Australian Manufacturing Workers' Union v Paper Australia Pty Ltd
[2023] FWC 2129
•24 AUGUST 2023
| [2023] FWC 2129 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Australian Manufacturing Workers’ Union
v
Paper Australia Pty Ltd
(C2022/5370)
| DEPUTY PRESIDENT COLMAN | MELBOURNE, 24 AUGUST 2023 |
Dispute arising under enterprise agreement – dispute determined
The Australian Manufacturing Workers’ Union (AMWU) has made an application under s 739 of the Fair Work Act 2009 (Act) and the dispute resolution procedure in clause 33 of the Opal Australian Paper Enterprise Agreement 2020-2023 Maryvale Mill Mechanical Maintenance and Engineering Store (Agreement) for the Commission to determine questions relating to two separate disputes between the AMWU and Paper Australia Pty Ltd (company).
One dispute concerns the classification of an AMWU member, Michael Warne, who was until recently employed by the company as a fitter and turner. Mr Warne was classified at level 7 of the classification structure in the Agreement. The union considers that Mr Warne should properly have been classified at level 6. It also believes that the company has failed to develop training programs and career pathways for employees in accordance with clause 11 of the Agreement, and that this contributed to Mr Warne’s incorrect classification.
The second dispute relates to the company’s use of labour hire. The AMWU believes that from October 2020 to March 2021, the company failed to comply with clause 40.8 of the Agreement by engaging a labour hire firm, Omega Network Pty Ltd (Omega), that did not afford its employees conditions of employment that were no less favourable than those of comparable company employees covered by the Agreement. The union also considers that the company has contravened clause 40.10 by failing to produce an information pack relating to the engagement of labour hire firms.
The company contends that it has at all times complied with its obligations under the Agreement as they relate to the two disputes.
The parties agree, and I am satisfied, that the Commission is authorised by clause 33.4.5 of the Agreement to determine the following questions that have been submitted for arbitration:
· Question 1: Has the company contravened clauses 11.1–11.3 of the Agreement by failing to develop training and development programs and career paths?
· Question 2: Was Mr Warne correctly classified at level 7?
· Question 3: Did the company breach clauses 40.8 or 40.10 of the Agreement in relation to its engagement of Omega from October 2020 to March 2021?
The classification dispute
Clause 11 of the Agreement is entitled ‘Classification/Career Paths’ and provides:
“11.1 The Company will implement training and development programs for all employees in accordance with business needs.
11.2 The Company will develop career paths consistent with the requirements of the Business, as early as possible, which enables employees to be rewarded for their skills. Progress on this will be the subject of three monthly meetings.
11.3 The Company may direct an employee to carry out such duties that utilise the employee’s skill, competency and training provided that such duties are safe, efficient, logical and legal.
11.4 The Company may direct an employee to carry out such duties and use such tools and equipment as may be required provided that the employee has been properly trained and competent in the use of such tools and equipment.
11.5 This includes the specific requirement to carry, on-site, communication devices including, but not limited to, radios and/or mobile phones, and to utilise them as directed.
11.6 Employees within each classification will perform a wider range of duties including work that is incidental or peripheral to their main tasks or functions.”
The AMWU contended that the company had not complied with clauses 11.1 to 11.3 of the Agreement because it had not developed training and development programs or career paths, had not conducted the three-monthly meetings contemplated by clause 11.2, and had directed employees to perform duties that were deskilling, contrary to clause 11.3.
The AMWU said that the meaning of clause 11 of the Agreement was informed by clause 15 of the Pulp and Paper Industry (Maintenance and Services) Award 2003, as it stood on 1 March 2006 (Award), which is incorporated into the Agreement by clause 2.1. The union contended that the training programs and career path referred to in clauses 11.1 and 11.2 of the Agreement needed to have the features set out in clause 15 of the Award. In this regard, clause 15.3 of the Award states that employers will develop training programs ‘consistent with: the current and future skill needs of the enterprise; the size, structure and nature of the operations of the enterprise; and the need to develop skills relevant to the enterprise…’ Clause 15.5 provides that training programs ‘will be directed towards employees developing the skills required at the enterprise for progression through the career path’. Clause 15.5.1 then states that certain principles will be adopted for the composition of the career path, including that tradespersons ‘shall be able to utilise all skills obtained in their trade training or required for their career path progression’ and that ‘all skills gained and/or held will only be applied to tasks incidental to the trade/classification’ (clause 15.5.1(e)). Clause 15.5.2 states that career paths ‘must provide incentives for the acquisition of skills’ and that career paths ‘should enhance the acquisition of skills’. The union contended that the company had failed to establish training and career paths that meet these requirements.
The AMWU further contended that the effect of the company’s failure in this regard had been to deskill employees, contrary to clause 10.1 of the Award, which states that the company may direct employees to carry out duties within their skill, competence and training, ‘provided that such duties are not designed to promote deskilling’. The company had therefore directed employees to perform tasks that were not legal, contrary to clause 11.3 of the Agreement.
The AMWU submitted that Mr Warne’s misclassification at level 7 was in part a consequence of the company’s failure to comply with its obligations under clause 11 of the Agreement and the incorporated award. It said that Mr Warne has been directed by the company to undertake over 500 hours of training, the details of which were set out in exhibit MW-1 to Mr Warne’s witness statement, and that accordingly he was entitled to have this training count towards his progression through the classification structure. Mr Warne was properly to be graded at level 6 of the classification structure in accordance with table B of Appendix B to the Agreement. Table B states that a level 6 worker will have undertaken 450 ‘approved training hours’, and Mr Warne had exceeded this number of training hours. Mr Warne had undertaken training as directed by the company and must now progress through the career path and be rewarded for the skills acquired. The union submitted that the Commission should order the company to refrain from directing its employees to undertake classification-related training that did not contribute to progression through a career path, and to recognise the training undertaken by Mr Warne by reclassifying him as an ‘advanced tradesperson’ at level 6. The AMWU did not identify any particular date from which it said this reclassification should apply. At the time it lodged its s 739 application, Mr Warne remained employed by the company, and the union’s position appeared to be that Mr Warne should simply be reclassified with prospective effect.
The company denied any contravention of clause 11 of the Agreement or the incorporated award. It submitted that there was already a career path for maintenance workers, a fact apparent from the classification structure in the Agreement itself, and that the company had provided a wide range of training to its employees, which Mr Warne’s own evidence showed. While some of the training undertaken by Mr Warne had been directed at technical skills, most related to non-technical aspects of his employment, and was neither relevant to, nor accredited for, the higher level 6 classification to which Mr Warne aspired. The company maintained that Mr Warne had been correctly classified as a ‘special class tradesperson’ at level 7. He was not an ‘advanced tradesperson’ at level 6.
In my view the company has not failed to comply with clauses 11.1 to 11.3 of the Agreement. Clause 11.1 states that the company will implement training and development programs for all employees ‘in accordance with business needs’. Clause 11.2 states that the company will develop career paths ‘consistent with the requirements of the business’. The company is not required to conduct training and development that is not needed, or to provide career paths that are not consistent with business needs. It is true that clause 11.2 states that progress on the development of career paths will be the subject of ‘three monthly meetings’ (presumably intended to read ‘three-monthly meetings’), and that this has not occurred. But if there is nothing to discuss, holding a meeting would be a pointless exercise. Further, the clause does not say who is to convene or attend such meetings.
It is relevant to note that the text of the Agreement already provides for a career path. Table B of Appendix B is headed ‘Mechanical career path’, and states that ‘the following career path applies to mechanical tradesmen’. The trades classification structure in table A is a skill-based structure, which results in higher remuneration for higher levels of skills. This is another reason to think that clause 11.2 does not require the company to create new career paths; rather, if in accordance with business requirements it does so, the career path must meet the stipulation of clause 11.2 and enable employees to be rewarded for their skills.
Even if clauses 11.1 and 11.2 create obligations on the employer that are more onerous than what I have described above, it would not be possible to conclude that the company had contravened them, because the clauses do not establish any particular timeline for the implementation of training or the development of career paths. Whatever the requirements of clauses 11.1 and 11.2 are, they can be met at any time during the operation of the Agreement. Clause 11.2 states that career paths consistent with business needs will be developed ‘as early as possible’, but there is no evidence as to what would have been possible in the circumstances.
The company has not contravened clause 11.3. This provision states that the company can direct an employee to carry out duties that utilise their skills, competency and training and which are safe, efficient, logical and legal. There is no evidence that the company has done otherwise. Nor is there any basis for the contention that the company has promoted deskilling.
The incorporated award provisions do not alter the above analysis. Clause 15.3 states that the company will provide training for skills ‘relevant to the enterprise’. Again, there is no evidence that the company has not done this. Clause 15.5 states that employees will be able to utilise skills obtained in training for their career progression. But it has not been shown that Mr Warne or other employees have not been able to do this. In fact, the union’s contention is that Mr Warne did in fact have the training and skills necessary to be reclassified at level 7. Clause 15.5 of the Award states that career paths must provide incentives for the acquisition of skills, but as noted above, the structure in Table B of the Agreement does this: higher skills attract a higher classification and associated pay. To the extent that clause 15 of the incorporated Award might be read as requiring the company to develop training or career paths other than in accordance with business needs, it would be inconsistent with the express terms of the Agreement and the latter would prevail (see clause 2.2 of the Agreement).
The AMWU’s submissions appeared to suggest that the company can only direct employees to undertake training if it has the characteristics identified in clause 15 of the Award. But the clause does not say this. Clearly an employer may need to conduct a range of training that has nothing to do with the subject matter of the Award, but is related to other dimensions of employees’ employment. The Award’s statement that all skills gained will only be applied to tasks incidental to the employee’s trade and classification means that the skills gained will not be directed to extraneous ends. It does not mean that training cannot relate to other subjects that are relevant to the employment, or pertain in other ways to the work covered by the Award. To the extent that the Award might be read to provide otherwise, it would be inconsistent with clause 11 of the Agreement which states that training will be in accordance with business needs.
As to the classification of Mr Warne, I find there to be a certain tension between the union’s claim that the company has failed to provide adequate training, and its contention that Mr Warne was sufficiently trained to progress to the next classification level. It seems that the union’s contention is that the company is required by clause 11 of the Agreement and clause 15 of the Award to implement training that actively moves employees along a career path and through the classification structure, whereas Mr Warne was employed at level 7 for many years, and despite the company’s alleged failings, had reached the point where he should have been reclassified. But clause 11 of the Agreement does require the company to ensure that employees progress through the structure. The question of Mr Warne’s correct classification depends on whether his circumstances bring him within level 6 or level 7 of the classification structure in Appendix B of the Agreement.
Table A of Appendix B sets out an eight-level classification structure for maintenance workers, commencing with ‘engineering tradesperson B’ at level 9, and culminating with ‘engineer’ at level 2. Mr Warne was classified as a ‘special class tradesperson’ at level 7. The descriptor for this classification states that such a worker has completed 300 hours of ‘approved accredited training or has achieved an equivalent level of agreed competency gained through on the job experience.’ The AMWU contended that Mr Warne’s correct classification was ‘advanced tradesperson B’ at level 6. The descriptor for this classification states that the worker has completed 450 hours of ‘accredited training or has 150 hours of accredited training and has achieved an agreed level of competence as defined in P7.’ Mr Warne said in his statement that over his years of his employment he had completed some 500 hours of training as directed by the company. He attached a list of all of the training that he had undertaken, which he said was extensive, and said that his skills had not been recognised by the company.
However, as the company points out, much of the training undertaken by Mr Warne has no apparent connection with the role of an advanced transperson. Mr Warne made no attempt to explain how the various training modules he had completed should be considered to be approved or accredited training. The AMWU appears to contend that accredited training does not necessarily have to have a connection to skills in order to count towards the 450 hours of training required for a level 6 classification. That would mean that delegate or diversity training could be included for this purpose. The union appeared to recognise that some kinds of training should not count but it did not develop a clear concept of where to draw the line. Mr Beales said in his statement that the vast majority of the training undertaken by Mr Warne was unconnected to his skills as a tradesperson and that the only training that could be considered skills-related were three mechanical courses totalling some 31 hours.
In my view, the training referred to in table A of Appendix B of the Agreement is to be understood in context as referring to training that is ‘accredited’ for the purposes of the relevant classification. It could not logically mean training of any kind. It would not make sense that a worker could advance to the classification of advanced tradesperson based on training that was unrelated to the skills of a tradesperson. The classification structure in table A is plainly a skills-based technical structure. It is obvious that an advanced tradesperson has higher specialisation than a special class tradesperson. What differentiates the two is the level of classification-specific training or on the job experience, not training on general employment matters. The conclusion that the classification structure is skills-based is fortified by the notes that appear under table A. These state that the ‘streams encompassed by the above career path structure are mechanical and fabrication’; and that ‘the extent of skilling across trade streams will be determined by the level of training undertaken by the employee and in accordance with the current Agreement’. I reject the AMWU’s contention that there should be a presumption that training counts towards an employee’s progression through the classification structure. The terms of the Agreement, read in conjunction with the Award, do not provide for this.
At the hearing, the AMWU advised that Mr Warne’s employment with the company had recently ceased. The company submitted that it was now unnecessary to answer question 2, which had been concerned with Mr Warne’s current classification, not his past classification. In my view, there must be some doubt about whether a person who is no longer an employee can continue to pursue a classification dispute pursuant to a s 739 application in the Commission after his employment has ended. But in this case, the applicant is the AMWU, which at least arguably has an interest in the determination of this matter that goes beyond the classification of the former employee. I will answer question 2. That answer is that the evidence does not establish that Mr Warne has completed 450 hours of ‘accredited training’, or that he has 150 hours of accredited training and has also achieved ‘an agreed level of competence’. The company accepts that Mr Warne had the training and experience required for level 7. In my view, this was his correct classification.
The contractor dispute
Clause 40.8 of the Agreement states:
“The Company shall only engage, and continue to utilise, a contractor to do Work, who:
(a) pay wages and conditions to its employees;
(b) receive payments to itself (in the case of a sole trader/self-employed Contractor); and
(c) make payments to Sub-Contractors;
40.8.1 that are no less favourable than that provided for in this Agreement for equivalent or similar work.”
From October 2020 to March 2021 the company engaged Omega to provide it with labour. Omega assigned its employees to work at the company’s paper mill. One of these employees was Renold Evans, who worked as a fitter on day shift in a role equivalent to a level 9 classification under the Agreement. From October 2020 to February 2021, Omega paid Mr Evans $54.99 per hour, and in March 2021 it paid him $56.08 per hour. Mr Evans had previously been employed by a different contractor that provided labour to the company, and had been paid $62.56 per hour. The lower rate of pay he received in his employment with Omega prompted Mr Evans to consult the AMWU about the level of his wages. This led to the AMWU’s second dispute with the company. Mr Evans submitted a witness statement attesting to the amounts that he was paid by Omega during the time he was deployed to work at the company’s paper mill.
The AMWU submitted that the wages paid by Omega to Mr Evans from October 2020 to March 2021 were less favourable than the amounts payable to company employees for equivalent work, and that therefore the company’s engagement of Omega during that period was contrary to clause 40.8 of the Agreement. There was no dispute that Mr Evans had worked in a casual role equivalent to a level 9 under the Agreement. The AMWU said that from October 2020 to March 2021, a level 9 casual employee of the company was entitled under Appendix D of the Agreement to $59.98 per hour. Mr Evans therefore received from Omega less pay per hour than he would have done had he been directly employed by the company. This meant that the company had engaged a contractor (Omega) that paid wages and conditions that were less favourable than those provided under the Agreement, contrary to clause 40.8 of the Agreement.
The company contended that the AMWU had miscalculated the wages of a level 9 casual employee under the Agreement at the relevant time, and that the union appeared to have drawn this figure from the ‘overtime hourly rate’ in Appendix D, to which the casual loading had then been applied. It said that the correct rate for a casual at level 9 at the relevant time was in fact $51.15. This rate was established by dividing the base weekly rate of pay by 38 and multiplying it by the casual loading of 25%.
It is clear that the ‘overtime hourly rate’ is not the general base rate applicable to casuals or any other employees. It is the rate for overtime hours. Moreover, it is a special rate that reflects a change from a 35-hour to a 38-hour week, as the note beneath Appendix D explains. The note states that this was agreed by the parties in order to ensure that employees were not disadvantaged, in relation to overtime, by the transition from a 35-hour to a 38-hour week. It was a special arrangement for overtime, not a general rate of pay. The overtime hourly rate represents the weekly rate (inclusive of tool and general allowance), divided by 35 rather than 38 hours. This is a departure from the new framework established by the Agreement under which employees work a 38-hour week. Although clause 19.1 states that the average ordinary hours for dayworkers shall be 35, this is evidently a historical statement, because clause 19.6 goes on clearly to provide that the ‘new 38 ordinary hours 4 day per week roster for Dayworkers is to commence on and from 10 April 2016’, and it is common ground between the parties that full-time employees work a 38-hour week.
The AMWU said that it had in fact derived the casual hourly rate of pay from the ‘weekly rate’ for a level 9 specified in Appendix D ($1679.39), which it had divided by 35 and then multiplied by the casual loading of 125%, to produce $59.98. It contended that, although employees employed under the Agreement worked a 38-hour week, 35 was the appropriate divider because clause 19 stated that employees were paid for 35 hours. I disagree. The hourly rate for a casual employee is the weekly rate divided by the number of hours worked by a full-time employee which is 38. It is irrelevant that for historical reasons, employees are deemed to be paid for 35 hours (and from 1 April 2021, 36 hours – see clause 19.5). Casuals work the hours for which they are engaged from time to time. The casual rate of pay is the relevant weekly rate of pay divided by the ordinary weekly hours worked by a full-time employee (38) multiplied by the casual loading.
The company contends that the casual rate of pay is derived from the base rate ($1555.03), not the weekly rate, in Appendix D, because the latter includes a weekly amount in respect of the general allowance and the tools allowance, whereas casuals are not employed by the week, as clauses 8.1 and 8.6 make clear. The company said that it did not make sense for casuals to receive a weekly payment for an allowance that reflects a full week’s work. But the relevant weekly rate is to be divided by 38 in order to produce an hourly rate; using the weekly rate as the starting point for calculating the casual rate does not result in casuals receiving payments for allowances in respect of hours they have not worked. Nothing in clauses 16.2 (tool allowance) and 16.5 (general allowance) disentitles casuals to these allowances. To my mind, it appears that the casual rate as at 1 April 2020 was to be determined based on the weekly rate of pay divided by 38, and then multiplied by the casual loading, which produces an hourly figure for a level 9 of $55.24. This is 25 cents per hour higher than the hourly rate paid to Mr Evans by Omega from October 2020 to February 2021, but 84 cents less than what Omega paid Mr Evans in March 2021.
However, it is important to note that clause 40.8 is concerned not just with the relevant rates of pay that are afforded to employees of contractors. It states that ‘wages and conditions’ must be no less favourable than those provided under the Agreement to company employees. I reject the union’s contention that this expression is to be read disjunctively such that wages must be no less favourable and conditions must also be no less favourable. Clause 40.8 states that the company can only engage contractors that ‘pay wages and conditions to its employees … that are no less favourable than that provided for in this Agreement.’ The more natural and sensible reading of this sentence is that ‘wages and conditions’ are to be considered together. It is unlikely that it could have been intended that each and every condition of employment afforded to employees of contractors must be no less favourable than the corresponding company condition. This could preclude the company’s engagement of a contractor whose employees received more money than company employees (in cases where they are paid generous non-wage benefits, but the weekly wage is marginally lower than company rates). In my opinion, an overall comparison is required.
Mr Evans’ payslips indicate that he received a travel allowance of between $40 and $120 a week, and sometimes a safety bonus. A comparable employee of the company would not have been entitled to these payments. This more than outweighs the very small margin by which Agreement wages exceeded those paid to Mr Evans by Omega from October 2020 to February 2021. Moreover, the overtime rate of pay that appears to have been paid by Omega to Mr Evans (the ‘double-time’ of $109.98 referred to in paysheets from November 2020 and of $112.16 in paysheets from March 2022) is higher than the company’s casual overtime rate for this level, which was $107.96 ($47.98 multiplied by 225%). In my assessment, Mr Evans was paid more by Omega than he would have been by the company during the relevant periods.
Mr Evans did not receive wages and conditions from Omega that were less favourable than those provided for in the Agreement for equivalent or similar work. I therefore conclude that the company did not contravene clause 40.8 during the relevant period.
I reject an alternative submission that was advanced by the company to the effect that clause 40.8 merely requires it to take all reasonable steps, such as making inquiries, to ensure that its contractors afford their employees conditions no less favourable than those of the Agreement. The company may be right to say that the clause does not require it to take any particular measures, such as an audit, to conclusively determine whether contractors’ employees receive comparable conditions to company employees. But if it transpires that contractors’ employees do not receive comparable conditions, the company will be in breach of clause 40.8. The provision is perfectly clear. The company ‘shall only engage, and continue to utilise, a contractor’ that meets the relevant labour requirements. The clause is not concerned with the steps that the company might take to check whether this is the case.
Had the union succeeded in demonstrating a contravention of clause 40.8, it sought an order from the Commission that would have required the company to investigate the circumstances of any employees of Omega who have performed work for the company at the mill, to determine whether there has been any ‘underpayment’, and to ‘make rectification’. In my view there would have been no power for the Commission to make an order of this kind because there is nothing in the Agreement that authorises it. The Agreement does not (and likely could not) make the company responsible for the payment of wages by contractors to its employees. It simply prohibits the company’s use of contractors that do not meet certain labour conditions. Further, it is not clear to me how the Agreement could validly authorise the Commission to make an order of this kind because it would relate to persons who are not covered by the Agreement, and would not pertain to the relationship between the employer and the employees covered by the Agreement (see s 172(1)).
The second question raised by the AMWU in relation to the contractor dispute concerns clause 40.10(b), which states:
“The Company intends to develop in consultation with the Unions an information pack. This information pack is designed to ensure all parties to this Agreement have first-hand knowledge so that decisions will be made consistent with the obligations and understanding of the parties”
The AMWU contended that the company had breached clause 40.10 because it has not developed an information pack on the engagement of contractors. It submitted that this was an obligation of substance and importance, particularly because of the prohibition in clause 40.8 on the company’s engagement of contractors that did not meet the relevant labour conditions. Further, the parties had had a number of disputes about the company’s engagement of contractors, many of which might have been avoided had the company developed the information pack as required by clause 40.10. Mr Zalesiak’s evidence was clear about the fact that no such information pack had been developed, and the company did not deny this.
Clause 40.10 states only that the company intends to develop an information pack. Assuming however that the company is required to develop the information pack, the clause does not mandate that this be done by any particular time. At most, this is an obligation that must be met during the Agreement’s period of operation. It cannot be concluded that the company has breached any such obligation.
Conclusion
The answers to the questions that have been posed for determination are as follows:
Question 1:Has the company contravened clauses 11.1–11.3 of the Agreement by failing to develop training and development programs and career paths?
Answer: No.
Question 2: Was Mr Warne correctly classified at a Level P7?
Answer: Yes.
Question 3: Did the company breach clauses 40.8 or 40.10 of the Agreement in relation to its engagement of Omega from October 2020 to March 2021?
Answer: No.
DEPUTY PRESIDENT
Appearances:
S. Fodrocy for the AMWU
L. Saccoccio for Paper Australia Pty Ltd
Hearing details:
2023
Melbourne
8 August
Printed by authority of the Commonwealth Government Printer
<PR765528>
1
0
0