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[2021] FWCFB 6045
General information, not legal advice.
Fair Work Commission (Full Bench)
2021-11-10
Original judgment source is linked above.
Section 604 - Appeal of decisions
Appeal against decision [2021] FWC 4123 of Commissioner Williams at Perth on 21 July 2021 in matter number C2021/300 - whether jurisdiction to determine dispute under enterprise agreement - calculation of entitlement to personal/carers leave - determination consistent with agreement and NES - permission to appeal granted - no appealable error - appeal dismissed
[1] The Community and Public Sector Union (CPSU) has lodged an appeal, for which permission is required, against a decision of Commissioner Williams issued on 21 July 2021[1] concerning the entitlement to personal/carer's leave under clause 33 of the Serco CPSU Acacia Prison General Enterprise Agreement 2019 (Agreement).[2]
[2] The Respondent to the appeal is Serco Australia Pty Ltd (Serco).
[3] In advance of the appeal being determined, the CPSU applied for a stay. By decision of a Commission Vice President issued on 17 August 2021 the stay application was dismissed.[3]
[4] The appeal (including the application for permission) was heard on 20 October 2021.
[5] Permission was granted for the Appellant and Respondent to be represented.
[6] The decision under appeal concerned an application by Serco under section 739 of the Fair Work Act 2009 (FW Act) for determination of a dispute. The application came before the Commissioner via clause 48 Dispute Settlement Procedure of the Agreement.
[7] The original dispute concerned the Personal/Carer's Leave provisions of the Agreement. Clause 33.2 of the Agreement is in the following terms:
"In accordance with the provisions of the NES, full time and part time Employees are entitled to 10 days of paid personal / carers leave per year of service."
[8] Clauses 33.3, 33.4 and 33.5 address how the NES provisions are interpreted and applied to employees covered by the Agreement.
[9] In proceedings before the Commissioner, Serco contended that, as a consequence of the High Court decision in Mondelez Australia Pty Ltd v AMWU[4] (Mondelez HC) the quantum of the annual entitlement to personal/carer's leave under clause 33.2 of the Agreement was that specified in column A of clause 33.4 (clause 33.4 is reproduced below).
[10] The Commissioner agreed with this contention and found:
"[145] My decision is that the rate of accrual for personal/carer's leave for an employee under the Agreement is 10 days of paid personal/carer's leave per year of service, which in hours consistent with Mondelez HC is,
An employee's fortnightly ordinary hours, or if they do not work a fortnightly roster 1/26 of that employee's annual ordinary hours, provided that for employees in the classifications who work the corresponding shift patterns detailed in the table at 33.4 of the Agreement their rate of accrual shall be no less than the number of hours set out in Column A of the table."
[11] In Mondelez HC the High Court upheld an appeal against a decision of a Full Court of the Federal Court[5] concerning the NES entitlement to personal/carer's leave in section 96(1) of the FW Act and made a declaration that section 96(1) is to be construed in the following way:
"The expression '10 days' in s 96(1) of the Fair Work Act 2009 (Cth) means an amount of paid personal/carer's leave accruing for every year of service equivalent to an employee's ordinary hours of work in a week over a two-week (fortnightly) period, or 1/26 of the employee's ordinary hours of work in a year. A 'day' for the purposes of s 96(1) refers to a 'notional day', consisting of one-tenth of the equivalent of an employee's ordinary hours of work in a two-week (fortnightly) period."
[12] The Commissioner found that, while the Agreement was being negotiated, the Federal Court Full Court's Mondelez decision had been delivered, and that clause 33.3 of the Agreement and column B of clause 33.4 reflected the interpretation of section 96(1) determined in that decision. However, it also became known during the negotiation of the Agreement that the Full Court's decision had been appealed and that the High Court had granted special leave to appeal. The Commissioner found that Column A represented the personal/carer's leave entitlement as it was under the preceding enterprise agreement based on the parties' shared understanding of section 96(1) prior to the Full Court decision. The Commissioner said, in relation to clause 33.5:
"[140] Clause 33.5 of the Agreement is an agreed process to deal with any change in the interpretation of the application of clause 33.2, the entitlement to 10 days personal /carer's leave per year of service. Clause 33.5 means that should there be such a change the parties will negotiate any consequences and claims arising from a change are not subject to the no further claims clause. If the parties do not reach agreement on those changes within a six-months period either party may refer the matter to the Commission in accordance with clause 48 Dispute Resolution Procedure.
[141] Clause 33.5 also means the parties agree the outcome of any referral to the Commission will not be less than the entitlement in Column A of the table in 33.4. The Respondent also agrees not to attempt to recover personal/carer's leave payments already made to an employee prior to the outcome of the referral to the Commission."
[13] Clauses 33.2 and 33.3 of the Agreement specify the entitlement to personal/carer's leave for full-time and part-time employees in the following terms:
"33.2 In accordance with the provisions of the NES, full time and part time employees are entitled to 10 days of paid personal/carer's leave per year of service.
33.3 Consistent with the current application of the NES provisions, when taking paid personal leave, the Employee will be paid for the ordinary hours of work they were allocated to work and otherwise would have for the day in question."
[14] Clause 33.4 quantified the entitlement in terms of hours per year for different shift patterns as follows:
"33.4 The table below details the Serco CPSU Acacia Prison General Enterprise Agreement 2017 entitlement in Column A, and the entitlement under this Agreement in Column B:
"33.5 The parties acknowledge that should the interpretation of the application of clause 33.2 above change during the period of this Agreement, the parties will negotiate any consequences in accordance with clause 4.1 of this Agreement. Should the parties not be able to reach Agreement on those changes within a six month period, either party may refer the matter to the Fair Work Commission in accordance with clause 48 Dispute Resolution Procedure. The parties collectively commit to the outcome of any such referral not being less than the entitlement in Column A above. The Employer acknowledges that should this occur, no attempt will be made to recover personal leave payments made to any Employee up till that time."
[16] Clause 4.1, which is referred to in the above provision, provides:
"4.1 With the exception of sub clause 3.2, and if relevant sub clause 33.5, it is agreed by the parties that up to the nominal expiry date of this Agreement, the parties will not pursue any further claims, and that this Agreement will cover all matters regarding employment conditions."
[17] Clause 48 contains the Agreement's dispute resolution procedure. Under clause 48.7(b), the Commission may arbitrate a dispute referred to it should the dispute not be resolved pursuant to the prior steps in the procedure. Relevantly clause 48 provides:
"48.7 If discussions at workplace level do not resolve the dispute, a party to the dispute or their representative may refer the matter to the FWC. The FWC may deal with the dispute in two (2) stages:
48.8 In resolving the dispute the FWC can exercise any of its powers under the Fair Work Act in relation to conciliation conferences, hearings, witnesses, evidence and submissions which are necessary to make the resolution of the dispute effective.
48.9 The parties to the dispute will be bound by and implement any decision of the FWC subject to an appeal to the Full Bench of the FWC."
[18] The CPSU's notice of appeal, as originally filed, contained four grounds:
1. The Commission erred at law by making a decision that contravened section 739(5) of the Fair Work Act 2009 (Cth) (FW Act).
The effect of the judgement is to re-write the provisions found at clause 33 of the Serco CPSU Acacia Prison General Enterprise Agreement 2019 [AE508713] (the Agreement).
2. The Commission erred at law by acting outside the jurisdiction afforded by section 739 of the FW Act.
By varying the Agreement, the Commissioner acted beyond power and outside the jurisdiction of the application made under s 739 FW Act because he varied the Agreement absent any application under sections 207, 217 or 217A of the FW Act.
3. The Commission erred at law at [142] of the judgement by finding that the Mondelez High Court judgement retrospectively changed the objective meaning of clause 33.2 of the Agreement (Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union; Minister for Jobs and Industrial Relations v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] HCA 29 (13 August 2020).
By attributing a replacement meaning to clause 33.2 of the Agreement based on an assessment of new circumstances that did not exist at the time the agreement was made, the Commissioner incorrectly applied the principles of interpretation as articulated in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, of which principles were endorsed in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Berri Pty Limited [2017] FWCFB 3005 (Berri).
4. The Commission erred at law because it failed to apply, or properly consider the Berri principles as they concern the interpretation of industrial agreements.
[19] In advance of the appeal hearing the CPSU sought leave to advance a fifth appeal ground - that the application at first instance was premature and as such not made in accordance with the dispute resolution procedure in the Agreement. Though granting leave was opposed, leave was granted given that the new appeal ground asserted a further ground of jurisdictional error. In the amended Notice of Appeal, the fifth appeal ground was expressed as follows:
5. The Commission erred at law by dealing with the matter at first instance (Serco Australia Pty Ltd v CPSU, the Community and Public Sector Union [2021] FWC 4123) in circumstances where the Commission did not have jurisdiction to deal with such matter as the six month precondition at clause 35.5 of the Serco CPSU Acacia Prison General Enterprise Agreement 2019 to refer the matter to the Commission had not been met.
[20] Serco made oral submissions on all appeal grounds and filed additional written submissions on the fifth appeal ground.
[21] An appeal under section 604 of the FW Act is an appeal by way of rehearing. The Commission's powers on appeal are only exercisable if there is error on the part of the primary decision maker.[6] There is no right to appeal and an appeal may only be made with permission of the Commission.
[22] 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 appealable error.[7] 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.[8]
[23] For reasons below, we have decided to grant permission but dismiss the appeal.
[24] Broadly speaking, the amended Notice of Appeal contends that permission to appeal should be granted because the appeal raises an important question of jurisdiction in the arbitration of disputes under section 739 of the FW Act (including dealing with an application pre-emptively made), the Commissioner acted upon wrong principles at law and had fallen into appealable error, and the legal principles applied by the Commissioner in interpretating the Agreement were inconsistent with those stated in the Full Bench decision in AMWU v Berri Pty Limited.[9]
[25] Permission is granted because we are satisfied it is in the public interest to determine an appeal such as this that raises a novel question concerning the private dispute settlement jurisdiction of the Commission. The novel question arises because the Agreement permits the referral to the Commission of a dispute about terms contingent on the outcome of known and pending High Court litigation. But for this novel question we would not be inclined to grant permission to appeal.
[26] We now deal with the grounds of appeal.
Ground 1: the decision contravened section 739(5)
[27] Section 739(5) of the FW Act provides:
"(5) Despite sub section (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties."
[28] The CPSU contend in ground 1 that the effect of the decision was to re-write the provisions found at clause 33 of the Agreement, and was thus inconsistent with a fair work instrument.
[29] We do not agree.
[30] It was not in dispute before the Commissioner that the substantive entitlement to personal/carer's leave under the Agreement is prescribed in clause 33.2, which incorporates by reference the NES entitlement in section 96(1) of the FW Act. That alone makes the Mondelez judgments directly relevant to the operation of the personal/carer's leave entitlements under the Agreement. Clause 33.3 sets out the "current application of the NES provisions" - that is, the construction of section 96(1) preferred in the Federal Court Full Court's Mondelez judgment and which applied at the time the Agreement was negotiated and made.
[31] The CPSU's appeal does not challenge the Commissioner's factual findings as to the objective background facts known to the parties at the time that the Agreement was negotiated, namely the delivery of the Federal Court Full Court's Mondelez judgment and the High Court's grant of special leave to appeal that judgment. Those objective background facts legitimately inform the construction of the relevant aspects of clause 33 of the Agreement.
[32] We do not consider that the Commissioner inappropriately relied upon extrinsic material associated with the negotiation of the Agreement or that any such reliance constituted error on the Commissioner's part, as contended by the CPSU. The CPSU in is written submissions on appeal accepted that the evidence established the parties "were uncertain about what to do once the judgement in Mondelez HCA was handed down".[10] The evidence before the Commissioner was uncontested that clause 33 (including clauses 33.4 and 33.5) were negotiated and agreed in the context of the Mondelez litigation proceeding from the Full Federal Court to the High Court and that the outcome of that litigation could bear relevantly on the personal/carers leave entitlement in clause 33.2. In Berri, the Commission made it clear that evidence of surrounding circumstances in the form of objective background facts is well able to be taken into account when interpreting agreements.[11] What the Commissioner took into account were objective background facts, not subjective opinions.
[33] The Commissioner was not in error, as the CPSU contend on appeal, to conclude that the negotiations and application contemplated by clause 33.5 related to the Mondelez litigation. That clause 33 makes no express reference to the Mondelez litigation is of no moment given that the objective facts as found by the Commissioner clearly establish that proposition and thus properly informed the construction the Commissioner applied to clause 33.5. Moreover, ground 5 of the appeal relies on the CPSU's claim that clause 33.4 imposes a 6-month restraint on the parties referring a dispute about clause 33 to the Commission. The CPSU argued that this restraint period under clause 33.5 commenced when the High Court delivered its decision in Mondelez HC. Quite obviously both propositions - that clause 33.5 does not refer to Mondelez HC and that the restraint in clause 33.5 is referrable to Mondelez HC - cannot be correct.
[34] It is clear from the words of clause 33.5, when read in context, that it is clause 33.2 which provides the entitlement to personal/carers leave for employees covered by the Agreement. Further, the opening sentence of clause 33.5 expressly contemplates that the "interpretation of the application of clause 33.2 above" might change during the period of operation of the Agreement. This can only reasonably be read as meaning that the "current application of the NES provisions" set out in clause 33.3, which reflected the Full Court's Mondelez decision, might be altered as a result of the High Court's appeal decision. That is the way the Commissioner construed it, and the CPSU's appeal did not contend that he erred in doing so. That opening sentence identifies the function and purpose of clause 33.5 - namely, to deal with the "consequences" if the High Court appeal succeeded. The cross-reference to clause 4.1, and the exception for clause 33.5 in the "no further claims" requirement in clause 4.1, indicates that parties might advance claims about the interpretation and application of clause 33.2 in light of the High Court's decision.
[35] It is also clear from clause 33.5 that, in the absence of agreement as to "those changes" which might be necessary in light of the High Court's decision, the Commission had the power to arbitrate the issue, including any claims which might be advanced to deal with the consequences of the decision. This did not authorise the Commission to change the basic entitlement prescribed by clause 33.2, but it did authorise the Commission to determine the way in which the entitlement was applied. as set out in clause 33.4, to reflect the construction of section 96(1) determined by the High Court. The Commission's determination may then require the parties to change how the Agreement is applied at the workplace - but that is not the same as varying the Agreement. That the Commission was authorised to do so is made explicitly clear by the second last sentence in clause 33.5: "The parties collectively commit to the outcome of any such referral not being less than the entitlement in Column A above". This sentence demonstrates that the Commissioner was empowered to arbitrate an "outcome" which comprised something different to Column B of clause 33.4, provided that it was not less than Column A. The last sentence of clause 33.5, "The Employer acknowledges that should this occur, no attempt will be made to recover personal leave payments made to any Employee up till that time", further confirms that an arbitrated "outcome" which changed the quantum of personal leave payments to employees would be authorised by clause 33.5.
[36] Ground 1 is rejected.
Ground 5: the decision contravened section 739(5) in that it was premature
[37] An associated challenge to the Commissioner's decision is appeal ground 5 whereby the CPSU contend that the decision is inconsistent with the Agreement because the originating application by Serco was made before the period of six months referred to in clause 33.5 had expired. The CPSU contend that clause 33.5 mandates a period of six months consultation and requires the full period of six months to expire before an application for dispute resolution could be lawfully made. The CPSU submit that only five months had expired following the High Court's Mondelez decision (and, by inference, a lesser period of negotiation) and therefore Serco's application was fatally premature. Further, the CPSU submit that dealing with a premature application was a jurisdictional error, and not an irregularity that could be cured by section 586 of the FW Act.
[38] In response, Serco submit that the CPSU's construction of clause 33.5 is wrong in that the clause places an outer limit of six months on negotiations but does not make applications within six months impermissible if negotiations have occurred and the dispute remains unresolved. Serco also rely on the fact that the CPSU expressly accepted the Commission's jurisdiction at first instance, did not raise an objection before the Commissioner based on the asserted 'six month rule' and advised Serco inside the six month period (and prior to the application being filed) that "there seems very little prospect of reaching any compromise acceptable to both parties the option of the Fair Work Commission seems all that remains".[12]
[39] As noted, leave was granted for Ground 5 to be advanced notwithstanding that Serco are factually correct on the aforementioned matters. The Commission has an obligation to satisfy itself as to jurisdiction. Jurisdiction, if it does not exist, cannot be conferred by joint or singular submission of the parties whether expressly or by inference drawn from participation in proceedings.
[40] However, we reject the submission that the Commissioner fell into jurisdictional error in determining a premature application, for three reasons.
[41] Firstly, clause 33.5 does not create the precondition asserted. Under clause 33.5 the condition precedent for such applications is whether the parties are able "to reach agreement on those changes within a six month period". It is the negotiations that are mandated, not the making of applications for conciliation or arbitration. Secondly, clause 33.5 refers to negotiations occurring "within" a six month period. Use of the term "within" strongly suggests that the six month stipulation is an outer limit for the negotiations. It follows that failure by the negotiating parties to reach agreement inside a six month period was sufficient to trigger a right to make an application to determine the dispute. Clearly negotiations had reached an impasse, as evident by the CPSU's email to Serco on 24 November 2021. Thirdly, the application came before the Commissioner not simply by virtue of clause 33.5 but under clause 48 Dispute Resolution Procedure. The making of the application before the Commissioner was authorised by clause 48.7 and not prohibited by clause 33.5 at the time it was made.
[42] We observe that it is inconsistent with the just and efficient settlement of disputes if negotiating parties during a stipulated negotiating period reach an irreconcilable stalemate, but the dispute is required to fester for the remainder of that period before consent conciliation or arbitration can be accessed. For that consequence to arise, it would require clear and unambiguous language. Such a consequence is neither required by the terms of clause 33.5 nor the dispute settlement procedure in clause 48, nor by sections 595 or 739 of the FW Act.
[43] Having so concluded, it is not necessary to deal with Serco's further submission that the application was not premature because six months had elapsed by the time the CPSU expressly accepted jurisdiction, or that premature applications can be cured as an irregularity using discretionary powers under section 589.
[44] It follows that the Commissioner did not conduct arbitration on an application pre-emptively made. Ground 5 is rejected.
Ground 2: excess of jurisdiction by varying the Agreement
[45] As noted in the stay decision, ground 2 is, in substance, an alternative formulation of ground 1. The Commissioner did not vary the terms of the Agreement. The contention that the Commissioner "re-wrote" clause 33 of the Agreement by making a ruling that was inconsistent with clauses 33.3 and column B of 33.4 is not made out. To the extent that the Commissioner determined that the High Court's Mondelez interpretation should apply to the entitlement in clause 33.2 and that this entitlement should operate in practice in accordance with Column A of clause 33.4, the Commissioner was plainly authorised to do so by clause 33.5. As earlier noted, the Agreement must be read as a whole. Clause 33.5 should not be read in isolation from the remainder of clause 33. That clause 33.5 refers to 'Column A' is a clear reference to the 'Column A' in clause 33.4. Thus, it cannot be said that an application under clause 33.5 could not deal with the entitlement created by clause 33.2 and expressed in clause 33.4.
[46] As a consequence of the Commissioner's decision, the entitlement to personal/carer's leave in clause 33.2 remained unchanged. The Commissioner made an arbitral determination concerning the interpretation and practical application of that entitlement which he was authorised to make pursuant to clauses 33.5 and 48.7(b).
[47] Ground 2 is rejected.
Ground 3: error of law in applying Mondelez HC decision
[48] As also noted in the stay decision, ground 3 is fundamentally misconceived. Clause 33.2 reflects the minimum statutory entitlement to personal/carer's leave in section 96(1) of the FW Act. The High Court's Mondelez decision provided a judicial determination of the meaning of section 96(1) - being the meaning that the section has always had. The High Court applied the meaning retrospectively, but the High Court did not "retrospectively change its objective meaning", as suggested by the appellant. That is, as a matter of law clause 33.2 and the NES entitlement of section 96(1) necessarily always had the same objective meaning.
[49] The Commissioner exercised the power he correctly considered was available by clause 33.5 to apply the interpretation of section 96(1) endorsed by the High Court in the Mondelez HC decision (which was delivered shortly after the Agreement was approved), with the consequence that the entitlement to personal/carer's leave, expressed in hours, was and is the hours identified in column A of clause 33.4.
[50] Thus, the Commissioner did not "attribute a replacement meaning to clause 33.2 ... based on an assessment of new circumstances that did not exist at the time the agreement was made" as asserted by this appeal ground. Rather, he applied the proper meaning of clause 33.2 that it always had including at the time the Agreement was made.
[51] Ground 3 is rejected.
Ground 4: error of law in applying Berri principles
[52] For reasons already stated, the Commissioner adopted a correct construction of the relevant provisions of clause 33. There was no misapplication of the Berri principles that guide construction of industrial instruments.
[53] Ground 4 is rejected.
J Raftos (of counsel) with D Stojanoski, with permission for CPSU, the Community and Public Sector Union
V Bulut (of counsel) with S Crilly and B Dudley, with permission for Serco Australia Pty Ltd
CPSU, the Community and Public Sector Union - 21 October 2021
[4] [2020] HCA 29; 381 ALR 601; 297 IR 338 (Mondelez HC)
[5] [2019] FCAFC 138; 270 FCR 513; 289 IR 29
[6] This is so because on appeal the Commission has power to receive further evidence, pursuant to s 607(2); see Coal and Allied Operations Pty Ltd v AIRC [2000] HCA 47, 203 CLR 194, 74 ALJR 1348, 174 ALR 585, 99 IR 309 at [17] per Gleeson CJ, Gaudron and Hayne J
[7] Wan v AIRC [2001] FCA 1803, 116 FCR 481 at [30]
[8] Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089, 202 IR 388 at [28], affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler [2011] FCAFC 54, 192 FCR 78, 207 IR 177; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663, 241 IR 177 at [28]
[10] Appellant Outline of Submissions paragraphs 22 and 23
[11] [2017] FWCFB 3005, [114]
[12] Email 24 November 2020 at BJW-5 to Statement of Brenton John Williams
Printed by authority of the Commonwealth Government Printer
CPSU, the Community and Public Sector Union
Serco Australia Pty Ltd [2021] FWCFB 6045
(1982) 149 CLR 337