C2014/1618, Transcript of Proceedings [2015] FWCTrans 378 (26 June 2015)

TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 1051995

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COMMISSIONER CAMBRIDGE

C2014/1618 C2014/1625 C2014/6205

s.739 - Application to deal with a dispute

Australian Institute of Marine and Power Engineers, The

and

Toll Marine Logistics

(C2014/1618)

Toll Marine Logistics & Australian Institute of Marine & Power Engineers Gladstone Inshore Maritime Agreement 2013

s.739 - Application to deal with a dispute

Australian Maritime Officers' Union, The

and

Toll Marine Logistics

(C2014/1625)

Toll Marine Logistics & Australian Maritime Officers Union Gladstone Inshore Maritime Enterprise Agreement 2012

s.739 - Application to deal with a dispute

Maritime Union of Australia, The

and

Toll Marine Logistics

(C2014/6205)

Toll Marine Logistics & Australian Maritime Officers Union Gladstone Inshore Maritime Enterprise Agreement 2012

Sydney

10.13 AM, THURSDAY, 4 JUNE 2015

PN1

THE COMMISSIONER: Good morning. Perhaps we'll start with the appearances in the matter, please.

PN2

MR A JACKA: Good morning, Commissioner. My name is Jacka, initial A, appearing for the Maritime Union of Australia.

PN3

MR T SAUNDERS: May it please the Commission, Saunders, with your permission, as counsel for the respondent.

PN4

THE COMMISSIONER: Thank you, and other parties appearing from remote locations are?

PN5

MR B MATTHEY: May it please the Commission, Matthey, initial B, for the Australian Institute of Marine and Power Engineers.

PN6

MS J THOMPSON: If it please the Commission, Thompson, initial J, for the Australian Maritime Officers Union appearing in Melbourne.

PN7

THE COMMISSIONER: Ms Thompson, thank you. I think we've managed to establish a link to Darwin, because there's a potential witness, a Ms Cull.

PN8

MR SAUNDERS: That's right, Commissioner. Ms Cull is in Darwin.

PN9

MS L CULL: Leanne Cull in Darwin.

PN10

THE COMMISSIONER: All right. You're there, very good. It's probably warmer up there than it is here. All right. How do we proceed this morning? There's a question of permission first, is there, that needs to be dealt with.

PN11

MR SAUNDERS: Yes, Commissioner.

PN12

THE COMMISSIONER: All right.

PN13

MR SAUNDERS: Will I address the Commission now on that question?

PN14

THE COMMISSIONER: Yes. I think there's something that's been filed, isn't there?

PN15

MR SAUNDERS: Yes. We put on some short written outline of submissions in relation to that question. We rely on the written outline, but I intend to supplement those submissions with something orally as well. In support of those submissions, but I hand up two cases. We notified the other parties yesterday about our reliance on these cases so they will have had a chance to have a look at them and the cases really go to the question of complexity under section 596(2)(a) of the Act. The first decision I've handed up is the decision of Fonterra Brands v AMWU. It's a very recent decision handed down by the Full Bench. The Commission can seen from paragraph 2 of that judgment in Fonterra Brands that the issue in that case is very similar to the issue in this case; that is, the matter in dispute between the parties concerned the meaning of ordinary pay in clause 22.8 of the agreement which deals with redundancy payments and the real question, as set out in paragraph 3 of the judgment, is whether ordinary pay in that case included shift loadings and penalties or not.

PN16

In paragraph 4, there's a reference to the fact that on the appeal, in the last sentence of that paragraph, the hearing was conducted before the Full Bench and Mr O'Grady of Counsel appeared for Fonterra and Mr D Vroland, the industrial officer, appeared for the AMWU.

PN17

Now, I've not provided the Commission with a copy of the decision at first instance, but I can tell you, Commissioner, that at first instance the parties were represented by the same people; that is Mr O'Grady represented the company and Mr Vroland, Industrial Officer, represented the union at first instance. The first instance decision states that permission was granted for Mr O'Grady as counsel to represent the company.

PN18

The first instance decision does not go into detail as to why permission was granted, but one can infer from the decision at first instance and the decision on appeal that the issue there was complexity; that is a complexity in terms of the interpretation of the enterprise agreement and the principles that should be applied to interpret it properly, and that's why permission was granted.

PN19

We say this case is very similar to the case of Fonterra Brands and we are going to rely upon it in the substantive matter itself in terms of the way to approach the construction of the agreement, but it is also authority for the proposition, we say, that when you have a complex matter like the one we have before us today involving difficult questions of construction of an enterprise agreement and the application of legal principle, including by recent decisions of the Full Bench such as Golden Cockerel, to apply those principles to the construction of the agreement in this kind of case does involve complexity and that warrants, in our submission, the grant of permission under paragraph (a) of section 596(2).

PN20

Now, the second decision I've handed up is a decision of Aly v Commonwealth Bank of Australia. It's a bullying case and it's a decision by Bissett C in which it was held that permission should be granted to the Commonwealth Bank to have legal representation because of the complexity of the bullying matter.

PN21

In paragraph 13, Bissett C says that:

PN22

This case rests on the determination of whether the actions taken by the respondent in performance managing the applicant, and otherwise interacting with the applicant at work, amounts to bullying.

PN23

And then in paragraph 15 and 16, Bissett C finds that the matter has a level of complexity and the matter would be dealt with more efficiently given the complexity. It's another recent example of a case in which a substantial corporation, such as the Commonwealth Bank, was granted permission because of the complexity of the proceedings. That's all I wish to say about complexity.

PN24

We also rely in the written submissions on paragraphs (b) and (c) of section 596(2). In terms of (b) and fairness, which are that:

PN25

Notwithstanding the experience of the respondent's representatives in contested matters before the Commission generally, it would be unfair to deny representation which calls for the degree of expertise and experience demanded in this matter.

PN26

Because this matter is significant to the parties; it's significant both in terms of the outcome of this matter to the industrial framework of Toll and particularly to the financial outcome, because the impact of this case has a significant financial impact on the parties, including of course Toll, because of the - - -

PN27

THE COMMISSIONER: Well, that's said, but I don't have any evidence of that, do I?

PN28

MR SAUNDERS: One can go to the agreements, the three enterprise agreements, the subject of this dispute and look at the difference in submissions between the parties. We say redundancy on the proper construction of the agreements has to be calculated on the basis of salary as prescribed in the schedule to the agreement. The unions say that's wrong; you should calculate severance payments on the basis of not just salary, but by reference to the allowances provided for in the agreement.

PN29

One can look at the allowances expressly set out in the agreement and see that they are considerable, so when one applies the redundancy formula in the agreement to include those allowances, the amount is significant.

PN30

THE COMMISSIONER: Is it?

PN31

MR SAUNDERS: it is, by reference to the formula in the agreements. The agreements provide - two of the agreements provide, in terms of calculating someone severance payment, to work out the total amount of salary paid to them during their time on the project; take 10 per cent of that amount, and that's the severance payment.

PN32

Now, when one looks at the salary figures in the schedule and then one looks at the allowances in the second schedule and in the agreement themselves, they're substantial and so to apply the formula in the agreement to come off the figure, it's clear that the difference between the two is a significant sum.

PN33

THE COMMISSIONER: I don't know what the difference is.

PN34

MR SAUNDERS: Well, I don't have the calculations here, but I can say to the Commission, based on the formula and the numbers set out in the enterprise agreement, that the difference is significant.

PN35

THE COMMISSIONER: And presumably, if that finding is made, then that difference would then apply to - if we describe it as the earlier redundancies, there might be a chain here of consequential alterations that would need to be made, but I am just guessing at that; I suppose that might be a logical consequence.

PN36

MR SAUNDERS: Indeed, and there is evidence before the Commission or there will be when Ms Cull's statement is tendered of the number of redundancies which have taken place in recent times and the number of redundancies which are likely to take place in the future, because of changes and all of those redundancies will be impacted by this decision, both in the past and the present.

PN37

THE COMMISSIONER: Right.

PN38

MR SAUNDERS: And that demonstrates the seriousness of the matter to all parties concerned.

PN39

THE COMMISSIONER: So the seriousness or the potential financial ramifications of an outcome are an appropriate consideration in respect of the question of representation and that aspect of section 596 which deals with the issue of inability to effectively represent - I think it is linked together, this question of inability and effectiveness - because of the what we might say are the heightened ramifications of the outcome.

PN40

MR SAUNDERS: Yes. We also say it goes to paragraph (c); that is, the question of fairness. If one is looking at fairness between the parties, one of the parties. Here is the respondent and the outcome of those proceedings is significant in the way of just described.

PN41

So if you have a dispute which is significant in terms of its outcome it is fair, in my submission, for a significant dispute to allow a party to be represented, particularly in this case, where in the submissions we filed back in April of this year the unions were put on notice that the respondent was represented by counsel, my name was on the submissions; that back in April this year.

PN42

Then a short while ago we filed the submissions in support of the application for permission and so every other party in these proceedings was on notice that that was what the respondent intended to do, which allows any party that wishes to engage their own legal representation. The fact that they were on notice at that point goes to the question of fairness.

PN43

In addition, in terms of paragraph (b), for a party to effectively represent itself, we point out in the written submissions that Ms Alam was involved in proceedings before the Fair Work Commission for the last three days - - -

PN44

THE COMMISSIONER: Sorry, are we able to turn down the volume on one of the remotes? It's blaring. That's a bit better. I don't know whether you could hear it, but I certainly kept getting it over the top of your voice.

PN45

MR SAUNDERS: It was quite distracting, thank you.

PN46

The point I was coming to is dealt with in paragraph 8 of our submissions, Commissioner. That is Ms Alam was involved over the past three days in proceedings in the Commission before Riordan C. They finished last night. She's been involved in those proceedings for three days and hasn't had the time that she would otherwise have had to prepare to represent Toll in this matter - - -

PN47

THE COMMISSIONER: So there is a peculiar logistical issue arising here.

PN48

MR SAUNDERS: Yes, which goes to the question of whether if permission for me to appear is not granted, whether the respondent would be able to represent itself effectively.

PN49

THE COMMISSIONER: Right. That might be a peculiar circumstance in this particular instance.

PN50

MR SAUNDERS: It is. I obviously wouldn't say that in many cases, but that's peculiar to this case.

PN51

THE COMMISSIONER: Because, frankly, one would think a company of this size would ordinarily contemplate, I think, dealing with the matter with its highly experienced and qualified staff, but this might look like a proposition where the circumstances and the particular timing of things has created a certain difficulty, that might be a relevant consideration that might not apply in other cases. I had this in an unfair dismissal matter where in fact it was, I think, that Downer EDI's industrial officer's wife was about to give birth and that persuaded me, in that instance, that some alternative arrangement should be made to accommodate that.

PN52

MR SAUNDERS: We'd put this in the same sort of category. We also say, in terms of timing, that it wasn't until last night that we were informed by Mr Jacka that Ms Cull would not be required for cross-examination. So we have been preparing this matter, including me as counsel, on the basis that Ms Cull would be cross-examined. We were only told last night that she would not be required for cross‑examination and that goes to the question of fairness in terms of the respondent engaging counsel to prepare the matter to be conducted this way.

PN53

We also say at paragraph 9 of the written outline on the question of fairness, we say that Mr Jacka is an experience legal officer acting for the MUA in these proceedings and on that basis it would be unfair not to allow the respondent to have its own external legal representation as a matter of fairness between the parties.

PN54

If permission is granted, I am confident we can conduct this matter in an efficient manner and we can finish the case easily today, most likely by lunchtime. I intend to make oral submissions in an efficient manner and to do so in a fairly short way. This is not a case that is going to go for days; it is going to be dealt with more efficiently, in my submission, if permission is granted. That's all I wish to say on the question of permission.

PN55

THE COMMISSIONER: All right then, thank you. So the order here, I guess, is Mr Jacka first then - well, I don't want to put Ms Thompson last; that doesn't look right. Or is that the way you prefer to do it?

PN56

MR JACKA: I'm content with any course you may suggest, Commissioner.

PN57

THE COMMISSIONER: Well, because you are in the immediate vicinity, you should go first.

PN58

MR JACKA: Yes.

PN59

THE COMMISSIONER: And then I am content for either Ms Thompson or Mr Matthey to then die after you, Mr Jacka.

PN60

MR JACKA: Thank you, Commissioner.

PN61

THE COMMISSIONER: All right.

PN62

MR JACKA: Commissioner, as you'd be aware, each of the union parties have raised an objection to Mr Saunders appearing today on behalf of the company. At approximately 12.53 yesterday, the union did two things, first of all we notified the company and the Commission that there no requirement for Ms Cull to appear for cross-examination and we also raised an objection.

PN63

Our objection was based on section 596 of the Act and what we say is firstly this company in this matter is a company of considerable means. They are highly resourced. They have an extensive Human Resources department as we understand it; more than qualified employees at the company to represent the company in this matter. We say that this matter is not sufficiently complex to warrant having a legal representative appear on behalf of the company, particularly taking into consideration that the resources available to the company mean that they are more than able to represent themselves in this matter.

PN64

Can I say that two of the issues that Mr Saunders has raised in relation to the financial impost that may arise in relation to this matter, there is no evidence in relation to that. That is not the question before the Commission and that has not been decided. What has been decided is a simple interpretation of the agreement. There is no evidence in relation to what the financial impacts may or may not be on the company and we say that that submission should be rejected on that basis.

PN65

We also say that the elements of section 596 don't go to this issue. The elements of section 596 are in relation to whether, if it would enable the matter to be dealt with more efficiently - we say in this instance it wouldn't - taking into account the complexity of the matter, where we say this isn't a complex issue. If you look at the union's submissions, they are not really that complex and they go to a simple issue of interpretation.

PN66

The other element of section 596 is in relation to whether it would be unfair not to allow the person to be represented because the person is unable to represent himself, herself or itself effectively. I've already addressed that point by saying we have a very well‑resourced company with a number of employee advocates that could easily represent the company in this matter.

PN67

The third element which is subsection (2)(c), it would be unfair to not allow the person to be represented, taking into account fairness between the person and other persons in the same matter. Now, first of all, on that point, none of the union advocates are admitted solicitors or legal practitioners; we are all officers of the union. Mr Saunders is counsel, and admitted to the bar and also the Supreme Court. Secondly, Ms Saunders raises some issues in relation to Ms Alam's previous commitments whereby Ms Alam appeared in an unfair dismissal matter over the last three days.

PN68

Now, as you would be aware, Commissioner, the timetable and directions for this have been set down for quite some months. If there was, with respect to Ms Alam, a clash or a resourcing issue, then it would have been quite easy for the company or Ms Alam to make other arrangements.

PN69

All the advocates in the room and the Commission is well aware that one party may approach another to seek either an extension of time or an adjournment or seek alternate representation in this matter.

PN70

The other issue raised by Mr Saunders was that we're on notice in respect to the submissions that he made and that we're on notice that he would be appearing. My understanding of the explanatory memorandum of section 596, what is says is there's no real issue in relation to submissions being made by legal representatives; what the issue really comes down to is representation in matters when you are actually at a conference or at a hearing. So we say that submission should also be rejected on that basis. We do not think that Mr Saunders should be granted permission to appear.

PN71

THE COMMISSIONER: Thank you. Now, Mr Matthey or Ms Thompson, who wishes to go next on this question of representation?

PN72

MR MATTHEY: Thank you, Commissioner. I will, if you don't mind. Commissioner, I don't have a great deal to add other than what Mr Jacka has already said. We're of the view that it is quite a simple matter; an interpretation of two words which is "gross salary". We don't take the view that this would have a significant financial impost on the company, because if you were to come out with an interpretation of what "gross salary" means under this agreement, that is only award obligations that Toll Marine used to have to abide by, so it's not as if it's a significant amount of money coming out of left field.

PN73

We would say that if you were to come out with an interpretation of "gross salary" that agreed to our interpretation, it only guides Toll as to what their obligations are under the Act. Secondly, I will leave this (indistinct) Commissioner, as Mr Jacka said, directions were set a number of months ago. Ms Alam could well have asked permission of the Commission to move the other matter.

PN74

I do note that all of the submissions and correspondence coming from Parliament being by Ms Alam, so it's not as if Toll Marine had to do a great deal of the work themselves; Ms Alam has done it all and all the correspondence and submissions from Toll have come from her. It's just that for whatever reason they then couldn't move the unfair dismissal, which quite frankly, I find a bit hard to believe that that couldn't happen. So Commissioner, that is all I've got to add other than agreeing with what Mr Jacka has already said.

PN75

THE COMMISSIONER: Thank you, Mr Matthey. Ms Thompson.

PN76

MS THOMPSON: Thank you, Commissioner. I concur with what Mr Jacka and Mr Matthey have both said. I also make the point that we rely on the Oceania case recently where the Full Bench rejected that a well-resourced company's argument that the complexity of the unfair dismissal case required that to be represented by a lawyer. We rely on that, we don't think there's any need for Toll to be represented in this case and it's not that complex of a matter in our matter; it's really just a matter of what the definition of "a day's pay" is. Thank you.

PN77

THE COMMISSIONER: Mr Saunders, do you want to say anything in response?

PN78

MR SAUNDERS: No, Commissioner.

PN79

THE COMMISSIONER: Well, it's obvious the Commission will need to make an ex tempore determination of this question and I will do that immediately.

PN80

Having regard for the factors that are relevant to the question of permission for representation by lawyers and paid agents, which is set out in subsection (2) of section 596 of the Act, firstly I observe that the matter on its face doesn't appear to be overly complex, but there is a level of complexity here that arises from the fact that there are three different instruments and some fairly competing terminology that is involved.

PN81

I think that in the ordinary course of events, the level of complexity itself wouldn't be sufficient to grant permission but when coupled with what I perceive to be particular logistical difficulties that have been associated in this particular instance, with the unavailability of the people that would ordinarily deal with the matter, I think to me would mean that it would be unfair not to allow the employer to be represented by lawyers and paid agents in the particular circumstances where those two factors in combination; that is, a level of complexity and the particular logistical difficulties that have been identified are present.

PN82

Certainly, just for completeness, on the issue of fairness as between the parties, I do not see that as a particular matter that would persuade, in this instance, for any unfairness to emerge, but that is irrelevant, because I believe that in combination, a question of complexity and the particular circumstances giving rise to a certain inability to effectively represent provide proper basis for the Commission to grant permission for the respondent employer to be represented and I do so.

PN83

Should we proceed straight on, or do people want a short break? Obviously if the question of representation had been against you, Mr Saunders, sometimes that puts is off to another day even, but that is not the case. I am ready to keep going or if the parties want a short break, I could take a short break.

PN84

MR SAUNDERS: We are ready to get going.

PN85

MR JACKA: We're happy to proceed.

PN86

THE COMMISSIONER: No objection to that?

PN87

MR MATTHEY: Yes, Commissioner.

PN88

THE COMMISSIONER: All right. Let's get going then. Could I just clarify then there is no witness evidence, or no evidence being advanced by any of the three unions. That's the position?

PN89

MR JACKA: Commissioner, I do propose to rely on a bundle of documents. I have raised this; it is not in our submissions and, yes, we have not filed evidence of such. However, we do refer to it in our outline of submissions at paragraph 5 and the respondent also raises some issues in there. I will just wait until you get to our submissions, it is our reply submissions.

PN90

THE COMMISSIONER: Submissions in reply. I'm just raising this, Mr Jacka, as the most appropriate way to deal with what we do have in terms of one witness statement.

PN91

MR JACKA: Yes.

PN92

THE COMMISSIONER: And what the position is about that. We have, of course, Ms Cull that we could, if need be obviously, call.

PN93

MR JACKA: Yes.

PN94

THE COMMISSIONER: But as there are no witnesses for any of the applicants, I wonder whether the most appropriate thing to do - I will just turn up your clause 5 - - -

PN95

MR JACKA: Paragraph 5, and I only address that now; I was going to rely on these documents during oral submissions, but because you asked the question I thought I'd raise it now, but you are correct. There are no witnesses from the MUA and I do not understand there to be any witnesses from the other unions, but perhaps they can inform you about that.

PN96

My understanding is that the MUA did not require Ms Cull for cross-examination . So it may be just a matter of just tendering her document, I'm not sure what Mr Saunders' intentions are in relation to Ms Cull's evidence.

PN97

THE COMMISSIONER: Well, the usual process in any matter is, of course, we get the evidence out first.

PN98

MR JACKA: Yes.

PN99

THE COMMISSIONER: And so if the evidence is only coming from, in this case, the respondent employer and unless there's another witness or something that I'm not aware of, that's the extent of the evidence and we should probably deal with that and then return to submissions.

PN100

MR JACKA: Yes, Commissioner. May it please.

PN101

THE COMMISSIONER: Is that the position, Mr Matthey? You're not adducing any actual evidence in the matter?

PN102

MR MATTHEY: No, we're not, Commissioner.

PN103

THE COMMISSIONER: Ms Thompson, are you in the same position?

PN104

MS THOMPSON: I'm actually having difficulty with the video, it's cutting in and out.

PN105

THE COMMISSIONER: I'll say that again, and I'll say it slowly. Do you have any evidence that you propose to lead in the matter?

PN106

MS THOMPSON: No, your Honour.

PN107

THE COMMISSIONER: Thank you.

PN108

MS THOMPSON: But I'd really appreciate if someone could help with the video link, because you were just cutting in and out for minutes.

PN109

THE COMMISSIONER: You're in Melbourne?

PN110

MS THOMPSON: Yes.

PN111

THE COMMISSIONER: Problems with Melbourne. We're sending a communication now.

PN112

MR JACKA: Commissioner, if it may assist, I've just spoken to Mr Saunders and we're happy to adjourn for a couple of minutes to sort that issue out, if that's the sensible option.

PN113

THE COMMISSIONER: Would it be best to deal with the witness statement at this stage, get that out of the way, adjourn and see if we can get the link better? Did you hear any of that Ms Thompson?

PN114

MS THOMPSON: Yes, I did, your Honour.

PN115

THE COMMISSIONER: All right. What we might do is just try and deal with the one piece of evidence that we are going to have in the matter, I think.

PN116

MR SAUNDERS: Commissioner, I tender the statement of Leanne Cull, dated 29 April 2015.

PN117

THE COMMISSIONER: Is there any objection to the admission of that document?

PN118

MR JACKA: The MUA has no objection, Commissioner.

PN119

THE COMMISSIONER: Thank you. Mr Matthey?

PN120

MR MATTHEY: No, the Institute has no objection, Commissioner.

PN121

MR JACKA: Sorry, I must apologise - save for the submissions in relation to the correct methodology, I think it's at - Ms Cull gives some evidence in paragraph 12 to 14 of her witness statement in relation to the correct methodology and there are some submissions made on that by the company. In our reply submissions we raise some objection in relation to raising that issue, but we will deal with that in our submissions today. We say that that's a new issue and hasn't been ventilated at all during this dispute or even as part of the question that we say is currently before the Commission and we would object to that evidence being tendered, that part of the statement. We have no issue with the other parts of the statement.

PN122

THE COMMISSIONER: Mr Saunders, do you say anything about that at all? This is this question of whether you use the actual period of time that you are employed there or whether you just take the higher rate at the point of departure.

PN123

MR SAUNDERS: Indeed.

PN124

THE COMMISSIONER: It's not really a matter of contest here, is it?

PN125

MR SAUNDERS: Well, we say it is, with respect, Commissioner, because we say that the dispute, as notified by the applicants, is on the proper construction of clause 22 of the enterprise agreement, meaning the amount of redundancy pay someone is entitled to on redundancy.

PN126

That has relevantly two aspects to it. One is the proper meaning of "gross salary" and the second aspect to it, we've identified both on the witness statement and in the submissions a month ago is this methodology point; whether you look at the total period and take 10 per cent, or whether you just look at the last year and do it that way.

PN127

Now, were not sure whether it's an issue between the parties, because none of the unions have come out and said that we are wrong about that. Now, if they say that we are right about it, there is no dispute, but that kept silent about it. What we want to do, which is consistent with the objects of the Act, is to make sure that the issues associated with this question of calculations of redundancy entitlements are ventilated and when there's a genuine dispute they're determined by the Commission in exercising its powers of arbitration to resolve the matter.

PN128

That's why we ventilated it and that's why we've put it forward and that's why we've put submissions on it, and that's why we'd like it determined. Otherwise we're going to end up with a situation where if you're against me on that and you say, "No, it's not part of this current dispute," then next week we would be back again and we will lodge a dispute and we will go through the same exercise.

PN129

THE COMMISSIONER: I'm not sure though that that's strictly correct in that, as I understand it, I am not being asked to determine whether that is the correct method or not. That's not part of the dispute, is it?

PN130

MR SAUNDERS: Well, that's what we are asking. As part of the dispute about the proper interpretation of clause 22 of the Deckhands Agreement, it gives rise to this issue of calculation. There is a potential - there is a dispute about it until we are told otherwise, and we are asking for that issue to be determined as part of the resolution of this dispute, as well is the question of what is gross salary.

PN131

As I say, if you are against me on that, we will just have to take the alternative course, which we don't think is very efficient of filing our own dispute next week and having that matter determined.

PN132

THE COMMISSIONER: But isn't the position this, that if you are correct in your assertion what, in effect, you are doing is making what we would call an over award or an over agreement payment?

PN133

MR SAUNDERS: Correct.

PN134

THE COMMISSIONER: Why would the Commission be involved in that?

PN135

MR SAUNDERS: Because we say that until we are told otherwise there is a controversy between the parties, a dispute between the parties as to the correct methodology. I can say. Now that we don't seek to clawback any money that we've paid to anybody; this is an issue in terms of moving forward.

PN136

So we are not using this as a mechanism to try and go back to somebody we have already paid money to, and say, "Well, now you owe us some refund," or claw some money back. We don't want to do that. We want clarification about the correct methodology, as part of the dispute between the parties under the enterprise agreement, which is now before the Commission for arbitration.

PN137

THE COMMISSIONER: Mr Jacka, do you want to say anything about that?

PN138

MR JACKA: Yes, certainly, Commissioner. As we've briefly touched upon, this matter has never been raised as part of this dispute application at all until we get to the point of the proceedings and submissions are made by the company. It was never raised in conciliation; it was never raised at the workplace level. It's a new issue and the question before the Commission, whilst there was no agreed question, as I understand it during the directions hearing before yourself.

PN139

It was established between the parties that the question before the Commission is whether the meaning of the term "gross salary" at clause 22.1 of the agreement as submitted by the MUA is the rates of pay in schedule 1 and any allowances paid under the agreement or, in the alternative, as the company suggests, is restricted to purely the rates of pay in schedule 1.

PN140

Now, the Act is very clear, Commissioner, about what the Commission can and cannot do and in relation to a dispute under section 739 of the Act, what 739(1) says is that this section applies at a term referred to in that section 738 requires or allows the Fair Work Commission to deal with the dispute.

PN141

In our submission, Commissioner, this point is a new issue an it's a new dispute and that would require the company under section 738(b), which is relevant to this current matter, an enterprise agreement includes a term that provides a procedure for dealing with disputes. Now, the agreement is quite clear in relation to what's required by the parties under the dispute procedure mechanism and that's clause 26 of the agreement, Commissioner. Do you have that before you?

PN142

Clause 26 sets out the steps. Step 1:

PN143

The matter in the first instance will be discussed between the employee and the immediate supervisor.

PN144

Step 2:

PN145

It will be referred for discussion between the employee's union delegate or nominated representative.

PN146

Step 3:

PN147

It will be referred to for discussion between the appropriate state branch official or state management official.

PN148

Step 4:

PN149

It will be referred to for discussion between appropriate national union official and other nominated representative.

PN150

Step 5:

PN151

In the event the proceeding steps have failed to resolve the matter, any person bound or covered by this agreement or nominated other representative may refer the dispute to Fair Work Australia.

PN152

None of those steps have been met in relation to this issue. It's a new issue and it's been raised as part of these proceedings. Frankly, in our view, it's akin to saying, "Well, look, if you are going to proceed with this application we are going to undo something that we've agreed to do in the past.

PN153

It's an agreed position in an industrial context that has been in operation since about 2012. To come here today or come into this proceeding and introduce it as a new issue we say, first of all, is a breach of the agreement. It doesn't meet the requirements under the disputes procedure and therefore can't be dealt with by the Commission; there's a jurisdictional issue and until such time as that the dispute procedure is being followed, you cannot deal with this issue, Commissioner.

PN154

Aside from that, we don't agree with the proposition in relation to how it's proposed to be the correct methodology, which is the new proposed methodology and we say that we are in dispute in regards to that matter.

PN155

Pardon me, Commissioner, if there's any questions.

PN156

THE COMMISSIONER: Well, this all arose from my question to you as to whether there was any objection to the admission of this statement.

PN157

MR JACKA: Yes.

PN158

THE COMMISSIONER: Now, I think the matters that you raise don't necessarily operate to exclude this material, but might by way of your submissions operate on the basis that you say there's no proper means by which that particular question could properly be resolved in this proceeding.

PN159

MR JACKA: Well, we say that, but we say on that basis that that part of the statement should not be allowed into evidence, because the Commission has no power to deal with that issue that's raised by Ms Cull.

PN160

THE COMMISSIONER: Because it hasn't been the subject of the dispute settlement procedure, exhausting all the various steps.

PN161

MR JACKA: Correct. And you would also be aware, Commissioner, there was extensive conciliation in relation to this matter. You put it to the parties during the conciliation - because as you recall, initially, the application was in relation to a dispute about how the consultation had occurred, implementation of the redundancies, et cetera.

PN162

During the conciliation, Commissioner, you gave the parties opportunity to raise any other issues that may arise out of the redundancies and during the course of those conciliation conferences, the union raised this issue in relation to an interpretation of clause 22.1.

PN163

At no stage did the company ever raise this issue and they had every opportunity to and we say that they have not met the standards required of them in the disputes procedure. It's a new issue and it cannot be dealt with by the Commission.

PN164

THE COMMISSIONER: Isn't it conceivable then that if you apply the sort of rigidity that you say about what the Commission can and cannot determine, that might also involve this question about the calculation of the quantum of the severance payment, because it is not identified in any of the applications that initiated the proceedings.

PN165

MR JACKA: Yes, Commissioner. I think the unions well understood that they only thing that we were asking the Commission to do in this matter was to give an interpretation of that clause, and I think if I recall, Commissioner, that was a question that you put to the union parties and that's what we agreed to and we said, yes, that's correct. That's restricted to an interpretation question in relation to what "gross salary" means. To introduce a new issue of how the payment is calculated is a new issue.

PN166

THE COMMISSIONER: It's a new issue and so also is the issue of the method for determining what the gross salary means in the respective provisions, because that's not identified in the applications. It is a question of how stringent do you apply this prospect? Where is the evidence that shows the employee raising a complaint about "I didn't get the right amount of severance pay. I take that up through all of the steps and it pops out ultimately here in these proceedings." There is no evidence of that, is there?

PN167

MR JACKA: No, but as I've submitted, Commissioner, the question was raised during discussions by yourself to the parties and if I recall, the question was words to the effect of, "Is there any other issues that the parties wish to raise as part of this application," and we did that.

PN168

As I understand it, the issue in relation to consultation and the way that the redundancies was ultimately resolved, which was part of the dispute application. However, at the end, this was the unresolved issue. There was no issue - - -

PN169

THE COMMISSIONER: I appreciate all that, but when people are in agreement and not taking the concept of there being an absence a jurisdictional foundation, you can do all sorts of things. But if you raise that sort of concept, is that a revolving door? Because if that's the position, where is the Commission's jurisdiction to deal with the very question that you want resolved in your favour to have the allowance is included in the calculation for the severance pay?

PN170

MR JACKA: Because the parties have agreed under the disputes resolution clause and under the powers of the Commission to deal with this particular question. We have not agreed to deal with this issue that's been raised as a secondary issue.

PN171

THE COMMISSIONER: Well, I'll say it is a dangerous piece of territory, isn't it?

PN172

MR JACKA: Why?

PN173

THE COMMISSIONER: Because one has to then say, if there isn't jurisdiction to deal with that particular aspect, because the dispute procedure and all of those attendant things cannot be properly identified, isn't there a potential for the other side to say the same about the primary issue that you want determined in your favour?

PN174

MR JACKA: Well, they've had that opportunity and if that was an issue than they should have raised it. We have consented in accordance with the dispute resolution procedure and agreed to proceed into an arbitration.

PN175

THE COMMISSIONER: The parties, by consent, can't invoke jurisdiction. It is either there or it isn't.

PN176

MR JACKA: I understand that, but it arose - - -

PN177

THE COMMISSIONER: If someone opens that - well, I was going to say Pandora's Box, but it might not be the right terminology, but if we go into this area of have all that T's been crossed and all the I's dotted in respect of getting the Commission properly into this position to determine the question, it can be a difficult and problematic proposition, I think.

PN178

MR JACKA: I understand that, but as I say, Commissioner, our submission is that this has never been raised during the conciliation. There was an opportunity to do that and now the company has chosen to introduce this new issue that has never been discussed between the parties; it hasn't been raised during conciliation - every opportunity to. We say that the Commission doesn't have power to deal with this particular point.

PN179

THE COMMISSIONER: I know what you say, but I am just saying that then couldn't conversely it doesn't have the power to deal with the other point either? If it's strictly approached, where is the power to deal with this question of the remuneration calculation? Where has the Commission got, clearly, evidence showing that all of the steps of the dispute settlement procedures in each one of the agreements has been followed on that issue to get to this point? You know, if that's raised and it's not there, then the answer is fairly obvious.

PN180

MR JACKA: Well, can I say, Commissioner, the evidence of Ms Cull says that - she says - and it's in the submissions of the respondent that, well, this issue hasn't been raised until August. So by the evidence of Ms Cull, it was raised at the local level and then has been escalated to the Commission through conciliation and now through arbitration.

PN181

THE COMMISSIONER: All right. I think I hear what you say about this. I would like to move forward a little with this. You object to, presumably, paragraphs 12, 13 and 14.

PN182

MR JACKA: Yes.

PN183

THE COMMISSIONER: All right. Now, I think Mr Matthew, did you have anything you wanted to say about - - -

PN184

MS THOMPSON: Sorry, Commissioner. Your technician has arrived here and I've missed half of this. Can we break now and get the technician to reset, please?

PN185

THE COMMISSIONER: I think we might have to. Yes, all right.

PN186

MS THOMPSON: Thank you.

PN187

THE COMMISSIONER: I think it was unfortunate if you've missed some of that, Ms Thompson, because it could be very significant in all of this, but anyway, let's a take a short break and allow the technical staff to try and improve the standard of the communication. We will adjourn for 10 or 15 minutes.

SHORT ADJOURNMENT [11.03 AM]

RESUMED [12.08 PM]

PN188

THE COMMISSIONER: I think we have partially rectified the communication problems. It seems now that, Ms Thompson, you can't see us, but you can hear us okay.

PN189

MS THOMPSON: Yes, that's correct, your Honour.

PN190

THE COMMISSIONER: We can see you, I think. Yes, we can see you but we'll just - unless some difficulty arises with communication, in which case you will need to wave at us or something, we will try and press ahead with the arrangement that we've got in place now with unfortunately Melbourne not being connected by visual means, but only with the audio.

PN191

So where are we up to? I think we're still trying to get the statement of Ms Cull dealt with, are we not?

PN192

MR JACKA: Yes, we are, Commissioner. You've heard our submissions in relation to objecting to paragraphs 12 to 14.

PN193

THE COMMISSIONER: Yes.

PN194

MR JACKA: But given the delay with the logistics, and we've been dealing with some issues in relation to representatives and jurisdictional contentions, subject to what you may see as the best way to proceed, Commissioner, can I suggest =-and I think it's based on your suggestion that you note our objection and we'll also have something to say in submissions and submissions in reply about the company's submissions.

PN195

You can make a decision or decide how you want to deal with Ms Cull's evidence and the submissions as part of your decision in relation to this matter.

PN196

THE COMMISSIONER: All right. Certainly, I understand the nature of your objection, yes.

PN197

MR JACKA: Yes.

PN198

THE COMMISSIONER: Mr Matthey, did you want to take any objection to the admission of the statement of Ms Cull?

PN199

MR MATTHEY: Commissioner, at the time I said that I didn't object, and I still personally don't object to it. I just assumed that paragraphs 12 to 14, (indistinct) that we'd put Ms Cull's statement to put the idea in your mind that they were framed correctly in the first place. So I didn't take much objection to it, because I just thought it was a clever point to try to plot that in your mind, so I didn't have any objection to it.

PN200

THE COMMISSIONER: Ms Thompson?

PN201

MS THOMPSON: Thank you, Commissioner. Look, it doesn't affect us as such, because our issue isn't gross pay, it's a day's pay, so our calculation is based on the last pay rate not what's been paid previously.

PN202

But if I can just clarify for your benefit, if you were so curious as to how we ended up with a different agreement than the other two parties, when this agreement was negotiated first in 2011/12, the genesis of it comes from the dredging industry which is 10 per cent of gross salary, which basically in the dredging industry means anything that's on the - gets taxed as salary is paid at 10 per cent at the end of it all and anything that was an allowance is not.

PN203

But what happened in these negotiations, the MUA, Ian Bray from the MUA negotiated a slightly different agreement in that he conceded in the dredging industry you get the 10 per cent - - -

PN204

MR SAUNDERS: Commissioner, I object to this. Sorry, for interrupting, Ms Thompson, but I object to this. Ms Thompson has been asked whether she objects to any part of the statement. We've not been told whether she does or does not, but now we're going into the history of negotiations.

PN205

If there's going to be some evidence about the history of negotiations and that impacting on the proper interpretation of the agreement, that's a matter for evidence and not a statement from the Bar Table and we object to that information being given to the Commission in this way.

PN206

THE COMMISSIONER: Did you hear that, Ms Thompson.

PN207

MS THOMPSON: Yes, I heard that. If you want the benefit of the negotiations to get the context of where this came from, it's for your indulgence, your Honour. If you wish me to continue, I will. If not, I will sit down again. I don't object to the statement because it doesn't apply to us.

PN208

THE COMMISSIONER: I think, Ms Thompson, it might be more appropriate that if you've got something to say about that, it might be dealt with in submissions. That might just be a better way to deal with it.

PN209

MS THOMPSON: Thank you, Commissioner.

PN210

THE COMMISSIONER: So you don't object. We've heard the objections which have been made by the MUA and to some extent echoed by AIMPE. The document will be admitted and this document will be marked as exhibit 1 and is described as the statement of Leanne Cull, dated 29 April .

EXHIBIT #1 STATEMENT OF LEANNE CULL DATED 29/04/2015

PN211

THE COMMISSIONER: Now, Ms Cull is not required for cross‑examination. She is welcome to remain in the Darwin precinct of the Commission to witness the rest of the proceedings if she wishes, but Ms Cull, if you don't want to you don't have to attend any further.

PN212

MS CULL: Thank you, Commissioner. I will stay and just observe. Thank you.

PN213

THE COMMISSIONER: So now there's no further evidence, I think, from the respondent.

PN214

MR SAUNDERS: That's correct, Commissioner.

PN215

THE COMMISSIONER: So now we just get to submissions in that matter. I think that was always going to be the substantial part of the case any way. So it's been a bit delayed, but we finally got there. So we'll take this in the order that we've been dealing with this MUA, AIMPE, AMOU, employer, unions, anything in response. I think that's the way to deal with it. So Mr Jacka.

PN216

MR JACKA: Thank you, Commissioner. First of all, we rely on the submissions filed with the Commission on 31 March 2015.

PN217

THE COMMISSIONER: Yes, I have those.

PN218

MR JACKA: Do you wish to mark those, Commissioner?

PN219

THE COMMISSIONER: I'm not sure that strictly needed, but just for convenience we might do that, in case we're going to refer to this, because of the amount of material. So we will mark the submissions of the MUA, dated 31 March 2015, as MUA1.

EXHIBIT #MUA1 SUBMISSIONS OF THE MUA DATED 31/03/2015

PN220

MR JACKA: We also rely on our outline of submissions in reply, filed on 7 May 2015.

PN221

THE COMMISSIONER: Once again, I think we will mark this so that it's more easily referred to. The MUA submissions dated 7 May 2015 made in reply will be marked as MUA2.

EXHIBIT #MUA2 SUBMISSIONS IN REPLY OF THE MUA DATED 07/05/2015

PN222

MR JACKA: Thank you, Commissioner. We say that this matter is in relation to a section 739 application before the Fair Work Commission. The question before the Commission is whether the meaning of the term "gross salary" at clause 22.1 of the Toll Marine Logistics and MUA Gladstone Inshore Maritime Enterprise agreement 2011 as submitted by the MUA is the rates of pay schedule 1 and includes any allowances paid under the agreement.

PN223

The question that's put to the Commission is the company's question of interpretation as to whether the gross salary is restricted to the rates of pay in schedule 1 of the agreement. In our submissions, Commissioner, and in our reply submissions in MUA2, we describe what we say is the plain ordinary meaning of the language in the agreement.

PN224

The principles of the construction are helpfully set out in the decision of the Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd, also referred to in the respondent's submissions.

PN225

In that decision the Full Bench at paragraph 19 refers to the decision in the City of Wanneroo, described as Wanneroo, where it talks about consideration of ordinary meaning of its words and the approach of construction of agreements.

PN226

The Commission further goes on to discuss at paragraph 20, they say, the oft-quote observations in Kucks v CSR, that the Commission shouldn't take a narrow, pedantic approach and that should be avoided, and they quote:

PN227

The task remains one of interpreting a document produced by another or others. 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. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.

PN228

And then in Golden Cockerel, the Full Bench helpfully sets out the steps in relation to construction principles and says that:

PN229

In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

PN230

We say, Commissioner, that the agreement has a plain, ordinary meaning in relation to the words "gross salary" in clause 22.1 of the agreement.

PN231

We say, and our submission is that those words provide for a severance payment equal to 10 per cent of the employees gross salary paid to an employee whilst they are employed by the company on the project.

PN232

In our submissions, Commissioner, in paragraph 9 and our reply submissions in MUA2, paragraph 2, we rely on the ordinary meaning in the dictionary, being that the word "gross" in relation to salary means "whole, entire or total, especially without having been subject to deduction as for charged loss," and then the dictionary uses the example of gross profits.

PN233

Our submission, Commissioner, is that word "gross" indicates that the calculation for the severance payment is based on the total salary paid to an employee whilst they were employed on the project.

PN234

Our submission, Commissioner, is that total salary for the purposes of this agreement in its plain ordinary meaning include the rates of pay set out in schedule 1 of the agreement and include allowances set out in clause 10, which is described as travel and other allowances, and schedule 2 which is the all purpose allowance for the Gladstone LNG Project.

PN235

Now, we submit, Commissioner, that clause 9 of the agreement assists with the context of the ordinary meaning of the words in the agreement. If you go to clause 9.5, what it says is:

PN236

The rates of pay prescribed in the schedules represent the total remuneration payable to any employee, save for any expense, allowance under this agreement.

PN237

What we say, Commissioner, in regards to the construction of this agreement, is that salary or gross salary is, in effect, set out or described in clause 9.5 Now, the respondent's submissions is that - one of the submissions made is that the MUA submits that gross salary and remuneration mean two things. That's not what we're saying and we will come to that shortly in relation to these differences.

PN238

What we're saying is for the purposes of this agreement you have to look at the ordinary meanings of the words and then look at the context in which those words are in the agreement. There is a number of allowances in the enterprise agreement that are in there to, in effect reimburse employees, but you also have the all-purpose allowance, which is an allowance that is paid for each day that the employees work on the agreement.

PN239

Our submission is not that gross salary means total remuneration. What our submission is is gross salary relates to ordinary earnings whereby employees have been paid a gross salary for the ordinary hours that they work on the project.

PN240

So in effect, they're paid a rate of pay for each day they worked which is set out in schedule 1, which is the annual rates of pay, but in addition to that, each time that they are working on the project, they are also paid particular allowances and that there forms what we would say is the correct interpretation of gross salary or ordinary earnings.

PN241

As we've previously submitted, Commissioner, clause 10 and schedule 2 set out the allowances. We submit that it is clear that the respondent is required to pay an employee an annual rate of pay in accordance with schedule 1 and allowances at clause 10, schedule 2 for any period that they were employed on the project.

PN242

Now, in respect to the respondent's submissions, they raise this interesting issue in relation to taxation and I refer to paragraph 23 of the respondent's submissions and also refer to paragraph 5 in MUA2, which is the MUA's submissions in reply.

PN243

Now what the respondent says in relation to this idea of "gross" meaning "before tax", what they say in paragraph 3 is that

PN244

First the MUA has misconstrued the word "gross", contrary to the MUA's assertion "gross" means "before tax". So much is clear both from the ordinary meaning of the word "gross" in clause 22.3 of the Deckhand Agreement. In particular, clause 22.3 explains that a gross payment or amount is the amount prior to the withholding of tax in accordance with the relevant law. It follows that calculating 10 per cent of the employee's gross salary paid to the employee for the period of continuous employment, it is necessary to look at the salary payments made to the employee prior to tax being withheld during the relevant period.

PN245

Now, at the start of the proceedings, Commissioner, I flagged that I would like to tender a document. I apprehend that perhaps Mr Saunders may have an objection to that. We sent this document to Ms Alam and copied Ms Cull in at about 3 o'clock yesterday, saying that we intended to rely on the document. Before I hand this document up, perhaps I might need to hear from my friend if he has any objection. I've raised this before the proceedings.

PN246

MR SAUNDERS: Commissioner, we want to be practical about this. Which is haven't had a chance, since it was provided to us yesterday afternoon to, in fact, look at the business records of the company to see whether this is an accurate document. One is a PAYG payment summary and another is a pay slip. Most likely it is.

PN247

I suggest a practical way of dealing with it is we let it be tendered. Now, as part of the MUA case. If, for some reason, we checked overnight and we say it is not an accurate document for some reason, which is unlikely, then we would put on a short submission and have that dealt with. But most likely that issue would just go away.

PN248

THE COMMISSIONER: That seems like a sensible way forward.

PN249

MR SAUNDERS: Thank you.

PN250

THE COMMISSIONER: I take it none of the other parties - have the other parties seen this document?

PN251

MR MATTHEY: Yes, we have, Commissioner.

PN252

MS THOMPSON: Yes, we have, Commissioner.

PN253

THE COMMISSIONER: No objection to me receiving it?

PN254

MR MATTHEY: None at all.

PN255

THE COMMISSIONER: We will as exhibit 2. It's tendered with the proviso that the respondent employer will be provided with an opportunity overnight to make further submissions in respect of it, if they desire to do so.

PN256

Exhibit 2 is described as a copy of PAYG payment summary and pay slip documentation dated 30 June 2014. Exhibit 2.

EXHIBIT #2 COPY OF PAYG PAYMENT SUMMARY AND PAY SLIP DATED 30/06/2014

PN257

MR JACKA: Commissioner, the first document in this bundle is PAYG payment summary, and just so we're clear, there are two pay slips for a Mr Alan Brennan. The first pay slip is when Mr Brennan was on swing, so he's at work and then the second payslip is when Mr Brennan is off swing.

PN258

Now, if you look at this document here, in relation to the first pay slip it is when Mr Brennan is on swing, and you go down the page you will see how his pay is broken down in relation to tax purposes and how the company displays how he is paid when he is on swing. And if you come down, you see the word "Description."

PN259

THE COMMISSIONER: Yes, I can see that.

PN260

MR JACKA: Then it says, "Before tax earnings" ie gross.

PN261

THE COMMISSIONER: Yes.

PN262

MR JACKA: Then you have "Ordinary pay".

PN263

THE COMMISSIONER: Yes.

PN264

MR JACKA: And then there is "Rec accrual", which is a crediting of hours. But the important parts here of this pay slip, Commissioner, are these: if you see included in the before tax earnings or gross salary, is all-purpose allowance is included and victualling is included. Then you go down to the next line which says, "Taxable gross earnings", is $3800.30.

PN265

Now, what that $3800 dollars is is the gross earnings including ordinary pay, all-purpose allowance and victualling. So we make two submissions on that. First of all, that goes to the MUA's submission in relation to the interpretation of what "gross salary" is, or "gross earnings" and it goes to the concept of ordinary earnings and the idea of gross earnings when the employee is on the job and working ordinary hours.

PN266

What this document shows is that when the employee is working ordinary hours, they earn a gross salary that includes an all-purpose allowance and a victualling allowance. It also goes to the submission, we submit, from the respondent where they say that the interpretation to be accepted by the Commission is that "gross salary" means "something before it is taxed."

PN267

In our submission, Commissioner, these documents -particularly the second document - show that when an employee is working on the project at work, working ordinary hours that part of their gross salary, for the calculations of the severance payment, include all-purpose allowance and victualling.

PN268

Now, we make the similar submission in relation to the respondent's submissions which are in paragraph 25 to 29 of their outline of submissions. Perhaps I've already made this submission, but I'll just reaffirm what we've said. In those paragraphs the respondent talks about a distinction between salary and remuneration and then in paragraph 32 the 35 it talks about a common industrial usage of those words.

PN269

What we say, as we have submitted previously, is that our submission is not that "gross salary" means "total remuneration" as such. What we say is it is ordinary earnings, and it's a gross salary derived from an employee's ordinary earnings when they work ordinary hours.

PN270

Now, Commissioner, if you're against us on the construction of the agreement that gross salary includes the rates of pay in schedule 1 and the allowances in clause 10, which include a variety of allowances that you may argue our reimbursements, then we submit that the all-purpose allowance in schedule 2 is distinct from the other allowances, because the all-purpose allowance is described in this way - that's page 21 of the enterprise agreement, schedule 2:

PN271

An all-purpose allowance of $90 per day shall be paid to all employees employed under this agreement in work in the Port of Gladstone in respect of LNG projects for each duty day or part duty day worked. This is a gross allowance and will be taxed appropriately in accordance with the applicable taxation law.

PN272

Then there's a table there that sets out how much gets paid. Now, the submission we make in relation to the all-purpose allowance relates to our submission regarding ordinary earnings and gross salary, and in effect, what this says is that for each day you work, you get paid the allowance.

PN273

Now, in conjunction with a day's pay and hours worked, we say that that is a constant allowance that is paid irrespective of what other circumstances may apply to you. So there is a distinction between those allowances in relation to clause 10 in schedule 2 and what we say is if you're against us that all the allowances are included in addition to schedule 1.

PN274

As part of the gross salary, that we would say that you cannot exclude the all-purpose allowance because that forms part of ordinary earnings. There may be a question of where different circumstances apply how the other allowances are paid, however, all‑purpose allowance is always paid for any day worked.

PN275

There's a submission made by the respondent at paragraph 29 of their submissions in relation to other clauses in the agreement which are clauses 12.1.2, clause 13 and clause 13.3, which supposedly make a distinction between how different salaries are paid or assist the Commission in some sort of construction argument in relation to the project payment.

PN276

Our submission is that those clauses are not relevant to the clause in 22.1. These clauses are in relation to accident pay, which is a top-up for any workers compensation payments and clause 13.1 is in relation to superannuation payments. Now, the only submission that I would make on that is that what the Super Guarantee Act says in relation to superannuation is that ordinary earnings includes any earnings worked for ordinary hours of pay.

PN277

If it's the submission of the respondent that somehow assists, we say that the only way it assists is in relation to the MUA's interpretation of the agreement and how ordinary earnings and gross salary are paid.

PN278

THE COMMISSIONER: So the superannuation is paid as a percentage of that total gross earnings figure, just looking at the pay slip, is that right?

PN279

MR JACKA: Yes, that's correct.

PN280

THE COMMISSIONER: So that's why you say that shows your salary.

PN281

MR JACKA: Exactly.

PN282

THE COMMISSIONER: And so it's the $3800.30 figure that's used for those purposes, for superannuation, not the $2633.12 figure.

PN283

MR JACKA: That's our submission and that's based on the Super Guarantee Administration Act 1992. I have an extract of that in section 6, which I am content to hand up if need be or I can read it.

PN284

THE COMMISSIONER: I understand what you're saying.

PN285

MR JACKA: Yes, and the superannuation is calculated as set out in that pay slip, but based on the definition of "ordinary time earnings", so it comes - - -

PN286

THE COMMISSIONER: Which is the larger figure which adds the other - - -

PN287

MR JACKA: Correct.

PN288

THE COMMISSIONER: But isn't it conceivable here, the company might have got this wrong and particularly for the victualling component, it's taxing an amount which is in fact an expense-related allowance.

PN289

MR JACKA: Without wishing to give evidence from the Bar Table - - -

PN290

THE COMMISSIONER: Maybe I shouldn't have asked the question.

PN291

MR JACKA: What I would say is that it's highly unlikely first of all that the company has got it wrong. Secondly the issue of the company withholding tax in relation to victualling allowance actually arose and initially employees were paid the victualling allowance and it wasn't taxed, and then as I understand it, again not wishing to give evidence from the Bar Table there was a tax ruling in relation to that and the company made a decision to withhold tax from the victualling allowances.

PN292

So in our submission, given that's the position where any employee works and is paid a victualling allowance, because you get the victualling allowance based on the fact that you are at work, and it's taxed accordingly, we say that forms part of gross salary.

PN293

THE COMMISSIONER: It's not quite the same as the ordinary travelling allowance of something like that, is it? It's a slightly different concept.

PN294

MR JACKA: No, that's right. The submission we made previously that if you're against us on all the allowances, then what we submit is that any allowances that are earned as part of the gross salary whilst the employee is at work working ordinary hours, is part of gross salary. That's set out in the pay slips and you can see the distinction in the pay slips between when an employee is at work and when an employee is not at work, because they are not being paid the victualling allowance and they are not being paid the all‑purpose project allowance, and therefore it doesn't form part of their salary.

PN295

So our submission would be that if you were to determine in favour of the MUA on that point, that the payment would be only related to when obviously those employees are at work and being paid those allowances. We are not suggesting it goes into the off swing component.

PN296

That is again strengthened by the way that the superannuation contribution is paid, because it is paid on those gross earnings and that's in accordance with the Super Guarantee legislation. I accept there may a question in that the company is wrong on that, but I highly doubt that.

PN297

Furthermore, Commissioner, the submissions made by the company in relation to section 119(2) and section 19 of the Act - and I'm sorry, I haven't been able to reference that submission point; if you're just give me a moment. That submission is made at paragraph 38 in relation to the idea that in this enterprise agreement the severance payment is some sort of payment likened to redundancy payments in the Fair Work Act and therefore it should be the base rate of pay.

PN298

Now, what we say in relation to that submission, Commissioner, is that section 55(4) of the Act states that:

PN299

A modern award or enterprise agreement may also include the following kinds of terms: (a) terms that are ancillary or incidental to the operation of an entitlement of an employer under National Employment Standards; (b) terms that supplement the National Employment Standards.

PN300

Now, clearly what we have here is that we have a bargaining arrangement between two parties in relation to how they are going to deal with project employees and what severance they are going to be paid. Upon reaching agreement on that bargaining, the parties have agreed to pay 10 per cent of the gross salary.

PN301

So in our submission, Commissioner, the submission from the respondent that somehow this is some sort of base pay arrangement in accordance with the NES and redundancy pay is not on point. What is on point is that there is a bargain reached in an enterprise agreement which is allowed for under the Act in any event and this is something completely separate; whilst it has the same types of concepts, we say it's a different concept, because we are talking about project employees, and we've got an arrangement here to deal with employees finishing up on the project.

PN302

Finally, the submissions made by the respondent in relation to if the allowances were included in the salary - and the submissions are made by the respondent at paragraph 41 - that it would not accord with business sense.

PN303

Now, our submission respectfully, Commissioner, is that if that were the case, then you would not have any allowances at all in any agreements that would deal with varying circumstances of employee. To us, this submission says, "Well, if you've got different circumstances for different employees and they are paid differently, then that just doesn't make common business sense."

PN304

Now, to submissions on that are (1) that that was always the understood outcome, that if you have an allowance and there are different circumstances, employees are paid differently and (2) which comes back to our submission about including all the allowances which, if you are against us on that, we would say that based on this submission, the only allowances that this submission could apply to are any allowances that may vary according to circumstances - so, for example, travel another type of allowance which varies according to different circumstances and different employees.

PN305

However, if you come back to victualling and the all-purpose allowance, both of those in essence are always paid to the employee for each day that they work on the project. We say that there is a distinction between those and allowances that are paid according to various circumstances of employees.

PN306

Now, in relation to the submissions made regarding the correct methodology, you have obviously heard our objections in relation to Ms Cull's evidence. We again press that objection and say that this submission should be rejected. We say that there are some considerable jurisdictional issues that arise and it was never agreed at the directions hearing for this matter, and that this issue has never been discussed or raised previously until we were in proceedings.

PN307

But perhaps what I will do is I will wait to hear what Mr Saunders says regarding that and then I will make submissions in reply. So if you have any questions, Commissioner?

PN308

THE COMMISSIONER: I think I understand the proposition that you advance.

PN309

MR JACKA: Yes.

PN310

THE COMMISSIONER: Thank you. Mr Matthey.

PN311

MR MATTHEY: (Inaudible) that they were sent through to your chambers and to the other parties on 6 May. I'd like to rely on them and just make a couple of points, as our submissions are fairly similar to that of the MUA and the clause in our agreement is fairly identical to the MUA's agreement. There's a couple of things that I wanted to raise, Commissioner - - -

PN312

THE COMMISSIONER: Mr Matthey, I think you might have been - we couldn't hear you for a moment then when you started. You referred to your written submissions, did you?

PN313

MR MATTHEY: Yes, my submissions that were supplied on 6 May, and I apologise for them not being dated. They were sent through to your chambers and to the other parties on 6 May.

PN314

THE COMMISSIONER: Is this 20 paragraphs, page 6 - there's a seventh page, but that has your name on it.

PN315

MR MATTHEY: Seven pages, that's correct. Yes.

PN316

THE COMMISSIONER: All right. I think we've all got the same document. Just so that we are all marking things with some consistency, the submissions made by the Australian Institute of Marine and Power Engineers of seven pages in length will be marked as AIMPE1.

EXHIBIT #AIMPE1 SUBMISSIONS OF THE AUSTRALIAN INSTITUTE OF MARINE AND POWER ENGINEERS

PN317

THE COMMISSIONER: Thank you. Please continue.

PN318

MR MATTHEY: Thank you, Commissioner. I'd like to rely on them and just make a couple of other points. As I said, our agreement, the wording of those clauses are extremely similar if not the same as the MUA and their agreement. So there's just a couple of things that I'd like to touch on.

PN319

When we first lodged this dispute, we had a look at the agreement and in respect to the severance and redundancy clause in the Institute agreement, it quite clearly says - and that's in clause 21:

PN320

shall be paid bona fide severance and redundancy payment equal to 10 per cent of the employees' gross salary.

PN321

Now, we go over to schedule 1 which I think the company are relying and schedule 1 is the salary rate. Now, nowhere in schedule 1 does it talk about gross salary. It talks about an annual rate, not gross salary.

PN322

We are of the view that, for obvious reasons, there is a difference between the annual rate and the gross salary. So what we did, we of the view that there couldn't be too many different interpretations of what gross salary meant, so we went to the place where we thought there may well be experts in salary and tax arrangements which is the Australian Taxation Office, and the definition from the Australian Taxation Office of a "gross salary" is "the amount of money earned before tax is deducted."

PN323

We then concluded from that there are a number of allowances that should then be included, as well is the annual rate, to make the gross salary and they are the all‑purpose allowance and the victualling. We also came to that conclusion, because these aren't occasional allowances. These aren't allowances like travel where you might travel once a week or where you might get a meal allowance if you do overtime.

PN324

If you work, these allowances are paid and they are taxed. So in our view, from that, they form part of the gross salary which is in addition to the annual rate, which is prescribed in the agreement. The other thing, Commissioner, is that in our view, when we went to the Australian Taxation Office trying to get an interpretation of what gross salary is, and it's quite clearly there on their web page.

PN325

As Mr Jacka alluded to, there are other things regarding superannuation and the like where you look at different arrangements, whether they be annual or gross salary, depending on the circumstances, we came to the view, Commissioner, that there cannot be more than one interpretation of gross salary.

PN326

You can't have an interpretation of gross salary from the people that collect your tax and have a different interpretation of gross salary and how it is taxed at a different end. So we are of the view that rightly there should not be an industrial definition of gross salary and a normal taxable definition of gross salary from the ATO.

PN327

We are of the view that there should only be one definition and that's a definition that is delivered by the people that collect your taxes and that is the ATO.

PN328

Commissioner, other than tabling our submission, we don't have anything else to add.

PN329

THE COMMISSIONER: All right, thank you. Ms Thompson.

PN330

MS THOMPSON: Thank you, Commissioner. We also rely on our written submission that was submitted the 6th or 7 May, a six-page document that everyone should have a copy of; outline of submissions.

PN331

THE COMMISSIONER: I've got six pages.

PN332

MS THOMPSON: Yes.

PN333

THE COMMISSIONER: Yes, all right. We will mark that document which is the outline of submissions from the Australian Maritime Officers Union. That document will be marked as AMOU1.

EXHIBIT #AMOU1 SUBMISSIONS OF THE AUSTRALIAN MARITIME OFFICERS UNION

PN334

MS THOMPSON: Thank you. The AMOU has a slightly different position than the other two unions in that our clause 9.3 of the agreement provides for rates of pay prescribed an all-inclusive payment, which constitutes the whole of the employee's remuneration and which commensurates employees for all aspects of employment, including ordinary hours, overtime or penalty rates or other payments or allowances, unless otherwise specifically provided in this agreement, which takes us to schedule 1 and 2.

PN335

It's our belief that the negotiations which brings me back to the history of these negotiations is where we differ. The provision of 10 per cent redundancy of gross salary; the Genesis is from the dredging industry and in the dredging industry, there is an interesting component where if you resign, you also get the 10 per cent payment.

PN336

But when the MUA negotiated this agreement with Toll, and there's a similar agreement with PB Sea Tow, they omitted the resignation. So when we came to negotiate our agreement I said, "This has a horrendous potential for the dredging industry and I'm not prepared to give up that the employees can still resign and get it." So that is the basis of why we negotiated an agreement that provided 38 days pay as opposed to 36.4 days pay, what it could have been.

PN337

So if I can take you to the example provided by Mr Jacka and his pay slip that he provides for Alan Brennan - - -

PN338

THE COMMISSIONER: Yes, exhibit 2.

PN339

MS THOMPSON: Under the dredging industry, Alan Brenna - if he had a gross payment of $154,000 and let's presume he just did one year so it's nice and settled, he would get $15,423 redundancy.

PN340

Under our scenario, we said to the companies, "We don't want to set a precedent in the dredging, so we will do something different." So we looked at it and said, okay," so using his example, so his pay was 376 a day, plus his 107, would be 483 a day, times for the year 38 days pay, so under our scenario, we would calculate that his redundancy is worth 18,360.

PN341

We did our calculation based on that we were giving up something, because in the past if someone wanted to just leave the job or got another job they got this money. So we said, "There's got to be some disincentive on the company," so we calculated that we would do the payment for both and that's what comes back to essentially is the difference between us and the MUA and the Institute in this agreement and why there is a difference in our calculation.

PN342

We say that because in the schedules and in relation to 9.3 which makes it quite clear that the rates of pay are in the schedules that the project allowance is also included in what is not commonly nine as the pay rate for the day. And we just say that's the ordinary; so if someone says, "What's my rate of pay," then it is those two figures, and that is why they are in the schedules together.

PN343

Otherwise, the agreement would have been structured so that the project allowance appeared in the allowance section in that component of the course of the agreement, rather than in schedules. So that is our argument, but we say that we should just take it as an ordinary.

PN344

So instead of the project allowances being in clause 10 for the travel and other allowances, we say that the rate of pay is prescribed in the schedules 1 and 2, and those rates determine what the redundancy should be based on. That is how we have done our negotiations and that is the history of the difference between the three unions. Otherwise, we rely on the submission that we have made. Thank you.

PN345

THE COMMISSIONER: Thank you, Ms Thompson. Do you want to press ahead? I know we've had an extended break because of the problems with the communication, but I am happy to take the respondent's submissions after lunch.

PN346

MR SAUNDERS: I'm content to go ahead.

PN347

MR MATTHEY: I am happy to press ahead, Commissioner.

PN348

THE COMMISSIONER: All right. Well, we will keep going. Yes.

PN349

MS THOMPSON: Yes.

PN350

MR SAUNDERS: Commissioner, we to rely on our written submissions. There are two sets of them. The first submissions are in-Chief, and they are dated 29 April, 2015.

PN351

THE COMMISSIONER: Yes. I think for convenience we will mark the submissions of the respondent employer dated 29 April 2015 as TOLL1.

EXHIBIT #TOLL1 SUBMISSIONS OF RESPONDENT EMPLOYER DATED 29/04/2015

PN352

MR SAUNDERS: We also have submissions in reply dated 26 May 2015, three pages.

PN353

THE COMMISSIONER: I don't have a date on those. What did you say they were dated?

PN354

MR SAUNDERS: My copy has a date. They're - - -

PN355

THE COMMISSIONER: Anyway, it doesn't matter. It just goes over the a third page.

PN356

MR SAUNDERS: It does, five paragraphs.

PN357

THE COMMISSIONER: So the respondent's submissions in reply we mark as TOLL2.

EXHIBIT #TOLL2 RESPONDENT'S SUBMISSIONS IN REPLY

PN358

MR SAUNDERS: Thank you. The Full Bench in Golden Cockerel tells us that the first step in construing an enterprise agreement is to determine whether the agreement has a plain meaning or whether there is some ambiguity.

PN359

Now, we say in respect of each of these three agreements, they have a plain meaning as to the calculation of severance pay and the plain meaning is evident both from language used in the relevant clauses, which I will take you to and the context is which it's put.

PN360

I intend to first focus on the the Deckhands Agreement, the MUA agreement and then I will deal with the other two. In terms of the Deckhands Agreement, the starting point is clause 22, or as Mr Jacka rightly pointed out, clause 22.1 which provides for employees to get a severance payment equal to 10 per cent of the employees gross salary paid to the employee for the period of their employment.

PN361

The union says "gross salary" means "salary plus allowances under schedule 2, plus all other allowances under clause 10. We say gross salary means the salary prescribed in schedule 1. Now, we say that the ordinary meaning of the word "gross", in terms of the context of the phrase "gross salary" means before tax.

PN362

If you talk about somebody's gross salary, you are talking about the amount they are paid by the employer by way of salary before you take any tax out, to be contrasted with net salary, which is your salary after taxes, been withheld. That's the ordinary meaning of the term "gross salary".

PN363

Now, that ordinary meaning is made crystal clear in this case that it should be applied by reference to clause 22.3. Clause 22.3 says that:

PN364

The payment described in clause 22.1 is a gross payment and shall be subject to taxation in accordance with the relevant law.

PN365

So it's made plain from clause 22.3 as well as the ordinary meaning of "gross salary", that gross salary is the amount is the salary before taxation.

PN366

Now, if I can just tuck across to schedule 2 of the agreement. Schedule 2 of the agreement on page 21 deals with the all-purpose allowance and in the last sentence of schedule 2 before we look at the table it says:

PN367

This is a gross allowance and will be taxed appropriately in accordance with applicable taxation law.

PN368

So it is again clear from schedule 2 as well as clause 22.3 that when this agreement talks about gross payments or gross amounts. It is talking about amount before taxation is withheld.

PN369

Now, the MUA in their reply submissions has looked at a dictionary definition of the word "gross" and they say the word "gross" means "whole" - I'll just turn to that. They say "gross" means "whole, entire or total, especially without having been subject to deduction as for charge, loss, et cetera." Now, another example of a deduction there is tax.

PN370

So in the context of this clause, talking about gross salary and applying an ordinary definition, what it's talking about is the whole, entire or total salary, whatever that might be, before tax is deducted. But all that does is beg the question, "What is salary?" What's the gross salary being talked about here? What's the salary? That's the focus of the inquiry. What's meant in this agreement, in clause 22.1 by "salary'?

PN371

Now, what you don't do is what the MUA is done and is look at an ordinary taxation or other meaning of the word "salary" and say, "Well, it means ordinary earnings. It means whatever you get. Therefore you better search through the agreement and work out what somebody gets paid." Golden Cockerel tells us that's an erroneous approach to interpretation.

PN372

What you need to do is look at the words of the agreement in their context and work out what they actually mean. And when you look at this agreement in its context, you see salary has a particular meaning, and the starting point of that analysis is to look at clause 9.
Clause 9 of this agreement says in 9.1, employees will be paid at the rates of pay prescribed in schedule 1. It doesn't say "all the schedules", but the rates of pay prescribed in schedule 1.

PN373

We turn to schedule 1 and it provides for an annual salary to be paid to employees. Schedule 2 , provides for the all-purpose allowance to be paid to employees. The all‑purpose allowance is not described as salary in the agreement and it's set out in a different schedule to schedule 1 which deals with salary.

PN374

So it's clear there a distinction in this agreement between the concept of salary which is dealt with in schedule 1 and the concept of an all-purpose allowance or an allowance which is dealt with in schedule 2.

PN375

THE COMMISSIONER: So the distinction being between the word "salary" and "allowance".

PN376

MR SAUNDERS: Correct. So when we are looking for what the word "salary" in clause 22 means, we need to bear in mind that in this agreement. There is a distinction between salary and allowances. Salary is what is clearly prescribed in schedule 1. Allowances are dealt with, in part in schedule 2 and in part in clause 10.

PN377

They are dealt with separately and that is what this agreement sets up as a means of distinguishing between on the one hand "salary", and on the other hand "allowance".

PN378

THE COMMISSIONER: Presumably then 9.5 is putting the two together.

PN379

MR SAUNDERS: Indeed, and that is my next point. Clause 9.5, what it does is it introduces a third concept. The third concept here is total remuneration and it is clear from clause 9.5 that what "total remuneration" is, is everything you are paid under the schedules - that's all of them, so that's salary plus all-purpose allowance, plus any other allowance you might get under the agreement.

PN380

So here "total remuneration" means "salary plus all-purpose allowance, plus travel allowance under clause 10, plus victualling allowance under clause 10." That's total remuneration. So again, there's a clear distinction in this agreement between, on the one hand "salary", dealt with in schedule 1 and on the other hand, "total remuneration" which is the salary plus all the allowances. . They're conceptual differences in this agreement between those concepts

PN381

Now, the MUA contends that "gross salary" means "total salary" and "total salary" means "total remuneration". But the problem is "total salary" doesn't mean total remuneration. Salary is only one component of total remuneration. The other problem with this analysis by the MUA is that it ignores the well-understood distinction between salary and remuneration in industrial law.

PN382

Now, we've set out in our written submissions this distinction which has been around for a very long time and the distinction is that remuneration is a broader concept than salary. Now, that distinction has been used in this agreement in the way I've described because remuneration is a broader concept; it includes allowances, with salary does not.

PN383

The next point is a very important point. If, as the MUA contends, the parties had objectively intended for the severance payments in clause 22 to be calculated on the basis of total remuneration, they would have used that expression in clause 22, rather than the narrower concept of salary.

PN384

That is, clause 22 would have said:

PN385

Employees entitled by way of severance payment 10 per cent to the employee's gross total remuneration paid to the employee during their employment.

PN386

Or the agreement would have said:

PN387

The employee is entitled to a severance payment of 10 per cent of the employee's gross salary plus allowances paid to them.

PN388

The agreement doesn't say that. The agreement says "gross salary" and the agreement clearly sets out what is salary, what is allowance what is total remuneration; all different concepts. What Golden Cockerel tells us is that we must construe the words in the enterprise agreement.

PN389

THE COMMISSIONER: Why doesn't is say "annual salary" to be consistent with schedule 1? Because that is all you are confining to, isn't it? You see, as I understand it, the payment is made putting aside the question of the three years or the last year, but the annual salary is in 1.3.

PN390

MR SAUNDERS: Yes.

PN391

THE COMMISSIONER: That's the basis upon which you calculate that 10 per cent. But why is the word there "annual salary" but back here it's "gross salary"?

PN392

MR SAUNDERS: The reason the word - to start with, 1.3 in schedule 1, "annual salary" is making clear that it is an annual amount being paid to the employee, obviously divided by 12 if they are paid monthly or fortnightly, so it is making clear that it is - you don't want someone to think that they are going to get $128,000 a week. It's an annual salary, so it makes that clear.

PN393

The reason the word "gross" is referred to in clause 22.1 is it's making sure that everybody clearly understands that when the severance payment is being calculated it's being calculated on the gross amount, not on the net amount of salary.

PN394

The framers of this document didn't want there to be any confusion that somebody might say, "Well, you are only getting your 10 per cent of what you're actually receiving in the hand, your net salary." What's being made clear in 22.1 is the gross salary; the calculation is based on gross salary. And when you look at the annual salary in schedule 1, clause 1.3, that's the gross amount of salary paid to an employee each year.

PN395

THE COMMISSIONER: But then to read it as you wish to interpret it, that should say "the gross annual salary as fixed by schedule 1", and then there would be no doubt.

PN396

MR SAUNDERS: I agree, if that word had been there, we would not be here today. There is no doubt about that, but what the annual salary is, as set out in the table, is the gross amount of salary paid to the employee each year. There is no doubt about that, there is no contest about that. It's the gross amount of salary pay to an employee each year. That's precisely the concept being dealt with in clause 2.

PN397

The inclusion of the word "gross" is not to go on some wider search for what else might be salary; it is still salary we are talking about. "Gross" as is made clear by 22.3 just means we are talking about an amount pre-tax. The problem with the interpretation of the MUA is they are trying to rewrite what is in clause 22.1. You can't rewrite the phrase "gross salary" to replace it with "total remuneration" or "salary plus allowances". That's what Golden Cockerel says you can't do. You've got to construe the words in their ordinary meaning and in the context in which they appear most importantly.

PN398

Now, Mr Jacka has relied upon exhibit 2. I want to say a few things about that. The first thing I want to say is that this payment summary, the first page exhibit 2 and pages 2 and 3 of exhibit 2 all relate to periods of time between 2013 and 2015. The first document, the PAYG payment summary, period of payment 1 July 2013 to 30 June 2014, and then over the page, the pay slips relate to April 2015, the first one, and again April to May 2015 for the second one.

PN399

The point here is that it's not permissible to take into account the conduct of the parties after an enterprise agreement has been made in order to interpret the enterprise agreement. So what these documents go to is conduct of the parties, making payments, providing pay slips after the enterprise agreement has been made. You can't look at the conduct in that regard to interpret what the agreement meant when it was made.

PN400

And authority for that proposition is a very recent decision of the Full Bench of the Commission in Essential Energy v Australian Municipal, Administrative, Clerical, Services Union and Others [2015] FWCFB 1981 at paragraph 23. I apologise for not having a copy of that decision; I just got this document last night and early this morning I was able to dig up that authority, but that is the proposition, that you can't look at post conduct to construe what an agreement means, and that is what this is, an attempt to do so.

PN401

That is the first point we make about it. Secondly, this document, exhibit 2 on page 2, doesn't deal with gross salary. It deals with before tax earnings, ordinary earnings, all-purpose allowance, victualling allowance, taxable gross earnings; it doesn't deal with gross salary, it deals with this different concept of earnings, gross earnings and ordinary earnings.

PN402

Now, we heard from Mr Jacka this morning, this concept of ordinary earnings. He says, "Well, you have got to look at ordinary earnings to work out what somebody should get by way of severance payment." There is no reference in the agreement whatsoever to the expression "ordinary earnings".

PN403

It would be erroneous to interpret an agreement by reference to an expression which doesn't appear in. It is the problem that Golden Cockerel points to; you can't rewrite the agreement in the way you might like to read. You have got to construe the words of the agreement and the phrase or the expression "ordinary earnings" doesn't appear in the agreement, it's a different concept to gross salary.

PN404

Earnings - there is plenty of case law on this - is a broader concept than salary. So it is just erroneous to talk about ordinary earnings and this document does not assist by telling - even if one could use that to construe the agreement, which is wrong - even if one could, it does not tell you what the gross salary is.

PN405

In terms of the point made by Mr Jacka about superannuation, what clause 13.1 of the agreement says is that the employer has to comply with the Superannuation Guarantee Administration Act. It does not matter what the opening words of clause 13.1 say, what the company has to do is to pay superannuation in accordance with legislation, and that is what it does.

PN406

In those circumstances, it is inappropriate to focus on the word "salary " in clause 13.1 to try and draw some inference or conclusion that that should dictate the meaning of "gross salary in clause 22.1 of the agreement.

PN407

Now, I provided earlier today, a copy of the decision of the Full Bench in Fonterra Brands v AMWU. If I could just take the Commission back to that decision, please, because it goes to more than the question of just permission. I explained a little earlier, that paragraph 3 of the decision makes it clear that the dispute in this case is about the calculation of redundancy pay, based on the formula or the expression "ordinary pay".

PN408

At first instance, it was held that ordinary pay includes shift loadings and penalties, whereas on appeal it was held by the Full Bench it does not. That is the context. If I can turn across to paragraph 14 of the decision of the Full Bench, the Full Bench held at paragraph 14 that:

PN409

The authorities make clear that the words in industrial agreements are to be given their ordinary or well‑understood meaning in industrial usage and that there should only be regard to extrinsic material to identify the any ambiguity or as an aid to interpretation with the words do not have been meaning and there is an ambiguity or uncertainty as to their meaning. Therefore the first step in construing an industrial agreement is to determine whether the agreement has a plain meaning or contain an ambiguity.

PN410

At paragraph 15:

PN411

In the present matter, the Commissioner found that there was an ambiguity or uncertainty in relation to the meaning of ordinary pay in clause 22.8.1. However, we consider that the meaning of the term is clear both through a plain reading of the clause and threw a consideration of the clause in the context of the agreement. The term "ordinary pay" has a well‑established and common industrial meaning in usage and the remuneration for employees weekly hours, but excluding any payment and the amount paid for shift work, overtime and other penalty.

PN412

Then at paragraph 19, the Full Bench said:

PN413

The term "ordinary pay" is not defined in defined in the agreement. In these circumstances and unless there are strong contextual or other reasons for adopting a different approach, we consider that ordinary pay as it is used in the agreement should be given its generally understood and accepted meaning in industrial usage. This is also the meaning which can be construed for a consideration of the agreement as a whole and which is generally in line with the purpose of providing redundancy payments.

PN414

Now, just pausing there, we pick up on this concept of purpose in providing redundancy payments in our written submissions. We say the purpose in providing redundancy payments to someone is very different from providing a notice payment in lieu of termination. Notice is to compensate somebody while they are out of a job and looking for another job. Redundancy doesn't have that purpose.

PN415

A redundancy payment, the authorities tell us, is there to compensate an employee for loss of non-transferable credit, such as long service leave, sick leave, and the like. Because there is a different purpose between redundancy payments and notice payments or payments in lieu, that is the rationale between different calculation in the legislation and in most industrial instruments between redundancy payments and notice payments.

PN416

For example, in the Fair Work Act, if you are entitled to a payment in lieu of notice. You are entitled to the amount you would have been paid had you worked during your notice period; and that is not just based pay, that is, whatever you would have earned had you worked, whereas under the Fair Work Act, if you are entitled to redundancy pay, you are entitled to your base pay; it is calculated on base pay and that is because there is a different purpose between redundancy pay and notice.

PN417

Now we accept that parties to an enterprise agreement are free to bargain to some different outcome. They can say, "Well, that's interesting that there is that historical purpose and difference, but we as parties are negotiating here and we're going to come up with a different solution." There is no problem with that. Conceptually, but in order to move away from what would be the usual position under the legislation and agreements, there have to be clear words in the agreement.

PN418

The clear words in this agreement are that redundancy pay is calculated on the basis of gross salary; salary is set out clearly in the agreement. And then finally on Fronterra Brands, in paragraph 22, in the third line, towards the end of the third line in paragraph 22, the Full Bench bench said:

PN419

There is no indication in the provision that such pay is to include shift allowances and the like. If the parties had intended that redundancy pay entitlements were to include shift allowances, it might be expected that they would have so provided in the agreement or the appendix as is the case of other entitlements.

PN420

Pausing there, this is our point, that if the parties had intended severance payments in clause 22.1 to be based on salary plus allowances, or in total remuneration, they would have said so; instead, they use the word "gross salary".

PN421

Now, we also raise in the submissions - - -

PN422

THE COMMISSIONER: Sorry - strangely enough here, they are in that rate, aren't they? They're not separated out.

PN423

MR SAUNDERS: I'm sorry?

PN424

THE COMMISSIONER: Well, clause 9.4. So it is a slightly different argument, isn't it, in terms of the components?

PN425

MR SAUNDERS: That's right. The salary rates in the schedule to incorporate some additional amounts.

PN426

THE COMMISSIONER: Unlike those Fonterra Brands, apparently.

PN427

MR SAUNDERS: Indeed. So in this case the parties have, we would say, bargained away from what might be the middleman position as doing it on base salary and have decided to do it on salary as set out in this schedule, which is more than just base salary, because it includes a component for shift work, we can work and public holiday work.

PN428

We also say in the written submissions that when one construes enterprise agreements, the authorities say - this is paragraph 41 and following - that we ought to have regard to the principle, the construction of enterprise agreements happens in the same way as you construe commercial contracts. One thing you do with commercial contracts is to make sure that the interpretation you get to them a chord with business commonsense. You would prefer a construction which accords with business commonsense to one which would not.

PN429

And here, in paragraph 42, we pointed to examples which we say demonstrate that the MUA view of the world would give rise to an outcome which would not accord with business commonsense. The first example deals with employees and given situations; that is, in this example, they work on the same project, same hours at the same times, but employee A lives further away from the airport than employee B, so he gets a higher travel allowance; that's fine, that's in clause 10.

PN430

But if the MUA's contention of the agreement is right, employee A gets a higher severance payment than employee B, merely because he lives further away from the airport. Now that's a very odd outcome industrially. It does not accord with business commonsense and it is one the Commission would be keen to avoid, unless it was in very clear terms in the agreement.

PN431

Similarly, another example of that relates to the victualling allowance. Now, under the agreement. It says when you work on a project, you get $350 a week victualling allowance, but if the company comes along and provides you with accommodation, food and the like, you don't get the allowance. So you can have a situation here where employees work on a project at different times; at one time where victualling allowance is paid and another time where it's not, because accommodation was paid.

PN432

You can have employees who were employed on a project for the same period of time, but at different times; one time when there is victualling allowance paid, one where there's not and that would give rise to a very different outcome for those employees when you come to calculate their severance pay if the MUA is right. Again, that is a very odd outcome and does not accord with business commonsense and would be one the Commission would avoid, unless there is a very clear language in the agreement, suggesting that that was the appropriate outcome.

PN433

Now, one thing Mr Jacka said in his oral submissions today which is not in writing is that if the Commission is against the MUA on including all allowances in the calculation of severance pay, then what we can really do is just look at schedule 2 allowances; the all-purpose allowance and you can ignore the allowances in clause 10, the travel allowance and the victualling allowance.

PN434

There are no words in the agreement, there is no contest in the agreement which could justify such a solution. Where are the words in the agreement? Where is the language in the agreement, I asked rhetorically, which could give rise to that being an appropriate approach. There is nothing an it just shows there is nothing, because it was never contemplated by the agreement that there would be some allowances in and some allowances out.

PN435

It is just a means by which the Commission is being encouraged to come to an outcome which might be seen to be industrially fair. Now, Golden Cockerel tells us that is not the approach we take. We construe the agreement, and it would be erroneous to take that halfway approach.

PN436

Now, in terms of the next issue is the correct methodology point: I m going to explain the point first and then come back to the jurisdictional issue which has been raised. In terms of the MUA agreement, in clause 22.1 it says the severance payment is 10 per cent of the employee s gross salary paid to the employee for the period of their continuous employment with the employer during the project under the terms of this agreement. Now, it s pretty clear - it s very clear, in my submission - that what s required when calculating this payment is to look at what was paid to an employee by way of gross salary each year during which they were employed on the project.

PN437

So if an employee has been there for five years, you look at their gross salary paid to them over a five-year period and you add it up together and you take 10 per cent of that total amount to give you the severance payment entitlement and that s clear from the language in the agreement, in particular looking at the words, paid to the employee for the period of their continuous employment with the employer. We say that s the plain, ordinary and obvious meaning of that expression in the agreement.

PN438

What the company has been doing is something different from that. The company has been adopting a more generous approach to employees. What it s been doing is rather than looking at the amount has been paid to the employee over their time on the project, the company has just been looking at the last year on which they worked on the project and said, Okay, what s your gross salary during that period? We take 10 per cent of that and then multiply it by the number of years on the project. Now, that s an erroneous approach that s been taken. It s been to the advantage of the employees and we don t seek to claw it back but what we want is clarification moving forward that that is in fact incorrect when one looks at the agreement.

PN439

The reason it s been done is set out in Ms Cole s statement and she says, Well, that s what you do under the AMAU agreement, which is correct; it s different. So we were doing it the same way here.

PN440

THE COMMISSIONER: But where does it say annualise? No-one s advanced this but no-one has probably looked at this in great detail, either.

PN441

MR SAUNDERS: Annualise it? Well, if somebody is - under this clause, if somebody has been on the project for five years and they re made redundant we say you should look at the total amount of gross salary, whatever that is, paid to the employee during that five-year period.

PN442

THE COMMISSIONER: Right.

PN443

MR SAUNDERS: So no need to annualise it at all.

PN444

THE COMMISSIONER: Right.

PN445

MR SAUNDERS: You just look at - in year one, they were paid X, year two, paid Y; add those two figures together, keep doing that until you cover the whole period, then take 10 per cent of that amount and that figure is the severance payment.

PN446

THE COMMISSIONER: All right.

PN447

MR SAUNDERS: No need to annualise it.

PN448

THE COMMISSIONER: But instead of doing it that way you ve been taking the figure at the last year - - -

PN449

MR SAUNDERS: Annual figure at the last year.

PN450

THE COMMISSIONER: - - and extrapolating that for the full period.

PN451

MR SAUNDERS: Correct.

PN452

THE COMMISSIONER: So if a person has been there for four years, you take the last figure and times it by four?

PN453

MR SAUNDERS: Exactly.

PN454

THE COMMISSIONER: As opposed to taking each one of the four years figures and adding them up?

PN455

MR SAUNDERS: Exactly, and because the salary goes up every year, if you do it the way they ve been doing it, by looking at just last year and times it by four, in your example, you end up with a bigger figure then if you add up each of the payments in the four years. But the agreement clearly talks about the gross salary paid to the employee for the period of their continuous employment. It doesn t talk about an annual amount times by the number of years you ve been there. That s just a different approach which is not supported by the language of the agreement. So that s what we say the proper construction of that clause is. We think it s very clear. No union has said we re wrong about it; they just haven t said anything about it. But we want it clarified or if they want to come along and say, We agree, you re right, well, that ll be an easy outcome.

PN456

We ve not been told whether they disagree with that or agree with it. Notwithstanding, they ve had our submissions for more than a month.

PN457

THE COMMISSIONER: Isn t it an academic exercise, because you re going to continue to pay it in the more generous fashion anyway?

PN458

MR SAUNDERS: No.

PN459

THE COMMISSIONER: You re not going to?

PN460

MR SAUNDERS: No. In the past we have but in the future we re not.

PN461

THE COMMISSIONER: I see.

PN462

MR SAUNDERS: We re going to properly apply the agreement; so we re not going to go back to people we ve already paid and try to claw any money back but this mistake has been realised and the company says, Well, hang on; we ve been doing it wrong. We want to do it the way the agreement tells us to do it.

PN463

THE COMMISSIONER: Isn t this then going to set you on a different pathway, because if that s right it s right for two but not all three of the agreements, isn t it?

PN464

MR SAUNDERS: Correct, yes.

PN465

THE COMMISSIONER: The AMIU agreement has a different calculation on these days in the period before the redundancy takes effect, or something?

PN466

MR SAUNDERS: Where you do look just at the last year so that s right, there would be a distinction in that scenario between those two of the three agreements because we say we re applying the clear language of the agreement. Now, in terms of the jurisdictional issue which has been touched upon, if one looks at clause 26 of the MUA agreement, it sets out the various steps that have to be taken before the dispute ends up in the final stage of conciliation and then arbitration if it can t be resolved. Now, there s no evidence before the Commission that any such steps have been taken in relation to the dispute which is now before the Commission, whether it be the narrower dispute, which the MUA contends for - that is just looking at the dispute about gross salary - or whether it s the wider dispute that we contend for, that is the proper construction of clause 22.1 and how you calculate redundancy payments.

PN467

Whether you look at the dispute in the narrow way or the broader way, there is no evidence before the Commission that any of those steps have been taken but we can point to clause 26.4. At 26.4 it says:

PN468

By agreement between the parties bound and covered by this agreement any or all of the above steps may be bypassed in the interests of the speedy resolution of the dispute and/or matter.

PN469

So here, this is not a situation where we re saying to the Commission that - ordinarily I d agree with the point you made earlier, that the parties can t agree to confer jurisdiction on the Commission; it either has it or it doesn t. But in this agreement the parties can agree to bypass the earlier steps to get to conciliation or arbitration. I m instructed that those earlier steps were not followed in relation to the gross salary point or in relation to the point about the proper methodology but what the parties have done is to - by their conduct they ve agreed to come before the Commission and go to arbitration in relation to the dispute.

PN470

THE COMMISSIONER: Well, that s implicit in the fact that there was no issue raised about the matter of the calculation of the severance pay. But on this more recent point, it does appear not to be agreement.

PN471

MR SAUNDERS: Well, the High Court in the Queen v Bain ex parte Cadbury Schweppes [1984] HCA 9; 159 CLR 163 at paragraph 12 said:

PN472

The dispute can be diminished or ended or enlarged or altered during the course of the proceedings in the Commission.

PN473

So a dispute is not a constant thing; it moves and in this case a classic example starts off that we re talking about consultation, all of those issues come and they go away and then we re left with residual issues, one of which is gross salary, another of which we say is this issue about methodology of calculation. Now, we raised that clearly and expressly in our submissions in April and in our witness statement in April. We get radio silence about it. Then we come here today and we re told for the first time, Hang on, you can t deal with that. It s not part of the dispute. Well, disputes move and evolve and it s always been - we say the dispute has always been about the proper construction of clause 22 and how you determine what amount of redundancy pay should be paid to employees.

PN474

Now, that has a number of components; one is this idea of gross salary and another is the methodology of calculating it. So we would say that it s clear that the parties, by their conduct, have agreed under clause 26.4 to come in a practical, sensible way to come to the Commission to ask the Commission to exercise its powers of arbitration, to resolve the disputes that can t be resolved between them about clause 22.1.

PN475

THE COMMISSIONER: So you say the absence of any earlier identified contest on the point of the - the more recent point about the method of calculation in terms of the last year, the absence of any identified contest before today is implied that it s open to the Commission by virtue of an agreement, an apparent agreement under 26.4?

PN476

MR SAUNDERS: Yes, just as this idea of arbitrating the question of gross salary is something the parties by their conduct have agree to allow the Commission to arbitrate, without having gone through any evidence - and there is none because it didn t happen - about all those earlier steps being followed in relation to the meaning of gross salary.

PN477

THE COMMISSIONER: So then by virtue of 26.5, I don t know what the current state of play is but unless and until determined you d continue to be paying the more generous arrangements?

PN478

MR SAUNDERS: That s what it says.

PN479

THE COMMISSIONER: Yes. All the agreements expired last December, didn t they?

PN480

MR SAUNDERS: They did. I m told they ve been replaced recently.

PN481

THE COMMISSIONER: They are new fresh agreements?

PN482

MR SAUNDERS: Yes, I ve not seen them but I m told recently the negotiations have concluded and they ve been replaced. I don t know if they ve yet been approved but they re certainly - - -

PN483

THE COMMISSIONER: So how does work for any determination of these terms? It s only going to be retrospective. Anything that I do can t be in respect of anything from the date of which the replacement agreement started to operate.

PN484

MR SAUNDERS: Pardon me one moment, please?

PN485

THE COMMISSIONER: Happened to me recently on a number of occasions.

PN486

MR SAUNDERS: Two things to say about that: one is the same phrase is used in the new agreement, so we re not talking about some academic issue here. It s going to arise again. In relation to your direct point to me, I agree that if somebody is made redundant today, assuming the new agreement has been approved then the new agreement applies and your ruling on the old agreement technically won t bind the parties to the new agreement. It s a different agreement, different dispute. But practically it will because it s the same expression used.

PN487

THE COMMISSIONER: So the parties made a new agreement with the same terminology in a period when the terminology was the subject of contest?

PN488

MR SAUNDERS: Yes.

PN489

THE COMMISSIONER: Curious thing to do.

PN490

MR SAUNDERS: Sorry, I m instructed that when this issue about gross salary arose, because it only arose reasonably recently in this dispute, the deal had already been done on the new agreement.

PN491

THE COMMISSIONER: You kept the words, Gross salary, there.

PN492

MR SAUNDERS: But that issue hadn t been ventilated before the deal had been done on the new agreement. Now, whether it might have been open to one of the parties to go back and try and renegotiate is a different question but I m instructed that the parties had reached the deal before this issue was raised and that s why one can see it happening in that way.

PN493

THE COMMISSIONER: But these effectively - the terms that I m being asked to interpret are no longer applicable.

PN494

MR SAUNDERS: Assuming the new agreements have been made and are in force, yes. There s the theoretical possibility, of course, that somebody comes forward in the future and says, Well, my employment wasn t a resignation, it was actually a redundancy and I m entitled to the benefits. That kind of situation can arise but it s a pretty rare sort of case. Otherwise, I agree with what you ve put to me. May I just make some short submissions about the other two agreements? In terms of the engineers agreement, it s very similar to the deckhands agreement, so all the same arguments apply. There are a couple of minor differences in the language but we say there s no difference in effect by that agreement.

PN495

The starting point for that agreement is in clause 21 of the engineers agreement. It has the same expression, that is severance payment equal to 10 per cent of the employee s gross salary paid to the employee. Clause 21.1 is slightly different from 22.3 that we saw in the deckhands agreement but it s to the same effect: that is, it s explaining what s meant by, gross; that is the payment prescribed by 21 above shall be subject to taxation. Different words are used in 21.1 than the deckhands agreement but to the same effect. Schedule 1 again deals with annual salary. Schedule 2 deals with the same, all-purpose allowance. Clause 9, there are a couple of minor differences.

PN496

THE COMMISSIONER: I think there s a difference in clause 26 that s quite important.

PN497

MR SAUNDERS: I see that.

PN498

THE COMMISSIONER: You see what s missing?

PN499

MR SAUNDERS: I do. I must say this only came up this morning; I hadn t looked at that agreement as well but you re right, it s missing. There is no reference to one agreement.

PN500

THE COMMISSIONER: This would be a precarious - there s all sorts of potential permutations here in terms of an outcome. Anyway, now I m told that all three of the instruments I m being asked to interpret are no longer operational; they ve been replaced.

PN501

MR SAUNDERS: Yes. But the determination obviously still has a significant impact on employees who have been made redundant. That s what gave rise to this dispute; certain numbers of employees were made redundant, a dispute was raised, (1) about consultation, but (2) about calculation of their redundancy payments, which had already been made to them and this dispute will determine those matters.

PN502

THE COMMISSIONER: Is that then properly a matter for the Commission to deal with by interpretation or the court to deal with by enforcement?

PN503

MR SAUNDERS: We say it s a proper matter for the Commission to deal with because what the Commission is doing is exercising a power of private arbitration in which the parties have conferred upon the Commission by reason of the MUA agreement clause 26, which says when there is any matter, breach or dispute arising under the agreement or in relation to the interpretation or application of the agreement, then there is a procedure to be followed which includes as the final step the Commission exercising powers of private arbitration to resolve the dispute.

PN504

In exercising powers of arbitration the Commission can and should determine the questions of interpretation of the agreement which are raised in the dispute. The distinction here is between exercising a power of private arbitration under clause 26 of the agreement, settling a dispute in that way on the one hand and on the other hand, in the old industrial sense of the word, settling industrial disputes and in settling industrial disputes not exercising powers of private arbitration. The Commission could only ever resolve a dispute by dealing with things that would bind the parties into the future, not looking at past breaches or past conduct. That was always what an industrial dispute was in the ordinary sense of the word.

PN505

But here, the parties are inviting you - in fact, empowered the Commission to exercise private arbitration, just like any commercial agreement between parties. They can say, We empower Mr John West QC to arbitrate any dispute over the interpretation of this commercial contract. The parties can t agree, they go off to Mr West and he makes a determination exercising his power of arbitration as to what the proper construction of what the agreement is.

PN506

THE COMMISSIONER: But that s fine if the agreement is still alive. The parties haven t - I m being asked to do that under a term which is in an agreement which is no longer operational.

PN507

MR SAUNDERS: Can I just clarify whether that s technically correct; whether the new agreement has in fact come into force?

PN508

MR JACKA: Yes, they have.

PN509

MR SAUNDERS: I understand now the point of this being put to me. This issue arose recently in a case I had before Vice President Lawler, where a decision was handed down last month about rights under an agreement that had come to an end and been replaced. In that case his Honour considered a decision of a full bench and then came to the view that when the Commission is being asked to exercise powers of private arbitration under a clause such as this one, in determining whether those powers continue to exist after the agreement basically has been replaced, what you have to do is look at the agreement and work out the intention of the parties like any other commercial contract, as to whether they intended certain parts of the agreement to survive beyond the termination or expiry of the agreement.

PN510

He came to the view - and I ll provide you with a reference to the case in a moment; it s a case involving United Protestant Association v Grabowksi and his Honour came to the view in that case that the rights under the private arbitration clause continued to exist post the termination or expiry of the agreement being replaced, because that s what the parties intended. Could I provide just a short note after today just with a reference to that case, because the issue has been raised and it deals directly with the issue that has been raised.

PN511

It certainly will have practical utility, I can say that, in this case. It s not as if we re dealing with a dispute that has no practical utility. It has practical utility because people have been made redundant, certain payments have been made to them and there are allegations that they ve not been paid the proper amount because gross salary means something different from that which we adopted and applied. In terms of the engineers agreement, clause 9 is slightly different; 9.1 is in effect the same as the deckhands agreement; clause 9.3 is slightly different in that it comes up with a concept of remuneration rather than total remuneration but it means the same as total remuneration.

PN512

It makes clear in 9.3 that remuneration is salary plus all allowances. In clause 10 the same allowances appear as they did in the deckhands agreement. Because of the similarities between this agreement, the engineers agreement and the MUA agreement, we say the same analysis should be applied and the same outcome should be reached. We also say in relation to the taxation definitions which have been relied upon, AAT has gone to the taxation ATO website and looked at tax definitions of certain phrases, including the gross income and gross salary and the like and they ve sought to adopt those definitions in construing this agreement. That s not the right way to construe an enterprise agreement: you need to look at the language of the enterprise agreement in the context of the agreement. You don t go to some taxation definition and apply that to an industrial agreement. Here there s clearly set out what is meant by salary, and that is prescribed in the schedule; schedule 1.

PN513

Finally, can I turn to the officers agreement; the AMOU agreement and can I first say that in proceedings involving the construction of an enterprise agreement, it s open to a party to put on admissible evidence about evidence of prior negotiations of the agreement to establish objective background facts known to all the parties and the subject matter of the agreement and also to show the origin of certain expressions in the agreement. Golden Cockerel makes that clear in the summary provided at paragraph 41 of the decision, in particular point 6.

PN514

Now, if the AMOU in this case wanted to put on evidence of that kind about historical negotiations and about origins of certain phrases or expressions in the agreement from history, then they had to put on evidence about it. They ve not done so. We ve come along today and heard a story or heard some information from the bar table about the historical origins of parts of the agreement. We object to that material being put to the Commission; we object to any reliance on that material because we ve not been given a chance to respond to it, not been able to give a chance to take instructions from anybody to find out whether it s accurate or not.

PN515

I m at a significant disadvantage because I have no way of knowing whether what s been told to the Commission is true or not. If that material had been put in a witness statement we would have checked it, we would have potentially put on our own witness statements in response to it and we would have cross-examined witnesses about it and made a lot of submissions about it but we ve been denied that opportunity because it s just come from the bar table. That s an inappropriate way for material to come from the bar table to the Commission if it s objected to by a party, and here we object to it.

PN516

So we say it would be erroneous to rely on any of that information, which is really in the nature of evidence given from the bar table by Ms Thompson. IN terms of the agreement itself, it s in different language to the other two agreements, in particular if one goes to clause 21 of the AMOU agreement in 21.1 it provides that:

PN517

An employee shall be paid a bona fide severance or redundancy payment equal to 38 days pay as defined in subclause 4.9 per year of service or each part year of service.

PN518

Now, there s a reference to clause 4.9 in 21.1 that when one goes to 4.9 it s clearly a mistake. Clause 4.9, part of the definitions, says that FWA means Fair Work Australia. That s obviously a mistake; they must mean clause 4.7. Clause 4.7 talks about daily rate and what we re trying to work out in clause 21.1 is what is a day s pay? 38 days pay - you need to work out what one day s pay is. To do that you need to look at the daily rate. So we say - and the union agrees with us on this - that the reference to the subclause 4.9 must be an error. It must be intended to be a reference to clause 4.7.

PN519

So the daily rate in clause 4.7 means the rate calculated by dividing the annual rate by 364. The phrase, annual rate, is not defined anywhere in the agreement so we ve got to work out what it means and that s why we re here. But the starting point, we say, is to look at clause 9. Clause 9 deals with rates of pay and in particular, clause 9.1 says:

PN520

Employees will be paid at the rates of pay prescribed in schedule 1.

PN521

Again, only reference to schedule 1. We then go across to schedule 1 on page 22 and it deals in 1.3 with the annual salary for project employees. Then we see there in the table, the table 1 project employees annual rate and there sets it out. So if one wants to know what the annual rate for these employees is, you go to clause 4.7 and look at the definition; that helps you to some extent. Then you go to clause 9.1, then you go to the schedule it points to you and you find out what the annual rate is and the annual rate is that set out in the table. It does not include the all-purpose allowance in schedule 2 in a different schedule. It does not include the allowances in clause 10.

PN522

THE COMMISSIONER: Is that annual salary and annual rate the same thing?

PN523

MR SAUNDERS: Yes. 1.3 says:

PN524

The annual salary for project employees shall be as follows -

PN525

And it refers you to the table and the table sets out one figure only for each year, and that is the annual rate. So it must be that annual salary means annual rate. So to work out daily rate, you divide annual rate as we see it in the table by 364. And in this agreement, just like the other two agreements, clause 9.3 distinguishes between the concept of salary or annual rate and remuneration.

PN526

Clause 9.3 again makes clear that remuneration, the broader concept, means salary plus all allowances, whether under the schedule or otherwise. So again, if the parties had intended there to be a calculation with severance payment on remuneration rather than salary, they would have said so.

PN527

There are two other difficulties that arise in relation to the union's construction of this agreement that don't arise with the other agreements. The first is the union says that in order to work out your severance payment, you should calculate it on the basis of the annual rate of salary in schedule 1, add the allowances in schedule 2.

PN528

In contrast to the other unions, they don't say you should have regard to the allowances provided for in clause 10. They say to work out severance pay, you only look at salary plus the all-purpose allowance in schedule 2.

PN529

Now, there's no explanation given in their submissions today as to why you include the allowances in schedule 2, but not the allowances under clause 10. The reason they've not been able to give an explanation for that or an explanation for the inclusion of any allowances in the calculation of severance pay is because it is not supported by the language of the agreement. There is no language in this agreement, which supports the inclusion of allowances in the calculation of severance pay.

PN530

The second difference between this agreement and the other agreements, the second issue that arises, is that the allowance in schedule 2, the all-purpose allowance, is not paid on every day of the year; it is only paid when the employees are working on the project. So if the union is correct and you calculate a day's pay in clause 21.1 by having regard to both schedule 1 and schedule 2, how does one know whether to include the allowance in schedule 2?

PN531

Does it depend on whether the employee was on the project on the last day of work or do you look at some period of time? Do you look at last 12 months or do you look at the last three years, or the last five years, to average out what the payments have been per year, two then average out the payments are per day.

PN532

How do you do it? There is no indication in the agreement of how you, if you are going to potentially include schedule 2 all-purpose allowance in the calculation of a day's rate, how do you do it? The reason why it is not dealt with in the agreement is because objectively the parties never intended for it to be part of the calculation of severance pay.

PN533

Unless I can assist the Commission further, those are the submissions I wish to make.

PN534

THE COMMISSIONER: And that other issue about the correct rate and so forth doesn't apply here?

PN535

MR SAUNDERS: No, it does not, because - - -

PN536

THE COMMISSIONER: Because they are using the 38-day, so they are using the most contemporaneous figures and so you're continuing - there's no argument about that particular point.

PN537

MR SAUNDERS: Exactly. It refers to 38 days pay per year of service. So you look at a day's pay - - -

PN538

THE COMMISSIONER: It's a different - those words that are in the other two agreements about the period of their continuous employment are not here; 10 per cent of the - - -

PN539

MR SAUNDERS: Correct. So we've been doing it right in the past and we will continue doing it right in the future for this agreement.

PN540

THE COMMISSIONER: And if you are correct on that, presumably you want something by way of a determination in respect of the wording in the MUA and the AIMPE agreements. You don't need anything here, you are content with what is in there on that points.

PN541

MR SAUNDERS: Correct.

PN542

THE COMMISSIONER: Yes.

PN543

MR SAUNDERS: Indeed. Unless I can assist further, they are the submissions I wish to make.

PN544

THE COMMISSIONER: Thank you. Mr Jacka, are you content to press on? We must be getting close to the end of this, I think.

PN545

MR JACKA: Yes, I'll be fairly brief, Commissioner. The submissions made by the respondent talked about the ordinary meaning in relation to what "gross payment" meant before taxation, and that is the submission that is consistent with the written submissions and the oral submissions and then there was this question of whether the pay slip for Mr Brennan put in context what the respondent's submission was, which was that this was about - the definition is about salary after tax.

PN546

Now, clearly in our submission previously what we have said is that - and pardon me, there was a submission about the payslip having a number of items in it and it was not only about - the payslip was not about gross salary. Well, we say clearly in the document, when you get to the point of the middle of the page on page 2, which is the pay slip, it says, "Taxable gross earnings."

PN547

Now, common sense would say is that gross earnings or gross salary and in this context it means the same thing. It clearly sets out an ordinary rate of pay; it clearly sets out an all-purpose allowance and it also includes the victualling. And then you see that all of that is subject to taxation. Then there's also the issue of how, down the bottom, superannuation is treated which is another clause in the enterprise agreement and that's the way that that company agrees to pay superannuation. What is does is it takes the gross salary and it pays 10 per cent of superannuation, and the company acknowledges under its superannuation obligations that the all purpose allowance and victualling allowance is a part of gross salary or taxable gross earnings.

PN548

Now, we also heard about the principles in Golden Cockerel in relation to construction of agreements. Well, what the Full Bench says in Golden Cockerel is that you need to look at the instrument as a whole, and the context in which the clauses sit in the document.

PN549

Now, you have heard a submission from Ms Thompson in relation to where these particular schedules sit in the agreement. What you have is you have two schedules that specific are separated from the rest of the document, one of which is rates of pay and then secondly there's schedule 2 which is the all-purpose allowance.

PN550

Now as has been raised first of all by Mr Matthew in submissions is that when you go to schedule 1, it talks about annual rates of pay, but doesn't talk about gross salary. It draws a different distinction. And then you have a second part in the agreement which is the schedule which is the all-purpose allowance.

PN551

Now, it's plainly obvious, the way that the agreement is constructed when you read clause 9.4, clause 9.4 talks about what is incorporated into the annual rates of pay, which is the overtime, weekend work and public holiday work.

PN552

So there are no other clauses that deal with that in this agreement, because they're incorporated into the annual rate, but clearly when this is drafted, this document, it sets out what you get paid for the days that you are working on the project and it sets out what our constant allowances that you get only for the days that you work and then there's the variable allowances. So that's the distinction as far as the construction of the agreement goes.

PN553

There was also a submission in relation to the industrial meaning of salary and remuneration and in the respondent's submissions at paragraph 32 to 34, they make a submission about the distinction between salary and remuneration. Paragraph 34 refers to Bell v McArthur River Mining.

PN554

Now, if you read the extract there, what it says is - and this is in reference to how the Workplace Relations section should be construed:

PN555

As meaning that the rate of remuneration applicable to the employee is an assessed annual rate of the cash payments made or liable to be made the employer to or on behalf of the employee, or benefits in kind for the private us of the employee exclusive of payment made as reimbursement, and identifiable as the reward or recompense for the work or service in the period of employment immediately prior to the termination of the employment.

PN556

Our submission regarding that case, Commissioner, is that the distinction that is being made there by the Full Bench is in relation to reimbursements. Now, if you look at, for example, the all-purpose allowance, that's not a reimbursement. What that is is that is part of your earnings that you receive for working each day on the project.

PN557

Again, if you are against us on all the allowances, then what we would say is that if you take that case and you make the distinction between salary and remuneration, and we support that extracts, what that does is that supports our argument to say that we are not talking about reimbursements, and there is the distinction. What we will be talking about is, first of all, schedule 2 which is the all-purpose allowance, however if you also read how the victualling allowance works at clause 10.4, what it says is that:

PN558

All employees will be entitled to a $350 per week, or pro rata for part thereof ($50p/d) for each duty week in lieu of any claims for food or incidentals whilst on duty.

PN559

So the distinction there is " whilst on duty", as opposed to, if you look at the travel allowance, where that's paid arguably whilst on duty, but it is not paid whilst you are at work.

PN560

So there is a distinction there in relation to reimbursements and therefore the distinction that the respondent is trying to make in relation to salary as opposed to remuneration doesn't hold up. We say that if you rely on that case, the distinction between salary and remuneration is in relation to reimbursements of things like bonuses that you may get and those types of arrangements. It does not apply to allowances that are a constant for each day that worked.

PN561

We were also taken to the Full Bench case in Fonterra Brands and we were taken to paragraph 22 and 23. Our submission in relation to that is, is the question before the Commission today is very different to the question before the Commission in this matter. In this matter we were talking about shift work over time and penalties.

PN562

In the matter before you today, Commissioner, we re not talking about something that s some kind of irregular occurrence. What we re talking about is for each day worked, the allowance is paid to an employee every time they work on a project. Shift work, overtime, other penalties come up in varied circumstances. That s not the case with these allowances.

PN563

Now, finally, in relation to the correct methodology, there were some submissions made in relation to why, first of all, we should accept the Commission should allow the evidence of Ms Cole s to be tendered in relation to the correct methodology and why the Commission should deal with this matter. Clause 26.4 was referred to as an attempt by the respondent to say that there was somehow some sort of agreement in relation to arbitrating this particular point. And I understand, Commissioner, that there were some issues raised in relation to what evidence was before the Commission in relation to what we say is the substantive point and what evidence was there to follow the enterprise agreement.

PN564

Now, firstly, the evidence of Ms Cole is, is that this was raised with her in 2014. Subsequently, after that was raised with her, the matter was an application was filed in the Commission. There was a number of conciliations, there was directions and there was an agreed position by the parties not to deal with this correct methodology issue. The agreed position between the parties was to deal with the interpretation of what gross payments was.

PN565

Now, the respondent submitted, first of all, is that there appeared to be some sort of acquiescence from the MUA in relation to this matter and that we were silent on it until today s proceedings. Well, that s just incorrect. If you look at paragraph 18 of our submissions in reply filed on 7 May 2015, we clearly say in those submissions- - -

PN566

HIS HONOUR: This is your submission in reply?

PN567

MR JACKA: Submissions in reply, yes.

PN568

MR MATTHEY: MUA 2.

PN569

MR JACKA: Yes, MUA 2, thanks. What we say is finally, the company makes additional submissions in relation to correct methodology of calculating the gross the amount of gross salary paid . This is a fresh argument, not previously raised by the company at any stage during the dispute. It is not the question currently before the Commission in this matter. The union objects to this submission and reserves it s rights in relation to this Commission.

PN570

So the respondent was clearly on notice that there was no agreement in relation to this submission. They were clearly on notice that we objected to the submission being made and therefore there was no agreement with the union to pardon me, I withdraw that. There was no agreement between the parties to deal with this issue and therefore, we say that the steps in the enterprise agreement haven't been followed.

PN571

Now, in relation to the matter that we say is before the Commission and the question of whether the steps have been followed in the enterprise agreement, what we say is this. I ll just find it. The submissions from the respondent, which have been relied on today in the proceedings, at paragraph 11 say:

PN572

In or around January 2015 the MUA, (inaudible) you notified the Fair Work Commission there was still an outstanding dispute matter which needed to be resolved being the interpretation of the redundancy clause in each of the Gladstone agreements.

PN573

And here s the important sentence:

PN574

In particular the issue in dispute was and remains whether the all-purpose allowance, the victualling allowance and the travel allowance should be included when calculating severance payments under the Gladstone agreements.

PN575

Absolutely no mention of correct methodology. Then the submissions go on to say:

PN576

There is no issue in this dispute that, (a) the dispute is one arising under this agreement and/or in relation to interpretation or application of this agreement (clause 26.1 of each of the Gladstone agreements), with the result that it may be dealt with pursuant to the disputes procedure in clause 26 of each of the Gladstone agreements. (b)- - -

PN577

And here s the part that we submit is the agreement between the parties to deal with what we say is the issue before the Commission, not the correct methodology issue, but rather the interpretation of what gross salary is and whether allowances should be included. It says:

PN578

Prior to the applications being filed in the Fair Work Commission, the necessary preliminary steps, including discussions between relevant representatives of the parties were undertaken and the Commission has a right under clause 26of each of the Gladstone agreements to arbitrate this dispute.

PN579

That s the submission. We did not object to that submission, we haven't opposed it and therefore we would submit that the Commission can be satisfied in relation to the interpretation of what gross salary is and whether allowances and schedule 1 form part of gross salary, that the dispute resolution procedure has been followed.

PN580

By contrast, there s no submissions in relation to the correct methodology argument. There s no agreement between the parties to deal with that issue in relation to the disputes clause and therefore, we would say that the Commission cannot deal with that particular issue because the terms of the enterprise agreement have not been appropriately correctly applied.

PN581

That s my submissions. If you have anything else, Commissioner.

PN582

THE COMMISSIONER: Thank you. Mr Matthey?

PN583

MR MATTHEY: Thank you, Commissioner. Commissioner, I only have three issues that I wish to raise out of the company s submissions. The first one being the company drew your attention to clause 9.3 of the Engineers Agreement. They make some attempt to bring your attention to words in clause 9.3 where it says:

PN584

The rates of pay prescribed in the schedule are an all-inclusive payment which constitutes the whole of employee remuneration and which compensates employees for all aspects of employment, including ordinary hours, overtime, any penalty or any other payments or allowances unless otherwise specifically provided for in this agreement.

PN585

They re talking obviously about schedule 1 which talks about the annual rate and that is inclusive overtime, ordinary hours, penalties and other payments. We clearly are talking about schedule 2, for duties otherwise specified.

PN586

Commissioner, going on from what Mr Jacka had said, we re of the belief that the company has numerous in-house legal representatives. They have a barrister at the table there, they have a former Commissioner on staff. If there is no dispute raised abbot this from steps one to four and further, I don't think we d be here now. They were a part of conciliation conferences before yourself, they were part of directions hearings and nothing was mentioned until an hour before you go off to start deliberating that, Well, we shouldn t be here because they haven't followed the disputes procedures .

PN587

Once again, I think that s a bit of a ruse to try to throw you off the track. But as I said, if we weren t following the disputes procedure, quite clearly we wouldn't be here at the moment.

PN588

But my last point, Commissioner, is and it s been mentioned numerous times today, the Golden Cockerel decision. And in a summary of the decision, the Full Bench says in point 10 of the summary:

PN589

The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome.

PN590

What I suggest the company is trying to do here, Commissioner, is add words into clause 21, where they talk about gross salary in the as far as the redundancy is concerned and they re wishing to add in words, beside gross salary, (excluding any other items or allowances when attached or not attached). And I also take the same view that they would be wishing to rewrite schedule 1 by adding in similar words and changing annual rate to gross salary excluding any other allowances taxable or non‑taxable .

PN591

I think what they re asking is a major rewrite, apart from this agreement and Commissioner, I think that flies in the face of, at minimum, the Golden Cockerel decision.

PN592

They re the only three points that I Have, Commissioner. If you have anything else?

PN593

THE COMMISSIONER: No, thank you, Mr Matthey. Thank you for that. Ms Thompson?

PN594

MS THOMPSON: Thank you, Commissioner. I support the comments made by Mr Matthey. I suspect Mr Saunders has been a little bit mischievous with his comments about jurisdiction and my discussion on the history of the negotiations because I do think it goes to the matter as to why there is a difference between them and I think you should be aware of differences in the detail.

PN595

But coming back to the substance of the matter, in our agreement, the annual rate is not expressly defined in the agreement and coming back to where I do agree with Mr Saunders submission is that we should take the ordinary meaning. And the ordinary meaning of rates of pay is defined in clause 9.3. And in our agreement, it refers to the word, schedules . It doesn't say schedule 1, it says, schedules which means schedule 1 and schedule 2.

PN596

And then clause 21 then says the rate our members will receive is 38 days 38 day pay. So I think the ordinary meaning of that should take place and the members should be paid their rate, their daily rate of pay plus the project allowance, and that s how it should be calculated.

PN597

If you ve got any further questions, that s my submission.

PN598

THE COMMISSIONER: Thank you very much thank you, Ms Thompson

PN599

MS THOMPSON: Thank you.

PN600

THE COMMISSIONER: I presume then that there s nothing further in the matter. I think there was a suggestion that there might be one matter you might want to provide some note on. I m happy for the parties to do that if they think there s something missed.

PN601

MR SAUNDERS: I just want to provide to the Commission, the reference to the case I referred to, the Grabowski v UPA because it deals directly with the point you asked me about, in terms of expiry of the agreement.

PN602

THE COMMISSIONER: Mr Grabowski?

PN603

MR SAUNDERS: Mr Grabowski.

PN604

THE COMMISSIONER: Yes.

PN605

MR SAUNDERS: Most people have, sadly, yes. But anyway, I can provide the reference. It s a decision handed down I was in the case handed down last month.

PN606

THE COMMISSIONER: Yes, well that is certainly a concerning aspect of this. It was put to me in another case recently where I was dealing with an interpretation of an agreement that had passed its nominal expiry date. Negotiations were underway and then in the period from reserving decision and before issuing a decision, I was advised that the agreement had been replaced by a new agreement and I anticipated that might happen and I asked the barrister in that case what for the union applicant, what should I do on those circumstances. And I was told I should do nothing, because to issue a decision would be to issue a dead letter.

PN607

Now, they are interesting questions here. You say that there s going to be a practical utility and this even, for the future and all of that, but it is of concern. But anyway, I ll have to just consider that in the scheme of things.

PN608

MR MATTHEY: Commissioner, can I just add that all the three agreements have been replaced when they were certified by Wilson C only a number of weeks ago and they re all exactly the same wording except the pay increases and obviously the name and the expiry dates.

PN609

THE COMMISSIONER: Yes. Thank you. Thank you, Mr Matthey. All right, well I take it there s nothing further. The decision is reserved in the matter or the matters and the proceedings are adjourned accordingly.

ADJOURNED INDEFINITELY [2.31 PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #1 STATEMENT OF LEANNE CULL DATED 29/04/2015......... PN210

EXHIBIT #MUA1 SUBMISSIONS OF THE MUA DATED 31/03/2015........ PN219

EXHIBIT #MUA2 SUBMISSIONS IN REPLY OF THE MUA DATED 07/05/2015 PN221

EXHIBIT #2 COPY OF PAYG PAYMENT SUMMARY AND PAY SLIP DATED 30/06/2014................................................................................................................................. PN256

EXHIBIT #AIMPE1 SUBMISSIONS OF THE AUSTRALIAN INSTITUTE OF MARINE AND POWER ENGINEERS......................................................................................... PN316

EXHIBIT #AMOU1 SUBMISSIONS OF THE AUSTRALIAN MARITIME OFFICERS UNION................................................................................................................................. PN333

EXHIBIT #TOLL1 SUBMISSIONS OF RESPONDENT EMPLOYER DATED 29/04/2015................................................................................................................................. PN351

EXHIBIT #TOLL2 RESPONDENT'S SUBMISSIONS IN REPLY............... PN357