AG2005/2729, Transcript of Proceedings [2005] AIRCTrans 1050 (29 April 2005)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 11308-1

SENIOR DEPUTY PRESIDENT O'CALLAGHAN

AG2005/2729

APPLICATION BY ADELAIDE HILLS COUNCIL & THE AUSTRALIAN WORKERS' UNION - GREATER SOUTH AUSTRALIAN BRANCH
s.170LJ - Agreement with organisations of employees (Division 2)
(AG2005/2729)

ADELAIDE

3.34PM, TUESDAY, 19 APRIL 2005

PN1

MR G J HILL: I appearing for the Adelaide Hills Council, together with
MS M SUTHERLAND.

PN2

MR N LLEWELLYN-JONES: I appear for the Australian Workers' Union, together with MS N JARRETT.

PN3

THE SENIOR DEPUTY PRESIDENT: Thank you. Now, I can advise the parties that as this matter was the subject of an e-hearing process, I am satisfied with all of the answers provided to me by the parties, other than the two particular clauses about which the parties were advised, being clause 4.6 and clause 6.3. I may well be satisfied as to those clauses, but I needed some further information from the parties, if I could. Perhaps if I start with clause 4.6 which relates to labour hire agencies? The clause indicates that the parties agree that all workers performing a role for the Council should be treated equitably in terms of wages and conditions of employment.

PN4

The first question that gives rise to is should I understand that the obligation the Council proposes to adopt is simply to ensure that labour hire agency workers are paid the same wage as employees under this agreement, or that they would be granted the same wage and conditions of employment? So there are no surprises, Mr Hill, the particular issue that I am concerned about in that regard is it seems to me that those labour hire agency employees are employees of a different employer, and hence there might be entirely different arrangements relative to hours of work, to superannuation, to various other entitlements. Now, it seems to me that a literal wording of the agreement probably dictates that the obligation on the Council is only to ensure the same wage is paid, but I must say, that doesn't sit all that comfortably with the first part of the sentence.

PN5

MR HILL: Thank you, your Honour. The intention of the parties, as I am informed, is that it does only relate to the wage rates. Now, in the agreement, the current agreement which this agreement replaces, that's spelt out a little bit more clearly. It only talks about the parity of the actual wage rates. But I would agree that that first sentence in 4.6 does tend to raise the question, that as I am instructed, it is the intention of the parties that as with the former agreement, it only relates to the requirement to have parity with the wage rates.

PN6

Now, if you took that first sentence at its absolute, you could have an arrangement whereby the employees coming in doing the work might be subject to superior wage rates and conditions of employment than people at the Council. That first sentence gives a philosophy, if you like, towards equity and taken at its absolute literal, if you were to do that, it would put a rather completely unintended, if not somewhat nonsensical type of implication on it. So I am advised, Senior Deputy President, that the intention of the parties is that the status quo be retained, that it only requires the parity of the wage rates, as with the former agreement.

PN7

THE SENIOR DEPUTY PRESIDENT: Yes. Secondly then, Mr Hill, the obligation the Council seems to be adopting is to ensure that labour hire agency workers receive a wage no less than that which an employed staff member would receive. Now, the Council isn't the employer in this instance, so should I understand that what the Council is proposing to do is to ask or instruct the labour hire contractor, as a condition of contract, that those employees should be paid the same as the salaries set out in this agreement?

PN8

MR HILL: That would be my understanding, your Honour.

PN9

THE SENIOR DEPUTY PRESIDENT: So the Council is not proposing to make direct payments to employees of the labour hire agencies?

PN10

MR HILL: No, no. How that normally operates is that there is contractual arrangements between the Council and the agency, and that is included as part of those terms and conditions.

PN11

THE SENIOR DEPUTY PRESIDENT: Are there any such arrangements in place at the present time, Mr Hill?

PN12

MR HILL: Well, as I have indicated, it's part of the current agreement.

PN13

THE SENIOR DEPUTY PRESIDENT: Yes, but are there any such arrangements in terms of agreements between the Council and a labour hire agency that are in force at the present time?

PN14

MR HILL: We're not aware, Senior Deputy President, that those contractual arrangements are actually in place, but I am informed that the effect of it is that the agencies are paying the Council's enterprise agreement rates of pay.

PN15

THE SENIOR DEPUTY PRESIDENT: I see, and there is currently a situation where there are labour hire agency personnel undertaking work for the Council?

PN16

MR HILL: Yes.

PN17

THE SENIOR DEPUTY PRESIDENT: Should I take it those employees were not involved in the voting process relative to this agreement? Or were they involved?

PN18

MR HILL: I understand that would be correct, that they would not have been involved.

PN19

THE SENIOR DEPUTY PRESIDENT: In terms of the provisions relative to those labour hire agencies, what do you say to me about the obligation that may exist in the event that the labour hire agencies have their own certified agreement? Does that mean you will look to another labour hire agency that doesn't do that?

PN20

MR HILL: I think the effect of that would be that if those rates of pay, pursuant to their own certified agreement, were less than those applicable under the Adelaide Hills Council, then it would be necessary to upgrade those rates to meet that level. Now, in the event that they did not do that, you have a situation then, a legal situation, between the Council and the agency and it may well be that what you have suggested would be the final result, that if they weren't prepared to meet that obligation, as it would be put to them as an obligation, then one of the very obvious options for the Council would be not to use that particular labour hire agency.

PN21

THE SENIOR DEPUTY PRESIDENT: Yes. A final question in this regard,
Mr Hill; in the Full Bench decision in Schefenacker, the Bench held that the obligation that the employer had agreed to undertake to require the labour hire contractor to pay wage increases commensurate with those set out in that agreement, was held by the Bench to be a logical component of the commitment to job security. That was embodied in the preamble, and if I recall it correctly, even in the title of that particular relevant clause. In this instance, clause 4.6 is part of a broader clause relative to flexible hours of work. It does reference a commitment to provide secure employment, and it references the general principles underlying the agreement.

PN22

I am wondering whether there's anything you want to say to me about the context in which I should construe this particular provision?

PN23

MR HILL: Well, I think coming back to the Full Bench decision in Schefenacker, it clearly found that it related to the security of employees, and in fact under the clause in question here, I think it actually talks about the - yes, in the second sentence of that paragraph:

PN24

In accordance with the Council's commitment to provide secure employment for its staff.

PN25

So I think the underlying theme of this clause is very consistent with the findings of the Full Bench in Schefenacker. But coming back to your point on the fact that the particular subclause is covered under the part 4, Flexible Hours of Work, I am not really sure as to how it is there, but I note that there are other aspects relating to part-time employment, casual employment and local area workplace agreements which are also lumped into that particular clause, and don't essentially touch on the flexible hours of work. Certainly relate to conditions of employment, or flexible conditions of employment perhaps, but I would say it could be located better elsewhere in the agreement, your Honour.

PN26

THE SENIOR DEPUTY PRESIDENT: Yes. Thank you, Mr Hill. Now,
Mr Llewellyn-Jones, before I move onto the next clause, can I take it you're in agreement with all of Mr Hill's responses, or do you want to add anything relative to any of those assertions?

PN27

MR LLEWELLYN-JONES: To answer both those statements, the Australian Workers Union is in agreement with Mr Hill. In terms of whether or not we'd like to add anything, with respect to the Commission, we see our role in this instance in assisting the Commission in determining whether or not the Commission is happy as to whether or not this clause pertains to the requisite relationship, thus fulfilling the jurisdictional requirements for certification under the Act. We're of the view that it does. We're under the view that the clause is effectively, in substance, identical to clause 17.6 of the Schefenacker agreement, and therefore the authority of the Full Bench in Schefenacker applies.

PN28

Mr Hill has gone into that in some detail so we don't want to go over that ground, but if the Commission would like further submissions on that point, we're happy to provide them.

PN29

THE SENIOR DEPUTY PRESIDENT: Well, I am very much in your hands in that regard, Mr Llewellyn-Jones. I haven't reached a conclusion at this stage. I am going to take Mr Hill's words of wisdom away and sleep on them. Given that which is on my agenda for the next four or five days, it might be five sleeps they score rather than one, and probably fairly wise.

PN30

MR LLEWELLYN-JONES: Well, if that's the case, Commission, I might then briefly outline why we would propose the said clause does pertain to the requisite relationship between employers and employees. As a starting point, we would make the proposition that because it's a division 3 agreement, we are talking about the relationship between employers and employees, we're not specifically talking about the relationship between Adelaide Hills Council and its employees, as it is not a division 2 agreement.

PN31

However, irrespective of that, we would say that Schefenacker as an authority applies because in the case of Schefenacker, there was no evidence brought forward towards the Commission in order for it to say that it could find a relationship existed in this, Schefenacker's relationship to its employees, as distinct from the general relationship, and it did address the question from the proposition of the authorities of whether or not a general relationship, it would apply. We would say in fact, your Honour, that there are three authorities which support the notion that such a clause would apply.

PN32

That of the High Court in R v Moore and Anors Ex parte Federal Miscellaneous Workers' Union, a case which has of course been referred to for some time. To give the Commission the full citation, if the Commission wants it?

PN33

THE SENIOR DEPUTY PRESIDENT: No, you don't need to. I have slept on Moore in the in the past. I am not sure it goes quite as far down the path of helping either position on this matter all that much, other than its somewhat oblique reference to Cox's case.

PN34

MR LLEWELLYN-JONES: The second authority we would - well, and Cox, of course, being the second High Court authority on this issue. Of course, we would also say that Wesfarmers in this instance supports the proposition that this kind of cause can pertain, and then of course ultimately we would rely on the authority of Schefenacker. Perhaps, rather than going through the reason why all those authorities suggest that this clause does pertain, it might be worthwhile looking at the underlying principle as to why the clause does pertain, and this is probably best expressed in the decision of Schefenacker, at paragraph 83:

PN35

Directly concerns a security of employment of the employees covered by the agreement.

PN36

This seems to be fundamentally the dividing line when it comes to labour hire. There is one authority of the High Court which says that you cannot create a clause which prohibits a business's ability to use labour hire, and there is a second authority of the High Court which says:

PN37

However, you are able to set terms and conditions of how a company will engage labour hire to make sure that there is not an incentive to sacrifice permanent employees in lieu of labour hire.

PN38

That, therefore, directly pertains to the relationship because it directly affects the job security of those people who are permanently employed, and that seems to be the dividing line running through the law when it comes to what does and doesn't pertain in terms of labour hire. Schefenacker, clause 17.6, effectively dealt with that. The Full Bench of the Commission at paragraph 81, when discussing that cause said:

PN39

The effect of the clause is to oblige the employer to instruct the labour hire agencies with whom it contracts to increase the wages they pay to their employees working at Schefenacker by the same percentage listed in the agreement.

PN40

So it was effectively a clause which, in the Full Bench's own words, set the pay rates for a labour hire company to be identical to the pay rates for the permanent employees. The Full Bench held that that pertained, and in doing so, they relied on the two High Court authorities and they relied on that distinction, and fundamentally determined that if in setting the minimum terms and conditions in a way which is - well, for a purpose, for that purpose being to make labour hire not as attractive so that it would not sacrifice the permanent employment prospects of the employees of the company, then it was an issue of job security and did pertain.

PN41

Fundamentally, those are our submissions. It would be very difficult, even on a factual basis, irrespective of the underpinning jurisprudence, to find a distinguishing factor between this clause and 17.6 in the Schefenacker agreement. As such of course we would simply propose that the authority of Schefenacker in the Full Court is binding on the Commission in this instance. But if we delve into the jurisprudence, the reason for that is that we're talking about a clause which its sole purpose is to protect and to make sure that in this instance the Adelaide Council is not inclined to sacrifice permanent jobs by going towards labour hire, by not making labour hire more attractive than permanent employees in terms of a simple cost relationship.

PN42

That's the purpose of the clause and that's why it does pertain and the reason for it is, as we have already submitted, quite clearly outlined in paragraph 83 of the Full Bench decision in Schefenacker. If it pleases the Commission, I think that clarifies our submissions on that point.

PN43

THE SENIOR DEPUTY PRESIDENT: Yes. I am safe, am I not, working from the premise that you agree with Mr Hill in terms of the fact that any labour hire agency workers were not, to the best of your knowledge, involved in the voting process associated with the agreement.

PN44

MR LLEWELLYN-JONES: That's correct. One last thing, if the Commissioner pleases, I do have some written submissions. I don't know if they'll assist in those five nights of sleep, but I am happy to provide them for bedtime reading. I think my friend is happy with them?

PN45

MR HILL: Certainly.

PN46

THE SENIOR DEPUTY PRESIDENT: Yes. Thank you, Mr Llewellyn-Jones.

EXHIBIT #AWU1 - WRITTEN SUBMISSIONS OF
MR LLEWELLYN-JONES

PN47

THE SENIOR DEPUTY PRESIDENT: Now, Mr Hill, I just have one question of clarification relative to the provisions of clause 6.3. It's probably more a question of clarification about your response to my email question.

PN48

MR HILL: Yes.

PN49

THE SENIOR DEPUTY PRESIDENT: Should I understand that in effect, you are providing an undertaking that the parties will interpret that particular provision, such that the membership of the SRT team, if I can call it that, the Service Review Team, will include management, a union representative and when requested by that representative, a union official, but that it may also include other employees who may or may not be members of the union?

PN50

MR HILL: That is essentially correct, your Honour. What we would be giving an undertaking to the Commission is that certainly 6.35 requires that there be a representative or representatives of management, a union workplace representative, and when requested by the representative, that may include a union official, but that is not, in our submission, intended to be totally the composition. It's not intended to be exclusive to the extent that nobody else can be included on that review committee.

PN51

What we would be saying is that we would ensure that from the work area group, there was an employee appointed to that group who would be appointed to represent the interests of all employees within that work area. Now, that would be in addition to that proscribed under 6.35.

PN52

THE SENIOR DEPUTY PRESIDENT: I see. Thank you. Mr Llewellyn-Jones, I take it that's consistent with the AWU position?

PN53

MR LLEWELLYN-JONES: It is, sir.

PN54

THE SENIOR DEPUTY PRESIDENT: Thank you. That issue I can put to rest now, in that I am satisfied that undertaking eliminates any residual concern relative to section 170LU(2)(a). Mr Llewellyn-Jones, you wanted to say something further?

PN55

MR LLEWELLYN-JONES: Sir, just because I am concerned you might close the proceedings before I get a chance to say it. I did just tender you up submissions of the AWU. I should make a note now, though, that the clause referred to in our submissions is actually - well, it's conceptually identical, but is actually phrased differently because the clause which had been sent to me when I drafted those submissions was actually different. It relates to exactly the same issue of setting - - -

PN56

THE SENIOR DEPUTY PRESIDENT: You mean I didn't get a personalised edition of these submissions, Mr Llewellyn-Jones, I got a pro forma variety, did I?

PN57

MR LLEWELLYN-JONES: I wouldn't go that far, Commissioner. They were personalised. They were just personalised incorrectly.

PN58

THE SENIOR DEPUTY PRESIDENT: I see. Very well.

PN59

MR LLEWELLYN-JONES: I am happy to make alterations and file submissions.

PN60

THE SENIOR DEPUTY PRESIDENT: No, you don't need to, thank you. I think I can pick up the gist of what it is you're saying to me.

PN61

MR LLEWELLYN-JONES: Thank you, sir.

PN62

THE SENIOR DEPUTY PRESIDENT: Thank you. Mr Hill, as I have indicated to Mr Llewellyn-Jones, I'll take the information you have provided to me away and ponder upon it. I am caught up in a Full Bench matter for the first few working days of next week. I will endeavour to get an answer out to the parties prior until that time, but I can't promise that.

PN63

MR HILL: That would be appreciated, your Honour. Thank you.

PN64

THE SENIOR DEPUTY PRESIDENT: All right. I shall adjourn the matter on that basis.

<ADJOURNED INDEFINITELY [3.59PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #AWU1 - WRITTEN SUBMISSIONS OF
MR LLEWELLYN-JONES PN46