David Grech v Dematic Pty Ltd
[2017] FWC 4175
•9 AUGUST 2017
| [2017] FWC 4175 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739—Dispute resolution
David Grech
v
Dematic Pty Ltd
(C2017/3191)
COMMISSIONER MCKINNON | MELBOURNE, 9 AUGUST 2017 |
Alleged dispute arising under the Dematic Pty Ltd – Hume DC Enterprise Agreement 2015.
Introduction
[1] Mr David Grech (Mr Grech) has applied to the Fair Work Commission under section 739 of the Fair Work Act 2009 (FW Act) for assistance in dealing with an alleged dispute involving Dematic Pty Ltd (Dematic) and its employees at the Woolworths Distribution Centre, in Hume, Victoria (Hume DC).
[2] The employees concerned are covered by the Dematic Pty Ltd – Hume DC Enterprise Agreement 2015 (the Agreement), which came into operation on 21 August 2015 and has a nominal expiry date of 21 August 2018. The Agreement applies to Dematic and its employees in the residential maintenance roles of Maintenance Team Leader, Maintenance Technician and Trades Assistant at the Hume DC. The Agreement incorporates the Manufacturing and Associated Industries and Occupations Award 2010 as varied from time to time (the Award), but prevails to the extent of any inconsistency. 1
[3] The National Employment Standards, the Award and the Agreement together establish the minimum safety net of terms and conditions of employment for Dematic’s employees at the Hume DC. While the Agreement has incorporated most terms of the Award, it has changed the effect of some of the Award terms, including in relation to rates of pay.
[4] At the time the Agreement was approved in August 2015, the Commission was satisfied that employees were ‘better off overall’ under the Agreement than they would have been if covered by the Award. This same test will apply if and when the Agreement is replaced by a new enterprise agreement.
[5] The employees affected by this dispute work a 12 hour, ‘4 days on, 4 days’ off roster over an 8 week roster cycle. Employees work a total of 336 hours over the roster cycle, or an average of 42 hours per week. Actual hours worked under the roster include an average of 38 ordinary hours per week, as well as hours that would ordinarily attract overtime, weekend and shift penalties.
[6] The dispute has arisen because of confusion over what is included in the ‘all up’ rates of pay paid to employees. The Agreement provides a flat ‘minimum hourly rate of pay’ for all rostered hours of work. However, employees are actually paid a higher ‘flat hourly rate’ under their contract of employment. The contract rates vary for day work, night shift, and overtime.
[7] Three matters in particular are in dispute. Firstly, whether employees are, or are entitled to be, compensated for reasonable additional hours worked over the roster cycle in their ‘flat hourly rate’. Secondly, the applicable rates of pay for weekend night shift work. And thirdly, whether employees are entitled to payment for public holidays on rostered days off before 1 August 2015.
[8] A conference was conducted in the matter on 5 July 2017 and the matter was not resolved. Directions were issued the same day, and the parties filed their materials in accordance with those directions. The parties agreed that the matter should be determined on the papers. This decision deals with the matter.
Jurisdiction
[9] Section 595 of the Act empowers the Commission to deal with disputes if it is expressly authorised to do so under or in accordance with the Act. The Commission can deal with disputes in a number of ways, including by mediation or conciliation, making a recommendation or expressing an opinion. The Commission can only arbitrate a dispute with the express agreement of the parties to the dispute. 2
[10] Under section 739, the Commission can deal with certain disputes under enterprise agreements and employment contracts if they include procedures for dealing with disputes between the employer and the employee that “require or allow” the Commission to deal with the dispute. 3
[11] The Agreement contains a dispute resolution term at clause 29, which relevantly allows the Commission to deal with disputes about “a matter arising under the agreement”. The clause is as follows:
29 Disputes resolution procedure
“29.1 If a dispute relates to:
(a) a matter arising under the agreement; or
(b) the National Employment Standards (except for disputes related to reasonable grounds for refusal of requests for flexible work arrangements or additional unpaid parental leave),
this term sets out procedures to settle the dispute.
29.2 An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term. In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management. If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to The Fair Work Commission.
29.3 The Fair Work Commission may deal with the dispute in 2 stages:
(a) The Fair Work Commission will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and
(b) if The Fair Work Commission is unable to resolve the dispute at the first stage, The Fair Work Commission may then:
(i) arbitrate the dispute by consent and,
(ii) make a determination that is binding on the parties.
Note If The Fair Work Commission arbitrates the dispute, it may also use the powers that are available to it under the Act. A decision that The Fair Work Commission makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.
29.4 While the parties are trying to resolve the dispute using the procedures in this term:
(a) an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and
(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:
(i) the work is not safe; or
(ii) applicable occupational health and safety legislation would not permit the work to be performed; or
(iii) the work is not appropriate for the employee to perform; or
(iv) there are other reasonable grounds for the employee to refuse to comply with the direction.
(c) The parties to the dispute agree to be bound by a decision made by The Fair Work Commission in accordance with this term.”
[12] As clause 29 makes clear, the Agreement allows the Commission to deal with disputes about “matters arising under the Agreement” as well as disputes over the National Employment Standards (NES) (with one exception not presently relevant).
[13] The contract of employment between Mr Grech and Dematic does not include a disputes procedure that requires or allows the Commission to deal with disputes. Clause 9 of the “Business Conduct Guidelines”, which appear to form part of the contract of employment, provides a process for dealing with “complaints and comments”. Employees can make “personal complaints” to specified persons, and there is a commitment to thorough investigation and confidentiality. Employees are encouraged to “exhaust the internal possibilities of mediation” in dealing with complaints. There is no other particular dispute resolution method specified in the Guidelines or in the contract.
Questions to be decided
[14] The questions to be decided are these:
a) Continuous shift workers under the Agreement work on a 12 hour shift, ‘4 days on, 4 days off’, 8 week roster cycle. Do the hourly rates in Schedule 2 to the Agreement apply to all hours worked in accordance with the roster? Do these rates compensate for rostered ‘reasonable additional hours’?
b) What is the rate of pay for continuous night shift worked from 6.00pm Saturday to 6.00am Sunday under the Agreement?
c) Were employees entitled to 7.6 hours pay for public holidays not worked during the period from 2011 to 1 August 2015?
[1] Each of these questions involve the interpretation of the Agreement. In The Australian Meat Industry Employees Union v Golden Cockerel Pty Limited 4, a Full Bench of this Commission set out the relevant principles to be applied in the construction of agreements. These principles were recently revised in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited5. I respectfully adopt and apply those principles in this decision.
[2] In relation to the first question at (a) above, Mr Grech has asked the Commission to decide whether the ‘flat hourly rate’ payable under his contract of employment incorporates payment for “4 reasonable additional hours” each week, averaged over the 8 week roster cycle. I have not made any findings about Mr Grech’s contract of employment, because it is not necessary to do so. The question can be resolved by adopting a plain and ordinary meaning of the relevant Agreement terms.
[3] I will consider each of the questions for decision in turn.
Do the hourly rates in Schedule 2 to the Agreement apply to all hours worked by continuous shift workers in accordance with the 24/7, 8 week roster, and do they compensate for ‘reasonable additional hours’?
[4] To answer this question, the starting point is the Agreement itself, and whether construed in context and purpose, relevant terms of the Agreement have a plain meaning.
[5] Under the Agreement, a full-time employee is an employee who is “employed to work 38 ordinary hours each week, in accordance with clause 11.1”. 6 Ordinary hours are paid at the “Normal Hourly Rate of pay”, subject to the shift and weekend penalties in the Agreement.7 A full time employee may be required to work “reasonable additional hours” in excess of 38 ordinary hours per week, and ordinary hours can be averaged over a work cycle of up to 3 months.8 Reasonable additional hours are paid in accordance with clause 15.9
[6] Clause 15 of the Agreement deals with overtime. It provides as follows [emphasis added]:
15.1 Dematic may require Employees to work reasonable additional hours at overtime rates. Overtime is only payable if Employees have obtained prior approval from their manager to work additional hours.
15.2 Subject to clause 11.5, overtime rates shall only be payable where the following conditions apply:
(a) fortnightly-paid Employees will be required to complete the full ordinary hours on a fortnightly basis:
(b) paid or approved unpaid leave of any kind (for example, personal leave or annual leave) will constitute ordinary hours worked. Unapproved absence (for example, lateness of any kind and/or unapproved absence during the day) will not be counted as ordinary hours. Consequently, ordinary hours must be made up over the week before any overtime for that week is paid.
15.3 If Dematic requires an Employee to work in excess of rostered ordinary hours, and the above conditions are satisfied, the Employee will be paid overtime rates as follows:
(a) for work done by employees on a 12 hour roster, double the ordinary rate of pay.
[7] Clause 15.2 and clause 15.3 operate subject to clause 11.5 of the Agreement.
[8] Clause 11.5 of the Agreement deals specifically with the ‘4 days on, 4 days off’ roster over a 24 hour period, 7 days per week, as contemplated in clause 11.3. It provides as follows:
“11.5 24x7 Shift Coverage
(a) Full-time Employees at Woolworths, Hume, a 24 x 7 shift coverage site, shall be rostered on 12 hour shifts, on 4 consecutive days in an 8 day period (i.e. four days on four days off), Monday to Sunday inclusive, and this shift roster is inclusive of ordinary hours and reasonable additional hours. Employees acknowledge and agree that these rostered hours include reasonable additional hours and are required to be worked.
(b) Employees will be paid no less than the minimum hourly rate according to their position as set out in Schedule 2 of the Agreement. This hourly rate takes into account the rostered ordinary hours and reasonable additional hours worked by the Employees, and in addition all allowances, shift loadings/allowances and penalty rates that would otherwise be paid under the Award unless provided for in this Agreement.
(c) Employees at this 24x7 shift coverage site shall only be entitled to the overtime rates in clause 15 for hours worked in excess of or outside the roster set in accordance with this sub-clause.
(d) Employees at this 24x7 shift coverage site shall be paid at a flat hourly rate.”
[9] Clause 12 and Schedule 2 to the Agreement deal with wages payable under the Agreement. Under clause 12:
“12.1 Employees will be paid a rate of pay not less than the rate in Schedule 2 of the Agreement. The rate of pay in respect of each position in Schedule 2 takes into account all allowances that would otherwise be paid under the Award unless provided for in this Agreement. Employees will be paid according to clause 11.5(b)
12.2 All wages and salaries will be paid in fortnightly instalments into the Employee's nominated bank account.
12.3 During the life of this Agreement, the rates of pay in this agreement will be increased as per the percentage described below or by the All Groups CPI set out in ABS 6401.0- Consumer Price Index, Australia for the June Quarter to June Quarter (whichever is greater but not both), on the first full pay period to commence on or after the following dates:
(a) 1 August 2015- A base wage increase of 3% or CPI (whichever is greater)
(b) 1 August 2016- A base wage increase of 3% or CPI (whichever is greater)
12.4 The employer may remunerate the employees an all up loaded rate for the purposes of ensuring non fluctuating fortnightly wage, provided that rate is no less than what the employee would otherwise receive under the terms of this agreement.”
[10] Schedule 2 sets out the minimum hourly rates of pay for work covered by the Agreement:
Schedule 2
Minimum hourly rates of pay as at the Lodgement Dates
Position | Hourly rate as at |
Maintenance Team Leader | $36.18 |
Maintenance Technician | $33.74 |
Trades Assistant | $25.87 |
[11] I find nothing ambiguous in any of the relevant Agreement terms. As the Agreement makes clear at clause 11.5(b), the minimum hourly rate in Schedule 2 takes into account both rostered ordinary hours and those reasonable additional hours that are required to be worked under the roster.
[12] Clause 11.5(c) deals specifically with payment for overtime (a term that can be used interchangeably in this context with the phrase ‘reasonable additional hours’). Overtime is only payable for work in excess of or outside the set roster, for example if an employee works more than 12 hours in a day, or outside the daily or nightly span of rostered hours, or after more than 336 hours in 8 weeks.
[13] The ‘minimum hourly rates’ in Schedule 2 to the Agreement apply to all hours worked in accordance with the roster, including reasonable additional hours. The rates in Schedule 2 are intended to compensate for rostered ‘reasonable additional hours’ required by the 4 days on, 4 days off, 12 hour shift roster. I so find.
[14] In doing so, I note that Dematic can choose to pay more than the minimum Agreement rates, as it appears to have done in relation to the employees concerned. However, the question of enforcement of contractual entitlements is generally a matter for the Courts.
What is the rate of pay for continuous night shift worked from 6.00pm Saturday to 6.00am Sunday?
[15] This question involves consideration of both the Agreement and terms of the Award that have been incorporated into the Agreement.
[16] The issue in dispute, as identified by Mr Grech, is whether continuous shift workers who work from 6.00pm Saturday to 6.00am Sunday (the Saturday night shift) should be paid double time, having regard to clause 14.4 of the Agreement and clause 37.5(c) of the Award.
[17] Dematic relies on clause 11.5 to say that the minimum hourly rates in Schedule 2 to the Agreement apply to all hours worked under the roster, including the Saturday night shift.
[18] Clause 14 of the Agreement deals with shift allowances and provides as follows:
“14. Shift Allowances
14.1 Definitions
For the purposes of this Agreement:
Rostered shift means any shift which an Employee has been provided with at least 48 hours notice;
Day shift means any shift finishing after 6:00pm and at or before midnight;
Night shift means any shift finishing after midnight and at or before 8:00am.
14.2 By agreement between Dematic and the Employees, the span of hours over which shifts may be worked may be altered by up to one hour at either end of the span.
14.3 Day and Night shift allowances:
(a) if Employees work on day shift they will be paid for such shift 15 per cent more than the Normal Hourly Rate of Pay for each hour worked;
(b) if Employees work on night shift they will be paid for such shift 30 per cent more than the Normal Hourly Rate of Pay for each hour worked.
14.4 Nothing in this clause is intended to displace penalty provisions in relation to work on Saturdays and Sundays as provided for by the Award. Saturday and Sunday penalty provisions are in substitution for the allowance provided for in clause 14.3 and not cumulative.” [emphasis added]
[19] Clause 37 of the Award also deals with shiftwork. Clauses 37.4 and 37.5 deal with rates for working on Saturday, Sunday and public holiday shifts as follows [emphasis added]:
“37.4 Rate for working on Saturday shifts
The rate at which a shiftworker must be paid for work performed between midnight on Friday and midnight on Saturday is time and a half. The extra rate is in substitution for and not cumulative upon the shift premiums prescribed in clause 37.3.
37.5 Rate for working on Sunday and public holiday shifts
(a) The rate at which a continuous shiftworker must be paid for work on a rostered shift the major portion of which is performed on a Sunday or public holiday is double time.
(b) The rate at which a shiftworker, on other than continuous shiftwork, must be paid for all time worked on a Sunday is double time and on a public holiday is double time and a half.
(c) Where shifts commence between 11.00 p.m. and midnight on a Sunday or public holiday, the time so worked before midnight does not entitle the employee to the Sunday or public holiday rate for the shift. However, the time worked by an employee on a shift commencing before midnight on the day preceding a Sunday or public holiday and extending into the Sunday or public holiday must be regarded as time worked on the Sunday or public holiday.
(d) Where shifts fall partly on a holiday, the shift which has the major portion falling on the public holiday must be regarded as the holiday shift. By agreement between the employer and the majority of employees concerned, the shift which has the minor portion falling on the public holiday may be regarded as the holiday shift instead
(e) The extra rates in clause 37.5 are in substitution for and not cumulative upon the shift premiums prescribed in clause 37.3.
[20] The starting point is that, under the Agreement, Saturday and Sunday penalties are those provided in the Award. The penalties are paid in substitution for shift allowances that might otherwise be payable under clause 14.3 of the Agreement. A plain reading of the Agreement makes this clear.
[21] Under clause 37.4 of the Award, the penalty rate for shiftwork on Saturday is time and one half. For continuous shiftworkers, if a major portion of their shift is performed on Sunday, the penalty rate is double time. A difficulty arises in this case because the Saturday night shift is rostered in equal parts on Saturday and Sunday.
[22] The issue is overcome by clause 37.5(c), which provides that time worked on a shift that starts before midnight on Saturday and continues into Sunday is to be regarded as time worked on Sunday. The effect is that rostered hours from 6.00pm to midnight on Saturday are regarded as time worked on Sunday, so that the applicable penalty rate for the Saturday night shift is double time.
[23] However, that is not the end of the matter. Clause 11.5 deals with the rates of pay for employees on the 4 days on, 4 days off, 24x7 roster. The rates of pay are those provided in Schedule 2 to the Agreement. Clause 11.5(a) provides for the roster to be worked over 7 days of the week, from Monday to Sunday.
[24] Clause 11.5(b) makes clear that the hourly rates in Schedule 2:
“[take] into account the rostered ordinary hours and reasonable additional hours worked by the Employees, and in addition all allowances, shift loadings/allowances and penalty rates that would otherwise be paid under the Award unless provided for in this Agreement.”
[25] Clause 11.5(d) confirms that employees at the site will be paid a “flat hourly rate”.
[26] The Agreement provides for Saturday and Sunday penalty rates to be “as provided for by the Award”. However, the agreement also provides for payment of a flat hourly rate to compensate for these entitlements in the context of work on the 24x7 shift roster.
[27] Schedule 2 sets out the rates of pay that apply under the Agreement. These rates are expressed both as minimum rates of pay and as flat hourly rates, inclusive of all rostered hours, shift penalties and allowances.
[28] But for clause 11.5, the applicable shift penalty for the Saturday night shift would be double time. However, clause 11.5 changes the position by providing for an ‘all up’ rate of pay for employees working the 4 days on, 4 days off, 24x7 shift roster.
[29] I find no ambiguity in any of the relevant Agreement terms or terms of the Award that are incorporated into the Agreement.
[30] It follows, and I find, that the rates of pay for continuous night shift worked on the Saturday night shift as part of the 4 day on, 4 day off roster, are the rates of pay in Schedule 2 to the Agreement. The exception is where the Saturday night shift is worked as overtime (either because it is “hours worked in excess of or outside the roster”). In that case, as clause 11.5(c) makes clear, the hours worked are overtime and paid in accordance with clause 15.3.
Entitlements arising during the period from 2011 to 1 August 2015
[31] This question requires me to consider whether, construed in context and purpose, the Agreement confers an entitlement to payment for public holidays on rostered days off prior to 1 August 2015.
[32] Mr Grech asks the Commission to ‘clarify and correct’ the position in relation to entitlements to 7.6 hours pay for public holidays ‘when not rostered on’ during the period from 2011 to 1 August 2015.
[33] Dematic says that during bargaining for the Agreement, there was a ‘one off’ agreement with employees that public holidays not worked when not rostered on would be paid from 1 August 2015. This was said to arise from perceptions of unfairness when some employees were paid more than others for public holidays because of their particular roster.
[34] Dematic also relies on its provision of additional annual leave under the Agreement, which it says satisfies any further obligation for public holiday pay having regard to clause 44.3(a) of the Award. That clause gives employers the discretion to provide 7.6 hours additional annual leave in lieu of 7.6 hours ordinary pay or a substitute public holiday off for public holidays falling on a rostered day off.
[35] Clause 16.1 of the Agreement deals expressly with the entitlement to 7.6 hours public holiday pay for permanent employees on rostered days off. It provides as follows:
16. Public Holidays
16.1 An Employee (other than a casual employee) is entitled to a public holiday without loss of ordinary pay unless the Employee is rostered to work as a part of the employees ordinary roster. An Employee (other than a casual employee) who is not rostered to work on a public holiday, as listed in 16.2, is entitled to be paid 7.6 hours at their base rate of pay from 1st August 2015.
[36] There is nothing ambiguous about this clause. From 1 August 2015, the intention of the parties is that employees will be entitled to 7.6 hours pay for public holidays that fall on a day that they are not rostered to work. I am unable to find any other term in the Agreement providing for the entitlement prior to 1 August 2015. Relevantly, there does not appear to be any term in the Agreement continuing the operation of any earlier enterprise agreement terms that might be relied upon.
[37] The National Employment Standards deals with public holidays, and provides the right to payment for absence on a public holiday for an employee’s “ordinary hours of work on the day”. 10 It does not provide for payment for public holidays an employee is not rostered to work.
[38] It may be that employees have a separate entitlement to payment for public holidays on rostered days off prior to 1 August 2015, either under the Award or an earlier Agreement. If so, there are remedies available to the employees to recover payment of entitlements through the Federal Court, the Federal Circuit Court and eligible State and Territory courts. 11
[39] I find that on a plain reading of the Agreement, the entitlement to payment for public holidays on rostered days off only applies from 1 August 2015.
Conclusion
[40] In summary, and in relation to each of the three questions, I find as follows:
1. Continuous shift workers under the Agreement work on a 12 hour shift, ‘4 days on, 4 days off’, 8 week roster cycle. Do the hourly rates in Schedule 2 to the Agreement apply to all hours worked in accordance with the roster? Do these rates compensate for rostered ‘reasonable additional hours’?
The ‘minimum hourly rates’ in Schedule 2 to the Agreement apply to all hours worked in accordance with the roster, including reasonable additional hours. The rates in Schedule 2 are intended to compensate for rostered ‘reasonable additional hours’ required by the 4 days on, 4 days off, 12 hour shift roster.
2. What is the rate of pay for continuous night shift worked from 6.00pm Saturday to 6.00am Sunday under the Agreement?
The rates of pay for continuous night shift worked on the Saturday night shift as part of the 4 day on, 4 day off roster, are the rates of pay in Schedule 2 to the Agreement. The exception is where the Saturday night shift is worked as overtime (either because it is “hours worked in excess of or outside the roster”). In that case, as clause 11.5(c) makes clear, the hours worked are overtime and paid in accordance with clause 15.3.
3. Were employees entitled to 7.6 hours pay for public holidays not worked during the period from 2011 to 1 August 2015?
The entitlement to payment for public holidays on rostered days off under the Agreement only applies from 1 August 2015.
COMMISSIONER
1 Clause 6 of the Agreement
2 CC Pty Ltd T/A Cook Colliery v Construction, Forestry, Mining and Energy Union [2017] FWCFB 2749
3 FW Act, section 738(c) and 739(1).
4 [2014] FWCFB 7447
5 [2017] FWCFB 3005
6 Clause 9.1(a)
7 Clause 9.1(b)
8 Clause 11.1(d)
9 Clause 9.1(c)
10 FW Act, section 116
11 FW Act, sections 45, 50 and 539.
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