020] and became the Group 4 Securitas (Qld Enterprise Bargaining) Certified Agreement 2005 (as Varied and Extended) (the ‘2009 Agreement’).

[11] Both of those Agreements contain provisions applying to Aggregated Rates employees. This inclusion will become relevant later. Group 4 Securitas Pty Ltd became ISS Security Pty Ltd (‘ISS’) and were a party to the ISS Security Pty Ltd & United Voice Secure Future Enterprise Agreement 2012 – 2016 [AE896448] (the ‘ISS Agreement’), which also covered the Union. At the time, ISS provided security staff to Brisbane and regional Queensland airports and this Agreement applied throughout Queensland. It commenced on 3 September 2012 and had a nominal expiry date of 30 June 2016. The Transport Allowance appeared in Schedule B – Wages and Allowances and was expressed as follows:

Allowances

Description

Frequency

First full Pay Period on or After

01 July 2012

01 July 2013

01 July 2014

01 July 2015

…

…

  

…

…

…

  

Transport Allowance

A Transport Allowance is paid for all purposes of this Agreement when an Employee is performing Security Work at a security regulated Airport or Maritime Port. Provided that in relation to qualifying Aggregated Rate Employees the Transport Allowance will be paid in addition to the Aggregated Rate for all purposes.

Per hour

$1.30

$1.37

$1.44

$1.50

[12] The ISS Agreement referred to the Modern Award (no doubt for the purposes of the BOOT). The Modern Award is the Security Services Industry Award 2010 [MA000016]. It has a provision for Aviation Allowance at cl 15(1)(a) – Wage related allowances as follows:

15.1 Allowance rates

(a) Wage related allowances

 

Allowance

…

Payable

% of standard rate

 

Aviation

Per hour

0.187

No reference is to be found in the Modern Award as to how the allowance is calculated.

[13] MSS’s involvement in airport and seaport security in Queensland commenced in 2010, when it won a contract at the Port of Gladstone and employees were covered by the Paton’s Security Pty Ltd Security Officers Collective Agreement 2006–2009 [AC303106] (the ‘Paton’s Agreement’), a collective agreement certified under the Workplace Relations Act 1996. Cl 21.5.8 dealt with the Aviation and Sea Ports Security Allowance as follows:

[14] In 2011, the Paton’s Agreement (and a Chubb Queensland Agreement) were replaced by the 2011 Agreement. It had a nominal expiry date of 1 July 2014. Clause 3.4.6 expressed the Aviation Allowance as:

3.4.6 Aviation and Sea Ports Security Allowance

[15] The 2011 Agreement was replaced by the 2014 Agreement and the Aviation Allowance appeared in a Table under Schedule A as follows:

5. Allowances

[16] MSS also has enterprise agreements in Victoria and Western Australia. However, the disputed words ‘all purpose’ are not in either of these enterprise agreements’ Aviation Allowance clauses.

WITNESS EVIDENCE

[17] The following persons gave written and/or oral evidence in the proceeding:

For the applicant

Mr Claudio Grasso

[18] Mr Grasso has extensive experience in the aviation industry, including 24 years with Qantas and in a position as MSS’s Aviation Contract Manager from June 2011 to August 2015. His responsibilities in this role were to manage the aviation security contracts for MSS, which included the transitioning between November 2012 and 1 February 2013 of the MSS contract for Brisbane Airport, previously held by ISS. As part of the transition, MSS offered employment to most of the ISS employees on terms and conditions they had enjoyed under the ISS Agreement. Mr Grasso said that MSS maintained the Transport Allowance (as the Aviation Allowance was then known) set out at Schedule B of the ISS Agreement. It was also expressed as to be paid for ‘all purpose’.

[19] However, Mr Grasso deposed that the allowance had always been calculated throughout the MSS business in other States and Territories, on a ‘stand alone’ basis; that it is not included in the base rate of pay, but is added separately on an hourly basis. It was his understanding that MSS had never paid the allowance on a compounding basis. Mr Grasso added that MSS enterprise agreements contain Aggregated Rates, which are expressed to include penalties that would otherwise be applicable for work at night, weekends and public holidays.

[20] In February 2014, MSS announced it was commencing negotiations for a separate aviation agreement to cover MSS employees at airports in Queensland. Mr Grasso and Ms Stinson were members of the MSS negotiating team. In late May 2014, the Union raised concerns about the application of the Aviation Allowance under the 2011 Agreement, sought copies of pay records and foreshadowed underpayment proceedings. Ms Stinson responded by indicating that the former ISS employees were at that time covered by the 2011 Agreement and that the Aviation Allowance was correctly calculated on a ‘stand alone’ basis.

[21] Mr Grasso said that in the ongoing negotiations which were conducted over 11 meetings, the Aviation Allowance issue was raised and MSS sought to clarify its meaning by removing the words ‘all purpose’ from the clause. However, other more significant issues, according to the Union, had priority, such as pay increases and the recovery of historic overpayments. An employee vote on the first MSS offer was rejected 104 – 41 on 20 June 2014. A subsequent survey of employees disclosed that the key factor in the ‘No’ vote was the pay increase. Negotiations continued over July and August 2014.

[22] A revised offer was made by MSS on 31 July 2014 which included reinstating the same wording in the 2011 Agreement in respect of the Aviation Allowance, i.e. restoring the words ‘all purpose’ to the clause. Mr Grasso recalled a meeting in early August in which the Union negotiator sought to further clarify the wording by making it clear the Aviation Allowance was calculated on a compounding basis. Mr Grasso had replied with words to the effect of:

[23] The revised offer, with the current wording in the Aviation Allowance provision, was voted up by a majority of employees on 19 September 2014. Mr Grasso was not aware of any employee complaints as to how the allowance was calculated, as MSS had continued to apply it on a ‘stand alone’ basis after the 2014 Agreement’s approval.

[24] In cross examination, Mr Grasso said that he was aware during the negotiations for the transfer of ISS employees to MSS in 2013, that an ‘all purpose’ Aviation Allowance applied to the employees and that MSS had agreed to maintain all ISS rates and conditions. Mr Grasso conceded he did not have an industrial relations background. Nevertheless, he knew the Aviation Allowance in the Modern Award was not ‘all purpose’ and MSS applied its understanding of the relevant clause across all its sites as a ‘stand alone’ allowance. It was Mr Grasso’s responsibility after June 2011 to ensure that the Aviation Allowance was correctly paid on a ‘stand alone’ basis. MSS and its officers had never wavered from that view.

[25] Mr Grasso was asked about the representations by the Union in May 2013 in respect to the correct calculation of the allowance. He agreed he had told Mr M McKeown of United Voice that he would seek clarification of what he was being asked. Clarification was sought from the General Manager, Mr Mark Casher and the HR Manager, Ms Stinson. Mr Grasso insisted that these inquiries were made, not because he was unsure, but rather because he was seeking a firm response to provide to Mr McKeown. Mr Grasso agreed that the Aviation Allowance was paid on annual leave, sick leave and public holidays.

[26] Mr Grasso acknowledged that the issue was raised again in September 2013 when Mr McKeown referred to material from the Fair Work Ombudsman website. He accepted that the parties continued to have different views. Mr Grasso agreed that during the negotiations for the 2014 Agreement, MSS had proposed to delete ‘all purpose’ from the clause. However, this was not a recognition that the Union’s view was correct; rather, it was intended to make clear that the Company’s interpretation had always applied across all of its sites. Mr Grasso accepted the draft agreement was rejected by the employees in a vote, in circumstances where the Union had run a ‘No’ campaign based on MSS’s desire to remove these words and other matters. Mr Grasso acknowledged that the words ‘all purpose’ were restored and the next vote of employees was in favour of the Agreement.

Ms Margaret Stinson

[27] Ms Stinson has extensive HR and Training experience gained since 2002. She has been MSS’s HR/IR manager since March 2008 and was involved in negotiations for the 2011 and 2014 Agreements.

[28] Ms Stinson set out the contract arrangements when MSS took over the Qantas aviation security contract from ISS in February 2013. Much of this evidence was not disputed and was generally similar to Mr Grasso’s evidence. Accordingly, I will not repeat it here. However, Ms Stinson added that when the former ISS employees were offered the same terms and conditions they were then employed under, they were also offered:

[29] Ms Stinson explained that MSS first paid the Aviation Allowance in Queensland in 2010 under a separate Agreement when it took over security work at the Port of Gladstone. This was in accordance with the Paton’s Agreement. It was paid as a ‘stand alone’ allowance for hours worked. It was Ms Stinson’s belief that this had been the practice of MSS in Queensland up to the present day. She had also been informed by Ms Jansen that this has been the Company national practice since 1998.

[30] Ms Stinson described the working of the aggregated ‘rolled up’ rate payable to permanent employees (less than 20 in Queensland) who work 12 hour shifts in a pattern of two days on, two nights on, followed by four days off for at least eight consecutive weeks. The rate is calculated by taking account of public holidays, penalties and loadings, but not the Aviation Allowance. This was consistent with the nature of the ‘stand alone’ allowance, as it was never intended to be applied to penalty rates.

[31] Ms Stinson said that the Aviation Allowance calculation was never an issue in the negotiations conducted over two years, for the 2011 Agreement. She also set out relevant details of the negotiations for the 2014 Agreement, which largely replicated Mr Grasso’s evidence. I do not repeat it here. She noted that of the four main concerns of the employees when they voted ‘no’ in the first vote, the Aviation Allowance was fourth in priority. Ms Stinson also corroborated Mr Grasso’s evidence as to why MSS reverted to the original wording of the clause and to the conversation he had with the Union officials (see para [22]).

[32] It was Ms Stinson’s further evidence that during the negotiations for the 2014 Agreement (including during the ‘No’ campaign prior to the first vote) the Union had repeatedly asserted that its interpretation of calculating the Aviation Allowance was applied by the former employer, ISS. However, after the approval of the 2014 Agreement, Ms Stinson became aware of a 2013 decision of Spencer C in which this very issue had been the subject of dispute between the Union and ISS. Spencer C had ruled that the allowance should be paid on a ‘stand alone’ basis; See: United Voice v ISS Security Pty Limited [2013] FWC 9306 (‘United Voice v ISS Security’).

[33] Ms Stinson deposed that she was unaware of any employee complaint or enquiry made to payroll about the Company’s continued calculation of the allowance on a ‘stand alone’ basis. The first time the matter was raised was when MSS was served with a right of entry notice by the Union in April 2015 and when the Union later filed proceedings in the FCC on 8 October 2015, concerning underpayment of the Aviation Allowance.

[34] In further oral evidence Ms Stinson gave details about the Aggregated Rates and the employees who are paid it. They tend to be employees who work in areas of the airport which require 24/7 security (security screening) and associated tasks in areas where passengers do not frequent. Ms Stinson confirmed from a payslip of Mr Conn, in November 2015, that the Aviation Allowance is a separate entry on the employees’ payslips.

[35] In cross examination, Ms Stinson set out the manner in which an employee would be able to work out from this payslip, the basis of the calculation of the Aviation Allowance. The payslip shows the hours worked or annual leave taken, divided into the total amount paid under the Aviation Allowance entry.

[36] Ms Stinson agreed she was involved in the negotiations of the 2011 Agreement which replaced the Paton’s Agreement. The Paton’s Agreement did not express the Aviation Allowance as ‘all purpose’. It was expressed as a flat hourly allowance (see para [13]). She accepted that the wording in the Paton’s Agreement was not reproduced in the 2011 Agreement.

[37] Ms Stinson said that in a document provided to employees during the 2014 Agreement negotiations, reference was made to the Modern Award and the fact that the Aviation Allowance was not an ‘all purpose’ allowance in the Modern Award.

Ms Rebecca Jansen

[38] Ms Jansen has been employed in two roles with MSS since 14 November 2012. She is the HR Manager for South Australia and the Northern Territory and lead HR person across the business responsible for aviation sites in the Northern Territory, Victoria, Queensland and Tasmania. Her evidence dealt with the industrial coverage and application of the Aviation Allowance across these jurisdictions. She said that to the best of her knowledge, the Aviation Allowance has always been calculated on a ‘stand alone’ basis in MSS agreements for aviation services in Queensland, Western Australia and Victoria. She attached a spreadsheet showing various 2012 – 2015 payslips of employees in each of these States to demonstrate how MSS has always calculated the Aviation Allowance.

[39] In cross examination, Ms Jansen explained that she had established her understanding of the calculation of the Aviation Allowance by reviewing past and present agreements and payroll records from MSS sources in each State. Ms Jansen confirmed that in the Western Australia and Victorian agreements the allowance is not expressed as ‘all purpose’, while it is in Queensland. Ms Jansen acknowledged that the data in the spreadsheet referred to above was not the same data the employees would see on their pay slip. However, employees have separate entries for the Aviation Allowance on their pay slips.

For the Union

Mr Damien Davie

[40] Mr Davie is the Union’s Queensland Branch Coordinator representing workers in the security industry, including those employed by MSS. Mr Davie was the Union’s lead negotiator for the 2014 Agreement. These negotiations commenced in about March 2014 and Mr Davie attended 10 negotiation meetings during that time. Mr Davie said that in the third, fourth and fifth meetings there was discussion around MSS’s proposal to remove the words ‘all purpose’ from the Aviation Allowance clause. Mr Davie believed this was contrary to the assurance, given to the Union when MSS took over ISS contracts, that it would continue paying airport security employees, the same pay and allowances provided for in the ISS Agreement. Mr Davie said that in early 2014 he had been informed by Mr McKeown, the Union Organiser, that MSS had not been paying the Aviation Allowance as an ‘all purpose’ allowance since taking over the ISS contract. Mr Davie referred to a Union Bulletin dated June 2013, which explained to members how the allowances should operate:

[41] Mr Davie claimed that when he put the Union’s view that MSS’s interpretation was incorrect during the 2014 meetings, no one from MSS responded. Mr Davie also provided MSS negotiators with a fact sheet which set out the definition of ‘all purpose’ as follows:

[42] Mr Davie believed that the draft 2014 Agreement was rejected by employees due to three key issues, one being MSS’s proposal to remove the words ‘all purpose’ from the clause. At the time, Mr Davie held discussions with the bargaining team about the issue and instructed them to discuss it with members, so that they could make an informed decision.

[43] Mr Davie said that in negotiations following the ‘No’ vote, MSS changed the key three issues and restored the phrase ‘all purpose’ to the Aviation Allowance clause. Mr Davie agreed that Mr Grasso had said what he set out in his statement (see para [22] above). However, Mr Davie had responded with words to the effect of:

[44] It was Mr Davie’s evidence that the calculation of the Aviation Allowance was not disputed in the negotiations for the 2011 Agreement, because the wording was clear and, in any event, the Aviation Allowance was not relevant, because MSS did not hold any aviation contracts in Queensland at the time. Mr Davie noted that as the MSS Agreements in Western Australia and Victoria do not express the Aviation Allowance as being ‘all purpose’, MSS’s reliance on them was irrelevant.

Mr David Anthony Conn

[45] Mr Conn commenced employment with ISS Security at Gold Coast Airport around February 2006. He was relocated to Brisbane’s Qantas Domestic Airport in or around January 2012. Mr Conn is a Union delegate. Mr Conn claimed that during his period of employment with ISS, he was paid the Transport (Aviation) Allowance as an ‘all purpose’ allowance. It was added to the base rate of pay and included in leave, penalty rates and other payments. It appeared in Schedule B to the ISS Agreement and was expressed as an ‘all purpose’ allowance.

[46] Mr Conn said that when he transferred to MSS in November 2012, he had a meeting with Mr Grasso. Mr Grasso had told him:

Shortly after commencing employment with MSS, Mr Conn noticed differences to his actual pay in his payslip and that there were issues around the Transitional Allowance and the Aviation Allowance. The Union Organiser, Mr McKeown told him that MSS had advised him that: ‘The Transitional Allowance was a 15% loading plus the difference between ISS Security and MSS Security rates.’ Mr Conn said he was confused at the time. In May 2013, there were a number of meetings with Management concerning pay and the two allowances. It turned out that in respect to the Transitional Allowance, employees had been overpaid. However, in respect to the Aviation Allowance, Mr Conn relied on an email from Mr Grasso to Mr McKeown on 17 May 2013 which read as follows:

[47] Mr Conn referred to another email exchange between Mr Grasso and Mr McKeown in August 2013 with extracts as follows:

 

Mr McKeown:

On another note while checking your “dummy” pay slip I think there is a problem with how MSS are applying the transport (aviation) allowance. It is supposed to be all purpose. This means it gets added to the base rate and penalties are then paid on it. Could you have a look at this for us? I can arrange to get a couple of ISS pay slips early next week if it will help.

 

Mr Grasso:

As discussed, I wish to summarise the content of our discussion as it relates to the “All purpose allowance”. For the purpose of application, MSS Security applies the Aviation allowance (or transport allowance as identified by ISS) as an all purpose allowance meaning it is applied per hour paid, including Overtime and Annual Leave, however it is not added to the base rate. I understand you are of the view that the Aviation allowance should be added to the base rate then penalties applied. As agreed you will provide further information in this regard however I also understand this may not be forthcoming for a week or two due to your other competing commitments. I will await further advice and supporting information from you.

Mr Conn added that later in 2013, during a meeting with Mr Grasso and Ms Stinson MSS’s response was, ‘You can take it to Fair Work’.

[48] Mr Conn described his understanding of the negotiations for the 2014 Agreement. His evidence is similar to that of Mr Davie. I will not repeat it here. However, Mr Conn described the discussion of the Airport Allowance issue between Mr Davie and Mr Grasso as ‘robust’. Mr Conn said that in the negotiations after the ‘No’ vote, MSS put out an ‘update’ which stated in part:

[49] It was Mr Conn’s evidence that from November 2014 to March 2015, when the Union was seeking authorisation from its members for access to their pay records to prepare for an application to the Commission, it drew a distinction between two groups of employees – being Aggregated Rates and Non-Aggregated Rates employees. It was the Union’s consistent position that Aggregated Rates employees were not entitled to the Aviation Allowance on an ‘all purpose’ basis.

[50] In cross examination, Mr Conn was asked to recall the discussions in 2012, when MSS took over the ISS contract. He acknowledged that Mr Grasso gave an assurance at the time that MSS had agreed with the Union to pay the same rates of pay and allowances that ISS had paid its employees.

[51] Mr Conn accepted that from February 2013 he could see from his payslip that the Aviation Allowance appeared as a ‘stand alone’ allowance and this continued to be the case. He conceded that when he voted for the 2014 Agreement, he knew MSS was applying the allowance on a non-compounded basis. However, because of issues with the Transitional Allowance, he was confused as to what his overall pay included. However, he was not confused as to how MSS was applying the Aviation Allowance in 2014, because it was based upon the same words as appeared in the 2011 Agreement.

[52] Mr Conn accepted that after the first ‘No’ vote for the 2014 Agreement, it was MSS’s position that the Aviation Allowance was paid on a non-compounded basis and it would continue to do so. This was despite the Union’s continued opposition to MSS’s interpretation.

[53] In reply statements Mr Grasso denied having said during briefings with the Union when MSS won the Queensland contract, that ‘you will not take a pay cut. You will get exactly the same as ISS’. What he did say was that MSS was committed to paying the same rates and allowances as prescribed by the ISS Agreement. He did not discuss how rates were calculated and, at no time, did he confirm that the Aviation Allowance would be subject to compounding. This was also Ms Stinson’s evidence in reply.

[54] Mr Grasso said the email he had sent to Mr McKeown on 29 August 2013, confirmed MSS’s position and practice of paying the Aviation Allowance on paid leave. It made clear that it was calculated on a per hour ‘stand alone’ basis. This was reiterated in a meeting with the Union in November 2013. Mr Grasso insisted that MSS had never told employees it was changing the method of calculating the allowance. The only method employees ever saw was how MSS had always calculated it on a ‘stand alone’ basis.

[55] In her reply statement Ms Stinson referred to Mr Conn’s payslip which disclosed how the allowance was calculated when he was on annual leave. For the fortnight ended 15 November 2015, Mr Conn was on annual leave for 32.25 hours and worked 37.5 hours at ordinary time and 20.75 hours of overtime. The payslip showed that the Aviation Allowance of $143.25 was based on his hours worked and the annual leave hours (95.5 hours at $1.50 = $143.25).

[56] Ms Stinson said that the Union did not make a distinction between ‘Aggregated Rates’ employees and ‘non Aggregated Rates’ employees during the negotiations for the 2014 Agreement. This was the first occasion (during this case) the Union had sought to do so. MSS had always calculated the Aviation Allowance on a ‘stand alone’ basis for both groups of employees and this was reflected on the employees’ payslips. Ms Stinson reiterated that she and Mr Grasso had always maintained that the Aviation Allowance is paid on a ‘stand alone’ basis. Despite reinstating the words ‘all purpose’ after the first failed vote for the 2014 Agreement, and the Union pressing for its interpretation to be accepted, she and Mr Grasso insisted the inclusion of the words did not alter MSS’s calculation of the Aviation Allowance, including when the same words were reproduced from the 2011 Agreement.

[57] Ms Stinson denied that MSS had no aviation security contracts in Queensland during the negotiations for the 2011 Agreement. MSS obtained the contract for Bundaberg Airport in July 2012 and the security employees under the 2011 Agreement were paid the Aviation Allowance on a ‘stand alone’ basis. Ms Stinson supplied sample payslips from July to December 2012 for two of the Bundaberg Airport officers to demonstrate her evidence on this point. These employees were eligible to vote for, and are now covered by the 2014 Agreement.

SUBMISSIONS

For the applicant

[58] In opening submissions, MSS set out the crux of the issue in this arbitration as being whether there was an ambiguity or uncertainty in respect to the calculation of the Aviation Allowance under the 2011 and 2014 Agreements. It was MSS’s contention that the Aviation Allowance is applied for each hour worked on a ‘stand alone’ basis, whereas the Union contends the Allowance is added to the base rate of pay before calculating penalty and overtime loadings, ie. on a compounding basis. Under s 217 of the Act, the Commission has the discretionary power to remove an ambiguity or uncertainty based on the parties’ respective arguments. This exercise should have regard to the mutual intention of the parties at the time the Agreements were made. MSS submitted that the parties’ mutual intention can be discerned from:

[59] MSS dealt with the industrial and historical context of the Aviation Allowance. When MSS commenced work at Queensland airports in February 2013, the Modern Award’s approach to the Aviation Allowance was on a ‘stand alone’ basis. Since that time MSS has continued to apply that approach. At no time, has MSS indicated it intended to adopt a different approach; let alone agree to a different approach.

[60] MSS observed that its method of calculation was the same that ISS had applied, prior to it losing the Queensland contracts. Employees would have well understood that one calculation had always applied. Moreover, in 2012, the Union had attempted and failed to have the Commission decide the same case it had run in this matter; See: United Voice v ISS Security. MSS submitted that it was ‘spurious’ for the Union to argue that the employees believed they were voting for a different method of calculation to that which had historically applied when the wording in the 2011 and 2014 Agreements was the same. MSS had only sought to remove the words ‘all purpose’ during the 2014 negotiations to make it absolutely clear what was the proper method of calculation. In addition, there was never any communication or words that suggested that MSS had changed its position.

[61] MSS submitted (correctly) that the Commission’s first task in the interpretive exercise under s 217 of the Act, is to establish whether an ambiguity or uncertainty exists. Only then is the Commission empowered to remove the uncertainty or ambiguity by varying the clause in the Agreements. The first task involves an objective assessment of the words ‘all purpose allowance will apply per hour’, given the context and purpose of the clause.

[62] MSS rejected the Union’s contention that the words ‘all purpose’ have a well understood meaning and there is nothing in the text of the Agreements to contradict that ordinary meaning. MSS noted that the Aviation Allowance is payable, and has been payable while employees are on annual leave, but it refutes the contention that the Aviation Allowance forms part of the base rate for the purpose of calculating payments for overtime and penalty payments. The well established and favoured approach when interpreting an enterprise agreement is not to take a pedantic or narrow view as to interpretation; See: The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited [2014] FWCFB 7447 (‘Golden Cockerel’). It was submitted that the contentious words ‘all-purpose allowance will apply per hour’ are open to different interpretations. Moreover, when read in context, it becomes apparent that the words were never intended to have the effect argued for by the Union.

[63] Attention was directed by MSS to the concept of the Aggregated Rates uniformly applying in both Agreements. The Aggregated Rates applied to full time employees who worked 12 hour shifts in a pattern of two days on, followed by two nights on, followed by four days off for at least eight consecutive weeks. The Aggregated Rates is defined to include ‘penalties that would otherwise be applicable for work at night, on weekends and public holidays…’ The Aviation Allowance is an additional and separate entitlement paid to Aggregated Rates employees on an hour by hour basis. This is a compelling explanation for the correct interpretation contended for by MSS. Had it been the intention to apply the Aviation Allowance in the manner contended for by the Union, it would have required the ‘unscrambling’ of the Aggregated Rates and then the inclusion of the Aviation Allowance. This would not make sense. It would result in ‘double dipping’ and be inconsistent with what the parties had intended.

[64] MSS relied on the decision of Spencer C in United Voice v ISS Security in which the Union had argued and lost the same argument that it had advanced in this case. Spencer C was asked to determine whether the then ‘all purpose’ Transport Allowance should have been added to the base rate of pay before the calculation of the aggregated weekly hourly rates ie. on a compounded basis. The Commissioner found that:

[65] MSS submitted that in the present case, the evidence was that MSS had always paid the Aviation Allowance on a ‘stand alone’ basis in Queensland and nationally. The two agreements contain provisions for Aggregated Rates and there is no mechanism to break down Aggregated Rates of pay. MSS agreed that it did seek to remove the words ‘all purpose’ during the 2014 negotiations. Nevertheless, the employees voted down the proposed agreement based on issues more important to them, such as wage increases and repayments of overpayments. At no time, despite the Union’s opposing view, did MSS express a different approach to how it always had, and intended to apply the Aviation Allowance. The words of the Aviation Allowance clause had not changed since the 2011 Agreement and the Union had never suggested wording to make the words clearer. It was plainly never the objective intention of the parties to apply the Aviation Allowance any differently to how it had always been applied. MSS submitted that the mere fact there are competing constructions of the Aviation Allowance demonstrates ambiguity or uncertainty, which should be rectified in terms of the proposed draft variation to the clause (see para [5] above).

[66] In oral submissions, Mr Dalton examined a number of well-known authorities concerning the interpretive process of enterprise agreements, including the Full Bench decision in Tenix Defence Systems Pty Limited [PR917548], 9 May 2002 per Ross VP, O’Callaghan SDP and Foggo C (‘Tenix’). In that case, the Full Bench held that a disputed provision needs to be considered by reference to the other provisions of the agreement which interact with it. Mr Dalton submitted that in this case the threshold or ambiguity for uncertainty was easily reached, not only for Aggregated Rate employees where the position is obvious, but also for Non-Aggregated Rate employees, where it might be said that the position is less clear. Mr Dalton proceeded to demonstrate that the Aggregated Rates do not include a component for Aviation Allowance because of the definition. This was plainly consistent with the analysis of Spencer C in United Voice v ISS Security in which the Commissioner said at para [74]:

[67] Mr Dalton put that the Union’s case went ‘perilously close’ to conceding that MSS’ contention applied to Aggregated Rates employees. As to the Non-Aggregated Rates employees, Mr Dalton also relied on Spencer C’s decision and added that while the Union claims ‘all purpose’ has a generalised and well understood meaning, one needs to look at other entitlements, such as loadings, penalties and overtime and ask whether the language used in these provisions, picks up the Aviation Allowance in a way which indicates it is to be compounded. Mr Dalton said that inconsistent terminology and undefined terms emphasise the ambiguity. Mr Dalton also relied on the Full Bench Decision in Four Yearly Review of Modern Awards [2015] FWCFB 4658 (‘Modern Award Review Decision’), which recognised, that despite some general understanding of the meaning of ‘all purpose’, the Bench left it open for a party to make an application to depart from the general understanding in specific circumstances.

[68] Mr Dalton relied on the evidence of Mr Grasso and Ms Stinson to support the existence of the mutual intention of the parties when negotiating the 2011 and 2014 Agreements and of a historical context in which MSS had never applied the Aviation Allowance in Queensland, Western Australia and Victoria in the manner contended for by the Union. Mr Dalton referred specifically to the words in Schedule A, para 4(c) of the 2011 Agreement which sets out that for Aggregated Rates employees, overtime is paid after 84 hours per fortnight. This means that any hours worked after 84 hours are paid at double time with the Aviation Allowance added, not compounded and for Non-Aggregated Rates employees, any overtime after ordinary hours is also paid double time. Mr Dalton opined that there is no reason why overtime would be treated differently for the two groups of employees in respect to the Aviation Allowance.

[69] Mr Dalton submitted that the mutual intention was clear when the employees voted for the 2014 Agreement in circumstances where MSS’s position was unambiguously the status quo. Mr Dalton relied on Mr Conn’s evidence that he well understood, from day one, that the Aviation Allowance was not paid on a compounded basis and that the Company’s position, right up to the 2014 Agreement, was that its interpretation was correct. The employees were never left in any doubt. The fact the Union disagreed at the time and kept its own counsel in order to worry about it later, was its choice. The revised offer was a package. It was clear that the employees knew MSS would continue to apply the Aviation Allowance on a ‘stand alone’ basis.

[70] Mr Dalton rejected any suggestion that the proposed removal of the words ‘all purpose’ was an implied acknowledgement that the Union’s interpretation was correct. The Union did not say anything to the employees to indicate that MSS had changed its view or accepted the Union’s interpretation. There was always a risk that MSS would seek to have the Commission make the interpretation clear beyond doubt. Mr Dalton noted that the annual leave clause makes it plain that the Aviation Allowance is paid on annual leave. This is to be contrasted to other provisions of the Agreement such as overtime and penalties.

[71] As to question of whether the Commission has the power to vary an expired and replaced Agreement Mr Dalton relied on a decision of Watson VP in Qantas Airways Limited [PR550766], 16 June 2014 (the ‘Qantas Short Haul Pilots Case’). In that case, His Honour made orders of retrospectivity, which were subsequently upheld by the Full Bench on appeal; See: Australian and International Pilots Association v Qantas Airways Limited [2014] FWCFB 8199. His Honour was persuaded that the Agreement needed to be varied to reflect the mutual intention of the parties. The Order was made retrospectively for seven years; See: [PR552082]. Mr Dalton submitted that while s 58 of the Act states that an agreement ceases operation if another agreement replaces it if it covers the same persons, s 58 is there for other purposes and is not applicable under s 217 of the Act. He claimed that the legislature could not have intended to deny an applicant on opportunity to pursue its legal rights going back at least six years, if an agreement expired only a year before the claim is made.

[72] Mr Dalton said that the purpose of s 217 of the Act was to equip the industrial specialist tribunal with the armoury to vary agreements in appropriate circumstances, so as to avoid litigation in the Courts which are ‘stuck’ with the words and which have limited tools for interpreting agreements. Mr Dalton also relied on a High Court Judgement in Re Brack & Ors; Ex parte Operative Painters & Decorators Union of Australia (1984) 7 IR 117 which found that the Federal Court and the Commission may make different findings about the same subject matter. This was because, in that case, the Commission examined the actual intention and industrial merit to decide whether a particular allowance was limited to the construction industry.

For the Union

[73] Mr Reed opposed the application to vary the two agreements. Firstly, he submitted that the Commission has no power to make an order of variation in respect to the 2011 Agreement as that Agreement had expired and was replaced and was therefore no longer operative. The language of s 217 is in the present tense and applies only in relation to an agreement which is in operation at the time that the order is made. Mr Reed submitted that the effect of ss 53, 54 and 58 of the Act is that:

To allow the Commission to retrospectively vary an agreement after it ceased to operate would be an illogical and absurd result which had the potential to ‘wreak havoc’ with rights and liabilities when the agreement was in force.

[74] Mr Reed set out the three steps in the interpretive exercise.

Mr Reed relied on the authorities dealing with the interpretation of industrial instruments, in particular Golden Cockerel. He added in particular, that it is not permissible to have regard to the conduct of the parties, subsequent to the making of the agreement: See: Australian Municipal, Administrative, Clerical & Services Union v Treasurer (Cth) (1998) 82 FCR 175; [1998] FCA 249 and Silcar Pty Ltd v "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) [2011] FWA 1083.

[75] Mr Reed submitted that there is no ambiguity or uncertainty in the words ‘all purpose allowance will apply per hour’. The concept is well understood in an industrial relations context and MSS could point to no authority which contradicted this obvious understanding. There is no qualifying language and the words used are plain and have the usual meaning; namely, that the Aviation Allowance is part of the base or ordinary rate of pay for the purposes of calculating penalties and other forms of leave; See: The Australasian Meat Industry Employees Union v Woolworths Limited trading as Brismeat [2015] FWCFB 1004 (‘AMIEU v Brismeat’) at [25]; Mechanical Maintenance Solutions Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors [2014] FWC 9163 (‘MMS v CEPU’) at para [17]; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors v Mechanical Maintenance Solutions Pty Ltd [2015] FWCFB 1769 (‘CEPU v MMS’) at paras [7]–[8]; and United Voice v ISS Security.

[76] Mr Reed said that the reliance on the awareness of the employees of the method used by MSS to calculate the Aviation Allowance merely demonstrated the subjective intentions or expectations of MSS. Such considerations are irrelevant to the objective construction of the words. Mr Reed said that the evidence of surrounding circumstances was that:

[77] Mr Reed put that since MSS had been required to pay the Aviation Allowance, it had adopted a ‘perverse or idiosyncratic interpretation’, that it is paid on a ‘stand alone’ basis, even though it is applied to annual leave and public holidays. Mr Reed emphasised that the Union had never accepted MSS’s interpretation, nor was there any evidence that the interpretation had been accepted as the intention of the parties.

[78] Mr Reed rejected MSS’s reliance on the Aggregated Rates in the Agreement and the decision in United Voice v ISS Security in circumstances where only 12 of the 220 employees to whom the Aviation Allowance applies, are paid Aggregated Rates. It was highly unlikely that the Aggregated Rates was within the contemplation of parties negotiating the Aviation Allowance. However, Mr Reed conceded that the reach of the ‘all purpose’ nature of the Aviation Allowance would not apply to 5% of the workforce. Mr Reed submitted that the decision in United Voice v ISS Security had no application to the issues in this case, as it dealt with a different matter, in circumstances where the Aggregated Rates had been the subject of prior agreement.

[79] Mr Reed put that even if an ambiguity was established, the Commission would not exercise its discretion to vary the clause. Moreover, MSS seeks to vary the clause to reflect its subjective intention or to validate its practice, which is contrary to authority. The application should be dismissed. Alternatively, if the Commission was minded to vary the Agreements it should make clear that Aggregated Rates employees receive the Aviation Allowance in addition to the Aggregated Rates of pay.

[80] In oral submissions Mr Reed put that the only sensible construction of s 217 of the Act was that the power ‘to vary an enterprise agreement’ must be an enterprise agreement in operation. Even Watson VP in Re Australian and International Pilots Association (2007) 162 IR 121; [2007] AIRC 303 (‘Re AIPA’) observed that s 170MD of the Workplace Relations Act 1996 (the equivalent of s 217 under the present Act) was a limited power because the process of otherwise varying a collective agreement, requires a majority of employees approving the variation. Moreover, if the Parliament had intended to expand the limited power to non-operative agreements, then one would expect the section would have said so. Nor was it a logical or sensible proposition for an application to be made many years after an agreement has ceased to operate.

[81] Mr Reed put that, in any event, the Commission would dismiss MSS’s application because the phrase ‘all purpose allowance will apply per hour’ is neither ambiguous nor uncertain. Mr Reed relied on a number of other authorities not previously referred to, including CoINVEST Limited, Re Visionstream Certified Agreement 2011 (2004) 134 IR 43; Print PR947076, 25 May 2004, to support the proposition that the Commission must be positively satisfied of the existence of an ambiguity before moving to the next step; See also: Tenix, SJ Higgins Pty Ltd and Others v Construction, Forestry, Mining and Energy Union, Print PR903843, 2 May 2001 (‘SJ Higgins’) and Re Victorian Public Transport Corporation, Dec 1253/95 M Print M2454, 7 June 1995. Mr Reed emphasised the following passage from SJ Higgins at para 49:

[82] Mr Reed submitted that while MSS was fixated on its own subjective views as to what the words meant, this had not been the mutual intention of the parties. After referring to Re AIPA, Mr Reed emphasised the difference in process between agreement and award making. Objective intention was the relevant starting point. See: Teys Australia Beenleigh Pty Ltd v Australasian Meat Industry Employees Union (No 2) [2016] FCA 2, citing Toll (FGCT) Pty Ltd v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52.

[83] Mr Reed put that the use of the words ‘per hour’ in the Aviation Allowance is merely to differentiate it from a weekly allowance; the real focus should be on the concept of ‘all purpose’ allowance which has a plain and well accepted meaning. Mr Reed referred to the authorities set out at para [75] above and submitted:

[84] Mr Reed rejected Mr Dalton’s reliance on a number of contextual and extrinsic matters to take the words out of their ordinary meaning. Mr Reed said that there was never any understanding by the Union and MSS as to what was meant by the term ‘all purpose’. Mr Reed put that asking what the employees understood they were offered, was the wrong question. Mr Reed argued that despite Mr Conn’s concessions, he was but one person on the Negotiating Committee. His evidence does not prove that there was some accepted understanding of what the clause meant. It was, in any event, a subjective view.

[85] As to the Union’s reliance on the Aggregated Rates employees, Mr Reed conceded that Aggregated Rates were set by agreement to include some penalties. Spencer C’s decision does no more than confirm that arrangement. In any event, for the bulk of the workforce (95%) the term ‘all purpose’ allowance has a common meaning. Mr Reed noted that reliance on the other MSS Agreements, was misplaced, given they do not express the Aviation Allowance as ‘all purpose’. Mr Reed suggested that when MSS sought to remove the words ‘all purpose’ during the negotiations for the 2014 Agreement it clearly knew it had a problem. The removal of the words was a major factor in the ‘No’ vote for the proposed agreement. Mr Reed accepted that the subjective views of both sides are not relevant.

[86] In summary, Mr Reed put that what MSS is trying to do is to rewrite the Agreements to reflect its subjective intention or to validate a practice it adopted in its own self-interest; a position which was never accepted by the Union or its members. The application should be dismissed. In the alternative, the Commission might see merit in making it clear that for Aggregated Rates employees, the Aviation Allowance is paid in addition to the Aggregated Rates, for all purposes.

[87] In reply, Mr Dalton relied on a Full Bench decision in "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Toyota Motor Corporation Australia [2011] FWAFB 2132 where the Commission upheld the making of a respective variation order to the commencement of the Agreement. (As a result of a question from me, Mr Dalton subsequently supplied me with a note in which he advised he had been unable to find any authority for varying an Agreement which was no longer operative. He added that, on the other hand, he could not find any authority which said that the Commission could not do so).

[88] Mr Dalton submitted that such power would be consistent with the potential for civil legal proceedings in a Court where liability can go back six years. Mr Dalton observed that the 2014 Agreement had a very broad description of a dispute and it was how Spencer C in United Voice v ISS Security dealt with a similarly broad disputes procedure; to determine the interpretation of the terms in two expired predecessor agreements (the 2005 and 2009 ISS Agreements). He noted that, similarly, MSS had filed a s 739 dispute related to this matter (see earlier para [3]).

CONSIDERATION

Statutory provisions and principles of enterprise agreement interpretation

[89] Section 217 of the Act deals with the powers of the Commission to vary the provisions of an enterprise agreement to remove an ambiguity or uncertainty. I set out the terms of the section below:

217 Variation of an enterprise agreement to remove an ambiguity or uncertainty

[90] Both parties are ad idem as to the legal principles the Commission is to apply in respect to the interpretation of an enterprise agreement. These principles have evolved from a long line of authorities dealing with the interpretation of industrial instruments generally and specifically, in respect to enterprise agreements; See: Short v FW Hercus (1993) 40 FCR 511; [1993] FCA 72, Kucks v CSR Ltd (1996) 66 IR 182; Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24 and Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241; [2005] HCA 10. A more contemporary authority which has distilled these principles is found in Golden Cockerel, a recent decision of the Full Bench in which it was said at par 41:

[91] As Mr Dalton and Mr Reed correctly submitted, Golden Cockerel makes clear that the interpretative exercise is a three stage process. Firstly, the task begins with an objective determination of whether the disputed terms have a plain and ordinary meaning or are ambiguous, uncertain or susceptible to more than one meaning. If the terms have a plain and ordinary meaning, evidence of surrounding circumstances will not be permitted to contradict the plain meaning. The Union in this case, contends that the Commission need not look to the surrounding circumstances or the common intention of the parties’, viewed objectively, because the words ‘all purpose’ have a traditional, common sense and well understood industrial meaning and that ends the matter - MSS’s application must be dismissed. For reasons which I will develop shortly, I do not agree. Secondly, in considering the surrounding circumstances, the Commission is obliged to have regard for the context and purpose of the disputed terms, given the text of the agreement as a whole, and the placement (interaction) and arrangement of the terms in the agreement. Thirdly, if ambiguity or uncertainty is established, the Commission may vary the clause to correct the ambiguity or uncertainty. This is an exercise of discretion. However, this does not mean the Commission can rewrite the clause, adding words or deleting them, merely to achieve what might be said to be a fair or just outcome. This is impermissible under the principles. I intend to adopt the Golden Cockerel principles to the interpretive task ahead. However, I will firstly discuss the other jurisdictional issue in this case.

Does the Commission have the power to vary an enterprise agreement which has been replaced and is no longer in operation?

[92] This is a unique and relatively novel question. Answering it is not without some difficulty. There is no authority – Full Bench or otherwise – which has addressed this issue. Mr Dalton conceded as much, although he conversely submitted that there is apparently no authority to prevent the Commission from answering the question in the affirmative. Mr Dalton relied on a decision of the Commission, under Schedule 3, Items 10 and 11 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 and s 218 of the Act, which dealt with whether a variation to an existing agreement arising from a finding of an ambiguity or uncertainty should be made; See: Qantas Short Haul Pilots Case. Obviously, the distinguishing feature between the Qantas Short Haul Pilots Case and this case, is that Watson VP varied an industrial instrument which was within its nominal term. His Honour made the variation retrospectively to the commencement of the Agreement which the affected employees were covered by at the relevant time. His Honour’s decision was subject to an appeal and the appeal was unsuccessful. In the result, it must be accepted that there is no jurisdictional impediment to the Commission, when exercising its powers under s 217 of the Act, to give retrospective effect to a variation to the terms of a non-expired enterprise agreement, including to its commencement date. Plainly, that is not the circumstance here. MSS proposes the Commission vary the 2011 Agreement which expired on 1 July 2014 and which was then replaced by the 2014 Agreement. Unsurprisingly, Mr Reed relied on ss 53, 54 and 58 of the Act to argue that there is no power for the Commission to vary a replaced agreement. These provisions deal with the coverage of an enterprise agreement, when an enterprise agreement is in operation and only one enterprise agreement can apply to an employee at a particular time. I set out the terms of ss 53, 54 and 58 of the Act as follows:

53 When an enterprise agreement covers an employer, employee or employee organisation

54 When an enterprise agreement is in operation

58 Only one enterprise agreement can apply to an employee

[93] It seems to me that the Commission is assisted in answering this jurisdictional issue, by posing a different question. Do any of the terms of the Fair Work Act 2009, and s 58 in particular, prevent a person from pursuing rights, such as unpaid entitlements, which may have arisen under an expired and replaced agreement? Of course the answer to that question is unequivocally no. Viewed from this perspective it seems to me that there is a certain inconsistency with the Union’s submissions and its own actions, remembering that the Union has an adjourned application before the FCC to do precisely what it says MSS cannot do in this case. Put another way, the Union relies on the terms of the expired 2011 Agreement to pursue claims for underpayment for its members, while arguing in this case that the 2011 Agreement cannot be varied to remove an ambiguity or uncertainty.

[94] In addition, there is a sense of irony (if not a bit of cheekiness) that the Union sought in 2013 to have the Commission interpret the corresponding Aviation Allowance provisions in the expired 2005 and 2009 ISS Agreements for the same employees later covered by the 2011 Agreement and now by the 2014 Agreement; See: United Voice v ISS Security. Both the 2005 and 2009 Agreements had ceased to operate. The relevant clauses under these two Agreements are set out at para [8] of this decision. I accept that this case was brought under s 739 of the Act; but to my mind, the underlying objective in that and this case is the same; the interpretation of an expired and replaced agreement.

[95] It is worth noting that there is some controversy about whether a person can bring a dispute under a dispute settlement procedure about matters arising under an expired agreement. This question was considered in Stephenson v Abetz, Print PR952743, 28 October 2014 (‘Stephenson’) where the Full Bench concluded it was not open to do so. However, Lawler VP noted in Grabovsky v United Protestant Association of NSW Ltd T/A UPA [2015] FWC 2504 that a person’s rights or entitlements continue beyond cessation of a contract. At paras [52]-[55] His Honour expressed concern with the ratio in Stephenson as follows:

[96] Having been slightly diverted, I return to the question I postulated earlier. It seems to me that there is no reason – let alone a compelling one – why the Commission would be prevented from varying an agreement to give clarity or certainty to unpaid entitlements said to have accrued under a non-operative agreement. As I said earlier, this is exactly what the Union is seeking in the FCC proceedings. It would be a curious result indeed, if the Commission could give clarity to the payment of entitlements arising under a non-operative agreement, that the same power could not conversely extend to giving clarity to whether an entitlement did not arise under the same agreement.

[97] I raise another matter concerning the express wording of s 217 of the Act. Without necessarily referring to the principles of statutory construction, I would observe that the words of s 217 ‘Fair Work Commission may vary an enterprise agreement’ do not distinguish between an expired and replaced enterprise agreement, an agreement within time and in operation, a greenfields agreement or a multi-enterprise agreement. There are no words of limitation or qualification. Accordingly, on this view, there is no impediment to the exercise of the Commission’s powers to vary an enterprise agreement (subject to an application under sub-sections (a), (b) and (c)), whether the agreement has ceased to operate or is in operation. In any event, I also observe that an expired agreement remains in operation until it is replaced. Thus, an expired agreement may remain in operation for many years after the end of its nominal term. In these circumstances, there would appear to be no doubt that an expired, but continuing agreement is able to be varied, under s 217 of the Act. This tells in favour of the proposition that the express language of s 217 applies generally to any enterprise agreement, whether replaced or not.

[98] Lastly, I note that the 2014 Agreement has been replaced by the MSS Security QLD Enterprise Agreement 2014 – 2018 [AE416905], operative from 8 December 2015 to 31 October 2018. This Agreement contains the same wording in respect to the Aviation and Sea Port Allowance found in the 2011 and 2014 Agreements. Seemingly, applying the same logic for which the Union contends, the Commission would have no power to even vary the 2014 Agreement, under s 217 of the Act, because it has expired and been replaced. I do not understand there to have been any submission by the Union to that effect. For the above reasons, I find that the Commission has the power under s 217 of the Act, to vary an enterprise agreement which has expired and been replaced.

Is there ambiguity or uncertainty with the words ‘all purpose’ in the Aviation Allowance clauses in the 2011 and 2014 Agreements?

[99] While I acknowledge the general industrial understanding of the words ‘all purpose’ is as the Union contends, it does not follow that it is a universal understanding in that there may be exceptions to that general understanding. For the following reasons, I consider the words ‘all purpose allowance’ used in the 2011 and 2014 Agreements’ Aviation Allowance clauses are examples of this exception.

[100] Firstly, the Union accepts that the current wording in the Agreements does not address the Aggregated Rates arrangement so as to easily accommodate the generally understood ‘all purpose’ Aviation Allowance. Indeed, the Union proposed that if any variation was considered necessary, it should only be to make clear that the Aviation Allowance applying to the Aggregated Rates employees is paid according to how MSS has been applying it since 2011. Mr Reed’s final submission was:

[101] In my view, there is no compelling reason why Aggregated Rates employees should be treated differently, let alone detrimentally, as demonstrated by Mr Dalton (see para [68] above). In my view, the small number of employees paid the Aggregated Rate is irrelevant. What is relevant is that both ‘non aggregate’ and ‘aggregate’ arrangements are provided for in both Agreements and this gives rise to an ambiguity or uncertainty as to why one approach to interpretation should be preferred over another. This is especially so when I think the better view is that the words in one clause of an agreement have the same meaning where they appear in another clause, except where the contrary intention is made clear.

[102] Secondly, in the Modern Award Review Decision, the Full Bench acknowledged that despite the general understanding of the meaning of ‘all purpose’, it was open to a party to make an application to depart from the general understanding in particular circumstances.

[103] Thirdly, I do not agree that the decision in United Voice v ISS Security is irrelevant to the present case. The Commissioner described the nature of the dispute in that case as ‘concerning the proper calculation of the aggregated rate, provided for in both Agreements, and the application of the “Transport Allowance (Previously known as “Aviation Allowance”)” (the Transport Allowance) in the calculation of the aggregated rate’ and the question the Commissioner was asked to answer was (at para [5]):

[104] With respect to Mr Reed, in my opinion, the Union in this case, argued for the same result it had failed to achieve in the dispute it lodged in 2013. It is plainly apparent that what it sought in 2013 is not substantively different to what was argued here, albeit that the mechanism the Union used to seek that result was through the interpretation of the terms of the then Agreement under the Disputes Procedure of the Agreement and s 739 of the Act. Spencer C referred specifically to the authorities and principles of interpreting enterprise agreements. In other words, the Union had lodged a dispute in 2013 to clarify the meaning of the same words which are in dispute in this case. It is difficult to reconcile that initiative with an argument that the United Voice v ISS Security is irrelevant in this case. More significantly however, by seeking clarity of the meaning of the same words in 2013 to those in the 2011 and 2014 Agreements it appears to me to be a plain demonstration that the Union accepts there is an ambiguity or uncertainty with the words. Thus, while it is understandable that the Union would seek to distance itself from the United Voice v ISS Security case, it really had no other choice. However, in my judgment this case is on ‘all fours’ with the arguments that were put in this case.

[105] Fourthly, Mr Reed relied on MMS v CEPU in support of the Union’s contentions. In my view, the issue before Gostencnik DP in MMS v CEPU was essentially the same as here. It does not assist the Union in this case. In simple terms, the contention of the Union in MMS v CEPU was that the shutdown/outage/flat allowance payable to casual employees should be calculated by adding the allowance to the ordinary rate of pay and then adding the casual loading. His Honour rejected this contention and adopted the approach of applying the 25% loading to the ordinary rate and then adding the allowance. An appeal Bench upheld His Honour’s conclusions. This is little different to what is being sought in this case, albeit by a different mechanism. It is akin to adding a penalty on top of another penalty. On one view, this case and United Voice v ISS Security should provide a complete answer to the Union’s contentions and a compelling basis for rejecting that Union’s submissions. But there are other reasons for doing so.

[106] Fifthly, I agree with Mr Dalton that within the two Agreements, there is inconsistent terminology and undefined terms which support the contention that ambiguity is created when interrelated clauses are to be applied and operate together.

[107] Sixthly, the contested issue is relatively straightforward. It is whether ‘all purpose’ means the Aviation Allowance is applied to the base rate of pay, before or after the inclusion of overtime or other penalty factors. In my view, the Union’s interpretation ultimately results in a penalty being paid on another penalty; See: "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v RACV Services Pty Ltd [2016] FWC 2845. While I accept the interpretative exercise is not about fairness, this produces a distorted outcome, no better demonstrated by the fact that the Aviation Allowance and the Union’s view would actually have a greater value for Non-Aggregated Rates employees to Aggregated Rates employees (see para [68]). In the absence of any evidence to the contrary I do not accept that this was the intended result of the parties negotiating the Agreements or the intention of the employees who voted for approval of the Agreements.

[108] It follows that I conclude that there is an ambiguity or uncertainty in the words used in the Aviation Allowance clause in the 2011 and 2014 Agreements. I turn then to the nature of the ambiguity and the competing contentions of the parties.

Mutual intentions

[109] In considering the surrounding circumstances to establish what the words ‘all purpose’ mean in the Aviation Allowance, I am persuaded that the intentions of the parties to the Agreements, namely the employees and the employer, point to the interpretation of the clause for which MSS contends. Mr Reed submitted that there was never any agreement or understanding from the Union as to the acceptance of the meaning of the Aviation Allowance, as contended for by MSS. That submission is obvious and undoubted. That said, I think Mr Reed elevated the Union’s standing in the enterprise agreement processes under Part 2-4, Div 3 of the Act to a level which it does not have through statutory fiat. It is not the Union’s agreement or otherwise which determines whether an agreement is submitted to the Commission for approval; it is a vote of the employees (s 182) in which the employees have genuinely agreed to the agreement. Indeed, there are many examples, where a bargaining agent (being the Union) is vigorously opposed to the approval of an Agreement, but it is nevertheless approved by the employees.

[110] It hardly needs stating that mutual intention does not mean agreement. This is the whole premise of bargaining – one side may give up something they would rather retain in exchange for something else. In other words, mutual intention can often mean accepting something to which you are opposed. When viewed in that light, the Union’s non-acceptance of MSS’s interpretation of the means of calculating the Aviation Allowance does not trump or override a mutual intention of what is intended to apply by historical practice.

[111] That is not to ignore the Union’s strenuous opposition to the MSS view or that the Union does not have the right to express its view and to have its intentions taken into account in its statutory capacity as an employee bargaining representative. However, what is important to understand is that under the scheme of the Act, Unions are no longer parties to enterprise agreements, as that notion had been understood for many years (save for greenfields agreements). This is not to demean or reduce the importance of the unions as direct bargaining representatives or default bargaining representatives for employees and for unions to be covered by the Agreement (s 201(2)), but the scheme of Part 2-4 of the Act, makes it plain that the emphasis in bargaining is on agreements reached between employers and employees. In my view, the distinction between being ‘covered’ by an enterprise agreement to being a ‘party’ to an agreement is not merely a distinction without a difference. It is why I consider the views and understanding of the employees as disclosed by their actions (what they understood they were voting for) as imperative to understanding their intention. These are not subjective views, but objective intentions. This discourse plainly demonstrates to me that mutual intention is not to be exclusively found in the intentions of the Union. Rather, it is the mutual intention of the employees to be covered by the agreement and the employer to which the prime focus should be directed.

[112] The undisputed evidence of Mr Grasso and Ms Stinson, which I accept, makes clear that since its first contracts at Queensland airports in 2010, MSS had never given any impression or suggestion, let alone commitment, to alter its view as to how the Aviation Allowance is calculated. Moreover, its view is reflected by its own conduct and actions over a number of years. Seeking to remove the words and restoring them during negotiations for the 2014 Agreement, is not an indicator that it believed it had a problem. Rather, it was to make the prevailing, longstanding and ongoing position crystal clear in the face of sporadic claims to the contrary by the Union. MSS never did or say anything which would have left an impression with the employees, who ultimately voted to approve the 2014 Agreement, that they were voting on something different in respect to the Aviation Allowance that had always been applied by MSS. I am reminded by what Lord Wilberforce said in Prenn v Simmonds [1971] 1 WLR 1381, at 1385:

[113] The evidence is that employees voted four times in favour of agreements which contained the words ‘all purpose’, but was not applied by the employer in the manner contended for by the Union (once where the former employer was ISS and three times where MSS was the employer in 2011, 2014 and 2015). It may be assumed that the Commission in approving the four Agreements was satisfied the employees had ‘genuinely’ agreed to the agreements (s188).

[114] It stretches credulity and is na�ve to submit that the employees did not know or were confused as to how the Aviation Allowance had always been calculated and how MSS intended to do so in the future. There was certainly no evidence to that effect, rather the evidence of Mr Conn was to the contrary, as was the evidence as to how the Aviation Allowance appeared and what the amount was, on the employees’ payslip. These are objective, not subjective factors.

[115] Accordingly, I am satisfied that the intention of the parties, being the employees and MSS, as to the calculation of the Aviation Allowance was as contended for by MSS. At this juncture, I refer to the Full Bench decision in Re Telstra Corporation Ltd (2005) 139 IR 141 and the following passage at paras 48–49:

[116] In the Qantas Short Haul Pilots Case cited by MSS, Watson VP said at paras [37]–[38]:

[117] Consequently, I propose to exercise my discretion to vary the Agreements to give effect to the mutual intention of the parties. I do not accept the submission that the proposed variation will result in the Commission rewriting the clause to reflect MSS’s subjective assessment or to validate MSS’s past practice. Correcting the ambiguity by variation will not rewrite the provision. It will do no more than clarify existing, longstanding and well understood arrangements. While not entirely relevant, I note that no employee will suffer any detriment or any reduction in current entitlements. Given the history of the matter, I am of the view that ongoing litigation and controversy as to calculation of the Aviation Allowance, is in no-one’s interest and should be resolved once and for all. Resolving the controversy is harmonious with the objectives of the Act.

[118] For the reasons herein expressed, I find as follows:

[119] Orders giving effect to these findings will be published contemporaneously with this Decision.

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DEPUTY PRESIDENT

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