“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU) v Downer EDI Engineering Power Pty Ltd

[2020] FWC 494

[2020] FWC 494

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
Downer EDI Engineering Power Pty Ltd
(C2019/3260)

COMMISSIONER MCKINNON MELBOURNE, 5 FEBRUARY 2020

Alleged dispute about matters arising under enterprise agreement – rate of leading hand allowance.

[1] This decision is about how to calculate leading hand allowances under the Downer EDI Engineering Power Pty Ltd/AMWU/AWU/CFMEU Metal Engineering On-Site Construction Agreement 2017-2020 1.

[2] The Australian Manufacturing Workers’ Union says the allowance is to be calculated based on rates of pay set by clause 13 of the Agreement. Downer EDI Engineering Power says the calculation is based on rates of pay in the Building and Construction General On-Site Award 2010. The 2010 Award is relevant because except to the extent of inconsistency, its terms have effect as terms of the Agreement. 2

[3] Clause 32 of the Agreement permits disputes of this kind to be referred to the Commission for resolution. As the parties agree that the disputes procedure in clause 32 has been followed, the dispute can now be resolved by arbitration.

[4] For the reasons that follow, I find that leading hand allowances are calculated as a percentage of weekly rates of pay in the 2010 Award.

The Agreement

[5] The Agreement incorporates the 2010 Award as varied, as well as the National Metal and Engineering On-site Construction Industry Award 1999” as it stood in 2002 and the National Metal and Engineering On-site Construction Industry Award 2002 (the 2002 Award) as varied. The “1999” Award does not exist and is instead likely intended to be a reference to the former federal National Metal and Engineering On-site Construction Industry Award 1989 (the 1989 Award). 3For the purposes of the Agreement, it prevails over the 2002 Award and/or the 2010 Award unless those instruments are more beneficial to employees in a particular respect. Express provisions of the Agreement prevail to the extent of inconsistency with the incorporated award terms.

[6] Under clause 7.4, the Agreement is to be interpreted so that references to “the Award” or “Award terms” are references to whichever incorporated award is applicable in context.

[7] Rates of pay and allowances are dealt with in the Agreement in the following way.

1. Clause 9 sets the formula for calculating an “all purpose” hourly rate under the Agreement as the ordinary weekly wage rate divided by 36.

2. Clause 13 requires Downer EDI to pay employees a weekly wage at the rates set out in that clause. Clause 25 provides for a 25% casual loading on the wage rates in the Agreement. Clause 26 provides for apprentices to be paid a percentage of the relevant Agreement rate of pay.

3. Clause 15 provides for adjustment of “any allowance or special rate that has application” under the Agreement commensurate with wage increases under the Agreement unless there is a clear contrary intention.

4. Clause 11 provides for meal allowance in connection with overtime. The amount of the allowance is fixed for 2017, 2018 and 2019 at rates that are higher than the 2010 Award.

5. Clauses 16 (tool), 17 (construction certificates), and 23 (protective clothing) contain allowances that are expressed as dollar amounts that are higher than comparable award allowances and are fixed for the life of the Agreement (that is, not adjusted by annual wage increments under clause 15). Clauses 18 (first aid), 19 (travel) and 20 (living away from home) similarly provide for allowances expressed as fixed dollar amounts and which are expressly noted as “in substitution for” comparable allowances in the incorporated awards.

6. Appendix A contains specific provisions for site allowance including when it is payable as well as the value of the allowance and method of adjustment.

7. Appendix B contains separate wage rates and allowances for work on major construction projects. Site and redundancy allowances in Appendix B are expressed as fixed hourly rates – the latter “in lieu of” clause 28 of the Agreement and the incorporated award terms.

[8] As can be seen, specific attention has been given by the makers of the Agreement to the fixing of certain allowances in the Agreement. In each case, these allowances supersede and replace terms of the relevant incorporated award. And except by incorporation, the Agreement is silent on leading hand allowance.

The Incorporated Awards

[9] Each of the three superseded federal awards provide for leading hand allowance, but it is the 2010 Award term that prevails because it is the most beneficial (both due its broader application and monetary value).

[10] Clauses 19.1 and 19.2 of the 2010 Award are found in the clause titled “Minimum wages”. Clause 19.1 sets minimum weekly and hourly wages for classifications in the 2010 Award. Clause 19.2 provides as follows:

19.2 Leading hands

(a) A person specifically appointed to be a leading hand must be paid at the rate of the undermentioned percentages of the above weekly rates of the highest classification supervised, or the employee’s own rate, whichever is the higher in accordance with the number of persons in the employee’s charge.

In charge of:	% of the appropriate weekly rate per week
1 person	2.4
2 to 5 persons	5.3
6 to 10 persons	6.7
More than 10 persons	9.0

[11] The “above weekly rates” referred to in clause 19.2 of the 2010 Award are as follows:

Level	Minimum weekly wage
$
Level 9 (ECW 9)	1009.00
Level 8 (CW/ECW 8)	991.60
Level 7 (CW/ECW 7)	968.20
Level 6 (CW/ECW 6)	941.20
Level 5 (CW/ECW 5)	916.80
Level 4 (CW/ECW 4)	889.60
Level 3 (CW/ECW 3)	862.50
Level 2 (CW/ECW 2)	838.00
Level 1 (CW/ECW 1):
CW/ECW 1 (level d)	821.00
CW/ECW 1 (level c)	805.90
CW/ECW 1 (level b)	794.60
CW/ECW1 (level a)	778.60

[12] The formula is thus:

Leading hand percentage	x	Applicable weekly rate above
(no. of employees supervised)		(higher of employee’s classification or highest classification supervised)

[13] Applying this formula, the current monetary value of leading hand allowances under the 2010 Award is:

In charge of
1 person	2-5 persons	6-10 persons	>10 persons
Level	Minimum weekly wage	2.40%	5.30%	6.70%	9.00%
$
Level 9	1009.00	$24.22	$ 53.48	$ 67.60	$90.81
Level 8	991.60	$23.80	$ 52.55	$ 66.44	$89.24
Level 7	968.20	$23.24	$ 51.31	$ 64.87	$87.14
Level 6	941.20	$22.59	$ 49.88	$ 63.06	$84.71
Level 5	916.80	$22.00	$ 48.59	$ 61.43	$82.51
Level 4	889.60	$21.35	$ 47.15	$ 59.60	$80.06
Level 3	862.50	$20.70	$ 45.71	$ 57.79	$77.63
Level 2	838.00	$20.11	$ 44.41	$ 56.15	$75.42
Level 1
(level d)	821.00	$19.70	$ 43.51	$ 55.01	$73.89
(level c)	805.90	$19.34	$ 42.71	$ 54.00	$72.53
(level b)	794.60	$19.07	$ 42.11	$ 53.24	$71.51
(level a)	778.60	$18.69	$ 41.27	$ 52.17	$70.07

Consideration

[14] The question is whether these same monetary values for leading hand allowance apply when clause 19.2 is read as a term of the Agreement, either because the rates of pay in clause 19.1 of the 2010 Award have been displaced or because the reference to an “employee’s own rate” in clause 19.2 means something other than a rate of pay provided for in clause 19.1.

[15] Clause 19.1 sets minimum weekly wages for each classification covered by the 2010 Award. It is inconsistent with clause 13 and Appendix B of the Agreement, each of which also expressly set minimum weekly wages for employees covered by the Agreement. To the extent that they fix new minimum weekly rates of pay, clause 13 and Appendix B of the Agreement prevail over clause 19.1. They do not, however, modify clause 19.1 for all purposes – that is, by substituting the rates in the table in clause 19.1 for the rates in the tables in clause 13 and/or Appendix B. It is only to the extent of the inconsistency with express terms of the Agreement that the incorporated award terms are displaced.

[16] Clause 19.2 provides for leading hand allowance and sets the formula for calculation of the allowance. As discussed above, the formula for calculating the allowance is a percentage of the “above weekly rates of the highest classification supervised, or the employee's own rate, whichever is the higher”.

[17] Plainly, in the award setting, the phrase “above weekly rates” refers to the weekly rates in clause 19.1 of the 2010 Award, as does the related reference in the table in clause 19.2 to the “appropriate weekly rate”. The phrase “employee’s own rate” refers to a rate of pay in the classification table in clause 19.1 that corresponds to the classification of the employee concerned.

[18] In this regard, the evident purpose of the distinction between an employee’s own rate and that of the highest person supervised is that the leading hand be rewarded by reference to the earnings of the highest paid person in the team, whether that be themselves or an employee under their supervision. The actual rate to be used for the purpose of calculating leading hand allowance under clause 19.2 depends on whether the employee’s own rate (that is, the rate applicable to the employee’s classification in clause 19.1) is higher than the rate(s) in clause 19.1 applicable to employees under supervision. The higher of the two rates is applied.

[19] There is no inconsistency between the express terms of the Agreement and clause 19.2 of the 2010 Award. Except by incorporation, the Agreement does not deal with leading hand allowance at all. In this respect, it is different to other award-derived allowances that are expressly dealt with in the Agreement and each fixed at rates that are higher than the 2010 Award.

[20] It is clear that the makers of the Agreement turned their mind specifically to the treatment of certain allowances in the Agreement, including the interaction between relevant award and agreement terms. For matters not dealt with expressly in the Agreement, the underlying safety net of terms and conditions established by the 2010 Award and its predecessors was preserved on the basis that the most beneficial of the award terms should apply.

[21] Consistent with that approach, leading hand allowance applies as a term of the Agreement in the most beneficial of its incorporated forms – that is, as found in the 2010 Award. Clause 19.2 applies on its terms, but as a term of the Agreement. The “above weekly rates” referred to in clause 19.2 for the purpose of calculating leading hand allowance are the rates of pay contained in the table in clause 19.1 of the 2010 Award. No contrary intention is evident from a reading of the terms of the Agreement as a whole.

[22] This is not a case where the terms of the Agreement are ambiguous or unclear. There is no warrant to read the Agreement as having been intended to vary clause 19.2 to remove the word “above”, or to substitute the wage rates in the table in 19.1 with those found in the Agreement - either for all purposes or for the purpose of leading hand allowance specifically. Given the detailed consideration given to adjustment of other award-derived rates and allowances in the Agreement, one would expect such an intention to have been made express.

Conclusion

[23] The result is that leading hand allowance under the Agreement is calculated by reference to the weekly wage rates in clause 19.1 of the 2010 Award, as varied.

[24] The dispute is determined accordingly.

COMMISSIONER

Appearances:

J Gardner for The Australian Workers’ Union.

D North for Downer EDI Engineering Power Pty Ltd

Hearing details:

2019.

Melbourne:

December 2.

Printed by authority of the Commonwealth Government Printer

<PR716296>

 1   [2018] FWCA 3058; AE428558.

 2   The Agreement, cl.7.2A.

 3   N100 A M Print H8482, 29 September 1989 ([incorporating N100 A-a N Print J2840]).