Port Waratah Coal Services Ltd v Maritime Union of Australia [2004] FCA 1369 (27 October 2004)

Last Updated: 27 October 2004

FEDERAL COURT OF AUSTRALIA

Port Waratah Coal Services Ltd v Maritime Union of Australia

[2004] FCA 1369

INDUSTRIAL LAW – Interpretation of enterprise bargaining agreement – Application of superannuation payments provision to employees working 12.5 hour rostered shifts.
































PORT WARATAH COAL SERVICES LTD v MARITIME UNION OF AUSTRALIA
NSD 851 of 2004


WILCOX J
27 OCTOBER 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 851 of 2004

BETWEEN:	PORT WARATAH COAL SERVICES LTD APPLICANT
AND:	MARITIME UNION OF AUSTRALIA RESPONDENT
JUDGE:	WILCOX J
DATE OF ORDER:	27 OCTOBER 2004
WHERE MADE:	SYDNEY

THE COURT DECLARES THAT:

1. The figure to be used for calculation of superannuation contributions applicable to a Permanent/Fixed Contract Employee of the applicant, whose terms and conditions of employment are governed by the Port Waratah Coal Services Ltd Certified Agreement 2002 (‘the certified agreement’), is to be calculated on the basis of the weekly wage rate pursuant to cl 15 of the certified agreement, and does not incorporate shift allowances and regular overtime.
2. In respect of employees whose terms and conditions of employment are governed by the certified agreement, the definition of ‘Base Salary’ in the Stevedoring Employees Retirement Fund Trust Deed is to be interpreted by reference to the weekly wage rate pursuant to cl 15 of the certified agreement.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 851 of 2004

BETWEEN:	PORT WARATAH COAL SERVICES LTD APPLICANT
AND:	MARITIME UNION OF AUSTRALIA RESPONDENT

JUDGE:	WILCOX J
DATE:	27 OCTOBER 2004
PLACE:	SYDNEY

REASONS FOR JUDGMENT

WILCOX J:

1 Some employees of the applicant, Port Waratah Coal Services Ltd (‘PWCS’), are members of the Maritime Union of Australia (‘MUA’), the respondent to this proceeding. PWCS and MUA are in dispute about the extent of PWCS’ obligations to make superannuation contributions in relation to employees who work 12.5 hour rostered shifts.

The applicant’s claim

2 In order to resolve the dispute, PWCS initiated this proceeding. It claims two declarations:

‘1 A declaration that, in respect of the Applicant, the superannuation contributions applicable to Permanent/Fixed Contract Employees of the Applicant whose terms and conditions of employment are governed by the Port Waratah Coal Services Ltd Certified Agreement 2002, is to be calculated on the basis of the weekly wage rate pursuant to clause 15 of the Port Waratah Coal Services Ltd Certified Agreement 2002, and does not incorporate shift allowances and regular overtime.

2 A declaration that, in respect of employees whose terms and conditions of employment are governed by the Port Waratah Coal Services Ltd Certified Agreement 2002, the definition of "Base Salary" in the Stevedoring Employees Retirement Fund Trust Deed is to be interpreted by reference to the weekly wage rate pursuant to clause 15 of the Port Waratah Coal Services Ltd Certified Agreement 2002.’

3 Counsel for MUA, Mr S Crawshaw SC, stated that his client does not dispute the accuracy of the statement embodied in the first proposed declaration, although it questions the need to make any declaration on the subject. His client does dispute the contention set out in the second proposed declaration.

The first declaration

4 Clause 15 of the Port Waratah Coal Services Ltd Certified Agreement 2002 (‘the certified agreement’) commences as follows:

‘The rates of pay herein are "total" and/or "paid rates" payable for individual classifications. Such rates comprehend all Agreement entitlements including, but without limiting the generality to payments for travelling time, travelling allowances, fares, excess fares, site disabilities such as space, height, dirt, mud, dust, coal sludge, waste and all abnormal conditions encountered when working with coal; irregularity of work, industry or special allowances, compensation for travel patterns, mobility etc. inclement weather, isolation, allowances, damage to clothing and any other similar or like payment but excludes those payments contained in clause 16 of this Agreement.’

5 The clause then sets out a table showing, in relation to each of eight classifications of employees, a ‘Base % Rate’: a weekly rate of pay from 1 August 2002 and a weekly rate of pay from 1 August 2003, the latter being 4% higher than the former.

6 Clause 17 of the certified agreement deals with superannuation contributions payable by PWCS. Different provisions apply to Permanent/Fixed Contract Employees, on the one hand, and Casual Employees on the other. In relation to the former category of employees, the clause says:

‘The company will make superannuation contributions of 14.5%, inclusive of the Superannuation Guarantee Levy. Superannuation contributions will be calculated based on the employee’s base weekly wage rate as defined in clause 15. Superannuation contributions will be made to the Superannuation Trust of Australia, Stevedoring Employees Retirement Fund, or any other superannuation fund nominated by the Company, subject to the superannuation fund’s acceptance of the employee’s application to become a member of the superannuation fund, and the Company being a participating employer of the superannuation fund or employees may recommend to PWCS an Australian Taxation Office recognised "Complying, Public Offer" Superannuation fund, which PWCS will contribute to on behalf of the employee.’

7 It will be noted that cl 17 imposes on PWCS an obligation to make superannuation contributions ‘based on the employee’s base weekly wage rate as defined in clause 15’. In fact, cl 15 does not define, or even use, the term ‘base weekly wage rate’. Nonetheless, as I have indicated, the parties agree that cl 17 must be understood as imposing an obligation on PWCS to make superannuation contributions at the rate of 14.5% of the wage rates prescribed in the table contained in cl 15. I agree with this view. The proposition set out in the first proposed declaration is correct.

The second declaration
(i) The relevant provisions

8 The second proposed declaration refers to the Stevedoring Employees Retirement Fund Trust Deed (‘the trust deed’). That deed apparently came into existence in 1967. It has frequently been amended. Relevant amendments were made as recently as 28 March 2001.

9 Clause 26 of the trust deed imposes contribution obligations upon both ‘Contributing Members’ and ‘Participating Employers’. Contributing Members are employees who have joined the Stevedoring Employees Retirement Fund (‘the fund’). Participating Employers are employers accepted by the Trustees of the fund as being, as I understand the position, employers of Contributing Members. PWCS is a Participating Employer in respect of numerous MUA members who are Contributing Members of the fund.

10 Clause 26(1) of the trust deed requires each Contributing Member to pay to the Trustee of the fund a ‘Normal Contribution’ equal to 4.8% of the ‘Member’s Classification Base Wage’. Pursuant to cl 26(5) of the trust deed, the payment of Normal Contributions is by deduction from the Contributing Member’s wages.

11 Clause 26(4) of the trust deed provides for ‘Voluntary Contributions’ to the fund, either by a particular Contributing Member (see cl 26(4)(a)) or by a Participating Employer in respect of a particular Contributing Member (see cl 26(4)(c)).

12 Clause 27 of the trust deed deals with payments by Participating Employers. By cl 27(3) of the trust deed, as from 1 July 1993, Participating Employers are obliged to make, in respect of each of their employees who are Contributing Members, payments totalling 12.6% ‘of each such Employee’s Classification Base Wage for each week the Member has paid or is deemed to have paid Normal Contributions’. The issue between the parties is the application of this formula to 12.5 hour rostered shift employees.

13 The term ‘Classification Base Wage’ is defined by cl 3(g) of the trust deed as follows:

‘"Classification Base Wage" or "CBW" in respect of a Member, means the greater of the following amounts:

(a) the amount of 75% of the Member’s Base Salary, expressed as a weekly amount; and
(b) the amount of:

(i) in respect of a GWE or a Permanent Part-Time Employee - $650 per week; and
(ii) in respect of any other Member - $950 per week,

provided that the Member’s Classification Base Wage shall not be less than the amount of the Member’s Classification Base Wage determine [sic] under the Rules immediately prior to 1 July 2000.’

14 The parties agree that none of the relevant employees is a ‘GWE or a Permanent Part-Time Employee’. Therefore, subparagraph (b)(i) is irrelevant to this case. The critical question is the application of the term ‘Member’s Base Salary’.

15 Clause 3(aam) of the trust deed contains the following definition:

‘"Base Salary" in respect of Member [sic] means the base salary (excluding overtime, productivity, incentives and bonuses) negotiated in an enterprise bargaining agreement or similar industrial instrument, as is notified to the Trustee by the Member’s Participating Employer, up to the maximum contribution base determined under section 15 of the Superannuation Guarantee (Administration) Act 1992 (Cth) unless the Trustee determines otherwise.’

16 The parties agree that the certified agreement is an ‘enterprise bargaining agreement’ within the meaning of this definition. Neither of them contends that the ‘maximum contribution base’ determined under s 15 of the Superannuation Guarantee (Administration) Act 1992 (Cth) is relevant to the determination of ‘Base Salary’. The present problem arises out of the fact that the certified agreement contains some special provisions concerning 12.5 hour rostered shift employees.

17 These provisions are contained in Appendix 3 of the certified agreement. The appendix is called ‘PWCS Roster Agreements’ (‘the roster agreement’). Clause 3.2 of the roster agreement requires it to be read in conjunction with the certified agreement and to ‘have precedence over it’.

18 Section 4 of the roster agreement stipulates roster arrangements based on employees working 43.75 hours per week, being 35 hours ordinary time and 8.75 hours overtime. The work is to be performed by one 12.5 hour shift on each of four consecutive days, followed by four rostered days off.

19 Section 7 of the roster agreement provides that each rostered shift shall be regarded as comprising 10 ordinary hours of work and 2.5 overtime hours. The ordinary rate of pay is that provided in cl 15 of the certified agreement. In addition, rostered shift employees are to receive a premium of ‘63.93% of the ordinary rate of pay for each hour of rostered shifts’. Clause 7.3 of the roster agreement states that this shift premium ‘reflects an average of the shift allowances, weekday and weekend penalty rates over each roster cycle’. Clause 19(c)(iv) of the certified agreement is to similar effect.

(ii) Submissions

20 Counsel for PWCS, Mr G Hatcher SC and Mr R Warren, argued that the relevant wage rate, fixed by cl 15 of the certified agreement, constitutes, for a particular employee, the ‘Base Salary’ in respect of that employee, for the purposes of the definition of ‘Classification Base Wage’ in the trust deed. Alternatively, they submitted, there is no such ‘Base Salary’, with the result that the Classification Base Wage is $950 per week, as set out in cl 3(g)(b)(ii) of the trust deed. Counsel pointed out that both the certified agreement and roster agreement make plain that the 63.93% premium is intended to reflect shift allowances and weekday and weekend penalty rates. They said the premium was therefore to be disregarded in determining the employee’s ‘base salary ... negotiated in an enterprise bargaining agreement’. They pointed out that the definition of ‘Base Salary’ specifically excludes ‘overtime, productivity, incentives and bonuses’. Counsel said any difference between the amount required to be paid by cl 15 of the certified agreement and a Participating Employer’s actual payments under the trust deed should be regarded as a Voluntary Contribution by the Participating Employer pursuant to cl 26(4)(c) of the trust deed.

21 Mr Crawshaw responded by pointing out that the roster agreement is to have precedence over the certified agreement in case of any conflict. He said the effect of the roster agreement was to require rostered shift employees to work more than 35 hours per week; so it is reasonable to treat their regularly recurring wage (including the 63.93% premium) as their base salary. If there was any ambiguity about the effect of the documents, counsel argued, they should be construed beneficially to the employees.

(iii) Conclusion

22 It may be said, in a general sense, that the full amount receivable by a rostered shift employee pursuant to the roster agreement is that employee’s base salary. That amount is received by the employee from week to week, regardless of whether a particular week happens to be one in which the employee works four consecutive days or is one in which the employee has four consecutive rest days, and therefore works on only three days. It is not difficult to imagine that a rostered shift employee would regard the full amount paid to him or her, being the cl 15 rate plus the 63.93% premium, as his or her weekly wage.

23 However, the question in the present case is not what would be regarded as the rostered shift employee’s weekly wage, or base wage, in ordinary parlance. The question is what is the employee’s ‘Base Salary’ for the purposes of the definition of that term in the trust deed. That definition speaks of the employee’s ‘base salary (excluding overtime, productivity, incentives and bonuses) negotiated in an enterprise bargaining agreement’. In the absence of the parenthetical words, it might be argued that the roster agreement has the effect of substituting a new negotiated base salary, being the cl 15 rate of pay plus the 63.93% premium, for the cl 15 rate standing alone. However, the parenthetical words make it clear that the base salary, taken for the purposes of the definition, is to exclude any payment by way of overtime or bonuses. And it is clear that the 63.93% premium is intended as compensation for the fact that rostered shift employees are required to work an average of 8.75 overtime hours per week and to do so, from time to time, on weekends and public holidays.

24 Particularly having regard to the express exclusion of overtime and bonuses from the definition of ‘Base Salary’ in the trust deed, it seems to me incontrovertible that the premium must be disregarded in applying that definition.

25 Affected employees might regard this conclusion as unsatisfactory. They might consider it to be unfair that the employer should be exempted from making any superannuation contribution in relation to a significant portion of the wage they receive as compensation for regularly working the hours required of them under an enterprise bargaining agreement. To a greater or lesser extent, the same view may be held by other employees who regularly work overtime or at times which attract penalty rates. There may be a case for industrial awards and agreements and trust deeds making no distinction, in relation to superannuation contributions, between earnings in respect of ordinary hours of work and earnings in respect of overtime and penalties. The contribution might simply be related to total earnings. However, whether or not this would be a preferable method of calculating employers’ superannuation contributions, it is not the method adopted in the present trust deed. I must interpret this document only by reference to what it says.

Disposition

26 Having regard to MUA’s position, it may not be strictly necessary to make the first proposed declaration. However, it may reduce the possibility of any later controversy about the matter if I do so. It is certainly desirable to make the second proposed declaration. Under the circumstances, I will make both declarations sought by PWCS.

27 There is no application for costs.

I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.

Associate:

Dated: 27 October 2004

Counsel for the Applicant:	Mr G Hatcher SC and Mr R Warren
Solicitor for the Applicant:	Freehills
Counsel for the Respondent:	Mr S Crawshaw SC
Solicitor for the Respondent:	Ms J White, Maritime Union of Australia
Date of Hearing:	13 September 2004
Date of Judgment:	27 October 2004