The Australian Meat Industry Employees Union (AMIEU) requested the Fair Work Commission (Commission) intervene in a dispute concerning a change in working hours for two employees by their employer, Golden Cockerel Pty Ltd. This was in accordance with the dispute settlement procedures set out in the Golden Cockerel Certified Workplace Agreement 2012 (Agreement).

Facts

The employees were changed from a fixed early morning shift (commencing around 3.00am), which attracted an approximate 20% allowance (under the grandfathered provisions of the Agreement) to a later starting time for ordinary hours of 5.00am.

The employees also were required to do one hour overtime and commence work at 4.00am. This situation did not attract the 20% allowance, however it would attract one hour of overtime pay.

Another clause in the Agreement allowed Golden Cockerel to alter departmental starting times at its discretion with 36 hours’ notice, or without such notice if by agreement with the employee.

The central issue to the dispute was whether or not the two employees were covered by the grandfathering clause in the Agreement, which guaranteed their continuing entitlement at all times to the applicable early morning shift allowance.

Initially, Senior Deputy President Richards found in favour of Golden Cockerel. The AMIEU then appealed to the Full Bench of the Commission.1

Decision

In determining how to interpret the terms of the Agreement, the Full Bench ruled that the Acts Interpretation Act 1901 (Cth) (AI Act) does not apply to the construction of an enterprise agreement made under the Fair Work Act 2009 (Cth) (FW Act). This is because the AI Act applies to an instrument made by an authority, and an enterprise agreement is not made by the Commission. Rather, the power conferred on the Commission by the FW Act is limited to the approval of agreements that have already been made between the parties.

Accordingly, the Full Bench said that “an enterprise agreement approved by the Commission must be interpreted without recourse to the AI Act.”

Other principles relating to the construction of enterprise agreements that were applied by the Full Bench in this decision are summarised below:

  • if the language in the agreement is ambiguous or susceptible to more than one interpretation, then evidence of the surrounding circumstances will be admissible to aid the interpretation of the agreement. Where there does not appear to be any ambiguity, then evidence of surrounding circumstances will not be admitted;
  • admissible evidence of the “surrounding circumstances” will include evidence of prior negotiations to the extent that they establish objective background facts and the subject matter of the agreement known to all parties. The objective common intention of the parties is also relevant; however the subjective intentions or expectations of the parties is not;
  • where the construction of an agreement is disputed, the resolution will turn on the language of the agreement, taking into account its context and purpose. Context can be drawn from the text of the agreement viewed as a whole, the disputed provision’s place and arrangement in the agreement and/or the legislative context under which the agreement was made and in which it operates; and
  • the task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by the parties.

In applying the above principles to the matter at hand, the Full Bench firstly considered whether an ambiguity in the Agreement existed. Accordingly, the Full Bench considered extrinsic material, such as early emails between the parties, to conclude that the provisions were not ambiguous. It ruled the dispute was capable of being resolved by reference to the plain language of the Agreement. On this basis, further use of the evidence of surrounding circumstances was not admissible.

The Full Bench then considered whether, based on the plain language of the Agreement, Golden Cockerel was entitled to alter the starting times of the employees.

It held that the grandfathering provisions preserved particular hours of work for some employees, however only to the extent that those clauses prevented ordinary hours from being worked before 5.00am without the employee’s consent.

Another provision permitted Golden Cockerel to require employees to work reasonable overtime. The Full Bench considered that the hour between 4.00am to 5.00am may be considered reasonable overtime. Accordingly, it upheld the determination of Senior Deputy President Richards, and ruled that Golden Cockerel was entitled to alter the starting time of the two employees and that the two employees could be directed to perform reasonable overtime.

Bottom line for employers

This case confirms that an enterprise agreement is made by the parties to the agreement, and not by the Commission. The correct position is that the Commission’s powers are limited to approving the agreement and consequently, the AI Act has no part to play in the interpretation of an enterprise agreement.

Employers should keep in mind that there are strict rules regarding when evidence of surrounding circumstances, including earlier negotiations, may be admissible to assist in the interpretation of an enterprise agreement.

Accordingly, employers should not rely on pre-agreement negotiations in the hope that a clause will be interpreted in a particular manner. Employers should ensure that clauses are sufficiently clear and adequately reflect the intention of the parties.