2024 WAIRC 00341
INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA


CITATION : 2024 WAIRC 00341

CORAM : INDUSTRIAL MAGISTRATE T. KUCERA

HEARD : MONDAY, 4 DECEMBER 2023

DELIVERED : FRIDAY, 14 JUNE 2024

FILE NO. : M 220 OF 2021

BETWEEN : NOEL JAMES WRIGHT
CLAIMANT

AND

CITY OF STIRLING (ABN 26 744 398 382)
RESPONDENT

CatchWords : INDUSTRIAL LAW – Interpretation of industrial award or agreement – Principles of construction – Failure to increase salary by correct percentage rates under industrial agreement – Breach of industrial agreement – Claim proven
Legislation : Fair Work Act 2009 (Cth)
Instrument : City of Stirling Outside Workforce Agreement 2017
City of Stirling Outside Workforce Agreement 2014
Case(s) referred
to in reasons: : Target Australia Pty Ltd v Shop Distributive and Allied Employees’ Association [2023] FCAFC 66; 324 IR 304
WorkPac Pty Ltd v Skene (2018) 264 FCR 536
Fedec v The Minister for Corrective Services [2017] WAIRC 00828, 97 WAIG 1595
City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362
Radakovic v RG Cram & Sons Pty Ltd [1975] 2 NSWLR 751
WorkPac Pty Ltd v Rossato [2021] HCA 23; 271 CLR 456
George A Bond & Company Ltd (in liq) v McKenzie [1929] AR (NSW) 498
Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10; 222 CLR 241
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165
Transport Workers Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829; 318 ALR 54
Shop, Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67
Kucks v CSR Ltd (1996) 66 IR 182
Cranford-Webster v McFarlane (1947) SASR 162
Gapes v Commercial Bank of Australia (1979) 38 FLR 415
Vehicle Builders’ Employees Federation of Australia v General Motors-Holdens Pty Ltd (1977) 32 FLR 100
Result : Claim proven
Representation:
Claimant : Ms R. Sorgiovanni (of counsel)
Respondent : Ms H. Millar (of counsel) as instructed by HWL Ebsworth Lawyers

REASONS FOR DECISION
1 This matter involves a claim by Noel James Wright (claimant), that his employer; the City of Stirling (respondent), underpaid him in breach of the City of Stirling Outside Workforce Agreement 2017 (Agreement).
2 The claimant’s allegations were initially raised in a Form 1.1 Originating Claim that he filed on 22 November 2021. While the claimant, on 4 May 2022, provided amended particulars of claim the allegations have, in the main, remained the same.
3 The claimant, who is employed by the respondent to maintain its reticulation systems, says that contrary to clause 11.1 and Schedule 1 of the Agreement, the respondent failed to increase his annual salary by the correct percentage rates; from 1 July 2018, and from 1 July 2019 (claim).
4 The claimant says that his salary should have been increased in both years by the percentage the Fair Work Commission Expert Panel (FWCEP) determined the national minimum wage had to be raised.
5 The respondent denies the allegations and says that it has complied with the Agreement and applied the correct percentage rate to the increases it made to the claimant’s annual salary from 1 July 2018 and from 1 July 2019.
6 For the reasons set out, I have determined the respondent has not applied the correct percentage rate to increase the claimant’s annual salary from 1 July 2018 and from 1 July 2019. As a result, I have reached the conclusion that the respondent has underpaid the claimant in contravention of clause 11.1 and Schedule 1 of the Agreement.
Agreement provisions at issue
7 Before summarising the facts that the parties agreed upon to decide the matter, it is necessary to first set out the relevant provisions of the Agreement, the subject of the claim. The first of these appears in clause 11.1 (Rates of Pay) and is cast in the following terms:
11. Rates of Pay
11.1. Minimum rate of pay per annum
Employees shall be paid in accordance with Annexure 1. The pay rates in Annexure 1 shall increase throughout the life of the Agreement as follows:
Date of Operation of the Agreement – Pay rates for Level 1 – 7 employees and Apprentices and Trainees will increase by 1.5%. Pay rates for Fleet Services – Mechanical Workshop employees will increase by 1%.
1 July 2018  Pay rates for all employees will increase by 2% or the greater of the following:
- WA Mercer Market Movement
- Perth CPI (Consumer Price Index)
- Percentage increase determined by the Fair Work Commission Expert Panel for annual wage reviews to the national minimum wage.
1 July 2019  Pay rates for all employees will increase by 2% or the greater of the following:
- WA Mercer Market Movement
- Perth CPI (Consumer Price Index)
- Percentage increase determined by the Fair Work Commission Expert Panel for the annual wage reviews to the national minimum wage.
8 The relevant part of Annexure 1 referred to in clause 11.1 is extracted below:
Annexure 1.1 – Method and Application Increase
Remuneration Forecast & Application of Consumer Price Index (CPI)
The annual increment applied to the Outside Workforce Agreement will be 1.5% and will apply from 1 January 2018. Only in year two or three, where CPI or Mercer Market Movement information is greater than 2%, the higher rate will be applied.
Mercer Human Resource Consulting (Mercer) supplies the City with actual market movement information and projected forecasts for Western Australia’s general market in November of each year.
On acceptance of the Agreement through a formal ballot process, the first increment of 1.5% will apply from 1 January 2018.
(*) Mercer Market Movement - “Forecast” and “Actual”
The increase, shown in annexure 1, is due from the 1st January 2018
Perth CPI
For the purpose of comparing the Mercer Market Movement rate with the Perth CPI rate (to determine the appropriate annual increase rate), the year-ended percentage change for September figure shall be used.
9 In addition to the provisions of the Agreement referred to, Annexure 1 also contains a table setting out the salaries for the various classifications that are covered by the Agreement, a copy of which is attached to these reasons as Schedule A (table of salaries and classifications).
Agreed Facts
10 The parties filed a Statement of Agreed Facts in which they relevantly agreed the following:
(a) The Agreement was approved by the Fair Work Commission (FWC) on 9 November 2018, and was operative from 16 November 2018. [2018] FWCA 6886.

(b) The Agreement applies to and regulates the terms and conditions of the claimant’s employment with the respondent.
(c) The rate of pay that applied to the claimant’s classification is determined by reference to clause 11.1 and Annexure 1.1 of the Agreement, with the position of Irrigation Maintenance Operator classified and paid as a Level 5 as set out in the table of salaries and classifications.
(d) Prior to 1 July 2018, the claimant reached and was paid, the maximum increment for the Level 5 classification that appears in the table of salaries and classifications.
(e) For the financial year commencing 1 July 2018:
(f) the respondent increased the rates payable under Annexure 1 of the Agreement by 2.2%;
(g) the claimant’s annual rate of pay prior to the increase was $62,215.73; and
(h) the claimant’s rate of pay increased to $63,584.48.
(i) For the purposes of applying clause 11.1 and Annexure 1.1 of the Agreement, the relevant figures for the calculation of a wage increase with effect from 1 July 2018 were:
· the Consumer Price Index (CPI) for Perth in September 2017: 0.8%;
· the increase determined by the FWCEP: 3.5%; and
· the WA Mercer Market Movement (Mercer): being 2.2%.
(j) For the financial year commencing 1 July 2019:
· the respondent increased the rates payable under Annexure 1 of the Agreement by the equivalent of 2.2%;
· the claimant’s annual rate of pay prior to the increase was $63,584.48; and
· the claimant’s rate of pay increased to $64,983.34.
(k) For the purposes of applying clause 11.1 and Annexure 1.1 of the Agreement, the relevant indicia for the calculation of a wage increase with effect from 1 July 2019 were:
· the CPI for Perth in September 2018: 1.2%;
· the increase determined by the FWCEP: 3.0%; and
· Mercer: 2.2%.
(l) For the financial year commencing 1 July 2020, the claimant’s annual rate of pay was not varied.
Principles to be applied when interpreting an industrial instrument
11 The determination of this claim requires the Court to decide how the terms of the Agreement, in so far as they impose an obligation on the respondent to increase the claimant’s salary, are to be interpreted and applied.
12 The relevant principles for interpreting industrial instruments are wellestablished. They were recently summarised by a Full Court of the Federal Court of Australia in Target Australia Pty Ltd v Shop Distributive and Allied Employees’ Association [2023] FCAFC 66; 324 IR 304 per Bromberg J at [8]  [9].
13 Referring to WorkPac Pty Ltd v Skene (2018) 264 FCR 536 at [197]; his Honour Bromberg J set out these 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: City of Wanneroo v Holmes (1989) 30 IR 362 (Holmes) 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 Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 (Amcor) 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  379, citing George A Bond & Company 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 bend 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 Ltd (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).
14 Also relevant is the decision of the Full Bench of the Western Australian Industrial Relations Commission in Fedec v The Minister for Corrective Services [2017] WAIRC 00828, 97 WAIG 1595 at [21]  [23].
15 In summary (omitting citations), the Full Bench stated:
The general principles that apply to the construction of contracts and other instruments also apply to the construction of an industrial agreement:
(1) the primary duty of the court in construing an instrument is to endeavour to discover the intention of the parties as embodied in the words they have used in the instrument;
(2) it is the objectively ascertained intention of the parties, as it is expressed in the instrument, that matters; not the parties’ subjective intentions. The meaning of the terms of an instrument is to be determined by what a reasonable person would have understood the terms to mean;
(3) the objectively ascertained purpose and objective of the transaction that is the subject of a commercial instrument may be taken into account in construing that instrument. This may invite attention to the genesis of the transaction, its background and context;
(4) the apparent purpose or object of the relevant transaction can be inferred from the express and implied terms of the instrument, and from any admissible evidence of surrounding circumstances;
(5) an instrument should be construed so as to avoid it making commercial nonsense or giving rise to commercial inconvenience. However, it must be borne in mind that business common sense may be a topic on which minds may differ;
(6) an instrument should be construed as a whole. A construction that makes the various parts of an instrument harmonious is preferable. If possible, each part of an instrument should be construed, so as to have some operation; and
(7) industrial agreements are usually not drafted with careful attention to form by persons who are experienced in drafting documents that have legal effect.
Claimant’s Submissions
16 The claimant submitted the proper construction of clause 11.1 and Annexure 1 of the Agreement required the respondent to increase an employee’s rates of pay, from 1 July 2018 and 1 July 2019 by the highest of the following:
(a) 2%;
(b) Mercer;
(c) CPI; or
(d) the FWC Increase. Respondents first outline of submissions dated 23 September 2023 (respondent’s first outline), paragraph 19.

17 The claimant submitted clause 11.1 is not ambiguous and that it must be read and applied together with Annexure 1 of the Agreement. Claimant’s first outline of submissions dated 25 August 2022 (claimant’s first outline), paragraph 8.
The claimant said clause 11.1 provides a mechanism to determine the amount of wage rises for particular periods of time, and that the role of the respondent is to increase employees’ wages by the highest of the four variables that are referred to in the clause.
18 The claimant submitted that the purpose of Annexure 1 is to assist the respondent in applying these variables. The claimant said this is necessarily so because without Annexure 1, it would not be possible to determine the CPI figure to be used to increase wages under clause 11.1 of the Agreement. The claimant submitted Annexure 1 assists by indicating that where one of these variables is greater than the stipulated 2%, ‘the higher rate will be applied’.
19 The claimant submitted that as Annexure 1 guides, but does not supplant clause 11.1, and the clause contains three other variables, one of which includes the FWCEP which, in the present case, was above 2%; Mercer and CPI, it was incumbent upon the respondent to apply the FWCEP increase.
20 The claimant submitted the table of salaries and classifications in Annexure 1, when considered properly, adds to the claimant’s contention the clause is to be read as creating an entitlement to the highest of the three variables, so long as they are above 2%. The claimant said on its construction, 2% is a safety net and an agreed minimum. The claimant submitted a 2% minimum increase only applies where all three of the alternatives fall below 2%.
21 The claimant submitted clause 11.1 was not a ‘twostep’ process:
The process is not a two-step process to determine the increase (“either” this OR that), but a single exercise of obtaining the other three figures (which were unknown and unknowable, at the time of the approval of the Agreement) and selecting the one that is the highest. Claimant’s first outline, paragraph 14.

22 The claimant contended Annexure 1 does not operate to narrow the scope of clause 11.1; it is merely explanatory. The claimant said the purpose of Annexure 1 is to provide guidance on the CPI and Mercer rates that are to be used. The claimant submitted that the potential to apply the percentage increase determined by the FWC would be excluded if Annexure 1 is supplanted or is used to narrow the scope of clause 11.1.
23 In further support of the explanatory nature of Annexure 1 the claimant referred to the headings at the top of the table of salaries and classifications, which describes 2% as the ‘minimum’ wage rise. As the annual figures for CPI, Mercer and the FWCEP were not ascertainable in advance, the only example the table could show, by way of explanation at the time the agreement was approved, was the 2% increase.
24 The claimant submitted that the use of the term ‘minimum’, in this context further supports the contention the parties intended to apply a figure greater than 2% if the other mechanisms yielded a higher amount. In other words, the mechanism which yields the highest pay increase is to be applied.
25 The claimant submitted the reference in clause 11.1 to the ‘Percentage increase determined by the Fair Work Commission Expert Panel for annual wage reviews to the national minimum wage’ does not require any further explanation in Annexure 1. This is because (unlike CPI), the plain words of clause 11.1 are sufficient to enable that figure, published annually, to be determined. The claimant said the function of the reference to the FWCEP in this context was to specify a readily identifiable mechanism by which to agree a percentage increase.
26 The claimant submitted that the role of the respondent in applying the plain and unambiguous words of the Agreement is to identify if any of the four measures in clause 11.1 are greater than 2% and to pay the greatest of those rates.
27 The claimant submitted that even on the respondent’s construction, the Court would be required to insert punctuation, semi-colons and colons, where they do not appear in the original text, to reach the construction being advanced by the respondent.
28 Regarding context, the claimant submitted that one of the purposes of wage rises is to maintain real wage purchasing power and that it is reasonable to infer the Union representing the workers interests at the time of the negotiation, would have ensured a mechanism was in the Agreement to make sure real wage purchasing power was maintained or improved.
29 The claimant submitted that construing the Agreement in a manner which enables the respondent to divorce wage rises from the maintenance of real purchasing power would be an unreasonable imposition on the sensible industrial representation by the Union engaged in bargaining on behalf of workers and would be inconsistent with an understanding of the document ‘in the light of its industrial context and purpose’. Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10; 222 CLR 241 (Amcor) [2].

30 The claimant said that by interpreting clause 11.1 as conferring upon the employer a discretion on the rate it will choose, which discretion is not expressed in the plain words of the text of the Agreement, means that not all parts of the Agreement are being given force and effect and the respondent is being relieved of or can abrogate at its discretion, the task required by clause 11.1 and Annexure 1.
Respondent’s submissions - clause 11.1
31 The respondent submitted the proper construction of clause 11.1 of the Agreement allowed the respondent to increase the employees’ rates of pay from 1 July 2018 and 1 July 2019, either by:
(a) 2%; or
(b) the greater of:
(i) Mercer Market Movement;
(ii) CPI; or
(iii) the percentage increase determined by the [FWCEP] for annual wage reviews to the national minimum wage. Respondent’s first outline, paragraph 10.

32 The respondent contended this construction is based on the plain language of the text. The respondent submitted that by paying a 2% increase, it would be complying with clause 11.1 of the Agreement. The respondent argued this construction gives the clause a meaning which is based on and precisely reflects, the plain language of the text.
33 The respondent argued the claimant in his outline of submissions, makes two criticisms of the respondent’s construction of the Agreement.
34 First, the respondent submitted the claimant had asserted the respondent’s construction of clause 11.1 relies on the word ‘either’ being read into the sentence. The respondent said this submission from the claimant rests on a misunderstanding of the proper grammatical operation of the conjunction ‘either…or’.
35 The respondent submitted that in a sentence using a positive construction, the word ‘either’ can be omitted without affecting the meaning of the phrase – ‘pay based on X or Y’ means the same as ‘pay based on either X or Y’. It is only in a negative construction that the word ‘neither’ cannot be omitted without rendering the phrase incoherent – ‘they paid neither X nor Y’ is coherent but ‘they paid X nor Y’ is not. The respondent submitted the fact the word ‘either’ does not appear in clause 11.1 of the Agreement has no relevance to the proper construction or operation of the clause. Respondent’s first outline, paragraph 14.

36 Second, the respondent submitted the claimant asserts the respondent’s construction introduces ambiguity into clause 11.1 of the Agreement. The respondent said the claimant had premised this argument on the basis the respondent’s construction would give it a discretion to decide the pay increases employees would be entitled to receive on 1 July 2018 and 1 July 2019.
37 In response to this, the respondent submitted that it is not immediately apparent why an agreement granting the respondent a discretion to determine the percentage of a pay increase is demonstrative of ambiguity. The respondent submitted that enterprise agreements routinely entitle parties to exercise discretion in relation to their working conditions – to offer overtime, to accept overtime, to adopt flexible working practices – without any ambiguity being created.
38 The respondent submitted that the ‘discretion’ under clause 11.1 is carefully fettered. The respondent submitted that employees’ interests have been protected by the inclusion of a range of market and pricing indicators. As a result, and even on the respondent’s construction of the Agreement, employees are guaranteed to receive a pay increase either of 2% or the greatest of Mercer, CPI or the FWCEP.
39 The respondent submitted that the claimant’s submission that clause 11.1 is ambiguous is misconceived, and that any discretion granted to the respondent to determine the quantum of a wage increase is neither unusual nor inappropriate.
40 The respondent also submitted the claimant’s construction of clause 11.1 cannot arise from the way it is currently drafted because of the location of the word ‘or’ in the middle of the sentence.
41 In clause 11.1 of the Agreement, the disjunctive ‘or’ appears after one of the listed alternatives (‘2%’) and before the words ‘the greater of the following…’. The respondent submitted this sentence makes it clear that the two alternatives being proposed are (a) a 2% increase or (b) the greater of the alternatives listed after the words ‘the greater of the following…’.
42 The respondent submitted that to achieve the meaning contended by the claimant, it would be necessary to move the disjunctive ‘or’ from its current position earlier in the sentence to immediately after the word ‘CPI’. This, the respondent submitted, would be consistent with the grammatical convention that a list of possible alternatives is drafted with the disjunctive ‘or’ between the final two alternatives.
43 When drafted in this manner, a list of alternatives is understood to include the same disjunctive link (‘or’) between each of the other alternatives even though the word itself is omitted for reasons of ‘style and euphony’. Radakovic v RG Cram & Sons Pty Ltd [1975] 2 NSWLR 751 (Radakovic), at 763

44 The respondent submitted that to achieve the meaning contended by the claimant, the qualifying phrase ‘the greater of…’ would need to be located either before the list of alternatives in clause 11.1 or at the conclusion of them.
45 As it is, the qualifying phrase, ‘the greater of’, is included in the middle of the list and only logically applies to a subset of the alternatives (those which follow the words ‘the greater of…’). The respondent submitted that in these circumstances, there is no logical basis for the assertion that the phrase should be understood as applying to all the items in the list.
The Respondent’s submissions - Annexure 1
46 The respondent submitted Annexure 1 is drafted in a way which is ambiguous and, at times, contradictory to the drafting of clause 11.1. The respondent said the ambiguities and contradictions demonstrate that Annexure 1 does not provide helpful guidance on the proper construction of clause 11.1 and ought not be relied on as a guide to interpreting the body of the Agreement.
47 In relation to the claimant’s submissions about Annexure 1, its content, and its effect, the respondent accepts the manner in which pay increases are to be determined, is described differently in Annexure 1 than it is in clause 11.1.
48 The respondent submitted clause 11.1 (on the respondent’s construction) allows the respondent to decide between a 2% increase and the greatest of Mercer, CPI and the FWCEP, whereas Annexure 1 states ‘…where CPI or Mercer Market Movement information is greater than 2%, the higher rate will be applied.’
49 Additionally, the table on the second page of Annexure 1 refers to a ‘minimum 2%’ increase applying on ‘1 July 2018’ and ‘1 July 2019’. The respondent submitted these provisions in Annexure 1 cannot be reconciled with the plain language of clause 11.1.
50 The respondent submitted that in addition to this, Annexure 1 is replete with irregularities and ambiguities. To this end, the respondent contended:
a. Annexure 1 and clause 11.1 are inconsistent in that clause 11 refers to [Mercer], CPI and the [FWCEP], while Annexure 1 omits any reference to the [FWCEP]. There is no apparent rationale as to why the CPI and [Mercer] are referred to repeatedly in Annexure 1, but the [FWCEP] is not referenced at all.
b. Clause 11.1 references pay increases in July 2018 and July 2019. However, the references to [Mercer] in Annexure 1 all refer to rates applying from January 2018. Further confusing matters is the following statement in Annexure 1: “[f]or the purpose of comparing the Mercer Market Movement rate with the Perth CPI rate (to determine the appropriate annual increase rate), the year-ended percentage change for September figure shall be used.” It is unclear how this statement should be read in light of the rest of Annexure 1 and the text of clause 11.1.
c. Annexure 1 states “Mercer Market Movement –‘forecast’ and ‘actual’. The increase, shown in Annexure 1, is due from the 1st January 2018.” However, contrary to this provision, there is no [Mercer] increase of any kind shown in Annexure 1 of the Agreement and it is unclear what is being referenced in this sentence. Respondent’s first outline, paragraph 27.

51 The respondent submitted that Annexure 1 contains so many inconsistencies, that it cannot and should not be relied on in determining the proper construction of clause 11.1.
Respondent’s further submissions
52 In addition to the submissions I have already outlined, the respondent argued the following:
(a) The text of an enterprise agreement is to be objectively understood. The Court should not interpret agreements based on the ‘subjective beliefs or understanding of the parties about their rights and liabilities’. Transport Workers Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829; 318 ALR 54 (Linfox) [35].
The precontractual subjective beliefs and the post-contractual actions of the parties are not relevant to the construction process.
(b) It is not the Court’s role to address any perceived ‘unfairness’ in the agreement or seek to improve or to make a ‘better bargain’ than that contained in the Agreement. WorkPac Pty Ltd v Rossato [2021] HCA 23; 271 CLR 456 (Rossato) [63].
The Court must resist the temptation to substitute the bargain which the parties actually made with a bargain which the Court believes to be better.
(c) The Court is not permitted to adopt a ‘result orientated’ approach to the interpretation of industrial agreements. Amcor [70].
This is so regardless of whether it is a union or an employer before the Court seeking to secure a ‘better bargain’. On this, the respondent submitted the construction being advanced by the claimant should be rejected by the Court because it relies on a redrafting of the clause, based on subjective interpretation of the words in the Agreement and a desire that a better bargain had been struck between the parties.
(d) Neither party had suggested any absurdity would result from the respondent’s construction. The respondent said that where the words of an industrial agreement do not give rise to ambiguity or absurdity, the Court should apply the plain meaning of those words as they are set out in the clause.
53 Having outlined the parties’ respective submissions, I now turn my consideration of the arguments made and the application of the principles to be applied when interpreting an industrial agreement.
Consideration
54 By his submissions, the claimant says, on his construction that clause 11.1 means from 1 July 2018 and 1 July 2019, all employees’ wages will increase by either a minimum of 2% or by CPI, Mercer or the increase determined by the FWCEP, whichever is the greatest.
55 In relation to this construction, I accept that clause 11.1 could have been drafted more clearly. To give effect to this interpretation, it is obvious the inclusion of the words ‘whichever is greater’ as appeared in the City of Stirling Outside Workforce Agreement 2014 (2014 Agreement) [2014] FWCA 7552.
would have put this matter beyond doubt. See clause 11.1 of the 2014 Agreement.

56 Despite this, it is not readily apparent from the text that the absence of these words is the end of the matter.
Words without work to do
57 If the respondent’s construction is accepted, it is not clear from clause 11.1 as to what would prompt or trigger an obligation upon the respondent to pay a wage increase more than 2%, when or if, one or more of the figures for Mercer, CPI or FWCEP are greater than 2%.
58 In other words, if on the respondent’s construction, the respondent only has to pay a 2% increase to comply with the Agreement, there would be no need to include the other three measures of Mercer, CPI or FWCEP. Put simply, it is reasonable to conclude that if there was no obligation on the respondent to pay a wage increase higher than 2%, these terms would have no work to do.
59 The issue this raises is that clause 11.1 on its own, is ambiguous. As a result, it is necessary to have regard to both the context in which the clause appears within the Agreement and the industrial context in which it was negotiated.
Clause 11.1 must be read with Annexure 1
60 It is clear from the ordinary words used in clause 11.1, which is headed ‘Minimum rate of pay per annum’ that the Agreement relevantly requires that employees are paid in accordance with Annexure 1.
61 As I noted in the preceding paragraph 9, Annexure 1 contains a table of salaries and classifications for those employees who are covered by the Agreement. It necessarily follows that clause 11.1 must be read to together with Annexure 1 of the Agreement.
62 Upon reviewing the words used in Annexure 1 it appears the purpose of the second sentence in clause 11.1 is to provide some explanation as to how the pay rates in Annexure 1 are to be increased over the life of the Agreement. On this, the parties accept that clause 11.1 provides for three wage increases to be made over the life of the Agreement.
63 For the claimant, the first of these increases was a 1.5% wage rise from the Date of Operation of the Agreement. Agreement decision, paragraph 5.
That increase was made to the salary that applies to the claimant’s classification and salary band that appears in the table of salaries and classifications. The 1.5% increase when applied to the various classifications are then listed in the second column of the table of salaries and classifications.
64 It is not disputed that clause 11.1 provides for the payment of a further two wage increases of least 2%, from 1 July 2018 and from 1 July 2019. Even without the parties’ concession on this point, this conclusion is uncontroversial because the word minimum is used within the Agreement in three connected places:
(a) the heading of clause 11.1;
(b) the heading of Annexure 1; and
(c) at the top of the columns for the annual salaries that appear in the table of salaries and classifications, which specifies the salaries that are to apply from 1 July 2018 and from 1 July 2019. Each of the salaries listed in these columns have been increased by 2%.
Strict grammatical interpretation is not appropriate
65 I accept, as in Holmes, that this is very much a case where the terms of the Agreement lack the precision in drafting one would expect to find in an Act of Parliament. City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362 (Holmes), 379.

66 I make this observation because it is well established on the authorities that I have referred to at paragraphs 13 and 14 that while strict adherence to principles of grammatical construction might be appropriate when interpreting a statute, they are less critical when interpreting an industrial award or agreement.
67 Rather, it is more appropriate to utilise a purposive approach when interpreting industrial instruments than a narrow or pedantic approach. Kucks v CSR Ltd (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).
It is on this basis I cautiously considered the respondent’s submission that the terms of agreements are to be objectively construed on the ‘basic conventions of the English Language’. Respondent’s second outline of submissions dated 20 November 2023, paragraph 10 citing Holmes, 378.
Industrial instruments are not always drafted so succinctly.
68 I also do not regard the case in Radakovic v RG Cram & Sons Pty Ltd [1975] 2 NSWLR 751 (Radakovic), which the respondent referred to and relied upon in its submissions, was particularly helpful in deciding the present case.
69 Radakovic involved the construction of a statute, rather than the interpretation of an industrial instrument. In the circumstances, it is of limited relevance to, and is distinguishable from, the circumstances at issue in the present case.
70 Despite this, and while the respondent’s strict grammatical analysis may be correct, the difficulty with the respondent’s construction (that the text of clause 11.1 only required the respondent to pay a 2% increase to comply with the Agreement), is that it would lead the references to Mercer, CPI and FWCEP in clause 11.1 of the Agreement devoid of a purpose.
71 A construction of Clause 11.1 where particular terms are left without a purpose should be avoided. Rather a construction that results in each part of an instrument, having some operation or work to do is preferrable. Fedec v The Minister for Corrective Services [2017] WAIRC 00828, 97 WAIG 1595 (Fedec) at [22].

Construction consistent with Annexure 1
72 I have already observed that clause 11.1 should be read together with Annexure 1. A construction of clause 11.1 that required the respondent to pay a wage increase of 2% or the highest of (greater of) Mercer, CPI or FWCEP is not inconsistent with, and can be reconciled with Annexure 1 of the Agreement.
73 Two parts of Annexure 1 support this view. The first, and as I have already noted, is that the increases from 1 July 2018 and from 1 July 2019 in the table of salaries and classifications, are described at the top of the respective columns in which they appear as a minimum of 2% per annum.
74 The second is with the sentence:
Only in year two or three, where CPI or Mercer Market Movement Information is greater than 2%, the higher rate will be applied.
75 In the same way all the terms in the Agreement should be construed to have some work to do, the words ‘higher rate will be applied’ must have some purpose too.
76 I do not accept the respondent’s submission that when interpreting the Agreement, Annexure 1 cannot and should not be relied on in determining the proper construction of clause 11.1.
77 As indicated, a construction that makes all parts of an instrument harmonious is preferable. Fedec at [22].
If the claimant’s construction is preferred, in the context of the Agreement as whole, the words ‘higher rate’ take on the meaning of an increase that is both more than 2% and the highest of the three potential choices.
78 That said, Annexure 1 does contain a pre-condition (or a qualification) in that one of CPI or Mercer, must be more than 2% before the ‘higher rate’, which could include an increase from the FWCEP that exceeds CPI or Mercer, will be applied. This is a point to which I will return.
Terms of the Agreement relevant to context
79 An important part of the context in which the Agreement must be construed, is the fact the Agreement only has a two-year term. On this, the parties do not dispute the Agreement was made to replace the 2014 Agreement which expired on 30 June 2017. Clause 3 of the Agreement relevantly provides:
The nominal expiry date of this Agreement shall be 30 June 2020. However, this Agreement shall continue to operate beyond the nominal expiry date and apply to employees beyond the nominal expiry date until a replacement enterprise agreement is made or this Agreement is terminated in accordance with the Fair Work Act 2009.
80 While there was no evidence before me as to when the parties commenced their negotiations for an enterprise agreement to replace the 2014 Agreement, it is reasonable to infer that it took them almost 18 months to finalise a replacement instrument. This much is clear from the dates on which the respective parties signed the Agreement. It is also clear from the date on which the FWC approved the Agreement.
81 The delay in the parties securing a replacement agreement is important contextually because at the time the parties signed the Agreement in June 2018, the employees who were covered by it, would not have had a wage increase since 1 July 2016, a year prior to the nominal expiry date of the 2014 Agreement.
82 Although the Agreement was drafted as though it had a three-year term, with increases that applied in each year of the Agreement and was described in the title as ‘the 2017 Agreement’, the Agreement did not take effect until it was approved by the FWC on 16 November 2018. Agreement decision, paragraph 5.

83 The approval of the Agreement in November 2018 not only resulted in the Agreement having an actual two-year term, but it also meant that two of the wage increases under the Agreement had to be applied with retrospective effect.
84 In this industrial context, it is reasonable to conclude that Annexure 1 has a functional or even explanatory purpose, in the way the claimant submitted it does. It seems reasonable to conclude that when Annexure 1 was agreed, there was a need to explain how the increases in clause 11.1 were to be applied both retrospectively and prospectively after the Agreement was approved by the FWC.
85 This construction of Annexure 1 also gives meaning to the words ‘year two and year three’ of the Agreement, which are logically, the dates the second and third wage increases respectively commence; 1 July 2018 and 1 July 2019.
Industrial context
86 During the hearing, the respondent helpfully tendered in evidence a series of exhibits regarding CPI both in Perth and nationally at the time the Agreement was negotiated. These documents were admitted into evidence and marked as Exhibits R1, R2, and R3.
87 I accept the respondent’s submissions as to what the parties would have likely known about CPI at the time they made the Agreement, is relevant to the industrial context in which the Agreement was negotiated and how it must be interpreted. I also accept the Agreement was negotiated in an entirely different industrial context to the one the parties are facing now.
88 On this, Exhibit R1, which shows CPI nationally, for ‘All Groups CPI, Australia’ at the time the parties were negotiating the Agreement, was sitting roughly at or just below 2%. However, there are two other important parts of the industrial context at the time the parties negotiated the Agreement that are also relevant.
89 First, the parties would have likely known about the percentage increases by which the FWCEP had increased wages in 2017 and 2018. Second, the parties would have been mindful the employees who would be covered by the Agreement had not had a wage increase since July 2016.
90 While the quantum of the increases the FWCEP determined were referred to in the Statement of Agreed Facts, they are also contained in reported decisions from the FWC, that I am permitted to have regard to.
91 In the lead up to the parties signing the Agreement, the FWCEP had, in the 2016  2017 financial year increased minimum wages by 3.3 %. Annual Wage Review 201617 [2017] FWCFB 3501.
For the 2017  2018 financial year (the year the Agreement was concluded), the FWCEP increase was 3.5%. Annual Wage Review 201718 [2018] FWCFB 3500.

92 Knowing that CPI was sitting at or just below 2%, Mercer was 2.2% and a decision from the FWCEP for the second year running had just issued at a rate higher than 2%, it seems likely that reasonable persons in the positions of the parties at the time the Agreement was being negotiated (which was prior to the wage increase to apply from 1 July 2018 coming into effect) would have been aware the FWCEP increase was the highest of the three figures.
93 While the parties may have regarded the 2017  2018 FWCEP increase of 3.5% as an outlier and they may have expected the percentage figures for CPI, Mercer and the FWCEP to land on 2% or close to that figure, it is likely the parties would have known prior to signing the Agreement there was the potential for the FWCEP to be higher than 2% prior to the date the next increase was due; on 1 July 2019.
Construction consistent with the industrial context
94 In the industrial context described, it is reasonable to conclude the parties would have agreed to a wage increase of either 2% as a minimum or the highest of Mercer, CPI or FWCEP, whichever was the greater and that the words ‘higher rate’ that I have extracted from Annexure 1, support this construction.
95 In this industrial context it seems so obvious that it goes without saying the parties would have agreed to the highest of a 2% increase, CPI, Mercer or the rise recommended by the FWCEP. There is no apparent reason why measures other than a 2% minimum increase would have been included if, for the purposes of complying with the Agreement, the respondent only had to pay a 2% increase.
96 It also makes no commercial sense the parties would, despite the difference in industrial context, have agreed to the inclusion of Mercer, CPI or FWCEP as a basis for a wage increase but then, by giving the employer a choice to only pay a 2% increase, have no real need to include those measures in clause 11.1 and Annexure 1.1 of the Agreement.
97 However, in this industrial context it is still open to find that reasonable persons in the position of the parties who negotiated the Agreement, agreed the ‘higher rate’ (which includes the FWCEP increase), would be subject to the qualification that is in Annexure 1 that I referred to in paragraph 78 above.
98 That is, the employer’s obligation to pay more than 2% would only be enlivened for the increases from 1 July 2018 or 1 July 2019 where CPI or Mercer was greater than 2%.
99 On this construction, the words: ‘Only in year two or three, where CPI or Mercer Market Movement Information is greater than 2%, the higher rate will be applied’ that appear in Annexure 1 are given work to do. The inclusion of this qualification is supported by and does not sit at odds with an industrial context where, although a 2% wage rise was agreed as a minimum, payment of a higher rate would be subject to these additional objective criteria being met.
100 Consistent with the authorities, this is a construction that should be preferred because it allows for clause 11.1 to be construed harmoniously together with all the words in Annexure 1 so that both provisions have purpose within the Agreement.
Consideration – Respondent’s other submissions
101 I accept the respondent’s submission that I should not have regard to the two 2.2% increases the respondent paid from both 1 July 2018 and 1 July 2019 as a basis to interpret the agreement. Transcript, 4 December 2023, page 7.

102 Evidence of the payment of these increases would not be relevant as an aid to construction as it post-dates the making of the Agreement and so is unhelpful in establishing the industrial context in which it should be understood. Rossato.
In any event there was no evidence as to why this quantum was paid.
103 I also accept the respondent’s submission that an industrial agreement should not be interpreted by reference to the subjective beliefs of the parties and that the Court’s role when interpreting industrial instruments, is not about addressing any perceived unfairness or to improve the bargain one party reached to the detriment of the other. Linfox [35].

104 However, it does not automatically follow that just because the respondent would, if the claimant’s construction is accepted, be at risk of a civil penalty, that these principles would be offended. Transcript, 4 December 2023, page 25.

105 In following the relevant authorities on the interpretation of industrial instruments, I am required to have regard to whether a construction of the Agreement that is based on a strict or a narrow interpretation of the industrial agreement, would contribute to a sensible industrial outcome that may be attributed to the parties who negotiated and executed the Agreement.
106 As Kirby J observed in Amcor:
The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court, of interpreting industrial instruments and especially certified agreements. I agree with the following passage in the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed:
It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.
(original emphasis) (footnotes omitted) Amcor [96].

107 Accordingly, I do not accept that ‘a reasonable person in the position of the parties’ in this case would have knowingly agreed to a mechanism in an enterprise agreement to increase wages that in effect left a decision to raise wages, whether by a minimum of 2% or to a higher amount, being CPI, Mercer or the amount determined by the FWCEP, to the employer. Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165, [40].

108 One of the self-evident purposes of the Agreement was to increase employee wages. Having regard to the industrial context that I have described in these reasons, it is reasonable to conclude the claimant’s construction of both clause 11.1 when read together with Annexure 1 required the respondent to pay the claimant the higher amount. In the present case this was the FWCEP increase.
109 I have had regard to the respondent’s submission that its exposure to a civil penalty, which would follow if I accept the claimant’s construction, is an injustice I should strain to avoid. Transcript, 4 December 2023, page 29.

110 While I have already noted clause 11.1 could have been drafted better so the obligation to pay the higher increase was cast in more precise terms, this is a matter where the comments of French J in Holmes at 380 regarding the application of the principles of construction to the terms of a badly drafted industrial award are apposite:
This fractured and illogical prose may be met by a generous and liberal approach to interpretation. That does not put it beyond criticism. Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties. While that fact has been seen as supporting a rule of strict construction — Cranford-Webster v McFarlane (1947) SASR 162 at 166 (Mayo J) — it must not be forgotten that proceedings for breach of an award are not criminal in character — Gapes v Commercial Bank of Australia (1979) 38 FLR 415 disapproving Vehicle Builders’ Employees Federation of Australia v General Motors-Holdens Pty Ltd (1977) 32 FLR 100. Accepting the serious and binding nature of industrial awards, a strict approach is not in my opinion appropriate and would be inconsistent with the general principles of interpretation to which I have already referred.
Conclusion
111 For all of the reasons outlined in the preceding paragraphs, I have concluded the claimant has established on the balance of probabilities that the respondent has breached clause 11.1 of the Agreement. I therefore find the claim has been proved.
112 Having reached this decision, I intend to hear from the parties on the relief that should issue and what if any other orders should follow.


T. KUCERA
INDUSTRIAL MAGISTRATE



Schedule A - Table of Salaries and Classifications
Level
Step
Current Salary
1 January 2018
1.5%
1 July 2018
(minimum 2%)
1 July 2019
(minimum 2%)
1
1
$42,414.85
$43,051.07
$43,912.09
$44,790.34
2
$44,467.18
$45,134.19
$46,036.87
$46,957.61
3
$46,519.51
$47,217.30
$48,161.65
$49,124.88
2
1
$47,545.68
$48,258.87
$49,224.04
$50,208.52
2
$49,187.55
$49,925.36
$50,923.87
$51,942.35
3
$50,829.40
$51,591.84
$52,623.68
$53,676.15
3
1
$51,855.57
$52,633.40
$53,686.07
$54,759.79
2
$53,189.59
$53,987.43
$55,067.18
$56,168.53
3
$54,523.60
$55,341.45
$56,448.28
$57,577.25
4
1
$55,549.76
$56,383.00
$57,510.67
$58,660.88
2
$56,575.94
$57,424.58
$58,573.07
$59,744.53
3
$57,602.10
$58,466.13
$59,635.45
$60,828.16
5
1
$58,628.27
$59,507.69
$60,697.85
$61,911.80
2
$59,962.27
$60,861.70
$62,078.94
$63,320.52
3
$61,296.29
$62,215.73
$63,460.05
$64,729.25
6
1
$62,322.47
$63,257.30
$64,522.45
$65,812.90
2
$63,964.33
$64,923.79
$66,222.27
$67,546.72
3
$65,606.19
$66,590.28
$67,922.09
$69,280.53
7
1
$66,632.35
$67,631.84
$68,984.47
$70,364.16
2
$68,684.69
$69,714.96
$71,109.26
$72,531.44
3
$70,737.01
$71,798.07
$73,234.03
$74,698.71