"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v George Weston Foods Limited
[2019] FWC 8660
•23 DECEMBER 2019
| [2019] FWC 8660 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
v
George Weston Foods Limited
(C2019/1423)
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
George Weston Foods Limited
(C2019/1469)
DEPUTY PRESIDENT DEAN | SYDNEY, 23 DECEMBER 2019 |
Application to deal with a dispute –basis for payment of overtime hours.
[1] This application arises from a dispute about how the payment for certain overtime is calculated for maintenance employees of George Weston Foods Limited (GWF) who are covered by the Tip Top Bakeries (NSW) Maintenance Agreement 2014 (the 2014 Agreement).
[2] The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) (collectively, the Unions) have each filed an application pursuant to s.739 of the Fair Work Act 2009 for the Commission to deal with this dispute in accordance with the dispute settling procedure (clause 13) of the 2014 Agreement.
[3] The 2014 Agreement covers GWF, the AMWU, the CEPU, and employees of GWF who are employed to perform maintenance work at its site in Chullora, NSW.
[4] There is no issue that the Commission has jurisdiction to deal with the matter in dispute and that the resolution of the dispute turns upon the interpretation of particular provisions in the 2014 Agreement.
[5] The matter was heard in Sydney on 14 August 2019. Ms K Presdee appeared for the AMWU, and Mr S Robinson appeared for the CEPU. Mr Mead of Australian Industry Group appeared for GWF.
Background and Agreed Facts
[6] The parties provided a Statement of Agreed Facts. The agreed facts and other relevant background that is not disputed are set out below.
[7] The 2014 Agreement was preceded by the Tip Top Bakeries (NSW) Maintenance Agreement 2012 (2012 Agreement).
[8] Prior to the commencement of the 2012 Agreement, maintenance employees worked a roster that averaged 42 hours per week. This roster pattern included an equal distribution of overtime on each rostered shift, and comprised 38 ordinary hours and 4 hours of overtime (the 42 hour week).
[9] The arrangements for the 42 hour week were carried into the 2012 Agreement and continued under the 2014 Agreement.
[10] Apart from the overtime within the 42 hour week, which is referred to as rostered overtime (i.e. hours 39, 40, 41, and 42), maintenance employees are also expected to work additional overtime on an ad hoc basis, which is referred to as ad hoc overtime (i.e. hours above 42).
[11] Employees are paid the sum of the following amounts for the 42 hour work week:
a. The base hourly rate for the employee’s classification specified in Schedule A of the 2014 Agreement (Base Hourly Rate), multiplied by 38 (Base Weekly Rate);
b. An amount specified as ‘Autoshift’ which is an approximation of the applicable shift allowances (if any) prescribed by clause 30 of the 2014 Agreement (Autoshift Amount);
c. Double the Base Hourly Rate, multiplied by 4 (Rostered Overtime Amount); and
d. Applicable allowances (e.g. first aid, electrical licence).
[12] There is no dispute that this is the correct basis for payment of rostered overtime.
[13] Until late 2018, payment for ad hoc overtime was calculated on the basis of the Base Weekly Rate plus the Rostered Overtime Amount, divided by 38. In other words, the hourly rate for the calculation of ad hoc overtime included the value of the Rostered Overtime Amount.
[14] In or about late 2018, GWF commenced consultation on a number of changes to the roster and practices around payroll. During this consultation, GWF identified that it believed there had been an error in the method by which the ad hoc overtime had been calculated and that the double time penalty should be applied to an employee’s Base Hourly Rate for their classification. The Unions and employees disagreed that there was any such error.
[15] In January 2019, GWF commenced application at the double time penalty for ad hoc overtime on the Base Hourly Rate. This resulted in a reduction of the hourly rate for ad hoc overtime.
[16] The Unions and employees have disputed that the resultant change to the hourly rate for overtime is consistent with clause 32.1(c) of the 2014 Agreement.
Issue to be determined
[17] The Unions say that the dispute is about how the payment of ‘ad hoc overtime’ is calculated. The 2014 Agreement does not distinguish between rostered and ad hoc overtime; as indicated earlier, these were phrases used by the parties for ease of explanation as to the issue in dispute, and I shall use these phrases in this decision. The parties agreed the dispute can be determined by answering the following two questions:
(1) How should the hourly rate in clause 32.1(c) of the Agreement be calculated?
(2) What is the appropriate weekly rate for the purposes of calculating the overtime hourly rate?
[18] For the reasons set out below, I find that the questions should be answered as follows:
a. Question 1 – The hourly rate in clause 32.1(c) is the applicable hourly rate, based on the employees’ classification as set out in Schedule A (ie, the Base Hourly Rate).
b. Question 2 – The appropriate weekly rate for the purposes of calculating the overtime hourly rate is the applicable hourly rate, based on the employees classification in Schedule A, multiplied by 38 (ie, the Base Weekly Rate). It does not include any amounts payable to an employee in respect of overtime.
[19] In reaching my conclusion, I have had regard to the principles applicable to the construction of an enterprise agreement which were enunciated in Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd1 (Golden Cockerel)and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Berri Limited2(Berri).
Relevant provisions
[20] Central to the dispute is the interpretation of clause 32.1(c) of the Agreement which provides:
“(c) The hourly rate, when computing overtime, is determined by dividing the appropriate weekly rate by 38, even in cases when an employee works more than 38 ordinary hours in a week.”
[21] Both parties agreed that the phrase ‘appropriate weekly rate’ was ambiguous.
[22] The Unions submitted that the following clauses are also relevant:
“7.1 For the duration of this agreement, an employee will remain entitled to receive the annual salary under his or her contract of employment, even where the employer introduces a reduction in the amount of rostered overtime for employees covered by this Agreement (at the commencement of the 2012 Agreement, employees worked 4 hours of rostered overtime each week, and were paid an annual salary under their contracts of employment which compensates them for a 42 hour week). To avoid doubt, this clause applies only to employees covered by this Agreement who were employed by the Company at the commencement of the 2012 Agreement (Tip Top Bakeries (NSW) Maintenance Agreement 2012).”
and
“27.1 Wages will be paid weekly according to the average weekly hours (including both ordinary hours and overtime) worked by the employee under the roster in place at the relevant time.”
[23] In addition, I note of relevance is clause 14 (Full Time Employment) which provides that the hours for a full time employee are 38 hours (or less) per week; and clause 22.1 (Classification and Wages) provides that all employees covered by the 2014 Agreement are to be classified according to the structure set out in Schedule A and paid the minimum wage in the 2014 Agreement.
[24] Finally, the clauses dealing with Hours of Work (clauses 29.3 to 29.6) provide that ordinary hours are an average of 38 hours per week.
[25] Schedule A is titled ‘Minimum Weekly Wages and Classification Structure’. Despite the title, the schedule provides hourly rates of pay, not weekly rates of pay, for each classification level.
Evidence and submissions
[26] The CEPU provided a witness statement of Mr J Hall, an employee of GWF. His evidence went primarily to his roster pattern and how he was paid. Mr P Kwok, GWF’s Payroll Administrator, provided a witness statement that outlined how 14 of the 15 maintenance employees were paid, and the basis for those calculations. Neither witness was required for cross examination. While this evidence was useful in the context of understanding how the issue in dispute has arisen, it does not assist in the task at hand, which is the interpretation of the particular provisions of the 2014 Agreement.
The Unions’ submissions
[27] The Unions submitted that the key definition to resolve the dispute is that of the ‘appropriate weekly rate’ in clause 32.1(c). They argued that the word appropriate could mean a rate appropriate to the employees’ classification, or the weekly rate best suited to determining an overtime payment, taking into account all-purpose allowances or penalty loadings, or it could mean a combination of those things.
[28] The Unions noted that the 2014 Agreement does not contain a weekly rate of pay for each classification. A determination was therefore required as to what a ‘weekly rate’ is for the calculation of overtime. The Unions argued that it is this lack of certainty as to what the weekly rate is that creates an ambiguity which the Commission must determine to resolve the dispute.
[29] The Unions relied on clause 27 of the 2014 Agreement which provides for the payment of wages to be paid weekly according to the average weekly hours (both ordinary hours and overtime) worked by the employee under the roster that is in place at the relevant time.
[30] The Unions further argued that for a group of maintenance employees, the consideration of the appropriate weekly rate will also have regard to clause 7.1 of the 2014 Agreement, which is set out above.
[31] The Unions contended that since the commencement of the 2012 Agreement, the weekly take-home pay for at least some of the maintenance employees must include payment for rostered overtime, regardless of whether those four hours are worked.
[32] They further argued that since prior to 2012, GWF has conducted its operations based on a consistent average of 42 hours of work for a week. They contended that when reading the text of the 2012 and 2014 Agreements, there appeared to be a preference that these past arrangements would continue. In this regard, the ‘annual salary’ which had been based on a 42 hour week contained in employment contracts that existed prior to the 2012 Agreement, was guaranteed under clause 7.1 for those employees employed at that time. It would be expected, then, that the appropriate weekly rate as expressed in the 2014 Agreement would continue the consistency of work arrangements that had been in place from the time employees received a salary based on a 42 hour week.
[33] The Unions also argued that the adoption of clause 7.1 (in both the 2012 and 2014 Agreements) formed the basis on which clause 27.1 was interpreted, i.e. an average weekly payment based on a 42 hour week. It contended that the decision by GWF to base the calculation of ad hoc overtime on the basis of the weekly rate, being 42 hours worked, was a natural extension of the arrangements in place prior to 2012, i.e. the appropriate weekly rate of a salary based on a 42 hour week.
[34] The Unions submitted that clause 32.1(c) should result in the rate for ad hoc overtime being calculated based on an appropriate weekly rate that is equivalent to an employees weekly wage payments based on an average of 42 hours work, divided by 38. It was their view that recognising the average 42 hour week in the calculation of overtime best reflects the arrangements that were agreed to continue when the 2012 Agreement was first made, and then confirmed by the parties again in the making of the 2014 Agreement.
[35] The Unions argued that the Commission could also have regard to post-agreement conduct that showed there has been a consensus on interpretation, provided that conduct is not merely the absence of complaint or common inadvertence.
The submissions for GWF
[36] GWF contended that the rates payable for rostered overtime and ad hoc overtime are to be calculated in the same way, adopting the same methodology.
[37] In terms of the proper approach to interpretation of the 2014 Agreement, GWF submitted that clause 32.1(c) prescribes a formula for calculating the overtime rates payable pursuant to clause 32. It prescribed a mechanism for deriving an hourly rate upon which overtime rates are to be applied, by reference to the “appropriate weekly rate”.
[38] GWF acknowledged that the term ‘appropriately weekly rate’ is not defined by the 2014 Agreement, nor is it used anywhere else in the 2014 Agreement.
[39] In applying the principles articulated in Berri, GWF contended that the proper interpretation of the impugned provision must be determined having regard to its context, including the text of the 2014 Agreement viewed as a whole.
[40] In this context, GWF submitted that the formula provided by clause 32.1(c) does not draw a distinction between overtime worked in different circumstances, and relevantly, it does not distinguish between rostered or ad hoc overtime. It applies, expressly, to the computation of overtime rates payable for all overtime worked. Further, the 2014 Agreement does not prescribe different overtime rates for rostered overtime compared to ad hoc overtime, or suggested different rates are payable for such work.
[41] GWF referenced a number of other provisions in the 2014 Agreement to demonstrate that the concept of rostered overtime and ad hoc overtime are not contemplated by the 2014 Agreement; expressly or by implication. Rather, the 2014 Agreement treats the performance of overtime synonymously.
[42] GWF contended that clause 29 of the 2014 Agreement, which permits the averaging of an employee’s ordinary hours within certain parameters, eventuates in employees performing more or less than 38 ordinary hours of work in a given week. The purpose and application of clause 32.1(c) in that context was clear, GWF argued, in that the clause ensured the relevant overtime rates are not applied to a rate that is higher than 1/38th of the appropriate weekly wage where an employee works fewer than 38 ordinary hours in a week, or less than 1/38th of the appropriate weekly wage where an employee works more than 38 ordinary hours in a week.
[43] In support of its interpretation, GWF also relied on clause 32.1(f) which provides that when computing overtime, each days’ work stands alone. It argued that the proposition that regard must be had to rostered overtime worked over the course of a week for the purposes of the calculation required by clause 32.1(c) was inconsistent with the terms of clause 32.1(f).
[44] In further support of its interpretation, GWF submitted that the phrase ‘appropriate weekly rate’ can have a sensible and plainly understood meaning in the context of all-purpose allowances which are provided for under the 2014 Agreement, and which due to their all-purpose nature, are paid also during overtime hours and not only ordinary hours.
[45] Finally, GWF argued that the terms of clause 32 have a very strong similarity, and indeed are materially identical, to the overtime clause (clause 40) of the Manufacturing and Associated Industries and Occupations Award 2010 (the Award) as it stood for both the making of the 2012 and 2014 Agreements. Relevantly, clause 40.1(c) of the Award provides:
“(c) The hourly rate, when computing overtime, is determined by dividing the appropriate weekly rate by 38, even in cases when an employee works more than 38 ordinary hours in a week”.
[46] GWF contended that having regard to the strong similarity of these provisions, it was open for the Commission to read both the reference to ‘appropriate weekly rate’ and ‘even in cases where an employee works more than 38 ordinary hours in a week’ as statements which are not referable to rostered overtime, as those concepts are not present in the Award in any respect.
[47] In light of the matters set out above, GWF submitted that the interpretation advanced by the Unions could not be sustained when regard was had to the context in which the relevant clause appears in the 2014 Agreement. In this regard, the plain and ordinary meaning of the words do not allow clause 32.1(c) to be interpreted so as to require the application of two formulae depending upon whether overtime is time worked by the employee each week or whether it is overtime worked irregularly.
[48] In relation to the relevance of clause 7 of the 2014 Agreement, GWF contended that the terms of clause 7 are self-evidently a savings provision, drafted with a specific purpose in mind, namely to protect the annual salary of an employee which was in place as at 5 June 2012, and exclude the application of the provision to an employee was not employed by GWF after that date. GWF argued that it was simply not sustainable to assert that this clause had any work to do in supporting the Union’s interpretation of clause 32.1(c). In particular, GWF highlighted that clause 7 makes no reference to the phrase that is at the core of this dispute, i.e. appropriate weekly rate, and does not in any way engage in the notion of how overtime is to be paid.
[49] In response to the Union’s submission that post agreement conduct was relevant, GWF said there was no basis for concluding that there was a ‘meeting of the minds’ as to the meaning of clause 32.1(c). GWF holds the view that the methodology by which ad hoc overtime rates were calculated prior to January 2019 constituted an error. Once it became aware of the error, GWF took steps to rectify it and to apply the 2014 Agreement in accordance with its interpretation.
Submissions of the Unions in response
[50] In response to the submissions of GWF, the Unions contended that the Commission should reject the arguments of GWF with respect to the Award, and that the post agreement conduct of GWF supported its interpretation of the clause in dispute.
[51] The Unions also submitted that it was open to the Commission to determine that neither position advocated by the parties was a correct interpretation of the 2014 Agreement. In this regard, it submitted that it was the role of the Commission to determine what the words used in clause 32.1(c) mean.
[52] The Union submissions concluded that the appropriate weekly rate must reflect that GWF paid their employees an average weekly rate based on 42 hours worked, not 38 hours, and as such, any calculation of the overtime hourly rate must reflect the average hours worked, not just the ordinary hours worked.
Consideration
[53] Reading the 2014 Agreement as a whole and the relevant provisions in context, I consider that the interpretation put forward by GWF is the correct interpretation.
[54] Clause 32.1(c) provides a single methodology for the calculation of overtime. Nowhere in the 2014 Agreement is rostered overtime and ad hoc overtime distinguished.
[55] Despite the heading of Schedule A the 2014 Agreement provides for an hourly rate of pay for each classification, and not a weekly rate of pay.
[56] The 2014 Agreement clearly provides that ordinary hours are 38 hours per week (or averaged at 38 hours per week).
[57] I do not consider that GWF’s post agreement conduct is anything more than an inadvertent error, and does not demonstrate a meeting of the minds. There was no evidence to support the Unions proposition that there was a meeting of the minds in this regard.
[58] In my view, clause 7.1 does not assist in determining the questions at hand. The clause is a savings provision designed to ensure that particular employees, employed at a particular date in 2012, were not disadvantaged financially if their roster changed.
[59] Similarly, clause 27.1 does not assist either. It is simply a payment of wages clause, providing that wages, including ordinary hours and any overtime, will be paid on a weekly basis. The clause does not engage in what should be paid, or how any such payment should be calculated.
[60] I do not accept the submission that the retention of a particular roster pattern across multiple enterprise agreements supports the view that rostered overtime should be included in the calculation of ad hoc overtime. Were this to be so, it would have been expressly stated in the 2014 Agreement.
[61] When regard is had to the context in which the relevant clause appears in the 2014 Agreement, and the plain and ordinary meaning of the words, clause 32.1(c) cannot be interpreted so as to require the application of two different calculation methods depending upon whether overtime is time worked by the employee each week or whether it is overtime worked irregularly.
[62] I find that the interpretation contended by the Unions is not supported by the provisions of the 2014 Agreement. In conclusion, the Rostered Overtime Amount is not included in the calculation of ad hoc overtime, and the answers to the specific questions are set out in paragraph 18 above.
[63] The dispute is so determined.
DEPUTY PRESIDENT
Appearances:
K Presdee for the AWMU.
S Robinson for the CEPU.
M Mead of Australian Industry Group for George Weston Goods Limited.
Hearing details:
2019.
Sydney:
August 14.
Printed by authority of the Commonwealth Government Printer
<PR715533>
1 [2014] FWCFB 7447.
2 [2017] FWCFB 3005.
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