"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)- New South Wales Branch v Ingredion ANZ Pty Ltd [2020] FWC 2490

1 Fair Work Act 2009 s.739 - Application to deal with a dispute "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)- New South Wales Branch v Ingredion ANZ Pty Ltd (C2020/450) DEPUTY PRESIDENT DEAN SYDNEY, 11 AUGUST 2020 Application to deal with a dispute –calculation of redundancy pay – base weekly rate of pay [1] This application arises from a dispute over the calculation of redundancy payments for electrical maintenance employees of Ingredion ANZ Pty Ltd (Ingredion) who are covered by the Ingredion Lane Cove Collective Workplace Agreement 2018 (the Agreement). [2] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, known as the Australian Manufacturing Workers’ Union (AMWU) has filed an application pursuant to s.739 of the Fair Work Act 2009 for the Commission to deal with this dispute in accordance with the dispute settling procedure (clause 33) of the Agreement. [3] The Agreement covers Ingredion, the AMWU and employees of Ingredion who are employed to perform maintenance work at its plant in Lane Cove, NSW. [4] There is no issue that the Commission has jurisdiction to deal with the matter in dispute and that the resolution of the dispute turns upon the interpretation of particular provisions in the Agreement. [5] A hearing was conducted by telephone, with Mr A Howell of Counsel appearing with Ms K Presdee for the AMWU, and Mr P Brown appearing for Ingredion. [6] The questions I need to determine are as follows: a. whether the use of the term “annual wage” for electrical employees in clause 16(f) of the Agreement creates an ambiguity with the term “Base Weekly Rate of pay” contained in clause 31.1(d)(ii); and [2020] FWC 2490 DECISION -- 1 of 12 -- [2020] FWC 2490 2 b. If the answer to the first question is Yes, should the “annual wage” for electrical employees be defined as the “Base Weekly Rate of Pay” for electrical employees in the application of clause 31.1(d)(ii)? [7] In determining this dispute, I have had regard to the principles applicable to the construction of an enterprise agreement which were canvassed in detail in Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd1 and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Berri Limited2 (Berri). [8] For the reasons set out below, I find that there is no ambiguity created by the terms ‘Base Weekly Rate of pay’ and ‘annual wage’ as set out in the first question above. Accordingly, the answer to the first question is No. On a proper construction of the Agreement, the redundancy payments for the relevant employees are to be calculated by reference to the Base Weekly Rate of pay (or BWR) as set out in Appendix B of the Agreement. Background [9] Ingredion has closed its operations at Lane Cove and as a result made some employees redundant. This application relates to three electrical maintenance employees employed by Ingredion. Relevant provisions [10] The relevant sections of the clauses in the Agreement that were identified by one or both parties as relevant to determining the dispute are as follows: 7. AGREED AIMS & OBJECTIVES (c) Deliver to employees in accordance with Clause 11 a significant improvement in wages, allowances and superannuation by way of annual adjustments to the base rate during the term of the Agreement, in return for the employees input to achieve improvement in quality, efficiency and profitability. 11. WAGE RATES AND INCREASES 11.1 Wages Subject to the provisions of Clause 15, Seven Day Shift Roster -12 Hour Shifts, Clause 16.1, Five Day Shifts and Rostered Callouts by Electrical Employees, an adult employee of a classification specified in APPENDIX A and C hereof shall receive a rate of pay to be known as the Base Weekly Rate as set out below clause 11.1 (a), (b), (c): … 11.2 Wage Increases under Enterprise Agreement -- 2 of 12 -- [2020] FWC 2490 3 The Base Weekly Rates of pay prescribed shall increase over the life of the Agreement as per clause 11.1 and Appendix B 16. FIVE DAY SHIFTS - ELECTRICAL EMPLOYEES 16.1 FIVE DAY SHIFTS AND ROSTERED CALLOUTS BY ELECTRICAL EMPLOYEES (a) This clause shall apply to electrical employees. (b) This clause shall be read in conjunction with the other clauses of this Agreement. However, where there is any inconsistency between the provisions of this clause and those prescribed elsewhere, the terms of this clause shall apply. (c) Electricians will work a new Five Day Shift Roster in conjunction with a rostered callout system which will ensure electrical maintenance coverage 24 hours a day, 7 days a week for the site by means of three rostered shifts and a rostered callout system. Shifts will be made up of: • 6.00am -2.00pm - First Day Shift • 10.00am -6.00pm - Second Day Shift • 4.00pm -12.00pm - Afternoon Shift The electrical employees will alternate weekly between the First Day Shift and the Second Day Shift (the Day Shifts). The contract electrician will work on the Night Shift. (d) The remaining hours in the week i.e. hours not covered by the day shifts and night shift, will be covered by a rostered callout system. The Company will supply the electrician who is rostered to be called back with a mobile phone as the method of contact. Callouts will be attended within 45 minutes. The callout roster will cover the following hours: • Weekdays: 12.00 pm to 6.00 am Monday to Friday= 30 hours per week where coverage will be shared between the nightshift electrician and the 6.00 am -2.00 pm (First Day Shift) electrician depending on the time of breakdown. • Weekends: 12.00 pm Friday to 6.00 am Monday= 53 hours per week where coverage will be provided by the electrician rostered on for callout during that weekend. One electrician will be rostered on each weekend over a three week cycle. -- 3 of 12 -- [2020] FWC 2490 4 (e) In addition to the Five Day Shift Roster and the rostered callout system set out in 16 (c) and 16 (d) above, electrical employees also agree to the following: (i) Annual leave will be covered by the electrical department closing ranks to ensure coverage for normal shifts e.g.: 10 hour days, swapping shifts, etc. (ii) Sick leave will be covered by the electrical department closing ranks to ensure coverage in the same manner as for annual leave. (iii) On any public holiday that the factory is running electrical employees will ensure coverage for all shifts. (iv) During periods of planned maintenance shutdowns, the employees' hours will be arranged in conjunction with other maintenance employees to meet the needs of the business. (v) The dayshift electricians agree to forfeit their RDO to provide maximum coverage to the factory. (f) In consideration for the electricians agreeing to the above working in accordance with the arrangements set out in this clause the employees will be paid an annual wage set out in Appendix F. (g) Any lump sum payments for excess productivity gains payable to employees under clause 11.3 shall also apply to electrical employees. 4 31. REDUNDANCY It is important to improve efficiency and productivity of the business by way of changes to work practices and arrangements. If, as a result of such changes and for genuine operational reasons such as economic, technological, structural" or similar nature relating to the Company's undertaking, establishment, service or business, or to a part of the Company's undertaking, establishment, service or business, and in order to ensure competitiveness of business, it may be necessary to make employees redundant. In circumstances where redundancies are necessary for such operational reasons the following provisions shall apply: 31.1 Redundancy Payments A weekly employee employed by the Company for more than twelve months whose employment is terminated by the Company and who is made redundant for any reason shall receive at the time of his or her termination payments calculated in accordance with the following: (a) Severance Payment 4 weeks at the rate prescribed in clause 31.1(d) below. (b) Redundancy Payment -- 4 of 12 -- [2020] FWC 2490 5 Employees shall receive 4 weeks redundancy payment for each completed year of service at the rate prescribed in clause 31.1(d) below. (c) Maximum Payment The maximum payment to be made to an employee as a consequence of the prescribed severance payment and redundancy payment shall be 75 weeks. (d) Rate for Calculations of Redundancy Payments (i) Employees working the seven day continuous running 12 hour shift roster shall have their redundancy payments calculated based on the "Multi Purpose Rate" set out in Clause 15.14. (ii) Employees who do not work the seven day continuous running 12 hour shift roster shall have their redundancy payments calculated based on their Base Weekly Rate of pay. 31.2 Other Benefits (a) Pro-rata long service leave payments shall be made to a weekly employee with 5 or more completed years of service with the Company. (b) The 17.5% Annual Leave Loading shall be paid in relation to any unused period of annual leave due and in relation to pro-rata leave payments. (c) A redundant employee shall receive a written statement of service and a written employment reference. (d) The Company will make available to each redundant employee out placement advice/counselling. 31.3 Conditions of Agreement The operation of this clause is subject to the following conditions being observed: (a) It is agreed between the parties that the severance payment and scale of redundancy payments prescribed by this clause are in complete substitution for the provisions prescribed by any relevant Award or right under and relevant statute in relation to periods of notice of termination (or payment in lieu of such notice periods), severance payments and/or redundancy payments. (b) The calculation of all other conditions of employment will be made in accordance with the terms of this Agreement. (c) The parties recognise that casual employees do not have an entitlement to benefits prescribed by this clause. [11] Also relevant are Appendix B and Appendix F: -- 5 of 12 -- [2020] FWC 2490 6 APPENDIX B Transitional Agreement - Wages Employee employed by the Company as at date of approval of 2018 Agreement by the Fair Work Commission Maintenance Employees Level BWR 15/5/17 BWR 15/5/18 BWR 15/5/19 BWR 15/5/20 3.00% 3.00% 3.00% C11 1209.81 1246.10 1283.49 1321.99 C10.5 1312.56 1351.94 1392.49 1434.27 C10 1381.87 1423.33 1466.03 1510.00 C9 1448.44 1491.89 1536.65 1582.75 CB 1514.63 1560.07 1606.87 1655.08 C7 1581.43 1628.87 1677.74 1728.07 C6 1647.82 1697.25 1748.17 1800.62 * Includes $4/week Special Allowance ** Weekly rates include a $25/week Mobility Allowance APPENDIX F PAY RATE CALCULATION FOR ELECTRICIANS ROSTER ORDINARY RATE STANDARD SHIFT ORDINARY HOURS 7.6 x Ord Rate 0.4 x Ord Rate x OVERTIME ALLOWANCE 1.5 SHIFT ALLOWANCE 10% of 38 hours ANNUAL LEAVE SHIFT ORDINARY HOURS 7.6 x Ord Rate 0 x Ord Rate x OVERTIME HOURS 1.5 SHIFT ALLOWANCE 0 THEREFORE A NORMAL WEEK= 5 X STANDARD SHIFT THEREFORE AN ANNUAL LEAVE WEEK = 5 X A/LEAVE SHIFT PLUS ANNUAL LEAVE LOADING 1/52nd of 4 x 38 x 17.5% PLUS ANNUAL LEAVE OVERTIME COVER 1/52nd of 160 hours x 1.75 of ord. rate -- 6 of 12 -- [2020] FWC 2490 7 1/52nd of 76 hours x 1.75 of PLUS SICK LEAVE OVERTIME COVER ord. rate PLUS PUBLIC HOLIDAY COVER 1/52nd of 8 P/H x ord. rate 1/52nd of 240 hours x 1.75 of PLUS ADDITIONAL HOURS ord. rate PLUS QUALIFIED SUPERVISORS CERTIFICATE The case for the AMWU [12] The AMWU called evidence from Mr Adrian Plumley, a Senior Electrical Technician employed by Ingredion. Mr Plumley was not required for cross examination. His evidence went to a discussion that occurred in the late 1990s regarding Ingredion’s move to a seven- day per week operation, including how employees would be remunerated for the seven-day operation. [13] In its written submissions, the AMWU relied on clauses 11, 16, 31.1, and Appendix B and F of the Agreement. Clause 7 was also referenced in its oral submissions. [14] It submitted that the relevant employees were paid an annual wage in accordance with clause 16(f) of the Agreement, noting that the Agreement did not strictly define what an ‘annual wage’ is. It contended that clause 16(f) provided that the annual wage was ‘in consideration’ of making significant changes to the relevant employees work arrangements including foregoing a number of entitlements including overtime. [15] The AMWU also relied on Appendix F of the Agreement which it said outlined how the ‘annual wage’ is calculated. It contended that the calculation was based on an ‘ordinary rate’ which was also not defined in the Agreement. [16] Because of the lack of definition of both an ‘annual wage’ and an ‘ordinary rate’, it submitted there is an ambiguity as to what relationship the Base Weekly Rate’ has with both the annual wage and the ordinary rate. The AMWU in its written submissions said this was suggestive that the Base Weekly Rate is not applicable to the relevant employees, and that the annual wage is calculated with reference not to the Base Weekly Rate but to the ordinary rate. [17] In the AMWU’s submission, if there is no ‘Base Weekly Rate’ for the relevant employees, they are still entitled to redundancy and that should be based on the annual wage. In other words, the redundancy payments should be calculated on the full take-home pay, and not a component of it. [18] During the hearing, the AMWU agreed that the references to BWR in Appendix B is an acronym for ‘Base Weekly Rate’ of pay. In this regard, however, it said: “The question that arises is what is the Base Weekly Rate for the employees to whom clause 16.1 applies … we say clause 16.1 is what provides the Base Weekly Rate.” -- 7 of 12 -- [2020] FWC 2490 8 [19] In other words, the AMWU contended that the Base Weekly Rate for the relevant employees was their annual wage, as calculated in Appendix F. In this regard, it made the following submission: “On its terms the base weekly rate for the employees in clauses 15 and 16 must be described in clauses 15 and 16. That is the ordinary meaning of the words used. It is why for 15 and 16 the meaning of base weekly rate is expressed as being subject to clauses 15 and 16 and not what is set out in clause 11.” [20] The AMWU acknowledged that clause 16 did not specifically deal with redundancy pay and went on to argue that: “… clause 11 identifies the base weekly rate … in defining ‘base weekly rate’ clause 11 is specifically expressed as being subject to clauses 15 and 16, which in terms, in my submission, indicates clauses 15 and 16 provide the base weekly rate for these workers. Clause 15 makes that plain because it has its own definition of ‘base weekly rate’. Clause 16 provides the base weekly rate, because that is how you read clause 11 and clause 16 together”. [21] The AMWU’s oral submissions concluded as follows: “With respect to the question of ambiguity, my client doesn't say, and nor does the questions for determination say 16(f) itself creates an ambiguity. What it says is 16(f) creates an ambiguity with the term ‘Base Weekly Rate of pay’ contained in 31.1(b)(ii). That is to say there is an ambiguity created when one reads those two provisions together. We don't say the word ‘annual wage’ is ambiguous. Indeed it is not. The question is how that is to be understood in the context of the term used in clause 31.1(d)(ii), which at no point is used in identifying the rate of pay for these workers. There is an ambiguity, in my respectful submission, and it falls to be resolved by the application of the proper principles of construction in the way that I've otherwise articulated. The answer to question 1 is yes. As contemplated by question 2, the annual wage is the base weekly rate. That is the submission that I have advanced. It is the question which we've invited for determination. The annual wage is what is determined in accordance with appendix F, and that is the submissions we otherwise advanced.” The case for Ingredion [22] Ingredion submitted that clause 31 of the Agreement covers the field with respect to redundancy, including redundancy payments on termination. In this regard, clause 31.1(d)(ii) provides that employees who do not work the seven day continuous 12 hour shift roster (i.e. -- 8 of 12 -- [2020] FWC 2490 9 the relevant employees) “shall have their redundancy payments calculated on their Base Weekly Rate of pay”. [23] Ingredion highlighted that Base Weekly Rate is a defined term in clause 15.13, which does not apply to the relevant employees in that it covers 7-day shiftworkers, however the definition is as follows: “The Base Weekly Rates are set out in Clause 11 and Appendix B, Wage Rates and Increases.” [24] Clause 31.3(a) notes that “the severance payment and scale of redundancy payments prescribed by this clause are incomplete substitution for the provisions prescribed by any relevant Award or right under and relevant statute in relation to periods of notice of termination (or payment in lieu of such notice periods), severance payments and/or redundancy payments”. [25] It was submitted that the relevant employees have been paid a weekly rate of $1,748.17 per week, calculated with reference to 7.6 hours per shift multiplied by the ordinary rate of $46 per hour multiplied by five days. Some payslips of the relevant employees showing this payment were annexed to the statement of Ms K Yates, Human Resources Manager of Ingredion, whose evidence was not challenged. [26] Ingredion submitted that the relevant employees fall within the scope of clause 31.1(d)(ii) of the Agreement and accordingly the redundancy payments must be calculated on their Base Weekly Rate of pay. In this regard it submitted that the Base Weekly Rate of pay that has application to the relevant employees is set out in Appendix B of the Agreement. [27] There was no dispute taken with the submission made by Ingredion that the relevant employees are classified as ‘Maintenance C6’ under the Agreement. In accordance with Appendix B, the BWR (or Base Weekly Rate) for a C6 level employee at the relevant date was $1748.17, being the rate of pay actually paid to the relevant employees. [28] In response to the submissions made by the AMWU, Ingredion contended that the undefined term ‘annual wage’ had no work to do in the current dispute. It noted that the Agreement made only one reference to ‘annual wage’ at clause 16(f), which provides that in consideration for agreeing to the working arrangements set out ‘above’, employees would be paid as per Appendix F. It argued that Appendix F did not contain an ‘annual wage’, but instead set out a formula for how the pay for employees to whom the provision applied would be calculated. In this regard, Appendix F references an ‘ordinary rate’. [29] Ingredion submitted that the word ‘above’ in clause 16(f), read in context, can only be a reference to clauses 16(a) to (e). None of the matters in clause 16 deal with redundancy pay. Accordingly, it submitted, clause 16.1 was of no assistance in resolving the dispute. -- 9 of 12 -- [2020] FWC 2490 10 [30] In relation to clause 16.1(b), Ingredion submitted that there is no inconsistency between the provisions of the Agreement with respect to redundancy pay and clause 16, and that clause 16 did not deal with payments made on termination of employment. [31] Ingredion made an alternative submission with respect to the calculation of redundancy payments, relying on s.55 of the Act, which is not outlined here. [32] In summary, Ingredion submitted that clause 31 had a plain meaning with respect to the calculation of redundancy benefits, and that there was no ambiguity in relation to any of the clauses relied on by the AMWU to advance its claim. Further, there is simply no interaction between clause 16.1(f) and clause 31.1. Finally, there was no inconsistency between clause 31.1(d)(ii) and any other clause of the Agreement. Consideration [33] Having considered the submissions made by the parties and having reviewed the Agreement in the manner set out in Berri, I find the interpretation put forward by Ingredion is the correct interpretation of the Agreement. [34] Clause 11 deals with wages and increases to wages. Clause 11.1 commences with the words “subject to the provisions of Clause 15 … and Clause 16.1 …, an adult employee …shall receive a rate of pay to be known as the Base Weekly Rate as set out in below in clause 11.1 (a), (b), (c)…”. Further, clause 11.2 provides that the Base Weekly Rates of pay shall be increased as per clause 11.1 and Appendix B. [35] It is not in contention that the relevant employees, to whom clause 16 applies, are paid an annual wage set out in appendix F for the normal performance of work. In this regard, Appendix F provides a formula to calculate the annual payment made to the relevant employees including components such as overtime, shift penalties, cover for sick leave etc. The matter in dispute, however, does not involve what the relevant employees are normally paid for performing work. It only involves the calculation of redundancy pay. [36] Clause 16.1(b) provides that clause 16 shall be read in conjunction with the other clauses of this Agreement. However, where there is any inconsistency between the provisions of clause 16 and those prescribed elsewhere, clause 16 shall apply. [37] The AMWU properly conceded that clause 16 did not provide for redundancy pay, and that redundancy pay was specifically dealt with in clause 31.1. In my view, there is no inconsistency between clause 16 and clause 31.1 given that clause 16 does not deal with redundancy pay at all. [38] Clause 31 deals comprehensively with matters related to redundancy, including redundancy payments at clause 31.1. So much is clear from clause 31.3(a). Clause 31 is not -- 10 of 12 -- [2020] FWC 2490 11 ‘subject to’ any other clause in the Agreement. It applies to all employees covered by the Agreement, and in my view covers the field with respect to the calculation of redundancy pay. [39] I do not accept the submissions of the AMWU that because of the lack of definition of both an ‘annual wage’ and an ‘ordinary rate’, there is an ambiguity as to what relationship the ‘Base Weekly Rate of pay’ has with both the annual wage and the ordinary rate. Further, I do not agree that this is suggestive that the Base Weekly Rate is not applicable to the relevant employees, and that the annual wage is calculated with reference not to the Base Weekly Rate but to the ordinary rate. Clause 11.1 supports this view. The starting point is that employees receive a rate known as a Base Weekly Rate which is set out in clause 11. The words ‘subject to’ at the commencement of clause 11.1 allow the higher rate provided in clause 16 and Appendix F to be paid to applicable employees. It does not, in my view, change the meaning of Base Weekly Rate of pay. This is also evident from clause 11.2 which provides that the Base Weekly Rates are increased as per clause 11 and Appendix B. [40] In my view it is clear that the Base Weekly Rate of pay is the amount set out in Appendix B, and this is not the annual wage or the ordinary rate. The annual wage and ordinary rate are applicable to the calculation of pay for employees covered by clause 16. They are not terms applicable to the calculation of a redundancy payment under clause 31. [41] While it is clear that clause 15 does not apply to the relevant employees, the definition of Base Weekly Rate in clause 15.13 is the rates in clause 11 and Appendix B. When the Agreement is read as a whole, this is suggestive that the Base Weekly Rate of pay for the relevant employees is the same, ie as set out in Appendix B, and further supports Ingredion’s interpretation of the Agreement. [42] In conclusion, I find there is no ambiguity that the Base Weekly Rate of pay referred to in clause 31.1(d)(ii) is a reference to the Base Weekly Rate of pay or ‘BWR’ as set out in Appendix B, and that the redundancy pay for the relevant employees is calculated by reference to the appropriate BWR in Appendix B. [43] The dispute is so determined. DEPUTY PRESIDENT Appearances: -- 11 of 12 -- [2020] FWC 2490 12 A Howell of counsel with K Presdee for the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, known as the Australian Manufacturing Workers’ Union (AMWU). P Brown of Baker & McKenzie for Ingredion ANZ Pty Ltd. Hearing details: 2020. Sydney (by telephone): March 31. Printed by authority of the Commonwealth Government Printer <PR719315> 1 [2014] FWCFB 7447 2 [2017] FWCFB 3005 -- 12 of 12 --