Fair Work Act 2009

s.160 - Application to vary a modern award to remove ambiguity or uncertainty or correct error

Manufacturing and Associated Industries and Occupations Award 2010 - Clause 40.6-Standing by.

[1] Mr Garry Whackett (Applicant) has made an application to the Commission to vary the Manufacturing and Associated Industries and Occupations Award 2020[1] (the MAI Award) pursuant to s.160 of the Fair Work Act 2009 (FW Act). The original application made was to vary the MAI Award pursuant to s.157 of the FW Act. Following a conference of interested parties the Applicant was given an opportunity to further consider his application. Following that consideration I allowed the Applicant to amend his application such that it was made pursuant to s.160 of the FW Act.

[2] The Applicant seeks two variations to the MAI Award.

[3] The first variation is to clause 32.14 of the MAI Award. That clause currently reads:

Subject to any custom prevailing at an enterprise, where an employee is required regularly to hold themselves in readiness to work after ordinary hours, the employee must be paid standing by time at the employee's ordinary hourly rate for the time they are standing by.

[4] The variation proposed is to delete the first eight words of the clause so that it reads:

Subject to any custom prevailing at an enterprise, Where an employee is required regularly to hold themselves in readiness to work after ordinary hours, the employee must be paid standing by time at the employee's ordinary hourly rate for the time they are standing by.

[5] The second variation proposed by the Applicant is to add another paragraph to clause 32.14 as follows:

Any employer, recalling an employee to work after their ordinary hours have finished, must have a system of work in place to ensure any recalled employee has had the opportunity to be properly rested and free of fatigue.

[6] Section 160(1) of the FW Act states:

(1) The FWC may make a determination varying a modern award to remove an ambiguity or uncertainty or to correct an error.

[7] The approach to an application under s.160(1) of the FW Act and the determination of whether a provision is ambiguous or uncertain was considered in Re Tenix Defence Pty Limited[2] (Tenix). The decision is Tenix was in relation to section 170MD of the Workplace Relations Act 1996 which provided that:

The Commission may, on application by any person bound by a certified agreement, by order vary a certified agreement:

(a) for the purpose of removing the ambiguity or uncertainty...

[8] The wording of s.170(MD) is not dissimilar to that in s.160 of the FW Act such that the reasoning in Tenix remains relevant to the matter currently before the Commission.

[9] The Full Bench in Tenix observed:

[28] Before the Commission exercises its discretion to vary an agreement pursuant to s.170MD(6)(a) it must first identify an ambiguity or uncertainty. It may then exercise the discretion to remove that ambiguity or uncertainty by varying the agreement.

[29] The first part of the process - identifying an ambiguity or uncertainty - involves an objective assessment of the words used in the provision under examination. The words used are construed having regard to their context, including where appropriate the relevant parts of a related award. As Munro J observed in Re Linfox - CFMEU (CSR Timber) Enterprise Agreement 1997:

"The identification of whether or not a provision in an instrument can be said to contain an 'ambiguity' requires a judgment to be made of whether, on its proper construction, the wording of the relevant provision is susceptible to more than one meaning. Essentially the task requires that the words used in the provision be construed in their context, including where appropriate the relevant parts of the 'parent' award with which a complimentary provision is to be read."

[30] We agree that context is important. Section 170MD(6)(a) is not confined to the identification of a word or words of a clause which give rise to an ambiguity or uncertainty. A combination of clauses may have that effect.

[31] The Commission will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention.

[32] Once an ambiguity or uncertainty has been identified it is a matter of discretion as to whether or not the agreement should be varied to remove the ambiguity or uncertainty. In exercising such a discretion the Commission is to have regard to the mutual intention of the parties at the time the agreement was made.' (footnotes omitted)

[10] In Re. Public Service (Non Executive Staff - Victoria) (Section 170MX) Award 2000[3] Senior Deputy President Polites provided clarity on the meaning of 'uncertainty' by adoption of the following definition:

In that respect I respectfully adopt the submission made by the State of Victoria that the term "uncertainty" means the quality of being uncertain in respect of duration, continuance, occurrence, liability to chance or accident or the state of not being definitely known or perfectly clear, doubtfulness or vagueness. Those are extracts for the Concise Oxford Dictionary adopted by Commissioner Whelan in Re: Shop Distributive and Allied Employees Association v. Coles Myer [Print R0368]. In my view, as I have indicated, this provision clearly falls within that definition.

[11] The first consideration therefore is to determine if the provisions sought to be varied are ambiguous or uncertain. It is only if this is found to be the case can a variation to remedy that ambiguity or uncertainty be considered.

[12] The Applicants submission to the Commission is that the provisions of clause 32.14 of the MAI Award are ambiguous and uncertain in effect because the operation of the clause is unfair. The Applicant says that the ambiguity arises from the general acceptance of the interpretation and not the wording of the clause.

[13] The Applicant submits that the explanation of the clause found on the Fair Work Ombudsman's (FWO) website supports his conclusion that the clause is ambiguous and uncertain. The FWO website says, of this provision in the MAI Award:

This payment doesn't apply if there's a "custom prevailing" at the workplace for employees to regularly be standing by.

'Custom prevailing' means that sanding by is a routine, regular and expected part of the work.

[14] The Applicant submits that the FWO interpretation means that if it is routine or regular that an employee is required to stand by there is no entitlement to payment but if it is not regular then there is an entitlement to payment.

[15] The Applicant argues that no new company can have an accepted custom in relation to standing by as, by its nature, a new company has not existed such that a custom can have developed or exist at the time the business comes into existence.

[16] The Applicant says that, at the time the award provision was first made in 1937, there was no similar provision in existence. An established employer at that time may well have had an established custom and hence, by the clause, was entitled to rely on the exception once the award was made and to continue with reliance on the exception from that time. However, a new company established after the award was made cannot have had an established custom because it is a new business and is therefore not entitled to rely on the exception.

[17] Of the decision in Logan v Otis Elevators[4] (Otis Elevators) the Applicant submits that reliance on it by others is misplaced. In particular he says:

The vulnerability in the Logan appeal decision [Otis Elevators] is that the Full Bench did not explore whether Otis's practice of not paying its employees' the standing by rate in the award, was legal or just a long standing breach of the award. Indeed in the Logan Appeal Decision, the Full Bench specifically rejected the submission that a "custom" must have existed "from time immemorial, or at least from a date before the insertion of the clause in the Award".

In adopting that position, the Full Bench could not establish if Otis was acting within the law or outside of it. The fact that a practice of not paying the award rate has existed throughout an enterprise's history means nothing, if that practice is not based on a lawful act.

This Full Bench decision either established or reflected the accepted interpretation which states if it is a normal part of your duties, your enterprise is exempt and you don't get paid any extra for being on standby. The logic says if the practice predates your employment then that is evidence enough that a custom does prevail.

Whilst that argument does seem compelling, it is flawed. While this may seem true as you go back for 5, 10 or even 15 employees, but when you get back to the first employee this argument falls apart. As stated earlier, every company that is engaging employees on standby today had a first day of engaging an employee under this award provision.

[18] It is on the basis of the decision in Otis Elevators and the advise on the website of the FWO that the Applicant says that he considers that "the ambiguity is created by the accepted interpretation of this provision and NOT the wording of the clause." [emphasis in written submissions]

[19] In effect the Applicant submits that the decision in Otis Elevators could only be true when you are considering a mature company with established practices and that it provides no answer to how a new company, today, could justify use of the exception.

[20] The Applicant says he does not seek, by his application, to "bring about any increase to the entitlements of those engaged on standby" but rather the "eliminate a long standing misinterpretation" of the MAI Award clause.

[21] The Applicant's submission in relation to the second proposed variation reflects his concern that the award does not provide adequate fatigue management protection for employees who are regularly called out to work after having completed a day's work and who then may not get enough rest following the call out before being required to present, again, for a further call out or their normal hours of work. The Applicant does not identify any ambiguity or uncertainty in existing MAI Award provisions but rather seeks a more explicit statement in relation to fatigue management.

[22] The AMWU filed submissions in relation to the application.

[23] The AMWU, whilst having no in-principle objection to the application in relation to the first variation, submits that:

• It was unlikely the Commission had jurisdiction to make the variation as there was no ambiguity or uncertainty in relation to the clause; and

• It has concerns, in any event, about how the first variation was expressed.

[24] The AMWU says that clause 32.14 is in substantially the same terms as the clause considered in Otis Elevators. It says that there is no reason to depart from the reasoning of the Full Court of the Industrial Relations Court in that matter. For this reason it says there is no ambiguity or uncertainty and the Commission therefore has no jurisdiction to deal with the application.

[25] The AMWU does agree that the clause appears to operate unfairly. It says that the clause appears to be designed to compensate employees for the disutility of having to stand by but that it appears incongruous that such disutility should be dependent on whether there is a custom in the workplace to regularly be subject to such disutility. However, unfairness does not create an ambiguity or uncertainty.

[26] As to the precise form of the variation proposed by the Applicant (to delete the opening eight words of the clause) the AMWU submits that to vary the clause as proposed but to leave the words "where an employee is required regularly to hold themselves in readiness to work" would create uncertainty as to the meaning of "regularly required".

[27] The AMWU says, in response to the submissions of Ai Group and ABI, that the exception that operates in clause 32.14 of the MAI Award only operates where an employee is regularly required to stand by. Otherwise it says that all employees required to stand by are otherwise entitled to the payment.

[28] As to the proposed second variation, the AMWU, whilst sympathetic to the issue raised by the Applicant, submitted that there are a number of clauses in the MAI Award that deal with overtime and fatigue and that employers are required to comply with relevant health and safety laws.

[29] The AMWU submits that the second variation is not necessary but that, in any event, no ambiguity or uncertainty has been identified and, as such, the Commission does not have jurisdiction to deal with the application as it relates to the second variation.

[30] The Ai Group opposes the application on the grounds that it says that clause 32.14 of the MAI Award is not ambiguous or uncertain. Issues in relation to the merits of the clause are not relevant, nor are contentions concerning s.138 of the FW Act or the modern awards objective.

[31] The Ai Group submits that:

Clause 32.14 requires that an employee be paid at the employee's ordinary hourly rate for the time that they are standing by if the employee is required regularly to hold themselves in readiness to work after ordinary hours, subject to any custom prevailing at the enterprise. If such a custom is prevailing at an enterprise, the clause does not apply and accordingly, an employee required to hold themselves in readiness to work after ordinary hours at that enterprise is not entitled to payment pursuant to the clause.

[32] The Ai Group submits that a "custom" is an "habitual practice" or a "convention". The exception present in clause 32.14 therefore applies where there is a current habitual practice or convention at the enterprise. The nature of the requisite custom is clear when the clause is read as a whole. It argues that the clause is clearly concerned with employees being required to regularly hold themselves in readiness for work. The exception therefore operates where it is the convention at an enterprise of employees being regularly required to hold themselves in readiness to work after ordinary hours.

[33] The Ai Group submits that its view on the operation of the clause is consistent with that expressed by the FWO that the "payment doesn't apply if there's a 'custom prevailing' at the workplace for employees to regularly be standing by."

[34] The Ai Group submits that the decision in Otis Elevators is relevant to a proper interpretation of clause 32.14 of the MAI Award. The clause considered in that case is in essentially the same terms as that in the MAI Award. It says that the Full Court found that the effect of the exemption is to exclude from payment circumstances in which employees are regularly required to hold themselves in readiness.

[35] Following an analysis of the history of the provision (which was not disputed by any party) the Ai Group submits that clause 32.14 of the MAI Award reflects a long standing provision that has applied over many decades. The intended meaning of the clause was affirmed in Otis Elevators.

[36] Ai Group submitted that the Applicant's submissions should be rejected because:

• (i) The change would remove the exemption and hence create an entitlement where one may not exist with cost implications for employers;

• (ii) There is no evidence that, when the clause was introduced in 1937, it was only intended to operate as a transitional provision;

• (iii) The Applicant's submission that only a pre-existing enterprise could satisfy the "custom prevailing" test misconstrues the application of the exemption which should not be read down as proposed by the Applicant.

• (iv) The Applicant's submissions with respect to clause 32.14 is internally inconsistent and misunderstands the exemption. The exception requires a consideration of whether, at the enterprise level, employees are regularly required to hold themselves in readiness. The second threshold requires a consideration of the incidence of the relevant employee holding themselves in readiness. Such a reading ensures no internal inconsistency.

• (v) Some of the Applicant's submissions concern the perceived merits of the provision which is not relevant to the determination under s.160 of the FW Act.

[37] With respect to the second variation the Ai Group submits that it is not directed to dealing with any ambiguity or uncertainty in the MAI Award and, for this reason alone, it should be refused.

Australian Business Industrial & the NSW Business Chamber Ltd (ABI)

[38] ABI says that the clause is neither ambiguous nor uncertain. In reaching this conclusion ABI applied the principles for assessing ambiguity or uncertainty are summarised by Senior Deputy President Marsh in Re Beltana No. 1 Salaried Staff Certified Agreement.[5]

[39] ABI submits that the relevant entitlement in the clause is that an employee regularly required to hold themselves in readiness to work after hours must be paid at the employees ordinary hourly rate and that this payment compensates the employee for that inconvenience.

[40] There is then an exception to the entitlement such that it is displaced where there is the existence of some custom at the enterprise (which, ABI says would presumably be comprised of an arrangement for standing by and some form of remuneration in that regard) which displaces the entitlement otherwise provided for in its entirety. In this respect the ABI distinguishes between regular expected periods where standing by is required and unexpected, inconvenient periods.

[41] ABI submits that the clause provides the necessary detail to prevent it being ambiguous or uncertain.

[42] In Otis Elevators the Full Court of the Industrial Relations Court was considering an appeal by Mr Logan.

[43] Mr Logan was employed by Otis Elevators from 1968 until his employment was terminated in 1995. Mr Logan made an application to the Court under the relevant legislation in relation to his dismissal. He was awarded compensation. An application was made for review of that decision by Otis Elevators. Mr Logan responded to that appeal by filing a Statement of Claim in which he sought orders that Otis Elevators pay him specified amounts that he said were due to him under the Metal Industry Award 1984 for excessive overtime and for "standing by". This claim was subsequently particularised by an application under s.179 of the Industrial Relations Act 1988 as a claim for award entitlements. Mr Logan's claim for payment of entitlements under the Award were dismissed. The Full Court decision is in relation to an appeal from that decision.

[44] In relation to the standing by claim, the relevant clause of the Award reads:

(g) subject to any custom prevailing under which an employee is required regularly to hold himself in readiness for a call back, an employee required to hold himself in readiness to work after ordinary hours shall until released by paid standing-by time at ordinary rates form the time which he is required to hold himself in readiness.

[45] In the decision a first instance Moore J said, in relation to the qualification in the clause, that "it is only necessary that it be demonstrated that a class of employee, namely local representatives, was required regularly to hold itself in readiness for a call-back. In my opinion, the evidence clearly enables an inference to be drawn that that was a feature of the employment of local representative."[6]

[46] On appeal Mr Logan argued that the word "custom" requires demonstration that practices are notorious, reasonable and certain and that the practice "Must have existed from time immemorial, or at least from a date before the insertion of a clause" like that under consideration in the predecessor to the 1989 award.

[47] The Full Court rejected these contentions and said:

We agree with Moore J but do not rest our opinion solely on the word "custom". The clause must be construed as a whole. It seems to us that the purpose of cl 14(g) is to provide compensation to employees for being placed on a specific alert. The sub-clause operates where an employee is "required to hold himself in readiness to work after ordinary hours". The employee shall "until released" be paid standing by time at ordinary rates "from the time which he is to hold himself in readiness". The sub-clause envisages both a requirement by the employer that the employee hold himself in readiness to work on a specific occasion and a release from readiness. Standing by payments apply during the period between those notifications. The sub-clause is to operate on an ad hoc basis, as and when stand by instructions are given by an employer.

It seems to us the opening words of the sub-clause do no more than emphasise this interpretation; the sub-clause does not apply where there is a "custom" under which the employee is regularly required to hold himself in readiness for a call back. In this context the word "custom" means no more than a prevailing and accepted practice.[7]

[48] The clause as it now appears in the MAI Award does not vary substantially from that considered in Otis Elevators. For this reason the reasoning of the Full Court remains relevant to the application before me. Importantly the Full Court rejected the proposition, not dissimilar to that put by the Applicant in this case, that the practice or custom must have existed from a time prior to the insertion of the clause in the award.

[49] To the extent that the Full Court found the clause in its application, the decision is binding on the Commission, absent some compelling case that circumstances have changed.

[50] The first task in considering whether the MAI Award should be varied is to determine if there is any ambiguity or uncertainty with respect to the provision sought to be varied.

[51] I am not satisfied that the Applicant has identified any ambiguity or uncertainty in the wording of the clause.

[52] I appreciate that the Applicant takes issue not with the words in clause but rather the interpretation of those words as exemplified in the FWO advice and the decision in Otis Elevators but this does not create ambiguity or uncertainty.

[53] The Applicant's issue goes to how the clause is applied and his strong belief that employers claim the existence of a custom so as to avoid an obligation to pay an employee who is required to stand by. Whilst this may be the view of the Applicant there is no direct evidence before the Commission that this is what does occur. Even if such evidence was put and the concern legitimate that does not suggest any ambiguity or uncertainty in the clause but rather possibly an inappropriate application of the clause.

[54] While the issues raised by the Applicant may be valid the resolution of these is through the disputes settling procedures of the MAI Award or through some alternative application to vary the MAI Award. Any such application however cannot be based on supposition but must be founded on strong evidence that can be tested by others who may have an interest in the matter.

[55] For these reasons I am not satisfied that any ambiguity or uncertainty has been identified in relation to the clause. It is not susceptible to more than one meaning and for this reason the application to vary the clause must be rejected.

[56] I would observe that the Applicant's critique of the decision of the Full Court in Otis Elevators does not assist his case. The Applicant has a strong view as to the deficiencies in the clause in the MAI Award. That the Full Court has a contrary view does not make that decision unsound and does not create the ambiguity or uncertainty necessary to allow a consideration of a variation to the clause.

[57] I acknowledge the apparent unfairness in the clause as identified by the AMWU but this is not a basis for a finding of ambiguity or uncertainty.

[58] The Applicant has remained committed in his pursuit of this issue and is to be commended for his willingness to argue his case but s.160 of the FW Act is not the means by which the fairness of the existing provision can or should be assessed.

[59] The failure to identify any ambiguity or uncertainty in the clause means that the jurisdiction of the Commission to vary the clause has not been made out and the application with respect to the first variation must be dismissed.

[60] The Applicant has not identified any ambiguity or uncertainty in the MAI Award in relation to rest breaks or fatigue. The complaint is that the Applicant does not consider that the fatigue protections in the MAI Award provide adequate protection.

[61] Given the failure to identify any ambiguity or uncertainty the prerequisite for an amendment has not been met and there are therefore no grounds on which the clause proposed by the Applicant should be added. The jurisdiction of the Commission which would allow a variation pursuant to s160 of the FW Act has not been enlivened and the variation cannot be made.

[62] For the reasons given above the application must be dismissed.

[1] Since the making of the application the Award has been varied as part of the 4 yearly review of wages. The matters relevant to this application have not changed although the clause number may have. The clause numbering in the 2020 version of the MAI Award has been used in this decision.

[4] [1999] IRCA 4

[5] [2003] AIRC 608

[6] [1999] IRCA 4 at [18]

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