Fair Work Act 2009

s.739 - Dispute resolution

Ricegrowers Limited T/A SunRice, CopRice Feeds and Australian Grain Storage Pty Ltd

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] - incorporation of Awards into enterprise agreements - inconsistency - Award allowances -whether allowances in the incorporated modern awards apply - ordinary meaning of words, read as a whole and in context - no general exclusion by the words used - employer to pay the Award Allowances to the extent that award provisions are not inconsistent with Schedule A of the Agreement.

• [1] The SunRice, AGS and CopRice Employees Enterprise Agreement 2017-2020[1] ("the Agreement") incorporates the terms of two underpinning modern awards "to the extent of any inconsistency". The Agreement provides for allowances to some workers in particular circumstances. A dispute has arisen regarding the operation of the agreement and whether any of the allowances in the incorporated modern awards apply.

• [2] The United Workers' Union (UWU) argues that the residual allowances in the Food, Beverage and Tobacco Manufacturing Award 2020[2] (the Food Award) and the Manufacturing and Associated Industries and Occupations Award 2020[3] (the Metals Award) apply by way of incorporation. Ricegrowers Limited (Ricegrowers) argues that the only allowances payable are those contained in the Agreement because the Agreement sets out comprehensively the applicable wage rates and allowances payable to employees.

• [3] The agreed question for the Fair Work Commission (FWC) to determine is as follows:

"Does the Agreement require the Employer to pay the Award Allowances[4] where these apply to work performed by employees covered by the Agreement and are not otherwise provided for in Schedule A of the Agreement?"

• [4] In AMWU v Berri Pty Limited[5] ("Berri") the Full Bench distilled principles for interpreting enterprise agreements. Those principles are often quoted and not controversial. Federal Court authorities endorse substantially the same approach. The Full Court in Construction, Forestry, Maritime, Mining and Energy Union v Hay Point Services Pty Ltd[6] said at [8]-[9]:

"The applicable principles for interpreting an enterprise agreement were recently recounted by a Full Court in WorkPac Pty Ltd v Skene [2018] FCAFC 131 (Tracey, Bromberg and Rangiah JJ) at [197]:

The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context: City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362 at 378 (French J). The interpretation "... turns on the language of the particular agreement, understood in the light of its industrial context and purpose ...": Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10; (2005) 222 CLR 241 at [2] (Gleeson CJ and McHugh J). The words are not to be interpreted in a vacuum divorced from industrial realities (Holmes at 378); 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 (Holmes at 378-9, citing Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR(NSW) 498 at 503 (Street J)). 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: see Kucks v CSR Limited [1996] IRCA 166; (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).

The reference there made to the observations of Kirby J at [96] of Amcor is a reference to his Honour's remarks that the construction to be given to a clause in an industrial instrument "should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement"."

• [5] The Agreement covers 43 maintenance employees and 414 production/operations employees. The same parties made agreements in 2011[7], 2014[8] and agreed to certain variations in 2020, including an extension of the nominal term of the Agreement.[9]

• [6] Clauses 6 and 11.1(a) of the Agreement are central to the dispute, viz:

The terms of the Food, Beverage and Tobacco Manufacturing Award 2010 and the Manufacturing and Associated Industries and Occupations Award 2010 ("the Award"), as varied from time to time, are incorporated into this Agreement. If an incorporated Award term is inconsistent with an express term of this Agreement, the express term in the Agreement prevails over the incorporated Award term to the extent of the inconsistency.

(a) The wage rates and allowances during the term of this Agreement are set out in Schedule A.

(b) The classification structure is set out in Schedule B.

(c) For the avoidance of doubt, Schedules A and B form part of this Agreement."

• [7] Clause 11.1 refers the reader to Schedule A. Clause 11.1 is the operative provision insofar as if Ricegrowers fails to pay a particular wage or a particular allowance then it contravenes clause 11 of the Agreement. Both parties agree that clause 11.1 contains a limitation, but do not agree on what that limitation is.

• [8] Ricegrowers argues that the words of clause 11.1 impose a limit on the wages or the allowances that might be payable to an employee covered by the Agreement. That is, Ricegrowers argues that the effect of clause 11.1 is that all of the wages or allowances payable to an employee are contained in Schedule A.

• [9] The UWU argues that the limitation in clause 11.1 is a limitation upon the period over which the increases in wages and conditions under the Award apply, being a reference to the parties having reached an agreement on the relevant wages and allowances for the life of the Agreement and no longer.

• [10] Both parties led evidence of documents and recollections from earlier bargaining processes. I was cautious to admit such evidence but did so in order to allow each party the opportunity to make submissions on how such materials could be relied upon.

• [11] Mr Madgwick gave evidence on behalf of the UWU. Mr Madgwick has worked for the UWU and its predecessors as an official for almost 14 years and has organised and represented union members across various industries within the UWU's coverage. He gave evidence about his usual processes when assisting members to negotiate enterprise agreements. Unfortunately Mr Madgwick had only limited specific recollections of bargaining for the earlier agreements. I do not criticise Mr Madgwick in this regard and I am satisfied that he gave his evidence in a careful, truthful and cooperative way. However his evidence was of limited value when measured against the cautions contained in the authorities about the relevance and utility of the evidence from individual bargaining parties.

• [12] Ricegrowers led evidence from Ms Parslow who has relevant experience in human resources and industrial relations and worked for Ricegrowers on two occasions between 2003 and 2020. Ms Parslow indicated that her understanding of the successive agreements was that Schedule A contained the only allowances payable, which self-evidently is of limited value to the matter at hand.

• [13] Ms Parslow did not give evidence of statements made in the course of bargaining, or of matters that might be said to be notorious facts or matters in common contemplation. Instead Ms Parslow gave evidence of her understanding that the rates for employees who might otherwise be eligible for a heavy vehicle allowance or a fumigating gas allowance are accommodated within the classification structure in a way that means their classification rate or level compensates them for any allowance they might otherwise receive. Ricegrowers did not lead any other evidence on this point. If I were to accept Ms Parslow's understanding as anything more than a submission I would need evidence of the process by which the classification structure was determined, of the way in which all of the relevant parties understood that the classifications specifically compensate relevant employees for these matters, or perhaps even evidence of a shared understanding between the bargaining parties that the placement of relevant employees within the classification structure recognised and compensated those employees in such a way that they were not to also be paid a separate allowance under the incorporated award.

• [14] Ricegrowers relied on documents given to employees in the course of bargaining or in the access period shortly before earlier enterprise agreements were voted upon. None of that material explicitly indicates that the allowances in Schedule A are the only allowances.

• [15] Similarly Ricegrowers led evidence of claims made by the UWU in earlier bargaining for, on face value, new allowances. Ricegrowers submits that these claims for new allowances are evidence that the UWU, and/or its members, knew that the only allowances payable were those contained in Schedule A. Ricegrowers relied on the notion that parties generally use the conditions of an existing enterprise agreement as a baseline for negotiation, and therefore, the UWU's claim for a new allowance was evidence of an acceptance at the time that the allowance was not an existing entitlement.

• [16] Ricegrowers did not provide fulsome evidence about these claimed allowances, did not provide any evidence of Ricegrowers' response to the claims save for the fact that the new allowance did not appear in the next agreement made. Applying the principles in Berri[10], I cannot find that this evidence is relevant to interpreting the current Agreement.

• [17] In short, if I were to find that the relevant terms of the Agreement are ambiguous, the extraneous materials provided by the parties in evidence do not assist me to resolve the present dispute.

• [18] Ricegrowers argues that the wages and allowances in the Agreement form a standalone package of entitlements, and that the words of clause 11.1(a) make it clear that all of the allowances payable to employees are set out in Schedule A.

• [19] Conversely the UWU argues that the phrase "during the term of this Agreement" refers to the wage rates and allowances that increase each year during the term of the Agreement.

• [20] That is, Ricegrowers argues that clause 11.1(a) limits the applicable allowances to only those contained in the Schedule, and the UWU argues that the same clause limits the period over which wages and allowances are settled.

• [21] Ricegrowers' substantive written submission was as follows:

"A plain reading of clause 11.1 is that the allowances payable during the term of the Agreement are those in Schedule A of the Agreement, to the exclusion of other allowances contained in any of the underlying awards. That intention is discernible from the expression in clause 11.1(a) that the "allowances during the term of this Agreement are set out in Schedule A" (emphasis added). Schedule A provides for the allowances payable to employees under the Agreement in specific and comprehensive terms, by detailing the circumstances in which the allowances are payable and the rates at which they are paid. This also applies to the applicable wage rates which are addressed in the same clause and schedule."

• [22] As stated above, the relevant operative provision of the Agreement in relation to allowances is clause 11. The central question for determination, as per clause 6 of the Agreement, is whether the "incorporated Award term is inconsistent with an express term of [the] Agreement." In this matter the question is whether the residual allowances in the incorporated awards are "inconsistent with" clause 11.1(a) and Schedule A.

• [23] If any or all of the Award terms dealing with allowances are inconsistent with clause 11.1(a) and Schedule A, then such terms are to be read down, but only to the extent of the inconsistency. As the UWU submits "in 2011, 2014, 2017 and 2020, the negotiating parties agreed that an Award term could only be excluded if the term was inconsistent with an express agreement term."

• [24] The terms of Schedule A are comprehensive, at least in relation to the allowances that are payable. The Schedule itself specifies the conditions attached to each allowance.

• [25] However, and perhaps unhelpfully for present purposes, the allowances in the Schedule use slightly different methodology:

a) The Dust Allowance applies in certain circumstances, but in different ways at different locations. It is reasonably clear that the provisions in relation to a Dust Allowance comprehensively displace any corresponding dust allowance in an incorporated award; > > b) the meal allowance has general application and would comfortably displace any corresponding meal allowance provision in an incorporated award; > > c) the "Combined Allowance", which is said to apply only to maintenance employees, "compensates for all difficulties incurred whilst working; including hot, cold, dirty or dusty work areas or tasks at height or in confined spaces." The reference to "all difficulties incurred whilst working" is somewhat problematic for identifying the kind of allowances in any incorporated award that might be displaced. Clearly any allowances relating to hot, cold, dirty or dusty work areas or tasks at height or in confined spaces are displaced but is not clear whether other allowances might be displaced; > > d) the "Availability Allowance" is also specific to maintenance employees who are required to make themselves available for callbacks to attend production breakdowns outside of their rostered hours. It is reasonably clear that the provisions in relation to callbacks for those maintenance employees displace any corresponding allowance in any incorporated award; and > > e) the "Qualified Electrical Supervisors Allowance" appears to compensate relevant maintenance employees who hold a particular electrical license and who are responsible for the technical supervision of others, which seem to comprehensively displace any similar allowance under an incorporated award.

• [26] Importantly, all of the allowances in Schedule A exclusively apply to maintenance employees except for meal and dust allowances. Maintenance employees are only a small minority of the employees covered by the Agreement, 43 out of 457, and so for most employees covered there are only two possible allowances payable.

• [27] In large part Ricegrowers' interpretation is an all or nothing proposition. It relies on the words of clause 11 to exclude any and all allowances that might otherwise be payable because, it says, the only allowances payable are those contained in Schedule A. On Ricegrowers' case, the inconsistency (per clause 6) is between the entitlement to any other kind of allowance in an incorporated award, and the exclusive terms used in clause 11.1(a).

• [28] Generally speaking the more comprehensive or detailed the provisions are in Schedule A, the more likely it is that the intention of the Agreement is that Schedule A provides an exhaustive set of conditions, and the more readily clause 11.1(a) can be read the way Ricegrowers says.

• [29] I accept Ricegrowers' submission that the terms of Schedule A are consistent with the parties having taken a deliberate and comprehensive approach to setting out the terms and conditions of the allowances referred to therein. Despite this, I have great difficulty accepting that the intention of the Agreement is to provide allowances to only a small minority of employees and to intentionally exclude any other allowances.

• [30] I am not permitted to interpret the Agreement by reference to what I think is a fair outcome, and I am not doing so. It is possible, and also quite unremarkable, to 'roll-up' or displace specific allowances or entitlements into higher wages in an enterprise agreement. The plainest example of this is when the terms of an enterprise agreement are expressed to wholly replace the terms of the underpinning award(s).

• [31] In this Agreement I do not accept that the terms of clause 11.1(a), measured against the incorporation terms of clause 6, have the effect Ricegrowers says they do. As above, it is possible for the words of an agreement to achieve this effect, but such words should clearly reveal that intention. The ordinary meaning of the words of clause 11.1(a), read as a whole and in context, do not mean that any and every allowance in the incorporated modern awards is of no effect.

• [32] Ricegrowers also argues that if I was to find that there was ambiguity within the Agreement then I must find that there was a common understanding between the parties that the only allowances payable are those in Schedule A. Ricegrowers has not provided sufficient evidence of this common understanding upon which I could make such a finding. In truth the only evidence is that Ms Parslow had a particular understanding, that she conducted herself in a manner consistent with that understanding, and that nobody else conducted themselves in a manner contrary to her understanding.

• [33] I accept that some allowances in the incorporated awards are inconsistent with the allowances contained in Schedule A. As described above, the terms of Schedule A use different methodologies for different allowances. Schedule A sets allowances by reference to particular categories of employees, such as maintenance employees, different locations and particular circumstances such as exposure to dust and so on. Allowances in an incorporated award that relate to the same categories of employees, locations and circumstances as those described in Schedule A, are displaced.

• [34] One potential area for ambiguity in this regard is the breadth of conditions captured by the "combined allowance" at clause 2.3 of Schedule A. Clause 2.3(a) in Schedule A says:

"A combined allowance is paid to Maintenance Employees for all hours of work, to compensate for all difficulties incurred whilst working, including hot, cold, dirty or dusty work areas or tasks at height or in confined spaces."

• [35] The words "all difficulties" are very broad. In my view, and for maintenance employees only, these words displace any entitlement to any allowances in the incorporated award that could be said to compensate for any difficulties incurred whilst working.

• [36] The agreed question for the FWC to determine is as follows:

"Does the Agreement require the Employer to pay the Award Allowances[11] where these apply to work performed by employees covered by the Agreement and are not otherwise provided for in Schedule A of the Agreement?"

• [37] The answer is yes, but only to the extent that any of the Award Allowances are not inconsistent with the specific terms of Schedule A.

Mr B Rauf of Counsel for the Respondent instructed by Mr E Slattery of King and Wood Mallesons

[1] AE425738.

[2] MA000073.

[3] MA000010.

[4] Defined by the parties to mean certain allowances in the Award that are not included in the Agreement, specifically a heavy vehicle driving allowance (clause 20.2(c)), a first-aid allowance (clause 20.2(e)) and a fumigation gas allowance (clause 20.2(f)(vii)).

[5] [2017] FWCFB 3005; (2017) 268 IR 285 at 310, [2017] FWCFB 3005 at [114], which modified the principles distilled in Australian Meat Industry Employees Union v Golden Cockerel Pty Ltd [2014] FWCFB 7447; (2014) 245 IR 394 at 414-415, [2014] FWCFB 7447 at [41].

[6] (2018) 282 IR 228, [2018] FCAFC 182.

[7] AE885316.

[8] AE410827.

[9] [2020] FWCA 5009.

[10] [2017] FWCFB 3005; (2017) 268 IR 285 at 310, [2017] FWCFB 3005 at [114], principles [11]-[14].

[11] Defined by the parties to mean certain allowances in the Award that are not included in the Agreement, specifically a heavy vehicle driving allowance (clause 20.2(c)), a first-aid allowance (clause 20.2(e)) and a fumigation gas allowance (clause 20.2(f)(vii)).

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