AG2003/3119, Transcript of Proceedings [2003] AIRCTrans 1978 (26 May 2003)

AUSCRIPT PTY LTD
ABN 76 082 664 220

Level 4, 60-70 Elizabeth St SYDNEY NSW 2000
DX1344 Sydney Tel:[phone] Fax:[phone]

TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

VICE PRESIDENT LAWLER

AG2003/3119

APPLICATION FOR CERTIFICATION
OF AGREEMENT

Application under section 170LK of the
Act by Salesforce Australia Pty Ltd for
certification of the Let's Agree (NSW)
2003 Agreement

SYDNEY

11.04 AM, FRIDAY, 9 MAY 2003

PN1

MR S. PILL: I seek leave to appear on behalf of Salesforce Australia Pty Ltd today, and appearing with me is MR J. KITCHEN. Mr Kitchen is the General Manager of New South Wales and New Zealand for Salesforce. Also present in the Commission is Mr M. MOODY. Mr Moody is a Customer Service Agent. He is also the employee of Salesforce who works in the Readers Digest project, who has played a significant role in the making of this agreement.

PN2

THE VICE PRESIDENT: I think in fact he's the employee representative, isn't he, in terms of signing the agreement on behalf of the employees?

PN3

MR PILL: I should clarify, your Honour, he's not an employee representative in the sense of being an elected employee representative but he did, along with two other employees, play a lead role in a communications group. As a matter of technicality it was probably unnecessary to have him sign the agreement. It's probably unnecessary for any employee to sign the agreement.

PN4

THE VICE PRESIDENT: Certainly. You have leave to appear. The purpose for asking you to come along today was for me to be able to raise a number of matters that I have concerns about in connection with the certification of this agreement. First of all, your decision to benchmark against the Foxtel award, I assume that you took the view that a strict reading of the relevant provisions meant that the interim award by Commissioner Smith was the relevant award within the meaning of the relevant provisions, but that because that award didn't contain any provisions in relation to wages and allowances and so on and so forth, it was necessary to select another award for the purposes of bench-marking. Do I understand the situation correctly?

PN5

MR PILL: You do, with a very minor qualification. I guess that's the use of the word "necessary", and I'm happy to address your Honour fully. Our submission would be it was not strictly necessary for Salesforce to do any more than have regard to the terms of the contract call centre interim award which is the award which was made by Commissioner Smith. It was really as a matter of fairness to the employees as well as consistency with the other existing certified agreement that applies at Salesforce in respect of its Victorian operations, which was bench-marked, and indeed there was a formal designation by Senior Deputy President Acton in respect of that agreement.

PN6

THE VICE PRESIDENT: Pursuant to 170XF?

PN7

MR PILL: Pursuant to 170XF to designate the Foxtel award in respect of that agreement in Victoria. That predated the interim contract call centre industry award.

PN8

THE VICE PRESIDENT: Did her Honour deliver reasons for designating that award as the appropriate award?

PN9

MR PILL: She certainly didn't deliver any written reasons. I can hand up to your Honour a copy of the agreement which briefly refers to and contains the extent of the published reasons. Your Honour will see it's no more than, about two-thirds of the way down the page there's a reference to 170XF determination, and over the page you'll see under the heading Determination she determines that, "The following award is the most appropriate award", and she designates the Foxtel award.

PN10

THE VICE PRESIDENT: At first blush it seemed rather odd that the Foxtel award was the award that was seen as the one that was most appropriate to utilise. I was unaware at that time that a determination had been made by her Honour under section 170XF in relation to this agreement that you've just handed up. Is there some basis for equating the work that's performed by the Salesforce employees with the work that's performed by persons employed under the Foxtel award?

PN11

MR PILL: There is - - -

PN12

THE VICE PRESIDENT: The businesses seem to be quite different in the sense that Foxtel is a cable television service provider and Salesforce operates call centres with sales teams for direct marketing presumably.

PN13

MR PILL: I'll address your Honour's question, then if I may I'd like to return to our primary submission which is that the only award that your Honour should have regard to for the purposes of the no disadvantage test is actually the interim contract call centre award, notwithstanding that it doesn't contain matters such as salaries and rates, and there's a Full Bench decision that supports that submission which I'll take your Honour to in a moment. But perhaps if I can address your Honour's question first. I'd like to hand up two documents for you.

PN14

THE VICE PRESIDENT: I was eager to see the information pack and the notice to employees for the making of the award.

PN15

MR PILL: Yes. I'm happy to take your Honour through the process in relation to the making of the agreement. There are two documents that I've handed up there. The first one is effectively a comparison of some of the Foxtel award classifications and the classifications in the Let's Agree agreement, and I'll come back to that. The second document which perhaps follows from your Honour accepting that whether it's formally designated or not, if your Honour is to have regard to something other than the interim award it should be to the Foxtel award. So perhaps I'll park that one for the moment.

PN16

Your Honour, it is the case that Foxtel conducts and operates its own call centre operations. It has a very significant operation in Mooney Ponds in Victoria and I understand it has smaller operations elsewhere.

PN17

THE VICE PRESIDENT: Is that in connection with the direct marketing channel that Foxtel operates?

PN18

MR PILL: My understanding is they do a number of things but they're essentially a call centre in the true sense, that if you have for example a complaint in relation to your Foxtel service you would ring and you would be speaking to one of those call centre operators. You might also want to subscribe to Foxtel and you ring and you'll be speaking to one of those call centre operators. A significant factor in support of our submission that the Foxtel award covers the same kind of work is that there are essentially two major projects undertaken by Salesforce in New South Wales: one is for Readers Digest; the other is for Foxtel. Essentially the employees of Salesforce are performing a call centre function for Foxtel that Foxtel does and continues to perform in addition to the Salesforce employees.

PN19

THE VICE PRESIDENT: Was that the case when this Victorian agreement was certified?

PN20

MR PILL: It is also the case that in Victoria Salesforce does work for Foxtel as one of its clients. It is also the case that in Victoria there are a significantly larger number of clients than in respect of Salesforce's New South Wales operations.

PN21

THE VICE PRESIDENT: Fine. Having regard to the fact that the other award that struck me as being an appropriate award is the Telecommunications Services Industry Award which is the principal award presently that governs call centre operations, and the fact that the rates in that award are significantly lower than the rates in the agreement or the Foxtel award for that matter, that I'm less concerned about that. What you've said thus far persuades me that the Foxtel award is an appropriate award for bench-marking, and particularly having regard to the fact that Senior Deputy President Acton has made that 170XF determination.

PN22

MR PILL: Having regard to your Honour's comments, and I won't take you through the first of those documents that I've handed up, perhaps before I move then to satisfying your Honour that the no disadvantage test is met I think it is appropriate that I address your Honour on whether your Honour should be formally designating or not the Foxtel award. We certainly have no objection to your Honour having regard to it and indeed - - -

PN23

THE VICE PRESIDENT: Well, I don't think I have any power to designate unless you make an application and there's an issue as to whether or not I can compel you to make such an application. At the moment I don't have any such application before me but perhaps it's in a practical sense more desirable for me to go to the specific matters in the agreement that I have some questions about and deal with those and we can then perhaps - it may be possible to dispense with any need to have arguments about the issue as to whether or not the only award that I'm entitled to measure against is the interim award, because if I'm satisfied that the agreement is satisfactory from the perspective of using the Foxtel award as the benchmark then there's no particular need to resolve that more significant issue.

PN24

The primary concern that I have is in relation to clause 25.2 and obviously clause 26 is relevant to the issues that arise in relation to clause 25.2. The agreement does not specify what the incentive or commission arrangements are and therefore there is no basis on the material before me at the moment to ascertain what would be the impact upon or course of an employee who was placed on 100 per cent incentive or commission based remuneration system.

PN25

MR PILL: Yes, I understand your Honour's question. Can I start perhaps by addressing the question of the Reader's Digest project, and I do that because it's an easier one to address because there are no commission arrangements there. They are potential bonus arrangements, but it is the case that each employee is guaranteed a particular minimum rate. Indeed that minimum rate is higher than the rates in this agreement and each employee has a letter of appointment to that effect that we have a contractual right to those rates and that is preserved and indeed the Salesforce has gone to the extent of providing each employee with a letter effectively guaranteeing that their actual rates won't in any way be impacted by the fact that the ones in the agreement are slightly lower.

PN26

In relation to the question of commission payments. It's the case that when the Salesforce is pitching for work, they essentially negotiate as best they can for wages and conditions which will be paid through them to Salesforce's employees. In some cases they are comprised of a composite package of a rate plus an incentive, a rate plus a commission. In some cases there is a 100 per cent commission basis.

PN27

The primary response on that to your Honour's question is that clause 26 provides a mechanism by which each employee is guaranteed and can request 12 monthly and on termination of employment for a reconciliation to ensure that they haven't been disadvantaged by that process. I am advised by Mr Kitchen that for example, Foxtel employees are presently on a 100 per cent commission, but I am also advised that the take home pay of those employees is on average in excess of $19 an hour and there is no reason that that should be reduced.

PN28

Can I say that there is no disadvantage for the purpose of the no disadvantage test to employees by having the capacity to be paid on a commission basis, provided that there is the guarantee set out in clause 26. Can I also say, your Honour, without in any way suggesting - - -

PN29

THE VICE PRESIDENT: Can I just make the assumption at the moment that Mr Kitchen and those run Salesforce are in fact honourable employers or employer representatives who are seeking to do the right thing by their employees and to create a work place where people are well rewarded for their work and to foster an environment that is a satisfactory work place environment - just make that assumption. But over the life of this agreement, there could, for example, be a change in management of Salesforce, and a very different group of managers end up being in control of the way in which this agreement is administered.

PN30

It would be rationally possible under this agreement, new managers might impose a 100 per cent incentive or commission based remuneration system on all of the employees of Salesforce, pursuant to the second paragraph in clause 25.2, which was peculiarly harsh or disadvantageous, and there could be a situation where people were working for a year at a time and earning substantially less than the Award. I understand that that is a hypothetical situation which is unlikely to occur, but it seems to me that the role of the Commission is to consider those sorts of hypothetical possibilities when it comes to applying the no disadvantage test.

PN31

MR PILL: The primary regard can I submit that your Honour should have regard to is the impact on the employees whose employment will be subject to the agreement. That obviously brings into sharp focus current employees which perhaps doesn't enable me to conclude that argument because Salesforce does have presently some people on 100 per cent commission.

PN32

THE VICE PRESIDENT: And you tell me all of those persons are in fact better off than what they would be if they were just being paid the rates under this agreement.

PN33

I see Mr Kitchen nodding there.

PN34

MR PILL: My instructions are yes, but with respect, the relevant question is that they are certainly no worse off and indeed they have, if your Honour accepts their application today, a right entrenched in a certified agreement to ensure that they are no worse off. Your Honour has identified what is the I guess the only potential hypothetical disadvantage which is a time lag between when they receive their pay and when the reconciliation occurs, which may be at a period of up to twelve months.

PN35

THE VICE PRESIDENT: That's not an immaterial disadvantage in the hypothetical situation I have raised.

PN36

MR PILL: Cannot I submit, your Honour, that although your Honour recognises it is a hypothetical, it is very much an extreme hypothetical both from the point of view of commercial realities in this industry. A 100 per cent commission basis obviously has potential to cost Salesforce's client more, and indeed Salesforce more than a set rate and as a matter of commercial practice, Salesforce and its clients would only negotiate a paid basis that is appropriate to the type of work being performed.

PN37

The vast majority of pay checks - - -

PN38

THE VICE PRESIDENT: The problem with that, Mr Pill, is that that really leaves it to the discretion of Salesforce to ensure that people are achieving levels of remuneration throughout a year which are in excess of the Award. Bearing in mind that there are a number of features of the operation of this agreement that call for appropriate compensation. The spread of hours, for example, is a very broad spread of hours. Salesforce can roster people for 12 hours at a time, and they are only being paid at the ordinary rates as I read the agreement.

PN39

For example, now the sort of flexibility that that spread of hours provides is precisely the sort of flexibility that it seems to me that the legislature was intending would be available to employers and employees in the striking of agreements and the task of the Commission applying the no disadvantage test is to weigh up these factors, some of which are intangible, and make an impressionistic assessment at the end of the day in relation to disadvantage.

PN40

My present view is that the rates in the agreement are sufficiently high as to provide an appropriate level of compensation for that spread of hours for example and the other clear disadvantages which viewed in isolation which include employees under this agreement. Say, for example, the provisions in relation to public holidays, means that if you are required to work on a Good Friday, Salesforce at its option can give you a day in mid week several months later, and be complying with the agreement as the benefit that the employee receives for having worked on a Good Friday.

PN41

Viewed in isolation, that is a disadvantageous arrangement compared to most arrangements for working on a Good Friday in Awards, but again my provisional view is that the rates of pay are sufficiently high as to offset those disadvantages and my primary concern in relation to the scope for abuse, using that word in a technical English sense - a dictionary sense - for abuse of clause 25.2, if there was a change of management, a change of ownership in Salesforce. Clause 25.2 it seems to me could be used as a vehicle to deliver remuneration for extended periods which is substantially less than the award. Having regard to the spread of hours and the other benefits in terms of flexibilities that Salesforce achieves under this award which unnecessarily, used in isolation disadvantages the employees suffer when compared with the ordinary conditions that one finds in the awards.

PN42

MR PILL: Your Honour, I can highlight in addition to the rates of pay other advantages, under let's agree which are not available to employees under the contract Call Centre Industry Interim Award or under the Foxtel Award - - -

PN43

THE VICE PRESIDENT: Mr Pill, I am desirous of trying to avoid having to have that particular argument with you because notwithstanding the clear words of the statute, the Parliament did not intend that the test, no disadvantage, oughtn't be applied to a award of this sort. This is an award which is interim in name but in substance as well because there is still negotiations occurring between the parties to that award as to appropriate scales of pay. The fundamental feature of an award which governs terms and conditions of employment is the setting of rates of pay and this interim award doesn't do that.

PN44

It was not intended when this award was made that it would provide an opportunity for employers covered by it as it were a window of opportunity for them to get through agreements which would visit disadvantages on employees. It would not be possible to visit upon those employees once rates have been finalised, either by agreement or arbitration, and included into a final award. If necessary I would want to give consideration to revoking this award for the purposes of testing the agreement in the present case in relation to the no disadvantage test. Of course I wouldn't do that unless I had given, first of all you an appropriate opportunity to make submissions, and necessarily also the other parties that would be affected. I feel sufficiently strongly about it as a matter of first impression and being prepared to be persuaded by the contrary that it would be to defeat the substantive purpose, the substantive intention of the Parliament to apply the no disadvantage test against this award for the purposes of resolving the concerns of that I have about clause 25.

PN45

MR PILL: Can I say firstly that the purpose of highlighting other advantages under the agreement wasn't directly to go to the issue about which award that you should have regard to. Bringing up your Honour's comment that part of your Honour's role is almost this impressionistic exercise and I was hopeful that I can push that impression a little bit further down the track to being satisfied that notwithstanding - - -

PN46

THE VICE PRESIDENT: You may be pushing against an open door in the sense that I have done a comparison between the rates in the agreement and the rates in the Telecommunications Services Industry Award and the rates in the agreement are significantly higher than the rates in that award which as I have observed are in fact lower than the rates in the Foxtel Award. So, I am not concerned about the application of the no disadvantage test in terms of the rates that are set on this agreement considered in the context of the other provisions subject to some matters that I think are quite preferable, we can deal with shortly.

PN47

I am fundamentally concerned that clause 25.2 confers an unfettered discretion on Salesforce to impose 100 per cent incentive or commission based remuneration systems which bear no relationship whatever to the rates in the agreement on each and every employee. Those systems so imposed may deliver for a period up to a year remuneration which is substantially less than a relevant award, be it Foxtel or the Telecommunications Services Industry Award.

PN48

MR PILL: Can I mention a couple of things, your Honour. At least insofar as existing employees who have letters of appointment which specify rates of pay, not only do they have already have a contractual entitlement to that, irrespective of any change in management, they also have - I apologise, your Honour, I don't have a copy here today, a letter from Salesforce guarantying that those rates of pay, terms and conditions, will not be reduced whilst they remain employees of Salesforce. That really only leaves - -

PN49

THE VICE PRESIDENT: Which letter would give rise to an estoppel presumably in due course.

PN50

MR PILL: Which really only leaves prospective employees, or future employees, with a change of management with commercial circumstances that fundamentally change to necessitate a move away from the current paradigm of setting rates which is by and large actual rates of pay with bonuses on top toward a 100 per cent incentive based pay.

PN51

The second which I would mention, which also fits under the umbrella of the advantages box, there are other advantages in this agreement and I will just direct your Honour's attention to one which are provided to all employees whether they get 100 per cent commission or rate of pay. Salesforce is committed to, at clause 12, a range of things which goes towards career development and career enhancement. This is, your Honour, and I don't say it lightly, very much an organisation that prides itself on having a very good relationship with its employees and encouraging them to fulfil their potential in a fun and fulfilling environment. It's a somewhat unique opportunity for me. You only need to look at the cover of the agreement to realise that this is a slightly unusual organisation that has a slightly unusual culture. If time permitted a visit by your Honour would, I think, confirm that to your Honour as well. A tangible example of that appears at clause 12.5 in relation to STARs training. Each and every STAR certificate I understand is a benefit to an employee in the nature of - - -

PN52

THE VICE PRESIDENT: Star stands for what?

PN53

MR PILL: Salesforce Training and Recognition System. I understand it is formally linked to schemes developed by the respective State governments. It is a form of qualification that is recognised across the industry. The costs involved are in the order of, as I understand it, $1500 to $2000 per certificate and that is something that is fully funded by Salesforce. Employees are encouraged to get as many certificates as possible and to progress as far as they can. That is one significant tangible advantage which appears under the agreement.

PN54

If your Honour ultimately is not satisfied in relation to clause 25.2 then it may be necessary for me to address your Honour on the area where we don't want to go.

PN55

THE VICE PRESIDENT: It was just wondering whether or not it can be dealt with by way of undertakings as I have the power to accept undertakings under section 170LB.

PN56

MR PILL: Can I also indicate, your Honour, and not to suggest in any way suggest your Honour doesn't have a role here to play but exactly the same provision appeared in the previous agreement that I have handed up, the Rainbow Connection Agreement certified by her Honour, Senior Deputy President Acton. I can't recall her Honour specifically raising this issue and indeed I didn't appear. My understanding is that she was satisfied with - - -

PN57

THE VICE PRESIDENT: I have to discharge my statutory functions in accordance with the oath that I have taken.

PN58

MR PILL: I understand, your Honour.

PN59

THE VICE PRESIDENT: If she had - if there was some written decision or some transcript where she had expressed a view, then that would certainly be a relevant matter that I would take to account, but in the absence of that I need to approach it as I understand my role and function.

PN60

MR PILL: There is not, your Honour, I can't - - -

PN61

THE VICE PRESIDENT: I mean it's entirely possible that it has simply escaped - the problem that I have adverted to is one that escaped her Honour's attention when she considered the agreement and that's a rational possibility.

PN62

MR PILL: I can't assist your Honour further as to whether that was or was not the case, other than to say I am aware that her Honour scrutinised the agreement at length.

PN63

THE VICE PRESIDENT: Is it necessary for the efficient functioning of the business that the movement to a 100 per cent incentive or commission based remuneration system is a compulsory movement or is it something where the business could equally live with a system whereby that was a move which the employee could veto, or which the employee would have an opportunity to not accept.

PN64

MR PILL: It's a little bit more fundamental than that with respect, your Honour, in that the basis of pay is often dictated by the client in the terms of the tender on which Salesforce is able to pitch for the work and if it was the case that Salesforce was constrained, it may be that (1) it can't pitch for the work at all, or (2) that if it does you won't get the work, and then the employees won't be employed.

PN65

THE VICE PRESIDENT: Doesn't clause 26 in those circumstances expose Salesforce to an enormous potential fiscal disadvantage or loss? What you say is that any concerns that I have under clause 25, if they materialise in relation to particular individuals, are addressed by clause 26 which guarantees that at the end of the day these people will get no worse than what they would have got under the Foxtel Award. Which means that theoretically Salesforce might find itself having to pay out more than what it has received from its clients if what it negotiates from a client for 100 per cent incentive or commission based remuneration system, is in fact delivering less than the Foxtel Award.

PN66

MR PILL: Theoretically if Salesforce negotiated an incentive based pay system which meant that - it's swings and roundabouts - they could have an incentive based pay system, which makes it such that the employer receives so much money that Salesforce loses on the deal altogether and therefore it is not commercial and therefore you don't pitch it to work. Alternatively the scenario that your Honour suggested, to put it bluntly, the Salesforce employees perform so badly having regard to the terms of the incentive, that Salesforce ends up wearing a significant cost through the operation of clause 26. What Salesforce is saying is that it's prepared to wear that cost. It certainly not seeking to shift any commercial risk to the employees. It's really highlighting, and I think this is your Honour's point, it's highlighting the commercial risk for Salesforce.

PN67

THE VICE PRESIDENT: So where is the problem in saying an employee can opt for payment under the rates provided for in the agreement or go on to the 100 per cent incentive or commission based remuneration system at their option as distinct from Salesforce's option.

PN68

MR PILL: Because it may be a condition of the commercial contract between Salesforce and the client as to the basis on which persons employed by Salesforce Force performing work on that project are to be paid.

PN69

THE VICE PRESIDENT: In other words the client says, we will only give you the work if the people that you employ are working on a commission or incentive system.

PN70

MR PILL: For example, because - - -

PN71

THE VICE PRESIDENT: Does that happen, Mr Kitchen?

PN72

MR KITCHEN: Your Honour, in a situation where it was viable from the employees perspective to opt for a rate of pay rather than a commission basis, considering that that rate of pay would be far lower than average earnings - - -

PN73

THE VICE PRESIDENT: They would be very unlikely to do it.

PN74

MR KITCHEN: Very unlikely to do it, and it wouldn't be in our interests to keep that employee on for a long term at that performance rate. If their performance doesn't justify them wanting to earn that commission structure, then it's not in their interest or our interest for that employee to continue.

PN75

MR PILL: Perhaps just to reinforce that, it is the case, your Honour, from Mr Kitchen's experience, that people on incentive based projects generally end up much better off than people on dollar based projects. Which I guess reinforces Mr Kitchen's point of view, that it would only be those employees who were very bad performers - - -

PN76

THE VICE PRESIDENT: Mr Pill, taking a very broad view of the history of award making in this country, it has been about protecting workers from exploitation from unscrupulous employers. Just as a lay reader of the press, one can look at various countries around the world, typically in the Third World, where workers are exploited unscrupulously. It seems clear on the face of these documents that this is not a risk that the current management of Salesforce, that this agreement, once it has been certified will have a force and operation by virtue of the provisions of the Act that means that for practical purposes it is set in concrete for a period of years.

PN77

It's not a fanciful possibility to contemplate a change of ownership. The present owners of Salesforce might decide that they've got some magnificent business opportunity elsewhere and are prepared to accept a good offer to sell it and new managers may be in control who are unscrupulous and who would be able to take a clause like this and utilise it in a way which would lead to employees receiving very poor rates of pay, but they would be people who would, hypothetically, need the work and therefore not be in a position to complain about it.

PN78

The notions of principle that underlie the no disadvantage test in the Act, are notions that involve a recognition that it is appropriate that the agreements which are certified under this Act do not allow that possibility to eventuate. If I can underscore that, I am not suggesting that in terms of the way Salesforce is presently run that this is a material risk, but who knows how things might change during the life of the agreement.

PN79

MR PILL: With respect to your Honour, may I suggest that it is very much a hypothetical. Can I also suggest to your Honour that to the extent that your Honour's concern had practical substance, it really is only for a period of three years. If the scenario arose that abuse occurred, once the nominal life of this agreement ends, yes, the agreement continues to operate until such time as it is replaced or it is terminated, and if as your Honour I think was suggesting, before the contract or central Award progresses during that time - which I think it will - then that abuse coupled with a substantive underpinning Award would be reasonable grounds on which to apply to terminate the agreement.

PN80

Should the hypothetical scenario put up by your Honour occur - - -

PN81

THE VICE PRESIDENT: There are other hypothetical scenarios I can think of that are less extreme than the one that I've given. I suppose the fundamental problem is this. This clause reposes a complete discretion in Salesforce to require persons to work on a remuneration scheme that bears no relationship, on the face of the agreement, whatever to the pay rates that the agreement provides for. And it offers clause 26 as a safety net. And you want to say that that option to have a reconciliation at the end of 12 months is sufficient to remove any disadvantage that might flow from particular exercises of the discretion that clause 25 confers?

PN82

MR PILL: I do, your Honour. Can I also, without perhaps going fully to the submission, and I am happy to go fully to the submission if your Honour wishes me to. When your Honour mentions before that the work that has ultimately led to this agreement was well in train before the making of the interim contract call centre award, I would like to disabuse your Honour if I could of any suggestion that this is some sort of opportunistic attempt by Salesforce to capitalise on the fact that there is an interim award with very few terms in it.

PN83

THE VICE PRESIDENT: No, the opportunistic flavour arises when you are in a position, because of the existence of an interim award, to put an argument that I am prevented from benchmarking, to use the term, the agreement against anything other than the interim award. An award that contains no rates of pay.

PN84

MR PILL: It is only a submission that follows from the provisions of the Act itself.

PN85

THE VICE PRESIDENT: I understand that.

PN86

MR PILL: Your Honour, it is a situation that Salesforce has grappled with and dealt with of its own volition.

PN87

THE VICE PRESIDENT: I was simply responding to your implicit concern that I was giving the entire exercise of making an agreement as an opportunistic exercise; I don't. But the submission that you are now able to advance based upon the interim award is an opportunistic submission. I don't use that word in a pejorative sense but as a factual descriptor. It presents you with an opportunity to require the application of the no disadvantage test in a way which the legislature would never have been seriously contemplating.

PN88

MR PILL: Can I say, your Honour, it is not only an opportunistic submission it is a necessary submission for me to make to ensure that your Honour complies with the requirements of the Act in determining whether it must certify this agreement. I understand your Honour's broader submission. And, your Honour, perhaps I can assist you partly by handing up a Full Bench decision of this commission in relation to AGC which involves not an identical but a very similar situation.

PN89

THE VICE PRESIDENT: Thank you.

PN90

MR PILL: It is a decision regarding the AGC certified agreement, it is print S2344. It is an appeal from a decision of Commissioner Wheelan who chose to designate a particular award for the purposes of conducting the no disadvantage test in circumstances where there was an award which technically bound the employer already. That award which technically bound the employer by virtue of its provisions anyone who earned over, I think it was $21,800 odd, the only provisions remaining in that award related to public holidays, annual leave, sick leave and maternity leave. And her Honour, in essence, designated another more substantive award, the Westpac Employees Award, essentially on the basis that she considered that the award which actually bound AGC was not an effective safety net.

PN91

The reasoning of the Full Bench starts at paragraph 10 and your Honour will see at paragraph 13 onwards:

PN92

The Full Bench considered that Commissioner Wheelan was in error.

PN93

And perhaps I could direct your Honour to the second part of paragraph 18 where the Full Bench notes:

PN94

When the commission is considering an application for the determination of a designated award under ...(reads)... and that it is binding on the employer at the relevant time.

PN95

And part of the commission's reasoning was - - -

PN96

THE VICE PRESIDENT: I am with you on your legal point here. And I thought it would have been apparent from the observations I made about the possibility of cancelling this interim award that I recognised that by reading the plain words of the section at the moment the interim award is the relevant award. In other words, what I adverted to before it is implicit in that I accept the correctness of the proposition - I was not aware of this Full Bench decision - but what it says accords with the approach that I thought was the correct legal approach; just looking at it as a matter of first principles.

PN97

MR PILL: Can I suggest, or can I submit to your Honour that if your Honour accepts that principal that under the provisions of section 170LT your Honour does not have a general discretion, no matter how valid.

PN98

THE VICE PRESIDENT: I don't but that problem doesn't arise if that interim award ceases to exist. Why can't I vary the interim award now to exclude employees of Salesforce in New South Wales from the operation of that interim award?

PN99

MR PILL: There would be a number of problems, I would suggest, with that approach. Notwithstanding the natural justice considerations for the other parties to that award who may be very concerned about that approach. They fought long and hard to get Salesforce into that award.

PN100

THE VICE PRESIDENT: Natural justice can be attended to. People can be given an opportunity. When I say "now", now subject to hearing from relevant periods.

PN101

MR PILL: The question of whether it is a relevant award, your Honour, is whether the award was binding on the employer immediately before the initial day of the agreement. This is s an agreement that has been made. We are here today making application to certify the agreement. It is a technical submission.

PN102

THE VICE PRESIDENT: Yes, awards can be varied retrospectively Mr Pill. There have been some celebrated instances of that and the Federal Court judgments have been circumvented by awards that have been subsequently made or varied. I really don't want to go down that path. I am simply seeking to convey to you my reluctance to allow the position that stands right now to prevent me from addressing the substance of my concerns about clause 25. In other words, I am unhappy, does not mean at the end of the day that I won't do what you suggest I ought to.

PN103

But I am at the moment unhappy about being told, well your concerns about class 25 are not concerns that you can properly hold, and canvas, and act upon because you must apply the no disadvantage test by reference to the interim award. When one does that since it contains no terms as to pay and conditions there can't possibly be any disadvantage in a system that confers complete discretion on sales force to impose insenitive or commission remuneration systems which are not quantified in any way in the agreement and would could amount to delivery any pay level no matter how little.

PN104

MR PILL: Your Honour, it is only complete discretion within the framework of the agreement including clause 26. It is, perhaps to pick up on your Honour's point, a possibility that Salesforce could have come here with an agreement that had rates of one dollar or no clause 26, and relied on the provisions of the Act to say that your Honour can only benchmark it against an agreement that doesn't have anything in it, or very little in it has some conditions. That's not what Salesforce has done. Salesforce has attempted in the scheme of the act - - -

PN105

THE VICE PRESIDENT: I understand, Mr Pill, I've probably said several times it strikes me that the present management Salesforce are endeavouring to if I can put it compendiously do the right thing by their employees.

PN106

MR PILL: Not only that but entrenched doing the right thing into the agreement, and I appreciate your Honour has views about the scope and the practical operation of clause 26, but in the scheme of the Act which places the primary obligation on Salesforce and its employees to determine the arrangements, these are the arrangements that they have chosen and this is the form of the agreement that they have before the Commission.

PN107

THE VICE PRESIDENT: There was a unanimous approval of this agreement. I just don't have those figures and the statutory declaration in my mind.

PN108

MR PILL: The figures don't appear in the statutory declaration. What appears in the statutory declaration is confirmation of valid majority. I can indicate to your Honour that of 51 employees that voted there are only 5 NOs and there were 46 YESs.

PN109

THE VICE PRESIDENT: So you say that voting was 51 employees voted.

PN110

MR PILL: Yes.

PN111

THE VICE PRESIDENT: And the YESs were?

PN112

MR PILL: 46.

PN113

THE VICE PRESIDENT: And NOs 5?

PN114

MR PILL: NOs 5.

PN115

THE VICE PRESIDENT: How do you have a valid majority of employees if the total number is 96?

PN116

MR PILL: Can I direct your Honour to section 170LE, a valid majority is a valid majority of those who vote. We can't compel employees to vote. I'll take your Honour to the information pack. We encouraged all employees to vote and we certainly facilitated anyone who wanted to vote that they were able to vote.

PN117

THE VICE PRESIDENT: Fine. So the information pack?

PN118

MR PILL: Perhaps I can take your Honour through the process of making the agreement which included in the information pack. The agreement, your Honour, is substantially drafted based on the one which applies in Victoria. It was prepared by management, consultation group which comprised three staff including Mr Moodie who is present today and two management representatives met including a meeting on 29 January 2003 for the entire day. The agreement or the draft agreement at that stage was gone through word by word and from that process a number of recommendations were made by staff representatives for changes. All of those changes were made. The agreement was put back to the employee representatives and they reported back that they were happy with the changes.

PN119

THE VICE PRESIDENT: The employee representatives were selected by management to fulfil that role I take it?

PN120

MR PILL: I understand a number of employees were asked, your Honour, and if they wanted to they were able to. What the occurred was substantive briefing sessions for all employees and at those briefing sessions employees, each and every one of them were given a copy of the draft agreement. They were also given this document which I'll hand up to your Honour. It's a document entitled, Important information on let's agree, NSW2003. Your Honour will see it sets out a process for voting. I direct your Honour's attention specifically to the last paragraph on page 1 where the notice in accordance with section 170LK4 of the Act advises employees that if they are a member of the union and that union is entitled to represent industrial interests in relation to work covered by Let's Agree, then they can request the union to represent them in a meeting in conferring with Salesforce about Let's Agree, NSW2003.

PN121

I can indicate that no requests were received. 15 days later on 2 April the vote was conducted so if I can go back a step. At - - -

PN122

THE VICE PRESIDENT: I'll mark the important information notice exhibit 1 just for the purposes of reference.

EXHIBIT #1 IMPORTANT INFORMATION NOTICE

PN123

MR PILL: I should indicate that at the briefing sessions the agreement was explained to employees. Employees had the opportunity and were encouraged to ask any questions that they had or to seek more information. A telephone hotline was set up and employees were encouraged if they had any concerns, questions, queries, to either use that hotline or indeed to speak to any management representative or team leader - - -

PN124

THE VICE PRESIDENT: Just if I can backtrack. This document, exhibit 1, was handed out to people at the briefing sessions?

PN125

MR PILL: It was.

PN126

THE VICE PRESIDENT: And that's the only circumstance in which it was handed out?

PN127

MR PILL: Yes.

PN128

THE VICE PRESIDENT: And you've got signed attendance sheets for all of the employees at the briefing sessions?

PN129

MR PILL: Yes we do, your Honour.

PN130

THE VICE PRESIDENT: Look, Mr Pill, what I propose to do is just adjourn for 5 or 10 minutes so I can just give a bit of thought to this underlying issue. That really is the only issue that's exercising me to any great extent. I just want to think for a couple of minutes about how I should proceed given that you haven't rushed to embrace my suggestion that undertakings can be given to address my concerns but would rather as I infer from what you're putting it require me to discharge my function and in accordance with your submissions I don't have any discretion but must certify the agreement given that the formal requirements of the Act appear to have been complied with.

PN131

I'll just as I say adjourn for 5 or 10 minutes and give that some thought.

PN132

MR PILL: That is an accurate position. Your Honour, obviously if you were against us on our preferred course the terms being undertaken would obviously be something we would need to consider.

PN133

THE VICE PRESIDENT: Certainly.

SHORT ADJOURNMENT [12.03pm]

RESUMES [12.35pm]

PN134

THE VICE PRESIDENT: I'm sorry that took longer than I anticipated, Mr Pill.

PN135

MR PILL: Your Honour, can I seek leave to put something before you before you comment and I did try to catch you before you came back in.

PN136

THE VICE PRESIDENT: Yes.

PN137

MR PILL: I've used the time to actually get some instructions to perhaps be able to more directly address the concerns that your Honour has raised. I should contextualise them. What I am about to say is not because we considered that there are any grounds that your Honour has or can properly have. What we are concerned about though is sending the wrong message to employees by some perceived unwillingness to put something on transcript by way of undertaking and so the undertaking that I'm instructed to give which is consistent with Salesforce's position would be that Salesforce Australia undertakes that 100 per cent incentive schemes will not be introduced under clause 25.2 capriciously or for the purpose of reducing employees earnings. That's the undertaking and I can submit to your Honour that that is indeed the position - - -

PN138

THE VICE PRESIDENT: So even though they may not be introduced capriciously or for the purpose of reducing employees earnings they may in fact have the effect of reducing employees earnings and then you would say clause 26 covers that.

PN139

MR PILL: Yes. As a matter of practice and having regard to what's occurred in the past I'd suggest that the introduction and resulting in a lesser level of wages is very much a hypothetical

PN140

example. It just doesn't happen and I guess this is an added level of comfort that I'm offering to the Commission consistent with the message that Salesforce wants to send to its employees that it does pay well and it will continue to do so.

PN141

THE VICE PRESIDENT: I'm making the assumption that that's what occurs at the moment and I'm making the assumption that that's what Mr Kitchener or other managers intend will occur under this agreement. But any agreement which vests a discretion in the employer, an unfettered discretion in the employer to impose a remuneration system which can be significantly less than the award is an agreement that's offensive, I think. That's my provisional view in terms of the no disadvantage test. To the extent that there is a relevant award that would set the standards against which benchmarking can occur - relevant award, using that term in its technical sense as it's used in 170X and 170XA.

PN142

Mr Pill, there is a further issue that you may need to consider and it's this. That 170XA(2) refers to relevant awards, plural, and I just wonder whether or not given the definition of award as including a state award that the situation that may not obtain here - the situation that may obtain here is that there is in fact two awards that are relevantly binding on Salesforce in relation to its employees, its call centre employees. It's the Contract Call Centre Industry Interim Award 2002 and the second is the relevant state award insofar as pay and conditions are concerned, that is, that ordinarily a federal award will displace entirely the operation of a state award because to the extent that it deals with the topic and the state award is inconsistent the state award has no operation.

PN143

However in this particular case because of the peculiar nature of the interim award it's confined in the topics that it deals with and it doesn't purport to regulate the totality of the terms and conditions. It seems to me that there's still scope for operation of the state award. Would you seek to disagree with that proposition or is that something you'd like to think about?

PN144

MR PILL: I'm happy to address your Honour on it. Can I ask for some clarification as to which state award your Honour has in mind?

PN145

THE VICE PRESIDENT: I haven't checked in the time that's available the relevant state awards. The Clerks Award presumably is one that may operate but I'd want to check that myself. Unfortunately or fortunately as the case may be the reality is that this is effectively an inquisitorial function that's occurring at the moment rather than the usual adversarial function. There's no contradictor present. We don't have a union representative present to put any arguments and therefore I'm obliged to explore my concerns directly with you.

PN146

MR PILL: Your Honour, the matter has been considered. In our submission the state award is not binding. The New South Wales Clerks Award, the proper name of which is The Clerical and Administrative Employees (State) Award is not a relevant award for the purposes of the no disadvantage test. It's not a relevant award for a number of reasons. The first is that in its terms it does not within the meaning of the definition of the relevant award in our submission regulate terms and conditions of employment of persons engaged in the same kind of work.

PN147

The Clerks Award applies to persons employed in clerical capacities. There is then an inclusionary definition. The closest that it comes, your Honour, is that it includes receptionists and telephonists. Your Honour, I need to brief you a little bit about what the people who are covered or proposed to be covered by this agreement do.

PN148

THE VICE PRESIDENT: Do you say that your research is - you've obviously considered this question if you've come equipped to be able to respond with that degree of specificity. Do you say there's no state award?

PN149

MR PILL: There's no state award that we've been able to find which properly covers this kind of work. I take some level of comfort in that position from the union campaign that is being run to introduce awards into the call centre industry and indeed the issue which we had before Senior Deputy President Acton was as much that this is a relatively new industry. It's one that industrial regulation is increasing and will continue to increase but the traditional awards including the traditional state common rule award such as the Clerks Award apply to different sorts of work to the sorts of work that are conducted in call centre operations of the nature of Salesforce.

PN150

THE VICE PRESIDENT: Would your clients be prepared to give an undertaking that they would allow clause 26 to operate in respect of three month periods?

PN151

MR PILL: I don't have instructions on that, your Honour. If your Honour was pressing me to give that - - -

PN152

THE VICE PRESIDENT: I take it Mr Kitchener is not in a position to give you those instructions, he'd need to speak to his overlords.

PN153

MR PILL: That is the case, your Honour, I'm sorry.

PN154

THE VICE PRESIDENT: There's a secondary problem with clause 26 in that given what I referred to earlier as the intangible issues that go to advantage and disadvantage, the spread of hours, the length of shifts, the way in which public holidays are treated which I'm satisfied on the rates that are specified in the agreement are more than adequately compensated for - well, they're adequately compensated for. When a person invokes clause 26 they in fact don't get the rates in the agreement, they get the rates in the Foxtel Award which are less and therefore the question arises as to whether or not there's been inadequate compensation for the spread of hours and the way public holidays are treated and the 12 hour shifts.

PN155

MR PILL: Can I direct that by making two observations? One is that the reconciliation is conducted against the entirety of the award and so in that sense if there is disadvantage in matters other than rates of pay then that needs to be taken into account. The reconciliation process would effectively require the employee and the employer to work out what the employee gets if they were employed under that award in its entirety.

PN156

THE VICE PRESIDENT: Mr Pill, clause 26 clearly envisages just a straight dollars and cents calculation. What were the rates of pay? How many hours were worked?

PN157

MR PILL: But earnings necessarily includes penalties. It includes overtime and I'd supplement that, your Honour, the list that your Honour produced including - - -

PN158

THE VICE PRESIDENT: No, I see what you're saying.

PN159

MR PILL: - - - including span of hours. The span of hours under the Foxtel Award is identical to the span of hours in the agreement. The only real difference in my submission between the two goes to the fact that the Foxtel award makes express the overtime rates for which will apply whereas this agreement has a greater flexibility in relation to that because it is a matter for negotiation between the client and Salesforce. But it is certainly the case that the intent of clause 26 is to make sure the employee is in no worse off position in total than they would have been in if they were employed under Foxtel award.

PN160

THE VICE PRESIDENT: Section 17XA2 provides that subject to the listed sections and agreement disadvantages employees in relation to their terms and conditions of employment only if it's approval of certification would result on balance in the reduction of the overall terms and conditions of employment of those employees under relevant awards. In the situation that I've hypothesised, needing to wait for twelve months before you can earn the level that is provided for in the award, seems to me to be a very material disadvantage if the rates that are actually being earned are substantially less than the award.

PN161

MR PILL: Your Honour's first task though is to look at the terms of the agreement and decide whether on the terms of that agreement there is overall, on balance, a reduction.

PN162

THE VICE PRESIDENT: I understand that it's not a piecemeal exercise but I'm saying that in that overall assessment, I would assign a significant, as presently advised, I would assign a significant disadvantage to the notion that someone would have to wait for twelve months before they could achieve the rate of pay provided for in the award in circumstances where there's a complete and unfettered discretion in the employer to place each and every employee on a 100 percent incentive and commission remuneration system which may, at the discretion of the employer, be at rates that are substantially less than the award.

PN163

MR PILL: Can I say by way of summary.

PN164

THE VICE PRESIDENT: I appreciate that is not the case at the moment. I appreciate it is not intended by management that that will occur.

PN165

MR PILL: It is not the case. There is no basis - - - .

PN166

THE VICE PRESIDENT: What you're saying is trust us, trust us, it will be okay.

PN167

MR PILL: No, I'm saying a lot more than that. There is no basis with respect before your Honour, to support your Honour's hypothetical that this agreement results in a reduction overall in the terms and conditions of employees. I would supplement that by saying I have instructions to give a formal undertaking that not only binds the present managers but also addresses the hypothetical that your Honour, has proffered any new purchases will be bound by that undertaking which supplements the commercial reality that introducing 100 percent incentive base pay which has the effect of earning less than the rates specified in that table doesn't happen and won't happen and I can only say by way of conclusion that your Honour is not obliged, and indeed it is not your Honour's task today to be comparing in any strict sense this agreement with the Foxtel award or indeed any other award other than the relevant award and if your Honour - - - .

PN168

THE VICE PRESIDENT: Well, say that I now wish to be satisfied that there is no state award which covers these employees because if there is a state award then I need to be persuaded that I'm not obliged to in fact consider this agreement against the state award if there be one, that would govern the salary, public holiday entitlements, casual loading entitlements and penalty entitlements of these employees.

PN169

MR PILL: Yes.

PN170

THE VICE PRESIDENT: In other words, I accept in summary, I accept your proposition based as it is upon that full bench decision that you handed up which I've now mislaid.

PN171

MR PILL: It's based on three things your Honour, that the objects of the Act about the privacy to agreement making and also the wording of the Act which I submit is clear and unambiguous.

PN172

THE VICE PRESIDENT: Yes, yes, so I accept that the interim award is a relevant award that must be utilised for the purposes of applying the notice advantage test. As presently advised because that award is limited in the terms and conditions that it purports to regulate and because it does not purport on it's face to regulate the totality of the terms and conditions of employees that therefore there is continued operation for a state award. I am uncertain as to whether or not there is any state award which applies on the basis of what you've said the clerk's award, to use the shortened description, does not appear be applicable but I need to be satisfied for the purposes of being able to discharge my statutory function that there was no state award that did apply.

PN173

MR PILL: There is no award of which I am aware and we have considered the question which would apply to the same kind of work as the persons who are employed by Salesforce, who will be covered by this agreement that the only questionmark in my submission would be the New South Wales Clerks' Award. The questionmark in the sense that if there was to be an award, that's the award and I would also submit that - - - .

PN174

THE VICE PRESIDENT: And then you would say that turns on the meaning of telephonists.

PN175

MR PILL: It turns on the meaning of telephonists and at least in so far as people such as Mr Moody, we have run the no disadvantage calculator, if you like, over the New South Clerks' Award and in our submission, if this agreement was assessed against that award, then Mr Moody would be no worse off.

PN176

THE VICE PRESIDENT: Mr Pill, we must be at cross purposes. My concern is not about no disadvantage resulting from a calculation on the rates in the agreement. The rates in the agreement appear to be generous when they're compared with Foxtel and when they're compared with the Telecommunication Services Industry Award.

PN177

MR PILL: Yes.

PN178

THE VICE PRESIDENT: So that I am satisfied that there is no disadvantage if this agreement was one which would apply such that the rates specified in the agreement were paid to the employees. However, my problem is elsewhere. It's with the operation of clause 25 which invests in the employer, an unfettered discretion to take employees off the those rates and to put them on 100 percent incentive and commission based remuneration systems about the details of which the agreement is silent about with the safety net being clause 26 which gives an employee an entitlement after twelve months to request a calculation of what they would have earned under the Foxtel award and to be paid the difference.

PN179

MR PILL: I understand your Honour and in my submission it's a much higher safety net than the employee's currently enjoy.

PN180

THE VICE PRESIDENT: That's a much higher safety net than they currently enjoy predicated upon there being no state award.

PN181

MR PILL: Predicated on there being no state award binding on Salesforce in respect of these employees.

PN182

THE VICE PRESIDENT: I think I need to satisfy myself that there's no state award. Mr Pill, I've discussed this matter with a number of my colleagues and I'm not an odd one out in terms of having a concern about the operation of clause 25 and again I emphasise, I accept that management at the moment operates this business in good faith and they intend to operate this agreement in good faith and that it is certainly going to deliver satisfactory remuneration to the employees of Salesforce on the current basis that Salesforce is being operated but it seems to me that that's just not to the point, it's just not to the point. The commission needs to approach it on the basis that the employer may choose to exercise whatever rights they have under the agreement and that when one comes to apply the notice of advantage of test you need to apply it on the basis that employers may exercise their rights in ways which are adverse to its employees.

PN183

MR PILL: Implicit in your Honour's comments that undertaking that I've been instructed to proffer.

PN184

THE VICE PRESIDENT: I would be happy to explore the undertaking with you. The undertaking, as I respond to it presently, doesn't go far enough because the question of intention is not to the point, once the point is what in fact occurs.

PN185

MR PILL: I appreciate what Your Honour is saying but excuse Commissioner, but the purpose is a slightly broader concept than an intention.

PN186

THE VICE PRESIDENT: Am I right in saying that Mr, am I right in saying Mr Kitchener, that the business, the way the business operates in terms of the way it contracts with its clients, is such that reposing a discretion on employees not to participate in incentive or commission based remuneration systems, would be impractical for you?

PN187

MR KITCHENER: Sorry Your Honour, could you repeat the last part?

PN188

THE VICE PRESIDENT: Reposing a discretion in employees not to participate in the Commission incentive systems is not practical for you?

PN189

MR KITCHENER: Your Honour, it wouldn't be practical and I can explain why if you wish.

PN190

THE VICE PRESIDENT: It's enough for you to say that it's not practical. So that rules out any undertaking which would ensure that employees are not compelled to move to these systems.

PN191

MR PILL: May I also indicate that.

PN192

THE VICE PRESIDENT: You're agreeing with me?

PN193

MR PILL: Yes, I agree. It is also the case that if an employee is to be on an incentive scheme they know that when they are offered and accept employment. Each employee at Sales Force receives a letter which sets out the basis of their remuneration. It is not a scenario that's implicit in your Honour's comments.

PN194

THE VICE PRESIDENT: Oh well, oh well, I know it well. Look, I'm less concerned about people who come and commence employment with open eyes and I'm more concerned with people who already employed there one basis, and then being required to move to another basis. Clause 25 is not confined to initial employment. It comprehends a power or a right and SalesForce to require people who are presently earning an hourly rate, who would be presently earning an hourly rate under the Agreement, being required to move to the incentive or commission based system.

PN195

MR PILL: I understand and tell Mr Kitchener to correct me if I'm wrong is that each project attaches a rate which might be an incentive based rate, it might be a ..... it might be just an hourly rate. Employees who employed are employed to work in a particular project.

PN196

THE VICE PRESIDENT: So they're employed project by project.

PN197

MR PILL: The only scenario in which, a scenario Michael Lyons is in and one of the projects finished and an employee wished to move to another project which had a different basis of remuneration then that employee would receive either a variation or a new letter of offer and the employee would be at liberty to- - -

PN198

THE VICE PRESIDENT: So you only employ people on a project by project basis Mr Kitchener. You don't employ people, you're a permanent of employee of SalesForce on an ongoing basis. You employ them project by project?

PN199

MR KITCHENER: That's correct Your Honour. In the main, we do have an area in our Melbourne office that deals with requirements for a number of different clients.

PN200

THE VICE PRESIDENT: Yes.

PN201

MR KITCHENER: However, in the main, our employees are employed/hired for the purpose of one particular client- - -

PN202

THE VICE PRESIDENT: Yes.

PN203

MR KITCHENER: Or project.

PN204

THE VICE PRESIDENT: Yes. Mr Pill I'm just not sure as to which way I take this matter forward. I think it's necessary for me to write something brief about this in any event. I don't think we've resolved, I don't think it's sufficient in terms of discharge of my functions for me to act upon your assurance that there's no other State Award which may have any operation and I haven't given adequate consideration in any event myself to whether or not there may be some authorities that bear upon the incidence clause in the Clerks Award and I think I need to have an opportunity to consider that. So I think it's necessary to bring you back, obviously you'd like to have this resolved quickly rather than with delays. Could I have a look at the diary. You can claim the distinction Mr Pill of appearing in relation to the first certification of agreement that's come before me that hasn't been a matter of mere formality.

PN205

MR PILL: Just whilst, well I'll let your Honour look at the dates. There is a matter on which I wish to address your Honour intends to focus on the State Award issue which pertains to that issue which you haven't addressed Your Honour on yet and I think it is incumbent upon you.

PN206

THE VICE PRESIDENT: Well, we have to find that. To find one first up before that even arises.

PN207

MR PILL: This is a submission which is applicable equally irrespective of what the award is.

PN208

THE VICE PRESIDENT: Yes.

PN209

MR PILL: It is the case that each employee at sales force in New South Wales is presently employed on the Australian Workplace Agreement. that was done, the company wishes, as is its right and for administrative costs purposes as much as anything else to move to a collective agreement approach to the regulation of its employment. It was conscious of that at the time that it entered into the AWAs.

PN210

THE VICE PRESIDENT: You are about to tell me that this has no real practical relevance for the time being anyway.

PN211

MR PILL: It does because the AWAs state that they expire on the coming into existence of a certified agreement which applies to employees of a sales force in New South Wales and I can hand up to your Honour a decision of Justice Marshall, an unreported judgment, CPSU and Another v The Crown in the Right of the State, Commonwealth and Another, 9806654, a decision of his Honour made 9 December 1998 and in that case his Honour was called upon. It was actually an interlocutory application by the CPSU to seek to prevent a Victorian State Department from terminating some AWAs. I can direct your Honour to the top of page 2.

PN212

THE VICE PRESIDENT: I see those agreements contain that clause that's marked there, yes.

PN213

MR PILL: Contain that clause and if your Honour turns over, it may be a case that your Honour has the copy that page 6 is before page 5. Page 5 and what should be immediately preceding, page 4, has the decision of Justice Marshall in which he upholds the validity of such a provision and does so, indeed, on the interlocutory basis.

PN214

THE VICE PRESIDENT: I must say I wasn't immediately imagining that such a provision wouldn't be valid or effective but in any event, yes.

PN215

MR PILL: Your Honour would be aware that one impact of the existence of the AWAs is that they operate to the exclusion of state awards.

PN216

THE VICE PRESIDENT: So there is no state award.

PN217

MR PILL: Irrespective of whether there is a state award there is no state award that has had - - -

PN218

So there is no state award that has any operation in respect of any employee of Sales Force.

PN219

MR PILL: Correct. To be fair to your Honour, your Honour might ask the question or does that mean that the interim contract call centre industry award also not have any application to Sales Force and the answer to that question is, no, it is still a relevant award because it applies at least outside of New South Wales, applies to Sales Force across Australia and it applies to people who are engaged in contracts for call centre work which is exactly the same work as employees are engaged in in New South Wales. The net effect of that - - - -

PN220

THE VICE PRESIDENT: Don't the provisions of the Workplace Relations Act depending on the terms of a Australian Workplace Agreement exclude the operation of awards in relation to the extent that the workplace agreement excludes the award, the award is excluded.

PN221

MR PILL: Your Honour is correct. My point is that there are other employees of Sales Force whose employment will not be regulated by that degree; there are not employees pursuant to AWAs - - -

PN222

THE VICE PRESIDENT: Who are governed by the interim award.

PN223

MR PILL: The interim award applies to all employees of Sales Force engaged in the call centre industry, and that would cover if not the majority - - -

PN224

THE VICE PRESIDENT: Including the people on the Australian workplace agreements?

PN225

MR PILL: As a starting point, yes but as a matter of law, given the operation of section 170BQ, no because the AWAs will operate to its exclusion. My point is there are other employees at Sales Force who are not on AWAs and therefore, the award continues to bind Sales Force in respect of employees performing the same kind of work - - -

PN226

THE VICE PRESIDENT: But none of those employees you say, are covered by this agreement?

PN227

MR PILL: That's correct.

PN228

THE VICE PRESIDENT: Can we talk a moment more about undertakings. I got to the point before of understanding that for commercial reasons an undertaking which proposed to the discretion of employees as to whether or not to move on to incentive or commission-based remunerations systems was unacceptable to the business, what about an undertaking which reduces the period which must elapse before there can be an accounting under clause 26?

PN229

MR PILL: I don't have the instructions and it may be a matter that I need to get instructions on, is it appropriate, your Honour perhaps to adjourn briefly into conference as a way forward.

PN230

THE VICE PRESIDENT: I don't know that we necessarily need to come back, you can contact my associate with the answer to that.

PN231

MR PILL: But the purpose of going into conference, your Honour, might be to explore a number of matters on which I could get instructions that may satisfy in the terms of 170BQ the purpose of the undertaking is to address a concern of the Commission and obviously, in conference it may be easier to explore that concern and what might address that concern.

PN232

THE VICE PRESIDENT: I'm disinclined to go into conference in this matter, I think it is important that this is done on the record. In any event, that is something you can explore with your clients, Mr Pill. For my part if the period which has to elapse before a reconciliation can be requested were reduced to three months I think I would be inclined to accept that as a satisfactory remedy for my concerns. I can't immediately think of other ways in which undertakings could be utilised to address the concern that I have now expressed on a number of occasions.

PN233

I am concerned not in the 170LB sense but I am concerned that there is a precedent value that may attach to this, given that I'm going to need to write something and that it will therefore be published, at least on the Commission's website and may be utilised by people.

PN234

MR PILL: Your Honour, can I say, it places my client in a little bit of invidious position as to whether what has been put to us is that your Honour is looking for an undertaking under section 170LB or whether your Honour is looking for something else.

PN235

THE VICE PRESIDENT: Let me put my position again in summary form. I am satisfied that the management of the company is seeking to achieve an environment where it's employees are remunerated well and in excess of the award. I am satisfied that the rates which have been included in the agreement are superior to the rates that apply in the Foxtel Award and they are significantly superior to the rates that apply in the Telecommunications Service Industry Award.

PN236

My only concern is in relation to clause 25 which on its face confers an unfettered discretion on the employer to require each and every employee to go into a 100 per cent incentive and remuneration-based, incentive or commission-based remuneration system which could deliver rates of remuneration which are substantially less than the award. Also, that the only protection that exists in the agreement in relation to that is clause 26 and I'm concerned that the 12-month delay that must elapse in relation to that right to invoke the provisions of clause 26 is too long a delay if the power in clause 25 were exercised so as to cause employees to be placed on low rates, rates that are substantially lower than the relevant award.

PN237

That is my only substantial concern in relation to the question of certification, the formal requirements of the Act having been observed.

PN238

MR PILL: Can I seek one point of clarification, your Honour stated that you were concerned that the operation - and I'm paraphrasing it - the operation of clause 26.2 might result in rates being less than the award, which award is your Honour referring to?

PN239

THE VICE PRESIDENT: The Foxtel Award or the Telecommunications Service Industry Award for that matter. People might end up receiving $100 a week. I understand, I'm talking about hypotheticals here but the agreement doesn't constrain the employer in any way in relation tot he rates that are payable under the 100 per cent incentive or commission-based remunerations systems. The only constraint it has is that after a period of 12 months an employee can request a reconciliation and the difference between whatever has in fact been paid and what was payable under the Foxtel Award will be paid.

PN240

MR PILL: My point which I believe understands, is that your Honour can only be looking to the Foxtel Award or indeed, the other award that your Honour mentioned, if your Honour is against me, the interim contract Call Centre Award is the relevant award.

PN241

THE VICE PRESIDENT: I understand that. I thought we were talking about undertakings which was a way of circumventing all of the problems that are involved in that particular issue and I was seeking to summarise what my concerns were for the purpose of enabling a better focus to be achieved in relation to undertakings.

PN242

THE VICE PRESIDENT: Yes, the only point of clarification was really whether it was an undertaking under section 170LB which necessitates that the Commission has grounds to refuse to certify the agreement which unfortunately your Honour requires the focus to be brought on to that question about what is the relevant award. I wonder, your Honour, whether if the matter is stood down briefly - - -

PN243

THE VICE PRESIDENT: Mr Pill - - -

PN244

MR PILL: - - - I can get instructions in relation to the timing undertaking that your Honour has raised.

PN245

THE VICE PRESIDENT: Mr Pill, I'm gong to consider this, in any event, you've raised a number of quite, quite properly, I don't criticise you in any way, you've put your arguments, if I might say so, forcefully and effectively and there is not insignificant force or merit in the propositions that you content for, I think I've expressed candidly my concerns and the reasons for them, I think a result is obtained by virtue of the merits of your legal arguments which is a result that the parliament did not intend.

PN246

The parliament intended, it seems to me, that when the no disadvantage test was applied, it wold be applied by reference to, there would be a measuring against award which provided for the essential conditions of employment that are ordinarily included in awards. I have not doubt that it was not in the contemplation of the parliament when it enacted the provisions of 170X and 170XA that the commission would be confronted by an employer saying that the relevant award for the purposes of the application of the test and, indeed, for the application of 170LV was an award like the call centre interim award. You are entitled to put your arguments. I am obliged to discharge my functions faithfully, in accordance with my oath, and apply the statute. It may well be, indeed there is some degree of probability I suppose about it, that you will be successful.

PN247

The whole point of talking about undertakings was to try and circumvent the need to deal with that issue and to remove the risk that I may come to a view which is adverse to the overall position that you are putting. Your response to that I don't criticise you for it, it is not an improper response at all, is to point out, quite correctly, that the taking of undertakings under section 170LV is conditioned upon reaching a view which effectively requires me to determine the correctness of your arguments.

PN248

So, it is a position that you have put which, not to put too fine a point on it, deprives me of the opportunity of taking a practical approach and simply proceeding to certification on the basis of an undertaking. You have correctly identified that that point of receiving undertakings doesn't get reached until I am satisfied that the rest of your arguments are wrong.

PN249

MR PILL: I understand everything your Honour has said. Can I say your Honour's concern as to whether the agreement passes the no disadvantage test has arisen in relation to an example that your Honour has raised. We may, by way of undertaking to the commission, notwithstanding that it is not an undertaking under section 170LV, enable the commission - enable your Honour - to be satisfied that the no disadvantage test has been passed effectively by satisfying your Honour that your hypothetical won't arise. Which, to put it bluntly, is a back-door mechanism by which your Honour could have regard to an undertaking, notwithstanding that it perhaps is not a formal undertaking pursuant to section 170LV.

PN250

The upshot of that, your Honour, is I will still get instructions in relation to the matter that your Honour has raised and I will contact your associate. If that is the way your Honour wishes to proceed.

PN251

THE VICE PRESIDENT: I still think we haven't actually connected, Mr Pill, in terms of - although I am sure you understand what my concern is, and I do understand, I think, what your position is. The mere fact of my examples being hypothetical examples, that mere characterisation does nothing to detract from the weight, as I see it, of the concern that I have. The mere fact that it is hypothetical. Because the reality is that hypothetical possibilities in the nature of things eventuate from time-to-time; and they may eventuate here.

PN252

And if other employers seek to adopt this particular mechanism it will be bound to eventuate more and more frequently, as more employers adopt this particular mechanism. Because, of course, in a sense it is a fortuitous circumstance, using that word in its strict English sense, that the interim award is an award of the sort that it is. But your arguments would still have sought to dissuade the commission that the provisions of clause 26 of the agreement were sufficient to redress any concerns that a commission member might have about the discretion conferred by clause 25. So, the fortuitous circumstance of the interim award does not detract from the broader practical significance of a regime of the sort that is encompassed in clauses 25 and 26.

PN253

MR PILL: I understand, your Honour, and if my client was in a position to give an undertaking that it would review in a timeframe of less than 12 months your Honour may have a greater ability to be satisfied that clause 26 addresses that concern.

PN254

THE VICE PRESIDENT: I must say reading the situation and giving faith to the assertions and assurances that you and Mr Kitchen have both given about the way in which this in fact is being administered in practice, means that it is unlikely to be any skin of Salesforce's nose to reduce the period to three months. Because if they are getting paid as well as it is asserted they are being paid no-one will ever want to access that particular reconciliation mechanism.

PN255

MR PILL: The only skin off - and I don't pre-empt - my client's response might be unnecessary administrative costs, your Honour. But I understand what your Honour says.

PN256

THE VICE PRESIDENT: Well, you have had to fly up from Melbourne did you, Mr Pill?

PN257

MR PILL: I did, your Honour.

PN258

THE VICE PRESIDENT: We in fact were intending to list this in Melbourne but were told the company wanted it listed in Sydney.

PN259

MR PILL: Primarily for the purposes of - obviously it is a New South Wales agreement that covers New South Wales operations. And also to facilitate better the attendance of people such as Mr Moody.

PN260

THE VICE PRESIDENT: Well, I will stand the matter over to Monday, 12 May 2003 at 3 o'clock. I will resume the matter at that time by video conference with Melbourne so that you don't need to travel back to Sydney.

PN261

MR PILL: I appreciate that, your Honour.

PN262

THE VICE PRESIDENT: Mr Kitchen and Mr Moody are, of course, more than free to attend in court 7A here. And if it is unnecessary to proceed with that directions hearing, because I have determined that I should act in accordance with your submissions and certify the agreement, in any event I will have my associate let you know. And to the extent that there are other questions to raise I will raise them at that time.

PN263

MR PILL: If your Honour pleases.

PN264

THE VICE PRESIDENT: Those questions might emerge from a consideration of State awards which I will need to undertake this afternoon. Is there anything further that needs to be said, Mr Pill?

PN265

MR PILL: I don't believe so, your Honour.

PN266

THE VICE PRESIDENT: Fine. Just before we adjourn. Mr Pill, clause 9, paragraph G of the agreement provides:

PN267

Until the matter ...

PN268

That is the dispute:

PN269

... is determined the employees must continue to work as directed by Salesforce. No party shall be prejudiced as to the final settlement by continuance of work in accordance with this procedure.

PN270

Paragraph H provides:

PN271

Where a bone fide safety issue is involved Salesforce and your appropriate safety representative must be notified or a genuine attempt made to notify that representative.

PN272

There is a certain lack of linkage between paragraphs G and H. I assume that where there is a genuine safety issue work does not need to continue provided H has been complied with?

PN273

MR PILL: Well work that gave rise to a bone fide safety issue.

PN274

THE VICE PRESIDENT: Yes, work that exposed the employees to a bone fide risk to their health or safety.

PN275

MR PILL: Yes, your Honour.

PN276

THE VICE PRESIDENT: A gas leak in the building, for example.

PN277

MR PILL: Yes, we won't be directing the employees to remain.

PN278

THE VICE PRESIDENT: In relation to clauses 13.3 and 14.1:

PN279

A call centre employee might be required to work outside core hours, say from 10.00pm to 3.00am over one evening. But if they received less than 160 hours in a four week period they will receive no overtime payment in respect of that work outside core hours.

PN280

Is that correct?

PN281

MR PILL: If I understand your Honour's example, yes. They would receive, obviously, 20 per cent loading. Such an employee in my submission is effectively akin to a night-shift worker.

PN282

THE VICE PRESIDENT: I am imagining somebody who has got an regular shift during the ordinary core hours but because the demand of the work on behalf of the client is such that people need to work overtime and continue working. Work long hours on a particular day to meet a particular sales drive or whatever, such a person will not receive the overtime.

PN283

MR PILL: Your Honour, the work performed by Salesforce in New South Wales is predominantly the two projects that I've mentioned: Readers Digest and Foxtel. The nature of the work performed by them is such that, with respect - - -

PN284

THE VICE PRESIDENT: Yes, but Mr Pill, you know as well as I do that over the life of this agreement other clients will come and go. I was just asking you to confirm that in fact the person might work between 10 pm and 3 am and not receive anything other than the ordinary loading for work outside core hours. They wouldn't receive an overtime loading as well.

PN285

MR PILL: They would receive the 20 per cent loading only.

PN286

THE VICE PRESIDENT: Yes.

PN287

MR PILL: The agreement has obviously been struck, your Honour, having regard to the work which is actually performed.

PN288

THE VICE PRESIDENT: In clause 23, 21.3, there's an overlap of one day in relation to each of the periods. One year or less is nil severance pay. One year up to the completion of two years is four weeks pay. A person who has precisely one year of service, what do they get, the nil weeks or the four weeks?

PN289

MR PILL: If the person has completed one year's employment in my view they would receive four weeks pay. If they have not completed one year's employment then they would receive nil.

PN290

THE VICE PRESIDENT: I think that's the way it's supposed to read, yes. That's all, Mr Pill. I'll adjourn the matter to 3 pm on Monday, 12 May 2003 by video conference with Melbourne, so far as you're concerned, and my Associate will notify you in the meantime if it's unnecessary for that mention to proceed.

ADJOURNED UNTIL MONDAY, 12 MAY 2003 [1.29pm]

INDEX

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #1 IMPORTANT INFORMATION NOTICE PN123