National Union of Workers v Serco Sodexo Defence Services Pty Limited

[2013] FWC 8620

[2013] FWC 8620

FAIR WORK COMMISSION

SUPPLEMENTARY DECISION

Fair Work Act 2009
s.739—Dispute resolution

National Union of Workers
v
Serco Sodexo Defence Services Pty Limited
(C2013/4673)

VICE PRESIDENT LAWLER SYDNEY, 6 NOVEMBER 2013

Dispute resolution - proper calculation of annualised salaries given the operation of Item 15 of Schedule 9 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

[1] On 18 September 2013 the Commission issued a decision ([2013] FWC 7115) on the arbitration of a dispute referred to the Commission by the National Union of Workers (“NUW”) under the dispute settlement procedure in the Serco Sodexo Defence Services Pty Ltd Garrison Support Services Central Northern NSW Collective Agreement 2009 (“Agreement”).

[2] The decision concluded:

“[28] For these reasons, my determination as private arbitrator is that, on its proper construction, the Agreement required Serco to vary the rates in Item 2 of Schedule D to the Agreement to reflect the increase in the ordinary time rate of pay for security employees employed under Item 3 of Schedule D required by Item 15(2) of Schedule 9 of the Transitional Act, using the same methodology that was used when the table in Item 2 of Schedule D to the Agreement was prepared. I direct the parties to hold discussions with a view to reaching agreement on the variations effected to Item 3 of Schedule D by Item 15(2) of Schedule 9 of the Transitional Act and clause 21.3.1. In the event that the parties are unable to agree those calculations, either party may seek to have the matter relisted and I will further arbitrate any disagreement as to the proper calculations to give effect to this determination (and facilitate consequential back payment to the affected security employees).”

[3] The parties were unable to agree the calculations and a further hearing has been conducted to enable the Commission to arbitrate that disagreement.

[4] The disagreement between the parties does not relate to the method of calculation of the annualised salary from a given base rate of pay, but rather as to correct amount of the “base rate of pay” from time to time. The differences are reflected in the following table:

Date	Agreement Rate	Instrument (Award) Rate	SSDS’s proposed input rates	NUW’s proposed input rates	NUW increase factor
September 2009	$15.80	$15.80	$15.80	$15.80	n/a
July 2010 (SNI)	$15.80	$16.03	$16.03	$16.03	1.46%
September 2010	$16.28	$16.03	$16.28	$16.52	3.00%
July 2011 (SNI)	$16.28	$16.58	$16.58	$17.02	3.00%
September 2011	$16.78	$16.58	$16.78	$17.08	0.35%
July 2012 (SNI)	$16.78	$17.06	$17.06	$ ?

[5] The Serco Sodexo Defence Services Pty Ltd (Company) contends that the correct “base rate of pay” for the calculation is the higher of the rate specified in Item 3 of Schedule D to the Agreement and the instrument rate (the figures in bold in the Agreement Rate and Instrument Rate columns).

[6] The NUW contends that the three percent increases are applied to the base rate of pay, as adjusted for safety net increases, in accordance with Item 15 of Schedule 9 to the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 (Transitional Act).

[7] The resolution of that dispute turns on the correct application of Item 15 of Schedule 9 to the Transitional Act and Clause 18 of the Agreement.

[8] Item 15 of Schedule 9 of the Transitional Act provides:

“15 Enterprise agreement base rate of pay not to be less than transitional minimum wage instrument rate

15(1) If:

(a) a transitional minimum wage instrument covers an employee; and

(b) an enterprise agreement applies to the employee;

the base rate of pay payable to the employee under the enterprise agreement (the agreement rate) must not be less than the base rate of pay that is payable to the employee under the transitional minimum wage instrument (the instrument rate).

15(2) If the agreement rate is less than the instrument rate, the enterprise agreement has effect in relation to the employee as if the agreement rate were equal to the instrument rate.

Note: If a transitional instrument applies to an employee who is covered by a transitional minimum wage instrument, then (subject to the continued application of the AFPCS interaction rules) the employee must be paid at least the rate required by the continued AFPCS wages provisions.”

(emphasis added)

[9] Clause 18 of the Agreement provides:

“The wages set out in this Agreement at Schedule A - H provide for:

(a) Wage rates payable on approval of the agreement by Fair Work Australia,

(2009 wage rates);

(b) 3% increase to base rates of pay the first full pay period twelve months after approval of the agreement by Fair Work Australia or on 1 September 2010, whichever is earlier.

(c) 3% increase to base rates of pay the first full pay period twenty four months after approval of the agreement by Fair work Australia or on 1 September 2011, whichever is earlier.”

[10] The wages specified for Security Officers (who are not on annualised salaries) are out in a table in Item 3 of Schedule D:

[11] In my view, on the proper construction of the Agreement, “the base rate of pay” referred to in clause 18, to which the 3 percent increases referred to in clause 18 are applied, are the “F/T hourly rates” in the 3^rd and 5^th columns respectively and there is no warrant for construing clause 18 as referring to the “base rate of pay” in Item 3 of Schedule D as adjusted from time to time by the operation of Item 15 of Schedule 9. On the proper construction of the Agreement, sub-paragraphs (a), (b) and (c) of clause 18 are subordinate to the tables in the Schedules A - H. Those subparagraphs merely explain how the rates in the table were derived at the time the Agreement was made – what the Agreement “provides for”.

[12] On that construction, the “F/T Hourly Rate” specified in the 3rd, 5th and 7th columns of this table are the “agreement rates” for the purposes of Item 15 of Schedule 9 for the periods commencing on the approval of the agreement, 1 September 2010 and 1 September 2011 respectively.

[13] On the plain words of Item 15 of Schedule 9, “[t]he enterprise agreement has effect in relation to the employee as if the agreement rate were equal to the instrument rate” only where the “agreement rate” is less than the “instrument rate”. For the period covered by the table in Item 3 of Schedule D, that was the case only in the periods between July 2010 and September 2010 and between July 2011 and September 2011. Item 15 of Schedule 9 will also operate in relation to some or all of the safety net increases that occurred since July 2012 while the agreement remained in operation.

[14] It follows that the approach of the Company is correct and the calculation proceeds with the base rate inputs identified by the Company (subject to any upward adjustment required by the 2013 Safety Net Review and Item 15 of Schedule 9) and the Commission determines accordingly.

VICE PRESIDENT

Appearances:

Mr. A. Snowball for the applicant

Ms. S. La Penna for the respondent

Hearing details:

2013

Sydney (via teleconference)

30 October

Printed by authority of the Commonwealth Government Printer

<Price code C, PR544067>