FEDERAL COURT OF AUSTRALIA

Newlands Coal Pty Ltd v Construction, Forestry, Mining & Energy Union [2005] FCA 1512

INDUSTRIAL LAW – industrial dispute – whether certified agreements prior or after the nominal expiry date prevail over an Australian Workplace Agreement to the extent of any inconsistencies – whether clauses in the certified agreements between the applicant and respondent exclude the operation of Australian Workplace Agreements

WORDS AND PHRASES – ‘industrial instrument’, ‘paid rates award’

Workplace Relations Act 1996 (Cth) ss 3, 4, 143, 170LV, 170LY, 170LW, 170LX, 170ME, 170MG, 170MH, 170MHA, 170MX, 170VF, 170VQ, 298B, 412, 413A

Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 79 ALJR 703 followed

Comalco Aluminium (Bell Bay) Ltd v O’Connor (1995) 131 ALR 657 considered

NEWLANDS COAL PTY LTD (ACN 010 082 578) v CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

QUD 157 OF 2005

DOWSETT J

28 OCTOBER 2005

BRISBANE

REASONS FOR JUDGMENT

Background

1                     The applicant operates underground and open-cut coal mines and a coal preparation plant.  Conditions of employment at the open-cut mine and the coal preparation plant are regulated by two agreements, the Newlands Open-Cut Coal Mine Certified Agreement 2003 and the Newlands Coal Preparation Plant Certified Agreement 2002.  I will refer to them respectively as the “Open-Cut agreement” and the “Preparation Plant agreement”.  The applicant and the respondent are the parties to both agreements.  The agreements have been “certified” pursuant to the Workplace Relations Act 1996 (Cth) (the “Act”).  The Act requires that such an agreement have a nominal expiry date.  For the Open-Cut agreement, the nominal expiry date is 31 January 2006.  For the Preparation Plant agreement it was 25 September 2005.  It is common ground that both agreements remain in force pending negotiation of new arrangements for employment at the two workplaces.  The agreements are in substantially similar terms.  Pursuant to s 170LY a certified agreement effectively regulates the terms and conditions of employment in the relevant workplace to the exclusion of any award.

2                     Subsection 170VF(1) of the Act provides:

‘An employer and employee may make a written agreement, called an Australian workplace agreement, that deals with matters pertaining to the relationship between an employer and an employee.’

3                     It is likely that such an agreement (an “AWA”) will deal with matters also dealt with in any certified agreement for the relevant workplace.  Whilst a certified agreement has general application to the terms and conditions enjoyed by all affected employees, an AWA applies only to the relationship between an individual employee and his or her employer.  The Act contains provisions for resolving any inconsistency between an award or certified agreement on the one hand and an AWA on the other.

4                     Since 25 April 2005 the applicant has been offering AWAs to individual employees employed in the open-cut mine and at the coal preparation plant.  Some employees have accepted the offers.  There are inconsistencies between the terms of the AWAs and the terms of the certified agreements.  In the course of these proceedings no attempt has been made to identify in detail those inconsistencies.  However it seems that the pay rates prescribed by the AWAs are higher than those payable under the certified agreements.

5                     A dispute has arisen between the applicant and the respondent as to the status of these AWAs, given that the certified agreements remain in place.  However the points in dispute are by no means clear.  The dispute was referred to the Australian Industrial Relations Commission (the “Commission”) pursuant to s 170LW of the Act.  Each certified agreement made provision for such reference as contemplated by the section.  Commissioner Bacon made recommendations for resolution of the dispute, based upon a particular view of the relationship between the certified agreements and the AWAs.  The applicant does not accept that view as being correct and so has brought proceedings pursuant to ss 412 and 413A of the Act for interpretation of the certified agreements.  The respondent has not submitted that the  proceedings in the Commission constitute a bar to my determining the matter.  However it submits that as a matter of discretion, I should choose not to do so in view of the fact that the parties have agreed that matters in dispute should be resolved in the Commission.  I consider that a purported resolution of the dispute based upon an incorrect interpretation of the certified agreements would be an unsatisfactory outcome.  I am inclined to undertake the task imposed by s 413A, namely to interpret the agreements.

6                     Commissioner Bacon’s recommendations assist in identifying the underlying cause of the dispute.  He observed at par 5:

‘The [respondent] contends that for reasons that will be discussed shortly the [the applicant] is precluded from applying the terms of an AWA to any employee who is covered by one of the certified agreements.  The [respondent] states that it knows and accepts that it will have a contest with [the applicant] for the “hearts and minds” of employees on the question of whether such employees want to remain in the “collective” enterprise agreement or whether such employees want to sign “individual” AWAs.  [The respondent’s] complaint is not that such a contest will take place but rather when that contest should take place.  [The respondent] expects that [the applicant] should honour its existing agreement and contends that [the applicant] is currently failing to do so.’

7                     Nonetheless, there is a legal basis to the dispute.  The Commissioner understood the respondent to assert that the certified agreements prescribe all conditions of employment and entitlements for the relevant employees, to the exclusion of all other terms and conditions.  This approach is said to lead to the conclusion that to the extent that an AWA deals with matters not mentioned in the certified agreement, it has no operational effect because the certified agreement is to be the sole source of all conditions of employment enjoyed by, or imposed upon the applicant and relevant employees.  This view is based upon the assertion that cl 4 of each agreement excludes the operation of all other relevant awards, agreements and industrial instruments, whether existing at the time at which the certified, agreement was made and certified or coming into existence thereafter.

8                     The Commissioner accepted this view and also accepted that the certified agreements prohibited the payment of amounts in excess of those specified in those agreements.  The Commissioner considered that the applicant had ‘bargained away’ its right to pay amounts pursuant to the AWAs where those amounts exceeded those payable pursuant to the relevant certified agreement. 

The Act

9                     The applicant submits that in construing the relevant provisions of the Act, it is necessary to take into account its principal object which appears in s 3.  That section provides as follows:

‘The principal object of this Act is to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia by:

(a)       encouraging the pursuit of high employment, improved living standards, low inflation and international competitiveness through higher productivity and a flexible and fair labour market; and

(aa)     protecting the competitive position of young people in the labour market, promoting youth employment, youth skills and community standards and assisting in reducing youth unemployment; and

(b)       ensuring that the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level; and

(c)        enabling employers and employees to choose the most appropriate form of agreement for their particular circumstances, whether or not that form is provided for by this Act; and

(d)       providing the means:

(i)         for wages and conditions of employment to be determined as far as possible by the agreement of employers and employees at the workplace or enterprise level, upon a foundation of minimum standards; and

(ii)        to ensure the maintenance of an effective award safety net of fair and enforceable minimum wages and conditions of employment; and

(e)        providing a framework of rights and responsibilities for employers and employees, and their organisations, which supports fair and effective agreement-making and ensures that they abide by awards and agreements applying to them; and

(f)        ensuring freedom of association, including the rights of employees and employers to join an organisation or association of their choice, or not to join an organisation or association; and

(g)        (Repealed)

(h)        enabling the Commission to prevent and settle industrial disputes as far as possible by conciliation and, where appropriate and within specified limits, by arbitration; and

(i)         assisting employees to balance their work and family responsibilities effectively through the development of mutually beneficial work practices with employers; and

(j)        respecting and valuing the diversity of the workforce by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual preference, age, physical or mental disability, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin; and

(k)        assisting in giving effect to Australia’s international obligations in relation to labour standards.’

10                  The applicant points particularly to pars (b) and (c), urging that they indicate a pre-eminent position for AWAs in the industrial system.  Those paragraphs may carry that implication.  However it may be that certified agreements will better serve other aspects of the public interest identified in s 3.  Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 79 ALJR 703 is authority for the proposition that certified agreements should be construed in the context of the legislative structure in which they exist.  It follows that AWAs should be similarly construed.  No doubt it is also necessary to construe the operative sections of the Act in light of s 3.

11                  For present purposes the starting point must be subs 170VF(1), the terms of which appear above.  Other sections contain limitations and prescriptions concerning the content of AWAs.  There are also provisions requiring that they be approved by the Employment Advocate and limiting the extent to which they may derogate from awards and/or certified agreements.  However there is no express limitation upon the entitlement of an employer and an employee to enter into an AWA pursuant to subs 170VF(1).  The applicant and those of its employees who have entered into AWAs have, in so doing, acted pursuant to the right conferred by subs 170VF(1).  The respondent does not challenge that proposition but argues that such AWAs have, in light of the certified agreements, no operative effect.  This raises the question of whether or not the individual employees who have entered into AWAs should have been joined in these proceedings.  However, given that the only dispute is between the applicant and the respondent, the nature of industrial relations in this country and the role of trade unions such as the respondent, there may be utility in resolving the dispute between the present parties without joining individual employees.

12                  Section 170VQ relevantly prescribes the effect of an AWA as follows:

‘(1)      During its period of operation, an AWA operates to the exclusion of any award that would otherwise apply to the employee’s employment.  This subsection has effect subject to subsections (2) and (3). 

(2)       An AWA is of no effect if it is made:

(a)        after the commencement of an award that is made under subsection 170MX(3) and applies to the employee’s employment; and

(b)        before the nominal expiry date of the award.

(3)       …

(4)       …

(5)       …

(6)       The relationship between an AWA and a certified agreement is as follows:

(a)        a certified agreement prevails over the AWA to the extent of any  inconsistency if:

(i)         the certified agreement is in operation at the time the AWA comes into operation; and

(ii)        the nominal expiry date of the certified agreement is after the date on which the AWA comes into operation; and

(iii)       the certified agreement does not expressly allow a subsequent AWA to operate to the exclusion of the certified agreement or to prevail over the certified agreement to the extent of any inconsistency;

(b)       a certified agreement that comes into operation after the nominal expiry date of the AWA prevails over the AWA to the extent of any inconsistency;

(c)        in all other cases, the AWA operates to the exclusion of any certified agreement that would otherwise apply to the employee’s employment.’

13                  If all three conditions identified in par 170VQ(6)(a) are satisfied, then a certified agreement will prevail over an AWA to the extent of any inconsistency.  If those conditions are not satisfied, then par 170VQ(6)(c) operates to give effect to the AWA to the exclusion of the certified agreement.  For present purposes it is common ground that in the case of each certified agreement, subpars 170VQ(6)(a)(i) and (iii) are satisfied.  As to subpar 170VQ(6)(a)(ii), it seems that some employees in the coal preparation plant entered into AWAs after the nominal expiry date of the Preparation Plant agreement.  The respondent conceded in argument that in those circumstances, par 170VQ(6)(a) does not apply and so, pursuant to par 170VQ(6)(c), those AWAs operate to the exclusion of the Preparation Plant agreement.  As to AWAs entered into with employees in the coal preparation plant on or prior to the nominal expiry date of the Preparation Plant agreement, and those entered into with employees in the open-cut mine (the nominal expiry date for the Open-Cut agreement not having arrived) par 170VQ(6)(a) regulates the relationship between each AWA and the relevant certified agreement so that the certified agreement prevails over each AWA to the extent of any inconsistency.  That conclusion might suggest that should the applicant or an employee seek to enforce any provision of an AWA, it would be necessary to look at that provision in order to see whether it is inconsistent with the relevant certified agreement.  However the respondent asserts that as cl 4 of each certified agreement exhaustively prescribes the conditions of employment in the relevant workplace, such an exercise is not necessary.  No provision of any AWA can have any operative effect.

Inconsistency

14                  Clause 4 of the Open-Cut agreement provides:

‘This agreement contains all conditions of employment and entitlements of employees employed under its terms and conditions by Newlands Coal Pty Ltd to the exclusion of all other Awards, Certified Agreements and industrial instruments.’

15                  Clause 4 of the Preparation Plant agreement is in the same form, save that the word “certified” is omitted.  Such omission may lead to the conclusion that cl 4 in the Preparation Plant agreement overrides a wider range of “agreements” than does cl 4 of the Open-Cut agreement.  For example, an AWA may well be an agreement for the purposes of cl 4 of the former agreement.  It is clearly not a certified agreement for the purposes of cl 4 of the latter agreement.  However the point is of no present practical significance.  The applicant accepts that AWAs are “industrial instruments” for the purposes of cl 4 of both agreements.  I will return to the meaning of this term at a later stage.

16                  The respondent submits that:

‘Clause 4 evinces a clear intention that the agreements exclude the operation of AWAs.’

17                  In other words, cl 4 operates to exclude both existing and future awards, agreements and industrial instruments.  The applicant submits that cl 4 was designed only to ‘clear the decks’ so that all past arrangements were terminated.  It also points to cl 8 which provides:

‘(a)      It is a term of this Agreement that all previous custom and practice, arrangements and agreements, whether documented or not applying at Newlands Open Cut Coal Mine will cease from the operative date of this Agreements.

(b)       No further customs and/or practices shall either be recognised or bind the parties hereto unless agreed in writing and incorporated into this Agreement.’

18                  Clause 8 of the Preparation Plant agreement is, mutatis mutandis, in similar form.  The applicant submits that cl 8 deals expressly with existing and future customs and practices and contrasts this with cl 4 which does not expressly deal with future awards, agreements or industrial instruments.  It submits that had the parties intended that cl 4 apply to future awards, agreements and industrial instruments, they would have said so expressly as was done in cl 8 in connection with customs and practices.

19                  Implicit in the respondent’s submission is the proposition that a certified agreement may exclude the statutory right to enter into AWAs by using a device such as cl 4.  In principle it may be possible for a person to bargain away his or her statutory rights, at least in the absence of a statutory prohibition.  However one would not readily construe the unqualified language of s 170VF as permitting such a course.  This is particularly so given the presence in the Act of subs 170VQ(6).  That subsection contemplates an AWA being partially inoperative because of inconsistency with a certified agreement.  This suggests that it will continue to operate in areas where there is no such conflict.  It is unlikely that such areas are to be limited to those in which the AWA is in identical terms to the certified agreement.  Such an arrangement would be pointless.  Clearly, Parliament contemplated AWAs dealing with issues not dealt with in a relevant certified agreement. 

20                  Other provisions of the Act also militate against the respondent’s submission that cl 4 should be given such a broad effect.  Pursuant to subs 170LX(2), a certified agreement ceases to be in operation when it is replaced by another certified agreement.  The respondent’s construction of cl 4 would exclude the operation of any such subsequent certified agreement.  Clearly, cl 4 must be read so as to avoid this outcome.  A similar problem arises out of subs 170LX(3) which provides that a certified agreement ceases to be in operation if terminated pursuant to ss 170LV, 170ME, 170MG, 170MH or 170MHA.  Each of those sections contemplates termination of certification by an order of the Commission.  It is at least arguable that such an order is an industrial instrument and therefore, on the respondent’s argument, unable to stand against cl 4 of the certified agreements.  The precise meaning of the expression “industrial instrument” is not clear, but some indication appears from Part XA of the Act.  The term is defined in s 298B for the purposes of that Part as:

‘an award or agreement, however designated, that:

(a)       is made under or recognised by an industrial law; and

(b)       concerns the relationship between an employer and the employer’s employees, or provides for the prevention or settlement of a dispute between an employer and the employer’s employee.’

21                  The term “award” is defined in s 4 of the Act to mean:

‘an award or order that has been reduced to writing under subsection 143(1), but does not include an order made by the Commission in a proceeding under Subdivision B of Division 3 of Part VIA.’

22                  Division 3 of Part VIA is not presently relevant.  Subsection 143(1A) provides that a decision to certify a certified agreement under Part VIB is not an award.  However the orders contemplated by ss 170LV, 170ME, 170MG, 170MH and 170MHA are orders terminating certification.  They are not excluded from the definition of “industrial instrument” by subs 143(1A).  Such orders may well be said to ‘affect an award’ for the purposes of s 143 if they result in an award taking effect upon cessation of the certification of a certified agreement.  According to the respondent’s argument such orders could not prevail against cl 4 of each certified agreement.  The proper construction of the term “industrial instrument” in cl 4 of the certified agreements has not been argued.  However it seems likely that an order of the Commission is such an instrument, subject to the limitations mentioned in the above definition. 

23                  Other provisions of Division 5 of Part VIB are also relevant in this regard.  For example, pursuant to subs 170LY(1), a certified agreement has no effect to the extent of any inconsistency with a previously certified agreement, provided that the nominal expiry date for the earlier agreement has not passed.  Similarly, subs 170LY(2) provides that where an award is made under subs 170MX(3) it may, in certain circumstances, exclude the operation of a certified agreement.  Pursuant to subs 170LY(3), an ‘exceptional matters order’ prevails to the extent of any inconsistency over a certified agreement which was certified before the order was made. 

24                  These potential effects of the respondent’s preferred construction of cl 4 suggest that it should be approached with caution.

25                  The right to enter into an AWA conferred by s 170VF is, apparently, unlimited.  If the parties to an AWA agree to a provision which is inconsistent with a provision of an extant certified agreement, subs 170VQ(6) operates to resolve the matter.  Whether there is such an inconsistency is a matter of construction.  Whilst it is theoretically possible that a certified agreement might “cover the field”, such an outcome cannot legitimately be created by giving an unreasonably broad meaning to cl 4, particularly when it is seen in its legislative context.  In my view, the wording of cl 4 is not apposite to produce the result for which the respondent contends.  The natural meaning of the words is that the agreement contains all current terms and conditions to the exclusion of others previously prescribed or agreed.  The respondent’s argument would exclude any possibility of future amendment, even by consent.  I prefer the applicant’s construction to that advanced by the respondent.

26                  I should also refer to cl 35.0 of the Open-Cut agreement and cl 40.0 of the Preparation Plant agreement, both of which provide:

‘It is a condition of this Agreement that the parties undertake not to pursue any extra claims for the duration of this Agreement except where permitted by the terms of this Agreement.’

27                  The respondent submits that by offering, or entering into AWAs, the applicant has made an “extra claim”.  In my view the clause is designed to avoid industrial disputes during the lifetime of each certified agreement.  The word “claim” applies an assertion of entitlement, moral or legal.  An offer is not a claim.  If an employer offers an AWA and an employee accepts, there is no claim.  The clause has no present relevance.

Rates of pay

28                  Perhaps surprisingly, the respondent also asserts that the applicant may not pay employees who have entered into AWAs at rates higher than those payable pursuant to the relevant certified agreement.  To some extent this assertion is a natural consequence of the respondent’s submission concerning cl 4.  However it also relies upon the precise wording of the provisions dealing with remuneration in the certified agreements.  The relevant provisions in the Open-Cut agreement are as follows:

‘13.0    REMUNERATION

The annual remuneration payable to an employee under this Agreement shall consist of an annual wage, payment for any non-rostered overtime that may be worked from time to time, employer superannuation contributions and all other applicable allowances and special rates.’

13.1     ANNUAL WAGE

The annual wage payable to an employee, working a particular roster, will be determined by the addition of the applicable base annual wage which is paid in lieu of all special rates and allowances, additional time spent in hot seat change overs, staggered crib breaks, rostered overtime hours and shift penalties where applicable.  The total of this amount will then be divided by twenty six (26) and paid in accordance with this particular pay cycle.

13.2     BASE ANNUAL WAGE

The base annual wage, calculated on an average of thirty five (35) hours per week, applicable to each level of production employees is as set out below:

…’

29                  A table then specifies annual wage rates for persons with varying levels of experience and at three different “employee levels”.  A note directs the reader to:

‘Refer Appendix 6 for basis of calculation and the manner in which additional payment/deduction by exception is to occur.’

I have been unable to derive any assistance from Appendix 6.

30                  The Preparation Plant agreement has somewhat different provisions relating to wages.  Clause 12 provides:

’12.0    WAGE RATES

(a)       The weekly (35 hour) rates of pay that appear below are for “all purposes” of the Agreement and include over award payments in consideration and recognition of continuous improvement in productivity levels obtained through the adoption of innovative work systems and maximum flexibility of labour within the working environment per medium of this Agreements.

…’

Weekly wage rates are then prescribed (for a 35 hour week).  There are provisions for overtime payments and other allowances. 

31                  Clause 13(1) of the Open-Cut agreement speaks of ‘the annual wage payable to an employee’ while cl 12 of the Preparation Plant agreement speaks of ‘the average weekly wage payable to each group of employees’.  Neither agreement expressly excludes the payment of amounts in excess of those specified, but it is arguable that any requirement in an AWA that the applicant pay an amount in excess of the amount payable pursuant to the relevant certified agreement raises an “inconsistency” between the two documents.  I suggested in argument that industrial legislation and awards and agreements made thereunder have traditionally fixed minimum rates rather than maximum rates, and that one would expect express words if it were intended to prohibit payment at higher rates.  Further, as Callinan J observed in Amcor at 729:

‘… certified agreements exist independently of contract, and it has been held by this Court that they operate with statutory force.  Employers and employees are bound by their terms and are incapable of contracting out of them, or derogating from them although employers may confer additional benefits on their employees by contract.’

32                  The respondent submits that prohibitions upon payments exceeding those prescribed in awards or agreements have a place in Australian industrial relations history in connection with “paid rates” awards.  However it is not clear to me that this is the case.  In Comalco Aluminium (Bell Bay) Ltd v O’Connor (1995) 131 ALR 657, the question was whether an award described as a ‘paid rates award’ necessarily involved a prohibition on over-award payments.  The Full Court of the Industrial Relations Court (consisting of three members of this Court) observed at 677-678:

‘The Act says nothing about the rights and obligations of parties to a paid rates award.  An award that contained the clause prohibiting entitlements in excess of those provided by it might satisfy the s 4 definition of “paid rates award”.  Justice Elizabeth Evatt inserted such a clause in the National Building Industry Trades Construction Award 1975.  We need not consider whether there are statutory or constitutional fetters on the Commission making an award in this form.’  (Emphasis added.)

33                  The Full Court seems to have entertained reservations concerning such a prohibition.  Against that background I feel comfortable in proceeding upon the basis that it would be, to say the least, unusual in the current industrial climate for any award or certified agreement to be construed in such a way as to prohibit payments of amounts in excess of those prescribed in the document in question.  At least in the absence of express words to contrary effect, an employer is at liberty to pay additional amounts to an employee as contemplated by Callinan J in Amcor.  In those circumstances I see no bar to the applicant’s doing so.

Declarations

34                  I propose the following declarations, subject to hearing further submissions:

1.         As to the Newlands Open-Cut Coal Mine Certified Agreement 2003:

(a)        that any Australian Workplace Agreement, previously entered into in accordance with the Workplace Relations Act 1996 (Cth) and approved by the Employment Advocate pursuant thereto, between the applicant and any employee or potential employee whose employment is, or will be, subject to the said certified agreement, takes effect subject to par 170VQ(6)(a) of that Act; and

(b)        that the applicant may pay to any such employee, by way of remuneration for his or her employment, an amount payable pursuant to the Australian Workplace Agreement between the applicant and said employee, notwithstanding that the amount may be greater than that payable pursuant to the said certified agreement; and

2.         As to the Newlands Coal Preparation Plant Certified Agreement 2002:

(a)        that any Australian Workplace Agreement previously entered into in accordance with the Workplace Relations Act 1996 (Cth) and approved by the Employment Advocate pursuant thereto, between the applicant and any employee or potential employee whose employment is, or will be, subject to the said certified agreement, takes effect as follows:

(i)         in the case of Australian Workplace Agreements coming into operation prior to the nominal expiry date of the said certified agreement, subject to the provisions of par 170VQ(6)(a) of the said Act; and

(ii)        in all other cases, in accordance with par 170VQ(6)(c) of the said Act; and

(b)        that the applicant may pay to any such employee, by way of remuneration for his or her employment, an amount payable pursuant to the Australian Workplace Agreement between the applicant and said employee, notwithstanding that the amount may be greater than that payable pursuant to the said certified agreement.

Costs

35                  I will also hear submissions as to costs.

Associate:

Dated:              27 October 2005