[2015] FWC 1959 [Note: An appeal pursuant to s.604 (C2015/839) was lodged against this decision - refer to Full Bench decision dated 22 June 2015 [[2015] FWCFB 3912] for result of appeal.]

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
Fonterra Brands (Australia) Pty Ltd
(C2014/1548)

COMMISSIONER RYAN

MELBOURNE, 31 MARCH 2015

Alleged dispute concerning classification structure and wage maintenance.

[1] On 25 August 2014 the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) made an application under s.739 of the Fair Work Act 2009 (the Act) to deal with a dispute in accordance with the dispute resolution process found in clause 6 of the Fonterra (Echuca) Agreement 2013 Part II (the Agreement). The Agreement was approved under the Fair Work Act 2009 (the Act) on 22 July 2013. The employer covered by the Agreement is Fonterra Brands (Australia) Pty Ltd (Fonterra).

[2] The dispute relates to a reorganisation of part of the processing and distribution operations of the Fonterra plant at Echuca and in particular relates to the classification and rates of pay of employees after the reorganisation is complete. The reorganisation occurred contemporaneously with a number of employees being made redundant due to a downturn in Fonterra’s Echuca operations.

[3] This matter was programmed for arbitration before me together with another dispute between the parties pursuant to the same enterprise agreement notified by the AMWU on 9 October 2014. That dispute, C2014/1876, related to the meaning to be given to the phrase “ordinary pay” in relation to the payment of redundancy pay to the employees made redundant contemporaneously with the reorganisation at the Echuca site.

[4] The matter was not subject to any conciliation as there was consent of the parties to the dispute that it proceed straight to arbitration.

[5] The AMWU was represented by Mr David Vroland and Mr Chris O’Grady was granted permission to represent Fonterra.

[6] Evidence for the AMWU was given by Mr Gwynne Healey, team coordinator (production) and AMWU shop steward; Mr Tom Hale, AMWU Organiser for the Fonterra site and Mr Damian King, former AMWU Organiser for the Fonterra site from January 1990 to May 2012.

[7] Evidence for Fonterra was given by Richard Raymond, Regional Manager - Milk Supply North; Rick Carpenter, National Human Resources Manager - Operations, Ingredients & Employee Relations; Derek Woodworth, Echuca Site Manager and Gillian McKnight, Regional HR Manager - North.

Details of the Dispute

[8] Fonterra operates a yoghurt and other dairy products manufacturing and packaging plant at Echuca. Once yoghurt is made flavouring is added and the flavoured yoghurt is inserted into a variety of containers and these containers are then packaged and readied for distribution.

[9] The dispute only concerns operations after the yoghurt has been made.

[10] The production process after yoghurt is made is made up of a series of production lines where the made yoghurt has the relevant flavour added, the flavoured yoghurt is injected into plastic containers ranging from small snack size to 500g size containers. The containers have plastic labels attached and the labelled containers are then packed at the end of the production line. The packed yoghurt is then moved to the distribution store on site awaiting for transport offsite.

[11] Each production line is currently staffed by three employees. The senior employee on each line is the Team Coordinator. The other two employees are Line Operators. The Team Coordinator can perform all of the tasks performed by each of the two Line Operators but there are tasks performed by the Team Coordinator that are not performed by the Line Operators. The Team Coordinator on each line reports to a Shift Manager.

[12] Fonterra intend to reorganize the supervision of the production lines by introducing a new position of Assistant Shift Manager who would take over some of the supervisory duties performed by the Team Coordinator and the remaining duties performed only by the Team Coordinator would be performed by any of the 3 line operators.

[13] The effect of the reorganisation would be that 22 Team Coordinator roles would be removed from the business and be replaced with three new Assistant Shift Managers. The Team Coordinators who remained in employment (a number accepted redundancy and termination of employment) would revert to Line Operator positions.

[14] Currently the Team Coordinators are Level 8 employees under the classification structure in the Agreement and this equates to a C10 classification in the Manufacturing and Associated Industries and Occupations Award. Line Operators are Level 6 employees under the Agreement and this equates to 92.4% of a C10 classification. The new Assistant Shift Manager position will sit above the classification structure contained in the Agreement and it is intended by Fonterra that the new position of Assistant Shift Manager will not be covered by the Agreement.

[15] The new Assistant Shift Manger will primarily be based in the Shift Manger’s office but will of necessity need to visit the production lines and interact with the Line Operators on a regular basis.

[16] The AMWU in its written submissions filed on 26 September 2014 posed a series of questions for the Commission to answer.

“12. Thus the AMWU seeks a determination from the FWC resolving the following questions:

a. What part of the current team coordinators’ role as set out in the current relevant position description will be performed by the newly proposed assistant managers?

b. Which class of employees, if any, will perform the residual part of the current team coordinators’ roles and to what extent?

c. Following from the answers to (a) and (b):

i. Is the new assistant shift manager position covered by the Agreement?

ii. What is/are the appropriate classification level(s) for line operators under the Agreement?”

[17] Fonterra in its written submissions filed on 26 November 2014 identified the following issues for determination:

“1.3. However, using the same general structure as the AMWU’s 26 September 2014 outline of submissions, there are five main issues for determination:

(a) Issue 1 - Are the new Assistant Shift Manager positions covered by the classification levels in the 2013 Agreement?
(b) Issue 2 - What is the appropriate classification of the remaining Line Operators under the new structure?
(c) Issue 3 - Has Fonterra failed to properly consult with the AMWU in accordance with subclause 5.1.1?
(d) Issue 4 - Is Fonterra barred from implementing the proposed restructure changes by virtue of clause 5.4?
(e) Issue 5 - Is Fonterra required to maintain change-affected employees’ ‘average ordinary weekly wages’ by virtue of subclause 5.1.4?

Contentions of the Parties

[18] Whilst both the AMWU and Fonterra posed specific questions for the Commission to answer the way in which both parties addressed the issues in dispute was by way of considering a number of separate issues. The AMWU in its Outline of Submissions of the Applicant identified three issues as follows:

Elimination of team coordinator role

Failure to properly consult

Reduction of employees’ wages.

[19] Fonterra in its Outline of Submissions identified five issues and the AMWU in its Reply Submissions used the same 5 issues. For ease of convenience the Commission will use the same five issues to consider the matters in dispute.

ISSUE 1 - ASSISTANT SHIFT MANAGER’S EA COVERAGE
ISSUE 2 - LINE OPERATOR CLASSIFICATION
ISSUE 3 - ALLEGED FAILURE TO CONSULT
ISSUE 4 - BARRIER IMPLEMENTATION
ISSUE 5 - WAGE MAINTENANCE

Interpretation of the Agreement

[20] The position adopted by both parties involves each party attributing a particular meaning to certain terms of the Agreement. In addressing the issues raised by the parties and in providing answers to the specific questions posed by the parties the Commission will need to discern the meaning of certain terms of the Agreement.

[21] The proper approach to the interpretation of enterprise agreements was recently considered by a Full Bench of the Commission in AMIEU v Golden Cockerel P/L 1, Justice Ross, President, Gostencnik DP, Johns C. The decision of the Full Bench was given after the conclusion of the hearings in this matter.

[22] The Full Bench in AMIEU v Golden Cockerel P/L said:

“Principles of construction of agreements

General approach

[19] The general approach to the construction of instruments of the kind at issue here is set out in the judgment of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (Wanneroo):

‘The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘...the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘... ideas that gave rise to an expression in a document from which it has been taken’ - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services union v Treasurer of the Commonwealth of Australia (1998)80 IR 345 (Marshall J).’

[20] To this we add the oft-quoted observations of Madgwick J in Kucks v CSR Limited that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, 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.’

[21] Although their Honours were each dealing with the proper interpretation of an award, the same principles are apt to apply to the interpretation of enterprise agreements. For example, similar observations were made in Amcor Limited v CFMEU (Amcor):

‘Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.’

[22] The fact that the instrument being construed is an enterprise agreement is itself an important contextual consideration. As French J observed in Wanneroo:

‘It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities - City of Wanneroo v Holmes (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned - see eg GeorgeA Bond and Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503-504 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):

‘Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.’” [references removed]

[23] Additionally the Full Bench in AMIEU v Golden Cockerel P/L undertook a thorough examination of the relevant court decisions relating to the use of extrinsic material as an aide to interpretation of contracts and agreements and summarised the state of the law as follows:

“[41] From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(b) notorious facts of which knowledge is to be presumed;
(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;
(b) the disputed provision’s place and arrangement in the agreement;
(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.”

ISSUE 1 - ASSISTANT SHIFT MANAGER’S EA COVERAGE

[24] The essence of the dispute between the parties on this issue is that Fonterra sees the new Assistant Shift Manager position as being a managerial position which sits wholly outside the coverage of the Agreement. Whereas the AMWU contended that because it is the intention of Fonterra to take key functions currently performed by the Team Co-ordinator and give them to the Assistant Shift Manager and to have the Assistant Shift Manager spend part of the time on the production line then the Assistant Shift Manager could be within the coverage of the Agreement.

[25] Given that there has not previously been an Assistant Shift Manager position within the production process at Echuca then much of the evidence and argument presented to the Commission in this matter relates to what Fonterra expects to happen. The focus of the AMWU on clause 5 of the Agreement arises because it is only through clause 5 of the Agreement that the AMWU and employees get the opportunity for a trial of the introduction of the Assistant Shift Manager position and the demise of the Team Coordinator position.

[26] In concluding oral submissions the AMWU made this clear:

“PN629. Mr Vroland: .... The other side of the same coin is to say well, if the assistant shift managers are being asked to perform work of the team coordinators some of that work will occur on the line. Again it’s an entirely legitimate question to ask is are they covered by the agreement? And that’s where our submissions are pitched. We are saying these are legitimate questions. The way they’ve answered them is to have a trial so that we can all see how it all works. But the reason that we wanted it to occur under the auspices of clause 5 and the trial period is because we have the right under clause 5 we would contend to – I’ll put it a different way. There is actually a requirement that agreement be reached in changes, whereas alternatively if we just let the changes go through and then run a classification case the nature of that case is different, it’s a rear guard action and we’re not prepared to just so easily give up the provisions of the agreement that we have.”

[27] Fonterra led evidence through Mr Woodworth as to the relationship between the new Assistant Shift Manger position and the positions of Team Co-ordinator and Line Operators. At paragraph 33 of his witness statement, Exhibit R1, Mr Woodworth said:

“In conjunction with my HR and Production Manager, for the purpose of this hearing, I produced a diagram illustrating the reallocation of duties and responsibilities between the new ASM’s, outgoing TC’s and existing operators (Attachment DW-5).”

[28] Attachment DW-5 is appended at Appendix A.

[29] Mr Woodworth also introduced into evidence, Exhibit R5, edited versions of the position descriptions for the Team Co-ordinator and Line Operator positions showing how their existing duties would be changed with the introduction of the Assistant Manager position. (Appendix B).

[30] The starting point for any consideration as to whether the Assistant Shift Manager position could be covered by the Agreement requires consideration of the coverage of the Agreement.

[31] Clause 3 of the Agreement describes the group of employees who are covered by the Agreement by reference to clause 1.3 of the Agreement which reads as follows:

“1.3. Parts I and II apply to all employees employed by the Company at its facilities at Echuca who:

i. undertake work within the scope of coverage of the classification provisions contained in the Manufacturing and Associated Industries and Occupations Award 2010 (the Manufacturing Award).

ii. are apprentices in the trades cited in the classification provisions contained in the Manufacturing Award.

iii. undertake work within the scope of coverage of the classification provisions contained in the Food, Beverage and Tobacco Manufacturing Award 2010 ("the Food Award").”

[32] For present purposes the Commission only need to concern itself with clause 1.3(iii) of the Agreement.

[33] The Food, Beverage and Tobacco Manufacturing Award 2010 relevantly defines the coverage of the award as:

“4.1 This industry award covers employers throughout Australia in the food, beverage and tobacco manufacturing industry and their employees in the classifications in this award to the exclusion of any other modern award.”

[34] The highest classification in the Food, Beverage and Tobacco Manufacturing Award is Level 6 which is described in Schedule B of the Award as follows:

“B.2.6 Level 6 (105% relativity to the tradesperson)

(a) An employee at Level 6 is an employee who has completed the following training requirement above that for Level 5:

(i) two competency units from the Associate Diploma of Food Technology (ADFT); or
(ii) six competency units from the Advanced Certificate of Food Technology (ACFT); or
(iii) six competency units above the requirement for Level 5; or
(iv) equivalent.

(b) Competencies

An employee at Level 6 performs work above and beyond a Level 5 and to the level of the employee’s training:

(i) exercises skills attained through satisfactory completion of the training prescribed for Level 6;
(ii) exercises discretion within the scope of Level 6;
(iii) works under general supervision either generally or in a team environment;
(iv) understands and implements quality control techniques;
(v) provides technical guidance and assistance as part of a work team;
(vi) exercises skills relevant to the specific requirements of the enterprise at a level higher than a Level 5.”

[35] The language of the classification definition is very general but as Fonterra correctly identify the level of responsibility attached to the classification is not at the managerial level and this is reflected in the language of the competencies for this classification and most clearly in the words: “works under general supervision either generally or in a team environment”

[36] Additionally the very fact that the highest classification level in the award is only at the 105% relativity to a tradesperson makes clear that the highest classification level was never intended to be for senior positions involving higher level supervisory roles or managerial roles.

[37] The evidence which has been presented in this matter by Fonterra falls far short of accurately and comprehensively describing the full range of duties to be performed by the Assistant Shift Manager position. However what is clear from the evidence is that the functions which have been transferred from the Team Co-ordinator role to the Assistant Shift Managers role are not the functions which involve the Assistant Shift Manager having a hands on role in the production process. Further the additional duties identified for the Assistant Shift Manager positional appear to have a skill and responsibility level which sits above 105% relativity with a tradesperson.

[38] The evidence in this matter is sufficient to establish that the Assistant Shift Manager position, if implemented in the manner described in the evidence before the Commission, will not be a position within the coverage of the Agreement.

ISSUE 2 - LINE OPERATOR CLASSIFICATION
[39] The issue in dispute between the AMWU and Fonterra is the determination of the appropriate classification for Line Operators once the Team Co-ordinator position is removed from the production line with the duties currently performed by a Team Co-ordinator being performed by either the new Assistant Shift Manager or one of three Line Operators on the production line.

[40] Fonterra contended that the duties transferred from the Team Co-ordinator to the Line Operator are all within the classification of a Line Operator and therefore the appropriate classification level for Line Operators after the Team Co-ordinator position is abolished and the new Assistant Shift Manager position is created is Level 6 under the Agreement.

[41] Fonterra also contended that Appendix 2 of the Agreement, which contains the classification structure for “Food Award employees” is to be interpreted in light of the classification structure in the modern award. Fonterra also contend that any question of reclassification has to be considered in light of the modern award classification structure and the principles for altering classification through work value cases:

“MR O’GRADY: .... With respect to the issue of the roles and the differences between the team coordinator role and the operator role, you will see that in the written submissions we have set out a fair amount of the evidence that went in respect of that issue. Mr Vroland has made the point with some force that the witnesses that were called by the company weren’t production employees and (indistinct) to operate the machines. Mr Healey, however, was such an employee. In my submission the effect of the evidence is that it was fairly put to Mr Healey that there was a considerable overlap between his role and the production employees’ role and he acknowledged that that was the case.

MR O’GRADY: It was fairly put to Mr Healey that the duties that are proposed to be allocated to production employees that were formerly duties of team coordinators are not onerous duties or duties that would cause them any difficulty and he acknowledged also that that was the case. In my submission his evidence as an experienced team coordinator corroborates the views expressed by the company’s witnesses as to the nature of the changes being proposed and the limited additional work if any associated with the work production employees that will be affected by those changes. We have set out in the written submissions reference to the work value principles. Can I hand up a couple of cases on that and I have addressed or sought to address Commissioner the matter that you raised last time at paragraph 6.7.

MR O’GRADY: ...you will see that the starting point in my submission in respect of that issue is whether or not as a matter of construction of appendix 2 the reference to relativities means that either we can’t implement the change that we’re seeking to make, and/or alternatively that making of that change automatically warrants a reclassification. In my submission reference to relativities is really there just simply to enable the classifications in the agreement to be aligned with those in the award and you mentioned the metals award. There are of course classifications set out in the Food Beverage and Tobacco Manufacturing modern award.....” 2

[42] The AMWU contended that as some of the duties of a Team Co-ordinator are being transferred to Line Operators then some Line Operators will be exercising Level 8 skills and thus should be classified at Level 8.

Consideration

[43] The structure of the Agreement and the contents of several clauses of the Agreement and of awards incorporated into the Agreement inform the outcome on this issue.

[44] Relevantly, clause 3 of the Agreement directly incorporates the terms of the Food, Beverage and Tobacco Manufacturing Award 2010 and also incorporates some terms of the Food Preservers Award 2000 although it is not clear what if any clauses of the Food Preservers Award 200 are incorporated into the Agreement. Clause 3 is as follows:

“3. RELATIONSHIP TO PARENT AWARD

3.1 Subject to clause 3.2 and 3.3, all the provisions of the following Awards, as varied from time to time, are hereby incorporated into this Agreement:

3.1.1 The Manufacturing and Associated Industries and Occupations Award 2010 ("the Manufacturing Award") in respect of employees who would otherwise be covered by this award.

3.1.2 The Food, Beverage and Tobacco Manufacturing Award 2010 ("the Food Award") in respect of employees who would otherwise be covered by this award.
(Note: together known as "the Awards")

3.2 However, variations to the Awards that are detrimental to the employees covered by this Agreement will not be incorporated.

3.3 The terms of Appendix 5 of this Agreement "Personal and Compassionate Leave Provisions" will apply in lieu of the Personal Leave and Compassionate Leave provisions in the Awards.

3.4 Where there is any inconsistency between an express provision of this Agreement and a provision in the Awards (including Appendix 5), the express provisions of this Agreement shall prevail to the extent of any inconsistency.

3.5 Further, existing over award or agreement payments and conditions of employment shall continue to apply as if they were a term of this Agreement except where the terms of this Agreement expressly provide otherwise. This sub-clause shall not operate so as to reduce wages or conditions of employees.

3.6 Upon incorporating Award terms into the Agreement the incorporated Award terms are to be read as altered with the appropriate changes to make them provisions of the Agreement rather than provisions of an award. So, for example, the loadings, penalties and allowances in the Award apply to the rate of pay due under this Agreement and references to "award" may mean "Agreement"."

3.7 Notwithstanding the terms of sub-clause 3.1, clause 7 of the Manufacturing Award (Award flexibility) and clause 7 of the Food Award (Award flexibility) are not incorporated into this Agreement (workplace flexibility is covered in clause 8 of this Agreement).

3.8 Neither party, (i.e. employer or employee/s) shall be disadvantaged by the incorporation of the Manufacturing and Associated Industries Award 2010 or the Food, Beverage and Tobacco Manufacturing Award 2010 in regard to the previously operative provisions of the Food Preservers Award 2000 and the Metal, Engineering and Associated Industries Award 19g8. The parties have included some provisions from the Food Preservers Award 2000 and the Metal, Engineering and Associated Industries Award 1998 in this Agreement. During the period of this Agreement, should the parties become aware of provisions of the Food Preservers Award 2000 and/or the Metal, Engineering and Associated Industries Award 1998 that have been omitted and which omission results in disadvantage to either party, then the term as identified will be applied in this Agreement and treated as being a term of the Agreement.”

[45] Whilst clause 3 incorporates award terms into the Agreement it does so with the proviso spelt out in clause 3.4 that “Where there is any inconsistency between an express provision of this Agreement and a provision in the Awards (including Appendix 5), the express provisions of this Agreement shall prevail to the extent of any inconsistency.”

[46] Appendix 2 of Part II of the Agreement provides for a specific classification structure as follows:

“APPENDIX 2- CLASSIFICATION STRUCTURE

1.1 The classification structure for Food Award employees is as follows:-

Classification	% ofC10 Base Trades Rate	Positions
Level 8	100%	Team Co-ordinator, In-line Quality Control, Despatch Co-ordinator
Level 7	95.88%	Yoghurt Makers
Level 6	92.4%	All Operators, Line Cleaner
Level 5	89.9%	Material Handler /Fork Lift Driver, Production Clerk
Level 4	87.4%	Yard Cleaner
Level 3	84.7%	Packer /Stacker

1.2 Other duties/jobs not included in the above classification structure, at the time of signing this Agreement, which may arise in the future will be classified in consultation with, and agreement between the company its employees and their representatives.
1.3 Employees will be classified at the wage rate for the work performed under the above classification structure whether training has been completed or not.”

[47] The classification structure at Appendix 2 of the Agreement is quite different to the classification structure in both the Food, Beverage and Tobacco Manufacturing Award 2010 or in the Food Preservers Award 2000. The classification structure from each award is as follows:

“Food, Beverage and Tobacco Manufacturing Award 2010

Schedule B—Classification Structure and Definitions
[Varied by PR991581]
B.1 The classification structure and definitions set out in this Schedule apply to employees covered by this award, except where otherwise specified.
B.2 Classification structure and definitions
B.2.1 Level 1 (78% relativity to the tradesperson)
(a) An employee at Level 1 has less than three months’ experience in the industry or enterprise, and does not possess recognised enterprise or industrial or prior learning experience and/or skills sufficient for appointment to Level 2 or above. Provided that the length of service required to advance to Level 2 for a seasonal employee is four weeks and for a casual employee is 152 hours.
(b) Competencies
An employee at Level 1 performs general duties essentially of a manual nature, and:
(i) exercises minimal judgment;
(ii) works under direct supervision; and
(iii) is undertaking up to 38 hours’ induction training which may include information on the enterprise, conditions of employment, introduction to supervisors and fellow workers, training and career path opportunities, plant layout, work and documentation procedures, occupational health and safety, equal employment opportunity and quality control/assurance.
B.2.2 Level 2 (82% relativity to the tradesperson)
(a) An employee at Level 2 is an employee who has either:
(i) completed a structured induction program over three months or for such shorter period as is necessary to reach the required level of competency for appointment to Level 2; or
(ii) has recognised enterprise or industrial experience, training or prior learning experience and/or skills to Level 2.
(b) Competencies
An employee at Level 2 performs a range of general duties essentially of a manual nature and to the level of the employee’s competency, and:
(i) exercises limited judgment;
(ii) works under direct supervision;
(iii) is undertaking structured training to enable the employee to work at Level 3.
B.2.3 Level 3 (87.4% relativity to the tradesperson)
(a) An employee at Level 3 is an employee who has either:
(i) completed an Australian Qualifications Framework (AQF) Certificate 1 in Food Processing; or
(ii) has equivalent recognised enterprise or industrial experience, training or prior learning experience and/or skills to Level 3.
(b) Competencies
An employee at Level 3 performs a range of duties including specialised work, and:
(i) may exercise judgment within defined procedures;
(ii) works under general supervision;
(iii) may undertake structured training to enable the employee to work at Level 4;
(iv) is responsible for the quality of the employee’s own work within the limits of Level 3;
(v) assists in the provision of on-the-job training in conjunction with tradespersons and supervisor/trainers or an accredited training provider.
B.2.4 Level 4 (92.4% relativity to the tradesperson)
(a) An employee at Level 4 is an employee who has either:
(i) completed an AQF Certificate 2 in Food Processing; or
(ii) has equivalent recognised enterprise or industrial experience, training or prior learning experience and/or skills to Level 4.
(b) Competencies
An employee at Level 4 performs work above and beyond the competencies of a Level 3 employee, and:
(i) exercises judgment;
(ii) works under general supervision;
(iii) may undertake structured training to enable the employee to work at Level 5 level;
(iv) is responsible for assuring the quality of the employee’s own work;
(v) assists in the provision of on-the-job training in conjunction with tradespersons and supervisor/trainers or an accredited training provider.
B.2.5 Level 5 (100% relativity to the tradesperson)
(a) An employee at Level 5 is an employee who has either:
(i) completed an AQF Certificate 3 in Food Processing; or
(ii) has equivalent recognised enterprise or industrial experience, training or prior learning experience and/or skills to Level 5.
(b) Competencies
An employee at Level 5 performs work above and beyond the competencies of a Level 4 employee, and:
(i) understands and applies quality control techniques;
(ii) has good interpersonal and communication skills;
(iii) is able to inspect products and/or materials for conformity with established operational standards;
(iv) exercises judgment and decision making skills;
(v) works under general supervision either individually or in a team environment;
(vi) may undertake structured training to enable the employee to work at Level 6.
B.2.6 Level 6 (105% relativity to the tradesperson)
(a) An employee at Level 6 is an employee who has completed the following training requirement above that for Level 5:
(i) two competency units from the Associate Diploma of Food Technology (ADFT); or
(ii) six competency units from the Advanced Certificate of Food Technology (ACFT); or
(iii) six competency units above the requirement for Level 5; or
(iv) equivalent.
(b) Competencies
An employee at Level 6 performs work above and beyond a Level 5 and to the level of the employee’s training:
(i) exercises skills attained through satisfactory completion of the training prescribed for Level 6;
(ii) exercises discretion within the scope of Level 6;
(iii) works under general supervision either generally or in a team environment;
(iv) understands and implements quality control techniques;
(v) provides technical guidance and assistance as part of a work team;
(vi) exercises skills relevant to the specific requirements of the enterprise at a level higher than a Level 5.
B.3 The percentage wage relativities in clause B.2 reflect the percentages prescribed in 1990 in Re Metal Industry Award 1984—Part I (M039 Print J2043). The minimum wages in this award do not reflect these relativities because some wage increases since 1990 have been expressed in dollar amounts rather than percentages and as a result have reduced the relativities.

Food Preservers Award 2000

16.2 Classification definitions

16.2.1 F1A - Food Production Employee, Level 1A

(Proposed relativity to Metal Industry Tradesperson Rate - 78%)

An employee in Level 1A has less than three months experience in the industry or enterprise, and does not possess recognised enterprise or industrial or prior learning experience and/or skills sufficient for appointment to Level 1B or above.

16.2.1(a) Competencies

A person employed as a Level 1A employee performs general duties essentially of a manual nature; and

exercises minimal judgment;

works under direct supervision; and

is undertaking up to 38 hours induction training which may include information on the enterprise, conditions of employment, introduction to supervisors and fellow workers, training and career path opportunities, plant layout, work and documentation procedures, occupational health and safety, equal employment opportunity and quality control/assurance.

Provided that:

classification shall not apply to new employees who have recognised enterprise, industrial or prior learning experience;

engaged on a casual, seasonal or short- term contracts of employment shall not be classified at Level 1A except as follows:

In respect of seasonal and casual employees, this classification level shall apply to employees who do not have recognised enterprise, industrial or prior learning experience, and who are engaged to perform duties set out in this classification level. However the length of service required to advance to Level 1B, for such a seasonal and casual employees, shall only be a period of four weeks or 152 hours respectively.

no person shall be employed in Level 1A unless there is a recognised structured induction training program in place in the enterprise which has been agreed to by the parties.

16.2.1(b) Typical duties

general labouring and cleaning.

16.2.2 F1B - Food Production Employee, Level 1B
(Proposed relativity to Metal Industry Tradesperson Rate - 82%)

An employee in Level 1B is an employee who has either:

completed a structured induction program over three months or for such shorter period as is necessary to reach the required level of competency for appointment to this Level. or:

has recognised enterprise or industrial experience, training or prior learning experience and/or skills to this level.

Competencies

An employee at Level 1B performs a range of general duties essentially of a manual nature and to the level of the employee’s competency; and

exercises limited judgment;
works under direct supervision;
is undertaking structured training to enable the employee to work at Level 2.

16.2.3 F2 - Food Production Employee, Level 2
(Proposed relativity to Metal Industry Tradesperson Rate - 87.4%:)

An employee in Level 2 is an employee who has either:

completed Level 2 structured training; or
has recognised enterprise or industrial experience, training or prior learning experience and/or skills to this level.

Competencies

An employee in Level 2 performs a range of duties including specialised work; and:

may exercise judgment within defined procedures;
works under general supervision;
may undertake structured training to enable the employee to work at Level 3;
is responsible for the quality of the employee’s own work within the limits of this classification;
assists in the provision of on the job training in conjunction with tradespersons and supervisor/ trainers or accredited training provider approved by the training committee.

16.2.4 F3 - Food Production Employee, Level 3
(Proposed relativity to Metal Industry Tradesperson Rate - 92.4%)

An employee in Level 3 is an employee who has either:

completed Level 3 structured training; or
has recognised enterprise or industrial experience, training or prior learning experience and/or skills to this level.

Competencies

An employee in Level 3 performs work above and beyond the competencies of Level 2 employee; and:

exercises judgment;
works under general supervision;
may undertake structured training to enable the employee to work at Level 4 level;
is responsible for assuring the quality of the employee’s own work;
assists in the provision of on the job training in conjunction with tradespersons and supervisor/ trainers or accredited training provider approved by the training committee.

16.2.5 F4 - Food Industry Tradesperson, Level 1

(Proposed relativity to Metal Industry Tradesperson Rate - 100%)

[16.2.5 corrected and substituted by PR977932 ppc 03Aug00]

A Food Industry Tradesperson - Level 1 is an employee who has either:

completed F4 Level 1 structured training; or
has recognised enterprise or industrial experience, training or prior learning experience and/or skills to this level.

Competencies
A Food Industry Tradesperson - Level 1 performs work above and beyond the competencies of Level 3 employee; and:

understands and applies quality control techniques;
good interpersonal and communication skills;
is able to inspect products and/or materials for conformity with established operational standards;
exercises judgment and decision making skills;
works under general supervision either individually or in a team environment;
may undertake structured training to enable the employee to work at Level 5 level.

16.2.6 F5 - Food Industry Tradesperson, Level 2
(Proposed relativity to Metal Industry Tradesperson Rate - 105%)

A Food Industry Tradesperson - Level 2 is an employee who has completed the following training requirement above that for a Food Industry Tradesperson:

two units from the Associate Diploma of Food Technology (ADFT); or
six modules form the Advanced Certificate of Food Technology (ACFT); or
six modules above the requirement for F.4.

Competencies
A Food Industry Tradesperson - Level 2 works above and beyond a tradesperson at F.4. and to the level of the employee’s training:

exercises skills attained through satisfactory completion of the training prescribed for this classification;
exercises discretion within the scope of this grade;
works under general supervision either generally or in a team environment;
understands and implements quality control techniques;
provides technical guidance and assistance as part of a work team;
exercises skills relevant to the specific requirements of the enterprise at a level higher than a Food Industry Tradesperson - Level 1.”

[48] The relevance of the difference between the classification structure in Appendix 2 of the Agreement and the classification structure in both the modern award and the pre-reform award is in relation to the operation of clause 3.4 of the Agreement.

[49] There is a clear inconsistency between the classification structure in Appendix 2 of the Agreement and the classification structure in Schedule B of the Food Beverage and Tobacco Manufacturing Award 2010.

[50] The classification structure of Appendix 2 of the Agreement is so different from the classification structure in the awards that clause 3.4 of the Agreement operates so that Appendix 2 of the Agreement prevails over the entirety of Schedule B of the Food Beverage and Tobacco Manufacturing Award 2010.

[51] Notwithstanding the provisions of clause 3.8 of the Agreement it would appear that clause 16.2 of the Food Preservers Award 2000 is not capable of being treated as being a term of the Agreement. However, even if clause 16.2 of the Food Preservers Award 2000 was incorporated as a term of the Agreement the same inconsistency arises in relation to Appendix 2 of the Agreement and the same conclusion is reached namely, that Appendix 2 of the Agreement prevails over the entirety of clause 16.2 of the Food Preservers Award 2000.

[52] Appendix 2 of the Agreement provides a comprehensive classification for employees of Fonterra who would otherwise be covered by the Food, Beverage and Tobacco Manufacturing Award 2010. The classification of an employee into one of the classifications in Appendix 2 of the Award is not dependent upon the employee having completed any training. Classification of an employee is based solely on the work performed by the employee. So much is clear from clause 1.3 of Appendix 2 of the Agreement.

[53] The 8 level classification structure in Appendix 2 does not relate to specific duties or tasks but rather relates to job titles or “Positions”. During the proceedings evidence was led as to the contents of Position Descriptions for both a position titled “Production Operator (TC)” and for a position titled “Production Operator - Grade 6” Exhibit R5. Whilst the Position Descriptions use position titles which are different from those used in the table in clause 1.1 of Appendix 2 of the Agreement it was common knowledge that the position titled “Production Operator (TC)” was the same as the Team Co-ordinator and that the position titled “Production Operator - Grade 6” was the same as Line Operator or All Operators at Level 6 of the classification structure.

[54] The Position Descriptions in Exhibit R5 were marked to identify which tasks currently performed by the Team Co-ordinator would transfer to the new Assistant Shift Manager and which would be performed by the Line Operators.

[55] Apart from a very minor change the Position Descriptions tendered to the Commission were the same as the Position Descriptions for the same positions as at the time the Agreement was made.

[56] Fonterra correctly drew the Commission’s attention to the fact that the Position Descriptions were not part of the Agreement.

“MR O’GRADY: In my respectful submission absent a provision along the lines of the position descriptions of these jobs are to be as set out in the following appendices or the position description at a certain time is to apply and needs to be read as part of this agreement. The position descriptions themselves do not form any part of the agreement and there is no limitation within the agreement on the employer altering them, so long as in so doing they are not in effect mis-describing the role that the employee has been engaged to perform.” 3

[57] I do not accept the correctness of the contention of Fonterra that, as the Position Descriptions are not part of the Agreement, there is no limitation within the Agreement on Fonterra altering the Position Descriptions.

[58] The Position Descriptions are directly relevant to understanding what duties were identified for each position as at the time the Agreement was made. Giving proper meaning to Appendix 2 of the Agreement can only be achieved by having regard to the Position Descriptions for each position referred to in clause 1.1 of Appendix 2 of the Agreement. Such an approach is consistent with the decision in AMIEU v Golden Cockerel P/L.

[59] Clause 1.2 of Appendix 2 of the Agreement requires that regard be had to the list of duties/jobs required to be performed by each position as at the date of signing of the Agreement, namely 30 April 2013. I note at this point that Fonterra in its written submissions on the construction of Appendix 2 did not refer to either clause 1.2 or 1.3 of Appendix 2 (para 6.9 - 6.17 of written submissions dated 26 November 2014).

[60] The evidence before the Commission makes clear that Fonterra considers that new additional duties are to be given to the Line Operators.

“MR VROLAND: It seems you’re saying some of the roles will go - of the team coordinator will go to assistant shift managers and some will go to the line operators, that’s right?

MR WOODWORTH:---That’s correct.

MR VROLAND: I put it to you that in fact what is likely to happen, and that’s as high as I can put it because it’s the future, is that the people who currently are team coordinators who are going to remain with the company will in fact be required to perform additional work above and beyond that work of the other line authorities?- Mr Woodworth: --That’s not the intention of the structure moving forward.

MR VROLAND: I put it to you that they will need to perform more work than they are currently performing now? Mr Woodworth:---I guess that’s where I disagree with the statement because the manning levels on the line remain the same. So if it’s a three person line there is going to be three people on the line. If I had to look at it really roughly with percentages here and we’ve done them (indistinct) you might say 70 per cent of those roles are already done by operators now. 20 per cent, 25 per cent I think are moving to the assistant shift manager and that’s really the sign offs, the extra labour, the checking of the quality, the safety, the improvements, the breakdowns and between five and 10 per cent you’d say it needs to be as a new task for the operators to pick up in terms of their (indistinct).” 4

[61] Fonterra contended that the additional duties to be performed by Line Operators are duties which can and should be performed by a Level 6 employee:

“MR O’GRADY: Commissioner, I may not have made it clear but I think I did keep a caveat in my earlier answer to my question. I’m not suggesting that it is a completely unfettered right, I think I said at the end of what I put forward earlier that subject to it not in effect mis-describing the role. So I’m not suggesting that my client could in effect simply give all the duties of a team coordinator to a packer and stacker for example and simply say well, because we’re still calling you a packer and stacker then that is - - -

THE COMMISSIONER: But an operator is such a broad descriptor, it actually says anything that relates to the operations of the business.

MR O’GRADY: I understand that and if what my client was seeking to do through this restructure is have an individual called an operator coordinate the team then there might be a very real argument well, that’s not an appropriate duty to allocate to somebody being called and paid as an operator. In my submission the question obviously there can be extreme examples but in my submission the touchstone to the resolution of this issue is whether the additional duties being allocated to a person in a particular classification are of a type that they are inconsistent with that person remaining at that classification and that would in effect involve an assessment of the work value associated with the additional duties being so ascribed. The question in my submission is not what did team coordinators used to do and you will recall I objected to a line of questioning along those lines. The question is what additional things are operators being asked to do?

THE COMMISSIONER: Yes, and we know that because concessions have been made by the respondent’s own witnesses, most recently by Mr Woodworth that operators will be required to do SAP and FAST where they haven’t been doing that although because some previously employed at a time when SAP was in place they know SAP therefore they can do it, but it’s not part of the job description of an operator.

MR O’GRADY: Yes, we do and we also know from Mr Healey’s own evidence that neither SAP and in particular FAST are particularly onerous or difficult tasks.

THE COMMISSIONER: Yes, but are those as additional duties for an operator, are they amenable to any dispute resolution process before the Commission? If you just go and add them to the duties of an operator?

MR O’GRADY: I’m glad you asked that, Commissioner, because in my submission it perhaps highlights one of the difficulties with this case which is the entire application is premature. I’m not saying, Commissioner, that if after we implement these changes and if it was the case as was asserted this morning that we are in effect requiring people who we’re calling and paying as operators to acutely be de-facto team coordinators that it would not be a capacity to agitate a dispute under this agreement and say in effect, well this is what I’m doing, I’m doing exactly the same thing as I used to do before the restructure and you’re only paying me as an operator and I have a dispute over how the agreement is being applied. But to suggest on the back of clause 5 that we can’t make the changes and then to have this argument about well, we don’t really understand what you’re trying to do, notwithstanding all the evidence that has been before the Commission that has gone into some detail about what it is and it hasn’t been suggested that the tasks that are being allocated or proposed to be allocated to the operators would warrant a reclassification under the work value principle, it seems to be accepted that they are on the whole really quite minor additional imposts to the extent to which they are additional imposts. To try and deal with that in the abstract, in my submission, makes it very difficult for you Commissioner. The better course in my submission would have been to not oppose the restructure, let us do it and if it turns out that we are somehow trying to effect these changes surreptitiously then to agitate the matter where you’ll have some hard evidence about what’s going on and why.

THE COMMISSIONER: But I’ve got hard evidence so far that the changes are going to be made.

MR O’GRADY: Yes, and the evidence – accepting that evidence, and I’m not saying you can’t determine the matter now because in my submission - - -

THE COMMISSIONER: Can I determine the matter now?

MR O’GRADY: Sorry?

THE COMMISSIONER: Can I determine the matter now?

MR O’GRADY: I’m saying you can.

THE COMMISSIONER: On what basis?

MR O’GRADY: On the basis that the employer has said, and it hasn’t been effectively challenged, that there are duties that are not such as would warrant a reclassification that are going to be allocated to the operators as part of the restructure.” 5

[62] The evidence of Mr Woodworth at PN2300 and the exchange between the Commission and Mr O’Grady at PN2685 - PN2687 makes very clear that there are duties/jobs which Line Operators have not previously been required to do

[63] Clause 1.2 of Appendix 2 of the Agreement makes very clear that any “duties/jobs” which were not included in the Line Operators classification as at the time the Agreement was signed cannot now be added to the Line Operators duties without agreement being reached “between the company its employees and their representatives”.

[64] It is possible to interpret clause 1.2 of Appendix 2 in a way which supports the position of Fonterra. Such an interpretation would read clause 1.2 as referring to the sum total of all duties/jobs which were contained in all of the position descriptions for all positions in all of the Level 3 to Level 8 positions. Therefore moving a duty/job from one position description to another or from one Level to another Level would not require “consultation with, and agreement between the company its employees and their representatives”. This interpretation would mean that only duties/jobs which had never been performed by any position within any of the Levels 3 to 8 and which Fonterra sought to introduce would require “consultation with, and agreement between the company its employees and their representatives”.

[65] In my considered view such an interpretation of clause 1.2 of Appendix 2 is inconsistent with the overall structure of the Agreement. Introducing new duties/jobs which no one had ever done before is most likely to trigger the consultation requirements of clause 21 of the Agreement. Just as clause 5 requires consultation and agreement over matters which are less than changes with significant effect on employees so it would be proper to read clause 1.2 of Appendix 2 as requiring consultation and agreement over addition of duties/jobs which were not part of the classification at the date of signing of the Agreement.

[66] The interpretation I have adopted in relation to clause 1.2 of Appendix 2 of the Agreement accords with the principles enunciated in AMIEU v Golden Cockerel P/L.

[67] The contention advanced by Mr O’Grady at PN2697 seems to miss the point made by the wording of clause 1.2 of Appendix 2 of the Agreement. The very issue of the classification of additional duties/jobs is a matter that must be determined by “consultation with, and agreement between the company its employees and their representatives” before the changes are introduced.

[68] What is very clear from Exhibit R5 is that there are some duties/jobs which the Team Co-ordinator is required to perform and which once the Team Co-ordinator position is abolished the Line Operator will be required to perform. Until such time as there is agreement to include these duties/jobs in the Line Operators classification then any employee performing these duties/jobs must be paid the Level 8 rate of pay. So much is obvious from the wording of clause 1.3 of Appendix 2 of the Agreement. It is the performance of a duty/job which attracts the rate of pay of a classification level and the correct rate is to be paid even where the employee performing the duty/job has not been properly trained to do so.

[69] To put this into context it is only necessary to look at Exhibit R5.

[70] The current position description for a Team Co-ordinator describes one of the duties/jobs required to be performed by the Team Co-ordinator as:

“Open and maintain required SAP and FAST transactions for the days production, including closing off of FAST before shift change for any incomplete production runs.”

[71] Exhibit R5 notes that the existing Line Operator Position Description requires that a Line Operator “maintains FAST recording system for downtime.” Exhibit R5 further notes that with the removal of the Team Co-ordinator position the Line Operator will be required to perform a “New task (which) is to enter data into SAP - consumption of raw materials and running of variance report and closing off FAST at end of shift”. The duty/job which Line Operators will be required to perform in the future is a duty/job which has been assessed under the current classification structure at Level 8 and which is not part of Level 6. Whilst clause 1.2 of Appendix 2 provides for a mechanism to have Level 6 include the new task being required of Line Operators until such time as the new task is made part of Level 6 then any Line Operator performing the new task will be performing a duty/job which is part of Level 8 and which will attract Level 8 rates of pay.

[72] There is a further aspect to this issue which needs to be considered. The evidence in this matter makes clear that the elimination of the Team Co-ordinator position and the creation of the new Assistant Shift Manager position is not the whole of the changes being proposed by Fonterra. Whilst Line Operators are to be required to perform new duties/jobs previously performed by the Team Co-ordinator the Line Operators are going to be required to be able to and be capable of working on any position on any of the production lines. This is a significant change from current practice where Line Operators generally work on a single production line and where some Line Operators work in a specific position on the production line.

[73] As Line Operators are all classified as Level 6 regardless of whether they only work as packers at the end of a production line or as operators at the beginning or in the middle of the production line then it makes sense to have a generic Position Description for a “Production Operator - Grade 6” which can apply to any Line Operator.

[74] In the context of clause 1.2 and 1.3 of Appendix 2 of the Agreement there would appear to be no constraint on Fonterra requiring each and every Line Operator to learn each and every position on every production line and to be able to be allocated to any Line Operator position at any time.

[75] Exhibit R5 identifies in relation to each “Role Accountabilities” for the Team Co-ordinator Position Description whether the role accountability is to go to the new Assistant Shift Manager position or to the Line Operator.

[76] A number of the role accountabilities for the Team Co-ordinator are specifically identified in Exhibit R5 as “exists in Operator Grade 6 PD”.

[77] The following table shows each of the role accountabilities in the Position Description for the Team Co-ordinator which are said to already exist in the Operator Grade 6 PD and the corresponding role accountability appearing in the Position Description of a Production Operator - Grade 6.

Production Operator (TC)	Production Operator - Grade 6
Ensure all work is performed in a safe and hygienic manner.	Ensure all work is performed in a safe and hygienic manner.
Ensure all actions are in the best interest to maintain the quality of the product.	Ensure all actions are in the best interest to maintain the quality of the product.
Ensure all duties are carried out in accordance with standard operating procedures.	Ensure all duties are carried out in accordance with standard operating procedures.
Target achievement of line KPI’s, including DPSA, MUV, unplanned downtime and efficiency for area of responsibility.	Target achievement of line KPI’s, including DPSA, MUV, unplanned downtime and efficiency for all products.
Co-ordinate base tanks and CIP requirements with yogurt makers to ensure line is clean prior to dial up.	Co-ordinate base tanks and CIP requirements with yogurt makers to ensure line is clean prior to dial up.
Contribute to the integrity of the operations Safety Health and Environment requirements through: - Observing all SHE policies and procedures relevant to position; - Maintain the working environment to ensure hazards are identified and eliminated; - Complete housekeeping audits in accordance with policy; - Complete forklift check sheet at start of each shift.	Contribute to the integrity of the operations Safety Health and Environment requirements through: - Observe all SHE policies and procedures relevant to position; - Maintain the working environment to ensure hazards identified and are eliminated; - Complete housekeeping audits in accordance with policy; - Complete forklift check sheet at start of each shift.
Attendance of taste panels, as required.	Attendance of taste panels, as required.
Perform all other duties as directed.	Perform all other duties as directed.
Actively participate in a shift handover at the start and end of each shift, ensuring all relevant information is passed on to the Team Co-ordinator following.	Participate in a shift handover at the start and end of each shift, ensuring all relevant information is passed on to the Production Operator following.
Accurately fill out all paperwork at the start and end of each shift and maintain throughout the shift.	Accurately fill out all paperwork and maintain records throughout the shift, as required.
Prepare and provide relevant information and feedback at DMS1.	Participate and contribute to all required meetings including MBU’s and material variance meeting.
Communicate any production issues for the day and issues raised at DMS 1 to Management and the follow on shift.	Actively participate in daily MBU 1s.
Follow up on any quality or production errors or variances for your area of responsibility.	Assist in any quality or production error follow ups for your designated production line, including Quality failures, material variances, overweights etc.
Open and maintain required SAP and FAST transactions for the days production, including closing off of FAST before shift change for any incomplete production runs.	Ensure all downtime information is recorded accurately utilising the downtime recording system.
Communicate any production issues to the shift manager, including raw and packaging shortages.	Calculate and monitor all raw and packaging availabilities during production.
Collect and return all of the required packaging materials for production, ensuring all carryover quantities are accurate.	Accurately maintain stock of all raw packaging materials to the machine. Return unused materials to the appropriate PSA, when required.
Ensure all wastes removed from the line.	Remove all waste from the line when required.

[78] The first 8 role accountabilities are identical as between the Team Co-ordinator and Line Operator Position Descriptions but the remaining 9 role accountabilities have differences and some of the differences are significant. A number of these differences require comment.

Actively participate in a shift handover at the start and end of each shift, ensuring all relevant information is passed on to the Team Co-ordinator following.

Participate in a shift handover at the start and end of each shift, ensuring all relevant information is passed on to the Production Operator following.

[79] The Line Operator is required to pass on information to the immediate following Line Operator. This role accountability for the Line Operator is expressed in the singular and therefore implies giving information to the Line Operator who will be doing the same job on the next shift. In contrast the Team Co-ordinator is passing on relevant information to the incoming Team Co-ordinator about the whole of the production line. Once the Team Co-ordinator position is eliminated there would appear to be a gap created in that each Line Operator will only be required to pass on information to one of the three incoming Line Operators but not to all three incoming Line Operators. There is no requirement in the current Position Description for the three Line Operators to co-ordinate amongst themselves as to what information they pass to the incoming team of Line Operators and as to how they communicate that information to their respective counterpart on the incoming team.

Follow up on any quality or production errors or variances for your area of responsibility.

Assist in any quality or production error follow ups for your designated production line, including Quality failures, material variances, overweights etc.

[80] The role accountability for the Line Operator is limited to providing assistance whereas the role accountability of the Team Co-ordinator is to follow up the relevant errors or variances. If this role accountability was transferred in full to the Line Operator then the Line Operator would be required to go beyond assisting in follow ups to initiating and being responsible for follow ups.

Ensure all wastes removed from the line.

Remove all waste from the line when required.

[81] This role accountability has a very different emphasis as between the Team Co-ordinator and the Line Operator. The Line Operator has a personal responsibility to “remove all waste from the line when required” whereas the Team Co-ordinator has a supervisory role over all of the workers on the production line to “ensure that all wastes removed from the line”. In the absence of the Team Co-ordinator position the individual responsibility of each Line Operator remains but there is no supervisory role being exercised. Exhibit R5 does not identify that in relation to this role accountability that any part of the role accountability of the Team Co-ordinator is to be exercised by the Assistant Shift Manager.

[82] As can be seen from the three role accountabilities examined the role accountability of the Team Co-ordinator has a level of responsibility which is not present in the similar role accountability of the Line Operator. Therefore if Fonterra requires the Line Operators to carry out the role accountabilities of the Team Co-ordinator which are similar but not the same as the role accountabilities of the Line Operator then it would appear to be obvious that Fonterra want the Level 6 Line Operators to perform work which is classified at Level 8.

[83] Once again the logic of the operation of clause 1.3 of Appendix 2 of the Agreement would require that Fonterra pay such Line Operators at the Level 8 rate of pay.

[84] There is a further important issue which will need to be considered at some point of time.

[85] At the time the Agreement was made an employee could be employed to be a packer on a single production line or a operator, but not packer, on a single line with each being classified and paid as Level 6 under the Agreement. At the time the Agreement was made some employees were employed to work on a specific production lines based upon the machine type used on the production lines. As the evidence of Mr Healy identified there are three types on machines used on the production lines. Two production lines use Hassia machines, two production lines use Erca machinery and the fifth line uses a different machine again which only permits the filling of preformed cups. The five lines are known as Hassia E, Hassia F, Erca A, Erca B and Filler G (or Oyster). (para 13 of Exhibit A3) As Mr Healy made clear, “The Erca and Hassia machines are completely different to each other.” (para 16 of Exhibit A3) When the Agreement was made some operators could work on the Hassia machines but not the Erca machines but operators on either a Hassia machine or an Erca machine were classified and paid the same as Level 6 employees.

[86] Once every operator is required to be able to work on every position on every line the question which arises is: Does an employee who has the skills to work on every position on every production line have the same or a higher level of skill as an employee who can only work on one position on one production line, or an employee who can work all positions on one production line?

[87] If the answer to the question is that the employee who has the skills to work on every position on every production line only has the same level of skill as an employee who can only work on one position on one production line then both employees will properly be classified as Level 6 employees. If the answer to the question is that the employee who has the skills to work on every position on every production line has a higher level of skill than an employee who can only work on all positions on one production line then the first employee most likely should be classified higher than Level 6 if the second employee is properly classified as a Level 6 employee. As can be seen from the question and answers there are a range of answers which might flow from a range of questions.

[88] The material before the Commission including both the evidence presented by both sides and the submissions of both sides does not permit this aspect of the issue to be determined at the present time. Nevertheless it will remain a real issue for the parties to consider.

ISSUE 3 - ALLEGED FAILURE TO CONSULT
[89] The AMWU in its written contentions dated 26 September 2014 identified its primary concern as being the failure of Fonterra to fully comply with clause 5.1 of the Agreement. The AMWU contended as follows:

“13. The AMWU submits that Fonterra has not fulfilled its obligations under Clause 5- ‘Consultation and Productivity’ of the Agreement because it has not provided sufficient explanations to deal with the AMWU’s concerns as identified above.

14. Clause 5 of the Agreement reads (in part) as follows:

“Consultative measures currently operating at the Echuca factory shall continue and shall be used to maintain continuing cooperation between the parties to achieve improved productivity of manufacturing, and related operations.

To provide a process for change the following provisions shall apply.

5.1 Where an issue is raised by the company, or an employee or the union as part of continuous productivity improvement, consultation shall take place as follows:

5.1 .1 The changes shall be explained to all affected employees including details of how the change or changes will work and how they will improve or alter productivity including output, waste, costs, etc.

5.1 .2 Employees will have their input and any alterations or alteration
considered.”

15. The AMWU submits that Fonterra’s failure to address the concerns of the AMWU and its members as outlined above amounts to a breach of its obligations under clause 5.1.1. to explain the changes to all affected employees including details of how the change or changes will work.

Further it does not appear that Fonterra has considered the input of its employees as required under sub-clause 5.1.2.”

[90] Fonterra contended that clause 5 did not apply in the present matter and therefore the consultation obligations under clause 5 were not relevant. Fonterra’s written submissions dated 26 November 2014 contained the following:

“13.2..... Fonterra’s primary submission is that clause 5 does not apply to the current restructure because the changes being implemented are not being proposed as part of a process of continuous productivity improvement. Rather, as explained in the evidence of Derek Woodworth, the rationale behind the restructure is to reduce costs to keep the factory viable.

13.3 In the alternative, Fonterra submits that it did (and continues to) engage in adequate consultation for the purposes of compliance with clause 5.1.”

[91] The AMWU in reply reiterated its initial position and further said:

“the AMWU’s submission is not that Fonterra has entirely failed to consult but instead that it has not adhered to all of the provisions of clause 5.”

Consideration

[92] The Agreement contains three terms that specifically deal with consultation, namely clauses 5, 21 and 46 which are set out below:

“5. CONSULTATION AND PRODUCTIVITY

Consultative measures currently operating at the Echuca factory shall continue and shall be used to maintain continuing cooperation between the parties to achieve improved productivity of manufacturing, and related operations.

To provide a process for change the following provisions shall apply.

5.1 Where an issue is raised by the company, or an employee or the union as part of continuous productivity improvement, consultation shall take place as follows:

5.1.1 The changes shall be explained to all affected employees including details of how the change or changes will work and how they will improve or alter productivity including output, waste, costs, etc.

5.1.2 Employees will have their input and any alterations or alteration considered.
5.1.3 Appropriate union representation shall be involved in this consultative process.

5.1.4 The changes will not reduce an employee’s average ordinary weekly wages exclusive of any shift allowance.

5.2 Where agreement is reached on the proposed changes, they will be implemented as soon as practicable.

5.3 Subject to 5.1 - 5.1.1, 5.1.2 and 5.1.3, if agreement cannot be reached to implement the changes, agreement will not be withheld to undertake a trial provided the proposed changes are permitted by the Awards. The process of implementation of the trial will be;

5.3.1 Consultation with affected employees and their representative(s) will be undertaken.

5.3.2 The trial period will commence as soon as practicable after the expiry of two working weeks from the date on which the productivity improvement is first raised and will continue until sufficient information is available to make a valid assessment.

5.3.3 A time period for the trial will be negotiated and agreed including the commencement date.

5.3.4 At the end of the trial period a review will be undertaken with all involved employees to examine the results of the trial.

5.3.5 During the trial period, the changes will not reduce an employee’s average ordinary weekly wages inclusive of any shift allowance.

5.3.6 It is recognised that a trial having a direct impact on all employees may not normally be capable of immediate implementation, but shall not take longer than four working weeks to implement. The implementation will be without prejudice to the union’s right to oppose the changes. The consultative process will continue while the trial continues.

5.4 For the changes to continue to be implemented after the trial,

5.4.1 The majority of employees affected by the change at the plant or enterprise must genuinely agree to the change.

5.4.2 The union, employees or employer shall not unreasonably oppose any agreement. It is agreed that it would be unreasonable for the employees or the employer to withhold agreement to a change if the other party has a unilateral right to implement the change under any other provision of this agreement (other provisions are the remainder of this agreement excluding this clause).

5.5 Either party may take the issue to the FWC at any stage after the issue is raised.

5.6 Where an occupational health and safety issue is raised, it shall be processed in accordance with the applicable occupational health and safety laws.

5.7 Where an employee has personal difficulties arising from a productivity improvement, those difficulties will be promptly investigated and the employee will have recourse to the Disputes Resolution Process as outlined in this Agreement.

21. CONSULTATION

21.1 This term applies if:

21.1.1 The Employer has made a definite decision to introduce a major change to production, program. organisation, structure, or technology in relation to its enterprise; and

21.1.2 The change is likely to have a significant effect on employees of the enterprise.

21.2 The Employer must notify the relevant employees and employee representatives of the decision to introduce the major change.

21.3 As soon as practicable after making its decision, the Employer must:

21.3.1 discuss with the relevant employees:

i. the introduction of the change; and

ii. the effect the change is likely to have on the employees; and

iii. measures the employer is taking to avert or mitigate the adverse effect of the change on the employees; and

21.3.2 for the purposes of the discussion- provide, in writing, to the relevant employees:

i. relevant information about the change including the nature of the change proposed; and

ii. information about the expected effects of the change on the employees;

and

iii. any other matters likely to affect the employees.

21.3.3 However, the Employer is not required to disclose confidential or commercially sensitive information to the relevant employees.

21.4 In this term, a major change is likely to have a significant effect on employees if it results in:

21.4.1 the termination of the employment of employees; or

21.4.2 major change to the composition, operation or size of the employer’s workforce or to the skills required of employees; or

21.4.3 the elimination or diminution of job opportunities {including opportunities for promotion or tenure); or

21.4.4 the alteration of hours of work; or

21.4.5 the need to retrain employees; or

21.4.6 the need to relocate employees to another workplace; or

21.4.7 the restructuring of jobs.

21.5 In this term, relevant employees means the employees who may be affected by the major change.

46. CONSULTATION FOR PRODUCTION LINE MANNING

46.1 Site management will ensure line standards are known to employees working the particular production lines and will advise when or if these standards change.

Consultation in relation to any required changes will occur consistent with clause 5 Consultation and Productivity.

[93] Clause 5 and 46 are specifically linked to each other but there is nothing in the terms of the Agreement which makes clear whether clauses 5 and 21 are mutually exclusive, mutually inclusive or somewhere in between.

[94] The AMWU places great reliance on clause 5 of the Agreement whereas Fonterra contended that clause 5 has no relevance to changes proposed to be introduced and that clause 21 is the appropriate term of the Agreement to be applied.

[95] Both the AMWU and Fonterra have focussed on the nature of the changes which have occurred and which will occur to then contend whether such changes are covered by clause 5 or clause 21 of the Agreement.

[96] The respective positions adopted by each of the AMWU and Fonterra treat clauses 5 and 21 as being mutually exclusive.

[97] Both the AMWU and Fonterra contend that clause 5 and 21 need to be interpreted in a way which gives both clauses work to do and the Commission agrees with this approach.

[98] On the plain words of both clauses 5 and 21 there is nothing to suggest that both clauses could not operate simultaneously in relation to an issue of change. A proposed change could be significant enough that it meets the criteria of clause 21 and thus that clause is enlivened. Simultaneously the change could involve continuous productivity improvement and thus enliven clause 5. On the plain words of both clauses 5 and 21 there appears to be no ambiguity or uncertainty in the wording of the clauses. Each has work to do and each can be given effect to without difficulty. The perceived ambiguity which is implied by the submissions of both the AMWU and Fonterra arises simply because of the competing positions adopted by both in this arbitration. Objectively read and understood the two clauses neither contain ambiguity nor uncertainty.

[99] In the present matter the evidence of the changes which have occurred (the termination of 12 out of the 20 Team Leaders) and which will occur (the introduction of the Assistant Shift Managers, the removal of the Team Leader position and the reallocation of the Team Leaders work between the Assistant Shift Manager and the Line Operator position) clearly involves a change with significant effects on employees and which clearly enlivens clause 21 of the Agreement. Simultaneously the changes to the allocation of work amongst the three persons who perform the hands on operation of each production line including removing duties from the Team Leaders and the increased multi-skilling of some existing Line Operators and the reorganisation of the management or supervision of the production process through the intended elimination of the Team Leader position and the creation of the Assistant Manager position are very much continuous productivity improvements and as such enliven clause 5 of the Agreement.

[100] The obligation on Fonterra to consult about these changes arises under both clause 5 and clause 21 of the Agreement.

[101] There are very real differences between clause 5 and clause 21.

[102] Under clause 21 consultation must occur after Fonterra has made a definite decision to introduce a major change and clause 21 deals with nothing more than the process of consultation.

[103] In contrast clause 5 requires consultation when changes are proposed which may be earlier than when a definite decision has been made to make a change. If the issue is not resolved by agreement between the employees and Fonterra then a trial of the proposed changes takes place and after the trial agreement of the employees is required before the changes can be permanently implemented.

[104] A further significant difference is the way in which disputes about the application or operation of the two respective clauses can be dealt with.

[105] If a dispute arises about Fonterra’s compliance with its obligations under clause 21 then the disputes resolution process of clause 6 of the Agreement comes into play. Clause 6 of the Agreement provides for a 5 step process with Steps 4 and 5 being as follows:

“Step 4

If the matter remains unresolved (including disputes between a union(s) and the

employer) the parties may, jointly or individually, refer it to the FWC for conciliation.

Step 5

If conciliation fails to resolve a dispute, the FWC is empowered to resolve the matter by arbitration provided the arbitration is limited to the specific:

i. Interpretation; and/or

ii. Application; and/or

iii. Process of implementation of.

a. a term or terms of this Collective Agreement, including the incorporated Award provisions, any other incorporated provisions and any other provisions or arrangements recognized in this Agreement; and/or

b. the National Employment Standards; and/or

c. If the matter is not limited to these matters the FWC may only arbitrate if the parties agree to binding arbitration.

[106] Clause 5 does not rely solely upon clause 6 but provides a specific mechanism to have a matter taken to the FWC:

“5.5 Either party may take the issue to the FWC at any stage after the issue is raised.”

[107] It is clear from the plain language of clause 5.5 that at any time after a change is proposed and before any consultation has occurred and before any trial of the proposed change has occurred either Fonterra or an employee or the union may take the issue of the proposed change to the FWC.

[108] It is clear from the structure of clause 5 that sub-clause 5.5 operates to permit the FWC to deal with a proposed change without the parties needing to consult, or have a trial or seek agreement on final implementation.

[109] The application by the AMWU in the present matter clearly falls within sub-clause 5.5.

[110] What is missing from clause 5 and in particular sub-clause 5.5 is mention of the powers that the FWC may exercise in relation to an issue that has been taken to FWC by a party to the issue. In the absence of clause 5 providing for the FWC to deal with an issue referred to in under sub-clause 5.5 in a specific manner then, having regard to the normal canons of construction of an enterprise agreement, the powers of the FWC in dealing with an issue under sub-clause 5.5 can be no more and no less than the powers that the FWC can exercise in relation to any other dispute arising in relation to the operation of a term of the Agreement. Therefore the powers of the FWC to deal with an issue arising under sub-clause 5.5 are those set out in Steps 4 and 5 in sub-clauses 6.4 and 6.5 of the Agreement.

[111] As is clear from sub-clause 6.5 of the Agreement the FWC is empowered to resolve an issue referred to it under sub-clause 5.5 by arbitration provided the arbitration is limited to the specific interpretation; and/or application; and/or process of implementation of a term or terms of theAgreement.

[112] Whilst clause 5 is predicated upon the parties at the workplace (Fonterra, relevant employees and the Union) usually dealing with a proposed change through agreement the clause specifically provides for a mechanism to by-pass dealing with an issue by agreement. In the present matter the Union application in this matter stops the process under clause 5 of dealing with an issue by agreement and replaces it with a process of dealing with the issue by arbitration.

[113] The process under clause 5 of the Agreement provides employees with significant leverage over Fonterra in relation to any proposal from Fonterra to introduce a change which improves productivity. The necessity for Fonterra to reach agreement with the union and the relevant employees provides a significant hurdle for Fonterra to overcome. The use of a trial where initial agreement has not been reached provides employees and the union with a real ability to examine the proposed change before it can become final. Additionally clause 5 contains a very specific wage protection for employees who may be affected by any proposed change as follows:

“5.1.4 The changes will not reduce an employee’s average ordinary weekly wages exclusive of any shift allowance

[114] Understandably the Union and relevant employees want Fonterra to comply with the requirements of clause 5 before any change is trialled or implemented.

[115] However, once an issue is taken to FWC by a party pursuant to sub-clause 5.5 then the necessity for agreement or a trial is replaced with an outcome determined by arbitration (as both the AMWU and Fonterra have agreed to bypass conciliation and proceed straight to arbitration).

[116] The conduct of the parties (Fonterra, AMWU and relevant employees) is relevant to the FWC’s determination of the issue but the arbitrated outcome is not dependent on requiring the parties to consult or to agree to an outcome or to trial a proposed change.

[117] I now turn to consider the specific issue as to whether Fonterra has failed to consult with the AMWU and relevant employees in accordance with sub-clause 5.1 of the Agreement.

[118] I note that the specific question posed by Fonterra was much narrower: Has Fonterra failed to properly consult with the AMWU in accordance with subclause 5.1.1? Paragraph 5.1.1 is only one of the steps in the consultative process set out in sub-clause 5.1 of the Agreement. The FWC will answer the question asked but any answer is necessarily misleading as it does not answer the question: Has Fonterra failed to properly consult with the AMWU in accordance with sub-clause 5.1? It is this larger question which also must be answered!

[119] Sub-clause 5.1 has three specific steps in the consultation process and also contains one qualifier on the consultation process. Further the consultation process is to take place using the consultative measures operating at the Echuca site as at the time the Agreement was made.

[120] Notwithstanding the AMWU’s traverse of the history behind clause 5 and the history of consultative mechanisms at the Echuca site under the various collective agreements going back to the 1992 agreement the most that can be said of the evidence in this matter is that it discloses that at the time the Agreement was made there were no formal consultative mechanisms in place and consultation between the AMWU, employees and Fonterra was ad hoc and informal and further that this informal approach continued in relation to consultation about the proposal to introduce the new Assistant Shift Manager and eliminate the Team Leader position.

[121] At the time that Fonterra raised the issue of the creation of the Assistant Shift Manager position and the elimination of the Team Leader position the evidence makes clear that Fonterra did not know in detail how the proposal would work in practice. The broad parameters as to the position and duties and reporting relationships both to and from the new Assistant Shift Manager were known. Also known were the general alteration of the duties of production line employees consequent upon the creation of the Assistant Shift Manager and the elimination of the Team Leader position.

[122] It is clear from the evidence (especially that of Mr Woodworth) that Fonterra communicated this information to employees and to the AMWU. The start of the consultation process as required by paragraph 5.1.1 occurred.

[123] However, the evidence in this matter must lead to the conclusion that paragraph 5.1 could not be complied with by Fonterra given the operation of paragraph 5.1.4. Fonterra’s own evidence and position was that the with the elimination of the Team Leader position those employees previously employed as Team Leaders and who had not taken the voluntary redundancy package would be kept in employment on the production line as Line Operators. The Line Operator rate of pay is less than the rate of pay of a Team Leader. Any consultation initiated by Fonterra necessarily proceeded upon the basis that if an existing Team Leader remained in employment after the changes were introduced the employee would not be a Team Leader but would be a Line Operator.

ISSUE 4 - BARRIER IMPLEMENTATION

[124] The matter at the heart of this issue is well expressed by the AMWU in its written contentions as follows:

“16. The AMWU further submits that Fonterra cannot implement the changes it seeks because it does not currently have the agreement of the parties and/or a majority of employees affected by the change in accordance with sub-clause 5.2 and 5.4.1 of the Agreement. Sub clause 5.2 of the Agreement states:

‘Where agreement is reached on the proposed changes, they will be implemented as soon as practicable.’

17.1t is clear on the face of these words that the parties to the Agreement intended that changes such as those proposed could only be implemented through a process of consultation culminating in agreement between the parties.

18. The AMWU submits that in the absence of agreement Fonterra is barred from immediately proceeding with its proposed changes. Notwithstanding this, the Agreement does make provision for the parties to agree to the implementation of a trial period for the changes.

Notably however, clause 5.4 of the Agreement states:

‘5.4 For the changes to continue to be implemented after the trial,

5.4.1 The majority of employees affected by the change at the plant or enterprise must genuinely agree to the change.
5.4.2 The union, employees or employer shall not unreasonably oppose any agreement.

It is agreed that it would be unreasonable for the employees or the employer to withhold agreement to a change if the other party has a unilateral right to implement the change under any other provision of this agreement (other provisions are the remainder of this agreement excluding this clause).’

To date no such trial has occurred or been requested and the AMWU reserves its position in this respect.”

[125] In response Fonterra contended as follows:

“that clause 5 does not apply to the restructure here under consideration.”

[126] In the alternative Fonterra contended that if:

“the FWC finds that clause 5 does apply to the present situation, Fonterra submits that the clause poses no barrier to the implementation of any of the changes because subclause 5.4.2 acknowledges and accommodates the company’s right to implement changes which it has an unilateral right to implement under the 2013 Agreement. Subject to compliance with clauses 21 (consultation over major change) and clause 22 (calling for voluntary redundancies first), Fonterra has a unilateral right to downsize its staff. The 2013 Agreement does not put in place any fetter on the allocation of duties to persons not covered by the classification structure.”

[127] To the extent that Fonterra sought to rely upon managerial prerogative the AMWU contended that:

“It is submitted that managerial prerogative may legitimately be curtailed through enterprise agreements and thus in the current case any managerial prerogative to implement the changes sought by Fonterra is subject to the Agreement and in particular the provisions of clause 5.”

Consideration

[128] The AMWU misunderstands the operation of clause 5 of the Agreement. It is clear that clause 5 is intended to allow the introduction of changes through agreement between the parties and that changes should not, in the normal course of events, be permitted without the agreement of the AMWU and relevant employees.

[129] However the very existence of sub-clause 5.5 tells against an interpretation of clause 5 that prohibits an employer from introducing change without the agreement of the AMWU or employees.

[130] Clause 5.5 must permit any of the AMWU, a relevant employee or Fonterra to take the “issue” to FWC even before the consultation process in sub-clause 5.1 has begun. Clause 5.5 would permit the FWC to exercise conciliation and even arbitration powers in relation to the “issue” even before consultation has commenced between the parties. Such being the case it is clearly contemplated by clause 5 that the FWC may through arbitration resolve the “issue” without the express agreement of any of Fonterra, the AMWU or the relevant employees to the specifics of the arbitrated outcome. By its very nature arbitration imposes an outcome on the parties to a dispute. Arbitration is only necessary when the parties have been unable to reach agreement to resolve a matter either through direct negotiation or through conciliation before the FWC.

[131] In the present matter the AMWU originally made an application for the FWC to deal with a dispute in accordance with the dispute settlement procedure of the Agreement with the dispute being identified as follows:

3. Clauses to which the dispute relates:

Clause 22 - Redundancy

Clause 6 - Disputes Resolution Process

Appendix 2 - Classification Structure

Clause 28- Wage Maintenance

4. What is the dispute about?

The Respondent is rearranging its production schedule from 4 shifts to 3 shifts.

Further, the Respondent is also reducing the number of staffing on each shift.

Consequently, there will be redundancies arising from these changes.

The Applicant disputes the manner in which these redundancies are being implemented.

[132] The original matter did not identify clause 5 of the Agreement as being a clause about which the dispute relates. However, the description of the dispute did include a dispute about “the manner in which these redundancies are being implemented”.

[133] During the progress of the dispute the AMWU drew specific attention to clause 5 and specifically alleged non compliance with clause 5 by Fonterra.

[134] By the time the parties had completed the filing of their respective evidence and submissions the operation of clause 5 of the Agreement was clearly and unambiguously in dispute and was specifically part of the dispute on which the parties had agreed would be arbitrated by the Commission.

ISSUE 5 - WAGE MAINTENANCE
[135] In its written contentions dated 26 September 2014 the AMWU said:

“Reduction of employees’ wages.

19. The changes Fonterra is seeking to implement appear to be designed to reduce employee’s average ordinary weekly wages. This would appear to breach sub-clause 5.1.4 of the Agreement which states:

‘The changes will not reduce an employee’s average ordinary weekly wages exclusive of any shift allowance.’

20. The AMWU acknowledges that as the changes have not yet been implemented no breach of sub-clause 5.1.4 can currently be alleged however we consider that it is appropriate to draw the FWC’s attention to this provision as a material consideration in determination of the issues at hand.”

[136] Fonterra in its written contentions contended as follows:

“14.1 As the AMWU notes in paragraph [20] of its 26 September 2014 submissions, this issue is premature / hypothetical because the changes are yet to be implemented.

14.2 The fact that the wage maintenance obligations under subclauses 5.1.4 and 5.3.5 could have no sensible application to employees made redundant as part of the restructure is consistent with Fonterra’s position that clause 5 does not apply to large scale restructures such as the restructure process here under consideration.”

Consideration

[137] The relationship between clauses 5 and 21 has been extensively considered above and it is clear that both could operate simultaneously in relation to a change.

[138] The structure of clause 5 of the Agreement provides a very specific limitation on the type of proposed changes that can be dealt with under that clause. Sub-clause 5.1.4 provides a very strong bar to Fonterra proposing any change which seeks as part of the change to reduce an employee’s wage. The presence and operation of clause 5.1.4 means that where Fonterra proposes a change “as part of continuous productivity improvement” then clause 5 will only operate where the outcome of the change is that the change will not reduce an employee’s average ordinary weekly wages exclusive of any shift allowance.

[139] Clause 5.1.4 will operate at two levels. Firstly, if the parties come to an agreement after having used the consultation process and trial process provided for in clause 5 then any final implementation of a change under clause 5 will only occur if the change does not result in an employee having their average ordinary weekly wages exclusive of any shift allowance reduced. Secondly, if an “issue” is taken to the FWC and the “issue” is dealt with by the Commission by way of arbitration then the operation of s.739(3) and (5) would require the Commission not to make a decision which had the effect of reducing an employee’s average ordinary weekly wages exclusive of any shift allowance.

[140] Clause 5.1.4 cannot operate to prevent Fonterra from proposing a change which will achieve continuous productivity improvement but which is explicitly predicated upon there being a cut in the wages of employees. The outcome of such a proposed change means that the change would have significant effects on the relevant employees and would be a matter best dealt with under clause 21.

[141] Clause 21 clearly comprehends the possibility of an employees’ wage being reduced. The requirement that an employer consider measures to mitigate the consequences of change may mean that instead of terminating employees the wages of employees might be reduced.

[142] The interesting crossover of clause 5 and clause 21 is found in the wording of each clause. Clause 5 clearly permits Fonterra to propose a change which will achieve continuous productivity improvement and which may include a proposed cut in the average ordinary weekly wages exclusive of any shift allowance. Clause 5 would apply in relation to consultation about such a proposed change but clause 5 would not allow the implementation of a change which will reduce an employee’s average ordinary weekly wages exclusive of any shift allowance. As soon as Fonterra make a decision to introduce a change which results in a reduction to an employee’s average ordinary weekly wages exclusive of any shift allowance, then clause 21 applies.

[143] In the present matter Fonterra have made a definite decision to remove the Team Co-ordinator positions from each production line and to replace the Team Co-ordinator with a Line Operator. Even though the changes have not yet been implemented the making of the definite decision triggers the operation of clause 21 and in relation to the application in this matter and the parties agreement to bypass conciliation and proceed to arbitration then the Commission does have the power under clause 6 of the Agreement to arbitrate the matter in dispute including determining the questions as to the classifications (and correspondingly the rates of pay) of employees to be employed on the production lines after the change is implemented.

Conclusion

[144] Each of the questions posed by the parties is to be answered as follows:

Question 1. What part of the current team coordinators’ role as set out in the current relevant position description will be performed by the newly proposed assistant managers?
Answer: Exhibit R5 identifies the specific Role Accountabilities currently forming part of the Position Description of the position Production Operator (TC) which will be performed by the Assistant Shift Manager. A differently expressed list of functions currently performed by the Team Co-ordinator but which will be performed by the Assistant Shift Manger was identified in Attachment DW5 to ExhibitR3. The answer to the question lies in both Exhibit R5 and Attachment DW5 to Exhibit R3.

Question 2. Which class of employees, if any, will perform the residual part of the current team coordinators’ roles and to what extent?
Answer: Where the work performed requires the skill level of a level 8 employee then an existing level 8 employee can continue performing that work. Additionallywhere the work performed requires the skill level of a level 8 employee then where existing level 6 employees are required to exercise skills currently at level 8 then such employees would have to be paid at the level 8 rate. Where the existing work of a current level 8 employee only requires a skill level of a level 6 employee then either an existing level 8 employee or an existing level 6 employee would be capable of performing the work.

Question 3. Are the new Assistant Shift Manager positions covered by the classification levels in the 2013 Agreement?
Answer: No

Question 4. What is the appropriate classification of the remaining Line Operators under the new structure?
Answer: After the introduction of the new Assistant Shift Manager positions the appropriate classifications for Line Operators will be both Level 8 and Level 6. The actual classification of each Line Operator will depend on whether the Line Operator is only performing the duties/jobs described in the Position Description for a Production Operator - Grade 6 as at the time the Agreement was signed or whether the Line Operator is performing duties/jobs which are additional to those duties/jobs described in the Position Description for a Production Operator - Grade 6 as at the time the Agreement was signed and which additional duties/jobs were identified in the Role Accountabilities in the Position Description for a Production Operator (TC).

Question 5. Has Fonterra failed to properly consult with the AMWU in accordance with subclause 5.1.1?
Answer: This question is meaningless given that the requirement to consult under clause 5 of the Agreement is to be found in sub-clause 5.1. As paragraph 5.1.1 is but a sub-set of the requirements for consultation to occur under sub-clause 5.1 the only meaningful question could be: Has Fonterra failed to properly consult with the AMWU in accordance with sub-clause 5.1? The answer to this broader question is: Yes

Question 6. Is Fonterra barred from implementing the proposed restructure changes by virtue of clause 5.4?
Answer: No. Clause 5.4 ceased to have any effect once an “issue” was taken to the FWC by the AMWU under sub-clause 5.5 of the Agreement.

Question 7. Is Fonterra required to maintain change-affected employees’ ‘average ordinary weekly
Answer: The requirement to maintain an employee’s average weekly earnings only arises from the language of paragraph 5.1.4 which operates to constrain the matters that can be subject of consultation under sub-clause 5.1 of the Agreement.Clause 5.1 ceased to have any effect once Fonterra made a definite decision to introduce a major change which required the reduction in pay of persons currently employed as Team Leaders. Furthermore the answers given to questions 1, 2 and 4 above appropriately deal with the subject matter of the appropriate wage to be paid to production employees.

Final Observation

[145] Both this dispute and the dispute in C2014/1876 concerning the meaning of ‘ordinary pay’ in clause 22.8.1 of the Agreement highlight significant issues with the wording of the Agreement. The Agreement has a nominal expiry date of 31 August 2015 and the last wage increase provided for by the Agreement was on 1 September 2014.

[146] The Commission, as currently constituted, would urge the parties to commence bargaining for the enterprise agreement which will replace the current Agreement. Whilst the Agreement has a number of clauses providing for consultation between Fonterra, the unions and the employees those consultative provisions do not have the same degree of flexibility as does the normal process of bargaining for a new enterprise agreement. Long before bargaining occurs around the key matter of wage increases the parties should use a bargaining process to carefully consider the language used in the Agreement and to consider the structure of the workforce and to consider the most appropriate consultative processes for the future.

[147] An employer’s desire to reduce costs and increase profits and an employee’s desire to increase wages and job security are not mutually exclusive and a Win/Win outcome is possible if all parties involved in the workplace approach enterprise agreement bargaining with goodwill.

[148] The Commission is available to assist the parties at any stage of the bargaining process either through the use of s.240 of the Act or at the direct invitation of the parties.

COMMISSIONER

Appearances:

D. Vroland of the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

C. O’Grady, counsel, for Fonterra Brands (Australia) Pty Ltd.

Hearing details:

2014.

Melbourne:

November 10, 12 and 26.

APPENDIX A

APPENDIX B

1 [2014] FWCFB 7447.

2 Transcript at PN537 to PN539.

3 Transcript at PN2681.

4 Transcript at PN2298 to PN2300.

5 Transcript at PN2683 o PN2697.

Printed by authority of the Commonwealth Government Printer

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

[2015] FWC 1959

31 MARCH 2015

DECISION

Interpretation of the Agreement

Consideration

Conclusion