AG2004/5687, Transcript of Proceedings [2004] AIRCTrans 2910 (28 July 2004)

AUSCRIPT PTY LTD
ABN 76 082 664 220

ADMINISTRATOR APPOINTED

Level 6, 114-120 Castlereagh St SYDNEY NSW 2000
PO Box A2405 SYDNEY SOUTH NSW 1235
Tel:[phone] Fax:[phone]

TRANSCRIPT OF PROCEEDINGS

O/N 12463
AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER CARGILL

AG2004/5687

APPLICATION FOR CERTIFICATION
OF AGREEMENT

Application under section 170LK of the Act
by Sam & Reddy Pty Limited for certification
of the Sam & Reddy Pty Limited Certified
Agreement 2004

SYDNEY

11.15 AM, MONDAY, 19 JULY 2004

PN1

THE COMMISSIONER: Could I have appearances please?

PN2

MR R. TAPPOO: I appear for the employer in this matter and to my left I have MR M. REDDY the employer representative and to my right I have MR CHETTY the employee representative.

PN3

THE COMMISSIONER: Did you want to address me in relation to the agreement?

PN4

MR TAPPOO: Yes please. Commissioner, we seek to have this agreement which was developed under section 170LK of the Workplace Relations Act and which is known as the Sam & Reddy Pty Limited Certified Agreement 2004 certified pursuant to section 170LT of the Act. We would submit that the agreement complies with all of the requirements of the Act and that it provides a net advantage to employees. It was arrived at with the full understanding and agreement of a valid majority of employees. All the employees subject to the agreement received valid notice of the agreement being made, that all time frames stipulated by the Act were complied with and that it contains a dispute settlement clause.

PN5

Commissioner, submitted with this application was an agreement information sheet which gave a clear background to the development of the agreement; would you like me to go into detail?

PN6

THE COMMISSIONER: Yes please.

PN7

MR TAPPOO: The employer company Sam & Reddy Pty Limited operates a cakes and pastries factory at South Granville in Sydney which supplies baked product to the Michel's Patisserie franchise network. All its employees are currently employed under Australian Workplace Agreements, AWAs, that are substantially similar in their terms to the proposed certificate agreement the subject of this application. This fact alone reasonably suggests that the individual employees have already received, understood, signed and been employed pursuant to an agreement almost identical to the proposed certified agreement.

PN8

In addition, the employer operates one of four independent factories that supply baked product to the Michel's Patisserie network. These four factories are located side-by-side at South Granville. The three remaining factories operated by individual proprietary limited companies who each have their own 170LK certified agreements already in place each of which were certified by Commissioner Harrison about this time last year on 30 July 2003 and all are substantially similar to the agreement subject of the present application.

PN9

The agreement will not reduce the aggregate earnings per hour or week as the case may be of existing employees assuming similar rosters and hours are agreed and worked to by the employees to those provided by the parameters in clause 15 of the agreement. A comparison of wages paid under the agreement and the award was provided with the application as attachment 2 to the employer's statutory declaration. We submit that this comparison table shows a net annual advantage for employees working under the agreement. I now put myself in the Commission's hands to address any question that may have arisen from this application.

PN10

THE COMMISSIONER: Mr Tappoo, there's a couple of questions I have got. One is in relation to clause 11.3 of the agreement which provides that there may be a review of the minimum rates of pay.

PN11

MR TAPPOO: Correct, Commissioner.

PN12

THE COMMISSIONER: That goes on to say that "Adjustments shall be made where appropriate".

PN13

MR TAPPOO: Correct.

PN14

THE COMMISSIONER: A concern I have there is that it in no way seems to prevent any adjustment in a negative sense. Is the company prepared to give any sort of undertaking that in fact if there is any adjustment it will only be upwards because a concern I have is this is skimming just above the no disadvantage test, this agreement. You've worked out these various rates which seem to indicate that they're going to be ahead by $100 or so a year.

PN15

MR TAPPOO: Correct, on a worst case scenario that calculation.

PN16

THE COMMISSIONER: Yes. The state wage case decision which hasn't gone into this award as yet, the relevant award, once it does they're going to be behind by some hundreds of dollars.

PN17

MR TAPPOO: Correct.

PN18

THE COMMISSIONER: And they're giving up any pay rise for the next three years; you're aware of that?

PN19

MR TAPPOO: Certainly my client would be prepared to give an undertaking that there would be no negative adjustment to the wage rates.

PN20

THE COMMISSIONER: Because they are giving up, potentially, three lots of pay rises that could end up being some hundreds of dollars if not into the thousands per year depending upon how the wage rises go up under the national wage case and then flow on to the state wage.

PN21

MR TAPPOO: Correct, but they won't be giving it up, Commissioner, there will be an annual review pursuant to clause - - -

PN22

THE COMMISSIONER: This is where I am getting to, Mr Tappoo, it does not say that there will be an increase; this is what I'm concerned about. It provides there that:

PN23

The employer and an employee representative will review the rates annually. Such review shall have regard for the CPI and the state wage increases.

PN24

It doesn't say that those increases will flow into the agreement. There could be such a review and it's decided there will be increase so you can't say that that goes in favour of the no disadvantage test. As far as I'm concerned that's just negative because the only way you'd include that as being a positive is if in fact it required that there then be an increase to take into account the CPI increases or those wage increases; it doesn't provide either of that, it just says they've got to review it and they just say, great, there's been an increase.

PN25

MR TAPPOO: I agree, Commissioner. To me this clause sits perfectly with the objects of the Act in terms of individual wage increases will be - and it only will be increases, there will certainly never be any decreases.

PN26

THE COMMISSIONER: I want two things; one is I want a guarantee from the employer, an undertaking that there will be no decrease.

PN27

MR TAPPOO: That can be provided, Commissioner.

PN28

THE COMMISSIONER: I also want you to acknowledge that that does not provide for an increase.

PN29

MR TAPPOO: It doesn't provide for automatic increases but it does provide for a review between the employer and the employee representative.

PN30

THE COMMISSIONER: And an employee representative.

PN31

MR TAPPOO: And an employee representative.

PN32

THE COMMISSIONER: It doesn't say with each employee. So they pick one employee representative - - -

PN33

MR TAPPOO: Correct. The intention of that clause when it was drafted certainly is that the employer will have an annual review of wages with each employee and - - -

PN34

THE COMMISSIONER: That isn't what it says, it's "an employee representative".

PN35

MR TAPPOO: An employee representative will take the lead role but certainly these legal minimum rates - in fact my understanding is the employer already pays above these minimum rates but certainly there is a provision for an annual review and definitely my client can provide an undertaking that there will be no negative adjustment certainly throughout the life of the agreement.

PN36

THE COMMISSIONER: As I say it just means that as soon as in fact the state wage case flows into that state award they are behind.

PN37

MR TAPPOO: But the annual reviews will definitely take them into account, the state wage case.

PN38

THE COMMISSIONER: You do understand my concern, Mr Tappoo. There is no requirement there that they be increased.

PN39

MR TAPPOO: I agree with your concern that there is no automatic - yes.

PN40

THE COMMISSIONER: The other concern I have is in clause 13.3. It seems to be saying, and correct me if I am wrong, the employees must apply to receive their overtime penalties. Now, either you have an entitlement or you don't have an entitlement. In my mind if you have to apply for something it's no longer an entitlement. It's like saying, the next thing will be, well, I've got to apply to have my wages paid. If overtime is an entitlement it's an entitlement; the employer must pay it. If they don't pay it they're in breach of the agreement.

PN41

MR TAPPOO: Correct, Commissioner. The counter-balance to that is that employees under this agreement shall not be directed to work overtime.

PN42

THE COMMISSIONER: I have no problem there but an employee should not have to ask to receive their legal entitlements. There is an obligation for an employer to pay that entitlement. An employee shouldn't be required to ask. What I would like you to do, and you may want to take a break to have a word to Mr Reddy off the record, but I want someone to indicate that in fact that's not going to be relied upon because in my view if it is, if employees are going to have to apply to receive their overtime rates it's no longer an entitlement and therefore it is struck out of the equation and I think the agreement will fail the no disadvantage test now.

PN43

So I would like you to have a word to Mr Reddy. You might want to have a break and ask him outside but certainly in my view requiring employees to ask for their entitlements in writing in advance is just not on. It no longer becomes an entitlement if someone has got to go cap in hand asking for something.

PN44

MR TAPPOO: All right, if I may seek a short adjournment?

PN45

THE COMMISSIONER: Maybe what we might do, I have another matter at 11.30, it should be brief so maybe it might be best if perhaps you take, say, 10 minutes or so and then come back in in 10 minutes when those people have left.

PN46

MR TAPPOO: All right.

SHORT ADJOURNMENT [11.25am]

RESUMED [11.42am]

PN47

THE COMMISSIONER: Yes, Mr Tappoo?

PN48

MR TAPPOO: Commissioner, we agree with your statement that where an employee works overtime they are entitled to penalty rates and my client would be prepared to provide an undertaking that where an employee does work overtime they will be paid at the applicable penalty rate specified in clause 13.3 but perhaps the wording in the agreement hasn't maybe expressed the intention of that clause as best as it could.

PN49

The intention of that clause is that certainly under the award and under the agreement where an employee works overtime then they will be entitled to their penalty rate. It's just to stop a situation where an employee unilaterally at their own choosing and without prior agreement of the employer works overtime; it's just designed to stop that effect for two reasons, one, to prevent the possibility of any unsubstantiated claims and the second to stop the employer breaching health and safety obligations.

PN50

THE COMMISSIONER: Mr Tappoo, maybe that was the intention but the way I read that clause is that, and you haven't said anything about removing those words which is what my concern is about, it still requires "employees to apply for overtime penalties in advance and in writing". That is the concern. If in fact that remains there it's no longer an entitlement.

PN51

MR TAPPOO: May I permit our managing director to address?

PN52

THE COMMISSIONER: Well, I thought you were appearing, Mr Tappoo.

PN53

MR TAPPOO: I will just take instructions.

PN54

THE COMMISSIONER: Of course. Whoever you are down there it sounds as though you've got the right idea.

PN55

MR TAPPOO: Yes, okay.

PN56

THE COMMISSIONER: The concern I have got is about the fact that it says that they must apply for overtime penalties.

PN57

MR TAPPOO: I understand that now, I am sorry.

PN58

THE COMMISSIONER: Obviously an employee can't work overtime off their own initiative, it has to be at the request of the employer. Obviously the employer doesn't request the employee to work overtime - well, I mean you're in a different area; that's not what the concern is. Say, Mr Reddy tells Mr Chetty that he wants him to work overtime tonight what this seems to require at the moment and what I have the concern about is that Mr Chetty then has to write ahead of that time to Mr Reddy and say, please pay me my overtime penalties for working tonight. We're on the same wavelength; that's the concern I've got. Obviously, there would have to be a need for the overtime but I have the concern that the employee under this clause actually has to say, please, can I be paid overtime penalty rates for doing the work that you actually want me to do. That's the concern.

PN59

MR TAPPOO: Okay.

PN60

THE COMMISSIONER: What I therefore want is some sort of undertaking or something to the effect that in fact employees won't have to apply for the penalties in writing.

PN61

MR TAPPOO: That can be provided.

PN62

THE COMMISSIONER: That's the concern I've got. I think there's probably not a concern with that then is there in getting such an undertaking.

PN63

MR CHETTY: No.

PN64

THE COMMISSIONER: What might be the best, Mr Tappoo, and I'm really in your hands, I don't mind. They're the two issues that I've got concerns about. It might perhaps be better for everyone to actually have those undertakings in writing then what I can do is I can indicate that provided those undertakings address what we've discussed today and meet those concerns that I will therefore certify the agreement so you don't have to come back but I was just thinking it might be better because then those undertakings can actually be placed on the file so that then everyone from both sides knows what in fact the company has undertaken in relation to the agreement.

PN65

MR TAPPOO: I agree, Commissioner.

PN66

THE COMMISSIONER: All right. So you understand the two issues; one is that under 11.3 there is an undertaking that there will be no reduction in wages. In other words, any adjustments that will be made will be made upwards not downwards.

PN67

MR TAPPOO: Yes.

PN68

THE COMMISSIONER: Perhaps you can put that in more elegant language but that is, in effect, what I am asking. Then in relation to 13.3 is that employees do not have to apply for overtime penalties in advance. Whatever the system you've got for actually organising the overtime and informing the employees of the overtime that's just a work practice, it's not relevant for these purposes. It's the fact of having to seek the permission to get the penalties is the concern.

PN69

MR TAPPOO: I agree.

PN70

THE COMMISSIONER: If you could reduce that to writing. Obviously, it will have to be signed by someone on behalf of the employer and then what we can do is place that upon the file here so that if ever there's any disagreement or dispute about what's been agreed to there is a copy on the file.

PN71

MR TAPPOO: Sure.

PN72

THE COMMISSIONER: Should, when the undertakings come in, I've got any further doubts I can re-list the matter but if that addresses my concerns then I can certify it.

PN73

MR TAPPOO: What I propose to do if I may, Commissioner, if I could perhaps come up with that draft undertaking perhaps even this afternoon, email it to your associate for your approval?

PN74

THE COMMISSIONER: Yes, that's probably a good idea.

PN75

MR TAPPOO: Once we get that approval we can get the respective employer and employee representatives to sign that and that can be annexed to the agreement.

PN76

THE COMMISSIONER: Yes, that would be fine then. Perhaps then what I will do is I will just indicate that we'll just adjourn the matter generally at the moment and await that to arrive, Mr Tappoo. Thank you, very much.

PN77

MR TAPPOO: Thank you, Commissioner, thank you for the Commission's time.

ADJOURNED ACCORDINGLY [11.49am]