C2004/4686, Transcript of Proceedings [2004] AIRCTrans 4476 (18 November 2004)

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TRANSCRIPT OF PROCEEDINGS


O/N 8988
AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER LEWIN

C2004/4686

BUILDING SERVICES (VICTORIA)
AWARD 1994

Application under section 113 of the Act
by Liquor, Hospitality and Miscellaneous
Workers' Union to implement the decision
of a Full Bench of the Commission
[PR032004 and PR062004]

MELBOURNE

11.05 AM, MONDAY, 8 NOVEMBER 2004

PN1

MS R. FRENZEL: I appear for the LHMU in this matter.

PN2

MS K. RICHARDS: I appear from the Victorian Employers Chamber of Commerce and Industry.

PN3

MS J. WATLING: I appear from the Australian Industry Group.

PN4

THE COMMISSIONER: Thank you. Ms Frenzel, I gather that the application is by consent and it seeks a variation from the test case standards in relation to the non-application of the severance payment and notice provisions where there is some continuity. Is that right?

PN5

MS FRENZEL: What the variation to the test case standard does, Commissioner, is provide an exemption regarding redundancy payments only to those employers who are - - -

PN6

THE COMMISSIONER: Severance payments, yes.

PN7

MS FRENZEL: Yes, who are respondent to the schedule to the award regarding portable long service leave.

PN8

THE COMMISSIONER: In the appendix, yes.

PN9

MS FRENZEL: Correct, that is right.

PN10

THE COMMISSIONER: The named employers.

PN11

MS FRENZEL: That is correct, and that is the only exemption that it provides outside the test case.

PN12

THE COMMISSIONER: And only in the circumstances where there is actually an acceptance of an employee's service. Is that right, or is it simply an exemption?

PN13

MS FRENZEL: It is simply an exemption with respect to the payment of severance payments if they are contributing fund members of the portable long service leave fund. I might indicate that the Building Services Victoria Award was a former State award of the Victorian Commission and there was provided for in the old TCR test case provision in that award, both in the State jurisdiction and then in the Federal jurisdiction from 1994 onwards a general exemption for all employers on contract change if an employee was offered a job by an incoming contractor.

PN14

THE COMMISSIONER: Did that offer require a transfer of entitlements?

PN15

MS FRENZEL: No, it didn't.

PN16

THE COMMISSIONER: Right, so it simply forfeited your entitlements for the job?

PN17

MS FRENZEL: That is right.

PN18

THE COMMISSIONER: Is that the effect of this?

PN19

MS FRENZEL: No, the effect of this is tighter.

PN20

THE COMMISSIONER: Well, you don't forfeit your long service leave accrual on an annual basis, so that you keep your long service leave accrual, but you don't get the severance payment.

PN21

MS FRENZEL: That is right.

PN22

THE COMMISSIONER: That is the way I read it.

PN23

MS FRENZEL: Yes, what we do is - let me explain. The way the fund operates is this. If there is a contract change between for argument's sake Tempo and Berkeley Challenge and the cleaners at a certain building, we will use Nauru House as an example, have more than 18 months' service with Tempo at the time of the contract change, then Tempo will pay that amount of money into the portable long service leave fund for those claimants.

PN24

Because Tempo is a contributing fund member, if any of the cleaners have less than 18 months' service with the employer at the time of the contract change, the fund picks up that deficit with respect to the service, so in other words the service is continuous for the cleaner and the obligation to pay by the employer into the fund only arises with respect to cleaners who have more than 18 months' service, so you can have a cleaner working - there are cleaners working in this building who have had less than 12 months' service in some cases and contract change, but their service has been continuous for the purposes of paying long service leave either on a pro rata basis on termination after 10 years or indeed on taking long service leave after 15 years.

PN25

So the membership of the fund provides benefits to the employees which really normally wouldn't come within the scope of say your transmission issues, because the liability with respect to long service leave and pro rata entitlements on termination only occur after 10 years under the Victorian State legislation, whereas here the employers are paying in post 18 months, so it is very beneficial for the employees, but it also provides a benefit for the employers as well, because they have a stable workforce.

PN26

Their cleaners don't mind going from contractor to contractor. The last thing that contractors need is a whole lot of cleaners at a particular site not wanting to leave the particular employer on a contract change when the employer has nowhere else to put them, so the previous exemption just exempted contract change generally and that was interrelated to the portable long service leave fund, although it wasn't specified, but there was an interrelationship as between the two provisions. What this provision seeks to do is to say those employers who are parties to the fund - - -

PN27

THE COMMISSIONER: It introduces the condition that they be fund members.

PN28

MS FRENZEL: That is correct.

PN29

THE COMMISSIONER: But I think the question I asked is probably still unanswered. It is a trade-off, is it? You don't get your severance payment, but you get your long service leave accrual.

PN30

MS FRENZEL: That is correct.

PN31

THE COMMISSIONER: All right.

PN32

MS FRENZEL: And with respect to contract changes and the Commission is acquainted with the industry in any event, but the contracts generally go these days for between two and three years, so the severance pay entitlement balanced against the fact that they are going to get long service leave paid into the fund for service less than 10 years with one employer is an important factor and we say it is certainly an improvement on the exemption which was previously - - -

PN33

THE COMMISSIONER: But it is not in the award now, is it?

PN34

MS FRENZEL: Sorry?

PN35

THE COMMISSIONER: Is that exemption retained? Is the State exemption retained?

PN36

MS FRENZEL: This is actually an improvement. If the Commission would excuse me for a moment, I might have - - -

PN37

THE COMMISSIONER: What clause is the exemption?

PN38

MS FRENZEL: It is clause 14.5 and it reads in the current award:

PN39

An employer in a particular redundancy case may make application to the Commission -

PN40

etcetera. That is the standard and then it says:

PN41

Provided, further, that where an employee under this award is employed by a contract cleaning company and that employer loses the contract upon which that employee is usually engaged and the contractor gaining the contract engages or offers to engage that employee, clause 14.3 -

PN42

which is the severance pay provision -

PN43

of this clause shall not apply.

PN44

So it is, in fact, an improvement for the cleaners.

PN45

THE COMMISSIONER: That is inconsistent with our test case principles, though, isn't it, that clause now?

PN46

MS FRENZEL: The current clause or the new one?

PN47

THE COMMISSIONER: The current clause.

PN48

MS FRENZEL: I agree. That is why we have sought to rectify the issue with respect to the 2004 redundancy test case. Can we say that given that the exemption has been there for an extraordinarily long time - - -

PN49

THE COMMISSIONER: But it would be consistent with the test case to actually strike that exemption out, wouldn't it?

PN50

MS FRENZEL: It would be, but it is not a matter which is - - -

PN51

THE COMMISSIONER: You are not seeking to have it taken out?

PN52

MS FRENZEL: No, we are not. We are seeking to give the employers a choice. They can either join the portable long service leave fund and contribute post 18 months' service for their employees on contract change or they can pay the severance pay as outlined in the test case.

PN53

THE COMMISSIONER: Is that the case, though, if the exemption remains in its current form?

PN54

MS FRENZEL: Well, it is a different type of exemption now.

PN55

THE COMMISSIONER: You are deleting that, are you?

PN56

MS FRENZEL: I am changing that, Commissioner.

PN57

THE COMMISSIONER: Yes, sorry. That is what the 14 - - -

PN58

MS FRENZEL: What I am saying at 14.5.2 is that ostensibly if a contract cleaning company is named as a participating employer in the portability of long service leave fund - - -

PN59

THE COMMISSIONER: I understand.

PN60

MS FRENZEL: - - - then that exemption applies, but only in that case.

PN61

THE COMMISSIONER: All right, yes. I understand better now, but I suppose what is on my mind is this, that if the award safety net is meant to reflect test case standards, which seems to be the policy of the decision in the safety net review of wages clause, why wouldn't you just strike out the exemption?

PN62

MS FRENZEL: Because, Commissioner, the important thing with respect to the operation of redundancy clause in this particular award and in this particular industry is that the cleaners want jobs and there is a real disincentive for employers to employ on contract change if you strike out the exemption and the employers have got to count previous service.

PN63

THE COMMISSIONER: But that just simply means that the person losing the contract has to pay them.

PN64

MS FRENZEL: Well, that is correct also, but then what happens is - - -

PN65

THE COMMISSIONER: Has to pay them the redundancy benefit.

PN66

MS FRENZEL: That is right, but then what happens also is that the cleaners may or may not get portable long service leave at the end of it and, indeed, they may not be employed at the end of a contract change. There is this cycle of cleaners working for a number of companies in the same building over a period of time and that is why the portable long service leave fund came into existence.

PN67

THE COMMISSIONER: Yes. Look, I am only asking these questions in a discursive sort of way, but I am trying to explore the rationale of the application, but I can see the problem. The cleaners are probably a more stable sort of element in the cleaning of any building than the contractors who actually manage that, because there is obviously a lot of advantage in taking on the cleaners who have been cleaning the building for the last 20 years or whatever it is, when you become the contract manager, rather than having to bring in a whole new workforce, particularly if they come across without any liabilities.

PN68

MS FRENZEL: That is right.

PN69

THE COMMISSIONER: But the issue really is about the consistency of the safety net and the principles, isn't it? I mean, I am mindful of the fact that there can be variations, but I need to understand fully what the rationale for the variation is and what the merit of it is. What you say it is is it is more likely to contribute to security of employment.

PN70

MS FRENZEL: Indeed, and it is also more likely to ensure that those cleaners are employed and therefore do have the benefit of a portable long service leave fund operating for them at the end of the 10 years or at the end of the 15 years or whenever they end up going. I mean, just as an aside, Commissioner - - -

PN71

THE COMMISSIONER: They have got a lot further to go to get an entitlement, haven't they?

PN72

MS FRENZEL: Well, that depends.

PN73

THE COMMISSIONER: I suppose they get it in the industry, you say, so it is a lot easier.

PN74

MS FRENZEL: That is right, and they can actually move, for argument's sake, from Nauru House to 101 Collins down to the Rialto and then back here, all for different contractors at different times in their working lives.

PN75

THE COMMISSIONER: And they accumulate what is it, point 8?

PN76

MS FRENZEL: 833 of a week per year of service.

PN77

THE COMMISSIONER: Yes, .833 of a week per year for each year of service.

PN78

MS FRENZEL: And, as I say, the benefit of the fund is that the first 18 months of an employee's service with a participating employer, the fund will pick up that 18 months' service out of its investments.

PN79

THE COMMISSIONER: Yes, thank you. All right, I might just hear if this is by consent or otherwise.

PN80

MS RICHARDS: Thank you, Commissioner. In relation to the point that has just been discussed by Ms Frenzel of the LHMU, we do not oppose the inclusion of clause 14.5.2 in the draft order that has been provided to the Commission. Perhaps if it assists the Commission, we would be relying upon paragraph 30, the supplementary decision, which is PR062004 which states that variations can be made to the model clauses if it is necessary to the particular industry and we would be supporting and concurring with the submissions made by Ms Frenzel on the basis that it is a particularity to the cleaning industry. Commissioner, would you like me to address you on the other parts of the draft order at this stage?

PN81

THE COMMISSIONER: Is there anything that is not by consent?

PN82

MS RICHARDS: There is one other small point which is at 14.3.4 of the draft order and I understand Ms Frenzel agrees - I believe there is consent at the bar table, Commissioner, where it states that:

PN83

Provided that service prior to 29 July 2004 -

PN84

in the second sentence of that clause, we would seek to have that come into effect from today's date which is 8 November 2004.

PN85

THE COMMISSIONER: It is in the draft order I have got.

PN86

MS RICHARDS: It currently reads 29 July 2004.

PN87

THE COMMISSIONER: I beg your pardon. Well, I don't know how it got there, but is this an issue?

PN88

MS FRENZEL: It is not an issue, Commissioner. It is a typographical error.

PN89

THE COMMISSIONER: All right. In the draft order I am looking at, it has got 8 November.

PN90

MS RICHARDS: I beg your pardon?

PN91

THE COMMISSIONER: In the draft order that I am looking at, it has 8 November.

PN92

MS RICHARDS: Thank you.

PN93

THE COMMISSIONER: That draft order has been subject to a certain amount of scrutiny and adjustment in my chambers having regard to the relevant principle.

PN94

MS RICHARDS: Commissioner, there are also a number of very small typographical errors which I am sure that your chambers have picked up on. Would you like me to take you through those also?

PN95

THE COMMISSIONER: Yes, please.

PN96

MS RICHARDS: At 11.11.2 of the draft order it states after the brackets:

PN97

If requested by an affected employee in good time -

PN98

there ought to be a comma rather than a fullstop after in good time and a small W -

PN99

with relevant information including...

PN100

And secondly, Commissioner, over the page, 11.11.3, in the second line down of that clause, as early as possible ought to have a comma after the word possible and aside from those small amendments, Commissioner, we do not oppose the making of the draft order in the terms that are sought by the LHMU and in relation to all the points that I have addressed the Commission on, I have had the opportunity to discuss these with Ms Frenzel and my understanding is that she doesn't oppose these amendments. If it pleases the Commission.

PN101

THE COMMISSIONER: Yes, thank you, Ms Richards. Ms Watling.

PN102

MS WATLING: Thank you, Commissioner. With the amendments being made, the Australian Industry Group would not oppose the variation in the terms sought by the union. If the Commission pleases.

PN103

THE COMMISSIONER: Thank you, Ms Watling. Is 14.5.2 the only variation?

PN104

MS FRENZEL: Yes, it is, Commissioner.

PN105

THE COMMISSIONER: Yes, this is an application to vary the Building Services Victoria Award 1994 so as to provide for the results of a test case decision of the Commission known as the redundancy test case decision and the redundancy case supplementary decision. The application is in all respects except one in accordance with the test case standards established by those two decisions. It should be noted that the Commission in determining those test case standards has provided for variations to be included in the terms of any award variation giving effect to the test case standards where it is relevant and appropriate to the industry circumstances of the award.

PN106

In this case, the difference is shown in the draft order under the heading alternative employment and provides that where an employee employed under the award is employed by a contract cleaning company who is named as a participating employer in a schedule to appendix B, portability of long service leave, to the award and the employer loses the contract upon which the employee is usually engaged and the contractor gaining the contract engages or offers to engage that employee, the severance payments provided by clause 14.3.2 of the award would not apply.

PN107

The effect of the variation is to substitute the benefit of continuous accrual of long service leave entitlements in a portable long service leave scheme in relation to employees who are engaged or offered employment where a cleaning contract passes from one contract service provider to another. This variation also seeks to remove from the award the current provision that is much simpler in exempting cleaning contractors who lose cleaning contracts from the obligation to make severance payments.

PN108

The relevant considerations are whether or not the circumstances warrant the variation sought and in particular the substitution of a long service leave benefit for a severance payment benefit which would accrue under the Commission's test case standards according to particular circumstances described in the terms and conditions of the relevant clauses which constitute the rights of employees and the obligations of employers in relation to redundancy situations in accordance with those standards.

PN109

The merits are problematic and finely balanced of pursuing either the provisions of the test case standard whereby severance payments would arise on the loss of a contract or a long service leave benefit with a portability aspect which of itself creates an entitlement which has particular advantages for employees and employers in the industry, having regard to the nature of the industry. In this case, I am persuaded to make the variations sought by the application on the basis of the consent of the parties.

PN110

The Commission defers to the parties' view that this particular variation is appropriate to the circumstances of the industry and I will therefore make an order in accordance with the draft order submitted with some minor adjustments to reflect a date of operation for the accumulation of service for the purposes of severance pay entitlements of employees of small employers and some minor changes in the punctuation in the document. The order will come into force on and from today's date and remain in force for a period of six calendar months thereafter. Thank you.

ADJOURNED INDEFINITELY [11.25am]