Federal Court of Australia

Construction, Forestry, Maritime, Mining and Energy Union v Fremantle Port Authority [2024] FCA 848

ORDERS

THE COURT ORDERS THAT:

1.    The application is dismissed.

2.    The respondent may apply for costs orders on or before 30 August 2024.

3.    Any application by the respondent for costs orders shall be made by filing submissions of no more than five pages specifying the orders sought and the contentions advanced to support the making of those orders, together with any necessary affidavit in support.

4.    Within 14 days of any application for costs orders the applicant may file submissions of no more than five pages in response together with any necessary affidavit.

5.    Subject to further order, the question of costs will be determined on the papers.

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

REASONS FOR JUDGMENT

COLVIN J:

1    Employees of the Fremantle Port Authority who were primarily engaged in bulk materials handling, port operations and maintenance, and in the provision of security, emergency and port services were covered by successive enterprise agreements.

2    The Construction, Forestry, Maritime, Mining and Energy Union claims that for the period between 16 October 2012 and 22 October 2017 the Authority contravened the terms of applicable enterprise agreements by making underpayments to many of its employees. The Union seeks orders for the payment by the Authority of pecuniary penalties and for the payment of statutory compensation to some 124 people who were employees of the Authority during some or all of that time.

3    The remedies are sought by the Union pursuant to s 545 of the Fair Work Act 2009 (Cth) on the basis that it is entitled to seek such relief in relation to the relevant employees by operation of s 540(2). It allows an 'employee organisation' to apply for an order under s 545 in relation to a contravention 'in relation to an employee' only if the employee is affected by the contravention and the organisation is entitled to represent the industrial interests of the employee. The Authority accepts that the Union meets these statutory requirements in respect of each of the relevant employees.

Claims in relation to Selected Employees

4    The parties identified three of the relevant employees in respect of whom it was agreed the Union's claims to orders for compensation would be determined before other claims (Selected Employees). They also agreed that the claims of those three employees will be considered for the period from 16 October 2016 to 22 October 2017, being a period in which each of two enterprise agreements applied for part of the period. These reasons concern the claims by the Union in relation to those Selected Employees for that period of just over a year. From 24 June 2014 it was the Fremantle Ports Operations and Services Enterprise Agreement 2012 (2012 Agreement) that applied. From 19 April 2017 it was the Fremantle Ports Operations and Services Enterprise Agreement 2017 (2017 Agreement) that applied.

5    If the Union's claims as to the Selected Employees are not upheld then it is accepted by the Union that the whole of the Union's claim must be dismissed. If the Union's claims as to the Selected Employees are upheld then it is accepted by the Authority that the claims of all relevant employees must be upheld and it will be necessary to consider at a later time the quantum of the claims for compensation and the claim to pecuniary penalties.

6    The Union's claim concerns the provisions in the two enterprise agreements that allow, by agreement between the Authority and the 'affected employee', the payment of an 'average annualised wage' for a given rostering arrangement. It will be necessary in due course to consider the detail of the enterprise agreements which provide for the payment by agreement of average annualised wages that incorporate payment for hours of work including rostered overtime and applicable shift penalties for that overtime as well as allowances. At this point it is sufficient to note that the enterprise agreements also made separate provision for payment based upon hours worked with loadings and allowances, described by the parties as the 'ordinary wages method'. So, if agreement had not been reached for the payment of an average annualised wage, those ordinary wages provisions applied.

7    At all material times, the relevant employees worked according to a rostering arrangement which involved two days working day shift, followed by two days working night shift, followed by four days off. In consequence, in any fortnight, the working hours of an employee may be 72, 84 or 96 hours plus rostered overtime (as well as any additional unrostered overtime). Therefore, payment according to the ordinary wages method would result in a fortnightly pay packet that fluctuated considerably. In contrast, payment according to the average annualised wage provisions in the enterprise agreements would result in an equal payment each fortnight for work undertaken according to the roster (plus additional payments for unrostered overtime worked in the fortnight). It meant a more even pay check each fortnight. It also resulted in superannuation being paid on the rostered overtime which was not the case under the ordinary wages method. From the perspective of the Authority, it was administratively less complex because calculations were not required to be undertaken for each fortnight for ordinary rostered hours.

The competing claims

8    Put broadly, the Union's claim is that the Authority paid its employees fortnightly based upon an average annualised wages approach in circumstances where such an approach could only be adopted if the employee had made a real, effective and informed choice to be paid in that way rather than by hours worked in the fortnight. On the Union's case it is not enough that employees have agreed to an annualised form of payment. It claims that the employees were not given an opportunity to make any choice between the average annualised wages approach and the ordinary wages method and, consequently, were required to be paid according to the ordinary wages method.

9    As to the application of the average annualised wage provisions, it is the position of the Authority that all that was required was an agreement by the employee to be paid an annual salary, the quantum of which was determined in accordance with the average annualised wage provisions. It says that an agreement of that kind was reached with all relevant employees and, in particular, with each of the Selected Employees. It accepts that if that position is not accepted to be correct then, subject to claims of set-off and estoppel, the employees should have been paid according to the ordinary wages method.

10    The Union accepts that there were fortnights when the payments made to each employee exceeded what was required by the ordinary wages method. Its claim is confined to those fortnights when the payments made by the Authority (on the basis of the average annualised wage approach) were less than the amounts that would have been calculated according to the ordinary wages method.

11    Significantly, the following two propositions are common ground:

(1)    if only the claimed fortnights are taken into account then the Selected Employees would be better off under the ordinary wages method; and

(2)    if all the fortnights in the relevant period are taken into account, then the Selected Employees were paid amounts in excess of the ordinary wages method.

12    Therefore, the claim by the Union depends upon significance being given to the fortnights when the payments were being made. The Union accepts that, viewed on an annualised basis, all employees have been paid a total amount which exceeds what the employees would have been paid had they in fact been remunerated fortnightly by applying the ordinary wages method over the duration of their employment.

13    If the Union's claim that the relevant employees were required to be paid fortnightly according to the ordinary wages method is upheld, then the Authority advances what was described by the parties as a 'set-off' defence as well as an estoppel defence. The set-off defence is based upon a contention that the amounts actually paid to employees that exceeded what was required by the ordinary wages method in those fortnights that are not the subject of claims by the Union were made for the purpose of remunerating the employee for ordinary hours worked plus rostered overtime and so can be set off against the shortfall in the fortnights the subject of the Union's claim. The estoppel defence is to the effect that neither the Union nor the relevant employees can claim that the required agreement that permitted payment of an average annualised wage was not in place.

14    Finally, if the set-off and estoppel defences are not upheld, then the Authority says that no loss has been suffered by any of the relevant employees for the purposes of s 545(2)(b), alternatively that the Court has a discretion whether to order compensation (because of the statutory terms that allow for the Court to 'make any order that it considers appropriate if the court is satisfied that a person has contravened') and it should exercise its discretion against making an order awarding compensation in the circumstances.

Outcome

15    The Union's claim as to the interpretation of the enterprise agreements should not be accepted. Further, each of the Selected Employees agreed to an average annualised wage. On that basis, the claim fails. Had it been necessary to determine the set-off defence then it was a defence that would have been upheld. If the set-off defence was not upheld then it has not been demonstrated that an order awarding compensation to those employees would be justified.

16    It is not necessary to determine the estoppel claims (which give rise to some complexity concerning the nature of the role of the Union in bringing proceedings 'in relation to an employee'). Nor is it necessary to consider the nature and extent of any discretion to decline to award compensation in circumstances where it has been demonstrated that loss has been suffered by an employee in relation to which an employee organisation has brought a claim. They are matters best determined in a case where their resolution is necessary in order to adjudicate the claim.

17    It follows that the Union's claim must be dismissed. The Authority sought an opportunity to consider whether to seek an order for costs in those circumstances. There should be liberty reserved to the Authority to bring any such application.

The Issues

18    As has been indicated, the Union advanced the claim on the basis that it had a statutory right to itself bring the claim for the benefit of an agreed list of affected employees. It was a status that assumed significance in the context of certain aspects of the contentions advanced by the Union, particularly as to the estoppel defence advanced by the Authority. The affected employees are not themselves parties to the proceedings. Further, as has been explained, the case advanced by the Union at the hearing concerned only the three Selected Employees (it being common ground as between the Union and the Authority that determination of the case as to those three employees would flow through to all of the employees the subject of the proceedings).

19    The parties formulated agreed issues and presented their submissions by reference to those issues. However, the hearing did not proceed as a trial of issues. Rather it proceeded on the basis that I was determining all issues in the proceedings brought by the Union other than the quantum of any claim that might be established and the question of penalties, albeit that the determination was to be undertaken based only on the circumstances of the Selected Employees for the period from 16 October 2016 to 22 October 2017.

20    The following issues arise:

(1)    On the proper construction of the provisions of the two enterprise agreements, in what circumstances will payment by the Authority to an employee of an average annualised wage as provided for by the enterprise agreements conform to the requirements of the enterprise agreements?

(2)    Did the payments made to each of the Selected Employees conform to the requirements of the enterprise agreements?

(3)    If no to (2), is there an estoppel of the kind alleged by the Authority that is a defence to the Union's claim?

(4)    If no to (2) and (3), can the Authority defend the Union's claims by setting off the payments it made in fortnights where the amounts paid to a Selected Employee exceeded what was required by the ordinary wages method against the shortfall in amounts paid in fortnights where the amounts paid were less than what was required by the ordinary wages method?

(5)    If no to (2) and (3) and no to (4), did the Selected Employees suffer a loss for which compensation may be ordered under s 545(2)(b) of the Fair Work Act?

(6)    If no to (2) and (3) and no to (4) and yes to (5), does the Court have a discretion under s 545(1) of the Fair Work Act to decline to order the payment of compensation and, if so, should the Court exercise that discretion by declining to order any compensation?

21    I will deal with the issues in the order stated, save that I will deal with Issue (3) (as to estoppel) after dealing with all other issues.

Issue (1): Proper construction of the two enterprise agreements

22    I will begin by considering the relevant principles to be applied. I will then explain the terms of the 2012 Agreement. I will then deal with the one respect in which the 2017 Agreement is expressed in materially different terms to the 2012 Agreement. Finally, I will express my conclusions concerning the construction issues raised by the parties' competing contentions.

Relevant principles of construction

23    The principles that govern the construction of 'industrial instruments' made under the Fair Work Act, including modern awards and enterprise agreements, are generally well established and interchangeable: see, for example, Transport Workers' Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148 at [40] (Siopis, Buchanan and Flick JJ) (judicial commentary as to the construction of awards is useful); One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77; (2018) 262 FCR 527 at [189] (Bromberg, Katzmann and O'Callaghan JJ) (principles the same for each); and Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208 at 212 (Northrop J) (principles of award construction 'have even stronger application to certified agreements'). This is the case even though the interpretation of enterprise agreements, unlike that of awards, is not subject to the Acts Interpretation Act 1901 (Cth): see Polan v Goulburn Valley Health [2016] FCA 440 at [34] (Mortimer J, as the Chief Justice then was) citing Toyota Motor Corporation Australia Limited v Marmara [2014] FCAFC 84; (2014) 222 FCR 152 at [68] (Jessup, Tracey and Perram JJ).

24    Recently, I dealt with the principles to be applied in interpreting a modern award in Wilkinson v Wilson Security Pty Ltd (No 3) [2024] FCA 705 at [16]-[26]. As was there noted, narrow or pedantic approaches to interpretation are misplaced. This reflects the character of awards as instruments that speak to the everyday circumstances of employment and are to be understood by employers and employees in the range of circumstances to which the instrument applies. Technical or obscure meanings are unlikely.

25    The Court's interpretation of an enterprise agreement 'turns upon the language of the particular agreement, understood in light of its industrial context and purpose': Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10; (2005) 222 CLR 241 at [2] (Gleeson CJ and McHugh J). It may also be helpful to consider the purpose and objects of the Fair Work Act when interpreting an enterprise agreement's terms. It has been said that the Court may presume that an agreement is intended to 'operate consistently with' the Fair Work Act: Construction, Forestry, Maritime, Mining and Energy Union v Hay Point Services Pty Ltd [2018] FCAFC 182 at [17] (Reeves, Bromberg and O'Callaghan JJ).

26    It was not suggested that there were any matters of context that were relevant to construction of the enterprise agreements in the present case. Although there was reference in submissions to the terms of the first enterprise agreement which provided for an average annualised wage, ultimately it was accepted that no case had been advanced that its terms were relevant contextual materials for the purposes of construing the 2012 Agreement or the 2017 Agreement.

27    In the present case, it is also necessary to have regard to the principles for construing contracts because issues arise as to what was agreed between the Authority and each of the Selected Employees. These matters are addressed when dealing with Issue (2).

The 2012 Agreement

28    The 2012 Agreement was approved by the Fair Work Commission to operate from 13 February 2013 to 19 July 2016. It was approved on the basis that the Maritime Union of Australia was a bargaining representative for the agreement and was entitled to represent the industrial interests of the employees in accordance with s 176(1)(b) of the Fair Work Act. The Maritime Union of Australia was covered by the agreement pursuant to s 183 of the Fair Work Act. It replaced an earlier enterprise agreement. The Union incorporates the Maritime Union of Australia.

29    The 2012 Agreement had a classification structure and provided for base rates of pay for each of 14 different grades, to apply at different times over the term of the agreement: cl 7(b). It allowed for limited salary packaging: cl 7(b) and (c). It provided for employees to be 'employed as a weekly or a casual employee': cl 13(a). In context, it was apparent that the base rates for pay were weekly rates. There were provisions for a loading of 25% on the base rate for casual employees (who were not entitled to annual leave or the benefit of the other leave provisions in the agreement): cl 13(b). Relevantly for present purposes, as to 'an Average Annualised Wage' (being an undefined term), the agreement included the following provision in respect of casual employees:

Notwithstanding the above, casual employees engaged in positions where an Average Annualised Wage applies will receive a loading of 25% on the Average Annualised Wage regardless of the period or shift being worked.

30    The ordinary hours of work were specified: cl 15(a). They were 35 hours per week with normal hours being between 7.30 am and 3.00 pm with a half hour unpaid meal break. There was provision for the ordinary hours to be worked according to a 'regular shift roster': cl 15(b)(i). There were loadings for shifts worked on particular days and for particular shifts (day/afternoon/night) as specified in the agreement: cl 15(b)(ii). There were also provisions as to rest periods and breaks (cl 16) and overtime (cl 17).

31    It was possible for the Authority to enter into an 'individual flexibility arrangement' to vary the terms of the agreement as they applied to the employee provided it met certain specified requirements: cl 18. It expressly required any such arrangement to be 'genuinely agreed to' by the Authority and the employee (reflecting the terms of s 203(3) of the Fair Work Act). It also provided for termination of any such agreement on notice. There were other express requirements that had to be met in respect of any such arrangement.

32    The provisions just described contemplated payment according to the ordinary wages method. Payment in any fortnight made according to those provisions would reflect the actual hours worked during the fortnight.

33    Then there was the separate provision for the 'Average Annualised Wage' that is in issue in these proceedings: cl 20. It was expressed in the following terms:

(a)    By agreement between the employer and an affected employee an Average Annualised Wage may apply to a given rostering arrangement.

(b)    The average annualised wages as agreed incorporates, where applicable:

•    hours of work including regular and/or averaged overtime;

•    all allowances;

•    shift roster and applicable shift penalties.

(c)    The average annualised wage has been calculated to take into account the provisions to apply for Annual Leave and Long Service Leave and shall, notwithstanding any other provision of this Agreement, be payable at the appropriate weekly rate to periods of Annual Leave and Long Service Leave.

(d)    Notwithstanding Clause 17 - Overtime and Clause 21- Callout/Callback, where Average Annualised Wages have been agreed the hourly rates applicable for overtime and callouts shall be as follows:

•    at the rate of one and one quarter (1.25) times the normal average hourly rate applicable for all shifts other than Saturday night shifts, Sunday day and night shifts and shifts worked on a public holiday.

•    at the rate of one and one half (1.5) times the normal average hourly rate for all Saturday night shifts, Sunday day and night shifts and shifts worked on a public holiday.

The average hourly rate will apply without application of any penalty loadings.

Note:    For the purpose of this clause, a public holiday shall mean the a 24 hour period commencing from the start of the rostered day shift for the public holiday and concluding at the end of the night shift ending on the day after the public holiday.

(e)    The average annualised wage shall apply for the purpose of definition of superannuation contributions and entitlements.

(f)    Sick leave, annual leave and long service leave as prescribed in this Agreement shall be converted to an hourly entitlement to reflect the rostered hours applicable to a given average annualised wage and shall be debited based on the rostered hours that would have been worked but for the leave been taken.

(g)    The rate of pay for workers' compensation shall be the rate as provided for by the Western Australian Workers Compensation and Injury Management Act 1981.

(h)    Allowances including Consolidated Allowance, Trade Skills Allowance, Port Services Allowance and Kwinana Bulk Terminal Allowance shall not be deemed to be a component of the Average Annualised Wage for the purpose of payment of sick leave on retirement or redundancy in accordance with Clause 23 - Personal Leave Sick Leave of this Agreement.

(i)    The operational requirements of the employer may change from time to time and in such instances there shall be consultation with affected parties.

(j)    Notice of intention to change any roster or operating condition which provides a component of the average annualised wage shall be one (1) month or less if the parties so agree.

(k)    In instances where the rosters or operational requirements are so altered, the average annualised wage shall be recalculated and adjusted in accordance with the relevant provisions of this Agreement.

34    Of particular significance for present purposes is cl 20(a) which provides that an 'Average Annualised Wage' may apply '[b]y agreement between the employer and an affected employee'. It is common ground that this required the existence of an agreement that was an enforceable contract at law. It may be noted that unlike the terms of cl 18 in relation to individual flexibility agreements, there was no express requirement for the arrangement to be genuinely agreed nor any other requirements as to the nature of the agreement. Specifically, there was no express reference to a choice between an average annualised wage and the calculation of fortnightly payments according to other provisions of the enterprise agreement (that is, the ordinary wages method). Rather, cl 20(a) referred only to agreement to the Average Annualised Wage.

35    Although the term 'Average Annualised Wage' was capitalised in cl 20(a), it was not defined. Elsewhere the term was used without capitalisation. As is explained below, the terminology in cl 20 as a whole indicates that the term is used to refer to an agreed form of annual payment that has been calculated in the manner described in cl 20. Significantly, the calculation provisions require the average annualised wage to include payments that would otherwise apply if fortnightly payments were determined on the basis of the ordinary wages method. As also explained below, audited calculated amounts are specified elsewhere in the enterprise agreement. Therefore, the term is being used to refer in a descriptive way to a particular calculation of a rolled-up amount which averages the payments that would otherwise be paid equally for hours worked (as well as forming the basis for calculating each additional hour above ordinary rostered hours).

36    In that regard, cl 20(c) referred to the 'average annualised wage' (an expression not there capitalised) as having been calculated in a way that takes into account annual leave entitlements and long service leave entitlements so that it would apply to payments to be made during those periods (as distinct from base pay entitlements). Also, in cl 20(d) there was provision for particular overtime and callout rates to apply to 'overtime and callouts'. They applied to 'the normal average hourly rate applicable for all shifts'.

37    Significantly, the whole of the average annualised wage applied for the purpose of determining 'superannuation contribution and entitlements': cl 20(e). There was also an agreed mechanism for determining sick leave, annual leave and long service leave rates by reference to 'the average annualised wage': cl 20(f). As well, the position in relation to various allowances to be paid in addition to the average annualised wage was made clear: cl 20(h). Those allowances were provided for under cl 21.

38    Returning to cl 20(a), it provided that by an agreement between the Authority and an employee an Average Annualised Wage may apply 'to a given rostering arrangement'. That is to say, the annual amount was one that applied to a particular and known rostering arrangement. Regard to the terms of cl 20(b) and (c) reveals that the calculation of that amount by reference to that known rostering arrangement would include rostered hours of work (including regular overtime), all allowances and shift penalties. The nature of such a calculation was that it produced an annual amount which was amendable to equal weekly division and, over the course of a year for a known rostering arrangement, would result in payment that was equivalent to that which would be paid if fortnightly payments were made on the basis of the hours worked according to the roster as otherwise provided for by the terms of the enterprise agreement. It would also result in the additional benefit of superannuation being paid on the whole of the amount paid.

39    It was also the case, as has been explained, that the terms of cl 20 provided for additional amounts to be calculated according to the terms of cl 20 (such as overtime in addition to rostered overtime and certain allowances), but that does not detract from the fact that the payment for the ordinary rostered hours was determined by an annual amount, not by individual fortnightly calculations according to the hours worked in that fortnight. Regard to the terms of cl 53 (see below) emphasises the way in which the annual amount was used to derive equal weekly (and hourly) amounts to be used for the purposes of the average annualised wage provisions in cl 20.

40    In short, the average annualised wage was a comprehensive mechanism by which many of the provisions in the agreement were replaced by calculations to be made based upon an agreed 'average annualised wage'. The clause operated to the exclusion of other provisions which used the base rate and overtime rates which varied according to hours worked in any particular rostered shift. It did not contemplate periods of work when the average annualised wage applied and periods when the other provisions in the enterprise agreement applied. Once agreed, all payments were to be made on the average annualised basis. Those payments were calculated in a way that meant they covered, over time, the amounts that would otherwise have been paid based upon hours worked in each pay period.

41    As to termination or variation of any agreement for the purposes of cl 20, the terms of the clause contemplated the possibility that there may be a change to the 'given rostering arrangement'. Clause 20(i),(j) and (k) provided for change to the roster or operating conditions with consequent adjustment by way of recalculation of the average annualised wage.

42    Turning then to the balance of the provisions of the enterprise agreement, although wages could be calculated weekly based upon hours worked or according to the average annualised wage provisions, in either case wages were required to be paid fortnightly: cl 22. Of some relevance to the Union's case in answer to the Authority's set-off claims are the agreed terms in relation to errors which were:

Any error in an employee's pay shall be adjusted as soon as practicable following advice of the error. In the case of hardship every effort shall be made to ensure adjustments are made without delay.

Adjustments to overpayments will not be made without consultation with the employee involved.

43    There were detailed provisions as to when leave may be taken: cl 23. There was agreement as to the provision of appropriate clothing and uniform: cl 24.

44    Thereafter, the enterprise agreement included an additional Part III. The purpose of that part was to deal with what had been agreed concerning rostering arrangements. It was introduced with the following explanation:

Purpose

The rostering arrangements are designed to maximise cost-effective services to customers while providing a safe system [of] work for employees.

Review

In order to maintain excellence in services and to respond to changing circumstances and market share these rostering arrangements will be reviewed from time to time.

Any review will be conducted with input from employees and the relevant consultative group.

Resulting changes to rosters and operations will be carried out in accordance with Clause 20 - Average Annualised Wage.

The parties are committed to pursue all opportunities to adopt world's best practices through modern technology and continuous improvements to all aspects of the employer's operations.

Levels of staffing and skills matrices, equipment and methods of operation may be varied from time to time to reflect changes consistent with safe work practices, improved technology, and new types of machinery or systems or for any other reason.

(emphasis added)

45    The emphasised language in the passage quoted above reveals the link between the concept of the average annualised wage in cl 20 and the rostering arrangements. That is to say, changes to rostering would have consequences for the average annualised wage.

46    In Part III there were details about rostering and work arrangements as well as responsibilities for particular classifications. Importantly for present purposes, for each classification there were specified annual amounts depending upon where the work was undertaken (outer harbour or inner harbour) and whether the role was for 'daywork' or particular shift rosters or leading hand or other roles.

47    Finally, the enterprise agreement included a schedule (cl 53) which was headed 'Rates of Pay Combined Schedule'. The schedule specified 'Annual', 'Weekly' and 'Hourly' rates for various positions for each of the years covered by the enterprise agreement. The weekly and hourly rates were a function of the annual rates. The amounts included in the schedule corresponded with rates that had been specified in the preceding provisions of Part III.

48    All these provisions as to the annual amounts contemplated that the same arrangement for remuneration would apply irrespective of the actual times worked in any week according to the usual roster (as it applied to the two weeks the subject of any particular pay period). Only if additional hours above the usual roster were worked in any fortnight would there have been payment above the amounts determined according to the average annualised wage amounts.

49    The terms of cl 53 must have pertained to the 'given rostering arrangement' at the time of the approval of the enterprise agreement by the Fair Work Commission, and as detailed in the provisions of Part III. However, as has already been noted, cl 20 contemplated the possibility of a change to those rostering arrangements with a consequent adjustment to the average annualised wage 'in accordance with the relevant provisions of [the] Agreement'.

50    Somewhat oddly, cl 53 began:

This schedule is a reflection of annualised rates appearing in the main body of this Agreement that have been audited and found correct. As a result, any discrepancy will be determined in favour of the rates in the main body of this Agreement.

51    The statement that the rates in the schedule have been 'audited and found correct' is language that points to an intention that they will apply. However, the second sentence states that any discrepancy will be determined in favour of the rates in the main body of the enterprise agreement. This appears to be a reference to the annual amounts set out in the provisions of Part III which appear after cl 20, rather than substitute average annualised wage calculations built up by reference to the base rates and overtime for the hours worked including regular and/or averaged overtime and all allowances and shift roster and applicable shift penalties (to apply the language of cl 20(b)).

52    It is not necessary to undertake any assessment as to whether there is any material difference because none was contended for by the Union and it was accepted that if the average annualised wage provision applied, then there had been payment in full.

The 2017 Agreement

53    Noting that the applicable rates were increased over those in the 2012 Agreement, for present purposes (save for the one matter noted below) the 2017 Agreement was in the same terms as the 2012 Agreement. The difference was that there were no annual rates of pay included in the body of Part III of the agreement for the various roles, locations and types of shifts covered by the schedule included in cl 53. Instead, each of the provisions in Part III of the agreement referred to cl 53 for the 'relevant rates of pay'. Again, it is not necessary to consider whether the difference between the terms of the two enterprise agreements had any significance because of the acceptance that there has been payment in full if the average annualised wage provision applied.

The competing contentions as to proper construction of cl 20

54    The Union claimed that the contracts of employment entered into between the Authority and each of the Selected Employees could not be an agreement for the purposes of cl 20 of the enterprise agreements. The Union contended that cl 20 gave the Authority and each employee a choice to opt out of the ordinary wages method of payment. Therefore, an agreement for the purposes of cl 20 had to be an informed choice to be paid each fortnight based upon an average annualised wage rather than hours worked in that fortnight.

55    Further, there was, on the Union's case, a difference between agreeing to be employed by the Authority and making an agreement for the purposes of cl 20. It contended that the agreement to be employed could not operate as an agreement for the purposes of cl 20 (or did not so operate given the terms in which the relevant contracts of employment were expressed). It said that by reason of the reference in cl 20(a) to an agreement between the Authority and 'an affected employee', there could be no agreement for the purposes of cl 20(a) unless and until the person concerned was an employee of the Authority. That is to say, the person first had to be employed on the basis of payment according to ordinary hours and only then could the person (now employee) agree to an average annualised wage.

56    The Union also maintained that the terms of the applicable enterprise agreement were not to form part of the surrounding circumstances in which to construe any agreement which was said to operate for the purposes of cl 20. Rather, the terms of cl 20 were only relevant to construction if both parties actually knew of its terms. It claimed that the Authority apparently knew of those terms but the employees did not.

57    The Authority claimed that provided there was an agreement 'at general law' to be paid an annual amount then there was no additional requirement to the effect that the employee must have been afforded 'a real choice' or must be shown to have made a fully informed 'election' to be paid according to cl 20. Also, on the Authority's case, the 'agreement' for the purposes of cl 20 could be formed as part of the contract by which the employee came to be employed by the Authority.

58    Further, on the Authority's case, it did not matter whether the employee was aware of the terms of cl 20 or the concept of an average annualised wage. Rather, it was sufficient if there was agreement between the employee and the Authority for payment of an amount derived from an agreed annual salary that was sufficient to cover the amount determined according to the average annualised wage provisions in cl 20. That is to say, there could be an agreement of a kind that contemplated a payment that would meet the description of an average annualised payment rather than payment by hours worked in each pay period and that would be sufficient for the arrangements in cl 20 of each of the enterprise agreements to apply. As to surrounding circumstances, the Authority contended that the terms of the relevant enterprise agreement in existence at the time that an agreement was made with an employee formed part of the context in which the agreement was to be construed. That was so, on the Authority's case, even if the terms of the enterprise agreement were not known to the employee, or if known were not adverted to by the employee.

Proper construction of cl 20

59    As both parties approached the issue on the basis that an agreement according to contract principles was required for the purposes of cl 20, I will do the same.

60    I can see no reason why the agreement contemplated by cl 20(a) could not be concluded as part of the terms of a contract recording the terms of employment of an employee. Indeed, it would be expected to be a matter to be addressed by any such agreement if the parties contemplated a regular fortnightly payment derived from an agreed annual amount from the outset. Nor is it the case that there must be some separate and identifiable dealing between the parties by which the employee is presented with an overt choice as to whether to be paid according to the hours worked in each fortnight by applying the ordinary wages method provided for by the general provisions of the enterprise agreement or by a fortnightly amount derived from an agreed annual amount according to the average annualised wage provisions of cl 20.

61    There is simply no language in the enterprise agreements to support the Union's position on these matters. It does not refer to the making of a choice or election. All that is required by the terms of cl 20 is agreement between the Authority and the employee to apply an average annualised wage. Clause 20 may be contrasted with cl 18 which has detailed provisions as to the quality of consensus required and the form and circumstances of the agreement. The absence of any embellishment of the nature and quality of agreement required by cl 20 is stark when compared to cl 18. Likewise, there is no requirement that the employee agree in terms to an 'average annualised wage'.

62    It is sufficient if the terms of the contract of employment between the Authority and the employee, on their proper construction, provide for an annual amount that is to be paid in equal instalments that is sufficient to cover the amount determined in accordance with the terms of cl 20 (which requires only that the employee's position and rostering arrangement be known). This reflects the terms of Part III of the 2012 Agreement and the 2017 Agreement. They identify for each position, the applicable rostering arrangement and the annual amount for the average annualised wage.

63    Further, there is no purpose evident from the terms of the enterprise agreements as a whole that would lead to a different conclusion. The provision is patently beneficial to the employee because it requires the payment of all amounts that would be payable on an annualised basis if the employee was paid fortnightly in accordance with the terms of the enterprise agreement based upon hours worked. It delivers the same total payment with the additional benefits of regular predictable payments as well as requiring superannuation to be paid on the full amount. On the evidence, it was an outcome that the Union had pursued in the interests of its members. The Union offered no suggestion as to why there may be some need to ensure that an employee who agreed to the additional benefits of the average annualised wage was protected by ensuring that there was some overt and separate opportunity to make a choice of the kind it submitted was required.

64    It may be accepted that there were administrative benefits to the Authority in paying its employees based upon the average annualised wage. However, there was no financial or other detriment to an employee that flowed from being paid on that basis. On the contrary, it meant that the employee received additional superannuation benefits. The Union pointed to no reason why, having regard to the nature of the average annualised wage (compared to the nature and level of payments that would otherwise be paid) there was some need for an informed choice in order to protect the interests of the employees.

65    It may also be accepted that there was asymmetry of knowledge as between the employee and the Authority when it came to undertaking the calculations to ensure that the average annualised wage met the requirements of cl 20. However, that point has no significance for construction purposes because it is common ground that payment of the average annualised wage (properly calculated) will result in an employee being paid the same as under the ordinary wages approach. That is to say, there is no computation required in order to compare the financial benefit of one method of payment as against the other. As has been explained, the whole basis for the average annualised payment is to calculate an amount that would be equivalent to payment according to ordinary hours with the benefit of additional superannuation. Further, the issue of calculation is addressed by the terms of the enterprise agreements which include in cl 53 the schedule amounts which specify the annual amount for each position and rostering arrangement and identify those amounts as having been audited.

66    Therefore, the submissions for the Union to the effect that the required agreement was one which involved a real, effective and informed choice of an average annualised wage rather than payment based upon hours worked in each pay period pursuant to the 'ordinary wages method' should be rejected.

67    In addition, the use of the capitalised term 'Average Annualised Wage' in cl 20(a) is to be contrasted with the reference to 'average annualised wage as agreed' in cl 20(b). As has been mentioned the term is not defined. The capitalisation in cl 20(a) is not adopted with any consistency. Indeed, it is the non-capitalised form that is used more often. Importantly, it is the non-capitalised form that is used in cl 20(i), (j) and (k) which deal with the way in which an average annualised wage is to be recalculated and adjusted if there is a change to the rostering arrangements.

68    In those circumstances, the words 'average annualised wage' are to be construed according to the general principles I have described above. Given the terms of cl 20, it is a phrase which refers to an amount which 'incorporates' the matters stated in cl 20(b) and which is applied in the manner described in the balance of the clause. It is linked to a given rostering arrangement, but may be changed to cater for a different rostering arrangement.

69    Further, it is an amount which is 'annualised'. As the references to annual amounts in the balance of the enterprise agreements show, it is required to be an amount that applies to a given rostering arrangement if applied over a whole year and an amount which 'incorporates' all of the hours of work (including overtime under the roster), allowances and shift penalties for the whole year, such that an average of that amount can be paid in each fortnightly pay period.

70    Therefore, an agreement as to an annual amount which is to be paid equally in each pay period and which covers the amounts specified in cl 20(b) for a particular rostering arrangement would be an agreement to pay an 'average annualised wage' as described in the enterprise agreement. It would not matter that the parties had not identified that annual amount, in terms, as an average annualised wage. It is not necessary for the agreement to be reached on the express or implied basis that it is an agreement made for the purposes of cl 20 or that it be identified or characterised by the parties as such. Provided that agreement is reached between the Authority and the employee for the payment of an annual amount by equal payments in each pay period and those payments are to cover each of the matters listed in cl 20(b) for a particular rostering arrangement, then it will be an agreement for the purposes of cl 20.

71    Of course, the specified annual amount must be sufficient to 'incorporate' all the amounts described in cl 20(b) as those amounts apply to the employee's classification. An annual amount which is insufficient to include all those amounts, based upon the given rostering arrangement for a whole year when paid in equal instalments for each pay period, will not be an average annualised wage. However, that will be because it is insufficient in amount not because it has not been expressly derived by a calculation undertaken by the parties on the conceptual basis specified in cl 20(b) (or by reference to the amounts specified in the table in cl 53).

72    As to the claim that the reference to 'an affected employee' means that the agreement has to be made after a contract of employment has been concluded, I do not accept that the terminology used manifests an intention to that effect. An agreement made as part of a contract of employment will be likely to speak prospectively. Many of its terms will operate when the term of employment commences. The terms that affect the person as an employee will be part of an agreement between the Authority and an 'affected employee' even though they were agreed before the employment relationship commenced. The Union's construction would also mean that an employee would be exposed to the prospect of being paid according to hours worked without the additional superannuation if the Authority did not agree once the terms of employment was concluded. Finally, as has been explained, there is no evident purpose that would be served by such a construction given the nature of the average annualised payment. That is to say, there is no reason why an employee would need to first be employed before being able to agree to an average annualised wage.

Issue (2): Conformance to the requirements of the enterprise agreements

73    The Authority claimed that payment to the Selected Employees conformed to the requirements of the enterprise agreements because they had each agreed to be paid an annual amount rather than an amount to be determined according to the provisions that would apply if there was no agreement to the average annualised wage. That is to say, the Authority's case was that an employment contract agreement which provided for an employee to be paid a sufficient annual wage took effect for the purposes of the enterprise agreements as an agreement that an average annualised wage would apply for the purposes of cl 20.

74    The Union claimed that in order to be an agreement for the purposes of cl 20(a) there had to be an agreement in terms between the Authority and the Union to an average annualised wage. That is to say it had to advert expressly to the concept as used in the enterprise agreements and involve a choice not to be paid according to the ordinary wages method. For reasons that have been given, the Union's case imposed requirements that did not apply on a proper construction of the enterprise agreements. What was required was an agreement by the employee to remuneration on the basis of an annual amount for an identified position and rostering arrangement. Payment in accordance with an agreed annual amount for a particular rostering arrangement that was equal to or exceeded the average annualised wage for the relevant classification under the enterprise agreement conformed to its terms.

75    There was a logical difficulty for the Union's position. In effect, its case was that the specification of an annual amount to be paid to an employee might result in the employee being entitled not to equal instalments of the annual amount in each pay period but rather to payments calculated according to the weekly rostered time actually worked. It ignored the fact that what was required if the provisions of the enterprise agreement other than cl 20 were to be applied was that there needed to be a specified weekly base rate or no agreement as to any rate at all so that the ordinary wages provisions of the enterprise agreement would apply. It was by no means clear how a weekly base rate of pay was to be derived from the terms of an agreement which specified only an agreed annual rate without inferring that the parties intended to reverse engineer in some way a weekly base rate from an annual amount which had been calculated by using the average annualised wage approach in the enterprise agreement. If that were the case, then surely the annual amount was more likely to be the specification of an amount on the basis that the average annualised wage payment was to apply.

76    In short, the specification of an annual amount of pay (being at or above the annual amount that would apply if there was agreement to the average annualised way) would be a most obscure way of manifesting an intention that the ordinary wages method was to be used in calculating weekly pay entitlements.

77    In addition, the Union's case also ignored the possibility that an annual amount might be agreed between the Authority and the employee that was above the rate of pay specified in the schedule. In that event, the annual figure could not be converted to a base rate of the kind provided for by the ordinary wage provisions of the enterprise agreement. In such a case, I see no reason why the agreement in the employment contract to the agreed annual salary could not operate as an agreement for the purposes of the application of the average annualised wage provisions of cl 20.

78    The reasoning just described does not depend upon the relevant contracts of employment being construed on the basis that their context includes the terms of the enterprise agreement, particularly cl 20. Rather, it rests upon a consideration of whether an agreement in a contract of employment to pay an annual salary for a particular rostering arrangement would be an agreement for the purposes of cl 20 of the enterprise agreement. Accordingly, in what follows, I consider what was provided for by the terms of each of the relevant contracts of employment on the basis that the terms of the enterprise agreement are not part of the context. I then deal separately at the end with the competing contentions concerning whether that is a matter that should be part of the context.

79    For the following reasons, there was an agreement with each of the Selected Employees that their pay would be determined by reference to an agreed annual amount for a specified position and rostering arrangement. In consequence, they each agreed to being paid an average annualised wage. In that regard, as I have noted, the Union accepted that once there was an agreement to an average annualised wage by an employee then that agreement continued to apply under successive enterprise agreements. Before dealing with the position of each of the Selected Employees, I address first the relevance of the fact that there were successive enterprise agreements and the relevance of that fact for whether there had been an agreement made for the purposes of the average annualised wage provisions of each of the 2012 Agreement and the 2017 Agreement (being the agreements that are relevant for present purposes).

Once made, the requisite agreement continued to apply to successive enterprise agreements

80    In the course of closing submissions, senior counsel for the Union confirmed that the Union did not put a case that there needed to be a separate or fresh agreement after each enterprise agreement in order for the average annualised wage provisions of the enterprise agreements to apply. That is to say, once made, the agreement to an average annualised wage continued to apply even though a new enterprise agreement came into effect.

81    At the time senior counsel gave that confirmation, the Union's case as to what was required in order for the average annualised wage provisions to apply to a particular employee was that there needed to be an agreement in the sense of an informed choice referable to the terms of the enterprise agreement and that it could not form part of the agreement by which the relevant employee was employed. For reasons that have been given, I have not accepted that aspect of the Union's case (which concerned the proper construction of the provisions of the enterprise agreements). However, the logic of the concession that an agreement to an average annualised wage, once made, continues to operate is unaffected by that conclusion. It is a conclusion that I would have reached in any event. That is to say, an agreement made between the Authority and an employee for the purposes of the average annualised wage provisions would continue to have effect as an agreement of that character (without the need for a fresh agreement) where the average annualised wage provisions continued to pertain under successive enterprise agreements.

82    In that regard, it was an agreed fact that there was an enterprise agreement that was in operation before the 2012 Agreement and that it was in operation for the period from 2 June 2010 to 12 February 2013 inclusive (2010 Agreement). The 2010 Agreement also contained an average annualised wage provision substantially in the same terms as the provision in each of the 2012 Agreement and the 2017 Agreement. It included the following terms:

By agreement between the employer and an affected employee an Average Annualised Wage may apply to a given rostering arrangement.

The average annualised wages as agreed incorporates, where applicable:

•    hours of work including regular and/or averaged overtime;

•    all allowances;

•    shift roster and applicable shift penalties; and

•    availability and on call requirements.

The average annualised wage has been calculated to take into account the provisions to apply for Annual Leave and Long Service Leave and shall be payable at the appropriate weekly rate to periods of Annual Leave and Long Service Leave.

83    Indeed, there was evidence that the concept of an average annualised wage had first been introduced in 1995.

84    Therefore, an agreement may have been made before the 2012 Agreement between the Authority and an employee that 'an Average Annualised Wage may apply to a given rostering arrangement'. If so, as was accepted by senior counsel for the Union, it would not be necessary for a new agreement to be made when the 2012 Agreement commenced operation. Rather, the agreement as to the manner of remuneration made during the currency of the 2010 Agreement would continue to apply (unless and until it was brought to an end). The Union's case appeared to be that once agreement had been reached with an employee for payment according to the average annualised wage provisions then that agreement could only be brought to an end by a process of changing the enterprise agreement. I do not see why any such agreement could not be brought to an end by the parties (that is the Authority and the employee). However, it is not necessary to resolve that aspect for present purposes.

Mr David Andrzejeski

85    After undertaking work at Fremantle Port for a labour hire firm, Mr Andrzejeski responded to a job advertisement for a role as a mechanical fitter working day shift for the Authority. The advertisement specified an annual salary range as well as an annual trade skill allowance of $7,500. The additional amount was identified as a temporary additional payment to respond to market conditions. Mr Andrzejeski attended an interview. He accepted that from what he was told in the interview that he understood that the annual salary that was being offered was set by the terms of an applicable enterprise agreement. I infer that things were said in the interview that made clear that the annual salary offered was referable to the enterprise agreement.

86    Mr Andrzejeski accepted a written offer of employment dated 21 January 2008. Relevantly for present purposes, written terms to the following effect were included:

(1)    the conditions of his contract of employment would be covered under the enterprise agreement;

(2)    his employment would be as a mechanical fitter (daywork) for the Outer Harbour and would be at 'a Grade 5b classification';

(3)    he would be eligible for superannuation as a member of the 'GESB Super scheme with employer contribution at 9%';

(4)    there would be a 'Total Employment Cost (TEC)' of $73,122 plus eligibility to a bonus scheme;

(5)    the TEC included a 'Salary' of $60,204 and provision of superannuation being 9% of that amount;

(6)    the TEC included 'a Trades Skills Allowance of $7,500 per annum' which was a temporary allowance being paid to remain competitive with market conditions that '[did] not form part of the annualised salary' (emphasis added) and would not attract additional superannuation or cessation of entitlement benefits.

87    The offer was headed 'Mechanical Fitter (Daywork) - Outer Harbour - Fremantle Ports'. It described the offer as being for the position of 'Maintenance Fitter - Daywork'. I infer, as would any reasonable person reading the terms of the offer, that the offer was for daywork according to the hours of work and rostering arrangements that then pertained for work on the Outer Harbour.

88    In cross-examination, Mr Andrzejeski was asked a number of questions about what he understood from those terms. However, in closing, senior counsel for the Authority accepted that the subjective knowledge of the employees 'doesn't really matter' for the purposes of determining whether there had been an agreement as required by the enterprise agreement in order for the average annualised wage provisions to apply. Therefore, it is not necessary to address those aspects of the evidence of Mr Andrzejeski (or the other two Selected Employees) for the purposes of dealing with Issue (2).

89    Mr Andrzejeski made a further written agreement on 11 June 2010 when he was employed in a different position working different shift arrangements. The classification for that position was specified as 'Maintenance Officer (Shiftwork 'A' Team) - Outer Harbour'. Therefore, it was an offer to work according to the hours and shift rostering arrangements that then applied to work for members of the 'A' Team in the Outer Harbour. The agreement was made during the operation of the 2010 Agreement. It was made in a context where, since 2008, Mr Andrzejeski had agreed to employment on terms that provided for regular wage payments determined by reference to an annualised amount described as Total Employment Cost which included a 'Salary'. His new agreement provided for a much higher Total Employment Cost. It referred expressly to the 2010 Agreement. It specified a 'Salary' (but did not include a trades skill allowance).

90    On the construction of the terms of the enterprise agreements that I have explained, each acceptance of the written offers of employment by Mr Andrzejeski with remuneration set on an annual basis for the roster then being worked took effect as agreements for the purposes of the average annualised wage provisions of the enterprise agreements and therefore those provisions applied to his employment. There was no suggestion that any contrary agreement was reached thereafter.

Mr David Cocodis

91    At all times that are relevant for present purposes, Mr Cocodis was employed by the Authority in the position of Bulk Services Officer - Outer Harbour.

92    It was agreed that until 10 March 2016, Mr Cocodis' terms of employment were governed by a contract of employment dated 5 March 2013. After that a contract dated 26 February 2016 applied until 31 March 2017. After that a contract dated 27 March 2017 applied.

93    Each of the contracts was substantively in the same terms as the contracts made with Mr Andrzejeski in that they each provided for an annual remuneration package (the amount of which was specified and included a 'Salary'), they each referred to the applicable enterprise agreement as containing the 'conditions of employment' and they each specified the employment classification. They referred to an entitlement to superannuation calculated on the annual amount. In addition, they provided for the 'salary' to be 'paid on a fortnightly basis'.

94    Plainly, the agreements did not provide for payment by hourly rate, loadings and shift penalties as provided for in the enterprise agreements. That is, they did not provide for payment according to the ordinary wages method. As has been explained, payment of an annual amount was not consistent with payment according to the ordinary wages method. The agreements specified an agreed annual amount to be paid for the employment plus superannuation.

95    The contracts did not refer expressly to rostering arrangements. However, they stated expressly that the conditions of employment were set out in the 2012 Agreement. As has been explained, Part III of the 2012 Agreement and 2017 Agreement specified the rostering arrangements to apply to the different positions at the different locations. Therefore, those rostering arrangements were incorporated by reference.

96    On the construction of the terms of the enterprise agreements that I have explained, the acceptance of the contract terms by Mr Cocodis with remuneration set on an annual basis took effect as agreements for the purposes of the average annualised wage provisions of the enterprise agreements and therefore those provisions applied to his employment. There was no suggestion that any contrary agreement was reached thereafter.

Mr Jason Grubelich

97    At all times that are relevant for present purposes, Mr Grubelich was employed by the Authority in the position of Deputy Team Leader - Outer Harbour. It was agreed that the terms of his employment were governed by a contract dated 27 March 2012 that applied throughout the relevant period. The contract described his position as 'Deputy Team Leader - Team 'C' (Outer Harbour)'. The contract referred to the conditions of employment 'as covered under' the 2010 Agreement. It provided for employment at a specified classification for a specified Total Employment Cost that included a 'Salary' and superannuation. It then stated: 'Your salary will be paid on a fortnightly basis …'. Plainly, the contract specified an annual amount to be paid fortnightly. It did not provide for payment by hourly rate, loadings and shift penalties as provided for in the enterprise agreements. That is, it did not provide for payment according to the ordinary wages method.

98    For reasons that I have explained in dealing with the contract of Mr Cocodis, the contract specified the rostering arrangement that was to apply.

99    On the construction of the terms of the enterprise agreements that I have explained, the acceptance of the contract terms by Mr Grubelich with remuneration set on an annual basis took effect as agreements for the purposes of the average annualised wage provisions of the enterprise agreements and therefore those provisions applied to his employment. There was no suggestion that any contrary agreement was reached thereafter.

Authority's claim that the terms of the enterprise agreements formed part of the context for construing the contracts with each of the Selected Employees

100    As I have explained, each of the contracts of employment referred to the enterprise agreement that was in existence at the time that the contract was entered into by the parties. They each referred expressly to the employment being covered by the enterprise agreement or to the conditions of employment being in the enterprise agreement. Thereby, they incorporated the terms of the enterprise agreements as conditions of the contract of employment. They did so irrespective of whether those conditions were known or adverted to by the employee.

101    As has been explained, those conditions allowed for payment either by the ordinary wages method or payment of an average annualised wage. In those circumstances, an issue arose as to whether there could be regard to the terms of the enterprise agreements for the purposes of construing the terms of the contract of employment, particularly as to whether they included agreement to payment of an average annualised wage.

102    A contract that concerns a statutory right must be construed having regard to the statutory provisions that confer and regulate the nature and extent of that right, especially where the parties use the statutory language in their contract: Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 at [12]; and H Lundbeck A/S v Sandoz Pty Ltd [2022] HCA 4; (2022) 276 CLR 170 at [51]. An enterprise agreement is a statutory artefact that has legislative character because it applies to the employment of all employees in the area of work with which it is concerned: Toyota Motor Corporation Australia Limited v Marmara at [89]-[90]. On that basis, in circumstances where the parties have expressly referred to the enterprise agreement as covering the employment, it is appropriate to construe the terms of the contracts of employment by reference to the provisions of the enterprise agreement, particularly the manner in which it provides for the remuneration to take the form of an annual amount to be paid fortnightly for an applicable roster. Regard to those provisions supports the conclusion that the terms of each of the contracts of employment expressed an agreement to an average annualised wage for the purposes of the enterprise agreements.

103    In addition, it is well established that the interpretation of a written agreement 'may involve consideration of the background knowledge available to the parties at the time of the contract, which may include matters of law including relevant legislation': see, for example, Westfield Management Limited v AMP Capital Property Nominees Limited [2012] HCA 54; (2012) 247 CLR 129 at [36] (French CJ, Crennan, Keifel and Bell JJ). More generally, ambiguity in the meaning of the terms of an agreement may be resolved by regard to surrounding circumstances mutually known to the parties or that are notorious: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 352 (Mason J, Stephen and Wilson JJ agreeing). Indeed, there is much authority for the view that the presence of ambiguity is not a precondition to resort to such surrounding circumstances to aid in construction: Commissioner of Taxation v Trustee for the Michael Hayes Family Trust [2019] FCAFC 226; (2019) 273 FCR 567 at [26]-[33] (Steward J, Griffiths and Derrington JJ agreeing).

104    It is not necessary that it be shown that there was conscious advertence by both parties to those matters known (or presumed to be known by reason of their notoriety) in order for those matters to be resorted to in construing the terms of the contract: QBE Insurance Australia Ltd v Vasic [2010] NSWCA 166; (2010) 109 NSWLR 184 at [35] (Allsop P, Giles and Macfarlan JJA agreeing).

105    In the present case, both parties knew of the terms of the enterprise agreement in the sense that the contracts referred to their existence and stated that the employment was covered by the enterprise agreement or that its terms provided for the conditions of employment. In those circumstances, the enterprise agreement formed part of the surrounding circumstances for the purposes of the construction of the contractual terms. By that further pathway, it may also be concluded that regard to the provisions of the enterprise agreements supports the conclusion that the terms of each of the contracts of employment expressed an agreement to an average annualised wage for the purposes of the enterprise agreements.

Additional findings

106    I have considered whether it is appropriate to make any additional findings as to factual matters to facilitate any further consideration of the case on appeal should the Union wish to persist in its claim as to the proper construction of the enterprise agreements. There were no substantive submissions advanced for the Authority to the effect that the employees were given the opportunity to make a choice of the kind contended for by the Union. Indeed, during the course of closing submissions for the Union, senior counsel for the Authority confirmed that it advanced no case to the effect that if the Union's construction was correct then the Selected Employees had made an informed choice. There were factual issues concerning the extent to which the Selected Employees were aware of the terms of the enterprise agreements concerning the average annualised wage and aware of the facts that they were being remunerated on the basis that those provisions applied. However, those matters were relied upon by the Authority in the context of its estoppel claims.

107    Accordingly, I find that, beyond entering into their employment agreements (as described above), each of the Selected Employees did not make a separate choice or election by reference to the average annualised wage provisions by which they agreed (in the manner contended for by the Union that they were required to agree) that the average annualised wage may apply to a given rostering arrangement.

108    If it be relevant, I also find that each of the Selected Employees were offered employment on the basis of an annualised amount. They were not told of the possibility under the terms of the enterprise agreements that they might be paid according to ordinary hours worked.

Authority's alternative case of an implied agreement

109    If the Authority did not succeed on its case as to the proper construction of the employment contracts, then it advanced an alternative case to the effect that a term ought to be implied into each of the contracts to the effect that the annual salary constitutes an average annualised wage for the purposes of the enterprise agreements. Given the conclusions I have reached, it is not necessary or appropriate to address the alternative. It would require me to assume some alternative construction of the contracts of employment contrary to that which I have reached. A hypothetical of that kind is difficult to formulate given the views I have formed. The claim is a legal one. No additional factual findings are required as to the alternative claim of an implied agreement.

Conclusion on Issue (2)

110    For the above reasons, each of the Selected Employees agreed to an average annualised wage for the purposes of the enterprise agreements.

111    As a result of that conclusion and the conclusion as to Issue (1), the claim by the Union must fail and it is not necessary to address the remaining Issues. Nevertheless, I will address them briefly.

Issue (4): Set-off of payments in some fortnights against payments in other fortnights

112    Given the conditionality of Issue (4) it must be addressed on the assumption that there has been no agreement to an average annualised wage for the purposes of cl 20 of the enterprise agreements and therefore each of the Selected Employees was required to be paid according to the ordinary wages method based upon actual hours worked in each payment fortnight.

113    The parties agree that if the total of all the payments made in the relevant period (16 October 2016 to 22 October 2017) are taken into account, then the Selected Employees were paid amounts in excess of the total amount payable according to the ordinary wages method over the whole period. However, the Union says that the Selected Employees are entitled to claim additional amounts for each of those fortnights where payment according to the actual hours worked would result in a greater payment in that fortnight to that which was actually made by the Authority in relation to that fortnight (whilst still retaining the higher payments made in those other fortnights where payment according to the actual hours worked in that fortnight would have produced a lower payment). That is to say, the Union claims that the employees covered by the enterprise agreements can take the best of two different worlds.

114    The claim advanced by the Union if there had been no agreement to an average annualised wage involved a number of steps. First, if there was no such agreement the ordinary wages method applied. So much can be accepted. Second, the ordinary wages method required fortnightly payments for hours actually worked in the fortnight. So much can also be accepted. Third, there were fortnights in which the amounts paid to each of the Selected Employees were less than the amount required to be paid in that fortnight if that amount is required to be determined according to the ordinary wages method. So much is admitted by the Authority. Finally, it was said that the set-off claim advanced by the Authority was to the effect that payments made in one fortnight that were specifically attributed to satisfying obligations in one pay period can be later reallocated by the employer to satisfy obligations in a different pay period. This was said to be impermissible because the payments in the different fortnights had been made to discharge different obligations. For the reasons which follow, it is this final proposition concerning the character of the fortnightly payments that must be rejected.

115    Even if (contrary to the conclusions I have reached) the fortnightly payments were not paid pursuant to an agreement that required payment according to the average annualised wage approach, that does not mean that the fortnightly payments actually made by the Authority were paid specifically for satisfying obligations performed in a fortnightly period. They were still payments that were made in respect of an agreed annual salary amount which was to be paid fortnightly. A salary amount paid by fixed regular payments, but determined as a total amount to be paid each year to undertake the contracted employment on an agreed rostering arrangement is not referable only to the work done in the period preceding the interval for each payment. Rather, those payments, if made fortnightly, are one twenty-sixth of the annual amount to which each employee is entitled based upon working on terms that include a specified rostering arrangement. As has been explained, it is a rostering arrangement which means that in any fortnight the hours required to work may vary considerably. However, the fortnightly payments do not fluctuate according to the hours worked in the fortnightly pay period. They are the same irrespective of the work that is done in the pay period.

116    By reason of the agreed rostering arrangements, the work to be done in each fortnight is not the same. Therefore, the annual salary paid according to the terms of the contract of employment for each of the Selected Employees is not paid on the basis that it is specifically attributable to work done in the fortnight to which the pay period relates. In some fortnights it will relate in part to work done in other fortnights.

117    Therefore, in every fortnight where the amount paid is greater than an amount which would have been paid according to hours worked, the difference (or surplus) is an amount that is paid in respect of work to be undertaken in those other fortnights where the amount which would have been paid according to the hours worked would be less than the fortnightly payment of the annual salary.

118    The principles to be applied when a set-off claim of the kind advanced by the Authority in the present case is made in respect of the discharge of obligations under an award were considered by Wheelahan J in Wardman v Macquarie Bank Limited [2023] FCAFC 13 at [126]-[131] (Snaden J agreeing at [290]). For present purposes they may be assumed to apply equally to amounts said to be required to be paid by the terms of an enterprise agreement that covers the circumstances of a particular employee.

119    As explained in Wardman, the term 'set-off' is applied in such cases to describe the extent to which a payment made in discharge of a contractual obligation can be brought to account in determining whether the payment may be treated as discharging a concurrent statutory obligation when calculating the amount properly due to an employee: at [128]. It requires regard to the objective contractual intent in respect of the relevant contractual payment that is said to discharge the statutory obligation (as discerned from the contractual terms as properly construed). Each case will turn upon its particular facts: Wardman at [130]. The factual question concerns the proper attribution of the payment, that is to say the identification of the nature of the liability that the payment discharged or to which it related. So, part or all of a payment which, as a matter of fact, is to be attributed to ordinary hours worked could not discharge a different type of statutory obligation such as the payment of a weekly allowance.

120    In the present case, the issue is whether the fortnightly payments made to discharge agreed annual remuneration might be said to discharge the obligation to remunerate the employees according to the ordinary wages method (an obligation which requires payment of an amount calculated by reference to the hours actually worked in each fortnight).

121    As has been explained, the character of the contractual payments actually made was to remunerate the employee for the work undertaken according to a particular rostering arrangement. The contractual payments were not properly viewed as payments for work done in the payment fortnight. Rather, the fortnightly contractual payments actually made by the Authority were intended to remunerate the employee for the hours worked according to a roster which would cause the hours worked in any fortnight to fluctuate. In those circumstances, the purpose or character of the fortnightly contractual payments actually made to each of the Selected Employees was to remunerate the employee for working the hours required by the rostering arrangement. It follows that, the fortnightly payments actually made under the contracts of employment were not confined to payment for work done in the payment fortnight. Rather, there were unders and overs as to payment for the work done.

122    Therefore, it is not correct in the circumstances of the present case to attribute the fortnightly payments made under the terms of the contract to payment for work done in the payment fortnight. Once those payments are properly attributed, it is clear that in the fortnights in which there was more work done, the contractual payment was insufficient payment for that work. Further in those fortnights when less work was done, the contractual payment was partly attributable to the work done in that fortnight and partly attributable to work done when there was insufficient payment. It follows that the contractual payments made in each fortnight are properly attributable to the obligation under the enterprise agreements to pay for work done according to hours worked according to the applicable roster.

123    Indeed, as has been explained, the way in which the average annualised wage is calculated is to ensure that it covers the entirety of the obligation to pay the employee the amounts due to the employee if payments were made based upon the hours worked in each fortnight (with the added benefit of superannuation contributions on overtime worked as part of the usual rostering arrangement). So much is apparent from the express terms of cl 20 of the enterprise agreements, particularly cl 20(b) which requires the average annualised wage to incorporate the amounts to be paid for hours worked (including regular or averaged overtime), allowances and applicable shift penalties. That is to say, there is an express correspondence between payment for hours worked as rostered and payment of the average annualised wage.

124    The Union placed reliance upon the reasoning of Goldberg J in Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406. In that case, the employees had worked 60 hours a week under agreed arrangements. There was evidence that the arrangements had been entered into 'for the purpose of giving the employees a specific continuous level of remuneration by evening out the peaks and troughs which had occurred hitherto': at [63]. However, on the findings made, in entering into those arrangements neither the employees nor the representative of the employer had turned their minds to the issue of award entitlements to overtime: at [64]. In those circumstances, Goldberg J concluded that none of the payments that had been made according to the arrangements made could be designated as having been made to discharge overtime entitlements. Therefore, they could not be said to be payments allocated in any way to meeting that liability.

125    In consequence, the case considered by Goldberg J was very different to the present case where, as has been explained, the average annualised wage was itself determined as an amount that would cover the entitlements of an employee according to the ordinary wages method. Here, there was a direct and expressly intended correspondence between the entitlements according to the two methods.

126    The above distinction must be borne in mind when considering what was decided by Goldberg J in Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd. His Honour considered whether over-award payments in some weeks should be set-off against under-award payments in other weeks when compared to payments actually made under the agreed arrangements for the 60 hour week. Based upon weekly calculations of all award entitlements for each week compared to payments actually made under the agreed arrangements, there were some weeks in which the calculations showed under-award payment and some which were over-award. The employer claimed that there should be a set-off as between the weeks. The union claimed that the employees were entitled to claim the under-award week amounts without making any adjustment for the over-award weeks. After a review of the authorities, Goldberg J concluded (at [60]-[61]):

These authorities make it clear that where a payment is made to an employee in discharge of an award obligation, which payment is in fact in excess of the amount of the obligation, the amount of the excess cannot be set-off against a claim in respect of a different award obligation unless at the time of the payment of the excess the employer designates that the excess is payable in respect of a purpose or an obligation different from the purpose for which the initial payment is made.

Put shortly, where there is a payment made for, or in respect of, ordinary hours of work which is in excess of the award obligation, the excess cannot be set-off against a claim for underpayment of overtime unless at the time of the payment of the excess, the employer designates that that excess over the amount of the award obligation is paid for the purpose of satisfying any entitlement to overtime payments.

(emphasis added)

127    As has been explained, the present case is not one in which the payments have not been designated to meet the relevant entitlements. The calculation of the average annualised wage was undertaken to include all of the entitlements under the ordinary wages approach and then convert them to an amount to be paid equally over the course of employment such that the entitlements are the same (with the additional superannuation). This was common ground. In those circumstances, the reasoning in Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd must be distinguished.

128    The Union also sought to rely upon the express provisions as to errors in payment as a reason why there could not be a set-off. The provision has already been quoted and is repeated here for ease of reference:

Any error in an employee's pay shall be adjusted as soon as practicable following advice of the error. In the case of hardship every effort shall be made to ensure adjustments are made without delay.

Adjustments to overpayments will not be made without consultation with the employee involved.

129    Reliance upon the above provision misconceives the nature of the 'set-off'. It is not a claim by the Authority that there has been any error in payment. Rather, it is a claim that the discharge of the contractual obligation by making the fortnightly payments also discharged the concurrent obligation under the enterprise agreements to pay the Selected Employees for hours worked. As has been explained, that claim has been made out.

130    Finally, the Union advanced a pleading point in respect of the set-off claim made by the Authority. It claimed that the Authority had admitted that the sum of money paid each fortnight was for work performed in the fortnight identified in the payslip. In particular, it said that there was an admission as to the temporal purpose of the fortnightly payments such that it could not be concluded that any part of a payment made in one fortnight related to hours of work in a different fortnight. Even if there was found to be no formal admission to that effect, it was claimed that the terms of the payslips showed that to be the case.

131    As to the pleading point, the allegation made by the Union was that in each fortnight, each employee 'was paid a sum of money by [the Authority] for work performed in that fortnight'. The allegation in those terms was admitted. It was submitted for the Authority that the admission reflected the general terms in which the plea was cast. It was an admission only that 'a sum of money' for work in the fortnight was paid not that the whole of the amount paid in each fortnight related to work done in the fortnight. Indeed, given the nature of the dispute between the parties, an admission that the whole of the amount paid related to work done in that fortnight would be fundamentally inconsistent with the whole basis for the dispute, namely that the payments made were a form of equalised payment that was the same in each fortnight irrespective of the work undertaken in the fortnight. When there is regard to the nature of the dispute, the admission would be fundamentally inconsistent with the way in which the parties have joined issue, particularly the premise upon which the issues were formulated by the parties. The position of the Authority was made clear in later pleas in which it alleged, as to the amounts claimed in respect of particular employees that 'there was a close correlation between the purpose of the payments [made in the fortnights of alleged underpayment] and the purpose of the payments made [in each and every fortnight]'. The pleading point is entirely without merit.

132    As to the pay slips, they each identified a fortnightly pay period. However, they also differentiated between 'normal time' and other payments such as overtime worked in addition to rostered overtime, annual leave or allowances. It is common ground that normal time is determined on the basis of the average annualised wage. It does not fluctuate with the hours actually worked. Therefore, I do not accept that the terms of the pay slips describe payments for work performed in the fortnight. Rather, they include normal time. The question is whether normal time payments correlate only to payment for work undertaken in the fortnight for the 'pay period'. For reasons that have been given, they do not.

133    Therefore, if the Union had succeeded as to Issue (2) it would not have succeeded as to its claim because, for the above reasons, the set-off claim made by the Authority must be upheld.

Issues (5) and (6): Compensable loss

134    Issues (5) and (6) assume that the Authority has failed on Issues (2), (3) and (4).

135    Section 545(1) of the Fair Work Act provides that the Court may make any order that it 'considers appropriate' if satisfied that a person has contravened a civil remedy provision. One such contravention is where a person has contravened a term of an enterprise agreement: s 50.

136    The contravention that must be assumed for the purposes of Issue (5) is a contravention of the provisions that require payment fortnightly according to the ordinary wages method. However, even in that event, it will still be the case that the Authority, over the whole of the relevant period, will have paid the Selected Employees for the work they have done an amount that exceeds the amount to which they would be entitled if instead of the contractual payments made they had been paid for hours worked calculated in accordance with the ordinary wages terms of the enterprise agreements.

137    Without limiting the generality of s 545(1), orders that may be made include an order 'awarding compensation for loss that a person has suffered because of the contravention': s 545(2)(b). So, in any case where a compensatory order is sought it remains the case that the Court must consider the order to be 'appropriate' in the circumstances. As to that terminology, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157, Keane, Nettle and Gordon JJ reasoned as follows at [103]:

… But the starting point of the process must be the text of s 545(1) read in the context of the Fair Work Act as a whole and, in particular, in light of s 546. So approached, the first and most immediate point of significance is the breadth of the terms in which s 545(1) empowers the court to make any order the court considers appropriate. What is 'appropriate' for the purpose of s 545(1) falls to be determined in light of the purpose of the section and is not to be artificially limited. As the ABCC submitted, such broad terms of empowerment are constrained only by limitations that are strictly required by the language and purpose of the section …

(footnotes omitted, original emphasis)

See also, Kiefel CJ at [23] and Gageler J at [51].

138    The Court may form the view that it is appropriate to order compensation that is less than full compensation: Dafallah v Fair Work Commission [2014] FCA 328; (2014) 225 FCR 559 at [157] (Mortimer J, as the Chief Justice then was). The view has been expressed that where a loss has been shown to be caused by a contravention it is difficult to see how it would be appropriate not to award compensation for the loss: Retail and Fast Food Workers Union Incorporated v Tantex Holdings Pty Ltd [2020] FCA 1258 at [162] (Logan J). However, as was observed by Lee J in Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No 4) [2021] FCA 1481 at [18], care needs to be taken in reaching firm conclusions based upon general conceptions because the statutory language requiring the order to be appropriate points to the need for the Court to form a view that the order is 'judicially appropriate, or "just"'. That is to say, it requires a contextualised assessment of the particular circumstances, applying a judicial form of reasoning.

139    However, it is the case that if compensation is to be ordered then the compensation to be ordered must be causally related to the contravention: Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120 at [28] (Allsop CJ, Mansfield and Siopis JJ).

140    In the present case, the contravention alleged is failure to pay according to the ordinary wages method in those fortnights where calculation on that approach would have resulted in a greater payment than was actually made. There was no world in which an employee could be entitled to payment according to ordinary wages in some weeks and payment according to an average annualised wage in other weeks. Therefore, in a world where there was no contravention, each of the Selected Employees would have been paid less in the weeks not the subject of claim.

141    Applying my reasoning in dealing with Issue (4), I would conclude that an assessment whether the Selected Employees had suffered loss because of the contravention would have to bring to account the payments made in all fortnights. That is because, as has been explained, payments made in 'over-award' fortnights included payments for work done in 'under-award' fortnights. It does not matter whether that conclusion is reached on the basis that it could be said that the Selected Employees had suffered loss 'because of' the contravention or whether it is reached on the basis that it is not appropriate to make the order.

142    However, given that Issues (5) and (6) assume that the Authority has failed as to Issue (4), it must also be assumed for present purposes that, for some reason, no part of the payment in one fortnight will be able to be treated as properly attributable to the work done in another fortnight for the purposes of the application of the set-off principles there described. Given the conclusions I have reached as to Issue (4), I find it difficult to see how such a conclusion might be reached. However, based on that assumption, it appears that the necessary causal connection would be established between the alleged contravention and a loss measured by reference only to the under-award payment fortnights. Nevertheless, in my assessment, an award of compensation as sought by the Union would not have been made even if the Union had succeeded on Issues (2), (3) and (4) because, in all the circumstances, it would not be appropriate. It would not be appropriate because, as has been explained, the Selected Employees have received all that they would have received if the enterprise agreements had been performed in the manner for which the Union contends. A judicial exercise of discretion as to whether to award compensation would not award compensation in such circumstances because it would award compensation for a loss that has not been truly suffered.

Issue (3): Estoppel

143    The estoppel claim as pleaded was to the effect that the Union and each of the Selected Employees by their conduct induced the Authority to assume that agreements existed for the purposes of cl 20 of each of the 2012 Agreement and the 2017 Agreement. The claim reduced to one in which it was said that to the knowledge of the Union and each of the Selected Employees, annualised salary payments were made by the Authority on the basis that the average annualised wage provisions applied to all employees and on the assumption by the Authority (induced by the Union and the Selected Employees) that the requisite agreement was in place.

144    I accept that, on the evidence, the Union had sought to secure arrangements by which all employees covered by the enterprise agreements would be entitled to be paid according to an average annualised wage. Further, for a time, there was uncertainty as to whether casual employees were entitled to payment according to the same rates. The Union pressed for and secured that outcome. There was no evidence for the Union to suggest that what it was seeking to secure was an option to choose between the average annualised wage and payment according to the ordinary wages method. On the evidence, I find that those involved for the Union approached the issue on the basis that securing payment of an average annualised wage (with associated additional superannuation) was itself of greater benefit to employees than payment according to the ordinary wages method. Accordingly, there is some irony in the nature of the claim that the Union now advances with its emphasis upon the need for a choice to be made by employees.

145    Further, I find that relevant officers of the Union understood that all employees of the Authority who were covered by the 2012 Agreement and the 2017 Agreement were being paid according to the average annualised wage. Mr Jeffery Cassar, gave evidence to that effect when cross-examined. Mr William Tracey agreed that the Union approached the negotiations for the 2012 Agreement on the basis that all employees were being paid on the basis of the average annualised wage provisions.

146    As to the Selected Employees, the details of the formula by which the average annualised wage was determined were not conveyed to them before they accepted their employment. Ms Amy Wiseman gave evidence about the way in which employment interviews were conducted. It was apparent from her evidence that nothing was said about the average annualised wage provisions. Rather, the terms of the offer of employment were explained to them. It provided for an annual amount to be paid fortnightly. However, the employees knew that they were being paid based on an annual amount and that the fortnightly payments for their regular shifts were the same each fortnight (and did not fluctuate).

147    So, it might be concluded, at least as to the Union, that it was aware of the basis upon which employees were being paid but did not at any time raise an issue concerning whether employees had made the agreement required by cl 20 of the enterprise agreements. The position as to the employees was more complex.

148    It is the Union's position that any estoppel claim must fail for each of three reasons. First, an estoppel cannot be relied upon to defeat a claim stipulated in an industrial instrument or the Fair Work Act. Second, there has been no conduct by the Union or the Selected Employees which might found an estoppel claim. Third, if there was an estoppel as between the Authority and the Selected Employees then it could not operate to affect the statutory claim that the Union can bring if there has been a contravention by the Authority in failing to comply with the terms of the enterprise agreements. The Union, so it was submitted, was not a privy in interest to the employees of the Authority and, therefore, its statutory rights were not affected by conduct of those employees.

149    It can be seen that some of the contentions advanced to support the Union's position relied upon alleged characteristics of the separate statutory right of the Union to bring proceedings. In that regard, s 540(2) of the Fair Work Act provides:

(2)    An employee organisation or a registered employee association may apply for an order under this Division, in relation to a contravention or proposed contravention of a civil remedy provision in relation to an employee, only if:

(a)    the employee is affected by the contravention, or will be affected by the proposed contravention; and

(b)    the organisation or association is entitled to represent the industrial interests of the employee.

150    It was accepted by the Authority that s 540(2) applied to the claims that the Union sought to advance.

151    The terms of s 540(2) appear to confer a separate statutory right upon an organisation or association of the kind described to bring a claim for 'an order under this Division', relevantly for present purposes a claim to compensation and penalties. The right is not expressed to be representative in character. That is to say, the organisation or association brings its own claim, not a claim on behalf of an employee. Nor is it confined to proceedings affecting employees who are members of the organisation or association. Where, as here, the claim concerns a right under an enterprise agreement then the union may be the representative of all employees covered by its terms, not just those of its members that are covered.

152    The nature of the statutory right conferred by s 540(2) was considered by Lee J in Transport Workers' Union of Australia v Qantas Airways Limited (No 4) [2021] FCA 1602 at [11]-[23]. In those proceedings, the union claimed to be acting in the interests of employees and the focus of his Honour's reasoning was upon the extent to which the union may have fiduciary duties to discharge in conducting proceedings brought on that basis, particularly whether actions by the union in the conduct of the proceedings may have consequences for the entitlements of the relevant employees. The issue was not addressed in the appeals where the decision of Lee J was upheld: Qantas Airways Ltd v Transport Workers' Union of Australia [2022] FCAFC 71; (2022) 292 FCR 34; and Qantas Airways Limited v Transport Workers Union of Australia [2023] HCA 27.

153    In Australian Federation of Air Pilots v Regional Express Holdings Limited [2021] FCAFC 226; (2021) 290 FCR 239, the nature of the related statutory right conferred upon industrial associations by s 540(6) was considered. The standing afforded by that provision was described as 'not derivative': at [178] . Further, it was said that:

In bringing an application the industrial association does not stand in the shoes of, or act as agent of a person affected by a contravention. Rather, an industrial association is given standing as a principal in an independent capacity to apply for an order in relation to a contravention if the condition in s 540(6)(b), that the industrial association is entitled to represent the industrial interests of the person affected by the contravention, is engaged.

154    The Full Court then made reference to the review of the authorities concerned with the development of the 'Dunlop principle' conducted by the High Court in Regional Express Holdings Limited v Australian Federation of Air Pilots [2017] HCA 55; (2017) 262 CLR 456 by which 'it came to be understood that an organisation or a union was entitled to protect the industrial interests of those groups of employees who were within its conditions of eligibility': at [33] (Kiefel CJ, Keane, Nettle, Gordon and Edelman JJ).

155    However, those authorities were not concerned with the extent to which the exercise by a union of rights of that character might have consequences for separate statutory rights conferred on the employees to pursue their own claims as to the same industrial interests.

156    In Elliott-Carde v McDonald's Australia Limited [2023] FCAFC 162; (2023) 301 FCR 1, Lee J had occasion to return to these issues. At [354], his Honour said that 'current and former workers are not privies' of an industrial association exercising the statutory right to bring a claim under s 540 and that:

… it is far from clear that any are bound at law or in equity by orders made in the proceeding (such as would be the case by a s 33ZB 'statutory estoppel' in a class action under Pt IVA of the FCA Act or in equity in a Chancery representative proceeding). …

157    In that case, Beach J described actions brought by employee organisations, registered employee organisations and industrial associations pursuant to the statutory rights conferred by s 540 as all being 'types of representative actions': at [37]. Later, his Honour described s 540 as regulating the standing of a 'party principal' (at [52]) and agreed with the views expressed by Lee J to the effect that the provisions did not confer any form of derivative standing, but rather left employees to be able to pursue for themselves the relevant statutory rights: at [56]. Writing separately as to that aspect, beyond agreeing that there was no inconsistency which meant that relevant Fair Work Act claims could not be brought as representative proceedings under Part IVA of the Federal Court of Australia Act 1976 (Cth) I preferred to express no view: at [448]-[449]. I simply observed (at [447]):

… [I]t is significant that s 540(6) does not confer authority upon an industrial association to bring proceedings as a representative of a person. If it brings proceedings then it does so in circumstances that are much closer to those considered in Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28; (2015) 256 CLR 507 at [41] (French CJ, Bell, Gageler and Keane JJ) where their Honours differentiated between a claim brought as a representative and a claim where the applicant 'acts for statutorily … permitted reasons within a statutorily defined area of responsibility in making such a claim'.

158    Lee J again considered aspects of the nature of the function performed by a union in exercising the statutory right to bring proceedings under s 540 when compared to the role of a representative applicant bringing proceedings pursuant to the regime in Part IVA of the Federal Court Act: Elliott-Carde v McDonald's Australia Limited (Stay Appication) [2023] FCA 1210; (2023) 301 FCR 84 at [117]ff. His Honour did so for the purpose of considering how to deal with competing applications advancing overlapping claims in respect of the same class of employees (referred to in the reasons as the Workers). In the course of that comparison, his Honour observed at [126]:

What is also evident is that the Workers here are not privies of the [union] in any relevant respect. Notwithstanding they are affected third parties, as non-parties to the litigation, they are not bound at law or in equity by orders made in the [union] Actions seeking any representative relief on their behalf (such as would be the case by operation of a s 33ZB 'statutory estoppel' in a Pt IVA proceeding or in a Chancery representative proceeding). This statement of the position is of course subject to the qualification in this case that it is difficult to see why it would be an appropriate exercise of power to make a compensatory order in the exercise of the discretion in s 545 of the [Fair Work Act] if a Worker had already had a compensatory claim dealt with on the Worker’s behalf by an employee organisation (or whether any attempt at a 'second go' may be prevented by novel arguments reliant upon notions of abuse of process).

159    Accordingly, very significant issues are raised by the contentions advanced by the Union in answer to the estoppel defence advanced by the Authority. They bear, in particular, upon the extent to which the exercise of a statutory right of action as party principal may be answered by facts that give rise to an estoppel that might be advanced as against some or all of the employees the subject of the claim.

160    For reasons I have given there are three successive reasons why the claims advanced by the Union should not be accepted. First, there has been no contravention of the enterprise agreements. Second, if there has been a contravention then the set-off case advanced by the Authority is a complete answer to the claim. Third, if there has been a contravention and the set-off case is not an answer then it is not appropriate to award compensation.

161    Further, the estoppel claims are not without complexity. There are real issues for the Authority in demonstrating the alleged assumption concerning the existence of an agreement.

162    In those circumstances, I have formed the view that it is not necessary or appropriate to consider the estoppel case which operates, in substance, as a fourth alternative answer to the claims made by the Union in a case where all three of the other alternatives have been made out.

163    However, I observe that irrespective of the conclusions reached as to the above matters, there was a fundamental difficulty for the Authority with the claim. It was a deficiency in any evidence to the effect that an assumption had been made of the kind alleged. The evidence given by those who were involved for the Authority did not establish the making of any such assumption. That is hardly surprising because there is no reason why the Authority would be acting on the views of the Union or its employees as to such matters. Rather, on the evidence, the Authority formed its own view as to how to formulate the contracts of employment. It presented those terms to the employees. It then proceeded to pay them on the basis that the average annualised wage provisions applied. The Authority took its own view as to what was required and acted upon it.

Conclusion and orders

164    It follows that the proceedings brought by the Union must be dismissed. As has been mentioned, the Authority sought an opportunity to make submissions as to costs. I will make directions for the filing of submissions and affidavits. Subject to further order, as matters presently stand any applications for costs orders will be dealt with on the papers.

Associate:

Dated:    1 August 2024