FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Maritime, Mining and Energy Union v Hay Point Services Pty Ltd [2018] FCAFC 182

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is allowed.

2.    The order of the primary judge dismissing the application is set aside.

3.    The proceeding be remitted for further determination by the primary judge in accordance with the Full Court’s reasons.

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

REASONS FOR JUDGMENT

THE COURT:

1    Section 50 of the Fair Work Act 2009 (Cth) (“FW Act”) provides that “[a] person must not contravene a term of an enterprise agreement”. The Hay Point Services Pty Ltd Enterprise Agreement 2013 (“Agreement”) is an enterprise agreement made and approved pursuant to the provisions of Pt 2-4 of the FW Act and an “enterprise agreement” within the meaning of s 50. The Agreement contains a clause dealing with overtime work which includes the following subclause:

34.1    Reasonable Overtime

HPS may require an employee to work reasonable overtime and the employee shall work such overtime as required.

2    Before the primary judge, the appellant (“CFMMEU”) alleged that by implementing a new roster, the effect of which was to require employees to work 455 hours of overtime per year or 8.7 hours of overtime per week, the respondent (“HPS”) contravened, and continues to contravene, cl 34.1 of the Agreement.

3    The primary judge dismissed the CFMMEU’s application on the basis of a threshold question raised by HPS. Her Honour found that cl 34.1 was not a provision which can be “contravened” by HPS for the purposes of s 50 of the FW Act (at [29]). That was because her Honour found that cl 34.1 did not impose any obligation on HPS.

4    That the primary judge erred in adopting that construction of cl 34.1 is the subject of the first and second grounds of the CFMMEU’s appeal. For the reasons that will emerge, that is the only issue that we need to determine.

5    Before turning to the primary judge’s reasons, it is convenient to outline other relevant clauses of the Agreement. Clause 6.1 of the Agreement deals with types of employment and provides that full-time employees “are engaged for a maximum of 35 ordinary hours per week, averaged over the work cycle of the area concerned”. Clause 13.1 also deals with ordinary hours of work and relevantly provides:

13.1    Ordinary Hours

(a)    Ordinary hours of work for employees subject to this Agreement will be worked in accordance with defined shift arrangements.

(b)    The shift arrangements operating under this Agreement provide for hours of work up to a maximum of 35 ordinary hours per week, to be averaged over a five (5) week cycle.

(c)    Any change to ordinary hours of work and shift arrangements will be implemented in accordance with Clause 13.2 of the Agreement.

Clause 5 defines “reasonable overtime” as follows:

“Reasonable Overtime” – for the purposes of this Agreement 104 hours overtime in a year is generally considered reasonable. This does not infer that 104 hours will be available to every employee, nor does it infer that each employee must work 104 hours of overtime

6    The primary judge determined whether cl 34.1 is capable of being contravened by HPS by reference to textual considerations. Her Honour observed the use of the verb “may” in cl 34.1 in relation to HPS and contrasted that with the use of the verb “shall” in relation to an employee. Her Honour appears to have been driven to her preferred construction because the language of obligation encompassed by the word “shall” was only used in relation to an employee and not in relation to HPS. At [30] her Honour said that it was plain that the word “may” in cl 34.1 “means no more than ‘has permission to’” and that cl 34.1 merely granted an entitlement to HPS without imposing any obligation upon it. This approach is reflected in the following observation made at [36]:

To that extent the fact that the parties to the [Agreement] agreed on the use of the word “may” in the context of cl 34.1 is important in identifying the entitlements and obligations conferred by that clause, and where such entitlements and obligations lie.

7    Her Honour continued at [37] (emphasis in original):

Finally, cl 34.1 does not provide that HPS “may not” require an employee to work overtime unless that overtime is reasonable. The submission of HPS that the CFMEU’s reading of the clause turns the clause “on its head” is correct. It does not follow from the existence of a mere entitlement to require employees to work reasonable overtime that there is a prohibition on requiring employees to work overtime that is at variance with the relevant standard. Those two points do not logically nor necessarily correlate.

considerations

8    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) 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) 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) 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    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”.

10    HPS contended that the primary judge was correct in her construction of cl 34.1 and, in particular, correct to have relied on the use of the word “may” to support her Honour’s conclusion that the clause merely granted an entitlement to HPS without imposing any obligation upon it.

11    We accept that the word “may” is permissive. We agree with the primary judge that cl 34.1 provides HPS with an entitlement and that it is a clause which is beneficial to it. However, we respectfully disagree with the primary judge’s conclusion that cl 34.1 is bereft of any obligation or restriction that HPS is incapable of contravening.

12    With respect to the primary judge, her Honour’s focus on the word “may” as having a permissive and entitling character failed to appreciate that whilst that was so, when read as a whole, the clause also has restrictive and protective elements. Clause 34.1 does not solely provide for an entitlement to HPS, but is also protective of the interests of employees. The limitation in the clause which qualifies its permissive character is provided by the word “reasonable”. That restriction is not beneficial to HPS. It imposes a negative or restrictive stipulation that only reasonable overtime may be required by HPS. A failure by HPS to comply with that stipulation will constitute a contravention of cl 34.1 and, in turn, a contravention of s 50 of the FW Act. We note, in that respect, that the term “contravene” in s 50 includes “fail to comply with”: s 2B, Acts Interpretation Act 1901 (Cth).

13    Clause 34.1 must be construed in context and, in particular, in the context of other provisions of the Agreement which deal with the hours of work that HPS may require an employee to perform. Clauses 6 and 13.1 restrict the maximum hours of work for full-time employees to 35 hours per week (which may be averaged over a five week shift cycle). The restriction there imposed on the capacity of HPS to require the performance of work is ameliorated by the entitlement provided to HPS by cl 34.1. It is unsurprising that, in that context, the word “may” was used in cl 34.1 to record the permission granted to HPS to require additional hours of work beyond the limitations otherwise imposed by the Agreement. However, the capacity to require additional work by way of overtime is restricted. That is the work of the word “reasonable”. Its purpose is to qualify the capacity of HPS to require employees to perform additional hours of work. It is manifest that the restriction imposed by cl 34.1 operates upon the permission given to HPS to require additional hours of work. The requirement to observe that restriction is the obligation which cl 34.1 imposes upon HPS. A failure to comply with or observe that restriction will constitute a contravention of the clause.

14    HPS’s submission acknowledged the restrictive and protective aspects of cl 34.1. However, its submission impermissibly sought to disconnect the restrictive aspect of the clause from its subject.

15    HPS contended that the protection conferred on employees by the word “reasonable” did not operate upon what HPS could require, but instead, only operated upon the obligation imposed by the clause upon the employee, by limiting the extent of that obligation to the performance of reasonable overtime. As HPS put it, the word “reasonable” entitled an employee to refuse any unreasonable requirement to work overtime but had nothing to say as to what HPS “may require”.

16    That approach is inconsistent with both the text and structure of the clause. The subject of the first part of cl 34.1 is what HPS “may require” of an employee. The subject of the second part of the clause is the obligation imposed on the employee to work. The limitation or restriction imposed by the word “reasonable” is found in the first part of the clause and qualifies or conditions what HPS “may require”. That restriction will have a consequential effect on the obligation imposed on the employee, but that does not justify disconnecting the qualification made from the subject matter that it conditions. That subject is what HPS “may require”. The restriction operates directly upon HPS and imposes upon it a limitation with which it must comply. The structure and text of cl 34.1 do not support the approach to construction for which HPS contended.

17    Furthermore, the Agreement is an instrument made under the FW Act and it must be presumed that its framers intended that its provisions would operate consistently with, rather than contrary to, the FW Act.

18    The “National Employment Standards” operate as “minimum standards that apply to the employment of employees which cannot be displaced” (s 61(1) of the FW Act). One of those standards is provided for by s 62(1), which imposes an obligation upon an employer not to “request or require an employee to work more than”, relevantly, and for a full-time employee – 38 hours, in a week, “unless the additional hours [requested or required] are reasonable”. It will be apparent that s 62(1) imposes a limitation on the additional hours that an employer may “request or require of an employee”.

19    On HPS’s construction of cl 34.1, and because that construction disconnects the limitation or restriction in the clause from what HPS “may require” by way of additional hours, HPS may request or require unlimited additional hours. If the clause so provided, HPS could make a requirement prohibited by s 62(1) of the FW Act. Clause 34.1 should be construed as intended to operate validly and consistently with the requirements of s 62(1). The construction we prefer is consistent with s 62(1); HPS’s construction is not.

20    It ought also be presumed that cl 34.1 was intended to be effective and produce a sensible industrial outcome. In that respect, and consistently with the purpose of s 62(1) of the FW Act, the purpose of the clause must be recognised to include the purpose of protecting employees from being compelled to perform unreasonable overtime. If it was the case that the limitation or restriction in cl 34.1 only conditioned the obligation on the employee to perform work, HPS would have no obligation to make an assessment about the reasonableness of its requirement for additional work and the effectiveness of the clause would be largely dependent upon the willingness of employees to refuse to comply with unreasonable requirements made by the employer. Construing cl 34.1 as imposing no burden upon HPS and imposing the burden of refusing unreasonable requirements to perform additional work on the employee does not produce a sensible industrial outcome, especially in circumstances where such a refusal may be perceived by the employee as jeopardising or likely to prejudicially affect the employee’s employment.

21    For those reasons, we have concluded that cl 34.1 is a term that may be contravened by HPS within the meaning of s 50 of the FW Act.

relief

22    Having determined the threshold question against the CFMMEU, the primary judge did not consider whether the requirement made by HPS that its employees work 455 hours of overtime per year, constituted the requiring of “unreasonable overtime” in contravention of cl 34.1. The primary judge’s failure to make that determination was the subject of the third and fourth grounds of the appeal. That the primary judge should have held that the requirement made by HPS could not have constituted a breach of cl 34.1 on the evidence relied upon by the CFMMEU, was the subject of a Notice of Contention filed by HPS.

23    Despite its Notice of Contention, HPS contended that should the Court hold, as we have, that cl 34.1 is capable of being contravened by HPS, the better course is for the proceeding to be remitted to the primary judge. The CFMMEU did not strongly oppose that course.

24    In our view, the issues raised by grounds three and four of the appeal and those raised by the Notice of Contention may agitate factual contests which the primary judge, who heard the evidence and saw the witnesses, is best equipped to resolve. In the circumstances, we consider that the most appropriate course is that the appeal be allowed, the primary judge’s orders dismissing the application be set aside and the proceeding be remitted for further determination by the primary judge in accordance with these reasons. We will make orders to that effect. No order for costs was sought and no such order should be made.

Associate:

Dated:    23 October 2018