AG2003/9945, Transcript of Proceedings [2003] AIRCTrans 5429 (8 December 2003)

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TRANSCRIPT OF PROCEEDINGS


O/N 10703

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER MANSFIELD

AG2003/9945

APPLICATION FOR ENTERPRISE
FLEXIBILITY AGREEMENT

Application under section 170NA(1) of the Act
by Capral Aluminium Limited (Extrusion Division)
re new certified agreement

MELBOURNE

2.36 PM, THURSDAY, 20 NOVEMBER 2003

PN1

MR D. DAVIES: I am a consultant, and I seek leave to appear on behalf of Capral Aluminium Limited. If leave is granted, MR P. BIBBY who is the General Manager, Manufacturing for Capral is on my left, and MR K. NEWMAN who is from the corporate human resources office will appear with me.

PN2

MR C. WINTER: I appear on behalf of the Australian Workers Union, and with me is MR G. RAE. And we would oppose leave, Commissioner.

PN3

MR G. GLOVER: I represent the ETU. And we are of the same opinion, we oppose leave being granted.

PN4

THE COMMISSIONER: Thank you. And Mr Rae is also with you, Mr Winter?

PN5

MR WINTER: Yes, that is right, Commissioner.

PN6

THE COMMISSIONER: Good. And you have opposed leave for Mr Davies.

PN7

MR WINTER: Yes. In relation to the application for leave, Commissioner, this is an application in accordance with section 170NA of the Act basically in an attempt to resolve a matter that hasn't been able to be settled by the parties through basically conciliation. I can't see that there will be any legal argument and intervention in relation to this matter is clearly, we would argue, not warranted. In relation to whether it is counsel or a consultant appearing before you, I suppose the bottom line is that intervention should only be granted if there are legal technicalities; if there is some issues that are of a legal nature where the parties are incapable of dealing, or one of the parties is incapable of dealing with the matter.

PN8

The other possibility of leave is where one of the parties doesn't have very much industrial experience, etcetera. In this case, as has been noted, there is a corporate HR person present from the company. So we would see that there is no need for leave being granted in this case. I would leave it at that at this stage, Commissioner.

PN9

THE COMMISSIONER: Thanks, Mr Winter. Mr Davies, are there any special reasons why the general position as set out in the Act, which is that the parties are directly represented by, in this case, representatives of the union or, in the case of the company, officers of the company should be overridden and you granted leave to appear on behalf of the company?

PN10

MR DAVIES: Commissioner, it seems to me that because these proceedings are by way of conciliation only, it is not my intention to be here raising technical legal objections. My role here, as I see it and as I ask the Commission to see it, is to provide advice to my client in relation to issues that may or may not arise during conferences before the Commission. The fact is that Mr Bibby is, as I indicated, General Manager, Manufacturing for the company. He is not an experienced advocate in these proceedings. And with due respect to Mr Newman, notwithstanding his role in the corporate HR area of the company, he is not an experienced advocate before the Commission either.

PN11

I also make the point that it is unusual in my experience, and I have appeared for Capral in this Commission on many occasions in the past, it is unusual for either of these unions to object to my appearance. I make no further submissions beyond that, Commissioner, other than to repeat that these proceedings are by way of conciliation only.

PN12

THE COMMISSIONER: Thank you, Mr Davies. Now, does everybody understand that what I intend to do is to, firstly, get on the record a brief statement from both of the parties as to the circumstances of this application, a brief statement?

PN13

MR DAVIES: Yes.

PN14

THE COMMISSIONER: And then I propose to go into conference to see whether there is any opportunity for the Commission to offer assistance which can avoid what appears to be a looming stoppage of members of the unions who are employed by Capral Aluminium. That is the intention of this afternoon's proceedings. Now, in that circumstance, Mr Winter, does that alter your position in regard to the appearance of Mr Davies and his being here to assist Mr Bibby and Mr Newman in their discussions?

PN15

MR WINTER: Commissioner, we would have no problems if it was a matter of assistance but the - if you look at the notification that has been put in, they are I suppose - we would class them as threats in relation to the application. And if you look at the application, Mr McCarthy of - Mr Davies, on behalf of his employer, states that he reserves his client's position in respect to any application that may be made pursuant to 127(2) of the Act. Normally when an application is made under 170NA, it is to seek the co-operation of the parties, the Commission to try and come up with some sort of resolution. The flavour of that notice puts in place a veiled threat that there is a possibility of a 127 action against us.

PN16

We would seek, prior to going into any conference to try and conciliate the matter, some sort of - we seek the company to provide us with where they believe we have breached the Act. We don't want to breach the Act in any way in relation to protected industrial action. We don't believe we have breached the Act in relation to our application. We believe we have got the bargaining period in; we have got the appropriate notice in in regard to protected industrial action. So we would like to deal with that matter first where they believe we - - -

PN17

THE COMMISSIONER: Sure, but, Mr Winter, as I understand it, the company has simply noted in its application that it may have some rights under section 127 and it wishes to reserve any rights it may have in terms of the future. Now, in my view, quite frankly, it wasn't necessary for that statement to be made. If it has rights, it has rights. It doesn't have to reserve them. And obviously it has caused some concern on the union side in the sense that you see that as an implied threat that some time in the near future you will have an application under section 127 taken against you.

PN18

MR WINTER: And that would be by, I presume, Mr Davies.

PN19

THE COMMISSIONER: Yes. Now, you have now asked the company to indicate where it believes the unions may have already been in breach of the relevant section - - -

PN20

MR WINTER: Because we would like to rectify it if that is a problem.

PN21

THE COMMISSIONER: Now, if you were to do that, if you were to do that and make that request, that does require a somewhat technical answer which neither Mr Bibby nor Mr Newman may be in a position to give. Now, I would suggest that rather than seeking the company provide some additional detail about where the unions may have been in breach of section 127 at this point, we simply turn to Mr Davies and say: Mr Davies, do you have any current intention of applying for a section 127 order?

PN22

MR DAVIES: Commissioner, perhaps I can assist in that regard. The short answer to your question is, no.

PN23

THE COMMISSIONER: So you are merely reserving your rights.

PN24

MR DAVIES: That is correct, and in relation to the comment that Mr Winter has not referred to - that is in relation to section 170MO - I put this application together on the basis of scant information yesterday.

PN25

THE COMMISSIONER: Yes.

PN26

MR DAVIES: It is not our intention to pursue that matter either.

PN27

THE COMMISSIONER: Good, okay. Thank you.

PN28

MR DAVIES: I perhaps put - - -

PN29

THE COMMISSIONER: So let me just stop you there, Mr Davies.

PN30

MR DAVIES: Yes, sorry.

PN31

THE COMMISSIONER: You have said you don't have any current intention of making an application under section 127.

PN32

MR DAVIES: I have said that.

PN33

THE COMMISSIONER: That is not to say that you won't decide that somewhere down the track if you think the conditions are there. But, Mr Winter, having heard that, that Mr Davies has got no current intention and the company has not current intention of making an application under section 127, I suggest that it is not necessary for the company at this point to go through what parts of the Act you may or may not have been in breach of.

PN34

MR WINTER: Yes, we accept that the company has made an error in its application, Commissioner.

PN35

THE COMMISSIONER: Okay. Good, thank you, Mr Winter. Now, having heard that, do you still maintain your position regarding Mr Davies?

PN36

MR WINTER: No, we wish to - if we can settle it, we will settle it.

PN37

THE COMMISSIONER: Okay, fine. Well, the unions have withdrawn their objection to Mr Davies appearing on behalf of the company, and I now grant leave to Mr Davies to appear.

PN38

MR DAVIES: Thank you, Commissioner.

PN39

THE COMMISSIONER: So, Mr Davies, could I hear from you a very - do you think it would be useful to put a brief statement on the record, or would you prefer to go straight into conference?

PN40

MR DAVIES: I think I would just like to put some statistics on the record for you to give you some flavour for what the business is all about.

PN41

THE COMMISSIONER: Good.

PN42

MR DAVIES: My client operates a factory at Campbellfield, and employs members of the AWU. My instructions are that there are 84 full time employees who are members of the AWU or are eligible to be members of the AWU in either process and maintenance operations at the factory. And there is one full time employee who is a member of the ETU. In addition to that, there is some 17 as I am instructed agency casual employees working in various roles, either replacing absent employees or acting as supernumeraries in relation to work that is going on at the factory.

PN43

The company provides obviously aluminium products to the automotive, marine, industrial - largely construction that is - industries and also provides material for the manufacture of truck bodies. It doesn't manufacture those but it does provide the material. The company and union representatives have been negotiating since 31 July for a new enterprise agreement which it is intended will be certified by the Commission. There is currently an agreement which has a nominal expiry date next Sunday, 23 November. Now, that was an agreement certified by Senior Deputy President Harrison on 24 November 2000 and, for complete reference, it has the document reference T3788.

PN44

Notice of protected action has been given by each of the unions indicating that strike action will be taken by its members employed by my client at Campbellfield from next Monday, 24 November, and that action will take place for two weeks. That, of course, causes us considerable concern for two reasons. First of all, that has come completely out of the blue in the sense that there was any threat or suggestion of industrial action. And there is a timetable I could go through but I won't waste time doing that now.

PN45

The second thing is that my client has invested some, or is investing some $21 million at the factory. Twelve months ago its plan was to close the factory and turn it effectively into a warehouse. In twelve months we have turned around by continuing with the warehouse project, by putting a new press in, and by putting in new machining operations; as I say, an investment of $21 million.

PN46

A significant proportion of our output goes to the automotive industry. The Commission will be aware of the just in time system that operates there, and we have something like three to four days lead time in relation to products to go largely to the Bosch organisation which makes parts for power brakes. At the same time and perhaps the timing couldn't be worse, the senior executive from Bosch in the United States is in Australia talking with my client about increasing its involvement, and we are very concerned that this strike and the timing of the strike is likely to jeopardise some two to three million dollars worth of business. Now, that is the background.

PN47

THE COMMISSIONER: Yes.

PN48

MR DAVIES: We say that the bargaining periods have been established by each of the unions, and the seven day qualifying period is up. And notwithstanding my comment in the letter, I have certainly double checked this morning and the period of notice in relation to the intended protected action is correct; we have been given the requisite period of notice.

PN49

THE COMMISSIONER: Mr Davies, how close are the company and the unions in terms of finalising the EBA in the view of the company?

PN50

MR DAVIES: Well, I am told, Commissioner, that there are two principal issues between the company, and these are my instructions. One relates to the question of wage increases, where the company has offered a 4 per cent wage increase immediately and 4 per cent each year for two years thereafter. We are looking for a three year agreement, although it has been made clear to the union that we are flexible on that. The other issue appears to be the question of shift allowances. The allowances - - -

PN51

THE COMMISSIONER: Is the factory a 24/7 or a 7/24 factory, seven days a week, 24 hours a day?

PN52

MR DAVIES: No, it is five shifts - sorry, five days a week, two shifts a day - I am sorry, three shifts a day.

PN53

THE COMMISSIONER: So 24/5.

PN54

MR DAVIES: 24 by 5, that is right., yes, with overtime worked and weekends as necessary. Now, typically shift allowances in this industry have been expressed as money amounts per shift; they are not expressed as percentage amounts. And that is a provision of the industry generally, as I am instructed, certainly in relation to the award which binds my client, the Capral Aluminium Limited Award 1998.

PN55

Now, all of the sites have monetary shift allowances. The method of varying those allowances is different from site to site, and from enterprise agreement to enterprise agreement but, nevertheless, at Campbellfield it has been the norm for the monetary shift allowance to be adjusted in accordance with whatever wage adjustment takes place under an enterprise agreement from the same time, if I have expressed myself correctly there.

PN56

THE COMMISSIONER: By a money amount or by a percentage amount?

PN57

MR DAVIES: Well, by a percentage amount, so that if it was - - -

PN58

THE COMMISSIONER: So if it was a 4 per cent agreed, the shift allowance would increase by 4 per cent.

PN59

MR DAVIES: Yes, if it was an $11 shift allowance, it would go up by 4 per cent to 11.44 or whatever that represents.

PN60

THE COMMISSIONER: Yes, yes.

PN61

MR DAVIES: And the company intends to continue with that process.

PN62

THE COMMISSIONER: And we are only talking here about Campbellfield?

PN63

MR DAVIES: Only talking about Campbellfield, yes. There are a number of other - - -

PN64

THE COMMISSIONER: Yes, not the other sites.

PN65

MR DAVIES: There are number of - I am sorry, we are talking about all the sites in relation to the concept of monetary shift allowances.

PN66

THE COMMISSIONER: Yes, but, I am sorry, in regard to this dispute - - -

PN67

MR DAVIES: But in relation to - we are talking about Campbellfield.

PN68

THE COMMISSIONER: - - - and the negotiation of an EBA, it relates only to Campbellfield?

PN69

MR DAVIES: Yes, it does indeed, because all of the other sites, I think I am correct in saying, run by my client have recently negotiated enterprise agreements and they are all current.

PN70

THE COMMISSIONER: And those agreements involve members of the unions who are here today?

PN71

MR DAVIES: Yes, they do.

PN72

THE COMMISSIONER: The AWU and the ETU?

PN73

MR DAVIES: Yes, they do.

PN74

THE COMMISSIONER: Good. Mr Davies, do you need to say any more?

PN75

MR DAVIES: I don't think so.

PN76

THE COMMISSIONER: Good, thank you. Now, Mr Winter, do you want to speak - are you speaking on behalf of the unions generally, Mr Winter, or just on - - -

PN77

MR WINTER: I am speaking on behalf of the AWU.

PN78

THE COMMISSIONER: The AWU, yes. Thanks.

PN79

MR WINTER: The ETU does have members there also.

PN80

THE COMMISSIONER: And Mr Glover may want to say something on behalf of the - - -

PN81

MR GLOVER: Yes.

PN82

MR WINTER: In relation to the negotiations, there has been 11 meetings between the parties, whether they be consultative committee meetings, meetings with the delegates, but there has been 11 since 31 July. Now, in relation to industrial action, the history of the site is that there has been very very limited industrial action over the years, and the AWU has been involved in that site for many many many years, and we have been able to work through many of the issues. But in the circumstances that are before us now there are significant differences between the parties.

PN83

The members concerned believe that over the years they have done the right thing by the company and fallen further behind the rest of the industry in regard to wage increases that have applied in both the aluminium, but also the metal industry that operate. The clear differences between the parties is this. The AWU seeks a two year agreement; the company has offered a three year agreement. The AWU is seeking 6 per cent per year; the company has offered 4 per cent per year. The AWU wishes to move away from the flat amount in regard to shift allowance and wishes to go to percentage shift allowances in line with what is already in the metal industry and in line with what is just about in any other award. Most awards don't contain flat amounts for shift allowances.

PN84

THE COMMISSIONER: Is the percentage you are seeking, Mr Winter, the standard industry percentage or is it something in advance of that?

PN85

MR WINTER: We are seeking the standard metal industry percentage.

PN86

THE COMMISSIONER: Yes, yes.

PN87

MR WINTER: So it is not an unusual claim that we just wish to move to those percentages.

PN88

THE COMMISSIONER: Mr Davies mentioned a figure earlier on of something around $11. Is that the sort of shift flat amount that is currently specified?

PN89

MR WINTER: They are the flat amounts that apply - there is various flat amounts; I think there is 1.11 and could be 1.15, but they are flat amounts and we wish to move away from those flat amounts and go - - -

PN90

THE COMMISSIONER: Is that an amount per shift, or an amount per hour, or what?

PN91

MR DAVIES: May I assist there? I use the 11 - I am sorry, I used the $11 as a sort of throwaway example. My instructions are that afternoon shift the allowance is $13.80 per shift and on night shift it is $15.70 per shift.

PN92

THE COMMISSIONER: And if it was a penalty rate of say 15 per cent or 20 per cent or whatever - - -

PN93

MR DAVIES: Yes.

PN94

THE COMMISSIONER: - - - what would that amount be?

PN95

MR DAVIES: I haven't quite calculated that, but what I - I am sorry, I am told that it is about 10 per cent for afternoon - represents about 10 per cent for afternoon, 12 per cent for night shift. I am told that to move to the union's claim would represent an annual increase of 10.4 per cent in the wage bill.

PN96

THE COMMISSIONER: In the wage bill.

PN97

MR DAVIES: Yes.

PN98

MR WINTER: In relation to that - - -

PN99

MR DAVIES: There are 53 people out of that original number who work shifts.

PN100

MR WINTER: In relation to that point, this is where our members believe they have been short-changed over the years. If you look at the vast majority of awards that exist in this country, the Metal Industry Award has set the standard. They contain percentage shift allowances. The national building trades, Construction and Maintenance Award, some of the key awards, airline industries, oil, they all contain percentage provisions for shift allowances.

PN101

THE COMMISSIONER: Yes, Mr Winter, I know in my own experience, I understand your point. Most workers who work shifts as I understand it, although taking Mr Davies's point into account, he made the observation earlier that he felt that in this particular industry it is more usual to have flat amounts, but in my experience more typically it is percentage amounts for shift penalties. However, having said that, if Mr Davies is right, that the claim of the union is going to result in a 10 per cent increase in the wages bill, it is a very significant boost to labour costs, isn't it? I am just acknowledging your point that most awards provide for percentage shift penalties, not flat rates.

PN102

MR WINTER: Yes. And there is clear - the clear reason for that is the difficulties associated with working shift work. Our members wouldn't work shift work unless they were required to do, and they don't believe that the $13 or the $15 adequately compensates that compared to other industries that work shift, and in this case, Capral has got their own award, and that is why they might be saying that - talking about this industry. Capral has operations throughout the country.

PN103

THE COMMISSIONER: Yes. So you have got the two issues of wages/remuneration.

PN104

MR WINTER: Correct.

PN105

THE COMMISSIONER: And level of shift penalties.

PN106

MR WINTER: Yes.

PN107

THE COMMISSIONER: Now, are they in your view, Mr Davies has identified those as the two principal issues, are they in your view the major sticking points, or are there a couple of others?

PN108

MR WINTER: No, there is a number of others. There are issues - and I will only go through a couple of other main ones. One of the main ones is that we are pursuing long service after 10 years instead of after 15, and again, many, many large companies provide that already.

PN109

THE COMMISSIONER: Yes.

PN110

MR WINTER: Where they provide the long service leave after 10 years and not the 15, but then we have got some other issues that we have had agreement with in the past with the company, but they seem to be moving away from those; issues such as right of entry, and they are standard sorts of issues which we have never had a problem in the past with right of entry, we have always had a provision for right of entry. We do the right thing, we notify that - when we are on site, we have no problems with that, but we believe we need to have that included in the agreement.

PN111

We haven't had any wording from the company in regard to one key component, even though they have mentioned that they are willing to look at it, and that is in regard to protection of entitlements. This has now become a major issue. We are not seeking to have the entitlements put away in a separate account such as NEST or anything, but we want to have some sort of auditing process put in place so the company can make it clear to us that they have the money there should they close up Campbellfield or whatever.

PN112

THE COMMISSIONER: Yes.

PN113

MR WINTER: And it has been mentioned that they were looking closer - - -

PN114

THE COMMISSIONER: Yes. Who are the owners of the company, Mr Winter? Is it a public company we are talking about?

PN115

MR NEWMAN: Yes, it is, Commissioner.

PN116

THE COMMISSIONER: It is a public company, so it is on the share market, and - - -

PN117

MR NEWMAN: Indeed.

PN118

THE COMMISSIONER: Yes, okay. Shares going up in price, or - - -

PN119

MR NEWMAN: They have gone down 50 per cent, 50 cents, $2.80 in the last six months.

PN120

MR DAVIES: No, I am told they are heading the other way, but - - -

PN121

MR WINTER: It is probably more important we get the protection of entitlements clause in there, Commissioner. So, as you can see, there are a number of issues that need to be resolved and there are some key issues that need to be resolved, and we are willing to talk about and continue talking about them, and we have done so since July, so it is not as if we have decided, had one meeting and said, well, that is it, we are going out the gate. We have been talking since July. If the Commission pleases, I will leave it at that.

PN122

THE COMMISSIONER: Thank you, Mr Winter. Mr Davies, do you want to add anything, having heard Mr Winter's comments?

PN123

MR DAVIES: No, Commissioner. I think it might be appropriate if we were to go into conference, if that suits the Commission.

PN124

THE COMMISSIONER: Good. We will do that. We will go into conference and see if we can make some progress in this matter.

NO FURTHER PROCEEDINGS RECORDED