“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU) v ABB Australia Pty Limited

[2013] FWC 2437

[2013] FWC 2437

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
v
ABB Australia Pty Limited
(C2012/1273)

Manufacturing and associated industries
COMMISSIONER BLAIR	MELBOURNE, 30 APRIL 2013

Alleged dispute concerning the correct wage classification

[1] This decision relates to an application by the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) (the Applicant) lodged with the Fair Work Commission (the Commission) pursuant to s739 of the Fair Work Act 2009 (the Act) to deal with a dispute in accordance with clause 18 - Dispute Settlement Procedure of the AMWU, ABB Australia Pty Ltd Fosters Site Collective Agreement 2011 [AE888543] (the 2011 Agreement). The respondent to the application is ABB Australia Pty Ltd (the Respondent). The dispute is in relation to the correct wage classification for apprentices.

[2] Two conferences were conducted, the first on 29 October 2012 and the second on 22 November 2012. The parties were not able to resolve their differences and the matter was set down for hearing on 18 April 2013.

[3] The issue, in summary, is whether or not the percentages that apply to the apprentices covered by the 2011 Agreement should be paid as a percentage of the C10 rate or, as the Applicant argued initially, the C8 rate but now, given that the majority of employees at that site covered by the 2011 Agreement have been reclassified to C7, that the percentages of the apprenticeship rate should apply to the C7 rate.

The Applicant

[4] In the Applicant’s outline of argument they state:

“This dispute concerns the interpretation of certain terms of the Agreement, in particular, clauses which relate to the calculation of pay rates for apprentice employees.

The Applicant alleges that the Respondent is failing to correctly apply the Agreement to apprentice employees and, as such, the apprentice employees are not being correctly remunerated.

Clause 11.4 of the Agreement provides:

Apprentices will be paid the following percentages of the Tradesmans rate of pay as set out in this agreement:

Year 1	42%
Year 2	55%1
Year 3	75%
Year 4	88%

Found at Appendix 1 of the Agreement is a table detailing the relevant classifications and each corresponding wage rate at relevant dates depending on the agreed pay increase. Under the table it states:

All tradespersons will be employed at the minimum C8 level.”

[5] The table at Appendix 1 is as follows:

Classification	Column 1  Current Weekly Rates Pay  $	2.5% from the first pay period on or after 1 July 2011 $	2.5% from the first pay period on or after 1 January 2012 $	2.5% from the first pay period on or after 1 July 2012 $	2.5% from the first pay period on or after 1 January 2013 $	2.5% from the first pay period on or after 1 July 2013 $	2.5% from the first pay period on or after 1 January 2014 $
C6 (125%)	1413.07	1448.39	1484.60	1521.72	1559.76	1598.75	1638.73
C7 (115%)	1284.61	1316.72	1349.64	1383.38	1417.97	1453.42	1489.76
C8 (110%)	1223.44	1254.03	1285.37	1317.51	1350.45	1384.21	1418.82
C9 (105%)	1175.41	1204.80	1234.92	1265.79	1297.43	1329.87	1363.11
C10 (100%)	1128.17	1156.37	1185.28	1214.92	1245.29	1276.42	1308.33
C11 (92.4%)	1022.24	1047.80	1074.00	1100.84	1128.36	1156.57	1185.48
C12 (87.4%)	967.02	991.20	1015.98	1041.37	1067.41	1094.10	1121.45

[6] The Applicant argues that when read in conjunction with clause 11.4 of the 2011 Agreement, it can easily be inferred that the apprentice wage is a percentage of the tradeperson’s rate, which is stated as being a minimum C8.

[7] The Applicant states that at the commencement of the 2011 Agreement all tradespersons were classified at the C8 level; however, on 1 July 2012 all tradespersons were reclassified to be employed at the C7 classification. Accordingly, according to the Applicant, the tradesperson’s rate under the 2011 Agreement became C7. It is the Applicant’s position that following the reclassification on 1 July 2012 the appropriate wage rate is a percentage of the tradesman rate under the 2011 Agreement which, from 1 July 2012, became a C7.

[8] The Applicant asserts that the Respondent is failing to properly apply the 2011 Agreement and is calculating the apprentice rate based on a C10 classification. They further assert that this interpretation is incorrect. They state that nowhere in the 2011 Agreement does it state that the tradesman rate is a C10 classification. They state that the 2011 Agreement explicitly states that the Tradesman rate is a minimum C8 classification.

[9] In the previous agreement, The ABB Australia Pty Limited Labour Hire Agreement 2009-2011 (the 2009 Agreement), clause 20 - Apprentices states:

“Apprentices working at sites pursuant to a written contract for the provision of a permanent maintenance crew will be paid the following percentage of the C10 rate of pay as set out in this Agreement.”

[10] During the negotiations for the 2011 Agreement (where the Applicant wanted a site specific agreement rather than a labour hire agreement) the words of clause 11 were changed. Clause 11.4 of the 2011 Agreement states:

“Apprentices will be paid the following percentages of the Tradesmans rate of pay as set out in this agreement.”

[11] The Applicant asserts that the new clause relating to Apprentices was negotiated and altered by the Applicant to acknowledge the new apprentice wage rate and to create an obligation on the Respondent to engage apprentices, an obligation that did not exist under the previous apprentice clause.

[12] The Applicant states that during the negotiations of this clause the only issue the respondent raised was in relation to the number of apprentices that the Respondent would be obliged to employ.

[13] The Applicant provided a response to the Respondent’s submissions and state the following:

“The AMWU made a claim for an increase in apprentice wages during the course of the negotiations for the 2011 Agreement. This claim was communicated to ABB and bargaining took place around this claim. It is true that this intention existed and it is reflected in the words.

The AMWU, on behalf of its members, made a claim for an apprentice pay increase, initially through increased percentages and also an increase to the pay rate that the percentages are based.

ABB did not accept the increased percentages however they did accept that apprentices would be paid a percentage of the tradesmans rates which was to be defined in the 2011 Agreement as being a minimum C8.”

[14] The Applicant concludes by stating that the words of the 2011 Agreement are clear and the issue lies with ABB’s failure to apply the words as they read. They state that the Commission should find that the Applicant is correct in its interpretation based on a plain reading of the words and evidence of the intention of the framers of the 2011 Agreement.

[15] In support of the Applicant’s argument a witness statement was provided by Mr Rob Collier, who was employed at ABB Australia Pty Ltd as a maintenance fitter for three and a half years. Mr Collier is also a delegate of the Applicant.

[16] Mr Collier asserts that he was present at the negotiations for the 2011 Agreement and states that at the time of those negotiations employees were covered by the 2009 Agreement. He states that the Applicant made many claims during the negotiations and the clauses relating to the tradesman’s rate of pay and apprentices were specifically mentioned during the meetings.

[17] A witness statement was also provided by Mr Tony Mavromatis and then also an amended witness statement which he intended to rely on. Mr Mavromatis is an official of the Applicant and looks after the industrial interests of the members engaged by the Respondent.

[18] Mr Mavromatis states that members of the Applicant wanted to change clause 20 - Apprentices of the 2009 Agreement. He states that the Respondent was put on notice that apprentice ratios and apprentice wages were an issue that needed to be addressed. He states that at one of the first meetings in May 2011 the issue of apprentice wages was raised.

[19] Mr Mavromatis attached to his statement a copy of notes from the meeting.

[20] Mr Mavromatis states that the issue of a separate site agreement is relevant to apprentices because it was the intention of the Applicant to recognise that apprentices, like the trades employees, are learning the special trades relevant to the particular site.

[21] Mr Mavromatis also states that clause 11 of the first draft of the 2011 Agreement was the Applicant’s claim in relation to apprentices. He states that the intention was to increase apprentice wages through an increase in the percentages which calculated the apprentice rates and also to alter the existing rate which the percentages were applied to from C10 to the tradespersons rate under the 2011 Agreement.

[22] Mr Mavromatis accepts that the Respondent was not happy with the percentage increases proposed by the Applicant. He also acknowledges that the Respondent did not accept the Applicant’s claim that the Respondent engage a certain number of apprentices in clause 11.2 of the first draft of the 2011 Agreement. He asserts that it was discussed and agreed that the Applicant would accept the Respondent’s percentage position and remove clause 11.2 if the Respondent accepted that the percentages would be based on the tradesperson’s rate which was to be defined in the 2011 Agreement as a minimum C8.

The Respondent

[23] The Respondent asserts that the dispute is in relation to the appropriate rate of pay for apprentices covered by the 2011 Agreement. They assert that the apprentices are currently paid a percentage of the rates applicable to the base trades classification, the C10.

[24] The Respondent states that the evidence in this matter is of relatively narrow compass and much of it is uncontroversial.

[25] The Respondent states that during the negotiations the Applicant claimed that the Respondent engage a minimum number of apprentices and that it engage them directly. That claim in part was accepted by the Respondent. A draft clause was provided that gave effect to that claim and was included in the 2011 Agreement as clause 11.

[26] The Respondent states that clause 11 includes the provision that apprentices will be paid “percentages of the Tradesmans rate of pay as set out in this agreement”. The Agreement does not define “the Trademans rate of pay”.

[27] The Appendix to the 2011 Agreement does provide classifications from C12 to C6 and below the table is an annotation to that: All tradespersons will be employed at the minimum C8 level”.

[28] The Respondent asserts that there is no evidence from the Applicant that it made any claim for an increase in apprentice wages beyond the general increases applying to all employees under the 2011 Agreement. The Respondent’s evidence (including contemporaneous notes) positively indicates that there was no such claim.

[29] In approaching the interpretation of the 2011 Agreement, the Respondent states that there are several general principles that are relevant to the present case. They are:

“(a) The interpretation of an industrial instrument begins with a consideration of the natural and ordinary meaning of its words, but the words are to be read as a whole and in light of their industrial context and purpose: Re City of Wanneroo v Holmes [1989] FCA 369 at [43]; Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 per Gleeson CJ and McHugh J at [2].

(b) Context should be considered in the first instance and not merely at some later stage when ambiguity might be thought to arise: K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd [1985] HCA 48; (1985) 157 CLR 309.

(c) Narrow or pedantic approaches are misplaced and an industrial instrument must be read so as to give effect to its evident purpose, despite inconsistencies or infelicities of expression which might tend to some other reading: see Kucks v CSR Ltd (1996) 66 IR 182.

(d) The search is for the meaning intended by the framers of the document, bearing in mind that such framers were likely of a practical bent of mind: Kucks at 184.

(e) The “intention” which is relevant to construction is not the subjective intention of the parties but the parties’ manifest intention; put differently, “the law is concerned, not with the real intentions of the parties, but with the outward manifestations of those intentions”: Byrnes v Kendle [2011] HCA 26 per Gummow and Hayne JJ at [52]ff; Taylor v Johnson (1983) 151 CLR 422 at 429; [1983] HCA 5.

(f) 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: Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337.”

[30] The Respondent states that applying those general principles to the circumstances of the present case:

“(a) the proper construction of clause 11.4 of the 2011 Agreement begins with the consideration of its natural and ordinary meaning, but considered in light of its particular industrial context;

(b) the construction of the instrument requires discernment of the intention of the parties, bearing in mind that they were of a practical frame of mind;

(c) the subjective intention of the AMWU and its representatives is irrelevant and it is the outward manifestation of their intentions which matters; and

(d) to the extent that the clause is ambiguous, evidence of surrounding circumstances is admissible.”

[31] In response to the Applicant’s assertion that clause 11.4 and the annotation that the apprentices are entitled to be paid a percentage of the C7 rate, the Respondent asserts that that construction is entirely speculative and there is no textual or other link between clause 11.4 and the annotation to the wage appendix, let along the C7 rate. Nor, they assert, is there any other reason to equate “The Tradesman’s rate” with the C7 rate”.

[32] The Respondent states that this is particularly so if the Commission accepts the view of a witness for the Respondent, Mr Fenske, that the annotation itself is nothing more than a promise that future tradespersons would be employed, in the sense of hire or engaged, at a minimum C8 level. As Mr Fenske explains in his statement at [7], this was a matter of job security and had nothing to do with apprentice wages.

[33] The Respondent asserts that there are several other contextual matters that are of significance in this matter. They state:

“First and most importantly, the expression “Tradesmans rate” or “trades rate is notorious in industrial relations. As Ms Purdy explains, the expression is well-known industrial jargon for the C10 rate and is used interchangeably with that phrase. No doubt the Commission would itself be familiar with the phrase and its significance in the history of industrial relations. Consistently with the decisions in Amcor and Kucks referred to above, the phrase “the Tradesmans rate” in clause 11.4 should be construed in the context of its particular industrial meaning.”

[34] The Commission noted that during the proceedings there appeared to be agreement that the term “Tradesmans rate”, “trades rate” or “tradespersons rate” all have the same meaning.

[35] The Respondent further states:

“By contrast, there is no context in which the expression “tradesman’s rate” is used interchangeably with the C8 or C7 rate. Those are special tradesperson grades and are known as such.

Second, the orthodox approach to setting apprentices wages is that they are set as percentages of the C10 rate: see for example clause 25.5 of the Manufacturing and Associates Industries Award 2010 and clause 5.3.1(b) of the Metal, Engineering and Associated Industries Award 1998. Although not determinative of itself, this is a strong indication that the most likely position is that asserted by the respondent.

Third, the AMWU did not take any action in respect of this matter until twelve months after the Agreement was approved. The proposition that a union, having won a 20% increase in wages for apprentices, would then neglect to enforce its win is entirely implausible. This is a strong indicator that the union did not itself perceive that apprentice wages had been increased in the manner now claimed.

Fourth, apprentices under the 2009 Agreement were paid a fraction of the C10 rate even though there were no C10 tradesperson employed at the time. In other words, there has not historically been a connection between apprentice wages and the actual classification of tradespersons on the site.”

[36] The Respondent further states:

“It seems uncontroversial in this case that the contested provision is open to more than one meaning. It is therefore open to the Commission to rely on evidence of circumstances extrinsic to the instrument, including evidence regarding the conduct of negotiations.

The evidence demonstrates that the AMWU proposed a particular clause which, it should be presumed, gave effect to its claim. ABB partially accepted the claim and as a result accepted an amended version of the AMWU clause.

Among other things, the proposed clause differed from the clause in the 2009 Agreement in that it referred to “the Trademan’s rate” rather than “the C10 rate”. But is not self-evidently a matter of significance, nor was it identified as such by its creator, the AMWU.

There is otherwise no evidence to suggest that an increased apprentice wages formed part of the AMWU claim. The respondent’s evidence, buttressed by contemporaneous notes, is utterly clear on this point: there was no claim, no negotiations and no agreement.

The applicant itself no longer asserts that there was such a claim, or at least not one expressly articulated. Rather, it somewhat diffidently suggests that the change to clause 11.4 and the appendix ought to have made it obvious to ABB that the AMWU sought an increase in apprentice wages.”

[37] The Respondent states that the Applicant asks the Commission to accept that the parties manifested an intention to increase apprentice wages by 20% without ever having debated the issue or even directly referring to it.

[38] The Respondent states:

“It should be remembered that the focus is “not with the real intentions of the parties, but with the outward manifestations of those intentions”. As it was put by Gaudron, McHugh, Callinan and Hayne JJ in Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [25]:

[the relevant intention] ... describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.

There is nothing in either party’s conduct which objectively speaking conveyed an intention to increase apprentice wages by 20%.”

[39] The Respondent finally asserts that the proper construction of the words “the Tradesmans rate as set out in this agreement” in clause 11.4 of the 2011 Agreement is that the phrase requires payment as the C10 rate applicable under the 2011 Agreement.

[40] Evidence was provided by Mr Marcus Fenske, who is employed as the site manager responsible for the Fosters site at Abbotsford. Mr Fenske took part in those negotiations.

[41] Mr Fenske states that during the negotiations in relation to wage increases to apprentices beyond the general increases provided to all employees there was no claim for an increase in apprentice wages and there were no discussions during negotiations about any increase in wages for apprentices.

[42] Mr Fenske states that he is particularly confident in saying that because Ms Donna Purdy and he worked hard to establish, with some precision, the actual increase in labour costs resulting from the 2011 Agreement.

[43] Mr Fenske states that they also worked hard to have the increases approved by senior management, particularly having regard to the costs restraints that applied under their contract with Fosters. They did not calculate the labour cost increase on the basis of any increase to apprentice wages and no such increase was endorsed by ABB management.

[44] Mr Fenske noted that prior to the 2011 Agreement they had no C10 tradespeople but their apprentices were paid a percentage of the C10 rate. The position under the 2009 and 2011 Agreements was the same in that respect.

[45] Further evidence was provided Ms Donna Purdy, who is a Human Resources Business Partner employed by ABB Ltd. Ms Purdy also participated on behalf of the Respondent in the bargaining process with the Applicant. She asserts that she kept handwritten notes and an electronic spreadsheet log of the elements of the claim and the Company’s responses throughout the progress of the negotiations.

[46] Ms Purdy states:

“The AMWU’s claim included a claim in respect of apprentices. The apprentices claim was specifically identified by the AMWU as having two main elements: first, a claim that ABB engage apprentices directly rather than through a registered training organisation; and second, a claim that ABB commit to engagement of a certain number of apprentices each year.

There was never any claim by the AMWU for an increase in apprentice wages beyond the general increase applying to those employees covered by the proposed agreement. It follows that there was no discussion of any increase and certainly no agreement to increased apprentice wages.”

[47] Under cross-examination, Ms Purdy did accept that there was a claim to increase the percentages that applied to the apprentice rates but that was rejected by the Respondent.

[48] Ms Purdy asserts that any increase from 14% to 19% in wages for apprentices without objection or even comment is entirely implausible. She states that in her experience that would be true in any wage negotiations, and particularly so in this case where they operated under an “open book” contract arrangement with Fosters. She states that the effect of that arrangement was that any increases in labour costs had to be agreed to by Fosters, failing which they would come out of ABB’s already slim profit margin on the work.

[49] Ms Purdy further states that Fosters ultimately agreed to a 5% increase in wage rates. Fosters did not agree to any increase in apprentice wages beyond that amount. Any increases in apprentice wages would have directly impacted on ABB’s profit margin and would have been a matter of significance for the Respondent.

[50] Ms Purdy confirms that apprentices working under the 2009 Agreement were paid a percentage of the C10 rate, even though all tradespersons at the site, to the best of her recollection, were classified at C8 or higher. She states that the apprentices’ pay rate was not connected to the tradesperson’s classification under the 2009 Agreement and was not connected to the tradesperson’s classification under the 2011 Agreement.

[51] Ms Purdy finally states that the reference to the tradesman’s rate in clause 11.4 of the 2011 Agreement does not have any relationship to the notation in the wage appendix. She states that it is simply a reference to the C10 rate, which is commonly referred to in industrial jargon as the “tradesman’s rate” or the “trades rate” and that it is well known in the industrial context that “tradesman’s rate” or “trades rate” means the base rate of pay for a qualified tradesperson, that is, the C10 rate.

Conclusion

[52] The Commission accepts that the Applicant initially put forward in the negotiations an increase in the percentages that applied to each level of the four year scale for apprentices. That was very quickly rejected by the Respondent. The Applicant then put forward two parts to their apprentice claim. One part dealt with the ratio of apprentices to tradespersons; the second part dealt with the apprentices being directly employed by the Respondent.

[53] The Commission does not accept, on the balance of probabilities, that there was any claim put forward by the Applicant in relation to the apprentices being paid a percentage of, then, the C8 rate, now being claimed as the C7 rate.

[54] Clause 11.4 of the 2011 Agreement states:

“Apprentices will be paid the following percentages of the Tradesmans rate of pay as set out in this agreement”.

[55] The Tradesmans rate of pay is Appendix 1 of the 2011 Agreement. It has seven levels in the classification structure ranging from C12 to C6. C10 is the tradesmans rate.

[56] As previously indicated, the term “tradesman”, “trades rate” or “tradesperson” all have the same meaning.

[57] The Commission is satisfied, based on the material provided to it, that there was never any claim made by the Applicant to align the apprentices percentage rate to the C8 or to the C7 level. If such a claim were made it would have resulted in wage increases of up to 20% for apprentices alone.

[58] The Commission accepts that such an increase would result in vigorous negotiations by both parties as to the impact those increases would have, not only on the Respondent’s operations but also on the relationship between the Respondent and Fosters because, given the evidence of Mr Fenske and Mr Purdy, those increases would have to be signed off by Fosters.

[59] Mr Fenske and Ms Purdy were both asked questions by the Commission as to whether they did calculations based on those increases that the Applicant states were agreed to. Both Mr Fenske and Ms Purdy stated that no such calculations had been done because no such thing had been agreed to, nor had any claim been put forward. Therefore, it wasn’t an issue.

[60] In looking at the proper construction of clause 11.4 of the 2011 Agreement, the Commission must give consideration to its natural and ordinary meaning but considered in light of its particular industrial context. The Commission must also give consideration to the history of the application of the percentages that apply to each level of the apprentices’ rate and that is very clearly identified with the tradesman’s rate, the C10 rate.

[61] The Commission is satisfied that there is no relationship between clause 11.4 and Appendix 1 of the 2011 Agreement, in particular the annotation “All tradespersons will be employed at the minimum C8 level.” It is an accepted proposition in the industrial context that, when referring to a “tradesmans rate”, “trades rate” or “tradespersons rate”, one is referring to the C10 classification level.

[62] Accordingly, the Commission dismisses the application.

COMMISSIONER

Appearances:

J Maloney for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

O Fagir, solicitor, for ABB Australia Pty Limited.

Hearing details:

2012.

Melbourne:

October 29 - Conference

November 22 - Conference.

2013.

Melbourne:

April 18 - Hearing

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<Price code C, AE888543  PR535877>