Transport Workers' Union of Australia v Linfox Australia Pty Ltd

[2013] FWC 6999

[2013] FWC 6999

The attached document replaces the document previously issued with the above code on 13 September 2013.

The Decision is being refiled to add appearances.

Melissa Nassios

Associate to Commissioner Roe

Dated 20 September 2013

[2013] FWC 6999

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Transport Workers' Union of Australia
v
Linfox Australia Pty Ltd
(C2013/5288)

COMMISSIONER ROE MELBOURNE, 13 SEPTEMBER 2013

Expiry of contract – proposed redundancy or redeployment – whether suitable alternative position.

Introduction

[1] On 3 September 2013 I issued an interim decision in this matter [[2013] FWC 6490]. A further hearing was held on 12 September 2013. I considered further submissions from the parties together with the following additional material:

● A letter from Linfox dated 30 August 2013 which set out the revised compensation package for the drivers Linfox proposes to redeploy from the Linfox Australia (Bulk Petroleum) Agreement 2011 (the Oil Industry Agreement) to the Linfox Road Transport and Distribution Centres National Enterprise Agreement 2011 (Distribution Agreement). 1

● An outline of the Transport Workers’ Union of Australia (TWU) response to the revised compensation package dated 5 September 2013. 2 The TWU argue that the proposed grandfathered rate does not reflect the 4.5% increase due to employees in the Oil Industry Agreement from 1 January 2014. The TWU argue that available overtime hours under the Distribution Agreement are significantly less than those under the Oil Industry Agreement. The revised offer is not comparable to the Silverwater NSW transfer where employees had access to the Level 7 rate in the Distribution Agreement which would be adjusted overtime whereas under the revised compensation package the rate offered would be frozen until the end of 2017 and then would drop to the Level 6 rate in the Distribution Agreement. The TWU also sought confirmation about how accrued leave entitlements would be paid.

● A response from Linfox dated 9 September 2013 in respect to the issues of accrued leave. 3

● A statutory declaration from Robert Padovano, National Payroll Manager for Linfox, which is primarily directed at establishing that if the recent past is a guide, available overtime for affected transferring drivers would not generally be less than that which has been available under the Oil Industry Agreement. 4

● Calculations prepared by the TWU of the effect on the income of the affected drivers taking into account the revised compensation package. 5

[2] The TWU and Linfox agree that there are the following significant differences between the two agreements:

Oil Industry Agreement	Distribution Agreement
Base Pay	$29.44 per hour grade 7 base (Common Hourly Rate $38.87) $30.13 per hour grade 8 base (Common Hourly Rate $39.77)	$23.24 per hour base rate (grade 6 - maximum available)
Superannuation	14.5%	12%
Annual leave loading	22.5%	17.5%
Hours	35 hour week	38 hour week

[3] Under the Oil Industry Agreement there are advantageous provisions re laundry and dry cleaning, meal and rest breaks are all paid, an additional week’s annual leave is achieved for those on particular shift patterns, 12 hour shift rosters are the norm maximising income, and training and licence costs are met. The Common Hourly Rate under the Oil Industry Agreement, which is the rate which applies for all hours worked on normal shifts inclusive of penalty payments and allowances is more than 1.5 times the base rate of pay in the Distribution Agreement. The tanker drivers are rostered to work 48 hours per week at the common hourly rate and regularly work additional shifts at an hourly rate which is 20% higher. Ordinary hours under the Mobil contract and the Oil Industry Agreement are worked over 4 days of the week and they are worked over 5 days of the week under the retail contracts. This will be a disadvantage to many affected employees in that it affects the number of days off which they are able to enjoy.

[4] The compensation package considered in my interim decision and the revised package are summarised as follows:

Original Compensation Package

Revised Compensation Package

First right of refusal to the affected drivers to job opportunities as a tanker driver which arise in the future.

First right of refusal to the affected drivers to job opportunities as a tanker driver which arise in the future.

Affected Drivers will continue to receive superannuation contributions at the rate of 14.5% on their ordinary time earnings.

Affected Drivers will continue to receive superannuation contributions at the rate of 14.5% on their ordinary time earnings.

Affected drivers will be paid the Grade 6 base rate under the Distribution Agreement. All other terms and conditions arising from the Distribution Agreement will apply; with full continuity of employment and accrued entitlements.

A one off payment of 13 weeks at the difference between the common hourly grade 7 rate and the standard retail driver rate.

Affected Drivers will be 'grandfathered' (red circled) on their current base fuel rate [Grade 6 - $28.7617; Grade 7 - $29.4442 or Grade 8 - $30.1281] until 31 December 2017. All other terms and conditions arising from the Distribution Agreement will apply; with full continuity of employment and accrued entitlements.

On 31 December 2017 the Affected Drivers will receive a payment of 13 weeks paid at a rate equal to the difference between their base fuel rate and the standard retail driver rate (Grade 6 NEA).

An upfront payment of the difference between the current common hourly grade 7 oil industry agreement rate and the standard retail driver rate in relation to accrued annual leave.

On 31 December 2017 the Affected Drivers will be paid an upfront payment of the difference between their base fuel rate and the standard retail driver rate (Grade 6 NEA) in relation to all accrued annual leave.

Accrued entitlements taken before 31 December 2017 will be paid at the grandfathered base oil industry agreement rate. Annual leave taken in the first twelve months after the redeployment will attract 22.5% leave loading. Subsequent leave will attract 17.5% loading.

Long service leave taken within 12 months of redeployment at the grade 7 common hourly rate (CHR) in the oil industry agreement.

Long service leave taken within 12 months post 31 December 2017 will be paid at the 'grandfathered' (red circled) base fuel rate. This will also apply to accrued entitlements taken before 31 December 2017.

[5] The Statutory Declaration of Mr Padovano examined overtime worked during the 2013 financial year for drivers in respect to the Coles and Woolworths contracts (the contracts which would be worked by the affected transferring drivers) and the overtime worked during the 2013 financial year under the Mobil Yarraville contract. The data for the Woolworths contract was not for the financial year but was for the year to date as that contract is relatively new. In respect to the data from the Coles Truganina depot Mr Padovano did not include employees who did not work additional hours over and above the minimum hours required pursuant to their contract of employment. The TWU submitted that the number of drivers included in the spreadsheets did not equate with their understanding of the number of drivers involved. The data produced by Mr Padovano was summarised as follows: 6

Linfox site	Average hours per week
Mobil Yarraville tanker drivers	50.87
Coles (Truganina)	59.55
Woolworths (all sites)	55.10
Coles (Somerton)	53.76

[6] The tanker drivers under the Oil Industry Agreement are regularly rostered for 48 hours per week and paid the common hourly rate for those hours. Although I accept that there are no guarantees about future working hours under any of the contracts it appears that there would be a reasonable expectation that 48 hours per week would be available to the transferring drivers. Taking into account the matters raised by the TWU, I am not satisfied that the transferring drivers will have access to significantly fewer hours of work than they would have had under the Oil Industry Agreement.

[7] I accept the submission of the TWU that some aspects of the revised compensation package are significantly inferior to the original package. The Grade 7 common hourly rate in the Oil Industry Agreement used to calculate the 13 week upfront payment in the original package is $9.43 per hour higher than the base hourly oil industry rate used to calculate the 31 December 2017 payment in the revised package. The same issue arises in respect to all accrued annual leave and to any long service leave taken within the first twelve months.

[8] Most of the affected employees will receive a lesser payment in respect to their accrued annual leave than they would have been entitled to if they were made redundant or if they had continued to be employed under the Oil Industry Agreement. Leave loading will also be less as it is calculated on the common hourly rate under the Oil Industry Agreement.

[9] The nominal expiry date of the Distribution Agreement is at the end of 2013. It is impossible to predict what wage increase may be agreed, if any, to offset the loss of the 4.5% increase due under the Oil Industry Agreement in January 2014. Due to the level of uncertainty I do not take this factor into account. If the employees are made redundant then they would not have access to the 4.5% increase.

[10] The differential in the Grade 7 base rate between the Oil Industry Agreement and the Grade 6 base rate in the Distribution Agreement is $6.20 per hour. I am satisfied that this differential is so great that I can be confident that under the revised compensation package there will still be a very significant drop in income for the affected employees if they have not been transferred back to tanker driving by 31 December 2017. The lump sum payment proposed would be a fraction of the annual loss in income. The loss when compared to what would have been paid under the Oil Industry Agreement will be even greater given that the Oil Industry Agreement rates will increase by 4.5% in January 2014 and some further increases in the rates under that Agreement are likely between now and the end of 2017.

[11] In looking at the income of the affected employees under the Oil Industry Agreement when compared to their expected earnings under the revised compensation package and the Distribution Agreement I consider that the following are relevant:

● The earnings for 38 hours work.

● The earnings for 48 hours work which are the hours the drivers were required to work under the regular roster performing the Mobil contract. Additional shifts were worked from time to time but the average hours worked was 51 hours per week.

[12] Linfox suggested a comparison based upon an average of 60 hours worked per week. Given the evidence of Mr Padovano I consider it unlikely that the affected employees would necessarily be able to work 60 hours per week on average. In any case it is not a reasonable comparison given that on average they now only have to work an average of 51 hours per week. However, for completeness I will make some reference to the expected earnings difference working 60 hours per week.

[13] The following comparison is derived from the figures provided by the TWU. 7 Overtime hours are paid at overtime rates in substitution for shift penalty rates under the Distribution Agreement. Hours in excess of 48 and on a Sunday receive a 20% loading under the Oil Industry Agreement. The majority of the affected drivers are on Level 7 although some are on Level 8. It is obvious that any income loss will be greater for the drivers on Level 8 but to avoid complication the table only relates to Level 7.

Shift	38 hours per week	48 hours per week	60 hours per week
Day shift Base	$1118.88	$1560.54	$2267.00
Day Shift CHR	$1477.06	$1865.76	$2425.48
Difference Day Shift	-$358.18	-$305.22	-$158.48
Afternoon Shift Base	$1314.68	$1756.34	$2463.00
Afternoon Shift CHR	$1477.06	$1865.76	$2425.44
Difference Afternoon Shift	-$162.38	-$109.42	+37.56
Night Shift Base	$1454.54	$1896.20	$2602.86
Night Shift CHR	$1477.06	$1865.76	$2425.44
Difference Night Shift	-$22.80	+$30.44	+177.42

CHR - Common Hourly Rate

[14] The 48 hour week figures would be affected if there are weekend shifts involved but not by enough to alter the negative difference on day and afternoon shifts into a positive when averaged over a roster cycle.

[15] Under the Oil Industry Agreement annual leave is calculated on the Common Hourly Rate plus a 22.5% loading. Under the compensation package after the first year and until 31 December 2017 affected employees will have their annual leave paid on the grandfathered base rate plus 17.5% or the shift and weekend penalties they would have earned if that is greater. It is clear that in most cases the affected employees will be worse off.

[16] In the interim decision I referred to a number of provisions in the Oil Industry Agreement which support an approach whereby every effort should be made to find redeployment opportunities rather than making an employee redundant. Linfox also referred to the provisions of the Act which require any redundancy to be genuine and this includes ensuring that all suitable opportunities for redeployment are exhausted. However, this does not alter the requirement for any redeployment to be to a suitable alternative position within the meaning of Clause 23.3 of the Oil Industry Agreement.

[17] In the interim decision I canvassed a number of features of the alternative position in this case which involves some disadvantage to employees. In particular I referred to the nature of the employment which does not fully utilise the skills, qualifications and experience of the affected tanker drivers. I also referred to factors such as the particular shift rosters and special allowances under the Oil Industry Agreement. However, I referred to these factors being mitigated by the compensation package, particularly the first right of refusal for future tanker driver work, and the maintenance of accrued personal leave entitlements. If the compensation package ensured that there was no economic disadvantage in the event that employment under the Distribution Agreement continued I would probably conclude that the first right of refusal was adequate to make the alternative employment suitable. Similarly if the employees had the option to be made redundant if tanker work did not become available by a specified date then I would probably conclude that the compensation package was adequate to make the alternative employment suitable notwithstanding a small economic disadvantage in the meantime.

[18] I reached the following conclusion based upon the original compensation package:

“I am satisfied that even taking into account the compensation package the tanker drivers face the prospect of significant economic disadvantage. The difference in the wages and conditions under the two agreements is wide. The compensation package does not bridge that gap unless there is a quick return to tanker driving work. Linfox may be successful at some point in obtaining further tanker driving work but there are no guarantees this will occur. I am satisfied that the affected drivers would be significantly disadvantaged in respect to wages and conditions of employment as a result of the redeployment even after taking into account the compensation package. This is a significant factor standing against a finding that the proposed redeployment is to a suitable alternative position.

Taking into account all of the objective circumstances I have no hesitation in concluding that the proposed redeployment is not to suitable alternative positions within the meaning of Clause 23.3 of the Oil Industry Agreement.” 8

[19] I accept that Linfox are making significant efforts to win new tanker work contracts, however, there was nothing in the evidence before me upon which I could base a conclusion that the commitment to first refusal is effectively a guarantee that the affected employees would be able to be transferred to this work within a short period of time.

[20] The revised compensation package will probably reduce the level of economic disadvantage for the affected drivers. However, I am satisfied that on average the tanker drivers would have to work significant additional hours and or significantly more work on socially inconvenient shifts in order to achieve a similar level of income in the alternative positions. Taking into account the revised compensation package they would continue to be significantly disadvantaged if they continued to work under the Distribution Agreement.

[21] I am satisfied that despite the revised compensation package the difference between the wages and conditions the tanker drivers enjoyed under the Oil Industry Agreement and the wages and conditions they are likely to enjoy under the revised compensation package and the Distribution Agreement is still significant and on the whole detrimental. This is a significant factor standing against a finding that the proposed redeployment is to a suitable alternative position.

[22] Taking into account all of the objective circumstances I determine in resolution of the dispute that the proposed redeployment is not to suitable alternative positions within the meaning of Clause 23.3 of the Oil Industry Agreement.

COMMISSIONER

Appearances:

Mr B Baarini appeared for the TWU.

Mr R West appeared for Linfox.

Hearing details:

2013

Melbourne

September 12

 1   Exhibit Linfox 5.

 2   Exhibit TWU 12.

 3   Exhibit Linfox 3.

 4   Exhibit Linfox 4.

 5   Exhibit TWU 13.

 6   Exhibit Linfox 4, Annexure RP 5.

 7   Exhibit TWU 13.

 8   [2013] FWC 6490, at paras [56] and [57].

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