AG2005/3358, Transcript of Proceedings [2005] AIRCTrans 1213 (26 May 2005)

1800 534 258

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 11594-1

SENIOR DEPUTY PRESIDENT WATSON
SENIOR DEPUTY PRESIDENT DUNCAN
COMMISSIONER WHELAN

AG2005/3358

APPLICATION BY CARLMON SERVICES PTY LTD T/AS DONUT KING HIGHPOINT CITY AND OTHERS
s.170LC - Multiple business agreement
(AG2005/3358)

MELBOURNE

2.01PM, TUESDAY, 17 MAY 2005

PN1

MS A BERTRAM: I am from the Australian Retailers Association, Victoria, appearing on behalf of the relevant franchisees in the Donut King Certified Agreement 2005, and with me is MS A BABTIST, Franchise Services Officer of Retail Food Group Australia.

PN2

SENIOR DEPUTY PRESIDENT WATSON: Thank you, Ms Bertram. There were directions issues which have been complied with. I will mark the material that's been provided in compliance with the direction.

EXHIBIT #DK1 MATERIAL PROVIDED IN COMPLIANCE WITH DIRECTIONS

PN3

SENIOR DEPUTY PRESIDENT WATSON: Now, there is I think, a preliminary issue in that the application was lodged a day late. So, if we could deal with that in the first instance, Ms Bertram?

PN4

MS BERTRAM: If the Commission pleases, I refer to the covering letter that was provided by Mr Mark Weldon in respect to the application which did indicate that the agreement was lodged one day out of time. However, on checking the provisions of section 170LM of the Act, we believe that the application was lodged within the prescribed statutory limit of 21 days, after the day on which the agreement was made which was 9 March.

PN5

SENIOR DEPUTY PRESIDENT WATSON: That's the after the day issue that's arisen previously.

PN6

MS BERTRAM: Pardon?

PN7

SENIOR DEPUTY PRESIDENT WATSON: The after the day issue. Yes. Very well. Just bear with me. The agreement was made on?

PN8

MS BERTRAM: On 9 March.

PN9

SENIOR DEPUTY PRESIDENT WATSON: Yes. It was lodged in time.

PN10

MS BERTRAM: Thank you.

PN11

SENIOR DEPUTY PRESIDENT WATSON: Yes. Do you wish to address us on the agreement proper?

PN12

MS BERTRAM: Thank you, your Honour. This matter is an application for the certification of a multiple business agreement in accordance with section 170LC(2) of the Workplace Relations Act. You should have before you a copy of the application for certification, a copy of the signed agreement, a statutory declaration in respect to public interest in accordance with section 170LC(4) and sub rule 51(3)(b) of the Commission's rules, and a copy of the statutory declaration in respect to the application.

PN13

SENIOR DEPUTY PRESIDENT WATSON: Yes.

PN14

MS BERTRAM: All these documents have been signed by Ms Babtist, Franchise Services Officer of Retail Food Group Australia on behalf of the employers who were party to the agreement. Ms Babtist has been authorised by each of the parties to sign these documents on their behalf. You should also have before you a copy of those signed authorities.

PN15

SENIOR DEPUTY PRESIDENT WATSON: Yes, we do. Thank you.

PN16

MS BERTRAM: Also before you, as you indicated, your Honour, is a folder containing information filed in respect to the directions issued. I will come to the information contained in that folder from tab 2 onwards in due course. However, as a preliminary matter, I would like to refer to the declaration at tab 1 of that folder, which is a declaration provided by Empowerment Australia in respect to the valid majority vote. As you will note, there is one store, Werribee, the employer being Intermat Pty Ltd, that does have a negative vote, eight employees voting against the making of the agreement and six voting in favour.

PN17

Just to clarify, two of the other stores, Fountain Gate and Bacchus Marsh, may appear on this results declaration that there is a negative vote there, however, the Brimbank and Fountain Gate stores are owned by the one employer, Hot Dog Construction Zone, and therefore the overall vote in respect to that business was a 7 to 5 vote in favour, and similarly, the Bacchus Marsh store is also owned by the one owner in conjunction with Woodgrove, and that owner is Adam and Greg
Pty Ltd. The result for that business was also 11 to 5 in favour of the agreement. However, in respect to the Werribee store, despite my best efforts to find a precedent case, I have not been able to find a clear precedent on this point.

PN18

However, we do fear that the agreement may not be able to be certified with this business party to the agreement as a result of the valid majority test. If the Commission pleases, I would like to leave this matter in the Commission's hands.

PN19

SENIOR DEPUTY PRESIDENT WATSON: In what sense?

PN20

MS BERTRAM: I guess as to some direction as to how we can deal with the fact that there was a negative vote in one of the particular businesses party to this multi-employer agreement.

PN21

SENIOR DEPUTY PRESIDENT WATSON: Yes, very well. Ms Bertram, would it be appropriate if we were to adjourn into conference and perhaps run through the issues with you in that forum in the first instance?

PN22

MS BERTRAM: Certainly.

PN23

SENIOR DEPUTY PRESIDENT WATSON: Yes, very well. I will adjourn.

<OFF THE RECORD

PN24

SENIOR DEPUTY PRESIDENT WATSON: I can indicate to Ms Bertram that the view of the Bench is that in light of the position in respect to the absence of a valid majority in Werribee, it would be necessary to remove Werribee from the agreement. That would require, in our view, an amendment of the agreement to that effect to be put back to the employees to obtain a valid majority support for the amendment of the agreement in those terms. Obviously, the employer, the franchisees and the RPAV can consider any other options for certification of agreement in another form, if that were thought appropriate. So that would necessitate an adjournment to allow that to occur.

PN25

However, we would wish to hear you in respect to the other issues, in particular the no disadvantage issue so that if necessary we can raise any further concerns which might be addressed before your clients go to the bother of some further process directed to having the agreement certified. So we will proceed now, I think, to deal with those other issues in respect to the no disadvantage test. I don't think there are any other issues that arise in respect to the client's certification, so it's really only the no disadvantage issue that you need address us on. We are also of a view that the specific LC requirements would be met, the public interest test could be met on the grounds raised in the statutory declaration, so as I say it's really only the no disadvantage issue that you need have addressed.

PN26

Perhaps a logical starting point in that context is to take us through the materials in relation to the penalty rates, base rate trade off, if you like, and then address any subsidiary issues, such as accident pay, laundry allowance and any others that might arise from the Bench.

PN27

MS BERTRAM: So, your Honour, will I address the public interest issue first, or go to the no disadvantage test?

PN28

SENIOR DEPUTY PRESIDENT WATSON: No, I don't think you need address the public interest, as having regard to the reasons advanced in the statutory declaration.

PN29

MS BERTRAM: Thank you.

PN30

SENIOR DEPUTY PRESIDENT WATSON: We're not bothered by that.

PN31

MS BERTRAM: Thank you, your Honour. In respect to 170LT(2) of the Act and the no disadvantage test, I propose that we have a walk-through the folder in front of you. At tab 2 is a summary of the key wage rates within the agreement, and the remaining tabs are actual wage comparisons for each of the franchises that are party to this agreement. You will note in the wage rates that the base ordinary hourly rate of pay for a retail food employee grade 1 is 95 cents per hour under the agreement above the award rate of $13.85. That represents, for a full time employee, an advantage of $36.20 per week. The grade 2 base rate of pay is also 77 cents an hour under the agreement above that as provided for under the National Fast Food Retail Award.

PN32

The grade 3 rate of pay is 99 cents per hour above the award rate of pay. You will also note that the award at the grade 2 level does not provide for junior rates of pay, however, the agreement does and you will notice that on 2.1 in tab 2 in the second table. Under the agreement, there has been a variation in the classification definition. Under the award, a retail food employee grade 2 is defined as an employee who does grade 1 work, however is primarily undertaking supervisory duties, some training and also exercising trade skills. The classification definition under the agreement does not provide a supervisory role. None of the franchises party to the agreement actually employ employees required to use trade skills and so the classification has been designed to provide an opportunity for grade 1 employees to take on some additional responsibilities, including banking, placing orders for supplies, providing some reports, minimal training responsibilities for new employees.

PN33

We believe that that is an advantage that is under the agreement. Because
60 per cent of the employees, we think, across the franchises that were party to this agreement are actually junior employees, it's our submission it would be advantageous to have this classification definition and the junior rates of pay within the agreement. In terms of comparing actual wage rates for any employees that are currently employed at that grade 2 level, and I understand there are about five employees at that level across the group, we have actually compared the rates of pay against the adult rate of pay, not the junior rate; that doesn't actually apply under the - - -

PN34

SENIOR DEPUTY PRESIDENT DUNCAN: Well, it doesn't exist.

PN35

MS BERTRAM: Yes, it doesn't exist under the award. Thank you.

PN36

COMMISSIONER WHELAN: So anyone who is being employed as a grade 2 at the moment is getting the adult rate?

PN37

MS BERTRAM: That's correct. That's correct, and that will not - - -

PN38

COMMISSIONER WHELAN: It will relate to new employees at the rate ..... juniors will be paid at this rate under the award?

PN39

MS BERTRAM: That's correct. Yes.

PN40

SENIOR DEPUTY PRESIDENT WATSON: You say that juniors under the agreement might be graded at grade 2, whereas under the award they would only be entitled to grade 1 classification?

PN41

MS BERTRAM: That's correct. Because the businesses are small businesses, the owners in general manage the actual stores, and so the requirement for supervision in a lot of those stores is not necessary.

PN42

SENIOR DEPUTY PRESIDENT WATSON: Yes, very well.

PN43

MS BERTRAM: You will also note that under the agreement there are no penalty rates that apply for work performed after 6 pm on a Monday to Friday, or the Saturday penalty of 25 per cent - additional 25 per cent on Saturday - and the Sunday rate of penalty has been reduced from 175 per cent to 150, and the Public Holiday percentage has also decreased from 250 per cent to 200 per cent. However, if we look at the information provided by each of the franchisees in this folder, we would submit that overall, over the pay period provided by the franchisees, that overall there is an advantage of about 2 per cent under the agreement as compared to the award. I have included, at the front of each of the tabs for each of the different businesses, the trading hours and as you can see, the majority of them do not trade past 9 pm and would only, in general, trade Thursday and Friday.

PN44

There are a couple of stores who do not trade at all on the late night trade as we know it, on Thursday and Friday, and there is one store who does not trade on a Sunday. I haven't got that noted in front of me, I apologise for that.

PN45

COMMISSIONER WHELAN: Brimbank?

PN46

MS BERTRAM: Brimbank.

PN47

SENIOR DEPUTY PRESIDENT WATSON: Highpoint City, it's indicated that the trading hours on Thursday and Friday go to 9 o'clock; there doesn't appear in the roster to be any after hours hours?

PN48

MS BERTRAM: If we look at - I will actually explain the way we have compiled this. If we look at 3.2 and 3.3 in tab 3 of the document, which is Highpoint City Two, we haven't actually included in 3.2 - which is the wages that would apply under the agreement - the pm hours. However, in 3.3, which is the comparative wages under the National Fast Food Retail Award, you will note that on Thursday and Friday, pm hours are noted?

PN49

SENIOR DEPUTY PRESIDENT WATSON I see. Yes.

PN50

MS BERTRAM: So that refers to hours worked after 6 pm during those trading hours.

PN51

SENIOR DEPUTY PRESIDENT WATSON: Under the award, yes.

PN52

MS BERTRAM: So we have divided that out. So overall, I note that, your Honour, you did refer to why some employers have only got one week or two weeks or three weeks for some, that was purely a time factor and if more information is required in respect to that, we can certainly do that. Some of the franchises have a fixed roster, so there may only be one set of calculations provided because they will have a fixed four-week roster. That might explain the differences between those different documents.

PN53

COMMISSIONER WHELAN: What about the ones that are fixed?

PN54

MS BERTRAM: I have actually noted that, I believe, on the front page of each of them. At tab 11, which is Shepparton, they have a fixed four-week roster.

PN55

COMMISSIONER WHELAN: I see, so where you have - - -

PN56

MS BERTRAM: Yes. At tab 13, which is the Southland information, has a fixed four week roster.

PN57

SENIOR DEPUTY PRESIDENT WATSON: So, sorry, Shepparton - - -

PN58

MS BERTRAM: Shepparton at tab - - -

PN59

SENIOR DEPUTY PRESIDENT WATSON: That explains why only one week has been provided?

PN60

MS BERTRAM: One week, yes.

PN61

SENIOR DEPUTY PRESIDENT WATSON: It doesn't matter, other than in respect to public holidays, presumably.

PN62

MS BERTRAM: Pardon?

PN63

SENIOR DEPUTY PRESIDENT WATSON: Other than in respect to public holidays, is it? Yes.

PN64

MS BERTRAM: Where there is a public holiday falling in the particular pay period, we have costed that out. For example, if we look at 3.3, which is Highpoint Two, the period ending 9/1/05, includes Monday, 3 January, which was a public holiday so there is comparative data related to payment under the award as compared to the agreement. As indicated, the difference overall, even with the public holiday included, is that under the agreement the wages payable for the 9th of the 1st, for the period ending 9/1/05, was $2895.25 under the agreement, as compared to $2887.55. So where a public holiday has fallen, we have made that comparative overall comparison as well.

PN65

SENIOR DEPUTY PRESIDENT WATSON: The Warringal store shows data for November of last year. Is there any explanation for that?

PN66

MS BERTRAM: When we were actually developing up the agreement, the franchisees were asked to put together this information as part of the process and so whilst that information does apply to the end of last year, that was the documentation that they had provided to me, to provide to you today.

PN67

SENIOR DEPUTY PRESIDENT WATSON: Okay. How can the Commission overcome any possible concern that hours might alter in some way during the course of the agreement - - -

PN68

MS BERTRAM: I beg your pardon, your Honour? Sorry.

PN69

SENIOR DEPUTY PRESIDENT WATSON: How could the Commission be satisfied that hours might not alter, with a greater preponderance of penalty hours under the award, penalty times under the award, once the agreement was certified?

PN70

MS BERTRAM: I guess we could provide some sort of undertaking in respect to the hours that are currently - or have been assessed as part of the no disadvantage test. Perhaps we could work on some sort of undertaking in respect to those penalty hours?

PN71

SENIOR DEPUTY PRESIDENT WATSON: Yes.

PN72

MS BERTRAM: As I understand it, these are not high growing businesses. They are fairly set in the number of hours that they work, or trade, on the weekends and evenings. There are certainly protective clauses within the agreement around overtime and those protective clauses would certainly be of benefit to the employees if they were offered additional hours over and above what's touched in the spread of hours within the agreement.

PN73

COMMISSIONER WHELAN: The stores that don't have a four week fixed roster arrangement, I think there are only two that actually do that, how are their rosters done? I am asking the question because part of the definition of - where you have touched on employee under the award, or a part time employee, that they have reasonable predictable hours of work. Now, looking at the clause in the agreement, there's nothing there that guarantees that they have reasonable predictable hours of work, except that they work less than 140 hours over a four week period, not less than 2 consecutive hours in a shift, and not more than 10 hours in one day.

PN74

So, normally one would look at the rosters to see whether that was reasonably predictable. You have told me that two of these stores actually have a fixed four week roster so people know, obviously, that sort of amount of time in advance what they're going to be working. How do the other stores work their rosters? How much notice, I suppose, do people normally have? I am not talking about the provisions of the agreement because they're the minimum requirements, but what sort of notice do people normally have of what their roster pattern is going to be?

PN75

MS BERTRAM: I might seek some clarification from Ms Babtist, Commissioner.

PN76

COMMISSIONER WHELAN: Yes.

PN77

MS BERTRAM: Commissioner, as I understand, the majority of franchisees party to the agreement do implement a fixed rostering arrangement. The only periods where that might vary is in respect to school holidays and public holidays, availability of employees which may affect the rostering of employees which may affect the rostering arrangements and - - -

PN78

COMMISSIONER WHELAN: Because they have exams on, so they don't want to work at that time?

PN79

MS BERTRAM: Exactly.

PN80

COMMISSIONER WHELAN: Yes, okay.

PN81

MS BERTRAM: I guess that's pertinent to the information that's been provided in the folder, in that a lot of this information relates to January, which is school holidays and includes public holidays.

PN82

SENIOR DEPUTY PRESIDENT WATSON: You mentioned the protections in relation to overtime, clause 16. I note there, 16.2.3, overtime would be paid in respect to work by a part time employee before the employee's regular commencing time of the day, and that fits the regular hours issue, to some degree. I am just not sure what 16.2.4 means, "After the prescribed session time of midnight on any one day".

PN83

MS BERTRAM: Whilst the agreement has included in the hours of work provision - your Honour, that reflects the award provision in so far as the ability to be able to roster up until midnight. However, as most - well, all - of the business do not trade - - -

PN84

COMMISSIONER WHELAN: Nobody opens until midnight?

PN85

MS BERTRAM: No, up until that time, then would really not be applicable in this case. It's reflective of the award provisions. The overtime provisions are enhanced above the award, in so far as part time employees can - whilst they can work up to 140 ordinary hours per four-week period, or 35 hours a week, any hours above that is paid at overtime. Under the award, that caps at 38 hours, so that is an advantage under the award.

PN86

COMMISSIONER WHELAN: But under the award, any hours in excess of their agreed hours is paid as overtime?

PN87

MS BERTRAM: There is an ability under the award, by agreement, by mutual agreement, to work up to 38 hours without the payment of overtime, whereas this agreement caps that at 35 hours.

PN88

SENIOR DEPUTY PRESIDENT WATSON: So it's overtime beyond the regular finishing time - - -

PN89

MS BERTRAM: Would be payable.

PN90

SENIOR DEPUTY PRESIDENT WATSON: Is that correct? Is overtime payable for a part time employee to work prior to the employee's regular commencing time? There's no similar provision in respect to work after the regular finishing time.

PN91

MS BERTRAM: If they work beyond their regular ceasing time, and they then work over the 35 hour week, they would be entitled to overtime. If they went beyond a 10 hour day, they would also be entitled to overtime. So it's subject to those limitations as well. The overtime rate under the agreement, at clause 16.3, is higher than under the award, particularly in respect to Saturday. So essentially, if an employee works overtime on a Saturday afternoon, they go into double time. Under the award, the provision is time and a half for the first 2 hours and then double time after that.

PN92

SENIOR DEPUTY PRESIDENT WATSON: Yes. Very well.

PN93

MS BERTRAM: There are also a number of rostering protections which are not included in the award, and these are at clause 15 of the agreement, where there is a requirement to post the rosters two weeks in advance and have seven days' notice of those changes of rosters. That protection is now included under the National Fast Food Award. In respect to leave entitlements, all leave entitlements would be payable at the higher base hourly rate under the agreement than under the award, which would be obviously an advantage to full time and part time employees, and the consequential annual leave loading would also be higher under the agreement than would be payable under the award.

PN94

There are enhanced provisions in relation to bereavement leave. The entitlement under the award is three working days within Australia, and then there are additional - well, separate benefits in reference to deaths that occur outside of Australia. Under this agreement, that entitlement is regardless of where that occurs. I think all other provisions within the agreement are in line with the award. Unless there are other questions?

PN95

SENIOR DEPUTY PRESIDENT WATSON: Well, the matters that aren't in the agreement, such as accident make up, laundry allowance - - -

PN96

MS BERTRAM: Go to - - -

PN97

COMMISSIONER WHELAN: You see, clause 19 of the agreement refers to uniforms and laundry, but doesn't provide either that the employer covers the cost of laundering or that the employee gets a laundry allowance. Under the National Fast Foods Award in Victoria, an employee has a laundry allowance in relation to the cost of laundering uniforms.

PN98

MS BERTRAM: That's correct, Commissioner. The agreement does not provide for that laundry allowance and we would submit that in view of the above award benefits under the agreement, and whilst we haven't done that statistical analysis, and perhaps we could undertake to do that, if the Commission directed us to, we believe that it would still satisfy the no disadvantage test. Employees are provided with uniforms and they do vary from franchise to franchise. In general, they're provided with pants and shirt, an apron and a cap, and we have not included the allowance in that agreement.

PN99

COMMISSIONER WHELAN: How many items are they provided with?

PN100

MS BERTRAM: It would vary, depending - - -

PN101

COMMISSIONER WHELAN: I mean, in terms of the number? If they're a full time employee, how many pairs of pants and how many shirts do they get?

PN102

MS BERTRAM: If I could just confirm that? There's no general rule, but as a guide, a full time employee working five days a week would get about three sets of uniforms.

PN103

SENIOR DEPUTY PRESIDENT WATSON: Accident make up?

PN104

MS BERTRAM: In respect to accident make up pay, that also has been excluded from the agreement and whilst we haven't got any information on how that is affected, we would submit that overall, the benefits of the agreement would certainly buy that out.

PN105

COMMISSIONER WHELAN: I notice that make up pay is payable for 26 weeks, so are you saying that the overall benefit in the agreement would compensate the employee if, and presumably - and hopefully this would not happen - that they were injured to such an extent that they had to have 26 weeks off work, the difference between what they would be paid under the award and what their Workers Compensation payment would be?

PN106

MS BERTRAM: The difference between - in accident make up pay is 5 per cent. The difference between what they would earn under - excuse me. For pre-injury earnings as compared to what they would be - excuse me, your Honour. We would submit that if you would require further calculations in respect to the no disadvantage test, we could certainly undertake to do that.

PN107

SENIOR DEPUTY PRESIDENT WATSON: We might adjourn briefly to consider a few points.

PN108

MS BERTRAM: Thank you.

<SHORT ADJOURNMENT [2.57PM]
<RESUMED [3.16PM]

PN109

SENIOR DEPUTY PRESIDENT WATSON: Yes. We have reached this view which we will convey to you, Ms Bertram and Ms Babtist. We would require you to provide the information that has been indicated, quantifying the advantages, disadvantages raised by the Bench and in your submissions. A second issue which arises - if you just bear with me for one moment. We have considered all of the material in respect to the rosters provided to us, and whilst you have put to us that there's a 2 per cent advantage arising overall, that does appear to us to vary considerably between stores, and indeed, in one, Woodgrove, there appears to be some disadvantage.

PN110

So we would require you to address us further in relation to the application of the no disadvantage test in those circumstances, and that also raises the issue of any other disadvantages in circumstances where there is a limited advantage from the penalty rate, base rate trade off. We would further, in relation to that, ask you, or the relevant employers, to consider the giving of an undertaking to the effect that the distribution of hours after 6 pm on weekdays and on Saturdays, Sundays and public holidays were to increase relative to Monday to Friday hours over the course of the agreement, whether the employers would give an undertaking in those circumstances to review the rates applicable to ensure there was no disadvantage to employees.

PN111

What we would propose to do is to invite you to provide that additional information. We will in some form communicate a view to the employers through you, Ms Bertram, in order to facilitate the processes of going back to the employers in respect to that Werribee agreement issue. We would indicate in that context that the no disadvantage test is applied at the time of certification, and that follows from terms of XA(2) where approval of certification might have the effect of disadvantaging the employees, and that there is currently reserved a safety net increase.

PN112

I am not sure what the relevant timing of the Fast Foods Award for such variations is, but that's a factor your clients may wish to bear in mind, having regard to the timing, of going back to the employers in relation to those other matters and ensuring that the no disadvantage test can be met at the time of certification. I think that's all we want to put to you at this stage. As I say, when that material reaches us, the Bench will consider it and give some indication of its position in respect to those issues. So we will adjourn the matter on that basis.

<ADJOURNED INDEFINITELY [3.21PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #DK1 MATERIAL PROVIDED IN COMPLIANCE WITH DIRECTIONS PN2