FEDERAL COURT OF AUSTRALIA

Australian Nursing and Midwifery Federation v Eastern Health

[2013] FCAFC 137

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

The Court

1    The Australian Nursing and Midwifery Federation (“the Union”) appeals from a judgment of the primary judge in which his Honour rejected the Union’s application to restrain a purported contravention of an enterprise agreement. The issue for determination on the appeal is whether the primary judge was correct in deciding that cl 46.1(b) of the relevant enterprise agreement did not require Eastern Health to pay a uniform allowance to employees subject to the enterprise agreement.

2    The relevant agreement is the Nurses and Midwives (Victorian Public Health Sector) (Single Interest Employers) Enterprise Agreement 2012-2016 (“the enterprise agreement”). Clause 46.1 of the enterprise agreement provides:

(a)    Where an Employer requires an Employee to wear a particular type or style of uniform then the Employer shall provide this at no cost to the Employee. Payment in lieu of providing the uniform is not permitted.

(b)    Where a uniform is not provided by the Employer the Employee shall be paid a uniform allowance at daily or weekly rate [sic] set out in section C of Schedule B, whichever is the lesser amount in total.

(c)    Where laundering by or at the expense of the Employer is not provided, the Employee shall be paid a laundry allowance at the daily or weekly rate set out in section C of Schedule B, whichever is the lesser amount in total.

(d)    The uniform allowances but not the laundry [sic] shall be paid during all absences on leave, except absence on long service leave and absence on sick leave beyond 21 days. Where, prior to taking leave, an Employee was paid a uniform allowance other than at the weekly rate, the rate to be paid during absence on leave shall be the average of the allowance paid during the four weeks immediately preceding the taking of leave.

(e)    Where an Employer provides an Employee with uniforms, all articles so provided remain the property of the Employer.

3    Clause 39.1(f) of the enterprise agreement defines “uniform” as “such apparel as may be required by the Employer”.

Undisputed matters

4    The following matters are not in contention:

    Eastern Health does not provide a uniform to most of the employees whose employment is subject to the enterprise agreement.

    Eastern Health has a dress code for such employees (nurses, midwives and enrolled nurses). The code provides for dress standards for employees engaged to work in patient care areas where no uniform is provided. The code provides that skirts and pants should be tailored, shirts should be collared and the like.

    The construction of cl 46.1(b) should be approached by treating the clause as a freestanding provision uninfluenced by the terms of cl 46.1(a), having regard to the history of the antecedent provisions leading up to the presence of these two paragraphs of cl 46.1 in the current industrial instrument.

The reasoning of the primary judge

5    The primary judge paid particular attention to the meaning of the word “uniform” in cl 46.1(b). Referring to the definition provided in cl 39, his Honour said at [21] of his judgment:

Reading that definition into cl 46.1(b), the result is that, when the apparel which the employer requires to be worn is not provided by it, the allowance is payable. If the employer does not require apparel to be worn, the allowance is not, in my view, payable.

6    His Honour stressed that Eastern Health does not require that all of the relevant employees wear a uniform. The primary judge’s interpretation of cl 46.1 (informed by cl 39) was that if Eastern Health required certain apparel to be worn by the employees and did not provide that apparel itself, a uniform allowance would be payable. His Honour did not consider that the dress code laid down any particular requirement for certain apparel to be worn by employees. At [29], the primary judge discussed certain provisions in the code such that shirts or pants be tailored but did not consider that such provision or any other in the code amounted to a requirement within the terms of cl 39.1(f).

7    The primary judge next dealt with a submission that the parties to the enterprise agreement had acted under a common understanding that a uniform allowance was payable irrespective of whether or not a uniform was required to be worn. His Honour noted counsel’s reliance on the judgment of Gray ACJ in Shop Distributive and Allied Employees’ Association v Woolworths Ltd (2006) 151 FCR 513, where his Honour said at [31]:

Counsel for the applicant contended that the past conduct of the parties could be relied upon as an aid in the construction of the Certified Agreement. 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. See Merchant Service Guild of Australia v Sydney Steam Collier Owners & Coal Stevedores Association (1958) 1 FLR 248 at 251 per Spicer CJ, 254 per Dunphy J and 257 per Morgan J, and Printing & Kindred Industries Union v Davies Bros Ltd (1986) 18 IR 444 at 452-453. 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. See Australian Liquor, Hospitality and Miscellaneous Workers Union v Prestige Property Services Pty Ltd [2006] FCA 11 at [44].

8    At [31] of the judgment below his Honour said:

It will be noted that, in this passage, Gray ACJ referred not only to the principle now relied on by the applicant, but also to the caution with which its invocation in a particular case must be attended.

9    At [32], the primary judge observed that the limited principle referred to by Gray ACJ was “an aid to construction” but was not of current assistance, as “the words actually used in the agreement are free of ambiguity”.

10    At [32] in Woolworths Gray ACJ observed that, in that particular matter, there was a lack of evidence as to any common understanding of the parties. His Honour pointed to the practice of Woolworths paying the entitlement in question without there being evidence before him explaining why it did so. Acting Chief Justice Gray referred to two possible explanations as to why that was so. The first was inadvertence as to the correct legal position. The second was generosity on behalf of Woolworths. Significantly, his Honour found that there was no evidence in that matter before him of “a settled interpretation, of which the parties had a common understanding”.

Principles of interpretation not in contest

11    The parties do not dispute the following principles which are relevant to interpretation of industrial instruments:

    construction begins with a consideration of the ordinary meaning of the words used;

    regard should be had to the industrial purpose sought to be achieved; and

    to determine context and general purpose, it is appropriate to have regard to the history of the relevant provision by examining its antecedents.

The Union’s contentions on appeal

12    The Union submits that the allowance provided for by cl 46.1(b) is payable where a uniform is not provided by the employer. It contends that this may occur where the employer has no uniform to provide.

13    Counsel for the Union contends that the plain words of cl 46.1(b) provide for a uniform allowance, irrespective of the reason for the non-provision of a uniform. Counsel submits that the cl 39.1(f) definition of “uniform” is “descriptive of a thing but not operative as to obligation”.

14    The Union asserts the existence of a common understanding between it and Eastern Health as to the operation of cl 46.1(b). It relies on the fact that prior to the making of the enterprise agreement, Eastern Health (and other public sector employers) had paid a uniform allowance to registered nurses and midwives whether or not a uniform was required to be worn. That was done, so the Union contended, pursuant to a common understanding as to predecessor provisions to cll 39.1(f) and 46.1(b) contained in previous industrial instruments applying to such employees. As a result, when the enterprise agreement was made it was to be assumed that the parties intended that cll 39.1(f) and 46.1(b) would operate consistently with that understanding.

15    The Union also submits that the dress code which Eastern Health has laid down for its employees falls within the definition of “uniform” in cl 39.1(f).

Eastern Health’s contentions on appeal

16    Eastern Health supports the construction favoured by the primary judge. In addition, it contends that the construction favoured by the Union ignores the common understanding of what is meant by an “allowance”. Counsel for Eastern Health observes that an allowance is an additional payment based on some requirement connected with the employees service, referring to Mutual Acceptance Company Ltd v Federal Commissioner of Taxation (1944) 69 CLR 389 at 396-397 per Latham CJ.

17    Eastern Health submits that “absent the requirement to wear a uniform, any basis for the payment of a uniform allowance does not exist”.

18    The Union responds with a submission in reply as follows:

The payment of an allowance in circumstances where no uniform is required is readily understandable as being payment to compensate for a particular disability or other aspects of nurses’ work, particularly having regard to the types of clothing nurses must wear in order to perform their duties as well as the problem with the distribution of pathogens and the consequent limitations on the wearing of their work clothes outside of work.

Consideration

19    The resolution of the issue of the short point concerning the correct interpretation of cl 46.1(b) “turns upon 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) 222 CLR 241 at [2] per Gleeson CJ and McHugh J.

20    Consideration of the ordinary meaning of the actual words used in cl 46.1(b) supports the construction favoured by the primary judge in circumstances where the definition of “uniform” in cl 39.1(f) informs its meaning in cl 46.1(b). Shortly stated, that is because Eastern Health does not require a uniform to be worn and its dress code does not amount to a requirement of the kind contemplated by cl 39.1(f) because it gives latitude to employees to dress as they wish, subject to some limitations on their choices. The entitlement to a uniform allowance is in lieu of the provision of a uniform where a uniform is required. On the current facts, a uniform is not required.

21    There is nothing in the industrial context or purpose of the provision which contradicts the primary judge’s interpretation of cl 46.1(b). His Honour carefully considered the antecedents to cl 46. An analysis of that history shows that the purpose of the provision is to compensate employees for having to provide their own uniforms.

22    The Union’s submission that the definition of uniform in cl 39.1(f) was “descriptive of a thing and not operative as to obligation”, was stated but not justified. Its submission that the use of the indefinite article instead of the definite article in the opening phrase of cl  46.1(b) was intentional and demonstrative of the construction for which it contends, was speculative and unconvincing in the face of the clear words of cl 46.1(b) read with the cl  39.1(f) definition.

23    Whilst we do not consider that a lack of apparent ambiguity in the words utilised in cll 39.1(f) and 46.1(b) precludes a consideration of whether a common understanding existed, there was no sufficient evidence before the primary judge of a settled interpretation of the predecessor provisions to cll 39.1(f) and 46.1(b) based on a common understanding of the parties. As in Woolworths, there are two possible alternative explanations for the payment of the uniform allowance which the evidence before the primary judge did not negate. The first is that Eastern Health and the Union acted under common inadvertence as to the correct interpretation of the prior industrial instruments. The second is that the allowance was paid as a consequence of the employer’s generosity. Whatever may be the case, it is sufficient to stress that, in the particular circumstances of this matter, the evidence that a uniform allowance was paid was not of itself sufficient to establish the existence of a settled interpretation based upon a common understanding of the parties.

24    The Court notes that the definition in cl 39.1(f) is in a clause of the agreement which only applies to registered nurses and midwives, but not to enrolled nurses. Clause 38 provides definitions peculiar to enrolled nurses. Clause 46 applies, on its face, to all employees. At first instance, the parties did not seek to draw any distinction between enrolled nurses on the one hand and registered nurses and midwives on the other, based on the absence of an express definition of uniform applicable to enrolled nurses. No point was sought to be made about that disparity on appeal and we need not further address it.

25    Given the Court’s view on the proper interpretation of cl 46.1(b) of the agreement, it is unnecessary for the Court to deal with the issues raised by the notice of contention filed by Eastern Health which is referred to at [16] to [18] above.

Conclusion

26    For the above reasons, the appeal must be dismissed.

Associate:

Dated:    22 November 2013