C2003/414, Transcript of Proceedings [2003] AIRCTrans 1359 (15 April 2003)

AUSCRIPT PTY LTD
ABN 76 082 664 220

Level 7, ANZ House 13 Grenfell St ADELAIDE SA 5000
Tel:[phone] Fax:[phone]

TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER BLAIR

C2003/414

CONSTRUCTION, FORESTRY, MINING AND
ENERGY UNION

and

O'BRIEN GLASS INDUSTRIES PTY LIMITED

Notification pursuant to section 99 of the Act
of an industrial dispute re redundancy

ADELAIDE

9.38 AM, THURSDAY, 27 MARCH 2003

PN1

THE COMMISSIONER: Good morning. Appearances please?

PN2

MS PERRY: Sir, I seek leave to appear pursuant to section 42 for the company. I can outline the reasons that I seek leave to appear but that may not be necessary if my friends agree to that.

PN3

THE COMMISSIONER: I will just see what the response is thanks, Ms Perry.

PN4

MS PERRY: And I appear with MR GATES, I beg your pardon.

PN5

THE COMMISSIONER: Yes, thank you.

PN6

MR KIRNER: Yes, certainly the CFMEU - - -

PN7

THE COMMISSIONER: Stand up please.

PN8

MR KIRNER: Sorry, yes. Certainly the CFMEU had lawyers involved in the last dispute over redundancy so we have no problem with them appearing this time.

PN9

THE COMMISSIONER: Okay and you make an appearance, Mr Kirner?

PN10

MR KIRNER: Yes.

PN11

THE COMMISSIONER: Along with Mr?

PN12

MR KIRNER: MR HOWLETT.

PN13

THE COMMISSIONER: Right, leave is granted, Ms Perry.

PN14

MS PERRY: Thank you, sir.

PN15

THE COMMISSIONER: Right, Mr Kirner, this was your union's application.

PN16

MR KIRNER: Yes. The issue is one of redundancy and the union has indicated to the company that we don't believe that there is a necessity for redundancy and in addition that if there is a necessity for redundancy, that there are a range of steps that need to be taken to minimise the impact on employees and particularly appendix D of the Clarkson's State Agreement has a section in relation to subcontract work which provides that if there is a need for redundancy, subcontractors would reduce their work loads prior to direct labour employees being retrenched which is clause 12 of the current redundancy agreement.

PN17

Clause 1 indicates that redundancy is defined as an excess of employees over current work requirements and there's a range of other issues that we are prepared to look at if there is a need but we have indicated that we would like to see the profit and loss against budget. We would like to play a greater role in identifying areas of waste and inefficiency within the company and we would certainly consider rather than employees being retrenched that there's an ability for people to look at issues such as working shorter time, additionally that there is a fairly large backlog of rostered days off, annual leave and long service leave that traditionally we would argue that those could be taken to minimise the impact of reduced sales if there are any in the business.

PN18

So at this stage we think there's other ways of going through it than have been proposed and that is essentially the issue we want to resolve, is what is the best way to go about resolving this particular issue.

PN19

THE COMMISSIONER: Right. How many subcontractors do you say are currently doing work for O'Brien's?

PN20

MR KIRNER: I believe it is approximately six to seven and they work for companies called - well I won't go through the names but there's six to seven employees working within those subcontract companies.

PN21

THE COMMISSIONER: Right, okay, thank you.

PN22

MR KIRNER: Thank you.

PN23

THE COMMISSIONER: Yes, Mr Gates?

PN24

MR GATES: Thank you, Commissioner. As the Commission is probably aware from proceedings on a very similar matter in Victoria, this whole issue has got some quite extensive background to it and the proceedings before you today largely arose from the behest of the organisation to provide some resolution to the market downsizing issues that we are facing as an organisation and certainly we would be seeking today the assistance of yourself, Commissioner, to resolve the issues in a fairly expeditious way.

PN25

We have some fairly workable solutions that you may be comfortable with, Commissioner, and these are issues which have been raised with my friend Mr Kirner. Perhaps it is appropriate if we just step through what has actually occurred in the State of South Australia just to familiarise ourselves with it and this is not something which has come out of the blue, nor that we haven't considered all issues, options, consultations and so forth.

PN26

If I take you back to the start, Commissioner, you may recall the process of looking for potential savings in labour came about by a memorandum issued on 27 February this year, a copy of which was sent to Mr Kirner and posted and discussed with our employees across Australia and a copy of that has been provided in other proceedings. I have another copy if you wish to see it, advising that as an organisation we were experiencing market downsizing, that potentially a number of positions were affected across Australia.

PN27

Specifically as part of that memorandum we indicated that we would be talking to the unions and the consulting committees where appropriate and if at some stage there were no alternatives to redundancy, then we identified very specifically what those selection criteria would be in how employees would be assessed. I had a conversation with Mr Kirner on or about 27 February after that memorandum was faxed to his office.

PN28

Subsequent to that we had discussions on the telephone in early March whereby we agreed we would set a meeting for the consultative committee which is represented by managers of the organisation, myself who was also present, Mr Kirner and employee delegates who formed the consultative committee. That consultative committee was held. It commenced on 11 March and went through another 2 days, 12 and 13 March, and you might recall not dissimilar to Victoria were also in the process of renegotiating the enterprise agreement.

PN29

That agreement expired in South Australia on 11 March of this year. Once again the timing for the two is less than perfect. At the consulting committee meetings which we held running over those 3 days attended by Mr Kirner and the delegates, we specifically looked at the financial position of the organisation, so how this was being affected and we talked about the 10 per cent downturn, year on year in sales across the business.

PN30

We specifically looked at how this would affect South Australia and in that we said that there was the potential to have one employee position affected here and that the onus upon us as a consultative committee was to look at ways of avoiding that loss of position from transpiring. We spent some time in the course of those days looking at potential alternatives. Specifically we discussed issues such as rostered days off.

PN31

We specifically discussed issues of annual leave and the taking of long service leave and we specifically discussed the issue of contractors and in that point appendix D clause 12 of the enterprise agreement, which I have a copy of if you wish to see it, Commissioner, and the view of Mr Kirner - and if I do him an injustice then perhaps he can correct it - was that he believed that the contractors should go before we lost an employee.

PN32

We spent some time in those meetings looking at what contractors were utilised within the O'Brien business in South Australia and we looked at each of them and in terms of the geographic area and work which was being provided those and we identified that there was only one of those contractors who was capable of being replaced, potentially by a full-time employee of O'Brien, thereby averting the need for a redundancy.

PN33

That one contractor performs on the after-hours roster, so performs after-hours work. There was a degree of discussion about how we service after hours in the State of South Australia and it is different than Victoria. In South Australia employees work day work and they then form an on-call after-hours roster. I am advised that there are 10 employees in South Australia who participate in that after-hours roster.

PN34

So the effect of that is that they perform their day's work and they are then on call through the night until the next morning. We then spent some time looking at potentials on how we could avert - sorry, how we could fill that contractor's role with an employee and we had a subsequent meeting with Mr Kirner on, my recollection is, 21 March of this year and you will recall, Commissioner, that we were in proceedings before you in Victoria where we set a two week period for further consultation and clarification.

PN35

We were very conscious of that and sought to expedite this process in advance, predicting what might become an issue here by having preliminary meetings to address any of those issues before today's date so we don't delay the process. As part of that process we very clearly identified that - well we clearly sought to come up with an interim arrangement, understanding that the enterprise agreement process is in the state of renegotiation.

PN36

As an interim move we suggested that if we were able to have one employee from day work move to what we would call and the award defines as an afternoon shift, from about 4 pm in the afternoon until 12 midnight as ordinary hours and then on-call post that, then that would avert the need for one redundancy in the State of South Australia because we could replace the only viable contractor with a full-time employee.

PN37

Mr Kirner expressed some concern with that as an approach and my recollection was that he objected to it on the basis of cost being - or overtime being lost by his members and that it wasn't advisable or necessarily going to proceed. Nevertheless Mr Kirner went to a mass meeting of employees and my recollection is that that occurred on 25 March, so on Wednesday. Prior to the meeting on the 25th we sent to Mr Kirner a letter dated the 24th where we very clearly set out our thoughts on how that afternoon shift would work and the rationale that we expressed for that.

PN38

Now, I have a copy of that letter if the Commission wish to see it. I spoke with David after the mass meeting on the 25th and his advice to me was that the employees weren't prepared to do an afternoon shift and he then sent an email letter to me essentially outlining that that wasn't going to occur and I also have a copy of that, Commissioner.

PN39

THE COMMISSIONER: Thank you.

PN40

MR GATES: So in probably summary as to where we are at this point in time, we have drafted a response to that but it is awaiting for my approval this morning before it gets sent through but essentially what we have, Commissioner, is we have a perfectly viable solution to prevent the loss of one employee by redundancy in the State of South Australia and that is through a provision which is or for which no impediment lies under the current enterprise agreements nor the award.

PN41

Specifically the award allows that to occur as a shift and it would be an afternoon shift for which employees would receive an increased level of ordinary earnings by doing that. We put it up as in interim measure pending our discussions as part of the enterprise agreement which would seem to be a less than all-the-way approach. We clearly have a need in the State of South Australia that this is required to be done and I have some specific figures, and this will be the first time that David has heard these specifics, but the sales - and this is commercially sensitive information, Commissioner. Perhaps if that part of the transcript could be struck pertaining to this information.

PN42

THE COMMISSIONER: Right.

CONTINUED IN TRANSCRIPT-IN-CONFIDENCE

CONTINUED FROM TRANSCRIPT-IN-CONFIDENCE

PN43

MR GATES: Clearly what we have is an excess of labour compared to the work which is performed. We also talked as part of the last proceedings that if the business did nothing and the forecast was a $1.7 million loss for this year and that we responsibly as an organisation had to turn that around to a forecast of just over $4 million. We think we've come a long way and certainly with your assistance from the last proceedings we've been able to identify what we see as a workable solution.

PN44

There are no impediments to it as I see and we would seek your support either through conciliation perhaps formally as a statement or recommendation after this that the parties adopt an afternoon shift and will work out how best to structure that within our business with the 10 employees who already do days and then on call through the night and that has been entirely consistent with clause 12 of appendix D of our 1997 enterprise agreement which says that contractors should not be used in preference to full-time employees in effect. If it pleases the Commission.

PN45

THE COMMISSIONER: Mr Gates, you indicated first off that if one employee were to move from 4 pm I think to midnight and you termed that as part of normal hours and then I thought I heard you say something different just recently about it would provide them with a capacity to earn slightly more. Are you saying that the 4 pm till midnight shift in part of their normal hours does not attract a loading?

PN46

MR GATES: Perhaps if I re-clarify.

PN47

THE COMMISSIONER: Thank you.

PN48

MR GATES: If it were an afternoon shift and the definition of afternoon shift is provided under clause 32(4) of the Glass Industry and Glass Merchants and Glazing Contractors General Award, they would attract a 15 per cent loading for their ordinary hours performed within that time and then in addition to provide some level of income assurance I guess we would continue with the existing arrangement of on call beyond 12 midnight through to 6 the next morning which is the existing arrangement, Commissioner.

PN49

The only difference would be that they wouldn't be required to work during the day as they currently do. So currently if we just recap, what we have now is those 10 glaziers that do the on-call roster work during the day from about 7.30 through to about 4, 4.30 pm, about those times and they are then on call, rostered on call through a roster which the team leaders who are the union delegates then manage and they then perform a number of on-call work commitments during weekdays and on the weekends.

PN50

So if anything we are requiring our employees to work less hours. They have the ability to earn more or higher base ordinary earnings plus we still retain an on-call component which goes some of the way on an interim move to address any potential issues on loss of income. So we believe this is actually quite a good system. It works to reducing hours worked by employees if we can do it on an after-hours shift as a higher remuneration then perhaps what we need to think about in here is how we would fairly rotate that roster within the existing structure and bearing in mind, Commissioner, we also have the EBA process going as well.

PN51

So we see this as a very - this is far from an absolute position. This is very much a: softly softly let's come to a workable solution which does not impact upon our employees adversely in terms of hours or commitments or change. It is something they already do and we are seeking this as a workable solution. If it pleases.

PN52

THE COMMISSIONER: Thank you. Mr Kirner?

PN53

MR KIRNER: Yes, Commissioner. When our redundancy agreement was originally made with the company some years ago there were negotiations around the issue of labour being direct casual, permanent part time, permanent full time or indeed subcontract and it was agreed that subcontract, and I quote:

PN54

It is further the intention that subcontractors only be used for work that cannot be performed by full time casual direct or permanent employees.

PN55

We have asked for the company to provide the dollar value of money expended by the company on the use of subcontractors in the last financial year. They have so far refused to do that and that may well go toward a breakdown of when those people actually perform that work because when - we make decisions based on that particular clause. The union was fairly clear and the workers were fairly clear and I spoke to the person who was originally involved in the negotiation of that agreement who seems to have a reasonable understanding of why it was made.

PN56

It was done on the basis of the company being able to perform certain types of work but that that would not in itself - we would not be in a situation where workers were retrenched while subcontractors were employed. So certainly we would need to see and we would request that it is fair that we see the level of funds expended and the times that those people work and in addition the matter of I suppose the integrity of the redundancy process, we have serious concerns about it.

PN57

We believe that redundancy agreements are there to provide for workers in the event that there is a need for redundancy but it is not to be used as a selected method of sacking workers with a pay-out. It is there for when there is no work. Now, in the last 2 years previous we have been before this Commission. It has almost got to the Federal Court, it has almost got to the Equal Opportunity Commission because of the lack of integrity of the redundancy process.

PN58

Last year we had a 48 hour stop-work over the lack of integrity. The year before a worker was sacked without any redundancy at all because he was on WorkCover and we had to go to court and they had to be told by Commissioner Foggo that a person who is on WorkCover who is retrenched is entitled to redundancy payments. That took quite a long time and a full exhaustion of the dispute resolution procedure before these people accepted that that was the case.

PN59

Last year a worker was sacked with no notice during a grievance procedure who just had two shoulder operations. They paid him redundancy this time but the ECC was in discussion over the issue of subcontract, the issue of rehabilitation and return to work and prior to the next meeting to discuss other options, he was sacked. Now, that person has still not been retrenched because WorkCover intervened and said you cannot terminate that worker in the manner you have done and there were threats of quite severe penalties to the company.

PN60

That was over safety, so workers walked off the job for 48 hours and we indicated we are not going to do unsafe work in a situation where the company year-in year-out sacks people on WorkCover. Now, this year it is another issue. It is redundancy again and certainly we believe there's a purpose behind it and we believe that the purpose may not be exactly the one that the redundancy agreement covers.

PN61

So we would be saying that the company does need to provide transparent financial information as per the EBA which provides that the work teams are entitled to see the budget and profit and loss against budge and we hear a lot of figures, $1.7 million loss around the country, when we ask specifically for South Australian figures in black and white and some evidence to suggest they are accurate figures, they are not just plucked out of the air. We say that that is management's prerogative only to see those figures and we can't see them.

PN62

So we are not sure that there is a bona fide redundancy in a situation where we are not seeing any figures at all. We have further concerns raised by workers on the site that certain turnover in South Australia for certain projects is not included in the South Australian budgets, it is put into other budgets and we would like to know which ones they are because we are not going to sit back and accept what the company says about the need for the redundancy with a complete lack of financial transparency.

PN63

We believe they have another agenda for redundancy so redundancy is used as a threat. They have already put to us that they want to have a 7/52/365 arrangement where they don't want people to do call outs. They want to have a situation of afternoon shift. Now, if they want to do that, that is fine. They should have the discussion about it but they should not threaten our members with the sack or redundancy if we don't accept their terms.

PN64

Now, as you know we are in a bargaining period at the moment. We are negotiating a claim for the 36 hour week. We are negotiating for pay rises and certainly the company in this bargaining period at the moment we believe and the workers believe wishes to advance aspects of their industrial agenda to eliminate the call outs as part of a process of redundancy.

PN65

Now, we didn't wake up yesterday. We know how companies operate. We don't believe that we should be party to processes of redundancy that lack integrity or transparency and we certainly would not wish to be party to it. I would draw the Commission's attention as well to original agreements we made about subcontract use. The proper utilisation of redundancy where a redundancy is required, not as a threat to workers to toe the line. The CFMEU does not accept that, and additionally the consultative committee constitution that this company signed off on at clause 10, change, says that:

PN66

Any changes in the workplace during the bargaining period relating to the proposed agreement and discussed by the committee -

PN67

and we've discussed these issues at the committee and they are proposing it in the agreement -

PN68

should be achieved with due regard to the quality of working life including the desire to maintain and enhance job satisfaction and shall not be implemented without the agreement of at least 65 per cent of South Australian employees.

PN69

Now, their proposal has been rejected because we believe it is a bully tactic. It is a threat to worker's jobs to get a desired industrial outcome and we do not wish to participate in that type of process. So when Steven gets up and says, look, I've got the solution. Well, there are a range of solutions to the problem that have integrity and the first step is to clearly identify to the satisfaction of all parties whether or not there is a need.

PN70

Secondly, it is to investigate the issue of subcontract usage and the value of it and the time it is done because what the company has indicated to us is it is seeking to save $60,000, right, $60,000. They agreed that at least 20 per cent of that $60,000 could be saved by the taking of leave of which workers have more than ample amounts because it is very hard for them to take leave. The workers themselves who are self managed work teams with authority and responsibility from the company, they believe they are currently understaffed.

PN71

So they find it hard to understand where this is coming from but the assessment we have collectively made is industrial bullying and we certainly would not support that. I would add that in relation to the self managed work teams, it does provide that the company will provide information about profits and loss against budget. There is authority and responsibility to get involved in work planning issues that relate to resource allocation. We have asked to see budgets and forecasts so that we can identify waste and mismanagement.

PN72

In that case we believe that certainly the savings that the company have asked for, which is $60,000, could be made by the union. We would also draw attention to the award clause in relation to working shorter time which has traditionally been used in the industry in circumstances where there may be jobs that are threatened, where workers can agree to work for a shorter period, for example 2 hours less per week. We have calculated that if all workers work 2 hours less a week that would provide the savings for one position.

PN73

That can continue on a month by month basis to be reviewed if a majority of employees agree to that. We've identified too because we were asked to in relation to the enterprise agreement areas of enhanced productivity and efficiency and savings. So we've done that and we've sent that through to the company. So they have seen that. So we are not inexpert in protecting workers employment nor working with companies to ensure that that job is saved. We have done that for quite some time but we do not wish to be bullied into accepting workplace change via the threat of a sacking and we have certain clauses that we believe protect our rights within the context of this particular dispute.

PN74

THE COMMISSIONER: Right, thank you. Mr Gates, I would have to say Mr Kirner makes a fair degree of sense in looking at alternative arrangements indicating that if there were a 2 hour reduction per week, and one assumes from that there's a 2 hour reduction in the pay, that would be sufficient to be able to make savings. There's the use of accumulated annual leave, long service leave, RDOs and I would have to say the Commission is curious - how many subcontractors do you say that are being used in Adelaide?

PN75

MR GATES: How many do I say?

PN76

THE COMMISSIONER: Yes. You said you identified that only one - - -

PN77

MR GATES: What we did as part of the last consultative committee meetings that we had is we went through each of the subcontractors that we utilised and we talked about the names and where those persons worked and the type of work that they were performing in the business. It was clearly identified and not contested in those discussions that these were ad hoc geographic work specific contractors that were coming in. The only contractor which was identified as performing substantive work which could be replaced by an employee was the one contractor who was doing after hours work permanently.

PN78

That is what was clearly identified. I have got the unions around Australia agreeing that contractors are an appropriate resource to be utilised by the business and the circumstances have been subject to numerous discussions with those. It is a reality within our business but the reason as we had in Victoria and why we utilised this subcontractor on after hours work is because the employees will not work it. They won't start. The team leaders who are paid to staff this after hours rosters have not done it.

PN79

I've got a current drop and the team leader saying: well, we can't fill it. They are paid to fill it. They are in charge of that roster but going to - I mean, my friend has raised many issues which aren't relevant to things which we are discussing today. The issues of RDOs and annual leave and long service leave were considered exhaustively by myself, both before and post the hearing that we had in Victoria. It was explained in four days of meetings with Mr Kirner and members of the consultative committee and it was identified as being not an option.

PN80

The 20 per cent which he says is not 20 per cent. What we said is that if you have RDOs, it is still 100 per cent cost to the business plus on-cost. There is absolutely no saving to that. If you take annual leave, there is a partial saving to the business and what you cannot get rid of is the on-cost plus the issue of trucks. That is in excess of 40 per cent and if you have a business that the best on forecast is going to convert 1 to 3 per cent profit on revenue at the end of the year from a $1.7 million loss, then every single cent which we can put through as a saving must be identified.

PN81

Now, it wasn't us. It was my friend who identified clause 12 in appendix D of the issue of subcontractors. We only have one subcontractor who can be replaced by an employee. It specifically says and I will read it out for the purposes of these proceedings. It says:

PN82

The company agrees to grant preference of employment to those members of the society it previously entrenched subject to discussion with team leaders.

PN83

The company agrees that all work that can be carried out under the scope of the Glass Merchants and Glazing Contractors Award will be carried out by employees of the company. The parties support additional employment based upon the provision of defined purely direct labour, permanent part-time and permanent full-time labour. It is further the intention that subcontractors only be used for work that cannot be performed by full-time casual direct or permanent employees.

PN84

We've approached this in an absolutely serious manner and we have considered all options. Annual leave is not an option. RDOs is not an option. Long Service Leave is not an option. I'm astounded that today after 4 days of meetings, two stop work meetings, this is the first time I've ever been presented with 2 hours less pay across all employees, if they agree. I mean, there have been two stop work meetings specifically to discuss this issue.

PN85

THE COMMISSIONER: Is that something that the company would be prepared to consider? I have to say to you that in my 30 years experience in the industrial relations, I have never heard a company reject outright in terms of trying to avoid redundancies, the use of long service leave, annual leave or RDOs. Yours is the only company that I've known to do that.

PN86

MR GATES: The issue for us, Commissioner, is two-fold. If we believed it to be a short term problem within the business, that is a realistic option. We do not believe that to be the case. The forecast is, this is a long term downturn and if the market is going to pick up, the market will pick up very very slowly. What we are trying to do - and if we look at the 2 hours issue, why cut every employee's base take home pay when what we have is a contractor who is not an employee of the business who we can say, we don't need to reduce your earnings.

PN87

We don't need to reduce any of our employees, let us just use the contractor and push an employee into that. The award provisions specifically allows for it. We've approached this in good faith by sitting down and saying: here is an interim solution, nothing more than interim. Sure, we have EBA discussions and we could address the substantive issues there and all the other issues that they have suggested. We can raise those as part of that process. This is an interim solution which we as an organisation needs to do expeditiously.

PN88

We have had numerous discussions about it and we've maintained a consistent approach. If you don't want that contract done, we would prefer to have an employee, then let us go down that as a path. Employees are working these hours already and we've got 10 employees.

PN89

THE COMMISSIONER: Why couldn't the interim solution be, I understand what you say what your predictions are or your forecast are that this is going to be a long term downturn and any pick-up will be over a slow period of time. That means then that the parties must explore and utilise all options available rather than come to the final solution which is a redundancy.

PN90

MR GATES: Yes.

PN91

THE COMMISSIONER: So why not as part of an interim solution you utilise the use of RDOs and annual leave and long service leave and then once that is utilised, you then look and see what other alternatives are?

PN92

MR GATES: Commissioner, what we - there is some absolutes that we know that the company is forecast to make a loss, we know that. We know that if we do nothing, we will run a loss for the year. That is the forecast, $1.7 million. One of the provisions of the enterprise agreement is that the parties do continual improvements to ensure the business remains viable. We are putting in jeopardy the whole of the business of O'Brien across Australia.

PN93

We've considered the workable solutions. You know, if it were - it comes back to what we said before. We have two issues. We have an excess of labour and we have an excess of cost. Those are the two issues. If you do RDOs or annual leave, then you may effect - well, you will effect the partial reduction in labour because it is an over supply vis-a-vis the current market and predicted market in the future. What you cannot remove is that cost component.

PN94

THE COMMISSIONER: But that cost component, I mean, if you utilise the annual leave, the RDOs and the long service leave - - -

PN95

MR GATES: The RDOs will be 100 per cent cost retaining in business.

PN96

THE COMMISSIONER: But that then is a cost that is removed from the books because whilst it is there, it is an ever accumulating debt.

PN97

MR GATES: Let me try some clarification. RDOs are paid when the period is taken, okay. So if it is on a Friday this week, we accrue the cost and pay the cost at that point in time. So there's no accrual, there's no transfer between balance sheets on the issue of RDOs. For long service leave and annual, yes, there is an accrual in the books of the business. So there is an apportionment of those funds but what we cannot escape is that we cannot get rid of the on-costs which attribute to it and, you know, we have worked those out.

PN98

Say for example they are 35 per cent plus, we know we are hitting superannuation, we know we are hitting workers' compensation, we know we are going to hit payroll tax. We know we accrue annual leave and long service leave as part of that period and those out to - well, it is 35 per cent plus, you know. In New South Wales it is 38.4 per cent. We then have on top of that the cost of the vehicle, okay, which we have provision to sell.

PN99

There's a cost recovery which comes through on that to the business and flows back through to the balance sheet. If we can't sell that motor vehicle, we continue to outlay funds on that vehicle remaining there, static cost, depreciation, registration, those costs there. If the truck goes out, then it is even further.

PN100

THE COMMISSIONER: But they are the ever accumulating costs - debt in terms of long service leave and annual leave is that the more they build up and as time goes on and the more they achieve in terms of salary increases, it becomes an ever accumulating debt. It does not reduce. So at some point, you have got to cut that cost and if they are agreeable to taking their annual leave and long service leave, that is a debt that comes off your books.

PN101

MR GATES: In terms of long service leave, it depends where that cost is. Say for example is some States, there is a payment through to an industry fund, so the industry fund, you know, we just make a payment, you know.

PN102

THE COMMISSIONER: But that payment is calculated on the earnings of the employee. You don't pay $100 into the fund if the employee is only $500, do you?

PN103

MR GATES: That is right but the cost that we still bear is all of the on-costs. There's no question about that. We can't avoid that.

PN104

THE COMMISSIONER: But you are going to have to bear those anyway.

PN105

MR GATES: But if we are able to transfer a person to what the contractor is doing, that completely absolves it. It addresses our issue because the contractor is earning profit on that which is eating through the margin.

PN106

THE COMMISSIONER: But if for instances you have two or three contractors during the day on an ad hoc basis, why not effect those?

PN107

MR GATES: There may be those that will be effected but let us be realistic about what our business is in South Australia. We have three geographic regions that we allocate our business here. We have five or six branches - six branches. We have, from memory, it is 18 employees on the books in South Australia spread across six branches. The geographic area which we cover in South Australia is hundreds of kilometres.

PN108

You have to use contractors in outlying areas. There is no way we can avoid this. There is insufficient density of work to justify a position. They may have specialist skills where in that area we don't have those skills. We may utilise them to cart a piece of plate for us and bring it on site. We may utilise subcontractors to do work on glass that we can't do here. There are lots of different things that we utilise them for, Commissioner, but it is not necessarily something that you can get rid of in your business but what we know that we can get rid of is the one after hours contractor.

PN109

THE COMMISSIONER: All right. Where do the parties want to go with this? Do they want to go into conference? Mr Gates?

PN110

MR GATES: I think it would probably be appropriate to go into conference, Commissioner. I was going to suggest perhaps if we just have an adjournment for 10 or 15 minutes.

PN111

THE COMMISSIONER: Sure, no worries.

PN112

MR GATES: With your leave?

PN113

THE COMMISSIONER: Yes. Do you wish to go into conference, Mr Kirner?

PN114

MR KIRNER: Yes, I have no problem with that, sir.

PN115

THE COMMISSIONER: Okay. All right. Well, what we will do is adjourn into conference but we will convene the conference at 10.35, is that okay?

PN116

MR GATES: Yes.

PN117

THE COMMISSIONER: Yes, okay. Commission will adjourn into conference.

OFF THE RECORD

RESUMED [11.42am]

PN118

THE COMMISSIONER: The Commission has had an opportunity to have a conference with the parties. Arising from that conference, the Commission would recommend the following. That a meeting occur of members of the union on Wednesday, 2 April 2003 at 7.30 am, which the Commission understands is 1 hour before normal commencement time.

PN119

MR GATES: It is at commencement time, Commissioner.

PN120

THE COMMISSIONER: Commencement time, okay. The company, I understand, has agreed to pay for 1 hour of that meeting. The union will put the following positions to its members in order to receive some feedback. The first issue would be whether an individual might be interested in putting in an expression of interest for a voluntary departure package, that would be on a without prejudice basis, of course. The employee would need to know what the package would mean in financial terms to them and simply putting in an expression of interest would not be taken by the company as being somebody who has said that they will take a VDP.

PN121

Second issue will be the union will put to its members whether or not they would be interested, in order to avoid redundancies, working of a 36 hour week for 36 hours pay which would be reviewed on a month by month basis. The third issue would be whether employees might be interested, in order to avoid redundancies, taking the accumulated rostered days off, any accumulated annual leave and any accumulated long service leave.

PN122

There will be a report back to the Commission by phone at 10 am on Friday, 4 April 2003 to hear the outcome of that meeting and to see what progress, if any has been made on the issue of redundancy. Also, the Commission, if it is the desire of the parties, would, while commending report back on the progress, if any, in their enterprise negotiations. Either party is free to have the matter relisted if they so desire.

PN123

MR GATES: Perhaps, Commissioner, there are two issues, perhaps. One was to make mention of consideration at the union meeting of the afternoon shift, where there was a person prepared to work. I thought we would discuss that.

PN124

THE COMMISSIONER: Yes, and I didn't make a note of it.

PN125

MR GATES: The second issue is perhaps making some comment in recommendations along the lines of what you said previously, the company will need to go on and consider those things itself, leading up to that time and also that it may need to look at replacing the contractor with an employee. I can't recall the words that you used but it was along the lines it may be required to do that under the terms of the award and the EBA.

PN126

THE COMMISSIONER: Mr Gates has raised with the Commission there was the issue raised about whether anybody might be interested, on a voluntary basis, of transferring to an afternoon shift, if that could be put to the employees to seek a response. The Commission did make comment during the conference and is now prepared to put it on transcript, that if all the options the parties have considered today are either not available or the employees are not prepared to exercise any of those options and even if they do, if at some point the company believes, after due consideration, that there is still a need for redundancy or the need for somebody to transfer to afternoon shift in order to replace a contractor to avoid a redundancy, then the company reserves its rights under the award and it may chose to do so.

PN127

The Commission obviously will take into consideration any response on behalf of the employees if the company choses to exercise its rights. Whilst all this is proceeding, in terms of the redundancy, the Commission would also recommend that no industrial action, in terms of this issue, be undertaken by the employees. The Commission does understand there is a bargaining period in place in relation to ongoing enterprise negotiations.

PN128

MR KIRNER: We would say in addition to the company exercising its rights under the award, that that only occurred having due regard for the dispute resolution procedure and in addition, all enterprise agreements that the company has signed off on and the Workplace Relations Act - I mean, I don't believe - if the company goes down the path saying we are going to go and do this because we reckon we are right - - -

PN129

THE COMMISSIONER: Whatever rights the union has, whether it is under an agreement, under award or whether it is under an Act, you can't sign away those rights. The point that the Commission wishes to make is that if the company choses to exercise their rights and the union wishes to exercise their rights, whatever they may be, it is done without recourse to industrial action because the industrial action over this issue would be non protected industrial action. You are in a bargaining period over enterprise bargaining.

PN130

MR KIRNER: What we are saying is the enterprise agreement and the award and the Workplace Relations Act are all to be read in conjunction. So if there is an issue in relation to the company exercising its rights under the award and that specifically relates to shift, we believe that should only occur if due regard is given to the dispute resolution procedure, which we believe is our right. Our enterprise agreement, which are signed legal documents, and the Workplace Relations Act.

PN131

If, for example, the company says we are going to introduce a shift, you go and work it, there may be a number of reasons why a person can't and they would all relate to those documents so when we came here on the issues, we believe that the Commission, for example, would, at the end of the day, make decisions relating to the settlement of the dispute, not that the company would go out and settle the dispute unilaterally.

PN132

THE COMMISSIONER: I think you are missing the point. The company has its rights under the award or agreement in terms of shifts. The union has its rights, not saying you should not exercise them, you can and one of those rights will be in terms of the grievance procedure to bring the matter back here and ask that the Commission determine it if you say that is what one of your rights are. All I am saying is, from the Commission's point of view, whilst all that is occurring, there is to be no industrial action over this issue of redundancy because you have a bargaining period in place that relates to negotiations of an EBA.

PN133

You reserve your rights in terms of industrial action about that. This is an issue quite apart from your EBA. It is the issue of a redundancy or a proposed redundancy. So whatever rights you may have, they are reserved. Whatever rights the employer has are reserved. If the parties are not able to reach an agreement, then you come back here.

PN134

MR KIRNER: I understand that but what I am trying to get to in relation to this recommendation, is that we are happy to be bound by grievance procedures when there is issues - there is an issue now which the company has put in terms of resolution of the issue, the introduction of a shift. I believe that they would take that opportunity if it arose. What I am saying is given that issue has already been raised in the current dispute resolution procedure, is it appropriate that the company then go off and introduce that shift prior to that matter being resolved at the Commission as to whether they can or should or whether the EBA makes specific mention of changes to working arrangements.

PN135

THE COMMISSIONER: A couple of things. One is there are a range of options to be explored before that decision is made, if at all it is made. Secondly, if the company does make that decision and you say that you have rights under the Act and under the agreements and under the award, you are entitled to exercise those, one of those might be that you bring the matter back here but you may argue or you may wish to argue, the same as the employer may wish to argue, for a 127 application in order to prevent, what you say, might be a unilateral decision on behalf of the employer. That will stand or fall on its merits.

PN136

MR KIRNER: So what you are saying is if the company goes ahead and introduces shifts, then we notify dispute over the introduction of shifts.

PN137

THE COMMISSIONER: You do whatever you want to do, other than take industrial action. If you say that you have got rights under an agreement in terms of the disputes procedure to bring it here, you do that. It is not unusual for one of the parties to argue that orders be issues under 111 or order be issued under 127, that is your argument. It either stands or falls on its merits. The employer may argue that there is no grounds in which the Commission should order a matter under 111 or under 127, that will either fall or stand on its merits. All I am saying is that if you don't reach an agreement and if the company choses to exercise its rights that it says it has under the award or an agreement and you chose to exercise yours, that's fine. If it ends up here, that's fine but you don't take industrial action on this issue.

PN138

MR KIRNER: I would have thought the issue of our rights would need to be explicitly stated otherwise the company may well exercise what it believes its rights without reference to our rights and our rights exist under - - -

PN139

THE COMMISSIONER: Are we going around in circles? I think we are.

PN140

MR KIRNER: From my point of view - - -

PN141

THE COMMISSIONER: Your rights are not diminished at all under any provision of the Act or agreement that you say applies, neither is the company's.

PN142

MR KIRNER: I thought this dispute also related to - we bought this dispute before the Commission in relation to redundancy. The company has put forward a proposition to the CFMEU which we are going to talk to our members about - - -

PN143

THE COMMISSIONER: In order to avoid it, so they say.

PN144

MR KIRNER: Which relates to afternoon shifts but the resolution of all matters relating to this redundancy will not be done in the context of this current hearing. If the company wishes to introduce a shift that would then become a separate hearing. It would not be this hearing any more. All I am saying is my understanding - - -

PN145

THE COMMISSIONER: Why, because you may wish to make a fresh application?

PN146

MR KIRNER: No, because - the way I understand the dispute resolution procedure to work, is if there is going to be a change to the current custom and practice, then that would occur after the Commission settled the dispute because our grievance procedure indicates that the status quo will remain in place until such time as the matter is resolved. If the company went about and now said you have to work this shift arrangement, we disagree, the matter has not been resolved. That is why we took it to the Commission in the first place, for settlement.

PN147

If I can just go to our dispute procedure, that we have, and this is the dispute we have had the last 2 years running:

PN148

While the foregoing procedure is being followed work shall continue normally and no party shall be prejudiced as to the final settlement by the continuance of work in accordance with this clause.

PN149

It was like when the call outs were done and there was disagreement about it, we didn't all of a sudden change the way we did call-outs to suit ourselves. We made until Munro made a decision and he made a decision and in relation to this shift issue and the redundancy issue, we believe it would be - it would possibly lead to disputation and certainly we would be unhappy if the company went and introduced a new change so work is not continuing normally any more, it is considered on their terms, prior to the Commission actually settling the matter.

PN150

THE COMMISSIONER: So would not that be part of you right to argue that?

PN151

MR KIRNER: We have always come to this Commission on the basis of settlement of disputes where there has been a disagreement.

PN152

THE COMMISSIONER: No, no. If the company says we are exercising our rights to transfer somebody to an afternoon shift and you say, well our rights are reserved in terms of the disputes procedure, that we do have a dispute, it has not been settled so we are now asking the Commission to relist the matter in order to argue that point and we hear from the employer. If the Commission takes the point, well, yes, the disputes procedure has not been exhausted then it has the powers under 111 or 127 to order the employer not to implement that change until such time as the matter is determined.

PN153

MR KIRNER: Our understanding of this dispute procedure is that there is processes to avoid disputes without the necessity of resulting to industrial action and certainly we understand that that is based on work continuing as per normal and we would argue that 2 years in a row, when they have gone out and sacked people, when you gave them an inch and then we ended up in Court or walking off the job because they took it a mile and all I am saying is in this situation, no one should be surprised if the company says, no to that, no to that and no that, bang, they are doing an afternoon shift.

PN154

THE COMMISSIONER: Okay, and then you ask for the matter to be relisted as a matter or urgency, don't you?

PN155

MR KIRNER: Well, what we will be saying quite clearly took is work shall continue as normal. We will not be doing any shifts until the Commission - - -

PN156

THE COMMISSIONER: We are trying to actually jump fences before you actually get to them.

PN157

MR KIRNER: I need to make it clear - - -

PN158

THE COMMISSIONER: That is fine, I understand exactly what you are saying and you are entitled to do that, entitled to have the matter relisted as a matter or urgency, the same as the employer is, not a problem. If they decide they are going to reject all the propositions that are put up and are going to introduce an afternoon shift, you have every right to ask that the matter be brought on and you argue your particular point, not a question about that.

PN159

MR KIRNER: Our understanding of that procedure is we are not obliged, whilst we are in a dispute to do what they want or change the way we operate and we will not be. So if they want to say, okay, now you are going to do a shift and expect us to do it and I will sack you if you don't do it, they need to be very clear that we would argue that the Commission, and where it has come before you, the issue of settling it is now before the Commission.

PN160

THE COMMISSIONER: That is the position that you would argue.

PN161

MR KIRNER: Yes. What we are saying is anything that is done in the context of this dispute, must be done in accordance with the grievance procedure. If they accept that they can't do anything unless the grievance procedure has been followed, I find it hard to see how they could turn around, whilst we are in dispute and say work a shift. I would also say that one, they should not be doing that but in addition, you know, we would not be working to a different procedure than we currently work.

PN162

Now, what we think is important and the reason we came here in the first place, was because we understand what the award says about shift, right. we have had a good read of it. We have read the Workplace Relations Act, what it says about family responsibilities, right, relating to introduction of shifts. We have read what 110 pages say about workplace change when it happens, how it happens, who is involved in it happening and we believe to give them an impression that they can go down the path of introducing a shift without reference to all those documents may give them a false impression of their rights under the award because we certainly believe there is more than award rights at play.

PN163

There is almost as many pages of the EBA as the award. This is why I say, in the recommendation, if we are to embrace it and we are to say we don't believe there should be industrial action whilst this is proceeding, then it should, for their benefit and the benefit of our members, make it very clear that the dispute procedure must be observed, that the EBA rights accrued to members must be read in conjunction with that award, as must the Workplace Relations Act because I don't want to be here in a week's time when they have tried to introduce shifts and have started putting the bullet into our members for not working them.

PN164

THE COMMISSIONER: Has not the Commission said that by indicating that the party's rights are reserved? I think I have said that.

PN165

MR KIRNER: Look, it is not my job to write recommendations and I am not trying to do that.

PN166

THE COMMISSIONER: That is good because otherwise we have a demark dispute.

PN167

MR KIRNER: There would be a demarcation dispute. We believe that the company, in the past, we have had to spend a lot of time encouraging them to go down the right direction and in every instance they have accepted what we have said, they have just - they have taken action before they finally understood what we were trying to explain to them. I do not think it is appropriate, in terms of dispute resolution, for them to go down a path that will simply end up creating a problem because they are not understanding or being advised accordingly.

PN168

THE COMMISSIONER: Would not be the first time. I am not saying in O'Brien, but it would not be the first time that somebody has gone down the path and created a problem for themselves.

PN169

MR KIRNER: Our problem though is we recognise, as is the procedure, that the commitment to this procedure is vital to the viability of the company and improved job security. So we would be saying before there is an all out blue over these matters, they need to follow this procedure, this EBA and the Workplace Relations Act so they know very clearly because otherwise they might not and then the whole dispute process collapses because it was not adhered to.

PN170

THE COMMISSIONER: Well, Mr Gates is sitting here, along with Ms Perry and they are hearing everything that you are saying and if it did not sink in then I would have a worry. So one would assume that they would abide by whatever obligations there are under the award, under the Act or under some agreement. I just think we are jumping at shadows at the moment. Your rights are reserved, the same as O'Briens. Your rights are reserved.

PN171

MR KIRNER: Other people will be reading the document to, for example, the CEO might read the document and say: the award, he thinks we can do it. They have told us we can do these sorts of things. He goes and does it and then we are in dispute again.

PN172

THE COMMISSIONER: That would not be unusual.

PN173

MR KIRNER: Yes but it would be a waste of everybody's time and effort unless they were to approach it in full knowledge - - -

PN174

THE COMMISSIONER: I am sure Mr Gates will give most professional advice to his CEO in terms of what the obligations of the company are. All right, I will hear from you in due course. The Commission will stand adjourned.

ADJOURNED ACCORDINGLY [12.02pm]