Devil (and the Dollars) in the Detail

Two cases decided within a week of each other highlight how important drafting of enterprise agreements is. Both cases involved argument about what the agreement clauses meant, and in both, the employer lost out, having to pay for lax drafting.

The first involved an argument about Latin. The agreement used the term “i.e.” which of course means “that is”. This expression is not about options or examples, but a clarification of the intent of the words that precede it. Using “i.e.” is about making certain the reader understands intent.

The company tried to argue that it was the same as the abbreviation “e.g.” but the FWC dismissed this as patently wrong. The words following that abbreviation are merely indicative of what the words preceding the abbreviation are about. There’s a world of difference between exemplar and clarifier.

The upshot of this basic error meant that the interpretation the employer relied on was invalid and the shift extensions which were the actual subject matter were not covered by the clause. The employer could not unilaterally require employees to extend their shifts and had to withdraw disciplinary notices to those who had earlier refused to extend their shifts on short notice.

The second case involved a long running dispute over the correct rate of pay where a casual works overtime. The normal way to deal with a casual working overtime is to pay the casual the same overtime rate as a permanent employee’s overtime rate. This is because the casual loading is attributable to those features of full time employment that the casual forgoes, such as annual leave and so on.

And since a permanent employee does not get any extra annual leave etc. when he or she works overtime, there is no justification for paying the loading to a casual on overtime. And in this case, it was even worse, because the agreement designated the casual ‘ordinary time rate’ as the loaded rate, and then applied overtime to that. So it was compounding the hourly rate beyond any justifiable entitlement.

The company tried arguing its case in the FWC, then an appeal to a full bench which failed. The drafting of the agreement left the company no room to wriggle. And once the FWC had resolved the dispute, when the company appealed to the federal court, it effectively refused to entertain the argument, saying that finality in these matters is necessary otherwise chaos would result.

The cases highlight why care is necessary, in both the words and symbols used in agreements. These companies spent small fortunes trying to argue their interpretations, to no avail, when what was needed was attention to detail in the critical areas affected. Some agreements last for four years at the minimum, and continue on for years after that. So it is worth spending the effort up front to get it right.

Construction, Forestry, Maritime, Mining and Energy Union -The Maritime Union of Australia Division v Qube Ports Pty Ltd T/A Qube Ports [2018] FWC 5537 (4 September 2018)

Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union [2018] FCAFC 146 (31 August 2018)