'Clearly defined' duties, classification and pay grades a must, says court
The Federal Court of Australia recently dealt with a dispute over employee classification and pay rates, highlighting the issues of interpreting enterprise agreements in the workplace.
The court grappled with the proper classification of certain employees under an enterprise agreement, underscoring the importance of clearly defining job duties and pay grades in employment contracts.
The case centred on a group of employees working at a paint manufacturer's distribution facility. The employer had classified and paid them as Grade 3 Level 1 employees under the relevant enterprise agreements. However, the union representing the workers argued they should have been classified at Grade 3 Level 3, or alternatively, Grade 3 Level 2.
Background of the case
At the heart of the dispute was the interpretation of the classification criteria in the enterprise agreements. The court had to determine whether the employees' actual duties matched the higher-level classifications, which would entitle them to higher pay rates.
The classification structure in the agreements was based on the nature, variety, and importance of tasks undertaken, generally dependent on the level of experience, skill, and training of the employee.
Grade 3 required employees to have a forklift licence and use various mechanical equipment, as well as attend to different kinds of "paperwork".
Decoding "paperwork"
One of the central issues in the case was the meaning of "paperwork" in the Grade 3 classification criteria. The court emphasised the importance of context in interpreting this term:
"In the classification criteria under the Agreements, what constitutes 'paperwork' should be given a liberal or generous interpretation such that it need not necessarily be complex or involved."
The court ultimately concluded that "paperwork" in this context meant working with actual paper in a task involving some greater level of complexity or decision-making than merely inputting data into a handheld computer or selecting options from a screen.
Context and agreement evolution
The dispute had its roots in the history of enterprise agreements at the workplace. Previously, the employees were covered by a 2014 agreement where they were classified as Grade 3.6 employees.
In 2017, some workers expressed a desire to transfer to coverage under the employer's national enterprise agreement.
This led to the creation of a temporary site-specific agreement in 2018, which was later replaced by a new national agreement in 2020.
The classification criteria in these new agreements differed from the 2014 agreement, leading to the current dispute over proper classification.
Employee duties and classifications
The court carefully examined the duties performed by the employees, including their use of forklifts, handling of dangerous goods, and involvement in order consolidation and dispatch processes.
It considered whether these tasks aligned with the higher-level classifications claimed by the union.
For example, the court looked at whether the employees' duties involving dangerous goods constituted "Dangerous goods paperwork" under the Grade 3 Level 2 criteria. The court found:
"The importance of the 'dangerous goods' task and the element of decision-making involved indicates that even when done by an employee picking loose cartons, that task itself is a Grade 3 duty. Therefore, I find that the Employees engage in 'Dangerous goods paperwork'."
The court’s decision
The court's decision discussed the need for employers to regularly review employee duties and classifications to ensure they align with the relevant agreements. It said that misclassification can lead to underpayment claims and potential legal disputes.
The court concluded that the employees were not entitled to the highest classification of Grade 3 Level 3. However, it did find that they should have been classified as Grade 3 Level 2 employees, rather than the lower Grade 3 Level 1 classification applied by the employer.
The court's reasoning was summarised in part:
"In my opinion, it is sufficient that the Employees perform the major and substantial portion of the duties specified under Grade 3 Level 2 for them to be classified at that Level."
This decision highlights the nuanced approach courts take when interpreting employment agreements and classifying workers. The judge emphasised:
"The classification criteria are generally task-based. In that context, while 'paperwork' is a noun, in the Grade 3 Level 1 criteria, it should be understood as involving doing a task. In other words, what is meant is, 'doing paperwork'."
This case serves as a reminder of the importance of clear and precise language in enterprise agreements and job classifications. HR professionals should ensure that job descriptions and classification criteria are well-defined and accurately reflect the duties employees are expected to perform.
