How to interpret enterprise agreements

Although enterprise agreements are in a sense a statutory instrument, by which I mean that a breach can constitute a punishable contravention of the Fair Work Act they are not interpreted in the same strict way as legislation because in the main they are not drafted by legally trained persons. Here are the principles.

“Principles of construction

Qantas and Jetstar (on the one hand) and the Engineers Association (on the other) adopted very different approaches to the construction of cll 6 and 14.6 of the Qantas Agreement and cll 20 and 30.5 of the Jetstar Agreement.

  1. The principles to be applied in construing these provisions were nevertheless common ground.  It was the application of those principles which occasioned division.
  1. In construing an award or an enterprise agreement the task is one of construing the document itself but doing so in a practical manner and within the industrial environment in which it was drafted:  Kucks v CSR Ltd (1996) 66 IR 182 at 184 (“Kucks”).  In a passage oft cited, Madgwick J there summarised this approach as follows:

Legal principles

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.

But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.

See also:  Transport Workers’ Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829 at [30]-[31], (2014) 318 ALR 54 at 58-59 per Tracey J. The task of construing the terms of an award or enterprise agreement “begins with a consideration of the ordinary meaning of its words” but those words “must not be interpreted in a vacuum divorced from industrial realities”:  City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813 at [53] and [57], (2006) 153 IR 426 at 438-439 and 440 per French J (as his Honour then was) (“Wanneroo”).

  1. The general approach to the interpretation of enterprise agreements has more recently been summarised by Tracey, Bromberg and Rangiah JJ in WorkPac Pty Ltd v Skene [2018] FCAFC 131, (2018) 264 FCR 536 at 580 as follows:

[197]       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 bent of mind” and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced: see Kucks v CSR 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 that approach which has been adopted in the present proceeding.”

Qantas Airways Ltd v Australian Licensed Aircraft Engineers Association (No 2) [2020] FCA 951 delivered 9 July 2020 per Flick J