Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, known as the Australian Manufacturing Workers' Union (AMWU) v Knorr-Bremse Australia Pty Limited
[2024] FWC 1890
•23 SEPTEMBER 2024
| [2024] FWC 1890 |
| 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
Knorr-Bremse Australia Pty Limited
(C2023/8050)
| DEPUTY PRESIDENT CROSS | SYDNEY, 23 SEPTEMBER 2024 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)]
This Application is made by the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (the Applicant or the AMWU). The dispute relates to whether the approach of Knorr-Bremse Australia Pty Limited (Knorr-Bremse or the Respondent) to considering the reclassification requests of various employees made on 8 March 2024 was correctly made based on the applicable provisions of the Knorr-Bremse Australia Pty Ltd Enterprise Bargaining Agreement 2021 (KBA Agreement), including the incorporation of the Manufacturing and Associated Industries and Occupations Award 2020 (the Award).
The parties have agreed on a question as follows:
Did the determination by Knorr-Bremse Australia of employee reclassification requests delivered on 8 March 2024 correctly understand the requirements of the Knorr-Bremse Australia Pty Ltd Enterprise Bargaining Agreement 2021, including as to the application or otherwise of clause 20 of the Manufacturing and Associated Industries and Occupations Award 2020?
Each party may rely on up to two (2) sample employees for the purpose of filing evidence and submissions in the matter.
The AMWU contends that Knorr-Bremse has not correctly applied the provisions of the KBA Agreement and therefore failed to properly determine the reclassification requests of relevant employees. The AMWU argues that the reclassification requests should have been determined with reference to the National Metal Engineering Competency Standards Implementation Guide (the Guide) as referred to in clause 20.5(b) (iii) of the Award.
Knorr-Bremse contends that it correctly applied the provisions of the KBA Agreement and properly determined the reclassification requests of relevant employees.
Relevant KBA Agreement Provisions
Career development, classifications and requests for re-classifications are addressed in clause 7 of the KBA Agreement. Relevantly, Clause 7 of the Agreement provides:
7.1 Classification Structure
During the term of this Agreement members of the Joint Consultative Committee commit to work together to develop an agreed internal classification structure that will benefit both the Company and the employees. with the intention being to achieve an outcome within the first twelve (12) months.
7.2 Career Progression
An employee will have access to reclassification to a higher classification, only after successfully completing the appropriate training and when there is a vacant position for which the employee has been selected by the Company to be appointed to.
Where possible, opportunities for advancement within the Company will be made available to all employees of the Company. Where appropriate. the job re-classification procedure will apply.
7.3 Job Reclassification
Application for re-classification of a weekly paid employee is to be made in writing to the General Manager - Operations. This may originate from the employee or the relevant Supervisor/Manager.
Where necessary, assessments will be carried out by an external assessor or a Company employee appropriately qualified/accredited to perform such assessments.
The recommendation for any change will be made to the General Manager - Operations for his/her approval in accordance with the needs of the business.
In circumstances where an employee submits an application for a review of his/her classification. and that review results in a higher classification being determined, the resultant pay increase will be back paid to the date on which the application for the classification review was submitted.
(Emphasis added)
Clause 14, Wages and Allowances, sets out the wage rates and increases relating to each of the classification levels. Importantly, clause 14.1 provides:
Wage increases are attainable through access to defined job structures and the skills development programs enabling new career paths within. and across, job streams. Further, an employee may gain higher wages if they have completed vocational or tertiary qualifications to acquire skills needed to reach the next highest job classification.
Only once the qualification has been successfully completed, and certification has been obtained by the employee. and the Company selects and appoints the employee to a vacant role with a higher classification is the employee entitled to receive higher wages.
(Emphasis added)
Clause 14.2 contains the applicable percentage increases for each level. It includes a note as follows:
Note: If there are any sub levels defined within each classification (regardless of the variance in the hourly pay rates amongst the sub levels), the same wage increase shall apply.
Example: If the Company elects to have a classification of C10 (Level I) and C10 (Level II), then the wage increase for Classification C10 shall apply to both sub levels i.e. C10 (I) and C10 (II).
Clause 4.1 of the Agreement provides:
Award Incorporation
(a) This agreement incorporates the terms of:
(i) the Manufacturing and Associated Industries and Occupations Award 2020, as varied from time to time, and
(ii) the Clerks - Private Sector Award 2020, as varied from time to time
(b) Where there is any inconsistency between a term in this Agreement and a term in the Awards, the term in this Agreement shall take precedence to the extent of any inconsistency. In incorporating award terms into this agreement, they are to be read as altered to incorporate necessary changes resulting. From example, the words “this Award” would become this “Agreement”
Relevant Award Provisions
Clause 20.5 of the Award states that the classification structure and definitions in Schedules A and B of the Award apply to employees. Paragraph (b) provides that the procedure classifying employees under the Award is set out in the Guide and that where there is agreement to implement the competency. The clause relevantly states:
20.5 Classifications
(a) The classification structure and definitions set out in Schedule A —Classification Structure and Definitions and Schedule B —Vehicle Manufacturing Employees—Skill Level Definitions—Trades, Non-trades, Post-trades, Drivers, Technicians/ Technical Officers and Supervisors/Trainers/Coordinators apply to employees covered by this award except where otherwise stated.
(b) Procedure for classifying employees covered by the National Metal and Engineering Competency Standards
(i) Clause 20.5(b) does not apply to vehicle manufacturing employees covered by clause 4.8(a)(xi) .
(ii) Procedures for classifying employees under this award are set out in the National Metal and Engineering Competency Standards Implementation Guide (the Guide) distributed by the relevant industry committee, which is currently the Manufacturing and Engineering Industry Reference Committee.
(iii) Where there is agreement to implement the competency standards at the enterprise, or in the event that the classification of an employee is called into question, the issue is to be settled by the application of competency standards in accordance with clause 20.5(b) and the National Metal and Engineering Competency Standards Implementation Guide or by reference to the minimum training requirement in the relevant classification definition, except as provided in clause 20.5(b)(iv) .
(iv) Where the employee has a relevant qualification recognised as a minimum training requirement for the level at which the employee seeks to be classified and the employee is exercising or will be required to exercise the skills and knowledge gained from that qualification necessary for that level of work, the employee must be classified appropriately. It is up to the employer to demonstrate reasons for a qualification that is a recognised minimum training requirement not being regarded as relevant for an employee’s work.
(v) Other provisions to be followed where competency standards are being implemented in an enterprise are that:
• management and employee representatives responsible for overseeing the implementation of competency standards within an enterprise must be given access to briefing and/or training courses on the competency standards and their implementation prior to implementation; and
• such briefings and/or training courses on the competency standards and their implementation can be either a joint briefing delivered by the parties or by one party with the approval of other relevant parties at the enterprise or an approved course delivered by a recognised provider with the approval of the relevant parties at the enterprise, provided that this does not exclude the delivery of additional training or advice by the parties to an enterprise.
[Emphasis added]
Background
The Respondent is a manufacturer and servicer of brake, door and air-conditioning systems for the rail and heavy vehicle industries. In September 2010 Knorr-Bremse purchased Sigma Coachair Group Pty Ltd (Sigma). Prior to the acquisition, Sigma sub-contracted the manufacturing of their products in Australia to Custom Group Australia Pty Ltd (CGA). Following the acquisition of Sigma, Knorr-Bremse's management decided to insource the assembly activity back to Knorr-Bremse. The majority of CGA staff made redundant were then recruited and employed by Knorr-Bremse.
Knorr-Bremse employs approximately 215 employees under the KBA Agreement. They are divided across the five worksites into Production employees, who are responsible for manufacturing and servicing of products (Direct Workers) and Warehouse employees, who are responsible for stock logistics in Knorr-Bremse's warehouses (Indirect Workers).
Since 2014 (being the first agreement negotiated involving the former employees of CGA), employees have been classified based on a qualifications-based classification structure. Under the qualifications-based classification system, employees' roles are classified based on whether they have met the minimum training requirements for each classification levels recognised by Knorr-Bremse. These classification levels are designed around the needs of the Respondents business.
Employees need to meet the minimum training requirements in order to be eligible to attain the corresponding classification level. Employees are paid according to their classification level and receive the percentage wage increases described in clause 14.2 of the KBA Agreement based on their classification level.
In September 2023, Knorr-Bremse received separate requests from 73 employees for their role to be reclassified in accordance with clause 7.3 of the KBA Agreement. To ensure a consistent and orderly approach to considering such a large number of requests, Knorr-Bremse developed a detailed description of its historical practice for assessing reclassification requests in accordance with clause 7.3 of the KBA Agreement. This included preparing a Reclassification Request Form to ensure that requests for reclassification contained all the necessary documentation to enable Knorr-Bremse to make a determination which complied with KBA's obligations under the KBA Agreement. This form replaced the previously used 'Change of Status' request form.
In November 2023 Mr David Dupen (Mr Dupen) and Mr Daniel Kaldas (Mr Kaldas) developed a description of KBA's historical practice for assessing reclassification requests in accordance with clause 7.3 of the KBA Agreement. Mr Kaldas submitted the Reclassification Request Process (Reclassification Process), which contains a table describing how KBA aligns its custom internal classification structure with the classification structure in Schedule A, clause A.3.1 of the Award. KBA has a classification structure which is adapted to the qualifications it needs employees to attain in order to perform the tasks that are required by the business.
The Respondent relied on two examples for the current proceedings:
Fazlur Rahaman (the Rahaman Example): Mr Rahaman commenced employment with Knorr-Bremse on 20 March 2023 as a Trades Assistant in the Calliper and Cylinder Cell at Knorr-Bremse's Granville Site. Mr Rahaman's Trades Assistant role was classified as a C12. Mr Rahaman requested that his role be reclassified Based on a review of his qualifications and the business needs of Knorr-Bremse, it was determined that Mr Rahaman' met the minimum trade qualifications for a C10 classification level under the classification structure. There was also an available role. Accordingly, Mr Rahaman's application to be reclassified into a C10 Fitter role was approved; and
Kenny Ha (the Ha Example): Mr Ha has been employed by Knorr-Bremse since 2012 as a Mechanical Refrigeration Technician in the Mining, Industrial and Defence team (MID team) at the Granville worksite. Mr Ha's role is classified as a C10, and his letter requested that his role be reclassified to a C9. Mr Ha’s qualifications did not meet the minimum training requirements for a C9 under the classification system. Further, there was no C9 position available in the Granville MID team. On a review of Mr Ha’s qualifications, his role was more appropriately classified as a C11 under the classification system (being a lower classification than his present classification). However, Mr Ha was informed that his application to be reclassified into a C9 role had been denied and that his current classification of C10 would remain unchanged.
The AMWU seeks to import the National Metal and Engineering Competency Standards Implementation Guide (the Guide) into the KBA Agreement through clause 4.1. The AMWU submitted that there is no mechanism in the KBA Agreement to properly assess the classification and skills of the employees.
The Evidence
There was scant witness evidence in this matter. The AMWU called no witnesses. The Respondent led evidence from Mr Kaldas regarding the reclassification process generally, and the circumstances of Mr Rahaman and Mr Ha specifically, and Mr Dupen regarding the development of relevant clauses from 2003 to date.
Applicants Submissions
The AMWU submits that Clause 7, under heading “Career development” refers to the development of a classification structure and the process for progression and reclassification to a higher level and that Clause 7.3 does not provide the methodology for a classification process or a way to determine an employee’s skill level. The AMWU asserts that the reference to “job reclassification procedure” is not set out in the text of the KBA Agreement. The clause nominates the General Manager-Operations to receive re-classification applications and who the application may originate from, but there is no direction as to how the reclassification will be done.
The AMWU submits that Clauses 7 and 14.1 both deal with job classification in parts, however they do not comprehensively deal with the relevant subject matter such that it covers the field about what the subject matter is meant to cover being the requirements for a classification assessment or reclassification. The Union asserts that the meaning the KBA Agreement clauses, read in conjunction with the relevant Award clause has a sensible meaning.
The AMWU submits that the reclassification determinations conducted by the Respondent did not properly meet the requirements of the KBA Agreement. 73 employees were assessed by the Respondent. The AMWU asserts that the conduct of the assessments was without any interaction with workers, at their relevant workstations or with a fulsome assessment of the skills they perform. The outcome of the reclassification does not identify the competencies, skills or jobs that were assessed. There is no information on the assessment criteria nor was there any consultation or agreement on the process for assessment.
Clause 20.5 of the Award states that the classification structure and definitions in Schedules A and B of the Award apply to employees. Paragraph (b) provides that the procedure classifying employees under the Award is set out in the Guide and that where there is agreement to implement the competency.
The AMWU asserts that where there is a question as to an employee’s classification, this is settled by the application of the Guide by reference to the minimum training requirement in the relevant classification definition. The Guide is intended to provide guidance to the implementation of competency standards when classifying employees within the Award classification structure, which is reproduced in the agreement. The AMWU submits that the competency standards provide a means of checking whether an employee’s classification is appropriate. The Guide provides detailed guidance and the necessary tool to check whether an employees’ classification is appropriate. The AMWU submits that this was not implemented or used by the Respondent in the process of assessing the classification of employees
The AMWU submits that the Respondent has provided no evidence that there was an agreement to remove the reference to the implementation guide from the KBA Agreement. In oral submissions the Union submitted the following:[1]
There's no evidence that's been led that there was any ever agreement to remove the reference to the implementation guide. Neither is there any evidence that this absence was because of any reason of unsuitability. There's been nothing that's been put forward that suggests that the implementation guide or the method that it uses to assess competencies was not suitable for the Knorr-Bremse business.
The most that could be said about the specific absence of the implementation guide is that it was inadvertent, as can be the case often during the course of industrial negotiations.
Respondents Submissions
The Respondent submits that the AMWU’s reliance on clause 4.1 to incorporate the Guide as providing the “substantive methodology for the classification of an employee” through the operation of clause 20.5(b) (iii) of the Award is misconceived. The Respondent submits that clause 20.5(b) (iii) of the Award cannot be read in isolation from the context. It is a subclause within Part 4, Wages, Allowances and Classifications, of the Manufacturing Award.
The Respondent submits Clause 20.5(b)(iii) of the Award operates:
(a) In connection with the classifications provided for in the Award: subclause 20.5(a);
(b) The classification levels correspond to the pay rates provided for in the Manufacturing Award: subclause 20.1;
(c) Subclause 20.5(b)(ii) makes clear that the procedures for classifying employees under the Award are set out in the Guide; and
(d) The Guide operates on the basis of a points system in determining the classification level. It does not require, as a relevant consideration, that a position is available and required by an employer.
The Respondent asserts that the structure of the relevant provisions of the KBA Agreement are not consistent with the structure of the provisions of the Award and therefore the KBA Agreement takes precedence and clause 20 of the Award (including clause 20.5(b) (iii)) does not apply.
The Respondent submits that even assuming that clause 20.5(b)(iii) of the Award is somehow incorporated into the KBA Agreement (which is disputed), it does not mandate the implementation of the Guide as clause 20.5(b)(iii) is clear that the Guide is to be applied where there is an agreement to implement them. Consistently, if the classification of an employee is called into question, it is to be resolved by applying the Guide or by reference to the minimum training requirement in the relevant classification definition.
The Respondent outlined the extensive industrial context and history of the KBA Agreement. The agreements which applied between 2003 and 2014 were the:
(a) Knorr-Bremse Australia Pty Limited Certified Agreement 2003;
(b) Knorr-Bremse Australia Pty Limited Union Collective Agreement 2006 (2006 Agreement);
(c) Knorr-Bremse Australia Pty Limited Enterprise Agreement 2009 (2009 Agreement); and
(d) Knorr-Bremse Australia Pty Limited Enterprise Bargaining Agreement 2011 (2011 Agreement).
In the 2003 Agreement, the job reclassification procedure was described in the final three paragraphs of clause 8.4(d) as follows:
Job Reclassification
Application for reclassification of a weekly paid employee is to be made in writing to the Consultative Committee, this may originate from the employee or the relevant Team Leader/Manager.
Assessments will be carried out by an external assessor or members of the Committee duly qualified to perform such assessments.
The recommendation for any change will be made to the Department Manager for his approval in accordance with the needs of the business.
Clause 7.4.4.1 of the 2006 Agreement was titled 'Implementation of Skills and Competency Standards'. Clause 7.4.4.1 provided that:
The development of career paths is achieved by defining work done in terms of skills and competencies and developing training programs for skills to facilitate flexibility, multi-skilling and career progression in and across job streams.
Classification and relativities shall be determined according to the provisions of the Metal and Engineering Industry Competency Standards Implementation Guide (the Guide) as published from time to time by Manufacturing Skills Australia (formerly MERSITAB) or its successors.
The Guide is hereby incorporated into this agreement except for any term of the Guide which is specified as prohibited content by government legislation or regulation, or which does not pertain to the relationship between the employer and employees subject to this agreement. Employees shall receive no less than the appropriate relativity percentage (as set out in the classification structure table in the Implementation Guide) of the C10 rate.
Clause 7.4.4.3 of the 2006 Agreement provided the job reclassification procedure referred to in clause 7.4.1, as follows:
Application for reclassification of a weekly paid employee is to be made in writing to the Consultative Committee. This may originate from the employee or the relevant Supervisor/Manager.
Assessments will be carried out by an external assessor or members of the Committee duly qualified to perform such assessments.
The recommendation for any change will be made to the Department Manager for his approval in accordance with the needs of the business.
Clause 7.5.1 of the 2009 Agreement provided the following mechanism for determining employee classifications:
The following provision applies in relation to the classification and reclassification of employees eligible to be covered by the Metal, Engineering and Associated Industries Award 1998 or its successor Modern Award.
Classification and relativities shall be determined according to the provisions of the Metal and Engineering Industry Competency Standards Implementation Guide (the Guide) as published from time to time by Manufacturing Skills Australia (formerly MERSITAB) or its successors.
The Company will endeavour, during the life of this Agreement, to facilitate a review of the classification of employees covered by the Agreement according to the Guide. An initial assessment of employees will be conducted by TAFE NSW, thereafter such reviews shall be conducted by an internal assessor appointed by the Company.
[Emphasis added]
Clause 7.5.1 of the 2011 Agreement provided as follows:
The following provision applies in relation to the classification and reclassification of employees eligible to be covered by the Manufacturing and Associated Industries and Occupations Award 2010.
Classification and relativities shall be determined according to the provisions of the Metal and Engineering Industry Competency Standards Implementation Guide (the Guide) as published from time to time by Manufacturing Skills Australia (formerly MERSITAB) or its successors.
The Company will commence facilitating during the first 12-month period of this Agreement, a review of the classification of employees covered by the Agreement according to the Guide. An initial assessment of employees will be conducted by a registered Training Organisation, thereafter such reviews shall be conducted by an internal or external assessor appointed by the Company.
The 2006 Agreement, 2009 Agreement and 2011 Agreement expressly refer to the Guide as the mechanism to be used to determine employee classifications. In 2011, a full reclassification exercise was undertaken whereby employees had their classifications assessed against the Guide, which resulted in employee classifications being confirmed or changed in accordance with the terms of the 2011 Agreement. The assessment was undertaken by an external third party.
Applicants Reply Submissions
The AMWU agreed with the general principles of interpretation referred to by the Respondent, and that the starting point for interpretation must be the ordinary meaning of the words, read as a whole and in context, including considering the industrial context and purpose of the agreement.
The historical context in the enterprise agreements between 2003 and 2014 do not establish that there was significant departure from the understanding between the parties about how a disputed classification, or classification structure, would function.
The Commission is required to interpret the Agreement based on the objective meaning of the text. The process of construction must direct attention to the words that are actually used, not what the instrument was meant to say.
The Respondent's interpretation fails to give proper effect to the intention of the parties as reflected in the language of the KBA Agreement when read as a whole.
The Respondent's argument that clause 20.5(b)(iii) cannot be "carved out" and applied in isolation ignores the clear intention of clause 4.1 to incorporate award provisions where
they are not inconsistent with the KBA Agreement. While clause 14 of the KBA Agreement outlines a process for wage increases and reclassification, it should not be interpreted as the sole means of determining an employee's classification.
Consideration
There was no issue between the parties as to the correct principles of interpretation of the KBA Agreement. In WorkPac Pty Ltd v Skene,[2] Tracey, Bromberg and Rangiah JJ expressed the correct approach as follows:
The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context. The interpretation “ ... turns on the language of the particular agreement, understood in the light of its industrial context and purpose ... ” . The words are not to be interpreted in a vacuum divorced from industrial realities; rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament. To similar effect, it has been said that the framers of such documents were likely of a “practical bent of mind” and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced”
(citations omitted).
While clearly the ordinary meaning of the words, read as a whole and in context, is a key consideration, that focus was highlighted in this matter by the limited witness evidence.
In this matter, the ordinary meaning of clauses 7 and 14 of the KBA Agreement, read as a whole and in context, clearly establish a reclassification structure pursuant to the terms of the KBA Agreement, and not as outlined in the Award.
Clause 7.2 of the Agreement includes the following:
7.2 Career Progression
An employee will have access to reclassification to a higher classification, only after successfully completing the appropriate training and when there is a vacant position for which the employee has been selected by the Company to be appointed to.
(Emphasis added)
Clause 7.3 goes on to highlight the needs of the business in job reclassifications, and Clause 14, Wages and Allowances, sets out the wage rates and increases relating to each of the classification levels, importantly providing:
Only once the qualification has been successfully completed, and certification has been obtained by the employee. and the Company selects and appoints the employee to a vacant role with a higher classification is the employee entitled to receive higher wages.
(Emphasis added)
I accept the Respondent’s submission that the terms of the KBA Agreement outline two conditions, being the successful completion of training, and a vacant role into which the employee is selected. That process and those conditions are different and distinct to Clause 20.5 of the Award. That distinction is made clear by subclause 14.2, and the sublevels defined within each classification, contrary to the Award provision.
While it is correct to observe that the Award is incorporated by Clause 4 of the KBA Agreement, quite clearly where there is any inconsistency between a term in the Agreement and a term in the Award, the term in the Agreement takes precedence to the extent of any inconsistency. I consider the terms of Clauses 7 and 14 inconsistent with the relevant terms of the Award, and in particular Clause 20.5.
In determining the ordinary meaning of clauses 7 and 14 of the KBA Agreement, I have not been required to consider the development and changes in relevant provisions and the corresponding provisions in antecedent agreements since 2003. In this particular determination I did not consider the evidence sufficient to support the determination urged by the Respondent.
The parties agreed on the following question:
Did the determination by Knorr-Bremse Australia of employee reclassification requests delivered on 8 March 2024 correctly understand the requirements of the Knorr-Bremse Australia Pty Ltd Enterprise Bargaining Agreement 2021, including as to the application or otherwise of clause 20 of the Manufacturing and Associated Industries and Occupations Award 2020?
The answer to the above question is “Yes”.
DEPUTY PRESIDENT
Appearances:
Ms A Devasia, on behalf of the Applicant.
Mr B Rauf of Counsel, on behalf of the Respondent.
Hearing details:
4 July 2024.
Sydney.
In-person.
[1] Transcript PN 407 and 408.
[2] WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 at [197]
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