[2020] FWC 6186

Fair Work Act 2009

s.739 - Dispute resolution

Maritime Union of Australia Division of the Construction, Forestry, Maritime, Mining and Energy Union

Application to deal with a dispute in accordance with a dispute settlement procedure in an enterprise agreement - alleged custom and practice concerning overtime.

[1] The Construction, Forestry, Maritime, Mining and Energy Union, Maritime Union of Australia Division (MUA) and GrainCorp Operations Limited (GrainCorp) are in dispute about the operation of an overtime roster for employees who work at GrainCorp's Newcastle terminal (Dispute).

[2] On 10 August 2020 the MUA filed an application pursuant to s 739 of the Fair Work Act 2009 (Cth) (Act) in the Fair Work Commission (Commission) for the Commission to deal with the Dispute pursuant to clause 11 of the GrainCorp Operations Limited (Newcastle Terminal) Enterprise Agreement 2019 (Agreement). That clause "sets out the procedures to settle any dispute about any matters arising under this Agreement, or any matter arising in the course of employment, and in relation to the NES". Step 5 of the procedure established by clause 11.1 of the Agreement provides that an unresolved dispute may be referred to the Commission for conciliation and/or arbitration.

[3] I conciliated the Dispute but could not resolve it. The MUA then asked for the Dispute to be arbitrated.

[4] There is no dispute between the parties, and I am satisfied on the evidence, that I have jurisdiction to arbitrate the Dispute. The arbitration hearing took place, by video conference, on 9 November 2020.

[5] The Agreement covers grade 1 to 7 employees of GrainCorp who are employed at the Newcastle grain terminal operated by GrainCorp (Employees), including the road/rail receival and loading/unloading facilities, silo storage facility, grain laboratory, and ship loading/unloading facilities on No 3 Western Basin Berth, located at Carrington, New South Wales (Carrington Terminal).

[6] There is no dispute that an overtime roster has been in place for many years for Employees working at the Carrington Terminal. The overtime roster records the overtime hours offered to an Employee. When an Employee is offered available overtime, the amount of overtime offered to the Employee is added to the Employee's tally of total overtime (Overtime Tally). It does not matter whether the Employee works the overtime offered to them; once the overtime is offered to the Employee it counts towards the Employee's Overtime Tally.

[7] The Employee with the highest Overtime Tally falls to the bottom of the overtime roster. The Employee with the lowest Overtime Tally sits on the top of the overtime roster. All other Employees are placed in order on the overtime roster, such that an Employee with a lower Overtime Tally than another Employee sits above them on the overtime roster. Once overtime becomes available to be worked by an Employee at the Carrington Terminal, the Employee at the top of the overtime roster is offered the overtime ahead of any other Employee, provided the Employee at the top of the roster has the requisite skills to undertake the overtime work, otherwise the overtime is offered to the next Employee on the roster who has the required skills to undertake the overtime work.

[8] The amount of overtime to be worked at the Carrington Terminal is decided by the Site Manager at the Carrington Terminal. That person is currently Mr Jade Mann. Once the amount of overtime is determined, a supervisor employed by GrainCorp allocates the available overtime in accordance with the overtime roster.

[9] Clause 27 of the Agreement governs a range of matters concerning overtime, such as payment for working overtime, rest periods after overtime, task based overtime, overtime for shiftworkers, cancellation of overtime, time off in lieu of payment for overtime, and indicative staffing numbers when overtime is worked, but neither clause 27 nor any other provision in the Agreement records or governs the establishment of an overtime roster, the manner in which the overtime roster is arranged, or how overtime is allocated in accordance with the overtime roster.

[10] GrainCorp previously operated a storage facility at Kooragang Island which is located about 13.5 kilometres from the Carrington Terminal. There were only one or two permanent employees based at the Kooragang Island storage facility. From time to time, Employees based at the Carrington Terminal, particularly those Employees with weighbridge experience, worked at the Kooragang Island storage facility for a discrete period of time, such as a day or up to a week. GrainCorp ceased operations at its Kooragang Island storage facility in 2016.

[11] It is common ground that any overtime offered to an Employee at the Kooragang Island storage facility was counted towards that Employee's Overtime Tally for the purpose of the overtime roster and determining which Employee would be offered the next available overtime at the Carrington Terminal.

[12] The first time an Employee went on a regional secondment to one of GrainCorp's other operations was in November/December 2017. At that time Mr Jack Forman was away from the Carrington Terminal on secondment to GrainCorp's country New South Wales operations and in Victoria for over six weeks. The overtime worked by Mr Forman on this secondment was not counted towards his Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal. The MUA says that was because Mr Forman was paid a lower rate of pay for his work on secondment than he would have been paid had he worked at the Carrington Terminal during that time.

[13] The second time an Employee went on a regional secondment to one of GrainCorp's other operations was in October/November 2018. At that time Mr Forman and Ms Huia Raniera were away from the Carrington Terminal on secondment to GrainCorp's Brisbane terminal for about two weeks. When Mr Forman and Ms Raniera returned to the Carrington Terminal after their secondment to the Brisbane Terminal, they were told by some Employees that the overtime worked by them on secondment would be included in their Overtime Tally.[1] In response, Mr Forman and Ms Raniera said they were not aware that overtime worked by them on secondment would be counted towards their Overtime Tally. On 5 December 2018 the Employees voted (nine for and five against) that the overtime hours worked by Mr Forman and Ms Raniera on secondment in Brisbane would not count towards their Overtime Tally. The MUA says that this decision was made because the Employees gave Mr Forman and Ms Raniera the benefit of the doubt in relation to their claim that they were not aware of the practice of overtime worked on secondment as counting towards their Overtime Tally. In the result, the overtime worked by Mr Forman and Ms Raniera on secondment in Brisbane in October/November 2018 was not counted towards their Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal.

[14] On 5 December 2018 the Employees held a vote to determine whether they wanted overtime worked by an Employee while on a regional secondment to be included in the Employee's Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal. Twelve Employees voted in favour of what they said was the 'status quo' and two voted against it. GrainCorp did not become aware of this vote of Employees until November 2019.

[15] The third occasion on which Employees went on a regional secondment was in November/December 2019. At that time four Employees were away from the Carrington Terminal on secondment to GrainCorp's Victoria operations for several weeks. The overtime worked by these four Employees on this secondment was counted towards their Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal. In November 2019 GrainCorp became aware, for the first time, that the overtime worked by these four Employees on secondment was being counted towards their Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal. Upon becoming aware of this, GrainCorp put a stop to it. Mr Mann's reasons for doing so were (a) he considered it unfair for those Employees who had left their friends and family behind to go on secondment, in order to help GrainCorp and their peers out, to have the overtime worked by them on secondment included in their Overtime Tally and (b) if seconded overtime was included in an Employee's Overtime Tally, there would be no incentive for Employees to go on secondment. The main reward for an Employee to go on secondment is the opportunity to work at the seconded site, where there is typically more overtime available on account of a substantial harvest or other event in the vicinity of the site to which the Employee has been seconded.

[16] On 19 December 2019 the Employees held a second vote to determine whether they wanted overtime worked by an Employee while on a regional secondment to be included in the Employee's Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal. Eleven Employees voted in favour of the proposition and five voted against it.

[17] Other Employees have gone on regional secondments in 2020. GrainCorp has not allowed overtime worked by these Employees on secondment to count towards their Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal. The MUA does not agree with this practice. That is why the parties are in Dispute.

[18] At some time during the period from January to April 2020, GrainCorp implemented what it described as a 'concession' whereby any overtime that would have been offered to the Employee had they remained working at the Carrington Terminal during the period of their regional secondment is included in the Employee's Overtime Tally. GrainCorp contends that its 'concession' in this regard deprives the MUA's claim of any merit because it means that the position of every Employee in the overtime roster does not change in any way when an Employee goes on secondment.

[19] The MUA contends that the Commission, in exercising its powers of private arbitration, should resolve the Dispute by recognising the custom and practice at the Carrington Terminal vis a vis the overtime roster, and requiring GrainCorp to comply with all of its component parts, including the recording of overtime hours worked whilst on secondment.[2]

[20] The MUA contends that there is a custom and practice of including overtime worked by an Employee on secondment as part of the Employee's Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal.[3] The MUA does not contend that GrainCorp is obliged by a contractual term in the Employees' contracts of employment or a term in the Agreement to maintain this alleged custom and practice. Instead the MUA contends that this alleged custom and practice is an 'industrial custom and practice' which does not depend upon the existence of a contractual term or a term in an enterprise agreement preserving or maintaining a custom and practice. In support of this contention, the MUA relies on a decision of a Full Bench of the Commission in Paull & Ors v Linfox Australia Pty Ltd (Linfox).[4]

[21] Linfox concerned an express term in an enterprise agreement which stated that it was "not intended to, nor shall it, alter a custom and practice applicable to the parties". There is no such term, or anything like it, in the Agreement.

[22] In Linfox, the Full Bench made the following observations about how a custom and practice is to be determined in a dispute settlement procedure before the Commission, depending on whether the basis for the custom and practice is the term of an enterprise agreement or a contract of employment:

"[20] The proper approach of the Commission to the determination of a dispute referred to it under a disputes procedure depends on the terms of that procedure, and the nature of the dispute at hand. The question of whether 'custom and practice' exists for the purposes of clause 5.1 of the 2014 Agreement does not necessarily have to be determined by reference to the principles in Con-Stan. Recourse to Con-Stan would only be required if the relevant dispute is about whether custom and practice has led to implied terms in employees' contracts. This was the case in the present matter. The dispute was not about whether there was an 'industrial' custom and practice unconnected with any contractual controversy. Rather, the dispute was whether there was custom and practice as described in Con-Stan.

[21] If the dispute had concerned 'industrial' custom and practice, it would not in our view have been necessary to apply the principles in Con-Stan; nor would it have been appropriate to apply, at least in an unmodified way, such contractual principles to a statutory instrument which is not (or would be unlikely to be) a contract at common law. We return further below to the use that might be made of Con-Stan in such cases."

[23] It is clear from paragraphs [20] and [21], together with paragraphs [33]-[35], [40]-[41] and [45], of the decision in Linfox that the expression 'industrial custom and practice' was used by the Full Bench to describe a custom and practice expressly preserved by an express term in an enterprise agreement, as distinct from a custom and practice arising from an implied term in a contract of employment, as described by the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterhur Insurance (Australia) Ltd.[5]

[24] I therefore reject the MUA's contention that the Commission can, when acting as a private arbitrator, determine and enforce an alleged custom and practice in circumstances where the applicable industrial instrument does not contain any term dealing with a custom and practice and there is no contention that the custom and practice is sourced in an employee's contract of employment. In order for a custom and practice to be legally enforceable, there must be a term in an industrial instrument such as an enterprise agreement, or a common law contract, which imposes an obligation on a party to maintain or preserve the custom and practice.

[25] Mr Neal, of counsel, appearing on behalf of the MUA, accepted, rightly in my view, that if he did not succeed in persuading the Commission that an 'industrial custom and practice' could be found and enforced regardless of the existence of a basis for the alleged right in the Agreement or a contract, then the MUA could not succeed in this Dispute. It follows that the Dispute must be determined against the MUA and the relief sought by the MUA must be refused. I will, however, for the sake of completeness, address briefly three other grounds, each of which are fatal to the MUA's application in this Dispute.

[26] Paragraphs [27] to [39] below proceed on the assumption, contrary to the conclusion I have just reached, that an 'industrial custom and practice' may be found and enforced regardless of the existence of a basis for the alleged right in the Agreement or a contract.

Factual basis for the alleged 'industrial custom and practice'

[27] There is plainly a custom and practice of overtime offered to an Employee at the Carrington Terminal or GrainCorp's Kooragang Island storage facility being counted towards the Employee's Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal. There is no dispute about that.

[28] The controversy between the parties concerns the MUA's contention that there is an 'industrial custom and practice' of overtime worked by an Employee on a regional secondment being counted towards the Employee's Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal. The MUA's contention in that regard is based, in part, on the historical practice of overtime worked by an Employee at GrainCorp's Kooragang Island storage facility being included in the Employee's Overtime Tally.

[29] However, there is a material distinction between an Employee undertaking work at the Kooragang Island storage facility, about 13.5km away from the Carrington Terminal, and the Employee leaving their usual place of residence to work for GrainCorp on a regional secondment at one of GrainCorp's other facilities, such as in Victoria, Queensland or country New South Wales. An Employee who works away from home on secondment has to leave their friends and family behind in order to undertake work in a different geographic region. GrainCorp does not have the right to require its Employees to work away from home on a regional secondment. GrainCorp relies on the agreement of Employees to undertake such work. In order to obtain such an agreement, there needs to be an incentive for the Employee to take up the secondment work. The main incentive is the opportunity for the Employee to undertake paid overtime while on secondment.

[30] Because of the material distinction between work undertaken at GrainCorp's Kooragang Island storage facility and work undertaken on a regional secondment at one of GrainCorp's other facilities, I do not consider that work undertaken at GrainCorp's Kooragang Island storage facility can be used to establish an 'industrial custom and practice' of overtime worked by an Employee on a regional secondment being counted towards the Employee's Overtime Tally. That leaves consideration to be given to work undertaken by Employees on regional secondment to a GrainCorp facility located away from Newcastle. The first such secondment happened in November/December 2017, at which time the overtime worked by Mr Forman on secondment was not counted towards his Overtime Tally. The second such secondment took place in October/November 2018. The overtime worked by the two employees on this secondment was not counted towards their Overtime Tally. The third such secondment happened in November/December 2019. The overtime worked by four Employees on this secondment was initially counted towards their Overtime Tally but that was reversed soon after GrainCorp became aware of the situation. It was this reversal which gave rise to the Dispute.

[31] Regardless of the reasons why the overtime worked on secondment by Employees in November/December 2017 and October/November 2018 was not counted towards their Overtime Tally, what happened on these two occasions is not sufficient to meet the threshold of an 'industrial custom and practice'. Indeed, even if the overtime worked on secondment by Employees in November/December 2017, October/November 2018 and November/December 2019 had been included in their Overtime Tally, these three occurrences would not, in my view, be sufficient to meet the threshold necessary to establish an 'industrial custom and practice' of the type alleged, in terms of "uniformity, time and substance".[6] It could not fairly be said that three such occurrences would result in the alleged custom and practice being notorious.

[32] Accordingly, the facts do not support the finding of an 'industrial custom and practice' of overtime worked by an Employee on regional secondment being counted towards the Employee's Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal.

[33] Given that the Agreement does not deal with the establishment of an overtime roster, the manner in which the overtime roster is arranged, or how overtime is allocated in accordance with the overtime roster, the question of how overtime is offered to Employees is a matter of managerial prerogative. The Commission as the arbitrator of a dispute concerning the relevance of overtime worked by an Employee on secondment on the decision to offer overtime at the Carrington Terminal would not interfere with the employer's decision unless it was unjust or unreasonable.[7]

[34] In my view, GrainCorp's decision not to include overtime worked by an Employee on a regional secondment in the Employee's Overtime Tally and therefore not have regard to such overtime in deciding which Employees should be offered overtime at the Carrington Terminal is not unjust or unreasonable. There is an evident and intelligible justification for this decision by GrainCorp, as set out in paragraph [15] above. Further, the reasonableness of GrainCorp's decision in this regard is supported by its 'concession' to include in an Employee's Overtime Tally any overtime that would have been offered to the Employee had they remained working at the Carrington Terminal during the period of their regional secondment. This enhances the relative position of Employees who do not go on a regional secondment. It should also be noted that Employees who do not go on a regional secondment are more likely to be offered a greater share of any available overtime at the Carrington Terminal during the period of a regional secondment because there are fewer Employees available to undertake such overtime. The fact that Employees who undertake a regional secondment are likely to work more overtime while on secondment than Employees who remain working at the Carrington Terminal is the incentive for the Employees to agree to go on secondment and does not result in GrainCorp's exercise of its managerial prerogative not to include such overtime on secondment on an Employee's Overtime Tally being unreasonable or unjust.

[35] I do not accept the MUA's contention that GrainCorp exercised its managerial prerogative by acquiescing in the alleged custom and practice of allowing overtime worked on secondment to be included in an Employee's Overtime Tally. The first time that happened was in late 2019, at which time GrainCorp took steps upon becoming aware of the conduct to reverse it and ensure it did not happen in the future.

[36] Clause 9.1 of the Agreement governs "extra claims". It provides:

"From the Commencement Date until the nominal expiry date, there will not be any extra claims in respect of the subject matter covered by this Agreement."

[37] An "extra claim" or "further claim" encompasses a "proposal made by a party to the Agreement to materially change the terms and conditions of employment set out in the Agreement other than in a manner already provided for by the Agreement".[8]

[38] The "subject matter covered by this Agreement" plainly includes overtime.[9]

[39] In my view, the MUA's proposal to include overtime worked by an Employee on a regional secondment in the Employee's Overtime Tally for the purpose of determining which Employee would be offered the next available overtime at the Carrington Terminal is an "extra claim" within the meaning of clause 9.1 of the Agreement. That is because the proposal would materially change the terms and conditions of employment set out in the Agreement other than in a manner already provided for by the Agreement. In other words, the MUA's proposal, if adopted, would impose on GrainCorp a new obligation in respect of overtime which does not exist in the Agreement. The MUA's proposal does not seek to simply maintain the status quo, because at present there is no obligation on GrainCorp to include overtime worked by an Employee on secondment to the Employee's Overtime Tally.

[40] It follows that the Commission does not have the power to grant the relief sought by the MUA, since s 739(5) of the Act forbids the Commission to make a decision which is inconsistent with the Agreement.

[41] For the reasons given, I determine that there is no right on the part of the Employees or the MUA, nor any obligation on GrainCorp, to include in an Employee's Overtime Tally any overtime offered to, or worked by, an Employee while working on a regional secondment away from the Carrington Terminal. The relief sought by the MUA is declined.

Mr A Neal, of counsel, with Ms Rowe, National Legal Assistant of the MUA, for the Applicant

[2] MUA's outline of submissions in chief dated 6 October 2020 at [52]

[3] MUA's outline of submissions in chief dated 6 October 2020 at [7], [10] & [34]

[4] [2018] FWCFB 1563

[5] [1986] HCA 14; (1986) 160 CLR 226

[7] Australian Federation Union of Locomotive Enginemen v State Rail Authority of New South Wales (XPT Case) [1984] CthArbRp 432; (1984) 295 CAR 188; Lend Lease Project Management and Construction (Australia) Pty Limited v CFMEU [2015] FWCFB 1889 at [26]- [27]

[8] Toyota Motor Corporation Australia Limited v Marmara [2014] FCAFC 84 at [37]

[9] See clause 27 (Overtime) and Schedule B, Grade 6 skill/task "preparation of overtime rosters" of the Agreement

Printed by authority of the Commonwealth Government Printer