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[2024] FWC 2721
General information, not legal advice.
Fair Work Commission
2024-09-30
Original judgment source is linked above.
s.739 - Dispute resolution
s.217 - application to vary an agreement to remove an ambiguity or uncertainty
Application by Coles Group Supply Chain Pty Ltd
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] - redundancy terms - automation of distribution centres over a five-year period - whether employer required to give 16 weeks' notice of the closure of whole site - whether employer can give a lesser period of notice to employees who are not required to work until the last day of operation - interpretation made according to orthodox interpretation principles.
Application to vary an agreement to remove an ambiguity or uncertainty - ambiguity or uncertainty found after considering the terms of the agreement, extrinsic evidence and the industrial history - objectively obtainable mutual intention - no objectively discernible common intention - a distinct likelihood that a variation as sought would give effect to a new and substantive change to the agreement - application dismissed.
15.6.1 In order to terminate the employment of a team member the Company must give the team member the following notice:
15.6.2 In addition to the notice above, team members over 45 years of age at the time of the giving of the notice with not less than two years continuous service, shall be entitled to an additional week's notice.
15.6.3 Payment in lieu of the notice must be made if the appropriate notice period is not given. Provided that employment may be terminated by part of the period of notice specified and part payment in lieu thereof.
15.6.4 For the avoidance of doubt, where the Company makes the decision to terminate the employment of a permanent full-time or permanent part-time member due to a retrenchment related to the full Site closure, the Company will provide in writing to the affected team member sixteen (16) weeks' notice (to be worked)."
(a) Clauses 34.4.1 to 34.4.3 set base conditions that apply to all redundancies;
(b) clauses 34.4.4 to 34.4.7 deal with an initial voluntary redundancy process that appears to have applied shortly after the Agreement was made;
(c) clauses 34.4.8 and 34.4.9 deal with any subsequent voluntary redundancy programs during the life of the Agreement; and
(d) clause 34.4.10 deals with involuntary redundancies including redundancies relating to the full site closure.
34.4.10 Any redundancy that is not a voluntary redundancy will be an involuntary (forced) redundancy. A permanent team member who is involuntarily retrenched resulting in the team members position being made redundant will be entitled to:
(a) Notice of termination as per clause 15.6.1 and 15.6.2 unless the forced redundancy relates to full site closure then the notice prescribed in clause 15.6.4 applies;
(b) Four (4) weeks' severance pay per year of completed continuous service (including casual service with the Company but not including any 'agency' or labour hire service), and if the team member is over the age of 45 years as at the date of termination, an additional one (1) weeks' pay per year of service to a maximum of ten (10) weeks' pay; and
(c) The severance pay under clause 34.4.10(b) will not exceed eighty (80) weeks' pay.
(d) Part-time team member's severance pay will be pro-rated based on rostered hours at the time of termination."
In addition to the enhanced severance pay, permanent team members will be provided a minimum of 16 weeks' notice (to be worked) if their employment will be terminated due to a forced (involuntary) redundancy resulting from the full site closure of the Smeaton Grange RDC. This ensures that all team members directly retrenched as a result of the full site closure receive more than the standard 4 weeks or 5 weeks (if you are 45 years of age or over) notice of termination".
"In early November 2019 I started to make a series of internal inquiries relating to Coles' appetite to include in any Goulburn EA a 16 week notice of full site closure. From my internal discussions and considerations, I formed the view that Coles would need at least 16 weeks in order to properly discharge its obligations with suppliers, transport carriers and other external parties in order to close the Goulburn DC. I was authorised by the business to include in any future conditional offer for the Goulburn site a commitment to provide Goulburn team members with 16 weeks written notice of the site closure once a definite decision had been made by the business. The notice was not an increase in notice of termination entitlements of more than 5 weeks (the maximum under the existing Goulburn EA at the time) for all team members, but as a consequence, only for those forcibly retrenched as at the site closure date."
"The 16 weeks' notice of site closure provided under the Goulburn EA was not intended to operate as each individual team member's actual notice of termination. The purpose of the clause was to provide notice of the date of full site closure, and accordingly notice of termination for those team members forcibly retrenched as at the site closure date. The notice was always specified and intended to be worked. Notice of termination for all team members was not a matter Coles would or did agree to increase, as it required the flexibility to downsize the workforce in leadup to site closure..."
"16 weeks' notice will be provided to team members retrenched due to and at Full Site Closure (to be worked)"
"At none of the bargaining meetings which I attended was there any discussion or disclosure from Coles' representatives of an intention to terminate staff in stages once site closure had been announced. There was discussion about staged redundancies, whether forced or voluntary, prior to the announcement of site closure, but the understanding during discussions was always that that workers still employed once closure was announced would be entitled to 16 weeks notice of redundancy which they would work.
Similarly, at no bargaining meeting I attended was there any discussion about how after closure was announced, staff could still be given 4-5 weeks' notice of termination. Nor was there discussion about how employees could be given both 16 weeks notice of site closure, and then 4-5 weeks' notice of termination individually. The discussion during bargaining was always that once site closure was announced, staff being made redundant would be given 16 weeks notice and they would be required to work those 16 weeks."
"I recall that the conversations during this period focussed primarily on the main impasses of bargaining, especially redundancy pay and voluntary redundancies. I do not recall there being any significant discussion regarding the 16 weeks' notice provision."
(a) the textual consideration support the construction. The reference to "full" site closure operates to condition both the broader concept of "site closure" and the otherwise ambulatory meaning of the word "relates";
(b) the contextual consideration support the construction. Clause 5.9 commits the UWU to provide flexibility to deal with operational needs and variations including the downsizing of the workforce and the transition to site closure. Clause 34.4.8 also includes a reference to the pending site closure, noting that permanent team member headcounts will reduce over time. These terms contemplate a phased downsizing process in the lead up to a full site closure;
(c) the supporting context of the other agreements made for the other distribution centres establish a common understanding between bargaining parties that "make plain that the 16 weeks' notice of termination entitlement extends only to team members retrenched due to and at full site closure."
"... The UWU's draft conditional offer expressed the 16 week notice claim as "16 weeks' notice will be provided at Full Site Closure (to be worked)". Coles amended that drafting to reflect its "clear position" that the 16 week notice period would apply to "team members retrenched due to and at Full Site Closure". That wording featured in each subsequent conditional offer exchanged between the UWU and Coles, and in the access period materials provided to employees."
"Four things emerge from those matters. First, no employee will be materially disadvantaged by the proposed variation: the vastly more generous redundancy pay terms included in each Impacted DC agreement provide (and were intended to provide) appropriate protection for impacted employees. Second, the materials exchanged between Coles and the UWU in each bargain (including Smeaton Grange) reveal Coles' position to have been clearly communicated. Third, that clearly communicated position was in turn communicated to team members prior to each vote (including at Smeaton Grange). Fourth, despite various differences in wording across the various agreements, no-one - not a single employee, nor the UWU, nor the SDA - has until now raised any concern about the site closure notice terms' intended operation. When understood in light of two site closures, that fact tells strongly of a common understanding."
"[68] There are practical consequences for the FWC's ascertainment of ambiguity or uncertainty for the purpose of s 217 being different in character from the interpretation of an enterprise agreement. One is that there was no need for the FWC to feel constrained in the matters to which it may have regard by the principles developed for the interpretation of enterprise agreements. Moreover, the FWC is obliged, in performing its functions or in exercising its powers in relation to a matter under the FW Act, to take into account, amongst other things, "equity, good conscience and the merits of the matter" - see s 578 of the FW Act. Furthermore, the FWC is not bound by the rules of evidence and procedure in relation to a matter - see s 591 of the FW Act. Each of those provisions applies to the discharge by the FWC of its functions under s 217(1). The consequence is that, far from being precluded from having regard to evidence of the parties' common intention and to the history of cl 1.2, the Deputy President was permitted to have regard to them as part of the "equity, good conscience and the merits" of the matter."
"Although Aurizon seeks that its variation application only be determined in the event that the dispute application is determined contrary to its position, we consider it is convenient to consider and determine the variation application first, for two reasons: > > (1) These matters were referred to a Full Bench, on Aurizon's application, on the basis that 'early guidance can be given concerning the proper construction and application of s 218A'. We do not consider therefore that the determination of the variation application should only be dealt with on a contingent basis. > > (2) The task of construing the expression 'known workings' in order to determine the dispute application is of such difficulty that we would prefer to resolve the dispute by varying clause 77.1 in appropriate terms should we have the power to do so."
(a) the process of ascertaining ambiguity or uncertainty in an enterprise agreement is "distinct" from the process of construction, the latter of which involves determining the "true meaning" of a provision: Bianco Walling, [66] - [67];
(b) ambiguity exists when a provision in an enterprise agreement is capable of more than one meaning: Bianco Walling, [67];
(c) ambiguity may be apparent on the face of the document or may only become apparent when extrinsic evidence is adduced: Bianco Walling, [67];
(d) a provision may be ambiguous even though capable of interpretation: Bianco Walling, [67].
(e) evidence of the parties "common intention" and the history of the impugned provisions are matters the Commission is permitted to have regard to in ascertaining whether ambiguity or uncertainty exists: Bianco Walling, [68].
(f) the mere existence of rival contentions as to the meaning or application of a provision or provisions in an enterprise agreement is unlikely to be sufficient to indicate ambiguity or uncertainty for the purposes of s 217: Bianco Walling, [70].
(g) and while the mere existence of rival contentions is insufficient to permit a finding of ambiguity or uncertainty, 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" (original emphasis): Bianco Walling, [70] citing Re Tenix Defence Systems Pty Ltd Certified Agreement 2001-2004 [2002] AIRC 531 at [31];
(h) the words "ambiguity" and "uncertainty" are not synonymous: Bianco Walling, [75]:
"There may, for example, be uncertainty in an enterprise agreement even when its terms are not ambiguous. The uncertainty may arise from the application of the unambiguous terms to a given set of circumstances. The distinction between patent ambiguity (linguistic ambiguity) and latent ambiguity (ambiguity in application) provides an illustration by analogy" (citations omitted)"; and
(i) a form of "uncertainty" can extend to the common law analogy of uncertainty, where a provision might be found to be void, because no definite meaning can be put on that provision. However, "uncertainty" in s.217 is not so limited: Bianco Walling, [77].
"[42] Once ambiguity or uncertainty has been identified, the Commission must then consider whether to exercise its discretion to vary the agreement. The Commission has discretion to "remove ambiguity or uncertainty", not to give effect to a new and substantive change to the agreement. Applications that seek the latter must be made under s 210 of the FW Act. A decision of the Commission under s 217 to remove uncertainty or ambiguity should give effect to the substantive agreement that was ambiguously or uncertainly reduced to writing in the terms of the enterprise agreement."
Is there ambiguity or uncertainty in the Agreement?
(a) If workers are given 16 weeks' notice of a full site closure there is a fairly compelling argument to say that any retrenchment that occurs after the notice is given is a retrenchment relating to the full site closure; or
(b) On the other hand there is an argument available on the terms of the Agreement to say that even after 16 weeks' notice is given of the closure of the site, only those employees who work through to the end of the 16 week period are retrenched because of the full site closure (because their employment ended when the site fully closed). This interpretation makes clause 15.6.4 slightly circular because on that construction clause 15.6.4 really only notes the fact that employees who are given 16 weeks' notice of the closure of the site, and who in fact work for the 16 weeks, will have received and worked 16 weeks of notice.
"But hypothetical and less common examples aside, other than 'consent' applications under s.217 or variations to allow an enterprise agreement to conform with a provision that has been formally construed, I am not aware of any decision of the Commission that suggests that the discretion under s.217 is largely unfettered or that the relevance of an antecedent common intention is anything other than significant."
"[25] ... the Deputy President's observation that common intention was a 'significant' consideration in the exercise of discretion under s 217 of the Act, was entirely consistent with the authorities. It is to be recalled that the Deputy President did not accept the NTEU's primary submission that discretion under s 217 can only be exercised to give effect to a variation that reflects the common intention of the persons who made the relevant enterprise agreement. The rejection of that contention is consistent with previous decisions of the Commission identifying common intention as one of the matters to which the Commission should have regard. Indeed that mutual or common intention could be a factor to consider and, where appropriate, a significant factor in the exercise of the discretion, was a matter the University accepted as the Deputy President noted at [119] of his decision.
[28] Therefore, the Deputy President's conclusion that common intention was a significant consideration in the exercise of his discretion to vary the Agreement to remove the identified ambiguity and uncertainty, and his observation that the circumstances in which the Commission would exercise discretion without evidence of mutual intention are "limited", finds support in the authorities and is entirely orthodox."
"The discretion of the Commission in the case of an ambiguity or uncertainty involves two questions. First, is it appropriate to vary the agreement? If so then secondly, what variations are appropriate? Similar considerations will often be relevant to both questions and hence the two questions frequently overlap. It is well established that a significant factor is the objectively ascertained mutual intention of the parties at the time the agreement was made [citing Re Tenix Defence Systems Pty Ltd Certified Agreement 2001-2004 [2002] AIRC 531]. It is not appropriate to rewrite an agreement or install something that was not inherent to the agreement when it was made [citing Construction, Forestry, Mining and Energy Union v Linfox Transport (Australia) Pty Ltd]. These principles reflect the notion that an agreement is made by the parties usually without any arbitrated content or independently determined standards of industrial fairness. The exercise of the discretion conferred on the Commission in relation to an ambiguity or uncertainty does not give rise to a general discretion to determine a matter based on industrial fairness [citing Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Qantas Airways Ltd [2001] FCA 547; (2001) 106 IR 307]. The task is to place the parties in the position they intended by their agreement - insofar as the wording of the agreement does not reflect that intention. Although a significant factor, the objectively ascertained mutual intention of the parties is not the only consideration. However it would be unusual for other considerations to weigh in favour of a variation that was inconsistent with the intention of the parties [citing Community and Public Sector Union v Telstra Corporation Ltd (2005) 139 IR 141]."
"[33] ... the Deputy President concluded at [141]-[143] that a search for an 'objectively determined' common intention is a search for 'actual mutual intention' assessed by reference to objective evidence "in the sense that [a court] does not merely accept what a party says was in his or her mind, but instead considers and weighs admissible evidence probative of intention".
In describing this as a way to ascertain common intention in relation to an enterprise agreement, the Deputy President was correct. Contrary to the University's contention, on our reading of the decision, the Deputy President did not find that that which must be established is actual or subjective mutual intention, rather than objectively ascertained mutual intention. The Deputy President's reference to 'actual intention' is not to a subjective intention but rather to objectively identified actual mutual intention. So much is clear from [143] of the decision where the Deputy President says that he "would approach that task 'in the sense' described by Kiefel J above, namely as a search for actual mutual intention through a prism of considering and weighing the admissible evidence probative of actual intention".
[34] At [144] of the decision the Deputy President acknowledges that a common intention may be objectively identified by engaging with the terms of an enterprise agreement and at [145] he notes that whichever approach is adopted, common intention in the context of an enterprise agreement is not lightly found. At [151] of the decision the Deputy President records that the University acknowledged the evidence did not point to any meeting of minds."
"[145] "Common intention" - however approached - for the purposes of an enterprise agreement is not lightly found. As Justice Gray stated in Australian Liquor, Hospitality and Miscellaneous Workers Union v Prestige Property Services Pty Ltd [2006] FCA 11; (2006) 149 FCR 209, "[c]are must be taken, however, to distinguish a common understanding from common inadvertence" and that "[t]here can be no meeting of minds, no consensus, if no-one has thought about the issue."
[146] In Shop Distributive and Allied Employees' Association v Woolworths Ltd [2006] FCA 616; (2006) 151 FCR 513, another decision by Gray ACJ, his Honour considered a submission that past conduct of the parties might lead to a finding of common understanding. His Honour stated at [31]:
"... There is authority that, if a provision has appeared in a series of agreements between the same parties, and if they can be shown to have conducted themselves according to a common understanding of the meaning of that provision, then it can be taken that they have agreed that the term should continue to have the commonly understood meaning in the current agreement. ... It is necessary to take great care in the application of this limited principle, to avoid infringing the general principle that the conduct of parties to an agreement cannot be taken into account in construing the agreement. For the limited principle to operate, there must be clear evidence that the parties have acted upon a common understanding as to the meaning of the relevant provision and not for other reasons, such as common inadvertence as to its true meaning."(emphasis added)
[147] His Honour observed that, in addition to "inadvertence" that might otherwise explain a past practice, there might also be instances involving "an act of generosity on the part of the [employer], from which it has now resiled." The observations of Gray J have been endorsed by Full Court decisions. To the list of "inadvertence" and "generosity", I would perhaps add guarded disagreement. Disputes about the operation of provisions of enterprise agreements are often resolved on a situational basis without the parties reaching agreement about the substantive future operation of the provision. The fact that the (disputed) provision of the enterprise agreement is then restated without amendment in a subsequent enterprise agreement does not indicate a common intention - it may indicate no more than an "agreement to disagree" in the interests of industrial peace at that point in time."
Is there an identifiable objectively obtained mutual intention?
"[155] Without limiting what might be appropriate in all the circumstances of a particular matter, the factors guiding the discretion to vary an enterprise agreement to remove and ambiguity or uncertainty might include, as appropriate: > > • The absence of an antecedent "common intention" or "substantive agreement". The presence of this factor would ordinarily be a matter of significant weight in favour of variation and, equally, its absence a significant factor for refusal; > > • The variation would not "give effect to a new and substantive change to the agreement" (citing Specialist People at [42]). This is a significant factor for refusal, if not satisfied; > > • The exercise of the power of variation granted by s.217 is only for the purpose of removing "an ambiguity or uncertainty" (citing Bianco Walling at [3]; Specialist People at [42] and [50]). A variation extending beyond that required to remove an ambiguity or uncertainty would be beyond the jurisdiction conferred by s.217; > > • The views of the employer and employees (and, for the latter, including the views expressed on their behalf by an applicable union) (citing Porter v MFESB at [58](3); Re Australian and International Pilots Association [2007] AIRC 303; (2007) 162 IR 121 at [17]; Re Energy Safe Victoria [2020] FWCA 6718 at [9]); > > • The utility of the amendments (citing Specialist People at [50]); > > • The stage of bargaining between the parties, where relevant (citing Re Australian and International Pilots Association [2007] AIRC 303; (2007) 162 IR 121 at [35]). Where an enterprise agreement has expired, it would be generally preferrable for the parties to endeavour to reach an agreed position rather than having the Commission determine a variation for the expired agreement; > > • The timing of an application for variation, including delay; > > • The specified date in which the variation is sought to be effective; and > > • The power under s.217 "does not give rise to a general discretion to determine a matter based on industrial fairness" (citing Re Australian and International Pilots Association [2007] AIRC 303; (2007) 162 IR 121 at [17])."
A Pollock of Counsel instructed by K Harrop of Corrs Chambers Westgarth
Printed by authority of the Commonwealth Government Printer
United Workers' Union
Coles Group Supply Chain Pty Ltd [2024] FWC 2721
(2020) 275 FCR 385
(2017) 268 IR 285
(2007) 162 IR 121
(2001) 106 IR 307
(2005) 139 IR 141
(2006) 149 FCR 209
(2006) 151 FCR 513