C2003/2113, Transcript of Proceedings [2003] AIRCTrans 1849 (16 May 2003)

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TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

VICE PRESIDENT LAWLER

C2003/2113

COMMUNITY AND PUBLIC SECTOR UNION

and

EXPORT FINANCE AND INSURANCE CORPORATION

Application under section 170LW of the
Act for settlement of dispute re method
of payment

SYDNEY

10.05 AM, FRIDAY, 2 MAY 2003

PN1

THE VICE PRESIDENT: Could I have appearances, please?

PN2

MR A. RICH: Your Honour, I appear for the CPSU. With me is

PN3

MR M. TULL, who is the Divisional Secretary of the CPSU.

PN4

MR M. BASTICK: If the Commission pleases, I seek leave to appear for EFIC. I appear with MR M. JACKSON, who is the General Manager, Corporate, of EFIC.

PN5

THE VICE PRESIDENT: Thank you. Is there any objection to leave being granted, Mr Rich?

PN6

MR RICH: No, MR RICH: .

PN7

THE VICE PRESIDENT: Yes, leave is granted. Yes, Mr Rich? First of all, I note that the dispute prevention and settlement procedure, clause 12.4, confers only a power of conciliation on the Commission. That's obviously an agreed position between the parties. It seems reasonably clear on the face of the agreement.

PN8

MR RICH: It's not a position that has been discussed but on the basis of the words in the agreement I don't think there's any dispute about that.

PN9

THE VICE PRESIDENT: Fine. So what is it about?

PN10

MR RICH: Well, I'll start from the beginning. The dispute, your Honour, relates to an interpretation of the redundancy provisions within the EFIC agreement, which are to be found at the end of the agreement in clause 33.

PN11

The reason that this has become an issue in part, just to set the background a little bit, is that EFIC is going through a divestment process which involves the sale of its business, I understand - and no doubt I'll be corrected if I'm wrong - and at the moment there is a tendering process going on as a result of which it is envisaged that there will be a number of redundancies that occur in EFICs business. That process of preparing the business for sale and the divestment process has brought these issues to a head. So that's where we're at presently.

PN12

THE VICE PRESIDENT: So the disagreement between the parties is one as to the proper construction and effect of clause 33?

PN13

MR RICH: Yes, and in particular clause 33.4 which relates to the actual payment and the way in which the payment is made. Now, in short the redundancy provision provides for a person to be identified as excess to requirements and in that circumstance redundancy arises, clause 33.2 says, and indicates in 33.2 then the factors that may lead to a person being excess to requirements. EFIC is required to look for alternative work. In the event that there's no alternative work then the employee's position is redundant. There's a notice period set out in 33.3.3 and then, following that notice period, there's an entitlement to retrenchment and to a retrenchment payment set out in clause 33.4.

PN14

Now, clause 33.4 refers to a retrenchment payment. It says, in 33.4.1:

PN15

Retrenchment payment for employees ...(reads)... seven months' salary maintenance.

PN16

A similar entitlement, although with a greater quantum. exists for employees who have more than 20 years' service or are over the age of 45. Now, the debate between the parties is around the means by which salary maintenance is to be paid.

PN17

THE VICE PRESIDENT: Is it a debate about what salary maintenance means?

PN18

MR RICH: Essentially. We say under this agreement, according to this agreement, the way it was written, the intention of the parties and the way it's been performed by the parties since it was certified, those words mean that employees should be entitled to choose a lump sum payment of salary maintenance. So the seven months' salary maintenance is an entitlement to a lump sum payment of seven months.

PN19

THE VICE PRESIDENT: EFICs position is - - - ?

PN20

MR RICH: Well, EFICs position has changed in the sense that this clause first appeared in a certified agreement that EFIC was a party to in 1997, which was the agreement previous to this one. The evidence demonstrates that from the commencement of that agreement until this issue was first raised in the context of divestment at the end of 2001, EFIC paid lump sum payments of salary maintenance to all employees, either seven or 13 months, over that period.

PN21

Then, when it was raised in the context of discussions about what would occur to employees when the divestment process took place and employees were made redundant, EFIC said it was seeking advice and an interpretation was put out to employees which was contrary to past practice, which was that salary maintenance meant fortnightly payment to maintain salary at a level to which employees were entitled upon redundancy at that point in time and there was a choice between that regular payment option and the lump sum payment indicated in subsection (a) of 33.4.1 and 33.4.2.

PN22

Since that time EFIC have now come to the position of offering what they refer to, I think, as being an above-award payment of five months' lump sum to employees who are made redundant which is not referable to anything in the agreement but a position they've reached as a means of making people's exist form the company in these circumstances more beneficial for them.

PN23

Of course, we say that, given past practice, given the intentions of the parties and given the way the agreement is worded and the background to the development of this agreement in terms of the previous award entitlements that employees had, this agreement gives entitlement to a lump sum payment.

PN24

THE VICE PRESIDENT: There is a tension in many applications that come to the Commission under section 170LW that arises in connection with the exclusive jurisdiction of the Federal Court to interpret agreements. That tension exists in this case. Does EFIC have any objection to the conciliation proceeding on the basis that it will or may necessarily traverse issues of the proper construction of clause 33?

PN25

MR BASTICK: Your Honour, EFICs position is that it just notes that this is actually the first time the matter has come to conciliation before the Commission on what is essentially the key issue pursuant to the agreement and it is prepared and happy to conciliate in accordance with the agreement, noting what your Honour said, but it's position is that if we're unable to resolve it then it is a matter that would normally be for the Federal Court to resolve and proceed on that basis. We bear that in mind in the context of participating in the conciliation.

PN26

THE VICE PRESIDENT: But it maybe that there are issues which are properly within the province of the Commission even taking the most technical view of the operation of those provisions of the Act that allocate the different roles between the Commission and the Federal Court but on the face of it there are - on the basis of what Mr Rich has said thus far - there are clearly some issues which look like pure construction issues arising.

PN27

MR BASTICK: Your Honour, that is how we understand it. To us it appears to be a pure construction issue and raises the extent to which you can go beyond the pure construction which is a Federal Court matter.

PN28

THE VICE PRESIDENT: Am I right in saying - I understand that my interjection has cut Mr Rich off and may not have completed what he's saying but the issue does come down to whether or not seven months salary maintenance requires only the periodic payment of the salary of seven months or whether or not it comprehends a lump sum payment.

PN29

MR BASTICK: Yes, your Honour, other than the question is more whether or not the relevant provision contemplates the salary maintenance payment or allows for salary maintenance to be paid as a lump sum or 13 months is a lump sum - yes, your Honour, that's correct.

PN30

THE VICE PRESIDENT: Before we move into the conciliation mode and go off the record is there anything further that you wish to put on the record, Mr Rich?

PN31

MR RICH: I do have some more things to say, your Honour, in terms of just putting our case, sort of outlining where we are coming from to give your Honour a fair indication as to - - -

PN32

THE VICE PRESIDENT: The approach I ordinarily adopt is to remain on the record for so long as is necessary to identify what the issues are which are the subject of the conciliation and I need to go off the record and into a conciliation mode.

PN33

MR RICH: I might just mention two other brief things just in terms of the background we say in terms of our case and just to make sure that your Honour and all parties are reading from the same page, if you like. The entitlements in clause 33.4.2, I might just go first to the salary and maintenance entitlements, the seven months and thirteen months entitlements. Prior to the existence of this agreement and the previous agreement which were in the same words redundancy entitlements presumably arose from the relevant awards which existed at the time. The first one was normally called the RPAGE Award which was the Redundancy Provisions Australian Government Employees Award and then subsequent to that there was another award made called the Australian Government Statutory Authorities Redeployment and Retirement Redundancy Award, the Statutory Authorities Award.

PN34

In the RPAGE Award and also in the Statutory Authorities Award there was what amounted to a 7 and 13 month entitlement to retention in employment. What effectively happened under the RPAGE Award however was that what was in a sense a notice period of 7 or 13 months ended up being bought out by agreement between employees and their employers in most circumstances and it had a term which was capitalisation where the employees would capitalise their entitlement to the retention period and they would have a lump sum paid out and that we say is the background to the 7 and 13 months entitlement that you see in clause 33.4, it's essentially recognising the previous entitlement to retention in employment and the practice of buying out that entitlement and that's certainly the way it was certainly understood by the parties and the way the parties carried out the agreement.

PN35

To that end I might just hand up a document to - - -

PN36

THE VICE PRESIDENT: Can I ask just this, please feel free to go on in a moment but can I just ask this question, is it really on EFICs side just a question of dollars and cents of the difference between the net present value of 7 months salary or 13 months salary and the total dollar quantum of those payments, is it that dollar and cents issue? Have I made myself clear? If you pay $10,000 a month for 10 months it has a net present value at the beginning of the payments that's less than $100,000. There are calculations available depending upon prevailing interest rates, formulas are available to allow one to calculate the net present value of a series of monthly instalments. Is it just a dollars and cents issue so far as EFICs concerned that they don't want to make the lump sum payments because it's delivering a greater economic benefit than the true cost of the payments over the periods of 7 months and 13 months respectively.

PN37

MR RICH: Your Honour, in one sense it is a dollar and cents issue because as your Honour has mentioned it involves the payment of more dollars over the salary and maintenance period but it's important but it's more than that because it involves provision of from EFICs prospective redundancy benefits which are in excess of what the existing entitlements are in the agreement, it raises issues about future agreements negotiations for those but also importantly the salary and maintenance arrangement proposes that the employees have the option of taking the lump sum and leaving or taking salary maintenance on the basis that they won't necessarily get the full 7 or 13 months, it depends on their prospects of obtaining alternative employment during that salary and maintenance period, so if they were to obtain a job the following month then salary and maintenance switches off. If they were to obtain, the approach that has been taken if they obtain a job that pays less then the salary is topped up for the period. So again it is in a sense dollars and cents but they're - - -

PN38

THE VICE PRESIDENT: It's not a simple net present value calculation issue.

PN39

MR RICH: Correct your Honour.

PN40

THE VICE PRESIDENT: Fine. Yes, Mr Rich.

PN41

MR RICH: Just briefly to continue where I left off I was about to hand up a document to your Honour, this document is a summary, you might recall in previous proceedings came to the Commission in relation to our access to documents under section 35B of the Act in relation to this particular issue. Mr Tull from the CPSU was by consent granted access to some documents in EFICs records and this is a summary of the documents that he perused.

PN42

The history here indicates or goes through each redundancy, based upon the information that Mr Tull was presented with summarises the payments that were made and makes two conclusions about the payment that was made and the way it was made and what this document demonstrates is that there is some question because of the information that Mr Tull was able to view about the nature of the payments up to payment number 8, so payments 1 to 7, it's not exactly clear for each of them how the payment was being made, however payment 8 is the first payment made after the certification of the 1997 EFIC Agreement contained as I indicated earlier the same clause, for the first time the same clause.

PN43

THE VICE PRESIDENT: Sorry, which agreement is that, did you say the 1997 agreement?

PN44

MR RICH: Yes, it was called the EFIC Certified Agreement 1997 which came into effect on 9 October 1997. That agreement contained the same provisions as are contained in the current agreement in relation to this issue at least and the first payment after that agreement took effect is payment number 8. From that point on until as I indicated to your Honour earlier this issue was first agitated in the context of the - - -

PN45

THE VICE PRESIDENT: You say that there's a consistent practice of paying out a lump sum of 7 or 13 months?

PN46

MR RICH: That's right your Honour and might I also draw your attention to payment number 16 and payment number 18 - - -

PN47

THE VICE PRESIDENT: Have you provided this document to EFIC before today?

PN48

MR RICH: Not before today, no.

PN49

THE VICE PRESIDENT: I mean there's an issue about typically someone in EFICs position would want to check - - -

PN50

MR RICH: About the voracity - - -

PN51

THE VICE PRESIDENT: No, not voracity but just accuracy, EFIC would no doubt want to check this, that's fine, yes.

PN52

MR RICH: Now payment number 18 and payment number 16, the documents provided referred explicitly to the certified agreement, payment of lump sum, 13 months as per CA was written on the document. There was an understanding it appears from this document and also from what employees had been told over the course of their employment that this lump sum was an entitlement that they had. When the 1997 agreement came up for renegotiation there was a staff meeting held and staff were explicitly told there would be no change to the redundancy entitlements, there's be no change to the redundancy part of the agreement.

PN53

THE VICE PRESIDENT: Told orally by?

PN54

MR RICH: Told orally at a meeting by Barbara Richards, I understand, who is the head of HR at the time

PN55

THE VICE PRESIDENT: And the additional element that the staff understood that the existing practice under the agreement was that the 7 or 13 months would be paid out in a lump sum, is that a position that's contended for? See, an EFIC representative standing up and saying there'll be no change, doesn't necessarily take you very far unless it's been made clear in some fashion to the employees that the existing way the agreement has operated is to pay out the lump sums.

PN56

MR RICH: The highest the CPSU can put it in terms of the evidence that we've been able to gather from talking to employees to date is that nothing explicit was said to employees about the lump sum entitlement to salary maintenance. However, it was common knowledge and well understood and it was talked about between managers and staff - - -

PN57

THE VICE PRESIDENT: Do you have a date for this?

PN58

MR BASTICK: Your Honour, can I raise one point? Perhaps it arises in the context of something you said before but in the context of conciliation there are past and present employees of EFIC here and I am just concerned that if it is possible this matter may be resolved in another jurisdiction, that presumably the process initiated presumably the union on behalf of employees would involve affidavit evidence, etcetera, and it may be that affidavits will be sought from people present in this room. If we are going to discuss what was said at particular meetings by particular managers it just raises the issue of preparation of those affidavits based on recollection.

PN59

THE VICE PRESIDENT: Let me say that about this. Mr Rich, I think that the concern that is implicit in what has just been said is a legitimate concern. Equally there are very good practical reasons why employee representatives ought to be involved in a conciliation so that they can own the process. Can I suggest a half-way house that you refrain from articulating or asserting what was said at particular meetings and if that becomes necessary that part of the discussion can occur just with the representatives present. Are you happy with that course?

PN60

MR RICH: Yes, your Honour, thank you.

PN61

THE VICE PRESIDENT: You were looking for a date, the date of this particular discussion.

PN62

MR RICH: At this meeting which took place and I understand it took place in about - - -

PN63

THE VICE PRESIDENT: Presumably it is July or August of 2003 or early September?

PN64

MR RICH: No, I am referring more to - there was a meeting which took place following - when the 1997 agreement was being renegotiated there was a meeting at which - - -

PN65

THE VICE PRESIDENT: That meeting must have been some time shortly before 31 October 2000, a month or two before that. That must have been in the month or two before the certification of the current agreement?

PN66

MR RICH: Yes, that's right. So that was about when the meeting took place.

PN67

THE VICE PRESIDENT: So it is likely to have occurred after redundancy 21 on this list?

PN68

MR RICH: Yes. Now, all I wish to say about that meeting was really just to indicate that there was an understanding - - -

PN69

THE VICE PRESIDENT: I withdraw that, I am sorry, I am confusing my dates again. The current agreement is certified on 31 October of 2000 which would mean that that occurs between redundancy 15 and redundancy 16.

PN70

MR RICH: Yes. Now, all I wish to indicate I guess is that as a result of that meeting and peoples understanding from personal conversations that they'd had with their managers in more private settings and general understanding of the way in which redundancies had been carried out for all staff over the period of the previous agreement there was an understanding that what was said to them meant that there would be no change to that past practice.

PN71

THE VICE PRESIDENT: Can I suggest that at the moment you are really delving into what might be described as the merits of the position rather than just identifying the issues. Is there anything further you wish to say by way of identification of issues for the purposes of transcript because if there isn't I'll just hear whether or not there is anything that Mr Bastick wants to put on transcript, or any comments he wishes to make in relation to the identification of issues and then we can go off the record and move into a more informal conciliation mode.

PN72

MR RICH: The only other thing I would say is that in terms of the people who are affected by this I understand, and I may be corrected, but I understand that we're talking about 40 to 50 people who are covered by the agreement and who may be affected in terms of their redundancy entitlement in the agreement.

PN73

THE VICE PRESIDENT: For those individuals it is a profoundly significant matter.

PN74

MR RICH: Yes. There are about 10 or 15 people who would fall into the category of persons who have more than 20 years service or over the age of 45 and therefore might have an entitlement of 13 months salary maintenance and the remainder fall into the category of being under 45 or having less than 20 years service approximately. That's just to give your Honour a feeling for the numbers we are talking about. I have nothing further.

PN75

THE VICE PRESIDENT: Mr Bastick, are there any matters that you wish to put on the transcript?

PN76

MR BASTICK: Your Honour, I think following my friend's outline the issue is probably clear so whilst we were prepared to go into some detail on the background to this issue I am happy to do that. I don't think that is necessary for the purposes of dealing with this particular issue.

PN77

THE VICE PRESIDENT: We will certainly have to talk about the background in conciliation because it is tolerably clear that this does turn on a conventional construction of the agreement question and it raises the issues of admissibility of extrinsic evidence to resolve ambiguity in the meaning of salary maintenance in clause 33 which invokes all of the considerations that are set out in Cadelfa.

PN78

MR BASTICK: Perhaps just on that point, your Honour, I just point out that - does your Honour have a copy of the actual certified agreement?

PN79

THE VICE PRESIDENT: I do.

PN80

MR BASTICK: Just if I may refer for example to clause 33.4.2 which provides for the, I guess, what EFIC sees as the two options available to employees in that category by payment of a lump sum termination payment calculated by reference to the two week per year of service formula or alternatively the election of the salary maintenance option of the 13 months. It would make the 33.4.2(a) provision otiose or irrelevant if in every case employees were entitled to elect to have the 13 months cashed out. So I just point out that on the matter of construction - - -

PN81

THE VICE PRESIDENT: Because 48 weeks is equal to the 12 months.

PN82

MR BASTICK: It will always be less than - the cap of 48 weeks will always be less than 13 months. Again I just raise that perhaps to assist in identifying the issue on the record. Just some other brief points in terms of the background given or raised by my friend. The tendering process for the sale of part of EFIC's business is not the whole of EFIC's business but part of it occurred and was completed some time ago. It is the case that the divestment of that part of the business will occur and it is just a question of timing and it is the case that - - -

PN83

THE VICE PRESIDENT: Is the purchase public knowledge?

PN84

MR BASTICK: Yes, it is, your Honour, I am happy to say. It is a company called Goehling NCM, and it is a company incorporated in the Netherlands. German/Dutch consortium.

PN85

THE VICE PRESIDENT: Is there anything else you wish to put on the record for me then, Mr Bastick?

PN86

MR BASTICK: Perhaps, just if I can note that a number of redundancies have actually already occurred. There has been in the order of 28 staff who have already been made redundant. Assuming that the divestment does proceed to completion, which is still subject to certain milestones or divestment benchmarks being met, it is likely that there will be further redundancies and the likely number is a total of approximately 65.

PN87

THE VICE PRESIDENT: Including the 28? Or a further 65?

PN88

MR BASTICK: Sorry, it is an addition to the 28. So an additional 65.

PN89

THE VICE PRESIDENT: Anything further for the record?

PN90

MR BASTICK: No, your Honour. That's all we wish to put on the record.

PN91

THE VICE PRESIDENT: We will go off transcript now, thank you, Madam Reporter.

NO FURTHER PROCEEDINGS RECORDED [10.35am]