Industrial Relations Commission of New South Wales CITATION: Notification under section 130 by New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union of a dispute with Integral Energy and another re breach of award [2010] NSWIRComm 45 This decision has been amended. Please see the end of the judgment for a list of the amendments. New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union PARTIES: Electrical Trades Union of Australia, NSW Branch Integral Energy FILE NUMBER(S): IRC 1576 of 2009 CORAM: Harrison DP CATCHWORDS: Industrial dispute - Meter Readers - appropriate rate of pay for voluntary redundancy - redeployment - whether incentive scheme should be included - whatever is substitute for overtime - award variation sought. Held - Award variation refused - determination made - incentive included for voluntary redundancy - redeployment subject to circumstances - element of overtime inherent in incentive scheme. Industrial Relations Act 1996 LEGISLATION CITED: Annual Holidays Act 1944 Long Service Leave Act 1955 HEARING DATES: 7 April 2010 DATE OF JUDGMENT: 8 April 2010 Counsel (Applicant) Mr J Nolan Solicitor Ms V Steinfelder LEGAL REPRESENTATIVES: White Barnes Solicitors Solicitor (Respondent) Mr G Phillips Middletons JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP 8 April 2010 Matter No IRC 1576 of 2009 Notification under section 130 by New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union of a dispute with Integral Energy and another re breach of award DECISION [2010] NSWIRComm 45 1 The New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union (USU), supported by the Electrical Trades Union of Australia, NSW Branch (ETU), seeks to vary the Integral Energy Award 2008 368 IG 1623 ("the Award") to provide the inclusion of incentive payments to Meter Readers in the base rate of pay for the purpose of calculating voluntary redundancy payments and salary maintenance for those redeployed to alternative positions within Integral Energy. 2 The Award was made by consent of the parties on 30 June 2009. 3 Fundamental to the wage increases agreed was an undertaking by the parties to explore work practice change. This is described in cl 1.4, Intent and Commitment, which recognises inter alia the obligation to serve the people of New South Wales by providing a high standard of service in the most efficient way; and in cl 3, Work Practice Change. 4 The principles of work practice change are stated at cl 3.1, 3.2 and 3.3 as follows: 3.1 Continuous Improvement and Best Practice Integral Energy seeks continuous improvement and best practice in all that we do. Employees commit to actively supporting and contributing to the "process" of change. 3.2 Change Following Consultation Any change will only occur following the consultation process outlined in clause 2. 3.3 Assessment Criteria Assessment criteria will include, but is not limited to safety, hardship, workload and any other legislative requirements. 5 Contracting bulk lamp change and meter reading functions involving consultation with the Contracting Consultative Committee is identified as an area of reform to be addressed during the life of the Award. 6 Cl 3.5(d) states: 3.5 Areas of reform being addressed The areas of reform to be addressed during the life of this Award include: … … (d) Contesting bulk lamp change and meter reading functions involving consultation with the Contracting Consultative Committee (CCC) 7 This matter is concerned with the meter reading function only. 8 The process of consultation has been completed resulting in the contracting out of meter reading functions and the consequent displacement of employees. 9 The employees are given the option of placement in an acceptable alternative position; redeployment within Integral Energy; or a voluntary redundancy package. 10 Meter Readers have, for many years, been remunerated on the basis of a base rate plus an incentive payment. The base rate is $52,906.00 per annum. The incentive payment is prescribed by the Integral Energy Meter Reader Workplace Agreement 2004 ("the Meter Reader Agreement"). The outcome for each Meter Reader is different, depending upon the number of meters read in excess of a base amount. The incentives achieved average $13,939 per annum. Tab 7 to exhibit 1 details the earnings of Meter Readers. This reveals that the base rate for the financial year 2009 varied from $49,228.38 to $62,974.05; and that, disregarding one employee who received no incentive payment, the incentive payments ranged from $433.25 to $43,969.10. The amount varies significantly from pay to pay and accordingly an annual figure is the appropriate consideration. 11 The Award provides that the Meter Reader Agreement be read in conjunction with the Award and be integrated into the Award over the term of the Award. 12 The parties have not addressed the integration issue. 13 The history of the incentive payment is adequately described in Integral's Outline of Submissions (Ex 8, at p 3) in the following terms: "In 1996 Illawarra Electricity amalgamated with Prospect Electricity to form the Respondent. Prior to the merger, in 1992, Illawarra Electricity introduced an incentive arrangement with its Meter Readers to replace overtime and instead provide them with a piece rate incentive payment for each meter read above their daily target, Prospect Electricity did not have an incentive arrangement with its employees but paid its Meter Readers overtime for all hours worked outside of their ordinary hours (except in limited circumstances). Following the amalgamation, the Respondent decided to continue with an incentive arrangement similar to Illawarra Electricity's. This incentive was introduced in place of providing the Meter Readers with overtime. The incentive provides the Meter Readers with a performance based payment which is calculated according to the number of meters read above their target. This incentive arrangement was documented in a Workplace Arrangement in 1996 which has been reviewed every 2 years. Throughout this time, the Meter Readers have continued to be provided with a performance based payment instead of the provision of overtime." 14 There are 48 Meter Readers involved. At the time of proceedings four had been placed in an acceptable alternative position and two are about to be placed. 15 For those for whom an acceptable alternative position is not achievable, the options are redeployment or voluntary redundancy. 16 I will deal first with voluntary redundancy. 17 Integral propose that where a displaced Meter Reader elects to take up a voluntary redundancy, the rate of pay used to calculate the redundancy benefit would be the classification rate; plus the average of incentive payment earned over the past three years for those who elect to take voluntary redundancy by 30 June 2010. 18 There is no opposition by the USU to this proposition other than the time limit. 19 I endorse this approach as fundamentally equitable. A time limit is desirable in expediting the process, however, is not to be regarded as immovable and is subject to employees having all necessary information available to them in a reasonable time to make an informed decision. 20 The parties remain apart on the appropriate rate of pay for salary maintenance in the circumstance where a displaced Meter Reader is redeployed to another position within Integral Energy. 21 The USU proposes that the classification rate plus the incentive payment should become the ordinary time rate of pay for the employee as this is the amount that the employee earned for ordinary time hours as a Meter Reader. 22 Integral submits that this proposal: · takes no regard to the historical overtime element in the incentive rate; · would result in a much inflated ordinary rate of pay for the alternative position; · would provide a windfall gain to displaced Meter Readers as the inflated ordinary time rate would be used for superannuation and overtime purposes. 23 The evidence is that for those employees in the SASS superannuation scheme the classification rate is the superable salary; and for those in the FSS scheme, the classification rate plus the incentive payment is regarded as the superable salary. 24 The distinction is that SASS is a promised benefit fund, the benefit of which is significantly effected by the superable salary; whilst FSS is an accumulation fund where the benefit is not so influenced by superable salary. 25 Integral submits that, having regard to the effect of the classification rate in the alternative positions and overtime, displaced Meter Readers are more likely to be better off in terms of take home pay than as Meter Readers (including incentive payment) and some will further benefit from a positive effect upon their superannuation by an increase in classification rate on transfer. 26 The positions identified as most suitable for redeployment are: Electricity Worker classification rate $50,134 - $59,355 pa Field Officer classification rate $60,808 - $62,962 pa Plant Operator classification rate $50,134 - $59,555 pa Some Meter Readers will also be suitable for the position of: Project Assistant classification rate $66,464 - $69,395 pa 27 These positions compare favourably with the base rate of $52,906 pa for a Meter Reader. 28 On redeployment the Meter Reader would be paid the higher of their entry classification rate or the classification rate appropriate to their placement in the grade for the position, and then advance in accordance with the applicable criteria. 29 Overtime is available in the Electricity Worker, Plant Operator and Project Assistant positions and is customarily worked in those positions. An incentive scheme is available in the Project Assistant position which results in average earnings equal to or in excess of average earnings of Meter Readers. 30 Integral offers an undertaking to review the circumstances of any displaced Meter Reader who is disadvantaged in a new position by comparison to the Meter Reader classification rate plus incentive payment. 31 Mr Nolan, appearing for the USU, submitted that this would be unfair to redeployed Meter Readers as they would have to work overtime to earn the same as they had as Meter Readers in ordinary time. 32 I do not accept the argument advanced in this respect. 33 There is no evidence that Meter Readers, particularly those achieving high incentive payments, worked ordinary hours only. 34 The Meter Readers Agreement specifically prohibits payment of overtime other than in exceptional circumstances where prior approval is required. This supports the conclusion that Meter Readers are free to work such additional hours as they choose to maximise, or optimise the incentive project. The evidence clearly establishes that Meter Readers, in particular the higher earners, did work additional hours without payment of overtime to achieve their level of incentive payment. 35 Mr Nolan tendered affidavits from a number of Meter Readers. This evidence is consistent in that each deposed that the DARG (the minimum number of meters to be read before commencement of incentive payment for any particular day) was achieved in approximately half a shift and that the balance of the shift involved reading meters which contributed to their incentive payment. Each of the deponents put that they regularly worked additional hours, some in excess of ordinary hours Monday to Friday, the majority working their rostered day off, and some working Saturdays to achieve higher incentive payments. This time is invariably worked without payment of overtime. There is no DARG for rostered days off or weekend work and all meters read on those occasions contribute to the incentive payment. 36 It is appropriate and fair, in my opinion, that a Meter Reader taking up another position within Integral has decided to embark upon a new career within the organisation, thus preserving all accumulated entitlements. 37 In my view it is to the advantage of the redeployed person to fit in immediately with the wages and working pattern of the new career. The displaced Meter Reader does so with the protection that the pre-deployment earning level is protected. 38 This approach also avoids the undesirable industrial outcome of different rates of pay for different people doing the same work. 39 I decline to vary the Award as sought. 40 I determine that voluntary redundancy be paid at the classification rate plus the average of incentive payment over the past three years in a fair and reasonable means of dealing with these conclusions. 41 I determine that displaced Meter Readers taking up a redeployment within Integral be paid the classification rate plus overtime for the relevant position with six monthly review of earnings against their earnings as a Meter Reader, calculated as to the Meter Reader classification rate plus average of incentive payment over the past three years. 42 Where the parties cannot agree on any individual circumstance, that matter may be addressed through the disputes settlement procedure. 43 No Meter Reader is to be worse off in terms of annual remuneration as a consequence of redeployment. The requirement to work some overtime is reasonable. The appropriate amount of overtime is that continuously worked within the classification to which the Meter Reader is redeployed. Refusal to work ordinary overtime or demand to work excessive overtime will be cause for review on an individual basis. 44 Mr Nolan referred to the definition of Ordinary Pay in the Annual Holidays Act 1944, the Long Service Leave Act 1995, and the Australian Superannuation Guarantee Legislation, all of which includes bonuses and commissions, or other incentive scheme payments in the definition. 45 Mr Nolan argued that the appropriate and fair rate of pay for redundancy and salary maintenance purposes is the rate calculated for those statutory purposes. 46 These rates of pay are not provided within the body of evidence in this matter. 47 There is some substance to the argument advanced by Mr Nolan, and should any individual circumstances require review on the basis that the redeployed Meter Reader is worse off having regard to base rate and reasonable overtime, the rate calculated for the particular employee in the final 12 months as a Meter Reader will inform that review. Specific evidence in respect to the circumstances of the individual concerned will be required to determine any particular matter. 48 I so determine. 49 Matter No IRC 1576 of 2009 is concluded. ________ AMENDMENTS HISTORY: 09/04/2010 - Addition of semi colon in line 3 of para 17 as a result of further correspondence received - Paragraph(s) 17 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.