Federal Court of Australia

Pacific National (Queensland Coal) Pty Ltd v Australian Rail Tram and Bus Industry Union [2026] FCA 1239

ORDERS

THE COURT DECLARES THAT:

1.    The Pacific National Queensland Coal Enterprise Agreement 2018 does not entitle employees covered by that agreement to Short Term Incentives for the 2021/2022 financial year, or at all.

THE COURT ORDERS THAT:

1.    The respondents’ cross claims be dismissed.

2.    There be no order as to costs.

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

REASONS FOR JUDGMENT

WIGNEY J:

1    The applicant, Pacific National (Queensland Coal) Pty Ltd conducts a business involving the freight of coal from coal mines in Central Queensland to freight terminals, ports and power stations throughout Queensland. It employs workers, some of whom are members of the respondents, the Australian Rail, Tram and Bus Industry Union (the RTBU) and the Australian Federated Union of Locomotive Employees (AFULE) (together, the Unions). The Unions and their members who were employed by Queensland Coal were covered by the Pacific National Queensland Coal Enterprise Agreement 2018 (the 2018 EA) from November 2018 to November 2022. Queensland Coal and the Unions are in dispute as to whether the workers who were covered by the 2018 EA (the 2018 EA workers) were entitled under the terms of the 2018 EA to payments referred to as Short Term Incentives payments (STI payments). The 2018 EA stated that the employees are remunerated on a “total remuneration basis” and that “Short Term Incentives” were one of the components of their “Total Remuneration Package”. While the EA workers received STI payments in the early years of the operation of the 2018 EA, they did not receive any such payments in October 2022 in respect of the 2022 financial year.

2    Queensland Coal acknowledged that STI payments had been made to the EA workers in the past, though it contended that the 2018 EA did not require it to pay, or entitle the 2018 EA workers to receive, any such payments in the 2022 financial year, or at all. It claimed that the Court should make a declaration to that effect. The Unions, however, contended that the 2018 EA workers were entitled to be paid STI payments under the terms of the 2018 EA, including in the 2022 financial year. They claimed that the Court should declare that Queensland Coal contravened the 2018 EA by failing to calculate and pay the EA workers any STI payments in the 2022 financial year. They also sought relief under the Fair Work Act 2009 (Cth), including orders requiring Queensland Coal to compensate the 2018 EA workers for the losses they suffered as a result of its breach of the 2018 EA and resulting contravention of the Fair Work Act and the imposition of pecuniary penalties in respect of that contravention.

3    The central issue that is necessary to resolve in order to quell the dispute between the parties turns on the proper construction of the clause of the 2018 EA which provided for the remuneration that Queensland Coal was required to pay, and that the EA workers were entitled to receive. The primary facts to which it was necessary to have regard to resolve that constructional issue were mostly not in dispute. While the parties filed voluminous evidence, ostensibly to provide relevant context, much of that evidence was of marginal, if any, relevance to the proper construction of the relevant clause.

4    As explained in detail in the reasons that follow, the relevant remuneration clause in the 2018 EA, properly construed, provided for, but did not require Queensland Coal to pay, or entitle the EA workers to receive, the so-called STI payments. A declaration to that effect should be made, and the Unions’ claims for relief must be dismissed.

AGREED AND INELUCTABLE FACTS

5    As has already been adverted to, there was little if any dispute in relation to the facts which materially bore on the constructional issue. The parties helpfully produced an Agreed Statement of Facts, Issues and Contentions. They also adduced affidavit and documentary evidence which, save for some minor objections, turned out to be largely uncontroversial. There was, however, disagreement as to extent to which some of the facts or evidence could properly be deployed or relied on in respect of the constructional issue. That disagreement largely turned on whether the facts or evidence provided any relevant context within which the terms of the 2018 EA should be considered. What follows is a short summary of the agreed or ineluctable facts. The extent to which some of the facts bear on the proper construction of the relevant provisions in the 2018 EA will be addressed later.

6    Queensland Coal is a national system employer for the purposes of the Fair Work Act.

7    Both the RTBU and the AFULE were employee organisations for the purposes of the Fair Work Act.

Potentially relevant industrial context

8    As discussed later, when construing an enterprise agreement or other industrial instrument, it is generally necessary to have regard to the relevant industrial context, which may include the terms of previous awards or enterprise agreements between the parties or in the industry in which they operate. The Unions relied on several past industry awards and enterprise agreements as providing relevant context. As will be seen, they also relied on facts or evidence concerning what they contended was a policy or practice that Queensland Coal adopted and followed, and its employees came to rely on, in respect of the calculation and payment of components of remuneration.

Prior rail industry awards and enterprise agreements

9    While Queensland Coal’s relevant coal freight operations only commenced in about 2009, the Unions contended that the practice of rail employees receiving remuneration comprising several components dated back to at least the National Rail Corporation Limited Enterprise Agreement which was certified by the then Australian Industrial Relations Commission in 1995 (the 1995 EA). That agreement provided (in clause 2.1) that “[e]mployees will be remunerated in the following ways: (i) aggregate salary; (ii) superannuation”.

10    Those “components of remuneration” in the 1995 EA were said to have been “rolled over in identical terms” in clause 16.1 of the Pacific National Queensland Collective Agreement 2004 (the 2004 CA), which provided that the “Total Remuneration for employees will include the following components: (i) Base Salary; and (ii) Aggregate Penalties”.

11    A similar clause (clause 15.1) was included in the Pacific National Collective Agreement 2007 (the 2007 CA), which provided that “[e]mployees are remunerated on a Total Remuneration basis” and that the “Total Remuneration for employees is made up of the following components (i) Base Salary; and (ii) Aggregate Penalties”. That was said to be the first time that the employees were expressly stated to be remunerated on a “Total Remuneration” basis, though that expression had also been utilised in the 2004 CA. The expressions “Total Remuneration” and “Total Remuneration basis” were not defined in the 2007 CA, other than to the extent that clause 15.1 specified the components that made up the “Total Remuneration”.

12    It should perhaps also be noted that clause 15.2 of the 2007 CA stated that the “Base Salary is comprehensive and unless specified elsewhere in this Agreement includes provision for the payment of any allowances or payments that may otherwise be payable or have been payable to an employee”. Several examples of such allowances were then given, including annual leave loading, public holiday penalty payments, “Tonnage/Distance payments” and “Coal/Dust allowance”. As will be seen, language similar to clause 15.2 was used in the 2018 EA and is of some contextual relevance when it comes to construing the key clause of that agreement.

13    The Pacific National Queensland Coal Employee Collective Agreement 2009 (the 2009 CA) also contained (in clause 14.1) a “Total Remuneration” clause which was expressed in somewhat similar terms to the 1995 EA, the 2004 CA and the 2007 CA. That clause stated that “[e]mployees are remunerated on a total Remuneration basis” and that the “Total Remuneration for employees is made up of the following components: (i) Base Salary; (ii) Shift Multiplier; and (iii) Short Term Incentives”. That was the first time that the expression “Short Term Incentives” was used in a relevant enterprise agreement. It was also said to be the first time that Queensland Coal had made an enterprise agreement in respect of its expanded coal operations.

14    Importantly, while the 2009 CA contained provisions which defined and quantified, or provided for the method of calculating, the Base Salary component (clauses 14.2-14.3) and the Shift Multiplier component (clause 15) of the “Total Remuneration”, the agreement did not define, quantify, or provide any method for calculating Short Term Incentives, or explain when and precisely to whom and in what circumstances Short Term Incentives would be paid. As will be seen, this is another feature which the 2009 CA shares with both the 2014 EA and the 2018 EA.

15    The Unions contended that the inclusion of Short Term Incentives as one of the components of the employees’ Total Remuneration package coincided with the expansion of Queensland Coal’s operations into the coal market. They pointed, in that regard, to clause 44.1 of the 2004 CA, which provided that “[i]f Pacific National Qld enters into a coal contract/s the parties will review the Remuneration for train crew engaged on work specifically for such contract/s”.

16    On 15 May 2014, the Fair Work Commission approved the Pacific National Queensland Coal Enterprise Agreement 2014 (the 2014 EA). It is necessary to discuss the 2014 EA in a little more detail as it featured prominently in the parties’ submissions.

The 2014 EA

17    Queensland Coal was covered by the 2014 EA, as were employees of Queensland Coal who were employed to perform work within the classification structure set out in clause 12 of the agreement (the 2014 EA workers).

18    The Unions were entitled to represent the industrial interests of the 2014 EA employees.

19    The 2014 EA came into effect on the commencement of the first full pay period seven days after it was approved by the Fair Work Commission.

20    As discussed later, the terms of the 2014 EA are relevantly similar to the terms of the 2018 EA. The only relevant difference of significance concerned one of the components of the employees’ total remuneration package.

21    Clause 13.2(a) of the 2014 EA provided that the “total remuneration package for employees” was made up of four components: “Base Salary”, “Shift & Aggregate Penalty Multiplier (APM)”, “Short Term Incentives” and “Longevity Bonus”.

22    Schedule 1 and clause 13(a)-(f) of the 2014 EA set out the amount of the “Base Salary” payable to the employees covered by the agreement, including the method by which increases to the Base Salary would be calculated.

23    Clause 13.3 of the 2014 EA provided details in respect of the “Shift & Aggregate Penalty Multiplier” that was payable to the 2014 Employees on top of the Base Salary.

24    Clause 7 of the 2014 EA defined “Longevity Bonus” and clause 13.2(e) set out the Longevity Bonus that was payable to employees covered by the agreement in the “first full pay period following their anniversary date of being appointed as a Driver Class 1 or Class 2”.

25    Like the 2009 EA, the 2014 EA did not define the expression “Short Term Incentives”, or include any clause which set out the terms or circumstances in which it would or might be calculated and paid. Indeed, the expression “Short Term Incentives” was not to be found anywhere in the agreement other than in clause 13.2(a).

STI payments made during the currency of the 2014 EA

26    It appeared to be common ground that payments representing the Short Term Incentives component of the employees’ total remuneration – STI payments – were made to some of the 2014 EA workers during the currency of the 2014 EA. The STI payments were one-off payments made in October each year. The Statement of Agreed Facts, however, referred only to payments made in respect of the 2018 financial year in October 2018.

27    Importantly, there was no dispute that Queensland Coal was solely responsible for determining the eligibility for those payments and the criteria pursuant to which those payments were calculated.

28    A document referred to as a “Leader Guide”, which was issued and distributed by Queensland Coal at some point in time prior to October 2018, set out the criteria in respect of the eligibility for and the calculation of STI payments for the 2018 financial year. In respect of the eligibility criteria, the Leader Guide stated that to be eligible for STI payments, an employee must have been employed under the 2014 EA at the time of the payment and must have performed the duties of a locomotive driver for at least six months between 1 July 2017 and 30 June 2018.

29    A table in the Leader Guide identified the criteria and targets against which STI payments were to be calculated and paid. There were four criteria. One concerned the “Individual Performance and Behaviour” of an employee as assessed in a performance review. An employee who was found at the review not to have met the performance and behaviour requirements, or in respect of whom “warnings existed”, would not be eligible to receive any “productivity bonus” referable to that criterion. Any “[f]ailure to fulfil employment contract” would also disqualify an employee from receiving any productivity bonus under that criterion. Otherwise, eligible employees would receive a productivity bonus of 1% of their Base Salary in respect of the “performance and behaviour” criterion.

30    The other three criteria concerned the meeting of specified performance targets (or key performance indicators – KPIs) in three areas of Queensland Coal’s operations: “Safety”, “Customer [service]” and “[financial] Performance”. An employee would receive a productivity bonus of 1% referrable to each of those areas if the specified performance targets for each of the areas were achieved in that financial year.

31    Employees who met the eligibility criteria in the Leader Guide could therefore potentially receive a payment of up to 4%, though that would depend on whether the employee, at the employee’s review, met the performance and behaviour requirements and had fulfilled their employment contract. It would also depend on the various performance targets in the three specified areas of Queensland Coal’s operations being met.

32    As already noted, it appeared to be common ground that in the 2018 financial year the relevant performance targets were met in respect of the safety, customer service and financial performance areas and that STI payments were made in October 2018 to the employees who were found to be eligible to receive the payments.

Bargaining and negotiations in respect of the 2018 EA

33    The Agreed Statement of Facts included facts concerning statements that were made by representatives of Queensland Coal during the negotiations or bargaining in respect of the 2018 EA. Those statements were recorded in “employee updates” which were prepared by Queensland Coal and sent to its employees, including the 2014 EA workers. Queensland Coal also tendered (as annexures to the affidavit of one of its witnesses) minutes of meetings between the representatives of Queensland Coal, the Unions and Queensland Coal employees. Those minutes recorded statements made by some of the representatives during the negotiations. There was no objection to that evidence. Some of the affidavit evidence relied on by the parties included evidence concerning the negotiations. That affidavit evidence was not objected to and was not the subject of any cross-examination.

34    Much of the evidence of what was said during the negotiation of the 2018 EA was irrelevant, or of, at best, marginal relevance, to the construction of the 2018 EA. The following summary of the agreed facts and evidence concerning the negotiations focusses primarily on those facts which tended to indicate the existence of a common understanding in respect of the nature of the STI payments that were made during the currency of the 2014 EA and the basis upon which those payments were calculated and made. As discussed in more detail later, any common understanding that the negotiators may have had in respect of those matters may be a relevant objective contextual consideration in construing the relevant terms of the 2018 EA.

35    On 28 August 2017, Queensland Coal disseminated an employee update that contained a summary of the discussions between representatives of Queensland Coal, “Peer Appointed Representatives” and employee delegates and union delegates from both the RTBU and the AFULE. Those discussions took place between 22 and 24 August 2017. That document included the following statement:

A number of items have been raised but held over for more detailed discussion until the overall impact of the various elements of the agreement become clearer. These include:

•    Short Term Incentives and the Longevity Bonus have been covered at a high level. One of PN’s principles is payment for task. When specifically related to the longevity bonus PN is seeking to change it from a guaranteed payment to a performance based payment over the life of the agreement. Some early ideas on how this may look have been discussed. This includes the potential to consider different treatment of the currently non guaranteed and not quantified Short Term Incentive.

(Emphasis added.)

36    An employee update in relation to the discussions concerning the proposed 2018 EA dated 28 September 2017, which referred to discussions that took place between representatives of Queensland Coal, the Unions and employees, included the following statement:

Longevity

•    One of the key principles for PN that has been communicated since the start of negotiations is payment for task. For the longevity bonus this means that the negotiation will focus on shifting this from a guaranteed annual payment of 6% to one that is performance based. The environment within which we now operate is vastly different from when the longevity bonus was developed. Its intent was as an incentive to attract employees to the company in a constrained labour market. Our customers now expect us to continue to improve productivity as they also compete in a volatile market.

•    Currently the performance bonus % amount is not defined in the EA. Over recent years the amount available for this bonus has been up to 4%. Discussions continue to revolve around bargaining for a method to convert the longevity from a guaranteed payment to one based on performance. This would be in return for a range of other claims that have been tabled including the possibility to define the performance bonus % amount within the EA. Ultimately the aim is to reward people for both their individual as well as company performance.

(Emphasis added, bolded subheading in original.)

37    Minutes which recorded negotiations which took place on 22 August 2017 recorded the following exchange between Mr Bruce Mackie, an RTBU delegate (referred to as BM in the minutes), Mr Mark Flanagan of Queensland Coal (referred to as MF in the minutes) and Mr Jon Clark, a peer appointed employee representative (referred to as JC in the minutes), included the following:

Longevity – BM - we will have immense difficulty working with the employees/members to move this. They currently have a guaranteed 6% and KPI based 4% per year. What do you see as the first step?

MF - I understand the difficulties, the STIP does not currently have a value in the EA.

BM - members tell us the Longevity is counted on as part of their Remuneration, the 4% is not counted on so happy to see a change to that. Problem is not one trusts STIP’s. Employees are saying that their ripping us off, never get the STI. What if you changed the Longevity to Bonus Payment guaranteed at 6% plus 4% at risk. Are they hung up on the name of it?

JC - call it anything just make sure it’s guaranteed.

(Emphasis added.)

38    Mr Flanagan was also recorded as having said during those discussions that there was “currently no obligation to pay STI in EA”.

39    The minutes recorded discussions between negotiators which took place on 6 September 2017, and recorded the following exchange between Mr Flanagan (MF), Mr Mackie (PM), Mr Robert Van Moolenbroek (referred to as RVM in the minutes), and Mr Clark, (JC), included the following:

PM what about the current productivity bonus?

MF the EA doesn’t talk to the percentage, it just talks about an STIP, not an obligation to pay it.

…

RVM would it be the same procedure as current practice (performance review process, lead by Supervisor determining your score)

MF it could be up to this process to look at that, none if that is articulated as yet. There is no binding obligation in EA. This is one of the important ones for us.

RVM would we get multiplier on this? Because it’s not guaranteed.

(Emphasis added.)

40    An employee update dated 8 December 2017 included the following statement:

Performance Based Incentive – It was noted that the current EA does not specify the amount of the performance based incentive currently offered (i.e. 4%).

The 2018 EA

41    The 2018 EA came into effect on the commencement of the first full pay period seven days after it was approved by the Fair Work Commission on 23 November 2018. It ceased to have effect from 3 November 2022. It was expressed to cover employees of Queensland Coal employed to perform work within the classification structure set out in clause 18 of the 2018 EA.

Relevant terms of the 2018 in respect of remuneration

42    The relevant clauses of the 2018 EA are those that concern remuneration. The main clauses concerning remuneration are clauses 19.1 to 19.3 which provide as follows:

19.1    Base Salary Increases

(a)     An Employee is entitled to the Base Salary specified in Schedule 1 as per their applicable Classification.

(b)     Schedule 1 includes Base Salary increases of:

(i)     2% from the Commencement Date;

(ii)     2% from the first full pay period 12 months following approval of this Agreement; and

(iii)     2% from the first full pay period 24 months following approval of this Agreement.

(c)     The parties commit to commencing negotiations 6 months prior to the nominal expiry of the Agreement.

(d)     There is no automatic entitlement to back pay in arrears of this agreement coming into operation. The effective date of the agreed Base Salary increase (above the 2% as provided for in ((a) above), unless otherwise negotiated, will be the date of the replacement enterprise agreement or other appropriate IR instrument coming into operation.

(e)     The following arrangements will apply on the nominal expiry of this Agreement:

(i)     A Base Salary and all allowances increase of 2% from the first full pay period after the nominal expiry of the Agreement if the parties have not reached agreement by the date of nominal expiry.

(ii)     If a replacement enterprise agreement or other appropriate IR instrument has come into operation prior to the nominal expiry date then this payment will not be made.

(iii)     If a replacement enterprise agreement or other appropriate IR instrument has come into operation after the nominal expiry date but not after 6 months of the nominal expiry date, the 2% Base Salary increase will form part of any replacement enterprise agreement or other appropriate IR instrument.

19.2     Total Remuneration Package

(a)     Employees are remunerated on a total remuneration basis. The Total Remuneration Package for Employees is made up of the following components:

(i)    Base Salary;

(ii)     Aggregate Penalty Multiplier (APM);

(iii)     Short Term Incentives; and

(iv)     Performance Bonus.

(b)     The Base Salary is comprehensive and unless specified elsewhere in this Agreement includes provision for the payment ci any allowances or payments that may otherwise be payable or have been payable to an Employee. The Base Salary does not include overtime payments.

(c)     Base Salaries for each classification are set out in Schedule 1 to this Agreement. Base Salaries will be increased on the anniversary of the lodgement date as set out in Schedule 1. An Employee’s progression to a higher classification will in each case be subject to them satisfying appropriate performance requirements, as determined by Pacific National Queensland Coal acting reasonably and considering all relevant circumstances.

(d)     Pacific National Queensland Coal is to pay Employees a Performance Bonus in recognition of an Employee retaining employment with it for the previous 12 months. It is paid in the first full pay period after each anniversary of the date of appointment as a Level 3 Advanced Trainee or above, under this Agreement. Employees who achieved eligibility for this Performance Bonus prior to the Commencement Date, will maintain their current anniversary payment date.

(e)     Employees who, immediately prior to commencing employment with Pacific National Queensland Coal, were employed by a related entity will be granted continuity of service and will have all service-based entitlements recognised by Pacific National Queensland Coal.

19.3     Aggregate Penalty Multiplier

(a)     Employees will be entitled to an Aggregate Penalty Multiplier (APM) of 28% of Base Salary and will be paid on a fortnightly basis.

43    The term “Base Salary” is defined in clause 7 as meaning “the annual base rates of pay for Employees as outlined in Schedule 1 of the Agreement”.

44    The term “Performance Bonus” is defined in clause 7 as meaning “an amount which is 6% of an Employee’s total Remuneration Rate and is payable under clause 19.2(2) (Remuneration)”.

45    The term or expression “Short Term Incentives” is not defined in the 2018 EA. Nor is that term or expressions used anywhere in the agreement other than in clause 19.2(a)(iii).

46    The term or expression “Total Remuneration Package”, while capitalised, which would suggest that it is a defined term, is in fact not separately defined elsewhere in the agreement.

47    The Unions’ contention that the 2018 EA, properly construed, required Queensland Coal to pay the 2018 EA workers Short Term Incentives focussed on clause 19.2(a) of the 2018 EA, which is not surprising given that it is the only clause that refers to or includes the expression “Short Term Incentives”.

STI payments made during the currency of the 2018 EA

48    There was no dispute that some STI payments were made to some of the 2018 EA workers during the currency of the 2018 EA. The use that may be put to the facts relating to those payments is, however, at best questionable given that, as discussed later, post-contractual conduct cannot ordinarily be used as an aid to the construction of the terms of a contract. The evidence and facts relating to those payments would appear, however, to be of some potential relevance to the relief sought by the Unions. The Unions essentially relied on the payments, or the documents which recorded the basis upon which they were calculated, as a basis for calculating the amounts that they contended should have been paid to the relevant employees in October 2022. Given the somewhat questionable relevance of the payments made during the currency of the 2018 EA, at least in relation to the issue concerning the construction of the 2018 EA, it is necessary to provide only a brief summary of the facts and evidence concerning those payments.

49    As was the case with the STI payments made during the currency of the 2014 EA, Queensland Coal issued and disseminated “Leader Guides” which set out the criteria specified and employed by Queensland Coal in determining the eligibility for, and calculation of, STI payments in respect of the 2019, 2020 and 2021 financial years.

50    The Leader Guide in respect of the 2019 financial year was very similar to the Leader Guide that was deployed in the 2018 financial year during the currency of the 2014 EA. The eligibility criteria were essentially the same in the 2019 Leader Guide, as were the criteria and targets against which STI payments were to be calculated and paid. The only real differences were in respect of the targets for the relevant financial year. One difference was that the table which identified the criteria in the 2019 Leader Guide included some detail in the “achieved” column which indicated that the targets had been achieved for that financial year. The other difference was that the “customer” criterion was now referred to as the “service delivery” criterion. As was the case with the 2018 Leader Guide, the maximum productivity bonus that an eligible employee could receive under the terms of the 2019 Leader Guide was 4% of their base salary (a maximum of 1% for each of the four criteria).

51    STI payments were made to some employees in October 2019, being the employees who were found to be eligible to receive payments in accordance with the eligibility criteria in the 2009 Leader Guide. The amounts paid to those employees varied.

52    The Leader Guide for the 2020 financial year was distributed by Queensland Coal in July 2020. The eligibility criteria in respect of the productivity bonus were once again essentially the same as those that applied in the earlier financial years. The table which set out the criteria and targets against which STI payments were to be calculated was also similar to the tables employed in the previous years, though the “safety” and “service delivery (performance)” criteria now had two separate targets, each of which attracted a maximum 0.5% bonus. The detail in respect of the financial year targets also differed in certain respects. There was no indication in the table as to whether those targets had been met for that financial year.

53    STI payments were again made to some employees in October 2020, being the employees who were found to be eligible to receive payments in accordance with the eligibility criteria in the Leader Guide. The amounts paid to the employees varied.

54    The Leader Guide for the 2021 financial year was different in material respects to the earlier Leader Guides. While the eligibility criteria were similar to those specified in the earlier years, there were significant differences in respect of the criteria relevant to the calculation of the amounts payable. In particular, the maximum bonus that an employee could receive was specified as 2% – comprised of a maximum of 1% referable to the “safety” criterion and a maximum of 1% referable to the “individual performance and behaviour rating” criterion. The Leader Guide indicated that no productivity bonus was payable in respect of the “service delivery” and “financial performance” criteria or categories, as in previous years, essentially because targets in respect of those criteria or categories had not been met.

55    STI payments were made to some employees in October 2021, being the employees who were found to be eligible to receive payments in accordance with the eligibility criteria in the Leader Guide. The amounts paid to the employees varied. The payments were no doubt lower than in previous years given that the maximum payable was 2% of an employee’s base salary.

56    No Leader Guide was issued in respect of the 2022. More significantly, no STI payments were made to any employee for the 2022 financial year.

57    While the agreed facts concerning the various Leader Guides for the financial years 2018 to 2020 might tend to suggest that the basis upon which the STI payments were calculated was consistent over most years, essentially being 1% of base salary in respect of each of the four specified performance criteria, there was uncontested affidavit evidence which tended to suggest that the percentages set by Queensland Coal in respect of the performance criteria varied from year to year. There was also uncontested affidavit evidence which tended to suggest that the amounts received by some employees varied as a percentage of their base salary from year to year. That variance could perhaps be explained as arising from different percentages being applied in respect of the individual performance criterion, however it is not entirely clear if that was in fact the case.

58    The apparent variance between the STI payments made by the employees between 2018 and 2021 is of some relevance to the Unions’ arguments concerning the proper construction of the 2018 EA. That is because, as will be seen, those arguments tended to presume that Queensland Coal employed a consistent or invariable practice or policy concerning the calculation of STI payments over the period 2018 to 2021. That presumption is, at best, questionable. In any event, the fact remains that there was no dispute, nor could there be, that it was Queensland Coal, and Queensland Coal alone, that determined the eligibility criteria for STI payments and it was Queensland Coal, and Queensland Coal alone, that determined the criteria used to calculate the amounts payable. Queensland Coal was not constrained in that regard by any provision in the 2018 EA. The Unions did not contend otherwise.

Bargaining for the 2022 enterprise agreement and the “Contract Bonus Plan”

59    The Agreed Statement of Facts included some facts concerning what occurred, or was said, during the negotiations in respect of the Pacific National Queensland Coal Enterprise Agreement 2022 which, as the name suggests, was entered into in 2022 (the 2022 EA). The relevance of those facts to the construction of the 2018 EA was unclear and was never fully explored in the parties’ submissions. It is, in those circumstances, unnecessary to recite those facts here.

60    Similarly, the Agreed Statement of Facts refers, albeit in the section referring to the parties’ contentions, to a scheme or plan, referred to as the “Contract Bonus Plan”, which related to payments that Queensland Coal was said to have made to employees who were not covered by the 2014 EA or the 2018 EA. The Unions, who initially appeared to place some reliance on that scheme or plan, ultimately abandoned any reliance on it. It is therefore again unnecessary to detail the facts, or the parties’ contentions, concerning that scheme or plan.

Affidavit evidence

61    The parties each read affidavit evidence from various witnesses. Some of the paragraphs of the affidavits were objected to and excluded and some paragraphs were not read. None of the witnesses were cross-examined.

62    It is unnecessary to refer in any detail to the evidence in the affidavits. The parties made scant, if any, reference to the affidavit evidence in their written and oral submissions. That is perhaps understandable because the relevance and admissibility of much of the affidavit evidence was at best questionable.

63    Some of the affidavit evidence simply addressed facts which were included in the Agreed Statement of Facts in any event. Some of the evidence comprised very general background facts in respect of the 2014 EA and the 2018 EA and the receipt of STI payments by some employees during the currency of those agreements. Some of the evidence concerned the negotiation of the 2014 EA, the 2018 EA and the 2022 EA. Much of that evidence was of dubious, if any, relevance because it rose no higher than evidence revealing the subjective views or understandings of those involved in the negotiations. The evidence that was of some potential relevance was the evidence (summarised earlier) which tended to indicate the existence of a common understanding of those involved in the negotiation of the 2018 EA concerning the operation of the relevant clause of the 2014 EA. That evidence, however, was largely reproduced in the Statement of Agreed Facts in any event. Some of the affidavit evidence was plainly irrelevant as it amounted to nothing more than the witnesses’ subjective views or understanding of the nature of the STI payments and the basis upon which they were made.

64    I made it clear to the parties that I did not propose to consider any of the affidavit evidence unless I was taken to those parts of the evidence that were relied on and the relevance of that evidence to the constructional issue was explained. As noted earlier, I was taken to very little of the affidavit evidence during the parties’ submissions. The only real exception to that was the affidavit evidence of Mr Flanagan (one of Queensland Coal’s witnesses), the main parts of which were, in any event, largely replicated in the Agreed Statement of Facts.

RELEVANT PRINCIPLES IN RESPECT OF THE CONSTRUCTION OF INDUSTRIAL INSTRUMENTS

65    The applicable principles in respect of the construction of industrial instruments, including enterprise agreements, are well established and were not in dispute in this proceeding. They were succinctly summarised by the Full Court (Tracey, Bromberg and Rangiah JJ) in WorkPac Pty Ltd v Skene (2018) 264 FCR 536; [2018] FCAFC 131 at [197]:

The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context: City of Wanneroo v Holmes (1989) 30 IR 362 at 378 (French J). The interpretation “… turns on the language of the particular agreement, understood in the light of its industrial context and purpose …”: Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [2] (Gleeson CJ and McHugh J). The words are not to be interpreted in a vacuum divorced from industrial realities (Holmes at 378); rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament (Holmes at 378–9, citing Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR(NSW) 498 at 503 (Street J)). To similar effect, it has been said that the framers of such documents were likely of a “practical bent of mind” and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced: see Kucks v CSR Limited (1996) 66 IR 182 at 184 (Madgwick J); Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16] (Marshall, Tracey and Flick JJ); Amcor at [96] (Kirby J).

66    The applicable principles were also summarised to like effect by Griffiths and SC Derrington JJ in James Cook University v Ridd [2020] FCAFC 123; (2020) 278 FCR 566 at [65];

The relevant principles applicable to the interpretation of an enterprise agreement may be stated as follows:

(i)     The starting point is the ordinary meaning of the words, read as a whole and in context (City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362, 378; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 [53]; WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 [197]).

(ii)     A purposive approach is preferred to a narrow or pedantic approach — the framers of such documents were likely to be of a “practical bent of mind” (Kucks v CSR Limited [1996] 66 IR 182, 184; Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 [16]; WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 [197]). The interpretation “turns upon the language of the particular agreement, understood in the light of its industrial context and purpose” (Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10; 222 CLR 241 [2]).

(iii)     Context is not confined to the words of the instrument surrounding the expression to be construed (City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 [53]). It may extend to “… the entire document of which it is a part, or to other documents with which there is an association” (Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511, 518; Australian Municipal, Administrative, Clerical and Services Union v Treasurer of the Commonwealth of Australia [1998] FCA 249; 82 FCR 175, 178).

(iv)     Context may include “… ideas that gave rise to an expression in a document from which it has been taken” (Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511, 518).

(v)     Recourse may be had to the history of a particular clause “Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form…” (Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511, 518).

(vi)     A generous construction is preferred over a strictly literal approach (Geo A Bond and Co Ltd (in liq) v McKenzie [1929] AR 499, 503-4; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 [57]), but “Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties” (City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362, 380).

(vii)     Words are not to be interpreted in a vacuum divorced from industrial realities but in the light of the customs and working conditions of the particular industry (City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362, 378-9; WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 [197]).

67    It should perhaps be emphasised that nothing said in either Ridd or Workpac concerning the applicable principles in respect of the construction of industrial instruments should be taken to materially exclude, derogate from, or diminish the general principle that agreements are to be construed objectively, not by reference to the subjective understandings or intentions of the parties: Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 352 (Mason J). Regard can, however, be had to the factual background and surrounding circumstances known to the parties at or before the date of the agreement: Codelfa at 348-350 (Mason J); Pacific Carriers Ltd [2004] HCA 35 at [22]; (2004) 218 CLR 451.

68    In the industrial context, the factual background and surrounding circumstances can in some cases include the parties’ common understanding of the meaning of terms in an instrument that were repeated in successive instruments. If a “provision has appeared in a series of agreements between the same parties, and if they can be shown to have conducted themselves according to a common understanding of the meaning of that provision, then it can be taken that they have agreed that the term should continue to have the commonly understood meaning in the current agreement”: Shop Distributive and Allied Employees’ Association v Woolworths Ltd [2006] FCA 616 at [31] (Gray J) citing Merchant Service Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Association (1958) 1 FLR 248 at 251, 254 and 257 per Morgan J; Printing & Kindred Industries Union v Davies Bros Ltd (1986) 18 IR 444 at 452-453.

69    Care must, however, be taken in drawing upon what is said to be a common understanding between the parties as an aid in construing the instrument in question. The evidence must establish that there has been a “meeting of the minds”, or a “consensus”, before it can be said that there is a common understanding: Australian Liquor, Hospitality and Miscellaneous Workers Union v Prestige Property Services Pty Ltd (2006) 149 FCR 209; [2006] FCA 11 at [44]. Evidence which merely establishes the subjective views of one party as to the meaning of a term in an agreement and inadvertence or an absence of complaint by the other party does not establish a common understanding. In Health Services Union v Ballarat Health Services [2011] FCA 1256, Gray J stated as follows (at [77]):

… An industrial instrument that has a consensual basis, such as an agreement negotiated between a trade union and an employer, is in that sense subject to the normal rule that the subjective understandings or intentions of the parties at the time they entered into the agreement cannot be used thereafter to aid in the construction of the terms of the agreement. Similarly, the conduct of the parties subsequent to the making of the agreement cannot be used as a guide to the construction of its terms. There have been cases in which it has been held that a common understanding of a term used in an industrial agreement can be used to aid in the interpretation of that term. In those cases, the parties to such agreements have acted on a common understanding as to the meaning of terms in those agreements, and the terms have been repeated in successive instruments, so that it can be said that the parties have entered into the successive agreements on the basis of their common understanding of those terms. Care is needed in approaching any suggestion of a common understanding as to terms used. In the first place, there must be positive evidence of a common understanding. Ordinarily, a failure to advance an argument as to the effect of a particular provision will not constitute such evidence. A failure to advance an argument is consistent with inadvertence, and common inadvertence is not common understanding….

70    Justice Gray went on to note a second need for care in relation to taking common understandings into account (at [79]):

The second need for care arises in the context of the manner in which industrial instruments are now created. In the days when an award might be negotiated between a union and an employer, and made by consent, the existence of a common understanding between the union and the employer as to the meaning of terms might have had some role to play in their construction. Whatever were the terms of such an agreement, and whatever was their meaning, those terms were imposed upon the employees who became bound by the award. In the current era, most industrial instruments are required to be put to a vote of the employees whose work will be covered by them, before they can be certified or approved so as to become enforceable by statute. The union and the employer who negotiated the terms might have had a common understanding of the meaning of them, but that understanding might not have been shared by all or some of the employees who voted for the operation of the agreement. They may have been entirely ignorant of the common understanding. In those circumstances, the occasions on which it can be said that a party to an agreement who entered into it on a common understanding should not be allowed to resile from that understanding will be rarer than they have been in the past.

71    There is an additional need for caution in the use of suggested common understandings as an aid to construction where the common understanding is said to arise from, or is said to be able to be inferred from, post-agreement conduct. Post-contractual conduct cannot be used as an aid to the interpretation of contracts: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 at [35]; Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at [11]-[13], [58], [306]-[335]. That is also the case in respect of the construction of industrial instruments: Australian Rail, Tram and Bus Industry Union v KDR Victoria Pty Ltd (t/as Yarra Trams) [2021] FCA 1377 at [61] and the cases there cited.

72    As will be seen, the principles concerning the irrelevance of the subjective views and intentions of the parties, and the potential relevance of the objective factual background and surrounding circumstances known to the parties, including, if established, the common understanding of the parties, are of particular importance in this case. That is particularly so in relation to the evidence concerning the 2018 EA negotiations and the question whether the parties had a common understanding of the operation of the remuneration clauses in the 2014 EA.

73    One final point should be emphasised in respect of the applicable principles. While the authorities establish that a “generous” construction is to be preferred over a strictly literal, narrow or pedantic approach, the task nevertheless “remains one of interpreting a document produced by another or others” and a “court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award”: Kucks v CSR Ltd (1996) 66 IR 182 at 184 (Madgwick J). Moreover, contextual considerations, including industrial history and industrial practices “do not take the place of the terms of the instrument” to be construed and “extrinsic matters cannot displace the clear meaning of the text”: Yarra Trams at [63]. In short, the task of construing an enterprise agreement must begin with the text of the agreement and the ordinary meaning of the words and, while regard must be had to the context and purpose of the provision, those considerations cannot result in a construction of the agreement which contradicts, varies, or gives a strained meaning to the words actually used in the document.

THE PROPER CONSTRUCTION OF THE REMUNERATION CLAUSES IN THE 2018 EA

74    As has just been noted, the starting point in construing the relevant clause in the 2018 EA is the text of the clause itself, considered in the context of the text of the 2018 EA as a whole. While the text must be read in light of all relevant contextual considerations, one must always begin with the words used in the written instrument in question.

75    As noted earlier, the Unions’ contention that the 2018 required Queensland Coal to make STI payments to the 2018 EA workers focussed on clause 19.2(a) of the 2018 EA.

The text of clause 19.2(a) considered in the context of the 2018 EA as a whole

76    The Unions pointed to the fact that clause 19.2(a) of the 2018 EA concerns a matter which is central to any industrial bargain, namely remuneration. They also relied on the fact that the clause uses mandatory and definitive language in that it provides that employees “are” remunerated on a total remuneration basis and that the Total Remuneration Package “is” made up of components, one of which is Short Term Incentives. That mandatory language, so it was submitted, indicated that the payment of Short Term Incentives was not a matter of discretion. The Unions also noted that the Short Term Incentives component in clause 19.2(a)(iii) is “enmeshed within the structure” of the clause and is treated no differently from the other components. In the Unions’ submission, each of the textual considerations to which reference has just been made indicated that clause 19.2(a) must be read as requiring or obliging Queensland Coal to pay Short Term Incentives to the 2018 EA workers.

77    I am unable to accept the Unions’ submissions based on the words or text of clause 19.2(a) of the 2018 EA. The language used in clause 19.2(a), considered in the context of the 2018 EA as a whole, does not indicate that Queensland Coal was required or obliged to pay any amount or amounts representing Short Term Incentives to the 2018 EA workers.

78    While it may perhaps be accepted that the words “are” and “is” may sometimes denote something that is definite or mandatory, in the sense of requiring or obliging something to be done or not done, that is not always the case. Much will depend on the context in which those words are used.

79    The context in which the words are used in clause 19.2(a) is not one which indicates the creation or imposition of a mandatory requirement or obligation on the part of Queensland Coal. Indeed, the clause does not require or oblige Queensland Coal to do anything. It passively states that employees are to be remunerated on a particular basis and specifies the components that make up the (otherwise undefined) Total Remuneration Package. It would different if the clause stated that employees “are to be paid”, or that Queensland Coal “is to pay” employees each of the specified components of the Total Renumeration Package. But that is not what clause 19.2(a) says.

80    The fact that clause 19.2(a) does not itself create or impose any obligation on Queensland Coal to pay employees any amount or amounts representing the components of the Total Remuneration Package is reinforced by the fact that the obligations or requirements to pay the employees particular amounts or components of the Total Remuneration Package are to be found elsewhere in the agreement.

81    In the case of the “Base Salary” component, clause 19.1(a) provides that an Employee is “entitled to the Base Salary specified in Schedule 1”. Schedule 1 specifies the precise amounts that employees in particular classifications are “entitled” to receive at the commencement of the agreement and after 12 and 24 months. There could be no doubt that clause 19.1(a) requires Queensland Coal to pay employees the amounts specified in Schedule 1.

82    In the case of the “Aggregate Penalty Multiplier”, clause 19.3 provides that employees “will be entitled to” be paid an additional amount (the “Aggregate Penalty Multiplier”) which is 28% of the Base Salary (as specified in clause 19.1(a) and Schedule 1). That additional amount “will be” paid on a fortnightly basis. There can again be no doubt that clause 19.3 requires or obliges Queensland Coal to pay employees that additional amount.

83    In the case of the “Performance Bonus” component, clause 19.2(d) provides that Queensland Coal “is to” pay employees a “Performance Bonus” and clause 7 defines “Performance Bonus” as an amount which is 6% of an employee’s “Total Remuneration Rate”, which in turn is defined in clause 7 as the “Base Salary and Aggregate Penalty Multiplier”. The definition of “Performance Bonus” in clause 7 also provides that it is “payable under clause19.2(e)” (though it is common ground that this is a typographical error and should read 19.2(d)). There can again be no doubt that clause 19.2(e) requires or obliges Queensland Coal to pay employees an amount calculated in accordance with the formula prescribed in the relevant definitional provision in clause 7.

84    In contrast, there is no clause in the 2018 EA which specifically provides that Queensland Coal is required or obliged to pay employees any amount in respect of the Short Term Incentives component of the Total Remuneration Package. The 2018 EA is completely silent in that regard. There is also no clause in the 2018 EA which defines what that component is, or how it is to be calculated. The 2018 EA is again completely silent in that regard. The only reference to Short Term Incentives in the agreement is in clause 19.2(a). That may be somewhat confounding, but that does not assist the Unions.

85    The Unions contended, in effect, that the apparent lacunae in the 2018 EA concerning the calculation and requirement to pay employees amounts representing Short Term Incentives could be filled by reference to the industrial history, which indicated that amounts representing Short Term Incentives had been calculated in a particular way and paid to employees during the operation of previous enterprise agreements, including the similarly worded 2014 EA. That contention, which was essentially based on the need to consider the text of an industrial instrument in its relevant industrial context, will be discussed in more detail later. It suffices at this point to note that there is nothing in the text of the 2018 EA to suggest or imply that Queensland Coal was required or obliged to calculate and pay amounts representing Short Term Incentives in accordance with any current or past practice, policy or scheme.

86    The Unions contended, in effect, that if clause 19.2(a) was not construed as requiring Queensland Coal to pay employees the specified components of the Total Remuneration Package, including Short Term Incentives, the clause would have no work to do. They submitted that clause 19.2(a) should be construed in a way which gives meaning to every word in that provision (cf Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [71], in respect of statutory interpretation). There is some force in that submission. There is ample authority for the proposition that the proper mode of construing any written instrument is to endeavour to give some meaning and effect to all words in the instrument and avoid treating some words as being surplusage or redundant. There are, however, two answers to the Unions’ surplusage submission.

87    The first answer is that clause 19.2(a) can potentially be construed as having some work to do, and the words used in it (including the reference to Short Term Incentives) may be given some meaning, even if the clause is not construed as itself requiring Queensland Coal to pay the 2018 EA workers all the specified components of the Total Remuneration Package, including Short Term Incentives. While the operation or intended operation of clause 19.2(a) is not entirely clear from its rather obscure wording, it may have been intended to indicate that employees are not entitled to claim any payments over and above the components that may make up the Total Remuneration Package. In other words, clause 19.2(a) is intended to preclude employees from claiming that they are entitled to be paid any other allowances or payments that do not fall within, or are not provided for, in the Total Remuneration Package.

88    That potential construction of clause 19.2(a) is perhaps supported by the terms of clause 19.2(b), which provides that the Base Salary is “comprehensive and unless specified elsewhere in this Agreement includes provision for the payment of any allowances or payments that may otherwise be payable or have been payable to an Employee”.

89    On that potential construction of clause 19.2(a), employees can receive payments in respect of the specified components of the Total Remuneration Package, including STI payments, however Queensland Coal is only required to pay employees amounts in respect of specific components (and the employees are only entitled to receive those amounts) if other clauses in the agreement so provide. In the case of Short Term Incentives, there is no such provision. Short Term Incentives are therefore payments that Queensland Coal can pay, but is not required to pay, under the terms of the 2018 EA.

90    The second, and perhaps more compelling and complete, answer to the Unions’ surplusage submission is that the canon of construction upon which it relies is subject to an important qualification. That qualification is that, while every endeavour should be made to give words used in an instrument some meaning or work to do, that endeavour should not result in the words being given a strained meaning, or a meaning which is at odds with, or not possible to reconcile with, other clauses in the instrument: see Western Australian Planning Commission v Southregal Pty Ltd [2017] HCA 7; (2017) 259 CLR 106 at [55] (in respect of statutory construction) and Re Strand Music Hall Co Ltd [1865] 35 Beav. 153 (in respect of written instruments more generally). In the industrial context, as effectively reflected in the general principles relating to the construction of industrial instruments to which reference was made earlier, the drafters of industrial instruments are regrettably all too frequently guilty of surplusage and the use of redundant and at times confounding wordage. It is not always possible to give that surplusage or confounding wordage any coherent meaning or any meaningful work to do. The strive to give meaning to every word in an industrial instrument can only be taken so far.

91    Even accepting that a generous construction of an industrial instrument is generally preferred to a strictly literal approach, the construction of clause 19.2(a) of the 2018 EA proposed by the Unions gives the words used in the clause a strained meaning which is inconsistent and impossible to reconcile with other clauses in the agreement and the agreement construed as a whole. As discussed earlier, the clauses which require Queensland Coal to pay the 2018 EA workers the Base Salary, the Aggregate Penalty Multiplier and the Performance Bonus are to be found elsewhere in the agreement. There is no such provision in respect of Short Term Incentives. Likewise, the clauses that provide for the calculation or quantification of the Base Salary, the Aggregate Penalty Multiplier and the Performance Bonus are to be found elsewhere in the document. There is no provision concerning the calculation or quantification of Short Term Benefits in the 2018 EA. Indeed, the expression “Short Term Incentives” is not even defined or used elsewhere in the 2018 EA.

92    The fact that the 2018 EA does not contain a provision which defines or provides any basis for the calculation or quantification of any amount or amounts to be paid to employees in respect of Short Term Incentives is significant. As French J (sitting as a single judge of this Court) observed in City of Wanneroo v Holmes [1989] FCA 553; (1989) 30 IR 362 at 380:

Awards, whether by consent or otherwise, should make sense according to basic conventions of the English language. They bind the parties on pain of pecuniary penalties.

(Emphasis added.)

93    The Unions contended that pecuniary penalties should be imposed on Queensland Coal in respect of its breach of the 2018 EA constituted by its failure to pay the 2018 EA workers any Short Term Incentives. But precisely what amounts should have been paid to the 2018 EA workers? No answer to that rhetorical question can be found within the four walls of the 2018 EA. It would be extraordinary to construe the 2018 EA as requiring Queensland Coal to pay workers certain amounts as part of their remuneration, and expose Queensland Coal to pecuniary penalties for failing to pay those amounts to employees in breach of the agreement, in circumstances where it is not possible, from the terms of the agreement itself, to determine exactly what amounts Queensland Coal would have been required to pay.

94    That consideration weighs heavily against the construction proposed by the Unions. The fact that an enterprise agreement binds the parties on pain of pecuniary penalties indicates that a construction which provides some degree of certainty and clarity should be preferred to one which does not. A construction of an enterprise agreement that requires (in the absence of an express requirement) an employer to pay undefined and unquantified amounts to all employees covered by the agreement could hardly be said to provide certainty and clarity.

95    The Unions sought to deal with this issue by contending that, properly construed, clause 19.2(a) required Queensland Coal to “each year, determine a mechanism by which a STI payment would be calculated and paid” and “entitled the Employees to an STI payment in accordance with the policy determined by [Queensland Coal] for such payments from time to time”. The Unions did not, however, advance any submissions which shed any light on how the text of clause 19.2(a), either alone or read together with any other provision of the 2018 EA, could sensibly be read or construed in that way. The contention, rather, appeared to be based entirely on contextual considerations, in particular the industrial history and the fact that STI payments had been made by Queensland Coal both during the currency of the 2014 EA and, at least initially, under the 2018 EA.

96    That provides a convenient segue to a consideration of what was said by the Unions to be the relevant industrial context, in particular the history or genesis of clause 19.2(a) of the 2018 EA and the payment by Queensland Coal of amounts representing Short Term Incentives during the currency of both the 2014 EA and the 2018 EA, at least until 2022 when Queensland Coal decided not to make any payments in respect of that financial year.

Context – the genesis of clause 19.2(a) and past STI payments

97    It may, of course, be accepted that the history or genesis of a particular clause in an enterprise agreement, and its inclusion and operation in previous agreements, may provide important context when it comes to construing that clause. That is not to say that such contextual considerations will always assist in shedding light on the meaning of the clause in question.

98    The history or genesis of clause 19.2(a) of the 2018 EA was detailed earlier in these reasons. In short summary, a clause referring to employees receiving “total remuneration” comprising various components first appeared in the 1995 EA, though it was not until the 2009 CA that the total remuneration was stated to include “Short Term Incentives” as one of the components. That clause was effectively replicated in the 2014 EA and, most significantly, replicated again in clause 19.2(a) the 2018.

99    I am not persuaded that the history of clause 19.2(a) of the 2018 EA provides any real or meaningful assistance in construing its meaning or intended operation. The equivalent clauses in the 2009 CA and the 2014 EA are as opaque and confounding as clause 19.2(a). Like the 2018 EA, neither the 2009 CA nor the 2014 EA contained any other clause which defined the expression “Short Term Incentives” or quantified or stated how that component was to be calculated, or when, or in what circumstances it was to be paid. The history of the provision provides little assistance in ascertaining, objectively, exactly why the provision was inserted or how it was intended to operate. In particular, the history and genesis of the clause sheds little, if any, light on why the “Short Term Incentives” component was added in circumstances where no other provision was inserted in the agreement concerning the payment of that component.

100    It was perhaps because the history of clause 19.2(a) of the 2018 EA provided such little assistance in construing the clause that the Unions placed considerable reliance on the history of the making of STI payments under or during the currency of the 2014 EA and the 2018 EA. The facts in respect of Queensland Coal making STI payments in the past were detailed earlier. There was no dispute that STI payments were made during the currency of the 2014 EA and during the first few years of operation of the 2018 EA. There was also no dispute that Queensland Coal would generally publish a Leader Guide which set out the criteria that would be used to determine who would be eligible to receive an STI payment and to calculate the amount that would be paid. Those criteria were determined by Queensland Coal. The criteria by which the payments were calculated generally included criteria based on a review of each employee’s performance and criteria based on the meeting of targets set by Queensland Coal. But precisely how do those contextual facts assist in the construction of clause 19.2(a) of the 2018 EA?

101    While the way the Unions put their respective cases varied and shifted over time, they ultimately both contended, in effect, that the fact that Queensland Coal had adopted or employed a policy, practice or scheme involving the calculation and payment of STI payments every year during the currency of the 2014 EA, and during the first years of operation of the 2018 EA, indicated that those payments were required to be made under the terms of those agreement. The payments therefore could not be said to discretionary, as contended by Queensland Coal. While the Unions initially appeared to contend that Queensland Coal was effectively obliged by clause 19.2(b) of the 2018 EA to continue the calculate and make the STI payments on the basis of the same criteria that it had employed in previous years, they ultimately contended that the clause required Queensland Coal, each year, to both determine a “mechanism” by which STI payments were to be calculated and paid, and to make payments calculated in accordance with that mechanism or policy. The Unions effectively conceded that it was entirely up to Queensland Coal to determine the metes and bounds of the mechanism and that all it was required to do was pay an STI payment “of some kind”.

102    I am not persuaded that the fact Queensland Coal made STI payments during the currency of the 2014 EA and the 2018 EA provides any support for the construction of clause 19.2(a) of the EA which was ultimately advanced by the Unions. The mere fact that Queensland Coal made STI payments does not necessarily indicate that it was required or obliged to make such payments, or that it considered that it was required or obliged to make such payments. It is equally consistent with Queensland Coal choosing to make such payments during those years or, as Queensland Coal put it, having the discretion to make such payments.

103    It does not assist the Unions to characterise Queensland Coal’s making of STI payments in the past as constituting or comprising a policy, practice or scheme. Nor does it assist the Unions to say that the policy, practice or scheme involved Queensland Coal determining the “mechanism” by which STI payments would be calculated and paid. The undisputed facts indicate that the so-called “mechanism” employed by Queensland Coal involved it setting the criteria, both in respect of the eligibility for, and the calculation of, the STI payments that were to be made. The criteria set by Queensland Coal were not specified or provided for in the 2018 EA, but rather were set by Queensland Coal based on factors or considerations wholly outside the terms of the 2018 EA. In that respect, at least, the STI payments could be said to be discretionary and not guaranteed or required to be made, let alone required to be made by the terms of the 2014 EA or the 2018 EA.

104    The point is that even if, at the time of the negotiation of the 2018 EA, Queensland Coal could be said to have had a policy or practice involving the payment of Short Term Incentives, and even if the reference to, or inclusion of, the words “Short Term Incentives” in clause 19.2(a) should therefore be construed as somehow referring to that policy or practice, it does not follow the 2018 EA employees were entitled to receive, or that Queensland Coal was required to make, such payments every year under the terms of 2018 EA. That is because any such policy or practice was not one in respect of which the employees were guaranteed to receive a STI payment every year, let alone a payment of any particular amount. Rather, Queensland Coal could determine what, if any, amount employees could receive pursuant to the policy or practice. The policy or practice, such as it was, enabled or permitted Queensland Coal to set the criteria or parameters pursuant to which any payments were to be calculated in such a way that employees might receive little or nothing.

105    In any event, the construction advanced by the Unions based on the existence of the so-called policy, practice, scheme or mechanism would require much to be read into clause 19.2(a) of the 2018 EA. That clause simply states that the “Total Remuneration Package for Employees” relevantly includes “Short Term Incentives”. The clause makes no reference whatsoever to any policy, practice, scheme or mechanism in respect of the calculation and payment of Short Term Incentives. No contortion or straining of the words actually used in the clause could possibly produce the complex construction advanced by Unions on the basis of the history of past STI payments. While the words used in an enterprise agreement must be construed having regard to relevant contextual considerations, the task remains to interpret the agreement based on the objective meaning of the text. Industrial practices adopted by a party to an enterprise agreement, to the extent that they can be seen to be a relevant contextual consideration, cannot supplant or dictate the meaning of the terms of the agreement. The construction advanced by the Unions based on the past STI payments seeks to do just that.

Context – the bargaining process and a common understanding

106    The construction advanced by the Unions based on the history of STI payments is also significantly undermined by the facts and evidence concerning the negotiation of the 2018 EA.

107    The facts relating to the bargaining process in respect of the 2018 EA, as summarised earlier, also support Queensland Coal’s contention that those who were involved in the bargaining process had a common understanding, or proceeded on the basis of common knowledge, that Queensland Coal was not obliged to pay Short Term Incentives, and that such payments were not guaranteed under the terms of the 2014 EA. As discussed earlier, the existence of a common understanding of the meaning of a term of an industrial instrument may in some circumstances be used as an aid to construction, particularly where that term has been repeated in successive instruments. A common understanding in that regard, however, is only made out if there is evidence of a meeting of the minds or consensus between the parties and even then, there is need for caution where the evidence suggests that the consensus may only be with the employees’ representatives, not the employees as a whole.

108    The Unions submitted that the facts and evidence concerning the negotiations in respect of the 2018 EA did not establish any common understanding concerning the meaning and operation of the clause of the 2014 EA which was in identical terms to clause 19.2(a) of the 2018 EA. They submitted, in particular, that the evidence indicated, at best, that the representatives of the Unions who participated in the negotiations may have had a common understanding and that there was no evidence to suggest that the employees as a whole shared that understanding. They also submitted that what was discussed during the negotiations was not sufficiently notorious to constitute common knowledge of an objective fact. I do not accept any of those submissions.

109    The agreed facts and undisputed evidence of what was said during the negotiations indicated that there was a relevant common understanding between Queensland Coal’s representatives and the Unions’ delegates and employee representatives. That common understanding was that Queensland Coal was not required to make STI payments and those payments were not guaranteed by the terms of the 2014 EA. Mr Flanagan made that point on more than one occasion and none of the Union or employee representatives demurred. One employee representative expressly conceded that STI payments were not guaranteed. The evidence, considered as a whole, established more than mere inadvertence or lack of complaint by the Union delegates and employee representatives. Moreover, Queensland Coal distributed “Employee Updates” which reported on the discussions. The available inference is that those updates were disseminated to the employees as a whole. There was no evidence to the contrary. Those updates again referred to the STI payments as being “non guaranteed” and that the 2014 EA did not specify any “value” in respect of those payments. The Unions did not adduce any evidence to indicate that any employees remained ignorant of what otherwise appeared to be a common understanding that the payment of Short Term Incentives under the 2014 EA was not guaranteed under the terms of the agreement.

110    Despite its somewhat compelling nature, I nevertheless do not consider that the evidence concerning the parties’ common understanding of the status or nature of the STI payments made during the currency of 2014 is a particularly significant contextual consideration, in and of itself, in construing the 2018 EA. What that evidence does do, however, is to significantly blunt, if not negative, the Unions reliance on the fact that Queensland Coal made STI payments during the currency of the 2014 EA. The evidence clearly indicates that Queensland Coal made those payments even though it considered that it was not required to do so under the terms of the 2014 EA. It follows that, even if it could be said that Queensland Coal had a policy or practice of calculating and paying STI payments under the 2014 EA, that policy or practice was discretionary and not mandated by the terms of the 2014 EA.

Conclusion

111    The construction of clause 19.2(a) of the 2018 EA advanced by Queensland Coal is correct. The text of that clause, considered not only in the context of the agreement as a whole, but also in the context of the history of similar clauses in earlier enterprise agreements, and in light of the so-called “industrial realities”, indicates that the clause merely allowed or permitted Queensland Coal to pay employees Short Term Incentives as part of their “Total Remuneration Package”, but did not require or oblige it to do so. The fact that Queensland Coal may have had a policy or practice of annually determining the eligibility and calculation criteria in respect of Short Term Incentives and paying eligible employees in accordance with that practice or policy provides no contextual support for the Unions’ contention that clause 19.2(a) required Queensland Coal to both determine a mechanism by which Short Term Incentives were to be calculated and to make payments in accordance with that mechanism. Nor does that construction of clause 19.2(a) find any support in the text of the clause or the agreement as a whole.

PROPLEMS WITH THE RELIEF SOUGHT BY THE UNIONS

112    Given that conclusion in respect of the proper construction of clause 19.2(a) of the 2018 EA, it is unnecessary to consider the availability or appropriateness of the relief sought by the Unions in their cross claims. It is, however, worth noting that the way in which the Unions couched their case in respect of relief over time has been somewhat of a moveable feast. That fact in and of itself tends to indicate that the Unions had difficulty grappling with the question of exactly what, if anything, Queensland Coal was required to do to comply with clause 19.2(a) of the 2018 EA.

113    The RTBU initially sought a declaration the effect of which was that clause 19.2(a) required Queensland Coal to pay employees “an amount equivalent to 64% of 4% of their base rate (or 2.5% of their base wage)” in the 2022 financial year. In its amended concise statement, however, the RTBU claimed (at [13]) that the effect of clause 19.2(a), properly construed, was “to require [Queensland Coal] to pay employees the Short Term Incentive payments calculated in the same manner as determined for employees not covered by the Enterprise Agreement”. The “manner” in which payments were to be calculated in that regard was (at [5]) said to be pursuant to a “formula” set by Queensland Coal each financial year. The RTBU ultimately did not press either of those contentions in respect of what clause 19.2(a) required Queensland Coal to do.

114    In its cross claim, the AFULE put its case in respect of the proper construction of clause 19.2(a) differently. It contended (at [11]) that clause 19.2(a) required Queensland Coal to pay employees to whom the 2018 EA applied an “STI Payment” each financial year “following the application of the STI Scheme for that financial year”. The “STI Scheme” was alleged (at [7]-[8]) to be a scheme, which was in existence at the time of the negotiation of the 2018 EA, pursuant to which Queensland Coal made STI payments “up to 4% of base salary, comprising 1% of base pay payable upon satisfaction of each of four key performance indicators: the Safety KPI, the Operations KPI, the Service Delivery KPI and the Individual Performance KPI”. That allegation was plainly based on one of Queensland Coal’s Leader Guides, not on anything in the text of clause 19.2(a), or any other provision in the 2018 EA. The AFULE sought a declaration that Queensland Coal breached clause 19.2 by failing to pay the “STI Payment” to employees to whom the 2018 EA applied, or by failing to apply the “STI Scheme”. The AFULE ultimately did not put its case in the terms pleaded in its cross claim.

115    As noted earlier, both the RTBU and the AFULE ultimately put their cases in respect of the proper construction of clause 19.2(b) in the terms outlined in the Agreed Facts: namely that clause 19.2(b) required Queensland Coal, each year, to “determine a mechanism by which a STI payment would be calculated and paid” and “entitled the Employees to an STI payment in accordance with the policy determined by [Queensland Coal] for such payments from time to time”. For the reasons given earlier, that construction of clause 19.2(a) finds no support in the text of clause 19.2(b) considered in the context of the 2018 EA as a whole. Nor does the history or industrial context support that construction.

116    In their pleadings, both the RTBU and the AFULE contended that Queensland Coal breached clause 19.2(b) of the 2018 EA in the 2022 financial because it failed to pay employees Short Term Incentives calculated in the various different ways that they alleged the payments were required to be calculated. The relief they sought included the declarations referred to earlier, though the declarations as pleaded did not frame the alleged breaches of clause 19.2(a) in terms of failing to “determine a mechanism”, which is the way their case was ultimately put in the Agreed Statement of Facts. Perhaps more significantly both the RTBU and the AFULE also sought orders the effect of which was to require Queensland Coal to pay pecuniary penalties for contravening s 50 of the Fair Work Act (constituted by its alleged breach of clause 19.2(a) of the 2018 EA) and pay the employees compensation pursuant to s 545(1) of the Fair Work Act.

117    The Unions’ claims that the employees were entitled to compensation arising from Queensland Coal’s alleged breach of s 19.2(a) of the 2018 EA raised another issue for the Unions. In circumstances where both Unions ultimately put their cases in terms which did not identify the amounts that Queensland Coal was actually required to pay the employees, neither was able to provide any meaningful particulars in respect of the amount of compensation which they contended Queensland Coal was required to pay to the employees. In the Statement of Agreed Facts, the Unions simply contended, in effect, that the amounts that were required to be paid to employees in respect of the 2022 financial year was to be calculated “in accordance with the policy determined by [Queensland Coal] in relation to that calendar year”.

118    Ultimately, the relief sought by the Unions in respect of the compensation payable to the employees was that a referee should be appointed to perform the appropriate “calculation exercise”, presumably having regard to the Queensland Coal’s “policy”. That, however, begs the question: exactly what policy? The answer, presumably, is the policy that required Queensland Coal to determine a mechanism pursuant to which the STI payments in the 2022 financial year would be calculated. If that be the case, however, it is difficult to see how a referee could determine precisely what that mechanism should have been. The proposed “calculation exercise” would be further complicated by the fact that it appeared to be common ground that the calculation criteria specified by Queensland Coal (the alleged “mechanism”) varied from year to year, so it would not be possible to use the criteria used in any past year as a guide.

119    If that sounds confusing, that is because it is. It is unnecessary to dwell any further on the inconsistencies and uncertainties in the way the Unions put their case in respect of relief. For the reasons given earlier, Queensland Coal’s construction of clause 19.2(a) is correct and the question of relief does not arise. The difficulties that the Unions had in framing their cases does, however, tend to highlight the difficulties and uncertainties inherent in the Unions’ proposed construction of clause 19.2(b).

CONCLUSION

120    A declaration along the lines of the declaration sought by Queensland Coal in its originating application will be made. The Unions’ cross claims will be dismissed. Queensland Coal did not seek an order that the Unions pay its costs of the proceedings. There will accordingly be no order as to costs.

Associate:

Dated:    27 August 2026