Industrial Relations Commission of New South Wales CITATION: Notification under section 130 by the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch, of a dispute with the National Roads & Motorists Association Limited re: Alleged Award Breaches [2005] NSWIRComm 1071 APPLICANT Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union NSW Branch PARTIES: RESPONDENT National Roads & Motorists Association Limited FILE NUMBER(S): 5527 of 2003 CORAM: Tabbaa C CATCHWORDS: S.130 - S.175 Interpretation - Extrinsic Evidence - Condonation only applicable to Unfair Dismissals - Custom and Practice Industrial Relations Act 1996 Metals Engineering and Associated Industries (State) Award LEGISLATION CITED: National Roads and Motorists' Association Limited Patrol Officers' Enterprise Agreement 2001 Bryce & Anor v. Apperley (1998) 82 IR 448 Codelfa Construction Pty. Ltd. v. State Rail Authority (NSW) (1982) 149 CLR 377 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch v BHP Steel Long Products, The Australian Workers Union v BHP Steel Long Products (2000) NSWIRC 164. Crown Employee3s Overtime Award (1968 AR 60) Merchant Service Guild of Australia v Sydney Steam Colliery Owners and Coal Stevedores Association and ors. (1958) 1 FLR 248 Saraswati v. The Queen (1991) 172 CLR 1 Cooper Brookes (Wollongong) P/L v. Commissioner of Taxation (1981) CLR 297 Australian Worker Union, NSW branch v. Zoological Parks Board of NSW (2003) NSWIRComm. 49 Burge v BHP Steel P/L (2001) 105 IR 81 Australian Transport Officers Association v Department of Motor Transport (1988) 25 IR 235 CASES CITED: Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union and ors. v Qantas Airways Limited (2001) 106 IR 307 Kingmill Aust. P/L t/as Thrifty Car Rental v Federated Clerks' Union of Australia, NSW branch [2001] NSWIRComm. 141 Seamen's Union of Australia v Adelaide Steamship Co. Ltd. (1976) 46 FLR 444 Printing and Kindred Industries Union & Anor. v. Davies Bros. Ltd. (1986) 18 IR 444 Re Hospital Employees' Conditions of Employment (State) Award (1999) 96 IR 245 Australian Workers' Union, New South Wales branch, and Zoological Parks Board of New South Wales ([2003] NSWIRComm 49 Zoological Parks Board of New South Wales and The Australian Workers' Union, New South Wales ([2004] NSWIRComm 85 The Australian Workers' Union, New South Wales v. New South Wales Technical and Further Education ([2001] NSWIRComm. 25 New South Wales Fire Brigade Employees Union and New South Wales Brigades ([2003] NSWIRComm 55 City of Wanneroo v. Holmes ((1989) 30 IR 362 at 378 In re Industrial Agreement - Newcastle County Council & FEDFA (1970) AR 218 HEARING DATES: 03/24/2004 DATE OF JUDGMENT: 08/10/2005 APPLICANT Mr A Neilson Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union, NSW Branch LEGAL REPRESENTATIVES: RESPONDENT Mr J Catanzariti Clayton Utz Lawyers DECISION: - 30 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: Commissioner Tabbaa 10 August, 2005 Matter No IRC 5527 of 2003 Notification under section 130 by the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch, of a dispute with the National Roads & Motorists Association Limited re: Alleged Award Breaches DECISION [2005] NSWIRComm 1071 1 The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (the AMWU), on 03 October, 2003, notified a dispute between members of its union and the National Roads and Motorists' Association Limited (the NRMA). 2 The dispute related to the conflicting interpretation of the parties of the provisions of Item 6 of the Wage Disparity Clause in the National Roads and Motorists Association Limited Patrol Officers Enterprise Agreement 2001 registered by the Industrial Relations Commission of NSW on 14 November, 2001 (the Agreement) relating to rounding up of the wages to the nearest dollar. 3 The total wage for a Patrol Officer in the Agreement was made up of several allowances, namely, a base rate, an over-award payment, tool allowance, and an industry allowance plus a loading factor of 25 per cent. 4 The Agreement provided for the Tool Allowance to be varied in accordance with movements to the Tool Allowance in the relevant underpinning Award. 5 It was agreed that the relevant underpinning award was the Metals, Engineering and Associated Industries (State) Award (the Award). 6 The Award is varied on 21 August of each year to reflect the decision of the Full Bench of the Commission in the State Wage Case of the corresponding year. 7 An adjustment was made to the Agreement Tool Allowance in September 2002 to flow on two Award variations to the Tool Allowance resulting from the State Wage Case decisions of 2001 and 2002. In both adjustments, the NRMA had rounded up the total wage to the nearest dollar. 8 A third variation was made to the Award during the life of the Agreement. The variation, made on 21 August 2003, included an increase of 3.2% in the tool allowance (or 40 cents per week) taking it from $11.20 to $11.60 per week. 9 It became apparent that the parties held conflicting views as to the rounding up issue when an adjustment was required to be made to the Tool Allowance in the Agreement as a consequence of the increase in the Tool Allowance in the underpinning Award. The Union submitted that the Agreement provided for the total wage to be rounded up to the nearest dollar as a consequence of the movement in its tool allowance component. 10 Although the NRMA had flowed on the third increase to the Tool Allowance, the parties were in dispute as to the rounding up of the total wage where, as a result of the increase, those wages were not expressed as whole dollar amounts. 11 The Union maintained that the Agreement required the NRMA to round up Patrol Officers' wages to the nearest dollar when either the Agreement or the Award afforded an increase. The Union particularly relied on point (6) of the Wages Disparity clause as reflecting the NRMA's concern in relation to varying wage levels. It was pointed out by the Union that the NRMA had applied the rounding up policy since the Agreement was approved and, relevantly, applied it in relation to the tool allowance increases resulting from previous State Wage Case decisions. 12 The NRMA submitted that, on a proper interpretation of the relevant provisions of the Agreement, it was not required to round up the total wage. 13 The Union sought a determination from the Commission, pursuant to Section 175 of the Industrial Relations Act 1996 (the Act), that the Enterprise Agreement required the rounding up of salaries to the nearest whole dollar where: * A flat wage increase was afforded in terms consistent with the Agreement; and * An increase was afforded to allowances, including but not limited to tool allowances, after a variation to the relevant underpinning award. 14 Several conferences were unable to settle the matter by conciliation. It was listed for hearing at which time Mr. A. Neilson entered an appearance on behalf of the AMWU and Mr. J. Darams, Solicitor, entered an appearance on behalf of the NRMA. EVIDENCE OF THE UNION 15 Mr. Geoffrey Cohen, NRMA Roadside Assistance Patrol Officer for approximately 20 years, tendered a principal statement in the proceedings and Statement in Reply. He stated that he was elected as one of the NRMA Patrol Representatives, a group representing approximately 420 Patrol Officers, in 1989 and as an elected convenor of that group since 2000. 16 In that role, he was required to liaise with both the Union and the NRMA and to participate in negotiation of the enterprise agreements. In particular, he had been heavily involved in the negotiations that resulted in the 2001 Agreement. 17 The negotiations were undertaken in three stages. Round one commenced on or about March 2000. Round three commenced in April 2001 and concluded on 12 July, 2001. There was mass meeting acceptance of the Agreement on 25 and 26 July, 2001. The Agreement was certified on 14 November, 2001 and took effect in or around April 2001. 18 The Agreement made provision for a tool allowance that was to be adjusted to reflect movements in the underpinning Award. 19 He recalled that Ms Hagerty, previously employed by the NRMA as Senior Human Resources Consultant, had been present, had been an active participant and played an influential role in the negotiations, especially on the issue of round up. She had been in attendance at various consultative committee meetings when tool allowance increases, flowing from State Wage Case increases, were discussed and referred to her for action and resolution. Her involvement in the process and her familiarity with, and application of, its intent to all wage increases and allowances was reflected in her correspondence. 20 He was also aware that Ms Carolyn O'Brien, previously employed by the NRMA as Human Resources Consultant, had assisted Mr. Ashton in the application of the rounding up of wages. 21 Two wage increases had thus far been applied to the Agreement rates of pay. In that time, two tool allowance increases had been granted and one was pending. The total wage had been rounded up as a result of the increases flowed on to the tool allowance. 22 The minutes of the Enterprise Agreement negotiation meeting held on 07 June, 2001 confirmed that it was the NRMA that had included the issue of rounding up on the agenda in order to address two issues: * The disparity between wages; and * Simplification of the payroll system. 23 Mr. Cohen agreed, during cross-examination, that the Minutes of the meeting held on 07 June, 2001 indicated that Ms Hagerty was not present when the principle of rounding up was first discussed. 24 The Minutes, accepted on 12 June, 2001, indicated that, apart from the top salary, other salaries would be "rounded to nearest dollar up". 25 Mr. Cohen conceded, during cross-examination, that the only evidence he had in respect of Ms Hagerty's involvement in the wage disparity issue was her attendance at the meeting of 12 June, 2001. 26 Minutes of the Enterprise Agreement negotiations meeting held on 12 June, 2001 indicated that the issue of wage disparity had been discussed. It was noted that the capping level was to be negotiated prior to future pay increases. 27 The issue was discussed at other such meetings, including the meeting on 18 June, 2001 at which was tabled the Patrol Officers wages and set the lowest range of wage rates at $787.93 per week to $1154.66 per week. The document demonstrated that the application of a 5% wage increase resulted in an increase of $47.80 that would be rounded up to $48.00. 28 Mr. Cohen agreed that, setting aside any wage increase at the commencement of the Enterprise Agreement, the agreement between the parties meant that Patrol Officers earning, say, $1011.34 and $1011.70 per week were immediately rounded up to $1012 per week from November 2001. 29 A memorandum, dated 19 July, 2001 and issued to Patrol Officers jointly by the NRMA and by himself as convenor of the Group was designed as an update on the negotiations relating to the Enterprise Agreement. That memorandum noted the adjustments that had been made to the draft Enterprise Agreement document at the meeting on 12 July, 2001. Those adjustments, upon examination, appeared to reflect, with minor amendments, the ultimate agreement arrived at between the parties. 30 One of those adjustments related to the issue of wages disparity. The document went on to list the six issues as to how wages disparity had been addressed in the agreement, including, 1. Flat dollar wage increase....... 6. All other salaries will be rounded up to the nearest dollars - some ranging from 1 cent to 99 cents. That agreement had been endorsed at the mass meetings and included in total as part of the Agreement. 31 Mr. Cohen pointed out that the General Manager, Human Resources of the NRMA, Ms. Cathy Doyle, had addressed mass meetings of Patrol Officers convened by the Union and the Patrol representatives on 25 and 26 July, 2001. She had requested that opportunity in order to present the company's views on, principally, the wage disparity issue. The Minutes of that extraordinary meeting noted the following as being the NRMA's position on that issue: * Unhappy with large pay variations between some patrols doing the same job, * No ability for new patrols to catch up on wages, * Problem was merit/performance payment over last 7 - 8 years and may take equally as long to fix. * NRMA looked at "ranging" to set guidelines for patrol wages (higher or lower). 32 Mr. Cohen stated that he understood her comments to mean, and include, the rounding up of wages. 33 He emphasised that the principle of "one-off" had neither been settled, nor mentioned, nor inferred at any time. In his view, the intent was to round up all salaries following every increase during the life of that Agreement. 34 Mr. Cohen insisted, during cross-examination that the increases entailed the application of all the principles agreed in the Wages Disparity clause, that is, both Item (1) and Item (6) above were to apply to each of the increases. For example, the 4% would be applied as a flat amount and then the total wage would be rounded up to the nearest dollar. 35 The calculations used to arrive at the total wage payable upon the approval of the Agreement were tendered. The remuneration increases were derived by calculating the total wage of all Patrol Officers divided by the number of Patrol Officers. The resultant figure was then rounded up to the nearest whole dollar. However, as a number of new Patrol Officers had been engaged during the negotiations, agreement was reached that the total average wage would be $950. The 5% first stage increase, according to his calculations equated to a rise of $47.50 which was rounded up to $48 and applied after the commencement of the Agreement. 36 He pointed out that the rounding up principle was only one aspect of the attempts to address the wage disparity issue during the life of the agreement. The 2001 Agreement provided a further 4% increase to wages in its second year. Ms. Hagerty wrote to Mr. Cohen on the 08 July, 2002 indicating that the increase of $39.20 would be rounded up to $40.00. 37 In anticipation of the State Wage Case decision being flowed on to the Award from the first pay period on or after 21 August, 2002, Mr. Cohen wrote to Ms Hagerty on 08 August, 2002 regarding movement in a number of allowances, including an increase from $10.50 to $10.80 in the tool allowance. 38 In that correspondence, Mr. Cohen had reminded the NRMA to "use round up principle as per Patrols Enterprise Agreement" in accordance with his understanding of the Agreement. 39 That was followed by further correspondence from Mr. Cohen to Ms Hagerty, dated 27 August, 2002, setting out the calculation of the Telephone Allowance, confirming that adjustment had been made to the Meal Allowance and seeking a response in relation to the Tool Allowance adjustment that had not yet been flowed on by the NRMA. 40 Mr. Cohen forwarded yet another letter on 31 August, 2002 in relation to the Tool allowance. 41 On 29 September, 2002 the Union sent a facsimile to Ms. Maree Callaghan, Chairperson of the NRMA Board, principally about averting strike action and resolving the impasse which existed at the time over a wider dispute relating to a whole host of issues, including the termination of the employment of three patrol officers and payment of allowances. Item 4 on the agenda proposed by the Union was the issue of "Allowances". 42 Mr. Cohen accepted, during cross-examination, that, as at August 2002, the NRMA had neither flowed on tool allowance increases nor rounded up the tool allowances. 43 Industrial action was undertaken on 30 September, 2002. 44 The successful outcome of the discussions with the NRMA was reported in Issue No. 1 of "AMWU Newsflash". In relation to the Tool Allowance, it had been reported that the "NRMA will now adjust the tool allowance to reflect 2 Award variations. An offer on back pay will be addressed at the mass meetings". 45 Mr. Cohen accepted, during cross-examination, that industrial action had been taken and that the bulletin had gone on to add that the NRMA, previously where it had not done it, would adjust the Tool Allowances to reflect the award increases. 46 The NRMA had not passed on the increases to the tool allowance effective in 2001 and 2002 for a period of time. Finally, on 08 October, 2002, correspondence was forwarded from Ms O'Brien to Mr. Cohen confirming that the NRMA had adjusted the tool allowance as from 25 July, 2002 to flow-on the two State Wage Case increases to the Award. In addition, the NRMA had increased the Patrol Officers salaries by $1 to reflect the rounding up of the 30-cent increase. 47 In anticipation of the Award variation effective from 21 August, 2003 to flow on the benefits from the 2003 State Wage Case, Mr. Cohen personally handed to Mr. Vince Surra, Manager Industrial Relations/Employee Relations, and Ms. Hegarty correspondence dated 18 August, 2003 reminding of its resultant effect on their Agreement. 48 As Patrol Officers commenced inquiring as to why the relevant allowances had not been flowed on, Mr. Cohen wrote to Mr. Garry Campbell, Acting Fields Operations Manager, on 15 September, 2003 advising of what adjustments had to be made urgently and the effective date. The Tool Allowance had increased from $11.20 to $11.60 from the first pay period commencing on or after 21 August, 2003. He had emphasised that the "NRMA should use round up principle as per NRMA Patrol Officers Enterprise Agreement 2001". 49 A dispute notification was filed by the Union on 03 October, 2003 following the NRMA's repeated failure to respond to requests for the rounding up of the tool allowance as a result of the third variation to the award made on 21 August, 2003. The parties met in accordance with the Recommendation of Tabbaa C. but were unable to resolve the issue. The NRMA wrote to the Union through its Solicitors advising that it would not be applying the rounding up principle to the Patrol Officers wages. EVIDENCE OF THE NRMA 50 Mr. Wayne Ashton, tendered an affidavit in the proceedings in which he stated that he had commenced his employment as Patrol Officer on 02 December, 1985, was promoted to Patrol Team Manager in August 1998 and then to his current position of District Manager in September 2003. 51 Mr. Ashton stated that he had been part of the management team that had participated in the negotiations with the Union for the Agreement. Other members of the management team were Cathy Doyle (then General Manager - Human Resources), Peter Steele (then Chief Operating Officer) and Don Ballard (Patrol Team Manager). The union negotiating team included the following Patrol Officers - Geoff Cohen, John Street, Damien Anderson, Paul Dilley and Angelo Galettis. 52 Mr. Ashton stated that a combination of practices had resulted in a disparity between the wages paid to Patrol Officers who were at the same level and undertaking the same tasks. Performance based pay reviews, introduced in the early 1990s and continued for approximately seven (7) years, combined with a system of increased remuneration for performance of additional duties (eg undertaking vehicle inspections) had contributed to the disparity. The NRMA had in excess of 387 different wage levels applying to approximately 446 Patrol Officers at the time those negotiations commenced in or about March 2000. Some wage levels differed in cents only. It was agreed by the parties that it was for that reason that the NRMA wanted to address that discrepancy in those negotiations. 53 Mr. Ashton pointed out that the management team involved in discussions on the rounding up process had comprised himself, Cathy Doyle (General Manager-Human Resources), Peter Steel and Dan Bollard. He recalled that the management team had caucused outside the meeting room at the Grace Hotel where negotiations were being held with the employees' negotiating party. They had discussed the problem of the numerous and varying wage levels. He further recalled Cathy Doyle making a statement to the effect that she had an idea as to how to fix that problem. Her idea was to round up the wages to the nearest dollar to reduce the number of levels of wages. They had discussed that idea but the ultimate decision to adopt it rested with Cathy Doyle. 54 Neither Ms. Janire Hagerty nor Ms. Carolyn O'Brien had been involved in the above negotiations as part of the negotiating team. Ms Hagerty had attended some meetings and was given a quick brief on where the negotiations were at whenever she attended. She had not always been consulted about the negotiations. Ms Hagerty had not addressed patrol team mass meetings but she had written to the patrol officers about various parts of the Agreement. After the Agreement had been signed off on, she merely forwarded on the information to the patrol officers about the wage increases. 55 Mr. Ashton stated that the NRMA intended the rounding up to apply as a once-off exercise to the wage increase on the commencement of the Agreement. Twelve months later, there would be a $40 increase and so on. There had not been any negotiations regarding a continuation of the rounding up of wages post the making of the agreement in relation to allowances. 56 He submitted that the management team had been aware of the nature of that payment. He conceded, however, that neither Ms Hagerty nor Mr. Cohen had been specifically advised that the round up was a once-off exercise. 57 Whilst the Agreement reached between the parties did not remove all of the discrepancies between the wages, the rounding up to the next whole dollar had the effect of consolidating a number of different wage groups at a similar level of salary and thus decreasing the number of pay levels. 58 The agreement reached to address the disparity in the wages involved the adoption of a combination of the following: (1) A once off rounding up of all the Patrol Officers' salaries to the nearest whole dollar at the commencement of the agreement. (2) Whole dollar increases in the remuneration throughout the life of the agreement based on the average salary of the Patrol Officers as a group. That is, for example, with the first pay rise, an increase of $48.00 per week based on the average of the Patrol Officers' wage at the commencement of the Agreement and a further increase of $40.00 per week in 2002. (3) Introduction of a cap on the maximum wage paid to Patrol Officers. For the pay year 2001, the cap was set up at $1,175 per week. Any part of the $48.00 per week increase for the Patrol officers which would have taken that top rate over the sum of the amount of $1,175 was paid as an up-front lump sum payment to the Patrol Officer. The maximum wage for the subsequent year was determined between the parties and based in part on the then CPI levels. (4) Introduction of an $11.00 once off payment for new Patrol Officers once they had served a qualifying period of 6 months. 59 He agreed that the NRMA's intention had not been properly reflected in the agreement. In fact, the Agreement neither confirmed nor refuted the intentions expressed by either of the parties. 60 Mr. Ashton confirmed that the agreement had afforded two increases. He further agreed that the tool allowance had been rounded up on the first two occasions. He had not had any involvement in the flow on of the two tool allowance increases. That was a human resources function and it appeared that the Human Resources Department had interpreted the Agreement along the lines suggested by the Union. When the last payment was drawn to his attention, he had made his recollection known. 61 He agreed that the patrol officers had interpreted the agreement as providing for the rounding-up to apply permanently over the life of the agreement. That belief had been expressed to the NRMA on several occasions recently. Despite the patrol officers having that expectation, he did not believe that it was right to pay $3 for a $1.10 increase. SUBMISSIONS 62 The bases upon which the Union relied was threefold. Firstly, the Patrol Officers had a reasonable expectation of the payment being continued to be made. Secondly, the NRMA had made the payment for two out of three years and, thirdly, the conduct of the parties. 63 The Union submitted that whenever an increase occurred in any component of the wage (for example, the tool allowance), then there ought to be a corresponding increase to the total or shop wage. 64 It was pointed out that the Agreement was between the Union and the NRMA, not with Mr. Ashton. Since the approval of the Agreement in November 2001, the Award tool allowance had increased three times as a result of State Wage Case increases. On two of those occasions, persons responsible for authorising payments, instructed by staff of the Human Resources Department of the NRMA, had flowed on those increases to the Agreement rate and then rounded up the total wages as a consequence during the full nominal term of the said agreement. The tool allowance had increased twice since the Agreement was approved in the Commission in November 2001. The NRMA had not taken any issue with the Union and/or the Commission about whether or not it was required to round up. 65 During the negotiations leading up to the Agreement, it was the Respondent that had raised the problem regarding wage parity. The rounding up of wages had been suggested as one way of addressing that problem. Hence the Wage Disparity Clause and, in particular, subclause 6 of that clause. It was pointed out that the wages disparity clause referred to the disparity being addressed by the provisions of the Agreement and the Agreement was expressed to apply over three years. 66 It was further submitted that the words used in that sub-clause were clear and express insofar as that it provided a general right for all salaries to be rounded up to the nearest dollar when increased during the term of the Agreement. 67 The law relating to the interpretation of instruments with legal force was reasonably settled. The plain, ordinary English meaning was to be given to the actual words used. In the majority judgment of Hungerford & Schmidt JJ in Bryce & Anor v. Apperley ((1998) 82 IR 448), their honours observed: In our view, in construing the true meaning of an industrial award, like any other instrument with legal force, the task requires an approach according to the actual words used in their plain, ordinary English meaning. [Emphasis added] It was noted by the Union that no-where in the disputed clause or, for that matter, the entire Agreement did the word "once-off" appear in relation to the round up of the wages. 68 The Commission was reminded that Mr. Ashton had admitted that he had not, at any stage, communicated to either the Patrol Officers or indeed any other member of his own management team his interpretation and/or belief as to how the Agreement was to operate with respect to the wages disparity issue. 69 The union further relied on the authority that where the language contained in the instrument had a plain meaning, evidence on the background of those words was not admissible. Such background was only admissible where the language was ambiguous or susceptible of more than one meaning. In Codelfa Construction Pty. Ltd. v. State Rail Authority (NSW) ((1982) 149 CLR 377), Stephen, Aickin and Wilson JJ concurred with the judgment of Mason J. wherein he held (at page 352): The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning, but is not admissible to contradict the language of the contract when it has a plain meaning. 70 If the Commission was not minded to accept that contention and held the view that the words in the disputed clause were ambiguous or susceptible of more than one meaning, then it was entitled to use custom and usage as a guide to arriving at an interpretation of the provision (Minister v. Day (1919) 18 AR 19). 71 The adoption of such industrial reality was confirmed in Crown Employees Overtime Award (1968 AR 60 @ 60) wherein Sheldon J. adopted the view that: Industrial reality should be applied when dealing with an ambiguity in the award and determining what was intended by those who made the award. The commission is entitled to take into account custom and usage as a guide to arriving at an interpretation of an award provision. 72 That principle was also cited with approval by his Honour Harrison DP in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch v BHP Steel Long Products; The Australian Workers Union v BHP Steel Long Products ((2000) NSWIRC 164). At paragraph 14 his Honour stated: It follows also that there is the most ample scope for the continued existence of customs in the trade or industry running alongside the award. Customs, of course, which if any dispute or questions arises on them, must be proved to the court in the ordinary way. 73 The Union had proved to the Commission that it was custom and practice for the NRMA to make the particular payment. That past application was of particular relevance. 74 It was a relevant consideration that the NRMA had not taken the opportunity to contest the matter previously. If the NRMA was truly of the belief that it was not entitled to pay an allowance in a particular way, it would seek to recover that money. The NRMA chose not to address that particular issue. 75 In the Union's view, the fact that the NRMA had previously twice applied the Union's interpretation and rounded up the tool allowance, meant that a custom had been created which should be maintained. The Union relied on the authority that where an ambiguity existed, then an interpretation acted upon by the parties for a considerable period of time was to be preferred. In Merchant Service Guild of Australia v Sydney Steam Colliery Owners and Coal Stevedores Association and ors. ((1958) 1 FLR 248), it was held that: A particular interpretation of an award provision adopted by the parties was, in cases of ambiguity, to be preferred, especially when that interpretation had been acted upon for a considerable period of time. 76 In considering what was a considerable period of time in the context of the comments in that judgment, the Commission should take into account the industrial instrument to be interpreted and its duration. As the Act provided that the maximum term of an Enterprise Agreement was three years, then two years into the Agreement would be considered a reasonable application. 77 It was submitted that a combination of the history of the negotiations, the plain construction of the disputed clause and its later application by the NRMA favoured the construction advanced by the Union. The relevance of history was considered by Harrison DP in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union NSW BHP Steel Long Products, Australian Workers' Union v. BHP Steel Long Products ([2000] NSW, IRC Comm. 164 @ 80) wherein his Honour cited with approval the comments of McHugh J in Saraswati v. The Queen ((1991) 172 CLR 1 @ 21) that: Sometimes the purpose of legislation can be discerned only by reference to the history of the legislation and the state of the law when it was enacted. 78 Whilst not conceding that both interpretations were open to the Commission, the union submitted that if the Commission itself held that view, then it ought to prefer the construction that would avoid inconvenience or injustice. In the High Court decision in Cooper Brookes (Wollongong) P/L v. Commissioner of Taxation ((1981) CLR 297 @ 305) Gibbs CJ observed: On the other hand, if two constructions are open, the court will obviously prefer that which will avoid what it considers to be inconvenience or injustice. Since language in its context very often proves to be ambiguous, this last-mentioned rule is one that not infrequently falls to be applied. 79 It was concluded that, given that rounding up had been applied previously and given that the expectation by employees of its application continuing, then the Commission ought to favour the Union's interpretation in order to avoid the imposition of an injustice on Patrol Officers. 80 The union next relied on the principle of condonation. In that regard, it relied on the decision of the Honourable Sams DP in which the concept, usually applied in unfair dismissal matters, was found to have relevance and general application to a consideration as to whether an employer waived its rights to challenge the payment of an allowance in circumstances where it had condoned its payment for many years. In Australian Worker Union, NSW branch v. Zoological Parks Board of NSW ((2003) NSWIRComm. 49 at para [124-137]), his Honour raised with the parties the relevance of the industrial principle known as "condonation" and queried whether an employer may be considered to have waived its rights to challenge the payment of an allowance in circumstances where it had condoned its payment for many years: Of course, the principle of employer condonation is usually applied in unfair dismissal matters. However, it seems to me to have relevant and general application to the particular circumstances of this case. 81 His Honour held that the principle of condonation did have particular relevance to that particular matter. It was submitted that the present circumstances were very similar. A rounding up exercise was conducted on two occasions before the Respondent decided to stop the payment of the allowance and to seek an interpretation of the clause. 82 The mere fact that the NRMA had previously rounded up the wages should be considered by the Commission as a powerful factor in its determination of the matter, not only for the principle of condonation, but also for the principle that the interpretation advanced by the Union was also agreed to by the Respondent for two out of three years. 83 The Union further relied on other authorities on condonation, albeit they related to unfair dismissal claims (Burge v BHP Steel P/L (2001) 105 IR 81); Australian Transport Officers Association v Department of Motor Transport (1988) 25 IR 235 and 244 per Macken J.) to support its conclusion that "a powerful determination of the matter" was the fact that the respondent had paid the round up previously. That payment alone should suffice for the Commission to arrive at the conclusion that the NRMA had condoned the payment even if it rejected the Union's argument on the construction of the clause. 84 The Union speculated on the motive of the NRMA for discontinuing the practice of rounding up and invited the Commission to call it into question on this occasion. The union considered, given that rounding up was applied by the NRMA without demur in 2001 and 2002, that it was being used as an industrial tactic in the current negotiations for a new agreement the progress of which could not be described as smooth sailing. 85 That was another feature in the Zoological Board Case that was also relevant to these proceedings. The parties to that particular dispute were in the midst of an industrial dispute and industrial negotiation. His Honour, Sams DP had observed: Finally, having regard for the recent history of this matter, I have some doubts as to the motivation of the respondent in pursuing this matter in the context of its recent enterprise agreement negotiations with the Unions. There is nothing remarkable about an employer seeking to reduce its costs by closely examining all of its operations. However, in the context of regularly negotiated agreements, I do not think it was very wise, and perhaps naive, to discontinue an allowance that had been paid for years on a particular basis. The decision probably had more to do with leveraging the negotiations... 86 In conclusion, it was submitted that: 1. The disputed clause was unambiguous and favoured the interpretation advanced by the Union. 2. If the Commission did not accept that proposition, then custom and practice and the previous application of the rounding up principle favoured the interpretation advanced by the Union; and 3. In coming to that conclusion, it was relevant for the Commission to apply the doctrine of condonation, which also supported the contention of the Union. 87 It was submitted on behalf of the Respondent that the same agreement struck on 12 July, 2001 in relation to addressing the disparity in patrol officers' wages had been inserted into the Enterprise Agreement that was ultimately certified in November 2001. 88 It was submitted that, on a proper interpretation of the clause, it was only required to round up Patrol Officers' wages once and that was at the commencement only of the Agreement. It was not disputed that the Respondent had complied with that obligation. The only obligation that remained, post the registration and the commencement of the Agreement, was to pass on to Patrol Officers any State Wage Case increases to the award. 89 The words in the relevant clause, given their plain ordinary English meaning (Bryce & ano. v. Apperley (1998) 82 IR 448 @ 442) were clear and unambiguous - rounding up was not required to be carried out throughout the life of the Agreement. 90 In deciding on the proper interpretation of the wages disparity provision, it was important to note that the parties had agreed on the payment of "A 5 per cent flat amount ($48), a whole amount which is calculated on the average salary will be paid from the mass meeting acceptance." That had occurred on 25 or 26 July, 2001. There was a further 4 per cent flat amount payable from 25 July 2002. Mr. Cohen had accepted, during cross-examination, that the increase was expressed in whole dollars because that had been agreed to by the parties prior to the certification of the Agreement. It was submitted that, on a proper interpretation, within the ordinary meaning, the NRMA had complied with its obligation by rounding up salaries at the commencement of the Agreement. 91 If the Commission held a contrary view, that there was some ambiguity in the operation of that part of the provision, then recourse can be had to extrinsic material to assist it with the interpretation (Codelfa Constructions P/L v State Rail Authority (NSW) (1982) 149 CLR 377 @ 352 per Mason J, Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union and ors. v Qantas Airways Limited (2001) 106 IR 307). It was emphasised that the disputed clause should be considered in the context in which the actual words appeared and emerged. The principle enunciated in Kingmill Aust. P/L t/as Thrifty Car Rental v Federated Clerks' Union of Australia, NSW branch ([2001] NSWIRComm. 141) was distilled from Bryce v. Apperley. The resource was limited to the material existing up to the date of the making of the Agreement. 92 It was submitted that the extrinsic material submitted supported the interpretation proposed by the NRMA. The statement of Mr. Ashton confirmed that the intention was to apply the rounding off as a once-off occurrence. The only relevant extrinsic material that may be considered was the evidence of Mr. Ashton, accepted by Mr. Cohen, that no discussions had been held between the parties as to the continuation of that exercise beyond the rounding up to reduce the number of different salary levels that existed within the patrol officer workforce. 93 The NRMA should not be held solely responsible for the ambiguity. If the NRMA was to be criticised for its omission in making reference to the rounding up being a once-off exercise, then the Union was also to be criticised for its failure to make reference to its continuation. 94 In referring to such extrinsic material as an aid to interpretation, the Commission may not properly have regard to the conduct of, or the interpretation ascribed to the provision, by either of the parties subsequent to the making of the agreement, even if the purpose of that reference is to resolve an ambiguity in the terms: Seamen's Union of Australia v Adelaide Steamship Co. Ltd. (1976) 46 FLR 444 @ 452; Printing and Kindred Industries Union & Anor. v. Davies Bros. Ltd. (1986) 18 IR 444 at 452 and Qantas Airways Case @ 423. The Commission may only have regard to the custom and practice that existed up to the date of the making of the agreement. Condonation, it was submitted, was only applicable to unfair dismissal cases. 95 In Re Hospital Employees' Conditions of Employment (State) Award ((1999) 96 IR 245 @ 262), McKenna C. cited, with approval, the Seamen's Union Case: Moreover, the conduct of the parties after the making of an award ordinarily may not be used to determine what was intended when the award was made. Plainly, the fact an award has been given a long-standing interpretation and application by any one or more parties does not mean that such an interpretation is correct. 96 It was contended that the situation was apposite to the current circumstances. The evidence neither supported the interpretation proposed by the Union nor demonstrated that the practice was long-standing or that the NRMA had condoned the practice as a consequence of an increase in the tool allowance under the Award. After the initial rounding up of wages to reduce the number of pay levels, there was only one further occasion during which rounding up occurred. In October 2002 two tool allowance increases had been passed on and that was when the NRMA staff mistakenly applied the rounding up. An increase to the parent Award in September 2003 caused the matter to be brought to management's attention. That was when the error was discovered. The increase was flowed on but the rounding up did not take place. That was the genesis of this dispute. 97 When the error was made in September 2002, it had been made as part of the settlement of disputed matters during a period of industrial action. Further, it was approved by Ms O'Brien, a person who had neither been involved in the negotiations nor in the processing of the payment. Clearly, her interpretation had been incorrect and that should not be held against the NRMA in this instance. 98 In relation to the principle of condonation, the NRMA rejected its applicability to proceedings other than unfair dismissal claims. It was pointed out that were it to be applied to proceedings involving interpretation of awards or agreements, it would run counter to the principle, described above, that conduct of the parties subsequent to the making of that instrument was not admissible as evidence of the proper interpretation. 99 Although the Agreement was expressed as having a nominal term of three years, that was because section 42 of the Act provided that the nominal term of an agreement cannot extend beyond three years. Nevertheless, the Agreement would continue to operate until replaced or rescinded by another. In fact, its term had expired and the Agreement was still in operation. It was therefore refuted that the rounding-up process had been condoned over a considerable period of time. 100 In summary, the NRMA contended that the first approach was to consider the ordinary meaning of the word. It was submitted that the evidence led on behalf of that organisation supported the concept of flat wage increases throughout the life of the agreement, with a once-off round up of salaries at the commencement of the agreement. If recourse was to be had to extrinsic material because the provision being interpreted was ambiguous, then the proper approach would be to have regard to material existing at, or up to, the time of the making the Agreement. CONSIDERATION Interpretation of Awards 101 The Union sought, pursuant to s. 175 of the Act, an interpretation of the Wages Disparity clause of the National Roads and Motorists' Association Limited Patrol Officers' Enterprise Agreement 2001. The Union relied on the expectation of Patrol Officers of the payment being continued to be made, condonation of the practice by the NRMA and the conduct of the parties. 102 Section 175 of the Act provides: Section 175 POWERS OF INTERPRETATION 175 The Commission may, for the purpose of exercising its functions in connection with a matter before it, determine any question concerning the interpretation, application or operation of any relevant law or instrument (including the industrial relations legislation and any industrial instrument). 103 Section 8 of the Act provides a definition for industrial instrument as follows: In this Act, industrial instrument means an award, an enterprise agreement, a public sector industrial agreement, a former agreement, a contract determination or a contract agreement. 104 I note and adopt the views of his Honour, Sams DP as expressed in Australian Workers' Union, New South Wales branch, and Zoological Parks Board of New South Wales ([2003] NSWIRComm 49) that the starting point in matters such as these is to use the same approach to the construction of an enterprise agreement as that which is applied to awards. 105 There are well-held and clearly defined principles relating to the interpretation of awards. Both parties referred to those principles which were discussed in Bryce v. Apperley, and helpfully elaborated on by Schmidt J. in The Australian Workers' Union, New South Wales v. New South Wales Technical and Further Education ([2001] NSWIRComm. 25). In undertaking the task of award interpretation, the starting point is a consideration of the actual words of the award given their ordinary and grammatical meaning: 15. The approach to be adopted to the construction of awards was discussed by the majority of the Full Court in Bryce v. Apperley (1998) 82 IR 448, particularly at pp 452 to 454. That approach requires that if the words used are capable, in their ordinary sense, of an unambiguous meaning, then it is not permissible to look further, unless it can be demonstrated that the effect was unintended. The true meaning of the award has to be ascertained from the actual words used, according to their plain, ordinary English meaning. That must be so even if the view is reached that the words used did not give effect to the intention of the award maker. On the other hand, the circumstances in which the award was made and the purposes for which it was intended are not irrelevant, but cannot justify a meaning, which the words are not fairly capable of bearing.... 19. The interpretation of awards is, of course, not to be approached in exactly the same way as the interpretation of statutes. In Apperley reference was made to the approach discussed by Street J, as he then was, in GEO A. Bond & Co Ltd (in Liq) v. McKenzie [1929] AR (NSW) 498 at 5034: Now speaking generally, awards are to be interpreted as any other enactment is interpreted. They lay down the law affecting employers and employees in their relations as such, and they have to be obeyed to same (sic) extent as any other statutory enactment. But at the same time, it must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result, as this award in fact did, from an agreement between parties, couched in terms intelligible to themselves but often framed without that careful attention to form and draughtsmanship which one expects to find in an Act of Parliament. I think, therefore, in construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award. 20. That approach, however, envisaged that the parties' general intention be gleaned from the award as a whole. It cannot provide a basis for departure from the meaning of words, which have not been used in any technical sense or in the context of the customs and working conditions of a particular industry. Again, there was no evidence from which such considerations could be said to arise in this case. 21. Thus it is that the meaning of the clause must be ascertained from the words used themselves in the context of the Award as a whole. 106 Those principles, representing a long-standing and settled approach to award interpretation, have been cited with approval on a number of occasions by this Commission. 107 The task before the Commission is the interpretation of the following relevant section of the Agreement: Wages Disparity Disparity in Patrol wages has been addressed as part of this agreement by: 1. Flat dollar wage increase. 2. ...... 3. ...... 4. ...... 5. ...... 6. All other salaries will be rounded up to the nearest dollars - some ranging from 1 cent to 99 cents. 108 In New South Wales Fire Brigade Employees Union and New South Wales Brigades ([2003] NSWIRComm 55), his Honour, Boland J, cited with approval the decision in City of Wanneroo v. Holmes ((1989) 30 IR 362 at 378) in which French J made the following observation, "That is not to say the words (of an award) must be interpreted in a vacuum divorced from industrial realities" and went on to refer to the decision of Street J in Geo A Bond & Co Ltd (in liq) v. McKenzie ([1929] AR (NSW) 498 at 503 where his Honour said: [In] construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award. 109 The Agreement provided two separate and distinct clauses relevant to the subject matter. The aforementioned Wages Disparity clause and a clause relating to a Tool Allowance. Neither clause made reference to the other. However, the Tool Allowance, once established, formed part of the wage rate for all purposes. 110 It was not disputed that during negotiations on the Agreement, it was the NRMA team that had raised the issue of the inordinate number of wage levels amongst Patrol Officers undertaking the same tasks. Some differed by mere cents. It was also not disputed that it was the NRMA that had suggested rounding up as a means of reducing the number of pay levels and thereby addressing the issue of wages parity. 111 The understanding reached between the parties as to the wages component of the proposed Enterprise Agreement was for an immediate 5 per cent increase in wages rounded up from $47.80 to $48 and a further 4 per cent increase during its second year of operation rounded up from $39.20 to $40. 112 The Agreement, in subclause (1) of the Wage Disparity clause, referred to a singular flat dollar wage increase. The 5 per cent wage increase had been rounded up paid on approval of the Agreement. The second increase of 4 per cent was to take effect during the second year of the operation of the Agreement. That subclause, in my opinion, was intended to refer to the 9 per cent increase which, when put into effect resulted in an additional $1.10 per week increase. 113 The Agreement, in subclause (6) of the Wage Disparity clause, referred to a rounding up of salaries to the nearest dollar. That exercise had also occurred. For instance, Patrol Officers previously earning $1011.34 and $1011.70 per week were rounded up to $1012 per week from November 2001. 114 Nevertheless, the fact that the Tool Allowance had been applied once in relation to two increases in a manner consistent with the union's interpretation had complicated the issue. The parties accepted that the Wage Disparity clause neither reflected nor refuted the interpretation of either of the parties. 115 The Tool Allowance, contained within the wage structure, was constant until and unless movements occurred in the relevant underpinning Award. The agreement reached between the parties was quite clear - although the tool allowance was included in the "Total Rate", it only altered as a consequence of movements made to the State Award: A tool allowance of $10.50 shall be paid to Patrol Officers, see Annexure "A" (subject to the employee maintaining the agreed list of tools). The tool allowance is included in the "Total Rate", and alters with the State Award. Special tools as defined by the employer shall be provided and maintained by the employer. 116 I note and adopt the comments of Sheehy J. In re Industrial Agreement - Newcastle County Council & FEDFA ((1970) AR 218 at 221): ....in the industrial field it would seem unwise to confine the arbitration to the written word - for an industrial arbitration to be efficiently performed, whether it involves interpretation or not, it is desirable that the tribunal should have the fullest knowledge of the circumstances under which any relevant award was made or document executed. CONCLUSIONS 117 In my opinion, the Wage Disparity Clause had been complied with by the NRMA. Both the above applications had achieved the required effect of reducing the number of pay levels within the structure, albeit not totally. 118 I do not accept, given the separate and distinct clauses set out above, that it was intended that the tool allowance flow-on from the underpinning award would be applied any differently to the Award. 119 The evidence before the Commission was to the effect that Ms Hagerty had not been in attendance when the round up principle was first discussed by the negotiating teams. During her attendance on 12 June, 2001, all that the minutes indicate was that the parties had agreed that salaries would be rounded upwards to the nearest dollar. 120 Mr. Cohen wrote to Ms Hagerty regarding the increase in the Tool Allowance and reminded her to use the round-up principle as per their Agreement. 121 At the conclusion of a period of industrial disputation, the Union had circulated its members with information that the Tool Allowance would be adjusted to reflect two increases made to the Tool Allowance in the Award as a result of State Wage Case increases in 2001 and 2002. 122 The alleged "error" had been discovered by Mr. Ashton when the claim was made for a flow on of the third Tool Allowance increase approved to the Award on 21 August, 2003 resulting from the State Wage Case of 2003. 123 In Zoological Parks Board of New South Wales and The Australian Workers' Union, New South Wales ([2004] NSWIRComm 85), a Full Bench of the Commission confirmed that there was no role for the principle of condonation in the area of interpretation of industrial instruments. 124 Even if reliance could be had on that principle, the NRMA submitted that rounding up had occurred in error. That error occurred only once as a decision was made in relation to both the increases in September 2002, the second year of the Agreement's existence. It can hardly be considered as condonation over a considerable period of time merely because the agreement was of 3-year duration. 125 I fail to see how the addition of the tool allowance, either as $11.60 per week or $12 per week across the board or ultimately rounding up the wage rate after the addition of a flat amount of $11.60 would have the resultant effect of reducing the number of pay levels. Reduction in the number of pay levels was the prime motivation for the rounding up principle proposed by the NRMA staff. The interpretation proposed by the Union would not achieve that objective. It merely results in a higher increase in the level of wages. 126 For the above reasons, and pursuant to s. 175 of the Act, I determine that, rounding up was not required to be undertaken as a result of an increase in the Tool Allowance. 127 Matter No. IRC 5527 of 2003 is hereby concluded. I. Tabbaa COMMISSIONER DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.