Federal Court of Australia

Independent Education Union of Australia v Corporation of the Roman Catholic Diocese of Toowoomba [2023] FCA 64

ORDERS

THE COURT ORDERS THAT:

1.    The application filed on 3 December 2020 is dismissed.

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

REASONS FOR JUDGMENT

THOMAS J:

1    The first respondent, the Corporation of the Roman Catholic Diocese of Toowoomba (Toowoomba Catholic Education), was the employer of the second applicant, Mr Michael Murtagh, as at 1 July 2019 and until 6 December 2019.

2    The second respondent, Downlands College, was the employer of the third applicant, Mr Francis O’Mara, as at 1 July 2019 and until 31 December 2019.

3    The first applicant, Independent Education Union of Australia (IEUA), is an organisation of employees registered under the Fair Work (Registered Organisations) Act 2009 (Cth) and an employer organisation for the purposes of s 539(2) Item 2 and s 540(2) of the Fair Work Act 2009 (Cth) (FWA).

4    By way of originating application, the applicants claim:

(1)    Pursuant to s 39B(1A)(c) of the Judiciary Act 1903 (Cth) (the “Judiciary Act”), s 21 of the Federal Court of Australia Act 1976 (Cth) (the “FCAA”), and ss 545(1), 562 and 563 of the Fair Work Act 2009 (Com) (“FWA”), a declaration that on, the proper construction of the Catholic Employing Authorities Single Enterprise Agreement Collective Agreement – Diocesan Schools of Queensland 2019-2023 (the “2019 Diocesan Agreement”), the First Respondent, Corporation of the Roman Catholic Diocese of Toowoomba ABN 88 934 244 646 (“Toowoomba Catholic Education”) is required to:

(a)    pay wages to Michael Murtagh for the period from and including 1 July 2019 at the hourly rate of $66.0933 provided in the 2019 Diocesan Agreement;

(b)    make superannuation contributions for Michael Murtagh for the period from and including 1 July 2019 to his superannuation fund at the rate of 9.5% on the the hourly rate of $66.0933.

(2)    Pursuant to s 39B(1A)(c) of the Judiciary Act, s 21 of the FCAA, and ss 545(1), 562 and 563 of the FWA, a declaration that on, the proper construction of the Catholic Employing Authorities Single Enterprise Agreement Collective Agreement – Religious Institutes Schools Queensland 2019-2023 (the “2019 Catholic Religious Institutes Agreement”), the Third Respondent, Downlands College ACN 071 878 4 (“Downlands College”), is required to:

(a)    pay wages to Francis O’Mara for the period from and including 1 July 2019 at the hourly rate of $66.0933 provided in the 2019 Catholic Religious Institutes Agreement;

(b)    make superannuation contributions for Francis O’Mara for the period from and including 1 July 2019 at the rate of 9.5% on the the hourly rate of $66.0933.

(3)    A declaration under s 545 of the FWA that Toowoomba Catholic Education contravened section 50 of FWA by contravening a term of an enterprise agreement, namely, clause 4.2.4 of the 2019 Diocesan Schools Agreement, by failing to pay the ordinary pay due to Michael Murtagh.

(4)    A declaration under s 545 of the FWA that Toowoomba Catholic Education contravened section 50 of FWA by contravening a term of an enterprise agreement, namely, clause 4.8.3 of the 2019 Diocesan Schools Agreement, by failing to make superannuation contributions for Michael Murtagh.

(5)    A declaration under s 545 of the FWA that Downlands College contravened section 50 of FWA by contravening a term of an enterprise agreement, namely, clause 4.2.4 of the Catholic Religious Institutes Agreement, by failing to pay the ordinary pay due to Francis O’Mara.

(6)    A declaration under s 545 of the FWA that Downlands College contravened section 50 of FWA by contravening a term of an enterprise agreement, namely, clause 4.8.3 of the Catholic Religious Institutes Agreement, by failing to make superannuation contributions for Francis O’Mara.

(7)    A declaration that the Second Applicant is entitled to be paid the sum of $1,746.95 being for wages in the amount of $1,595.39 and for superannuation in the amount of $151.56.

(8)    In the alternative to (7), a declaration that:

(a)    the Second Applicant is entitled to be paid the sum of $1,595.39 for wages;

(b)    the First Respondent is required to make a superannuation contribution for the Second Applicant to his superannuation fund in the sum of $151.56.

(9)    A declaration that the Third Applicant is entitled to be paid the sum of $424.24 being for wages in the amount of $387.43 and for superannuation in the amount of $36.81.

(10)    In the alternative to (9), a declaration that:

(a)    the Third Applicant is entitled to be paid the sum of $387.43 for wages;

(b)    the Second Respondent is required to make a superannuation contribution for the Third Applicant to his superannuation fund in the sum of $36.81.

(11)    An order under s 545(2)(b) of the Fair Work Act 2009 that Toowoomba Catholic Education pay Michael Murtagh the sum of $1,746.95 for compensation for underpayment of wages and superannuation.

(12)    In the alternative to (11), an order under s 545 of the Fair Work Act 2009 that Toowoomba Catholic Education:

(a)    pay Michael Murtagh the sum of $1,595.39 for underpayment of wages;

(b)    make a superannuation contribution for Michael Murtagh to his superannuation fund at the rate of 9.5% on the the hourly rate of $66.0933 for the period of his employment after 1 July 2019.

(13)    An order under s 545(2)(b) of the Fair Work Act 2009 that Downlands College pay Francis O’Mara the sum of $424.24 for compensation for underpayment of wages and superannuation.

(14)    In the alternative to (13), an order under s 545 of the Fair Work Act 2009 that Downlands College:

(a)    pay Francis O’Mara the sum of $387.43 for wages;

(b)    make a superannuation contribution for Francis O’Mara to his superannuation fund at the rate of 9.5% on the the hourly rate of $66.0933 for the period of his employment after 1 July 2019.

(15)    An order under s 547 of the FWA that Toowoomba Catholic Education pays interest on any amount required to be paid to or for the benefit of Michael Murtagh as compensation for underpayment of wages and superannuation under s 545 of the FWA.

(16)    An order under s 547 of the FWA that Downlands College pays interest on any amount required to be paid to or for the benefit of Francis O’Mara as compensation for underpayment of wages and superannuation under s 545 of the FWA.

(17)    An order under s 546 of the Fair Work Act 2009 that Toowoomba Catholic Education pay a pecuniary penalty for each contravention found.

(18)    An order under s 546 of the Fair Work Act 2009 that Downlands College pay a pecuniary penalty for each contravention found.

(19)    An order under s 546(3) of the FWA that any pecuniary penalty ordered be paid to the First Applicant.

(20)    Such further or other orders as the Court deems fit.

(Errors in original)

BACKGROUND

5    The parties filed an agreed statement of facts.

6    Toowoomba Catholic Education conducts a school at St Joseph’s College, Rangeville, Toowoomba. Downlands College conducts a school in Toowoomba.

The 2019-2023 Diocesan Schools Agreement

7    The Catholic Employing Authorities Single Enterprise Collective Agreement – Diocesan Schools of Queensland 2019-2013 (2019-2023 Diocesan Schools Agreement or EB9) was approved on 25 November 2020 and operated from 2 December 2020.

8    Clause 1.4 provides that the 2019-2023 Diocesan Schools Agreement covers Toowoomba Catholic Education. Clause 1.2 of the 2019-2023 Diocesan Schools Agreement entitled “Commencement Date” is as follows:

1.2.1    This Agreement shall operate seven (7) days after approval from the Fair Work Commission.

1.2.2    This Agreement shall remain in force until 30 June 2023 unless otherwise agreed in terms of the provisions of the Fair Work Act 2009.

1.2.3    Where this Collective Enterprise Agreement specifies an earlier operative date in relation to a particular provision, then that provision shall operate from that date for all applicable employees employed at that earlier date.

9    The 2019-2023 Diocesan Schools Agreement covers Toowoomba Catholic Education identified in clause 1.4.2 as follows:

Any employee of the employers identified in clause 1.4.1 who is covered by the Educational Services (Teachers) Award 2010 and the Educational Services (Schools) General Staff Award 2010 and who is employed in a school accredited by the Non-State School Accreditation Board (NSSAB) of Queensland or its successor.

10    Clauses 4.2.1(a)(i) to (iv) of the 2019-2023 Diocesan Schools Agreement provide, respectively, for the following salary increases for teachers:

(i)    2.5% of the applicable salary rate operative as of the first full pay period on or after 1 July 2019;

(ii)    a further increase of 2.5% from the first full pay period on or after 1 July 2020;

(iii)    a further increase of 2.5% from the first full pay period on or after 1 July 2021; and

(iv)    from the first full pay period on or after 1 July 2022, a further salary increase that will be the same headline percentage wage increase paid to teachers employed by the Queensland Department of Education on or from 1 July 2022 (excluding from that headline percentage wage increase any “catch up” component attributable to any “wage freeze” implemented by the Queensland Government affecting the increases outlined in the Department of Education State School Teachers’ Certified Agreement [CB/2019/101]).

11    Clause 4.2.4 of the 2019-2023 Diocesan Schools Agreement provides that: “The actual salaries and allowances for all classifications of teacher are set out in Schedule 1 – S1.1 (Wages, Salaries and Allowances)”.

12    By Schedule 1 – S1.1 Teachers of the 2019-2023 Diocesan Schools Agreement, a 4 Year Trained teacher classified Proficient 8 is entitled to be paid an hourly rate of $66.0933 from 1 July 2019, the rate being inclusive of the 2.5% increase.

13    By clause 4.8.3 of the 2019-2023 Diocesan Schools Agreement, Toowoomba Catholic Education is required to make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid it being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee at a contribution rate equal to 9.5% of an employee’s ordinary pay (the “superannuation contribution”).

14    The Toowoomba Catholic Education did not pay the July 2019 Diocesan Schools increase (and therefore the superannuation contribution on that increase) to any of its teachers who were employed as at 1 July 2019 but had resigned employment before the 2019-2023 Diocesan Schools Agreement came into operation, and were no longer working in another Diocesan School at the date it came into operation.

15    The respondents assert that, in accordance with the provisions of the FWA, the 2019-2023 Diocesan Schools Agreement does not apply to employees who resigned before the agreement came into operation.

16    The applicants’ position is that this construction is incorrect.

The 2019-2023 Religious Institutes Schools Agreement

17    The Catholic Employing Authorities Single Enterprise Collective Agreement – Religious Institutes Schools of Queensland 2019-2023 (2019-2023 Religious Institutes Schools Agreement or EB9) was approved on 25 November 2020 and operated from 2 December 2020.

18    In clause 1.4.1, Downlands College was identified as an employer covered by the 2019-2023 Religious Institute Schools Agreement.

19    Clause 1.2 of the 2019-2023 Religious Institutes Schools Agreement entitled “Commencement Date” is as follows:

1.2.1    This Agreement shall operate seven (7) days after approval from the Fair Work Commission.

(a)    This Agreement shall remain in force until 30 June 2023 unless otherwise agreed in terms of the provisions of the Fair Work Act 2009.

(b)    Where this Collective Enterprise Agreement specifies an earlier operative date in relation to a particular provision, then that provision shall operate from that date for all applicable employees employed at that earlier date.

20    The 2019-2023 Religious Institutes Schools Agreement covers Downlands College in relation to employees identified in clause 1.4.2 as follows:

Any employee of the employers identified in clause 1.4.1 who is covered by the Educational Services (Teachers) Award 2010 and the Educational Services (Schools) General Staff Award 2010 and who is employed in a school accredited by the Non-State School Accreditation Board (NSSAB) of Queensland or its successor.

21    Clauses 4.2.1(a)(i) to (iv) of the 2019-2023 Religious Institutes Schools Agreement provide, respectively, for the following salary increases for teachers:

(i)    2.5% of the applicable salary rate operative as of the first full pay period on or after 1 July 2019;

(ii)    a further increase of 2.5% from the first full pay period on or after 1 July 2020;

(iii)    a further increase of 2.5% from the first full pay period on or after 1 July 2021; and

(iv)    from the first full pay period on or after 1 July 2022, a further salary increase that will be the same headline percentage wage increase paid to teachers employed by the Queensland Department of Education on or from 1 July 2022 (excluding from that headline percentage wage increase any “catch up” component attributable to any “wage freeze” implemented by the Queensland Government, affecting the increases outlined in the Department of Education State School Teachers’ Certified Agreement [CB/2019/101]).

22    Clause 4.2.4 of the 2019-2023 Religious Institutes Schools Agreement provides that: “The actual salaries and allowances for all classifications of teacher are set out in Schedule 1 (Wages, Salaries and Allowances)”.

23    By Schedule 1 – S1.1 Teachers of the 2019-2023 Religious Institutes Schools Agreement, a 4 Year Trained teacher classified Proficient 8 is entitled to be paid an hourly rate of $66.0933 from 1 July 2019, the rate being inclusive of the 2.5% increase.

24    By clause 4.8.3 of the 2019-2023 Religious Institutes Schools Agreement, Downlands College is required to make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid it being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee at a contribution rate equal to 9.5% of an employee’s ordinary pay (the “RI Schools superannuation contribution”).

25    Downlands College did not pay the July 2019 Religious Institutes Schools increase (and therefore the RI Schools superannuation contribution on that increase) to any of its teachers who were employed as at 1 July 2019 but had resigned employment before the 2019-2023 Religious Institute Schools Agreement came into operation, and were no longer working in another Religious School at the date it came into operation.

26    The respondents assert that, in accordance with the provisions of the FWA, the 2019-2023 Religious Institutes Schools Agreement does not apply to employees who resigned before the Agreement came into operation.

27    The applicants’ position is that this construction is incorrect.

THE LEGISLATION

28    The objects of Part 2-4 of the FWA include to “provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits” (s 171(a) of the FWA).

29    Section 172 of the FWA deals with the making of an enterprise agreement such as EB9. An enterprise agreement that is about matters including pertaining to the relationship between an employer that is covered by the agreement and that employer’s employees who are covered by the agreement (s 172(1)(a)) and how the agreement will operate (s 172(1)(d)) may be made in accordance with Part 2-4 of the FWA.

30    An employer may make a single-enterprise agreement with employees who are employed at the time the agreement is made and who would be covered by the agreement (s 172(2)(a)).

31    Section 173 of the FWA deals with the giving of notice of employee representational rights to each employee who will be covered by the agreement and is employed at the notification time for the agreement. The “notification time” (s 173(2)) is the time when:

(a)    the employer agrees to bargain, or initiates bargaining, for the agreement; or

(b)    a majority support determination in relation to the agreement comes into operation; or

(c)    a scope order in relation to the agreement comes into operation; or

(d)    a low-paid authorisation in relation to the agreement that specifies the employer comes into operation.

32    Section 180 of the FWA requires that, before an employer requests (under s 180(1)) that employees approve a proposed enterprise agreement by voting for the agreement, the employer must comply with the requirements contained in s 180(2) as follows:

The employer must take all reasonable steps to ensure that:

(a)    during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:

(i)    the written text of the agreement;

(ii)    any other material incorporated by reference in the agreement; or

(b)    the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.

33    An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it (s 181(1)).

34    The agreement is made when the majority of those employees who cast a valid vote approve the agreement (s 182(1)).

35    Given that the agreement is made when a majority of those employees who cast a valid vote approve the agreement (as opposed to a majority of all employees), it is possible that an enterprise agreement might be made by approval of less than a majority of the actual employees who would be covered by the agreement. In contrast to the entering into of a commercial contract, there is no offer and acceptance process.

36    Once the enterprise agreement is made, a bargaining representative for the agreement applies to the Fair Work Commission (FWC) for approval of the agreement (s 185(1)).

37    Section 186 deals with the approval of the agreement by the FWC, including the satisfaction of certain requirements, set out in ss 186 and 187, to the enterprise agreement. Amongst other things, the FWC must be satisfied that the agreement specifies a date as its nominal expiry date not more than four years after the date on which the FWC approves the agreement.

38    A person must not contravene a term of an enterprise agreement (s 50).

39    An enterprise agreement does not impose obligations on a person, and a person does not contravene a term of an enterprise agreement, unless the agreement applies to the person (s 51(1)).

40    Conversely, an enterprise agreement does not give a person an entitlement unless the agreement applies to the person (s 51(2)).

41    Pursuant to s 52(1), an enterprise agreement applies to an employee, employer or employee organisation if:

(a)    the agreement is in operation; and

(b)    the agreement covers the employee, employer or organisation; and

(c)    no other provision of this Act provides, or has the effect, that the agreement does not apply to the employee, employer or organisation.

42    Section 52(2) provides:

A reference in this Act to an enterprise agreement applying to an employee is a reference to the agreement applying to the employee in relation to particular employment.

43    Section 53 deals with the question of coverage. An enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer (s 53(1)).

44    Section 54 deals with when an enterprise agreement is in operation. Pursuant to s 54(1), an enterprise agreement approved by the FWC operates from:

(a)    7 days after the agreement is approved; or

(b)    if a later day is specified in the agreement—that later day.

THE PROVISIONS OF EB9

45    EB9 is used collectively to describe both enterprise agreements in this case, namely the Catholic Employing Authorities Single Enterprise Collective Agreement – Diocesan Schools of Queensland 2019-2023 (which has been defined as 2019-2023 Diocesan Schools Agreement) and the Catholic Employing Authorities Single Enterprise Collective Agreement – Religious Institutes Schools Queensland 2019-2023 (which has been defined as 2019-2023 Religious Institutes Schools Agreement).

46    Clause 1.2.3 of the 2019-2023 Diocesan Schools Agreement, which is cl 1.2.1(b) of the 2019-2023 Religious Institutes Schools Agreement, is in these terms:

Where this Collective Enterprise Agreement specifies an earlier operative date in relation to a particular provision, then that provision shall operate from that date for all applicable employees employed at that earlier date.

47    Clauses 4.2.1(a)(i) to (iv) of the 2019-2023 Diocesan Schools Agreement provide, respectively, for the following salary increases for teachers:

(i)    2.5% of the applicable salary rate operative as of the first full pay period on or after 1 July 2019;

(ii)    a further increase of 2.5% from the first full pay period on or after 1 July 2020;

(iii)    a further increase of 2.5% from the first full pay period on or after 1 July 2021; and

(iv)    from the first full pay period on or after 1 July 2022 2022, a further salary increase that will be the same headline percentage wage increase paid to teachers employed by the Queensland Department of Education on or from 1 July 2022 (excluding from that headline percentage wage increase any “catch up” component attributable to any “wage freeze” implemented by the Queensland Government affecting the increases outlined in the Department of Education State School Teachers’ Certified Agreement [CB/2019/101]).

DISCUSSION

48    The clause in issue (clause 1.2.3 of the 2019-2023 Diocesan Schools Agreement and clause 1.2.1(b) of the 2019-2023 Religious Institutes Schools Agreement) is as follows:

Where this Collective Enterprise Agreement specifies an earlier operative date in relation to a particular provision, then that provision shall operate from that date for all applicable employees employed at that earlier date.

49    It is necessary to determine the meaning of that clause as it is used in EB9.

50    The applicants’ contended that employees like Mr Murtagh and Mr O’Mara, who were employed at the earlier dates, but who resigned or retired before EB9 came into operation, have the benefit of the pay increases. They say it flows from a plain reading of EB9, applying the rules of construction and a practical approach, producing a result which is fair and logical and a construction consistent with industry reality and common sense.

51    Essentially, the operation of the clause turns upon what is meant by “for all applicable employees employed at that earlier date”.

52    Is the intention for the clause to be read for all “current and past” applicable employees who were employed at the earlier date or is to be read for all “current” applicable employees who were employed at that earlier date?

53    The clause could have been more clearly expressed.

54    Of course, as has been observed, industrial agreements are made for various industries in the light of 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. Therefore, a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced: Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (MV Portland Case) (No 2) [2020] FCA 1138 (Fair Work Ombudsman).

55    The applicable principles as to interpreting an enterprise agreement were set out by Bromberg J in Fair Work Ombudsman, referring to the Full Court decision of WorkPac Pty Ltd v Skene (2018) 264 FCR 536 at [197] (Tracey, Bromberg and Rangiah JJ) and endorsed by White J in WorkPac v Rossato [2020] FCAFC 84, as follows (at [21]):

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 (Holmes) 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 (Amcor) … 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).

56    Kirby J in Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241; [2005] HCA 10 (Amcor) remarked (at [96]) 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”.

57    In relation to the construing of an enterprise agreement so as to determine the existence of a claimed entitlement, Gleeson CJ and McHugh J in Amcor said (at [2]), in relation to resolution of the entitlement of employees under an industrial agreement, that it turned upon the “language of the particular agreement, understood in the light of its industrial context and purpose, and the nature of the particular reorganisation”.

58    The applicants submitted that the provisions of EB9 which allow pay increases from earlier dates are dealt with by this provision as those pay increase provisions specify an “earlier operative date in relation to a particular provision” with the result that the provision operates from that date for the applicants, as the applicants each were employed at the earlier date.

59    The respondents assert that the clause does not apply because neither of the applicants was an employee at the time EB9 was entered into or came into operation.

60    The applicants submitted that the expression “applicable employees” does not have a defined or technical meaning and the words should have their ordinary meaning. It was submitted that the meaning of “applicable” was not intended to be, and cannot be, obtained from an examination of the provisions of the FWA. In the context of EB9, the words used are intended to denote people covered by the enterprise agreement in the periods over which the terms conferring entitlements under the enterprise agreement extend. The applicants submitted that, to do other than apply the ordinary meaning of the words, requires an exercise in illogicality in that it has the absurd result of reading the express words of clause 1.2.3 that specify qualification for an entitlement by reference to being employed at one date – 1 July 2019 provided in clause 4.2.1 – and then immediately requiring that this date be ignored in favour of an as yet unknown date, namely the date when the enterprise agreement commences to operate.

61    The applicants submitted that the plain language clearly referred to operation of the clause conferring the benefit, not to operation of an enterprise agreement in the sense of s 54 of the FWA. It was asserted it is equally plain that it is concerned with extending benefits to employees in the class of those who were employed at the earlier date, in this case the date of the retrospective increase. It was submitted that the intention of the enterprise agreement is to use “applicable” in its ordinary commonly understood meaning referring to those to whom the provision (as specified in the enterprise agreement) applies or to whom the salary level (again specified in the enterprise agreement) applies.

62    The respondents submitted that it is necessary to consider the terms of the legislation to analyse the interpretation of the enterprise agreement.

63    That is the correct approach. The terms of the enterprise agreement must be consistent with (and comply with) the statutory requirements.

64    The respondents referred to the wording of s 52(1) of the FWA as follows:

An enterprise agreement applies to an employee, employer or employee organisation if:

(a)    the agreement is in operation; and

(b)    the agreement covers the employee, employer or organisation; and

(c)    no other provision of this Act provides, or has the effect, that the agreement does not apply to the employee, employer or organisation.”

(Underlining added; emphasis and italics in original)

65    The respondents submitted that the natural reading of s 52 is that an agreement “applies” when its criteria are met and, if they stop being met, the enterprise agreement stops “applying”. One of those criteria is that the person be “an employee”. This was touched upon in the Western Australia Industrial Appeal Court in Pooley v Commissioner of Police [2009] WASCA 67. The matter was dealt with by the Full Bench of the Fair Work Commission, Ross J presiding, in Robert Battye v John Holland Pty Ltd (JHPL) t/as Territoria Civil [2019] FWCFB 8678. The Full Bench concluded that if an industrial agreement “does not apply to anyone, it cannot impose any obligations or confer any entitlement” (at [23]).

66    This was also considered by the Full Bench of the Fair Work Commission in Ms Manchula Vendrig v Ausgrid Pty Ltd [2021] FWCFB 370 where it was concluded that where “[an employee] is no longer employed by [employer], and the [enterprise] agreement no longer applies to her (see s 52 of the Act). An enterprise agreement does not give a person an entitlement unless the agreement applies to the person (see s 51(2)). [The employee] is no longer able to invoke or use the dispute resolution procedure in the [enterprise] agreement.”

67    The respondents referred to s 53(1):

An enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer.

(Underlining added; emphasis and italics in original)

68    The respondents submitted that, if a person is to have an entitlement under an enterprise agreement, there must be some point in time when all criteria in ss 52(1) and 53(1) are met. No such point in time exists for either of the applicants because they were not employees when the enterprise agreements were in operation. It was submitted that this result arose from both the text of the FWA and also the enterprise agreements themselves.

69    The respondents submitted that use of the word “employee” denotes a present relationship. “Employee” does not mean “ex-employee”.

70    In relation to the question of interpretation, the respondents submitted that clause 1.4 of EB9 identifies the relevant “employees” by reference to the duties and award coverage. Clause 1.2.1 specifies when EB 9 commences operating. Together, these two clauses determine the persons to whom EB9 may apply.

71    The respondents further submitted that the phrase “applicable employees” signals that the clause is not expanding the meaning of “applicable employees” but rather referring to a subset of those persons.

INDUSTRIAL CONTEXT

72    Since the FWA commenced to govern agreement-making in 2010, the agreements between the parties (commencing with EB6, nominal expiry date 30 June 2012; EB7, nominal expiry date 30 June 2015; and EB8, nominal expiry date 30 June 2019) have each provided for an annual pay increase on 1 July each year. For example, EB8, which was approved on 25 August 2016 and operated from 1 September 2016, contained two salary increases – one as at 1 July 2015 and the second as at 1 July 2016. As to Toowoomba Catholic Education, these pay increases were paid to each of its teachers who were employed at the operative salary increase date, even though they had resigned employment with effect that the employment terminated before the operational date of 1 September 2016. Similarly, EB9 (operative 2 December 2020) provides for back pay to 1 July 2019 and 1 July 2020.

73    The applicants submitted that, since the FWA commenced to govern agreement-making in 2010, the agreements between the parties have uninterruptedly provided for an annual pay increase on 1 July each year, with a transitioning arrangement in the 2010 agreement providing for back pay to 1 May 2008. It is asserted that every agreement preserved the continuity of annual increases by providing for back pay.

74    It is not denied by the respondents that teachers were paid in accordance with the increases agreed at each of the nominated dates of an increase even if they were not employed by the time of the operative date. It is asserted that the benefit of the pay increases was an outcome sought on behalf of teachers (including the applicants) as IEUA members which would have flowed to the applicants without argument if they had kept their employment relationship alive and kept them on a par with teachers they worked alongside.

75    The applicants asserted that the historical context and purpose of the clause in question has been to ensure that employees did not lose the continuity of expected annual increases because of the traditional, lengthy bargaining process.

76    This, it was asserted, is an aspect of the industrial context and purpose and also evidences the background of the way the parties have applied the enterprise agreement.

77    The respondents asserted that, as to the industrial context, the “retrospective pay increase” has a practical benefit in that it encourages staff to vote “yes” to the agreement. A “no” vote typically results in the negotiation process restarting and the employees losing the entire “retrospective increase” period. This, it was asserted, can be particularly important where (as here) the employer has invested considerable resources in a protracted enterprise bargaining process. That benefit is achieved through its influence on employees who are entitled to vote.

78    As to the way in which the payments were made historically, the respondents asserted that, while there is evidence as to payments made to teachers who resigned, there is no evidence that a payment was ever made to a person who was dismissed. It was asserted that agreements have not historically been dealt with in the way that the applicants contend. Payments made were more akin to an ex gratia payment – the evidence is that payments have only been made to people who depart on good terms or at least by their own decision rather than those who have been dismissed. Therefore, the industrial context does not, it was submitted, support the applicants’ case because the evidence does not go that far. Nor is it illustrative of the way the parties applied the enterprise agreement.

79    To the extent that the applicants’ submissions rely upon conduct demonstrated in the way in which payments have been treated in the past, the past events do not support (nor detract from) the applicants’ contentions nor do they provide any guide as to the interpretation of the enterprise agreement when considering the “back pay” issue and the rights of ex-employees. The enterprise agreement does not draw any distinction between those who were dismissed and those who resigned or retired. The applicants’ contention must be considered in the context of all the circumstances and the evidence of past experience is not therefore helpful either to the interpretation of the enterprise agreement as to ex-employees or the way in which the parties have operated in the past.

80    To the extent that evidence is available (principally the agreed statement of facts), it can be concluded that each of the enterprise agreements has uninterruptedly provided for an annual pay increase on 1 July each year and by doing so has preserved the continuity of annual increases by providing for a payment calculated by reference to percentage increases agreed on earlier dates which post-date the previous termination date, but pre-date the operative date of the particular enterprise agreement.

81    The interpretation urged by the respondents is consistent with that industrial context.

82    The evidence does not assist to give any guidance as to the position of persons who leave employment (for whatever reason) before the operative date of the enterprise agreement.

STATUTORY CONTEXT

83    Each party made submissions about the relevance of the statute. The enterprise agreement must comply with the requirements of the statute and insofar as the statute covers the ground it is determinative of the way in which the enterprise agreement will operate.

84    The enterprise agreement must work harmoniously with the requirements of the legislation.

85    It is necessary to take into account the statutory context, including the nature of an enterprise agreement.

Retrospective operation

86    One of the issues of divergence between the parties was whether the enterprise agreement operated in a retrospective way. As outlined earlier, the relevant clause provides that, if the agreement specifies an earlier operative date in relation to a particular provision, then that provision shall operate from that date for all applicable employees employed at that earlier date.

87    Originally, the applicants submitted, as common ground, that this provision is valid and effective to retrospectively confer entitlements to pay back to 1 July 2019. The respondents disagreed.

88    Section 54 provides that the enterprise agreement operates from:

(a)    7 days after the agreement is approved; or

(b)    if a later day is specified in the agreement—that later day.

89    The FWA does not allow for the agreement to operate from an earlier date. The two possible dates are seven days after the agreement is approved or any later date specified in the agreement.

90    Moreover, s 51 provides that the enterprise agreement does not impose obligations on a person, nor give a person an entitlement, unless the agreement applies to the person. Amongst other requirements, an enterprise agreement only applies to an employee, employer or employee organisation if the agreement is in operation (s 52(1)(a)).

91    Ultimately, the applicants agreed that “there is no controversy that the liability to make payments or liability for contravention only arises at the point from which EB9 operates, that is, 2 December 2020”. That position is consistent with the requirements of the Act.

92    The respondents’ submitted that the intention of EB9 was that the employer would pay a lump sum figure after the enterprise agreement commenced operation in the nature of a lump sum bonus payable on a certain date.

93    The applicants submitted that the agreement provides for retrospective increases and rejected, as having no basis, the proposition that the salary increase provisions are lump sum payments or bonuses.

94    Bearing in mind the provisions of the legislation, the EB9 agreements cannot provide for an earlier operative date than that which is specified by s 54. Neither party ultimately contended otherwise.

95    This issue was considered by the Fair Work Commission in The Australian Workers’ Union v TAD Pty Ltd T/A Tad Industrial [2016] FWC 1794, where it adopted the position the “[Industrial] Agreement, once approved, did not afford a right to the rates of pay in the agreement from December 2013 and December 2014 to employees whose employment with TAD ended prior to 18 August 2015 because the [Industrial] Agreement did not apply to them” (at [46]).

96    The enterprise agreement must have been intended to impose a fresh obligation to be paid as a lump sum calculated by reference to the wage increases for which the enterprise agreement provides. Until the agreement is finalised, it is not possible to know the extent of the increase. Thus, the precise figure could not be calculated until the enterprise agreement proscribing the increases was made. A payment requirement, other than by way of a lump sum (after the time the figure was able to be calculated and agreed), would be impracticable and impossible to comply with. Moreover, under s 51, the enterprise agreement does not impose obligations nor provide entitlements unless the agreement applies to a person, which only happens if the agreement is in operation (see s 52).

97    The fact that the payment must be by lump sum, after the agreement is operative, strongly supports the intent that the agreement is referable to employees and not ex-employees.

98    The position asserted by the respondents is a sensible approach consistent with the statutory requirements.

The focus in the statutory provisions

99    Pursuant to s 172 of the FWA, the enterprise agreement is about matters including those pertaining to the relationship between an employer that is covered by the agreement and that employer’s employees who are covered by the agreement and how the agreement will operate. The section provides that the employer may make a single enterprise agreement with employees who are employed at the time the agreement is made and who would be covered by the agreement. The focus of s 172 is very much on those people who are employees at the time.

100    When dealing with giving the notice of employee representational rights, s 173 deals with the giving of notice to each employee who will be covered by the enterprise agreement and is employed at the notification time for the enterprise agreement.

101    Section 180 provides that, before an employer requests that employees approve a proposed enterprise agreement by voting for the agreement, the employer must take all reasonable steps to ensure that, during the access period for the agreement, the employees employed at the time who will be covered by the enterprise agreement are given a copy of specified materials. An employer who will be covered by a proposed enterprise agreement may request employees employed at the time who will be covered by the enterprise agreement to approve the agreement. The agreement is made when the majority of those employees who cast a vote approve the agreement.

102    The focus of the legislation is clearly upon those persons employed at the time. A former employee is not included in the process and, as would be expected, has no right to vote.

103    EB9 should be interpreted in a consistent way.

104    This focus supports the conclusion that clause 1.2.3 is intended to apply to persons who are actually employees, but who were also employed at the earlier date.

The nature of enterprise agreements

105    Another factor which is relevant by way of background is the nature of enterprise agreements. The Court in Bianco Walling Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (2020) 275 FCR 385; [2020] FCAFC 50 said (at [60]):

… It is, however, necessary to keep in mind that enterprise agreements made under Pt 2-4 of the FW Act are sui generis. In particular, they are not simply one form of a commercial contract in the conventional sense. In this respect, the statements of the Full Court in Toyota Motor Corporation Australia Ltd v Marmara [2014] FCAFC 84; (2014) 222 FCR 152 are pertinent:

[88]    … Under the FW Act, an enterprise agreement is an agreement in name only. Those who, by s 172(2), are empowered to “make” an enterprise agreement are the employer and “the employees who are employed at the time the agreement is made and who will be covered by the agreement”. A contract lawyer would assume that those persons would be parties to the agreement, and that the assent of all of them would be necessary for the agreement to be “made”. But the lawyer would be wrong on both counts. The FW Act does not identify the employer, or any employee, as a “party” to an enterprise agreement. Further, notwithstanding the specific empowering terms of s 172, it is not necessary for all the employees who are employed at the time an agreement is made and who will be covered by the agreement to assent to the terms of the agreement. Once a majority of those employees have agreed by voting, the agreement must be sent to the Commission for approval and, if approved, thenceforth applies to all the employees in the relevant group, even those who did not agree, and even those, subsequently taken into employment, who were not part of the relevant group at the time the vote was taken under s 182.

[89]    … The effect of the legislation is to empower the employer and the relevant majority of its employees to specify terms which will apply to the employment of all employees in the area of work concerned. The legal effıcacy of those terms will arise under statute, not contract, and, as mentioned above, will be felt also by those who did not agree to them. Someone, such as an employee subsequently taken on, who had nothing to do with the choice of the terms or the making of the agreement, will be exposed to penal consequences under s 50 if he or she should happen to contravene one of the terms. When viewed in this way, it is not diffıcult to share in the perception that an enterprise agreement approved under the FW Act has a legislative character.

(Emphasis added.[in original])

106    As was observed by the Full Court in Toyota Motor Corporation Australia Ltd v Marmara (2014) 222 FCR 152; [2014] FCAFC 84:

    “[t]hose who, by s 172(2) are empowered to ‘make’ an enterprise agreement, are the employer and ‘the employees who are employed at the time the agreement is made and who will be covered by the agreement’”;

    “it is not necessary for all the employees who are employed at the time an agreement is made and who will be covered by the agreement to assent to the terms of the agreement”;

    “[o]nce a majority of those employees have agreed by voting, the agreement must be sent to the FWC for approval and, if approved, thenceforth applies to all employees in the relevant group, even those who did not agree, and even those, subsequently taken into employment, who were not part of the relevant group at the time the vote was taken under s 182”; and

    a person “such as an employee subsequently taken on, who had nothing to do with the choice of the terms or the making of the agreement, will be exposed to penal consequences under s 50 if he or she should happen to contravene one of” them.

107    Of course, there is a balance struck in the way in which the legislation deals with the creation of an enterprise agreement and, in particular, the options available to an employee, or prospective employee, which would ameliorate the exposure to which the judgment notes that employees might be subjected without their agreement.

108    In the case of the new employee, the individual will be aware of the terms of the enterprise agreement and can make the decision whether to accept employment, on those conditions. For those current employees, there is also an option. Pursuant to s 51(1), an enterprise agreement does not impose obligations on a person, and a person does not contravene a term of an enterprise agreement, unless the agreement applies to the person. This only occurs (pursuant to ss 52 and 54) a minimum seven days after the agreement is approved. The existing employee, if not content with the terms of the bargain reached as part of the negotiation bargaining process or is concerned about exposure for a contravention to which the employee might be subject, could resign and, provided this was completed before the enterprise agreement applied to the employee, the employee would not accrue any obligations.

109    The interpretation suggested by the applicants would remove this safeguard provided by the legislation. That is not an outcome which would be intended.

COVERAGE AND AFFILIATION

110    The High Court in ALDI Foods Pty Limited v Shop, Distributive and Allied Employees Association (2017) 262 CLR 593; [2017] HCA 53 (Kiefel CJ, Bell, Keane, Nettle, Gordon and Edelman JJ) discussed the different concepts of coverage and application of an enterprise agreement. The plurality said:

25    … It is evident from these provisions of the Act that an enterprise agreement may “cover” an employee even though it does not yet “apply” to that employee in the sense of imposing obligations on the employee and the employer. An enterprise agreement imposes obligations on employees and employers covered by it only when it applies to such persons. Section 51 of the Act provides that an enterprise agreement does not give a person an entitlement, nor does it impose obligations on a person, unless the agreement “applies” to the person.

26    Section 52 of the Act deals with when an agreement “applies” to an employee. Importantly, ss 52 and 53 expressly indicate that an enterprise agreement may cover an employee when it is not in operation, but it can only apply to an employee when it is in operation.

…

28    Section 53(1) provides that “[a]n enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer.”

29    Section 53(6) provides:

“A reference in this Act to an enterprise agreement covering an employee is a reference to the agreement covering the employee in relation to particular employment.”

(Italics and emphasis in original)

111    The plurality pointed out that, because an employee may be covered by more than one agreement at any one time, s 58(1) of the Act provides that “only one enterprise agreement can apply to an employee at a particular time”. The plurality observed: “That is because only one set of rights and obligations can be in operation in relation to the work actually performed by the employee at that time in relation to particular employment” ([at 30]).

112    The plurality continued (at [34]):

An enterprise agreement comes into operation in the sense of creating rights and obligations between an employer and employees in relation to the work performed under it only after it has been approved by the Commission. After that time the agreement applies to the employers and employees who are covered by it. But before that time, as will be seen, by virtue of s 182(1) of the Act, a non-greenfields enterprise agreement is “made” when a majority of those employees who will be covered by the agreement cast a valid vote to approve the agreement. As will be seen, once the agreement is made in accordance with s 182(1), the agreement is treated by the Act as covering the employers and employees to whom it refers.

113    The applicants submitted that the distinction between coverage an application is critical in understanding the way in which clause 1.2.3 operates. In essence, it was submitted that EB9 applies to an employee if it is in operation and it covers the employee. Coverage of an agreement is left for the agreement to specify (s 53(1)). Sections 52 and 53 contemplate that an enterprise agreement may cover an employee when it is not in operation.

114    It is of course a matter of construction of the enterprise agreement to determine what the agreement provides about the employees covered.

115    The respondents submitted that in relation to both coverage and application the significant criteria for each is employment. Both application and coverage are limited to “employees”. The applicants were not “employees” at critical times such as when the agreements commenced, when they were voted upon and “made” under s 182(1) or even when negotiations concluded.

CONCLUSION

116    The interpretation advanced by the respondents is, in my opinion, the correct interpretation. The ordinary meaning of the words used supports this interpretation. The interpretation is consistent with the industrial context and purpose of the arrangements for increase in wages embodied in the enterprise agreement. Moreover, the interpretation is consistent with the requirements of, and approach taken in, the legislation and also with the characteristics of the statutory arrangements which are in place with respect to enterprise agreements.

Associate:    

Dated:    7 February 2023