INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA

CITATION : 2023 WAIRC 00960

CORAM : INDUSTRIAL MAGISTRATE R. COSENTINO

HEARD : WEDNESDAY, 15 NOVEMBER 2023

DELIVERED : FRIDAY, 15 DECEMBER 2023

FILE NO. : M 27 OF 2023

BETWEEN : THE AUSTRALIAN MARITIME OFFICERS' UNION

CLAIMANT

AND

NORTH WEST CREWING PTY LTD

RESPONDENT

CatchWords : INDUSTRIAL LAW - Fair Work Act 2009 (Cth) - Alleged contravention of enterprise agreement - Entitlement to annual rate increase - Meaning of ‘period of this Agreement’ - Whether ‘period of this Agreement’ refers to the nominal expiry date - What rate do increases operate on?- two components of total base salary - Liability determined  - Claim upheld - Remedy and penalties to be determined  

Legislation : Fair Work Act 2009 (Cth)

Instrument : North West Crewing Pty Ltd Enterprise Agreement 2018

Case(s) referred

to in reasons: : Australian Workers’ Union v Orica Australia Pty Ltd [2022] FWCFB 90

Kucks v CSR Ltd (1996) 66 IR 182

NSW Trains v Australian Rail, Tram and Bus Industry Union [2021] FCA 883

Toyota Motor Corporation Australia Ltd v Marmara [2014] FCAFC 84

Workpac Pty Ltd v Skene [2018] FCAFC 131

Result : Liability determined

Representation:

Claimant : Mr C. Fogliani (of counsel) as instructed by The Australian Maritime Officers’ Union

Respondent : Mr J. Parkinson (of counsel) as instructed by Kingston Reid

REASONS FOR DECISION

1         Mr Andrew Wells was employed by North West Crewing Pty Ltd as a Tug Master. During his employment, the North West Crewing Pty Ltd – Enterprise Agreement 2018, being an enterprise agreement made and approved under Part 2-4 of the Fair Work Act 2009 (Cth), was in operation and covered him and North West Crewing.

2         The Enterprise Agreement contained the following clause:

7 Remuneration

7.1 Classifications

(a) The Employees’ remuneration is outlined in Schedule 1. Any additional remuneration to which the Employee is entitled is outlined in the Employee’s contract of employment.

(b) Any additional days worked by Employees (other than casual employees) beyond their nominal rostered days will be paid at twice the daily rate appropriate to their classification with no leave accruing.

(c) The rates in Schedule 1 shall be increased on and from 1 July in each year during the period of this Agreement by an amount to be determined by the Company, provided that such increase will not be less than the CPI for Perth, Western Australia as at the end of the March quarter immediately for that year.

(d) Notwithstanding any other document which may apply to an Employee’s employment, including but not limited to the Employee’s contract of employment and the Company Staff Policy and Procedure Handbook 2016, only the increase in salary set out in clause 7.1(c) will apply to Employees for the life of this Agreement.

(e) Wages shall be disbursed on a fortnightly basis in arrears by electronic funds transfer into a Bank account nominated by the Employee.

(f) The Company will conduct an annual audit of hours worked by Employees to ensure the salary paid to each Employee is better than that they would have received, had the Employee been paid the minimum payments provided for in the Marine Towage Award 2010.

3         In each year from 2018, when the Enterprise Agreement was approved, until 2021, Mr Wells received a pay increase. He did not receive a pay increase in 2022 or subsequently.

4         Mr Wells is a member of the Australian Maritime Officers’ Union. It commenced this action on his behalf, alleging that North West Crewing’s failure to increase Mr Wells’ pay on 1 July 2022 and subsequently was in breach of clause 7.1(c) of the Enterprise Agreement (the rate increase clause), and therefore was a contravention of the Act. The Union seeks an underpayment order, interest and a pecuniary penalty.

5         North West Crewing denies any contravention of the Enterprise Agreement or the Act. North West Crewing says that the rate increase clause did not require it to increase rates of pay after the Enterprise Agreement’s nominal expiry date of 25 June 2022. It also says, in the alternative, that the rate increase clause operates on the rates in Schedule 1 of the Enterprise Agreement headed ‘Classification and Minimum Rates’, and that even if it had increased the Schedule 1 rates in 2022 and subsequently, Mr Wells was paid in excess of any such rates in any event.

6         The matter was listed for hearing to determine whether there had been contraventions of the Enterprise Agreement and the Act only. Therefore, the issues I must decide at this stage are:

(a) What does the rate increase clause mean when it refers to ‘the period of this Agreement’? Does it mean the period of operation of the Enterprise Agreement, as the Union asserts, or does it mean the period until the Nominal Expiry Date, as North West Crewing asserts?

(b) If the correct construction of the rate increase clause is that the period referred to is the period of the Enterprise Agreement’s operation, then what is the rate that the rate increase clause operates on? This involves, first, deciding what the rate increase clause means and second, as a matter of fact, what the relevant rate was as at 1 July 2022 and subsequently.

What is the Enterprise Agreement’s ‘period’ for the purpose of the rate increase clause?

7         The principles that apply when construing an industrial instrument are not in dispute. They are encapsulated at [197] of WorkPac Pty Ltd v Skene [2018] FCAFC 131:

The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context: City of Wanneroo v Holmes ; (1989) 30 IR 362 at 378 (French J). The interpretation “... turns on the language of the particular agreement, understood in the light of its industrial context and purpose ...”: Amcor Limited v Construction, Forestry, Mining and Energy Union; (2005) 222 CLR 241 at [2] (Gleeson CJ and McHugh J). The words are not to be interpreted in a vacuum divorced from industrial realities (Holmes at 378); 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 (Holmes at 378–9, citing Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR(NSW) 498 at 503 (Street J)). 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: see Kucks v CSR Limited ; (1996) 66 IR 182 at 184 (Madgwick J); Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16] (Marshall, Tracey and Flick JJ); Amcor at [96] (Kirby J).

8         Neither party led evidence of, nor relied upon extrinsic evidence for the purpose of construing the Enterprise Agreement. No one sought to rely on the clause’s history, or antecedent instruments from which the clause was derived, nor past practices in relation to antecedent instruments, as relevant contextual matters.

Statutory Context

9         Both parties agree that the rate increase clause must be construed by reference to the statutory framework and clause 3 of the Enterprise Agreement.

10      Clause 3 is headed ‘Period of Operation of Agreement’. It says:

(a) This Agreement shall commence operation 7 days after the date that it is approved by Fair Work Commission (FWC) (Commencement Date).

(b) This Agreement will operate for a period of 4 years from the date on which the FWC approves it.

(c) This Agreement will continue to operate and apply beyond the nominal expiry date until a replacement enterprise agreement is made between the parties or it is terminated in accordance with relevant legislation.

11      Clause 3(a) and (c) reflect the Act’s scheme relating to enterprise agreements. In particular, s 54 of the Act deals with when an enterprise agreement operates. It says:

54 When an enterprise agreement is in operation

(1) An enterprise agreement approved by the FWC operates from:

(a) 7 days after the agreement is approved; or

(b) if a later day is specified in the agreement—that later day.

(2) An enterprise agreement ceases to operate on the earlier of the following days:

(a) the day on which a termination of the agreement comes into operation under section 224 or 227;

(b) the day on which section 58 or subsection 278(1A) first has the effect that there is no employee to whom the agreement applies.

Note: Section 58 and subsection 278(1A) deal with when an enterprise agreement ceases to apply to an employee.

12      Section 186(5) is also relevant. It says:

186 When the FWC must approve an enterprise agreement—general requirements

Basic Rule

(1) If an application for the approval of an enterprise agreement is made under subsection 182(4) or section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).

…

(5) The FWC must be satisfied that:

(a) the agreement specifies a date as its nominal expiry date; and

(b) the date will not be more than 4 years after the day on which the FWC approves the agreement.

…

13      In this statutory context, which precludes the Fair Work Commission from approving an enterprise agreement unless it has a nominal expiry date that is no more than four years after the day on which the Fair Work Commission approves it, clause 3(b) must be understood as containing the agreement’s nominal expiry date. While clause 3(b) does not use the phrase ‘nominal expiry date,’ no other clause of the agreement does either. The parties agree that the nominal expiry date for the purpose of the Enterprise Agreement is the date specified in clause 3(b).

14      That s 54 of the Act has the effect that an enterprise agreement may operate beyond its nominal expiry date does not preclude the possibility that there is a different point in time when a particular provision within the agreement will come to an end or during which a particular obligation is to continue: see for instance Toyota Motor Corporation Australia Ltd v Marmara [2014] FCAFC 84 at [58], NSW Trains v Australian Rail, Tram and Bus Industry Union [2021] FCA 883 and Australian Workers' Union v Orica Australia Pty Ltd [2022] FWCFB 90.

15      It is also relevant statutory context that once the nominal expiry date of an enterprise agreement has passed, claims by employees and the employer in connection with a new agreement may, subject to some preconditions, be supported by organising and taking protected industrial action under Division 2 of Part 3-3 of the Act. This statutory context might support the view that conditions bargained in an agreement are generally in settlement of claims until the agreement reaches its nominal expiry date so that provisions expressed as operating for a fixed time should be construed as limited to the nominal life of the agreement: Orica at [28]-[31].

16      The statutory context does not, on its own, elevate a particular constructional choice over another in this case.

Structure and Text of the Enterprise Agreement

17      This leaves the text of the agreement, considered as a whole, as the primary source available to assist in the present constructional quandary. The text is far from a fecund field. But it does yield a lean output.

18      North West Crewing relies on the following textual indications that the ‘period of this Agreement’ in the rate increase clause means the period up until the nominal expiry date, i.e. the period specified in clause 3(b):

(a) Clause 3(b) expresses a period: North West Crewing say that clause 3(b), which provides for a nominal expiry date of 4 years from the date of the agreement’s approval, is the only period that is designated and defined in the Enterprise Agreement as a reference point for the rates increase clause.

(b) Different language manifests intended different meanings: clause 7.1(d) uses the phrase ‘life of this Agreement’ as distinct from ‘period of this Agreement’. If ‘life of this Agreement’ means the Enterprise Agreement’s period of operation under the Act, then the different phrase ‘period of this Agreement’ must have a different meaning.

(c) Clause 7.1(d) clarifies that rate increases are limited: clause 7.1(d) speaks of ‘only’ the increases in the rate increase clause applying to Employees, signalling a limitation on the rate increase clause. Clause 7.1(d) recognises, by the use of the phrase ‘life of this Agreement’ that the Enterprise Agreement may operate beyond the nominal expiry date, but that the rate increases would apply for a finite period.

19      The period expressed in clause 3(b) is not the only fixed period identifiable in the Enterprise Agreement. The agreement’s period of operation is also a fixed period that is identifiable and referable: NSW Trains at [61], [63].

20      In considering whether the words ‘period of this Agreement’ is intended to refer to the period described in clause 3(b), the structure of clause 3 is relevant. It is in three parts. Each part deals with a different subject related to the topic identified in the clause’s heading: Period of Operation. Clause 3(a) deals with when the agreement commences. Clause 3(b) deals with the agreement’s nominal expiry date. Clause 3(c) deals with the agreement’s period of operation.

21      Clauses 3(a) and 3(c) mirror the Act’s provisions. They do not do anything that the Act does not do. The drafter presumably considered it desirable to include these clauses for clarity and completeness, rather than for their operative effect.

22      Clause 3(b), on the other hand, has a substantive role to play. It qualifies the agreement for approval because it specifies the agreement’s nominal expiry date. The agreement would not be capable of approval if it did not specify a nominal expiry date not more than four years after its approval: s 186(5).

23      The nominal expiry date of an enterprise agreement is defined in s 12 of the Act, relevantly, as ‘the date specified in the agreement as its nominal expiry date’.

24      Under the Act, the nominal expiry date of an enterprise agreement sets the time during which industrial action must not be organised or engaged in: (s 417), and after which an application for termination of an enterprise agreement can be made: (s 225). Notably, the Act refers to agreements being ‘passed’ their nominal expiry date, recognising that the nominal expiry date is a point in time that otherwise has no effect, in and of itself, on the operation of an enterprise agreement.

25      It is apparent, then, that the primary purpose of clause 3(b) is to identify the agreement’s nominal expiry date. There is nothing that indicates clause 3(b) was intended to define the Enterprise Agreement’s ‘period’ as a concept distinct from or different to its period of operation. Indeed, the heading to the clause indicates otherwise.

26      This means that when the rates increase clause speaks of the ‘period of this Agreement’, there is no reason to consider it is referring to the period identified in clause 3(b). That is not clause 3(b)’s apparent purpose.

27      The Union’s counsel described the Enterprise Agreement as a ‘minimum rates agreement’ which contains minimum rates which in reality, no one is ever paid, as opposed to a ‘live rates agreement’ which sets out the actual rates people are paid in the workplace. Of course, the Act does not distinguish between such categories of enterprise agreements. Under the Act, the terms and conditions of an enterprise agreement are ‘the main terms and conditions of employment of an employee’: s 43.

28      However, it is apparent from the Enterprise Agreement’s structure and text that the rates set out in Schedule 1 are only part of an employee’s remuneration. Clause 6 makes this clear:

6 Intent and Operation of the Agreement

(a) This Agreement, along with the contract of employment and the Company Staff Policy and Procedure Handbook (which is incorporated into this Agreement), shall form the complete agreement covering all Employee’s terms and conditions of employment. It shall operate to the exclusion of any and all other industrial instruments which might otherwise apply.

(b) Each Employee who is or becomes bound by this Agreement will be provided with a contract of employment and Company Staff Policy and Procedure Handbook which:

(1) Confirms the application of this Agreement; and

(2) Outlines any individual benefits to which the Employee is entitled.

(c) Nothing in the contract of employment will operate to reduce any of the terms and conditions to which the Employee is entitled under this Agreement.

(d) Nothing in this Agreement will operate to reduce any of the terms and conditions to which the Employee is entitled at the time the Employee becomes bound by this Agreement.

29      This intent is important to understanding clause 7.1. It is reflected in clause 7.1(a) which:

(a) refers to both the remuneration in Schedule 1 and ‘any additional’ remuneration under a contract of employment; and

(b) when referring to the Schedule 1 remuneration, refers to the plural or collective ‘Employees’’, but when referring to additional remuneration refers to ‘the Employee’ in the singular or individual sense.

30      This intent is picked up in clause 7.1(d). This clause also refers to the singular ‘Employee’s contract of employment’ as well as with the plural or collective ‘Employees’ salary’. It also refers to the Company Staff Policy and Procedure Handbook, which is incorporated into the Enterprise Agreement under clause 6(a).

31      In this context, the evident purpose of clause 7.1(d) is to distinguish between the different sources of employee entitlements for the purpose of the increases in the preceding rates increase clause. When the clause refers to ‘only the increase in salary set out in clause 7.1(c)’ as applying, it is not limiting increases in number or in time. Rather, the limit invoked by the use of the word ‘only’ is the type of increase. That is, the only entitlement under the Enterprise Agreement to an increase in salary is the entitlement described in clause 7.1(c). That is so, ‘notwithstanding any other document which may apply’ to an individual employee’s employment.

32      In effect, the purpose of clause 7.1(d) is to clarify that increases in salary that an individual employee is entitled to under their contract of employment, or the Company Staff Policy and Procedure Handbook, are not to be treated as increases in the Enterprise Agreement’s rates, or as entitlements under the Enterprise Agreement even though the Company Staff Policy and Procedure Handbook is incorporated in the Enterprise Agreement.

33      I do not agree with North West Crewing’s contention that clause 7.1(d) is intended to limit increases in salary temporally, that is, to the nominal expiry date. It is an unnatural reading of the clause which ignores the context I have set out. It would be an exceedingly clumsy and confusing way of achieving what could be achieved simply. It gives the words ‘Notwithstanding any other document’ no work to do.

34      Once the purpose of clause 7.1(d) is properly understood, its use of the phrase ‘life of this Agreement’ is inconsequential. North West Crewing says the phrase means during the Enterprise Agreement’s period of operation. That is uncontentious. It says contentiously that the fact this phrase is used to describe the period of operation in clause 7.1(d) means that the different phrase ‘period of this Agreement’ used in the rates increase clause must have a different meaning. It draws support for its approach from the Federal Court’s decision in NSW Trains, where it was held that the use of different phrases in an enterprise agreement manifested an intention on the part of the drafter to identify two separate dates.

35      I do not consider the use of different phrases indicates a deliberate distinction between the periods referred to in clause 7.1(d) and the rates increase clause. There is nothing to indicate this was a deliberate drafting choice. There are many forms of words the drafters could easily have chosen to make a clear distinction, including formulations like:

(a) ‘prior to the nominal expiry date of the agreement’;

(b) ‘from July 2018 to July 2021’;

(c) ‘until June 2022’; or

(d) ‘during the term of the agreement’ with a definition of ‘term’ that refers to the commencement date and the nominal expiry date.

36      When, in NSW Trains, Flick J observed at [59]:

The use of two different phrases in clauses 12 and 13 would, at least initially, suggest that each phrase has a separate and discrete meaning.

his Honour was construing the phrase ‘life of this Agreement’ in a Facilitation of Changes clause. The different phrase with which this phrase was compared, was the unambiguous phrase ‘prior to the nominal expiry date of this Agreement’.

37      In this case, the Enterprise Agreement uses two ambiguous phrases. It is therefore more difficult to conclude that one is intended to carry a different meaning to the other.

38      The use of different language in the Enterprise Agreement is a ‘mere inconsistency’ more likely to reflect the industrial reality that its drafters wrote the agreement without careful attention to legal niceties, form and fine points: Kucks v CSR Ltd (1996) 66 IR 182 per Madgwick J. I note that the Enterprise Agreement is not a lengthy document. It has 16 clauses. It does not contain any definitions. Its minimalist content indicates against the suggestion that the drafters intended to build-in different time periods for continuation of different obligations, as North West Crewing suggests it does.

39      For the above reasons, I prefer the Union’s contended for construction. The phrase ‘the period of this Agreement’ in the rates increase clause means the period of operation of the Enterprise Agreement. The rate increases must, therefore be made annually until the Enterprise Agreement is terminated or replaced.

What must be increased under clause 7.1(c)?

40      The next question is, what exactly must the increase be applied to?

41      In this respect, the Enterprise Agreement is unambiguous. It expressly refers to the ‘the rates in Schedule 1’.

42      Schedule 1 is headed Classification and Minimum Rates. It contains four classifications against which there is an amount specified and described as ‘Minimum Base Rate Per Annum’. (Clause 7 also appears to refer to these rates interchangeably as ‘wages’ and ‘salary’).

43      Clause 7.1(a) describes Schedule 1 as outlining ‘the Employees’ remuneration’ in the plural. It then addresses the singular: ‘Any additional remuneration to which the Employee is entitled is outlined in the Employee’s contract of employment’. As discussed above, clause 6 identifies that an individual’s contract of employment and the Company Staff Policy and Procedure Handbook are also sources of individual employee terms and conditions. In that context, clause 7.1(a) distinguishes between the minimum rates payable to employees under the Enterprise Agreement in a collective sense, and the remuneration of individual employees. It also points to the possibility that an individual employee’s remuneration will be something other than the Schedule 1 remuneration by virtue of their contract of employment.

44      The rate increase clause only refers to Schedule 1 rates. It makes no mention of increases to the ‘additional remuneration,’ total remuneration, individual benefits or the remuneration generally provided for in clause 7.1(a). Rather, as set out above, clause 7.1(d) clarifies that increases under individual contractual arrangements are not rate increases under the Enterprise Agreement.

45      The Union suggested that clause 7.1(d) prohibits contractual increases in salary for the life of the Enterprise Agreement. I have dealt with what I consider to be the purpose of clause 7.1(d) above. It clarifies what increases apply under the Enterprise Agreement to employees collectively. It does not have any effect on an individual employee’s contractual entitlements. This is consistent with clause 6(d).

46      Because the rate increase clause requires that the Schedule 1 rates be increased each year during the period of the Agreement, Schedule 1 does not set out the Enterprise Agreement’s rates of remuneration from on or after 1 July 2018, being the date of the first increase.

47      The rate increase clause provides that the rates in Schedule 1 can be increased by any amount determined by North West Crewing, provided the amount is not less than the CPI for Perth at the end of the immediately preceding March quarter.

48      It is an agreed fact that on or around 5 July 2018, North West Crewing provided Mr Wells with a pay increase of 0.9%. It is also clear that this increase was applied to something other than the Schedule 1 Minimum Base Rate. Prior to 1 July 2018, the minimum base rate in Schedule 1 for a Tug Master was $105,000. Had an increase of 0.9% been applied to this rate, it would bring the minimum rate to $105,945.00. Mr Wells’ base salary was increased from $208,057 to $209,929.

49      The only available inference is that Mr Wells received additional pay as well as the pay provided for by Schedule 1.

50      The Union relied on correspondence that Mr Wells received from North West Crewing which notified him of his pay increases, and purported to explain the basis for those increases. The Union says these letters themselves make it clear that the pay increases set out in the letters were the rates of pay for the purpose of the Enterprise Agreement.

51      North West Crewing’s letter to Mr Wells of 5 July 2018 relevantly stated:

…

As per your Enterprise Agreement, we are pleased to confirm that the annual remuneration review was conducted and your base salary will be increased by Perth CPI of 0.9% effective from the 1st of July 2018.

In this regard, your total annual remuneration package has now increased to $239,320.06 per annum. This is comprised of:

Base Salary $209,929.88

Superannuation $29,390.18

Total Annual Package $239,320.06

…

52      This correspondence is not evidence of the Schedule 1 rate of pay for a Tug Master increasing to $209,929.88. While reference is made to the Enterprise Agreement, the letter simply states that the annual remuneration review was conducted ‘as per’ the Enterprise Agreement. It also notifies of an increase to ‘your base salary’, not the Enterprise Agreement’s minimum rates.

53      The letter does not provide evidence of what increase was applied to the Schedule 1 minimum rates. However, the minimum amount by which the Schedule 1 rates had to have increased was the Perth CPI of 0.9%.

54      Letters were issued to Mr Wells in substantially the same terms in 2019 and 2020.

55      In 2021, the letter given to Mr Wells, dated 17 September 2021, was in different terms. It said:

…

As per clause 7.1(c) of your relevant Enterprise Agreement, we are pleased to advise that your rate of pay has been increased from the 1st of July 2021 as per the below details.

Base Salary $218,112.44

Superannuation $30,535.74

Total Annual Package $248,648.18

…

56      Notably, the 2021 letter:

(a) did not expressly distinguish between the rates review process in the Enterprise Agreement and the increase to Mr Wells’ individual pay. Rather, the increase to Mr Wells’ pay was said to be ‘as per’ the Enterprise Agreement; and

(b) did not refer to Perth CPI. It only referred to ‘your rate of pay’ being ‘increased’.

57      In his unchallenged evidence, Mr Wells described this letter as giving him a 0.6% pay increase on his then base salary of $216,611.03. Based on my calculations, the increase is closer to 0.7%, but in any event, it was not an increase to the entire base salary in line with Perth CPI. The relevant Perth CPI rate was 1%, according to the unchallenged evidence of North West Crewing’s witness, Mr Luke Bettesworth.

58      The Union said that the effect of the 17 September 2020 letter was to increase the Enterprise Agreement’s Schedule 1 rate to the amount of the base salary provided for in the letter so that, from 1 July 2021, the Schedule 1 rate that applied to Mr Wells was $218,112.44. Accordingly, he was entitled to a CPI increase on that rate in the subsequent year.

59      Mr Bettesworth’s evidence-in-chief was that Mr Wells’ 0.69% increase in pay of 16 September 2021 was by way of an employment contract variation. In cross-examination, the Union’s counsel asked Mr Bettesworth whether he agreed that the pay rises referred to in the letters to Mr Wells were ‘pay rises under the Enterprise Agreement’. Mr Bettesworth agreed that was what the letters said, and that the letters were accurate. He also agreed that the letters explained the rate to Mr Wells in terms of his ‘new rate under the Enterprise Agreement’.

60      After further questioning on the topic, Mr Bettesworth refined his answer slightly:

[Mr Fogliani]: And again, it starts with the same wording as the other two letters, which was, “As per your Enterprise Agreement, we are pleased to confirm that the annual remuneration review was conducted and your base salary will be increased by Perth CPI of 2.07 per cent, effective from 1 July 2020”. And then it has some figures. Do you accept that that was Mr Wells’ pay rate under the Enterprise Agreement as at 1 July 2020?---

[Mr Bettesworth]: ---That's what we paid him at that time, yep, and what we increased his pay by.

61      When asked questions focused on what seemed to be inconsistency between Mr Bettesworth’s answers in cross-examination, and his characterisation of the increases as being under Mr Wells’ contract of employment, Mr Bettesworth retracted his previous affirmative answer:

[Mr Fogliani]: What it really was, that letter dated 17 September 2021, you were setting his rates under the Enterprise Agreement?---

[Mr Bettesworth]: ---No.

[Mr Fogliani]: I put to you, Mr Bettesworth, that that's exactly what you were doing when you issued the letter to Mr Wells on 17 September, was you were increasing his rate under clause 7.1C of the agreement?---

[Mr Bettesworth]: ---We were increasing his, um – his rate based on CPI, yes.

62      It would be easy to discount Mr Bettesworth’s evidence as inconsistent, and therefore unreliable. The Union says his answers confirm that as a matter of fact, the increases detailed in the letters were increases ‘under the Enterprise Agreement’ and that the increases then set a new base rate ‘for the purposes of’ the Enterprise Agreement.

63      But considered closely, the different form of questions put to Mr Bettesworth might have warranted different answers, without any actual inconsistency.

64      For instance, his affirmative answer to the question about rate increases being under the Enterprise Agreement does not mean the increases set rates for the purpose of the Enterprise Agreement. Further, agreeing that the letter set out a ‘new rate under the Enterprise Agreement’ is not the same as agreeing the letter set out a new Schedule 1 rate, because the Enterprise Agreement deals with both Schedule 1 rates and ‘additional remuneration to which the Employee is entitled’.

65      Mr Bettesworth explained that North West Crewing passed on the increases that were required to be made under the rates increase clause to ‘everyone who worked with us’, regardless of whether they were covered by the Enterprise Agreement. He also explained that the increase ‘which is talked about in the agreement’ was applied to each individual employee’s base rate of pay, that is, what they were actually paid, not the Schedule 1 rates. In fact, no employee was paid at the Schedule 1 rate. All employees were paid more than the Schedule 1 rate.

66      Mr Bettesworth did not concede that the letters sent to Mr Wells set his Schedule 1 rates for the purpose of the rate increase clause of the Enterprise Agreement. His evidence was only to the effect that the increases paid to Mr Wells were calculated consistent with the methodology used in the Enterprise Agreement, and that the increased salary was then Mr Wells’ new rate under the Enterprise Agreement.

67      In my view, the letters given to Mr Wells did not have the effect that the Schedule 1 rate of pay for Tug Master as of 1 July 2021 was $209,929.88. I do not accept that this was the relevant rate of pay for the purpose of the rate increase clause of the Enterprise Agreement.

68      First, as I have already observed, the letters pre-dating September 2021 expressly apply increases to ‘your base salary’. The letters do not purport to increase the Schedule 1 remuneration, either by reference to Schedule 1, or to the ‘minimum base rate’ or to ‘Employees’ remuneration’ in the collective sense.

69      Second, the Schedule 1 base rates apply to all employees covered by the Enterprise Agreement. The letters were addressed to Mr Wells only. There is no evidence that any other employee was privy to the letters to Mr Wells. Had another Tug Master sought to ascertain the minimum rates of pay for the purpose of the Enterprise Agreement, or indeed sought to enforce the Enterprise Agreement, the letters to Mr Wells would not be available to them for the purpose of establishing the relevant base rate.

70      Third, although the 17 September 2021 letter refers to clause 7.1(c) of the Enterprise Agreement, the pay increase it notified Mr Wells about was not an increase that was not less than Perth CPI for the immediately preceding March Quarter, applied to Mr Wells’ total base salary.

71      According to the CPI increases given by Mr Bettesworth, applying Perth CPI annually only to the rates specified in Schedule 1, gives an amount of $109,359.71 as at 30 June 2021. If that was the relevant rate, then a 1 July 2021 increase to $218,112 is an increase in the order of 92%. In the context of a clause which uses CPI as a floor, it is an absurdity to suggest an increase of this order was pursuant to the rates increase clause.

72      The more logical and coherent conclusion is that Mr Wells’ salary was, at the time of registration of the Enterprise Agreement and at all times subsequently, comprised of two components. It was comprised of the Schedule 1 rate plus additional remuneration under his contract of employment as expressly contemplated by clauses 6 and 7.1. The additional remuneration was not the subject of the obligation in the rate increase clause. The Schedule 1 component was.

73      The increases that North West Crewing was obliged to make to the Schedule 1 rates on 1 July 2022 and 1 July 2023 were 7.6% and 5.8%, respectively. On my preliminary calculations, this equates to an increase of $8,394.45 per annum and $6,893.17 per annum. As these increases were not applied to Mr Wells’ total remuneration, the Union has established that North West Crewing contravened the rates increase clause, and s 50 of the Act.

Orders and Disposition

74      The matter will be listed for further hearing to determine the issue of remedy and penalties.

R COSENTINO

INDUSTRIAL MAGISTRATE