Australian Industry Group v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union

Australian Industry Group v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union - [2007] NSWIRComm 1061 - NSWIRComm 2006 case summary — Zoe

[33]

19 Mr Reginald Ross deposed that he was involved in the negotiation of the Cessnock Council Construction and Road Maintenance Employees' Workplace Agreement 1998, operative from 16 March 1998. He stated a feature of this Agreement was that "in return for trading in ... allowances, they offered everyone 38 hours per week plus 5 hours overtime at time and a half for 52 weeks a year". 20 It was Mr Ross' evidence that the parties had agreed that no employee would be disadvantaged as a result of the "wrap up" of allowances and the overtime proposal. 21 Mr Ross deposed at length how the respondent's mistake was made and contended that he had sought to explain the basis of his complaint at the meeting between the Union and the respondent convened on 1 March 1999. It was also his evidence that respondent's officers dismissed his claim - "they thought I was ridiculous for trying to argue that". Mr Ross stated that as he had failed to convince that meeting, which was also attended by Mr Coyle, he had adopted the view that "they must have been right". 22 During 2005, the respondent's Director of Works, Mr Lou Oldfield, sought to alter the start location of a number of employees. At that time, he asked for a copy of his "wrap up" calculations. Mr Ross subsequently recalculated his "wrap up" and referred his findings to Mr Coyle and Mr Collins, who subsequently put the matter to the respondent. 23 Mr Ross stated there had been an underpayment of one hour's pay per month since March 1998. Mr Ross deposed while the respondent had acknowledged the error, the Union had advised him: Council would not be paying any back pay as the error was never picked up by the Union when they signed the original agreement and no-one has checked the calculations in the subsequent agreements. 24 Mr Ross explained that the calculations for the purposes of the agreement comprised 43.6 weeks of work, four weeks annual leave, two weeks of public holidays and 2.4 weeks on account of recreation leave. He explained that the respondent had deducted an hour of overtime from the recreation day payment under the 1998 Agreement calculations. He also stated that at the time, Mr Kidd had explained that 0.45 of an hour each day accrued towards the monthly recreation day.

[38]

35 Mr Coyle stated that in the early part of 1999, Mr Ross complained to him that he was not being paid correctly and thought the respondent was deducting three minutes per day from his pay. Accordingly, he arranged a meeting with Ms Crosdale and Mr Kidd on 1 March 1999. Unfortunately, neither Mr Ross nor himself could convince the meeting that a mistake had been made in calculating Mr Ross' "wrap up". 36 It was Mr Coyle's evidence that during 2005, the respondent sought to vary the start and finish location of certain employees. As the Union had appointed Mr Collins to conduct the negotiations, Mr Ross sought Mr Coyle's assistance to arrange a meeting with Mr Collins to explain his concerns. 37 Mr Coyle stated he and Mr Collins subsequently presented a spreadsheet explaining the alleged "wrap up" calculation error to Ms Crosdale and Mr Kidd who subsequently agreed that an error had been made. In January 2007, affected employees received correspondence acknowledging an error had been made and salaries had been adjusted. However, the respondent also informed employees that back pay would not be paid "because the Union were as much at fault when the original Agreement was negotiated". 38 In cross examination, Mr Coyle confirmed that at the request of the Union, he had been seconded to the respondent's Human Resources Department for approximately six months in 1998 to help facilitate the new agreement. He agreed that his role involved problem solving and explanation of aspects of the proposed agreement to members. His role also provided a conduit between the Union and the respondent. 39 Mr Coyle agreed that Mr Ross had approached him in relation to the "wrap up" calculation in 1999 and in response, he convened a meeting with Ms Crosdale, Mr Findlay, Mr Kidd, Mr Ross and himself to discuss the matter. He was emphatic that he had informed the Union about Mr Ross' claim, but could not recall the timing of that communication nor could he recall whether Mr Ross had raised his claim with him during the intervening period between 1999 and 2005. 40 Ms Hann also referred Mr Coyle to the second line of Annexure I attached to Ms Crosdale's affidavit, a document that purported to summarise a log of claims raised by outdoor maintenance employees in negotiations for the 2001 Agreement, which stated: Reg - 3 min for RDO. 13 hours preserved travelling. Accountant to look at.

[48]

56 Ms Crosdale deposed the overtime paid on the leave component was based on 8.4 weeks leave which included 20 days of annual leave, 10 public holidays and 12 recreation days. Accordingly, the claimable travelling allowance was based on 43.6 weeks. Where the total travelling allowance claimable was greater than the overtime paid on leave, an employee received a travelling allowance make-up payment. However, there was no additional payment made where the overtime paid on leave was greater than the total travelling allowance claimable. 57 Ms Crosdale confirmed that she and Mr Kidd had met with Mr Ross, Mr Coyle and Mr Findley on 12 March 1999 to discuss "a claim regarding the calculation of the travelling allowance in relation to the inclusion of recreation days in the overtime on leave calculation". She also confirmed that she and Mr Kidd disagreed with Mr Ross' explanation as they thought his calculation "covered the payment of overtime on recreation days". Moreover, Mr Kidd had pointed out to the meeting at the time that when an employee took a recreation day, the respondent actually credited that employee 0.05 hours so as to ensure the employee had enough time banked to cover his rostered day off. 58 Ms Crosdale deposed that following the meeting on 12 March, she conferred with Mr Cowan who subsequently wrote to the Union on 3 May 1999 and advised that the respondent was not prepared to change the calculation of the travelling make-up in the Agreement: ... It is my understanding that the travelling make-up was included in the calculation of the agreed rate of pay ... to ensure that those employees who at the time received less than five hours overtime ... would not be disadvantaged by wrapping up of travelling allowance within the agreed rate of pay. I am not prepared to change the calculation of the travelling make-up as Council and the Union agreed at the time of the negotiations that the calculation was correct. The subsequent signing of the agreement created an obligation on both Council and the Union to abide by the provisions of the negotiations, including the calculation of the travelling allowance make-up.

[73]

92 Ms Hann denied that the calculation had been changed following implementation of the 1998 Agreement and also stated that the majority of employees under the 1998 Agreement had received pay rises. 93 Following annual competency assessments conducted in December 1998, Ms Hann submitted that a number of employees in receipt of the agreed "make up allowance" had also received an increase in their base rate of pay. The respondent believed at he time it was entitled to absorb the make-up allowance from salary increases arising from competency assessments. In Mr Ross' case, as the quantum of the proposed salary adjustment exceeded his make up allowance, the calculation "changed to that of employees who did not receive a make-up allowance". The Union disputed the respondent's treatment of the allowance and the matter was subject to arbitration before this Commission. 94 In Federated Municipal and Shire Council Employees' Union of Australia, NSW Division and Cessnock City Council, his Honour, Deputy President Sams held the respondent was entitled to absorb the competency assessment salary increases: ... While it may now seem unfair, this aspect of the agreement was one of swings and roundabouts of the package of arrangements entered into at the time. I note that the agreement also provided a roll up of fixed overtime amount whether it was worked or not. This was one aspect of the agreement which can be described as an upside ... Put colloquially, it meant accepting the good with the bad. 95 Ms Hann said the respondent had not breached the 1998, 2001 or 2005 Agreements nor had it sought to mislead the Union or employees in relation to the calculations. Simply put, no breach of ss 9.1 or 9.2 had occurred. Rather, Mr Ross' evidence was that he had been paid in accordance with the calculations expressly outlined in s 9.2 of the 1998 Agreement: This salary, including overtime, shall be paid for all annual leave, public holidays and recreation leave as follows: Annual leave 20 days Public holidays 10 days Recreation leave 12 days. 96 Ms Hann submitted the Local Government (State) Award expressly excluded overtime payments from the composition of ordinary pay applicable to public holidays and annual leave.

[89]

110 Ms Hann asserted that the rationale adopted by the Australian Industrial Relations Commission in the Compass Group Australia Pty Ltd decision was echoed by the Full Court of the Federal Court in Australian Industry Group v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union (2003) 25 IR 449 at 463]: Once parties to an agreement have settled their difference on the matters in issue, it is appropriate that their bargain be protected and that further industrial action not be permitted with respect to issues which were once in dispute but are now settled. 111 Ms Hann submitted the 1998 Agreement withstood a challenge by the Union concerning an unintended consequence of that instrument when Deputy President Sams in Federated Municipal and Shire Council Employees' Union of Australia, NSW Division and Cessnock City Council held: In my view, where there is a provision in an agreement, which is unambiguous and its interpretation plainly obvious, it must be the agreement provision which has primacy. Put another way, it is not open for the parties to overturn, negate or otherwise act to subvert or displace an agreement provision which is so pellucidly clear. ... The parties have a duty to preserve the integrity of the agreement. I have a duty to ensure justice to both parties. A contravention of the agreement would destroy the integrity of the agreement and be a denial of justice. 112 It was the respondent's contention that clause 9.2 of the Agreement was clear and unambiguous. The leave calculation had remained unchanged from the respondent's initial staff presentation in 1996 through to 2006 when the matter was more formally raised by the Union. Ms Hann argued the Commission should uphold the decision of Deputy President Sams and refuse to intervene: The Commission should not contemplate taking apart the clear agreement of the parties simply because the Union sees the opportunity to rectify an unintended consequence for these privileged employees. It is opportunistic to pick apart agreements with the benefit of hindsight and demand retrospective payments. 113 Ms Hann noted the evidence that there were some economic factors behind the respondent's decision not to make retrospective payments beyond 2006, but stressed that in re-examination, Mr Mortomore had expanded upon the more compelling reasons for that course of action: From my understanding of it, the previous agreements, these issues hadn't been raised. The agreement that was done in '98 was at the time signed off by the Union and everyone else involved. Everyone at the time obviously understood or thought that it was correct and I believed that it was unreasonable to go back beyond that point and revisit something that there had been an opportunity to look at on a number of occasions and hadn't been done so. When asked whether, essentially, it was about preserving the integrity of the past agreements Ms Hann stated that Mr Mortomore had answered " I believe so ".

[98]

120 Mr Collins submitted that the respondent had attempted to bring evidence before the Commission to suggest the Union had submitted a log of claims with a reference to the calculations (Ex "6", Annexure 1). However, he said neither Mr Coyle nor Mr Ross had recognised that document as a log of claims prepared by the Union and there was no evidence before the Commission to indicate when it was prepared, who was the author or its purpose. Accordingly, it should carry no weight in these proceedings. 121 Mr Collins submitted that the respondent has an obligation to pay the employees in accordance with the terms and conditions of the Agreement and said "the method of calculation to a certain extent is immaterial". He referred to Ms Crosdale's evidence concerning the Union's audit in February 1997 and submitted that the calculations had changed throughout negotiations and after the Agreement "had been ratified by the parties". He said Ms Crosdale had confirmed that the breach had operated since the making of the 1998 Agreement when she said "the calculation hasn't changed from the Agreement in 1998 through to the Agreement in 2006". 122 Mr Collins further submitted that cl 9.2 does not provide any reference to a method of calculation. rather, it only provides a commitment to when payment will be received for an overtime payment, namely all days including those listed in 9.2. He also submitted that what the Award provides is immaterial as a Council Agreement is intended to vary the award provisions exclusively for the benefit of the parties to the Agreement. 123 Mr Collins stated the new evidence submitted had only been discovered two days prior to the hearing and it did not prejudice the respondent as it essentially confirmed the evidence of Ms Crosdale that there had been a number of changes to the method of calculation. He said it was misleading to describe it as a complex document and as it is a document that Ms Crosdale has utilised over the years to demonstrate the method of calculation. 124 In conclusion, Mr Collins submitted: 1) The respondent cannot assert that cl 9.2 contained an anomaly to the calculations of leave as the provision contains no calculations. It simply confirms the intent of the parties to annualise salaries. 2) The respondent's assertion that the Union had compounded the error by its inaction is not supported by the facts of the case. It was the Union's belief that the error of calculation was not " ... an intentional act by Council to deprive employees of their entitlements under the Agreement". Rather, it could be argued that the respondent had also compounded the error by not having suitable internal checks in place to examine the calculation that would have led to its early discovery.

[103]

130 It is abundantly clear on the evidence before the Commission that the relevant outdoor staff had given their trade union representatives the power to negotiate on their behalf for a new enterprise agreement and to be bound by that agreement. That position was not disputed by the Union. Further, the 1998 and subsequent 2001 and 2005 Agreements were all approved by meetings of members and "signed off" at the conclusion of the relevant negotiations by the respondent's representatives and the authorised Union representatives at the time. All parties acted in good faith which is consistent with the history of sensible and productive industrial relations between the Union and the respondent. 131 Council Agreements are legally binding industrial instruments. The predominant purpose of an agreement is to afford the parties finality and bring industrial certainty for a pre-determined period of time. The public interest consideration requires strict adherence to both the terms and spirit of the agreements reached. Bargains reached by the parties are important. As such, agreements need to be considered in their entirety. Accordingly, it is in the public interest that the sanctity of such agreements is protected and that they are honoured. In Electrical Trades Union of Australia v Queensland Electricity Commission and Ors (1986) 16 IR 292 a Full Bench of the Australian Industrial Relations Commission stated observed at 316: It is a cornerstone of proper industrial relations that agreements made must be honoured even if they subsequently prove to be inconvenient to one or other of the parties. If there is not a guarantee that agreements will be honoured the processes of conciliation as a means of resolving industrial disputes will be at least inhibited and possibly frustrated. This would be contrary to the specific objects of the Conciliation and Arbitration Act . 132 The public interest in the maintenance and preservation of industrial instruments made by consent dictates that they should not be re-opened during their nominal term unless there are good and cogent reasons for doing so. Support for that proposition can be drawn from the observations of the Full Bench in respect of varying an award in the special case decision Re Operational Ambulance Officers (2001) 113 IR 384 at 418: By s10 of the Industrial Relations Act 1996, the Commission is required, in considering an application to vary an award, to assess whether the conditions of employment in the award are fair and reasonable. This is a primary test for evaluating whether an award should be altered . 133 Having regard to the background and history of this matter and the intention and conduct of the parties in relation to the "wrap up" agreement, it is apparent from the evidence that the 1998 Agreement was negotiated on the understanding that the "swings and roundabouts" principles would apply to the applicable annualised salaries so as to avoid double counting of overtime. The majority of employees received a pay rise following the introduction of annualised salaries and on any global analysis, employees were advantaged with fair and reasonable conditions of employment and overall, the benefits afforded may outweigh any errors made in the calculation of the "wrap up".

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