AG2005/4388, Transcript of Proceedings [2005] AIRCTrans 1659 (5 August 2005)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 12316-1

SENIOR DEPUTY PRESIDENT O’CALLAGHAN

AG2005/4388

AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION-SOUTH AUSTRALIAN BRANCH
AND
SAFRIES PTY LTD
s.170LJ - Agreement with organisations of employees (Division 2)
(AG2005/4388)

ADELAIDE

11.03AM, FRIDAY, 22 JULY 2005

THE FOLLOWING PROCEEDINGS WERE CONDUCTED VIA VIDEO CONFERENCE AND RECORDED IN ADELAIDE

PN1

MR P BAUER: If it pleases the Commission, I appear on behalf of the Australian Manufacturing Workers' Union.

PN2

MR D DUNCAN: I appear on behalf of Safries.

PN3

THE SENIOR DEPUTY PRESIDENT: Thank you, Mr Duncan. The questions that I had of the parties in relation to this agreement have been forwarded out by email to the parties. I note that the employer has responded to those questions. It might be best if we briefly go through those issues. I'm satisfied that the process that was followed in reaching this agreement was consistent with that detailed in the Act. The parties have acknowledged, as I understand it, that if the agreement is to be certified it will be certified, prospectively.

PN4

The issue relative to previous agreements is, as I understand it, that the parties intend those previous agreements will be adopted in terms of existing over award payments and conditions of employment and where that is the case those arrangements have been documented. Is that the case, Mr Duncan?

PN5

MR DUNCAN: Yes, Senior Deputy President.

PN6

THE SENIOR DEPUTY PRESIDENT: Thank you. The issue relative to clause 7 and the dispute settlement process causes me a little confusion. Clause 7 appears to provide a capacity for the dispute resolution provisions in each of the two referenced awards to be applied in this particular agreement. In that regard, in the event that a dispute arises which involves employees covered by both those awards, would the parties see that the process that was followed would adopt one award dispute resolution mechanism or would both need to be applied?
Mr Bauer?

PN7

MR BAUER: Sir, the situation with the employer being covered by both awards wouldn't apply - it wouldn't occur because we have a clear delineation between award coverage of production workers and these are undertaking the production work in the factory and maintenance workers who are covered by the Metal Industry Award.

PN8

THE SENIOR DEPUTY PRESIDENT: Maybe I'm not making the question clear enough. Let's say, for instance, a dispute arises with production and maintenance personnel. The issue there is, as I understand, the parties' intention relative to clause 7, it is that the relevant award would be used. In that event you'll have two awards with some variations in their dispute resolution mechanisms. I'm trying to establish how the parties would see the dispute being resolved in that context. Does that help you at all in terms of explaining my question, Mr Bauer?

PN9

MR BAUER: Yes, your Honour. I understand what you're saying.

PN10

THE SENIOR DEPUTY PRESIDENT: Yes. I'm not sure there's a right or wrong answer in this regard. I would suspect it was far more critical of the parties to have a common view as to their interpretation of that situation. Do you want to ponder upon my question and come back to it?

PN11

MR BAUER: Your Honour, from our perspective it would be a rare occurrence - whilst the two groups may act uniformly the issue would probably be more than not more commonly related to either one or all and they may all react in a similar way to reinforce the point.

PN12

THE SENIOR DEPUTY PRESIDENT: Does that mean you would apply the dispute resolution mechanisms in both awards in that instance?

PN13

MR BAUER: I guess I hadn't really thought about that one, your Honour.

PN14

THE SENIOR DEPUTY PRESIDENT: You see, that's the question I'm asking. I'm happy to leave it with you for a moment, Mr Duncan, because it may be there are other issues that you'll need to address. I've noted the wages schedule provided to me by the parties. That takes me to clause 11 of the agreement which was the payroll deductions clause. This clause simply says that it is agreed that the employer will provide all employees with a payroll direct debit facility for split banking, medical insurance or union subscription fees to be remitted to the intended recipient at least monthly.

PN15

Mr Duncan, are you able to give me some more information about how that arrangement works insofar as can you tell me whether it's a salary sacrifice arrangement or how does it in fact operate? To perhaps help you, so that I don't trip you up in that process, the issue of payroll deductions has been considered at some length by the Commission in various decisions. The last Full Bench ruling relative to payroll deductions that I'm aware of was the decision of the Full Bench in Schefenacker in March of this year. If you need to look back at that decision, it's PR956575. In dealing with payroll deductions, the Bench was in that case considering a clause that was particularly orientated to union dues. The clause in question said that the company will continue to support deductions of union dues through payroll deductions.

PN16

The Full Bench confirmed that the clause was not about a matter pertaining to the employment relationship. In that regard, it had regard to the decisions of the
High Court in Portus and Alcan and noted an earlier Full Bench decision in Atlas Steels. It said that in the Atlas Steels matter the Full Bench was relying on a distinction between a claim and a matter which had been agreed. It commented that the reasoning adopted in that Atlas Steels' matter had not survived the High Court consideration in the Electrolux decision of September last year. Accordingly, the clause in the Schefenacker agreement was held not to pertain to the employment relationship and as result, to be a bar to further consideration of the agreement.

PN17

As a separate issue, the Schefenacker decision dealt with a couple of clauses that related to salary sacrificing. It determined that salary sacrificing could be said to be a matter which pertained to the employment relationship. It's not an easy leap, if I can use that phrase, to say why salary sacrificing might pertain and yet to say payroll deductions for union dues does not pertain. But it's that issue which underpins the question that I'm asking about the payroll deductions clause 11 in your agreement. I hope that my background information provides a context within which I'm asking that question.

PN18

MR DUNCAN: Yes, it does thank you. From our perspective, be it salary sacrifice or payroll deductions, it is nominated by the employee on the basis that, I guess, it's their earnings, their income and how they split it or distribute it is entirely at their discretion. What we provide is that facility to do that.

PN19

THE SENIOR DEPUTY PRESIDENT: So, how does that system work, Mr Duncan. Does the employee nominate amounts that they want to have deducted from their salary and paid to another third party?

PN20

MR DUNCAN: Yes, they do, Senior Deputy President.

PN21

THE SENIOR DEPUTY PRESIDENT: Do they actually specify the amount?

PN22

MR DUNCAN: Yes they do, and because they're paid weekly, things such as medical insurance - we forward those subscriptions on a monthly basis. I guess, if they want to split as some employees do to pay mortgages through one account and put their savings in another account, they do split banking. I guess from our perspective if they decide they want to pay the union through that mechanism, they have the choice to nominate that.

PN23

THE SENIOR DEPUTY PRESIDENT: Is the deduction from the employee's salary made from the gross or the net figure? Is it pre tax deductions or post tax?

PN24

MR DUNCAN: Salary sacrifice is pre tax and direct debit facility is post tax, out of their net amount. That's really the only difference between the two from our perspective as an employer.

PN25

THE SENIOR DEPUTY PRESIDENT: Let me once again cover some of this ground, because I'm not sure that I still understand that clause 11. Is the direct debit facility then applied post tax?

PN26

MR DUNCAN: Yes, it is applied post tax.

PN27

THE SENIOR DEPUTY PRESIDENT: Is it applied in the same way for split banking, medical insurance or union subscription feed?

PN28

MR DUNCAN: Yes, it is.

PN29

THE SENIOR DEPUTY PRESIDENT: I see, so it's a payment out of earned monies.

PN30

MR DUNCAN: Out of their net earnings, yes.

PN31

THE SENIOR DEPUTY PRESIDENT: Yes.

PN32

MR DUNCAN: The employees have to fill out a form to advise the pay office to do that. We don't do it otherwise.

PN33

THE SENIOR DEPUTY PRESIDENT: Thank you. Is there any more information you want to give me in relation to that clause? I will need to take that clause away and ponder upon it in the context of the information that you've given me so far.

PN34

MR DUNCAN: No, I think that covers it off. I mean, as I said, we would see salary sacrifice or direct debit payroll deductions as really the same issue from an administrative point of view. It's just that one is pre tax and one is post tax. In both instances the employee advised us to do that. We don't do it of our own volition.

PN35

THE SENIOR DEPUTY PRESIDENT: Thank you. Mr Bauer, you want to say anything to me about these particular provisions?

PN36

MR BAUER: Yes sir, just in relation to particularly your question regards to 6.3. Whilst the company has identified that they believe that the award conditions that are over award have been documented in previous EBAs. There are, in fact,
over award payments and conditions which aren't documented in EBAs or agreements. They were subject to some discussion at our last certification of our previous agreement. We identified to the Commission in a letter dated 11 August 2003, those issues which are not covered in the EBA which that clause refers to.

PN37

THE SENIOR DEPUTY PRESIDENT: Does that letter hold true then?

PN38

MR BAUER: That letter holds true. There's been no changes to my knowledge. I can provide a copy of the draft letter if you wish.

PN39

THE SENIOR DEPUTY PRESIDENT: No, you won't need to. If someone needed to research the Commission's file, no doubt will locate the 2003 file.

PN40

MR BAUER: No, I've got nothing else to add sir, in relation to the matters.

PN41

THE SENIOR DEPUTY PRESIDENT: Mr Duncan, back in terms of clause 11, is there an explanation of that payroll deduction or direct debit arrangement which is provided to employees?

PN42

MR DUNCAN: There is - no, there's only the form that they actually fill out to say that they want their net pay directed through different channels and we give them the option of splitting it - I think it's six different way. So that can be between separate bank accounts to medical benefits funds or whatever they choose. I can provide a copy of the form if you like.

PN43

THE SENIOR DEPUTY PRESIDENT: Yes, if you could provide me with that form. What I'm going to suggest too, is that you provide me with that form and indeed any other information that you consider might be relevant to clause 11.

PN44

MR DUNCAN: Yes.

PN45

THE SENIOR DEPUTY PRESIDENT: Perhaps before you actually send that information to me you and Mr Bauer might want to put your heads together and hopefully provide me with some agreed position in terms of how clause 7 might operate.

PN46

MR DUNCAN: Yes.

PN47

THE SENIOR DEPUTY PRESIDENT: So that you can incorporate that in the advice to me. At the conclusion of the hearing my associate will give you an email address., although, you can send the material straight back to the same email address that you've used previously.

PN48

MR DUNCAN: Okay.

PN49

THE SENIOR DEPUTY PRESIDENT: In the event that having pondered upon the information you are going to provide to me about clause 11, I'm satisfied that the agreement is able to be certified. I would certify it from the date upon which I receive that information. A certificate would then be forwarded out to the parties. That certificate would refer to the various clauses about which I sought clarification. It won't detail the information which I've foreshadowed to the parties in my email, nor indeed the parties' responses because those will all be retained on the Commission's file.

PN50

In the event that I'm not able to certify the agreement, I'll set out the reasons for that and try to provide some assistance to the parties as to how the certification process could then be expedited. I certainly haven't reached any conclusion in that regard and you ought not to presume that I have at all. Are you happy with that approach Mr Duncan?

PN51

MR DUNCAN: Yes, I am.

PN52

THE SENIOR DEPUTY PRESIDENT: Mr Bauer, are you happy too?

PN53

MR BAUER: Yes I am, sir.

PN54

THE SENIOR DEPUTY PRESIDENT: Thank you. Perhaps for Mr Bauer's benefit rather than yours, Mr Duncan, you will note Mr Bauer, a somewhat different approach has been applied in relation to this agreement in that the questions that I have, have been forwarded out to the parties in advance of the hearing. The objective there is twofold.

PN55

First of all, it's designed to try to give the parties the opportunity to avoid the need for a hearing by way of email responses prior to the hearing date. Secondly, in the event that a hearing is necessary, at least you should be forewarned and forearmed about the questions. Don't read anything untoward into that approach, I'm simply trying to expedite the process.

PN56

MR BAUER: I find it a helpful approach, sir.

PN57

THE SENIOR DEPUTY PRESIDENT: Thank you. I'll adjourn the matter on that basis.

<ADJOURNED INDEFINITELY [11.22AM]