AG2001/1635, Transcript of Proceedings [2001] AIRCTrans 556 (10 April 2001)

AUSCRIPT PTY LTD
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TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

JUSTICE MUNRO

AG2001/1635

170LK APPLICATION FOR CERTIFICATION OF AGREEMENT
(EMPLOYEES - DIVISION 2)

APPLICATION UNDER SECTION 170 LK OF THE ACT BY
KORVEST LTD FOR CERTIFICATION OF THE KORVEST LTD
ADELAIDE ENTERPRISES AGREEMENT 2001 - 2002

SYDNEY

2.34 PM, MONDAY, 26 MARCH 2001

Hearing Continuing

THIS MATTER WAS CONDUCTED BY VIDEOCONFERENCE IN SYDNEY

PN1

HIS HONOUR: This is matter 1635 of 2001. It's an agreement sought for certification under section 170LK of the Act. Could I have appearances please.

PN2

MR C. STARR: If the Commission pleases, I appear for Korvest Limited and with me is MR GREIG.

PN3

MR MILLS: Your Honour, I represent the employees.

PN4

HIS HONOUR: Yes, the application before the Commission is for certification of an agreement under section 170LK. The parties bound I note according to clause 4 I think are Korvest Limited at 580 Prospect Road, Kilburn and employees of the company in Adelaide covered by the Metal Engineering and Associated Industries Award and reflects an Enterprise Agreement between these parties named. There is no application clause to the agreement although it would appear that it means the employees bound by the Metal Engineering and Associated Industries Award when reference is made to the employees bound. To what employment or work is the Agreement stated to apply or intended to apply?

PN5

MR STARR: Yes, your Honour, I am advised that its the it's for all duties within the company, certainly those covered under the Federal Metal Engineering and Associated Industries Award 1998.

PN6

HIS HONOUR: And where?

PN7

MR STARR: Sorry sir, at the premises at 580 Prospect Road, Kilburn.

PN8

HIS HONOUR: And only at that site?

PN9

MR STARR: Yes, your Honour.

PN10

HIS HONOUR: Yes.

PN11

MR STARR: If I could just add a little further if I may sir, that the parties of course have had numerous meetings which has resulted in this agreement being reached and in fact report back meetings from management and the employee representatives on the consultative committee have been regularly held.

PN12

The agreement contains also, sir, a dispute settling procedure at clause 9 and a no extra claims provision at clause 8. I can further report, sir, that all the employees were provided with access to copies of the terms of the final agreement a full 14 days prior to its acceptance by a valid majority on 2 March, 2001. I would further submit that there is no reduction in the overall terms of the employees conditions of employment and the parties have agreed that the agreement shall operate from 1 January, 2001 and shall remain in force until 31 December, 2002.

PN13

HIS HONOUR: Well, perhaps let's come to a couple of those points. The notice of intention to enter into the agreement, is there a copy of that available?

PN14

MR STARR: I don't have it with me, sir, but the notice of intention to the employees on this occasion was in similar terms to what it was previously, the previous agreement which has just expired was also a 170LK.

PN15

HIS HONOUR: Well, what I'm going to is that on 14 February it is said at paragraph 5.7 of the statutory declaration that all employees received copies of the proposed agreement with a covering memo and that memorandum should have expressed their entitlement to be represented if they were a member of an organisation.

PN16

It then says in 5.9 that no request was made for the organisation to represent but as a matter of course I would require a copy of that notice of intention that was circulated to be established. Perhaps Mr Mills is able to indicate what that notice was?

PN17

MR GREIG: This was your right to have been represented by other people, the copy of the notice from the company, but you've chosen to negotiate yourselves.

PN18

MR MILLS: We negotiated the agreement ourselves with management and there were three representatives.

PN19

MR GREIG: But you had every right to have representation if so chose.

PN20

MR MILLS: I'm aware of my right to have representation.

PN21

MR GREIG: That's the question that I guess the Commissioner is asking you.

PN22

MR MILLS: Yes, I knew we had the rights of a representative.

PN23

HIS HONOUR: Yes, well, I think, Mr Starr, I will require a copy of that notification to be provided, perhaps it's something I should have alerted to you beforehand. You say you don't have it in your possession today so that can be supplied to Registry or perhaps it could be forwarded to me direct. Perhaps let's go onto some other matters. You have submitted and paragraph 6 of the statutory declaration attests about the agreement at 6.2 that on balance there's no reduction in overall terms; 6.3:

PN24

Please identify by referring to specific clauses in the agreement ...(reads)... or other law that there are nil.

PN25

Perhaps if you turn to clause 9 of the agreement that is the dispute settling procedure, it provides for a board of reference - I will come back to that - it's not clear to me under clause 9(d) how an agreement can appoint or require the Commission to appoint a board of reference. The power in section 131 arises out of an award. More substantively clause 10 - think I have probably found the answer to this question. The parties bound agree to the classification procedures and associated rates of pay detailed in appendix A. My question really goes to the self sufficiency of that but I think when I look at page seven of 16, appendix A does have introductory words that show that the rate set out on the second page are those to apply from particular dates to take the C13 rate.

PN26

Am I correct in understanding that with effect from 1 January 2001, the rate of $458.20 is to apply, that being inclusive of a four percent rise?

PN27

MR STARR: Yes.

PN28

HIS HONOUR: And the reference to categories into which employees are to be classified referred to in paragraph 10(c), the Korvest Limited job classification structure as detailed in a separate document and may be amended from time to time by management after consultation with a consultative committee, what is that separate document?

PN29

MR MILLS: That's that form we got.

PN30

MR GREIG: Just there, if I may, the separate document is - they're not detailed classification structure for each part of the business units that Korvest have as in Korvest Galvanising Division, and Korvest Manufacturing Division and Korvest Easystrut Warehousing Division. We saw a bit and take the classification structure out of the enterprise agreement and because of the changing of job requirements from time to time, that would allow us to ..... in a classification structure that was separate away from the ..... enterprise agreement.

PN31

HIS HONOUR: How does that link back to C13 to C10 which are effectively award categories of classification? I'm somewhat at a loss to see how you can have the separate document outside the agreement as the classification structure yet inside the agreement have categories that are referable to award classifications.

PN32

MR STARR: I am advised that if it is of any assistance that it is a document that we can forward to your office, sir.

PN33

HIS HONOUR: Well, in relation to that aspect of the matter, I think there would need to be an undertaking by the company approved by the representative of the employees that the agreement will operate on the basis that the Korvest Limited job classification structure as forwarded to the Commission is the operative classification structure to which the rates in appendix A apply over the life of the agreement and that undertaking could be given for the purposes of section 170LU of the Act. I would accept it because essentially I can see what probably is the intention there and I will assume that the job classification structure does not involve any substantial departure from the appropriate classifications in the award of those relatively well known positions. Could I come though to - - -

PN34

MR STARR: Also, I have been advised by the company they are willing to give what it will take.

PN35

HIS HONOUR: Yes, very well. Clause 11, as I read this clause in (b)(3):

PN36

Normal working time shall not exceed 12 hours per day excluding ...(reads)... in any one week.

PN37

Why does that not mean that you have 44 hours at normal time, up to 60 hour weeks totally and overtime after 12 hours per day or after 44 hours per week?

PN38

MR STARR: Sir, I am advised by the company that in actual fact they do pay overtime in excess of 8 hours in a day. The terminology, I am advised, in the carryover from the previous era that the reality is that any hours in excess of 8 does in a day do attract a penalty rate.

PN39

HIS HONOUR: How long do they work? What's the average working week, or what is the working week?

PN40

MR GREIG: 38 hours, sir.

PN41

HIS HONOUR: Mr Mills, what do you say in relation to that?

PN42

MR MILLS: Your Honour, 38 hours is a lot more than 30 hours.

PN43

HIS HONOUR: I am somewhat at a loss why you have such clear provision for 44 hours per week and yet you have in the statutory declaration to which I took you an indication that there are no reductions.

PN44

MR STARR: I guess that from the company's perspective we would need to discuss that with Mr Greig and Mr Mills. I understood that that was the working arrangement. I have not read it wholly myself but in order for clarification we have ascertained that it is a 38 hour working week and penalty rates are attracted beyond that.

PN45

HIS HONOUR: Well, you can see, I trust Mr Starr what I am concerned about - - -

PN46

MR STARR: Yes, of course, sir.

PN47

HIS HONOUR: That I have a statutory declaration that says there are no reductions and yet I have a provision, I suppose, treating it most sympathetically that individual work groups shall be free to negotiate with management changes subject to the following criteria. That normal working times will not exceed 12 hours. You have got a change in the spread from 5am to 5pm. That has an effect upon the penalties for work between 5 and 6.

PN48

You then have a change in the spread to 7.00 pm and the time you work outside those hours shall attract the appropriate shift premiums for overtime rates. It then goes on that you've got a 44 hour ordinary week, ordinary time or a capacity to work it. The two changes made there mean that firstly the overtime provisions of the award are bypassed in relation to the difference between 38 hours and 44. In other words, six hours would be free of overtime. In addition, afternoon shifts after 6.00 pm would not be attracted for that work and nightshifts for shifts up to 6.00 am would not be attracted because of the capacity to start at 5.00 am, I would have thought.

PN49

MR STARR: Well, I can only assume, sir, that what has been attempted in the previous agreement with reference to maybe some of the facilitative clauses in regard to the spread of hours at least.

PN50

HIS HONOUR: Yes, well, it sounds like it but perhaps if that is a reference to the facilitative clauses then the necessity would be to indicate that there are reductions in the agreement in the form in which it is advanced. I must say I'm not too sure how one gets a facilitative clause to provide for 44 ordinary hours per week.

PN51

MR STARR: No, I'm purely meaning the 5.00 am to 7.00 pm.

PN52

HIS HONOUR: That aspect, perhaps but up to five working days, it's not even clear that that covers Monday to Friday. Do you in fact work Monday to Friday or is Saturday/Sunday work included in the ordinary working time?

PN53

MR MILLS: Monday to Friday, sir.

PN54

HIS HONOUR: Well, it sounds as though you've got a provision in the agreement that goes well beyond what you're in fact working. It then provides penalty rates are to be applied in 10C to the shift penalty rate on overtime worked on weekdays. Now, that appears to be a provision that gives advantage, does it, to the employee by bringing the shift penalty into the all purpose rate for the purpose of calculating overtime, is that the intent of them?

PN55

MR STARR: Yes, that's right, sir.

PN56

HIS HONOUR: Clause 14, I don't understand what 14 means in relation to employees superannuation contributions. It seems to say that if employee superannuation contributions become compulsory that will be their responsibility, but in the second paragraph notwithstanding pending Commonwealth Government legislation, the company will maintain its existing arrangements regarding employees super entitlements and they are made only to the STA.

PN57

MR GREIG: Does that go to ......

PN58

MR MILLS: I think that's the intention of what was said to the minute with response to the STA.

PN59

MR STARR: I saw that the thinking behind this was limit the choice of funds to STA alone.

PN60

HIS HONOUR: There's a question of the validity of it if it tries to do anything more because it might be that Commonwealth Government legislation was something that came from some years ago and I don't think there can be any notwithstanding about what is now actual government legislation. In relation to the leading hand allowance, the over 21 employees - I'm looking at page 9 of 16, the rate per week is given as $38.70. I'm informed that the award rate at clause 5.9.1A is $40.90 per week.

PN61

MR STARR: I'm sorry, sir, I'm a little disadvantaged insofar as the photocopies that have been taken are unfortunately only one side of a two page document and we've just become aware of it.

PN62

HIS HONOUR: I see, well, take my word for it that appendix A, the third rate of a leading hand allowance shows $38.70 for over 21 employees whereas the award currently prescribes $40.90 per week and I suppose in one sense that's not a reduction. If you treat the leading hand allowance as applicable to over award rates, for instance the C10 level are set at some $60 a head. Let me come back to that point. Perhaps that's something that could be examined.

PN63

MR STARR: I'm advised just on that point, sir, I've got the company's perspective to that, it is their intention to pay the award rate, not their intention to pay something less, so the $40.70 would apply, sir.

PN64

HIS HONOUR: Yes, and I think the other rates do correspond with the award rates as do the percentages for junior rates. Let me come back to the preceding page, however perhaps this is something that you may need to check because you'll understand then why I have done it. If I take the C13 rate which the award rate is $417.10, if one were to take six hours overtime even at time and a half, it would produce for a 44 hour week ordinary time about $119 and perhaps I'm using the wrong figure here - yes, at time and a half about $98.76 for six hours work, from recollection I think it's two hours at ordinary time, isn't it, two hours at time and a half and then the next, double time was the first three hours.

PN65

MR STARR: I think the federal - was three hours.

PN66

HIS HONOUR: The first three hours. Well, my calculation is slightly wrong on that, but it would come somewhere over $100 while the wage differential is $41.10. Effectively the agreement gives $41.10 above the award at C13. If the 44 hour week ordinary time provided for without overtime is compared with the award, then you would need something upward of $98 to let's say $110 to compensate for that change in benefit.

PN67

Now, I hear what you say, that in fact you're working a 38 hour week, in fact you're applying the award. I would have to say it was probably just as that that is what you were doing if you were not doing that, given the statutory declaration that appears to have just passed through saying there are no reductions, no changes, then I would view askance a statutory declaration that comes to the Commission that has not been drafted with real care.

PN68

I would at least remind whoever had drawn it that it is an offence under the statutory declaration's act to make a statement in a statutory declaration that is wilfully made and false and I for one expect parties lodging statutory declarations about no reductions to do so with care. They are statutory declarations, wilfully making a false statement under s.11 of that Act, if it's tried extensively is punishable by four years imprisonment on a summary. I'm not suggesting that has happened on this occasion because I do not think that there is any wilful misrepresentation on what has been put, but if the Commission were to be faced with a situation where people were working a 44 hour week, not paying overtime on it and bringing forward a statutory declaration saying there was no reduction, take it from me that I, for one, would require the parties to show cause why I should not refer the papers, including the statutory declarations of both employer and employee to the Director of Public Prosecutions to examine whether or not there is an offence.

PN69

The matter in my view of these cases, particularly because the Commission's processing time is scarce and difficult to apply means that we have to trust, to a great degree, what the parties put to us particularly in s.71 your case, and it needs to be accurate.

PN70

I accept here in this instance that you have got into an agreement a provision that seems like facilitant of provision. Perhaps it is a badly drafted 12 hour arrangement that was intended to be associated with and perhaps indeed is associated, you work only a half day as I gather, with rostered days off and there is an incomplete statement.

PN71

I take this opportunity, to at least put you on notice, that there is a risk with some of these provisions, if there is not real care in drafting the supporting material and drafting the agreement. Let me come to how I propose to handle the matter, I'll give you leave, Mr Greig to lodge the notice of intention, to enter into an agreement, to also lodge the Korvest Limited job classification structure, together with a statement authenticated by the company to the effect, that that classification structure is to operate in conjunction with attachment A, during the light of the agreement, and subject to clause 10C of the agreement.

PN72

I think in relation to the concerns that I have expressed about the potential operation of clause 11, to lodge an undertaking that for the life of the agreement, which is I notice only for the year, the agreement.

PN73

MR STARR: .....

PN74

HIS HONOUR: I thought it was until 31 December 2001.

PN75

MR STARR: No, 2002.

PN76

HIS HONOUR: I see, it's 2002, yes I stand corrected on that, and there were two pay increases on it too, weren't there.

PN77

MR STARR: Yes.

PN78

HIS HONOUR: Yes, that's right. For the life of the agreement, clause 11 shall operate on the basis of maintaining the existing working arrangement, associated with the observance of a 38 hour week, ordinary time, subject to payment of overtime and penalty rates in relation to time worked in excess of eight hours per day, or 38 hours for the week, provided that should any alteration be proposed to work different hours in accordance with clause 11, the terms and conditions of doing so will be renegotiated through the consultative committee to ensure that there is no disadvantage to employees in the outcome as against penalty rate entitlements, under the existing work arrangements.

PN79

If you give me those undertakings in clear form and I expect that they will be in clear form, because they should be binding upon for you for purposes of s.170LU of the act, I am prepared to certify the agreement in the terms in which it is submitted. I notice that a copy of the agreement I have appears to have an explanation document which I guess is part of the agreement submitted. I'm not sure I - to be honest I hadn't read that - I don't think it's in all copies unless I've missed it.

PN80

When I look at it it's got headed "Korvest Agreement Explanation Document. This explains the various clauses in the agreement and the benefits to the employees in the company and it says that clause 11A, for instance, sets out the company's intent to employ all employees on a three or six months casual basis and to ensure that no employee retains casual basis for any longer than six months. I haven't checked how that squares with the relevant award in terms of probationary appointment, but I will accept that essentially there is no disadvantage on broad comparison, but 11B then is described as setting out general limiting conditions within which individual work groups can negotiate hours of work with management and this clause should benefit the company where it wishes to adjust working hours to meet customer demands and those employees who may wish to work different hours to suit their particular lifestyle, but I note that despite your explanations today the company's own explanation document apparently issued to employees seems somewhat at odds and it accentuates the need for care when lodging statutory declarations to the effect that there are no reductions, the calculations I've given you somewhat approximately in relation to overtime.

PN81

36 hours in a 40 hour week is sufficient of itself to suggest that the over award payment does not appear generous and contrasted with what would be six hours overtime at ordinary time rates even for a C13 classification.

PN82

Care needs to be taken if the statutory declaration associated with a change of that kind or the flexibility and acquisition of that kind was introduced as saying no reduction. There is a risk that if the Commission gets the document that says there is no reduction it takes the parties at the word and doesn't look at it.

PN83

Subject to those assurances being given and being lodged within, it can be, let's say by 3 April. I have another one of these conferences on 3 April which is, I think, only next Tuesday, isn't it. Let's say you lodge in on 2 April. That will give you until Monday to get that to me. I will certify the agreement with effect from 3 April 2001 and it will remain in force until 31 December 2002. I would do so on the basis of the receipt of the 170LU undertakings on the basis of satisfaction that the requirement of the Act and rules have been met and having regard to the scrutiny that has been made otherwise of the content of the statutory declarations lodged.

PN84

Could I just refer to one other matter and that is, when I go to the undertakings, I think there needs to be two other points covered. That it is agreed that the agreement shall operate in relation to the employment by Korvest Limited trading as Korvest Galvanisers Easy Strut of employees bound by the Metal Industry's and Associated Industries Award at the company's premises at 580 Prospect Road, Kilburn, South Australia. That is just so as that your application clause is clear.

PN85

I would stress for my purposes at least because you run a risk that you will encounter me again that I look to certified agreements to have a parties bound clause or have a parties clause at least to identify who are the parties and to identify who are the persons bound by it, which is a different concept. Thirdly, to have an application clause to identify to what employment the agreement applies.

PN86

They are three quite distinct concepts and a deficiency, particularly in relation to the application clause, can lead to confusion and in fact, a frustration of the agreement. Often, and perhaps in this case it is thought that by marrying together the parties and the parties bound clause you have somehow covered the scope of the agreement. In fact, I think on this occasions, they probably have slipped through. If a court had to construe this then it might find that the Commission itself was deficient in having certified an agreement as to which the application was quite unclear.

PN87

Finally, in that respect you have given an undertaking in the course of the hearing which I overlooked to mention and that is that the provision for - I must say, these copies are a bit confused. The leading hand allowance should be on the basis of the application of the award rate. You might put that in as well.

PN88

There is a little bit of lack of clarity also about the payment of the $10.50 tool allowance rate. If you look at the foot of appendix A, the tables, C10 rates include tool allowance of $10.50 per week. Well, perhaps that is the intention for the Korvest site rate but I would not that the award rate that is given, the $492.20, to which I think the 4 per cent has been applied, doesn't include the $10.50 tool allowance rate. Probably what you mean is that the rates that you're paying at the C10 level are inclusive of the tool allowance. If that is not your intention then perhaps you could even revise that.

PN89

MR STARR: I put that into the documentation I sent to you, sir.

PN90

HIS HONOUR: Yes. That's something - it does not so much go to the no disadvantage test. The main problem, I mean, how your calculations are is not something I want to embark upon but my concern is more the no disadvantage test in ensuring that it has been adequately applied and that the undertakings to overcome the concerns I have are clearly enough expressed so that if necessary they are on file and can be accessed on behalf of the employees. Could I just check, Mr Mills, that your understanding was as transpired at the hearing today and that you are content with that outcome?

PN91

MR MILLS: Yes. I am quite content with this outcome.

PN92

HIS HONOUR: The employees have voted on the agreement as a whole, I take it?

PN93

MR MILLS: Yes.

PN94

HIS HONOUR: And they are happy with it?

PN95

MR MILLS: Yes.

PN96

HIS HONOUR: Yes. Very well. Unless there is a difficulty with the provision of those undertakings and I take it there is not, is there, Mr Greig?

PN97

MR GREIG: No, sir.

PN98

HIS HONOUR: I will certify the agreement with effect from 3 April. If there is a difficulty then I will re-list the matter on short notice on the 2nd when I have got your correspondence to be brought into the same hearing on the 3rd. It will also be via video conference. Now, you have the necessary address and so on for here, do you? I think if you lodge the matter, anyhow, under this agreement number matter with the South Australian registry then they will get it to me.

PN99

Very well. All done. Commission will adjourn.

NO FURTHER PROCEEDINGS REQUIRED [3.21pm]