) Associate to Commissioner Ryan Dated 22 September 2023 -- 1 of 13 -- -- 2 of 13 -- Workplace Relations Act 1996 s.709 - Application to Commission to have a dispute resolution process conducted (Div 5) Joseph Haddad v P.T. Garuda Indonesia Ltd T/A Garuda Indonesia [2023] FWC 2390

[2023] FWC 2390 The attached document replaces the document previously issued with the above code on 15 September 2023. At Page 1, the reference to the Act and Section has been corrected to reflect: Workplace Relations Act 1996 s.709 - Application to Commission to have a dispute resolution process conducted (Div 5) Associate to Commissioner Ryan Dated 22 September 2023 -- 1 of 13 -- -- 2 of 13 -- 1 Workplace Relations Act 1996 s.709 - Application to Commission to have a dispute resolution process conducted (Div 5) Joseph Haddad v P.T. Garuda Indonesia Ltd T/A Garuda Indonesia (C2023/1209) COMMISSIONER P RYAN SYDNEY, 15 SEPTEMBER 2023 Dispute relating to redundancy pay – agreement made under Workplace Relations Act 1996 – whether Fair Work Commission has power to arbitrate dispute – Commission has functions and powers given to it by the terms of the agreement. Introduction and Background [1] This decision concerns an application made by Mr Joseph Haddad (Applicant) for the Fair Work Commission (Commission) to deal with a dispute in accordance with the dispute settlement procedure in the P.T Garuda Indonesia Ltd Union Collective Agreement 2007 (Agreement) (Application). [2] The Agreement was approved under the Workplace Relations Act 1996 (WR Act). In in accordance with Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (TPCA Act), the Agreement is defined as a ‘WR Act instrument’ and became a ‘transitional instrument’ on the WR Act repeal day (1 July 2009). [3] Schedule 19 of the TPCA Act provides that the WR Act continues to apply on and after the WR Act repeal day in dealing with disputes arising under transitional instruments (including WR Act instruments that become transitional instruments) and that such disputes are to be dealt with by the Commission. [4] The dispute relates to the Applicant’s employment with P.T. Garuda Indonesia Ltd (Respondent) and whether the Applicant’s role as Cargo Manager has been made redundant within the meaning of section 119 of the FW Act. [5] The Applicant was employed by the Respondent in 1989. The Applicant contends that in or around September 2019, the Respondent outsourced the Applicant’s role and responsibilities to an external agency and that the Respondent has failed to declare the Applicant’s role redundant and pay to the Applicant redundancy entitlements in accordance with clause 29 of the Agreement. [2023] FWC 2390 DECISION -- 3 of 13 -- [2023] FWC 2390 2 [6] The Respondent denies that the Applicant’s role and responsibilities have been outsourced, or that his role has been made redundant. [7] The dispute settlement procedure is set out in clause 8 of the Agreement as follows: 8. GRIEVANCE HANDLING / DISPUTE RESOLUTION 8.1 Employee(s) having a query or grievance shall raise the matter first and without delay with his/her/their immediate supervisor and/or manager. The facts and information shall be discussed and if possible either clarified or resolved. If appropriate, the Branch General Manager may be involved at this level. 8.1.1 At any stage during this procedure, an employee(s) can be accompanied by a representative of their choice. 8.1.2 If this process fails to achieve an acceptable outcome, the issue can be raised with the next level of Company Management, Southwest Pacific Coordinator. 8.1.3 Where as a consequence the matter still remains unresolved other forms of escalation shall be made available. 8.2 Where necessary in the view of either the Company or the employee(s) or their representative of choice, the matter may nevertheless be raised ultimately with the AIRC for the purpose of conciliation. 8.3 If the matter is not resolved it must be submitted to the AIRC. All participants in the matter must accept the decision of the arbitrator. 8.4 In the course of the implementation of any and all of the above procedures, the Company’s business shall be permitted to proceed unimpeded, unless issues of safety are in dispute. [8] Item 6 of Schedule 3 of the TPCA Act provides that if a provision of a transitional instrument confers a power or function on the Australian Industrial Relations Commission (AIRC), that provision has effect on and from the WR Act repeal day as if the reference to the AIRC was a reference to the Commission. [9] After attempts by the Commission to conciliate the matter did not result in a resolution, the Applicant sought to have the matter determined by arbitration. [10] The Respondent objected to the Commission arbitrating the dispute on the grounds that the terms of clause 8 of the Agreement do not provide the Commission power to arbitrate the dispute and the Respondent has not otherwise consented to arbitration. [11] The parties requested that the Respondent’s jurisidictional objection be determined as a threshold issue. Accordingly, I issued directions to the parties to file submissions in support of, or in opposition to, the jurisdictional objection. Furthermore, the parties consented to the -- 4 of 13 -- [2023] FWC 2390 3 jurisdictional objection being determined on the papers and have consented to the public disclosure of this decision.1 Relevant Legislative Provisions [12] Section 709 of the WR Act provides as follows: 709 Application (1) A person may apply to the Commission to have a dispute resolution process conducted by the Commission under this Division in relation to a matter or matters in dispute if: (a) the dispute is one that, under the terms of a workplace agreement, may be resolved using a dispute resolution process conducted by the Commission; and (b) any steps that, under the terms of agreement, must be taken before the matter is referred to the Commission have been taken. (2) An application to have a dispute resolution process conducted by the Commission under this Division must: (a) be in the form (if any) prescribed by the regulations; and (b) describe the matter, or matters, in dispute in relation to which the dispute resolution process is to be conducted; and (c) be signed by the party to the dispute on that matter or those matters who is making the application; and (d) specify that the dispute resolution process is to be conducted under the terms of a workplace agreement and not under the model dispute resolution process. (3) The Commission may request the parties to provide further information about: (a) the matter or matters in dispute; and (b) the steps that have been taken to resolve the dispute. Note: Under section 353, a workplace agreement must include a dispute resolution process. That process may be something other than the model dispute resolution process, and may involve applying to have the Commission conduct an alternative dispute resolution process. [13] Section 711 of the WR Act provides as follows: 711 Commission’s powers -- 5 of 13 -- [2023] FWC 2390 4 (1) In conducting the dispute resolution process under this Division, the Commission has, subject to subsection (2), the functions and powers: (a) given to it under the workplace agreement; or (b) otherwise agreed by the parties. (2) The Commission does not have the power to make orders. (3) The Commission must, as far as is practicable, act: (a) quickly; and (b) in a way that avoids unnecessary technicalities and legal forms; and (c) if the parties have agreed, either in the workplace agreement or otherwise, that an aspect of the process is to be conducted in a particular way—in accordance with that agreement. (4) Subdivision B of Division 4 of Part 3 of this Act does not apply in relation to the conduct of the dispute resolution process by the Commission under this Division. Summary of Respondent’s Submissions [14] The Respondent referred to s.711 of the WR Act and relevant authorities and submitted that in the absence of the consent of the parties, the Commission’s power to deal with disputes arising under the terms of an enterprise agreement derive from the terms of the dispute settlement procedure contained in the enterprise agreement. [15] While the Respondent contends that clause 8 of the Agreement does not provide the Commission power to arbitrate the dispute, it accepts that matter turns on the proper construction of that clause. [16] The Respondent submitted that the principles to be applied concerning the proper construction of an enterprise agreement were set out by a Full Bench of the Commission in “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Berry Pty Ltd2 (Berri). [17] The Respondent also cited the decision in Workpac Pty Ltd v Skene3 (Skene) in which the approach to the proper construction of enterprise agreements was summarised by the Full Court of the Federal Court. The Respondent submitted that the Commission should apply the principles set out in Berri and Skene in determining this issue. [18] Turning to the language of clause 8 of the Agreement, the Respondent submitted under clause 8.2, the “matter may nevertheless be raised ultimately with the [Commission]” and that the word “ultimately” conveys that the referral to the Commission in clause 8.2 is the final step in resolving the dispute and that step is limited to conciliation. -- 6 of 13 -- [2023] FWC 2390 5 [19] In relation to clause 8.3, the Respondent submitted that the use of the word “must” makes the reference of the matter to the Commission as a final step mandatory. The Respondent submitted that while the second sentence states “all participants in the matter must accept the decision of the arbitrator” that is not sufficient to convey the conferral of the power to arbitrate. [20] The Respondent submitted that, in the absence of the word “arbitration” being used, or the function described, the reference to “arbitrator” could simply be a reference to the member of the Commission and a “decision” could be to issues of procedure for conciliation or concluding the matter where it remains unresolved. [21] The Respondent submitted that in the context of the statutory scheme, and in the absence of the Agreement expressly authorising the power to arbitrate, it would be a bold decision to find that clause 8 of the Agreement empowers the Commission to arbitrate the dispute. [22] The Respondent submitted, with reference to s.711(2) of the WR Act, that even if the Commission did have the power to arbitrate, the Commission does not have the power to make the orders sought. [23] The Respondent submitted that the Application be dismissed. Summary of Applicant’s Submissions [24] The Applicant agreed that the question of whether the Commission has jurisdiction to arbitrate the dispute turns on the proper construction of clause 8 of the Agreement and the critical issue is the proper construction of clause 8.3. [25] The Applicant submitted that the principles relevant to the interpretation of industrial instruments are well settled. The Applicant submitted that while the Respondent correctly identified the relevant principles in Berri and Skene, the Respondent proceeded to interpret clause 8 of the Agreement in a “narrow or pedantic” manner, which it submits, is precisely what the authorities warn against. [26] The Applicant submitted that on any proper application of the relevant principles, it is clear that clause 8 confers power on the Commission to arbitrate the dispute. [27] The Applicant submitted that the Respondent’s submission that the word “ultimately” in clause 8.2 limits the Commission’s power to conciliation is odd and entirely ignores the words “it must be submitted to the AIRC” in clause 8.3. The Applicant submitted that clause 8.3 contemplates the parties’ dispute being “submitted” to the AIRC. [28] The Applicant submitted that the second sentence in clause 8.3 is a clear conferral of power on the Commission to arbitrate the dispute and objectively demonstrates that the framers of the Agreement expected the Commission to arbitrate the “matter” that had been “submitted” to it. [29] The Applicant submitted that there is no requirement in the WR Act for any “express authorisation” for the Commission to deal with the dispute. Rather, all that is required pursuant -- 7 of 13 -- [2023] FWC 2390 6 to s.711 is that the parties have agreed that the Commission can arbitrate a dispute under the Agreement. [30] The Applicant submitted that whether the Commission can make the orders sought by the Applicant is not a matter that goes to whether the Commission has the power to arbitrate the dispute. [31] The Applicant submitted that the Respondent’s jurisdictional objection be dismissed. Summary of Respondent’s Submissions in Reply [32] In reply, the Respondent submitted that in context and on the plain meaning of the words used in clauses 8.2 and 8.3, the referral to the Commission is the ‘one’ referral for the ‘ultimate’ final step in the dispute resolution process. That is for the purpose of conciliation and that is only ‘re-affirmed’ in clause 8.3. [33] The Respondent further submitted that the Applicant’s construction relies on narrowing the focus of clause 8.3 and relying on an inferential construction from certain words used in that clause. The Respondent submitted that in the statutory context in which the Agreement exists, that cannot be accepted. Principles of construction of enterprise agreements [34] The principles relevant to the approach that the Commission should take to the construction of enterprise agreements was not in dispute between the parties. [35] In Berri, a Full Bench of the Commission set out the principles as follows: 1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from: (i) the text of the agreement viewed as a whole; (ii) the disputed provision’s place and arrangement in the agreement; (iii) the legislative context under which the agreement was made and in which it operates. 2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties. 3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties. 4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations. -- 8 of 13 -- [2023] FWC 2390 7 5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement. 6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement. 7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning. 8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists. 9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement. 10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement. 11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations. 12. Evidence of objective background facts will include: (i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement; (ii) notorious facts of which knowledge is to be presumed; and (iii) evidence of matters in common contemplation and constituting a common assumption. 13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions -- 9 of 13 -- [2023] FWC 2390 8 advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement. 14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was. 15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post- agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding. [36] More recently, the Full Court of the Federal Court in Skene succinctly restated the principles as follows: “The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context. The interpretation “…turns on the language of the particular agreement, understood in the light of its industrial context and purpose …”. The words are not to be interpreted in a vacuum divorced from industrial realities; rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament. To similar effect, it has been said that the framers of such documents were likely of a “practical bent of mind” and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced.”4 [references omitted] [37] I have applied these principles in determining this issue. Consideration [38] It is well established, and s.711(1)(a) of the WR Act provides, that the functions and powers that may be exercised by the Commission in conducting a dispute resolution process are derived from the terms of the Agreement.5 [39] Accordingly, and in circumstances where the parties have not otherwise agreed that the Commission may arbitrate the dispute,6 the issue before the Commission concerns the proper construction of clause 8 of the Agreement and whether the parties to the Agreement have empowered to Commission to determine disputes by arbitration, and in particular, the proper construction of clause 8.3. -- 10 of 13 -- [2023] FWC 2390 9 [40] The task of properly construing clause 8.3 requires an analysis of the text, context and purpose of the provision. As set out in Berri, context might appear from the disputed provision’s place and arrangement in the agreement. [41] Clause 8 of the Agreement is a dispute settlement procedure and provides for a series of escalating steps to resolve disputes or grievances. [42] Clause 8.1 provides a procedure for dealing with disputes within the workplace. If the parties consider it necessary, clause 8.2 of the Agreement confers power on the Commission to conciliate a dispute. [43] Clause 8.3 follows clause 8.2 which deals with raising the matter with the Commission for the purpose of conciliation. Clause 8.3 begins with the words “if the matter is not resolved”. In my view and having regard to ordinary meaning of those words and the context and place in which they appear, those introductory words refer to the outcome of conciliation conducted pursuant to clause 8.2. Therefore, the step (or procedure) set out in clause 8.3 is enlivened if conciliation conducted in accordance with clause 8.2 does not resolve the matter. [44] Once clause 8.3 is enlivened, the matter must be “submitted” to the Commission and the parties (or participants) to the dispute “must accept the decision of the arbitrator”. I agree with the Applicant’s submission that clause 8.3 confers power on the Commission to arbitrate the dispute submitted to it. The Applicant’s submission as to the plain and ordinary meaning of those words is consistent with the ordinary dictionary meaning of the key words. [45] The Macquarie Dictionary7 defines: “submitted” as “to yield in surrender, compliance, or obedience”, “to subject (especially oneself) to conditions imposed, treatment, etc” and “to refer (something) to the decision or judgement of another or others.” “decision” as “the act of deciding; determination (of a question or doubt)” and “a judgement, as one formally pronounced by a court.” and “arbitrator” as “a person chosen to decide a dispute, especially one empowered to examine the facts and to decide an issue”.8 [46] In Australian and International Pilots Association v Qantas Airways Limited9, Vice President Watson stated: [10] Where a dispute settlement procedure does nothing more than provide that if a matter is not settled it may be referred to the Commission, it is fair to assume that the parties intended that the referral be for a purpose, but in the absence of clear words implying more, that role is confined to conciliation. [ABC v Media Entertainment and Arts Alliance Print M3463; Warkworth Mining v CFMEU [PR916526]] If the parties confer a power on the Commission “for determination” then this is to be interpreted as conferring a power to arbitrate. [SDA v Big W Discount Stores [PR924554]; CEPU v Telstra (2003) 125 IR 88] -- 11 of 13 -- [2023] FWC 2390 10 [47] On appeal, a Full Bench of the AIRC upheld the Vice President’s decision stating: [12] Had the dispute settlement procedure referred any dispute to the Commission for determination we would have accepted that should be read as the parties having agreed to empower the Commission to arbitrate in respect of that dispute. This too was clearly accepted by the Vice President. In support of that proposition he first referred to the Full Bench decision in Shop, Distributive and Allied Employees Association v Big W Discount Department Stores (Big W). There, the relevant agreement provided in its dispute settlement procedure that any matters which had not been resolved were able to be referred to the “Australian Industrial Relations Commission for determination”. The other decision referred to by His Honour is Communications, Electrical, Electronic, Energy, Information Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation. In that case the dispute settlement procedure provided, relevantly, that “a dispute referred to the Australian Industrial Relations Commission will be referred for … conciliation/determination”. We note that this decision was the subject of an appeal to a Full Bench which allowed the appeal in part but not in relation to the aspect of the decision here being discussed. The Full Bench accepted that where, in the context of a dispute resolution procedure, a dispute is referred to the Commission for “determination”, provided it is unqualified, that is to be taken as meaning arbitration.10 [48] Having regard to the ordinary meaning of the words in clause 8.3, it is clear that the provision confers power on the Commission to decide (or determine) disputes if the matter is not resolved by conciliation undertaken pursuant to clause 8.2. [49] In coming to this view, it is important to note that conciliation does not involve a ‘decision’ or ‘determination’ that must be accepted by the parties. Rather, any resolution of a dispute through a process of conciliation is by agreement between the parties. Where a dispute is ‘submitted’ to an ‘arbitrator’ and the dispute settlement procedure requires that the parties must accept the ‘decision’, this is to be interpreted as conferring a power to arbitrate.11 [50] I do not accept the Respondent’s submission that the word “ultimately” in clause 8.2 has the effect of limiting the function and powers of the Commission to conciliation and that clause 8.3 merely re-affirms that. While the inclusion of the word ultimately adds ambiguity, when the two provisions are read as a whole and in context, that submission cannot be accepted. [51] I also do not accept that the Respondent’s submission that, in the absence of the word “arbitration” being used, or the function described, the reference to “arbitrator” could simply be a reference to the member of the Commission and a “decision” could be to issues of procedure for conciliation or concluding the matter where it remains unresolved. The task is to interpret the agreement produced by the parties beginning with a consideration of the ordinary meaning of the relevant words, having regard to the context and purpose, and in a manner that avoids a narrow or pedantic approach. Conclusion -- 12 of 13 -- [2023] FWC 2390 11 [52] I find that clause 8 of the Agreement confers a power of arbitration on the AIRC, and that in accordance with the relevant provisions of the TPCA Act and the WR Act, the Commission has jurisdiction to determine the dispute. [53] The matter will be listed for further programming and case management. COMMISSIONER Printed by authority of the Commonwealth Government Printer <PR766297> 1 See s.712(2)(b) of the WR Act. 2 [2017] FWCFB 3005 at [114]. 3 [2018] FCFCA 131 at [197]. 4 Skene at [197]. 5 Construction Forestry Mining and Energy Union v Australian Industrial Relations Commission [2001] HCA 16 at [31]-[34]. 6 See s.711(1)(b) of the WR Act. 7 Macquarie Dictionary Online (http://www.macquariedictionary.com.au). 8 Ibid. 9 [2008] AIRC 290 at [10]. 10 Australian and International Pilots Association v Qantas Airways Limited [2008] AIRCFB 739 at [12]. 11 Ibid. -- 13 of 13 --