Mechanical Maintenance Solutions Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

[2014] FWC 9163

[2014] FWC 9163 [Note: An appeal pursuant to s.604 (C2014/1018, C2015/1019, C2015/1079) was lodged against this decision - refer to Full Bench decision dated 19 March 2015 [[2015] FWCFB 1769] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Mechanical Maintenance Solutions Pty Ltd
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU); Construction, Forestry, Mining and Energy Union
(C2014/361)

DEPUTY PRESIDENT GOSTENCNIK MELBOURNE, 17 DECEMBER 2014

Alleged disputes concerning the application of particular all purpose allowance to causal employees; dispute about the method of calculating a casual employee’s all purpose rate of pay when allowance is payable

Introduction

[1] Mechanical Maintenance Solutions Pty Ltd (MMS) has applied under section 739 of the Fair Work Act 2009 (Act) for the Commission to deal with two related disputes in accordance with the Mechanical Maintenance Solutions P/L Latrobe Valley Power Stations (AMWU and CFMEU) Greenfield Enterprise Bargaining Agreement 2012 – 2016 (Maintenance Agreement) and the Mechanical Maintenance Solutions Pty Ltd (MMS), Latrobe Valley (Victoria) Power Industry Electrical (ETU) Greenfields Enterprise Agreement 2013 (Electrical Agreement) respectively. The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) and the Construction, Forestry, Mining and Energy Union (CFMEU) are covered by the Maintenance Agreement while the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) is covered by the Electrical Agreement.

[2] The issue in dispute may be simply stated. Each agreement provides for a power station shutdown/outage allowance which is expressed in each agreement to be an all purpose allowance. The issue in dispute is whether in circumstances where the power station shutdown/outage allowance is payable to a casual employee, that allowance is to be added to the ordinary hourly rate of pay before or after the application of the 25% casual loading provided for in each agreement. MMS contends that under both agreements it is the former, the AMWU and the CFMEU contend it is the latter in relation to the Maintenance Agreement and the CEPU also contends that it is the latter in relation to the Electrical Agreement.

[3] The resolution of the dispute turns therefore on the proper construction of the relevant provisions of the Maintenance Agreement and the Electrical Agreement.

Principles of construction of enterprise agreements

[4] The principles applicable to the construction of an enterprise agreement have been recently canvassed at length in Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited 1 and are not necessary to repeat here. I apply those principles to the construction exercise required to resolve this dispute.

[5] Evidence of that which might be described as the surrounding circumstances was given in the proceedings by Mr Tim Brown the Managing Director of MMS and Mr Steve Dodd an organiser with the AMWU. I do not think that evidence assists in identifying any particular ambiguity in the relevant provision beyond that which is apparent from the words. Nor does it assist in establishing an objective framework of facts which might otherwise assist in resolving the proper construction of the agreements.

Relevant provisions

[6] The Mechanical Agreement relevantly provides as follows:

7.1 Casual Employee.

. . .
7.1.2 A casual employee is one who is engaged and paid as such. A casual employee for working ordinary time shall be paid per hour one thirty-sixth of the weekly rate applicable to the classification of the individual employee concerned, plus a twenty five percent (25%) loading. The loading constitutes part of the casual employee’s all purpose rate.

. . .

35.1 Weekly Pay Rate

35.1.1 The above rates include all site allowances, disability payments and any special rates or allowances contained in parent awards, other than those specifically detailed in clause 36 - Allowances. Employees will be paid to the classification level on the basis to which they are employed.

. . .

36.6 Power Station Outage Allowance
The following PSO Allowance (all purpose) for shutdown/outage work will be paid per hour for the period of the unit shutdown/outage for work performed on that relevant unit only.

36.6.1 The allowance shall be paid:
a) For all planned outages greater than 7 days duration; or
b) For any unplanned overrun of planned outages past 7 days duration. In such an instance the allowance is not paid retrospectively; or
c) For any unplanned/breakdown outages greater than 7 days.
In such an instance the allowance is not paid retrospectively and will not attract the outage allowance until after the 7th day.

36.6.2 For pre and post outage works on planned outages greater than 7 days duration, the allowance will be paid on 2 weeks pre-outage and 1 week post-outage work for specified works only.

36.6.3 Mobilisation of huts, supply and connection services, procurement, preparation and delivery of materials, planning and overhaul works do not attract pre-outage allowance.

Date Payable From Station Allowance
(All purpose)

Date of Lodgement $1.55 per hour
1 st April 2013 $1.62 per hour
1st April 2014 $1.69 per hour
1st April 2015 $1.76per hour

[7] The Electrical Agreement, in terms not materially different to the Mechanical Agreement relevantly provides:

8.3. Casual Employee

8.3.1. A casual employee is one engaged and paid as such. A casual employee for working ordinary time shall be paid an hourly rate on the basis of one thirty-sixth of the weekly wage prescribed in this agreement for the work classification plus a casual loading of 25%.

8.3.2. The loading constitutes part of the casual employee’s all purpose rate.

. . .

15.WAGE RATES

15.1. An employee is entitled to be paid the weekly rate for his or her classification as set out in the table of clause 14. Increases will apply from the first full pay period on or after the date shown for all wage and allowance rates stated within this agreement. Relativity increases are inclusive of base rates. These rates are inclusive of all allowances unless specifically mentioned in this agreement.

. . .

Power Station Shutdown/Outage Allowance (All Purpose Allowance)

19.3.8. The following Power Station Shutdown/Outage allowance for shutdown/outage work will be paid per hour (all purpose) for the period of the unit shutdown/outage for work performed on that relevant unit only.

19.3.9. The Allowance shall be paid:
a) For all planned outages greater than 7 days duration; or
b) For any unplanned overrun of planned outages past 7 days duration. In such an instance the allowance is not paid retrospectively; or
c) For any unplanned/breakdown outages greater than 7 days. In such an instance the allowance is not paid retrospectively and will not attract the outage allowance until after the 7th day

19.3.10. For pre and post outage works on planned outages greater than 7 days duration, the allowance will be paid on 2 weeks pre-outage and 1 week post outage work for specified works only.

19.3.11. Mobilisation of huts, supply and connection services, procurement, preparation and delivery of materials, planning and overhaul works, do not attract pre-outage allowance.

Date Payable From Station Allowance
(All purpose)

Date of Lodgement $1.55 per hour
1st April 2013 $1.62 per hour
1st April 2014 $1.69 per hour
1st April 2015 $1.76 per hour

Proper construction of the provisions

[8] MMS submitted on a proper construction of both agreements, an hourly rate of pay is established for a casual employee working ordinary hours. This is calculated by identifying the classification into which the casual employee has been engaged, identifying the weekly wage or weekly rate applicable to the classification, dividing that wage or rate by 36 (being the maximum ordinary working hours per week) and then adding to that sum a loading of 25% of the sum. The loading forms part of a casual employee’s all purpose rate with the result that the loaded up hourly rate becomes the base from which other penalties and allowances are calculated.

[9] The unions maintain that in order to give full effect to the all purpose nature of the power station/outage allowance, the allowance must first be added to the weekly classification rate divided by 36. To do otherwise would mean that the allowance is not at all purpose allowance.

[10] This argument is not without merit and highlights a degree of ambiguity or perhaps uncertainty in the provisions, but ultimately it is one that runs counter to the proper construction of the provisions at issue. For the reasons which follow, in my view the construction contended for by MMS is correct.

[11] Each agreement makes provision for a power station shutdown/outage allowance. That allowance is payable to employees working in connection with the power station shutdown or outage. It is paid for each hour an employee is engaged in the work during for the period of the shutdown or outage and during periods an employee is engaged in pre-outage and post-outage work. The allowance is also expressed to be an all purpose allowance with the effect that it is added to an employee’s ordinary hourly rate of pay and then becomes the base from which other penalties and allowances are calculated.

[12] The power station/outage allowance is expressed as a flat dollar amount. If it were expressed as a percentage then whether or not it is to be applied, in the case of a casual employee, to the hourly rate of pay before or after the calculation of the 25% casual loading, the result would be the same. However the application of a flat dollar amount to the rate of pay before calculation of the 25% casual loading yields a higher result and therefore higher all purpose rate of pay than if the flat dollar value of the allowance is applied after the 25% casual loading is calculated and added.

[13] Clause 7.1.2 of the Mechanical Agreement and clause 8.3.1 of the Electrical Agreement relevantly establish the rate of pay per hour for a casual employee for work performed during ordinary hours work. This is clear from the introductory words of the second sentence in each clause, namely, “a casual employee for working ordinary time shall be paid . . .” That rate of pay includes a casual loading of 25%.

[14] When a casual employee performs work during ordinary hours that is also work which attracts the power station shutdown/outage allowance provided for in each of the agreements, the flat dollar hourly allowance is added to the hourly rate of pay to which a casual employee is entitled for working ordinary hours. As the rate of pay to which a casual employee becomes entitled for working those ordinary hours already includes a 25% loading by reason of clause 7.1.2 of the Mechanical Agreement and clause 8.3.1 of the Electrical Agreement, it follows that the hourly power station shutdown/outage allowance is added to that rate of pay.

[15] The construction contended for by the unions would result in the rate of pay to which a casual employee is entitled for working ordinary hours being higher than that provided for in clause 7.1.2 of the Mechanical Agreement and clause 8.3.1 of the Electrical Agreement by reason of the multiplier effect of the 25% loading being calculated after the addition of the allowance. Alternatively it results in the value of the allowance being higher for casual employees than for other employees by reason of the multiplier effect. This would be inconsistent with the fixed flat dollar rate of the allowance. There is in my view no sound reason to be discerned from the text of the provisions why this should be the result and in my view is inconsistent with the plain language of clauses 7.12 of Mechanical Agreement and 8.3.1 of the Electrical Agreement which clearly establish a consistent hourly rate of pay for a casual employee working ordinary hours and with the fixed value nature of the allowance set out in clauses 36.6.3 of the Mechanical Agreement and 19.3.11 of the Electrical Agreement.

[16] Furthermore the construction I prefer is consistent with the all purpose nature of power station shutdown/outage allowance because ultimately it is added to the ordinary time rate of pay for a casual employee (which includes a 25% loading) and thereafter is included as a base in the calculation of other penalties of allowances that might become payable, for example, overtime. This is exactly the same method used for non casual employees and there is nothing in the text of the agreement that would suggest a contrary approach.

[17] An all purpose allowance forms part of an employee’s ordinary time base rate of pay. A casual employee’s ordinary time base rate of pay is established relevantly by clause 7.1.2 of the Mechanical Agreement and clause 8.3.1 of the Electrical Agreement. This includes the 25% casual loading. The hourly power station shutdown/outage allowance, being an all purpose allowance is applied to that ordinary time base rate of pay with the result in the case of a casual employee, it is applied after the casual loading has been applied.

[18] The CEPU raises a further argument in support of its construction. In summary the argument is as follows. By clause 5 of the Electrical Agreementthe terms of the Electrical, Electronic and Communications Contracting Award 2010 (Modern Award) are incorporated into the agreement and subject to inconsistency rules, are operative terms of the agreement. Clause 17.1 (a) of Modern Award provides that “all-purpose allowances are payable for all purposes of the award and are part of the gross weekly ordinary all-purpose rates of pay”. By reason of clause 5.4 of the Electrical Agreement the reference to “award” in clause 17.1 (a) of the modern award as incorporated, is to be read as a reference to the Electrical Agreement. It follows, according to the CEPU, that the hourly power station shutdown/outage allowance when payable is to be applied to the rate of pay for the classification in which an employee is engaged, and thereafter, in the case of a casual employee the 25% loading is prescribed in clause 8.3.1 of the Electrical Agreement is to be applied.

[19] This, according to the CEPU, is made clear from the terms of clause 10.3 (b) of the Modern Award which provides that “a casual employee will be paid no less than 1/38th of the all purpose weekly wage rate for their classification in clause 16... plus a casual loading of 25%.”

[20] This is not a correct reading of the Electrical Agreement as a whole and is rejected for the following reasons. First, properly construed in the context in which the incorporated Modern Award provision appears, clause 17.1 (a) is referring to all-purpose allowances that are provided for in that instrument. It does not take on an expanded meaning merely because it is a term that is incorporated into the Electrical Agreement. That which is incorporated, relevantly into the Electrical Agreement, is the all-purpose allowances prescribed in the Modern Award. The method of applying those prescribed incorporated allowances is not thereby expanded to allowances separately provided for in the Electrical Agreement. The reference in clause 17.1 (a) to “all-purpose allowances” is a reference only to those allowances incorporated into the Electrical Agreement. The incorporated all-purpose allowances do not include any allowance of the kind dealt with in clauses 19.3.8 – 19.3.11 of the Electrical Agreement.

[21] Secondly, the reference in clause 17.1 (a) of the Modern Award to “weekly ordinary all-purpose rates of pay” appears to be a reference to the “weekly all-purpose rate of pay” as described in clause 16.3 of the Modern Award. Clause 15.1 of the Electrical Agreement provides as follows:

An employee is entitled to be paid a weekly rate for his or her classification as set out in the table of clause 14. Increases will apply from the first full pay period on or after the date shown for all wage and allowance rates stated within this agreement. Relativity increases are inclusive of base rates. These rates are inclusive of all allowances unless specifically mentioned in this agreement.

[22] Clause 5.2 of the Electrical Agreement provides that where “there is an inconsistency between a term of this Agreement and an incorporated term of the Award, the term of this Agreement will prevail over the incorporated award terms to the extent of any inconsistency”. Clause 5.4 of the Electrical Agreement provides that “incorporated Award terms are to be read as altered with the appropriate changes to make them provisions of this Agreement rather than provisions of an award. For example, the loadings, penalties and allowances in the award, to the extent that they are not inconsistent with the terms of this Agreement, applied to the rates of pay under the Agreement, not the Award rate”.

[23] Without traversing the various tests for inconsistency, it seems to me clear that clause 15.1 of the Electrical Agreement is directly inconsistent with the incorporated Modern Award terms dealing with allowances and the calculation of the all purpose weekly wage rate. In the result the only allowances that are payable pursuant to the Electrical Agreement of those expressly provided for in that agreement. It follows that clauses 17.1 (a) and 16.3 operating as incorporated terms from the Modern Award cannot operate consistently with the express terms of clause 15.1 of the Electrical Agreement and therefore do not have the effect contended for by the CEPU. It also follows that the method of calculating a casual employee’s hourly rate of pay in clause 10.3 (b) of the Modern Award operating as an incorporated term, is also directly inconsistent with clause 8.3.1 of the Electrical Agreement by reason of its reliance on the all purpose method of calculation prescribed in clauses 16.3 and 17.1 of the Modern Award.

[24] Although the AMWU and the CFMEU did not make similar arguments, I note for completeness that by clause 5 of the Mechanical Agreement the provisions of the Metal, Engineering and Associated Industries Award 1998 – Part I as in force on 1 March 2006 are incorporated as terms of the Mechanical Agreement subject to inconsistency rules. Clause 35.1.1 of the Mechanical Agreement seems to me to be to the same effect as clause 15.1 of the Electrical Agreement with the consequence that the ongoing application of allowances prescribed in incorporated instrument would be inconsistent with clause 35.1.1. Likewise any alternative method of calculating a casual employee’s ordinary hourly rate of pay would be inconsistent with the method prescribed by clause 7.1.2 of the Mechanical Agreement.

Conclusion

[25] For the reasons given above, in my view the construction of the relevant provisions of the agreements and consequently the order in which the 25% loading and the hourly flat rate power station shutdown/outage allowance in each agreement is applied, is as contended for by MMS. First the relevant classification rate of pay for a casual employee is identified which is then divided by 36. Next the 25% casual loading is applied to that classification rate and then in the prescribed circumstances, the hourly flat rate provided for in the power station shutdown/outage allowance is applied.

[26] The dispute is determined accordingly and no orders are necessary.

DEPUTY PRESIDENT

Appearances:

S. Zeitz for Mechanical Maintenance Solutions Pty Ltd

K. Reidy for Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

K. Reid for Construction, Forestry, Mining and Energy Union

B. Terzic for “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)

Hearing details:

Melbourne.

2014.

27 November

Final written submissions:

“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) 2 December 2014

 1   [2014] FWCFB 7447 [19]-[41]

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