• [20] The Respondent submits that the Applicant's interpretation of the incentive scheme would lead to anomalous outcomes. The Respondent submits that the:

The employee on unpaid maternity leave for the whole year contributes nothing to the company's performance under the organisational objectives. Nor will have they have advanced the goals of the individual objectives; there will have been no performance at

• [21] The Respondent submits that both the organisational and individual objectives are related to the work which the employee performs. When an employee works, they contribute to the mine's output and its organisational objectives. The Respondent submits that it would be a anomalous for an employee who is absent from work to receive full credit for not causing a safety incident, as that would reward the employee for doing nothing.

• [22] Similarly, the Respondent argues that the fewer shifts an employee is rostered on, the fewer Take 5s which an employee performs and consequently the employee makes a lesser contribution. The Respondent argues that, regarding performance management, that the objective must be assessed according to how much work the employees perform without performance management or disciplinary issues, rather than a mere absence of performance management or disciplinary issues.

• [23] The Respondent primarily argues that the incentive scheme cannot be given its plain meaning as contended for by the MEU, as when read in context with the objectives of the incentive scheme and its clear industrial purpose, that would create incoherent and anomalous outcomes.

• [24] At the hearing, the Respondent also argued that a term may be implied into the agreement consistent with the Respondent's interpretation.

• [25] The starting point in interpreting the Incentive Scheme are the objectives in Appendix 2. Those objectives reveal the objective intention of the parties:

1. Motivate Employees by rewarding them for company performance within the accountability of their role and alignment with Stanmore Values.
2. Directly base each Employee's incentive payments on the achievement of high performance and meeting the intended objectives.

• [26] Reading the objectives in context with the rest of Appendix 2, the first objective relates to the organisational criteria, and the second objective relates to the individual criteria.

• [27] I note the first objective is stated to "Motivate Employees", which suggests some desired action on the part of the employee. This accords with the definition of "incentive" from the Macquarie Dictionary, which is "that which incites or stimulates action".

• [28] The second objective states that the incentive payments are intended to be "directly base[d]" on achieving high performance and meeting the intended objectives. "High performance" is, of course, a subjective assessment. It is therefore necessary to have some frame of reference to assess performance. That frame of reference is the individual objectives which comprise of 30% of the target bonus payment.

• [29] The employer is required under the terms incentive scheme to communicate the mine KPIs and individual objectives to employees in February or March of the calendar year. I therefore accept the MEU's argument that the scheme is predicated on employees being assessed on criteria of which they have been informed. If the employee was not aware that a certain criterion was being assessed, this would not accord with the objective purpose of the scheme, as an employee cannot be incentivised to meet an objective of which they are not aware.

• [30] The individual assessment criteria are set out in clear language. Subparts (a) and (c) are phrased in the negative - the employee is required to not directly or indirectly be responsible for a safety incident and not have performance management or disciplinary issues in the incentive year. The assessment criteria do not specify that an employee is only counted as meeting these criteria if they are at work during the relevant time period.

• [31] The second assessment criterion in paragraph (b) is to complete one Take 5 per rostered shift. This only assesses the period in which the employee is undertaking rostered shifts during the year.

• [32] The assessment of the employee's performance with respect to the relevant criteria is carried out by the company.

• [33] I note that the last sentence of the individual objectives section does not appear to accord with the rest of the scheme. That sentence states:

The amount payable for the individual objectives will be determined by the Company considering each Employee's overall performance and alignment against their job objectives, individual KPIs, behaviours and Charter Values in the relevant financial year.

• [34] In context, this sentence is incongruous. The objectives of the scheme base the incentive payments on the employees meeting the "intended objectives". Factors such as "overall performance" and "behaviours" are not otherwise referred to in the scheme. Further, the scheme does not permit the introduction of new factors into the assessment because the 30% individual objectives component is clearly broken down into three discrete criteria weighted at 10% each. I consider it likely that this last sentence is an unintended inclusion from the previous BMA Agreement which applied at the Poitrel mine. I note the Respondent representative advised during the hearing that he was not aware that any other criteria had been used in the assessment of the individual objectives. I recommend that the parties address this drafting issue in the next round of negotiations.

• [35] Under the heading, "Payment", the performance calculation is described as follows:

The annual incentive payment for each Employee is the sum of the Mine's performance against its KPIs (70% of the target incentive payment) plus the Employee's individual performance (30% of the target incentive payment), multiplied by the target payment of $16,000pa.

• [36] This calculation is effectively as follows:

((Mine KPIs Met / 70) + (Individual Objectives Met / 30)) / 100 × 16,000.00 = Employee incentive payment

• [37] The incentive payment provides for a pro-rata payment where an employee joins the mine part way through the calendar year. However, an employee will not be eligible for any amount under the incentive scheme unless they meet an initial qualifying period of three months' employment. The KPIs are then notified to the Employee. The employee will receive a pro-rata incentive payment for service of more than three months, but less than 12 months.

• [38] I am not convinced by the Respondent's argument that the terms of the scheme are ambiguous and cannot be ascribed a plain meaning. Although I accept that the last sentence of the individual objectives section creates some confusion, the scheme can otherwise be interpreted according to its plain meaning.

• [39] Firstly, I observe that the criteria for assessment under the scheme are clear and defined. The language of the scheme permits only two variables in the incentive calculation (with an exception for employees who join partway through the year): the mine KPIs and the individual objectives. If the individual objectives were specified to be at the discretion of the employer, the outcome would be different. However, here, there are three discrete, set criteria for the individual objectives. It was open for the employer to introduce a third variable when negotiating the agreement, being the employee's attendance. They did not do so.

• [40] Secondly, the Commission must take the Agreement as it is, rather than substituting how it ought to be written. The Respondent states, correctly, that the purpose of incentive schemes generally is to motivate action by the employees. However, the wording of the scheme, in order to achieve its intended result, is a matter for the parties. In this case, the individual assessment criteria set something of a low barrier to entry. There are many cogent industrial reasons why an employer may have a bonus scheme like this, such as to secure a yes vote to the agreement or for employee retention. It is not the role of the Commission to second-guess the clear objective criteria laid down by the parties, because the Respondent feels that the scheme is not motivating high performance as well as it could.

• [41] Thirdly, I observe that the task of interpretation of an enterprise agreement is not to arrive at an outcome that seems "fair". Insofar as the Respondent suggests that the relevant employees are being rewarded "for work they did not perform", I consider that this is an appeal to perceptions of fairness.

• [42] I accept the MEU's position that the incentive scheme does not explicitly, in the wording of Appendix 2, or otherwise in the Agreement, allow for the incentive payment to be pro-rated on the basis of unpaid leave or part-time employment. Clause 7(c) only explicitly states that part-time employees will receive a pro rata annualised salary and entitlements. The Respondent argues that the Agreement is also not explicitly inconsistent with their interpretation. I have difficulty with this argument in that, in a binding enterprise agreement between the employer and employee, one would expect a provision which retrospectively disentitles employees from full payment under the scheme to be made explicit.

• [43] While I accept that the meaning of the word "motivate" and "incentive" suggest a positive action is desired on the part of the employee, I do not accept that it is inconsistent with objective purpose of the scheme for employees to be paid an incentive scheme for a period in which they have been on unpaid leave or work part-time. The scheme is not directly linked to an employee's attendance at the mine. For example, an employee who works overtime and works more time than others does not receive a higher payment under the incentive scheme. The incentive assessment is qualitative rather than quantitative.

• [44] In relation to the Respondent's arguments regarding implied terms, I tend to prefer the view that terms should not be implied into enterprise agreements using the test from BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, given the rigorous statutory provisions which apply to ensure that the employees have understood and genuinely agreed to the terms of the Agreement and given an agreement, when in force, applies in the same way as an Award or Statute.[6] Even if I were to find that I could imply a term into the Agreement using the BP Refinery test, I would not do so as I do not consider it to be necessary.

• [45] Accordingly, I find that the answers to the questions posed for arbitration are as follows:

1. Does the Enterprise Agreement provide for the incentive payment to be paid on a pro rata basis in relation to hours worked, other than where an employee commenced employment part way through the relevant year?

• Did the Enterprise Agreement allow for the incentive bonuses paid to Ms Coombes and Ms Macpherson to be reduced due to their part-time work arrangements?

• Did the Enterprise Agreement allow for the incentive bonus paid to Ms Coombes, Ms Macpherson and Mr Mills to be reduced due to approved unpaid leave that was taken?

• Did the Enterprise Agreement allow for the incentive bonus paid to Ms Cameron to be reduced due to absences from the workplace whilst on Workers Compensation?

[1] AMWU v Berri Pty Ltd [2017] FWCFB 3005.

[2] James Cook University v Ridd [2020] FCAFC 123 at [65].

[4] Applicant Submissions [13]-[14].

[6] See "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Skilled Engineering Ltd [2003] FCA 260 [12]-[14], [18].

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