AG2003/879, Transcript of Proceedings [2003] AIRCTrans 671 (3 March 2003)

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TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

MUNRO J

AG2003/879

APPLICATION FOR CERTIFICATION OF AGREEMENT

Application under Section 170LK of the Act
by the ABB AT Division, ABB Australia Pty
Limited for certification of the ABB
Australia Pty Limited Pilkington Ingleburn
Enterprise Agreement 2002-2004

SYDNEY

10.25 AM, WEDNESDAY, 12 FEBRUARY 2003

PN1

HIS HONOUR: This is matter AG879 of 2003. This is an application lodged on 24 January under section 170LK of the Act seeking certification of an agreement to be known as the ABB Australia Pty Limited Pilkington Ingleburn Enterprise Agreement 2002 to 2004. The parties to the agreement are ABB Australia Pty Limited. I think adding the ABB AT Division. But the party would have to be ABB Australia Pty Limited in so far as the business number provided in the ACN number appears to be of that corporation. Could I have appearances, please?

PN2

MR B. GEE: Good morning, your Honour. If the Commission pleases, my name is Gee, initial B. I seek leave to appear for the applicant, ABB Australia Pty Limited and the employees to be covered by the proposed agreement. I have with me this morning Mr Mike Smith on behalf of ABB Australia, and two employee representatives, Mr Steve Jackson and Mr Matthew Hicks, should they be able to assist the Commission.

PN3

HIS HONOUR: Yes, thank you. Steve Jackson and Matthew Hicks, is it?

PN4

MR GEE: Yes.

PN5

HIS HONOUR: Thank you. Yes, the application clause, I grant leave to appear, Mr Gee. The application clause seems to be in the form of a preamble and there is clause 1, parties bound, ABB, and then all employees in any of the occupations are cited as employees of the Pilkington Glass site at Ingleburn. And application clause 2 says:

PN6

The agreement shall be binding on ABB Australia Pty Limited and any item not referred to this agreement shall be dealt with as per the provisions of the Metal and Engineering.

PN7

So it is something of a stretch of the imagination to work out just what, from that, the agreement applies to. Presumably it is intended to apply to that part of ABB as a single business, constituted by the work or business related to work on the contract with Pilkington at its Ingleburn site. There is some continuing focus of attention upon single businesses and parts of single businesses and some Delphic divinations of the meaning of the expression "business or part of a business" at High Court and Federal Court level. Part of those observations include the observation of the word "business" becoming a chameleon like expression that takes its colour from its context.

PN8

I do not really know what that means. I do know that there has been a practice that businesses like ABB have identified as part of a single business a contract to supply labour at another business. Commonsense would tell me that that is part of ABB business. And I am not persuaded that I should forsake commonsense in order to attempt to apply or understand some definitions of what may be part of the single business that seemed to emerge from the decisions of the High Court in PP Consultants and Stellar Call Centres, to mention two of the cases that are in mind.

PN9

In the circumstances, and this is more a matter of dealing with this matter, Mr Gee, I will require that ABB undertakes that clause 2.2 shall be read and operate in the same way and to the same extent as it would if it declared that employment by ABB Australia Pty Limited, through its ABB AT Division, pursuant to a contract between ABB and Pilkington to supply employees to work at the Pilkington glass site at Ingleburn is a part of the single business of ABB for all purposes of the agreement and the Act. Thus, that seems to be the clear intention of it. If you read together parties bound and application of the agreement, what the clause that I would require by way of an undertaking under 170LV would state what appears to me to be obvious.

PN10

That I am of the view that it is probably necessary if some of the reasoning and dicta of the court is to be made sense of. The Federal Court, for instance, has concluded that 12,000 employees of Telstra engaged in call centres are not a part of the business of Telstra. The business of Telstra being to engage in telecommunications. The provision of ancillary services internal to Telstra is not part of its business. That utterance is one that I am too simple minded to be able to understand and apply. But if 12,000 employees of Telstra are not part of its business then I cannot see how whatever number of employees you have engaged to work at Pilkington Glass site can be part of your business either.

PN11

That inconvenient conclusion is one that I expect that you would seek to avoid, and I place you under notice if you come forward in future with agreements I would expect that you have a declaration in the agreement for these sorts of things to say, "Well, we have a contract. It is with Pilkington. We supply employees for the purposes of it. That is a part of our business". And on the face of the agreement at least, in the hopefully unlikely event that it ever has to be enforced or transmitted, somebody in a court can read it and say, "At least the parties thought it was a part of the business and it wasn't just some inane idea in the mind of a member of the Commission that it could have been part of a single business".

PN12

How it could not be conceived to be and the parties conceive it to be at a loss, but I think I will give you the words because the matter is of some substance, I fear, and I will write them into the certificate in due course. But I would want it to be reasonably clear because it is something in the nature of a precedent. And I am assuming that I will have your and ABB's concurrence. I find that the Pilkington glass site at Ingleburn is not a part of ABB Australia Pty Limited. The agreement applies to employment at that site by ABB under contract from Pilkington, and in that sense applies to a distinct part of ABB's business.

PN13

MR GEE: May I address your Honour on that point?

PN14

HIS HONOUR: Yes.

PN15

MR GEE: You have raised a number of issues which I would like to address, very briefly: firstly, the document is the product of the parties at the site, themselves, and reflects their understanding of their circumstances, including the prior certified agreement they have made. AS, I understand it - and I am instructed the agreement is between ABB Australia Pty Limited - that is the legal entity that employs the relevant employees and those employees engaged by ABB at the Pilkington Ingleburn site in Sydney within the scope of the Metals Engineering and Associated Industries Award 1998, and there happens to be 12 of those employees. It is the intention of the parties that the agreement be read in conjunction with that award, as referred in clause 2.2.

PN16

And in relation to your Honour's point about whether that site constitutes a part of the employer's business, I - rather than refer to irrelevant transmission of business decisions - as your Honour has indicated - I would refer your Honour to section 170LB(3)(b), and submit that the part of the business referred to in the application, is referred to in the context of it being a distinct operational and geographic part of the employer's business. ABB Australia has a view that it is not a provider of labour to Pilkington Ingleburn under a labour hire arrangement. Rather, it has been contracted to provide what it terms a total maintenance operation at that site which involves intellectual property, labour, materials, plant and equipment, and that has been identified - - -

PN17

HIS HONOUR: I am sorry, what section are you referring to?

PN18

MR GEE: 170LB(3).

PN19

HIS HONOUR: V for Victor?

PN20

MR GEE: No, capital L, capital B.

PN21

HIS HONOUR: Well, you are saying that what, that this is a geographically distinct part of the single business?

PN22

MR GEE: Yes, your Honour.

PN23

HIS HONOUR: And how do you define the part of the single business for that purpose?

PN24

MR GEE: The application refers to the on site total maintenance operations of ABB Australia Pty Limited.

PN25

HIS HONOUR: The application might, but where does agreement contain that?

PN26

MR GEE: It does not. It does not appear to do so in either clauses 1 or clause 2, so, to the extent, that an undertaking is required under section 170LV. The undertaking is provided in that the agreement is contended by the parties to apply at that site and that site alone.

PN27

HIS HONOUR: Well, I think, the form of words that I offered may require some minor modification to specify it in the terms as the on site total maintenance operation of ABB - AT division at the Ingleburn operations at Pilkington Australia Pty Limited as a single business, or part of a single business of ABB for all purposes of the agreement and the Act. But with that qualification, I still require the undertaking to be specific because on its - what I require is - that on its face, you identify the single business you are talking about. And I note that you try to avoid the transmission of business provisions, or any reference to them, but I have to say I think the commission and the parties are faced with the situation where avoid them as you might, you either have - if you have a single business for the purposes of 170LB(2), it escapes me how that cannot - or a part of a single business for purposes of 170LB(3) - it escapes me how that cannot be also part of a single business for the purposes of 170MB. And those who sit in judgment on these matters seem to think that they are dealing with different creates.

PN28

In the event of your transmitting, for instance, your contract with Pilkington with these employees to someone else, on the existing state of authorities I would think the employees, if they sought to have the agreement enforced, would be met with an argument, "This can't be a part of ABB single's business." ABB is in the business of - I will think of it, whatever it is - in providing solutions. It gives these employees over to someone else who thinks they are in business of labour hire - utterly different businesses - so we are in "cloud cookie land", I would have thought. And I, at least, will be insisting that the agreements, on its face - LK agreements, not least on their face - have distinctly identified single businesses, so that if 170MB ever has to be evoked - and it is not infrequently that it does have to be - at least the court has in mind what was the single business and it is not driven to some extrinsic document where there is an answer to a question that is unreinforced in this instance. The application clause does not even make sense. I appreciate you understand the point I am making on that score. There is no application clause as such.

PN29

MR GEE: Yes, I do, your Honour.

PN30

HIS HONOUR: Could I say this to you, Mr Gee, if you are anxious about it. It is - and I will certainly give you an opportunity to argue the matter against me if you wish to - but it was a matter I thought that was not much more than a formal consequence. I know it may have implications for other ABB and certainly other total operations or labour hire - I will not use the word - or other solutions firms, but it is a problem that, I think, needs to be addressed, and I am the wrong member of the Commission to expect to ignore it - I will not. So, any agreement of these kind that come before me in the future, I will be asking the parties to tell me what is the single business to which this applies, and I will expect it to be defined either in the agreement or through an LV undertaking with enough clarity for the court at least to know that if it ever comes up under 170MB, this is what we thought we were addressing. And I will be starting on pretty firm ground if the agreement does not even have an application clause that makes sense, which this one does not. But what I am offering you is - for the purposes of 170LV - a means of bypassing the problem. We will just go on, we can come back to that. I think the agreement in terms of termination date is specified as January 2005:

PN31

That the declarants declare that the nominal expiry date is 9 January 2005.

PN32

For purposes of any certification that would be required I treat the agreement as not empowering the Commission for purposes of 170LW. The clause 7(d) refers to conditions contained in the Metal Engineering and Associated Industries Award, so, it has a dispute settling procedure but there is no specific empowerment of the Commission to settle disputes over the application of the agreement. So, I will treat that as not being a 170LW and in the circumstances there is no requirement for the Commission to approve the form of empowerment in clause 17. And finally, in relation to wages clause 10, I note that the wages are not specified. There is merely an indication that:

PN33

The parties recognise and intend that the employees are to receive a maximum wage increase of 9 per cent over the life of the agreement. On and from 9 October ordinary hourly rates of pay will be increased by 5 per cent. On and from 9 January 2004 ordinary hourly rates of pay will be increased by 4 per cent.

PN34

I would require, if this agreement is to be certified, an undertaking that identifies what are the rates and classifications in operation to which the 5 per cent increase should apply on and from 9 October 2002 that is what with the rates in force to which the agreement is to apply. Those will be noted as part of the undertaking given on the basis that the agreement is to operate as though clause 10 specifies those rates for purposes of the operation of the agreement.

PN35

Without those rates it would require extrinsic evidence to demonstrate what is a fairly primary provision of the agreement and some members of the Commission, I think, do require that the rates be in the agreement. I have not adopted that practice. So, otherwise I hope this is not too obscure for members at the back of the court. It is a technical problem that has started to emerge in relation to the identification of the application of agreements, whether they do in fact apply to something called a single business within the meaning of the Act.

PN36

And there are particular problems associated with employment under contracts at various locations remote from an identifiable place of business of the employer concerned. What I have put to Mr Gee requires that to be overcome by an undertaking that will identify the single business. Perhaps could I just read out what I had in mind there. Pursuant to section 170LV - I think that is the right section, is it not? LV(1):

PN37

ABB undertakes that clause 2.2 of the agreement shall be read and operated in the same way and to the same extent as it would if it declared that employment by ABB in the on site total maintenance operations of the ABB AT division at the Ingleburn operations of Pilkington Australia Proprietary Limited is a part of the single business of ABB for all purposes of the agreement and the Workplace Relations Act.

PN38

Now, I require that undertaking because I find that the Pilkington Glass Site at Ingleburn is not part of ABB Australia Proprietary Limited. The agreement might be construed but would need to be construed to apply it to employment at that site by ABB either under contract from Pilkington or described as in on site total maintenance operations at the ABB AT division at the Ingleburn operations at Pilkington Australia Proprietary Limited as a distinct part of ABB's business. In this instance a geographically distinct part of the single business for the purpose of section 170LB(3)(a).

PN39

Now, subject to undertakings in relation to 170LV as to wages, specifying the wages clause, and as to that single business and the operation of clause 2.2, I am prepared to certify the agreement. The certificate would come into force - I take it the date is not sensitive, so, it will be when I have received those undertakings, Mr Gee - from the date on which I make the certificate. And it will remain in force until 9 January 2005. I am certifying the particular date of 9 January, that seems consistent with the intention, is that the case, do you know, the agreement just says January on the face of it?

PN40

MR GEE: Yes, I was going to address your Honour on that. The omission of the number 9 from clause 3.1 was just that, an innocent omission.

PN41

HIS HONOUR: Yes, so, it is common ground that it should end on 9 January?

PN42

MR GEE: Yes, your Honour.

PN43

HIS HONOUR: Was there anything the employer reps or the company rep wish to put, have you got any concerns or questions you wanted to raise?

PN44

MR GEE: No, your Honour.

PN45

HIS HONOUR: I have taken it, I have not asked the employer reps and I am satisfied that the stat decs are accurate in the sense that you have genuinely negotiated this matter and I take it also that you have had some experience at this, so, I have not needed reassurance. I am satisfied on the statutory declarations that the agreement is properly made and fairly made. The points I have raised are ones that are of more general concern but Mr Gee has the misfortune that this is the first time these points have been brought to attention probably but they are part of I suppose a general series of difficulties that have arisen with these agreements that I think need to be progressively addressed. Is that a satisfactory course to you, Mr Gee?

PN46

MR GEE: Your Honour, I will certainly be seeking instructions today on the matters that you have outlined and which you seek under section 170LV(1). In relation to the wages issue, that is not a concern. We will forward a document describing the five minimum rates that apply at that site to which the 9 per cent wage increases will apply to over the life of the agreement. That is not a concern. In relation to the other matter, I wish to put some very brief submissions on record. If your Honour turns to - - -

PN47

HIS HONOUR: Perhaps we had better work out what we are doing. You are welcome to put the submissions but, in that event, I will treat as reserved any decision on the matter. I wont - and this is not in terrorem - I will need to consider any submissions you are going to put and, in that case, I do not give a provisional decision along the lines I indicated that I will certify the agreement subject to receipt of a undertaking. If you are opposing the grant of an LB, making of an LB undertaking, then that is all right by me but I will not be certifying the agreement on the basis that I will get the LB undertaking.

PN48

MR GEE: Your Honour, if you turn to clause one of the proposed agreement, clause one describes, under the heading "Parties Bound" describes at 1.1 "ABB Australia Pty Limited hereinafter the company/employer". I take it from that the parties intend that one of the parties is to be ABB Australia Pty Limited. At 1.2, the agreement describes that - I take it to be an intention - that it is to include all employees engaged in the occupations, industries or callings specified with metals, engineering and associated industries award employed at the Pilkington Glass site at Ingleburn. Now, I would submit that when the commission gives regard to the intention of the parties, it is clear that agreement is only intended to apply to employees at that physical location.

PN49

HIS HONOUR: Well, why is it clear?

PN50

MR GEE: It is expressed to be limited to those employees engaged or - - -

PN51

HIS HONOUR: You do not even own the Pilkington site, do you?

PN52

MR GEE: No, we do not but we have an operation located at that site.

PN53

HIS HONOUR: So, it is a matter of inference, is it? You are talking about the parties bound.

PN54

MR GEE: I am talking about the parties - - -

PN55

HIS HONOUR: So, you are talking about all employees engaged in any of the occupations in the metal industry employed at the Pilkington Glass site at Ingleburn, the site occupied by another employer.

PN56

MR GEE: And by inference - - -

PN57

HIS HONOUR: And here you are talking about the parties bound, not what the agreement applies to. They are quite distinct concepts.

PN58

MR GEE: I appreciate what your Honour is saying. To the extent that we are required under part VIB of the Act, I am giving an undertaking at this time that, for the purposes of part VIB of the Act, the part the applicant submits that that location, that operation, is a part of a single business within the meaning of section 170LB(3). Now, when I turn to sections 17LT and LU, unless your Honour is able to identify where in those sections it is set out that it is a ground to refuse to certify an agreement that the part of the business is not appropriately identified either in the terms of the document itself or by an undertaking under section 170LB.

PN59

HIS HONOUR: It is not a matter for me to do that, Mr Gee. It is a matter for you to persuade me that I can. I have quite a number of decisions on those subjects. Off the top of my head, I cannot recall all of them but you could try names like Webfords and the other one has got Wyatt in it. I do this once a fortnight, more or less. I have not seen you here all that frequently. No party who regularly appears before me is unaware of the fact that I come down fairly heavily on those who have the lack of understanding to turn up with agreements that do not have proper application clauses in them. I expect an agreement to identify, normally at least, the work or employment to which the agreement applies.

PN60

That necessity arises because it is necessary to identify, at least, who are the employees covered by the agreement. Now, if, as in this instance, you have the parties bound expressed in one way very widely and very loosely the identification of the parties to an agreement, and I assume, since you have been granted leave to appear, does not identify to what their agreement applies. You and I may have an agreement. We are the parties to it. What does our agreement stipulate? If I am your employee making an agreement in relation to what work, what part of your business does it apply. So, perhaps have told you, since you ask, what is the basis upon which I tend to insist that there be a proper application clause in the agreement but it is for you to persuade that you can get by without one. Not for me to tell you, at this stage.

PN61

I will in due course because you are entitled to put your submission. But, I confess I came to this matter on the basis that it would be taken for granted that it is desirable that there be a specific application clause in an agreement. I will be happy to go back through them, various matters in which I have spelt out the need for an application clause and what one does when there is not one and you should try to work out to what work employment the agreement applies. And I will also, then, try to work out whether, having regard to the authorities, work or employment as the application and agreement can properly be categorised as part of a single business.

PN62

I was giving you that indication in shorthand when I referred to the startling observation that 12,000 employees engaged in providing business support services to Telstra are not part of its business which is the observation with which the Federal Court, or full court of the Federal Court, has associated itself.

PN63

MR GEE: Your Honour, I do not - - -

PN64

HIS HONOUR: It poses a challenge.

PN65

MR GEE: Your Honour, I do not for a moment suggest that the agreement can survive without an application clause. I suppose my submission goes to what form that application should rightly be in. I am hesitant to give the undertaking you seek right now because it is not a matter I have instructions.

PN66

HIS HONOUR: Well, that is all right, Mr Gee. I will reserve liberty to you to put in writing a written submission or to, in due course, put it in the 170LB undertaking. If you choose to put a written submission in - you can consider at length, I will order transcript in this matter. I think we will have transcript in all of these matters. When you have considered the transcript and your position, you can either elect to put a written submission or, if you get instructions to the effect, you can give the 170LB undertaking. If it is a written submission, I will consider it and produce a ruling in due course. I trust that will not prejudice the entitlements under the agreement?

PN67

MR GEE: No, it wont, your Honour. The parties have all ready - - -

PN68

HIS HONOUR: Yes. I would not want to be holding the employees up by this problem. I appreciate that it may have some down stream consequences in relation to this area of employment. That is the reason I am raising it. It does have down stream consequences of some considerable substance, in my view.

PN69

MR GEE: Your Honour, before you adjourn, for what it is worth the form of clauses 1 and 2 are an exact mirror for their corresponding clauses in the immediately preceding agreement. So, there has been no - - -

PN70

HIS HONOUR: That is usually the case.

PN71

MR GEE: There has been no consideration for - - -

PN72

HIS HONOUR: But it would not have been before me, I do not think. I have been here now three years or so. I have been berating parties for not having application clauses or have I spoken too soon? Did I certify it?

PN73

MR GEE: My memory, as faulty as it is, seems to recall that it was before your Honour but I will check that.

PN74

HIS HONOUR: Well, you must have got me on a slow day. I think I probably have given the benefit of the doubt to application clauses but not for some years.

PN75

MR GEE: I am certainly not aware of any intention of parties to - - -

PN76

HIS HONOUR: Well, I have trained AIRG - I am sorry I am cutting across you, Mr Gee - I have trained AIRG and most of the unions to have proper application clauses but I think I have tended to accept 170LB undertakings. This is taking a new phase. Ordinarily, I just save the very submission you were putting. In fact, well, if you read this sympathetically, it is meant to apply to this area of our operation and I have treated that as satisfactory and I just expect people to intone something like an LB undertaking. I keep a transcript of it and assume that it is going to work that way. The reason I am going beyond it now is that I am beset in several matters by questions as to whether employment under, effectively, a contract for a particular site can be part of the business.

PN77

MR GEE: Your Honour, it has just occurred to me that section 170MB also sits within part VIB of the act. So, to the extent that the undertaking is being given in relation to defining the part of the business within the meaning of section 170LB(3), that meaning would apply for the purpose - for all purposes - of part VIB which would include section 170MB.

PN78

HIS HONOUR: Yes.

PN79

MR GEE: Does that address your concern?

PN80

HIS HONOUR: Well, that is what I was addressing. That is the form of undertaking that I am seeking.

PN81

MR GEE: Well, in that case, I apologise. I read the undertaking required would apply for all purposes of the Act. I certainly have not had the opportunity to consider, but for the purposes of Part VIB - - -

PN82

HIS HONOUR: Well, effectively, that is what I am talking about is 170MB. I am not sure what other purposes there are there, but I do not want to be too indirect about it. I put in the words, "for purposes of the Act", so as it is clear enough to say, "We've read the Act. This is, for what it is worth, the single business to which this agreement is meant to apply." Now, nothing that appears in the agreement can bind a court looking at 170MB(2) of the Commission. But at least the parties have said, "Well, if you are looking around for a single business, it's not anything other than what we have described, and we have described this as the part of the single business", that is what I am about because - as I said at the outset of this - it astonishes me that you can have 12,000 employees and they are not even part of your single business. I wonder what they are doing there.

PN83

And in the days when you have cost centres and you think - seem to think - that part of your single business is something you are doing with, what is it, eight or 23 employees - 12 employees at somebody else's site. Well, it is news, it seems, today. They are just activities. They are not part of your business. And if they are not part of your business, how can you have an agreement for the purpose to make them part of your business?

PN84

MR GEE: Well, without addressing the issue of transmission of business directly.

PN85

HIS HONOUR: Well, I am not concerned with transmission of business. I am concerned with what is the single business in relation to which you make an agreement. You say, "It's quite simple. It's the geographically distinct part of your business constituted of your operations at Ingleburn." There will be undertaking requiring from you is that, for purposes of the Act, this agreement says, "That is the single business to which the - part of the single business - to which the agreement applies", it is simple.

PN86

MR GEE: And I might a request a short period of time in which - as in a matter of dates - to submit either a submission or an undertaking to that effect, your Honour.

PN87

HIS HONOUR: You have got that, Mr Gee. I will stand the matter over on the basis indicated in the transcript.

ADJOURNED INDEFINITELY [11.08am]