C2001/507, Transcript of Proceedings [2001] AIRCTrans 388 (23 March 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 6325
AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

SENIOR DEPUTY PRESIDENT ACTON

C2001/507
C2001/1258

NATIONAL UNION OF WORKERS

AND

FRANKLINS LIMITED

NOTIFICATION PURSUANT TO SECTION 99 OF
THE ACT OF A DISPUTE RE ALLEGED BREACH OF
UNDERTAKINGS CONCERNING NSW INBOUND
DISTRIBUTION PROJECT AND REMOVAL OF WORK
WITHOUT CONSULTATION

MELBOURNE

12.10 PM, THURSDAY, 8 MARCH 2001

PN1

MR M. PAKULA: I appear for the National Union of Workers, and appearing with me is MR R. GORMAN.

PN2

MR C. HARTIGAN: I seek leave of the Commission to appear.

PN3

THE SENIOR DEPUTY PRESIDENT: Any objection to the application for leave to appear.

PN4

MR PAKULA: No, your Honour.

PN5

THE SENIOR DEPUTY PRESIDENT: Leave is granted.

PN6

MR HARTIGAN: Thank you, your Honour.

PN7

THE SENIOR DEPUTY PRESIDENT: Mr Pakula.

PN8

MR PAKULA: Thank you, your Honour. This matter is - and I should say at the outset, in regards to the two matters, we are happy to address them concurrently because they do run into one another. This has been effectively the basis of already two previous hearings before the Commission on 19 December and 5 January this year. Both of those hearings from memory were the basis of section 166A applications by the company. There has also been threats from the company of further 127 applications which have in part been averted by meetings which have been held between the union and the company in the last couple of months. There has been two meetings.

PN9

So over the last three months we have effectively had two Commission hearings, I think three meetings between management and the union, at least two mass meetings conducted by officials of the union, probably a further three mass meetings conducted by the shop stewards. So it has been quite an involved process. The basis of all of that activity has been primarily concern that has been held by our members about the company's operations in regard to the inbound distribution centre, but also in more recent times concern that has been expressed by our members about the uncertainty relating to the ongoing operation of the Franklins Distribution Centre, and I suppose Franklins is a viable entity in a broader sense, and we have all probably seen some of the newspaper reports about both the losses that Franklins have endured, but also the public musing of their parent company about what they are going to do with the company.

PN10

Now, the Commission hearings that have been held have been, in part, resolved by the union and the company giving each other various undertakings about - from the union's part about our conduct in relation to the placing of bans and limitations on certain activities of the company, and in return undertakings from the company about the types of work that go through the IDC, the purpose of the IDC as it relates to the distribution centre at Somerton, and specifically that the IDC is meant to free up space for new products and lines to go through the DC at Somerton. And the provision of certain types of information from the company to our delegates when there are para-anomalies, in terms of whether items are going through the IDC are slow-moving, and the seasonality of some of those items, particularly in the summer months.

PN11

We are still unfortunately, your Honour, dealing with a situation where the morale at the warehouse has got to the point where I would describe it as nothing other than diabolical, and there are probably, I suppose, three reasons behind that. Firstly with relation to the IDC related issues. Despite the undertakings given by the company there are still on a daily basis items coming through the warehouse for distribution out to the stores. So basically it has been cross-stocked through the warehouse. Coming from the IDC which are clearly not slow-moving, and even if they are considered slow-moving on an annual basis that in a seasonal sense they are fast-moving items. And no matter what discussions and what figures are received by our members that situation does not seem to abating at all.

PN12

Secondly, the consultation that goes, and I am going to go to that issue, but in terms of the lack of consultation, things like the annual Easter egg display which has always been done at the warehouse, been contracted out to P. & O. Cold Stores to be done. There are two issues behind that. Firstly that it means a loss of overtime for our members, but also breaches the contracting out provisions of the agreement, and I will go to that in a little while.

PN13

Thirdly, the morale in the warehouse has been destroyed by the all of the speculation about the future of the place, by managers running around the place telling our members that they are filling out job applications, and by the failure or refusal of senior management to address our members in any sensible way and give them some idea of what is going on. So they are the three basic headings that I want to deal with.

PN14

With relation to the IDC, the only thing I think is proper for the union to present to the Commission today is just some of the examples. Because what we will get from the company is more of the same, that is slow-moving items. Slow-moving items are defined as one carton per store per week. That is what is going through the IDC. If it is seasonal and it becomes a fast moving item, it comes back to the DC. Now, no matter what figures are being presented to our delegates that is clearly not happening, and I will just give the Commission some examples.

PN15

Start with - and this is all over the last two weeks, and the Commission I hope will forgive me for going through some of these product lines in some detail. Aeroplane jelly; raspberry, bubblegum, banana Aeroplane jelly. Clearly a seasonal line. There are six cartons being sent to each store, and the slow-moving criteria is less than one per week. Now, that is going through quite regularly. And I should indicate that that is based on state figures. And if we use national figures, which is the proper measurement, it would be even higher than that when you take into account places like Queensland.

PN16

Panadol 12s; if anyone can suggest to me that Panadol is a slow-moving item I will go he. 79 boxes came through just last week and there are only 63 stores in Victoria. Clearly not a slow-moving line coming through the IDC. Just yesterday, Greens Pancake Mix; 32 boxes came through for one store. Now, the company might say, oh, yes, but that might be their requirement for the next nine months. But the fact is that when you got to those stores, and I appreciate that this is anecdotal, it might mean that at some point we need to do inspections to determine whether this is correct, but if you go to these stores where these supposedly slow-moving lines are going to, the shelves are empty.

PN17

Now, if it is true that there are cartons and cartons going out to stores, and the shelves are empty, and they are not being held out the back because there is no room for that to happen, they are obviously not slow-moving. They are going through very quickly. So, you know, maybe this store has got nine month's supply of pancake mix, but I very much doubt it. It wouldn't last that long anyway.

PN18

No Frills Lemon Laundry Detergent; 37 boxes going to one store. Sunsilk Shampoo; the Dry and Oily and Permed stuff is going through the DC but the Normal shampoo is coming from the IDC. Now, if any of those as fast moving items it is going to be the Normal shampoo. No Frills biscuits, and we are talking Choc Monte, Scotch Fingers and Mint Slices, they are currently being held in both the DC and the IDC. So what the company is asking us to believe with regards to them is that it is both a slow-moving and a fast moving line.

PN19

We have got flysprays, remember we are coming off a hot summer, we have got flysprays coming through the IDC as a slow-moving line. Castrol Oil and Spree Laundry Detergent, I have got photos which I will not hand up unless the Commission wants them, but there are literally - and the Commission needs to remember that a pallet is just for one store, and in this case it happens to be Heidelberg which is only a small store, there are just boxes and boxes and boxes piled up going out to one store. Now, these are clearly not slow-moving lines and the company can say, look, we are providing your members with figures that say that they are. But our members believe their eyes. They are not going to believe figures if those figures are patently not reflecting what is going on.

PN20

The company is very quick to notify 127s and 166As and try and drag us before the Commission and get us threatened with legal action. But when we present them with an opportunity to try and resolve some of the issues that are causing our members concerns, they are doing nothing about it. They are simply presenting us with figures and saying, look, believe it. And it is not believable because the evidence which is shown to our members, with their own eyes, of what is coming through and going to various stores, clearly refuges what is being put on paper.

PN21

So they are just some of the examples. We were told, as I said, that the IDC was designed to expand the project range and so that 1100 new lines could go in. Prior to last Saturday there have probably been about 40 new lines laid in at the Somerton DC. Now, there were another 30 put in on Saturday which makes one wonder why it has happened all of a sudden. It might have something to do with the fact that we had a Commission hearing today. There has been, I think, about another 30 new lines laid in but they are they are drinks and the season for drinks is about at an end, and we have got things like red capsicum salad dressing, which is hardly going to be a fast moving line.

PN22

So one of the concerns for our members is what the company is doing is putting of the slow-moving stuff into the DC and all the fast-moving stuff stays at the IDC. The whole thing from our members' perspective in terms of the way that the IDC is working vis-a-vis the Distribution Centre is that there seems to be no discernible plan. The so-called plan that was coming through in December which was that, all right, the stock in the DC has plummeted, we understand that, that was about sending certain results through to Hong Kong, and it will all ramp up again come the new year.

PN23

It is March now and the DC is still about 40 per cent empty. There are nearly 900 empty pit bays in the DC. The work is simply not returned. It is returned in part. But our members were told by Simon Coates who is one of the - I hope I do not overstate his position, I believe he is a director from Sydney - that there would be, you know, 1700 lines coming back and probably only half of that has occurred. And now we are being told that the rest of it is not going to happen.

PN24

So our members are in a situation where their jobs are at jeopardy. They know that. The company has lost hundreds of millions of dollars over the last couple of years. And it is this type of sort of planning debacle that is behind it, in part. Obviously there are far wider problems for Franklins than just what goes on in the DC, but this is symptomatic of the sort of thing that is causing our members' jobs to be at risk.

PN25

With regard to the consultation, I briefly touched on the Easter egg situation before. Somerton has picked the Easter egg display that goes out to the stores for the last 11 years. Now, it is true that last year the eggs melted. But that was because the receiving manager instructed the staff to leave the stock out in the receiving bay, out in the sun, rather than bring it into the DC where it has always been kept for the previous 10 years. And for the previous 10 years there has never been a problem.

PN26

So the stuff instead of being done by our members, it was transferred out to P. & O. Now, we can't rectify that now in terms of getting the work back because it is all in the stores. But we thought that we had an enterprise agreement with this company and I will read you a relevant section of the EBA which is in appendix B. It says:

PN27

That if at any time Franklin decides to contract out all or any part of the work covered by this agreement, or make any other arrangement for the performance of the work done at Somerton by any other person then the following processes will apply.

PN28

And it refers to notifying the state secretary in writing, notifying an explanation of the impact on the DC and why the company has done what it has done, having a one month negotiation period to examine the company's rationale, and whether there are alternatives. Now none of that occurred. The company ought to have told us that it was planning to take the Easter eggs out of the Somerton DC, why it was planning to do it, where they were planning to send it.

PN29

The only reason we found out about it was because at a meeting last week one of our members said, hang on, where are the Easter eggs. And when we went and asked management they say, oh, yeah, we sent them all to P. & O. Now, it might sound petty, but our members have regularly relied on getting two Saturday's overtime to do that work. Now, when you are in a situation where our members don't know if they are going to have a job in three month's time, two Saturday's overtime is very important to them, because they don't know how long they are going to be going to receive an income with this company. And the consultation procedure in the agreement has clearly been breached.

PN30

When we go to the issue of morale in general. As I have said we have got a situation where every week, and sometimes two and three times a week, the media is publicly speculating about Franklin's future. They are talking about $135 million loss. They are talking about Dairy Farmers trying to hive off the company, break it up into pieces, sell it off. Aldi might be interested. Royal Ahold might be interested, Coles, Woolworths, all want a piece of Franklins.

PN31

Now, most of these company have distribution centres, and it would in all likelihood mean that the prospect of some or all of our members at the Somerton DC losing their jobs is a very real one. The company's response to that, and we have said to them, when is Dennis Carter, when is the MD going to come down and tell our people something about what is going on. The company's response is, "When there's something to tell them." Now, it might be that there is no final deal entered into with anyone at the moment, and it might be that the future of the company is not finally determined. But there is no doubt that the company could be telling our members a hell of a lot more than what they are telling them.

PN32

They could be giving them weekly or fortnightly updates on the progress of the discussions, what is going on. But in the meantime they just morale of the place to completely disintegrate whilst managers run around saying "I'm already filling our my CV." And then when our members showed some discontent and are understandably upset about the fact that no one is telling them if they are going to have a job, they can see the stock levels in the warehouse diminishing on a daily basis, they see stuff coming in from the IDC that they should be doing, and it has been work in Sydney. They see their Easter egg display which would give them a little bit of overtime being sent to P. & O. No one has talked to them about it. No one has talked to the union about it.

PN33

Then when things start to go amiss and the members say, well, look, screw this, this is not the way, you know - why should we give the company 100 per cent when they are treating us like this. They threaten to sue us. They threaten us with a 127 and 166A, and they say, you know, the union is somehow in the wrong here. We have conducted five mass meetings, all of which have been for the purpose of trying to defuse these situations. We have had meetings with management for the same purpose. We have been to the Commission three times.

PN34

But none of the problems that our members have and none of the issues that they want addressed ever get addressed. They get thrown a piece of paper which says, there, this proves what we are saying is right, accept it. And when our members say, look with your own eyes, that's the reality not what you have got written down there, they are told, oh, no, but it is a national average. Totally disregarding the fact that the rules say that if it is seasonable it should come back to the DC. Not telling them anything about their futures.

PN35

Now, we have got a number of remedies that we think the Commission could recommend to try and resolve some of these things. And I am happy to deal with them on the record or in conference, at the Commission's pleasure. I am not too fussed about how we do it.

PN36

THE SENIOR DEPUTY PRESIDENT: Have you discussed the remedies with the company?

PN37

MR PAKULA: No, I have not.

PN38

THE SENIOR DEPUTY PRESIDENT: Then why don't you put them on the record.

PN39

MR PAKULA: All right, well, I will. I think first of all it is only fair, given that the company has totally disregarded the provisions for consultation in the agreement with regards to the removal of the Easter eggs, and I do not think they will dispute that there is a couple of Saturdays overtime contingent on that work that our members get financially recompensed for the loss of that work. So we are suggesting the equivalent of two Saturdays overtime for each member, because that is what it was, first of all.

PN40

Secondly, we think that our delegates ought to be sent by the company to Sydney to the IDC, so they can see at that end what is going on. So they can talk to the employees at that warehouse and find out from that end, what sort of work is being done there, and whether there might be some remedy that we put in place at the source of the problem, to stop some of this work being sent down to the Somerton DC in the first place, in an already packed - you know, already palletised, rather than it coming to the site to be picked as it should be.

PN41

Thirdly, we think that someone from senior management at Sydney ought to give our members regular reports and updates, perhaps on a fortnightly basis, of what is going on, both in relation to the IDC and in relation to the future of the Company and our members' jobs. And fourthly, we think that the Company, in order to try and rectify some of the problems, ought to appoint a couple of people, and we will nominate a couple of people, from within our membership to be, if you like, IDC coordinators.

PN42

Two people whose job is to monitor what is coming in from the IDC, the numbers, where they are going, and in what quantities. Now, that could take place over say a three month period, so that the Company don't then come back and say, look, you've just picked a one week sample, it is not reflective of what really happens over a longer term. So we think three months would be a fair sample. If we had two people dedicated to that job, to gather that information and keep track of what is going on, and we could then meet with the Company and if necessary, report back to the Commission at the end of that process.

PN43

Because effectively, your Honour, what we want is if we have got a problem with bulk goods coming in from the IDC, and we question it, and even if it gets set aside for a period of time while that is being checked out, we don't want to be doing that with a thread of a 127 hanging over our head every time that happens. We don't want to be putting bans on products. it is not what we want to do. It doesn't help our members. It is a waste of everybody's time. But when the Company leaves us no other effective remedy, other than, you know, say - well, there you go, there's is the figures,we know those figures aren't correct.

PN44

I am not sure what they expect. So what we are saying to your Honour is, give us another effective remedy. Allow us a couple of people who can check the items, who can keep a record of them. And if those people come from within our membership, our members will have a lot more confidence in the sorts of data that is being presented to them, than the data they are getting at the moment. So they are the remedies that we are suggesting, your Honour. And I am happy to hear from the Company about their view.

PN45

THE SENIOR DEPUTY PRESIDENT: Mr Hartigan.

PN46

MR HARTIGAN: Thank you, your Honour. What I would like to do is to lay out briefly how we have got to this position and reply to, on the record, to some things Mr Pakula has said. I have here with me today to address and we would propose as well to go into conference, the Director of Human Resources for Franklins and the National Supply Chain Development Manger, can explain these issues about fast moving and slow moving.

PN47

But I think it is on the record, and I have got copies here of an agreement that was reached with the National Union of Workers, and was appended to the certified agreement, which is the current certified agreement, and that appendix was negotiated at a very high level between the Company - there were at various times negotiations and discussion in this place between Ms Cornell, who is the Managing Director of the company and Greg Sword, who is the National General Secretary of the National Union of Workers.

PN48

And a consequence of those detailed discussions, expressly about these issues of contracting out of work, there was this agreement reached, which is part - that Mr Pakula in part has referred to. Now part of the understanding that underpinned this agreement was that at Somerton there was a need - and other places - there was a need for supply chain to change, because the Company has, you know, on a sort of a standard number of lines, something like 12,000 - go through its stores, and some of those lines come through in greater bulk more frequently than others. The Company had set out on a project to find an efficient way to put the things through at a slow moving and fast moving.

PN49

There is recognition by the Union that the Somerton Distribution Centre in its current form, could not cope with that, and there were these principles that were agreed to. If I can just take you first of all to point 3 in that appendix, under the heading, Contracting Out, there was a statement that:

PN50

The NUW recognises the obligations Franklins has to its shareholders and the current capacity issues at Somerton DC. If at any time Franklins Limited decides to contract out all or any part of the work covered by this agreement or make any other arrangement for the performance of the work done at Somerton by any other person, then the following processes will apply.

PN51

Franklins notify the State Secretary of the NUW in writing. And then the parties undertake negotiations for one month, whether there are alternatives to contracting out, and then, thirdly, and this was - that I have referred to in prior proceedings before you in relation to this matter:

PN52

...that if the contracting out impacts upon the agreed level of permanent employment ...

PN53

- as in that the NUW members' jobs are threatened -

PN54

... contained in this agreement, the NUW may give seven days notice to terminate the agreement.

PN55

That is if the level of permanent employment is decreased by the contracting out at Somerton, then they would have the right to exercise their rights under the Act. Under point 2, if we go back, it says that:

PN56

Under guarantee of permanent numbers at Somerton, the NUW and Franklins will commit to guaranteeing a set number of permanent employees at the Somerton DC until the normal expiry date of the agreement. The parties agree that this number is 109, which are the number of permanent employees at the date of the memorandum of agreement.

PN57

Which was late 1999. Now, my instructions are that currently the permanent numbers of NUW members at Somerton DC is 119. So it has been increased in accordance with another part of that agreement by a further 10.

[12.37pm]

PN58

Now, what then happened is that in about November of last year this new distribution centre was opened in New South Wales as the first part of this program of dealing in a different way with stock. And it would appear that one of the issues for the NUW is that this warehouse, it is not owned and conducted by Franklins, it is owned and conducted by Linfox and the relevant union covering the employees is the Transport Workers Union.

PN59

So in November and December at the Somerton Distribution Centre, bans were placed on the stock coming from that Smithfield Distribution Centre into the Somerton Distribution Centre. And that occasioned the first application under section 166A to the Commission because these ongoing bans were causing the company loss despite significant consultation had taken place and information-flow throughout the Year 2000.

PN60

And consistent with this agreement, which was certified in early 2000, but was negotiated late 1999, there was still industrial action taking place. And we came to the Commission and there was an agreement reached and we understood that it was a bona fide agreement with the union that the bans would be lifted in respect of certain information provision. And I am not sure whether on this file you have a copy of the transcript from those prior hearings, but I have a copy because I think it is important to briefly go to these, because Mr Pakula has referred to these issues.

PN61

THE SENIOR DEPUTY PRESIDENT: I will mark the appendix B document as H1.

EXHIBIT #H1 APPENDIX B DOCUMENT

EXHIBIT #H1 TRANSCRIPT

PN62

MR HARTIGAN: This is a transcript of the hearing before yourself on 19 December 2000 and in that I reported to you the agreement that had been reached. And at paragraph 7 on what is - the pages aren't numbered, but the second page of the exhibit, it says that, I said that:

PN63

The application was made in relation to a dispute that was taking place at the Somerton Distribution Centre and the relevant employees are members of the National Union of Workers.

PN64

Now, on the basis that the National Union of Workers will give an undertaking there will be no limitation at all in the processing of product through the Somerton Distribution Centre, the company is prepared to agree to the following. Firstly, the company would supply the delegates of Somerton with information about vendors and products to what was going through the Smithfield site.

PN65

Secondly, in relation to the current casual workforce at Somerton, there was then an agreement about the following provisos, as maintenance of work performance; secondly, a re-affirmation the NUW and its members has a right - the company has a right to discipline employees for poor performance. It then talks about an increase in the permanent workforce at Somerton by 10 employees. And there would be a review of performance at the site.

PN66

Mr Thow then confirmed the undertaking by the union not to place any limitations on the product coming from Smithfield. Unfortunately following that hearing in early January, there were further bans placed on the product coming in so we get a sense from Mr Pakula that what is happening at the site - and this appears to be the case - is that certain persons, presumably the delegates, are looking at pallets coming in and are saying, oh, Panadol, there's more than X boxes of Panadol here today, therefore, the company is moving unauthorised amounts through the distribution centre.

PN67

Now, what has been indicated to the union, and we can go into this in more detail, is that as a rule of thumb - and this was referred to previously - that the company uses an indicative rule of thumb to match slow-moving versus fast-moving, that an average of carton per store nationally over the previous 12 months is when you look at those figures you then have a sense of what would fall into the basket of fast-moving or slow-moving. So if it is less than that figure, then it would be slow-moving; if on the whole it is more than that, it would be fast-moving.

PN68

THE SENIOR DEPUTY PRESIDENT: One carton per store over what period?

PN69

MR HARTIGAN: One carton per store per week nationally, and there are 290 stores nationally, and averaged over the previous 12 months.

PN70

THE SENIOR DEPUTY PRESIDENT: And so it's averaged, is it. So you might get some store that takes three cartons a week, and another store that takes half a carton a week.

PN71

MR HARTIGAN: Exactly.

PN72

THE SENIOR DEPUTY PRESIDENT: And then you average it to get one.

PN73

MR HARTIGAN: That is right. My instructions are that in some stores in Victoria might have a turnover of half a million a week, and they may go down to a very small store that might have only 80,000 or 100,000 turnover. And in some products that are regional-dependent, you know, in Queensland they might consume more particular product than in Victoria because of seasonal factors.

PN74

So that you need to look at the national picture. So I think Mr Pakula has given us a very clear indication of why the company has a problem and is confused about this, because when he gave an example of the Panadol, for example, because he says there are 63 stores in Victoria. What the delegates are doing is, if they see more than 63, 75 boxes turn up they then say, oh, you know, that's more than one per store in this one week, therefore we'll put bans on and we'll stop the whole process.

PN75

MR PAKULA: That is not right.

PN76

MR HARTIGAN: That has then happened in December. In early January there were bans imposed and because the agreement is in force for like another 18 months, the company exercised its rights to make a further application under 166A. I am not sure what Mr Pakula is talking about about 127s. There certainly have not been any made that I am aware of. In that hearing there was a further undertaking by the NUW not to impede the product coming out of Smithfield Distribution Centre, and I would like to hand up copies of the transcript of that hearing.

EXHIBIT #H3 TRANSCRIPT OF 05/01/2001

PN77

MR HARTIGAN: In this transcript on page 2 of the exhibit - - -

PN78

THE SENIOR DEPUTY PRESIDENT: It is better if you to the paragraph numbers on it.

PN79

MR HARTIGAN: Yes. Yes, your Honour. Paragraph 14, I was reporting to the Commission the understanding of the company of a further agreement that it believed it had. I said - referred to the previous hearing where the bans had been placed in December and the company withdrew its application subject to commitment that the bans would be removed.

PN80

And there was a request for information to be supplied to the delegates and the information was supplied to the delegates, and at that hearing copies were provided and on the Commission's file. But despite that, further bans were put in place. Now, at paragraph 19 I referred to the - stated as follows, that:

PN81

The company believed that it complied with this undertaking in respect of these issues -

PN82

PN83

as in supplied with information:

PN84

As I understand it, the delegates felt that it wasn't enough and they wanted more information.

PN85

And in particular, as I understand it, some dispute about this, there was a request for the national sales volumes for each of these items across the country to go behind as to whether they are slow-moving or fast-moving. So there is this continual issue that has gone on that Mr Pakula has referred to again today, that although information was supplied the delegates for whatever reason, don't accept those figures and feel that they are free to take further industrial action.

PN86

In paragraph 21 I referred to the agreement that was reached at that time and said that there would be a meeting in the next two weeks and involved senior officials of the union, Mr Donnelly, the State Secretary who was on leave at that time, and senior manager of the company who were also on leave, and it would be discussions about the issues that have taken place. And I think Mr Pakula has confirmed in his submission that those meetings have taken place and the information has been supplied.

PN87

We recorded there that if it were the case that the union had continuing problems, rather than imposing bans that the appropriate course to take would be to notify a dispute to the Commission.

PN88

MR PAKULA: That is what we have done.

PN89

MR HARTIGAN: My instructions are that following those meetings there were further bans imposed on the dealing with the product from Smithfield on 21 and 22 February despite the undertakings given to the company and given to the Commission and after discussions between the company and officials of the union those bans were removed, but essentially it needs to be recorded that the company breached the undertakings that they gave - the union breached the undertakings that they on 5 January.

PN90

Now, in respect of some of the matters that Mr Pakula has raised today, he raised the matters of the Easter eggs and he confirms that when the Easter eggs were handled through Somerton last year they melted which clearly caused loss to the company. My instructions are he is incorrect to state that they had been handled the last 10 years by Somerton. The company has for a number of years contracted to P. and O. Cold Stores its cold storage, but it is not cold storage done at Somerton.

PN91

P. and O. Cold Storage has an enterprise agreement with the National Union of Workers. Over the last three years that Easter egg work was done at Somerton, my instructions are that involved for the permanent workforce one Saturday's overtime. The work Mr Pakula said the work was not done by his members, that is incorrect. It was done by his members who are employees of P. and O. Cold Stores.

PN92

So we can in conference go into more detail about this issue of slow-moving and fast-moving and the lines. You would appreciate when we were talking about 12,000, there is significant potential for a dispute about where one item falls in and out, particularly if the response to seeing more than 63 boxes going through the distribution centre is to immediately impose bans.

PN93

But the company has - it has met with senior, with directors. Mr Pakula referred to the fact that the director responsible for supply chain, Mr Coates, came down in January and spoke to the workforce at Somerton. It needs to be remembered that there are 119 permanent employees at Somerton. The company employs 25,000 employees and has responsibilities to all of them.

PN94

The company doesn't deny that there are morale problems at Somerton, but also morale problems throughout its workforce, because of the difficult circumstances it goes through at the moment. As we all would be aware, it is impossible to wave a wand and remove those morale problems when there are financial difficulties and uncertainty in a company. But the same would apply to the 25,000 in stores and it certainly affects the morale of people in stores when product can't be delivered out and customers are upset and give them a hard time about it.

PN95

Mr Pakula talked about a rule in relation to what is fast and slow and everything, and I think it is probably best to address that in conference, but there is no rule in the order that I am sure that the NUW would like. As to regular reporting, there is a managing director's report, a written report is supplied to all sites, including Somerton, on a weekly basis. That includes issues about development with Supply Chain and developments with the company and it does address those issues on a regular basis. If the Commission pleases, I request that we go into conference at this time.

PN96

THE SENIOR DEPUTY PRESIDENT: Are you happy to go into conference, Mr Pakula?

PN97

MR PAKULA: I would like to address some of the points very briefly on the record.

PN98

THE SENIOR DEPUTY PRESIDENT: Yes.

PN99

MR PAKULA: If your Honour will indulge me. There has been some - how can I put this - some whoppers suggested to your Honour. Let me say first of all that maybe I should have made myself clearer. I would have thought that when I said that the work is not being done by our members with regard to the Easter eggs, that Mr Hartigan would have understood that what I meant was that it is not being done by our members at Franklins.

PN100

But if I need to be clearer about that, let me make it clear. I am not suggesting that the work is not being done by members of the NUW at P. and O. Cold Storage and whether it is or whether it is not is completely irrelevant to what we are talking about. It is not being done by our members at Franklins who have had the experience and expectation of doing that work, and I note for the record that Mr Hartigan has not addressed at all the issue of the failure of the company to consult with the union about that.

PN101

And I suspect, I would hope that given that Mr Hartigan has conceded that it is at least a day's overtime on Saturdays that the company will have no difficulty in at least acceding to our claim in part with regard to that. Mr Hartigan also by implication seeks to blame the union, I suspect, for low morale in stores when they are out of stock. Now, that has got to be one of the more brazen suggestions that the company has made through this process.

PN102

Our members at the DCs have been saying for months, if not longer, that when you go to any Franklins store all you see is out of stock, out of stock, out of stock, and in no small part the reason for the company's current poor performance is that consumers cannot get the things that they want from Franklins Stores. And if Mr Hartigan is trying to suggest for a moment that 36 hours or so of bans on slow-moving products is in any way responsible for Franklins Stores being out of stock of a multitude of products ranging from one end of the scale to the other, then all I can say is that he has to be joking.

PN103

There would be 15 to 20 per cent out of stocks every single day in the warehouse and it is not just some of them. Every DC in Australia is half empty and most Franklins Stores are half empty. You go to any bay in any Franklins Stores and you try and get what you want and you cannot and it has got nothing to do with what our members have done. When Mr Hartigan says that the company cannot wave a wand and improve morale, I agree with him, but the company could do something.

PN104

At the moment if the company could come up with a scenario whereby they made morale any lower, I don't think they could do it. They have done and said every possible thing that a company could do to destroy morale. Product leaving the warehouse, no consultation with employees, no contact from management, treating them like mushrooms, taking their work away and sending it to the IDC, they have done the exact opposite of any thing that any decent employee would do to try and improve morale.

PN105

Mr Hartigan tried to suggest again in an implied way that in some respect the issue for the NUW was a demarcation one that in some respect it was the fact that the work was being done by Linfox and the TWU that was behind this. I haven't suggested for one moment that either of the Commission hearings that I have been attending, I don't think I have mentioned Linfox or the Transport Workers Union once, so that was nothing but a cheap shot. In terms of the transcript from the hearing in January, the comments I made then are still relevant today, that it is not good enough to provide information, the purpose of us seeking the undertaking wasn't just to receive information, that information had to serve a purpose, and the purpose of the information was to somehow satisfy our members that what the company said was happening was actually happening.

PN106

Now, for the company to say we have complied with the letter of what we said we would do is hardly the point, it is like the company saying if we give you a piece of paper that says, Coca Cola is a slow moving item, then we have complied and you have got to accept that. And that is what we have said for the last two months. The company has said today that as a rule of thumb it is one carton per store per month. Now, the rule tends to be getting greyer and smokier as we go along, because it is the first time that myself or Ray Gorman, and I have checked with the delegates, any one of them, have heard the term rule of thumb used.

PN107

Now, we need to understand whether or not this is a rule or it isn't a rule. The reference to seasonal work coming back to the DC in the season. I note Mr Hartigan didn't address that at all, and the company has been very elusive on that point. So, your Honour, there are a whole range of things. The last point I want to make is that Mr Hartigan is somehow suggesting that both prior to the last Commission hearing and since the last Commission hearing that what happens is this, we look at a pallet, if it looks like there is too much product on it we put bans on. Now, that is a complete distortion of what has gone on.

PN108

The bans that preceded the last Commission hearing did not occur for that reason, it occurred because there was a fundamental disagreement between our members and the company about whether the company was complying with its undertakings or not. What has happened since then, anyone would think that today's hearing had been called by the company as a result of there being bans in place. It was called by the union. Now, the company has never been slow to haul us into the Commission if it thinks there are bans on which are disadvantaging them.

PN109

Now, the company again has suggested that, what happens if the delegate looks, if there is too much Panadol we put a ban on, that hasn't occurred. The company said the proper process is that we come back to the Commission, that is what we have done. So there are a lot of things that Mr Hartigan said that I disagree with, I think I have just touched on some of them. But having gone through all that, if my friend is happy for the on-record stuff to stop there I am, and I am happy to go into conference.

PN110

THE SENIOR DEPUTY PRESIDENT: I will adjourn into conference.

NO FURTHER PROCEEDINGS RECORDED

INDEX

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #H1 APPENDIX B DOCUMENT PN62
EXHIBIT #H1 TRANSCRIPT PN62
EXHIBIT #H3 TRANSCRIPT OF 05/01/2001 PN77