TENIX DEFENCE SYSTEMS PTY LIMITED CERTIFIED AGREEMENT 2001-2004

Variation of a certified agreement - ambiguity or uncertainty - s.170MD(6) Workplace Relations Act 1996 (Cth) - the identification of an ambiguity or uncertainty requires the determination of a jurisdictional fact - role of Full Bench in appeals from such findings - appeal upheld - agreement varied but not in the terms sought by Tenix.

[1] Tenix Defence Pty Ltd (Tenix) undertakes a shipbuilding business at its shipyard in Williamstown, Victoria. The principal work performed by Tenix at the shipyard relates to the ANZAC Ship Project (ASP).

[2] The ASP is a collaborative arrangement between the Governments of Australia and New Zealand for the development and construction of ten new ANZAC Class guided missile frigates - eight for the Royal Australian Navy and two for the Royal New Zealand Navy.

[3] The contract for the ASP was awarded to Tenix on 10 November 1989. The ASP is the only contract currently performed at the Williamstown Shipyard.

[4] On 20 July 2001, the Applicant changed its name from "Tenix Defence Systems Pty Ltd" to "Tenix Defence Pty Ltd".

[5] Tenix is a party to the Tenix Defence Systems Pty Ltd Certified Agreement 2001-2004 [AG806735] (the Agreement). The Agreement was certified under Division 2 of Part VIB of the Workplace Relations Act 1996 (WR Act) by Commissioner Hingley on 9 April 2001. The nominal expiry date of the Agreement is 9 April 2004.

[6] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU), the Australian Workers Union (AWU), and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (the CEPU**)** are also parties to the Agreement.

[7] The Agreement applies to all employees of Tenix who are covered by the Tenix Defence Systems Pty Limited Award 2001-2004 [AW807056] (the Tenix Award). The Tenix Award was made by the Commission, as a consent award, on 2 May 2001. The Tenix Award came into force on the beginning of the first full pay period on or after 9 April 2001.

[8] The unions named above (the AMWU, AWU and CEPU), are also named respondents to the Tenix Award. The Tenix Award applies to the employment of all employees of Tenix as "shipbuilders" (which includes mechanical, electrical and production employees).

[9] Tenix currently operates on the basis of a three-shift rotation (day, afternoon and night). The shifts are currently all conducted on the basis of nine hours on site, which includes a one half hour meal break.

[10] Employees are paid for eight and a half hours work per shift. The day shift, undertaken by the majority of employees, currently commences at 6.00 am and finishes at 3.00 pm (prior to Monday 17 September 2001, the day shift commenced at 7.00 am and finished at 4.00 pm). The afternoon shift commences at 3.00 pm and concludes at midnight. The night shift commences at midnight and concludes at 9.00 am.

[11] The existing shift cycle is five (8.5 hour) days one week, an unpaid day off (UDO) every second Monday, followed by three (8.5 hour) days and then a "short Friday", whereby the employees finish at 2.30 pm (an 8 hour shift).

[12] In June/July 2001, Tenix identified a need to implement changes to its current work organisation in order to enhance the effectiveness of its operations so as to meet the requirements of the ASP. In particular, Tenix sought to address the problem of an overlap of shifts that had been identified following the introduction of a "proper" afternoon shift in May 2001, pursuant to the Agreement.

[13] From July 2001, Tenix sought to implement changes to its rosters and work cycle to address this problem of overlap. One of the particular proposals sought to be introduced by Tenix, the introduction of a 19 day work cycle, was strongly objected to by the unions respondent to the Agreement.

[14] In proceedings before Commissioner Hingley in relation to three applications for orders under s.127 of the WR Act (made by Tenix (C2001/4039), the AMWU (C2001/3970), and the CEPU (C2001/3974) respectively), it was submitted on behalf of the unions that Appendix 3 (the calendar) and clause 34 (Annual Closedown) of the Agreement, fixed the existing work cycle for the life of the Agreement.

[15] Commissioner Hingley did not grant any of the orders sought by the parties. In deciding not to grant the order sought by Tenix, Commissioner Hingley expressed the view that he did "not believe it is open to the company to implement its present proposal during the term of the agreement."[1] Commissioner Hingley also expressed the view, based on the evidence before him, that "any ordinary person reading the document [the Agreement] would see that the calendar represents the position for the next three years."[2]

[16] On 27 September 2001, Tenix applied to the Commission for an order to vary the Agreement pursuant to s.170MD(6) of the WR Act to remove ambiguity and uncertainty. The variation sought was to insert the following words at the end of clause 34 of the Agreement.

"This clause and Appendix 3 set out the closedown dates, leave and RDO arrangements as they apply in relation to the work cycle and rosters in place at the commencement of this Agreement.

However, nothing in this clause, or Appendix 3, is to be read in any way as a restriction on the Company in introducing changes to the current work cycle and rosters in accordance with the Award."

[17] Tenix submitted that clause 34 and Appendix 3 of the Agreement were ambiguous and uncertain insofar as they related to the ability of Tenix to vary work cycles.

[18] The application was heard by Commissioner Hingley on 7 and 18 December 2001. On 19 December 2001, Commissioner Hingley also conducted an informal site inspection of Tenix's shipyard at Williamstown in Victoria.

[19] The following witnesses gave evidence during the proceedings:

· Mr Allen Rootsey, Employee Relations Manager; and

[20] On 11 January 2002, Commissioner Hingley issued the decision subject to appeal[3]. In dismissing the application the Commissioner found that there was no ambiguity or uncertainty in the relevant provisions:

". . . I am not persuaded that an argument can be made out for more than one contention in this matter. Disagreement does not found a s.170MD application. As to the question of public interest, in Part VIB of the Act - Certified Agreements, s. 170LA(2) [Public interest does not apply] provides `Section 90 (Commission to take into account the public interest) does not apply to the performance of functions of the Commission under this Part. There are no contentious words in the relevant provisions to remove. I find that on a proper reading and construction of clause 34 and Appendix 3 there is no ambiguity or uncertainty and the interpretation of the unions is the correct one and therefore would dismiss the application. . . . The application is dismissed as I find no uncertainty or ambiguity in the relevant provisions."[4]

[21] The Commissioner further held that even if he had found more than one contention was arguable and was required to consider the exercise of the discretion to vary the Agreement, he would decline to do so. The Commissioner's reasons for adopting such a course are set out at paragraphs 77-83 of his decision, in the following terms:

"[77] Even if I had found more than one contention was arguable and was required to consider the exercise of the discretion available to me to vary the Agreement, I would decline to do so for the following reasons, including the intentions of the parties at the time the Agreement was made and the subsequent conduct of the parties (see the Public Transport Agreement decision) and that clause 10 of the Agreement (in addition to s.170LA(2) of the Act) ensures that its terms prevails over the Award where conflict arises.

[78] I am satisfied the evidence supports the contention that the calendar was integral to the overall package (transcript PNs 224-225) to be voted upon. There is no evidence of Tenix briefing delegates or advising employees before they voted, that the calendar could be changed by a decision of the employer during the life of the Agreement. Clause 34 and the calendar had been a contentious issue in negotiations in relation to the Christmas and Easter closedown annual leave requirement. In the minds of the unions and their voting members I am satisfied there was no doubt they were voting in the calendar program being fixed for the life of the Agreement, at least in respect of any changes without their agreement to vary. Had it been otherwise the evidence suggests the Agreement proposal would not have received the support of a valid majority.

[79] The evidence supports the view that the employer wished to include the calendar as part of the Agreement to demonstrate operational stability, for the life of the Agreement. It was to be both a marketing tool and a convenient means of employees planning future holiday absences. The proposed variation now before the Commission, requires changes to that calendar and thus has the effect of mitigating against both intentions, certainly the latter. The evidence suggests to me that at the time of certification of the Agreement the company was content with that stability for the life of the Agreement and had no plans or intentions to change the nine day fortnight work cycle, notwithstanding a commitment by all parties to continuous improvement, flexibility and "World Best Practice", which is still operative. This is demonstrated for example in the change of starting and finishing times of the day shift within the Award prescribed daily spread, in late 2001 which at the time was specifically aimed `to achieve maximum continuity of operations without disruption of work flow'. (Award clause 2.2. Flexible Hours of Work).

[80] In short the inclusion of the calendar, put before employees in the Agreement, voted upon and accepted, confirmed I believe, the mutual intention of the parties, at the time of reaching the agreement. I am satisfied no reading of an alleged matrix of provisions can now be constructed to remove that intent.

[81] Resort to a 19 day month cycle is a significant change from existing arrangements which is my view based, on proper reading of regulating instruments, is not and cannot now be a matter of managerial prerogative. On my reading it is a matter only capable of being addressed where allowable under the Act based on changed intent, or future enterprise bargaining, where the employees have the protections inherent in the theme of Part VIB of the Act.

[82] Were the Commission to be faced with an exercise of its discretion, and to adopt either the applicant's primary or its alternative variation proposals would be to, in my view, not remove an ambiguity or uncertainty, but to `install something that was not inherent to the agreement when it was made.' (see the Linfox Transport decision).

[83] If the company failed to appreciate at that time it was precluding a future right to change the work cycle, that would not persuade me to grant the application to vary the agreement to overcome an ambiguity and uncertainty."

[22] The nature of an appeal under s.45 of the WR Act was the subject of consideration by the High Court of Australia most recently in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (Coal & Allied). Gleeson CJ, Gaudron and Hayne JJ, in a joint judgment, said:

"Because a Full Bench of the Commission has power under s.45(6) of the Act to receive further evidence on appeal, an appeal under that section is properly described as an appeal by way of rehearing. And because there is nothing to suggest otherwise, its powers under sub-s (7) are exercisable only if there is error on the part of the primary decision-maker. And that is so regardless of the different decisions that may be the subject of an appeal under s.45."[5]

[23] The grounds of appeal relied on by Tenix in this matter can be categorised under two broad heads:

1. the Commissioner failed to correctly apply the appropriate test for determining the existence of an ambiguity or uncertainty and erred in concluding that no ambiguity or uncertainty exists; and

2. the Commissioner's discretion miscarried by making errors in the decision making process in concluding that he would not in any event resolve any uncertainty or ambiguity in the manner sought by Tenix.

[24] Tenix contends that the determination of whether there is an ambiguity or uncertainty involves the determination of a jurisdictional fact; it is not a matter which involves the exercise of a discretion. Accordingly it is said that on appeal the Commission is concerned with the correctness of the conclusion reached in the decision at first instance, not whether that conclusion was reasonably open.

[25] The second category of appeal grounds go to the exercise of the Commissioner's discretion in declining to vary the Agreement. In order to succeed on these grounds Tenix must establish an error of the type identified by the High Court in House v R[6]. The types of error that may constitute grounds for review of a discretionary decision of the kind here under consideration were re-stated in Coal & Allied in the following way:

"Because a decision-maker charged with the making of a discretionary decision has some latitude as to the decision to be made, the correctness of the decision can only be challenged by showing error in the decision-making process [See Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 518-519 per Mason and Deane JJ]. And unless the relevant statute directs otherwise, it is only if there is error in that process that a discretionary decision can be set aside by an appellate tribunal. The errors that might be made in the decision-making process were identified, in relation to judicial discretions, in House v The King in these terms:

`If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. [(1936) 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ].' "[7]

[26] Before turning to consider the arguments advanced on appeal we propose to deal with the proper construction and application of s.170MD(6).

"The Commission may, on application by any person bound by a certified agreement, by order vary a certified agreement:

(a) for the purpose of removing the ambiguity or uncertainty"

[28] Before the Commission exercises its discretion to vary an agreement pursuant to s.170MD(6)(a) it must first identify an ambiguity or uncertainty.[8] It may then exercise the discretion to remove that ambiguity or uncertainty by varying the agreement.

[29] The first part of the process - identifying an ambiguity or uncertainty - involves an objective assessment of the words used in the provision under examination.[9] The words used are construed having regard to their context, including where appropriate the relevant parts of a related award. As Munro J observed in Re Linfox - CFMEU (CSR Timber) Enterprise Agreement 1997:

"The identification of whether or not a provision in an instrument can be said to contain an `ambiguity' requires a judgment to be made of whether, on its proper construction, the wording of the relevant provision is susceptible to more than one meaning. Essentially the task requires that the words used in the provision be construed in their context, including where appropriate the relevant parts of the `parent' award with which a complimentary provision is to be read."[10]

[30] We agree that context is important. Section 170MD(6)(a) is not confined to the identification of a word or words of a clause which give rise to an ambiguity or uncertainty. A combination of clauses may have that effect.[11]

[31] The Commission will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention.[12]

[32] Once an ambiguity or uncertainty has been identified it is a matter of discretion as to whether or not the agreement should be varied to remove the ambiguity or uncertainty. In exercising such a discretion the Commission is to have regard to the mutual intention of the parties at the time the agreement was made.[13]

[33] We agree with Tenix that the first step in dealing with a s.170MD(6)(a) application - the identification of an ambiguity or uncertainty - requires the determination of a "jurisdictional fact". In Corporation of the City of Enfield v Developmental Assessment Commission the joint judgment of Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ described the term "jurisdictional fact" in these terms:

"The term `jurisdictional fact' (which may be a complex of elements) is often used to identify that criterion, satisfaction of which enlivens the power of the decision-maker to exercise a discretion."[14]

[34] Similarly in Re: CFMEU - Termination of Bargaining Periods, Lee and Madgwick JJ said:

". . . the question presents as one of whether the Commission may have erred as to a `jurisdictional fact', that is, the existence or non-existence of a state of affairs which was a statutory precondition to the Commission acting. . ."[15]

[35] In the context of s.170MD(6)(a) the Commission must first identify the existence of an ambiguity or uncertainty before exercising its discretion to vary the agreement. We agree with the Full Bench in Re: CFMEU Appeal which described the existence of an ambiguity or uncertainty as "a necessary statutory prerequisite to any variation being made."[16]

[36] In dealing with an appeal from the determination of a jurisdictional fact a Full Bench of the Commission is concerned with whether the member at first instance reached the right conclusion. It is not concerned simply with whether the decision of the single member was reasonably open to him or her.[17] As Gummow J pointed out in Minister for Immigration and Multicultural Affairs v Eshetu,[18] a court or tribunal cannot give itself jurisdiction by erroneously deciding that a jurisdictional fact exists. In our view the converse also applies - an erroneous decision about the non-existence of a jurisdictional fact would be a constructive failure to exercise jurisdiction.

[37] We now turn to consider for ourselves whether the Agreement is ambiguous or uncertain.

[38] Section 170MD(6) empowers the Commission to vary a certified agreement for the purpose of removing ambiguity or uncertainty. Tenix contends that clause 34 and Appendix 3 of the Agreement are ambiguous and uncertain for the reasons identified below. Before turning to the detail of the arguments put before us it is necessary to set out the relevant provision in the Agreement and the Award.

[39] Clause 34 of the Agreement is headed `Annual Close Down', it provides: "Further to sub-clause 7.1.13 of the Award, the following Easter and Christmas close downs will apply." The clause goes on to specify the date on which work ceases and the date on which there is a return to work for each of the Easter and Christmas breaks from Easter 2001 to Christmas 2003/4. The clause concludes with the words: `NB Appendix 3'. As the Commissioner noted in the decision subject to appeal the abbreviation "NB" stands for nota bene or note well.

[40] Clause 7.1.13 of the Award is the clause which deals with annual close down as part of the annual leave provisions.

[41] Appendix 3 of the Agreement is headed "Leave and RDO Calendar". It sets out the days of each month from January 2001 to March 2004 noting each short day, public holiday, annual leave day and RDO. A copy of the Appendix is attached to this decision at Annexure 1.

[42] Clause 10 of the Agreement deals with the relationship to the parent award (the Tenix Award). It states:

"This Agreement shall be read and interpreted wholly in conjunction with the Tenix Defence Systems Pty Limited Award 2001-2004 as varied during the life of this Agreement provided that where there is any inconsistency between this Agreement and the Tenix Defence Systems Pty Limited Award 2001-2004, this Agreement shall take precedence to the extent of the inconsistency."

[43] Clause 6 of the Tenix Award deals with hours of work, shift work, meal breaks, overtime, public holidays and Sundays. Sub-clause 6.1 deals with hours of work of day workers and sub-clause 6.2 has similar provisions relating to shift work. Clause 6 is set out in Annexure 2.

[44] Tenix contends that the above provisions clearly vest Tenix with the right to determine the way in which hours are worked. This is said to be emphasised by the following provisions:

¬ Clause 6.1.1 - By providing that the ordinary hours of work are to be worked on one of the alternative bases, Tenix would comply with its obligations under the Tenix Award by applying a roster which complied with any one of those alternatives.

¬ Clause 6.1.2 - Enables ordinary hours of work to be worked continuously at the "discretion of the company". Clause 6.1.2 provides express acknowledgement that the working of a 38 hour week must provide maximum flexibility in respect of working requirements and authorises implementation by a range of alternative mechanisms. In the event of opposition to a change, the Tenix Award requires the matter to be referred to the AIRC.

¬ Clause 6.2 gives Tenix a right to require shift work in certain areas that are required to maintain unimpeded production. The right to implement shift work for short periods when production schedules so require is expressly mentioned.

¬ Clause 6.2.2 deals with continuous work shifts. It provides that subject to certain limited conditions which are not relevant in the present context, continuous shift workers shall work at such times as Tenix may require.

¬ Clause 6.2.3 also provides that the ordinary hours of non-continuous shift workers "shall be worked continuously except for meal breaks at the discretion of the company".

¬ Clause 6.2.4 deals with rostered days off for shift workers. This provision:

· requires discussions with employee representatives

· in implementation of the 38 hour week, requires parties to have regard to projections in respect of future workload.

· permits accrual of rostered time to a maximum of 5 days.

· provides that the working time of a 38 hour week must provide maximum flexibility in respect of working requirements.

· provides a range of alternatives for working the 38 hour week; and

· requires any unreasonable refusal of requests for change to be referred to the AIRC.

[45] Clause 11.3 of the Agreement records, among other things:

¬ the commitment of the parties to reviewing and adjusting as necessary work organisation;

¬ the willingness of the employees to accept total flexibility of jobs and duties;

¬ the willingness of employees to avoid any action which might disrupt the continuity of production or reduce the effectiveness of Tenix's business.

[46] Clause 11.5 of the Agreement records the parties' agreement to ensuring that terms and conditions will be based upon specific needs of the enterprise; and that Tenix and its employees will constantly seek improvements in safety, methods of production, work organisation, quality and the other areas which will enhance the effectiveness of Tenix's operations.

[47] Clause 11.8 of the Agreement records the agreement of the parties to continue to achieve real and sustained performance improvement by embracing a philosophy of continuous improvement.

[48] Clause 12 of the Agreement records the parties' agreement that "international or other relevant Best Practices may be identified and adopted in measuring and improving the efficiency of all workplace functions." In this context the parties agreed that "World Best Practice" is:

". . . simply the best way of doing things - it is a process of constantly changing and adapting to new pressures and work methods. World Best Practices are not fixed. At any particular point in time, it is the method of operation to achieve exemplary levels of performance. World Best Practice is not restricted to an examination of cost, but also includes quality and timely completion of work in a safe and efficient manner."

[49] We now turn to the question of whether the Agreement is ambiguous or uncertain. In this regard the Commission has to make an objective judgement about whether, on a proper construction of the relevant provision of an agreement, the wording of the provision is susceptible to more than one meaning.[19] In SJ Higgins Pty Ltd and others v CFMEU, after referring to the Victorian Public Transport case, SDP Williams said:

"It must be noted, however, that, immediately prior to its reference to the observations of Gray J, that Full Bench stated that the first part of the process "involves an objective assessment as to whether or not an ambiguity or uncertainty exists". In my view, it is not enough that there are or may be rival contentions as to the proper construction of the terms of an award or agreement. Nor is it enough that claims may have been made in the field for the application of a particular provision in circumstances and its applicability of the provision is disputed. Such contentions and claims may well be self serving. The correct approach, as applied by the Full Bench, requires the making of an objective judgment as to whether, on the proper construction of the relevant provision of an agreement, the wording of that provision is susceptible to more than on meaning".[20]

[50] Tenix contends that the way in which the Agreement and Award provisions set out above interact and the extent to which it can be said that Appendix 3 regulates work cycles for the period of the Agreement is "highly ambiguous and uncertain". Tenix contends that there are at least three possible interpretations of the nature of Tenix's obligations under clause 34 and Appendix 3 of the Agreement:

1. Clause 34 simply sets out the compulsory annual leave days for six particular periods between Easter 2001 and January 2004. Appendix 3 merely sets out those annual leave days in calendar form. Rostered days off are marked off in the calendar for convenience of understanding but without imposing obligations or requirements. Clause 34 and Appendix 3 does not impose any obligations in relation to rostered days off.

2. Insofar as clause 34 specifies particular days on which work is to cease and when employees are to return to work, those days must be observed. To the extent that those absences incorporate more than the specified number of days' annual leave, then the additional days must be observed through rostered days off or some other permissible basis.

3. The calendar in Appendix 3 nominates particular days for annual leave and rostered days off and it represents the position for the next three years in the sense that the nominated days are to be observed.

[51] Tenix contended that the last possible interpretation was "barely arguable" given that award and agreement obligations need to be expressed in clear and plain language.[21]

[52] In reply the AMWU and CEPU, supported by the AWU, contended that Commissioner Hingley was correct in determining that the Agreement is not ambiguous or uncertain. Appendix 3 is a calendar for the years 2001, 2002, 2003 and 2004. It clearly sets out the days on which RDOs and Public Holidays fall and when annual leave must be taken. It also sets out the days which are to be worked as short days. The respondents submit that the third "possible interpretation" identified by Tenix is the only arguable interpretation of these provisions.

[53] On balance we find that the extent to which Appendix 3 of the Agreement can be said to regulate work cycles for the period during which the Agreement is in operation is ambiguous and uncertain. In our view it is arguable that there is some question as to the status of the calendar - what obligations or entitlements does it create in the context of the Agreement and the Award? The absence of express provisions stating that the RDOs will be observed on, and cannot be altered from, the days in the calendar gives rise to an ambiguity or uncertainty.

[54] As we have identified an ambiguity or uncertainty in the Agreement it is now a matter of discretion as to whether or not the Agreement should be varied to remove the ambiguity or uncertainty. In exercising such a discretion the Commission is to have regard to the mutual intention of the parties at the time the Agreement was made.

[55] In the decision subject to appeal the Commissioner concluded that even if he had found the Agreement ambiguous or uncertain he would not have exercised his discretion to vary the Agreement. The Commissioner's reasons for adopting this course are set out at paragraphs 77 to 83 of his decision.[22] It is apparent from his reasons that the Commissioner rejected Tenix's submissions as to what were the mutual intentions of the parties. The Commissioner went on to say:

"[82] Were the Commission to be faced with an exercise of its discretion, and to adopt either the applicant's primary or its alternative variation proposals would be to, in my view, not remove an ambiguity or uncertainty, but to `install something that was not inherent to the agreement when it was made.' (see the Linfox Transport decision).

[83] If the company failed to appreciate at that time it was precluding a future right to change the work cycle, that would not persuade me to grant the application to vary the agreement to overcome an ambiguity and uncertainty."

[56] The above extract discloses that in considering the exercise of his discretion the Commissioner limited himself to considering whether or not he should give effect to Tenix's primary or alternative variation proposals. Having identified an ambiguity or uncertainty the Commission was empowered to remove it by varying the Agreement in a manner which gave effect to the mutual intentions of the parties at the time the Agreement was made. In that regard the Commissioner was not limited by the form of the application before him.

[57] This aspect of the Commissioner's decision amounts to no more than a statement to the effect that even if he had found an ambiguity or uncertainty in the Agreement he would not have varied the Agreement in the manner proposed by Tenix. For reasons which will become apparent we agree with that conclusion and we do not propose to vary the Agreement in the manner proposed by Tenix. But that is not the end of the matter. There is a broader issue which was not dealt with in the decision subject to appeal. That is, should the Agreement be varied to remove the ambiguity or uncertainty in a manner other than that proposed by Tenix. In the proceedings before us Tenix conceded that if we formed the view that the objectively ascertained mutual intention of the parties was that the work cycle implicit in Appendix 3 was to remain unchanged for the life of the Agreement then we could properly give effect to that intention by varying the Agreement pursuant to s.170MD(6).[23]

[58] To the extent that it is necessary to do so we have decided that the approach adopted by the Commissioner, in limiting his consideration of the issue to the variations proposed by Tenix, amounted to an error warranting correction on appeal.

[59] In deciding whether we should exercise our discretion and vary the Agreement, and the manner of such a variation, we have had regard to the submissions and evidence in the proceedings at first instance and the submissions on appeal.[24]

[60] In the proceedings at first instance Tenix advanced three broad propositions in support of the first interpretation:[25]

_ As a matter of construction, taking into account the nature of award and agreement obligations and the need for such obligations to be expressly stated rather than implied, the first interpretation should be adopted.

_ The mutual intention of the parties. In this regard the evidence establishes that there was no agreement to alter the rights of Tenix to initiate change. The negotiations merely addressed the question of annual close downs and did not go beyond that.

_ The objects of the WR Act. Considerations of efficiency, productivity and the need for the sort of flexibility Tenix seeks point in favour of granting the application.

[61] We note that on appeal the first proposition was changed somewhat in that Tenix submitted that the second interpretation was "probably a better [sic] interpretation of all".[26]

[62] We have considered each of the interpretations advanced.

[63] We do not find the first interpretation - that is, that clause 34 simply sets out the compulsory annual leave days for six particular periods between Easter 2001 and January 2004 - to be persuasive. On its face clause 34 is not so limited. It states:

Further to Sub-Clause 7.1.13 of the Award the following Easter and Christmas closedowns will apply:

[64] Clause 34 includes a reference to Appendix 3, which is the leave and RDO calendar. One looks at the calendar to ascertain the make up of the days which constitute the closedowns prescribed in clause 34. For instance the part of the calendar dealing with the Easter 2003 closedown is set out below:

[65] The Easter 2003 closedown is for ten days - work ceases on 17 April 2003 and resumes on 28 April 2003. The ten days consist of:

_ 4 public holidays (18, 19, 21 and 25 April);

[66] The interpretation advanced by Tenix relies on the heading to clause 34 and the cross reference to clause 7.1.13 of the Award. Clause 7.1.13 is the subclause which deals with annual close down as part of the annual leave provisions. But in our view these features of the clause do not operate to confine its operation in the manner suggested by Tenix.

[67] The words of clause 34 are clear and it is inappropriate to confine them by reference to the heading or to clause 7.1.13 of the Award.[27]

[68] A useful summary of the law with respect to the use of headings in statutory construction was given by Murray CJ in Ragless v Prospect District Council:

1. If the language of the sections is clear, and is actually inconsistent with the headings, the headings must give way.

2. If the language of the sections is clear, but, although more general, is not inconsistent with the headings, the sections must be read subject to the headings.

3. If the language of the sections is doubtful or ambiguous, the meaning which is consistent with the headings must be adopted."[28]

[69] In this instance the language of clause 34 is clear and to the extent that it is inconsistent with the clause heading, the heading must give way.

[70] The second interpretation advanced - and the one contended for by Tenix - is that insofar as clause 34 specifies particular days on which work is to cease and when employees are to return to work, these days must be observed.

[71] Tenix contends that we should adopt this construction of clause 34 and vary the Agreement, pursuant to s.170MD(6), by inserting the following words at the end of clause 34:

"This clause and Appendix 3 set out the close down dates, leave and RDO arrangements as they apply in relation to the work cycles and rosters in place at the commencement of this Agreement.

However, nothing in this clause, or Appendix 3, is to be read in any way as a restriction on the Company in introducing changes to the current work cycle and rosters in accordance with the Award other than the days on which work ceases and return to work commences on each of the Easter and Christmas close downs specified in clause 34."[29]

[72] We accept the interpretation of clause 34 advanced by Tenix. But that does not lead inexorably to the adoption of the variation proposed. The flaw in Tenix's submission, in our view, is that interpretations two and three are somehow mutually exclusive. We do not think they are.

[73] The third interpretation deals with Appendix 3, not clause 34. Tenix contends that it is arguable - though barely so - that Appendix 3 nominates particular days for annual leave and rostered days off and it represents the position for the next three years in the sense that the nominated days must be observed. In our view the interpretation posited is more than barely arguable. We think it is the proper construction of Appendix 3 having regard to its context within the Agreement and the circumstances in which it was negotiated.

[74] Three matters in the Agreement itself support the construction set out above:

_ the heading of Appendix 3 - "Leave and RDO Calendar";

_ clause 34 concludes with the words "NB Appendix 3". The abbreviation "NB" stands for nota bene or note well.

_ Appendix 3 clearly identifies the short days, public holidays, RDOs and annual leave days over the life of the Agreement.

[75] We also note that Appendix 3 is mentioned in clause 2, Arrangement.

[76] The identification in Appendix 3 of the RDOs to be taken over the life of the Agreement begs the question - why were they set out if the intention was not to fix them for the duration of the Agreement? The interrelationship with clause 34 provides a partial answer. The closedowns prescribed in clause 34 made it necessary to specify which of the days of the closedown were annual leave days and which were RDOs or public holidays. But this does not provide an adequate explanation for why the other RDOs - those outside of the closedowns - were specified.

[77] The third interpretation posited by Tenix provides the answer. Appendix 3 nominates particular days for annual leave and RDOs and it represents the position for the next three years in the sense that the nominated days must be observed.

[78] Tenix contends that the style of the Agreement tells against the notion that Appendix 3 was intended to be prescriptive. It is said that the Agreement is more in the nature of an expression of intent and approach - it is not a prescriptive agreement. We agree that some of the clauses in the Agreement are of the type suggested by Tenix - for example clauses 11 and 12. But there are also a number of provisions which are prescriptive in nature, for example:

[79] The general statements of intent and approach in clauses 11 and 12 must be read subject to the specific rights and obligations set out elsewhere in the Agreement.

[80] We do not agree with the submission that the style of the Agreement tells against the construction of Appendix 3 we have adopted.

[81] The negotiations for the Agreement also shed some light on the intended effect of Appendix 3. In that context Tenix contended that the proposition that the parties intended to lock in the nine day work cycle for the duration of the Agreement is simply not credible in the light of the evidence regarding the negotiations.

[82] The negotiations commenced in November 2000. Between 29 November 2000 and 22 March 2001, the parties met formally on 23 separate occasions.[30]

[83] The union's log of claims in respect of the Agreement did not contain a claim for the fixing of the work cycle for the life of the Agreement or any other reference to hours of work or rostering.[31]

[84] During the negotiations for the Agreement Tenix made it clear that there would be close down periods at Easter and Christmas and that employees would be required to take annual leave at those times. There was significant debate and discussion about this issue. The unions sought information from Tenix as to its proposed close down periods and how annual leave was to be scheduled during those periods. Calendars were first tabled and discussed with the union negotiators at the fourth formal negotiating meeting on Tuesday, 23 January 2001.[32]

[85] Attached to Mr Irving's supplementary witness statement are his file notes of some of the meetings between the parties.[33] The file note of the meeting on 23 January 2001 attributes the following comment to Dr Varum, Tenix's lead negotiator:

"This afternoon we will have the details of clause 35. The Easter and Christmas shutdowns will be spelt out and we will prepare a red line copy of the documentation for you."

"We have some red line copies here. We suggest you go through them and we can talk tomorrow. Also available is a new clause 35 together with some coloured charts. You will see that the Easter and Christmas closedowns have been set out for the next (3) three years. We have moved UDOs where appropriate to get cleaner lines of production - We hope you will be happy with these arrangements."

[86] The proposed close down periods increased the number of annual leave days that employees would be required to take at Christmas and Easter, from 18 days over a three year period to 41 days over three years.[34]

[87] It was at Tenix's initiative that the calendar was included as an Appendix to the 2001 Agreement. It is clear that the calendar was discussed during the negotiations between the parties and its inclusion was part of a package offer.[35]

[88] In his evidence Mr Irving, Manager - Industrial Relations for Tenix, did not provide, in our view, any credible explanation for the inclusion of the calendar as part of the agreement on this occasion. He stated that it was done for the convenience of the employees; but conceded that the calendar could have been provided to the employees without forming part of the Agreement.[36] In this regard it is relevant to note that the 2001 Agreement was the first time a calendar of the type set out in Appendix 3 was included as part of the agreement between the parties.[37] In previous years, around August/September of each year, an annual leave and rostered day off calendar was prepared by Tenix at the request of the shop stewards. The calendar set out Tenix's proposed Easter and Christmas close down periods and the dates on which rostered days off would occur. A copy of the calendar was posted on notice boards.[38]

[89] In his evidence Mr Rootsey provided the following explanation for the inclusion of the calendar as Appendix 3:

"We spent a great deal of time in relation to discussing the Christmas period or the duration of the Christmas period. We got to the detail of understanding that there were about seven days of annual leave which were free for employees to take at their own request. There was a bit of concern from my recollection of the events that, well, that doesn't give people much of an opportunity, and there was a lot of discussion about shortening that period. From that, discussions got around, well, let's have a look at a sample of what this could mean so that people could have early notice - new employees or current employees could have early notice of anticipated leave, and also to the point where they could manage their leave balances to coincide with those annual close down periods. And it was on that basis that we went to some extent to provide a calendar so that - it become like a ready reckoner that people could look at it and see at a glance exactly what was going to confront them in the course of their employment."[39]

[90] Mr Rootsey was also questioned about the extent to which the calendar set down the dates on which RDOs would occur:

"Ms Gooley: And I can look at the calendar and I can see that I am going to have an RDO before Cup Day in November, I am going to have hopefully a four-day long weekend?

Ms Gooley: In fact, I could plan my long weekends for the entire three years based on this calendar, couldn't I?

Mr Rootsey: You could very well do that, yes."[40]

[91] In his evidence Mr Darren Nelson, the Assistant Secretary of the Victorian Branch of the AMWU, stated that one of Tenix's negotiators - Dr John Varum - told the unions that the calendar would be used by Tenix as a marketing tool. Tenix would be able to tell prospective clients "These are the days the shipyard is open."

[92] Mr Irving said that he could not find any comments in his file notes of the relevant meeting to the effect that the calendar was a marketing tool. But he did not go so far as to deny that such a statement was made,[41] nor was Dr Varum called to rebut Mr Nelson's evidence. Further, in a later stage in his cross examination Mr Irving effectively conceded that the calendar was used as a marketing document so that Tenix's clients would know when Tenix would not be open, as appears below:

" Mr Maddison: Is it not your evidence, Mr Irving, that you wanted to show people this Christmas close down to your clients, say, the shipyards will not be open from 20 December 2001 till 15 January 2002?

Mr Irving: It sets out their annual leave periods for that period.

Mr Maddison: That is not my question Mr Irving. My question was, is it not your evidence, you want to be able to show people these days, so your clients know when Tenix would not be open?

Mr Maddison: But my question to you, Mr Irving, was, is it not your evidence that you wanted to show your clients the days that Tenix would not be open?

Mr Irving: We do show our clients that agreement, yes."[42]

[93] On the basis of the evidence it seems to us that Tenix had at least two reasons for incorporating the calendar into the Agreement:

_ it would assist employees in forward planning - they could "see at a glance exactly what was going to confront them in the course of their employment'[43]; and

_ it could be used as a marketing document so that Tenix's clients would know when Tenix would, and would not, be open for business.

[94] The calendar in Appendix 3 is based on a nine day cycle - five 8.5 hour days one week, an unpaid day off (or RDO) every second Monday, followed by three 8.5 hour days and then a short Friday whereby employees finish at 2.30 pm (an 8 hour shift). In our view the mutual intention of the parties was to fix that work cycle for the duration of the Agreement. Such a conclusion is consistent with two of the reasons Tenix gave for including the calendar as part of the Agreement.

[95] We note that the nine day work cycle was not discussed per se during the negotiations for the Agreement.[44] But that work cycle is implicit in the calendar that was tabled by Tenix during the negotiations and ultimately accepted by the unions. Moreover at no stage during the negotiations was any change to the work cycle - such as moving to a 19 day month - discussed.[45] This is particularly significant as the nine day work cycle has been in place since July 1990.[46]

[96] In these circumstances it is understandable why the union negotiators did not consider it necessary to make any specific claim regarding the fixation of the work cycle. They believed - reasonably in our view - that the calendar fixed the work cycle.

[97] Tenix argued that as no disagreement existed as to Tenix's right to initiate a variation to work cycles during the life of the Agreement, or in any way to modify the effect of the flexibilities provided in clause 6 of the Award, it is "impossible to say on an objective view of the parties actual intentions that the parties agreed to lock in the nine day work cycle for the duration of the agreement."[47]

[98] The essence of Tenix's submission was that it had the right to initiate a variation to work cycles under clause 6 of the Award, and in particular clause 6.1.2 - Rostered days off, and it was inconceivable that it would have agreed to vary those rights in the absence of a specific demand to do so.

"The working of a 38 hour week must provide maximum flexibility in respect of working requirements and, in addition to the existing arrangements which include Unpaid Days Off (UDO), the method of implementation may be either:

Should a request from Management to change the working hours within the above options to meet workload projections be unreasonably refused, then the matter shall be referred to the Australian Industrial Relations Commission." (Also see clause 6.2.4).

[100] The unions do not agree with the proposition that the Award gives Tenix the right to vary the work cycle in the absence of an agreement to do so. It is unnecessary for us to resolve that controversy. We are prepared to assume - without deciding - that Tenix's interpretation of the relevant Award provisions is correct. But in our view that does not lead to the conclusion contended for by Tenix.

[101] Tenix put forward the calendar as part of a package deal. The calendar identifies the RDOs over the life of the Agreement. In our view a fair reading of the Agreement leads to the conclusion that the RDOs specified in the calendar were fixed for the duration of the Agreement. The fact that a consequence of such an interpretation of Appendix 3 is that Tenix's award rights were constrained is relevant but not determinative of whether the interpretation is correct. Agreement making often involves constraining a parties award rights (see s.170LY).

[102] The work cycle in question had been operating since 1990. Tenix had never sought to rely on its `right' to vary those arrangements. In such circumstances we do not think it can fairly be said that there was no disagreement about Tenix's right to vary the work cycle. Implicit in such a submission is the proposition that the parties were in agreement about that issue. In truth there was no such agreement. Rather the parties were operating on the basis of entirely different assumptions about Tenix's ability to vary the work cycle in the absence of agreement.

[103] Tenix's submissions about the mutual intentions of the parties have not persuaded us to adopt the interpretation of the Agreement for which they contend. In our view the mutual intention of the parties at the time they entered into the Agreement supports the construction of the Agreement which we have adopted.

[104] The final broad proposition advanced by Tenix in support of the variation sought relied on the objects of the WR Act. The evidence of Mr Jonathon Laverick Smith in the proceedings at first instance was said to be relevant in this regard. The following points may be drawn from Mr Smith's evidence:

_ in order to make up a schedule slippage of some four months (and increasing) in the ANZAC contract an increase in effective output is required;

_ shift work is the most effective means of introducing more hours into the program with the increased congestion and overcrowding caused by rostering additional employees on the same shift;

_ the current shift arrangements provide an overlap between shifts which is not an effective working arrangement, particularly during the interface of the day and afternoon shifts, due to overcrowding on the ships. The cost of this disruption in lost time is estimated to be in excess of $5 million per year;

_ Tenix has introduced a 6 am start in an effort to remove the overlap. But this is not popular with the skilled personnel Tenix is seeking to recruit, and its ability to increase personnel has been compromised;

_ a 19 day month would enhance the effectiveness of Tenix's operations by minimising the overlap between the start and finish of day and afternoon shift. The option of using one RDO per four week cycle would provide a shift pattern that does not affect the starting time of day shift (7 am) but would bring forward the end of day shift by 30 minutes (to 3.30 pm). This, combined with the start of afternoon shift moving back by 30 minutes (to 3.30) would remove the substantial overlap presently occurring. Further, under the proposed 19 day month work cycle there is greater scope for Tenix to provide more employment opportunities as additional employees can be recruited and effectively utilised.

[105] We accept that the enhanced flexibility implicit in the variation sought by Tenix would improve its competitiveness and assist in assuring its future. Such an outcome would be consistent with a number of the objects specified in s.3 of the WR Act (see particularly s.3(a) and (b)).

[106] Absent other considerations we would have found this aspect of Tenix's submission to be compelling. But there are other considerations. In particular we think as a matter of construction the third interpretation of the Agreement ought to be adopted. Further we are of the view that such a construction is consistent with the mutual intention of the parties. Moreover, considerations of fairness tell against the variation sought by Tenix.

[107] In relation to the last point it is important to note that Mr Nelson's evidence was that at the mass meetings of employees at which the terms of the Agreement were explained questions were asked about the inclusion of the calendar. At paragraph 17 of his witness statement he says:

"Members were told that the company insisted on the calendar being included in the EBA and that the days set out in the calendar for annual leave and RDOs could not be changed for the life of the Agreement. I have spoken to members of the AMWU at Tenix and they have told me that they understood that the inclusion of the calendar in the EBA meant that the RDO and what days the company required them to take annual leave were fixed for the life of the EBA."[48]

[108] Mr Nelson's evidence also made reference to a petition signed by some 365 Tenix employees, in the following terms:

"We the undersigned have read, understood and agree with the following:

1. I am employed by Tenix Defence Pty Limited under the terms of the Tenix Defence Systems Pty Limited Certified Agreement 2001-2004 ("Agreement")

2. Early in 2001 I attended a meeting which voted on whether or not to accept the Agreement.

3. When the Agreement was put to me it was put that the calendar (that appears in appendix 3) indicated the days I would have to work and the days I would not have to work. That is, I was told fro[sic] the life of the Agreement the Public Holidays, Annual Leave days and RDO's that are marked on the calendar could not be changed.

4. I voted on the document believing that the days were fixed for the life of the Agreement."[49]

[109] Mr Nelson was not cross-examined on this aspect of his statement.

[110] Tenix submitted that evidence as to what may have been communicated to mass meetings of employees "is most unhelpful and probably quite irrelevant to the task at hand."[50] We disagree.

[111] The Agreement was certified pursuant to Division 2 of Part VIB of the WR Act. The statutory requirements for certification include:

_ Tenix must take reasonable steps to ensure that the terms of the agreement are explained to all of the persons employed at the time whose employment will be subject to the agreement (ss170LJ(3) and 170LT(7)); and

_ the agreement must be approved by a valid majority of the persons employed at the time whose employment will be subject to the agreement (ss170LJ(2) and 170LT(5)).

[112] Mr Rootsey's evidence was to the effect that Tenix delegated its obligation to explain the terms of the Agreement, to the unions:

"Ms Gooley: Don't you have an obligation to explain the agreement to your employees?

Mr Rootsey: We negotiated the agreement, it was for the unions to place the matter as part of the negotiating team to put it before the employees. It wasn't my responsibility to explain to the members what they were agreeing to or not agreeing to."[51]

[113] In circumstances where Tenix effectively delegated to the unions its statutory obligation to explain the terms of the Agreement to its employees we do not accept that it is either appropriate or fair for the Commission to vary the Agreement in a way which would allow Tenix to resile from the explanation of the Agreement given to its employees before they voted on whether or not to approve the Agreement.

[114] In this regard the object set out in s.3(e) of the WR Act states:

"The principal object of this Act is to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia by: . . .

(e) providing a framework of rights and responsibilities for employers and employees, and their organisations, which supports fair and effective agreement-making and ensures that they abide by awards and agreements applying to them". [emphasis added]

[115] We have decided to vary the Agreement, pursuant to s.170MD(6) of the WR Act, to give effect to what we regard as the objectively ascertained mutual intentions of the parties. Appendix 3 of the Agreement will be varied to insert the following words:

"The calendar in this appendix is based on a nine day work cycle - five 8.5 hour days on week, an unpaid day off (RDO) every second Monday, followed by three 8.5 hour days and then a short Friday whereby employees finish at 2.30 pm (an 8 hour shift).

The calendar sets out the closedown dates, leave and RDO arrangements as they apply in relation to the nine day work cycle.

These arrangements are to remain in place for the duration of this agreement."

[116] For the reasons given we have decided to grant leave to appeal and to uphold the appeal.

[117] We find that the extent to which Appendix 3 of the Agreement can be said to regulate work cycles for the period during which the Agreement is in operation is ambiguous and uncertain.

[118] We have decided to remove that ambiguity and uncertainty by varying the Agreement in the manner set out in paragraph 115 above.

G. Watson (of counsel) for Tenix Defence Pty Ltd.

A. Gooley on behalf of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

S. Wood on behalf of The Australian Workers' Union.

6. HOURS OF WORK, SHIFT WORK, MEAL BREAKS, OVERTIME, PUBLIC HOLIDAYS AND SUNDAYS

The ordinary hours of work shall be an average of 38 per week, to be worked on one of the following bases:

· 38 hours within a work cycle not exceeding seven consecutive days, or

· 76 hours within a work cycle not exceeding fourteen consecutive days, or

· 114 hours within a work cycle not exceeding twenty-one consecutive days, or

· 152 hours within a work cycle not exceeding twenty-eight consecutive days.

6.1.1.1 The ordinary hours of work prescribed may be worked on any days or all of the days of the week, Monday to Friday.

6.1.1.2 The ordinary hours of work as distinct from the spread of hours prescribed on any day shall be worked continuously, except for meal breaks, at the discretion of the Company, between 6:00 a.m. and 6:00 p.m., provided that:

· Work done prior to the spread of hours fixed in accordance with this subclause for which overtime rates are payable shall be deemed for the purposes of this subclause to be part of the ordinary hours of work, and

· The spread of ordinary hours as distinct from starting and finishing times may be altered by mutual agreement between the Company and the majority of employees in the section or sections concerned.

6.1.1.3 The ordinary hours of work prescribed herein shall not exceed ten hours on any day provided that:

· In any arrangement of ordinary hours where the ordinary working hours exceed eight on any day, the arrangement of hours shall be subject to agreement between the Company and the majority of employees in the plant or work section or sections concerned; and

· By arrangement between the Company, the Union or Unions concerned and the majority of employees in the plant or work section or sections concerned, 12 hour days or shifts may be introduced subject to:

· proper health monitoring procedures being introduced;

The procedure for dealing with the implementation of the 38 hour week shall be discussed with the Shipyard's Accredited Employee's Representatives and shall have regard to projections in respect of future workload. Accrual of rostered time to a maximum of five days shall be allowable to meet the production requirements of the Company. The accrued time must be taken within twelve months.

The working of a 38 hour week must provide maximum flexibility in respect of working requirements and, in addition to the existing arrangements which include Unpaid Days Off (UDO), the method of implementation may be either:

Should a request from Management to change the working hours within the above options to meet workload projections be unreasonably refused, then the matter shall be referred to the Australian Industrial Relations Commission.

The Company, under normal circumstances, may require shift work in certain areas that are required to maintain unimpeded production. In some cases, production schedules will require the implementation of shift work for short periods. The following provisions shall apply:

6.2.1 Definitions - for the purpose of this clause:

Afternoon Shift means any shift finishing after 6:00 p.m. and at or before midnight.

Continuous Work means work carried on with consecutive shifts of people throughout the twenty-four hours of each of at least six consecutive days without interruption, except during breakdowns or meal breaks or due to unavoidable causes beyond the control of the Company.

Night Shift means any shift finishing subsequent to midnight and at or before 8:00 a.m.

Rostered Shift means a shift of which the employee concerned has had at least forty-eight hours' notice.

This subclause shall apply to shift workers on continuous work as previously defined the ordinary hours of shift workers shall average 38 per week inclusive of crib time and shall not exceed 152 hours in twenty-eight consecutive days. Provided that, where the Company and the majority of employees agree, a roster system may operate on the basis that the weekly average of 38 ordinary hours is achieved over a period which exceeds 28 consecutive days. Subject to the following conditions, such shift workers shall work at such times as the employer may require:

A shift shall consist of not more than ten hours inclusive of crib time. Provided that:

6.2.2(a) In any arrangement of ordinary working hours where the ordinary working hours are to exceed eight on any shift, the arrangements of hours, shall be subject to agreement between the Company and the majority of employees in the plant or work section or sections concerned; and

6.2.2(b) By agreement between the Company, the Union or Unions concerned and the majority of employees in the plant, work section or sections concerned, ordinary hours not exceeding twelve on any day may be worked subject to:

· proper health and monitoring procedures being introduced;

6.2.2(c) Except at the regular change over of shifts, an employee shall not be required to work more than one shift in each twenty-four hours.

6.2.2(d) Twenty minutes shall be allowed to shift workers each shift for crib, which shall be counted as time worked.

This subclause shall apply to shift workers not on continuous work as previously defined. The ordinary hours of such shift workers shall not exceed:

· 38 hours within a period not exceeding seven consecutive days, or

· 76 hours within a period not exceeding fourteen consecutive days, or

· 114 hours within a period not exceeding twenty-one consecutive days, or

· 152 hours within a period not exceeding twenty-eight consecutive days.

6.2.3.1 The ordinary hours shall be worked continuously, except for meal breaks at the discretion of the Company. An employee shall not be required to work for more than five hours without a break for a meal. Except at regular changeover of shifts, an employee shall not be required to work more than one shift in each twenty-four hours.

Provided that the ordinary hours of work herein shall not exceed 10 hours on any day; and

· In any arrangement of ordinary working hours where the ordinary working hours are to exceed eight on any shift the arrangement of hours shall be subject to agreement between the Company and the majority of employees in the plant or work section or sections concerned; and

· By agreement between the Company, the Union or Unions concerned and the majority of employees in the plant, work section or sections concerned, ordinary hours not exceeding twelve on any day may be worked.

6.2.3.2 The time of commencing and finishing shifts, once having been determined, may be varied by agreement between the Company and the majority of employees concerned to suit the circumstances of business or in the absence of agreement, by seven days' notice of alteration given by the Company to the employee.

The procedure for dealing with the implementation of the 38 hour week shall be discussed with the Shipyard's Accredited Employee Representatives and shall have regard to projections in respect of future workload. Accrual of rostered time to a maximum of five days shall be allowable to meet the production requirements of the Company.

Where such agreements have been reached, the accrued time must be taken within 12 months.

The working of a 38 hour week must provide maximum flexibility in respect of working requirements and, in addition to the existing arrangements which include Unpaid Days Off (UDO), the method of implementation may be either:

Should a request from management to change the working hours within the above options to meet workload projections and demands be unreasonably refused, then the matter shall be referred to the Australian Industrial Relations Commission.

6.2.5(a) A shift worker whilst on afternoon or night shift shall be paid for such shift 15 percent more than the ordinary rate.

6.2.5(b) A shift worker who works on an afternoon or night shift which does not continue:

· For at least five successive afternoons or nights in a five day workshop, or six successive afternoons or nights in a six day workshop, or

· For at least the number of ordinary hours prescribed by one of the alternative arrangements in subclause 6.1.1.1 and 6.1.1.2 hereof, shall be paid for each shift 50 percent for the first two hours thereof and 100 percent for the remaining hours thereof in addition to this ordinary rate.

· During a period of engagement on shift, work night shift only, or

· Remain on night shift for a longer period that four consecutive weeks, or

· Work on a night shift which does not rotate or alternate with another shift or with day work so as to give at least one-third of working time off night shift in each shift cycle, shall, during such engagement period or cycle be paid 30 percent more than the ordinary rate for all time worked during ordinary working hours on such night shift.

The minimum rate to be paid to a shift worker for work performed between midnight on Friday and midnight on Saturday, shall be time and a half. Such extra rate shall be in substitution for and not cumulative upon the shift premiums prescribed in subclause 6.2.6(a), (b) or (c).

Shift workers on continuous work on rostered shift, the major portion of which is performed on a Sunday or public holiday, shall be paid as follows:

· Shift workers on other than continuous work, for all time worked on a Sunday or public holiday, shall be paid at the rate prescribed by clause 6.4. Public Holidays and Sundays of this Award. Where shifts commence between 11:00 p.m. and midnight on a Sunday or holiday, the time so worked before midnight shall not entitle the employee to the Sunday or holiday rate; provided that the time worked by an employee on a shift commencing before midnight on the day preceding a Sunday or public holiday shall be regarded as time worked on such public holiday.

· Where a shift falls partly on a public holiday, that shift, the major portion of which falls on a public holiday, shall be regarded as the holiday shift.

Notwithstanding anything contained elsewhere in this Award, in any area where by reason of the legislation of a Sate, Summer time is prescribed as being in advance of the standard time of that State, the length of any shift:

· Commencing before the time prescribed by the relevant legislation for the commencement of a Summer time period, or

· Commencing on or before the time prescribed by such legislation for the termination of a Summer time period, shall be deemed to be the number of hours represented by the difference between the time recorded by the clock at the beginning of the shift and the time so recorded at the end thereof, the time of the clock in each case to be set to the time fixed pursuant to the relevant State legislation. In this subclause, the expressions standard time and Summer time shall bear the same meaning as are prescribed by the relevant State legislation.

Subject to subclause 6.3.4 of this Award, for all time worked in excess of the ordinary hours prescribed by this Award, the rate of pay for a day worker shall be time and a half for the first two hours and double time thereafter, such double time to continue until the completion of the overtime work.

Shift workers, for all time worked in excess of the ordinary working hours prescribed by this Award or on a shift other than a rostered shift shall;

· if employed on continuous work be paid at the rate of double time, or

· if employed on other shift work at the rate of time and a half for the first two hours and double time thereafter, except in each case when the time is worked,

· for the purpose of effecting the customary rotation of shifts, or

· on a shift to which an employee is transferred on short notice as an alternative to standing down the employee in circumstances which would entitle the Company to deduct payment for a day in accordance with subclause 4.6 of this Award.

The Company may require any employee to work reasonable overtime as demonstrably required by the task in hand and always to the personal requirements of the employee.

6.3.4.1 When overtime is necessary it shall, wherever reasonably practicable, be so arranged that employees have at least ten consecutive hours off duty between the work of successive days. Provided always that the total consecutive hours of work, including meal breaks, exceeds 12 hours.

6.3.4.2 An employee who works so much overtime between the termination of ordinary work on one day and the commencement of ordinary work on the next day that the employee has not had at least ten consecutive hours off duty between those times shall, subject to this subclause, be released after completion of such overtime until the employee has had ten consecutive hours off duty without loss of pay for ordinary working time occurring during such absence.

6.3.4.3 If on the instructions of the Company such an employee resumes or continues work without having had such ten consecutive hours off duty, payment shall be at double rates until the employee is released from duty for such period and the employee shall then be entitled to be absent until the employee has had ten consecutive hours off duty without loss of pay for ordinary working time occurring during such absence.

6.3.4.4 The provisions of this subclause shall apply in the case of shift workers with eight hours being substituted for ten hours when overtime is worked;

· where a shift worker does not report for duty and a day worker or shift worker is required to replace such shift worker, or

· where a shift is worked by arrangement between the employees themselves.

An employee called back to work overtime after leaving the Company's premises (whether notified before or after leaving the premises) shall be paid for a minimum of four hours' work, or where the employee has been paid for standing by in accordance with subclause 6.3.7, shall be paid for a minimum of three hours' work at the appropriate rate for each time recalled; provided that:

· Except in the case of unforeseen circumstances arising, the employee shall not be required to work the full three or four hours as the case may be if the job the employee was recalled to perform is completed within a shorter period.

· Overtime worked in the circumstances specified in this subclause shall not be regarded as overtime for the purpose of subclause 6.3.4 of this clause when the actual time worked is less than three hours on such recall or on each of such recalls.

· This subclause shall not apply in cases where it is customary for an employee to return to the Company's premises to perform a specific job outside ordinary working hours, or where the overtime is continuous (subject to a reasonable meal break) with the completion or commencement of ordinary working time.

A day worker required to work overtime on a Saturday shall be afforded at least four hours' work or paid for four hours at the appropriate rate except where such overtime is continuous with overtime commenced on the day previously.

An employee required to hold himself/herself in readiness to work after ordinary hours shall, until released, be paid standing-by time at ordinary rates from the time which the employee is told to hold in readiness.

Unless the period of overtime is less than one and one half hours, an employee before starting overtime after working ordinary hours shall be allowed a meal break of twenty minutes which shall be paid for at ordinary rates. The Company and employee may agree to any variation of this provision to meet the circumstances of the work in hand, provided that the Company shall not be required to make any payment in respect of any time allowed in excess of twenty minutes.

An employee working overtime shall be allowed a crib time of twenty minutes without deduction of pay after each four hours of overtime worked if the employee continues to work after such crib time; provided that where a day worker is required to work overtime on a Saturday, the first prescribed crib time shall, if occurring between 10:00 a.m. and 1:00 p.m. be paid at ordinary rates.

On the condition that the employees agree (and continue to agree) to take their 20 minute mid week crib (when entitled) after finishing overtime (and on the proviso that overtime offered is not in excess of two hours) management agrees to pay the mid week crib entitlement at the rate of time and one half, and the Saturday crib at the rate of double time.

An employee required to work overtime for more than two hours without being notified on the previous day or earlier that the employee is so required to work, shall either be supplied with a meal by the employer or paid $8.30 for the first meal and each subsequent meal. Unless the Company advises an employee on the previous day or earlier that the amount of overtime to be worked will necessitate the partaking of a second or subsequent meal (as the case may be) the Company shall provide such second and/or subsequent meals or make payment in lieu thereof as above prescribed. If an employee pursuant to notice has provided a meal or meals and is not required to work overtime or is required to work less than the amount advised, the employee shall be paid as above prescribed for meals which the employee has provided but which are surplus.

N.B.: Meal Allowance, where appearing in the Award, will be subject to escalation each twelve months in the following manner:

· On and from the first full pay period subsequent to the date of ratification of the Award and for the following twelve months $8.30 per meal

· For the second twelve months of the Award $8.70 per meal

· For the third twelve months of the Award $9.10 per week

When an employee, after having worked overtime or a shift for which the employee has not been regularly rostered, finishes work at a time when reasonable means of transport are not available, the Company shall provide the employee with a conveyance home, or pay current rates for the time reasonably occupied in reaching home.

6.3.11.1 An employee may elect, with the consent of the Company, to take time off in lieu of payment for overtime at a time or times agreed with the employer.

6.3.11.2 Overtime taken as time off during ordinary time hours shall be taken at the ordinary time rate, that is an hour for each hour worked.

6.3.11.3 The Company shall, if requested by an employee, provide payment at the rate provided for the payment of overtime in the Award, for any overtime worked under paragraph 6.3.11.1 of this subclause where such time has not been taken within four weeks of accrual.

6.3.12.1 An employee on day work may elect, with the consent of the Company, to work make up time under which the employee takes time off ordinary hours and works those hours at a later time, during the spread of ordinary hours provided in the Award.

6.3.12.2 An employee on shift work may elect, with the consent of the Company, to work make up time under which the employee takes time off ordinary hours and works those hours at a later time, at the shift work rate which would have been applicable to the hours taken off.

Subject to the provisions of clause 6.4.3 -2nd paragraph:

An employee on weekly employment shall be entitled, without loss of pay, to public holidays as follows:

or other such day as is generally observed in a locality as a substitute for any of the above days.

· Where Christmas Day falls on a Saturday or on a Sunday, the following Monday and Tuesday shall be observed as Christmas Day and Boxing Day respectively.

· Where New Year's Day falls on a Saturday or on a Sunday, the following Monday shall be observed as New Year's Day.

· Where Boxing Day falls on a Saturday or Sunday, the following Monday shall be observed as Boxing Day, and

· Where Australia Day falls on a Saturday or Sunday, the following Monday shall be observed as Australia Day, and

· The Saturday and/or Sunday shall be deemed not to be public holidays.

By agreement between the Company and a majority of employees concerned, other days may be substituted for the above public holidays.

Except as provided in subclause 6.2.8, an employee not engaged on continuous work shall be paid at the rate of double time and a half for work on a public holiday. Such double time and a half shall continue until the employee is relieved from duty.

Where an employee is absent from employment on the working day before or the working day after a public holiday without reasonable excuse or without the consent of the Company, the employee shall not be entitled to payment for such public holiday.

Except as provided in subclause 6.2.8, an employee not engaged on continuous work shall be paid at the rate of double time for work done on Sundays, such double time to continue until the employee is relieved from duty.

An employee, other than a casual employee not engaged in continuous shift work, who works on a Sunday or a public holiday for 12 consecutive hours or more (including meal breaks) shall on being relieved from duty, be entitled to be absent for ten consecutive hours off duty, without deduction of pay for ordinary time of duty occurring during such absence.

Minimum payment - public holidays and Sundays. Employees, other than shift, required to work on a Sunday or public holiday shall be paid for a minimum of three hours' work at the appropriate rate.

An employee not engaged on continuous work working on a Sunday or public holiday shall be allowed a crib time of twenty minutes without deduction of pay after each four hours of work, if the employee continues work after such time and provided that, where a day worker is required to work on a Sunday or public holiday, the first prescribed crib time shall, if occurring between 10:00 a.m. and 1:00 p.m., be paid at ordinary rates.

6.4.7 Meal Allowance - Public Holidays and Sundays

An employee not engaged on continuous work, required to work on a Sunday or public holiday for more than four hours without being notified on the previous day or earlier, shall be entitled to be paid a meal allowance of $8.30 for the meal taken during the first and during subsequent crib breaks.

Meal breaks shall be for a period of 30 minutes. The time during which a meal break is taken may be varied to meet special work conditions. The duration and commencement time of meal breaks may be varied by the Company.

Notwithstanding the above an employee shall not be required to work for more than five hours without a break for a meal except in the following circumstances:

6.5.1 In cases where canteen or other facilities are limited to the extent that meal breaks must be staggered and as a result it is not practicable for all employees to take a meal break within five hours, an employee shall not be required to work for more than six hours without a break for a meal; and

6.5.2 Depending upon operational requirements, and by agreement between the Company and the majority of employee's in the plant, work section or sections concerned, an employee or employees may be required to work in excess of five hours but not more than six hours at ordinary rates of pay without a meal break.

6.5.3 The time of taking a scheduled meal break or rest break by one or more employees may be altered by the Company if it is necessary to do so in order to meet a requirement for continuity of operations.

6.5.4 The Company may stagger the time of taking a meal and rest break to meet operational requirements.

6.5.5 Subject to the provisions of subclause 6.5.1 hereof an employee employed on regular maintenance shall work during meal breaks at the ordinary rates of pay whenever instructed to do so for the purpose of making good breakdown of plant or upon routine maintenance of plant which can only be done while such plant is idle.

6.5.6 Except as provided in subclause 6.5.1 and 6.5.2 hereof and except where any alternative arrangement is entered into as a result of discussion with the Shipyard's Accredited Employee Representatives as provided in clause 3.1, time and a half rates shall be paid for all work done during meal hours and thereafter until a meal break is taken.

The conditions of the Metal Engineering and Associated Industries (Accident Pay, Victoria) Award 1998 shall apply.

The maximum period of payment relative to the above Award shall not exceed 39 weeks' lost time.

In recognition of the unusual work patterns, requirements and functions to be performed and the unconventional nature of specific conditions during Sea Trials, this clause will stand alone in respect to the prescriptions for the payment of wages, penalties and conditions as set out in the following clauses of the Tenix Defence Systems Pty Limited Award 2001- 2004:

This Sea Trials clause also stands alone in relation to other prescriptions contained in this Award which are contrary to the specific prescriptions set out in this clause for Sea Trials.

Sea Trials shall be defined as a rostered period of time an employee is appointed by Tenix Defence Systems Pty Limited management and makes himself/herself available to perform tasks while the vessel is deemed to be on Sea Trials and will vary as required by the Trials Programme.

Sea Trials will be deemed to have commenced on the designated appointment and time Tenix Defence Systems Pty Limited management nominates.

Sea Trials will be deemed to have ceased by management's notification of the cessation and an employee is authorised to go ashore:

6.7.1(a) at Tenix Defence Systems Pty Limited, Williamstown; or

6.7.1(b) at another disembarkation point at the employee's request; or

6.7.1(c) on arrival at Williamstown, having travelled by authorised transport from another disembarkation point; or

6.7.1(d) on arrival at an agreed destination of the employee's request en-route by authorised transport from a disembarkation point to Williamstown.

All payments to provide and cover all aspects of shipboard environment are included in the following rates:-

For all on board rostered working hours (at any time) performed on Sea Trials during any ordinary week days (Monday to Friday), a Sea Trials Loading of 110% of an employee's ordinary hourly rate as prescribed in Clause 5.1.2 of this Award shall be paid.

6.7.2.2 Sea Trials - Saturday, Sunday, Public Holidays and Unpaid Days off

For all on board rostered working hours (at any time) performed on Sea Trials during Saturday, Sunday, Public Holidays or "Unpaid Day Off", a Sea Trials Loading of 185% of an employee's hourly ordinary rate as prescribed in Clause 5.1.2 - Rates of Pay - of this Award shall be paid.

The hours of work required to be performed during Sea Trials will vary from time to time according to Sea Trials requirements, however, employees engaged on Sea Trials will be normally provided with a minimum of ten (10) Sea Trials work hours and up to an anticipated maximum of sixteen (16) Sea Trials work hours in each 24 hour period, excepting that on the last day of each Sea Trial this may be reduced but each employee would receive the minimum equivalent of eight (8) hours pay on these days.

In recognition that an employee is on stand-by to work if the need arises, employees on Sea Trials during assigned rest period will be paid the employee's ordinary hourly rate as prescribed in Clause 5.1.2. - Rates of Pay - of this Award.

Meal periods during rostered Sea Trial work hours will consist of 20 minute Crib breaks and be paid as if worked. Crib breaks will be rostered to cover work requirements. Breaks will be every 3 to 4 hours.

Accommodation will be of limited but adequate standard and will consist of multiple share units and separate combined messing areas.

Adequate meals will be provided by The Company for all personnel to suit Sea Trial work requirements.

Printed by authority of the Commonwealth Government Printer

1 Tenix Defence Pty Limited, Print PR908675, 6 September 2001 at paragraph 60.

2 Tenix Defence Pty Limited, Print PR908675, 6 September 2001 at paragraph 50.

4 Print PR913098, 11 January 2002 at paragraphs 76 and 84.

5 [2000] HCA 47; (2000) 203 CLR 194 at 204.

6 [1936] HCA 40; (1936) 55 CLR 499 at 504.

7 [2000] HCA 47; (2000) 203 CLR 194 at 205.

8 Re Victorian Public Transport Enterprise Agreement 1994, Print M2454, 7 June 1995 per Ross VP, Polites

SDP and Grimshaw C at 3; and Re CFMEU Appeal, Print R2431, 25 February 1999 per Harrison SDP, Drake DP and Larkin C at paragraph 8.

9 Re Victorian Public Transport Enterprise Agreement 1994, Print M2454, 7 June 1995 per Ross VP, Polites SDP and Grimshaw C at 3.

11 Re CFMEU Appeal, Print R2431, 25 February 1999 per Harrison SDP, Drake DP and Larkin C at para 12.

12 Re: Victorian Public Transport Enterprise Agreement 1994, Print M2454, 7 June 1995 per Ross VP, Polites SDP and Grimshaw C at p. 4; Re: CFMEU Appeal, Print R2431, 25 February 1999 per Harrison SDP, Drake DP and Larkin C at para 13.

13 Re: Victorian Public Transport Enterprise Agreement 1994, Print M2454, 7 June 1995 per Ross VP, Polites SDP and Grimshaw C at 3-4.

14 [2000] HCA 5; (2000) 199 CLR 135 at 148.

15 [2002] FCR 301, 20 March 2002 at para 53.

16 Re CFMEU Appeal, Print R2431, 25 February 1999 per Harrison SDP, Drake DP and Larkin C at para 6.

17 Pawel v Australian Industrial Relations Commission [1999] FCA 1660, 10 December 1999 per Branson and Marshall JJ at para 16.

18 (1999) 162 ALR 577 at para 127. Also see R v Judges of the Federal Court of Australia; Ex parte WA National Football League [1979] HCA 6; (1979) 143 CLR 190 at 214.

19 Re Victorian Public Transport Corporation, Print M2454, 7 June 1995 per Ross VP, Polites SDP and Grimshaw C; and SJ Higgins Pty Ltd & Ors v Construction, Forestry, Mining and Energy Union, Print PR903843, 2 May 2001 per Williams SDP.

21 Exhibit A1 at para 43; and Appeal Book Tag 12 at para 14.

27 For example see Hornsby Building Information Centre Pty Ltd [1978] HCA 11; (1978) 18 ALR 639 at 645 per Stephen J; and Bevance Pty Ltd v Lu bid ineuse [1985] FCA 134; (1985) 59 ALR 334 at 341.

28 [1922] SAStRp 28; [1922] SASR 299 at 311.

29 This was Tenix's alternate variation in the proceedings at first instance - see Exhibit T5 at para 36, Appeal Book Tag 12.

30 Witness statement of Allan Irving, Appeal Book Tag 7 at paras 51 - 52; witness statement of Allen Rootsey, Appeal Book Tag 10.

31 Witness statement of Allan Irving, Appeal Book Tag 7 at para 55 and Annexures A1 - 2 and A1 - 3; witness statement of Allen Rootsey, Appeal Book Tag 10.

32 Witness statement of Allan Irving, Appeal Book Tag 7 at paras 60 - 62; witness statement of Allen Rootsey, Appeal Book Tag 10.

34 Witness statement of Cameron Teal, Appeal Book Tag 22 at para 6.

35 In Mr Irving's file note of the meeting on 1 February 2001 Dr Varnum is reported as saying: "We think the wage offer and the overall package is a good one but I don't want anyone to be under any misapprehension - there is no more - we won't be moving off it." Also see the reference to the calendar on p.5 of the file note of the meeting on 23 January 2001.

36 Evidence of Allan Irving, transcript, 7 December 2001 at PN170; witness statement of Allen Rootsey, Appeal Book Tag 10.

37 Evidence of Allan Irving, transcript, 7 December 2001 at PN170; witness statement of Allen Rootsey, Appeal Book Tag 10.

38 Witness statement of Allan Irving, Appeal Book Tag 7 at paras 58 - 59 and Annexure A; witness statement of Allen Rootsey, Appeal Book Tag 10.

43 Evidence of Mr Rootsey, transcript, 7 December 2001 at PN391.

44 Witness statement of Allan Irving, Appeal Book Tag 7 at para 32; witness statement of Allen Rootsey, Appeal Book Tag 10.

45 Witness statement of Darren Nelson, Appeal Book Tag 17 at para 8; witness statement of Shaun Leane, Appeal Book Tag 20 at para 10; evidence of Allan Irving, transcript, 7 December 2001 at PN291.

46 Witness statement of Allan Irving, Appeal Book Tag 7 at paras 36 - 40; witness statement of Allen Rootsey, Appeal Book Tag 10.

47 Exhibit T1 in the proceedings at first instance at para 33; Appeal Book Tag 6.