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

[2015] FWC 6304

[2015] FWC 6304

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
Knorr-Bremse Australia Pty Ltd
(C2015/2699)

SENIOR DEPUTY PRESIDENT DRAKE SYDNEY, 18 SEPTEMBER 2015

Dispute in relation to the interpretation of clause 18 of the Knorr-Bremse Pty Ltd and Sigma Air-Conditioning Pty Ltd Enterprise Agreement 2014.

[1] This decision arises from a notification pursuant to s.739 of the Fair Work Act 2009 (the Act) concerning the application of theKnorr-Bremse Pty Ltd and Sigma Air-Conditioning Pty Ltd Enterprise Bargaining Agreement 2014 (the Agreement). 1 Pursuant to clause 22 of the Agreement the Fair Work Commission (Commission) is empowered to settle all disputes arising under the Agreement by conciliation and, if necessary, arbitration.

[2] The notification identified the dispute as follows:

“1. The Knorr-Bremse Pty Ltd and Sigma Air Conditioning Pty Ltd Enterprise Agreement 2014 (‘the Agreement’) came into effect on 9 October 2014.

2. Subclause 14.2 of the Agreement sets out percentage wage

increases.

3. Subclause 14.3 sets out the dates on which the relevant increases will be paid – 1 April 2014, 1 April 2015, and 1 April 2016.

4. When the Agreement came into effect on 9 October 2014, employees were backpaid the 3% increase for the first year to 1 April 2014.

5. Subclause 18.1 provides that ‘Any labour hire worker engaged by the Company for a period of 6 months or more will be eligible to be paid at the company hourly rate plus 25% loading.’ This obligation has existed in previous agreements since 2009.

6. Several labour hire workers at Knorr-Bremse reached the 6-month engagement mark between 1 April 2014 and 9 October 2014.

7. The interaction of clauses 18 and 14 means that these workers are entitled to the company hourly rate, which was increased by 3% for that period, plus 25% loading.

8. Knorr-Bremse have not met this obligation under the agreement.”

[3] Clause 18 of the Agreement is extracted below:

“18. EXTERNAL LABOUR HIRE AND COMPANY CASUAL EMPLOYEES

18.1 External Labour Hire

Labour hire (also referred to as ‘Leasing’ or ‘Casual’ personnel) will ordinarily only be used to overcome peaks in operational demands.

The Company will endeavour to ensure that at no time will the percentage of labour hire employees (as compared to permanent employees) exceed 15% across Knorr-Bremse Australia Pty Ltd and Sigma Air Conditioning Pty Ltd. Should it appear as though a percentage in excess of 15% is required due to major project work or other significant operational requirements, the Company will consult with the Consultative/Training Committee regarding the additional resources and the anticipated timeframe for these additional human resources if known.

Further, a labour hire worker who is engaged by the company will be paid for the first six (6) months the applicable Award rate plus 25% loading. Any labour hire worker engaged by the Company for a period of 6 months or more will be eligible to be paid at the Company hourly rate plus 25% loading.

18.2 Company Casual Employees

A casual worker who is engaged by the Company will be paid the shop rate plus 25% loading. Any casual worker employed by the Company for a period of six (6) months will have the right to request permanent employment. Such request shall not unreasonably refused by the Company.

If the Company accepts the request, the casual employee will become a permanent employee and will be paid the Company rate upon acceptance of the Company’s Contract of Employment. Accrual of permanent entitlements such as long service leave etc. will commence and accrue from the date the permanent contract of employment is accepted.”

(my emphasis)

[4] At the hearing of this application on 5 August 2015 Mr Lavelle-Wilson appeared for the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers' Union (AMWU) and Mr Bray from The Australian Industry Group (AiG) appeared for the company. In its submissions 2 the AMWU identified the question to be answered as set out below and submits that the answer is yes.

Do clauses 18.1 and 14.2-3 of the Agreement obliged Knorr-Bremse to ensure that labour hire workers who reached six months service before 9 October 2014 receive the benefit of the backdated wage increase?

[5] The company provided written submissions 3. In essence its submission was that:

• clause 18.1 does not impose any obligations regarding labour hire workers because they are not employed by the company and/or,



• clause 18.1 and clause 14 do not interact retrospectively to impose an obligation for any period prior to 9 October 2014.

[6] The AMWU notes that the company accepts that, once the Agreement came into effect, there was an enforceable obligation requiring the company to give effect to the relevant wage increase from 1 April 2014 in relation to its permanent employees. The AMWU relies upon Parks Victoria 4 for its contention that a clause in an enterprise agreement can commence operation on the actual commencement date of the Agreement and still give rise, as a result of its clauses, to an obligation to calculate and provide back pay. It submits that this Agreement containsa prospectively enforceable obligation requiring the company to give effect to a wage increase from 1 April 2014. It submits that this obligation applies to labour hire employees pursuant to clause 18.1.

[7] The AMWU provided statements from Mr Geoffrey Wallace 5 and Mr Terence Potter6, who also gave oral evidence. The company provided a statement from Ms Jasmine Cooney7, who also gave oral evidence.

[8] Mr Wallace gave evidence that there are 15 employees who the AMWU contends should have been paid back pay.

[9] Mr Potter gave the following evidence:

“4. Knorr-Bremse employ casuals and use labour hire workers. They tend to do this to supplement the workforce when there is a lot of work on. The company has committed to trying to keep the total percentage of labour hire to less than 15% of the workforce.

5. Because of the nature of the industry, when projects come in, they are often for a limited time (as short as 6 months or longer than 3 years), and the labour requirements change. We became concerned that there were more casuals and labour hire workers being put on, and that our jobs may be replaced.

6. During negotiations for the 2014 agreement, key issues included casual conversion, the percentage of labour hire workers as a proportion of the workforce, and wages. I kept notes of the negotiations.

7. The idea of the labour hire clause is that by including a 25% loading for casuals and labour hire workers, the agreement encourages the company to maintain permanent positions and put labour hire and casuals on as permanents after 6 months. This gives us better job security.

8. The wage rates for labour hire workers and casuals weren’t negotiated, they were rolled over from the 2011 agreement.

9. The negotiations dragged on for a long time, and the members were concerned about backpay from the expiry of the previous agreement (1 April 2014), to the date of approval of the new one.

10. We made sure that the first wage increase of 3% would be payable from 1 April 2014. This is reflected in clause 14.3 of the 2014 Agreement, in the same language as the 2011 Agreement.

11. It was my understanding that backpay would be paid to everyone on site, including casuals and labour hire workers.

12. During negotiations, Knorr-Bremse did not say that labour hire workers wouldn’t receive the backpay. If this position had been put, we would have discussed it with the members, and I believe it would have been rejected.

13. Under the previous agreement, backpay was paid to the labour hire workers.” 8

[10] Ms Cooney gave the following evidence:

“11. I was involved in the negotiations on behalf of the Company for the enterprise agreement. I also was responsible for providing the explanation of the proposed agreement before it was voted in September 2014.

12. The negotiations took place with the four unions over a lengthy period of time – about five months.

13. At no point in the negotiations was the question of backpay raised.

14. At a mass meeting in about the 7^th August 2014, where I went through the proposed agreement, in Sydney (where branch sites dialled into the meeting and were also able to see the presentation online), a labour hire employee asked me whether there would be back pay for casuals (employed by agencies).

He said: ‘Will casuals also be back paid from the 1^st April 2014, or is this just for permanent staff’. And I replied: ‘Good question. I want to make it very clear only permanent company staff will get back paid. Casual staff will be paid the higher rate from the date the EBA becomes approved, and at this stage I don’t know when this date will be, as we have to be notified in writing by the Commission.’ No further questions on this matter were asked.

15. This was the only time over the course of the negotiations the matter was raised.” 9

[11] Concerning clause 18.1, the AMWU submits that the Agreement requires the company to ensure, through its interaction with the relevant labour hire company, that the labour hire workers are paid certain amounts. It submits that this meaning is apparent on the face of the clause after taking into account the interpretation of job security clauses and applying the decision of Schefenecker:

“…The intent of cl.17.6 is that employees of labour hire agencies working at Schefenacker should receive the same increase as the Schefenacker employees will receive under the agreement. This is sought to be achieved by obliging Schefenacker to give that directive to the agencies. Whether that means it will be effective or not, the intent is that the relationship between the cost of labour supplied by the agencies and the cost of the labour of Schefenacker’s employees will be relevantly the same after the agreement as it was before. For that reason we think that the sub-clause pertains to the relationship between Schefenacker and its employees. It directly concerns the security of employment of the employees covered by the agreement.”  10

Conclusion

[12] I am not satisfied that there is any ambiguity or uncertainty in this Agreement. I have therefore not taken into account the past conduct of the parties or the words which Ms Cooney states that she spoke at a meeting of employees. I have only considered the ordinary and natural meaning of the words.

[13] On becoming operative the Agreement dictates how direct employees will be paid and, I am satisfied, also how labour hire employees will be paid. This is not a retrospective payment. I am satisfied that the Agreement makes it clear that direct employees and labour hire employees with more than six months service will be paid at the Agreement rate from 1 April 2014 to the date of operation, 9 October 2014.

[14] What I am not satisfied about, and about which I have had no submissions, is whether it is the company’s obligation to pay for all of the period from 1 April 2014 to 9 October 2014 or only from the date at which six-month service is completed to 9 October 2014. The parties should provide further submissions concerning this issue.

SENIOR DEPUTY PRESIDENT

Appearances:

J Lavelle-Wilson for the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)

D Bray, The Australian Industry Group, for Knorr-Bremse Australia Pty Ltd

Hearing details:

2015.

Sydney.

August 5.

 1   AE410459

 2   Exhibit AMWU 1

 3   Exhibit KB2

 4   Parks Victoria v the Australian Workers Union and others[2013] FWCFB 950 (11 February 2013)

 5   Exhibit AMWU 2

 6   Exhibit AMWU 3

 7   Exhibit KB2

 8   Exhibit AMWU 3, paragraphs 4 – 13

 9   Exhibit KB 2, paragraphs 11 – 15

 10   Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union and Others Re Schefenecker Vision Systems Australia Pty Ltd, AWU, AMWU Certified Agreement 2004 [2004]AIRC1064 PR952801

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