s.739 - Application to deal with a dispute

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)]

• [1] On 12 June 2025, the United Workers' Union (the UWU/the Applicant) lodged an application (the Application) pursuant to s.739 of the Fair Work Act 2009 (Cth) (the FW Act) for the Fair Work Commission (the Commission) to deal with a dispute with Katherine Town Council (the Council/the Respondent). The dispute relates to clause 22 of the Katherine Town Council Enterprise Agreement 2021-2025 (the Agreement), and a denial by the Respondent's Chief Executive Officer (CEO) to approve increment increases to employees' remuneration. The dispute was notified in accordance with clause 9 of the Agreement.

• [2] A telephone conference was conducted in this matter on 24 June 2025, however, the matter was unable to be resolved.

• [3] Further to an extension of the directions at the parties' request, and following receipt of all materials, the matter was listed for brief Telephone Hearing on Friday, 15 August 2025 for Closing Submissions.

• [4] This decision determines the dispute in relation to clause 22 of the Agreement.

• [5] The Respondent operates a local government administration throughout the Township of Katherine, known as Katherine Town Council.

• [6] Between 2020 and 2025, the Respondent has conducted annual performance appraisals of its employees, in accordance with the Agreement.

• [7] Ms Ingrid Stonhill commenced in the position of CEO of the respondent on 7 February 2022.

• [8] In the 2021/2022 financial year, the CEO did not approve any increment increase to employees covered by the Agreement. This decision was made for financial reasons.

• [9] The parties are in dispute about the proper construction of clause 22 of the Agreement, and whether the CEO is entitled to not approve an increment increase under the Agreement.

• [10] The parties have sought that the dispute be resolved via a determination of the Commission in accordance with clause 9.3.4.2 of the Agreement.

• [11] This decision determines the dispute in relation to clause 22 of the Agreement.

• [12] Clause 9 of the Agreement provides the Dispute Resolution Procedure as follows:

9.3 The following procedure will be used in the event of a dispute arising between the parties to this Agreement over the terms of the Agreement, the Award or the National Employment Standards or any other Enterprise Agreement employment related matter:

9.3.4 If discussions at the Workplace level do not resolve the dispute, ta party to the dispute may refer the matter to the Fair Work Commission. The Fair Work Commission may deal with the dispute in two (2) stages:

9.3.4.1 Fair Work will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation.

9.3.4.2 If the Fair Work Commission is unable to resolve the dispute at the first stage, the Fair Work Commission may then arbitrate the dispute and make a determination that is binding on the parties.

9.3.4.3 Note: If the Fair Work Commission arbitrates the dispute, it may also use the powers that are available to it under the Act.

9.3.4.4 A decision that the Fair Work Commission makes when arbitrating a dispute is a decision for the purpose of Division 3 of Part 5.1 of the Act. Therefore, an appeal may be made again the decision.

• [13] Clause 22 provides the process for employees' advancement through pay levels:

22.1 Employees assessed through the annual performance appraisals process as performing satisfactorily will be considered annually for one (1) step pay increment increases in the relevant grading level, up to the highest increment rate.

22.2 Performance appraisals are to be done by May of each year in preparation for the next year's financial budget and any increment awarded will be effective from the first full pay period on or after 1 July in the following financial year.

22.3 Should the appraisal not be done in May due to the fault of the Employer, the increment increase will automatically progress, however the appraisal must be done soon thereafter.

22.4 Should the appraisal not be done in May due to the fault of the Employee, the increment increase will remain unchanged until an appraisal is completed. No back-payments will be considered should the employee still not have their appraisal completed by the 1st of July. Increment increase will be effective from the date the appraisal is completed in its entirely.

22.5 Council may defer advancement within increments for any employee that:

22.5.1 Has their performance graded during an appraisal as 'unsatisfactory'; or

22.5.2 Has received disciplinary action in the last twelve (12) months; or

22.5.3 Has had excessive non-attendance issues for up to twelve (12) months.

22.6 Advancing through increments will be at the recommendation of the employees Manager after successfully completing an appraisal, it must be endorsed by the Director, Human Resources and approved by the CEO.

22.7 Advancing through several increments may be used as a form of Reward and Recognition for employees who have been deemed 'exceptionally performing employees' through means of a performance appraisal.

22.8 Council will recognise relevant accredited or tertiary training/qualifications if the position requires such training to be a part of the role and the employee is required to utilise various components of the training throughout the course of undertaking their duties. Recognition will be at the discretion of Human Resources and the position's direct report.

22.9 Throughout the course of your employment, completing an accredited or tertiary training/qualification will not guarantee or automatically result in an increment increase.

22.10 Increment increase will only be provided based on satisfactory and/or exceptional work performance and will not be influenced by qualifications (unless the position absolutely needs that qualification).

22.11 All increment increases must be approved by the CEO."

• [14] The parties provided an agreed statement of facts as follows:

"1. The applicant, the respondent and certain employees of the respondent[1] are covered by the Enterprise Agreement which commenced operation from 18 October 2021.

2. On 7 February 2022, Ingrid Stonhill commenced in the position of CEO of the respondent.

3. In September 2022, Ms Stonhill, in her capacity as CEO, did not award any increment increases to employees covered by the Katherine Town Council Enterprise Agreement 2021-2025.

4. Ms Stonhill did not award any increment increases to staff due to the adverse financial position of the respondent at that time.

5. Since September 2022, Ms Stonhill has not exercised a discretion not to approve an increment increase to all employees."

• [15] The Applicant proposed that the questions for arbitration were as follows:

"(a) If an employee is assessed through the annual performance appraisal process as performing satisfactorily and they have not received any disciplinary action or had any excessive non-attendance issues in the last twelve months, is the Chief Executive Officer required to approve an increment increase under subclauses 22.6 and 22.11 of the Agreement?

(b) Can the Chief Executive Officer of the respondent consider any matter other than the performance of an employee (including any disciplinary action taken against the employee, and any excessive non-attendance issues in the last twelve months) when deciding whether to approve an increment increase under subclauses 22.6 and 22.11 of the Agreement?"

• [16] The Applicant submitted that the answers to these questions are 'yes' and 'no', respectively.

• [17] The Applicant submitted that the principles to be applied in determining the proper construction of clause 22 of the Agreement are well established, and were succinctly summarised by the Full Court of the Federal Court of Australia in WorkPac Pty Ltd v Skene:[2]

"(a) the starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context;[3]

(b) the interpretation '...turns on the language of the particular agreement, understood in light of its industrial context and purpose...';[4]

(c) The words are not to be interpreted in a vacuum divorced from industrial realities;[5] rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament;[6] and

(d) To similar effect, it has been said that the framers of such documents were likely of a "practical bent of mind" and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced.[7]"

• [18] The Applicant submitted that, in interpreting an enterprise agreement:

"(a) "meanings which avoid inconvenience or injustice may reasonable be strained for", per Kucks v CSR Ltd (1996) 66 IR 182; and

(b) narrow or pedantic approaches should be avoided, in circumstances where the framers where more likely to be concerned with intention, as understood in the industrial context, rather than with "legal niceties or jargon"."[8]

• [19] The Applicant submitted that the clauses at the centre of this dispute are sub-clauses 22.6 and 22.11 of the Agreement, which provide:

"22.6 Advancing through increments will be at the recommendation of the employees Manager after successfully completing an appraisal, it must be endorsed by the Director, Human Resources and approved by the CEO.

22.11 All increment increases must be approved by the CEO."

• [20] The Applicant submitted that the task of interpreting sub-clauses 22.6 and 22.11 begins with considering the ordinary meaning of the words in the sub-clauses, read as a whole. In this regard, the Applicant submitted that both sub-clauses 22.6 and 22.11 makes clear that the CEO's approval is a condition precedent for increment increases given to employees under clause 22. However, the Applicant submitted that the sub-clauses are silent as to what level of discretion, if any, the CEO has in deciding whether to approve an increment increase, and if there is any discretion, what factors they should or should not consider in exercising the discretion. The Applicant submitted this ambiguity is the cause of this dispute.

• [21] The Applicant submitted that the Commission should pay special attention to the word "approved", which appears in both sub-clauses, and whether the ordinary meaning of that word can provide any clarification as to the ambiguity identified in the preceding paragraph. The Applicant submitted that the Macquarie Dictionary defines "approved" as "past tense and past participle of approve".[9] The Applicant submitted that the Macquarie Dictionary includes two non-obsolete definitions of "approve":

• (a) "to pronounce or consider good; speak or think favourably of: to approve the policies of the government";[10] and

• (b) "to confirm or sanction officially; ratify".[11]

• [22] The Applicant submitted that it should be uncontroversial that the first non-obsolete definition of "approve" is not applicable here and that it is the second - "to confirm or sanction officially; ratify" - that is the ordinary meaning of the word "approved" in sub-clauses 22.6 and 22.11.

• [23] The Applicant submitted that the Macquarie Dictionary defines "confirm" as "to make valid or binding by some formal or legal act; sanction; ratify: to confirm an agreement",[12] "sanction" as "authoritative permission; countenance or support given to an action, etc.; solemn ratification" or "to ratify or confirm; to sanction a law",[13] and "ratify" as "to confirm by expressing consent, approval or formal sanction".[14] The Applicant submitted that the ordinary meaning of the word "approved" in the context of sub-clauses 22.6 and 22.11 supports an interpretation that the CEO's approval acts only as a 'rubber stamp' on the annual performance appraisals.

• [24] The Applicant submitted that there is also support for the interpretation advanced in the preceding paragraph in the manner in which sub-clause 22.6 is structured. The Applicant submitted that sub-clause suggests that there is a three step-process towards "[a]dvancing through increments":

"(a) The first step is that the employee is recommended for advancement by their manager after successfully completing an annual performance appraisal;

(b) The second step is that this recommendation is endorsed by the "Director, Human Resources; and

(c) The final step is that it is "approved by the CEO"."

• [25] The Applicant submitted that having the approval by the CEO as the last step, after both an annual performance appraisal by the employee's manager and endorsement by the "Director, Human Resources", supports the interpretation that the CEO's approval is merely a 'rubber stamp'.

• [26] Further, the Applicant submitted that in respect of the context in which sub-clauses 22.6 and 22.11 appears, there are several other sub-clauses within clause 22 which suggest that progression through increments is determined entirely and exclusively on the performance of the employee:

"(a) Subclause 22.1 provides that employees will only be considered for increment increases under cl 22 if they are "assessed through the annual performance appraisals process as performing satisfactorily", meaning that satisfactory performance is the only means by which an employee can be eligible to receive an increment increase under cl 22;

(b) Subclause 22.3 provides that "should the appraisal not be done in May due to the fault of the Employer, the increment increase will automatically progress...", suggesting that the employee's performance as assessed by the annual performance appraisals process is the only relevant factor in determining whether an employee should receive the increment increase;

(c) Subclause 22.5 specifies that the respondent may defer increment increases if the employee has been graded during the annual performance appraisals process as "unsatisfactory", has received disciplinary action in the previous 12 months or has had excessive not-attendance for up to 12 months. These are the only references in cl 22 as to grounds for denying increment increases, and there two aspects of this clause are noteworthy:

i. Firstly, all the grounds for deferment relate to aspects of an employee's performance; and

ii. Secondly, the word "deferment" is used rather than reject or deny, suggesting that it is expected that an employee will receive an increment increase once they have rectified the performance concerns that form the grounds for deferring the increase;

(d) Subclause 22.7 provides that an employee may be advanced "through several increments" as a "form of Reward and Recognition for employees who have been deemed "exceptionally performing employees" through the means of a performance appraisal", again reinforcing the connection between increment increases and work performance; and..."

• [27] The Applicant submitted that sub-clause 22.10 provides that "increment increase will only be provided based on satisfactory and/or exceptional work performance and will not be influenced by qualifications" (Applicant's emphasis). The Applicant submitted that this makes clear that an employee will only receive an increment increase based upon work performance and that no other factor can be considered in providing an employee with an increment increase.

• [28] The Applicant submitted that the other sub-clauses in clause 22 outlined above support the interpretation that the only relevant matter that can be considered by the Respondent in providing, or not providing, an increment increase is that of an employee's performance. The Applicant submitted that this, in turn, suggests that in the event that the CEO did have the discretion to approve or not approve an increment increase, the only matter that they could consider in exercising such a discretion is an employee's performance.

• [29] The Applicant submitted that it has been unable to accurately determine what economic loss employees of the employer have suffered. However, the Applicant has derived the following estimation:

"• Appendix 2 of the Agreement contains the relevant pay scale for employees employed after the commencement of the Agreement.

• Appendix 2 contains 9 levels of pay and a further 4 or 5 increments of pay within each level.

• There is no uniform increases between increments and each increment varies an employee's annual renumeration differently.

• The highest increment increase is $2,884 per annum whereas the lowest increment increase is $1,030 per annum.

• Where the Respondent employs 15 people, and those 15 people were awarded an increment increase pursuant to clause 22 of the Agreement, the Respondent would renumerate its employees between $15,450 and $43,260 additionally."

• [30] The Applicant submitted that, for the reasons outline above, the UWU's interpretation of clause 22 should be preferred, that being that:

"(a) The role of the CEO in approving an increment increase is that of a 'rubber stamp', such that if an employee is assessed through the annual performance appraisal process as performing satisfactorily and they have not received any disciplinary action or had any excessive non-attendance issues in the last twelve months, the CEO should be required to approve an increment increase under subclauses 22.6 and 22.11 of the Agreement; and

(b) The only relevant matter that can be considered by the respondent in providing, or not providing, an increment increase is that employee's performance, such that if the CEO did have the discretion to approve or not approve an increment increase, the only matter that they could consider in exercising such a discretion is an employee's performance."

• [31] The Applicant submitted that as to the questions to be determined by the Commission, the answers should be as follows:

"(a) In respect of the first question, the answer should be "yes"; and

(b) In respect of the second question, the answer should be "no"."

"(a) pursuant to sub-clauses 22.6 and 22.11 of the Enterprise Agreement, the CEO retains a discretion to approve (or not approve) an increment increase; and

(b) the exercise of the discretion by the CEO to not approve an increment increase is not constrained by sub-clause 22.5."

• [33] The Respondent confirmed that increment increases are covered under clause 22 - Advancement through pay levels - of the Agreement. The Respondent submitted that the relevant provisions of the Agreement provide as follows:

"22.1 Employees assessed through the annual performance appraisals process as performing satisfactorily will be considered annually for one (1) step pay increment increases in the relevant grading level, up to the highest increment rate.

22.5 Council may defer advancement within increments for any employee that:

22.5.1 Has their performance graded during an appraisal as 'unsatisfactory'; or

22.5.2 Has received disciplinary action in the last twelve (12) months; or

22.5.3 Has had excessive non-attendance issues for up to twelve (12) months

22.6 Advancing through increments will be at the recommendation of the employees manager after successfully completing an appraisal, it must be endorsed by the Director, Human Resources and approved by the CEO.

22.11 All increment increases must be approved by the CEO."

Rules applying to interpretation of Enterprise Agreements

• [34] The Respondent submitted that the principles for interpretating Enterprise Agreements are well established. The Respondent submitted that the Full Bench of the Commission developed clear principles of interpreting Enterprise Agreements in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union' known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited (Berri).[15] The Respondent submitted that the Full Bench in Berri set out the principles at paragraph [114], as follows:

"1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;

(ii) the disputed provision's place and arrangement in the agreement;

(iii) the legislative context under which the agreement was made and in which it operates.

2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.

3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.

4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.

5. The FW Act does not speak in terms of the 'parties' to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are 'covered by' such agreements. Relevantly s 172(2)(a) provides that an employer may make an enterprise agreement 'with the employees who are employed at the time the agreement is made and who will be covered by the agreement'. Section 182(1) provides that an agreement is 'made' if the employees to be covered by the agreement 'have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement'. This is so because an enterprise agreement is 'made' when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.

6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.

7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.

8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(ii) notorious facts of which knowledge is to be presumed; and

(iii) evidence of matters in common contemplation and constituting a common assumption.

13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s 180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.

14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties' intention or purpose was.

15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post- agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding."

• [35] The Respondent cited the decision in Torrens University Australia Ltd v Fair Work Ombudsman,[16] in which Halley J stated:

"18. The principles governing the interpretation of words in modern awards are well settled. The following fundamental propositions can be distilled from the summary of relevant principles provided by the Full Court in Workpac Pty Ltd v Skene (2018) 264 FCR 536; [2018] FCAFC 131 at [197] (Tracey, Bromberg and Rangiah JJ) in the context of interpreting enterprise agreements:

(a) the starting point is to construe the ordinary meaning of the words in context and read as a whole;

(b) the words must be construed in light of their industrial context and purpose, and not in a vacuum divorced from industrial realities; and

(c) the persons framing the words are likely to have a "practical bent of mind" and be more concerned with expressing concepts in a way likely to be understood in the relevant industry rather than with "legal niceties and jargon", making it appropriate to adopt a purposive approach to interpretation of the words.

17. In adopting a purposive approach, the Court should construe an award in its industrial context and purpose: see Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241; [2005] HCA 10 at [2] (Gleesson CJ and McHugh J); [96] (Kirby J). In construing an award in its industrial context and purpose, it should adopt an approach that contributes to a sensible industrial outcome: Amcor at [96] (Kirby J); Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (Nine Brisbane Sites Appeal) (2019) 269 FCR 262; [2019] FCAFC 59 at [5] (Allsop CJ)."

• [36] The Respondent submitted that whilst Enterprise Agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. In this regard, the Respondent cited the decision in Pantalleresco v John Beever (Aust) Pty Ltd,[17] at [44], where Commissioner Johns stated:

"There is considerable force in the Appellant's contention that, as a general principle, all words in an enterprise agreement must prima facie be given some meaning and effect. It would seem to follow that the inclusion of a laundry allowance in Appendix 3 of the 2014 Agreement should not be regarded as superfluous or insignificant. Such an approach accords with the principles of statutory construction."[18]

• [37] The Respondent submitted that the relevant principle being referred to by Commissioner Johns is the below comments from the majority in Project Blue Sky Inc v Australian Broadcasting Authority:[19]

"Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision. In The Commonwealth v Baume Griffith CJ cited R v Berchet to support the proposition that it was "a known rule in the interpretation of Statutes that such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent"."[20]

Interpretation of the Enterprise Agreement - ordinary meaning applied

• [38] The Respondent's primary position is that clause 22, and more specifically sub-clauses 22.6 and 22.11 have a plain meaning. Therefore, the Respondent submitted that the words in those clauses are to be given their ordinary meaning.

• [39] The Respondent submitted that sub-clause 22.6 "undoubtably" requires a three-stage process for an employee to receive an increment increase:

"(a) First, an employee must be recommenced by the Manager (after successfully completing an appraisal);

(b) Second, the increment increase must be endorsed by the Director of Human Resources; and

(c) Third, the increment increase must be approved by the CEO."

• [40] The Respondent submitted that sub-clause 22.11 is then a standalone sub-clause, which reinforces that any increment increase must be approved by the CEO.

• [41] The Respondent submitted that the ordinary meaning of "approved by the CEO" requires a decision by the CEO. The Respondent submitted that it is trite that a decision cannot have only one outcome (i.e. only approve); it must allow the CEO an option to approve or not approve. Therefore, the Respondent submitted that it is "implicit (if not express)" that the CEO retains a discretion to approve (or not approve) an increment increase.

Interpretation of the Enterprise Agreement - ambiguity meaning applied

• [42] The Respondent submitted that whilst it is not necessary to consider construction principles given the clauses have an ordinary meaning, it is convenient to show that upon application of the relevant construction principles, the same result is obtained.

• [43] The Respondent submitted that the proper construction of the clause is best illustrated by:

"(a) a negative analysis: considering the position contended for by the applicant against the relevant construction principles; and

(b) a positive analysis: considering the position contended for by the respondent against the relevant construction principles."

• [44] The Respondent submitted that the position contended for by the Applicant would effectively require the CEO to ratify/'rubber stamp' a recommendation of the employee's Manager and the endorsement of the Director of Human Resources without any capacity as the chief executive of the organisation to countermand the recommendation of a subservient employee within the organisation. The Respondent submitted that "[t]here are, at least, seven problems with such an interpretation" as follows:

"• First, contrary to the requirement to have regard to the context and purpose of the Enterprise Agreement and the relevant provision (i.e. clause 22) as a whole, such an interpretation fails to consider the entirety of clause 22. Relevantly, the language of sub-clause 22.1 is not a mandatory right to an annual increment increase, rather it is only a requirement to be 'considered' for an annual increment increase (if performing satisfactorily).

• Second, such an interpretation would render the balance of sub-clause 22.6 (i.e. 'approved by the CEO') perfunctory. Sub-clause 22.6 clearly requires a three stage approval, each of those stages being distinct and requiring an action (with multiple options) to be performed.

• Third, contrary to the requirement that 'no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent', such an interpretation would render sub-clause 22.11 nugatory and redundant as it has no work to do.

• Fourth, and building on the preceding paragraph, contrary to the requirement to obtain context from 'the disputed provision's place and arrangement in the agreement', such an interpretation ignores sub-clause 22.11 being standalone and the final sub-clause in clause 22.

• Fifth, such an interpretation would deny the CEO any managerial prerogative to determine increment increases and therefore would prevent the CEO from prudently managing the remuneration budget and the financial affairs of the respondent. Moreover, if the applicant's position is accepted, the practical outcome is that the Manager, who recommends an employee for an increment increase, would subsume the CEO's decision making powers, without any direct authority to do so. Not only does this ignore the wording of the relevant sub-clauses, it is also contrary to ordinary business practices.

• Sixth, and building on the preceding paragraph, such an interpretation would partially remove operational control of the respondent from the CEO and pass it onto the employee's Manager. It must be remembered that the CEO is vested with the responsibility for the appointment of the council's staff in accordance with a budget allocated to staffing expenditure. Further, a delegation cannot derogate from the CEO's functions. The interpretation contended for by the plaintiff would effectively result in a derogation of the CEO's powers under section 167 of the Local Government Act 2019 (NT), including to:

(a) undertake the day to day management of the council's operation, including the management of the council's staff;

(b) to ensure that the appointment of the council's staff is properly managed within the budget allocated to staffing expenditure approved by the council; and

(c) to ensure that proper standards of financial management are maintained, including proper controls over revenue and expenditure.

The problematic interpretation is further compounded by legislative requirements in relation to the eligibility of a CEO, for which similar requirements do not apply to an employee's Manager.

• Seventh, if the parties to the Enterprise Agreement had intended for there to be an annual mandated increment increase, they would have included clear and unambiguous words to provide such an increase."

• [45] The Respondent submitted that, in these circumstances, the interpretation contended for by the Applicant cannot be accepted as correct.

• [46] The Respondent submitted that its position is not impeded by the same problems. To the contrary, the Respondent submitted that its position is 'supported':

"• First, the respondent's interpretation has regard to the context and purpose of the Enterprise Agreement and the relevant provision (i.e. clause 22) as a whole. Relevantly, it acknowledges that the language of sub-clause 22.1 is not a mandatory right to an annual increment increase, rather only a consideration.

• Second, the respondent's interpretation ensures the balance of sub-clause 22.6 (i.e. 'approved by the CEO') is not perfunctory. It respects the three stage approval process, each of which are distinct and require an action (with multiple options) to be performed.

• Third, the respondent's interpretation ensures that sub-clause 22.11 is not nugatory and redundant with no work to do. To this end, it provides an interpretation that results in all the words in sub-clause 22.11 being useful and pertinent, such that the CEO retains an all-encompassing discretion to not approve (or approve) an increment increase.

• Fourth, the respondent's interpretation gives primacy to the position and style of the sub-clause 22.11, noting it is standalone and the final sub-clause in clause 22.

• Fifth, the respondent's interpretation ensures that the CEO maintains managerial prerogative to determine increment increases, allowing the CEO to prudently manage the remuneration budget and the financial affairs of the respondent. It removes the managerial prerogative subsumed by the Manager that would obtain if the applicant's position was accepted. This aligns with ordinary business practices.

• Sixth, the respondent's interpretation ensures the CEO maintains operational control and that the CEO and the respondent remain compliant with the Local Government Act 2019 (NT).

• Seventh, the respondent's submissions pay homage to the fact that there are two direct references to the requirement for CEO approval and one of those is a standalone sub-clause. The language could not be more clear or unambiguous."

• [47] The Respondent submitted that, in these circumstances, the interpretation contended for by the Respondent ought to be preferred.

• [48] The Applicant summarised the Respondent's position as being that:

"a. pursuant to sub-clauses 22.6 and 22.11 of the Agreement means that the CEO retains a discretion to approve or not approve an increment increase; and

b. the exercise of the discretion by the CEO to not approve an increment increase is not constrained by sub-clause 22.5."

• [49] In response, the Applicant submitted its position is that sub-clause 22.5 establishes criteria under which the CEO is able to exercise their powers under sub-clauses 22.6 and 22.11 to deny an advancement.

• [50] The Applicant submitted that the relevant clauses must also be considered in the wider context of clauses 21 and 22, the purposes of which are to establish a classification structure (clause 21), and to provide employees with a mechanism to advance through pay levels and earn promotions (clause 22).

• [51] The Applicant submitted that clause 22.5 creates guiderails, in that the company may only defer advancement for employees if their performances is graded as 'unsatisfactory', they have received disciplinary action in the last twelve months, or that they have had excessive nonattendance issues for up to twelve months. The Applicant submitted that the Respondent, by establishing these guiderails, receives the consequential benefit that employees will focus their performance on these criteria in their aspiration to move forward in classifications.

• [52] The Applicant submitted that the CEO's powers to defer advancement must be interpreted in accordance with the overall operation of the classification and advancement system. The Applicant submitted that the power relied upon by the Respondent exists within the context of a clause designed to assess each individual staff member and their performance, as well as their eligibility for progression. The Applicant submitted that both the text of the Agreement and the structure of the Personal Development Plan (PDP) program give rise to an implication that each person will be assessed on their individual merits.

• [53] The Applicant submitted that Ms Stonhill did not have the power to make "blanket refusals" for reasons unrelated to the performance and capacity of the individual employee, as to do so would conflict with Council's obligation to ensure employees are "_considered annually for one step pay increment increas_es" under sub-clause 22.1. The Applicant submitted that an employee affected by the blanket approach would not have been "considered" for progression as required under the Agreement.

• [54] The Applicant noted that in its submissions, the Respondent cites[21] the principle that "all words in an enterprise agreement must prima facie be given some meaning and effect". The Applicant submitted that this is often referred to in other case law as the concept that each clause must "have work to do". The Applicant submitted, however, that to interpret the CEO's power as being able to be exercised in relation to blanket matters not pertaining to the relevant staff member would be to render the overall classification and advancement system as deficient. The Applicant submitted that, not only would certain sub-clauses have "no work to do", but "the entire operation of clauses 21 and 22 would be undermined".

• [55] The Applicant submitted that in these circumstances, the Applicant's position is that to facilitate the rights that exist under the Agreement to participate in the performance and career development program, there is a right for employees to have their increment increase considered individually by the CEO, rather than as a collective.

• [56] The Applicant submitted that the Respondent has advanced the argument[22] that the Applicant's preferred interpretation would have the consequence of "prevent[ing] the CEO from prudently managing the remuneration budget and the financial affairs of the respondent", and also that it would result in the Manager "subsuming the CEO's decision-making powers". The Applicant submitted, however, that these arguments ignore the fact that it was the CEO that entered into the Agreement when it was reached, having full regard to the prudent management of the remuneration budget and the financial affairs of the Respondent. The Applicant further submitted that the current CEO will have the same opportunity to consider prudent management of Council's remuneration budget when the Agreement expires on 30 September 2025, and the parties commence negotiations for a subsequent agreement.

• [57] Finally, the Applicant submitted the suggestion that the Manager's decision would subsume that of the CEO is also incorrect, as the implication of the Applicant's interpretation is merely that the CEO has to consider the same criteria as the Manager.

• [58] The Respondent summarised the Applicant's position as relying on the following interpretations:

"(a) Both sub-clauses 22.6 and 22.11 make clear that the CEO's approval is a condition precedent for an increment increase, however, the sub-clauses are silent as to what level of discretion, if any, the CEO has in deciding whether to approve an increment increase;

(b) Macquarie Dictionary definition of 'approve' is "to confirm or sanction officially; ratify"; and

(c) The other sub-clauses within clause 22 suggest that progression through increments is determined entirely and exclusively on the performance of the employee."

• [59] However, the Respondent submitted that the Applicant's interpretation ought not to be preferred for the following reasons.

• [60] The Respondent submitted that the Applicant's reliance on the Macquarie Dictionary definition of 'approve' results in a narrow or pedantic approach to interpretation, that is: 'approval solely means rubber stamping'. The Respondent submitted that such an approach should be avoided.

• [61] The Respondent submitted that it is plain from its context that the ordinary meaning of "approved by the CEO" requires a decision by the CEO. The Respondent restated its submission that "it is trite that a decision cannot have only one out come (i.e. only approve)". The Respondent submitted that if a person is asked to 'approve', the person must also be permitted to 'not approve', otherwise such an approval is perfunctory and/or nugatory. The Respondent submitted that "it is convenient to ask yourself, what is the purpose of requiring approval (in this context), if it is effectively automatic?"

• [62] The Respondent submitted that the Applicant has rightly conceded that there is a decision to be made by the CEO. However, the Respondent submitted that the Applicant then goes on to say that the decision as to whether to deny staff members an increment increase can only be made for reasons related to the performance of the employee. The Respondent submitted, accordingly, the Applicant's contention that the Macquarie Definition of 'approve' (i.e. rubber stamp) ought to apply, must fail, even on the Applicant's own case.

Progression through increments is determined entirely and exclusively on the performance of the employee

• [63] The Respondent submitted that the contention that progress through increments is determined entirely and exclusively on the performance of the employee does not withstand proper analysis of clause 22 of the Agreement. The Respondent submitted that:

"• First, sub-clause 22.1 only provides a right to be 'considered' for an increment increase if the employee is assessed through the annual performance appraisals process as performing satisfactorily. It does not grant a mandatory right to an increment increase if the employee has been performing satisfactorily.

• Second, sub-clause 22.3 is irrelevant (or at best, neutral) to the contention that increment increases are determined solely by employee performance and should not be read as giving weight to the applicant's contention. Sub-clause 22.3 operates in its own field. It operates to incentivise the respondent to engage with the performance management process and is punitive where the employer fails to do so. This is understandable otherwise an employee would not be eligible to be 'considered' for an increment increase if it has not completed an appraisal (irrespective of whether that was at the employer or employee's fault).

• Third, sub-clause 22.5 is not drafted in an exhaustive way, nor does it use words of limitation such as "may only".

• Fourth, sub-clause 22.7 neither supports nor contradicts either parties' contentions. It is hardly surprising that exceptional performance may result in advancement through multiple increments (akin to promotion). The clause does not otherwise advance the applicant's contention.

• Fifth, the applicant misconceives sub-clause 22.10 and its relevance to the current application. The purpose is plain: qualifications do not determine increment increases. It goes no further than that. It is true that an employee can only advance through increments based upon work performance, as much as obvious by the need for an employee to be assessed as performing satisfactory (see sub-clause 22.1) and the requirement to successfully complete an appraisal (see sub-clause 22.6). However, sub-clause 22.10 does not address, nor provide limits, on the basis on which an increment increase can be refused."

• [64] The Respondent noted that none of the submissions of the Applicant respond directly to, nor counteract, the Respondent's key submissions that:

"(a) The Respondent's interpretation ensures that subclause 22.11 is not nugatory and redundant with no work to do;

(b) The Respondent's interpretation gives primacy to the position and style of the subclause 22.11;

(c) The Respondent's interpretation ensures that the CEO maintains managerial prerogative to determine increment increases, allowing the CEO to prudently manage the remuneration budget and the financial affairs of the respondent; and

(d) The Respondent's interpretation ensures the CEO maintains operational control and that the CEO and the respondent remain compliant with the Local Government Act 2019 (NT)."

• [65] The Respondent submitted that in light of the above, the Respondent's interpretation ought to be preferred.

• [66] I have taken into account all of the submissions and evidence that has been submitted by the parties. The fact that an issue is not mentioned in this decision does not mean that it has not been taken into account.

• [67] Whilst the courts have recently reinforced the relevant principles that a Court and Tribunal should follow when interpreting enterprise agreements, the most concise and comprehensive decision which collated all of the historical precedent was the Commission's Full Bench decision in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union' known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited (Berri).[23] Relevantly, in Berri the Full Bench enunciated 15 principles as outlined by the Respondent at paragraph [34] of this decision.

• [68] It is uncontroversial that the Berri Principles apply in this matter, and that the 'ordinary meaning' of the words in the Agreement must be considered. I also accept the general principle that every phrase and word has work to do.

• [69] In accordance with s.590 of the FW Act, I have looked at the annual budgets for Katherine Town Council over the last few years. These budget outcomes show an operating surplus for 2020/2021, 2021/2022, 2022/2023, and 2023/2024 but a deficit for 2024/2025. I note that the increment increases were not withheld in the second or third years of the Agreement. I have taken this into account.

• [70] The classification structure (clause 84, Appendix 2 of the Agreement), has two pay scales. Existing employees at the commencement of the Agreement were all under Pay Scale 1. This classification structure has 11 levels with 8 steps in each level. The step increases range from $2,000 - $4,000. Pay Scale 2 is for new employees and possibly for existing employees who change jobs. It has 9 levels but only 4 - 5 steps in each level. The step increases in this pay scale are approximately $2,000. It would appear that the parties decided to adopt a broadbanding exercise of the classification structure where the number of levels and steps have been compressed. Relevantly, clause 22 of the Agreement is the only provision that mentions progression through to the highest rate in a pay level. I have taken this into account.

21.1 Salary rates (the minimum) are determined based on the classification and grading of the position.

21.2 Positions are graded according to the Position Classification Matrix procedure.

21.3 Katherine Town Council have two (2) pay scales, Pay Scale 1, and Pay Scale 2, for the purpose of concluding Pay Scale 1 through natural attrition.

21.4 Employees who are already employed with Council prior to the commencement of this Agreement, will remain on Pay Scale 1.

21.5 Employees who are employed after the commencement of this Agreement, will be engaged using Pay Scale 2.

21.6 Employees under Pay Scale 1, who changes positions, receives a promotion, or change in position classification, may move to Pay Scale 2 as long as the Employee is better-off in the Pay Scale 2 than what they would have been in Pay Scale 1."

Each classification has obviously been graded according to an agreed Position Classification Matrix. I have taken this into account.

• [72] Clause 22 is written in clear and concise terms. It states that employees are to be assessed, individually, every 12 months, and if they are performing satisfactorily then they will be considered for a 1 step pay increment increase up to the top of their pay grade. This means that an employee who stated in 2020 at the first pay level of their grade, could be at the top pay level in 2028 if they have performed their role satisfactorily.

• [73] Relevantly, clause 22.5 provides the precise criteria that the Respondent can utilize to defer any annual increment progressions. The three areas of assessment are:-

"22.5 Council may defer advancement within increments for any employee that:

22.5.1 Has their performance graded during an appraisal as 'unsatisfactory'; or

22.5.2 Has received disciplinary action in the last twelve (12) months; or

22.5.3 Has had excessive non-attendance issues for up to twelve (12) months."

There is no mention of any other factor that can be utilized by the Respondent to prevent a satisfactorily performing employee from getting a 1 step annual increase. I have taken this into account.

• [74] Further, the assessment must be done individually and not as a group. It would appear that the CEO has rejected all entitled employees in September 2022 and treated them as one large group. I have taken this into account.

• [75] The eight step (or 4 - 5 step) pay step in each pay level is part of the classification structure in the Agreement. It is not open for negotiation on an annual basis. If the Respondent wants to change the classification structure and the way that it operates, then this opportunity arises when the Agreement is being re-negotiated. I have taken this into account.

• [76] The issue of an 'annual' increment is quite common in the local government sector. For example, 2 regional councils in Queensland - Ipswich City Council and Townsville City Council - have similar provisions in their Enterprise Agreements:

Ipswich City Council Officers Certified Agreement 2024

Movement to the next highest salary point within a level will be by way of annual increment subject to the employee having given satisfactory service for the prior twelve (12) months in accordance with agreed Performance Appraisal processes in place.

Where the ICC chooses not to implement a Performance Appraisal System, movement between salary points will occur at yearly intervals."

Townsville City Council (Queensland and Local Government Officers) Certified Agreement 2022

Movement to the next highest salary point within a level will be by way of annual increment, subject to the employee having performed satisfactorily for the prior twelve months in accordance with the performance planning process.

Movement to the lowest increment of the next salary point for a banded position will be by way of annual increment where qualifications, experience and satisfactory performance exists for the prior twelve months in accordance with the performance planning process.

Where no performance planning review is in place, the employee will automatically advance to the next increment within the level.

Increment will not be applied where an employee is involved in a formal performance improvement plan at least three months prior to the scheduled annual increment date. An incremental increase will not be withheld for more than one scheduled annual increment."

• [77] I do not accept the fanciful submission that a Manager somehow usurps the authority of the CEO simply by making a recommendation for an employee to receive an annual increase in accordance with the Agreement. The CEO has the final say in the process, as per clause 22.6 and 22.11. However, the CEO's decision must be in accordance with the provisions of the Agreement and not due to any factors that are not mentioned in the Agreement. I have taken this into account.

• [78] Further, this isn't a question of managerial prerogative, this is a question of the Respondent complying with the terms of an Enterprise Agreement, that had recently been agreed to by the parties.

• [79] Finally, the reason why the CEO gets final approval, is that they may have a different view about the performance of the employee. Alternatively, they may have given that employee a warning which may not be known by the Manager. Further, the CEO may have seen the employee arriving late or leaving early, unbeknown to the Manager, and therefore that employee could not meet the necessary criteria as set by the Respondent. This is why the CEO gets final approval, not because there is some discretion to introduce elements or criteria that sit outside the Enterprise Agreement. I have taken this into account.

• [80] The wording of the Agreement is clear and precise. Employees are to participate in an individual annual assessment. If they can satisfy the 3 criteria in relation to their performance, disciplinary code and attendance at work, then they are entitled to be put forward for an annual pay step increment, up to the top of their pay level. This increase must be recommended by the employee's Manager, then endorsed by the HR Director and finally, approved by the CEO.

• [81] The CEO and the HR Director cannot utilize any other criteria than that explicitly specified in clause 22.5 to defer or reject the Manager's recommendation.

• [82] As a result, I am satisfied and find that the employees of the Respondent, who met the necessary criteria and had room to progress in their pay level, should be paid the increment that they were due in July 2022.

[1] Additional footnote of the parties: "Being those employees that the Applicant brings the application on behalf of."

[2] [2018] FCAFC 131, [197] (Tracey, Bromberg and Rangiah JJ).

[3] Ibid, citing City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362, [43] (French J).

[4] Ibid, Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10; (2005) 214 ALR 56, [2] (Gleeson CJ, McHugh J).

[5] City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362, at 378.

[6] City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362, at 378-9, citing Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR(NSW) 498 at 503 (Street J).

[7] See Kucks v CSR Limited (1996) 66 IR 182 at 184 (Madgwick J); Shop Distributive and Allied Employees' Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16] (Marshall, Tracey and Flick JJ); Amcor at [96] (Kirby J); Wanneroo at 378-9, citing Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR(NSW) 498 at 503.

[8] Kucks v CSR Ltd (1996) 66 IR 182 at 184 (Madgwick J); Shop Distributive and Allied Employees' Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16] (Marshall, Tracey and Flick JJ); Amcor at [96] (Kirby J).

[9] Macquarie Dictionary (online at 14 July 2025) 'approved' (def 1).

[10] Macquarie Dictionary (online at 14 July 2025) 'approve' (def 1).

[11] Macquarie Dictionary (online at 14 July 2025) 'approve' (def 2).

[12] Macquarie Dictionary (online at 14 July 2025) 'confirm' (def 2).

[13] Macquarie Dictionary (online at 14 July 2025) 'sanction' (def 1 & 7).

[14] Macquarie Dictionary (online at 14 July 2025) 'ratify' (def 1).

[15] [2013] FWCFB 3005.

[16] [2025] FCA 634.

[17] [2022] FWC 1541.

[19] [1998] HCA 35; (1998) 194 CLR 355.

[21] Respondent's Outline of Submissions at [15] and [16].

[22] Respondent's Outline of Submissions at at Paragraph [30].

[23] [2017] FWCFB 3005.

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