C2015/1312, Transcript of Proceedings [2015] FWCTrans 253 (5 May 2015)

TRANSCRIPT OF PROCEEDINGS

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Fair Work Act 2009 1051585

SENIOR DEPUTY PRESIDENT HARRISON
DEPUTY PRESIDENT LAWRENCE

COMMISSIONER BULL

C2015/1312; C2015/1313

s.604 - Appeal of decisions

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers' Union (AMWU);

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU)

and

Viva Energy Refining Pty Ltd
(C2015/1312; C2015/1313)

Sydney

10.08 AM, THURSDAY, 19 MARCH 2015

PN1

SENIOR DEPUTY PRESIDENT HARRISON: Good morning. There are no appearances here in Sydney. May we have appearances in Melbourne?

PN2

MR WIELADEK: Your Honour, my name is John Wieladek and I appear for the AMWU and I seek permission from the Commission to also appear for the CEPU.

PN3

SENIOR DEPUTY PRESIDENT HARRISON: Mr Wieladek.

PN4

MR O'GRADY: If the Full Bench pleases, my name is O’Grady, initial C, and I seek permission to appear on behalf of Viva, the respondent to the appeal. I understand that permission is not opposed.

PN5

SENIOR DEPUTY PRESIDENT HARRISON: Yes, thank you. Any other appearances in Melbourne?

PN6

MR O'GRADY: No, no, Your Honour.

PN7

SENIOR DEPUTY PRESIDENT HARRISON: Mr Wieladek, is Mr O’Grady correct to say that you do not oppose permission being granted?

PN8

MR WIELADEK: That’s correct.

PN9

SENIOR DEPUTY PRESIDENT HARRISON: We have had an opportunity to read the submissions filed in support of the appeal and opposition to it and have formed the view that this appeal would be dealt with more efficiently taking into account the complexities raised in the appeal if permission was granted to counsel to appear for the respondent. It is granted.

PN10

MR O'GRADY: Thank you.

PN11

SENIOR DEPUTY PRESIDENT HARRISON: I just want to address a couple of matters concerning finding my way around the appeal book. It might be best to do that first. In the index there is an entry in the column: “Document.” There is an entry: “Applicant Union Submissions.” Is that the document that was marked “A2” below?

PN12

MR O'GRADY: Your Honour, I will just briefly check but I believe that is correct. Yes, that document was A2 below.

PN13

SENIOR DEPUTY PRESIDENT HARRISON: I take it the next document, the respondent’s submissions, was marked “R2” below?

PN14

MR O'GRADY: I think that is correct, your Honour. Yes, that is right.

PN15

SENIOR DEPUTY PRESIDENT HARRISON: What about the remainder of the documents that are there identified? I note that they all bear dates subsequent to the Commissioner’s hearing on 30 July. So, presumably, they weren’t given an exhibit number. But would you both, perhaps, put them in context for us in your submission as to the circumstances in which the need for them to be filed arose because there seems to be a number of submissions that were filed subsequent to the hearing. Presumably they were pursuant to leave to do so. But let us understand that. Also, I think at some stage you will need to identify in the document for us documents referred to by Johns C in his decision and you will need to give us an appeal book page number for them. You will know that he identifies some exhibits, in particular, or annexures that he says were of assistance to him in his reasoning process.

PN16

MR O'GRADY: Your Honour, if I could perhaps address those matters upfront so that they are out of the way and if I could direct the Full Bench to paragraphs 9 and 10 of the decision of Johns C which appears at page 16 of the appeal book.

PN17

SENIOR DEPUTY PRESIDENT HARRISON: Yes.

PN18

MR O'GRADY: You will see in those paragraphs that what the Commissioner says is that in the light of the decision in Linfox being handed down and then subsequently in the light of the Full Bench decision in the Golden Cockerel case being handed down, he invited further submissions from the parties.

PN19

SENIOR DEPUTY PRESIDENT HARRISON: Yes.

PN20

MR O'GRADY: It was in that context that the further submissions that you have referred to were filed by the parties. In respect of the document that Johns C refers to, that was appended to the submissions filed by the respondent, exhibit R1, before him. Unfortunately, it didn’t make it into the original version of the appeal book. But we subsequently sought to augment the appeal book and file a copy with Your Honour’s chambers and it appears relevantly at appeal book page 246A through to 2.6V of the appeal book. I can see in your hand your Honour has a colour document. That is the only colour document in the appeal book so that should be the document in question.

PN21

SENIOR DEPUTY PRESIDENT HARRISON: Yes, we all have that. Yes, thank you.

PN22

MR O'GRADY: Yes, if it pleases the Full Bench.

PN23

SENIOR DEPUTY PRESIDENT HARRISON: Then, whilst you are at it, if one or other of you could just then identify in the appeal book, I think, a couple more documents. In paragraph 44 of the Commissioner’s decision he refers to heading 4 in the respondent’s offer of settlement, particularly ‑ ‑ ‑

PN24

MR O'GRADY: I am sorry, your Honour. You are fading in and out.

PN25

SENIOR DEPUTY PRESIDENT HARRISON: I am sorry. Yes, that is my fault. I wasn’t speaking directly into the microphone. Paragraph 44 of the Commissioner’s decision.

PN26

MR O'GRADY: Yes.

PN27

SENIOR DEPUTY PRESIDENT HARRISON: Where do we find that in the appeal book? Sorry, where do we find the document he refers to in that paragraph in the appeal book?

PN28

MR O'GRADY: That is in the document that I have just taken the Full Bench too that that appears at page 246A and following

PN29

SENIOR DEPUTY PRESIDENT HARRISON: Yes.

PN30

MR O'GRADY: I think the relevant page or the page that is being referred to there is 246U.

PN31

SENIOR DEPUTY PRESIDENT HARRISON: 246U. At paragraph 46, he refers to attachment A to exhibit R2.

PN32

MR O'GRADY: Yes.

PN33

SENIOR DEPUTY PRESIDENT HARRISON: I think now I know what that is having got the confirmation earlier of what R2 is. Let me just make sure it has an attachment A in our appeal book.

PN34

MR O'GRADY: That is the document. That is the colour document I have been taking the Full Bench to.

PN35

SENIOR DEPUTY PRESIDENT HARRISON: No, it seems to be submissions I am referring to now. It is the document ‑ ‑ ‑

PN36

MR O'GRADY: Yes. What happened, as I understand it, your Honour, was that the submissions of the respondent, which are exhibit R2, were filed and they included the attachment which is the colour document.

PN37

SENIOR DEPUTY PRESIDENT HARRISON: Yes, now I have it.

PN38

MR O'GRADY: Your Honour will see at page 246 there is actually the items that go into attachment A.

PN39

SENIOR DEPUTY PRESIDENT HARRISON: Yes, yes.

PN40

MR O'GRADY: When the appeal book was originally formulated, the attachment itself wasn’t appended but we subsequently filed that.

PN41

SENIOR DEPUTY PRESIDENT HARRISON: Yes, thank you.

PN42

MR O'GRADY: The offer of settlement that your Honour was referring to is actually at 246R.

PN43

SENIOR DEPUTY PRESIDENT HARRISON: Thank you.

PN44

MR O'GRADY: As your Honour pleases.

PN45

SENIOR DEPUTY PRESIDENT HARRISON: Just a couple of other matters. Perhaps neither of you should do what I have just been doing, that is turn away from the microphone when you are addressing us because it probably makes it harder for us to hear you. Also, try and keep the shuffling of papers to a minimum because it is quite audible here and it can be a little distracting. If at any time you need to take some instructions or consider a matter, just let us know and we could either put the link on mute or just vacate the court for a short time to allow you to talk to those instructing you. Or maybe even confer with others at the Bar table. The whispers are generally audible. If you wish us to hear it then that is fine. But if you don’t, move away from the mikes. Having said all of that, Mr Wieladek.

PN46

MR WIELADEK: Thank you, your Honour. The appellants have filed a written outline of submissions. We rely upon that document to set out the bulk of the argument that we present today. We propose to put short oral submissions. I think it is quite a discrete point of agreement interpretation. If the Commission pleases, I propose to first go through how we say the agreement operates, the errors that we say occurred in the decision at first instance, and then deal with the issue of, Commission, to appeal.

PN47

SENIOR DEPUTY PRESIDENT HARRISON: Let me mark your submissions. I think they are adopted by each of the appellants, are they? Yes, they are on behalf of the two appellants.

PN48

MR WIELADEK: Yes, that’s correct.

PN49

SENIOR DEPUTY PRESIDENT HARRISON: We will mark them. They are dated 12 February 2015. We will mark them A1.

EXHIBIT #A APPELLANT SUBMISSIONS DATED 12/02/2015.

PN50

SENIOR DEPUTY PRESIDENT HARRISON: Yes.

PN51

MR WIELADEK: Thank you. So turning firstly to the agreement, by way of background the hours that are worked by the employees subject to the agreement which, for the purpose of this dispute, are the electrical and mechanical maintenance employees at the Geelong refinery. It used to be the Shell Geelong refinery. It is now presently the Viva Energy Geelong refinery. They work there a 35-hour week. The composition of that week is nine days of work at 7.78 hours and one RDO of 7.78 hours. When that goes through a two-week cycle it becomes 70 hours work with one day off out of the 10 ordinary working days of the week.

PN52

The way that things presently stand is that the day off is the second Monday in that cycle going through and at appeal book 229 to 230, which is the applicant union’s submissions at first instance, we set out a table that describes how that working week occurs. So this pattern of work, what that establishes is what is commonly known as the 35-hour week in the oil refining industry.

PN53

The tension that exists here in this dispute in this appeal is the role which an annualised salary takes and how that impacts a specific provision relating to RDOs and whether they can be reallocated and if they can under what circumstances. Part 4 of the agreement deals with how workers working under this arrangement, working the 35-hour week, how they are compensated. So what it establishes is an annualised salary. The annualised salary is not a strict annualised salary that might be encountered, let’s say, in white collar work where a fixed figure compensates an employee for all the work they do. What it is, is effectively an allowance that prepays a certain amount of overtime.

PN54

The part of the agreement that deals with the annualised salary is found in appeal book 104 to 115. I might turn to that to have that on hand as I refer to some of the clauses in that part of the agreement. So clauses 4.1 and 4.2, et cetera, they explain what the role and aims of the parties were in establishing an annualised salary and what it was generally intended to do and 4.3 deals with what they call salary conventions. It should be said by way of background, this is the second iteration of an annualised overtime component at the refinery.

PN55

The first one - and there is some reference to it in the agreement, there is some reference to it in the other documents in the appeal – what is called FHA. FHA was, what one could say, version 1 of the annualised overtime entitlement. The parties between the current agreement and the last agreement decided to change it. Effectively it changes what type of work qualifies for the allowance and when the overtime allowance changed from FHA to MSA, more or less, I think it could be fairly said, a broader variety of work fell under it. But it is a similar concept. It is prepaying an allowance for certain work to be done so you don’t have what would be otherwise known as wages based overtime; time and a half, double time, et cetera.

PN56

So the way that the MSA specifically works is described best in clause 4.7.3 and that is at appeal book 106. There, there are the four years of the agreement which the agreement will last and in each year there is an increasing number of hours that annually have to be met by an employee to qualify for the allowance to be paid. So in year one it is 120, 132, 144, et cetera. So when that is broken down on a month’s basis, it is 10 hours a month, 11 hours a month, 12 hours a month, 13 hours a month.

PN57

There is the word there “unrestricted” next to it and that, as was submitted below, and I don’t know whether is a dispute about this, but the use of the term “unrestricted” is to make it clear that it is not like FHA because different work qualified for different allowances or for overtime. “Unrestricted” means basically if you are called in to do a particular task, that call in is deduced from the MSA. It is not different types of work that existed under the FHA.

PN58

What happens for an employee once they exhaust or they meet their hours of 120 hours or 132 hours, an employee then can do one of a number of things but the two, sort of, most prominent options possible under the agreement is they could bring forth some of next year’s MSA hours. That is permitted under the agreement. So they can start chipping away against next year’s MSA hours or they can then go, once they have met their MSA quota, they can go onto wages based overtime. So they meet the quota then they convert to earning double time or whatever it may be. That process is set out in clause 4.7.9 and that appears at appeal book 110 and that there is the process of what happens once the MSA allowance has been met.

PN59

SENIOR DEPUTY PRESIDENT HARRISON: Just pause there, would you, and maybe you can help me with this matter. You have addressed what happens when the annual quota is reached. But clause 4.7.4(iv) identifies the nominal hourly MSA hours and it seems to be that there is also certain calculations that occur as a consequence of working the nominal hours per month. Is there any need for me to better understand that clause than just reading it; namely, to assist me with, in a practical way, how it works? I don’t recall that it has been mentioned in the submissions but I was reading the whole of clause 4.7 and wanting to understand how it all worked.

PN60

MR WIELADEK: Your Honour, I think for the purpose of resolving the tension between 5.7 and part 4, I don’t think that needs to be drilled to. But if it arises that we revisit this matter, I would be happy to formulate a position on that. But I think that subparagraph (iv) really deals with the 10 to 13. That really there is the escalating number of hours of the commitment. But it goes here: “May also involve further or reasonable additional hours.” I think that is there to suggest that further hours could be worked, but the MSA would still – you would be having a deduction of credit against your bank of MSA hours. But for the purposes, I think, of the dispute here today, it doesn’t necessarily need to be determined.

PN61

If I just go back to clause 4.3.1, that there states the general principle where for the overtime, other than when the MSA is exhausted, all existing entitlements to overtime and penalty payments are comprehended in the new salary. Accordingly, there should be no claim by or additional payments to an employee for work performed on the basis of the required task except permitted as part 4.

PN62

What we say that means is the parties have come to the view you get this allowance and that discharges all the other payments. It is really a question of what monetary compensation you get. Clause 4.8 really deals with some of those allowances that are comprehended and AB110 to 111, you can see that things like rain money, phone payment, meal moneys, kilometres relating to overtime, all overtime, blah, blah, blah, et cetera; those things have been cashed out effectively by this allowance.

PN63

So that is how the prepaid overtime allowance works. We now turn to part 5. Part 5 generally deals with hours of – the title says: “Hours work breaks, overtime shift work and leave.” So the theme of part 4 is compensation and establishes a relatively sophisticated compensation scheme. Part 5 deals with organisation of the base labour and the hours and the mechanics of that. We say it is thematically a different matter.

PN64

We say when you look at the scheme of the rest of clause 5, if we put clause 5.7 aside it co-exists quite comfortably with the rest of the document. There is nothing there that suggests subservience. Because the subject matter is different, it interacts with but doesn’t override other parts of the document. Clause 5.7 deals with the issue of working on an RDO and the key paragraph here is the first paragraph of that clause which is one sentence but is probably best analysed in two halves and we say the split should occur where the comma appears.

PN65

So it first says: “The provisions of the Standard Hours (Oil Companies) Award shall continue to regulate the operations of the 35-hour week for all employees covered by this award.” Perhaps we will stop there. Under the Standard Hours Award which the respondents have sent copies of to the Full Bench, I understand, under that award working an RDO is overtime. If the Commission were to flick back to the table where we set out in our initial submissions in A2, the working week, it stands to reason if you work an RDO you have done nine days at 7.79 and then you do a tenth day at 7.79. That is more than the 35-hour week or the 70-hour fortnight. That is in excess. So it must follow, we say, that that day is overtime and that would be the case under that award if it was the only document that regulated the situation.

PN66

The second half of the sentence in the first paragraph of 5.7 states that: “When an employee has requested an RDO, the employee can choose to be paid at single time rate and take an alternative single time day in lieu prior to the next scheduled RDO.” What we argued at first instance and we argue here is this creates an additional RDO right. That right doesn’t exist in the Standard Hours Award. This is an additional benefit that the parties have cited to insert here.

PN67

In its terms it doesn’t say that you have to wait until the MSA is exhausted. Its plain terms say that when you are requested to work an RDO, whoever the case may be, an employee can choose to be paid at the single time rate and then take a day in lieu. If we refer back to that table again of the working week, what occurs there? An employee, let’s say on the second Monday is their rostered RDO, a critical piece of maintenance needs to occur and the worker is called in.

PN68

SENIOR DEPUTY PRESIDENT HARRISON: Where are you taking us back to? Where are you taking us back to again, the appeal book number?

PN69

MR WIELADEK: I am sorry. That is the table in A2 which is AB229 to 230.

PN70

SENIOR DEPUTY PRESIDENT HARRISON: Yes, that was an annexure.

PN71

MR WIELADEK: Sorry, the table is at 230.

PN72

SENIOR DEPUTY PRESIDENT HARRISON: Yes, it was an annexure to some submissions filed below. Or not an annexure. It was part of.

PN73

MR WIELADEK: That is right.

PN74

SENIOR DEPUTY PRESIDENT HARRISON: Yes, I have that. The table is on appeal book 230.

PN75

MR WIELADEK: Yes. So, for example, let’s say on that second Monday, halfway down the table, an employee is called in to do an essential piece of maintenance. They come in and work it and they say: “I exercise my right under 5.7 and I will have it on Friday.” If we tally the hours again for that modified working week with a substituted RDO, the hours that were worked by the employee are still 70. They don’t work any extra hours. It is simply a one for one exchange.

PN76

DEPUTY PRESIDENT LAWRENCE: Mr Wieladek, can I just stop you? Did I hear you correctly in saying that in your submission clause 5.7 deals with an entirely different matter to the matters that are dealt with in clause 4.7, if I can say it that way? Is that right? Because 5.7 is dealing with the working or non-working on RDOs. It is the working of overtime. How is it an entirely different matter from all the matters that are dealt with in 4.7?

PN77

MR WIELADEK: 4.7 we say deals with how a worker is compensated and establishes the allowance for that. This is how the working week is arranged and it gives an employee an election on when they can have their RDO.

PN78

DEPUTY PRESIDENT LAWRENCE: It may give people an election but the question is when does that election operate? I mean, the parties have constructed an extraordinarily elaborate system here in this system. I am not quite sure to what purpose, really, other than making it inordinately complicated, given that it appears it is not a total loaded rate in any event. But it just seems to me that, I mean, essentially what the Commissioner was saying was that you need to look at the agreement as a whole, perhaps inadequately drafted as it is. What your submission is that you don’t look at it as a whole, is that right?

PN79

MR WIELADEK: No, we say that the Commission should look at it as a whole but I think the key issue is what happens when all the hours of a working fortnight get tallied. We accept that if a worker works on their RDO but doesn’t reallocate, they are working overtime, and if they are under the cap of hours that they are owed that will be deducted from MSA. If they are over the cap, that would be dealt with by the wages based overtime. If they exercise their choice to reallocate the RDO, they are not working more than 70 hours a fortnight. So our submission is that that is not overtime. That is a one for one replacement.

PN80

There is reference in 5.7 to the issues or to the concept of a single time rate. It is in two points there. They can choose to be paid at single time rate and to be paid on an alternative day at single time. We say that the parties did that in order to be crystal clear on what their entitlements are. When one looks at – there was an old document which appeared in the witness statement of Mr Towitt(?) at appeal book 205 and there that document suggests that there is – this is a memorandum going back to – it seems that it is a copy of a set of notes from 1978 and the date of the memorandum is 1980.

PN81

In that document there there was an historical practice where you wouldn’t be paid one for one. You would be effectively allow to – it would almost be a form of double dipping or placing a penalty on the employer for calling someone in on their RDO. So we say that that reference to single time clarifies that and really renders that particular practice that is recorded in the chief engineer’s note, you know, a historical practice rather than the current practice.

PN82

So that is what we say about that. But going back to that initial point is whether the matters are completely different. When an employee elects to reassign the day he or she never ticks over the 70 hours a fortnight. So on that basis we say it is not overtime and the MSA has no role. We summarise this approach in paragraph 7 of our submissions that were marked this morning.

PN83

I might briefly now touch upon what we say the Commissioner’s error was at first instance. We say there are two principal errors. One is that in his comments – if one looks at the conclusion of the Commissioner which indicates that clause 5.7 is subordinate to part 4 in the MSA system. The Commissioner made implied terms and effectively rewrote the agreement to – I am just finding the exact paragraph. I might just take a moment, I am sorry, Commissioner. It is paragraph 34 of the decision and it is at appeal book page 41 and he inserts the sentence there: “Subject to the operation of the MSA, the provisions of the award shall continue to regulate.”

PN84

We say that that is in light of the principles in Golden Cockerel which his Honour repeated and applied in the decision that that is an impermissible rewriting of the agreement. If that insertion of those words there in paragraph 34 in the italicised and underlined part, is an implication of terms, his Honour made an error by not applying the test for implication which we would say would be that test in BP Refinery.

PN85

DEPUTY PRESIDENT LAWRENCE: Can I just say, Mr Wieladek, that, I mean, is the Commissioner doing that or is he really pointing out what is obvious point that there was extraordinarily inadequate drafting of the agreement if the appellant’s argument is right. I mean, the parties here have constructed this elaborate system, this MSA system, and just haven’t really had regard to how the agreement operates totally to the extent of leaving a reference to a 2003 award in clause 5.7 which is a pretty inadequate way of dealing with something, you would have thought, rather than expressing it completely. So I think what the Commissioner is saying: “Well, look, there is a conflict here. There is an ambiguity. It is poorly drafted.” He does express a view as to what the meaning is, he thinks. But I don’t know that he is redrafting the agreement, is he?

PN86

MR WIELADEK: Your Honour, I accept that can be put against that argument. I accept that that reasoning can be put against the argument we have put forward. But if that paragraph is read in its entirety the Commissioner, with respect, adds these words, “supposes what the parties intended,” and makes reference that it is a missed opportunity to amend and the suggestion is that this is what, you know, these added words are the ones that should have been there. We say that that clause can exist without any trouble without those words being inserted. All that would simply mean is that the choice on the RDO can be exercised at any point by a worker. It doesn’t lead to one of those absurd outcomes or a perverse outcome, for example, double dipping or a counter intuitive outcome where someone becomes entitled to a benefit that truly grates against the compensative nature of an allowance.

PN87

Your Honours, Commissioner, I might go to our second point of what we say the error is - is that there was a failure to properly take into account some extrinsic evidence and the Commissioner goes through the process of analysing the extrinsic evidence and the consideration that he gives it and the consideration portion of the Commissioner’s judgment appears at appeal book 41 through to 44. In relation to the extrinsic evidence it is dealt with at paragraph 47 on appeal book page 43. That is where his Honour reproduces the test about extrinsic materials from Gold Cockerel, the evidence of prior negotiations, notorious facts, common contemplation and common assumption, and relies on attachment A to exhibit R2 which we discussed this morning which is that coloured document that is the insert in the respondent’s submissions at first instance.

PN88

We say his Honour should have taken into account and relied upon Mr Towitt’s evidence but that doesn’t appear to have occurred in paragraph 47. Mr Towitt is a tradesman electrician at the workplace. His statement appears at appeal book 80 through to 221. It incorporates a number of annexures but his statement proper, not including the annexures, goes from 80 to 86. In that witness statement there it should be remembered that below Mr Towitt was not required for cross-examination and much of the material that he makes reference to wasn’t challenged by Ms Murray’s statement. Ms Murray’s statement at paragraph 4 discloses exactly what the limits of the understanding and knowledge that she had about the negotiations and other conduct at the refinery.

PN89

If I can go through the points that Mr Towitt makes, he refers to the practice of swapping an RDO one for one as a generalised practice. This is in paragraph 11 of his statement at appeal book 81: “Everybody reallocated their RDO to a day before their next RDO. I cannot recall anyone working their RDO and claiming overtime for it.” He also indicates that he has spoken to other employees and in his own experience it has been the practice since 2004 and one of the other employees he has spoken to has told him that this has been there for 39 and a half years, which is the length of service of the other employee and that is at paragraph 12 of appeal book 82.

PN90

He also annexes two documents that describe the historical practice. One was that 1980 memorandum I referred to and that there contemplates the swap arrangement and that is appeal book 205 to 206. That is - I will just check that reference – yes, 205 to 206 and that describes that practice that existed at that point in time. There is another document that he refers to and that is his attachment P83 and he describes the genesis of that document in paragraph 15 of his witness statement and that is the records of a metal trades review meeting and that describes Shell’s view of a number of issues.

PN91

The document appears at appeal book 203. In that document it is clear that the document is created by Shell and on the second half of the page towards the bottom there is a description from Shell’s point of view, because it is in the column “responded items.” These items are previously raised and responded to by the company. It describes how the RDO situation is dealt with and that there is a swap on a one for one basis and the date of that document is 2008.

PN92

We say that these two documents and the evidence of Mr Towitt as to his experiences and observations he has had, this forms part of the notorious background and the obvious facts that existed at that point in time. He goes on to say that when the agreement was negotiated, the present agreement was negotiated, clause 5.7 and its operation was never ever discussed. So a practice that existed for nearly 40 years, an alteration to it was never ever discussed in those negotiations and his reference to that is at appeal book 84 at paragraph 30.

PN93

The last point about extrinsic material we would like to make submissions on is the role of the statutory declaration made by Ms Freya Poulter, a HR officer of the company, of the respondent, in support of the certification of the agreement. The statutory declaration appears at appeal book 212 to 221. It is quite clear it is the standard form F17 and in order for an agreement to be approved there needs to be this type of declaration filed that sets out a number of things and on page 214 it is clear there is declarations made as to how the agreement has been generally approved.

PN94

First to 2.14, there is the question about what steps have been taken to be represented – what steps the employer took to enable representation by bargaining representatives to occur. At 2.5, how was the written text of the agreement and incorporated material distributed. 2.6, further down the page, the steps that the employer took to notify employees of the time and place of the approval. Finally, what we focus on is 2.7: “Please specify the steps taken by the employer to explain the terms of the agreement and the effect of those terms to relevant employees.” This is the question that Commission must be satisfied of under the criterion in section 180(5) of the Act when it comes to approve the agreement.

PN95

Over the page at appeal book 215, the third dot point there, within the email was a summary document outlining the changes made to each clause in the proposed agreement. That was a document which summarised the changes distributed to the employees. So that document there – if I just find that document – that document appears at AB208 to 210. On the second page at appeal book 209 there is a reference to clause 5.7, “Working on an RDO,” and there is says, “No changes.”

PN96

So what we say is this is an important matter that should have been taken into account by the Commissioner and should have been relied upon because the declaration of the company to the question, “How have you explained the terms of the agreement and what do they mean, what is their effect?” they rely on the document and the document says, “No changes.” The previous practice can be – you know, the obvious question there is if there is no changes, no changes to what? We say the logical conclusion is no changes to the previous practice and Mr Towitt explains what the previous practice is.

PN97

SENIOR DEPUTY PRESIDENT HARRISON: Just looking through that document quickly and this observation may not be 100 per cent accurate, but it looks to me as if the changes refer to wording or numbering or cross-referencing, rather than anything else? If that is so, the comment about clause 5.7 was correct but only goes to the fact that the wording was not changed.

PN98

MR WIELADEK: Your Honour, I understand that argument. We say look at the genesis of the document and the manner in which it was relied upon and produced. It was produced and relied upon into a question as to the effect and meaning.

PN99

SENIOR DEPUTY PRESIDENT HARRISON: Yes.

PN100

MR WIELADEK: That is the declaration that was made by Ms Poulter because it is produced and relied upon in relation to the question to section 180(5). If it were a summary document and only was put together to be relied upon in 2.5 at appeal book 214, the question as to how the written text of the agreement has been distributed and there is a mention there of it ergo a document that summarised the changes was sent out. If it was simply relied upon in that matter that would be one thing because that may be a strict textual analysis: where the full stops have been moved, where the words have been changed, where the renumberings have occurred. But it has been put out as a document that explains the effect of these things and if a worker read that document that said “No change,” there is no disclaimer here. There is no disclaimer here at all that says: “This is only changes to wording and there is no changes as to the effect.” So that is what we say about that point.

PN101

Finally, your Honours, Commissioner, I will just briefly touch on the question of permission to appeal. We say if the Full Bench identifies that there is an error, as the authorities say, if there was an error in the interpretation of agreement that is an error of law, there is a public interest in the Commission correcting decisions that have been infected by error. But otherwise we do accept it is a contest of relatively private rights between the respondent and the employees and we also accept if there is no error in the reasoning then it would follow that permission ought not to be granted.

PN102

SENIOR DEPUTY PRESIDENT HARRISON: I take it from that last comment you accept that the dispute settlement procedure does not give an independent right of appeal. It is an appeal that proceeds in accordance with section 604 necessitating first the grant of permission.

PN103

MR WIELADEK: Your Honour, that is correct. We did raise that argument in our submissions, but we don’t press it at the hearing.

PN104

SENIOR DEPUTY PRESIDENT HARRISON: No, no, I think that is a proper concession, I must say. I didn’t think it was a strong argument. Yes, thank you for that.

PN105

MR WIELADEK: Yes, we accept it is materially different to the cases where that has been upheld.

PN106

SENIOR DEPUTY PRESIDENT HARRISON: Yes, indeed. Thank you.

PN107

MR WIELADEK: Unless I can assist the Full Bench further, they are the submissions of the appellant.

PN108

COMMISSIONER BULL: Mr Wieladek, you can assist me, if you don’t mind. You say that clause 5.7 is not about overtime but about reallocating the RDOs. Is that what I heard you say?

PN109

MR WIELADEK: I am sorry, Commissioner. I missed that last point.

PN110

COMMISSIONER BULL: Just tell me if I have got this right. Did you say that clause 5.7, titled “Working on an RDO,” is not about overtime but about reallocating the RDO? Is that what you said?

PN111

MR WIELADEK: Yes, that is right. It is implicit in the clause, however, that, you know, there is the word “choice” used there. Choosing to reallocate is only one half of the equation. If you don’t choose to reallocate, it is overtime because at that point you work the 77.97 hours a fortnight.

PN112

COMMISSIONER BULL: So ordinarily working on an RDO is overtime; would you concede that?

PN113

MR WIELADEK: In the event there is no reallocation, yes.

PN114

COMMISSIONER BULL: So if they reallocate, they get paid the single time rate and take another paid day off; is that right?

PN115

MR WIELADEK: Yes.

PN116

COMMISSIONER BULL: But isn’t that some form of an overtime payment? That is double time, isn’t it? They are getting paid ‑ ‑ ‑

PN117

MR WIELADEK: No, that is the compensation that the workers get for working a longer day ever day. That is part of the 35-hour week. All that is done is rather than the RDO being on every second Monday, for a particular worker in a particular given fortnight, that Monday might require work so it is reallocated to the Thursday or the Friday or whatever other day. There is no extra work done.

PN118

COMMISSIONER BULL: No, I understand about the extra work, but 5.7 says that an employee can choose to be paid – this is what you are talking about – the single time rate and take a paid day off in lieu.

PN119

MR WIELADEK: Yes, that’s right.

PN120

COMMISSIONER BULL: You say that that is choosing not to b paid overtime, do you?

PN121

MR WIELADEK: Yes, that’s right. It is moving the date.

PN122

COMMISSIONER BULL: They take their paid date on another occasion, but for the time they do work they get paid for that.

PN123

MR WIELADEK: Yes, that’s right.

PN124

COMMISSIONER BULL: You say that that shouldn’t ‑ ‑ ‑

PN125

MR WIELADEK: But the case is that whichever day it is all worked, whichever day the RDO is worked, the employees under the 35-hour week get paid for every day of the 10-day fortnight.

PN126

COMMISSIONER BULL: If I look at page 230 of the appeal book which is the table you have taken us to previously which is an outline of your submissions, is that right?

PN127

MR WIELADEK: Yes.

PN128

COMMISSIONER BULL: So at paragraph 12 there you say they work nine day by 7.78 hours which gives them the 70 hours a week. They have one day off a fortnight.

PN129

MR WIELADEK: Yes.

PN130

COMMISSIONER BULL: That one day off a fortnight, where does the payment for that come from?

PN131

MR WIELADEK: That comes from working the point 1.8 extra every day.

PN132

COMMISSIONER BULL: So they are not actually paid nine days by 7.78. They are paid 10 days by seven hours; is that right?

PN133

MR WIELADEK: Yes. In that nine days if the employee – so on the preceding page on appeal book 229, that little equation there at paragraph 10 describes what happens in an RDO week. Let’s say there is no overtime. There is no extra hours there. You have got the nine days at 7.78 and then you get the one day at 7.78 as an RDO. That is a conventional RDO cycle where you work longer, get paid for less than you work and you bank a paid day.

PN134

COMMISSIONER BULL: I understand that. Thank you. Then on page 230, if that is meant to line up, under the one day by 7.78 hours, you have got underneath there: “RDO overtime / MSA.”

PN135

MR WIELADEK: Yes.

PN136

COMMISSIONER BULL: So what do you mean by that?

PN137

MR WIELADEK: That is because on that day the employee attended work and performed work. I probably could have explained that bolded label better. If you are directed to work on that RDO you have got nine days work and a tenth day work. When I say, “RDO overtime MSA,” that is because an employee could either, depending on their individual circumstances, be paid overtime wages or they could be contributing to their bank of hours under the MSA allowance. It depends on what point they are during the year and how much previous overtime they have worked. But that there comprehends attending work 10 days.

PN138

COMMISSIONER BULL: Going back to 5.7, the second paragraph talks about where you are called in on your RDO on more than two occasions. You get paid overtime and you have a day off without pay. Is that what that means?

PN139

MR WIELADEK: I think that is an additional condition and I am looking at the rest of clause 5.7. These are additional conditions that must arise really where employees are put to the inconvenience of more than two days, two or more days of their RDOs being interrupted. But that particular paragraph hasn’t featured in the dispute but ‑ ‑ ‑

PN140

COMMISSIONER BULL: I am just looking at the reference to paid overtime. I am not sure whether it means days or not. It says: “If an employee is called in on an RDO on two or more separate occasions.” Is that two occasions on the one day or two separate days?

PN141

MR WIELADEK: I might have to get instructions about that.

PN142

COMMISSIONER BULL: Anyway, it refers to paid overtime tasks.

PN143

MR WIELADEK: Yes. I think I understand this. Is, Commissioner, what you are suggesting that coming in is referred to as paid overtime?

PN144

COMMISSIONER BULL: Yes.

PN145

MR WIELADEK: That that therefore must be subject to the MSA.

PN146

COMMISSIONER BULL: I am just asking. I don’t know the answer.

PN147

MR WIELADEK: We go back to the general rule there, that if you work an RDO it is paid overtime. But if you elect to swap you are not working extra hours. I mean, that clause there wouldn’t make sense if you were allowed to swap the RDO because then you would double dip. How can you have paid overtime and have the day in lieu? But when there is just a direct swap day to day, we say that practice on a straight forward basis, it never trips into overtime territory. It never becomes extra hours worked.

PN148

COMMISSIONER BULL: All right, thank you.

PN149

MR WIELADEK: Unless I can assist the Commission further, they are the appellant’s submissions.

PN150

SENIOR DEPUTY PRESIDENT HARRISON: Yes, thank you.

PN151

MR WIELADEK: Thank you.

PN152

SENIOR DEPUTY PRESIDENT HARRISON: Mr O’Grady.

PN153

MR O'GRADY: Yes, thank you, your Honour.

PN154

SENIOR DEPUTY PRESIDENT HARRISON: Sorry.

PN155

MR O'GRADY: Would your Honour just bear with me while I rearrange some things. Can I start by seeking to direct the Full Bench to the submissions that we filed on the appeal and adopt those and rely upon them. I am afraid they were undated but if I could ask that they be accepted by the Full Bench.

PN156

SENIOR DEPUTY PRESIDENT HARRISON: Yes, they were forwarded to us on 10 March 2015 and they will become exhibit R1.

EXHIBIT #R1 RESPONDENT'S SUBMISSIONS FORWARDED TO COMMISSION ON 10/03/2015.

PN157

MR O'GRADY: Thank you, your Honour. The first point I would seek to make is that the respondent’s primary position is that the MSA scheme put in place by part 4 of the agreement paid for through the MSA allowance a defined number of additional hours of work if required. The construction being contended for by the unions would enable the employees to receive that additional payment without performing the additional work. It is completely inconsistent, with the greatest of respect, with the scheme that the agreement seeks to put in place in respect of part 4.

PN158

If I can elaborate on that by reference to the agreement itself, if one starts with part 4, and this is at page 104 of the appeal book, you will see that it is headed, “Annualised salary and related matters,” and the objective of that part of the agreement is set out in part 4.1: “The aim of the annualised salary is to provide an environment in which world class maintenance service can be provide at the refinery both in terms of outcomes and costs and to provide employees with enhanced lifestyle through reducing the number of additional hours required whilst maintaining a competitive predictable salary.”

PN159

In 4.2 there is a definition of annualised salary and that is the total remuneration to be paid to an employee for work performed during the hours reasonably prescribed for the performance of tasks. In 4.3 we have the annualised salary conventions and it provides, 4.3.1, overtime: “Subject to the terms of this part, all existing entitlements to overtime and penalty payments are comprehended in a new salary. Accordingly, there should be no claim by or additional payments to an employee for the work performed on the basis of the required task except as permitted by this part 4.”

PN160

You will have seen in the written submissions that we filed, that clause is in a different form to the equivalent clause in the predecessor agreement; the 2009 agreement, which appears at appeal book 150 or commences at appeal book 150. The equivalent clause there was clause 4.5.1 which is at appeal book page 164 and it confined the effect of the annualised salary to existing entitlements pertaining to overtime and penalty payments in the award. The difference being that the annualised salary is not confined to entitlements set out in the award in the current agreement, but rather extends to all existing entitlements. We would say that on a literal construction that would include entitlements provided for in clause 5.7 to the extent to which they impact upon this issue.

PN161

4.3.2, then, provides flexibility. The salary supports and compensates employees in respect of the obligation to complete the tasks at hand including both scheduled hours as defined by roster and unscheduled additional hours. So once again, with respect, the point would appear reasonably clear that the idea underpinning this part of the agreement is that in return for an annualised salary which has an MSA component, the employees are agreeing to both work their scheduled hours and unscheduled additional hours. As Mr Wieladek has made very clear in this submissions to the Full Bench this morning, the construction he contends for would enable employees to avoid working additional unscheduled hours to the extent that those unscheduled hours were asked to be worked on an RDO, because Mr Wieladek’s construction hangs on the proposition that employees can insist that in respect of additional hours asked to be worked on an RDO the employee can avoid that obligation through the expedient of taking a substitute RDO and, accordingly, not working more than 70 hours in a fortnight. In my submission, it is a proposition that is completely inconsistent with the scheme that clause 4.3.2 describes and seeks to put in place. Then in 4.6 ‑ ‑ ‑

PN162

DEPUTY PRESIDENT LAWRENCE: Sorry, Mr O’Grady. Sorry to interrupt but I just want to ask you about the difference between the MSA scheme and the FHA scheme that operated previously. I hope this is an appropriate time.

PN163

MR O'GRADY: Yes.

PN164

DEPUTY PRESIDENT LAWRENCE: It appeared to be Mr Wieladek’s submission that essentially there has been annualised salary in operation for some time. The MSA scheme really wasn’t all that different from what operated previously. Now, clearly that is not the view that Johns C took. If you look at paragraph 48 of his decision he makes it clear that the MSA system was a new system that operated differently to the FHA system. I would just like you to summarise, if you can, the differences between the two systems.

PN165

MR O'GRADY: I think in the broad, your Honour, the difference was that there was, in effect, a pool of money that was available to be allocated for overtime tasks under the FHA scheme and it wasn’t, if you like, tied into a comprehensive annualised salary in the way that the MSA scheme seeks to achieve. As you will have seen from what Johns C says, there are a number of differences in the way in which the clauses are expressed including the one that I took you to a moment ago, namely the purported exclusion of entitlements being confined to award entitlements under the FHA scheme as opposed to the MSA scheme.

PN166

But the position of the respondent is that one, I suppose, has to, in effect, look at what part 4 in the current agreement provides and for the reasons that I was attempting to explain, in my submission, it sets out an elaborate scheme whereby in consideration for working a prescribed number of overtime hours if required employees are to receive this set allowance. As I understand it, that is not the way that the previous scheme operated.

PN167

If I can simply take the Full Bench to, perhaps, attachment 1 of the 2013 agreement to make good this proposition and you will see this is the attachment that is referred to in clause 4.6 of the 2013 agreement. It appears at page 134 of the appeal book and, perhaps, before going to that you will see that there are a number of allowances set out in 4.6. So there is the maintenance miscellaneous allowance, the maintenance site coverage allowance and the maintenance service allowance in 4.6.3.

PN168

Then in the table at page 134 you will see in respect of various classifications the amounts of those allowances in the years of the agreement are set out and, relevantly, the MSA allowance is a significant allowance in that it provides that a fitter who is in the 6B classification is to receive an additional almost $21,000 by way of the MSA allowance in the first year of the agreement. A boilermaker receives a lesser sum of $17,861 and those amounts increase over the life of the agreement. So that as at 2016, a fitter is receiving an MSA allowance of $22,673 and that is part of their annualised salary.

PN169

It is my understanding that the previous scheme did not prescribe for an annualised salary in that form and in that way and, as you will have seen from the decision of Johns C, there was a number of changes made to the wording of the scheme to reflect that and as the attachment A to the submissions filed by the respondent below makes clear there was significant negotiation associated with what is described in the documentation as the buyout of the previous scheme whereby this new scheme was put in place.

PN170

Before leaving 4.6.3, can I simply direct attention to what the MSA is for? Namely, the MSA is paid at the rate prescribed in attachment 1 as comprised of two entitlements: an incentivised annualised salary for which the purpose is to deliver smarter working methodologies that drive and result in increased reliability, preventative maintenance and work efficiency. But the second component is the one, of course, which the respondent draws particular attention to: an annualised salary component that captures a portion as described in clause 4.7 of prepaid additional hours worked. It is that that we rely upon and then we come to 4.7 which sets out the additional hours worked.

PN171

I accept what was said by Mr Wieladek that it may not be necessary for you, Harrison SDP, to go through of the intricacies in 4.7.1, but in the respondent’s position the parts of that clause that you directed Mr Wieladek’s attention to are designed to – well, sorry, that is a reference to 4.7.4(iv). The parts of that clause that you directed Mr Wieladek’s attention to are really designed to put in place protections for employees. So what we have in place is we have a system whereby there are an annualised number of hours that can be required to be worked and that is set out in clause 4.7.3.

PN172

There is normally going to be 10 to 13 hours worked per month. It may be more than that but the clause indicates that that must be a reasonable additional hours. So there is a protection for employees provided by that part of the clause. Then at the foot of 4.7.4(iv) there is an additional protection in that if Shell does not require employees to work all of the MSA hours that those hours will drop off from the annual entitlement. That prevents, in effect, my client from, if you like, banking those hours and then, in effect, requiring employees to work them at all one hit towards the end of the year.

PN173

But the point remains that it is apparent from these clauses, in my submission, that the parties intended to put in place a salary component which was in consideration for a capacity on behalf of my client to require employees to work additional hours outside of their rostered hours and I have already submitted ‑ ‑ ‑

PN174

SENIOR DEPUTY PRESIDENT HARRISON: I must say, I understand what you are saying that it is torturous the manner in which the scheme has been drafted. What you have just described you could put in two clauses but maybe that is something for the next round of bargaining. Yes, proceed.

PN175

MR O'GRADY: I am in the happy position, your Honour, to be able to say I had nothing to do with it and I accept the point that has been made by other members of the Full Bench that, you know, it is not a simple scheme. But it does appear apparent, at least from the parts of it that I have taken the Full Bench to, that what the parties were hoping to do was to put in place an ability on behalf of the employer to require additional hours to be worked up to certain prescribed limits and in return employees received a not insignificant additional salary component.

PN176

SENIOR DEPUTY PRESIDENT HARRISON: Yes.

PN177

MR O'GRADY: We say that is really, if you like, the nub of the case and it is really the bias of the construction being contended for by the unions because on their construction at least insofar as the work is concerned with work on RDOs, the employees get to keep the additional salary component but not do the work. The other problem, of course, associated with the construction being contended for by the unions is that it would give rise to a very artificial distinction between additional hours worked on an RDO and additional hours being asked to be worked on a weekend. Because, as I understand it, it is not contended by the union that my client couldn’t insist that these additional hours be worked on a weekend and there would be no entitlement to ask for a substituted day. If the parties had have intended to give rise to that outcome, one would have thought that that would be something that would be addressed clearly and clearly it hasn’t been.

PN178

I am instructed that, in addition, there was restrictions in respect of the FSA regarding the scope of the work and the hours that could be worked and the MSA was unrestricted both in respect of the scope of the work and the hours. That is a matter which becomes more apparent, and I can take you to it, when I go to the documentation that was associated with the negotiation of the move away from the HA to the MSA.

PN179

Can I now go to clause 5.7, and I have also set out other parts of the relevant clauses in the submissions but I don’t need to take the Full Bench to them, I don’t believe. In my submission, the suggestion on behalf of the unions that 5.7 has nothing to do with overtime simply cannot be supported. It is not a submission that was put below and you will have seen in the written submissions that we filed we say that there is, in effect, a Metwally v University of Wollongong point here because in the submissions put before Johns C it was acknowledged that this was a clause directed to overtime.

PN180

But it is, in my submission, a clause that does not withstand scrutiny when one has regard to the clause itself because what the clause is concerned with is a situation that pertains when an employee is asked to work hours, additional to those with respect to which they have been rostered. What it does is, it gives them an option to take a day in lieu as an alternative to receiving overtime payments. The form of compensation, in my submission, doesn’t change the characterisation of the clause.

PN181

We provided to the submission this morning a copy of the Standard Hours (Oil Companies) Award 2003 and if I can just take the Full Bench to the relevant parts of that award you will see – and does the Full Bench have a copy of that?

PN182

SENIOR DEPUTY PRESIDENT HARRISON: Yes.

PN183

MR O'GRADY: I apologise for not including it in the bundle of authorities but I think we made contact with your Honour’s associate this morning.

PN184

SENIOR DEPUTY PRESIDENT HARRISON: Yes, yes.

PN185

MR O'GRADY: If I can simply take the Full Bench to clause 4 which sets out the hours of work for day work and, as Mr Wieladek explained, what is sought to be put in place is a nine-day fortnight consisting of 70 hours of ordinary time in the course of that fortnight. Then clause 9 deals with work on a rostered day off and it is clear from that clause that work on a rostered day off is to be paid as overtime. So work on a rostered day off unsurprisingly is treated by the award as overtime work for additional hours. The form of compensation that clause 5.7 puts in place is to take a day in lieu of receiving overtime payments but it is, nonetheless, a clause that is inconsistent with the overarching scheme that part 4 of the agreement seeks to put in place.

PN186

Picking up your point, Harrison SDP, about the wording of the clause not changing and I will come to it in more detail in a moment but we say that that is the correct construction of the document that was appended to the statutory declaration that was filed when the agreement was approved. It does appear that the parties have simply cut and pasted what was 5.7 of the 2009 agreement into this agreement. If proof were required of that, it can readily be seen by clause 5.10.2 which appears at appeal book page 118 where there is a reference to the FHA.

PN187

So what would appear clear is that the parties have not, perhaps, with the sort of degree of thoroughness that one might have hoped, have not turned their mind to the necessary modifications that need to be made to clause 5 in order to operate consistently with the provisions of part 4. That doesn’t, of course, mean that the provisions cannot operate consistently and we have set out in the written submissions how we say the clauses operate; namely, that up until the time that the additional hours can be required to be worked under part 4 are worked, clause 5.7 does not operate to impinge upon the scheme that part 4 puts in place. Thereafter, of course, it is capable of operation. That, of course, gives rise to a sensible outcome because at that point in time the additional hours that have been paid for through the MSA allowance have either been worked or have not been required to be worked because, as I pointed out earlier, they can drop off and the provisions in the agreement operate according to their terms.

PN188

Can I then go to the attachment to the respondent’s submissions and this appears at appeal book page 246A and this is the colour document. You will see at page 246Q there was an email chain that gave rise to an agreement for a move away from the FHA scheme and there was, in effect, a buyout associated with that as appears from the middle of that email and that there was then to be a new scheme that was to be the subject of negotiation.

PN189

Then the next page at 246R is the offer made by Shell in December of 2012 as to how that new scheme was to operate in general terms and that was to be reflected in the new scheme that was put forward. There were negotiations about that scheme and it led to the position that appears at page 4 of 4 where you will see at the top of the page there was to be a replacement of some of the allowances under the FHA scheme, the new maintenance services allowances.

PN190

SENIOR DEPUTY PRESIDENT HARRISON: Where are you? Where are you, Mr O’Grady? Sorry, I have lost you. Where are you?

PN191

MR O'GRADY: Sorry, at page 246U.

PN192

SENIOR DEPUTY PRESIDENT HARRISON: U, thank you.

PN193

MR O'GRADY: U, and at the top of the page.

PN194

SENIOR DEPUTY PRESIDENT HARRISON: Yes.

PN195

MR O'GRADY: It would appear that the parties would from the documentation – I think this was a submission put to the Johns C at first instance that there was an acknowledgement that the FHA scheme was broken and wasn’t working at all effectively and there was, in effect, a revisiting of how this issue could be dealt with. The scheme that is set out here, in effect, was the agreement in principle that subsequently was incorporated into the agreement. You will see a number of the mechanisms and caveats that were reflected or that are reflected in the clauses I have already taken the Full Bench to, were foreshadowed in this document.

PN196

Importantly, it was made clear in point one at about halfway down the page that an employee would not receive overtime until the annual bank of hours are worked and the only exception, see points three and four, and those appear there and I don’t need to go to those in detail because they are not relevant to the current dispute. Secondly, in point 2, that:

PN197

There is an obligation for all employees to work extended hours under the MSA scheme when requested by Shell. This nominally equates to 10 to 13 hours per month depended upon the relevant year of the agreement. Where an employee, works more than the monthly MSA hours and these hours will be credited to the employee’s bank of hours. Alternatively where Shell has asked an employee to work all the monthly MSA hours, the remaining hours will drop off the employee’s bank of hours.

PN198

MR O'GRADY: That, of course, is mirrored in the clause that I took the Full Bench to a few moments ago; namely, clause 4.7.4(iv). But it is, in my submission, very clear that the parties were on notice that this was the deal, that there would be, in consideration for the additional hours being worked, a requirement to – sorry, in consideration for the annualised salary and the MSA allowance there would be a requirement to work additional hours if required by the employer.

PN199

Could I briefly go to some of the submissions that we have provided to the Commission and if I could commence with Project Blue Sky? I understand that a folder of decisions were sent up to Sydney. I hope they have been received by the Full Bench.

PN200

SENIOR DEPUTY PRESIDENT HARRISON: Yes, they have, but you don’t need to take us to them if really the point you make about them is that which is extracted in your written submissions.

PN201

MR O'GRADY: Yes, well, that is the point I make in respect of Project Blue Sky that clearly whilst the Full Bench needs to try and construe the provisions harmoniously, that may involve determining which is the dominant and which is the subordinate provision and, for the reasons that I have sought to explain, we submit that part 4 should be seen as the dominant provision.

PN202

We have also referred in the bundle to the ANMF v Eastern Health case which is a decision of a Full Court of the Federal Court. The point made there goes to a submission that was made this morning regarding the practice, as I understand it, that Mr Wieladek relies upon. There is really two points that we would seek to make in respect of that practice. Firstly, it is a practice that even on Mr Wieladek’s submissions evolved under an agreement different from the agreement here under consideration.

PN203

It is not suggested that that practice evolved in a situation where you had identical agreements in operation, rather, as the material I have taken the Full Bench shows, there was an attempt to change the system and that is what gave rise to part 4 in its current terms.

PN204

The other point I would seek to make, and this appears from the decision itself at paragraphs 7 through to 10 and particularly at paragraph 23, that it is not enough that there be a practice under a previous iteration of the agreement. It must be a practice that cannot be explained by reference to either common inadvertence as to what the agreement requires or, alternatively, employer generosity. That appears in the conclusions of the Full Court at paragraph 23.

PN205

In my submission, the Full Bench doesn’t need to get there because of the different terms of the agreements that were the subject of the practice and you will recall that whilst Mr Wieladek took you to some documentation going to the practice, that was documentation that had been generated under previous agreements, not under the current agreement. In my submission, it doesn’t support an argument of the type currently being contended for by the union.

PN206

Mr Wieladek also relied upon what he said was the failure of the Commission to have regard to the evidence going to the intention of the parties or the extrinsic material. The position of the respondent is that to the extent Mr Towitt is talking about what he anticipated would have been in the agreement, it can go no further than his own subjective intention and that is not something that the Full Bench should be concerned with. We have set out in the bundle of authorities Moshirian v the University of New South Wales [2002] FCA 179. If I can simply direct the Full Bench to paragraph 24 where that issue is dealt with.

PN207

Turning to the documentation relied upon by Mr Wieladek that accompanied the certification of the agreement, can I start with exhibit PAT-5 which commences at page 207 of the appeal book. Can I endorse the observation made by your Honour, Harrison SDP, that clearly what the parties have been concerned to describe here are changes in the wording of the clauses as opposed to the effect of the clauses.

PN208

The second point I would make is that part 4 is dealt with as is the fact that there is a move from the FHA to the MSA arrangements and, this appears at page 209 at the top of the page, that there is a new system which changes the scope, obligations, management and review. So, in my submission, the parties were clearly on notice that there was a new system and that was going to impact upon the way our additional hours had been worked previously.

PN209

The other point I would make is that it is not a case that this was the only document put forward or only mechanism through which the terms of the new agreement were explained to employees. As appears from page 215 of the appeal book there were discussions with delegates and there was an email sent to employees. As attachment 1 to the submissions filed by the respondent shows, the nature of the new system was clearly front and centre as was the fact that it would require or could require employees to work additional hours if required by the company.

PN210

If you just bear with me. To the extent that Mr Wieladek suggests that the Commissioner sought to read words into the agreement, in my submission, that is an incorrect reading of the relevant part of the Commissioner’s decision. In my submission, the Commissioner is doing no more than identifying the fact that in a perfect world the parties might have expressed themselves more clearly and it is perhaps a pity that they did not do so. In my submission, it is clear from the language used by the Commissioner that he is not inserting words into the agreement. Rather, he is noting that – and this is at paragraph 34 of his decision – that perhaps the parties should have used some different words to make things clearer.

PN211

That said, what the Commissioner then does, of course, is what he was required to do which is make the best of it that he can which involves a weighing up of the scheme of the agreement in order to ascertain what the parties should be taken to have objectively intended. Unless there are any issues that I can address, additional issues that the Full Bench wishes me to address, those are the submissions I would seek to put.

PN212

DEPUTY PRESIDENT LAWRENCE: Yes, I just have one, please, Mr O’Grady. I just want to make sure that I understand your submission in paragraph 28 of your written submissions. This is where you talk about what work clause 5.7 has to do and you make three points there. Are you saying that the option of a day in lieu can operate in those circumstances that are listed there? So, in other words, my question is: is there at all an option for a day in lieu for employees?

PN213

MR O'GRADY: We would say, yes, and perhaps most clearly in the circumstance where an employee has worked the additional hours required by the agreement. So if, for example, an employee had worked 120 additional hours in the first couple of months, thereafter because there had been a satisfaction of the annual hour requirement the employee would be in a position to say: “I have done my additional hours. I am now entitled to rely upon what is provided for in clause 5.7.” That would be 10 days overtime.

PN214

DEPUTY PRESIDENT LAWRENCE: You say otherwise it would be double counting. That is what you ‑ ‑ ‑

PN215

MR O'GRADY: Otherwise it would be double counting because in a nutshell what I say is that it would appear clear that part of the remuneration in the annualised salary is to pay for the right in the employer to require employees to work a defined number of additional hours in a year and that clause 5.7 would undermine that because it would enable employees to not do that additional work and simply substitute the RDOs.

PN216

COMMISSIONER BULL: Mr O’Grady, just trying to understand what is being put this morning, clause 4.7.9 “Overtime” refers to overtime that will be paid at double the supplementary hourly rate as described in attachment 1.

PN217

MR O'GRADY: Sorry, 4.7.9, yes.

PN218

COMMISSIONER BULL: If I want to know what the hourly overtime rate is I go to that subclause there, I assume. Is that correct?

PN219

MR O'GRADY: Sorry, I didn’t catch that, Commissioner.

PN220

COMMISSIONER BULL: I am just trying to work out if someone actually is to be paid overtime, how do we work out what the overtime rate is?

PN221

MR O'GRADY: Yes.

PN222

COMMISSIONER BULL: 4.7.9(2) there refers to overtime being paid at double the supplementary hourly rate in attachment 1.

PN223

MR O'GRADY: Yes.

PN224

COMMISSIONER BULL: There is a supplementary hourly rate in attachment 1.

PN225

MR O'GRADY: Yes.

PN226

COMMISSIONER BULL: So you get double that rate.

PN227

MR O'GRADY: Yes, that is case.

PN228

COMMISSIONER BULL: I am just trying to make sense of the two arguments. One says – which I think you are quite correct in saying that this wasn’t put below that 5.7 is not an overtime provision. It is a relocation provision. In any event, 5.7 talks about can you be paid at the single time rate. What is the single time rate, do you know? As opposed to the supplementary hourly rate.

PN229

MR O'GRADY: If I can instructions on that, Commissioner.

PN230

COMMISSIONER BULL: All right.

PN231

MR O'GRADY: As I understand it, the single time rate would be obtained by dividing the base rate by 35 hours.

PN232

COMMISSIONER BULL: But if somebody doesn’t choose to do that and they have exceeded their MSA hours, they would get paid double the supplementary rate for the whole day they work on that RDO. Is my understanding correct?

PN233

MR O'GRADY: For the overtime work they performed, yes.

PN234

COMMISSIONER BULL: Yes. So I am just trying to work out your argument, as you say, that this is an overtime provision.

PN235

MR O'GRADY: The position that I am putting is that it is wrong to contend, as I understand the AMWU to be now contending, that it has nothing to do with overtime.

PN236

COMMISSIONER BULL: No, I understand that, yes.

PN237

MR O'GRADY: As I understand it, the position being put against us is that while there is no conflict between part 4 and clause 5.7 because they have got nothing at all to do with each other and, in my submission, that is just not right.

PN238

COMMISSIONER BULL: But your submission, Mr O’Grady, is that when people under this current – under your interpretation when people work on an RDO and they haven’t exhausted their MSA hours they receive no payment, is that right?

PN239

MR O'GRADY: They don’t receive any additional payment, no.

PN240

COMMISSIONER BULL: Nor an RDO?

PN241

MR O'GRADY: Nor an RDO.

PN242

COMMISSIONER BULL: I understand that. So if we go down to the next paragraph where it says there if they work for two or more separate occasions on an RDO they are paying for overtime. For paid overtime tasks, if they haven’t worked their MSA they get paid nothing. That would be the case?

PN243

MR O'GRADY: In my submission, if they haven’t worked their MSA, there is no scope for additional payments to be made in respect of the work on an RDO contemplated by the second subparagraph of 5.7 because part 4 makes it clear that the payments in the MSA override any other payments and that is the point that I ‑ ‑ ‑

PN244

COMMISSIONER BULL: Yes, I understand that. But it goes onto say that they can have a day off without pay. Would that still be applicable under your interpretation?

PN245

MR O'GRADY: No, it wouldn’t be. In other way of perhaps putting it, Commissioner, is that in my submission until the MSA hours are worked, the scheme for managing additional hours is comprehensively dealt with in part 4 and is a code.

PN246

COMMISSIONER BULL: All right, thank you.

PN247

SENIOR DEPUTY PRESIDENT HARRISON: Yes, thank you, Mr O’Grady.

PN248

MR O'GRADY: Thank you, your Honour.

PN249

SENIOR DEPUTY PRESIDENT HARRISON: Mr Wieladek, anything in reply?

PN250

MR WIELADEK: Your Honour, Commissioners, we have nothing in reply. Was there any questions?

PN251

COMMISSIONER BULL: I was just going to ask, Mr Wieladek, I am trying to find the clause. I am sorry, I will find it here again. Would you accept the point made by Mr O’Grady that this argument about relocation wasn’t argued in the first instance?

PN252

MR WIELADEK: Sorry?

PN253

COMMISSIONER BULL: Do you accept Mr O’Grady’s point that you didn’t argue in the first instance that clause 5.7 wasn’t related to overtime?

PN254

MR WIELADEK: I think this issue about what was put at first instance, at first instance we put clearly, and it is in paragraph 10 of our submissions, that they are separate entitlements. It might have been not the best phrase to describe it. They had nothing to do with each other. But I was just emphasising that they deal with two separate subject matter; one with the right to allocate, the other a formula for compensation. If you accept our arguments, Commissioner, there is a situation that if an employee reallocates they don’t work – if you accept our position that 5.7 can co-exist with the part 4 system, if there is a reallocation there are no extra hours worked. If there is no extra hours worked, it is not overtime.

PN255

COMMISSIONER BULL: Thank you.

PN256

SENIOR DEPUTY PRESIDENT HARRISON: Anything else, Mr Wieladek?

PN257

MR WIELADEK: No, your Honour.

PN258

SENIOR DEPUTY PRESIDENT HARRISON: All right. We will reserve our decision in this matter and now adjourn.

ADJOURNED INDEFINITELY [11.52 AM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #A APPELLANT SUBMISSIONS DATED 12/02/2015................... PN50

EXHIBIT #R1 RESPONDENT'S SUBMISSIONS FORWARDED TO COMMISSION ON 10/03/2015............................................................................................................... PN157