Notification under Section 130 by the Construction, Forestry, Mining and Energy Union (NSW Branch) of a dispute with Macquarie Generation re refusal to pay annualised salary loading [2008] NSWIRComm 192

APPLICANT Mr K Endacott Construction, Forestry, Mining and Energy Union (NSW Branch) LEGAL REPRESENTATIVES: RESPONDENT Counsel Mr J Phillips SC

• 17 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Notification under section 130 by Construction, Forestry, Mining and Energy Union, New South Wales Branch of a dispute with Macquarie Generation re refusal to pay annualised salary loading

1 Mr Greg Sneddon has been employed by Macquarie Generation and its predecessors for over 28 years. 2 Mr Sneddon had been in the position of Power Plant Operator (PPO) at Liddell Power Station ("Liddell") at salary point (SP) 34 for some 18 months when he responded to an advertisement for expressions of interest published by Macquarie Generation for the position of Generation Controller at Bayswater Power Station ("Bayswater") (SP 32). Mr Sneddon had been employed at Bayswater for some nine years prior to appointment at Liddell. He sought to return to Bayswater. 3 Bayswater is owned and operated by Macquarie Generation in close proximity to Liddell. Liddell is situated on the northern side of the New England Highway; Bayswater is on the southern side of the same highway, the entry/exit roads from the highway serving both locations. 4 Mr Sneddon was successful in the interview and selection process. On taking up training for the Bayswater position Mr Sneddon's wages were reduced by approximately $700 per week. 5 Macquarie Generation assert that this is in accordance with the Macquarie Generation Enterprise Agreement 2008 [2008] NSWIRComm 1059 ("the Agreement") which applies to employees at both Liddell and Bayswater. 6 The Construction, Forestry, Mining and Energy Union, New South Wales Branch (CFMEU) on behalf of Mr Sneddon dispute this application of the Agreement. 7 The dispute was not able to be resolved in conciliation. Directions issued to bring the matter to hearing on 2 October 2008. 8 Macquarie Generation has entered into a referral agreement with Unions NSW and affiliates pursuant to s 146A of the New South Wales Industrial Relations Act 1996 ("the Act"). The referral agreement (NREF 44 of 2007), filed with the Industrial Registrar, commits the parties to the provisions of the Act and the powers of the Commission conferred thereby.

9 Mr Endacott appeared on behalf of the CFMEU with Mr Allen Drew. Mr Ferguson appeared on behalf of the Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (PSA). 10 Mr J Phillips of Counsel appeared on behalf of Macquarie Generation with Mr K Petersen. THE EVIDENCE

11 Mr Endacott brought evidence in Statement form from Mr Sneddon (Ex 1); and from Mr Allen Drew, President of the CFMEU Energy Division (Ex 3). 12 Mr Phillips brought evidence from Mr John Dyson, Production Manager Bayswater, in Statement form (Ex 5). 13 Mr Sneddon, Mr Drew and Mr Dyson were not required for cross examination. 14 Macquarie Generation offered the Bayswater position to Mr Sneddon in writing (Ex 1, Attach. 2) in the following terms: "Following your application and interview, I have pleasure in offering you appointment to the position of Generation Controller, commencing upon satisfactory completion of all the required Generation Controller Training.

On your acceptance, your employment will be subject to the terms and conditions of the Macquarie Generation Employees (State) Award 2005 (now a preserved State Agreement). In addition to the particular provisions outlined in this letter, your employment will also be in accordance with legislation governing employment and the electricity industry in New South Wales ,as well as the rules, policies and procedures issued by and amended from time to time by Macquarie Generation. Upon completion of the required training for a Generation Controller, the salary range for the position is $1636.10 - $1751.10 per week (Salary Points 30-32 covered by the Award) and you will commence at Salary Point 30 (currently $1636.10 per week). Progression to higher salary points within this range will be in accordance with the Bayswater Operators' Agreement.

In addition, allowance and loadings in accordance with the Award and the Employee Incentive Scheme will apply. Hours of work are currently based on a 7 x 2 roster, working 12 hour shifts.

Payment during your training will in accordance with Clause 10.21 of the Macquarie Generation Employees Award 2005 (now a preserved State Agreement). Please note that as this is not a promotion on your current role, you are not entitled to receive roster loading, shift allowance or penalty rates for the duration of the training .

A probationary period of six months applies upon commencement in the Generation Controller position, during which your performance and competencies will be reviewed. Upon successful completion your appointment will be confirmed.

Formal confirmation of your acceptance, or otherwise, no later than 4.00pm on Friday 9 May 2008 would be appreciated. In this regard, please complete the acceptance on the attached page of this letter and return to Human Resources, Bayswater Power Station. Details relating to your assigned shift will be provided prior to commencement."

[Emphasis added] 15 Mr Sneddon deposed that he disputed the manner of payment for the period of training set out in the offer and was informed by Macquarie Generation that if he did not accept it on the terms offered, the appointment was not open to him. 16 Mr Sneddon commenced training for the Generation Controller position at Bayswater on 24 July 2008. This is a self-paced modular course. Mr Sneddon deposed that he was informed that the hours were flexible but could not include weekends or night shift. The training involves some classroom study and on the job plant familiarisation. Mr Sneddon has been successful in completion of modules undertaken so far, however, expects the training to go on for some months. 17 The evidence of Mr Sneddon is (Ex 1, para 8): "The role I performed as a Power Plant Operator at Liddell is a higher graded role than the Generation Controller position at Bayswater and I understood that I would have to undergo refresher training to fulfil that role." 18 Mr Sneddon deposed (Ex 1, para 10): "This refresher training is for the Senior Generation Officer and Generation Officer components of the job. The Generation Controller position incorporates the roles of Senior Generation Officer, Senior Generation Controller, Generation Officer (coal plant), Generation Officer (ash and dust plant). For me in the main, it is refresher training as I had performed the roles of APPO (Assistant Power Plant Operator) and ADAPO (Ash and Dust Assistant Plant Operator). I was never officially appointed as an ACPO but conducted a training course to give me competencies of that position. These roles were performed by me at Bayswater Power Plant and at Liddell Power Plant. For a period of approximately 9 years, I worked at Bayswater Power Station performing many of the roles I am being refresher trained for including ADAPO from October 1984 to March 1989; APPO from June 1991 to February 1994 and Staff Training Officer from February 1994 to July 1995." 19 Mr Sneddon attached a number of items of email correspondence to exhibit 1 in which he informed Mr Drew that he accepted the position under duress and commented that, as the majority of his training will be refresher training, he should be paid shift penalties and associated entitlements (Attach. GDS 4). Mr Sneddon advised Macquarie Generation (Ex 1, Attach. GDS 5) that he was previously trained in Ash and Dust Plant and Coal Plant Operation and that this will be refresher training. 20 Mr Sneddon's statement also includes a series of email exchanges with Mr Dyson (Ex 1, Attach. GDS 7) concerning the circumstances of his commencement at Bayswater. 21 In response to a query from Mr Sneddon as to plans for his transfer and training Mr Dyson replied: "I was proposing to use Geoff Hungerford for the APPO refresher training." 22 There is then discussion concerning Mr Hungerford's return from leave and subsequent communication with Mr Sneddon to organise the training. 23 Mr Sneddon accepted this arrangement and on 17 June 2008 received an email from Mr Dyson which states: "Geoff Hungerford will be off shift from next Monday 23 June whilst he conducts the training course/s.

Your refresher training should start next Monday on daywork as well." 24 The email from Mr Dyson then discussed arrangements for release of Mr Sneddon from Liddell. Mr Sneddon's training commenced in accordance with these arrangements. 25 The evidence of Mr Dyson is that he has been employed by Macquarie Generation and its predecessor since October 1978, some 30 years. Mr Dyson has had many positions over that time and was the Production Manager at Liddell from July 2001 to May 2004 when he took up his present position of Production Manager at Bayswater. 26 The relevant evidence of Mr Dyson, including his opinion of the appropriate application of the Agreement, is (Ex 5, paras 10, 11): "10. Mr Sneddon is in the process of completing what I described as "refresher training". This related to only part of the training he is doing for the new position. The "refresher" part refers to competency based assessment of two previous positions prior to his current one. He used to be an Ash and Dust Assistant Plant Operator (ADAPO) at Bayswater and an Assistant Power Plant Operator (APPO) (see paragraph 10 of his Witness Statement). In relation to that assessment he has been given some training in areas where it was considered he was deficient at this stage of his training program. This training was for skills possessed by a position graded less in the salary point scale than what he currently occupies. He also needs to train for those areas not previously part of ADAPO or APPO work required for the position of Generator Controller (GC).

11. It is understood that this additional training is not part of the Union's claim brought on Mr Sneddon's behalf." 27 Mr Dyson's Statement is part evidentiary and part submissions. The evidentiary component puts Mr Dyson's understanding of the industrial instrument in the following terms: 7. My understanding is that when an employee is trained for an appointed position at a lower grade than the one he is currently appointed to, he or she does not receive roster loading, shift allowances or penalty rates. This is reflected in the letter of offer that Mr Sneddon and marked "GDS2". Accordingly, if he or she is not in receipt of these loadings or allowances he is not entitled to Annualised Salary. 28 Mr Dyson deposed (Ex 5, p2): 8. Sub-clause 10.21 does not apply to Mr Sneddon: i. he is not being given training for another position at his existing or higher grade - 10.21(a)

ii. he is not attending refresher training for his appointed duties - 10.21(b)

iii. no reliance is placed by him or his advisors on sub clause 10.21(c). He is being trained for a position at a lower grade than the one he occupies. 29 The evidence of Mr Drew (Ex 3) is that Mr Sneddon remains a Liddell Power Station employee. Exhibit 3 states: 1. I have been advised by Ken Peterson, who is part of the Industrial Relations Management at Macquarie Generation, that sometimes when he has completed his training for Generation Officer, he is still classified as a Liddell Power Station employee classification level Power Plant Operator SP 34.

2. Upon reclassification as a Generation Controller at Bayswater Power Station, he will be allocated to a position of Generation Controller.

INDUSTRIAL REGULATION 30 The Agreement applies to both Bayswater and Liddell Power Stations. 31 The relevant classification is Operator, however, the positions within the classification are different at each power station. 32 At Liddell the historical structure of Power Plant Operator (PPO) and Assistant Power Plant Operator (APPO) continue to apply. 33 The statement of functions and remuneration in the form of salary points taken from the 40 point salary schedule at cl 3 of the Agreement are specified in an agreement between management, unions and employees made in 1998, known as the Liddell Operator Restructuring Agreement (Ex 1, Attach. GDS 9). APPO is SP 26 - 29 PPO is SP 32 - 33 SP 34 on installation of DCS 34 At Bayswater Power Station the positions of APPO and PPO were replaced with the positions Generation Controller and Senior Generation Controller. The range of duties and method of working is different to Liddell. The Bayswater arrangements are specified in an agreement between management, unions and employees made in 1998 titled Operator Restructuring Document Bayswater Power Station (Ex 1, Attach. GDS 8).

Senior Generation Controller SP 34 Unit and Two Station Plant SP 33 Unit and One Station Plant SP 32 Unit Plant Control

Generation Controller SP 32 Unit and Two Station Plant SP 31 Unit and One Station Plant SP 30 Unit and Senior Generation Officer Duties 35 It is noted that the positions of Senior Generation Officer SP 27-29 and Generation Officer SP 22-24 exist in the Bayswater Agreement. 36 The provisions of the Industrial Agreement relied upon are: Payment While at Training

10.21 Shift workers must be paid the roster loading, shift allowance and penalty rates for public holidays, Saturday and Sunday shifts, which they would have received for their appointed duties if they are: (a) training for appointment to a position in their existing or higher grade; or (b) attending refresher training courses; or (c) attending general training courses and/or station training courses to qualify to carry out higher grade duties.

Payments must not include any overtime or higher grade which might have otherwise been worked.

10.40 Agreements on Annualised Salary, insofar as they contain provisions otherwise inconsistent with the Agreement, shall take precedence over such provisions, to the extent of such inconsistency.

The relevant Annualised Salary Loading replaces roster Loading, Weekend Penalties, Public Holidays and Shift Allowance, where applicable.

• time worked - annual leave - "H" day, where applicable - approved study leave - training - secondments - community leave - personal leave

Work groups will be able to negotiate the extension of Annualised Salary to Long Service Leave, Sick Leave and Worker' Compensation. SUBMISSIONS

37 The primary submission advanced by Mr Endacott is that cl 10.40 requires that Mr Sneddon is entitled to continue to be paid the annualised salary he was receiving before commencement of training. 38 Mr Endacott submitted that the majority of training undertaken by Mr Sneddon is refresher training, with only a small component of additional training or training involving work he had not performed during his previous engagement at Bayswater. 39 Mr Endacott submitted that until Mr Sneddon completes the relevant training and is appointed as a Generation Controller at Bayswater his substantive position remains as an APPO (SP 34) at Liddell. 40 Mr Endacott put that the provision of cl 10.40 of the Agreement places no limit on the specific type of training, and accordingly Mr Sneddon is entitled to be paid the annualised salary for his substantive position. 41 Mr Endacott submitted that there is no foundation for the argument advanced by Macquarie Generation that Mr Sneddon is not entitled to the annualised salary for his substantive position as the training undertaken by him is relevant to a position of lower salary. 42 Mr Endacott put a secondary submission that if it were found that the annualised salary should not be paid, Mr Sneddon would be entitled to payment of shift allowances prescribed by cl 10.21 of the Agreement on the basis that prior to training Mr Sneddon was a shiftworker and continues to be a shiftworker "in training" as envisaged by cl 10.21(b) "attending refresher training courses". 43 Mr Endacott put that cl 10.21(c) provides for payment as sought. 44 Mr Endacott put that the training undertaken by Mr Sneddon, which is not refresher training, falls within the scope of "general training courses" which are not limited to those required to qualify to carry out higher duties. 45 Clause 10.21(c) states: (c) attending general training courses and/or station training courses to qualify to carry out higher grade duties.

46 Mr Endacott put that the use of "and/or" resulted in the descriptor "general training courses" and "station training courses" to qualify to carry out higher duties, being read both as mutually exclusive and conjunctive. 47 Mr Endacott referred me to the decision of his Honour Justice Madgwick in Kucks v CSR Ltd (1996) 66 IR 182 which he put was an adequate and useful enunciation of the principles of interpretation to be applied in resolution of this dispute. His Honour said (at 184): Legal principles

It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.

But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.

48 Mr Phillips supported reliance upon the principles found in Kucks, in particular: "A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding as an arbitral body does, what might fairly be put into an award" 49 Mr Phillips also referred to the Judgment of a Full Bench of this Commission in Zoological Parks Board of New South Wales v Australian Workers' Union (2004) 135 IR 56, which he submitted applied principles similar to those encountered in Kucks. In particular Mr Phillips relied upon the following passage (pp 66-67, [43]): "The relevant principles to be applied when interpreting industrial instruments are well settled: for example, Kingmill Australia Pty Ltd (t/a Thrifty Car Rental) v Federated Clerks Union of Australia (NSW Branch) (2001) 106 IR 217 and Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Delta Electricity [2003] NSWIRComm 135 at [44]-[46]. Broadly speaking, the primary consideration in such matters is the actual words used (and these should be given their plain, ordinary meaning) and the context in which the words are used. 50 Mr Phillips submitted that these principles dictate that in the application and interpretation of an industrial instrument the actual words used must be given their plain and ordinary meaning in the context in which they are used. 51 Mr Phillips submitted that in order to arrive at the correct context it is necessary to read clauses 10.21 and 10.40 together so as to give clarity to the type of training identified as qualifying for payment of the annualised salary. 52 Mr Phillips contended that the training identified as attracting payment of the annualised salary must be the same sort of training that, absent the annualised salary, attracts shift allowances as prescribed by cl 10.21. 53 Mr Phillips put that it is then helpful and instructive to have regard to the history of what the annualised salary was meant to do. 54 Mr Phillips relied upon exhibit 7, a document known as exhibit M produced in August 1991 as a notation to the 1991 Award which introduced annualised salary for power production operators, to support his submission that annualised salary (TR 2/10/08 p6): "was struck to put to put together into one all up rate the range of allowances or penalties or loadings which would otherwise have existed if one just merely had regard to the award alone and we say in that context when you understand what the annualised salary rates purpose was its purpose was to make sure that it was paid for as an all up rate for the loadings or disabilities or allowances which would have otherwise applied if one just really had regard to the award" 55 Mr Phillips further relied upon the transcript of proceedings before the Commission in Court Session on 5 February 1991 (Ex 6), which records the description of annualised salary by Counsel for the employer in the following terms (at p 31): CAHILL VP: What is annualised salary?

ANDERSON: That is a salary rate which will include components to be paid as part of the salary rate which take into account various allowances, such as penalty allowances, that are paid separately at the present time. So that a person would be paid a particular salary rate which would in effect cover the normal incidence of his employment - an all up salary rate. 56 Mr Phillips' submission is that the effect of the annualised salary rate is the average of all of the applicable award payments into the same payment each pay period, avoiding large fluctuations each pay period. 57 Mr Phillips submitted that cl 10.40 is specific in what attracts the annualised salary and what does not. 58 Mr Phillips put (TR 2/10/08 p7): "What it's not paid for is in that position which possibly the parties never even contemplated and this is when someone applied for a lower paid job, an objectively lower graded job and of course in this instance, this is a point of distinction between Mr Sneddon and others, he consciously and this is found in the emails and the application, he applied for, for whatever reason and that'd be him and he was accepted for a lower graded job. He was on salary point 34 and he applied for a different position at salary point 32." 59 Mr Phillips further submitted that the preamble to cl 10.21 makes clear that training must be for the appointed duties, and the itemised provisions of (a), (b) and (c) of cl 10.21 only allow payment of shift allowances when training for higher duties. 60 Mr Phillips submitted that the parties had the opportunity to include "or lower paid duties" in cl 10.21 but did not. 61 Mr Phillips relied upon the principles of interpretation to support his submission that the words "or lower grade duties" cannot now be added or inferred. 62 Mr Phillips put that these proceedings are not arbitral in nature and the Commission cannot re-formulate the Agreement on any notion of fairness or equity, but must apply it as it stands, notwithstanding that the present circumstances of application for a lower graded job are most unusual, and more than likely the parties have not put their mind to such circumstances in reaching their agreement. 63 Mr Phillips' submission is that there is a lacuna in the award into which Mr Sneddon has fallen, adding that this should be no surprise to him as he was made well aware of the payment for training prior to commencement. 64 Mr Phillips submitted that cl 10.21 makes clear that training which attracts the prescribed benefit (TR 2/10/08 p11): "it's refresher training for your existing position or it's training for another position in your existing grade or it's training in a position which is objectively valued by reference to the salary scale at a higher grade. It has nothing to do we would submit with preference of where one would like to be, where one's been before and the like" 65 Mr Phillips noted that not all of the training being undertaken by Mr Sneddon is refresher training, and that subject matter totally new to him could not fall within the provisions of cl 10.21. 66 Mr Phillips put that if the Commission were to find that some of the training undertaken by Mr Sneddon is refresher training and accordingly attracted the annualised salary, a schedule distinguishing between refresher and new training would have to be developed.

CONSIDERATION 67 Mr Sneddon accepted the position in the terms offered by ticking the acceptance box on a form document provided to him by Macquarie Generation which sought his commitment in the following terms: "I accept Macquarie Generation's offer and the conditions outlined in the letter advising of my selection for the position of Generation Controller. I agree to the conditions outlined in the letter of offer ."

68 There can be no doubt that Mr Sneddon accepted the offer on the terms described by Macquarie Generation. The question arises as to whether the terms of the offer are a correct and allowable application of the Agreement, and, if not, whether the parties, i.e. Macquarie Generation and Mr Sneddon, can contract outside it. 69 Macquarie Generation do not purport to hold Mr Sneddon to a contractual position in respect to the rate of pay for training, and accept that their proposition that "as this is not a promotion ... you are not entitled to receive roster loading, shift allowance, or penalty rates for the duration of the training" is contingent upon that proposition being a correct application of cl 10.21 of the Agreement. 70 The correct approach to this matter is to determine the employment status of Mr Sneddon, then apply the industrial instrument in accordance with the well established principles of interpretation. 71 There is no doubt or contest that Mr Sneddon remains an employee of Macquarie Generation. Mr Sneddon's substantive employment is in the classification "Operator" as confirmed by the evidence of Mr Drew. 72 Mr Sneddon remains a PPO at Liddell with the option or capacity to return to that position if he is unsuccessful in the training or does not satisfactorily complete the requirements of the probationary period. 73 The letter of offer to him does not appoint him to a position at Bayswater. In fact this letter states that he will not be appointed to a position at Bayswater until he has successfully completed his training, and then his appointment is subject to a probationary period of six months. 74 The position at Bayswater attracts a lower salary range than the position at Liddell and accordingly cannot be considered to be higher graded duties for the purposes of cl 10.21 of the Agreement. 75 I conclude that as Mr Sneddon remains appointed to the position of PPO at Liddell the relevant question is whether the training duties he is directed to perform disentitle him to the annualised salary payment for that position. 76 The answer must be no. 77 The relevant consideration is cl 10.40, Annualised Salary which provides that agreements on annualised salary take precedence over the industrial agreement where an inconsistency is encountered. 78 There is significant difference between cl 10.40 and cl 10.21 of the Agreement. Clause 10.40 provides that the annualised salary is paid for "training", no further definition or qualification of training is provided; as opposed to cl 10.21 where training is qualified and further defined. 79 Mr Phillips' submission that the Agreement does not provide for training associated with a lower graded position, and that the parties probably did not turn their mind to such circumstances, has substance but is unhelpful in this matter. 80 The Agreement is bereft of transitional training provisions in the circumstances encountered here and cannot be remedied in these proceedings. 81 In these circumstances the history of the annualised salary does not help construct context because if it is to simply replicate the agreement on an annualised average, it cannot do that in respect to a situation not provided for by the Agreement. 82 If this is indeed a lacuna which may only be repaired by amendment of the Agreement, it does not necessarily follow that Mr Sneddon is the victim and Macquarie Generation is the beneficiary. 83 I accept Mr Phillips' submission that the Agreement must be applied as it is written, giving the plain and ordinary meaning to the words. When this is done I find in favour of the argument advanced by Mr Endacott that cl 10.40 prevails and that annualised salary is paid for training without further qualification. 84 I determine that Mr Sneddon is entitled to payment of the annualised salary as a Power Plant Operator at Liddell unless and until he is appointed to and accepts another position. 85 I strongly recommend that the parties confer with a view to amending their industrial agreement to make specific arrangements for transitional training. 86 Mr Sneddon is not bound by his acceptance of the conditional offer of transfer to Bayswater as, for the reasons set out above, this offer was predicated on an incorrect application of the industrial instrument. 87 I so determine. oo0oo

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