C2001/3142, Transcript of Proceedings [2001] AIRCTrans 3257 (26 November 2001)

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TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER RAFFAELLI

C2001/3142

FINANCE SECTOR UNION OF AUSTRALIA,
COMMONWEALTH BANK OFFICERS SECTION

and

COMMONWEALTH BANK OF AUSTRALIA

Notification pursuant to section 99 of the Act
of a dispute re related issues regarding integration
programme between the Commonwealth Bank of Australia
and Colonial Services Ltd

SYDNEY

2.05 PM, THURSDAY, 18 OCTOBER 2001

Continued from 20.9.01

PN810

THE COMMISSIONER: Yes, Mr Douglas.

PN811

MR DOUGLAS: Commissioner, I've got a very short - - -

PN812

THE COMMISSIONER: Re-examination.

PN813

MR DOUGLAS: Re-examination of Ms Sanderson.

<SURENE SANDERSON, ON FORMER OATH [2.06pm]

<RE-EXAMINATION BY MR DOUGLAS

PN814

MR DOUGLAS: Do you remember having some questions put to you from my learned friend in cross-examination about the PDR system?---Yes, I do.

PN815

I think at about transcript page number 574 you refer to that system as being a system which judged the performance of individuals?---Correct.

PN816

Can you expand on that a little bit as to how the system worked? What did it measure?---The PDR system measured an individual's performance against the key result areas that were predetermined before they commenced their job and in certain job families there were three main KRAs, that was our people, our business, our customers, and within each of those KRAs would be some individual performance indicators and also some predetermined skills and abilities criteria that were established for the position. So at the annual review they were judged against their KRAs and their performance indicators and their skills and qualities which had been predetermined and how they performed against that.

PN817

So it was a process that was directed to the performance of the individual?---Correct.

PN818

Now, the other area I wanted to ask you about is this just very briefly. In your statement you referred to the number of Colonial and Colonial franchise employees who joined the CBA and I think the figure is 878. Do you remember that?---Yes.

PN819

That is in your statement. You have got a couple of attachments at the end, attachments A and B, which deal with the movement across to the bank?---Yes.

PN820

In the transcript - I don't have the page number, it is really not relevant, but in the transcript you refer to the fact that there were 32 franchises, four of which were owned by Colonial Bank. Remember that? Yes, I think it is at paragraph number 597?---Yes, approximately four were owned by the bank.

**** SURENE SANDERSON RXN MR DOUGLAS

PN821

Yes. Now, in round terms, percentage terms maybe, are you able to say how many of the 878 employees would have come from the franchise rather than directly from Colonial Bank?---The majority of employees.

PN822

The majority?---Yes.

PN823

What do you mean, 51 per cent or 75, 80?---Could be 80, 90 per cent.

PN824

80 or 90 per cent, okay. Thank you, Commissioner, that is all I have in re-examination.

PN825

THE COMMISSIONER: Thank you, Ms Sanderson, you are excused?---Thank you.

<THE WITNESS WITHDREW [2.10pm]

PN826

MR DOUGLAS: Commissioner, before my friend starts, and as I understand it he will address you this afternoon and probably finish today, could I deal with one issue. It is contended in our outline of submissions that there is no ambit to support the proposed variation and no doubt you have taken note of that. The FSU in paragraph 2.1 of its response referred to a log of claims that was served on the bank in about December 1995. We had no knowledge of that service, Commissioner, and we therefore did not refer to it in our outline of submissions. In fact, after receiving the union's response we made detailed inquiries as to that particular service without anything coming forward.

PN827

However, we now accept because of additional material that the FSU has supplied to us and I presume some of it would be on the record, we now accept that a log was served on the bank on 21 December 1995; that it was formally rejected by the bank in a letter to the union and that as C number 20005 of 1995 it was the subject of a dispute finding by Deputy President Maher on 15 January 1996 and that finding can be found in transcript at page 9. Now, based on my recollection, Commissioner, Deputy President Maher actually fell ill around about that time, went off on leave and in fact really didn't come back to work.

PN828

THE COMMISSIONER: Yes.

PN829

MR DOUGLAS: It would appear because of that event he didn't record his finding in the usual way and therefore it remained in the transcript and didn't go further. We don't take any technical as to that. The finding was made and it exists, we accept there is a dispute but I think that is the reason why we couldn't find it. Having said that, Commissioner, I also indicate that therefore we also accept because of what is claim 2 in the log, and I don't go to it, that there is sufficient ambit to support the proposed variation. So the ambit issue we originally raised is dead. I'm sure you are very happy with that.

PN830

THE COMMISSIONER: Yes. I would have thought that the FSU would have had a sizeable hurdle to get over that, but for that. Yes, thank you. Yes, Mr Penning?

PN831

MR PENNING: Thank you, Commissioner. Just in relation to that last point, Deputy President Maher did in fact issue formal finding of dispute based on the log that Mr Douglas has referred to and that formal finding of dispute was issued on 17 January. As nothing now turns on it I don't need to say anything more about that.

PN832

THE COMMISSIONER: Well, has it got a print? I mean, unless you have - have you got a copy?

PN833

MR PENNING: Yes, I can provide a copy.

PN834

THE COMMISSIONER: We need not trouble you at this stage. It just wouldn't be a bad - - -

PN835

MR PENNING: I think you should have the log and the finding, Commissioner.

PN836

THE COMMISSIONER: Yes.

PN837

MR PENNING: In the documents we tendered or that we filed, Commissioner, not as yet tendered, we have included the transcript. I didn't at the time have the formal finding of dispute. I have since obtained it and I don't have a spare copy with me but I am sure that we will have that for tomorrow. Commissioner, completing our case I seek to tender two volumes of materials. The first volume was filed and served and with the - before the Commission on the last occasion and from that there were two particular documents which were extracted and given specific exhibit numbers. Commissioner, do you have that first volume - - -

PN838

THE COMMISSIONER: Yes, I've got both of them, yes.

PN839

MR PENNING: That is title documents relied upon by the Finance Sector Union in support of that application. The documents that we have extracted and tendered included the letter behind tab 1 which was a letter dated 21 March 2001 from the bank to the union and that was marked exhibit FSU9 and the second document was behind tab 17 which was marked exhibit FSU4 which was a document entitled: Commonwealth Bank of Australia Acronyms, which the union had prepared hopefully as assistance to understanding some of the acronyms used in the Commonwealth Bank and relevant to this case. Commissioner, I seek to tender the remainder of volume 1.

PN840

THE COMMISSIONER: As a whole document? As an entire exhibit?

PN841

MR PENNING: Yes. I propose to do that for ease of reference, Commissioner, but if you feel otherwise I'm in the Commission's hands. In that respect I will seek also to tender document - the volume which I have titled: Volume 2 of documents relied upon by the union, in support of the application. Again in respect of that matter and subject to objections that Mr Douglas may or may not make about the particular documents in either volume, I'm in the Commission's hands as to whether it is most appropriate that you refer to as one exhibit or several.

PN842

THE COMMISSIONER: Just behind tab 1 there's a whole range of - there's actually two letters.

PN843

MR PENNING: Yes.

PN844

THE COMMISSIONER: I suppose we will know where we are. Is there any objection to that?

PN845

MR DOUGLAS: No, Commissioner.

PN846

THE COMMISSIONER: We will mark the rest of - including the index at the front - the rest of the material in volume 1, we will mark that exhibit FSU10 and any individual documents therein, they will just be FSU10 dash 1 or dash 7, whatever it might be.

EXHIBIT #FSU10 REST OF MATERIAL IN VOLUME 1, INCLUDING INDEX AT FRONT

PN847

THE COMMISSIONER: Volume 2 we might do the same thing.

EXHIBIT #FSU11 VOLUME 2

PN848

MR PENNING: Thank you, Commissioner. Before I commence, I take it Mr Douglas would also wish to put into evidence his volume of documents.

PN849

MR DOUGLAS: Yes.

PN850

MR PENNING: We have no objection to that.

PN851

THE COMMISSIONER: Again globally, Mr Douglas?

PN852

MR DOUGLAS: Yes, I think so, that is easier, Commissioner. I won't be relying on all of them.

EXHIBIT #CBA3 BANK'S BUNDLE OF DOCUMENTS

PN853

MR PENNING: Thank you, Commissioner. I have prepared a written outline of submissions - - -

PN854

THE COMMISSIONER: Could I just ask you this before you start. You are not calling Mr Reardon or anybody else?

PN855

MR PENNING: I should clarify that. No, in light of the documents being admitted into evidence through the two volumes of materials, it was felt that it was not necessary to call Mr Reardon. There was some correspondence between the parties in relation to that matter but that can rest at this point.

PN856

THE COMMISSIONER: Okay.

PN857

MR PENNING: Commissioner, we have prepared a separate outline of submissions as to the merits of the claim and an outline of submissions as to issues of ambit, jurisdiction and other matters excluding merits raised by the respondent. Could I hand up a copy of the outlines?

PN858

THE COMMISSIONER: Yes.

PN859

MR PENNING: Commissioner, I would propose to go first to the outline of submissions as to the merits of the application.

PN860

THE COMMISSIONER: Yes.

PN861

MR PENNING: In the initial paragraph I have sought to bring together the sources of transcript and other materials that have been filed to date that give an outline of the position put by the union. In doing so I took note of the comment which you made previously, Commissioner, as to drawing your attention to transcript or other matters that have been before Senior Deputy President Duncan which we wish the Commission to now have regard to. I don't propose at this stage to go through those references and would note that in relation to various - the outlines that we have not sought to take the Commission to, all of the grounds that were initially filed.

PN862

At page 2 we attempt to set out what we say are the arguments and issues that the Commission is asked to determine in this matter in assessing the fairness or otherwise and industrial equity of the actions taken by the Commonwealth Bank. First argument, we say, is essentially that ex Colonial staff employed in the GC classifications are not new employees and they are not akin or should they be compared to persons who are employed from either outside the finance industry or from another unrelated bank. That being the argument, that is essential to the bank's application - the bank's position.

PN863

In paragraph 1.1 we say that the bank essentially accepts the former Colonial employees continuity of service for all relevant industrial purposes including annual leave, long service leave, sick leave, share acquisition and other matters. As the evidence stands, Commissioner, I believe that the only issue that service with Colonial is not accepted as continuous for is the positioning of the employee on the GC or general classifications salary scale. Now, we say there's no good nor logical reason for that distinction and certainly none has been made out in the bank's evidence to the Commission.

PN864

The second paragraph under section 1.1, the concession that we recognise there is that if a Colonial employee or a former Colonial employee as at the date of transfer of that employee's service to the Commonwealth Bank didn't have 12 months service up with Colonial, that that employee would have to wait until the 12-month period or 12 months service had expired before getting the benefit of the application that we seek the Commission make.

PN865

Paragraph 1.2, you say that virtually all of the documentation that was issued both by the Commonwealth Bank and Colonial as a merged entity and by Colonial in its own right, during 2000 and indeed during calendar year 2001, the process that has occurred within the two organisations is described as a merger or an integration or a coming together of two employers and in that respect, we take - we refer the Commission to a document which was titled, "Scheme Booklet" which is behind tab 1 of volume 2 of the materials relied upon by the union, exhibit FSU11 and give particular reference to page 86 in that matter.

PN866

Commissioner, we ask that Commission take account of all perhaps of page 86 in this respect. So that essential argument is that this is not just Colonial employees seeking - ceasing employment with Colonial and being employed by the new employer, the reality of this situation is that there is a merger or an integration of two organisations and we say on that basis, it is not appropriate nor logical that the Colonial employees be regarded as starting afresh, or as a new employee for the purposes of a positioning on the GC salary scale. In further support of that argument, we have referred the Commission to documents issued by the various entities, behind tabs 3 and 4 of volume 2.

PN867

Those documents - I might just for example, Commissioner, ask the Commission to refer to those. For example, document behind tab 2 of exhibit FSU11, the second volume of material and the heading itself of those various - the headings themselves we say of those various documents support the argument that this is the coming together of two organisations. In some instances, those documents are referred to as, "Merger Update", again there's emphasis on the merger concept. Behind tab 3, the heading of the document issued to staff is, "Integration Update".

PN868

At paragraph 1.3, we say that the evidence in this matter, Commissioner, is that the processes for integration that were put in place by Commonwealth Bank and Colonial with the merged group was such that the merged group had the ability to select those employees which it wanted to appoint to positions within the newly amalgamated organisation. The purpose of that process is to allow the resultant organisation, that is the merged Commonwealth Bank and Colonial organisation to select the best of the employees that are available from the group.

PN869

We say again that does not support a subsequent approach which is taken by the bank which says that: all right, we regard Commonwealth Bank employees as having continuous service within this merged group but we don't regard Colonial employees having continuous service, or certainly not for GC positioning purposes within the merged group. We say the rest of paragraph 1.3, that looked at in the sense of fairness and industrial equity, that as a result of the merger and the banks process of selecting employees as it wished from the two organisations that the bank gained the considerable experience of the former Colonial employees.

PN870

In that respect we rely on the evidence of Karen Harris and Tracey Thompson, both those women you will recall, Commissioner, had approximately 6 years employment with Colonial, whether as an employee of one of the Colonial franchises or prior to that with Colonial Limited or indeed prior to that with the State Bank of New South Wales. None of them go back to the Rural Bank as it was but nevertheless, within the context of that continuity of service and the information that has been provided to us by the bank in terms of the length of service of all of the employees, it may well be that some of that group do in fact go back to Rural Bank days.

PN871

Now, continuity of service was recognised for those employees when the Rural is taken over or there's a change to the State Bank although from recollection I think that remains a Government entity.

PN872

THE COMMISSIONER: I think their name changed, wasn't it?

PN873

MR PENNING: I'm not sure. It may have been, Commissioner. There was a time when the State Bank was privatised but even so, when it was privatised there remained continuity of service for those employees when Colonial Limited took over the State Bank, whatever the corporate mechanism was for doing that, there remained continuity of service for all purposes when those employees transferred to a franchise in some instances or in other instances remained employees of Colonial Limited, there was continuity of service. Now, here there's continuity of service for all purposes but for salary positioning.

PN874

Now, we say in terms of fairness, look at the example of Ms Thompson. She is a full time employee. Her evidence, which is uncontroverted, is she is extremely experienced, she has got good performance ratings as did Ms Harris. Ms Thompson is in fact training other employees, yet she is put at the bottom scale. In respect of Ms Thompson, she also evidence that said: I've asked for a performance appraisal to be done on me, the evidence of Ms Sanderson is also that a performance appraisal can be done.

PN875

In fact, it could have been done after 3 months, it could in fact have been done before that. It can certainly be done before the expiry of the 12 month period yet it is a policy decision of the bank which says: well, we won't reposition you for salary purposes until 12 months has expired. We say if you look at this issue of fairness, the bank got the best of both worlds, well, that is what it is seeking to do. It got all the advantages of the Colonial employees being brought into the Commonwealth Bank group, it got the contacts that the branch staff, the tellers and so forth have got with customers, with business people in their local communities.

PN876

It used those contacts and networks and familiarity with the system to its advantages but yet it says after the people are across there, and after they are even doing the work within the Commonwealth Branch integrated structure, all right, the offer that we are going to make to you is only at the base level of the relevant GC staff, putting aside for the moment the argument or issue about the offer in respect of individual agreements or contracts pursuant to clause 8 of the relevant certified agreement. At point 1.4 we say that these Colonial employees, the former Colonial employees in fact had to do a little bit more.

PN877

In many instances, they had to change work locations, they had to learn new systems, they had to make an extra effort in terms of assisting customers of Colonial who might have been disappointed about the change or may have considered going to another bank or another branch or transferring products. They had to assist those people. They had to try and win that business and keep it yet the bank then turns around and says: well, we won't put you at the medium level, or, we won't conduct a performance appraisal earlier than 12 months.

PN878

We say that, for example, the evidence of both Thompson and Harris supports that submission, that is that there was more to do. They had to learn different systems. They are not forgetting the old systems because there's an integration of the approaches that they have used but they have to learn a lot more. That again is another fact to be taken into account in assessing whether they should more properly been put on the middle scale.

PN879

Point 2, we say that as a result of the integration of the two networks, the two organisations, the Commonwealth Bank did have full access to all relevant Colonial records in relation to the employees who were offered general classification GS employment. In this respect, it is not a strong argument at all to say that these people are like a new employee who is appointed from either outside the finance industry or from another unrelated bank because in those circumstances of course, the employee applies for employment, they present a resume but the bank does not have access to their previous performance appraisals.

PN880

You know, it can do a record check, it can do a reference check but it does not have anything like the access to material that this employer had as a result of the integration. In fact, the access to information is unrestricted. Most importantly, the Commonwealth Bank didn't have to employ everyone and they didn't. Their own documentation make that extremely clear even though that we say in cross-examination, Ms Sanderson appears to some extent to dispute the proposition that selection for employment was based on merit. She said: well, appointments were made based on the business needs of the organisation.

PN881

Well, yes, sure, that is part of the answer. You wouldn't appoint someone to a position at all if you didn't have a need for the position to be filled but the second situation is if you have got more than one person who could be appointed to the position, and that has certainly happened in a great many cases because there's been a reduction in the work-force by about 2,500 people, then you can clearly select. We've gone into some detail in documenting or listing what the documentary evidence is from the bank's own materials as to how it selected employees on the basis of merit.

PN882

I don't take the Commission to all those matters but they are referred in the outline. Commissioner, at point - paragraph 2.2, we've highlighted a statement in the Commonwealth Bank Colonial merger policy document and I've referenced where that is. It is behind tab 5 of volume 2 of the documents relied upon and I've highlighted a section of that policy. It says:

PN883

In the current context of the integration of Colonial with the Commonwealth Bank, there is a large measure of common ground and policy recruitment selection in appointment to roles.

PN884

No fundamental changes in principal are required from policies previously in place in both organisations to align policies and procedures for appointment to roles with business and organisation objectives. Now, that is our emphasis to that but we say that that statement by the bank, and it can be seen within the context of the whole merger policy of the banks, undercuts any argument that my friend might seek to make which says: there were differences in the appraisal systems of the two organisations and a Commonwealth Bank person couldn't make sense of or use the staff appraisal or other systems of a Colonial Limited employee or a Colonial franchised employee.

PN885

So there's no evidence we say and the bank could have put that evidence before the Commission if it wished to weigh up the two respective performance appraisal systems and say: well, Colonial employees were assessed against this system but how could you compare that to the Commonwealth Bank's performance appraisal system. Now, that is within the ability of the bank to put that evidence before the Commission if it assisted its case. There's no evidence of that type at all before the Commission. The merger policy at section 2.4 further describes what managers are to do when making an assessment as to who they would offer employment to.

PN886

They include specific things like reviewing outcomes of career assessment and succession planning. So that means they go to the Commonwealth Bank - to the Colonial documentation and they review and use that documentation in deciding whether to offer appointments. Subparagraph (ii) "Review of Available Resume Information of Staff employed by organisations", previously comprising Colonial and Commonwealth Bank, why could he be considered for redeployment. The evidence of Ms Harris was also that she had in fact undergone a staff appraisal whilst still a Colonial employee, Colonial franchise employee, but after about April 2000 which was the date that effectively the Commonwealth Bank had an organisational role or a decisive role within the structure.

PN887

I refer also to section 2.4 of the merger policy document and that goes over to page 6 and that said that relevant managers were to consider relevant information which may be obtained or may be available from Colonial HR system such as a performance review and development and training and development. We are given a reference to that. Now, that notion of the performance review and development system is in fact the same name as one of the performance appraisal systems used by the Commonwealth Bank and for an explanation of some of the differences between the performance appraisal systems, we would refer the Commission to the acronyms at exhibit FSU4.

PN888

There's a series of other references to how the merit selection process was to work, Commissioner, they are at paragraphs 2.4 and 2.5. 2.6 managers were told that they to ensure that all candidates were to be reviewed against selection criteria. They were told to conduct reference checks. There was also a policy for redeployment which included a requirement or a provision that the policy was to be open, well communicated and consistently applied so that employees were treated with fairness and dignity. At paragraph 3, a proposition that we asked the Commission to - - -

PN889

THE COMMISSIONER: Yes, before you get on with that. Let us say the bank had - well, let us say it has access, easy access, to the Colonial records and let us say it proceeded to use those records and perhaps each branch manager assessed people and there was an outcome - that outcome is not necessarily consistent with your application, is it, because your application says that: they should all be deemed to be exactly three to less than six.

PN890

MR PENNING: Yes.

PN891

THE COMMISSIONER: Well, other than imposing a penalty on the bank for not doing something that you think they should have done, how can we assume that those employees in fact would fall three to less than six? Perhaps some might, but what about some that might not? Your application does not provide any grey, it does not direct the company to do what I think they promised to do - - -

PN892

MR PENNING: Yes.

PN893

THE COMMISSIONER: I know they say it went off the rail because of the certified agreement.

PN894

MR PENNING: Yes.

PN895

THE COMMISSIONER: Well, they didn't have to do it because of the certified agreement, but your application does not direct them to - does not say: immediately classifies them in accordance with the award. It just says: put them at the second column, no ifs or buts.

PN896

MR PENNING: Yes. It proposes a few things in relation to that question, Commissioner, and hopefully those issues are more fully developed and explained in the course of the submission but, yes, we accept that the Commission has options that it has available to it in determining this matter. One, it can reject our application. Two, it can accept the application and amend the award in the form sought. Or, three, some other provision can be made. The other type of provision that is certainly available is a decision which would have the effect of a performance appraisal being undertaken after a period of 3 months, instead of a period of 12 months, which banking tends to apply.

PN897

THE COMMISSIONER: That would be very - you mean an order that imposes that on them?

PN898

MR PENNING: Well, a decision that that would be the - that would be what the result is of the application, bearing in mind there are two applications before the Commission, there is the section 99 dispute notification and there is the award variation application. Pursuant to the dispute notification we say, there is an issue about the operation of clauses of the award and in determining that dispute the Commission can arbitrate and it can make a decision which is different to the application that we have made.

PN899

MR DOUGLAS: We are not arguing about that.

PN900

THE COMMISSIONER: Yes. I'm not quite sure that the - well, I'm not saying I'm not quite sure - any such decision had to take the form of an order may very well much more come up against 89A than your primary application, or your application. Anyway, you get my point - - -

PN901

MR PENNING: I do.

PN902

THE COMMISSIONER: Okay.

PN903

MR PENNING: Perhaps this point that we make at number 3 goes - - -

PN904

THE COMMISSIONER: Well, I know - - -

PN905

MR PENNING: - - - goes to that issue, Commissioner, but the essential argument we say as a result of that question that the bank didn't have to appoint everyone and that it selected people on the basis of merit is really that: even if an employees performance was not adequate and not satisfactory, then, that employee would not have been offered employment with the Commonwealth Bank. They were under no obligation to offer employment to someone whose assessment - and they had access to all the relevant documentation - indicated that they were not performing adequately - and that point is made at paragraph 2.5 and, I trust, further developed at paragraph 3.1.

PN906

Now, I understand also, Commissioner - but I would have to look at this and give the Commission a particular reference - that even Colonial employees had three unacceptable assessments with Colonial, that that person would not be offered employment with the Commonwealth Bank, so that is why we say that - and we get to this point that - it is only the employees who have got a performance problem who are defined as having, or judged to have unacceptable performance who are within the base category for the GC rates of pay, and that is why we say that none of the Colonial employees - or the Commission on the evidence could be satisfied that the Colonial employees who were transferred did not fit into that base category.

PN907

Now, that point is developed at paragraph 3, as I say, and that is essentially that the base column part of the Commonwealth's pay scale for GC employees says that: if you have an overall PDR, Performance Development Review Rating of less than 3 - that is 01, or 2 - or a rating for any one of the individual PDR components - these are called Key Result Areas, KRAs - of less than 3, then you are defined as having unacceptable performance, or being an ineffective officer. In that respect, Commissioner, we might ask the Commission to refer to a letter from the bank to the union dated 6 November 1998, which is behind tab 12 of volume 2 - the documents relied upon by the union, exhibit FSU11. I would ask the Commission to turn to page 4.

PN908

THE COMMISSIONER: Yes.

PN909

MR PENNING: I don't, Commissioner, go into explain the background or detail to what is in this letter, but the background - I have referred to this over at page 8 - is understandable by looking at the correspondence - the previous correspondence - but this is only in November 1998 and this is the Bank saying figures - it is saying that the rating dispersion for 1997 was that only 1 per cent of general classification employees within the bank were in that classification overall of the base level. 78 per cent - that is by far the large bulk of GC employees - were in the middle classification level and 21 per cent were in the top classification level. I would ask the Commission to - well, that is from table 1 of that document, Commissioner.

PN910

Then, at table 2 - and this really is the background to the letter - the bank is talking about making a change to the rating scale, so that you would effectively have, instead of three general groups, you would have four general groups and it is saying: well, we intend that there be a change in the dispersion, or the spread of employees within those groups. We say this is most telling - in the bank's own words. After the two tables it says:

PN911

As raised in our discussions in August the current system for GCs has only practically two pay points, medium and high.

PN912

So the result was effectively that: if an employee fell into that group, that is the base group which all of the former Colonial employees have been put, irrespective of performance, that employee was deemed to have an unacceptable performance and commenced on a performance management scheme. That employee knew then that they had to considerably prove, or change their employment or, ultimately, they would lose their job. We say that point is made even stronger by the fact that not only if you have an overall PDR of less than 3, do you get defined as being unacceptable. Or, if you have any one PDR of less than 3 - any one rating within the PDR scale of less than 3, you get defined as unacceptable.

PN913

THE COMMISSIONER: Now, there is we say no justification at all for saying that all of the former Colonial employees would fall into that category - that is the worst performers by far and that statistic we say is stark. That is the group, that 1 per cent, of the poor performers but is also the group, and there wouldn't have been many, presumably, in there, that is the group where Westpac and someone coming from the insurance industry or the National Bank - - -

PN914

MR PENNING: Yes.

PN915

THE COMMISSIONER: - - - they would also go there for a while, wouldn't they, and they are interviewed and equally in being interviewed they are selected, they don't have to be employed - - -

PN916

MR PENNING: Yes.

PN917

THE COMMISSIONER: So presumably, they have got some obvious capabilities to the manager, just like the Colonials have and they go into that 1 per cent pool but, presumably, crawl out of that pretty quick smart, don't they?

PN918

MR PENNING: Yes.

PN919

THE COMMISSIONER: What is the process for these new employees?

PN920

MR PENNING: Yes, well, the policy says that the bank has a discretion, quite considerable here, it can conduct - say, someone is put into that category, that is the base category to begin with, its own policies make it very clear, I put this to Ms Sanders in cross-examination and she accepted that and it is also in the documentation, that the bank can conduct a performance appraisal at any time it likes and certainly can do that after three months, there's nothing that says it has to wait for 12 months to do so. Moreover, I don't believe that there is any cogent or strong evidence before the Commission that says that the bank had to put all new employees in that classification, that category.

PN921

Now, I might be wrong on that.

PN922

THE COMMISSIONER: I see.

PN923

MR PENNING: There might be something that the bank - well, the bank has not tendered any documentary evidence at all and I believe I've read most of ours and I'm not aware of that being in any policy document that is before the Commission. Really, the position is that the bank has a discretion, it does not have to do that and even an individual manager sees the person is doing a good job after only a short period of time then they can be put up - a performance appraisal can be done, they can be put in a different band with - I mean, that issue interrelates with the position in relation to probationary employees. If a person is a new employee from another employer, that is outside the industry or from another bank but not Colonial the person would be appointed at this classification on a 3-month probationary period.

PN924

If, after three months or, presumably, towards the end of the three months because the bank wouldn't want to let the probationary period go over three months. So some stage after two months they do a performance appraisal and if the person has an overall rating of less than 3, or if the person has a rating for any one component of the scheme of less than 3 they don't get continued the probation, they are terminated during the probationary period, that is what the banks' own documentation provides. So again, we say it is very inequitable and inconsistent to say that all the Colonial employees, the 623 or so, should all be defined as, or put into the bottom or base grade.

PN925

In further support for health, we say the system is inequitable, we ask the Commission to just look at the descriptions which are given to the individual components of the PDR or the KRAs, and they are at tab 18 of volume 1 of the documents tendered. For example, rating 0, that says:

PN926

The required standards are rarely achieved -

PN927

rating 1 -

PN928

Some standards are achieved -

PN929

and rating 2 -

PN930

Some required standards were achieved but some improvement must be made.

PN931

Now, the banks' position is that it can deem all Colonial employees to afore within that type of a description. It is not until you get to a rating of only 3 that you get even judged to be meeting the required standards and the job requirements are basically met. Now, that is not a high benchmark, we say, to have to get to. In fact, if a Colonial employee couldn't get to that basic benchmark the reality is they would not have been employed. Point 4, we say, that representations or make the submission that representations were made to Colonial staff on which they were entitled to rely to the effect that there would be a full recognition of a prior Colonial service for all relevant industrial purposes and that recognition for industrial purposes, we say, includes positioning on the relevant Commonwealth Bank scale.

PN932

Commissioner, I've made reference to a range of Commonwealth Bank documents that were issues to these employees during the year 2000 and there's no reference in any of those documents to people being put only the base rate of pay. The reality is there's no advise at all to former Colonial employees that they would be put on only the base rate of pay if they chose to accept award in certified agreement appointment until after they are actually working within the Commonwealth Bank group and then they are given a letter which says, "These are your two options." That is appointment at the base level or appointment under the terms of a clause 8 contract.

PN933

We ask the Commission to have regard to offers of letters of appointment, for example, that were made to Karen Harris, exhibits FSU7 and FSU8, and what her employer is saying to her there is:

PN934

Although you will have a new employer terms and conditions will otherwise be the same, you will be continued on, you will be regarded by your new employer or your service with your current employer and employment with Colonial State Bank, where applicable, will be regarded by your new employer as service with it for the purpose of calculating all service related benefits.

PN935

Then there's some examples given. We say, that the examples given don't detract from the general statement that is made, that is, there's recognition of prior service for all purposes. That recognition for all purposes can't include a definition of the person as being a new employee for one purpose only. FSU8, the employer says - - -

PN936

THE COMMISSIONER: Well, the bank might have been attempting to save itself legal disputation by accepting that prior years of service with Colonial has to be counted for long service. I mean, it goes back to various - - -

PN937

MR PENNING: Yes.

PN938

THE COMMISSIONER: - - - State Acts.

PN939

MR PENNING: Yes.

PN940

THE COMMISSIONER: So it says: you have 700 people taken to Court, etcetera, it had to recognise that that might be one reason, the only reason is just fairness but the difficulty you have, because it gets back to one of the criticisms, one of the points the other side make, this competency or experience in the job must be anything other than service related, otherwise they - we get hit with this inability of the Commission to recognise service increments or to give status to service increments. I mean, I thought your argument was his long-service increment?

PN941

MR PENNING: Well, this isn't a service increment though.

PN942

THE COMMISSIONER: Well, no, but it is service based, I would have thought you would be saying: well, it is not service based, it is based on experience, it is based on competency, you see what I mean? It just gets back to when the bank says: we recognise your service, it is not saying: we will recognise your experience or your competence or anything like that, it is just saying: we will recognise your service, and they - I mean, I am just assuming what you are going to say, that they have done that.

PN943

MR PENNING: I'm not sure that I do understand the matter you are raising, Commissioner. We certainly don't cavil with the recognition of service for all other purposes, we don't have any problem with that, why would we? We say that that is entirely appropriate and consistent with what has been done before. What the bank is putting to the Commission, what it has said to employees is that: we recognise your service for all purposes except salary positioning.

PN944

THE COMMISSIONER: Yes, but the services it recognises, I would have thought, are statutory services, that they either recognise or they challenge, they can't say: we know you have been there a while and so we will give you long-service leave, they have to actually say: - - -

PN945

MR PENNING: I understand what you are making, yes.

PN946

THE COMMISSIONER: - - - we recognise you have got 7.8 years of long-service entitlement and we will recognise it.

PN947

MR PENNING: Yes.

PN948

THE COMMISSIONER: When it gets to this other aspect it is not quite the same.

PN949

MR PENNING: I understand that point, Commissioner, Well, that is certainly right in relation to long-service leave because it would be regarded as a related corporation, so to the extent I'm familiar with the New South Wales long-service Act that would certainly be the case. It would probably be the case, I will assume, for the annual purposes of the annual holidays case, again, I'm only familiar with New South Wales, the majority of employees are in New South Wales, but it is not in the case in relation to sick leave benefits and they were recognised, sick leave entitlements, there's no statutory entitlement to recognition of prior sick leave.

PN950

THE COMMISSIONER: No, no, but they recognise the service, they don't turn around and say: we will give everybody, deem everybody 50 days of sick leave, they have actually gone and they have said: like, you were there - - -

PN951

MR PENNING: Yes.

PN952

THE COMMISSIONER: - - - with Colonial for 25 years, you have only taken three days sick leave - - -

PN953

MR PENNING: Yes.

PN954

THE COMMISSIONER: - - - and so therefore we will transfer over 152 days, that is all - well, we are probably delving into it more than we need to, it is only a question but - - -

PN955

MR PENNING: What we are putting to the Commission is that, that we are saying this is the same as the sick leave really. If you had ten days sick leave accrued. That's gone over. There's no statutory requirement that it go over but it has gone over. It is recognised. Say you are - - -

PN956

THE COMMISSIONER: Yes, I understand. You are saying you should have done the same for GC shouldn't she?

PN957

MR PENNING: Yes.

PN958

THE COMMISSIONER: These are experienced people and that should be recognised?

PN959

MR PENNING: Yes and in fact - - -

PN960

THE COMMISSIONER: The only thing they didn't recognise.

PN961

MR PENNING: The point I made at the outset, Commissioner, say a Colonial employee had only 6 months service as at the date of transition, then our application is such that they don't automatically get position in the same way. They have to wait until 12 months is - 12 month period of service has expired. So the submission we make is that - what we are proposing here is consistent with the approach the bank has taken in those matters which are other than statutory requirements.

PN962

THE COMMISSIONER: Yes.

PN963

MR PENNING: There is not direct evidence as such in relation to share acquisition for example but I doubt that the bank would dispute that but again, there is no statutory requirement that service be recognised for purposes of share acquisition but that is in fact what has occurred. The claim is regarded as having the same now with the Commonwealth as having a continuous period of service back to when they started with whatever the relevant organisation was or incorporation was at that time. We rely on the letters which are in evidence in exhibits FSU7 and 8 and we say, no-one at all until - in relation to Ms Harris, for example, Karen Harris - nowhere at all is it said to her until the time that she actually gets the letter of - from the Commonwealth Bank, that your choice is only positioned at the base level on the GC scale or contract.

PN964

There is no prior indication at all that is going to be the bank's position and we say the bank's policy documents themselves say they will have an open and transparent policy and that was not the case. In relation to this issue of representation being a fact that the Commission can reasonably take account of, we rely upon a decision of a decision of Senior Deputy Commissioner Duncan in a matter involving Westpac Banking Corporation in relation to the out-sourcing of information technology and the finance sector union. That is print 3225, a decision made on 9 November 2000 and we refer the Commission to paragraphs 41 to 54 in relation to the representation issue.

PN965

Commissioner, tomorrow I will have a - anticipating the matter will go until tomorrow - bundle of cases that we will rely upon. Point 5 or proposition 5 we say that the approach taken by the Commonwealth Bank in the integration between the Commonwealth and the State Bank of Victoria, the SBV, in 1990 when all transferring employees were placed on the middle PDR scale, is an appropriate model and that is a practice where there was a large scale acquisition of an organisation and a large scale transfer of employees that it is appropriate for the Commission to have regard to.

PN966

We say the approach now taken with Colonial employees to place all of them at the bottom scale, is harsh and unfair in comparison to that approach taken and, without going to the relevant documents in relation to that matter, Commissioner, we've given references to where the details of the award variation application and the decision of Deputy President MacBean at print RJ6205 made in December 1990 are and at that form of the current application is modelled on the form of the cause that was in the award arising from the integration of the State Bank of Victoria.

PN967

Proposition 6, we say the bank's actions have disproportionately impacted upon various groups of employees who are disadvantaged within the work force and we say those groups are those who are lowest paid, those who are women and those who are part-timers. Now, we concede, Commissioner, we don't have much in the way of facts to support that proposition but it does not appear that there is a dispute from the bank that there is significant proportions, although we don't know to what extent of women, part-timers and low-paid within the GC classification scale.

PN968

The bank certainly has documentation, Commissioner, but it has not made it available in this matter in relation to gender breakdown within its work force and gender breakdown within various classification within its work force and we were able to get access to some updated gender classification breakdown and that is behind tab 15 of volume 1 of materials relied upon by the union and exhibit FSU10. The simple submission we make further in relation to that point is that we sought that information in cross-examination from Ms Sanderson. She said she didn't have it. We said: we put you on notice that we were going to ask that question, and she said, maybe rightly so: I wasn't told by my solicitors, and the solicitors said: well, we didn't get the fax.

PN969

We say pursuant to Section 93 of the Work Place Relations Act that their appropriate matters would be, we should have regard to in its assessment of merits for this claim. Paragraph 7, we make some general responses to what we see as the bank's propositions. First the bank says that the employees had a choice and therefore the process must inherently have been fair and equitable such as not to warrant the Commissioner's intervention - and Commissioner you will recall that was really the basis of significant cross-examination of Ms Harris and Ms Thomson by Mr Perry. We don't travel with the fact, nor could the witnesses, really, with the fact that, yes, they had some basic choice.

PN970

They had a choice, first of all of whether they would accept the job if it was offered, or not. That is right, although the alternative in those circumstances, was you are out of employment. That is the basic choice. The second choice is where you can accept an individual contract or you can accept, according to the terms of the award, and the certified agreement, but the very base scale.

PN971

THE COMMISSIONER: When you say: individual contract, what does that mean?

PN972

MR PENNING: The individual agreement. That's the agreement - - -

PN973

THE COMMISSIONER: That is the clause 8 or 12, isn't it?

PN974

MR PENNING: Clause 8, yes.

PN975

THE COMMISSIONER: Since you have mentioned it - that is not like an AWA is it? It is not a comprehensive - - -

PN976

MR PENNING: No, it is not an AWA.

PN977

THE COMMISSIONER: The AWAs are also there. I notice there's a few people with that but, this clause - this is where they, people for extra money, give up some allowances, is it?

PN978

MR PENNING: Well, you contract out of, yes. You contract out of effectively, various of the award provisions or the certified agreement provisions.

PN979

THE COMMISSIONER: Rostered days off - - -

PN980

MR PENNING: Yes.

PN981

THE COMMISSIONER: They are the ones, aren't they, 12.2?

PN982

MR PENNING: Yes.

PN983

THE COMMISSIONER: Meal money, overtime and second attendance. Is that overtime payments or overtime attendance, which?

PN984

MR PENNING: Well, I'd assume overtime payments. That is, you are not - you work extra hours but you are not regarded as working overtime - - -

PN985

THE COMMISSIONER: I see, yes, so if you work - - -

PN986

MR PENNING: - - - so you are not - - -

PN987

THE COMMISSIONER: - - - an extra half an hour to get the job done, well, you just cop that?

PN988

MR PENNING: Well, however long, yes, yes.

PN989

THE COMMISSIONER: Well, I'm not critical. I'm - you all agreed to it, I don't - yeah.

PN990

MR PENNING: Yes.

PN991

THE COMMISSIONER: But that is the point. That is what you mean by an agreement. It is an agreement but it is not an agreement that they agreed to anything - well, it is an agreement to have things a little bit different from what is in the bulk of the agreement or award but to a large extent the award or the agreement apply, don't they?

PN992

MR PENNING: Yes, Commissioner, to the extent of - - -

PN993

THE COMMISSIONER: That is what you mean by the Agreement. Okay.

PN994

MR PENNING: Yes, and I'm using a shorthand form to describe that provision.

PN995

THE COMMISSIONER: So anyway, you were telling me they had a choice, that there wasn't much - - -

PN996

MR PENNING: We say, we don't deny that there was some choice but we say that the question was really, was that choice there in the sense it was the choice they could basically accept the individual agreement pursuant to clause 12 or just go on the base rate. That is the question for the Commission to determine. That is the nub of this whole case. Was that choice there? Was there any fundamental reason why the employee, for example, should not have been put on the middle scale which we say should have occurred and which we say is the basis of our application, or, didn't have a performance appraisal done before they started and be individually assessed to go on some different scale but presumably that would only be the middle scale or the top scale.

PN997

THE COMMISSIONER: Or at the very least that there's a performance appraisal after only, say, 3 months or so in the job. Those are the options that the bank had. What the bank has done is taken the harshest and - the harshest option. It is the option that saved it most money and these people didn't really had a choice because the choice of - well, the choice of not accepting the job was that you are out of work. Perhaps you forego a range of accrued benefits, I don't know, we haven't explored that issue.

PN998

MR PENNING: So we say then the question is: yes, there was a choice given but the bank defined or limited what the choices were. So that is why we say: well, yes, Mr Perry got some concessions from the witnesses in cross-examination about choice but that is just not the end of the matter at all. I make the point at 7.3 - perhaps this is a re-statement of the argument that is made in paragraph (1) - that it is not appropriate to equate an employee whose employment was altered because of the organisational restructure within the Commonwealth Bank and Colonial Group to an employee who chooses of his or her volition or motion to apply for a job with a different employer.

PN999

Clearly when someone applies for a job with a different employer they do it because they believe there's a benefit in that new employment, whether it is a promotion, whether it is a better status, whether it is better career opportunities, better pay, closer to home, who knows, but it is done, done for a reason. The employees on this circuit, this case, don't have that choice. The group restructures presumably to increase shareholder profits and as a result the job they previously held is gone. They have to do something.

PN1000

Mr Perry made a further point or sought to in cross-examination of the two worker witnesses which seemed to be an argument that you are already employed under the terms of an individual contract so what was wrong with the offer of an employment agreement, albeit pursuant to the award that was made by Commonwealth Bank. We say that line of cross-examination or that proposition is based on an incorrect assumption because at the time that these offers were being made the employees were not award-free. They were covered by the Colonial Retail Network Multi-Franchise Interim Award 2000. I put a copy of that award in there, Commissioner, and given the references to the various decisions of Senior Deputy President Drake in relation to that matter.

PN1001

So the arguments seem to be that, well, here you are award-free, therefore why is there any disadvantage in giving up a range of your award conditions and accepting the contract that you are offered or the individual agreement that you are offered. It is just not right because the union had fought against some fairly strenuous opposition over a period that preceding year to get an award, to get federal award coverage for these employees, and that was after the franchising out of the Colonial network had occurred during 1999.

PN1002

There were all sorts of problems - although there is not evidence about this in this matter - because employees didn't have the award protection that they previously had. Now, again not entirely relevant but by way of background, prior to the federal award and in relation to the multi site franchises, these employees would have been covered by another appropriate federal award, that is the award relating to Colonial Limited and indeed before that back to a New South Wales state registered industrial agreement under the New South Wales Industrial Relations Act. That was when the bank was - when it was the State Bank rather than Colonial.

PN1003

So it is not as if there's any long history of non-award regulation that is relevant in this matter, quite the contrary. There's a history of consistently fought for industrial regulation. A further point we make at paragraph 7.5 and this is again in respect of this argument which Mr Perry seemed to be developing in cross-examination which was that you were not award-covered. We say that even before the Colonial Retail Network Multi-site Franchise Interim Award was made by Senior Deputy President Drake, it is at least arguable that the employees who were doing the teller and branch duties work were covered by a state clerical award.

PN1004

The two relevant potential state clerical awards with the state, Clerical Employees Award and also the State Clerical Employees in Retail (State Award), and it has given a reference to a recent decision of New South Wales Industrial Magistrate Walquist, and I will provide a copy of this decision tomorrow, in which we actually acted for an employee, Ms Ball, who sought certain payments from her employer which was one of the Colonial franchises. The Industrial Magistrate's decision was that the employee was covered by a State Clerical Award, that being the Clerical Employees in Retail (State Award).

PN1005

Again we say that there is no proper basis for any assertion that these employees were not award covered. The essential point there is that yes, they could accept the individual agreement but they would forego in doing that a significant number of benefits that they would otherwise have received under the award. Those benefits are not inconsiderable or not insignificant, particularly where they include rostered days off and for part women or part-timers with family responsibilities. That can be a significant matter in relation to a person's employment and the extent to which you can fit family responsibilities around your work.

PN1006

Overtime is again a significant issue, not small at all. If an employee can be required to work back any amount of time and often there are many pressures in the banking industry to work back, but not receive any overtime payment, that is not a small matter to have to forego. Meal allowance. Again if you work back and have to do that, forego a meal allowance, again not a small amount. Now, in relation to that point, Commissioner, at paragraph 12.3.2 - I'm sorry, I will withdraw that. 12.3, it is said that - and this was the basis of the agreement between the parties:

PN1007

The clause put up by only two select specialist employees, we say these GC employees were not select specialist employees.

PN1008

Or -

PN1009

- individual situations where the employee and the bank agree that normal award and EBA provisions are inappropriate for the retention and recruitment of individual employees.

PN1010

We say - and this is the union, the proposition has been put on many occasions and it is in correspondence to the bank - the wholesale offer of these contracts to - well, these agreements to all Colonial GC staff was not at all what was envisaged by the parties when that clause was agreed to. The banks other argument - - -

PN1011

THE COMMISSIONER: Before you get to that. I know that you are saying that they were - these people were disadvantaged vis-a-vis other Commonwealth Bank employees, none of whom would be required to be at, you know, be treated at the base level. I know that the two witnesses indicated their annual rate offered as a GC base was less than what they were receiving but that the bank had matched, if not bettered, that rate providing they - well, within the clause 12 scheme. I know Mr Perry was of - his questioning seemed to say: well, you weren't really disadvantaged.

PN1012

Well, you say they might have been disadvantaged because they had to forego various items to get that old rate. What is not before me and I don't know how relevant it is, it is up to you both if you tell me that it is, but there's nothing - I've heard that by going to the GC base rate, GC1 or 2, they were disadvantaged, their rate dropped but there's nothing to suggest that they were disadvantaged globally, is there. I mean, I - we don't know - I mean, I don't know but the Commonwealth Bank certified agreement and the Commonwealth Bank Award may very well be superior to the Colonial Bank Award. Let us assume that operated.

PN1013

I note for example, you know, there's all these provisions there, staff housing loans which people got which is a benefit. It has to be a benefit because I notice it is about to be not applied to new people but also I notice in that agreement, there's no maternity - there's no parental leave provisions.

PN1014

MR PENNING: Sorry, Commissioner, which agreement is this?

PN1015

THE COMMISSIONER: The 2000 agreement, there's no parental - I'm just getting to this point - it is probably someone else but I remember many years ago, a couple of decades ago, the Commonwealth Bank had very good parental leave standards. In fact I think they had even a days paid paternity leave when no one had ever thought of it. All I'm saying is, as a package did these people really - were they really disadvantaged in coming over to - not only do they get a job and, yes,they might have been put at the GC base level but they might have been, nonetheless, very delighted to be working for - well, it is a little bit like people getting a job - Ansett people getting a job at Qantas.

PN1016

It is not just having a job but there are a range of conditions by being in a much bigger show, they might get certain advantages. I mean, I know it does not go to whether or not, you know, the strict provisions of the award or the agreement have been complied with but when you talk about fairness, I mean, shouldn't I also consider whether perhaps they were treated very fairly in other ways?

PN1017

MR PENNING: Yes, I understand the point. I would like to say this. If that was a proposition that the bank sought to put before the Commission, and was encumbered on the bank and put that evidence to you and the history of employment with Colonial was that the union fought to get an interim award and did get it at the end of 2000. That certainly wasn't all of the conditions of employment. So the only way the Commission could really make that assessment of the relative comparability of the whole of the package that available then to it, in employment to the two sets of employees would be to look at not only the industrial award provisions but the policies and a range of other non award or non agreement conditions that apply.

PN1018

When the award, the interim award was made by Senior Deputy President Drake, it was a minimum rates award and it didn't go anywhere near anything above what the provisions were that applied in practice because what had happened traditionally was that these employees had continued over benefits that they had with the State Bank. Now, really the State - so the history of their employment conditions when both bodies were Government owned, Commonwealth owned by the Federal Government and State Government, New South Wales Government owned State Bank was that, yes, they probably both did have employment conditions that were - might objectively be regarded as quite good.

PN1019

The trade-off for that was often that these people had very low wage rates and the wage rates of these people again, when viewed against perhaps general community level, I mean, we are talking about starting salaries of 27,000 for a GC1 are very low, 27,000 per annum. I haven't got - - -

PN1020

THE COMMISSIONER: Anyway, sorry to cut you off there. True it is that Mr Mason, is that the chief person?

PN1021

MR PENNING: Yes.

PN1022

THE COMMISSIONER: In all the correspondence when you were all jumping up and down about this, the bank never said: why are you complaining about these people that we've given them all these other fantastic things.

PN1023

MR PENNING: No, we didn't.

PN1024

THE COMMISSIONER: That has never been put to you in response. So presumably that is not great - - -

PN1025

MR PENNING: No, no.

PN1026

THE COMMISSIONER: Yes, I see.

PN1027

MR PENNING: If we had been here and tried to do any sort of an exercise of weighing up all the benefits of the two - of the respective sets of employment packages that related to all employees, we would be here for another year.

PN1028

THE COMMISSIONER: Okay. Yes, we don't want to do that. The other thing too is this because as we move on, you see. I know you will probably say: well, it is not our problem, it is the bank's problem but just on the clause 12 people, you keep on calling them 8 but I think it is the award people.

PN1029

MR PENNING: It was the old clause 8 so it is now clause 12. So I think in that respect I may be right because when they transferred over, they would have been 8.

PN1030

THE COMMISSIONER: Yes, they were 8, yes. Anyway, people - that is an arrangement that is made between the branch manager or relevant person and the employee and they say - well, presumably they write it down and it is all recorded somewhere but if your application gets up and the rates in fact increase, does that mean there needs to be - well, that those who have chosen the clause 12 rates would have to reassess their position?

PN1031

MR PENNING: Well, it does not mean they have to.

PN1032

THE COMMISSIONER: No, because it does not - it is not a no disadvantage test, is it. I mean, if people would just say: I will go under those conditions for an extra $1 and others might bargain a bit better and get $10,000, isn't it?

PN1033

MR PENNING: Also, Commissioner, with 2 weeks notice, I'm instructed, an employee can give notice they wish to cease to be covered - - -

PN1034

THE COMMISSIONER: Yes, that is true, yes, I know. So if the award wasn't fixed, those people would say to their manager, you either up the deal or I'm back to - yes, I see.

PN1035

MR PENNING: Indeed, Ms Sanderson's evidence was that manager's had an enormous amount of discretion to do that. She said: well, the manager has really been encouraging people to go on to the clause 8, clause 12 agreement, could offer people, you know, an extra $1000 or whatever amount and Tracey Thompson's evidence was in fact that she had been told: well, we will offer you an extra $1000 per annum if you sign an agreement but you won't have it if you persist in wanting the award and certified agreement provisions.

PN1036

THE COMMISSIONER: Yes, okay, sorry.

PN1037

MR PENNING: The last issue we say is our initial response to the argument that seems to have been developed by the bank that the certified agreement negotiations over the early part of 2000 constituted an acceptance or agreement by the union to the bank's position that it would position the former Colonial staff at the base. On that point, we say there isn't any plausible evidence that the bank has put before the Commission to support that proposition and there's no specific reference in the Customer Service Division Enterprise Bargaining Agreement, which is behind tab 10 of volume 1 of the document, to the position of former Colonial staff.

PN1038

Now, the bank says that there is an inference that that provision was to relate to former Colonial employees. We say that is not a reasonable proposition to put at all. If that had been the agreed intention of the parties then it would not have been difficult at all to be expressed in putting that provision in. We say the evidence that is completely contrary to that position that is put by the bank, include the letter from Mr Mason to the union dated 21 March 2001, which is exhibit FSU9.

PN1039

I took Ms Anderson to that document and it is behind tab 1, Commissioner, of exhibit FSU10.

PN1040

THE COMMISSIONER: Yes.

PN1041

MR PENNING: It is probably not necessary to take the Commission to it on this occasion, as it was gone to previously, but it is clear what Mr Mason said there. He put a middle ground proposition. Now, it is not seen whether that is accepted or rejected, but his middle ground proposition is: we will position them after 3 months. Now, we say there is absolutely no evidence in any documentary form or any other appropriate evidence before the Commission, saying that the bank withdrew that proposal that was put. We have included in volume 2 of the material that we have tendered today, tab 6, minutes of a meeting between the Commonwealth Bank and the Finance Sector Union concerning the Colonial integration held on 29 March 2001. That is admitted without objection.

PN1042

Ms Thomas, who is with me today, actually took the minutes of that meeting. They are quite detailed minutes, and Mr Mason is quoted there as saying:

PN1043

The column assessment will be done no longer than 3 months after they -

PN1044

meaning the GC employees:

PN1045

... have been in the role.

PN1046

I might just ask the Commission to turn to that, if I could?

PN1047

THE COMMISSIONER: To the minutes?

PN1048

MR PENNING: Yes.

PN1049

THE COMMISSIONER: Yes, got them.

PN1050

MR PENNING: Tab 6, and that statement is made at about .5, about halfway on the middle page, and there's a question to Mr Mason. Mr Mason being TM, Terry Mason. The question comes from RK, and that is Rosemary Keogh, who is a senior industrial officer with the union:

PN1051

Question: GC on base rate. Are you firm on that position? Question. Yes, the column assessment with be done no longer than 3 months after they had been in the role.

PN1052

The heads of agreements on negotiated outcome of the EBA which was signed on 9 April 2001. That makes no expressed or implied reference to the position of Colonial employees, or former Colonial employees. Finally, we say that the bank's proposition is inconsistent with the immediate actions that were taken by the union when it realised that this issue couldn't be resolved through discussion and negotiation. That is, the union said: what has occurred is wrong, we have never agreed to it. It disadvantages a large number of employees and so it has activated the dispute settlement procedures of the award and the agreement and subsequently section 99 dispute notifications are filed, and the matters proceed after that.

PN1053

We say, if there was any sense in which the union had agreed to, or accepted, in the context of the enterprise bargaining negotiations that Colonial employees would be placed at the base rate only for 12 months, then in all good faith, it would not have been pursuing this application in this way. It would be fundamentally dishonest to have done that. There is no suggestion been put in any correspondence that that is the position. The union has acted in a bona fide way, it has acted with an appropriate degree of expedition and speed, because it does not see that there was any agreement at all about the position of the Colonial employees.

PN1054

Finally, we make a brief submission as to the claim for retrospectivity. The reality of this claim, Commissioner, is that, if retrospectivity is not granted, that the application in the form that it is filed, would seem to have no effect, or no work that can be done. We have cited references as to what we say are circumstances where it has been seen to be appropriate by the Commission to grant retrospectivity and, again, I will provide copies of these cases tomorrow. One of the grounds that Commissioner Cargill in her decision, print 7348, gives for circumstances which may warrant retrospectivity include:

PN1055

The actions of the employers in relation to proceedings have been such as to cause them to be unduly protracted.

PN1056

PN1057

Now, we are not seeking to be overly critical of the bank in this position, nor its legal representatives. They are entitled to present the case as fully as they can, but when the matter was before the Commission in respect to the 107 reference application, we did make submissions as to the bank's conduct in seeking to raise various matters. We said, at the 12th hour, or just before the relevant hearing dates came up. I don't repeat those submissions, but we would rely upon the chronology of events that we tendered on 23 August, which is exhibit FSU3. So in that matter it is a balancing up of - well, if you don't give any retrospectivity to the decision, does the decision have any effect? We say, well, probably it does not, and the result is that irrespective of what the merits may be, irrespective of what the Commission's decision is in respect of the jurisdictional arguments that are raised, without retrospectivity the employees who can potentially benefit by the applicant, do not get the benefit.

PN1058

THE COMMISSIONER: Why is that? Because of that other application that has been made, that is the application that gets rid of the GC column?

PN1059

MR PENNING: Yes.

PN1060

THE COMMISSIONER: Is that why?

PN1061

MR PENNING: Yes.

PN1062

THE COMMISSIONER: Okay, and that is before Senior Deputy President Duncan, is it?

PN1063

MR PENNING: Yes.

PN1064

THE COMMISSIONER: That is right, is it? You seem to be a bit unsure of that, what I mean is - - -

PN1065

MR PENNING: I believe that is right.

PN1066

THE COMMISSIONER: Yes, if it wasn't for that - I see, yes, Ms Thomas - - -

PN1067

MR PENNING: Ms Thomas isn't here at the moment.

PN1068

THE COMMISSIONER: But if it wasn't for that, then it would be not - well, retrospectivity is important because every week past is increased.

PN1069

MR PENNING: Yes.

PN1070

THE COMMISSIONER: But from here on, they might have a benefit, but because of the operation of that other - well, because of the other application which came out of the certified agreement - - -

PN1071

MR PENNING: Well, that is right, Commissioner, and also the fact that the large majority, if not all of the employees who would be affected by this application, have already "transitioned" from Colonial to Commonwealth, so we are not talking about it operating prospectively. We are talking about the circumstance where the employees have already come across and, in fact, in most instances came across in March-April of this year, 2001.

PN1072

THE COMMISSIONER: Yes.

PN1073

MR PENNING: So in those circumstances, if the decision didn't have retrospectivity then it would have either none or limited application to what are virtually the majority of employees.

PN1074

THE COMMISSIONER: Yes. Yes - sorry.

PN1075

MR PENNING: Just by way of further example, we refer the Commission to the full bench headed by His Honour, the President, decision in the AWU v Caltex, section 170MX award application and that decision was on 17 September 2001 and granted retrospectivity for salary increases back to 1 July 2000. Commissioner, those are our submissions in relation to the merits of the matter. Should I continue with the submission concerning ambit and jurisdiction, sir?

PN1076

THE COMMISSIONER: Why, did you want a break, Mr Penning?

PN1077

MR PENNING: Yes, Commissioner, the only thing I'm thinking about in that matter is that we have prepared a written submission. It refers to a number of cases and I don't have the volume of cases that we propose to rely upon with me this afternoon.

PN1078

THE COMMISSIONER: Why are you raising ambit for? They have made a concession on that - it was the last bit.

PN1079

MR PENNING: Yes, well, in that instance it may well be brief.

PN1080

THE COMMISSIONER: Yes. On the ambit I thought it was left on the basis that you would provide both sides with a copy of relevant documentation, including the finding by Deputy President Mark - - -

PN1081

MR PENNING: Yes.

PN1082

THE COMMISSIONER: Really, for completeness, but I think the bank has accepted there is a basis for - a jurisdiction basis for your application. One thing you have not dealt with here is the 89A argument, or is there not one?

PN1083

MR PENNING: Yes, there is.

PN1084

THE COMMISSIONER: Yes. I'm not inviting you to respond but that is another - I just thought there was another - there is 111(1)(g) argument - - -

PN1085

MR PENNING: Yes.

PN1086

THE COMMISSIONER: But that is in many ways intertwined with the EBA document I thought.

PN1087

MR PENNING: Yes.

PN1088

THE COMMISSIONER: But there is that 89A - did you want a short break?

PN1089

MR PENNING: I might actually, Commissioner, yes, thank you.

PN1090

THE COMMISSIONER: We will adjourn and resume at 4 o'clock.

SHORT ADJOURNMENT [3.47pm]

RESUMED [4.00pm]

PN1091

MR PENNING: Thank you, Commissioner. Commissioner, at paragraph 1 of the outline of submissions concerning ambit, jurisdiction and other matters that we have tendered today, we have said that we also rely upon the applicant's response to respondent's outline of submissions filed on 1 August and supplement those submissions in certain respects. In respect of the matter that you raised in relation to 89A - relating to 89A(2) and 3 - that matter was dealt with in our response to the respondent's outline of submissions at paragraph 3.1 to 3.3. In respect of 89A(2), we also submit that the matter about which the Commission is asked to arbitrate is an allowable matter, pursuant to section 89A(2)(a): Classifications Of Employees And School-Based Career Paths. And (c): Rates Of Pay Generally.

PN1092

In respect of the evidence on that matter we would refer the Commission also to the cross-examination of Ms Sanderson in respect of what the performance appraisal system actually did and what it was measuring - what it was about, and without taking the Commission to it - but depending on what matters are raised by my friend is maybe a matter we would wish to return to in submissions in reply. We would refer to transcript of 20 September at paragraphs commencing paragraph number 569, through to 585. In those paragraphs I put certain propositions to ask questions of Ms Sanderson in relation to: what it was that was actually being done and measured by the performance appraisal system?

PN1093

Ms Sanderson, for example, conceded at paragraph number 572 that: what was being partially measured at least was an assessment of skills and qualities and she agreed to that. Similarly, at 573, there was an assertion contained also in Ms Sanderson's witness statement which suggested that the salary columns provided for incremental rates of pay and I questioned Ms Sanderson about: what she meant by incremental rates of pay? She said and conceded certainly that: there was nothing automatic in terms of a progression by length of service, or time spent, or any other - or in any other sense by the meaning of the phrase, "incremental". She simply meant that they were different and that the positioning of an employee on one of the three band widths was based on the skills that the person individually demonstrated in the work that they did, as it was measured by the employer.

PN1094

So in our submission what is being sought in this application is consistent with the provisions of 89A. In support of that proposition we further rely upon the fact that the award classification structure in that respect went through the WROLA Act review process. It went through an arbitration before Senior Deputy President Drake and that is referenced. It then went subsequently through an appeal on various matters before the Full Bench and in none of those circumstances has the nature of the wage system been challenged by the bank, nor have any questions been asked about it by the Commission. Indeed, when the Commonwealth Government was involved with the review processes of various decisions of the Commission, again that provision was not challenged.

PN1095

In respect of 89A generally, Commissioner, we would reserve our right to reply to that in any submissions in reply to matters that may be new and which may be raised by my friend. The only other point on 89A is that there is some consideration of 89A in respect of the Commonwealth Bank Officers' Award 1990. In a Full Bench decision, which I have actually referred to at the bottom of page 2 of the written submission and the top of page 3, that was a Full Bench decision Print P1297, and that is behind tab 22 of volume 2 of the documents relied upon. That was an application of a particular matter by the bank in respect of a section 111(1)(g) application.

PN1096

THE COMMISSIONER: I see.

PN1097

MR PENNING: Without going in detail to that decision we say that a broad construction of the meaning and intent of section 89A was given by the Full Bench in that matter. In relation to the argument as to possible breach of the enterprise bargaining agreement, we again rely on the earlier file. Applicant's response to respondent's outline of submissions at paragraph 5. We note that subsequent to this matter commencing before the Commission there has been an application filed by the bank alleging breach of the EBA and that application and summons are in evidence before the Commission at - or statement of claim, I should say, rather than summons, are before the Commission in exhibit CBA3 at tab 5 and 6. That matter is listed for a direction in the Federal Court. There's no urgency being sought by the bank in respect of it.

PN1098

We say that there's merit in the application. It is a matter that will be determined by the Federal Court in due course. We say there is no merit in the application and it will be resisted. At the tail end of this matter we say, that application being put on in that form, it is not a basis for the Commission to refrain from determining this matter. Those are our submissions, if the Commission pleases.

PN1099

MR DOUGLAS: What time do you intend to sit to, sir?

PN1100

THE COMMISSIONER: We are not going to finish today, are we?

PN1101

MR DOUGLAS: No, no.

PN1102

THE COMMISSIONER: So did you want to start or did you want - I only came back because I thought Mr Penning was looking for something, so I thought it was convenient - - -

PN1103

MR DOUGLAS: Yes. I would like to have 5 minutes because I would like you to leave the bench with a real problem about this application because the reality is that it has no legs. Commissioner, could I hand up a copy of the order that was made by Senior Deputy President Duncan on 9 October this year varying the bank's award in accordance with the EBAs agreement to remove what was the three-column structure in the culmination of 416 and schedule A 1.1.

PN1104

THE COMMISSIONER: Yes. This is print - just for identification - PR 909988.

PN1105

MR DOUGLAS: The variation is on the first page, Commissioner, over the - to the top of the second page. You will see clause 16 has been deleted, 16(1) as it was, and the clause set out there has been inserted. The performance claimant division of the award, as it as, has been deleted and the new provision has been served. Now, Commissioner, that gives rise to a real problem from the point of view of the union hoping to succeed on this application. Can I just direct your attention to the application?

PN1106

Who proceeds in the assumption that that clause 16 is still in the award? The reality is that if the award is varied today at this moment in the form, this will have no operational effect because it can't impact on something that does not exist. The only way this application can have any effect is by you on your own motion reinserting the provisions that Senior Deputy President Duncan has taken out of the award by the agreement of the parties. That was a consent variation. I would suggest that the Commission does not have the capacity to re-insert those provisions in the face of that agreement, no consent. The union is not asking you to put back in the award that provision because it knows it can't.

PN1107

It has agreed to its removal and that agreement is squarely set out in the current EBA. So this application, as I say, if granted today, has no legs. It will have absolutely no operative effect because it seeks to refer to things that are not there. Now, further, there's an even greater problem, Commissioner. At paragraph number 329 Tracey Thomson told you that she was given a salary of $29,795 having rejected the clause 8 contract proposal. Clause 8 contract proposal involved significant higher salaries than that. So she went on, having rejected the clause 8 contract proposal, went on 29.7.95. Now, if you look at exhibit FSU2, Commissioner, which is the single sheet that sets out the rates in the award as they were at the time - this is the salaries schedule, the schedule A1.1.

PN1108

THE COMMISSIONER: 17 November.

PN1109

MR DOUGLAS: Yes, that is right. This salary schedule was put forward by my friend as being the operative provision under the award during the relevant period and I accept that. The three salary columns provision have gone and that is because of Senior Deputy President's order. You will notice from the order that the salaries - this is the second page in the order - the salaries that he inserts - reinserts in the one column, according to the agreement, are exactly the same salaries that are set out in the first column in FSU2. So the rates haven't changed during that time.

PN1110

THE COMMISSIONER: I have lost you there.

PN1111

MR DOUGLAS: If you are looking at FSU2 and the rates in the first column for the GC(1) is 22,706.

PN1112

THE COMMISSIONER: Maybe one of your colleagues can help me. Yes, I have got that. In that same document at the second-last page of that document - - -

PN1113

MR DOUGLAS: Which document is this, Commissioner?

PN1114

THE COMMISSIONER: This is exhibit FSU2, that is the award, you are right, I was looking at the agreement rates. Sorry.

PN1115

MR DOUGLAS: Yes, I notice the rates in the first column in FSU2 which were the award rates at the time - - -

PN1116

THE COMMISSIONER: Yes.

PN1117

MR DOUGLAS: - - - are exactly the same award rates that are now in the single column in Senior Deputy President Duncan's order. Now, one would presume that from FSU2 that my friend is saying: we want you to grab the application because we want to access the rates in column 2 in FSU2. See the rates 23,906 for PC1? However, just going back to Ms Thomson, she was offered 29,795. The reason for that was that rate was the - - -

PN1118

THE COMMISSIONER: Agreement rate.

PN1119

MR DOUGLAS: - - - column 2 rate for her grade in the certified agreement, the EBA existing at the time. Now, the problem is this. Every one of the employees that my friend is concerned with went on to rates higher than the column 2 award rates. What they didn't do was to go on to rates equivalent to the column 2 rates in the EBA at the time. The EBA of the time has gone. It has been replaced by a new EBA and it can't be restored by you or by my friend or by agreement, can't be restored by any method because in fact section 17LX2 says:

PN1120

Agreement ceases to be in operation if its normal expiry date has passed -

PN1121

and that is what happened to the EBA that was in operation at the time -

PN1122

and it is replaced by another certified agreement.

PN1123

So that agreement that my friend was hoping to access presumably via this application has gone. Now, all he can do, even if you replace the old award provision, all he can do is to access the column 2 award rates and the problem he has got is that every one of the 300-plus, 400 employees that he is concerned about were offered rates and are in fact on rates higher than the column 2 award rates as they were at the time. So this case has got absolutely no legs whatsoever. I will come back - - -

PN1124

THE COMMISSIONER: Can I just say this, Mr Douglas. If it was as simple as that, why are we here?

PN1125

MR DOUGLAS: Well, that is why I want to tell you this now because I invite you to come back in the morning and ask my friend to address you on that point and if he does not satisfy you on that point then you should throw the application out. Otherwise I am going to spend the rest of tomorrow dealing with matters that are quite unnecessary. You will not need to go to those matters to give a decision. This application is a nonsense, simply put.

PN1126

THE COMMISSIONER: In respect of what Senior Deputy President Duncan has done, I could - the net effect - I understand that by deleting those various columns in the award, the existing CBA employees, they have maintained those rates as the jumping board for their annual assessments, haven't they? Does it work that way?

PN1127

MR DOUGLAS: Yes. They have never been on those rates because they have been on the EBA rates. They have never been on those rates. You see, that is the problem that my friend has got. Even if you put those columns back, you can't put the EBA back and it is the EBA rates that he wants to access, not the award rates.

PN1128

THE COMMISSIONER: Well, it really does not - can I just mention this? Whether or not the 19 whatever it was, 1997 EBA has been replaced by the 2000 EBA and therefore is no longer operative, it really wouldn't matter, would it. I mean, there's just no way the Commission can alter an EBA or make an order that - - -

PN1129

MR DOUGLAS: Of course, even if it was there. That is right.

PN1130

THE COMMISSIONER: What you say is these people have not been - well, because they were and are being paid more than under either the award or the varied award as they say, as they sought, it is not an area where the Commission should even go near exercising a discretion.

PN1131

MR DOUGLAS: Exactly, exactly, in a sense it is an over award issue. It is not a minimum rates issue. It is an over award issue but more importantly, the complaint of unfairness that my friend goes to is not there because they have all received better than the column 2 award rate but he seeks to convince you that what he is about to get them the protection and what was the column 2 award rate and that is just not true. So I leave it there, Commissioner, and I make the invitation that I've just referred to.

PN1132

THE COMMISSIONER: Yes, thank you, Mr Douglas. We will adjourn and resume - I think it was 9.30 tomorrow morning.

ADJOURNED UNTIL FRIDAY, 19 OCTOBER 2001 [4.25pm]

INDEX

LIST OF WITNESSES, EXHIBITS AND MFIs

SURENE SANDERSON, ON FORMER OATH PN814
RE-EXAMINATION BY MR DOUGLAS PN814
WITNESS WITHDREW PN826
EXHIBIT #FSU10 REST OF MATERIAL IN VOLUME 1, INCLUDING INDEX AT FRONT PN847
EXHIBIT #FSU11 VOLUME 2 PN848
EXHIBIT #CBA3 BANK'S BUNDLE OF DOCUMENTS PN853