Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Delta Electricity

Industrial Relations Commission (NSW)|2003-05-28|Before: Wright J, Walton J

CITATION : Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Delta Electricity [2003] NSWIRComm 135 APPLICANT: Construction, Forestry, Mining and Energy Union (New South Wales Branch) PARTIES : RESPONDENT: Delta Electricity FILE NUMBER: IRC 6930 of 2002 CORAM: Wright J President; Walton J Vice-President; Ritchie C CATCHWORDS : Appeal - Award - Award interpretation - Payment to relieving shift workers - Principles of award interpretation - Regard to subjective intentions of parties erroneous - Importance of actual words used - Significance of context - Leave to appeal granted - Appeal upheld - Orders to be made LEGISLATION CITED : Industrial Relations Act 1996 s 130 s 379 Broken Hill Chamber of Commerce and Barrier Industrial Council [2002] NSWIRComm 89 CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 Fox v GIO Australia Ltd [2002] NSWIRComm 318 CASES CITED : House v The King (1936) 55 CLR 499 Kingmill Australia Pty Ltd T/as Thrifty Car Rental v Federated Clerks' Union of Australia, New South Wales Branch (2001) 106 IR 217 Knowles v Anglican Church Property Trust (No 2) (1999) 95 IR 380 Perisher Blue Pty Ltd v Australian Workers' Union (1999) 91 IR 274 State Rail Authority Firefighters Award 2001, Re [2002] NSWIRComm 159 HEARING DATES: 03/17/2003 DATE OF JUDGMENT: 05/28/2003

LEGAL REPRESENTATIVES: RESPONDENT Mr A Gotting of Counsel Mr E McLachlan Industrial Relations Manager Delta Electricity

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES FULL BENCH

CORAM: WRIGHT J, President WALTON J, Vice-President RITCHIE C

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION (NEW SOUTH WALES BRANCH) AND DELTA ELECTRICITY Application by Construction, Forestry, Mining and Energy Union (New South Wales Branch) for leave to appeal and appeal against a decision of Commissioner Redman given on 15 November 2002 in Matter No IRC 7732 of 2001 DECISION OF THE COMMISSION [2003] NSWIRComm 135

1 This matter concerns an appeal from a decision of Commissioner Redman given on 15 November 2002. That decision involved the Commissioner resolving a dispute filed pursuant to s 130 of the Industrial Relations Act 1996 ("the Act") as to the appropriate payment to be afforded day workers employed at the Mount Piper Power Station when relieving shift workers engaged under a 12 hour shift arrangement.

The Issue 2 This matter essentially concerns the construction of the Delta Electricity Employees Award 2000 ("the award") and an instrument purportedly made in compliance with cl 24 of that award known as the "Mount Piper Power Station 12 Hour Shifts Agreement" ("the agreement"). The issue at the heart of the appeal is whether day workers who are transferred to work shift work on a 12 hour shift pattern are entitled to receive, at their election, payment of the shift allowance provided for in clause 10.7 of the award for all hours worked when rostered on the day shift of the 12 hour shift roster arrangements.

3 The agreement, however, relevantly provides that shift workers shall be engaged on two shifts under the 12 hour shift roster. Putting aside any differences created by weekend arrangements, day shift is worked under the 12 hour shift roster between the hours of 7 am and 7 pm and the night shift between the hours of 7 pm and 7 am.

4 All shift workers permanently engaged under the 12 hour shift system receive an allowance in addition to their ordinary wages of 37.7 per cent by dint of an arrangement for the payment of annualised salary which is incorporated in a further agreement ("the annualised salary arrangement"). The annualised salary arrangement described the payments under the award which are forgone by the payment of the allowance. These include shift allowances, weekend and public holiday penalties.

5 The respondent pays day workers who are engaged on temporary relief duties as shift workers on the 12 hour shift roster the night shift allowance under the award, namely a 20 per cent shift allowance for all work performed on night shift under the 12 hour shift roster. The respondent pays to those relief workers the afternoon shift allowances of 20 per cent for four out of the 12 hours when the relief worker is engaged on day shift. It is the payment made to the relief workers on day shift that generates the present dispute as the appellant claims that, as a matter of law, the relief worker is entitled to the payment of the afternoon shift allowance for all time worked during the day shift of the 12 hour shift roster. In other words, it is claimed that the relief workers should receive eight hours additional payment of the afternoon shift allowance for each day shift worked.

6 Having described the dimensions of the dispute involved in the appeal, the issue of interpretation is relatively straightforward. The appellant submits that cl 10.28 of the award prescribes that an employee who is a "dayworker" and is transferred to work shift work and perform work on a 12 hour shift roster (that is, work between the hours of 7.00 am and 7.00 pm) is entitled to payment of the afternoon shift allowance for all hours worked on that day shift. The respondent does not dispute this interpretation of the award, but contends that the relevant provisions of the award as to day workers are ousted by the provisions of the agreement which prevail over the provisions of the award by virtue of the operation of cl 24 of the award.

7 The appellant accepts that the agreement is validly made under the terms of cl 24 of the award and that, if by its terms, it excludes the operation of the award, then it would have that effect in law. However, it is contended that the provisions of the agreement do not have that effect. That is, the construction issue before us is whether the enterprise agreement has the effect of overriding the terms of the award so as to provide for the system of payment applied by the respondent.

8 It should be noted at this juncture that the appellant's statement of the issue requires some slight modification or refinement. The relevant provision of the agreement operating in relation to this dispute provides that relief staff may elect to be paid annualised salary or "pay as per roster". Without at this point pursuing all of the issues as to that aspect of the relevant clause, it is sufficient to note that the parties agreed that a reference to paid annualised salary is a reference to the 37.7 per cent "12 hour shift roster" allowance referred to earlier in this decision and the reference to "pay as per roster" is a reference to payment in accordance with the award.

9 Further, there was limited evidence at first instance as to the relative value to employees of the 37.7 per cent annualised salary allowance and the system of payment for relief day workers contended for by the respondent in these proceedings. In general terms, the respective values will vary for an employee depending on the pattern of work with the performance of more public holiday and weekend work rendering the payment system contended by the respondent more beneficial to the employee than the 37.7 per cent allowance payment. It appears that there was no evidence in the proceedings at first instance which would enable a comparison to be drawn between the 37.7 per cent annualised salary allowance and payments made to relief workers in accordance with the award (that is, in accordance with the payment system contended for by the appellant).

The Provisions of the Award and Agreement 10 There is a clear distinction made in the award between day workers and shift workers. This distinction is demonstrated in clauses 6.1 and 9.5 which are set out below: 6.1 The ordinary hours of work for day workers will not exceed 35 hours per week or 70 hours per fortnight where a nine-day fortnight is observed. Ordinary hours for shift workers are in 10.3. ... 9.5 For the purpose of meeting the needs of the industry, Delta Electricity may require an employee to work: (a) reasonable overtime, including Saturdays, Sundays and public holidays (b) day work or shift work, or to transfer from one system of working to another, including transfer from one system of shift work to another. Three months notice will be given to employees required to change on a long term basis from one system of working to another where this will cause a reduction in income, provided that the employees have been working in the first system for a minimum period of twelve months. Arrangements for staff to meet these working requirements will be made in a consultative manner taking into account the needs of the business.

11 We also refer, in this respect, to cl 11, Overtime, of the award which makes specific provisions for day workers and shift workers.

12 Clause 10 of the award provides a comprehensive set of provisions for shift work. Clause 10.6 defines shift work as follows: 10.6 Shift work may be: (a) Early Morning Shift - a shift commencing after 5:00am and before 6:30am.

(b) Afternoon Shift - a shift finishing after 6:00pm and at or before midnight. (c) Night Shift - a shift: (i) finishing between midnight and at or before 8:00am; or (ii) commencing between midnight and at or before 5:00am. Delta Electricity, in consultation with affected employees or their representatives, will decide the commencing and finishing times of shifts to suit the needs and circumstances of each establishment.

13 Clause 10.7 sets out the system of payment for shift workers as follows: 10.7 Shift workers, who work on a shift work roster, must be paid the following allowances: Early Morning - the greater of 10% of single time for the shift and: (i) from the first pay period on or after 8 June 2001 - $7.70 (ii) from the first pay period on or after 8 September 2001 - $7.80

(iii) from the first pay period on or after 11 March 2002 - $8.10 Afternoon - the greater of 20% of single time and: (i) from the first pay period on or after 8 June 2001 - $28.10

(ii) from the first pay period on or after 8 September 2001 - $28.40

(iii) from the first pay period on or after 11 March 2002 - $29.50 Night - the greater of 20% of single time and: (i) from the first pay period on or after 8 June 2001 - $28.10

(ii) from the first pay period on or after 8 September 2001 - $28.40

(iii) from the first pay period on or after 11 March 2002 - $29.50

14 The significant clause in the award is cl 10.28, which is in the following terms: 10.28 Dayworkers required to transfer to shiftwork must be paid for the ordinary hours worked on that roster: (a) for the first two weeks, time and one half or normal shift penalties whichever is the greater.

(b) for the period in excess of the first two weeks, normal shift penalties and roster loadings. Dayworkers will not be required to transfer to shiftwork for a duration of three shifts or less. For periods of three shifts or less the provisions of 11 - Overtime apply.

15 As was stated earlier, the respondent accepts that this provision operates in such a manner as to provide that (after a 2 week engagement) a day worker transferred to shift work (on a 12 hour shift arrangement) would be paid the afternoon shift penalties for the whole of the day shift component of the 12 hour shift arrangement.

16 The respondent relied, in part, upon the provisions of cl 24 to sustain the contention that the aforementioned award provisions do not apply to relief day workers whilst the agreement operates. The relevant provisions of cl 24.1 and cl 24.2 are as follows: 24.1 This clause is intended to provide the means by which the conditions of employment may be varied as a result of an arrangement which is agreed at the local workplace and by the affected and relevant union/s. 24.2 A local workplace agreement provides for flexibility in the conditions of employment in relation to the provisions of this Award and in accordance with the following: (a) Within the award span of hours for day workers, work may be extended outside of the normal hours for that day and the number of additional hours worked taken off at a later time. The ordinary hours accumulated must not exceed a total of 35 hours.

(b) Except as provided in (a) above, the hours of work cannot be altered so that they exceed the maximum ordinary hours allowed in 6 - Hours of Work.

(c) The meal break provisions of the award relating to work in ordinary hours shall not be varied in local workplace flexibility agreements.

(d) The provisions in (a) and (b) above do not prevent a local workplace flexibility agreement from providing for work to commence from 6.30am.

17 The agreement operated initially on a trial basis. The form of the clause at the centre of this dispute in the trial agreement (dated 18 November 1998) was in the following terms: 12 Hour Roster All staff involved in 24 Hour shift work will work in accordance with the agreed roster (refer to Appendix A) which consists of 12 hour shifts, (five (5) panels) and be paid the appropriate 7x3 Annualised Salary Rate. No benefits additional to those arising from a 7x3 roster will be accumulated in relation to Sick, Annual or Long Service Leave, or Public Holidays.

18 The counterpart provision in the agreement is in different terms as follows: 12 Hour Roster All staff involved in 24 Hour shift work, will work in accordance with the agreed roster (see Appendix A) which consists of 12 hour, five (5) panel shifts. Other than relief staff, employees will be paid the appropriate 7x3 Annualised Salary Rate. Relief staff may elect to be paid Annualised Salary or pay as per roster. No benefits additional to those arising from a 7x3 roster will be accumulated in relation to Sick, Annual or Long Service Leave, or Public Holiday (subject to the TSP negotiations and outcomes). (our emphasis)

19 A further clause of the agreement relates to the genesis of the agreement. The clause entitled "Award Flexibility Clause" is in the following terms: Implementation of the 12 hour shift roster shall be carried out under Clause 25, Local Workplace Flexibility of the Delta Electricity Employees Award, 1997.

20 The parties agreed that cl 25 of the Delta Electricity Employees Award 1997 was in relevantly the same terms as cl 24 of the award.

21 There was some debate in the proceedings as to the significance of the preamble to the agreement. It is appropriate therefore to set out that provision in full: Preamble This document sets out the conditions agreed upon between Mount Piper Shift workers, Power Station Management and endorsed by CFMEU, ETU, AIMPE & PSA for the implementation of a 12 hour shift roster at Mount Piper Power Station. This implementation will be from 6th August 1999. Delta agrees to the continuation of 12 hour shifts with the understanding that all parties commit to meaningful negotiations on a suitable total salary package (TSP) . Discussions may encompass, but not be limited to, handover time, overtime payments etc. The unions have claimed that the TSP negotiations should include leave in lieu of Public Holidays at 12 hours and the annualised salary percentage based on 20% shift allowance for the full day rather than 16 hours. Subject to business needs, this agreement, the current 12-hour shift pattern and working conditions will continue during the negotiations on total salary package. This agreement will be modified with respect to working conditions in accordance with the outcomes of those negotiations (including arbitration if necessary). The shift duration will not change with the outcomes of TSP negotiations, but may do so subject to business needs. If any party wishes to terminate this agreement, adequate notice will be given to allow appropriate consultation and negotiation. (our emphasis)

22 The respondent conceded that the reference to "total salary package" or "TSP" in the preamble is a reference to the annualised salary arrangement. As earlier mentioned, that agreement (which provides currently for the 37.7 per cent allowance) states that the annualised salary takes into account award prescriptions for shift work conditions, including roster loadings, shift allowances, weekend penalties and public holiday penalties.

23 As to the provision of the agreement which lies at the centre of the controversy, the respondent conceded that the words "pay as per roster" meant "pay as per the award", but submitted that, upon the proper construction of the agreement, the provision should be read as incorporating the following words "provided that such pay in the case of relief staff relieving on day shift is calculated with 20 per cent shift loading for 4 hours of the shift only". Thus, on the respondent's submission, the relevant component of the "12 hour roster" clause would be read as follows: Relief staff may elect to be paid Annualised salary or pay as per roster, provided that such pay in the case of relief staff working on dayshift is calculated with 20 per cent shift allowance for 4 hours of the shift only. (our emphasis)

The Decision at First Instance 24 The matter came before Commissioner Redman as an industrial dispute concerning the refusal by the respondent to pay relief workers the afternoon shift allowance under the terms of the award whilst they were engaged in relief work under a 12 hour shift arrangements.

25 The Commissioner joined to the s 130 proceedings related proceedings under s 379 of the Act whereby it was claimed that Mr Wayne Hutchison should receive a payment of $1,767.97 from the respondent for under payment of the shift allowance, the subject of the proceedings. It was agreed by the parties that Mr Hutchison was a day worker within the meaning of the award who had been transferred to work on a 12 hour roster.

26 The Commissioner determined the matter in favour of the respondent. He refused the claim for payment of the shift allowance for the full 12 hours of the 12 hour shift and refused the claim made on behalf of Mr Hutchison under s 379 of the Act.

27 The Commissioner's reasons for so finding may be summarised as follows: 1. The agreement arose in consequence of cl 24 of the award. 2. The relief day workers are subject to the terms of that agreement. 3. The concept of annualised salary was introduced for operators in the "Electricity Commission in December 1991 as part of an award restructuring exercise". That annualised salary has been continued to be paid to employees of the respondent since 1996. The annualised salary takes into account shift allowances under the award. 4. The agreement excludes the award. It was the intention of the parties to the agreement that the relief day workers would be paid under the agreement by payment of the annualised salary allowance or payment of the afternoon shift allowance for any part of the day shift of the 12 hour shift roster.

28 The Commissioner observed that the agreement commenced on 2 August 1997, after a trial, and it was the uncontroverted evidence before the Commission that one of the bases for the agreement was "cost neutrality". The Commissioner held that: On that basis the annualised salary rate for the 7x3 8-hour roster applied to the 7x2 12-hour roster. This resulted in the payment of shift allowance remaining unaltered at 16 hours for each 24 hour period. It is noted that the award provision relevant to the definition of afternoon shift continued to apply, pursuant to cl10.6(b), then the 20% shift allowance would have been payable for 24 hours each day. This would have increased the annualised salary percentage and would have been contrary to the requirement of cost neutrality. The annualised salary rate of 37.7% was provided under the agreement for all staff working on the 12 hour roster.

29 Those arrangements did not alter after a further trial of the 12 hour roster and the agreement was executed in November 1999.

30 The Commissioner relied in this respect upon the evidence of Mr Jones who was called by the respondent. He found that Mr Jones' evidence was that the parties to the 12 hour shift agreement agreed that the 12 hour shifts would be cost neutral and as a result the annualised salaries agreement employees are "predicated in the annualised salaries rate calculation with a payment of the afternoon shift allowance of twenty per cent for 4 hours only of the 12 hour shift worked in the 12 hour roster".

31 Redman C concluded that employees transferred to 12 hour shifts from day work are engaged under the terms of the agreement. He also noted the term "pay as per roster" was not defined in the agreement and was not referred to in the award (although he did not deal with the significance of these words in his decision). The Commissioner found that the relief officers were not entitled to the 20 per cent shift allowance for the full 12 hours of the day, in part, because "they would, as a result, receive a condition of employment not available to the permanent shift workers". He also concluded that on the evidence this was clearly not Delta's intention when negotiating with the Union for the introduction of 12 hour shifts.

32 As to the questions of interpretation of the award and agreement the Commissioner relied upon the decision of Sams DP in Broken Hill Chamber of Commerce and Barrier Industrial Council [2002] NSWIRComm 89 at [13]. In the light of that decision, the Commissioner concluded, in a key component of his reasoning, that: The effect of the Union's claim is that, if granted, employees concerned in this matter would be entitled to be paid an additional 8 hours at 20 per cent of single time for each day shift worked. I find on the evidence that it was not the intention of the parties to the Award and the Agreement to give effect to the Claim now pressed by the Union.

Evidence 33 We do not propose to discuss the entirety of the evidence in the proceedings but will consider shortly the evidence of Mr Jones having regard to the Commissioner's reliance upon his evidence in coming to his decision.

34 Mr Jones was the production manager at Wallerawang employed by the respondent. He was responsible for the operation of the Wallerawang power station situated near Lithgow. He gave detailed evidence regarding annualised salary arrangements which we do not repeat. As to the 12 hour shift arrangement for Mount Piper, he stated that he was aware that one of the principles agreed between the parties at the time was that "the introduction of a 12 hour shift roster should be cost neutral as compared to an 8 hour shift roster." He further deposed that "one aspect of ensuring cost neutrality was that the Annualised Salary rate calculated for 8 hour shifts would be applied to the 12 hour roster."

35 Mr Jones further stated that, during the course of concluding an agreement as to the annualised salary arrangement, a debate ensued as to whether the afternoon shift allowance would be applied to the 12 hour day shift. He observed that the respondent had not accepted that the agreement would so apply for the purposes of assessing the annualised salary rate. He stated: Had the Annualised Salary agreement not been in place Delta would have ensured that the Award definition of the Afternoon shift was varied to cater for 12 hour shifts. I am certain that the introduction of the trial of 12-hour shifts would have been acceptable to Delta only on the basis that the 20 per cent shift allowance was not payable for the full 12 hours of the day shift. This would have ensured cost neutrality for 12 hour shifts.

36 As to relief production operators, Mr Jones noted: [I]n order to provide greater flexibility in the taking of leave the station operations and for future training of operating staff, Mount Piper has established and maintains a crew of production officers based on day work.

37 In his statement, Mr Jones gave evidence that he had considered the question of the payment for shift work for relief production officers (presumably when evaluating any amendment to the enterprise agreement put in place for the trial period) and had been concerned that the application of the annualised salary rate to them may disadvantage them if they were required to work a disproportionate number of weekends or public holidays (because they did not work for a full year on the 12 hour shift roster).

38 He then gave evidence that: [T]o overcome this possibility, I decided that the Relief Production Officers should be given the choice between annualised salary and a payment based on Award conditions for weekends and public holidays. Hence the term "pay as per roster" was introduced in the section of the agreement headed "12 hour roster".

39 Mr Jones then proceeded to discuss the position regarding payment of the shift allowance in general terms and stated that "at no stage did I intend that the Relief Production Officers should be entitled for the 12 hour shift allowance for the full 12 hours of the day shift within the 12 hour roster" as "to do so would have meant that relief Production Officers would be in a more favourable position for payment for such shifts compared to the full time shift workers." He also stated that to do so would be to destroy "cost neutrality".

40 Finally Mr Jones stated that he understood the meaning of the words "pay as per roster" in the agreement as meaning payments made to shift workers when they are not working their normal shifts.

41 We make these initial observations about Mr Jones' evidence, in the context of the decision given by the Commissioner: 1. It was the evidence of Mr Jones that the Commissioner relied upon in reaching his decision as to the "intention" of the parties. 2. Whilst Mr Jones' evidence was emphatic that the respondent had resisted the payment of the afternoon shift allowance for the full 12 hours of the day shift in negotiations for the annualised salary arrangement, his evidence regarding the special arrangements for relief production officers was quite different. This evidence was couched in terms of equivocal language such as "at no stage did I intend" or "to do so would have meant". No direct evidence was given by Mr Jones as to an agreement having been concluded to the effect that the formula applicable to the calculation of annualised salaries would also operate with respect to the relief production officers (that is, the day workers acting in a relief capacity) so as to render those officers ineligible for payment of the shift allowance for the whole of the day shift. Rather the evidence suggests an ex post facto rationalisation being given by Mr Jones that such an agreement "could not have been" reached because of various factors. There was no evidence of a specific arrangement applying to day workers in relation to the payment of the shift allowance during the day shift. 3. This illustrates why it is inappropriate to construe instruments having regard to the subjective intentions of the parties. Evidence of those intentions rarely assist in understanding what is actually relevant to the interpretation of an instrument; for example, an examination of the purpose of the instrument when the instrument is considered in context. 4. Mr Jones' understanding as to the meaning of the words "pay as per roster" are, in fact, more consistent with the interpretation contended for by the appellant.

Submissions of the Parties 42 The submissions of the parties were directed to the construction of the award and the agreement. It is unnecessary to recount those submissions fully having regard to the conclusions we have reached. However, we would note briefly that the parties joined issue as follows: 1. The appellant submitted that the matter should be determined by reference to the plain words of the terms of the award. The respondent submitted that the appropriate instrument to consider in order to resolve the issues in the matter was the agreement. 2. As to the agreement, the respondent submitted that it was necessary to read the instrument in context with weight being given to every part of it. It was also necessary for the words in the agreement to be considered against the background of the circumstances under which the agreement was made. The Commission should have regard to the purpose and policy of any provision within it. 3. The respondent further submitted that the critical phrase within the agreement was that set out in the "12 hour roster" clause and in particular the words, "relief staff may elect to be paid Annualised Salary or pay as per roster." It was submitted that this provision does not have a plain meaning and is ambiguous. It was, therefore, appropriate for the Commissioner to have regard to extrinsic material in the construction of the agreement. 4. The respondent further submitted that it was necessary to consider the instrument in context and in this respect it was necessary to have regard to the preamble which made it plain that the parties had an intention to provide a benefit to relief day workers which did not include payment of the shift allowance for the full day shift. It was also necessary to have regard to the fact that shift workers on the 12 hour shifts did not receive an annualised salary based upon the payment of the afternoon shift for the full day shift. Thus, it was submitted, by considering the context of the phrase and the current working conditions existing at the time the agreement was made, the true intent of the parties in making the agreement may be ascertained. In this respect reliance was placed upon the evidence of Mr Jones. 5. The appellant for its part submitted that the agreement did not operate in the manner contended for by the respondent. It had to be read in the light of the provisions of the award and, in particular, the words "as per roster" should be read as incorporating, by the employee's election, the full effect of the award. It was further contended that neither the Commissioner's decision nor the respondent's position gave any real work for those words to do in the construction of the agreement. 6. The appellant submitted that the Commissioner erred in relying upon extrinsic material as to the subjective intention of the parties. 7. The appellant also submitted that the Commission should apply a beneficial construction in its consideration of the award and the agreement. The respondent replied by contending that such an approach is qualified by the rider that the interpretation adopted must be restrained within the confines of the actual language employed and what was fairly open on the words used.

Consideration Leave to Appeal 43 Despite submissions by the respondent to the contrary, we consider that the Commissioner did have regard to the subjective intention of the respondent or its officers in resolving the issues before him as to the construction of the agreement and the award which practically and logically resulted in there being insufficient consideration of the actual terms of the award. The application of that approach to the construction of an award or enterprise agreement is contrary to principle and is therefore of some significance for the industrial jurisprudence as to awards and enterprise agreements under the Act. In the circumstances of the present appeal it should lead to the grant of leave to appeal: see Knowles v Anglican Church Property Trust (No. 2) (1999) 95 IR 380. We therefore grant leave to appeal.

44 The reliance on the subjective intention of the parties in the interpretation of the industrial instruments involves error in principle thus requiring appellate intervention: see, for example, House v The King (1936) 55 CLR 499. Further, we consider that, by adopting that approach, the Commissioner erred by failing to have sufficient regard to the actual terms of the instruments being construed, namely the terms of the award and the agreement. Nor was the Commissioner's approach consistent with the normal approach to interpretation, including interpretation of awards, which requires the particular words or phrases under consideration to be considered in their context (for example, Fox v GIO Australia Ltd [2002] NSWIRComm 318 and Perisher Blue Pty Ltd v Australian Workers' Union (1999) 91 IR 274 at 283). The evidence of Mr Jones does little to provide material which is likely to assist in the construction of the instruments, save to the extent that it placed in evidence part of the history of the various provisions (which is a matter often relevant to the interpretation of awards and agreements: Perisher Blue at 284).

45 We note that the Commissioner did correctly endeavour to give a purposive construction to the relevant provisions but the attempt was affected by the reliance on the subjective intention of the parties.

46 When the respective instruments are considered, having regard to the orthodox approach to interpretation (see, for example, the authorities cited above; Kingmill Australia Pty Ltd T/as Thrifty Car Rental v Federated Clerks' Union of Australia, New South Wales Branch (2001) 106 IR 217 at 228 - 230; Re State Rail Authority Firefighters Award 2001 [2002] NSWIRComm 159 and CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408), the resolution of the issues in this matter is relatively straightforward. The plain words of the agreement permit a relief day worker to elect to be paid in accordance with the award. This interpretation is derived from the words "or pay as per roster" which is found within the clause entitled "12 hour roster" in the agreement. This approach does not require too literal an interpretation of the instrument. In any event, the same conclusion is reached whatever analytical approach to the construction is adopted.

47 The Preamble to the agreement does refer to a restriction upon the payment of the 20 per cent shift allowance to 16 hours in a 24 hour "12 hour shift" period but this is a reference to the negotiation of the annualised salary package and not the provision of an entitlement for relief day workers which was treated under the terms of the agreement as a matter for separate and special consideration. Thus, when the agreement is considered in context it becomes clear that a different arrangement was reached for employees moving from day work to 12 hour shift arrangements than that applying to permanent shift employees who work under an "annualised salary arrangement". Indeed, this interpretation is confirmed by the approach of the respondent to the appeal where it was obliged to contend for the incorporation of additional words in the relevant clause of the agreement to make out its case.

48 The conclusion we have reached is also entirely consistent with a purposive approach to interpretation. The relevant evidence at first instance revealed that employees who move from day work to shift arrangements generally received special protection under the award (see cl 10.28). The same approach was adopted in the agreement so as to take account of the fact that the engagement of a day worker on a 12 hour shift basis may lead to some real disadvantage if the 37.7 per cent allowance was paid to that employee. The election afforded a day work relief employee within the 12 hour shift roster provision of the agreement, by allowing for reversion to the award, was designed to protect that employee's rights, which may be adversely affected by the application of the annualised salary arrangements. Thus, the special arrangements under the agreement for day workers transferring to 12 hour shifts conforms with the general approach under the award where an employee moves from day work to shift work. In those circumstances, the entitlement of the employee is clear and conforms with the appellant's approach on the appeal.

49 There may well have been a debate about "cost neutrality" in the negotiations for the annualised salary arrangements but there is no clear evidence as to how that notion or concept was to apply in the case of day relief workers engaged on the 12 hour shift system. It was acknowledged in the evidence of Mr Jones that different outcomes for an employee (and hence variations in costs) may arise depending on the mode of engagement of the day relief worker on the 12 hour shift roster. There was, in fact, no evidence before the Commissioner or before us as to the respective costs of the appellant's and respondent's contentions in this case. Thus, the issue of "cost neutrality" does not assist in resolution of the issues of construction, even on a purposive approach.

50 The overall purpose of the relevant provision of the agreement is, in our view, to afford some protection to a relief day worker who is engaged on a 12 hour shift basis (and, therefore, not permanently engaged under those arrangements where there would be a proper balancing of benefits and costs as was done in the case of the annualised salary arrangements).

51 Once it is concluded that the agreement operates so as to enable the employee to elect to claim the full benefit of the award it follows that the Commissioner's findings were erroneous because, as the respondent concedes, the award provides for the afternoon shift allowance being paid for the entire day shift of the 12 hour shift roster.

Conclusion 52 The appeal should therefore be upheld. The effect of our decision is to declare that the award governs the terms and conditions of a day relief worker when such employee is engaged on a 12 hour shift roster and elects to have the award apply to him or her. Where the day worker so elects, the award provides for the payment of a shift allowance of 20 per cent for each hour worked during the day shift of the 12 hour shift. Our conclusion would also result in the grant of particular relief to Mr Hutchison although we do not have the material which would enable us to precisely compute the sum of money which should be awarded to him.

53 The appellant should therefore file and serve draft orders within 21 days to give effect to this decision.

54 The Full Bench orders: 1. Leave to appeal granted.

Appeal upheld and the decision at first instance is set aside.

The appellant shall file and serve draft orders to give effect to this decision within 21 days. __________________

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At a glance

Court

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Before

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Judgment (73 paragraphs)

Parties

Cases Cited (8)