Peabody OK in cutting wages
FWC supports miners method of unscrambling Total Fixed Remuneration.
Wednesday 25 January 2017
The CFMEU has failed in its attempt to appeal a decision last year by the Fair Work Commission (FWC) that allowed Peabody to reduce pay for its Coppabella employees by thousands of dollars.
In the wake of collapsing coal prices, Peabody moved to reduce its wages bill at the mine by cutting the number of hours miners were rostered for work, and at the same time reducing their hourly rate.
While the CFMEU accepted that under the relevant Enterprise Agreement Peabody could reduce rostered hours, it challenged the methodology Peabody used to reduce the hourly rates that applied to the new rosters.
The reason that calculating the hourly rates wasn’t more transparent was that during better times both the CFMEU and Peabody had agreed on a Total Fixed Remuneration (TFR) wage package.
Under this all-encompassing pay system, a miner received a TFR made up of a base rate plus a fixed rostered - overtime allowance for an average 42 hour week, however the TFR was never broken down into its parts.
At various times both parties tried to clarify the hourly rates incorporated in the TFR, but gave up because it was too hard to reach agreement.
However in 2016 as the downturn bit, Peabody reduced the hours and the hourly rate using a formula that was built around the only known hourly rate - which was the hourly rate for “non-rostered” overtime.
This was calculated as double the Coal award base rate, so by dividing it by two Peabody came up with a new overtime rate.
One of the CFMEU’s biggest concerns with the calculations were that they referenced the Award - something they felt had been ruled out by the 2013 Enterprise Agreement.
However in the end the full bench of the FWC rejected the appeal.
“In our view, the Deputy President did not err in finding that the review methodology adopted by Peabody was consistent with the terms of the Enterprise Agreement.
“There is no doubt that regard was had to various provisions in the Award in deconstructing the TFR and making assumptions to develop the model used by Peabody and KPMG to review the Base Salary and Roster Allowances consequent upon the change in rosters.
“In exercising the broad discretion conferred on her, we are of the view that the Deputy President did not err by having regard, as part of her consideration of the models for TFR review put forward by each of Peabody and the CFMEU, to whether the application of either or both of those models would give rise to an unreasonable or unfair outcome for Peabody and/or the employees covered by the Enterprise Agreement”
“Furthermore, we agree with Peabody’s contention that the Deputy President’s reasons for preferring Peabody’s model were not primarily based on notions of fairness, rather, the Deputy President found that Peabody’s model was consistent with the terms of the Enterprise Agreement and with the intent of the parties as ascertained from the relevant objective background facts.”