Macquarie Generation Employees (State) Award 2002 [2006] NSWIRComm 32

Macquarie Generation Employees (State) Award 2002 [2006] NSWIRComm 32 | Case summary | Zoe

(f) No employee will have their salary point reduced as a consequence of this clause 3.6A taking effect. 9 Included in the application are detailed position descriptions for the classifications EO/PO Level 1, Level 2, Level 3, Level 4, and Level 5 in draft form as prepared by Mercer Human Resources in consultation with Bayswater management and employees in accordance with the MOU. This process was assisted by a job analysis undertaken in March 2004. These were identified as the generic position descriptions. 10 The application seeks inclusion of the generic position descriptions in the 2002 Award or as an appendix to the award which is opposed by Macquarie Generation who put that the current form of salary administration should not be altered. 11 The present application has been subject to extensive conciliation by the Commission as presently constituted and negotiation between the parties. This process resulted in agreement that: · It is appropriate to have all members of the Bayswater Engineering Group placed in a new structure, and · that the generic position descriptions developed in the consultative process be adopted with one exception. 12 The issues to be determined by arbitration are: (a) whether there should be a Professional Officer level 5 classification; (b) whether there should be a qualification bar preventing an Engineering Officer level 3 who has a trade certificate from being able to access the top salary points within the salary band for level 3, and (c) the salary point (SP) ranges for the proposed new levels to apply to all members of the Bayswater Engineering Group. 13 The issues are opposed by Macquarie Generation on the basis that firstly: · there is no need for an Engineering Officer Level 5 classification; · the inclusion of a trade qualification with experience in preference to a requirement for a formal engineering qualification would compromise the evaluation of the position arising from application of the Macquarie Generation Corporate Standard to the Mercer job evaluation process; · there is no case on work value grounds for an increase in salary points; · the MOU and Award prohibit the application. 14 The competing positions of the parties are set out below: Engineering Officer/ Macquarie Generation Proposed Range Award Application Professional Officer Level 1 SP16-SP18 SP18-SP20 Level 2 SP18-SP22 SP20-SP24 Level 3 SP22-SP26 SP24-SP28 Level 4 SP26-SP30 SP28-SP32 Level 5 Not applicable SP32-SP34 Team Leader SP34-SP36 SP36-SP40

(b) Work in accordance with the classification descriptions, salary points and Skills Development Programmes negotiated under Award Restructuring 32 On 3 June 2005 the Macquarie Generation Employees (State) Award 2005 [2005] NSWIRComm 196 ("the 2005 Award") was made by consent of the parties, replacing and rescinding the 2002 award. 33 There is some controversy between the parties as to what weight should be afforded to the 2005 Award, and its effect or otherwise on these proceedings. Notwithstanding the disparate views, the "effect" of the 2005 Award on these proceedings is a matter for exercise of discretion by the Commission, having regard to all of the circumstances. 34 The 2005 Award provided wage increases of 4.5 percent and 0.25 percent, cumulative from 1 July 2005 . 35 The 2005 Award does not alter the intent and scope nor does it alter the provisions of clause 3, salaries, other than by increase in money value of the 40 point salary scale. 36 It is appropriate to note that the successive industrial instruments up to and including the 2005 award continued the Classification Advisory process unaltered and retained the six classification structure introduced in the Elcom Award. 37 There has been a continuing stream of issues brought to this Commission in accordance with the applicable disputes procedure over the period from 1992. It is appropriate to note that in the early years industrial issues were invariably attended by industrial action of a disruptive and damaging nature. To the credit of the parties the latter years are characterised by compliance with and application of the disputes settlement procedures, these proceedings being but one example in a large number of issues which are to be expected in a dynamic industry sector in which technological and organisational change have become the constant. THE EVIDENCE 38 Unions NSW brought evidence from the following employees of Bayswater Power Station: · Mr Trevor Woolley, Engineer Electrical Power Systems (Ex 26, 27, 28) · Ms Melanie McDonald, Engineering Officer Level 4 (Professional Officer (Ex 11, 12) · Mr Steve Morris, Engineering Officer (Ex 14, 15) · Mr Brian Wallace, Plant Owner/Turbines (Ex 17, 18) · Mr Bill Summers, Engineering Officer Central Systems (Ex 20, 21) · Mr Russell Byers, Professional Officer-Station Plant Control Systems (Ex 23, 24)

Mr Trevor Woolley 39 Mr Trevor Woolley commenced employment in the electricity generation industry as a cadet engineer with Elcom in February 1975. Mr Woolley completed a Bachelor Engineering (Electrical) at the NSW Institute of Technology Sydney in a "sandwich pattern" of six months study followed by six months work. The work semesters were at different locations, including apprentice training, power plant design, Waratah Transmission Centre, Wagga Transmission Centre and Munmorah Power Station. On graduation Mr Woolley worked at Wangi Power Station from December 1980 to June 1984 when he moved to Bayswater as a Generating Commissioning Engineer. 40 Mr Woolley has remained at Bayswater in various positions, including I & P Electrical Engineer, I & P Boiler Engineer, I & P Turbine Engineer and from January 1988 Electrical Power Systems Engineer. 41 Mr Woolley deposed that since 1988 his title has changed from Electrical Engineer/Generating Plant to Engineer Electrical Power Systems to Team Leader Electrical Plant as a consequence of reorganisation and restructure within Bayswater, which he put has altered his work and associated responsibilities. 42 There has also been some movement in Mr Woolley's salary level in this time. 43 Mr Woolley was appointed as a PO/Engineer grade 3/4 in 1987. Mr Woolley was appointed as a PO Level 1 in May 1990 at SP 33. In February 1991 Mr Woolley moved to SP 35 in the newly created 40 point salary scale. Mr Woolley deposed that in June 1993 he was informed that his position had been revised within the salary structure to SP 34-36; Mr Woolley remained on SP 35 until approximately 2001 when he advanced to SP 36. 44 Mr Woolley deposed that despite significant change in his duties and responsibilities his position remains valued at SP 34-36 within the 40 point salary scale. 45 Mr Woolley provided copies of letters of appointment for each salary change (Ex 27, Annexures TW3 and TW4): "The recent decision to create a single award for all Electricity Commission of New South Wales employees contributes to the new emphasis on improving how your organisation does business. The Commission's single Award coverage and transfer to a Single Salary Structure provides us with the direction to create rewarding jobs, training opportunities and defined career paths so we can continue to provide a more efficient service to our customers.

49 Mr Woolley referred to organisation charts for Pacific Power and Bayswater from 1989, 1990, 1995 and 2004 to demonstrate that there has been an overall reduction in the size of the Engineering Team which he put has resulted in an increase in the volume and complexity of the work. 50 The organisation charts (Ex 27, attachments TW6, TW7, TW8, TW9 and TW10) describe a reduction in staff numbers to the order of 50 percent and transformation from a complex multi-tiered organisation to a much simpler organisation concentrated on Bayswater Power Station. 51 Mr Woolley deposed that position descriptions and associated salary points have not changed since 1993. Mr Woolley refuted an assertion by Macquarie Generation that the work has not changed. 52 Mr Woolley put that the 1993 position descriptions were written and valued in the context of a large organisation. Mr Woolley put that the large organisation has been taken away and Macquarie Generation has failed to assess the consequences. 53 Mr Woolley's evidence is that, of the positions abolished in the removal of the large organisation, some were technical specialists at SP 36-38 and others were managerial in nature at SP 38-40. Mr Woolley put that the duties performed by these positions had been taken up by power station employees without any increase in salary. 54 Mr Woolley deposed that closure of Pacific Power and creation of the National Electricity Market (NEM) have had significant impact on the work of the Engineering Group at Bayswater; in particular, responsibility for long term planning, management and detailed engineering is now a function to be performed in a flatter organisation structure in the commercial environment created by the NEM. 55 Mr Woolley deposed that the electrical protection systems at Bayswater were "owned" and maintained by Transmission Division staff from the Waratah Regional Centre until 1993, when the separation of transmission and generation took place, ultimately creating TransGrid, resulting in the electrical control systems becoming the responsibility of Power Station Engineering staff. 56 Mr Woolley's evidence is that prior to disaggregation power station engineers were assisted with technical support and co-ordination by Head Office and benefited from regular peer group meetings of engineers from all power stations who would co-operate in setting standards, problem solving and investigative projects, such as life extension strategies to extend operation beyond the 20 year design life of plant. Mr Woolley's evidence is that this support and resource is no longer available, the full responsibility falling upon the Bayswater Engineering Team. 57 Mr Woolley deposed that an asset management plan must be written every year, including plant status, maintenance, modifications and augmentation for life extension and associated budget. 58 Mr Woolley deposed that the Bayswater Engineering Team has also taken responsibility for control of high voltage electrical switching instruction, formerly the responsibility of Systems Operations based at Eraring Power Station, and within the Transmission Division at the Waratah Regional Centre. 59 Mr Woolley put that electrical testing and chemical analysis were previously undertaken by the High Voltage Test Section based at Homebush, and the Metallurgical and Chemical staff from Central Laboratory, which provided an in house service which included relevant history, recommendations and suggestions along with test results. Following the disaggregation and closure of those facilities, external providers are used which provide test results only, the full responsibility for analysis of the results, risk assessment and action is held by the Bayswater Engineering Group. 60 Mr Woolley deposed that in addition to the broad organisational restructure, further restructure at Bayswater has also contributed to additional duties and responsibilities of the Engineering Group, which he deposed are undertaken by a lesser number of staff, meaning a further cost reduction for Macquarie Generation. 61 Mr Woolley put that operation as a commercial entity increased the intensity of work as any plant downtime is now a direct revenue loss. 62 Mr Woolley deposed that among the changes to duties resulting from the introduction of the NEM, engineers at Bayswater had forced upon them the need to adopt an asset management/risk management role, which he deposed has increased the criticality of decisions by the Engineering Group members, putting that any mistakes made can cause a huge impact on the viability of the organisation. 63 Mr Woolley deposed that compliance with and reporting on NEM regulatory requirements, a function previously the responsibility of a Central System Control Group based in Sydney, is now a site responsibility. Mr Woolley deposed that requirement for additional information and controls which had not previously been sought added to this function. Mr Woolley deposed that the new and additional requirements involved the development and testing of new procedures and protocols, a function which Mr Woolley had undertaken on behalf of all power stations prior to disaggregation. 64 Mr Woolley's evidence is that he was required to write the technical component for negotiation of the connection agreement between Macquarie Generation and TransGrid. 65 Mr Woolley put (Ex 27 p15): "Others in the Engineering group have assisted in negotiations for water agreements, provided extra instrumentation for supply of data to NEMMCO and assisted the Federal Government Australian Green House Office with calculations. Prior to disaggregation, all these activities would have been the responsibility of head office and would not have been done by power station engineering staff." 66 Mr Woolley deposed that the linking of New South Wales power stations with South Australia, Victoria and Queensland increased the geographical reach of the responsibilities of Engineers at Bayswater. Mr Woolley provided some detailed examples of cause and effect. 67 Mr Woolley also gave detailed evidence of the impact of changes in outage planning and management and the additional responsibilities in contract management, also detailed by other witnesses. 68 Mr Woolley put that a departure from the "time based" maintenance protocol recommended by the original equipment manufacturer in favour of a condition based maintenance protocol was made possible due to good operations, good condition monitoring and good engineering investigative work by the Engineering Group, resulting in a significant cost saving without risk to the safety of plant and extended plant availability times. Mr Woolley deposed (Ex 27 p 22): "A time based system is a "no brainer" when it comes to justification and determining the work scope. .... Condition based maintenance depends on intelligently gathering as much test and operating data on the plant as possible and interpreting that data to determine the condition of the plant. From this, decisions can be made on the required work scope. ... The work scope for maintenance is determined by the engineering group and is a risk/condition based decision. In making these decisions, the members of the engineering group effectively take responsibility for the reliability and safety of the plant. This is a distinct extra responsibility over that taken when time based maintenance is used or when policy was set by a remote head office." 69 Mr Woolley deposed that despite the good engineering input resulting in these cost savings and additional pressure involved in the extended condition bases maintenance upon which marketing and financial planning is based, the Engineering Group has not received any wage increase recognising the increased value of their function. 70 Mr Woolley deposed that a significant consequence of the reduction in staff numbers at Bayswater is that members of the Engineering Group must operate in a more autonomous manner, taking more responsibility with less support and supervision. Mr Woolley's evidence is that, while he reports directly to the Power Station Manager, it is unusual to have any detailed contact on a day to day basis regarding immediate production issues as the Power Station Manager is more involved in what Mr Woolley described as "corporate issues". 71 Mr Woolley deposed (Ex 27 p 23): "I now commonly provide the highest level of technical input on an issue available within Macquarie Generation. This is a distinct increase in responsibility from previous structures."

and (Ex 27 p 26): "Because we now have less trades people and those employees in the maintenance group are overloaded with work, more work is going out to contract. The responsibility for managing those contracts comes back to the Engineering group. We have to ensure that the contract work is done correctly, within time and within budget. We are accountable for those contracts. The workload has continued to increase over time, not only because of the reduction in the number of maintenance staff, but also because the Power Station is ageing and maintenance requirements are increasing." 72 Mr Woolley deposed that Alliance Contracts have been introduced to Bayswater over the past four to five years. Mr Woolley described Alliance Contracting in the following terms (Ex 27 p 26): Alliance Contracts are in place for the maintenance and operation and upgrade of some items of plant. An alliance contract is an agreement between two companies to co-operate on a particular project. There is an agreed method of sharing costs and a joint management team is established to run the alliance "company". This involves Macquarie Generation staff at Team Leader and senior PO level forming a joint management team with a contractor to run the alliance. The management team is responsible for the safety, OH&S, strategy, operation, employment and resourcing of all work done under the alliance. This is a significant increase in responsibilities over previous contractual arrangements because a partnership arrangement provides an ongoing additional responsibility whereby staff from the power station being predominantly members of the Engineering Group actually sit as part of management structure for that partnership. Ms Melanie McDonald 73 The evidence of Ms McDonald is that she was first employed by Elcom in 1987 as a cadet chemist. The cadetship required Ms McDonald to attend university full time for six months of each year and to work at various locations including Head Office, Environmental Services Group, and Bayswater Chemical Section. 74 Ms McDonald finished her studies in 1992 and graduated from the University of Technology, Sydney with a Bachelor of Applied Science, gaining an Honours Degree in Applied Chemistry in 1993. Ms McDonald spent a year with Pacific Power Advanced Technology unit prior to taking up the position of Generating Plant Chemist at Bayswater in December 1993. 75 The rate of pay for the position of Generating Plant Chemist was subject to some controversy and proceedings in this Commission in late 1996 and early 1997, resulting in payment at SP 26 from January 1995 and SP 27 from January 1996. 76 Ms McDonald deposed that a new position description was written and, on her evidence, never evaluated. Ms McDonald applied for the revised position and was appointed on 31 May 1999 as a PO/EO Chemist at SP 27 in the salary range 26-28. This appointment did not involve an increase in salary for Ms McDonald, who had been paid at SP 27 from January 1996. 77 Ms McDonald's evidence is that during 1997 she began to undertake additional tasks for the Water Plant Team following redundancies in that section. 78 On 23 September 2002 Ms McDonald was appointed to the position of EO Level 4, salary range 26-30, and on 1 March 2003 she was transferred to her current position of PO/EO Level 4 in the Water Plant Team and was subsequently afforded a salary increase to SP 28 in November 2003. 79 Ms McDonald described her role as responsible for operations and process control, which includes: · Preparation of operational strategy, nominating performance targets for all plant areas; · Monitoring plant performance and working to optimise all plant processes; · Liaising closely with operating and maintenance staff to achieve operational targets; · Coordinate and carry out technical investigations into plant condition, failures and operational problems leading to recommendations for solutions and implementation of final decisions. 80 Ms McDonald reports to the Team Leader Water Plant who reports to the Performance and Plant Engineer (Mr Stubbs) who reports to the Station Manager. 81 Ms McDonald's evidence is that as a result of organisational changes, redundancies, and non-filling of vacancies she has been required to take on additional and wider ranging duties, including tasks classified at a lower level and those of greater responsibility and skill that are classified in the salary point structure above her position. 82 Ms McDonald gave specific evidence of work value considerations, in which she deposed that changes from 1993 in staff numbers, occupational health and safety risk management, environmental management, contract management, and management of consultants resulted in increased complexity in the tasks required of her and a reduction in assistance and supervision. 83 Ms McDonald provided detail of the structural and organisational changes which have resulted in higher levels of responsibility and additional duties, prior to concluding exhibit 11 in the following terms: 41. ……one of the most significant changes in the organisation over a number of years has been that I am now responsible for monitoring several plant process, identifying any anomalies, carrying out the technical investigation, recommending and then implementing the solution. Previously a number of people of varying classifications were dealing with those different tasks.

Due to reduced numbers, the current structure of the Chemical and Water Plant Teams relies on all employees performing additional duties and the Trainee EO performing duties of a qualified EO. Prior to the retirement of the Team Leader/Chemical, the EO and Trainee EO reported to the TL/Chemical, who reported to the Environment and Chemical Officer. The EO and Trainee EO now report directly to the Environmental and Chemical Officer. Mr Steve Morris 84 Mr Morris commenced employment in the power generation industry as an apprentice electrical fitter with Elcom in 1978 and has held various positions in that organisation until he became a trainee power station technician at Liddell Power Station in 1991 until moving to Bayswater in December 1992. 85 Mr Morris was employed as an: · Engineering Officer - Electrical Power Systems SP 24-25 from December 1992 to June 1993; · Engineering Officer (Plant Owner/Protection and Switchboards SP 24/25/26 from June 1993 to March 2001; · Engineering Officer Level 4 Electrical Power Systems from March 2001 to August 2002; and · Engineering Officer - Level 4 Control Systems from August 2002 to the present. 86 Mr Morris deposed that he has been paid SP 28 from June 2002 and that his current position should be valued at SP 30 in the proposed structure. 87 Mr Morris is a member of the Electrical Trades Union of Australia, NSW Branch (ETU) and has been an ETU delegate for the Bayswater Engineering Group EOs for approximately 18 months. Mr Morris holds the following qualifications: · Electrical Trades Course Mount Druitt TAFE 1980 · Electrical Engineering Certificate Course Granville TAFE 1981 · Licensed Electrician (Qualified Electrical Supervisor) since 1983 · Protection & Revenue Metering Technician Electricity Commission of NSW internal training 1983 · Power Station Technician Pacific Power internal training 1991 88 Mr Morris deposed that his main responsibility at the time of appointment to Bayswater was the maintenance of plant electrical protection systems in which he was assisted by power station electricians and contractors. Mr Morris put that at this time the more mission-critical protection systems associated with the generators and generator transformer groups were the primary responsibility of the Transmission Division, which carried out maintenance with staff from the Northern Region headquarters. Mr Morris put that his role was limited to that of a local coordinator/facilitator. 89 On disaggregation of Pacific Power the assets became the responsibility of Bayswater Engineering Teams. 90 Mr Morris deposed that from mid 1993 his responsibility had expanded to include electrical switchboards, and that this expansion of responsibility and reduction in staff numbers continued over the next 10 years. Mr Morris put as team members left and were not replaced the work was distributed amongst the remaining employees on a "best fit" basis. 91 The evidence of Mr Morris is that, of all the changes which took place from 1993, the two most significant in terms of impact on his responsibility were the abolition of the Contracts Section and elimination of the Engineering Manager position, which had taken away a level of support. 92 The evidence of Mr Morris is that: No longer was there somebody whose prime focus was the integrity of the engineering function within Bayswater Power Station. The coordination of multi discipline projects became the responsibility of the teams and individuals initiating the project. This requires a greater understanding of the various plant interactions within the power station.

93 Mr Morris deposed that engineering staff are now required to write the full contract specification, not just the technical aspects, conduct tender meetings, evaluate tenders, establish the contractor on site and administer the contract without assistance. Mr Morris compared this with the previous circumstances in which the engineering team provided a work description, technical specifications and handed the job over to the Contracts Section which undertook all other tasks until the contractor was established on site at which time administration was returned to the Engineering Team with continued assistance from the Contracts Section. 94 Mr Morris deposed that prior to the demise of the Contracts Section, EOs dealt previously with work orders of lower value and importance than formal contracts, which were administered by Engineers and overseen by Inspectors. 95 Mr Morris put that EO's were initially used as Inspectors and subsequently to administer formal contracts as well as work orders, putting that there is now no qualification bar on whether an Engineer or EO can be responsible for a particular function on any given contract. Mr Morris put that reduction in staff numbers at Bayswater resulted in additional contract maintenance work, which added to the volume, complexity and importance of contract work, which added responsibility to the role of EO. 96 The evidence of Mr Morris is that elimination of Pacific Power Head Office, otherwise identified as Pacific Power International (PPI), had shifted responsibility for all technical aspects of the plant to the Engineering Teams. Mr Morris deposed that PPI had provided detailed technical support, providing advice sheets in respect to all work, for example, a Protection Setting Advice and Relay Test Instructions for the setting and testing of protection systems. Mr Morris deposed that he now has the responsibility of calculating the required settings and translating them into Relay Test Instructions. 97 The evidence of Mr Morris is that establishment of the NEM brought with it the requirement that Bayswater comply with the emerging standards of NEM, which, for example, included the establishment of Revenue Metering Systems at Bayswater and Liddell. 98 Mr Morris deposed that, as the Plant Owner of the Metering Systems at Bayswater, he became the Bayswater representative to a committee given the function of determining the nature and location of the meters. Mr Morris deposed that he held the responsibility for proving compliance with the interim standard and was involved in the interpretation and negotiation of other technical aspects of compliance.

Mr Brian Wallace 101 Mr Wallace has been employed in the electricity generation industry for 43 years. Mr Wallace has progressed through a number of positions since working as a fitter and machinist at Wangi, Vales Point and Munmorah Power Stations. 102 In his present position Mr Wallace reports to the Team Leader/Turbines who reports to the Power Station Manager. 103 Mr Wallace deposed that his current position description (Ex 17 annex. BW1) was concluded in July 1993 at SP 28-30. Mr Wallace was then appointed to SP 30 which is the maximum salary point payable to an EO within Macquarie Generation. Mr Wallace described his duties to include the following: a) Major Maintenance Contract Specification preparation, Tender Analysis, Contract management and administration b) Formulating and implementing Maintenance and Operational Strategies and Procedures (annual and long term) c) Preparing and controlling Budgets (annual and long term) d) Controlling spares inventory and purchase requirements from Original Equipment Manufacturer and other suppliers including initiating reverse engineering procedures where appropriate e) Liaising with the Original Equipment Manufacturer, Contractors Field Groups and Service Providers to ensure best Practice Maintenance and Operational Practices are applied f) Providing Specialist Technical support to Station Operations and Maintenance staff 104 Mr Wallace's evidence described the changes in the "Turbine Team" from 1993 to present, which he put had resulted in a reduction from six people to five people and replacement of senior positions with more junior positions as individuals left for whatever reason. 105 Mr Wallace described the major changes to the Turbine Team as being the loss of the Technical Assistant; the PO 2; the Project Officer and the Senior EO. Mr Wallace deposed the work of the PO 2 (SP 30-32) was previously allocated to him, which included special project work such as special modification work, plant failure investigation and acting into the position of Team Leader. Mr Wallace deposed that he now undertakes this work in addition to those tasks and functions described in his position description, in particular most of the duties of the Team Leader when the Team Leader is absent from site. Mr Wallace put that he is not paid any additional acting in higher grade allowance. 106 Mr Wallace deposed that management policy is that he and the Team Leader Turbines cannot be absent from site at the same time as one must cover for the other. 107 Mr Wallace deposed that changes in the Turbine Team resulted in a loss of experience on departure of the Senior EO who was replaced with a Junior EO, resulting in additional responsibility falling to himself and the Team Leader. 108 Mr Wallace put that loss of the Technical Assistant resulted in the responsibility for spares and special tools needed by the Turbine Contractor, which he described as time consuming and critical, falling to him. 109 Mr Wallace described the changes to his role since 1993 in the following terms: 20. The changes to my position in terms of greater complexity, greater responsibility and difficulty within the job fall under several different headings. These are: 1. The introduction of the National Electricity Market; 2. The loss of the original equipment manufacturer in 1999 being Toshiba; 3. The loss of Head Office and other outside support; 4. The reduction in onsite staffing leading to an increase in the number and range of responsibilities. 5. Occupational Health and Safety responsibilities 6. Changes in IT Technology 110 Mr Wallace described the changes resulting from the NEM as creating a commercial atmosphere in which plant downtime became more critical and less time allowed to carry out required maintenance, thus requiring a greater efficiency in the planning, organising and controlling of the work. Mr Wallace put that as plant became older the intensity and responsibility has increased. Mr Wallace put that he was issued with a mobile phone in 2002 and is now required to be on call outside normal hours much more than previously. Mr Wallace deposed that the task is made more difficult as he (on behalf of Macquarie Generation) must compete with other power generators for specialist contractor services as a result of all generators adopting a spring and autumn plant outage. 111 Mr Wallace put: Prior to the formation of the National Electricity Market (NEM) this problem did not occur as the previous Co-ordinated Maintenance Outage Program('CMOP') would schedule the outage program statewide and stagger the schedule to spread the load on both the available pool of contract labour and workshop resources. The available pool of experienced contract labour prior to the formation of the NEM was far greater than now as the workforce would progressively move from site to site following the CMOP program of outages. Now due to the narrow outage windows available because of market requirements many sites are carrying out their maintenance outages at the same time and a large proportion of this (contract labour) workforce has left for more permanent employment in other areas of industry as the continuity of work is no longer there. This makes it very difficult to find sufficient experienced contractor staff to carry out outage work for Macquarie Generation. This means that I am now required to increase my assistance to the Turbine Contractor Site manager in the familiarisation and training of new contractor staff which adds substantially to the workload of my position. 112 Mr Wallace put that when turbine maintenance was contracted to the original equipment manufacturer (Toshiba) it was Toshiba which subcontracted and controlled all offsite work such as repairs to turbine components and non-destructive testing. Mr Wallace put that in 1999 the turbine repair contract was won by KPS of South Korea which is not responsible for offsite work which falls to him to organise and co-ordinate. 113 Mr Wallace put that when Toshiba undertook turbine maintenance the work was in accordance with their schedule; now he is responsible for determining and prioritising the work schedule, co-ordinating KPS and their principal subcontractor, all other contractors, safety of work and associated commercial issues. Mr Wallace provided a number of detailed examples. 114 Mr Wallace put that the loss of Head Office has increased his responsibility for contract management and that the introduction of a computer based purchasing and inventory management system requires a high commitment from the user which adds to the day to day complexity and demands of his position.

120 Mr Summers put that in 1992 when his position description was evaluated there were 14 Engineering and Professional Officers undertaking the work now the responsibility of four people, including himself. Mr Summers deposed that in addition the scope of work and associated responsibility had expanded significantly since 1992, and the level of guidance and support has diminished. 121 Mr Summers provided an analysis of additional responsibilities in annexures to his statement (exhibit 20). 122 Mr Summers deposed that he has had to acquire skills in contract administration, compared to the previous arrangements of assistance by way of service agreements with PPI administered at the team leader level. 123 Mr Summers' evidence is that from 1995 he has been required to take on the work formerly done by the Computer Engineer, including overall responsibility for maintenance of the computer system in addition to his role of database management. 124 Mr Summers put that the additional duties and responsibilities required him to develop enhanced time management skills in order to deal with the additional duties. Mr Summers deposed that duties of higher responsibility required of him include inventory control with delegation from the Team Leader for expenditure to $1,000.00. Mr Summers put that he was given responsibility for the SO2/NOx emission gas environmental monitor, which resulted in him becoming accountable for the integrity of the data recorded by this equipment, which is an important aspect of the environmental licence under which Bayswater functions. Mr Summers deposed that, having acquired this responsibility, he had to become familiar with issues surrounding the environmental licence. 125 Mr Summers provided a number of examples of additional duties associated with provision of technical assistance in plant areas not previously his responsibility 126 Mr Summers' evidence is that his responsibility and demand upon him has been increased by the introduction of the NEM, more stringent requirements of occupational health and safety legislation, and the reduction in assistance from other positions which no longer exist or have acquired additional responsibility to the extent that they are no longer accessible. 127 Mr Summers put (exhibit 20 p 9): I am acknowledged as the Unit-based computers specialist. Technical support in this role is provided through the contract I now administer. I also coordinate the calibration testing of the S02/NOx monitoring equipment required as part of the station's environmental licence. I provide review and release services for unit based spares, including technical assistance to the Purchasing team. Also this position carries out unloading tests, test trip monitoring and other technical support on unit issues.

Mr Russell Byers 128 Mr Byers has been employed in the electricity generation industry from 1982 when he joined Elcom as a Professional Engineer in Sydney, moving to Bayswater in 1987 and progressing through a number of positions prior to taking up his present role in 1996. 129 Mr Byers is paid at SP 30 and has been since February 1991. It was Mr Byers' submission that he believed his current position should be valued at SP 34 in the proposed structure. 130 In his current position Mr Byers reports to the Team Leader/Control Systems who reports to the Plant and Performance Engineer, Mr Stubbs. 131 Mr Byers described his current role (Ex 23 p6) in the following terms: My position involves developing short term and long term asset management strategies, preparation and management of aspects of the team budget, management of inventory, undertaking engineering investigations, managing a combination of Macquarie Generation and contractor resources to implement plant maintenance and improvement activities to meet organisational objectives. The role also involves the provision of support engineering services to team leaders/plant owners in the Turbines, Coal and Ash Plant Engineering and Water Management Plant teams. 132 Mr Byers deposed that the assets now include the Barnard River Pumping Station taken over from TransGrid, and improvement in electronic infrastructure security since 2001. Mr Byers provided a schedule of projects that he has undertaken since 1993 and projects on which he is currently engaged. 133 Mr Byers deposed that he has taken responsibility from initial evaluation to implementation, including economic and financial evaluations, reports to management, technical and financial specifications, tender evaluations, and contract management. Mr Byers deposed that the introduction of alliance contracts have added to the complexity of asset management. 134 Mr Byers deposed that he is required to communicate extensively with people, both inside and outside the control team, to meet objectives and to apply a combination of technical, business and interpersonal skills. 135 Mr Byers deposed that from 1993 to the present the number of people undertaking the range of duties has decreased from 10, within a group of 13, to four. Mr Byers remains the senior PO in a group of three, which has taken on additional work as the staff numbers have been reduced, head office support removed, contract management responsibilities increased, and tasks have become more rigorous to meet the commercial environment introduced by the creation of the NEM. 136 Mr Byers deposed that the work has also become more complex as the size and scope of the plant has been upgraded, at the same time basic plant is aging, increasing the scope of upgrade and maintenance required. 137 Mr Byers' evidence is that he works with minimal supervision and is required to act into a Team Leader role which carries a wider range of responsibility than the relevant Team Leader role in which he acted in 1993. Mr Byers put (Ex 23 p7): 30. My position now requires the simultaneous management and prioritisation of a number of conceptually different tasks including (but not limited to); · asset strategy preparation; · budget preparation; · technical and commercial specification writing; · contract administration and quality management; · engineering investigations; · risk assessment; · people management.

My position now also includes requirements for conducting significant negotiations or discussions with outside organisations including consulting engineers, IT service providers, electronic infrastructure security consultants, mining companies, contracting companies and product suppliers. In 1993 I was not responsible for any duties of this nature. Mr Thomas Stubbs 138 Macquarie Generation brought evidence from Mr Thomas Stubbs in reply to that put by the Labor Council witnesses. 139 Mr Stubbs has been employed in the electricity generation industry since 1962 when he joined Elcom. Mr Stubbs was appointed to Bayswater in February 1984 and took up his present position in January 1999. 140 The evidence of Mr Stubbs describes changes to the organisational structure at Bayswater which commenced with the restructure of engineering and technical staff into: Operations, Mechanical, Electrical, and Investigation and Planning Sections. This structure remained until late 1980 when structural reform in the industry resulted in the formation of a four panel shift maintenance arrangement which included engineering, technical staff, trades and non-trades employees. 141 Mr Stubbs deposed that in about 1989 the Power Station Construction Branch was abolished, as their services were no longer required as new power stations were not being built, and surplus staff transferred to power station sites. Ten engineering, technical and administrative staff were transferred to Bayswater and were formed into the Contracts Section. 142 In 1990, amid further structural reform, the Senior Executive Service (SES) concept was introduced resulting in establishment of a new management structure of Power Station Manager, Production Manager and Engineering Manager. 143 Mr Stubbs put that the concept of internal service providers was introduced, leading to service agreements being established with all power stations, including Bayswater, for engineering services for the design and modification of power station plant. 144 The evidence of Mr Stubbs is that in 1994 the process of identification of non-core business and the shedding of those activities commenced. This was accompanied by a reduction in power station staff through a voluntary redundancy program, transfer to PPI, and the formation of a Hunter Engineering Services Group accommodated at Bayswater and Liddell Power Stations undertaking defined project work in accordance with an engineering service agreement. 145 Mr Stubbs deposed that an outcome of the early 1990's reform was the introduction of a job evaluation process that used the Cullen Egan Dell methodology. 146 Mr Stubbs put that the Power Station Manager at Bayswater at the time opted for individual position descriptions which followed a set format and, while all had some common elements, each contained some matters pertaining to the individual's role which made the position description unique. 147 The evidence of Mr Stubbs is that all other power stations, including Liddell, used generic position descriptions. 148 All positions were evaluated in accordance with the Cullen Egan Dell methodology and individuals appointed. The process was subject to review by his Honour Marks J in Matters No IRC 200 of 1995 and 280 of 1995 (unreported) which determined that the salary should commence from the time the incumbent can be shown to have performed the duties, not the date of appointment. This resulted in a review of all engineering, administrative and professional officers' positions. The review was completed in April 1996 resulting in retrospective payment to 16 employees. 149 Mr Stubbs deposed that in 1996 Mr John Neely, then recently appointed Manager Bayswater Power Station, indicated a desire to move to generic position descriptions for EO's and PO's. Mr Stubbs' evidence is that consultation and negotiation took place between management and union delegates from this time without agreement. 150 In November 2000 expressions of interest were called for an EO/PO Level 1 position in accordance with a generic position description adopted by management following the years of unsuccessful dialogue. Three persons were appointed to the position on the basis that the issues remained unresolved and the positions could be subject to review. 151 Discussion ensued over several months against the background of a pressing need by management to appoint staff to EO/PO level 4 positions. These discussions resulted in the MOU following a conference at Bayswater on 4 October 2002. 152 In accordance with the MOU, Mercer Human Resources (formerly Cullen Egan Dell) was engaged to assist with finalisation of position descriptions and evaluations. 153 Mr Stubbs evidence is that, with the exception of the qualification barrier in the level 3 position, the generic descriptions for levels 1 to 4 were agreed. 154 The evidence of Mr Stubbs is that discussions continued into 2004 on the generic position description for an engineering team leader, entitled Team Leader/Power Plant, resulting in substantial agreement. 155 Mr Stubbs put that, in an endeavour to resolve the matter, management offered to introduce a PO level 5 position at SP 30-32 as a concession to employees. Mr Stubbs put that the PO level 4 position description was taken as the starting point and duties added to increase the work value of the position. 156 The Team Leader positions were valued by Mercer resulting in conclusions detailed in the evidence of Mr Leck that Team Leader positions, with one exception, were valued at SP 34-36, with one valued at SP 36-38 based on capital expenditure levels. Mr Stubbs notes the comments of Mr Leck in his report of 27 April 2004 (Ex 45, Attach.18) that: In the case of Team Leaders, their budgets varied quite markedly, so three profiles have been devised. In cases where a Team Leader may only have a small budget, we have also modelled an Advisory accountability profile - which as you can see, does not change the "typical" Team Leader outcome. Given that the PO 5 is a position that only personnel with an in-depth level of technical/professional knowledge and extensive experience could aspire to, Mercer is of the view that it makes little sense to develop a "minimum" or "maximum" profile as was the case for our previous advice regarding more junior EO/PO roles, because there would be little, if any learning curve within the PO 5 role. … … As far as the Team Leader roles go, Mercer does view the $ expenditure accountability as deserving of an overall higher Accountability score than all other Team Leaders who typically had less than half this amount. Note that this outcome also takes into account the fact that irrespective of budget, all Team Leaders have similar delegations and the same level of autonomy and independence. Therefore, where a Team Leader may have an expenditure budget for recurrent and capital in the range $, this would likely result in a paypoint 36-38 level being applicable. If this is undesirable organisationally, then steps could be taken to redistribute resources on a more even basis. However, whilst this situation exists, the work value is higher in our view, but there should not be any case for "flow-on", as it is highly unlikely that any other Team's expenditure would exceed $. In the case of the Boilers Team, Mercer is of the view that this is a bigger role than the others, and deserves to be classified and paid at the higher level. From time-to-time, other Teams may also temporarily move above the $ budget level if a major project is established. In these cases, Mercer would recommend an HDA payment at the higher set of pay points (36-38) for the Team Leader concerned, without the need to permanently reclassify the position at the higher level. 157 The evidence of Mr Stubbs is that as a concession to resolution of the matter, management offered to create two team leader positions at Bayswater and Liddell at the SP 36-38 level despite preferring to adopt the redistribution of resources option identified by Mercer. 158 Mr Stubbs deposed that when agreement could not be reached all offers and concessions were withdrawn. 159 The evidence of Mr Stubbs is that the generic position descriptions were prepared in consultation with Mr Peter Fuller, Mr Trevor Woolley, and Mr Scott Delforce, Human Resources Officer/Bayswater. Mr Stubbs, Mr Fuller and Mr Woolley were provided with training conducted by Mercer in Sydney in analysing and documenting jobs, which presented the method and format to be used to prepare position descriptions, and further training in the job evaluation process. 160 The evidence of Mr Stubbs is that the current organisation of Bayswater Engineering and Professional staff is in ten teams or groups identified as Boiler, Turbine, Electrical, Chemical, Station Services, Coal, Water, Control Systems, Performance and Construction, and External Electrical Engineer. The groups or teams are at different levels in the organisation. 161 Mr Stubbs put that arising from structural reforms of the 1990's, flexibility between classifications resulted in the merging of the work of some EO's and PO's, the merged positions being described as EO/PO. 162 Mr Stubbs put that the work to be done within Bayswater Engineering Group can be conveniently divided into four levels: EO/PO Level 1, EO/PO Level 2, EO/PO Level 3, and EO/PO Level 4. 163 The evidence of Mr Stubbs is that the required number of positions at the appropriate level are assigned to each team or group; for example, an employee may be classified either as an EO or PO and appointed to a position of EO/PO Level 3 and be assigned to the Boiler Team. 164 Mr Stubbs deposed that of the 35 employees within the Bayswater Engineering Group, 21 have been appointed in accordance with a generic EO/PO position description, the generic Team Leader Power Plant position description, or the Team Leader Station Services position description. All others remain on their individual position descriptions which are, in the main, those developed in 1993. 165 Mr Stubbs presumed that those persons remaining on their specific position descriptions do so in the exercise of their right in accord with point 8 of the MOU, which protects employees from disadvantage. 166 Mr Stubbs' evidence is that where there is a need to advertise a new or vacant position, this is done in accordance with the generic position description hence the increasing number of employees on generic position descriptions. 167 The evidence of Mr Stubbs is that in designing the four generic position descriptions, two were formulated as higher level work which would be undertaken by competent, experienced and technically qualified persons, the lower two were designed for work that was not as critical or demanding, or as a role in which an employee could develop to gain promotion. 168 Mr Stubbs deposed that: All employees had the opportunity to transfer without loss of salary point to the generic positions. I am disappointed that this did not occur and that the process as agreed in the MOU dated 4/10/2002 has not been honoured by the unions. Macquarie Generation has incurred significant costs pursuant to Clause 3 of the MOU. Macquarie Generation would not have spent this money if the unions had a right either to withdraw from the MOU or not to accept the findings by the independent expert. 169 In addressing the claim for a Level 5 position, Mr Stubbs deposed that this position description was developed having regard to circumstances existing at Liddell at the time, in order to establish a position at salary level 30/31/32 to be filled as and when required at the discretion of management. Mr Stubbs deposed that with the exception of the Team Leader/Station Services, there is no need for a position between that of an EO/PO Level 4 and Team Leader/Power Plant. 170 Mr Stubbs asserted that this conclusion is reinforced by the Mercer job analysis. 171 In addressing the disputed qualification barrier in the EO/PO Level 3 position, Mr Stubbs put that the EO/PO Level 3 position was designed for persons who are competent, experienced and technically qualified. 172 In addressing the issue of a classification barrier for appointment to Level 3, Mr Stubbs conceded that three employees who did not possess the stated qualifications had been appointed to Level 3. Mr Stubbs deposed that these appointments were on the understanding that the employee would not progress to the upper levels of the position without obtaining the qualifications. 173 Mr Stubbs deposed that Macquarie Generation had a generous training assistance program to facilitate the acquisition of qualifications by employees seeking advancement. Reply to Evidence of Unions NSW Witnesses

174 Mr Stubbs noted that five of the six witnesses are employees who satisfy the academic requirements of EO/PO Level 3, and the sixth is a Team Leader. Mr Stubbs noted that there is no evidence from an employee in the EO/PO Level 1 or EO/PO Level 2 category. 175 In reply to Mr Woolley, Mr Stubbs asserted that all of the work described as undertaken by Mr Woolley is within the 1993 position description which continues to apply. 176 Mr Stubbs deposed that the changes described by Mr Woolley are not as great as he suggests. Mr Stubbs deposed that Mr Woolley has engaged in exaggeration and overstatement, and has put a gloss on the circumstances which is unwarranted and inappropriate. 177 Mr Stubbs deposed that Mr Woolley's analysis has failed to take into account increases in the value of the 40 point salary scale agreed by the employer in return for structural reform, deposing that the flexibility within and between classifications and the utilising of all skills held by an individual has meant that employees are able to undertake a broader range of tasks than prior to the structural reform taking place. Mr Stubbs deposed that Mr Woolley also failed to recognise movement up the scale as experienced by himself from SP 35 to salary range 34-36 resulting in Mr Woolley's appointment to SP 36. 178 Mr Stubbs took issue with the accuracy of evidence provided, deposing that all employees are not required to work outside their position description. 179 The evidence of Mr Stubbs is that all EO's and PO's work in accordance with their training and experience in their particular field of expertise, deposing that the requirement for application of skills has not changed over time. Mr Stubbs acknowledged that engineering knowledge and techniques develop over time in the same way any professional vocation is advanced by results of research, learning and experience. Mr Stubbs put that any increased value is reflected in the results of the Classification Advisory Committee process and individual promotion. 180 Mr Stubbs was obliged to concede that the 1993 position descriptions were written prior to the abolition of the Contracts Section, however, maintained his view that the work associated with contract management taken over from the Contracts Section fell within the 1993 position descriptions. 181 Mr Stubbs evidence is that where an officer finds work interesting and chooses to become involved or to pursue issues to a higher professional level, this is not discouraged so far as it is practical and consistent with the requirements of the power station and the individual's professional development. 182 Mr Stubbs deposed that adequate professional supervision and support is available within Macquarie Generation or from experienced consultants. Mr Stubbs deposed that the work of arranging and managing a consultant engineering service is not significantly more arduous than arranging and managing a maintenance service. 183 Mr Stubbs did not accept that a reduction in staff numbers necessarily leads to great job complexity. 184 Mr Stubbs' evidence is that Macquarie Generation have moved from a structure based on occupational discipline to a plant focussed structure which brings together multi-discipline teams. 185 Mr Stubbs put that initiative has always been required of EO's and PO's and that they have always been required to interact with external groups, including other Pacific Power business units, original equipment manufacturers and suppliers on a frequent basis. 186 Mr Stubbs asserted that, whilst emphasis is given to work done and work acquired in preceding years, Unions NSW witnesses failed to identify work no longer performed. 187 Mr Stubbs deposed that the nature and complexity of work is not increased by changing technology, putting that the function performed by the technology, e.g. control of a conveyor, remains unchanged by an upgrade of the control system to a different technology; and that the engineering requirement to manage and maintain the technology falls within the ordinary scope of engineering work. 188 Mr Stubbs refuted the assertion that legislative changes in occupational health and safety and more stringent environmental standards have added to the responsibility and value of EO/PO work, deposing that safety, risk management, and environmental considerations have always been important aspects of the work. 189 Mr Stubbs conceded that the requirement for an EO or PO to personally sign off on a risk assessment did not exist in 1993. 190 In addressing the evidence of Mr Summers, Mr Stubbs conceded that there has been an increase in work level intensity, which he deposed indicates an increase in volume, not necessarily an increase in complexity. 191 Mr Stubbs deposed that Mr Summers: "has become more competent in his duties because he has developed skills and knowledge which have been recognised by increases in remuneration". 192 In cross examination, Mr Stubbs identified the increase in remuneration as an increase of one salary point in 1995 and the general increase in the value of the 40 point salary scale. 193 In addressing the evidence of Mr Wallace, Mr Stubbs refuted the assertion that shorter outage periods result in a greater amount of work and put greater pressure on the position. Mr Stubbs put (Ex 45 para 282): The incumbent is only required to provide 100% effort for the allotted hours per week. Productivity improvements have occurred within the workplace to enable the shorter time periods to be achieved, including greater reliance on the contract resource and the contractor's quality assurance programme. 194 Mr Stubbs noted the provision for working overtime and deposed that the mobile telephone was provided at the suggestion of the employee. 195 Mr Stubbs deposed that Mr Wallace continues to undertake work that he has performed for many years. Mr Stubbs' evidence is that there is no increased intensity in the work, and in any event if there were an increase in the intensity this would not require additional skills. 196 Mr Stubbs deposed that Mr Wallace does not carry sole responsibility, putting that he is assisted by the Team Leader and other management staff as required and that management remains responsible for major strategy decisions. 197 Mr Stubbs refuted the assertion that a change from the original equipment manufacturer for maintenance resulted in any increase in complexity or responsibility for Bayswater staff. 198 Mr Stubbs deposed that the position description has always required the incumbent to: "keep abreast of new technological and procedural developments and apply these where possible to the turbine plant area." 199 Mr Stubbs' evidence is that it is not a new or additional responsibility that the incumbent work with minimal supervision and handle multi-tasks concurrently. 200 Mr Stubbs denied that use of the SAP computer system has added to employee responsibilities, deposing that: SAP is Macquarie Generation's suite of business software that was introduced as an update in 1998. Employees were using a variety of software tools, including Maintenance Information and History System, the Material Management Information System and the Cost Commitment System for inventory and contract work, and this was described in the 1993 position description. The introduction of SAP provided an improved tool to facilitate the work, once the nuances of the software had been learnt. The need to learn the software is no different than the need to learn the latest Microsoft Windows version to use a PC (personal computer), and does not represent a significant increase in work skills. 201 All of the Unions NSW witnesses deposed statements in reply to Mr Stubbs which take issue with much of his reply. Job Evaluation Processes

The narrow work value range for EO/PO 1 indicates that a narrower pay range ought to apply, and this is matched by current classification practice. For levels 2, 3 and 4, Mercer notes that these grades have been broad banded across five rather than three pay points. 209 The report put that Mercer compared these valuations with a specific sample of nearly 200 advanced trade, technical officer, senior technical officer and engineering professionals, predominantly from the energy sector or large engineering/manufacturing establishments, and while a direct comparison was not available, Mercer was satisfied that relativities with similar jobs are fair and reasonable. 210 These results were subject to further discussion between Mr Leck, management and employee representatives, in which the results were subject to scrutiny and debate which led Mercer to adjust the evaluation profile of the EO/PO level 4 but not others. 211 In correspondence to Macquarie Generation conveying final adjusted results (Ex 40 Annex. G) Mr Leck put that Mercer would acknowledge that the EO/PO4 role may verge on being an acknowledged "expert" resulting in a higher rating being plausible, but in their view incorrect. Mr Leck added that if this higher value in the independence and influence factor was accepted the work value would increase into the SP 30-32 range. 212 The final advice offered by Mercer (Ex 41 Attach. G) is that the EO/PO 4 generic position is right at the top of the SP28-30 range. 213 The final salary point evaluations officer by Mercer are: EO/PO Level Current Grade Evaluation 1 16-18 16-18 2 18-22 18-20 min. 20-22 max. 3 22-26 22-24 min. 24-26 max. 4 26-30 26-28 min. 28-30 max. 214 Macquarie Generation subsequently asked Mr Leck to value the Team Leader role and the possible role of an EO/PO level 5. 215 Mr Leck's evidence is that most team leader positions produced a work value result of SP 34-36 with one based on budget expenditure valued at SP 36-38, and that the potential EO/PO5 would be SP 30-32. 216 Mr Leck's evidence is that in the course of conciliation in these proceedings he was requested by Macquarie Generation to report on the relativity of pay scales at Macquarie Generation compared to energy sector standards. Mr Leck deposed that: 16. Mercer's energy sector or utilities payline underpinning many of the remuneration comparison charts provided in the abovementioned report was developed from over 3000 positions from 20+ energy sector SOC and GOC organisations. As such, this payline is an extremely solid empirical basis on which to develop fair market comparisons for EO/PO roles, or other common industry positions.

Mr Gordon Brock 222 Unions NSW brought evidence from Mr Gordon Brock, a full-time officer of The Association of Professional Engineers, Scientists and Managers Australia (APESMA). Mr Brock's evidence, amongst other things, went to the implementation of the MOU process, meeting Mr Leck on equal terms on the issue of detailed job evaluation, industry and general market wage relativities. 223 Mr Brock's evidence is that he has been assisting members in the New South Wales energy sector from his commencement with APESMA in 1999 and has been involved in many award negotiations since then. 224 Mr Brock deposed that his responsibilities required him to research the history of award regulations in the New South Wales electricity generation industry. The statement of evidence deposed by Mr Brock (exhibit 4) describes this regulatory history, the background to this dispute, negotiation of the MOU, and conduct of the parties in accordance therewith in terms consistent with the description above. 225 Mr Brock deposed that the lengthy and difficult negotiations addressed the salary point range for the Engineering Group and the Mercer valuation process, which he put had not changed since first established in the early 1990's as the Cullen Egan Dell method. 226 Mr Brock noted that the Mercer process and the Corporate Standard for conversion of work value points to salary points had not been reviewed or amended since its inception and had never formally become part of the award or subject to agreement. 227 Mr Brock deposed that salary point movements negotiated between Macquarie Generation and other groups has significantly altered internal pay relativities between groups of workers. Mr Brock deposed that a comparison of salary movement of the Power Station Manager compared to a Team Leader in the Engineering Group who reports directly to the Power Station Manager shows a dramatic disadvantage to the Team Leader. 228 Mr Brock's evidence is that while a maximum of SP 30 is retained at Bayswater, higher salaries can be achieved elsewhere in the power generation industry. 229 Attachment 25 to exhibit 4 is an analysis of salary points available at all New South Wales electrical power generators. This chart reveals that EO's are not appointed above SP 30; PO's can be appointed to SP 30, 32, 34; and the general level of Team Leader is SP34-36 with some appointed to SP 36-38 in particular circumstances. 230 The comparative information is not substantiated or challenged beyond the evidence of Mr Brock. 231 In addressing external relativities Mr Brock relied upon charts (Ex 4 Attach. 26 and 27) prepared by Mercer which compare current rates of pay of the Bayswater Engineering Group against the general market and utilities market for comparable positions. 232 Mr Brock deposed that these graphs show Bayswater employees at a relative disadvantage. Mr Brock's evidence is that this is supported by a survey undertaken by APESMA (Ex 4 Attach. 28). 233 The charts support the earlier evidence of Mr Leck that Bayswater salaries at EO/PO 1 and EO/PO 2 are above the median. EO/PO 3 is above the median at the lower levels and represents the median at the upper levels. EO/PO 4 approximates the median whilst the proposed level 5 and Team Leader positions fall progressively below the median as the upper levels are achieved, the Team Leader position falling to the lower quartile of the positions surveyed in both the general and utilities markets. 234 Mr Brock provided an analysis of how the union claim would translate to salary point movement for current application (Ex 4 Attach. 30) and how the Macquarie Generation proposal would take effect (Ex 4 Attach. 31). Mr Brock asserted that the Macquarie Generation proposal would result in no increase, with a potential reduction in salary for future appointees. 235 Mr Brock deposed that there is a long standing practice of transferring employees from the same position in an existing salary point range to that in a revised salary point range, i.e. a person at the starting point of an existing salary point range would move to the starting point in a new range, whilst a person at the top of the existing range would move to the top of the revised range where the salary point spread is the same. 236 Mr Brock was subject to cross examination on a series of communications between himself and Macquarie Generation, subsequently relied upon by Mr Taylor in submissions. Mr Kenneth Petersen 237 The evidence of Mr Petersen is that he has been employed by Elcom and its successors as an Industrial Relations Officer from 1976. Mr Petersen joined Macquarie Generation on its establishment in March 1996 as Staffing Manager and has been the Employee Relations Manager for Macquarie Generation since December 1999. 238 Mr Petersen's evidence is in reply to that of Mr Brock. Mr Petersen refutes Mr Brock's evidence that there has been significant change in the value of work done by the Engineering Group since salary levels were set in 1991-1993. 239 The evidence of Mr Petersen acknowledged that the system of salary administration for EO's and PO's has been the source of dispute and discontent for both employees and the employer for many years. 240 Mr Petersen noted that the present award carries forward arrangements resulting from the introduction of a 40 point salary scale to replace over 300 specific classifications in proceedings before this Commission in 1991. Those proceedings also introduced a job evaluation system found in the award. 241 Mr Petersen deposed that there has been significant movement in the remuneration levels by successive award movements which, inter alia, have significantly compensated employees for providing a commitment to the continuing development of the Macquarie Generation workforce so that staff can work flexibly in order to adapt more readily to changes in its business needs. 242 Mr Petersen's evidence is that he has not been trained in the Mercer process of job evaluation used by Macquarie Generation and subject to some conjecture in these proceedings. 243 With reference to exhibit 36 Mr Petersen accepted that internal and external relativities should be considered in setting salary levels. 244 Mr Taylor put the Cullen Egan Dell process to Mr Petersen, suggesting that the three sequential steps were: 1. establishment of a position description 2. establishment of work value points, and 3. setting of remuneration

248 Mr Taylor seeks an operative date of 11 December 2002, putting that there is no dispute that these proceedings had their genesis in 1996, when the issue of generic position description was first raised by management and re-emerged in 2000 with unsuccessful discussion continuing thereafter. 249 Mr Taylor submitted that the Engineering Group at Bayswater is distinguished by its patient and co-operative approach, which he put was unlike others who insisted upon agreement to both position descriptions and wage increases prior to undertaking changed roles. Mr Taylor put that the Engineering Group have accepted flexibility and extensive change in the way in which they work. 250 Mr Taylor submitted that there is no barrier to retrospectivity in s 15(3)of the Act which allows discretion to determine an operative date from the time the industrial dispute giving rise to the award is notified to the Commission. 251 Mr Taylor put that retrospectivity in this matter would be consistent with the judgment of Marks J in Matters 200/280 of 1995 (22 May 1995) which has subsequently directed policy that a revised rate of pay is to be applied from the date that the relevant employee commenced the revised or altered dates. 252 Mr Taylor put that there is no argument that there is any lack of jurisdiction or statutory authority to vary the 2002 or 2005 Awards. Mr Taylor put that Macquarie Generation's argument that the Commission would not exercise discretion to grant the claim: "as to do so would be inconsistent with the agreement of the parties expressed in the MOU" misapplies the MOU and is not sustainable. 253 Mr Taylor refuted Macquarie Generation's assertion that the MOU is an inescapable arrangement that the determination of the independent expert, Mercer, would determine all issues. 254 Mr Taylor submitted that in any event Mercer did not determine the issues of the qualification barrier to level 3 or the validity of a level 5 position. 255 Mr Taylor relied upon correspondence from Mr Leck to Mr Neely (Ex 40 Attach. F) which states: The one substantive issue not able to be resolved was the qualifications and experience required for EO/PO Level 3. The wording of the final draft position description reflects management's final policy decision rather than Mercer's view, or the view of several employee representatives on the working party. and further correspondence (Ex 40 Attach. G) reporting upon a final site meeting of employee management and union representatives on 11 September 2003, stating that conjecture over the need for a level 5 position is beyond the scope of Mercer's current brief. Mr Leck states that: The issue of remuneration relativities was also raised … the group accepted that this was beyond the scope of Mercer's brief. 256 Mr Taylor further submitted that the MOU never intended for an independent expert to determine salary outcomes, which he put is taken from the language of the MOU expressed as a process to "assist" the parties; and the evidence of Mr Brock who described the MOU as providing guidance to the parties. Mr Taylor put that Mr Neely used the same expression in correspondence to Mr Brock (Ex 4 Attach. 21) wherein Mr Neely writes: "The MOU will guide the parties to resolving this matter". 257 Mr Taylor submitted that the role of Mercer to "facilitate" the process was confirmed in instructions to Mercer by Macquarie Generation, and the evidence of Mr Petersen that Mercer's role was not to determine the issues but to assist the parties to agreement (TR pp 96 to 98). 258 Mr Taylor also put that management refused to sign off on the MOU. Mercer's role, pursuant to the MOU, was to evaluate the work value points, not determine the monetary value or salary point to apply. 259 Mr Taylor submitted that Mercer's use of the Corporate Standard to translate work value points to salary points was never contemplated by the unions. Mr Taylor relied upon Mr Brock's evidence that he was unaware of the Corporate Standard at the time the MOU was agreed. Mr Taylor further submitted that the Corporate Standard is a matter of management policy, not agreement with the unions, and accordingly cannot be raised to a point where it can be held that the unions (or this Commission) are bound by its application. 260 Mr Taylor noted that these proceedings are not by way of appeal or review of the Mercer process, but require the Commission to exercise its statutory function in accordance with the wage fixation principles. 261 Mr Taylor submitted that Mercer did not in any event set rates of pay but simply applied the Corporate Standard in a mechanical sense to the work value points. 262 Mr Taylor relied upon Mr Leck's evidence (TR p 216) that the salary points developed are those that would obtain if the Corporate Standard was applied, and a report to Macquarie Generation by Mr Leck dated 26 June 2004 (Ex 43) wherein Mr Leck responded to a request by Macquarie Generation to provide information on market remuneration and work value comparison. Mr Leck advised that: Macquarie Generation pay scales are ahead of the general market and other utilities for the lower grades, but from pay point 30 or 375 work value points they start to slip below the market median. Team Leader (or equivalent roles) in pay points 36 to 38 approximate the lower quartile of the market rather than the median. 263 Mr Taylor submitted that this report was the only report by Mr Leck not included in the evidence filed by Macquarie Generation, and emphasised that Mr Leck went on to suggest: Given that only some, but not all positions, may be below a fair market rate, the easiest way to address this would be to change the points/grade table that applies to the more senior positions without changing the standards that apply to the lower graded positions. 264 These suggestions were not taken up or acted upon by Macquarie Generation. 265 Mr Taylor submitted that it is clear from exhibit 43 that if Mercer had been asked to consider salary rates as part of the MOU process they could not have concluded that the rates arising from the Corporate Standard were appropriate. 266 Mr Taylor submitted that there is no evidence of any agreement between the parties to the Corporate Standard and that the Standard is obsolete. 267 Mr Taylor relied upon evidence from Mr Brock that the Corporate Standard is not found within current Macquarie Generation policies and is only available on the Internet in "Old Pacific Power Standards"; and the evidence of Mr Petersen that the Classification Advisory Committee, the group with award responsibility for application of the Standard, has not been convened for a number of years. 268 Mr Taylor further submitted that the MOU process was not binding as Mercer did not satisfy the criteria of independence as they appeared to have separate communication with Macquarie Generation which influenced the outcome. 269 Mr Taylor submitted that the interference by Macquarie Generation in the integrity of the process is further demonstrated by the fact that the final report from Mercer, which determined salary points for level 5 and Team Leader in draft form, was withheld by management contrary to the expectation of Mr Leck who expected the report to be part of the consultative process at the time it was furnished. 270 Mr Taylor emphasised that the unions had not reneged on a commitment to be bound by the MOU process, submitting that Macquarie Generation had failed to honour its undertaking to consider internal and external relativities in the process. Mr Taylor relied upon the evidence of Mr Brock to the effect that Mr Neely, in agreeing to the MOU, had accepted that internal and external relativities would be considered; the fact that they were not; and the evidence of Messrs Petersen and Stubbs which does not refute the evidence of Mr Brock. 271 The evidence of Mr Petersen is that management did agree to take relativities into account. The evidence of Mr Stubbs (TR pp 245 to 247) is that this was later qualified to exclude groups who had not been subject to job evaluation and subsequently to exclude the consideration of relativity from the Mercer task. Mr Stubbs put that internal relativities were considered by Macquarie Generation's executive management, not Mercer. 272 Mr Taylor submitted that this approach is in conflict with the proper application of the Mercer job evaluation system as put by Mr Leck (TR pp 161-163) that consideration of internal relativities is essential to ensure the integrity of the system. 273 Mr Taylor submitted that the MOU process was a useful part of the conciliation which significantly narrowed the dispute, but was never intended to determine actual salary rates which were reserved for negotiation with the benefit of information from the MOU process, and in any event cannot take away the rights of the parties pursuant to the Act. 274 In supporting the establishment of a Level 5 position Mr Taylor noted that management had in fact written a position description for it. Mr Taylor submitted that the Level 5 position is necessary and of particular importance as a proper means of recognising employees who do not necessarily manage work teams or have a budget responsibility, however, contribute a high level of technical knowledge and experience deserving of a commensurate rate of pay. 275 Mr Taylor submitted that Macquarie Generation's perception that there is no current need for the position at Bayswater is no barrier to its inclusion in the pay structure. Mr Taylor relied upon evidence from Mr Brock and Mr Petersen that technical specialists at level 5 or equivalent exist elsewhere to support his submission that a need could and most probably would arise at Bayswater. 276 Mr Taylor noted Mr Byers' assertion that he was in fact a technical specialist, and the evidence of Mr Stubbs to the contrary. Mr Taylor puts that this issue is not for resolution in these proceedings but does not preclude establishment of the position.

Work Value 281 Mr Taylor noted that the parties are two salary points, or approximately seven percent (7%), apart on each position. 282 Mr Taylor submitted that there is no ambit in to the union claim, putting that in the period from 1990, 7% movement is a conservative figure. 283 Mr Taylor relied upon the work value principle, submitting that the evidence demonstrated a significant net addition to the work of each position so as to justify the increase sought. 284 Mr Taylor submitted that a two salary point increase, when considered against relevant internal and external wage rates, would not result in wage leapfrogging. 285 Mr Taylor referred to Re Public Hospital Nurses (State) Award No 4 (2004) 131 IR 17 (Wright J, President, Boland J, Patterson C), in particular at 27 where it is stated: A tribunal charged with determining whether the tests under the work value principle have been met must carefully sift through the material that has been placed before it and separate out those changes which have occurred to the nature of the work, skill and responsibility of employees or to the environment in which the employees work and which have not previously been the subject of compensation. An objective assessment then has to be made as to whether the changes that have occurred amount to such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification. The change is to be measured from the last time wages were increased on the basis of work value or from the date of operation of the second structural efficiency adjustment allowable under the State Wage Case 1989, whichever is the later. An assessment is then to be made as to how that change should be measured in money terms. Such assessment will normally be based on the previous work requirements, the wage previously fixed for the work and the nature and extent of the change in work. Finally, in relation to the application of the work value principle we refer to the Full Bench decision in Crown Employees (Teachers and Related Employees Technical and Further Education Teaching Services) Salaries and Conditions Award (The TAFE Case) (unreported, Industrial Commission, NSW, 1619 of 1989, Fisher P, Bauer and Hungerford JJ, 7 August 1991) where after analysing the work value principle applicable at that time it was held (at 44): We consider that reliance on this principle for general wage movements across all classifications in an award is not justified. Consideration of the phrases emphasised by underlining show that the purpose of this principle is directed towards specific work changes in specific areas. It was not intended that generalised across the board wage increases should be based on this principle.

286 Mr Taylor put that there is no dispute between the parties that the appropriate datum point arising from application of the second structural efficiency adjustment allowable under the State Wage Case 1989 (1989) 30 IR 107 is 25 September 1990. 287 Mr Taylor noted that it is not contended that salary points for EO/PO's have not changed from that time other than introduction of a lower entry point at SP 16-18. 288 Mr Taylor submitted that the claim for an increase in salary points assisted in separating those across the board increases from 1990 which have been cost of living, general efficiency and productivity, from those which would properly be regarded as work value. 289 Mr Taylor submitted that the analysis of external wage rates provided by Mr Leck (Ex 40 Attach. I) showed that, with the exception of SP 16-18, all rates were below the median. Mr Taylor noted that this analysis was at 1 July 2004, including a 4.5% wage increase in the Macquarie Generation award. Mr Taylor submits that the same comparison on 30 June 2004, not including the 4.5% wage rise, would pt the Macquarie Generation wage rates lower, reinforcing the absence of any propensity for a two point salary increase to result in flow-on or leapfrogging. 290 Mr Taylor also referred to Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award (2004) 133 IR 254 at 287: It would be a rare case where change in volume of work would have even an indirect effect on work value. However, part of the Federation's case came within this rare situation. That is because the nature of the changes in the skills and responsibility of teachers, which we will discuss below, not only satisfied the work value principle because of the significant change in the functions and tasks of teachers, but also because the magnitude of those changes required a significant adaptation of work methods by teachers to enable them to discharge the full range of their current duties. In other words, in order to carry out the full range of the complex and voluminous professional responsibilities since 1991, teachers have been required to be more sophisticated and skilled in the management of their work and the discharge of their new accountabilities, both in and outside of school hours. This is a factor relevant to be considered under Principle 6. 291 Mr Taylor submitted that a comparison of the advertisements placed by Macquarie Generation in 1986 and in January 2005 (Ex 27 Annex. 30 and 31) for the position of Team Leader is demonstrative of the changes described in the evidence which confirm the requirement that EO/PO's be more sophisticated and skilled in managing their work and the discharge of new accountabilities. 292 The 1986 advertisement, to which Mr Woolley replied, provided a summary of duties and functions in the following terms: The successful applicant will be responsible to a section head for the control of Professional Engineers and other staff in an Electrical or Mechanical Maintenance, Electrical or Mechanical Planning, or Operations Section at a Power Station. In carrying out these duties the appointee will be required to apply a knowledge gained through experience in design, construction, operation or maintenance of plant similar to that used in power stations or large industrial undertakings.

Reporting to the Station Manager the successful applicant will be informed and committed to workplace health and safety, EEO, environmental principles and will have: · Degree in Mechanical or Electrical Engineering from a recognised educational institute · Extensive, relevant professional experience in operation and maintenance of a coal fired power station or similar large industrial undertaking · Proven management skills, possess a demonstrated capacity to supervise a team of Professional and/or Engineering staff of varying skills and experience, and be able to exercise initiative and leadership · An ability to represent the interests of the organisation in negotiations with regulatory authorities, government bodies and commercial organisations · An understanding and experience in the administration of maintenance and construction contracts · Demonstrated high level of oral and written communication skills 294 Mr Taylor relied upon the evidence of Mr Stubbs (TR pp 306 to307) that representation to external bodies was formerly at the higher Grade 8 level and has now devolved to the Team Leader, as the need for initiative and leadership are now requirements reflecting the fact that the Grade 8 Engineer position no longer exists. 295 Mr Taylor submitted that a comparison of the advertisements demonstrated the increased responsibility of the Team Leader, which he put has resulted in an increased responsibility to team members. 296 Mr Taylor referred to the evidence of Ms MacDonald that she now does work formerly done at SP 30 and by a Grade 3/4 Engineer (now Team Leader), and that of Mr Byers to demonstrate the devolution of responsibility within the team. 297 Mr Taylor submitted that the evidence supported a conclusion that the Engineering Group has acquired additional responsibility from the introduction of the NEM which has resulted in the requirement to comply with a new regulatory structure and increased the intensity of the work as the consequences are immediate in a physical and commercial sense. Mr Taylor put that Alliance Contracting has resulted in the Team Leader taking on the additional responsibility of being part of the Alliance Contracting Management Group. 298 Mr Taylor accepted that risk assessment and occupational health and safety considerations have always been part of the job, however, put that the type of process is much more comprehensive and engineers are now required to take personal responsibility for the outcomes. 299 Mr Taylor submitted that the evidence of the employee witnesses in respect to work changes withstood challenge and is to be preferred over that of management. Mr Taylor put that the employee witnesses had all been employed and directly involved in the work over the relevant time, which could not be said of management witnesses. 300 Mr Taylor submitted that the evidence of Mr Stubbs suffered the defect of adopting a Mercer perspective that if the work value points have not changed the work has not changed; and that if employees were capable of taking on additional responsibilities then those additional responsibilities did not contribute to an increase in work value. 301 Mr Taylor refuted assertions that increases in award rates from 1990 have compensated Engineering Group members for change in their work. 302 Mr Taylor submitted that the language of the awards is one of facilitation and commitment to embrace change, not direct acceptance of change and compensation for changes identified. 303 Mr Taylor relied upon cl 3.8(c) Classification Flexibility (339 IG 18) which provides: Those jobs which change as a result of classification flexibility will have the new position evaluated within one week of a signed Position Description becoming available.

Both parties agree that this clause will not be used to impede the development of flexible work practices. 304 Mr Taylor submitted that this provision demonstrates that a wage increase in addition to award increases is available, which he put is reinforced by the negotiation of increased rates of pay for operators and technicians in respect to significant change in the work of those classifications. 305 Mr Taylor put that, to the credit of the Engineering Group, its members have embraced change, unlike others who refused to give effect to changes until the wage issue was resolved. 306 Mr Taylor submitted that the award wage increases are adequately explained by cost of living increases and productivity. Mr Taylor submitted that productivity measured on gigawatts per hour per employee shows that there has been a 260% increase in productivity per employee over the relevant period, which he puts is far in excess of the award wage increases. 307 Mr Taylor submitted that the appropriate form of remedy is a specific and separate award for the engineering group which would be incorporated into the Macquarie Generation Award at the earliest convenience. 308 Mr Taylor submitted that the operative date should be 11 December 2002, the operative date of the 2002 Award, as Macquarie Generation should not benefit through its refusal to settle the matter in conciliation. 309 In the alternative Mr Taylor put that there is ample basis for retrospective application from 24 May 2004 when the unions put their formal position. 310 Mr Phillips submitted that the unions were prevented from relying on changes taking effect prior to the 2002 award by their commitment in prior awards to a no extra claims provision. Mr Phillips submitted that any changes in work or claim based thereon were subsumed or merged by the making of the award. 311 Mr Phillips relied upon the judgment of Wright J, President in Re Corrections Health Service Nurses' (State) Award (1999) 90 IR 235 at 245: It should be emphasised that the Commission must ensure the integrity of not only its own wage fixing principles but also the strict observance of agreements and undertakings given by parties compliance with which, properly considered, are important and indeed essential to the integrity to the principles. Undertakings such as no extra claims provisions are crucial parts of the integrity of the system of wage fixation which occurs in the New South Wales system of industrial regulation. Therefore, nothing in this decision should be seen as providing any precedent for any other award or for any other part of the public sector. It is to be emphasised that this decision is arrived at in the light of the very particular and unusual set of circumstances of the present application. Any other consideration of such matters would necessarily depend on its particular facts. 312 Mr Phillips acknowledged that the no extra claims provision does not inhibit the union from the time of the 2002 Award, adding that in the period 1991 to 1996 awards made then pursuant to the Industrial Relations Act 1991 constituted settled rights and consequently could not be reopened to consider any matters arising during those years. 313 Mr Phillips submitted that there is no basis for removal of the qualification requirement in EO/PO Level 3, which he put was a negotiated and agreed position. Mr Phillips relied upon the evidence of Mr Stubbs that a position paper drafted as part of the 1992 restructure resulted in agreement recorded at a meeting of the parties on 17 November 2003 (Ex 4 Attach. 16) that: Consideration would be given to amending the EO/PO 3 P.D. to include a qualification of "Trade Certificate plus extensive experience" but with progression capped at SP 24 in the absence of an Advanced Diploma or Degree qualification. 314 Mr Phillips put that so far as Macquarie Generation was concerned it had agreed as a concession to the unions to bring the qualification requirement in line with the equivalent EO/PO Level 3 at Liddell Power Station. 315 Mr Phillips referred to Re Broken Hill Commerce and Industry Consent Award (No 2) (2002) 120 IR 429 wherein the importance of industrial parties observing their bargains and undertakings is emphasised to support his submission. 316 Mr Phillips put that seeking removal of the qualification barrier is inconsistent with the earlier arguments by the unions that EO's be allowed to progress to Level 3 to achieve conformity with Liddell. 317 Mr Phillips submitted that the evidence of Mr Woolley that there are Level 3 EO/PO's with sufficient knowledge and experience to progress to the upper levels of the classification despite absence of the qualification falls down by failure of the union to bring any incumbent Level 3 EO/PO's to support the assertion. 318 Mr Phillips noted that there is no dispute that formal qualifications are required for EO/PO Level 4 which demonstrates acceptance that formal qualifications become an essential pre-requisite at a point. Mr Phillips submitted that determination of that point is primarily a matter of managerial responsibility in discharge of the obligation to good management of the plant. 319 Mr Phillips also relied upon advice from Mr Leck to Mr Neely in correspondence of 22 August 2003 (Ex 4 Annex GB 11) which states: "In assessing the E0/P0 Level 3 role, Mercer has used the qualification levels as specified by Macquarie Generation, although Mercer's suggested compromised wording would have resulted in the same outcome. However, there is no way that a Trade qualification (even with extensive experience) would allow a rating of D+ or E- on the Knowledge Experience sub-factor, unless the role also has substantial people and resource management accountabilities - which the E0/P0 3's do not. The depth and knowledge gained through a degree, an advanced diploma or a diploma, does fully justify the D+/E-ratings. Had Mercer used the "Trade plus extensive experience " criteria, expertise points for the E0/P0 Level 3 would have reduced and to a lessor extent, judgment points would have also been effected. 320 Mr Phillips submitted that the qualification barrier was not set to preclude individuals from advancing through level 3, noting that Macquarie Generation has a generous educational assistance scheme to support employee progression. 321 In opposing the establishment of a Level 5 position, Mr Phillips submitted that a case has not been made out to justify the establishment of a Level 5 position or that any of the Engineering staff at Bayswater meet the criteria developed in the draft position description. 322 Mr Phillips objected to the making of an award for EO's and the inclusion of the position description and salary points in the award as unnecessarily complicating the industrial regulation. Mr Phillips referred to the judgment of Marks J in Matters No 200 and 280 of 1995 (22 May 1995 unreported) demonstrate that the present arrangements work effectively for the parties. 323 The matters considered by his Honour Justice Marks dealt with retrospective application of job evaluation. 324 Mr Phillips contended that the significance of the judgement in those proceedings is the statement by his Honour at page 7 that the corporate standard for translation of work value points to salary points had been agreed. His Honour said: The transcript of proceedings in Matter No 91/279 before Mills DP on 12 August 1992 indicates that a document, presumably the one to which I have made reference and which became Exhibit 11, was agreed by Mr Turner and Mr Corkhill then appearing on behalf of the EC to represent agreement reached between them subject only to the endorsement of the union membership. I was informed that the membership by a substantial majority endorsed the proposal which consisted of a corporate policy document PP HR 001 approved by the General Manager of EC on 28 October 1992 and a draft corporate standard policy statement PP HR 001 issued on Pacific Power paper and referring to agreement being reached between Pacific Power and the unions in 1992. Both of those documents are part of Exhibit 10 tendered in the proceedings before me. They again reflect agreement between the unions and EC. 325 Mr Phillips acknowledged that the application falls with wage fixation principles, accepting that the starting point for application of the work value principle is 1990. 326 Mr Phillips submitted that any and all changes in the work performed by the Engineering Group have been adequately compensated by increases in award wages paid pursuant to the structural efficiency principle of the relevant wage fixation principles from 1990. 327 Mr Phillips acknowledged that massive reform has taken place across the industry, and particularly in the New South Wales power generation industry, which he put is consistent with the proper application of the structural efficiency principles. 328 Mr Phillips put that the power generation industry in New South Wales has been subject to evolving and continual change based upon the structural efficiency principle which has been reflected in award wage increases, all of which have been above the CPI or minimum wage movements. 329 Mr Phillips took issue with Mr Taylor's submission that the Engineering Group have embraced change prior to wage increases, putting that the opposite is the case when regard is had to the delay in settlement of generic position descriptions which management first sought in 1996. Mr Phillips also took issue with the form of the claim, putting that to seek a separate award for EO/PO's is to regress to arrangements prior to the single award arising from the 1990 proceedings, and to pursue the present increases is to abandon job evolution, acceptance of which was one of the foundations for the second structural efficiency wage increase in 1992. 330 Mr Phillips submitted that the proposition that wages be set by negotiation or work value proceedings is contrary to the commitment to the job evaluation process, which he submitted was in reality a devolution of power from the commission to the parties based on work value. 331 Mr Phillips put that no good reason has been made out to abandon the job evaluation system. Mr Phillips submitted that dissatisfaction with the result is no basis for departure from, or modification of, the long standing Corporate Standard for conversion of work value points to salary levels. 332 Mr Phillips relied upon submissions of Mr Brock in the proceedings of 26 November 2003, wherein Mr Brock reported that the parties had reached a point where the next step was to identify the salary ranges for each of the position descriptions, to emphasise his argument that the unions accepted the process until May of 2004 when they took their first documented objection on the basis of failure to reach agreement on the salary points claimed. 333 In correspondence from Mr Brock to Mr Neely dated 24 May 2004 (Ex 4 Attach. 20) Mr Brock refers to the Corporate Standard and accuses Macquarie Generation of breaching it and the Mercer process. Mr Phillips put that this is evidence that the unions were aware of the Corporate Standard and were aware, as were the trained evaluators, Mr Woolley and Mr Fuller, that it was not part of Mr Leck's brief to not disturb or alter the Corporate Standard. 334 Mr Phillips submitted that this is reinforced by the MOU which guaranteed that no employee would lose money as a result of the process. 335 Mr Phillips put that the MOU, having been written by people involved in the industry, must be read with the industry parameters and common knowledge in mind, which he argued are relevantly the award, letters of appointment, and the existing job evaluation system including the Corporate Standard. 336 Mr Phillips submitted that the unions have accepted the Corporate Standard without objection for many years and are accordingly bound by it. 337 Mr Phillips undertook a comprehensive review of the structural efficiency principle from its introduction into wage fixation principles and emphasised the determination expressed in the wage fixation principles that double counting be avoided and the inappropriateness of wages adjustment based on wage survey data, described by the National Wage Case August 1989 (1989) 30 IR 81 at 91 as a: Spiral of nonsense and contrary to the spirit and purpose of the wage fixation principles and encourages workers to break the commitment to those principles made by their unions on their behalf. 338 Mr Phillips submitted that vigilance against double counting and the unhelpful nature of market surveys was adopted by this Commission in framing and implementing the wage fixation principles applied in this State and relevantly to the power generation industry. 339 Mr Phillips also relied upon the Nurses (State) Award No 4 case (at 26-27) where the Bench says: 17 Further, there should be no double counting. That is, changes that were, or should have been taken into account in any previous work value adjustments are not to be included in any work evaluation under this principle. 18 These requirements under the work value principle impose a significant burden on an applicant, particularly because of the strict test requiring the applicant to demonstrate a "significant net addition to work requirements so as to warrant the creation of a new classification or upgrading to a higher classification". It might be asked how such a burden exists in a decade or more of rapid and continuing workplace change and the almost universal impact that phenomenon has had on employees. But as the principle makes clear, changes in work by themselves may not justify an increase in wages. Some changes bring about a net reduction in work requirements. Others merely reflect the evolving nature of the particular occupation where skills or responsibilities are lost and new ones gained without producing a net addition to work requirements. In many occupations, particularly professional occupations, change, and the requirement to cope with it by coming to terms with new methods and new technology, is an inherent and accepted characteristic of the employment and rarely will this evolutionary process attract extraordinary wage increases under the work value principle . In this respect, we note the observations of Fisher P in Re Medical Officers Hospital Specialists (State) Award (1990) 33 IR 79 at 84 where, after referring to the work value principle. his Honour said: One of the problems with the application of the "strict test" to professional or managerial employment lies in the nature of the change. Change must be accommodated, being an essential part of what professional practice is all about. It does not follow therefore without more, that changes even spectacular changes, necessarily fall within the work, value principle.

[Emphasis added] 340 Mr Phillips submitted that the evidence of increased volume of work does not assist the union's case, having regard to the comments of the Full Bench in the TAFE Award case where at 287 the Bench included the following in some global observations in relation to the assessment of work value in that matter: 90 It would be a rare case where change in volume of work would have even an indirect effect on work value. However, part of the Federation's case came within this rare situation. That is because the nature of the changes in the skills and responsibility of teachers, which we will discuss below, not only satisfied the work value principle because of the significant change in the functions and tasks of teachers, but also because the magnitude of those changes required a significant adaptation of work methods by teachers to enable them to discharge the full range of their current duties. In other words, in order to carry out the full range of the complex and voluminous professional responsibilities since 1991, teachers have. been required to be more sophisticated and skilled in the management of their work and the discharge of their new accountabilities, both in and outside of school hours. This is a factor relevant to be considered under Principle 6. 341 Mr Phillips also relied upon the directions of the Bench at 288 (supra) when the intersection between structural efficiency and work value changes of a prospective and retrospective nature was considered: 92 We do not consider that passage to be of much assistance in our assessment of work value in the present matter. The Educatio n Teaching Services case was brought on the dual bases of work value change and structural efficiency reform, the latter being the focus of the case. However, whereas structural efficiency reforms plainly require a "future" assessment, work value changes may have both retrospective and prospective elements. That is, an assessment of work value changes may involve an analysis of changes which have already occurred - the traditional work value case - or changes which are yet to be implemented (but are known), for instance, by virtue of workplace agreement or by force of statute. With respect to the latter type of change, it is conceivable that there may be a merger of the concepts of structural efficiency reform and work value changes. However, it is also possible that the particular future changes may satisfy the requirements for structural efficiency changes, but not satisfy the work value principle.

347 The establishment of a Level 5 position to recognise and reward a level of Technical Knowledge and Expertise is not unprecedented within Macquarie Generation. The development of the draft position description was undertaken in relation to the existence of the position at Liddell at that time. 348 The capacity to appoint or employ a suitably qualified person to an EO/PO Level 5 position, where justified on the basis of work required, provides flexibility and scope to properly remunerate appropriately qualified staff. 349 There is no evidence in these proceedings to support the appointment of any particular individual to the position of EO/PO Level 5, however, the capacity for management, or a Classification Advisory Committee, to consider the position would be sensible and desirable. 350 I recommend that EO/PO Level 5 be included in the Engineering Group salary structure at SP 30-32. Filling of the position is to be needs based. Work Value 351 The MOU has afforded the parties a useful process to advance the instant issues to resolution. The MOU process was of the parties own device and, whilst helpful, has not been conclusive. 352 The argument that the parties are bound by the outcome of the MOU process to the extent that they conceded award and statutory rights is not sustainable. 353 The evidence leads to a conclusion that the MOU process was a means by which the parties applied themselves to the award dispute settlement procedure. This procedure, found at cl 23, Grievance and Dispute Procedures, of the 2002 Award 339 IG 13 at 57 concludes with subclause h(ii) which states: if agreement cannot be reached on the matter through the foregoing procedure, it may then be submitted to the Industrial Relations Commission of New South Wales. 354 The Commission is then bound by the terms of the Act and the relevant wage fixation principles. 355 It is not open for Macquarie Generation to accuse the unions of not accepting the outcome of the MOU process when it has not accepted recommendations or conclusions from the process. The evidence supports the conclusion that the final determination of salary points which required the consideration of internal and external relativities was not within the task assigned to Mercer by management; nor was it agreed by the unions. 356 The unions have a right under the Award, the Act and wage fixation principles to pursue a work value case on behalf of their members. 357 The argument that the unions are restrained in pursuit of the matter by previous structural efficiency increases and the award classification advisory process are equally unsustainable. 358 Structural efficiency increases are a relevant consideration in the strict tests to be met in application of the work value principles, but are not prohibitive. 359 I do not accept that classification flexibility provisions of the award eliminate work value considerations. 360 Clause 3.8(c) 339 IG 13 at 18 provides for classification flexibility in the following terms: (c) Classification Flexibility - Following agreement through consultation with classifications affected and/or relevant unions where required, work can be performed across the classifications referred to in subclause 3.8(b) above.

Both parties agree that this clause will not be used to impede the development of flexible work practices. 361 It is appropriate to note that these provisions, which provide a mechanism for salary increases over and above those agreed pursuant to the structural efficiency principle, precede the No Extra Claims provision found in cl. 3.9. 362 The award so provides a process for consideration of change and re-evaluation. 363 The EO's and PO's subject to this application fall within the classifications covered by the relevant job evaluation system. This is no more than the mechanism by which additional skill levels can result in additional remuneration. The test is whether additional skills justify additional remuneration. 364 For those classifications covered by the job evaluation system the award provides a classification advisory process as a means of consultative review. 365 The classification advisory process is found in cl 8, Classification Advisory Committee, of the 2002 Award. It is an advisory process only, the procedures specified in subclause 8.4 (339 IG at 24): The Committee proceeds by exchange of views and discussion, not by vote. It is the responsibility of the Chairperson to prepare a report, including a recommendation, to the Chief Executive Officer of Macquarie Generation, setting out the view of the Committee. If there are differing views, the report must include them. 366 Subclause 8.6 reserves rights under the Act in the following terms: This clause will not prejudice or affect any right any person may have under the Industrial Relations Act 1996 . 367 The evidence is that the classification advisory process has been dormant for a number of years. That neither party sought to utilise it raises a number of questions not addressed in these proceedings, however, there is no barrier to the pursuit of a work value argument. 368 The evidence demonstrates that there has been broad organisational and structural change within Macquarie Generation and that this has altered the work of the Engineering Group. 369 These changes have been in terms of quality and quantity of work and increased level of responsibility. 370 There is unquestionably a professional obligation to embrace change as knowledge and technology change. It must be accepted that an engineering and professional role is not static and the techniques, methods and means by which outcomes are achieved will change over time, while the outcomes or substantive tasks and responsibilities may not. 371 The effect is not uniform over all positions. I find no basis for altering the entry level. 372 There is, in my view, no basis for an increase in the salary structure arising from the transition from individual position description to generic position description. The inherent value lies in the work performed. 373 Analysis of the changes relied upon by the unions leads to the conclusion that, with the exception of the team leader position, the effect has not been of such significance so as to meet the tests set out in the work value principle. 374 The electricity generation industry has experienced a broad based, systemic change in its structure. Such events as introduction of the National Electricity Market and legislative changes in occupational health and safety fall broadly across the industry and do not constitute grounds for specific work value adjustment. 375 Concurrent and consequential micro-reform identified, including the removal of support services in the form of less internal line management and staff resources and the closure of Pacific Power, are in large measure replaced by access to consultancy services or result in less onerous reporting obligations. This might require a different mix of skills but does not constitute a net addition to work value, particularly for entry and intermediate levels. 376 The acquisition of additional assets, change in maintenance procedures to extend the life of the plant, and a revised outage calendar, require different methods of working, which result in a different skill mix and emphasis but do not constitute new skills or a significant net addition to work value. 377 The volume of work issues relied upon does not, in this matter, provide a foundation for a work value increase. 378 The team leader position is the role in which I find there is significant change not adequately recognised in the salary system or structural efficiency increases. The evidence establishes that the team leaders have been required to exercise a higher degree of leadership, technical and commercial responsibility. 379 I determine that there should be progression available to SP 38. An appropriate range for team leader is SP 36-38. 380 There is no basis on the evidence to afford increase to other classifications. The nature of the changes described in evidence does not constitute a significant net addition to work, the way it is performed, or the environment in which it is undertaken. 381 I find that the increased responsibility falls upon all team leaders, any differences in skill, experience and other relevant factors are accounted for in the salary range.

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Judgment (152 paragraphs)

Cases Cited (9)

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