"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Autocare Services Pty Ltd

[2020] FWC 6632

[2020] FWC 6632

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
v
Autocare Services Pty Ltd
(C2020/7341)

COMMISSIONER MCKINNON MELBOURNE, 9 DECEMBER 2020

Alleged dispute about any matters arising under the enterprise agreement and the NES – Autocare Services (Vehicle Processing) Enterprise Agreement 2018 – meaning of “ordinary time rate of pay”.

[1] Autocare Services Pty Ltd recently announced redundancies affecting employees covered by the Autocare Services (Vehicle Processing) Enterprise Agreement 2018. The Agreement covers Autocare Services, its employees in relevant classifications and the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

[2] There is a dispute about how to calculate Agreement entitlements expressed by reference to the “ordinary time rate of pay”. The parties have followed clause 10 of the Agreement in seeking to resolve the dispute but have been unsuccessful. The question is, what is the meaning of “ordinary time rate of pay” in the Agreement? It is a question that is plainly about matters arising under the Agreement.

[3] The approach to interpretation of enterprise agreement terms is well settled. The starting point is to consider the ordinary meaning of the words used in the Agreement, having regard to their industrial context and evident purpose. The search is for the objective common intention of the makers of the enterprise agreement, who likely had a ‘practical bent of mind’ rather than being focused on legal niceties and jargon. The focus of the inquiry is on the language used to give effect to their agreement. Only where there is ambiguity, evidence tending to establish relevant objective background facts known to both parties may be admitted to aid interpretation. 1

[4] The Agreement incorporates the terms of the Vehicle Manufacturing – Repair, Services and Retail Award 2010 as it stood at the time the Agreement was made on 10 May 2019. Terms of the Agreement prevail over terms of the Award to the extent of inconsistency. The Agreement is also to be read ‘in conjunction with’ the National Employment Standards.

[5] The term “ordinary time rate of pay” is used directly in the Agreement in five places, dealing with payment for a crib break during overtime (clause 26.7), payment for personal/carer’s leave when taken (clause 38.3), payment for jury service (clause 45.1), payment for public holidays (clause 46.2) and redundancy (clause 50.7). It is used to specify the rate at which these entitlements are to be calculated, and expressed interchangeably as “the ordinary time rate of pay” and the “Employee’s ordinary time rate of pay”. It is also found in incorporated terms of the Award dealing with payment for travelling time (at clause 9.6(b)(i)) and standing by (clause 28.7). The term is not expressly defined either in the Agreement or the Award.

[6] “Ordinary time rate of pay” is not the only basis for calculating entitlements under the Agreement. Annual leave is calculated at the “base rate of pay”. The meaning of this term is explained in clause 35, which provides that “one day of Annual Leave for a Full-Time Employee would equate to ordinary hours of work at hours per day at the Employee's base rate of pay”. The parties agree that “base rate of pay” for this purpose means the employee’s rate of pay in clause 23 of the Agreement. This interpretation is the necessary result of reading the Agreement, as the makers intended, “in conjunction with” the National Employment Standards. It also accords with the ordinary meaning of base or ‘minimum’ rate in the context of the Agreement as a whole.

[7] The Agreement also uses the term “ordinary base time rate of pay” for the purposes of calculating compassionate leave entitlements. Clause 41 defines this term as the rate “specified in Clause 24 of this Agreement”, but the reference to clause 24 of the Agreement is an obvious error, because that clause deals with shift loadings. Read in context, it is clearly intended to be a reference to clause 23, which contains the Agreement’s rates of pay. What that means is that “base rate of pay” and “ordinary base time rate of pay” have the same meaning in the Agreement.

[8] Autocare Services says that the same is true for the phrase “ordinary time rate of pay” in the Agreement, having regard to its use and treatment in predecessor agreements and awards. It points to the historical definition of severance pay in earlier iterations of the Award, which included rates of pay but not overtime, penalty rates, special rates and a range of allowances. For the reasons that follow, it is neither necessary nor appropriate to delve into the history of industrial arrangements between the parties to understand the phrase in dispute, because the meaning of ordinary time rate of pay in the Agreement is clear. Even so, the contention wrongly assumes that severance pay was formerly calculated only by reference to minimum hourly rates of pay, when the definition of ‘weeks pay’ for that purpose was not so limited.

[9] The Union submits that when regard is had to the terms of the incorporated Award, the ordinary time rate of pay includes both base rates of pay in clause 23 of the Agreement and “all commissions, shift-loadings, over-award payments and allowances”. The Union points to the calculation of annual leave entitlements in clause 29.9(a) of the Award, which is reliant on the concept of wages for ordinary hours not worked without any term giving expression to that concept. It is a concept unique to the particular provision of the Award. The Union also points to clause 18.1(c) of the Award, which operates as an incorporated term of the Agreement and deals with transfer to lower paid duties on redundancy.

[10] Clause 18(c) relies on the more common formulation of “ordinary rate of pay”, a term used in the Award in connection with the calculation of weekend and public holiday pay. Clause 18.1(c) makes specific provision for the ordinary rate of pay to be calculated inclusive of “all-purpose allowances, shift rates and penalty rates applicable to ordinary hours”. The Union submits that the term is synonymous with ordinary time rate of pay in the Agreement.

[11] In the Award, the ordinary rate of pay is given a broader meaning in clause 18.1(c) than elsewhere in the Award. It does not affect the calculation of redundancy pay entitlements which are derived from the National Employment Standards and calculated on the base rate of pay defined in section 16 of the Fair Work Act 2009 (Cth) (Act). By contrast, redundancy pay under the Agreement is not determined by reference to the National Employment Standards. Clause 50.7 of the Agreement instead provides for redundancy to be calculated “at the Employee’s ordinary time rate of pay”, which finds its meaning in the terms of the Agreement as a whole.

[12] While clause 50.7 does draw on the National Employment Standards, it is for the evident and limited purpose of ensuring that the Agreement is not taken to ‘exclude’ the National Employment Standards under section 55 of the Act when submitted for approval to the Commission. It is a protective provision that otherwise has no apparent work to do because the minimum payment for redundancy pay in the Agreement is 4 weeks’ pay and wage rates in the Agreement are higher than rates of pay in the modern award.

[13] In my view, the term “ordinary time rate of pay” in the Agreement means the rate of pay that is payable to an employee under the Agreement for their ordinary hours of work. Ordinary hours of work are set out in clause 21 of the Agreement. For full time employees, these are 38 hours per week (averaged over a 28 day period) between the relevant span of days and ordinary hours. For day shift, the span is 6.00am and 6.00pm, Monday to Friday. For afternoon shift, it is hours of work starting between 12.00pm and 6.00pm. For night shift, it is hours of work commencing after 6.00pm and not later than 4.00am, Monday to Friday. The meaning of ordinary time rate of pay is not affected by the defined term “ordinary time earnings” in superannuation guarantee legislation, which is a concept drawn from a separate statutory regime and not otherwise found in the language of the Agreement.

[14] The ordinary time rate of pay does not include overtime or penalties for work outside of ordinary hours, but nor is it limited to the base rate of pay in clause 23 of the Agreement. The connection drawn in the language of clauses 26, 45 and 50 to “the Employee’s” ordinary time rate of pay suggest that the makers of the Agreement intended it to be a question of fact in each case. For some employees (and perhaps the majority) the ordinary time rate of pay will equate to the base rate of pay because no additional amounts are payable to the employee for work during ordinary hours. For others, the ordinary time rate of pay will be more than the base rate of pay because of the nature of their work, their ordinary hours and their entitlement to one or more allowances under clause 26 of the Agreement. It does not, however, extend to ‘over-award’ payments - that is, those derived from a source other than the Agreement or its incorporated terms.

[15] Clause 26 of the Agreement provides for team leader allowance, tool allowance, first aid allowance, travel allowance, overtime and off site meal allowances and overtime crib breaks. Allowances that are only payable when overtime is worked will self-evidently not fall within the meaning of ordinary time rate of pay. The same is true of allowances in the nature of a reimbursement of expenses, including off-site meal allowance and compensation for travel.

[16] Team Leader allowance is payable “per week” to “allocated Employees who perform the role as per the agreed position description”. The allowance is payable in respect of time worked during ordinary hours by relevant employees each week. For those employees, it forms part of their ordinary time rate of pay.

[17] Tool allowance is only applicable under the Agreement when an employee is required to provide their own tool kit to perform duties as stipulated in the role classifications in clause 19 of the Agreement. The allowance will form part of the ordinary time rate of pay for employees whose contract of employment requires them to provide a tool kit to enable them to perform their duties during ordinary hours of work.

[18] First aid allowance is payable to designated employees who have obtained first aid training organized by the Company. The Agreement contemplates that one employee each week will be entitled to first aid allowance and that if first aid duties are shared, the allowance will be apportioned on a pro rata basis. In other words, it is paid on a rostered ‘per shift’ basis. Whether it forms part of the ordinary time rate of pay for the purpose of calculating entitlements depends on whether, and the extent to which, an employee can be considered to have been “designated” to perform first aid duties at the point in time at which the entitlement in question arises.

[19] Shift loadings form part of the ordinary time rate of pay, because shift loadings are payable for ordinary hours of work while on shiftwork.

[20] The construction I prefer gives rise to a question about whether the parties could have intended for different leave entitlements to be calculated at different rates under the Agreement. This is because personal/carers’ leave, jury service and public holidays not worked are each paid at the ordinary time rate of pay while annual leave and compassionate leave are paid at the base rate of pay. Long service leave is separately provided for under relevant state legislation.

[21] In the case of both annual leave and compassionate leave, the Agreement evinces an intention to replicate (in summary form) the National Employment Standards. A different intention is evident in relation to personal leave and jury service, each of which supplement the National Employment Standards respectively, by providing for cashing out of personal leave as a way of incentivising attendance and for jury service, by conferring an entitlement of more than 10 days’ pay. The approach to public holidays is separately informed by the Award.

[22] In my view, no logical inconsistency arises in relation to the payment of annual leave under the Agreement because unlike other leave entitlements, it separately attracts a loading of at least 17.5% (clause 29.9 of the Award). There is however a logical inconsistency in relation to compassionate leave, because of the different (and specific) way that clause 41 is expressed. The best answer as to why this is so is that the makers of the Agreement did not turn their minds to the matter of logical coherence when settling upon the terms of entitlements that now have a statutory foundation, cannot be excluded by the Agreement and are liable to change by reason of factors outside of their control.

[23] The dispute is determined accordingly.

COMMISSIONER

Final written submissions:

Applicant, 26 October 2020
Respondent, 9 November 2020
Applicant, in reply, 16 November 2020

Printed by authority of the Commonwealth Government Printer

<PR725295>

 1   Workpac Pty Ltd v Skene [2018] FCAFC 131 at [197]; see also Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) v Berri Pty Limited[2017] FWCFB 3005.