C1427/300, Transcript of Proceedings [2001] AIRCTrans 1005 (29 May 2001)

AUSCRIPT PTY LTD
ABN 76 082 664 220

Level 4, 179 Queen St MELBOURNE Vic 3000
(GPO Box 1114J MELBOURNE Vic 3001)
DX 305 Melbourne Tel:[phone] Fax:[phone]

TRANSCRIPT OF PROCEEDINGS


O\N 7300

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER HOLMES

C No 14273 of 2000
C2001/1595

AUSTRALIAN WORKERS UNION

and

EXCEL QUARRIES PTY LTD

Notification pursuant to section 99 of the Act
of a dispute re demotion of two employees

Application under section 170LW of the Act
for settlement of dispute re threatened demotion

MELBOURNE

11.25 AM, WEDNESDAY, 9 MAY 2001

Continued from 11.4.01

PN3011

THE COMMISSIONER: Ms Angus.

PN3012

MS ANGUS: Thank you, Commissioner. Commissioner, I am conscious that a fair amount of time has passed since the last time we were having the matter heard, so I will just start with a very brief summary of our position over all. It is our view that there are three principle reasons why the company should not be allowed to proceed with the proposed demotion of Darren Vanstan and John Severyn, and they are firstly that the enterprise agreement itself does not provide for a process of demotion, it provides for a progression up the classification structure, but not downwards.

PN3013

Also, in terms of the enterprise agreement, it contains criteria - descriptions of the classifications, objective ones, and the evidence that we have brought before the Commission is that, if the Commission keeps in mind the industrial application of the classification structure, both John and Darren are properly classified in terms of the enterprise agreement. And finally, in terms of the enterprise agreement, the agreement itself builds into - it builds in a process of agreement making in relation to the system of remuneration, and any changes to that system of remuneration, and that is contained at 3.1 and 6.4 of that agreement.

PN3014

So the first reason we put to the Commission is that the agreement itself does not provide for a process of demotion. The second reason we put to the Commission is that if these proposed demotions were to be assessed according to the statutory principles that describe what constitute harsh, unjust or unfair termination, then these demotions would fail that test, and we argue, Commissioner, that it is appropriate that the Commission be mindful of those statutory principles and use that test - use that standard to test the properness or otherwise of the proposed demotions of John and Darren.

PN3015

And the third reason that we put to the Commission as to why these demotions should not proceed is that particular individual arrangements were entered into with both John and Darren, and they are relevant and should be considered by the Commission because, as I have pointed out, the enterprise agreement itself provides for a process of agreement making, of agreement between the parties on both a collective and an individual basis, contained at 3.1 and 6.4 of that agreement, and also that the statutory principles themselves at 170CG(3)(e) of the act provide for, and I am quoting that:

PN3016

Any other matters that the Commission considers relevant.

PN3017

So those individual arrangements that have been entered into between the company and John and Darren are both - it is important that the Commission considers those, both in light of the agreement itself and also those statutory principles. So they are the three parts of our argument. Last time we appeared before you, Commissioner, I ran through how those three arguments apply in the case of John Severyn, and if my memory serves me correctly and the transcript is correct, we were half-way through discussion of how those three arguments apply in the case of Darren Vanstan.

PN3018

We have spoken about the first arrangement that was entered into in 1997, in relation to Darren, which involved around a commitment to maintaining his pay while changing his duties. We have also spoken about the second arrangement that was entered into in January 2000, which was that Mr Williams, Terry Williams, the Victorian Manager, called for volunteers, on the basis that there would be no pay cut or, in any sort of loose sense, no disadvantage to that employee. Both of those I argued the Commission should be mindful of and I handed up a decision, a High Court decision, which I want to use as a further justification for our argument that Darren Vanstan in this case should not be demoted. And that decision, Commissioner, I understand you have it before you?

PN3019

THE COMMISSIONER: Waltons Stores.

PN3020

MS ANGUS: That is right. So for the record it is the Waltons Stores (Interstate) Limited v Maher, M-a-h-e-r, (1998) decision, and it was before a full Court of the High Court of Australia, and this decision that I have got is to be found at 164 Commonwealth Law Report and it was handed down in 1998. Commissioner, the facts of this case are very different, vastly different. In fact this relates to contract law rather than employment law, but there is a legal principle that I want to extract from this decision, that is of crucial importance to these proceedings.

PN3021

In this High Court matter Waltons Stores, which we are all probably familiar with, is a shop, entered into an arrangement with a builder called Tony Maher, and it was discussed and agreed that Tony Maher would demolish one of Waltons Stores' buildings and erect a new building. They had provided the specifications of the building, they had formalised the leasing of the land, but given the severe time constraints the builder had actually proceeded to demolish and erect 40 per cent of the new building prior to the formalisation of the legal contract itself.

PN3022

Now, after a certain period of time Waltons decided - well, after Tony Maher had actually built 40 per cent of the new building - Waltons decided they wanted to withdraw, they wanted to pull out of the arrangement entirely, and it argued that because there had been no consideration, no formal contract between the parties it was able to do that. Now, the High Court actually found in favour of the builder in this matter. It found that - and it talks about - this decision is based on a legal principle called equitable estoppel and I want to, if I may, Commissioner, I will quote Brennan J, an excerpt from Brennan J at paragraph 12 of his - which I understand you should have, Commissioner. I had actually handed up one that marked the - in the side, I do not know if that is - - -

PN3023

THE COMMISSIONER: Does that start with "the nature of estoppel in pais?"

PN3024

MS ANGUS: That is the one, Commissioner, okay, so that is fine.

PN3025

THE COMMISSIONER: It is not marked, but I have got it.

PN3026

MS ANGUS: All right. So I will read from that if I may. This is what Brennan J has to say about the matter:

PN3027

The nature of an estoppel in pais is well established...(reads)... would suffer detriment if the assumption were not adhered to.

PN3028

Now, that in legalise is the nature of the principle and if the Commissioner turns over half a dozen pages Dixon J at paragraph 25 of Dixon Js decision, further as:

PN3029

The unconscionable conduct which it is the object of equity to prevent ...(reads)... avoid the detriment which that failure would occasion.

PN3030

Now, that is all very complicated and I appreciate that. But the principle is basically this, Commissioner, that party - if party B engages in conduct because of an expectation, assumption or promise of party A, and party B acts to their detriment, and the Courts have found that it is appropriate in those circumstances to enforce the promise, the promise of party A in order to prevent the detriment of party B.

PN3031

Or in common-sensical terms, if you promise something you have got to deliver if you are not fulfilling your promise actually disadvantages the person that you have promised to, because they go ahead according to your assumption, according to the assumption of your promise, to their detriment. That is the commonsense legal basis and in terms of these proceedings Darren actually volunteered to transfer, and he volunteered on the basis of a promise, expectation or assumption that had been provided to him and there is evidence that at least three employees have heard it and Mr Williams himself acknowledges that he provided some variation on this promise.

PN3032

Darren volunteered on the basis of this promise, the conduct he is engaged in, ie volunteering for the transfer, has now resulted in his detriment, ie his proposed demotion. The Court rule under the basis of this legal principle of equitable estoppel that it is appropriate for the Courts to intervene in a situation like this and enforce the contract, enforce the promise, in order to avoid the detriment to the other party.

PN3033

THE COMMISSIONER: Do I have the power to enforce the contract?

PN3034

MS ANGUS: Well, you have the power to the extent that we agree about the jurisdictional issues, so to the extent that you are of the view, Commissioner, that the Commission in this situation can issue any order, is in the position to issue an order, then we would argue that there are legal principles at play out of the commonwealth system that you should be mindful of and that is that people have got to carry out their promises.

PN3035

THE COMMISSIONER: Because it is a private arbitration.

PN3036

MS ANGUS: That is right. That is exactly right, Commissioner. Well, that is the principle of equitable estoppel, and that is the first reason why we argue that Darren Vanstan should not be demoted. The second point in terms of the - so that is if you like, that is the wing of our argument that says that there are individual arrangements that have been entered into in relation to Darren that need to be protected and preserved by this Commission.

PN3037

The second argument that we have made in relation to Darren is that the enterprise agreement itself - according to the enterprise agreement itself Darren is properly classified, and there are two parts to this argument. Firstly, I think it is possible to say, based on the evidence that both parties have produced before you, Commissioner, in these proceedings, it is possible to say that there is bipartisan agreement that at least at You Yangs Darren was properly classified. Now, that is the evidence that Peter Maatin has provided and I think he has said on a number of occasions he said that Darren was properly classified as level 4 at You Yangs, he has acknowledged that.

PN3038
He also says that at You Yangs Darren can operate all the equipment and he says that in the transcript at PN2349, so I think it is fair to say that we have got a concession from the company that at You Yangs he was properly classified as level 4.

PN3039

THE COMMISSIONER: What if I come to the view that at the other side he is not properly classified, because he - - -?---

PN3040

MS ANGUS: Well, even if you come to that view, and I will argue that he is properly classified at the other side, but even if you do come to that view, Commissioner, then we would argue that certain arrangements have been entered into, such that (a) he was promised not to have it to his detriment, and that should be enforced.

PN3041

THE COMMISSIONER: That is the estoppel argument?

PN3042

MS ANGUS: That is right. And the second point is that that would not be a valid reason for his demotion anyway, because that was the nature of the - that was a term of the arrangement that had been entered into anyway. So even if you are of the view that he is not properly classified at level 4 now, we would still say that that is not a sufficient justification for his demotion. And well, really, that is - they are the crux of the argument.

PN3043

I mean, that is, I think, probably fairly succinctly put, that he was properly classified, he has been promised that it will not cause a detriment, his transfer will not result in a detriment, and it is the equitable estoppel argument that we rely on there to enforce that promise, and secondly, that, given the arrangements that had been entered into in 1997 in 2000 and - well, for those two reasons he should - it was precisely a term of his arrangement, not a reason for his demotion that has resulted in that - that we say is the reason why he should not be demoted.

PN3044

And the other point I want to make. Peter Maaten gave a lot of evidence - well, in his initial witness statement he suggested that in fact Darren was more appropriately classified as a level 2 and that he could not do a whole range of things, and he had denied training and his initial statement outlines, I think, a fairly dramatic position in relation to Darren. It was found over the course of cross-examination that none of that held up, that in fact he does operate a loader on a regular basis, that Peter Maaten, to use his words, "He stands corrected," in terms of whether Darren can operate fixed plant, and he stands corrected on the issue of declining of training.

PN3045

So the initial position of the company has been severely, seriously retreated from, and that in itself is a crucial point. But in terms of the - the second crucial point is that in terms of the classification descriptions contained at level 4, Darren is still properly classified over in You Yangs in - at Rockbank, and that is because we have evidence before the Commission that there are other level 4s who do not operate all the equipment and also who are not required to operate all the equipment. That evidence is from Peter Maaten and we also have Terry Williams' position that there are a number of people who are not required to, nor indeed competent to operate all the equipment who are also level 4.

PN3046

So, Commissioner, in our argument it is essential that you take into account the industrial reality, the application of the wording, those two have to sit together, the actual objective criteria contained in the classification structure combined with the evidence that has been brought before you about how those objective criteria apply in reality. And the third ingredient that we would argue is that given there is, you know, that there is disagreement between the parties, we would argue that you should exercise any discretion in favour of the employees in this situation, and that is because it would be to their detriment otherwise.

PN3047

So it is of the heaviest to the employees not to the company, so if there is any flexibility that we have heard exists in the application of the classification structure, then it must be flexibility that is in favour of Darren and John in this situation, because otherwise it would cause a major impact on both their livelihood, their financial income and also on the status at their employment. The third and final leg of our argument in relation to Darren and John, but in terms of Darren here is the issue of the statutory principles themselves, and, Commissioner, we just make the one simple point here, is that there needs to be a valid reason and procedural justice, and it is the same notion of valid reason and procedural justice that that is the test applied to termination is appropriate here to consider in relation to the motion.

PN3048

In terms of procedural justice certainly we have had a lot of notice of the proposed demotion, but there has been no procedural justice if the reason for the demotion of Darren is his conduct. And there has been a sort of suggestion that that is the reason has infused these proceedings, but if that is the basis - if that is the reason for the demotion of Darren he has received no warnings, no counselling, no formal notification and no opportunity to respond. So we would say that there has been no procedural justice afforded to Darren if the argument is one of conduct.

PN3049

If, in terms of the valid reason, in our argument it is not a valid reason to demote Darren because he is not performing the duties of level 4. He is not performing the duties of level 4 - obviously our primary submission, Commissioner, is that he is performing the duties of level 4 and industrial realities will tell us that. If he is not performing the duties of level 4 and we are wrong on that then that is still not a valid reason for his demotion and that is because he - the reason for that is precisely a term of the agreement that was entered into in '97 and the year 2000. It is point 1 and point 2 is that he was promised that a change in his duties would not result in a detriment to him in January 2000 at that meeting and that promise should be enforced.

PN3050

THE COMMISSIONER: That promise in relation to no detriment, what do you say to a proposal that would involve a change in classification, but maintenance of the gross rate of pay?

PN3051

MS ANGUS: Well, our key test would be the issue of detriment. If that resulted in a freezing of his pay and he was not therefore entitled to any collectively negotiated movements in the pay increase, then that would, in our argument that would represent a detriment to him. Both of the parties here, and it is also - it is our view is that both of these employees are really, you know, they are happy to do whatever duties are most required and needed of them on the site, but not if that means that they actually bear the consequences of that decision, ie financial consequences.

PN3052

Commissioner, they are the crux of our argument. I do not think I need to summarise them again because I have probably summarised them a number of times as we have proceeded. I want to make a final point about jurisdiction though, and that is our primary argument at the outset in terms of jurisdiction was that clause 2.3 of the agreement, which is the dispute resolution procedure, provides for, in our argument, the ability for the Commission to arbitrate over any dispute, and that is disputes that extend beyond the scope of the agreement. That is our primary position, and that is because there is a precursor of that clause that says, "Subject to any provisions of the Workplace Relations Act."

PN3053

Now, we have argued at the outset that it has been in our mind, our interpretation of that High Court decision is that subject to the provisions of the Workplace Relations Act - well is effectively meaningless because it has been tested in the Courts and it has found that that would not restrict, that arbitrations over the application of agreement are not restricted to the application of that agreement, they can actually extend to any matters that are of dispute between the parties, and that once the parties have pre-committed themselves to having the Commission arbitrate about disputes, then so be it, and the Commission has the right to arbitrate about whatever matters are in dispute between the parties.

PN3054

Now, if the Commission is with me on that, then the implication of that position is that everything that - all matters that have been discussed before you are admissible, and that the Commission can, and indeed should take account of all the arguments that have been put before you, and that you further may issue an order which binds the company and that you can do that because of the prior commitment of both parties to have the matter arbitrated, to have any dispute arbitrated.

PN3055

So that is our first position in relation to jurisdiction. If you are not with me on that, Commissioner, then I would make two points. If you are against us and you are of the view that in fact you have no arbitral power at all because there is no agreement between the parties as to your right to arbitrate in relation to matters in dispute, then we would still seek a determination from you and your recommendation as to how best to solve this and we believe that the company would abide by that just in the interest of industrial good harmony. So we are seeking some form of determination from you.

PN3056

If, however, in terms of the jurisdictional issue you are against us in that you are of the view that any arbitral powers that you have only extend to the scope of the agreement, and no broader than that, then we would say the following. The key argument - well, that might put us in a slightly difficult situation where you might not, Commissioner, be able to consider the statutory principles. But that is the extent of the information that you could exclude.

PN3057

If you found that you could only determine matters that applied to the application of the agreement then I might, and I reserve my position on this because of my primary submissions, but we might be of the view then that you might not necessarily be able to consider those statutory principles. But that would not cause a fundamental problem in terms of the submissions that we have put forward to you because you would still need to consider the individual arrangements that had been entered into, because primarily our argument here is that the company's decision to demote represents a misapplication of the enterprise agreement.

PN3058

Built into the enterprise agreement itself, as I have argued at 3.1 and 6.4, is a process of agreement making about the system of remuneration and changes to remuneration. Now, all the submissions that we have put, and all the evidence that you have heard about individual arrangements that have been entered into, are themselves part of that individual agreement making that is comprehended within the scope of the agreement. So it is for that reason in terms of jurisdiction that we say that if you conclude on the jurisdictional matter that you can only arbitrate in relation to - within the scope of the agreement itself, then the scope of the agreement itself allows for individual agreement, and that is why, Commissioner, you must be mindful of the actual arrangements that have been entered into in the case of both of these employees.

PN3059

It is for all those reasons, Commissioner, that we are seeking orders from you that would maintain the existing pay and classification of these two employees, of Darren Vanstan and John Severyn, and we are also seeking that the company be prevented from implementing any further demotions for reasons of alleged over-classification.

PN3060

THE COMMISSIONER: In relation to these two employees?

PN3061

MS ANGUS: No. Certainly in relation to these two employees, and also in relation - if the company is considering any further demotions based on over-classification, then the implications of the argument that we have put to you, Commissioner, is that that does not fall within the scope of the agreement and therefore the company should be prevented from any further demotions, if those demotions are for reasons of alleged over-classification. And, Commissioner, they are our submissions.

PN3062

THE COMMISSIONER: Thank you. Mr Hoy.

PN3063

MR HOY: Thank you, Commissioner. Commissioner, Ms Angus has stated that she relies on three main arguments in relation to the decision that you should make that these two employees should not be demoted, that is that (1) the demotion is a misapplication of the enterprise agreement, (2) that there is case law on demotion with relates to demotion being the same process as a termination and therefore the principles of section 170CG should apply. Thirdly, that there were particular individual arrangements entered into and on the principle of estoppel that would prevent any change to those arrangements from occurring.

PN3064

In support of their demotion being a misapplication of the enterprise agreement, Ms Angus has relied on clause 3.1 of the enterprise agreement that is establishes a system of remuneration and she further supports that argument by referring to clause 6.4 of the agreement which relates to trials and changes. Commissioner, clause 3.1 contains - sorry, part 3 of the agreement contains five subclauses. 3.1 is the payment system and it refers to appendix 1 of the agreement. 3.2 relates to the payment of wages and salaries, and it says that, "Wages and salaries shall be paid fortnightly." 3.3 relates to the occupational superannuation provisions. 3.4 relates to allowances and mentions schedule 1 of the agreement, and 3.5 relates to the key performance indicates.

PN3065

Now, if we look at schedule 1, which I assume is the appendix 1 that is referred to at 3.1, that outlines the wages and allowances that are to paid to employees who are covered by the agreement. Now, that is the system of remuneration that is to be relied on.

PN3066

Paragraph 2 of clause 1, sorry, paragraph 2 of schedule 1 of clause 1 refers to the gradings contained in schedule 2 and it states that Excel reserves the right to nominate the number of employees that are required in each grade. In a general sense one could argue that that right could apply to increasing or decreasing the numbers at that level or at a particular level.

PN3067

The clause is not clear as to whether it is restricted to recruitment, promotion or demotion at a particular level. However I think it is fair to assume that the practice and the intent of the parties to that enterprise agreement was that it did not extend to the operation of the clause to a demotion situation. We accept that in negotiating that agreement and putting that clause in there was no intention of the parties that it would apply to a demotion. Having said that, it does not necessarily mean that the agreement specifically denies a demotion from ever occurring.

PN3068

It is silent and does not prevent management from utilising its prerogative on determining the classification levels of employees in accordance with the enterprise agreement grading levels. Ms Angus has also claimed that 6.4 is also a prevention of demotion of the applicants as no agreed trial was entered into in accordance with that clause. Now, it is my submission, Commissioner, that such a clause is not relevant to a demotion situation.

PN3069

The clause is about whether items such as weekly, fortnightly, monthly wages or salaries, whether you could have a nine day fortnight, change work practices, etcetera. It is not about individual arrangements, it is about arrangements that affect the whole work force. Mr Williams did not agree with the suggestion that - - -

PN3070

THE COMMISSIONER: Does it have to affect the whole work force or it could be just part of the work force as a result of new equipment or technology being introduced?

PN3071

MR HOY: Yes, I agree, Commissioner. The whole work force or a distinct operational side of the work force. Mr Williams did not agree with the suggestion that John Severyn's trial on a dozer should fall within 6.4, and I refer to transcript at paragraph number 1468 - - -

PN3072

THE COMMISSIONER: I have it.

PN3073

MR HOY: - - - where in response to a question whether the trial of John on the dozer was conducted in accordance with 6.4 of the agreement, Mr Williams responded:

PN3074

No, 6.4 did not refer to that sort of trial. It more a larger scale trial.

PN3075

In the further paragraph number 1673:

PN3076

This clause was written more a major change in the way we do things.

PN3077

So it is my submission, Commissioner, that the system of remuneration does not apply to a demotion, that has been put forward by Ms Angus. Ms Angus has also claimed that the case at law has established that the motion constitutes termination of an employment contract and for that reason the statutory principles contained at 170CG(3) should be applied, or at least should have some recognition when you are coming to a decision.

PN3078

Now, if we looked at those in isolation, section 170GA(3)(a) says there must be a valid reason. Our position has been all along that there is a valid reason, the employees are not performing to the level required at the grade 4 level, or indeed the grade 3 level. We say that is a valid reason. Subparagraph (b), whether the employee was notified of that reason. They were notified of the reason, they were notified back in November that it was the company's intention to demote the employees concerned.

PN3079

Paragraph (c), whether the employee was given an opportunity to respond to any reason relating to the capacity or conduct of the employee. The employees were made clear that the reason for the demotion was that they were not performing to the level required for the grading. Paragraph (d), the fifth determination relating to satisfactory - unsatisfactory performance by the employee, whether the employee had been warned about that unsatisfactory performance. The demotion was not in relation to any unsatisfactory performance.

PN3080

Then in paragraph (e), any other matters the Commission considers relevant, and Ms Angus has put forward the principle of estoppel as any other matter. We would say, Commissioner, that on a reading of those principles that the company has met its requirement. However it is my submission that Ms Angus argument is flawed in two critical areas. One is that as yet there has been no demotion. There has been no demotion and the issue cannot be assessed according to those statutory principles. And two, the matter before you is an application under section 170LW, not under 170CE, and 170LW relates to the settlement of a dispute over the application of an agreement. In this case, we say the dispute is over the correct classification of the two employees concerned.

PN3081

Therefore it is my submission that the argument about applying the statutory principles to determination of this matter should be rejected as being irrelevant. Now, on the issue of private arrangements entered into, Ms Angus has also relied on the arrangement that was entered into some years ago for both employees when working at the You Yangs. She has relied on the principle of estoppel. Now, it is my submission for estoppel to occur there must be evidence that the employees, because of the arrangement, have altered their position because of the promise and they would now suffer a detriment.

PN3082

Now, for estoppel to occur there must be a representation, there must be a reliance on that representation and an action that has then led to a detriment suffered by the employees concerned. Now, there has been no evidence led that either of the employees have acted upon the promise that has led to any detriment. It is not sufficient to say that the employees would suffer a reduction in their living expenses. For estoppel to apply they must have made some specific action, taken some action, such as because of the promise being made they have taken out a mortgage, to purchase something, invest in some arrangements or whatever, and as a result of a change now being proposed, they are going to suffer a detriment of that.

PN3083

THE COMMISSIONER: Mr Hoy what do you say about the additional expenses incurred in travelling to the new place of work?

PN3084

MR HOY: In relation to Darren Vanstan, he volunteered to transfer, so there was an offer made, or there was a request for any employee to volunteer to transfer to another site. He put his name forward and accepted that, so therefore in respect to Darren there is no claim for any additional expenses involved. In respect to John Severyn, he was transferred, one might say compulsorily transferred from You Yangs to Rockbank because of a safety incident that occurred.

PN3085

I would also submit, Commissioner, that the arrangement was voluntarily broken, with Darren volunteering to Rockbank and was legitimately terminated when John was transferred because of the safety breach. If the estoppel argument was relied upon, the extrapolation of that is that there can be no change in anybody's employment. It could be argued that any termination or retrenchment or transfer should be estopped because of a prior arrangement or a contract entered into. Now, I would submit that provided there is a valid reason, provided there has been adequate notice of the change in the employment nature, then estoppel does not apply.

PN3086

Commissioner, the matter before is an application under section 170LW, it is not a '99 application, that was changed at the commencement of these proceedings. The union made it clear that their application is under section 170LW. Now, we have put jurisdictional arguments before you in respect to the limitations that you may have and we would rely on those arguments. If one looks at the dissection 170LW argument, then it is my submission that the merit of the matter before is confined to what is the correct classification level of the two employees concerned.

PN3087

To determine the correct classification level you would need to look at the work being performed and compare that against the grading levels contained in the enterprise agreement. Now the transfer of the two employees I submit does complicate the issues, but when the issue is broken down it is purely about the correct classification. We say there was a valid reason for transfer. There was a reduction in work at You Yangs. Darren Vanstan volunteered to transfer to Rockbank. There was a safety issue with John Severyn at You Yangs. At a result of that he was transferred to Rockbank.

PN3088

There was an argument in evidence led there was some confusion about whether John's transfer was permanent or temporary. There was evidence from Peter Maaten that in his view it was permanent. John Severyn claims that in discussions he had with Terry Williams, Terry claimed that it was a temporary arrangement. Terry has indicated that he had no knowledge of that. Certainly, within two weeks of the transfer when John raised it again with Peter or Terry it was made clear at that time that it was a permanent transfer, so at the very least outside there would only be an issue of some two weeks where there may have been some confusion as to whether it was a permanent or temporary transfer.

PN3089

There has been - if there is a claim pressed for a travel allowance, then I would say at the outside it would only amount to a two week period in relation to John Severyn. Since he has been transferred to Rockbank the company has paid travel allowance when he has been required to attend other sites that would warrant an excess or an increase in travelling time. So on that basis it is clear that his permanent position is at Rockbank.

PN3090

The question of estoppel in my submission also calls upon you to make a judicial decision about an arrangement that is in place that you should continue to be in place. Now, that, in my submission, is beyond arbitration. It is not about creating a new right, it is about ruling that a right that exists should continue to apply, and should be honoured, and I would say that that is a judicial decision and outside the powers of the Commission as presently constituted. We do not argue that at the time of transfer of both employees that there was no indication provided to them that they suffer a reduction in their pay levels. I think that has been conceded by Mr Williams that he gave no thought at the time that there would be a demotional reduction in their grading levels.

PN3091

Now, this may not have arisen at any stage in the future. However we need to question why such an issue arose, when it is obvious that the work that the two employees were undertaking were not at the particular level, not at the grading levels, and it was clear to other employees working on the site that this was the case. Ashley Cox in evidence agreed that this was the case, and I refer you to paragraph I54, where in response to a question from myself, "Did you ever make a comment that you believed that employees at Excel were top heavy, the levels?" Ashley replied, "Yes." "So you believe there were a number of employees over-classified?" "If you look at the industry from an overall point of view there is."

PN3092

Then there was a bit of evidence led about what was the level and how would you move people up. In paragraph 563 Mr Cox has responded, "I have had that discussion with two different people out there." Then at paragraph 564 in response to my question, "So there is an issue brewing if you like out there about people being paid over the level to which they are working?" "Yep, there definitely is." So it is clear, Commissioner, that there is an issue out there, that other employees believed that Darren Vanstan and John Severyn are working at a level below their graded classification level.

PN3093

In such a situation management needs to do something about it. They can either ignore it, they can upgrade everybody to the level, or they can review the classification. In this case management reviewed the classification in accordance with the agreement. Now, if we look at the classification structure there is a grading for a review committee and there is an area for any dispute to go to the grading review committee, or to be decided by management.

PN3094

The whole structure, the emphasis is on the employee to apply to be upgraded. There is no clause, there is no provision in their for anybody to be demoted. Now, I say that does not prevent management from demoting somebody, because that is a managerial prerogative. There is nothing in the agreement that says about termination, but that does not necessarily mean that management cannot terminate anybody.

PN3095

The issue about the demotion being like a termination is relevant, in that there must be a valid reason for it, there must be a procedure that is seen to be fair, and if there are issues of difference between the parties there must be an issue or provision that can be explored. We say that that has been offered to the employees and it has gone through that process. John Severyn was demoted because the work that he was doing was not at the grading level. He was not demoted because of a safety incident. He was transferred because of a safety incident.

PN3096

THE COMMISSIONER: Does that mean he was redundant?

PN3097

MR HOY: The duties of foremen at You Yangs were probably disappearing at a great rate of knots. I think there was indication at the time that he may have only had two other employees working there. If the transfer had not taken place when it did then his position may have been looked at on a redundancy basis. Certainly there is no longer a position of foreman available at You Yangs. Management has not replaced that foreman position.

PN3098

There has been evidence that the practice has been to apply the grading levels on a flexible basis if you like, particularly where an employee may not meet all of the requirements, but is quite exceptionally good in one area that is of value to management. Now, it was claimed that 80 per cent of employees at the grade 4 level had not met the requirements for the grade 4 grading level. That was based on - there were five employees graded at that level.

PN3099

One was graded correctly and therefore the other four were not. If we break down that other four two of the employees achieved the level on the basis of the 80 per cent secret ballot arrangement, and the other two employees are the subject of these proceedings before you. So I do not believe it is relevant to say that 80 per cent of the employees graded at grade 4 did not legitimately get there.

PN3100

THE COMMISSIONER: So, does one draw from that submission that - if I can take you back to the evidence that you took me to at paragraphs 554 and 563 where Mr Cox indicated that there were employees at the site who were unhappy about what they believed to be the over-classification. That evidence did not evidence identify who the employees who were over-classified were who were the source of discontent. But what you have indicated now is that at least two of the five have received a vote so it would seem implicit in that that there is 80 per cent of the work force, if there is an acknowledgment that those people, whilst they are over-classified, it is not a source of discontent.

PN3101

MR HOY: Yes, Commissioner. The only source of discontent in our submission is the two employees subject to this matter before you. The issue of the grading structure at grade 4, there are a number of parts to it. To be a grade 4 you must have achieved all of the grade 3 levels, you must be:

PN3102

Competent and required to operate all equipment on site, to work unsupervised, and have a good knowledge of the plant and processes. Can demonstrate a good understanding of the QA System, undertake an OH and S Course. Must demonstrate qualities, abilities and competencies adjudged to be well in excess of normal job requirements by at least 80 per cent of the team in a secret ballot, the result of which is submitted to the grading committee.

PN3103

Now, it has been said that that particular grade is peculiar to Excel Quarries. It is my submission that, whilst it is not clear, that last sentence was an attempt by the parties to have a provision in there that, whilst employees may not be competent and required to operate all equipment on site, that where they do perform to meet those in excess of the normal job requirements, that an avenue be there for them to be promoted to grade 4.

PN3104

Now, I admit that it is not exclusive and it is part of that whole paragraph, but I would submit that that was the intent of the parties and it is the practice as how it has been applied would support that. And there was also evidence led about the gradings of Darren and John when they were at You Yangs, but it is my submission this is not about You Yangs it is about the work they are performing at Rockbank, and it was clear that the evidence was that they were not required to operate all the equipment at Rockbank, nor were they operating all the equipment at Rockbank, and in fact the grade 3 level also requires a person to be competent and required to operate all equipment on site.

PN3105

So on a strict interpretation of the level they would not even meet grade 3. Grade 3 also has a requirement in there to work safely in an unsupervised environment and with the safety incident that John Severyn was involved in, there would also be a question mark about his ability to meet that criteria.

PN3106

THE COMMISSIONER: But has there been any incident subsequent to that that supports that submission?

PN3107

MR HOY: There has been no further safety incidents involving John Severyn. There is also evidence led that both employees have been spoken to about their performance. Now, we are not saying it is unsatisfactory performance, but it is performance not to the standard required. And I think it was clear that the type of counselling, if you like, that was provided was more of a daily exchange of conversation that management were not entirely happy with what they were doing and it would be wise for them to meet the required standard. It was not a formal counselling approach, it was not a formal counselling session, but it was a chat to say, "You need to pick things up."

PN3108

THE COMMISSIONER: This is at Rockbank?

PN3109

MR HOY: This was at You Yangs and later, I think, at Rockbank.

PN3110

THE COMMISSIONER: But if you are contending - - -

PN3111

MR HOY: I am sorry, I am sorry, no. I retract that. It was at Rockbank. Commissioner it was at Rockbank and at Moriac in respect to Lester Hall and John Severyn. Now, I know Mr Severyn has denied that any such conversation took place. Now, it may be that the interpretation applied by Mr Severyn to it was that it was not a counselling session, but we say there was a conversation, we have Mr Hall's diary notes that supports a conversation or at least an exchange did take place in relation to those issues.

PN3112

I do not think it is sufficient to say that because the diary notes may have been made in different types of biro that it detracts from the validity of the document. In that type of environment there is nothing to say that they must be made at a particular point of time, they may have been made at different points in time. I think the evidence of Mr Hall was that he made some notes initially at the start of the day and then he would add to them during the day or the next day, depending what had occurred over the period of time.

PN3113

The only statement I wish to make in respect to the unsafe fact regarding to Mr Severyn was that, at the very least, it was a serious misjudgment, and in effect he still does not accept that it was a safety breach. Now, I would say it was bad enough for an employee at the time to ignore safety signs indicating that it was an area not to be walked upon, but at the time Mr Severyn was a foreman, and a foreman has an additional responsibility over and above an employee and should also provide an example to other employees, and to totally ignore safety signs we say was a serious breach and one that legitimately could have led to, at the very least, demotion or even termination.

PN3114

There was a statement issued, or tendered from a Phil Henchcliff. There was no evidence led and we say that no weight should be played at all on that statement. There was also tendered three unsworn documents in relation to Mr Severyn's performance over a number of years. Two were from past employees relating to work at You Yangs prior to December '99 and one was from Mr Porter who supported the view in the review between management that Mr Severyn be downgraded.

PN3115

Now, if we looked at his particular reference, which was AWU4, Mr Porter states that he had known John for approximately five years. In the second sentence;

PN3116

While at Rockbank John operated a variety of fixed and mobile equipment and in my opinion the work John completed over this time met with my high expectations and standards.

PN3117

He does not say that he worked all mobile equipment, fixed equipment, it is only a variety. That would further support my argument that he is not required to operate all the equipment on site. In summary, Commissioner, we say that Darren Vanstan's and John Severyn's original positions no longer exist at the You Yangs. At the time Darren was operating as a plant operator, he was transferred to You Yangs as a plant operator. John Severyn at the time of transfer had only two employees reporting to him and it is likely that his position may have come under review in the near future irrespective of the transfer of place.

PN3118

Other employees have raised the issue of work value compared to both John Severyn and Darren Vanstan's position. They are not required to operate all equipment and they are not operating all the equipment on site. It is our submission that on a strict interpretation of the gradings that they are operating at a level 2. Now the Commission is faced with a number of options. They could issue an order that they be downgraded immediately and confirm the company's desire to downgrade the employees.

PN3119

They could be progressively downgraded over a period of time, or, as you have already suggested in debate with Ms Angus, that they could have what is called the red circle applied to them and their correct classification identified but their wage rate frozen, until the grading level catches up with them. Now, should the Commission rule that they not be downgraded then that does create other problems of the employees seeking to be graded at the same level based on a work value comparison. At the very least, Commissioner, we say you should be mindful of those future problems, they have already been raised by the union and they are live problems.

PN3120

If you are persuaded that Darren Vanstan and John Severyn should not be downgraded, then we would say you should make issue a clear statement, that their positions are unusual and should not be relied on or used as a benchmark for other employees claiming a similar classification level based on a comparative of work being undertaken. If the Commission please.

PN3121

THE COMMISSIONER: Thank you, Mr Hoy. Yes, Ms Angus?

PN3122

MS ANGUS: Yes, Commissioner. A couple of comments in relation to Mr Hoy's submissions, in no apparent order. Firstly, it is precisely the concern that we have is the company's inconsistency in relation how it is reading the enterprise agreement. On the one hand Mr Hoy wants to argue that the agreement is silent in relation to demotion and therefore, well, therefore they can do it, but outside the scope of the enterprise agreement and therefore by implication it is beyond the jurisdiction of this Commission to arbitrate on.

PN3123

On the one hand Mr Hoy wants to argue that, but on the other hand he has also argued that the review, and I am quoting his words here, that the review of the classification is in accordance with the agreement. So there is an inconsistency in the position that the company is adopting here and I think it is an inconsistency that in a sense is - well, it is an intentional inconsistency because they want to pull jurisdiction as a way of keeping the Commission out of making a broad sweeping determination, but also argue that they are using the agreement in a manner that is proper and that the agreement does facilitate a process of demotion.

PN3124

And you cannot have that bob each way and up - it is - in our view, the agreement does provide for a process of movement up and the company is precisely trying to use the agreement as a basis for a justification of demoting these two employees and that is the basis for our argument, that they are misusing the agreement and that is why also, by implication, the jurisdiction of the Commission is attracted.

PN3125

Likewise, following from that, the argument that Mr Hoy has run that they are using the agreement to facilitate downgrading people and they have - he has given us some examples about how - that Ashley Cox has made some reference to being top heavy. There has been no evidence brought before the Commission other than a reference to a comment by a union organiser. There has been no evidence supplied that there is a broad sweeping problem of over-classification out there, and it is not appropriate in final submissions from the bench should just make all these assertions that everyone out there is over-classified and there is a problem.

PN3126

THE COMMISSIONER: From the bar table I think you mean.

PN3127

MS ANGUS: From the bar table. That is right, yes, wrong seat. Sorry, Commissioner. That is not appropriate - it is not - - -

PN3128

THE COMMISSIONER: Trying to bait me are you on - upgrade Mr Hoy?

PN3129

MS ANGUS: I would certainly - I am not after anyone's demotion in these proceedings, Commissioner. So there is no foundation to any assertion that there is a widespread problem of people being over-classified out there. But even if it were true, Commissioner, then there is a way to use the enterprise agreement to properly facilitate changes in people's classifications. And that is to next enterprise agreement, negotiate a classification structure that fits, negotiate a training package that means that if there are any deficiencies in people's skills relative to their classification level, that that be adjusted over time.

PN3130

There is a collective way to actually address the problem. If the problem is that people are over-classified, and I do not think that there has been sufficient evidence for the Commission to know either way if that is the case. But if that is a genuine concern of the company there is a proper way to use the enterprise agreement to solve their problems. Now, that is not what is being done here. They are trying to use other elements within the enterprise agreement to reclassify, and it is - Mr Hoy's language is that they are using the agreement to reclassify - properly in accordance with the agreement, I think that was the expression he used.

PN3131

And quite simply that is not proper, that is not a proper use of the agreement, it is a misapplication of the agreement. He also wants to suggest that, and it flows on from, I think, an inconsistent argument about what the company is doing is in accordance with the agreement but it is also beyond the scope of the agreement so you should butt out, Commissioner, and all we are supposed to be considering, according to the company's argument is what is the proper classification, and only that. What is the proper classification of these employees according to their work performance.

PN3132

Now, the evidence in relation to that matter - well, the argument put is that because neither John nor Darren operate all the equipment or are required to operate all the equipment therefore they are over-classified. But we have also heard evidence that there are a number of other employees that also do not operate or are required to operate. So the evidence you have before you, Commissioner, is that is precisely one of the application of the classification structure, is that it applies in different ways to different people and we are simply getting into a situation where we have a double standard going, where it is okay for some employees to not operate all the equipment or be required to operate all the equipment, but in relation to these two employees the company says that is justification for demotion.

PN3133

Likewise there was no evidence brought that there is a team of discontented employees out there who do not like the fact that Darren and John are supposedly over-classified. It is not sufficient for Mr Williams to say that employees are unhappy with the arrangement. That does not constitute evidence, that is just something that he is saying to the Commission, and we could equally say, and I can say it right now, that that is not true.

PN3134

THE COMMISSIONER: His statement was made under oath.

PN3135

MS ANGUS: Well, it was, but - and that is correct, but it is a statement about his notion of what employees - his view that there are employees who are unhappy.

PN3136

THE COMMISSIONER: It is a question of weight, is it not?

PN3137

MS ANGUS: Sorry?

PN3138

THE COMMISSIONER: It is a question of weight, not whether it is - - -

PN3139

MS ANGUS: Yes, it is a question of weight, and on that basis I would argue that it has got almost no weight, because, you know, it could equally be understood to be a very convenient argument that has been put before you that, Commissioner, there are all these other unhappy people here, out there, that do not like the classification of John and Darren. It would have more weight had he produced some actual evidence that there is mounting dissatisfaction.

PN3140

But that notion has got to be balanced against the opposite view, and that is that if the company has the right to downgrade employees in a manner that is not in accordance with the enterprise agreement, rather than using the agreement in collective negotiations to solve any problems they have got with classification and training. If the company is allowed to do that then there will indeed be widespread discontent, and dissatisfaction and concern from employees. So those two concerns have got to be balanced next to each other in the Commission's mind. I have made a few comments, Mr Hoy made a few comments about Mr Severyn that I want to pick up. Firstly, there is this constant reference to the safety breach. Yes, there was a safety breach.

PN3141

THE COMMISSIONER: Sorry, can I take you back to the evidence of Mr Cox. Just on that last point, at paragraph 563 and 4, and well in the context of the questions and responses at 555 and 556. Does that not support Mr Williams' evidence?

PN3142

MS ANGUS: Well, it may, Commissioner, but solution being put by the company of demoting two individuals is not a satisfactory one. The way to demote in a manner that is in accordance with the agreement would be to negotiate a collective process of addressing any issues of over-classification, if indeed there are any.

PN3143

THE COMMISSIONER: Thank you. Sorry I stopped you in full flight.

PN3144

MS ANGUS: That is all right. In terms of John Severyn and the constant references to the safety breach, I simply reiterate our argument that there was a safety breach, that the punishment at the time was quite clear, there would be a change of duties, a change of location and no alteration of his pay. It is not appropriate for the company some 11, 12 months later to implement the final instalment in that punishment. It is precisely part of the arrangement that his duties be changed, it is not itself a reason for demotion.

PN3145

Likewise in terms of Mr Hoy's comments about those references, again he is having a bob each way. He reads out a reference in relation to John Severyn which refers to John's abilities on the equipment, but does not specify all the equipment, and that, we are supposed to conclude, is the basis for an argument that therefore he is not even a level 4. But we have heard the evidence from Mr Williams that there is in fact subjective criteria going on that are not recorded in the agreement and that is the basis for the company's argument.

PN3146

The company is arguing that they have the right to ignore the objective criteria - well, not ignore them, but put more weight on subjective evaluations of employees, and subjectively the evaluation that the referee gave John in that reference was that he performed to the highest expectations. So the company, I think, needs to be consistent in its position in relation to why it is that these people are being proposed to be demoted.

PN3147

Likewise I think the evidence in relation to the application of clause 6.4 of the agreement as contested, Commissioner, I think Mr Hoy painted a fairly one-sided view. He suggested that the evidence in relation to the appropriateness of using clause 6.4 was that the company believed that it was not appropriate, that it should not be - that any change in remuneration or trial should not be comprehended as falling with the scope of clause 6.4. But in fact the evidence of Mr Williams himself was that demotion would have a significant impact, that it did result in a change in remuneration, and that it did affect the working arrangements of an employee.

PN3148

Despite all those logical steps, if you like, he does not conclude that a trial or a demotion falls within the terms of 6.4, but I think the Commission could equally conclude that it should, and that 6.4 does apply but was not applied, which is further basis for our argument that the agreement was not properly applied in this situation. Two final points, Commissioner. Mr Hoy has made the point that we are not pursuing this matter under section 170CE as a termination, and indeed we are not. It is quite clear that the demotion has not occurred, and we all know that. Nor are we seeking a remedy.

PN3149

We simply make the point that to the extent to which the Commission can arbitrate in relation to a dispute between the parties, then, on the basis of our submissions, we argue that you should be mindful of principles that exist out there which are used widely in the world to assess what is or is not a proper demotional termination. That is the weight that we put on that argument. And finally, I do not entirely understand Mr Hoy's argument about the principle of estoppel not being relevant here. He is saying that the principle of estoppel only applies when someone actually takes action in accordance with a promise.

PN3150

Now, he makes two points. That is the first point he makes. And - but quite clearly Darren has taken action in accordance with a promise. The action that he took was to voluntarily transfer himself to a situation where, by the company's account - he put himself in a situation where possibly he could then be judged to be deficient in his competencies relative to the classification structure because of all the new equipment that applied at Rockbank. So he voluntarily put himself in a situation where he would no longer have competency over all the equipment on site.

PN3151

Now, he did that under the promise of no disadvantage or no pay cut, whatever the words is, and I make the point that it is not as Mr Hoy has argued that Terry Williams gave evidence that he thought - sorry, that he had no intention - it was a thought process - he had no intention of or no thinking about the notion of pay. That is not the evidence that is before the Commission, it is not just what Terry Williams was or was not thinking.

PN3152

The evidence before the Commission is that he has actually said to people that there would be no pay cut, and given that that is the evidence before the Commission, that there would be no pay cut, Darren has quite clearly engaged in a conduct which has put himself in a situation of detriment, because he has put himself in a situation where he could possibly be assessed as vulnerable, relative to the classification structure, because he has some deficiencies in his competency because there is new equipment at this new plant. So I, in terms of Mr Hoy's comment that there was no action that was taken, there was quite clearly action that was taken and it was taken precisely because there was an expectation that he not be disadvantaged in his pay.

PN3153

THE COMMISSIONER: That argument carries some implications, does it not, for the - sorry, classification implicit in what you have just said?

PN3154

MS ANGUS: Well, you will need to spell them out for me before I agree that it does carry those implications.

PN3155

THE COMMISSIONER: Well, if Mr - - -

PN3156

MS ANGUS: Mr Vanstan, Darren?

PN3157

THE COMMISSIONER: Yes, yes, thank you. If Mr Vanstan put himself at risk because of the new equipment and the reclassification implicit in that, is there not an acknowledgment of a lack of capacity to meet the requirements of - - -

PN3158

MS ANGUS: Well, only if he knowingly - - -

PN3159

THE COMMISSIONER: - - - grade 3 and 4?

PN3160

MS ANGUS: Sorry. Only if he knowingly put himself at risk. The principle itself was that Tony Maher in the actual case itself actually proceeded to build the house. He did not know he was putting himself at risk because he trusted the promise. So he did not contemplate, "Oh, my god, what if this man doesn't deliver?". He trusted the promise and he proceeded with the task. Likewise Darren trusted the promise and he proceeded with the task. He did not think to himself or express to anyone else, "I am exposing my deficiencies and my competencies here." No. And it is not a concession on our behalf that he is deficient relative to level 4.

PN3161

The final point is the point of travel. We would argue that both are eligible for travel. Darren, because he was promised that there would be no detriment, and John, because - and this is we concede is contested, this evidence is contested - but John, because he had been informed that the arrangement was temporary and therefore he should be, in our argument, entitled to temporary travel costs. Thank you, Commissioner.

PN3162

THE COMMISSIONER: Thank you, Ms Angus. Well, I do not think you will be surprised that I propose to reserve my decision in this matter, given the complexity of the evidence and the issues, and you will be provided with a decision with written reasons as soon as I am able. This matter is adjourned.

ADJOURNED INDEFINITELY [12.47am]