C2004/1313, Transcript of Proceedings [2004] AIRCTrans 2425 (29 June 2004)

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TRANSCRIPT OF PROCEEDINGS

O/N 11947
AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER RAFFAELLI

C2004/1313

MARITIME INDUSTRY SEAGOING AWARD 1999

Application under section 113 of the Act
by The Maritime Union of Australia and
Others to vary the above award re safety
net review - wages May 2004

SYDNEY

10.21 AM, FRIDAY, 18 JUNE 2004

PN1

THE COMMISSIONER: Could I have the appearances, please?

PN2

MR N. KEATS: Good morning, Commissioner, I'm a solicitor and I seek leave to appear on behalf of the Maritime Union of Australia, the Australian Institute of Marine and Power Engineers, and the Australian Maritime Officers union.

PN3

MR M. SECK: If the Commission pleases, I seek leave to appear for Intercontinental Ship Management Pty Ltd with MS J. OLSSON who is the crew co-ordinator for ISM.

PN4

MR A. MEAD: If it please the Commission, I appear on behalf of the Australian Industry Group. We appear today on behalf of the Australian Shipowners Association.

PN5

THE COMMISSIONER: Leave is granted where it is necessary. Yes, Mr Keats.

PN6

MR KEATS: Thank you, Commissioner. Can I commence by handing up first of all, a statement of service? I might at the outset say that the position of the various respondents is different today. We have got, as I understand it, Intercontinental Ship Management making an application in relation to the appropriateness of the application made by the unions. And a consent position given on behalf of Mr Mead's represented clients.

PN7

The union says in relation to the application that it complies with the principles of the safety net review decision May 2004. Relevantly wages have been increased in accordance with principle 8 and allowances have been increased in accordance with principle 5. I draw your attention to two items that I dealt with slightly differently. The first is item 8 which is clause 16.1.2 which according to clause 16.1.3 of the award is increased by one quarter of the total CPI movement for the preceding four quarters; they are the December to December quarters. And items 21 and 22 which are all in clause 24.5.1 which are increased by the total CPI movement for those four quarters. That is relevantly an increase of 2.4 per cent.

PN8

The unions each give the usual undertaking as to absorption. And as the award was last varied by you, Commissioner, on 3 July last year with effect from 30 July 2003 we would ask that the variation take effect from the first full pay period to commence on or after 30 July 2004. I might leave it there and let my friends make their various applications, Commissioner.

PN9

THE COMMISSIONER: Perhaps if I could hear from you, Mr Mead?

PN10

MR MEAD: Thank you, Commissioner. It is my instructions that the Australian Shipowners Association has no objections to the award being varied in the terms sought.

PN11

THE COMMISSIONER: Thank you. Yes, Mr Seck?

PN12

MR SECK: If the Commission pleases. Commissioner, my client, Intercontinental Ship Management Pty Limited, opposes the application in the terms sought by each of the maritime unions as set out in schedule B to the application which has been filed in these proceedings.

PN13

The basis for the opposition to that, Commissioner is that the rates of pay which have been sought to be increased, set out in the schedule to the application, are greater than that which has been determined by the Full Bench in the May 2004 safety net review wages decision. As the Commission would be aware the determination which had been made by the Full Bench in the safety net review was an increase of a flat rate of $19 per week on all award rates. If the Commission has reviewed the schedule to the application the Commission might note that on our calculations the amounts which are being sought on the total rates for reach of the positions set out in the table are in fact greater than $19 which is being granted by the Full Bench.

PN14

The basis upon which, I understand, the increases have been determined by each of the maritime unions under the application, was to increase the minimum rate component by $19 per week, but also increase the overtime component by a ratio of the overtime component and the minimum rate component. That ratio is roughly point 38, slightly lower than that, I think it is consistent throughout the table. Mr Keats can correct me if I am wrong on that. That means that the overall pay increase which is granted if the application succeeded to employees who are subject to the award would be roughly about $26 per week.

PN15

In our respectful submission, Commissioner, that would be above the safety net and wouldn't be permissible by way of this application. The appropriate way of doing it, obviously, would be for each of the unions to make an application pursuant to principle 10 of the national wage case principles for a special case and for the Full Bench to determine that, or, for a relevant Presidential Member to authorise a Member of the Commission to undertake that review.

PN16

THE COMMISSIONER: It is more than $19 because of the operation of the overtime components.

PN17

MR SECK: Correct, Commissioner. I suppose the issue which arises in the circumstances is what is the properly fixed minimum rate in these circumstances? There has been determination of this issue beforehand but there has also been recent cases before the Commission in other contexts which have determined that in the context of an annualised salary where there is an overtime component the relevant, properly fixed, minimum rate is the minimum component - the minimum rates component - exclusive of the overtime component.

PN18

In our respectful submission, that is the appropriate approach to be adopted in these circumstances. In the alternative we would say that the overtime component and the minimum rates component should be taken together, and the $19 should apply to the total rate as opposed to splitting the components up.

PN19

THE COMMISSIONER: But the safety net review wages decision as it applies as draft orders, or orders are subsequently applied to the vehicle awards used, such as probably the Metal Industry Award. Well, the Hotel Award for short, the Metal Industry - I am only using the short words - the TWU Award, Transport Workers Award. In awarding $19 if people then worked overtime well obviously they would do better than $19 wouldn't they? What is the difference between that and here?

PN20

MR SECK: The fundamental difference, Commissioner, is the way that overtime is approached under those awards to which the Commission has just referred, and the way overtime is dealt with under the Maritime Industry Seagoing Award. As the Commission is aware it is a unique award. Overtime is built into the overall rate and that has been the subject of considerable analysis and review by various members of the Commission, including the Commission as currently constituted in various contexts.

PN21

We would make two alternative submissions, Commissioner. Firstly, the overtime component whilst it is identified separately in the award it is part of an overall, all-up rate dealing with various issues. That is the first issue, we would say the $19 applies to that. Secondly, in our submission, Commissioner, the various awards which have been varied in the safety net review 2004 have expressed over time as a function of the base rate. That doesn't occur here so we would say that is fundamentally different to what the Maritime Industry Seagoing Award deals with. I would be happy to refer to it. We've got various material and various cases to which we're prepared to refer the Commission if necessary if further support is required.

PN22

THE COMMISSIONER: Yes, you'd better take me to that.

PN23

MR SECK: If the Commission pleases. Perhaps the starting point, Commissioner, might be just to raise an issue which Mr Keats will ultimately raise but to deal with it first, it's a decision of Commissioner Lawson. I have a copy to hand up but it might be more convenient - Mr Keats, I understand, has prepared a folder of authorities. Were you going to hand that up later?

PN24

MR KEATS: It depends what you say.

PN25

MR SECK: I will hand up a decision of Commissioner Lawson. It's a decision of Commissioner Lawson which gave effect to the safety net review wages April 1999, May 2000, May 2001. It's a decision dated 9 July 2002. The submissions which I'm raising today in part have already been raised previously on behalf of another respondent to the Maritime Industry Seagoing Award, CSL Australia. The arguments are neatly set out in Commissioner Lawson's decision. What I might note is at the very end paragraph 14, page 5 the reasons which are given by Commissioner Lawson in granting the application of each of the maritime unions to increase the wage rates or the rates of pay in the Maritime Industry Seagoing Award in terms which are similar to those which are sought in the current application before the Commission. Paragraph 14, and I'll read that out, relevantly says:

PN26

It is clear that the rates of pay in the award have been subjected to the above principles ...(reads)... including Mr Meehan's clients, CSL Australia.

PN27

Paragraph 15 says:

PN28

I did not regard the present application as one to which review principle number 10 applies ...(reads)... was not accompanied by a section 107 reference.

PN29

Subsequently an order was issued by Commissioner Lawson which granted the increase to the rates of pay in accordance with the application which had been sought by each of the maritime unions. I only raise that, Commissioner, because clearly it will be an issue which will be raised against me, I assume, my opponent today. Commissioner Lawson didn't reject the submissions which had been made by CSL Australia other than to say well with the greatest of respect it was consented by other members of the Australian Ship Owners Association and everyone has enterprise agreements anyway so it's not a real big issue.

PN30

With respect we would say those are irrelevant considerations which had been taken into account by Commissioner Lawson in coming to his decision. I accept Commissioner Lawson's decision in terms of the submissions which have been made by CSL Australia in that case which we would adopt today. Commissioner, the starting point, I think, is to determine what the properly fixed safety net is for the purposes of the Maritime Seagoing Award because that will establish the relevant point upon which the $19 per week increase granted by the Full Bench can be based.

PN31

The Maritime Industry Seagoing Award was initially - its predecessor was initially a paid rates award and there was a conversion which took place to convert into a minimum rates award. That process was undertaken by Commissioner Wilks in 1999. Commissioner, I do have a copy of the transcript before Commissioner Wilks at that time plus a number of attachments which refer to ASOA submissions. I might hand that up.

PN32

MR KEATS: Could I have a look at the document before it's tendered because I haven't seen the attachment?

PN33

MR SECK: Those were the documents handed up by CSL Australia in the proceedings in 2002 before Commissioner Lawson.

PN34

THE COMMISSIONER: This will be exhibit ISM1.

EXHIBIT #ISM1 CSL DOCUMENTS IN 2002 PROCEEDINGS BEFORE COMMISSIONER LAWSON

PN35

MR SECK: Commissioner, the reason I've handed up the transcript of proceedings in the hearing involving the paid rates conversion of the Maritime Industry Seagoing is that there was reference to the properly fixed minimum rates. In the transcript before Commissioner Wilks the decision unfortunately wasn't that helpful and I think it would have been a lot more helpful if we looked at the transcript in the circumstances. Commissioner Wilks did have the benefit of joint submissions both written and oral of the parties.

PN36

They dealt with three things. Firstly in establishing the key award classification and the parties submitted and it was accepted by the Commission that the key classification was the integrated rating position. There was a comparison with the benchmark classification of fitter in the Metal Engineering and Associated Industries Award 1998 and the parties submitted and it was accepted by the Commission that the proposed relativity for an integrated rating was 107 and a half per cent of the metal industry tradesman fitter position. There was the development of an appropriate base rate for ordinary hours. The parties submitted to the Commission that the base rate for an integrated rating would be $26,290 based on ordinary hours of 1998 hours per annum.

PN37

The basis of this submission was that it did not include "intrinsic overtime" which as the Commission knows is part of the annualised wage set out in the Maritime Industry Seagoing Award. Accordingly it was submitted that the monetary value should be assigned to the overtime in the proceedings before Commissioner Wilks. I might refer the Commission at this stage to page 24 of the transcript before Commissioner Wilks and the submissions which have been made by the parties - I'll just find the relevant spot, Commissioner. The first line says:

PN38

The consent position reached by the parties after much deliberation is that ...(reads)... to work under the awards.

PN39

That was a submission which had been made by the Commission. Those submissions were supported by the Australian Ship Owners Association by letter dated 27 July 1999. That is an attachment behind the transcript, Commissioner. It's marked attachment 3. The effect of those submissions is that an overtime factor has been developed in recognition of the intrinsic overtime that is worked by seafarers and it was submitted that this amount will be incorporated into the base wage and the award will note that the base rate incorporates overtime. So those were the submissions made by the Australian Ship Owners Association at the time.

PN40

During the course of the proceedings Commissioner Wilks did ask Mr Umanski, who I understand was acting and appearing for the Australian Ship Owners Association at those hearings, on page 24 at the bottom, Commissioner:

PN41

And you say that if I adopt you -

PN42

I assume that means your submissions in respect to the rates of pay -

PN43

that the rates of pay will be the minimum rates of pay.

PN44

Mr Umanski responded:

PN45

Yes, sir, there is, even though we would incorporate overtime to the base wage those rates will be minimum rates. They will be consistent.

PN46

The Commissioner goes on to say:

PN47

Whether overtime is worked or not?

PN48

Mr Umanski responded:

PN49

Whether overtime is worked or not overtime will be referable to the fact that the seafarers can be called ...(reads)... we say it's not possible to define what that actual -

PN50

and the Commissioner responded:

PN51

Okay, I understand.

PN52

Commissioner Wilks subsequently made a statement on transcript setting out his findings. That is reflected, Commissioner, on page 28 of the transcript. The second bottom line is where I'm going to start from, Commissioner:

PN53

I would indicate at this point that I am inclined to accept the submissions ...(reads)... is acceptable to the Commission.

PN54

So there's a finding on transcript, Commissioner, by Commissioner Wilks that the properly fixed minimum rate is the all-up rate inclusive of the overtime component. Unfortunately there is no published decision of Commissioner Wilks in regard to the conversion of the paid rates award to the minimum rates award. He does say at page 29:

PN55

I'm not sure it is necessary for me to publish formal sets of reasons for ...(reads)... I accept the position of the parties.

PN56

In those circumstances our submission is, Commissioner, that the properly fixed minimum rates in the Maritime Industry Seagoing Award includes the salary components described as and inclusive of the minimum rates and the overtime component. Accordingly, in our submission, those amounts taken together cannot be increased by an amount that exceeds the safety net increases which have been determined by the Full Bench as to do so would be to vary the Maritime Industry Seagoing Award for wages above the safety net level.

PN57

THE COMMISSIONER: But how could the overtime - if you're right, then the base rate in the award is wrong. It's too low. Either that or there is no overtime in this industry and you can't have it both ways, can you?

PN58

MR SECK: In my submission, Commissioner, this distinction between the minimum rate and the overtime component is really an historical relic of the award being converted from a wages and overtime award to an annualised salary award. It serves no legal purposes to distinguishing between the minimum rate and the overtime component. What ultimately matters for both the employer and the employees who are subject to the award is the total rate which is paid. That doesn't change in terms of the amount of overtime which is worked at all by employees who are subject to the award.

PN59

THE COMMISSIONER: No, because the parties have agreed that a certain amount of overtime is a fair thing and some ships in some instances will work more and some will work less, but in the end, 22 percent or whatever the percentage is, is right. Now, ISM was a respondent of the award in those days?

PN60

MR SECK: That is my understanding, Commissioner.

PN61

THE COMMISSIONER: Yes, and no-one appealed?

PN62

MR SECK: No-one appealed, ISM did not appeal and I did not have instructions to appear for ISM in those circumstances. CSL Australia was the only party which opposed the granting of the safety net increase back in 2002 before Commissioner Lawson. The Commission may note the date of the decision of Commissioner Lawson, it was 9 July 2002, but the hearing of the matter was on April 10, 2002.

PN63

From the Commission's knowledge of CSLs operations generally from other proceedings the Commission may be aware that there was a significant change in CSL Australia's operations between those dates. CSL Australia ceased to employ any crew members after 10 April. So there was no practical utility in CSL Australia pursuing the appeal, even though it considered that it had reasonable grounds for appealing and ultimately to the Full Bench.

PN64

Commissioner, I'm not sure if the Commission has a copy of the Maritime Industry Seagoing Award as it currently stands.

PN65

THE COMMISSIONER: No.

PN66

MR SECK: I might hand that up for the purposes of ease of reference.

PN67

THE COMMISSIONER: Yes, thank you. Is this the entire document?

PN68

MR SECK: As I understand it. I downloaded it from the Commission website last night, so my assumption is that it is correct and it reflects the entire document. Does the Commission propose to mark it as an exhibit?

PN69

THE COMMISSIONER: We might because it may not be sufficient for today's purposes. Anyway, it will be exhibit ISM2.

EXHIBIT #ISM2 COPY OF THE MARITIME INDUSTRY SEAGOING AWARD

PN70

MR SECK: Thank you, Commissioner. The only two points I would raise, just to address one of the issues, that the Commission just raised concerning overtime. There is an overtime clause in the award. I might just find that to assist the Commission. It might be reflected in clause 32 of the award dealing with hours of work. Commissioner, clause 32.1.1 says:

PN71

The ordinary hours for operation and maintenance will be eight hours per day each day of the week.

PN72

And relevantly 32.1.2 says:

PN73

Subject to 32.3 to meet the requirements of the vessels, employees will be required to work in excess of the ordinary hours.

PN74

There are some limitations which are set out subsequently in 32.1.3 onwards in terms of the number of consecutive hours which can be worked and 32.3 sets out a clause dealing with avoidance of physical exhaustion which also places a limit on the amount of overtime which an employee can work consecutively over and above their ordinary hours.

PN75

So, in effect, Commissioner, there is a requirement for employees, in the general terms, to work reasonable overtime under the award without any additional compensation. So the overtime component does not vary depending on the amount of overtime. It is purely a reflection - I might take the Commission back to Commissioner Lawson's decision where he deals with this issue; and we adopt what Commissioner Lawson says here. In paragraph 11, Commissioner Lawson refers to the maritime industry work value inquiry. I will just read out the paragraph:

PN76

For their part the applicant unions submitted that since the maritime industry work value inquiry ...(reads)... in order to reflect the component of overtime.

PN77

Those were the submissions made. We would obviously reject that last sentence made by Commissioner Lawson.

PN78

If our submissions be wrong, Commissioner, that the $19 per week increase determined by the Full Bench in the safety net review 2004 should only apply to the total rate, inclusive of both minimum rate and overtime rates, we would say it only applies to the minimum rate component and not the overtime rate component. There has been a recent decision of Commissioner Bacon - which I would like to hand up - which deals with annualised salaries which incorporate an overtime component.

PN79

Commissioner, Commissioner Bacon's decision deals with the simplification of two of the coal mining industries supervision and administration consent awards. One deals with New South Wales and Tasmania and the other one deals with Queensland; it is PR944614. The issue which was the subject of the proceedings before Commissioner Bacon was determining the component of the annualised salaries set out in the coal mining industry awards which constituted the properly fixed minimum rates. And, as the Commission will note, below paragraph 1 there is a heading in Commissioner Bacon's decision which is, Properly Fixed Minimum Rates, the Overtime Component.

PN80

There were submissions which have been made by the relevant union in that case, the Association of Professional Engineers and Scientists and Managers, Australia, APESMA, in determining whether or not the overtime component should be removed from the staff awards because the overtime component did not reflect a properly fixed minimum rate. It does beg the question whether or not the overtime component in the Maritime Industry Seagoing Award in fact is a properly fixed minimum rate but I will leave that issue for another occasion.

PN81

Commissioner, the relevant parts of Commissioner Bacon's decision, we would say, arise from paragraph 18 onwards which is on page 4 of Commissioner Bacon's decision and there is consideration by Commissioner Bacon of a decision of Vice President Ross in dealing with a similar issue under the Masters and Deckhands Award 1992, in simplifying it from an annualised minimum rate which included an overtime component.

PN82

I do have a copy of Vice President Ross' decision but I don't think it will be necessary for me to hand it up because the relevant parts of the decision have been quoted in Commissioner Bacon's decision. Importantly, I will take the Commission to paragraph 21 where it says:

PN83

Importantly, the Vice President, the award under review is satisfied that the aggregate rates are to be on properly fixed minimum rates and in my opinion will operate as minimum rates of pay.

PN84

If the Commission goes down to paragraph 22 in the third line it says:

PN85

Importantly, this properly fixed minimum rate does not include overtime payments. From the properly fixed minimum rate the relevant award penalty, including overtime can be applied to aggregate and annualised wage rates.

PN86

Further down in paragraph 23 the Commission says:

PN87

None is therefore going to the issues facing the Commission. The properly fixed minimum rates, i.e., the 100 percent and the 97.5 percent ...(reads)... Tugboat Industry Award 1999.

PN88

We would say paragraph 26 nicely summarises the issue, Commissioner:

PN89

APESMA has established that it is permissible to include ...(reads)... from the relevant award classification rates.

PN90

In our submission, Commissioner, if our initial submission be rejected, both the minimum rate and the overtime component constitutes the properly fixed minimum rate. Commissioner Bacon's approach is the correct approach, that is, he excludes the overtime component in determining what the properly fixed minimum rate is and the $19 per week increase can only be to the minimum rate component and not the overtime component. Anything above that would be inconsistent with the full bench decision in making that review and would involve a special case which would need to be referred to the full bench. At this stage I have nothing further to add to those submissions. If the Commission pleases.

PN91

THE COMMISSIONER: I am not quite sure, Mr Seck, what is the relevance of what Mr Bacon said, well how is what the unions are applying for different from what the approach Vice President Ross has taken, and seems to be still there?

PN92

MR SECK: Commissioner, which part are you referring to? I think if I can understand the Commission's question correctly, what Vice President Ross did, which is set out in paragraphs 22 and 23 of Commissioner Bacon's decision, is to say the properly fixed minimum rate does not include overtime payments. From the properly fixed minimum rate the relevant award penalties, including overtime, can be applied to aggregate and annualise the wage rate. So what I think he has done is he has said all right the properly fixed minimum rate does not include overtime, so the $19.00 pay increase only applies to the minimum rate, not the overtime component and then if you want to annualise the salary again you multiply it by 52. That's what I take Vice President Ross doing in that paragraph.

PN93

THE COMMISSIONER: In the current awards you are saying that - - -

PN94

MR SECK: They are alternative submissions we are making Commissioner.

PN95

THE COMMISSIONER: You are saying, looking at clause 14, that the $19.00 should be annualised but added to the minimum rate column and that the overtime component column should remain as is?

PN96

MR SECK: Correct, on the basis of the alternative submission Commissioner. If it helps the Commission, I don't know if it will help, clause 15 deals with computation of wages and salaries and it deals with how one goes about calculating wages and salaries and talks about monthly rates, and daily rates. One would assume that means total rates and that's upon which it has been calculated. Unfortunately, there is no basis upon which a weekly rate can be calculated, which isn't particularly helpful but I might just point out the safety net review wages principles, principle eight, paragraph (f) says:

PN97

By consent of all parties to an award where the minimum rates adjustment ...(reads)... determined by arbitration.

PN98

The principles unfortunately don't deal with increasing rates of pay by way of an annualised salary which makes the position even more confusing.

PN99

THE COMMISSIONER: Well you tell me that, but I think there are tons of awards of the Commission in the public sector where a particular formula has been used for many, many years. I can't remember what it was - - -

PN100

MR SECK: Absolutely Commission I accept that - - -

PN101

THE COMMISSIONER: - - - some number like 636 divided by 13, I can't remember, something like that and that's they way and nobody's ever put up draft orders based on $19.00 added to something, it is always turned out $423.00.

PN102

MR SECK: We are happy to adopt that as an approach Commissioner.

PN103

THE COMMISSIONER: Now I don't understand, in relation to the Hospitality Award, the draft order would have applied $19.00 to a weekly rate. In addition to that it is clear that people work overtime. They get more, right?

PN104

MR SECK: Correct Commissioner.

PN105

THE COMMISSIONER: Well in this instance the parties have agreed that instead of having a traditional overtime clause there is an overtime component and why wouldn't that reflect, if that is a 20 percent addition to the minimum rate, or to the standard rate I'll call which is a term that no one has used so far, why shouldn't that 20 percent be applied to the $19.00. I don't understand.

PN106

MR SECK: The reason for that we would say Commission is that the overtime provisions for example in the Hospitality Award expresses overtime as a product of the base rate. That's not expressed in the Maritime Industries Seagoing Award, it is part of an overall total rate and there is no limitation as to how much or how little overtime an employee works.

PN107

THE COMMISSIONER: But the component is set out isn't it, and it is established as a certain percentage?

PN108

MR SECK: It has been established as a certain percentage and we say submit that there might be appropriate grounds for increasing that but not pursuant to the safety net adjustment application process Commissioner. We would say that becomes a special case. There might be a good case for the Maritime Union to take that the Full Bench and seek that equivalent increase - - -

PN109

THE COMMISSIONER: Why haven't you applied to disaggregate the wage if this is you view? That's what you should be doing shouldn't it? That's the only fair outcome. That there should be no overtime component in this award.

PN110

MR SECK: Commissioner if that's going to be necessary to do then we would do it. We would simply say the overtime component does not have any meaning in and of itself, it is purely an historical incident arising out of the creation of aggregate salaries back in the 1960s or '70s. That has continued on for whatever reason but ultimately for the purposes of the Commission and for the purposes of the parties we would say the only relevant rate which needs to be examined in determining a safety net adjustment is the total rate, or in the alternative the minimum rate. You can't have it both ways and have the overtime rate we would say Commissioner. The wage increase can only be based on a properly fixed minimum rate.

PN111

THE COMMISSIONER: Yes, one thing that strikes me is that the Commission could of course apply $19.00 to all the rates and then with appropriate notice to the parties hear argument why a particular provision shouldn't be put in to the award requiring the payment of overtime at the rate of double time or time and a half for the first two hours, whatever it a fair thing. So that every overtime worked beyond 35 hours, or 8 hours however it is described, that an overtime be applied to $19.00. I mean does your employer want to go through the administrative difficulties of that?

PN112

MR SECK: The Commission may be aware in other proceedings involving CSL one of the difficulties always faced is to provide an incentive to employees to work overtime. So if there was a clause in the award which said employees would need to work the overtime in order to be entitled to the overtime then it is certainly something which - - -

PN113

THE COMMISSIONER: Yes but the overtime clause would only be overtime applicable to $19.00. There is no application before me to disaggregate the overtime, the total rate in the award at the moment is there, so you are stuck with 19, for the master, with 19,142 as an annualised overtime component. No one is going to touch that, not without a fresh application.

PN114

MR SECK: There is no application Commissioner before the Commission at the moment, but we would say that that's not the relevant question. The relevant question is whether or not the overtime component by itself is a properly fixed minimum rate; that is the relevant question before the Commission. Either you include it as part of the total rate, and the $19 applies to the total rate, or it only applies to the minimum rate. The overtime component in and of itself, in our submission, Commissioner, cannot constitute a properly fixed minimum rate.

PN115

THE COMMISSIONER: Yes, but the consequence of these national wage cases - however described - is that people do receive more than $19, they get overtime. To my knowledge no-one has touched in the award simplification process, or the item 51 process, no-one has looked at properly fixed overtime rates. Some awards provide double time from the start, others provide time and a half for the first three hours, others provide time and a half for the first two hours.

PN116

Equally, an outcome of the $19 is that allowances of various descriptions are increased using a formula - I think the furnishing trades formula is the one that is commonly used. But no-one has suggested that any of those allowances, providing they are allowances, have been properly fixed. So, meal money in one award might be $20, another award might be $6.50; they will all get a percentage of what $19 -

PN117

MR SECK: I assume in those circumstances the parties accept that those allowances have been properly fixed. We would say in these circumstances the Commission ought not to be persuaded that the overtime component is a properly fixed minimum rate.

PN118

THE COMMISSIONER: Well, you as a party to the award should have said something about that prior to now.

PN119

MR SECK: Commissioner, we do concede that nothing has been said beforehand - it hasn't been endorsed by Intercontinental Ship Management, it certainly hasn't been opposed by it - but we would say that the Commission would need to look at each circumstance independently, and the material and evidence before it, and make a judgment, as opposed to accepting that this is the way we have always done it, therefore, we should continue doing it.

PN120

THE COMMISSIONER: Yes, thank you, Mr Seck. I don't think I need to hear from you, Mr Keats. It is a novel argument in opposition to the granting of a variation to the award to reflect the safety net decision of 2004. I note that it has been applied for by the three relevant unions; there are no respondents in opposition to it other than one respondent, Intercontinental Ship Management. I note the argument of ISM that the consequence of the Commission varying the award and reflecting schedule B to a document presented - which I should have marked exhibit K1, I think. It was a statement of service but attached to it was a draft order.

EXHIBIT #K1 STATEMENT OF SERVICE WITH ATTACHED DRAFT ORDER

PN121

The position of ISM is that that reflects more than an outcome of $19; I won't repeat the argument of ISM. I don't accept that the Commission should not vary the award in terms of the application. As far as the award currently stands the wages are made up of a particular column noted as "minimum rates", they are in an annualised form. There is also an overtime component which was agreed to and determined some time ago. It reflected what the parties thought was a fair thing, that is, a fair amount of overtime worked. That amount - I think it was a percentage - was annualised and so the minimum rate plus the overtime component is added to a total rate.

PN122

The Commission notes that the total rate reflects more than $19. I think it is said that it reflects probably about $26 which I take it to mean, $19 weekly applied to the minimum rate together with the appropriate agreed level, or a maintenance of the relativity of the overtime component. That is said to be more than $19 and therefore is said to offend the outcome of the national wage decision however described. I am not prepared to accept that. Obviously that is true on its face but the net effect, or the effect of the national wage case, has always been that the $19 is applied in a variety of ways. First of all, it can be applied in an annualised form. It doesn't have to be applied weekly.

PN123

Secondly, the net effect of the $19 wage increase is that such an increase is compounded by shift penalties, it is compounded by overtime rates, because of certain relationships it is compounded by the way that various allowances are applied. To my mind, the way that this award operates is no different other than the obligation of an employer to pay a certain amount of overtime reflecting that $19 is made very much clear and apparent from the start rather than in the traditional way that the $19 is applied as an index for overtime which is worked in some instances and not worked in others.

PN124

In this instance, the parties have agreed for some time that there is a level of overtime which is regarded as a proper reflection of reality. As I said, while it's true that more than a $19 wage increase will apply, that is only because an overtime component is made apparent in the rates set out in this award. In other awards it's not so apparent but that does not mean that the Commission in any way can be satisfied that only $19 is ever applied in awards where overtime occurs or shift penalties are worked etcetera.

PN125

There is an argument that the overtime component is not a properly fixed minimum. Well, it may be that is the case but nor are shift penalties and overtime provisions in awards to my knowledge in the hospitality industry, the building industry, the child care industry etcetera, to my knowledge they are not necessarily ..... but those penalties have been properly fixed minima. I don't think the Commission has generally turned its mind to those industrial concepts.

PN126

That is a long way round saying that while I note the application of ISM, I don't find it persuasive but if at all there is a concern as to how the overtime component operates in this award and the whole concept of all up salaries, then that respondent should make appropriate application to reflect what it seeks. I am satisfied that the real outcome of the draft order or the variation sought is no different from the real outcome of other awards varied by the Commission including the variations reflected by the most recent national wage case.

PN127

Consequently the order that is proposed will be made. It will operate from the first full pay period on or after 30 July 2004 and will remain in force for a period of six months. On that basis, these proceedings are now adjourned.

ADJOURNED INDEFINITELY [11.15am]

INDEX

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #ISM1 CSL DOCUMENTS IN 2002 PROCEEDINGS BEFORE COMMISSIONER LAWSON PN35
EXHIBIT #ISM2 COPY OF THE MARITIME INDUSTRY SEAGOING AWARD PN70
EXHIBIT #K1 STATEMENT OF SERVICE WITH ATTACHED DRAFT ORDER PN121