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Underpayment of some Western Power employees

Following a review of pay and remuneration processes, Western Power has identified an error relating to the application of the `better off overall’ test to Individual Agreements (IAs) and Flexible Agreements (FAs) against the Australian Services Union Enterprise Agreement (ASU EA).

Key facts

  • As a result of an enquiry from the Australian Services Union (ASU) on this issue, Western Power initiated a review of how we have applied the ‘better off overall’ test to IAs and FAs against the ASU EA.
  • This review determined that Western Power had made an error applying the better off overall’ test to IAs and FAs. Specifically, Western Power failed to consider progression through the ASU EA pay point levels.
  • This has resulted in underpayments to some current and former employees on IAs or FAs.
  • We have reported the error to our Minister, the Fair Work Ombudsman and the ASU.
  • We are working to ensure that current and past employees are paid their entitlements.
  • We regret this error, and apologise to our affected employees, both current and former.
  • The process of making good the error will take time and we will keep all affected current and former employees informed.
  • The error only potentially affects employees on IAs or FAs. It does not affect employees who have only ever been employed under the conditions of the ASU EA, nor any employees engaged under the Western Power and CEPU Enterprise Agreements.

FAQs

The error only affects some employees who are currently on or at some previous time have been on an IA or FA. It does not affect employees who have only ever been employed under the conditions of the ASU EA, nor does it affect any employees engaged under the Western Power and CEPU Enterprise Agreements.

If you are, or were, covered by an IA or FA, you may be affected. If you are, or were, covered purely by the EA, you will not be affected.

Details will be attached to your employment contract. If you don’t have access to your original contract, please email remuneration.enquiry@westernpower.com.au.

We anticipate there will be around 380 current IA and FA employees who receive an adjustment to their ASU EA pay point as of September 2019.

We are working quickly to calculate and make good any past underpayments that may have occurred due to the error to current and former IA and FA employees. This step is more complicated, as it involves considering the impact on individual employees on IAs or FAs, and we are not in the position at this stage to advise of final numbers.

People employed under the conditions of the ASU EA can move up through either one or two pay points, subject to time in role and an annual review each year confirming that alignment exists between the employee’s performance and the expectations at the next pay point (see clause 12(b) of the ASU EA). The next pay point attracts a higher salary (noting that most classifications only have two pay points - step 1 and step 2).

Previously, when undertaking the ‘better of overall’ test for IA or FA employees, Western Power's interpretation was that such employees were not eligible for pay point progression, and hence the salary for better off overall comparison was only the pay point the employee was on when they first signed an IA or FA, which in many cases was the first pay point (step 1).

Refer to clause 12(b) of the ASU EA for details.

Back pay will be calculated by first determining how much an IA/FA employee would have been paid if they were employed on the ASU EA only taking into consideration pay point progression and the other monetary obligations payable under the ASU EA. This would then be compared to the amount which was actually paid to the employee under their TFR, pursuant to their IA/FA. If the employee was not better off overall under the terms of the EA they will likely be eligible for back pay.

Employees, including those on IAs and FAs, are considered to progress through the pay points within the classification level subject to time in role and an annual review confirming that alignment exists between the employee’s performance and the expectations at the next pay point (see clause 12(b) of the ASU EA).

The answer to these questions is that we don’t know yet. Western Power is working quickly to determine this and has engaged PwC to help with the process. We anticipate the determination of who is eligible for back pay, the calculation of how much the back pay will be and when/how back pay will be processes will take time to finalise.

We’ll keep current employees updated via regular internal communication, and post updates on our website that former employees can access.

Current and former employees can contact us via remuneration.enquiry@westernpower.com.au

The calculation of any back-pay entitlements will consider all monetary items that an IA/FA employee would have been entitled to if they had only been on the ASU EA, including overtime, allowances etc.

This issue was queried by the ASU in mid-2017. At this time, Western Power believed its approach for undertaking the ‘better off overall’ test (including its interpretation relating to pay point progression) was correct and responded accordingly.

We believed the past interpretation of how the ‘better of overall’ test was applied to be correct.

As a result of a query from the Australian Services Union (ASU), our Head of Human Resources, undertook a review of the ‘better off overall’ test for employees who have been employed on IAs or FAs, both of which are underpinned by the provisions made under the Western Power and ASU Enterprise Agreement 2017 (ASU EA).

This review determined that Western Power had made an error applying the ‘better off overall’ test to IAs and FAs. Specifically, Western Power failed to consider progression through the ASU EA pay point levels and also did not take into account other monetary obligations such as overtime and allowances etc. This has resulted in underpayments to some current and former employees on IAs or FAs.

Former employees that have been affected by past underpayments will be paid what they are entitled to. 

We anticipate the calculation and payment of past underpayments will take time to finalise, and we will keep former employees informed throughout the process. Please check our website for updates.

Former employees can contact us via remuneration.enquiry@westernpower.com.au.

A review of Western Power’s employment and remuneration arrangements and practices has been initiated to ensure we are fully compliant with the ASU EA and the CEPU EA and the Fair Work Act.

We have engaged with the Office of the Fair Work Ombudsman to keep them informed of this process. and have asked our external advisers to assist us with the review.