[2020] FWCFB 4
FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.604—Appeal of decision

Transit Systems West Services Pty Ltd T/A Transit Systems West Services
v
Australian Rail, Tram and Bus Industry Union
(C2019/6694)

VICE PRESIDENT CATANZARITI
DEPUTY PRESIDENT SAMS
DEPUTY PRESIDENT SAUNDERS

SYDNEY, 6 JANUARY 2020

Appeal against decision [2019] FWC 6767 of Commissioner Cambridge at Sydney on 11 October 2019 in matter C2017/3235 – proper interpretation of copied State award – permission to appeal granted – appeal dismissed.

Introduction

[1] Transit Systems West Services Pty Ltd T/A Transit Systems West Services (Transit Systems) is in dispute with the Australian Rail, Tram and Bus Industry Union (RTBU) in relation to a decision made by Transit Systems not to make a payment to particular employees (Drivers), who were not rostered to work on Easter Saturday, 20 April 2019 (the Dispute).

[2] The RTBU filed an application in the Fair Work Commission (Commission) for it to deal with the Dispute pursuant to s 739 of the Fair Work Act 2009 (Cth) (Act). The Dispute was arbitrated by Commissioner Cambridge. The outcome of the arbitration turned on the proper construction of clause 67.3 of a copied State award formerly known as the State Transit Authority Bus Operations Enterprise (State) Award 2018 (STA Bus Award), which applies to the Drivers (Copied State Bus Award). The Commissioner determined that clause 67.3 of the Copied State Bus Award should be construed in the manner contended for by the RTBU (the Decision). 1 Transit Systems has appealed the Decision.

[3] The Commissioner’s principle task at first instance was to consider the proper construction of the relevant clause of the Copied State Bus Award, including the rights and obligations they conferred and imposed on Transit Systems and the Drivers, and then to consider whether Transit Systems’ conduct accorded with those rights and obligations. 2 It follows that, on appeal, the question before us is whether the Commissioner reached the correct conclusion, not whether the conclusion he reached was reasonably open to him. The Decision is not a discretionary one; the principles in House v The King3 do not apply.4

Background and Decision

[4] In 2018, the New South Wales Government privatised bus operations within a geographical region known as ‘region 6’, which includes part of Sydney’s inner west. One of the entities within the Transit Systems group of companies was awarded the contract to operate buses in region 6. Employees who had formerly been employed by the State of New South Wales were offered employment with Transit Systems. Those employees, including the Drivers, were covered by the STA Bus Award prior to the transfer. The transfer took effect on 1 July 2018.

[5] There is no dispute that the privatisation of bus operations in region 6 constituted a transfer of business from a non-national system employer that was a State public sector employer to a national system employer. By operation of Part 6-3A of the Act, to which we shall return in more detail later, the transfer of business gave rise to the creation of a new federal instrument, namely the Copied State Bus Award, which included the same terms as the STA Bus Award. The Copied State Bus Award applies to Transit Systems and the employees who were formerly employed by the State of New South Wales and covered by the STA Bus Award.

[6] In addition to being bound by the Copied State Bus Award, Transit Systems agreed with the New South Wales Government that a number of specific operational and human resource policies and procedures would transfer to Transit Systems and would be applicable for a defined period (subject to any change by consent). Further, Transit Systems agreed that following the relevant defined period, changes could only be made to an applicable policy or procedure after consultation with staff and unions.

[7] One of the operational and human resource policies and procedures which Transit Systems was bound to apply for at least 6 months following the transfer of business on 1 July 2018 was the Bank, Concessional Picnic and Public Holiday Procedure (Public Holiday Procedure). Clause 2.4.1 of the Public Holiday Procedure states:

2.4.1 Saturday Public Holiday Payment for Bus Operators

When a public holiday falls on a Saturday, Bus Operators who are rostered off will qualify for payment if they have worked at least 10 Saturdays in the preceding 12 months. Bus Operators employed within the last 12 months of the Saturday Public Holiday to be cleared as a “day off” worked are to have the decision for payment to be determined on a pro-rata basis.”

[8] There is no dispute that Transit Systems did not consult with affected staff and unions about changing clause 2.4.1 of the Public Holiday Procedure prior to Easter 2019.

[9] Clause 67.3 of the Copied State Award provides:

“A full-time employee who ordinarily works on a day on which a Public Holiday is proclaimed, but is rostered off, will be entitled to the Additional Payment based on the ordinary hours, which the Employee would have worked, but for the rostered day off, up to a maximum of 7.6 hours.”

[10] The Commissioner considered the history of both clause 67.3 of the Copied State Bus Award and clause 2.4.1 of the Public Holiday Procedure in determining the proper construction of clause 67.1. Relevantly, that history includes the fact that the RTBU notified the Industrial Relations Commission of New South Wales (NSW IRC) of an industrial dispute on 15 April 2013. 5 The dispute was described in that notification as follows:6

“The Union disputes State Transit Authority’s interpretation and implementation of sub clause 67.3 of the Bus Operators Award.”

[11] In 2013, clause 67.3 of the STA Bus Award was in the same terms as it is now in the Copied State Bus Award. The dispute in the NSW IRC was listed for conciliation before Justice Haylen on a number of separate days. It is plain from the transcript of those proceedings before Justice Haylen that the RTBU and the State of New South Wales (via the State Transit Authority) were in dispute in relation to the proper construction of clause 67.3.

[12] On 20 May 2013, following conciliation in the NSW IRC on 17 April 2013, the New South Wales Government sent a “without prejudice” letter in the following terms to Mr Gary Way, then President of the RTBU:

“Dear Mr Way

Re: IRC 13/271 – Dispute regarding the Saturday Public Holiday Payment

I refer to your letter of 10 May 2013 regarding the above.

State Transit has considered the RTBU’s proposal and can respond as follows:

In the interest of resolving the dispute, State Transit is prepared to make changes to the proposal detailed in the 25 March letter as follows:

(a) Bus Operators will qualify for payment of the Saturday Public Holiday when rostered off if they worked at least ten (10) Saturdays in the preceding 12 months, and

(b) In relation to Easter Saturday 20 March 2013, State Transit is prepared to extend the entitlement to Bus Operators who worked at least four (4) Saturdays in the previous 12 months.

I trust the above clarifies State Transit’s position on this matter and will assist in resolving this dispute…”

[13] On 12 June 2013, Mr Preston, appearing for the RTBU, and Mr Eldridge, appearing for the New South Wales Government, provided the following information to Justice Haylen: 7

“PRESTON: I would like to on record thank your Honour for your assistance in this matter. The union and the STA have come to an agreement in this particular matter, and that is there will be ten Saturdays required to receive a payment that falls on the public holiday if you are rostered off. Also in the agreement we have the Easter Saturday just gone will be treated under the same interpretation as 2012, therefore we can move forward on this, we believe. State Transit have an email they are going to read out which we have agreed to.

ELDRIDGE: I’ll read out a communication we have had with the RTBU

“Dear Mr Way,

State Transit is prepared to treat the 2013 Easter Saturday public holiday the same as the 2012 public holiday for pay purposes.

For future Saturday public holidays State Transit will treat any employee on a six day roster covered by the Bus Operators Award as entitled to be paid for the Saturday public holiday if rostered off, so long as they have worked ten or more Saturdays in the previous 12 months.

New employees will be treated on a pro rata basis to determine the number of Saturdays required to be worked to become entitled to payment.

Staff transferring from a non six day roster to a six day roster are to be treated the same as the new employees for the purposes of determining entitlement.”

HIS HONOUR: I take it, Mr Preston, on the reading of that statement the matter in dispute in 271 is resolved?

PRESTON: Yes, it is, your Honour. We thank you for your assistance.

HIS HONOUR: I close the file on that basis and congratulate the parties on their agreement.”

[14] Accordingly, it is clear that the RTBU and the State of New South Wales made an agreement on about 12 June 2013 to resolve their dispute about the proper construction of clause 67.3 of the STA Bus Award (2013 Agreement).

[15] The New South Wales Government complied with the 2013 Agreement between the period when it was made and the transfer of part of its business concerning the operation of buses in region 6 to Transit Systems on 1 July 2018. Furthermore, the New South Wales Government and the RTBU negotiated two further consent awards, in 2015 and 2017, to replace the STA Bus Award in operation at the time the 2013 Agreement was made. Each time the STA Bus Award was renegotiated and made by the NSW IRC, in 2015 and 2017, clause 67.3 remained in the same terms. The STA Bus Award renegotiated in 2017 commenced operation on 1 January 2018 and remained in force at the time the transfer of business took place on 1 July 2018.

[16] The evidence before the Commissioner did not reveal when clause 2.4.1 of the Public Holiday Procedure was first put in place, but the evidence did disclose that it was contained within a copy of the Public Holiday Procedure issued in September 2015 8 and remained in the Public Holiday Procedure at the time of the transfer on 1 July 2018.

[17] The approach taken by the Commission to the task of construing clause 67.3 of the Copied State Bus Award may be summarised as follows: 9

(a) The Commissioner examined the text of clause 67.3 of the Copied State Bus Award;

(b) The Commissioner recognised the nature and status of the industrial instrument under consideration. In particular, the Copied State Bus Award is not an enterprise agreement, nor is it a modern award;

(c) Although the STA Bus Award was made by the NSW IRC, it was made on the basis of consent by the RTBU and the New South Wales Government. The terms of the STA Bus Award were negotiated between the RTBU and the New South Wales Government in much the same way as the terms of an enterprise agreement are negotiated. As a consequence, the Copied State Bus Award is an industrial instrument which should appropriately attract, with necessary modification, the application of principles applicable to the task of construing an enterprise agreement. Those principles were summarised in paragraph [114] of the decision of the Full Bench of the Commission in AMWU v Berri10

(d) The construction of clause 67.3 of the Copied State Bus Award commences with a consideration of the ordinary meaning of the relevant words;

(e) It is relevant to have regard to whether any objectively determined common intention of the parties can be established;

(f) The relevant circumstances are somewhat unusual because the contested terms of the Copied State Bus Award were created without any involvement of Transit Systems. The parties that created the contested terms were the RTBU and the State of New South Wales. However, by operation of Part 6-3A of the Act, the transfer of business from the public sector to Transit Systems meant that Transit Systems has, “in a practical sense, inherited what might be described as the industrial legacy of the position of the STA”; 11

(g) In assessing the objective intention of the parties who made the STA Bus Award, it is relevant to have regard to the words and actions of the State of New South Wales and the RTBU. In particular, it is necessary to have regard to the making of the 2013 Agreement, the compliance with that 2013 Agreement after it was made, together with the fact that the STA Bus Award was renegotiated (without any amendment to clause 67.3) and made by the NSW IRC twice, once in 2015 and again in 2017, before the transfer of business to Transit Systems; and

(h) Clause 67.3 is ambiguous, particularly insofar as it relates to the meaning of the phrase “ordinarily works”. That ambiguity was resolved by the making of the 2013 Agreement and its consistent application thereafter. The terms of the 2013 Agreement reflect the objective intention of the parties when the STA Bus Award was made in 2017 and came into operation on 1 January 2018.

[18] The Commissioner determined the Dispute as follows: 12

[75] In respect to the primary question, having regard for all of the evidence that was presented, and by application of the principles relevant to the task of construing contested terms such as those under examination in this instance, the Commission Determines as follows:

The words “ordinarily works” appearing in clause 67.3 of the Copied State Award are to be given a meaning that accords with the terms of clause 2.4.1 of the BCPH procedure. Accordingly, clause 67.3 of the Copied State Award is to be applied as if it contained the following additional terminology:

Saturday Public Holiday Payment for Bus Operators

When a public holiday falls on a Saturday, Bus Operators who are rostered off will qualify for payment if they have worked at least 10 Saturdays in the preceding 12 months. Bus Operators employed within the last 12 months of the Saturday Public Holiday to be cleared as a “day off” worked are to have the decision for payment to be determined on a pro-rata basis.

[76] Given that the primary question has been resolved so that the construction to be given to the contested terms of clause 67.3 of the Copied State Award accords with the terms of clause 2.4.1 of the BCPH procedure, it is unnecessary to determine the secondary, subsidiary question regarding any legal or other obligation on Transit Systems that may have arisen from the transition arrangements documentation associated with the transfer of business.

[77] Consequently, the dispute has been Determined broadly in accordance with the application made by the RTBU. The application is concluded accordingly.”

Permission to appeal

[19] It is uncontentious that the Copied State Bus Award does not confer on the parties to the Dispute a right to appeal. Accordingly, the appeal provisions in s 604 of the Act apply, including the requirement for permission to appeal. 13

[20] Section 604(2) of the Act provides that, without limiting when the Commission may grant permission to appeal, it must grant permission if it is satisfied that it is in the public interest to do so.

[21] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment. 14  In GlaxoSmithKline Australia Pty Ltd v Makin15 a Full Bench of the Commission identified some of the considerations that may attract the public interest:

“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.” 16

[22] Other than the special case in s 604(2), the grounds for granting permission to appeal are not specified. Considerations which would usually justify the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration or that substantial injustice may result if leave is refused. 17

[23] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so, because an appeal cannot succeed in the absence of appellable error. 18 However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.19

[24] The present appeal gives rise to important questions concerning the correct approach to the interpretation of a copied State award. That issue has not, to our knowledge, been considered by a Full Bench of the Commission or a superior court. On that basis, we are satisfied that it would be in the public interest to grant permission to appeal.

Transit Systems appeal grounds and submissions

[25] Transit Systems relies on five grounds of appeal.

Ground 1 – reliance on conduct of different parties

[26] Transit Systems contends that the Commissioner’s reliance on ‘evidence’ of previous conduct of different parties to the STA Bus Award in construing the meaning of clause 67.3 of the Copied State Bus Award disclosed an unorthodox application of the legal principles relevant to the interpretation of awards and was erroneous. Transit Systems submits that the Commissioner began with a consideration of “evidence of words and actions of the STA and the RTBU”, rather than the ordinary grammatical meaning of the words used in clause 67.3. Resort to matters such as negotiation or policy, so Transit Systems contends, is of dubious assistance, if admissible at all.

Ground 2 – the evidence fell short of establishing a common intention or common understanding

[27] Transit Systems contends that the evidence relied on by the Commissioner fell well short of establishing a common understanding of the meaning of clause 67.3 or the common intention of the parties to the Copied State Bus Award, especially in circumstances where the previous conduct did not involve the current employer party to the Copied State Bus Award and was indeed unknown to that employer.

[28] Transit Systems contends that, as a piece of extrinsic material, the 2013 Agreement was only admissible to aid the interpretation of the Copied State Bus Award if it tended to establish objective background facts which were known to all parties leading to the formation of the Copied State Bus Award. Transit Systems did not have any knowledge of the 2013 Agreement at the time the Copied State Bus Award was made on 1 July 2018. At its highest, Transit Systems contends that the 2013 Agreement informs as to the subjective intentions of different parties, to a different instrument, made under a State law. It cannot form part of the objective backgrounds facts to the making of the Copied State Bus Award, so Transit Systems contends, because it was simply unknown to one of the parties to the Copied State Bus Award, namely, Transit Systems.

[29] Transit Systems contends that the Commissioner’s construction of clause 67.3 of the Copied State Bus Award relies heavily on the existence of clause 2.4.1 of the Public Holiday Procedure as evidence of conduct showing that there had been “a meeting of the minds, a consensus”. Transit Systems contends that there are three difficulties with this reasoning. First, clause 2.4.1 of the Public Holiday Procedure was not a consensual document; it was an information kit provided unilaterally to employees about transitioning arrangements. Therefore, clause 2.4.1 of the Public Holiday Procedure was not admissible to show any common understanding on the part of Transit Systems. Secondly, it is doubtful that clause 2.4.1 of the Public Holiday Procedure reflected any subsequent conduct which may be relevant to the interpretation of the Copied State Bus Award. This is because clause 2.4.1 of the Public Holiday Procedure was issued around the time of the transfer, rather than subsequent to the making of the Copied State Bus Award. Third, the transitioning arrangements contemplated that the 10 day specification would only apply for a finite period of time, following the transfer. Far from showing that the parties to the STA Bus Award had formed any mutual objective intention regarding clause 67.3, Transit Systems submits that the conduct of the State of New South Wales and the RTBU was equivocal. They failed to vary the STA Bus Award to reflect the terms of their informal agreement, despite being free to do so when the award was renegotiated. Further, the transitional arrangements made clear that the 10 day arrangement was not set in stone.

Ground 3 – clause 67.3 is not ambiguous and evidence should not have been relied on

[30] Transit Systems contends that there was nothing ambiguous about clause 67.3 of the Copied State Bus Award that should have compelled resort to the evidence, and the evidence should not have been relied on by the Commissioner to contradict the ordinary plain meaning of clause 67.3.

[31] Transit Systems submits that the extrinsic evidence was only admissible as an aid to interpret the Copied State Bus Award if the meaning of clause 67.3 was ambiguous. Transit Systems submits that the terms employed in clause 67.3 were clear, with the result that the extrinsic evidence could not contradict those clear terms.

Ground 4 – the proper construction of clause 67.3

[32] Transit Systems contends that, on a proper construction of clause 67.3 of the Copied State Bus Award, the Commissioner should have found that:

(a) the provision operates to compensate employees who would have ordinarily worked on a day on which a public holiday is proclaimed but are rostered off, because it is a public holiday and there is a reduction in the required services and a corresponding reduction in the requirement for workers on that day; and

(b) the employer is not required to make any additional payments to employees who in accordance with their ordinary roster cycle are not rostered to work, and do not work, on the public holiday.

[33] Transit Systems submits that the Commissioner’s construction of clause 67.3 eschewed any reliance on the text of the clause. Therefore, the Commissioner did not place any weight on a number of additional textual indicators which tell in favour of the construction for which Transit Systems contends. First, clause 67.3 calls for an assessment of what are the ordinary hours “which the Employee would have worked” on the actual day, not, as contended for by the RTBU, what could have been their ordinary hours. Secondly, the “Extra Payment” provided for in clause 67.3 is “based on the ordinary hours, which the Employee would have worked”. This involves an inquiry as to how many ordinary hours the employee would have actually worked had it not been a public holiday on that day. Thirdly, the Extra Payment is itself an ordinary time payment. This is made clear when clause 67.3 is read in conjunction with clause 67.2. Thus it is necessary to have regard to the employee’s ordinary rotating roster cycle to determine if and for how long the employee would have worked on the day in question, in order to calculate the payment.

[34] Transit Systems also contends that the Commissioner erred in not considering that the underlying purpose of clause 67.3 was to prevent the employer from avoiding payment by rostering staff off, who would otherwise have worked on the public holiday.

Ground 5 – adopting a construction of clause 67.3 which makes sense

[35] In finding that when a public holiday falls on a Saturday employees who are rostered off will qualify for payment if they have worked at least 10 Saturdays in the preceding 12 months, Transit Systems contends the Commissioner:

(a) erred in failing to adequately explain how working only 10 Saturdays in a year satisfies the requirement of “ordinarily works” found in clause 67.3 of the Copied State Bus Award; and

(b) erred in failing to adopt a construction of clause 67.3 which makes sense according to the basic conventions of the English language as well as ordinary, industrial common sense.

[36] Transit Systems submits that the 10 day specification adopted by the Commissioner makes no sense, either as a matter of language or logic. It is difficult to reconcile working only 10 Saturdays a year, so Transit Systems contends, as either ‘ordinary’ or ‘regular’ where that number represents less than one-fifth of Saturdays in a year.

[37] Transit Systems submits that a line of authorities in the NSW IRC establishes that similar provisions have been interpreted on the basis of a ‘sound’ principle of industrial common sense – if the day on which a public holiday falls is not an ordinary working day for any particular employees, then as they in fact suffer no loss of pay by reason of the occurrence of the holiday, no case arises for payment. 20

RTBU’s submissions

[38] The RTBU submits that the Commissioner was correct to conclude that clause 67.3 of the Copied State Bus Award is ambiguous. In support of this contention, the RTBU identified a number of examples, including a person who is rostered off on some Saturdays but not all Saturdays. Do they ordinarily work on Saturdays?

[39] The RTBU submits that the Commissioner engaged in an ordinary common garden variety application of principle to ascertaining the meaning of the words in question. The Commissioner’s approach to ascertaining the meaning of the words was orthodox, so the RTBU submits, involving a search for the objectively ascertained intention of the parties.

[40] The RTBU contends the Commissioner was entitled to have regard to surrounding circumstances as an aid to interpretation because the words of the clause were ambiguous. The RTBU submits the most telling matter in ascertaining the objective intention of the parties was the very objectively identified known and obvious fact that there was a common understanding of what the words meant in the context of a consent award negotiated between a single employer and a single union. That understanding was overwhelming in favour of the 10 days in 12 months formulation that the parties settled on as the meaning which was to be ascribed to the words.

[41] The RTBU contends it was correct for the Commissioner to focus attention on the negotiated agreement between the RTBU and the State of New South Wales because the dispute in 2013 was exactly the same dispute that arose in 2019: what did the words ‘ordinarily works’ mean? The parties entered into the STA Bus Award by consent knowing exactly what they intended the words of clause 67.3 to mean.

[42] The suggestion that the Commissioner was either precluded from having regard to, or subject to some limitation in viewing, matters commonly contemplated and commonly assumed by the parties as to the meaning of the words is, so the RTBU contends, absurd and contrary to both principle and common sense.

[43] The RTBU also submits that the resort to 10 days worked in a twelve-month period was a practical and common-sense application to resolve the obvious ambiguity in the antecedent award provision that was reproduced in the Copied State Bus Award. The adoption of that formulation recognised the kind of ‘ordinariness’ or regularity that would be required to qualify for the payment under the clause. It was not necessary for the Commissioner to gainsay the agreement of the parties once it was established that their intention was so reflected in the Copied State Bus Award provision.

[44] The RTBU submits that permission to appeal should be refused and the appeal should be dismissed.

Proper construction of clause 67.3 of the Copied State Award

Statutory framework

[45] As the Commissioner correctly observed, it is necessary to consider the statutory framework in which the Copied State Bus Award came into existence. In particular, part 6-3A of the Act governs the transfer of business from a State public sector employer to a national system employer:

Division 1 – Introduction

768AA Guide to this Part

This Part provides for the transfer of certain terms and conditions of employment when there is a transfer of business from a non‑national system employer that is a State public sector employer (called “the old State employer”) to a national system employer (called “the new employer”).

A transfer of business involves the transfer of employment of one or more employees of the old State employer to the new employer. Each of those employees is a “transferring employee”.

If there is a transfer of business, then this Part provides for certain terms and conditions of employment with the old State employer to be transferred to the employment of the transferring employee with the new employer.

This Part achieves the transfer of those terms and conditions by creating a new instrument—a “copied State instrument”—for each transferring employee. The new instrument is a federal instrument and is enforceable under this Act.

768AB Meanings of employee and employer

In this Part, employee and employer have their ordinary meanings.

Division 2—Copying terms of State instruments when there is a transfer of business

768AC What this Division is about

This Division sets out when there is a transfer of business from the old State employer to the new employer.

768AD When does a transfer of business occur?

When there is a transfer of business

(1) There is a transfer of business from a non‑national system employer that is a State public sector employer of a State (the old State employer) to a national system employer (the new employer) if the following requirements are satisfied:

(a) the employment of a person who is a State public sector employee of the old State employer has terminated;

(b) within 3 months after the termination, the person becomes employed by the new employer;

(c) the work (the transferring work) the person performs for the new employer is the same, or substantially the same, as the work the person performed for the old State employer;

(d) there is a connection between the old State employer and the new employer as described in subsection (2), (3) or (4).

Transfer of assets from old State employer to new employer

(2) There is a connection between the old State employer and the new employer if, in accordance with an arrangement between:

(a) the old State employer or an associated entity of the old State employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old State employer, or the associated entity of the old State employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.

Old State employer outsources work to new employer

(3) There is a connection between the old State employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old State employer, or an associated entity of the old State employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer is an associated entity of old employer

(4) There is a connection between the old State employer and the new employer if the new employer is an associated entity of the old State employer when the transferring employee becomes employed by the new employer.

768AE Meaning of transferring employee, termination time and re‑employment time

(1) The person referred to in paragraph 768AD(1)(a) is a transferring employee in relation to the transfer of business.

(2) The termination time of a transferring employee is the start of the day the employment of the employee is terminated by the old State employer.

(3) The re‑employment time of a transferring employee is the start of the day the employee becomes employed by the new employer.

Subdivision B—Copied State instruments

768AG Contravening a copied State instrument

A person must not contravene a term of a copied State instrument for a transferring employee that applies to the person.

Note 1: This section is a civil remedy provision (see Part 4‑1).

Note 2: For when a copied State instrument for a transferring employee applies to a person, see section 768AM.

768AH What is a copied State instrument?

A copied State instrument for a transferring employee is the following:

(a) a copied State award for the employee;

(b) a copied State employment agreement for the employee.

768AI What is a copied State award?

(1) If, immediately before the termination time of a transferring employee:

(a) a State award (the original State award) was in operation under the State industrial law of the State; and

(b) the original State award covered (however described in the original State award or a relevant law of the State) the old State employer and the transferring employee (whether or not the original State award also covered other persons);

then a copied State award for the transferring employee is taken to come into operation immediately after the termination time.

Note 1: Even though a copied State award comes into operation in relation to the transferring employee, it will not be enforceable by the employee or another person (for example, the new employer) unless and until it applies to the employee or other person. In particular, it will not apply to the employee or new employer before the employee becomes employed by the new employer. For when the copied State award applies to a person, see section 768AM.

Note 2: A copied State employment agreement for the transferring employee may also come into operation immediately after the termination time, see subsection 768AK(1). If it does, then the State’s interaction rules that were in force immediately before the termination time apply for the purposes of working out the interaction between the copied State award and the copied State employment agreement (see item 11 of Schedule 3A to the Transitional Act as that item applies in a modified way because of section 768BY).

(2) The copied State award is taken to include the same terms as were in the original State award immediately before the termination time.

Note: The State’s instrument content rules that were in force immediately before the termination time apply to the copied State award (see item 10 of Schedule 3A to the Transitional Act as that item applies in a modified way because of section 768BY).

(3) If the terms of the original State award were affected by an order, a decision or a determination of a State industrial body or a court of the State that was in operation immediately before the termination time, the terms of the copied State award are taken to be similarly affected by the terms of that order, decision or determination.

768AJ What is a State award?

(1) A State award is an instrument in relation to which the following conditions are satisfied:

(a) the instrument regulates terms and conditions of employment;

(b) the instrument was made under a State industrial law by a State industrial body;

(c) the instrument is referred to in that law as an award.

(2) However, the regulations may provide that an instrument of a specified kind:

(a) is a State award; or

(b) is not a State award.

768AM When does a copied State instrument apply to a person?

Transferring employee and organisations

(1) A copied State instrument for a transferring employee applies to the transferring employee or an organisation if:

(a) the instrument covers the employee or organisation; and

(b) the instrument is in operation; and

(c) no other provision of this Act provides, or has the effect, that the instrument does not apply to the employee or organisation; and

(d) immediately before the employee’s termination time, the employee or organisation would have been:

(i) required by the law of the State to comply with terms of the original State award or original State agreement for the instrument; or

(ii) entitled under the law of the State to enforce terms of the original State award or original State agreement for the instrument.

New employer and other employers

(2) A copied State instrument for a transferring employee applies to an employer (whether the new employer or another employer) if:

(a) the instrument covers the employer; and

(b) the instrument is in operation; and

(c) no other provision of this Act provides, or has the effect, that the instrument does not apply to the employer; and

(d) immediately before the employee’s termination time, the old State employer would have been:

(i) required by the law of the State to comply with terms of the original State award or original State agreement for the instrument; or

(ii) entitled under the law of the State to enforce terms of the original State award or original State agreement for the instrument.

Note: This subsection may operate in relation to an employer that is not the new employer in the situation where there has been a later transfer of business by the new employer (see Part 2‑8).

Other circumstances when instrument applies

(3) A copied State instrument for a transferring employee also applies to a person if an FWC order made under a provision of this Act provides, or has the effect, that the instrument applies to the person.

Instrument only applies in relation to transferring work

(4) A reference in this Act to a copied State instrument for a transferring employee applying to the employee is a reference to the instrument applying to the employee in relation to the transferring work of the employee.

768AN When does a copied State instrument cover a person?

Transferring employee and new employer

(1) A copied State instrument for a transferring employee covers the employee and the new employer in relation to the transferring work from the employee’s re‑employment time.

Employee organisation

(2) A copied State instrument for a transferring employee covers an employee organisation in relation to the employee if:

(a) the instrument covers the employee because of subsection (1); and

(b) immediately before the employee’s termination time, the original State award or original State agreement for the instrument covered (however described in the original State award or original State agreement or in a relevant law of the State) the organisation in relation to the employee.

Employer organisation

(3) A copied State instrument for a transferring employee covers an employer organisation in relation to the new employer if:

(a) the instrument covers the new employer because of subsection (1); and

(b) immediately before the employee’s termination time, the original State award or original State agreement for the instrument covered (however described in the original State award or original State agreement or in a relevant law of the State) the organisation in relation to the old State employer.

Other circumstances when a person is covered

(4) A copied State instrument for a transferring employee also covers a person if any of the following provides, or has the effect, that the instrument covers the person:

(a) a provision of this Act or of the Registered Organisations Act;

(b) an FWC order made under a provision of this Act;

(c) an order of a court.

Example: The FWC may make a consolidation order specifying that the instrument covers a person specified in the order (see subsections 768BE(1) and 768BH(1)).

Circumstances when a person is not covered

(5) Despite subsections (1), (2), (3) and (4), a copied State instrument for a transferring employee does not cover a person if any of the following provides, or has the effect, that the instrument does not cover the person:

(a) a provision of this Act;

(b) an FWC order made under a provision of this Act;

(c) an order of a court.

Example: If, after the transferring employee’s re‑employment time, an enterprise agreement starts to cover the employee, subsection 768AU(2) provides that a copied State instrument for the employee ceases to cover the employee.

(6) Despite subsections (1), (2), (3) and (4), a copied State instrument for a transferring employee that has ceased to operate does not cover a person.

Covered only in relation to transferring work

(7) A reference to a copied State instrument for a transferring employee covering the employee is a reference to the instrument covering the employee in relation to the transferring work of the employee.

768AO When is a copied State instrument in operation?

When instrument comes into operation

(1) A copied State instrument for a transferring employee comes into operation immediately after the employee’s termination time.

When copied State award ceases to operate

(2) A copied State award for a transferring employee ceases to operate at the following time:

(a) unless paragraph (b) applies—the end of the period (the default period) that is 5 years or such longer period as is prescribed by the regulations, starting on the day the employee’s termination time occurred;

(b) if the regulations allow the FWC to make an order to extend the period of operation of a copied State award for a transferring employee and, in accordance with those regulations, the FWC makes an order that the award operates for a period that is longer than the default period—the end of that period.

(3) The regulations may:

(a) prescribe circumstances in which the FWC may make an order for the purposes of paragraph (2)(b); and

(b) prescribe a maximum period that the order may specify; and

(c) otherwise make provision in relation to the making of the order.

When copied State agreement ceases to operate

(4) A copied State employment agreement for a transferring employee ceases to operate when it is terminated, which may happen before or after the nominal expiry date of the agreement.

Note 1: See section 768AY for how the copied State employment agreement can be terminated.

Note 2: If, after the transferring employee’s re‑employment time with the new employer, an enterprise agreement is made that covers the employee and the new employer, then the copied State employment agreement will cease to cover the employee and the new employer and will never cover them again, see section 768AU.

(5) The nominal expiry date of a copied State employment agreement for a transferring employee is:

(a) the day the original State agreement would nominally have expired under the State industrial law of the State; or

(b) if that day falls after the end of 4 years beginning on the day the employee’s termination time occurs—the last day of that 4‑year period.

Once instrument ceases operation, can never operate again

(6) A copied State instrument for a transferring employee that has ceased to operate can never operate again.”

[46] It is readily apparent from these provisions that a transfer of business from a non-national system employer that is a State public sector employer to a national system employer creates a new federal industrial instrument for the transferring employees. Where the employees in question were covered by a State award prior to the transfer, the new industrial instrument is known as a copied State award.

[47] The coverage and application of a copied State award differs from the State award that applied immediately prior to the transfer of business, in that the copied State award does not cover or apply to the public sector employer but does cover and apply to the national system employer to whom the business or part thereof has been transferred. Importantly, however, the “copied State award is taken to include the same terms as were in the original State award immediately before the termination time”. 21 [emphasis added]

[48] In the present case, because the terms of the STA Bus Award immediately before the transfer of business from the State of New South Wales to Transit Systems on 1 July 2018 are the same as the terms of the Copied State Bus Award, clause 67.3 of the Copied State Bus Award must have the same meaning, on its proper interpretation, as it had in the STA Bus Award immediately before the transfer.

[49] In Public Service Association and Professional Officers’ Association Amalgamated Union of New South Wales v Secretary of the Treasury22 Justice Walton, then President of the Industrial Court of New South Wales, examined in detail23 the principles applicable to the interpretation of consent awards made by the NSW IRC. Those principles are applicable to the interpretation of the terms of the STA Bus Award immediately prior to the transfer of business from the State of New South Wales to Transit Systems. It is not necessary to set out those principles in full, but we do wish to highlight the following relevant parts of them for the purposes of the present appeal:

[115]  Putting aside for one moment the refinements applicable to award interpretation to which Street and French JJ alluded, these statements of principle may
be synthesised as follows:

(1)The legal meaning of “a provision of an award” is to be ascertained through a process of construction by which the intention of the provision is deduced. It is the duty of the court to give the words of the award a meaning that the authors of the award are taken to have intended them to have.

(2)The process of construction must begin with a textual analysis of the words of the provision, that is, a consideration of the ordinary and grammatical meaning of the words.

(3)Whilst the surest guide to the meaning of an award provision is language used in a provision of an award, the meaning of the text may require consideration of the context (which includes, inter alia, consideration being given to the instrument as a whole). Thus, the initial step in construction may involve construing the words of an award provision in context.

(4)The consideration of the words of the provision of an award in context includes examining the general purposes and the policy of the provision derived from a statement of policy in the award or from the terms of the award. Thus, the legal meaning may be ascertained by reference to general purpose, consistency and fairness, although, again, the purpose of a provision derives from its text and structure. A relevant consideration in this respect is the mischief remedied by a provision. (See Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 at [47].)

(5)An examination of the purpose of an instrument is very much part of the traditional approach to award interpretation. It was accepted by Kelleher J in In re Dispute between Broken Hill Pty Co Ltd and the Federated Ship Painters and Dockers’ Union of Australia, New South Wales Branch, Re Tank Tops [1961] AR 312 at 314 that it is proper to pay regard to “the purposes for which the provision was intended” (as quoted in Bryce at 452 and Kingmill at [63]). An application of this approach may be found in the judgment of Hill J in Australian Workers Union (NSW) v Pioneer Concrete (NSW) Pty Ltd (1991) 38 IR 365 at 380, where it was stated that provisions in awards must be construed reasonably and realistically, “having regard to their purposes and objectives”. I will add further to this consideration when returning to the notion, developed in the dicta of Street and French JJ, that a generous construction should be adopted in the interpretation of awards.

(6)The determination of the purpose or intention of a provision of an award neither permits nor requires a search for what those who drafted or made the award had in mind when the award was made: see Construction, Forestry, Mining and Energy Union (NSW Branch) v Delta Electricity [2003] NSWIRComm 135; (2003) 146 IR 360 at [44] and NSW Fire Brigades at [47]. Further, it is not for the court to construct its own idea of a desirable policy, import it to the award-maker and then characterise it as the purpose of the provision: see Brown at [40] per Bathurst CJ.

[116]  A related question concerns the extent to which extrinsic material may be employed in award interpretation.

[128]  In order to ascertain the meaning of a provision of an award which is susceptible to more than one meaning, even after the consideration of the immediate context of a provision, recourse may be had to the circumstances surrounding the making of an award in order to see what the circumstances were with reference to which the words of the award provision were used. Within those parameters, reference may be had to a mutually known factual matrix present at the making of the award, including the conduct of prior negotiations, the forming of an agreement and, more generally, the history of the provision. Evidence is not admissible to ascertain the subjective intentions of the parties. Nor is evidence of their conduct subsequent to the commencement of the instrument admissible.

[129]  Some further short reference should be given to the consideration of the history of a provision of an award. An examination of the actual history of the provisions of an award, the subject of an application for declaratory relief, may form part of the consideration of context.

[130]  In Short (at 517–518), Burchett J (with whom Drummond J agreed) gave the following vivid description of the use of history in the interpretation of awards:

“No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use. It is in those circumstances that the author of the award has inserted this particular clause into it, and they may fairly be regarded as having shaped his decision to do so. The rules of construction, Mason and Wilson JJ said in Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297 at 320, are really rules of common sense. Common sense would be much offended by a refusal to look at the facts I have summarised. As Isaacs J said in Australian Agricultural Co Ltd v Federated Engine-drivers’ and Firemen’s Association of Australasia (1913) 17 CLR 261 at 272, citing Lord Halsbury LC: ‘The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it.’

True, sometimes it does stand as if alone. But that should not be just assumed,
in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed.”

[131]  In PSA v Department of Education and Communities at [26], the full bench
observed:

“[26] (7) … In the same way that reference to legislative history is a factor
relevant to the consideration of the context of a provision, we consider that it was open to his Honour, in the context of the present matter, to have regard to award history (or, as it were, the absence of award history).”

[134]  In Amcor at [96], Kirby J, albeit in the context of industrial agreements, gave
the following explanation for a liberal construction of industrial instruments:

“[96]The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court, of interpreting industrial instruments and especially certified agreements.” (Foot notes omitted)”

Ambiguity

[50] We reject Transit Systems’ contention that there is nothing ambiguous about clause 67.3 of the Copied State Bus Award. In our view, clause 67.3 is ambiguous in two respects. First, there is ambiguity as to whether the indefinite expression “a day on which a Public Holiday is proclaimed” in clause 67.3 means the day of the week on which the public holiday in question falls (e.g. a Saturday) or the particular public holiday in question (e.g. Easter Saturday 2019). Both interpretations are available on the language used in the provision. Secondly, there is ambiguity concerning the meaning of the phrase “ordinarily works on a day” in the context of employees who work a six day roster. One available interpretation is that each employee working a six day roster “ordinarily works” on each day of the week. Another available construction is that such employees must work a certain number of shifts on a particular day or with a particular regularity or frequency to satisfy the requirement of “ordinarily works”.

Evidence of surrounding circumstances

[51] There is no doubt that the 2013 Agreement was a settlement agreement reached between the RTBU and the State of New South Wales and did not constitute “an order, a decision or a determination of a State industrial body or a court” within the meaning of s 768AI(3) of the Act. However, that did not necessarily mean that the existence and consistent application of the 2013 Agreement were irrelevant to the task of construing clause 67.3 of the Copied State Bus Award.

[52] Contrary to Transit Systems’ contention, the Commissioner was correct to have regard to the history of the provision and the available extrinsic evidence to interpret clause 67.3 of the Copied State Bus Award. 24 Even if there had been no ambiguity apparent on the face of clause 67.3 of the Copied State Bus Award, it is permissible to have regard to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.25

[53] The relevant history of clause 67.3 is summarised in paragraphs [4] to [16] above. It shows not only that the 2013 Agreement was made between the parties to the STA Bus Award to resolve their dispute about the proper interpretation of clause 67.3, but that (a) both parties complied with the 2013 Agreement between the time it was made and the time of the transfer of business to Transit Systems and (b) in 2015 and again in 2017, when the STA Bus Award was renegotiated by the parties and made by the NSW IRC on the basis of an agreement reached between the parties, the terms of clause 67.3 did not change. At the time the STA Bus Award was made in 2017, these objective background facts were both known to the parties to the STA Bus Award and were notorious facts of which knowledge by the employees covered by the STA Bus Award is to be presumed. These background facts assist in the task of properly construing clause 67.3 of the STA Bus Award immediately before the transfer of business to Transit Systems on 1 July 2018 because they reveal the parties’ presumed intention when they negotiated the STA Bus Award in 2017. Their presumed intention was to resolve the two ambiguities which we have identified in clause 67.3 in a way such that the indefinite expression “a day on which a Public Holiday is proclaimed” in clause 67.3 means the day of the week on which the public holiday in question falls (e.g. a Saturday) and employees who work at least 10 Saturdays in the preceding 12 months satisfy the requirement of “ordinarily works” in clause 67.3. The context to which we have referred assists in establishing the meaning of clause 67.3 of the STA Bus Award immediately before the transfer of business to Transit Systems, but does not displace the meaning of the provision. 26 As we have stated earlier, clause 67.3 of the Copied State Bus Award has the same meaning, on its proper interpretation, as it had in the STA Bus Award immediately before the transfer of business to Transit Systems on 1 July 2018.

Knowledge of Transit Systems

[54] We reject Transit Systems’ contention that the 2013 Agreement did not form part of the relevant objective background facts because it was unknown to one of the parties to the Copied State Bus Award, namely, Transit Systems. It is correct that only objective background facts known to the parties, or notorious facts of which knowledge is presumed, at the time an agreement is made may potentially be used as an aid to construction. 27 However, the Copied State Bus Award was not made by, or as a result of, an agreement between Transit Systems and any other person or entity to whom the Copied State Bus Award applies. The Copied State Bus Award was created by operation of law on the transfer of part of the business of the State of New South Wales (operating buses in region 6) to Transit Systems.

[55] Relevantly, the agreement which gave rise to the terms of clause 67.3 of the Copied State Bus Award was made between the RTBU and the State of New South Wales in 2017 when the NSW IRC made the Copied State Bus Award by consent. It was the surrounding circumstances in existence when that agreement was made which may aid in the task of interpreting clause 67.3. In particular, as Justice Mason observed in Codelfa Constructions Pty Ltd v State Rail Authority of NSW28

“… [W]hen the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting.”

[56] It follows that in interpreting clause 67.3 of the Copied State Bus Award it would be irrelevant and erroneous to have regard to evidence of objective background facts known to the parties at the time the Copied State Bus Award was created by operation of law on 1 July 2018.

The Commissioner’s construction was correct

[57] We reject Transit Systems’ contentions that the Commissioner’s construction of clause 67.3 eschewed any reliance on the text of the clause and does not make sense. The Commissioner commenced his analysis with the ordinary and grammatical meaning of the words in clause 67.3 of the Copied State Bus Award and then used relevant objective background facts to assist in the resolution of the ambiguity which he had identified in the text of the clause. The interpretation found by the Commissioner makes sense both from an industrial relations perspective and having regard to the ambiguous language used in the provision.

[58] We reject Transit System’s contention concerning the underlying purpose of clause 67.3. The purpose of the provision is to define the circumstances in which an employee will be paid for a day on which they ordinarily work but are not rostered to work.

[59] For the reasons given, we agree with the Commissioner’s construction of clause 67.3 of the Copied State Bus Award and reject the grounds of appeal relied on by Transit Systems.

Conclusion

[60] We grant permission to appeal on the basis that it is in the public interest to clarify the correct approach to be taken to the interpretation of a copied State award. However, we dismiss the appeal because we are satisfied, for the reasons set out above, that the Commissioner’s conclusion in relation to the proper construction of clause 67.3 of the Copied State Bus Award was, in the context of the present Dispute, correct.

al of the Fair Work Commission with member's signature,

VICE PRESIDENT

Appearances:

M Moir, of counsel, for Transit Systems West Services Pty Ltd.

R Reitano, of counsel, for the Australian Rail, Tram and Bus Industry Union.

Hearing details:

2019.

Sydney: 12 December.

Final Written Submissions:

Submissions dated 21 November 2019 for Transit Systems West Services Pty Ltd.

Submissions dated 4 December 2019 for the Australian Rail, Tram and Bus Industry Union.

Printed by authority of the Commonwealth Government Printer

<PR715664>

 1   [2019] FWC 6767

 2   University of Western Sydney v Fletcher (2009) 183 IR 256; [2009] AIRCFB 368 at [22]-[24]

 3   (1936) 55 CLR 499

 4   Transport Workers’ Union of Australia v Wymap Group Pty Ltd [2014] FWCFB 3484 at [12]

 5   Appeal Book (AB) 185

 6   Ibid

 7   AB 219

 8   AB 286

 9   Decision at [54]-[67]

 10   [2017] FWCFB 3005

 11   Decision at [59]

 12   Decision at [75]

 13   DP World Brisbane Pty Ltd v The Maritime Union of Australia [2013] FWCFB 8557 at [46]-[50]; DL Employment Pty Ltd v AMWU [2014] FWCFB 7946 at [38]

 14   O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennon, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others [2011] FCAFC 54 at [44] – [46]

 15   (2010) 197 IR 266

 16   Ibid at [27]

 17   Also see CFMEU v AIRC (1998) 89 FCR 200; and Wan v AIRC (2001) 116 FCR 481. Also see the Explanatory Memorandum to what is now s 604, at paragraph 2328.

 18   Wan v AIRC [2001] FCA 1803 at [30]

 19   GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27]; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler; [2011] FCAFC 54; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]

 20   Re Shift Workers Case 1972 [1972] AR 633 at 660-1, citing the 1962 Steel Award Case [1962] AR at 397-398; Re Engine Drivers (Broken Hill Water Supply) Award [1937] AR at 187.

 21   s 768AI of the Act

 22   (2014) 87 NSWLR 41 (PSSA v Secretary of Treasury)

 23   at [101]-[141]

 24   PSSA v Secretary of Treasury at [101]-[141]

 25   AMWU v Berri Pty Ltd [2017] FWCFB 3005 at [114(8)]

 26   PSSA v Secretary of Treasury at [127]

 27   AMWU v Berri at [110(12)]

 28   (1982) 149 CLR 337 at 352