AG2005/6057, Transcript of Proceedings [2005] AIRCTrans 2141 (14 October 2005)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 13012-1

COMMISSIONER HINGLEY

AG2005/6057

APPLICATION BY J & TM BRADY
s.170LK - Agreement with employees (Division 2)
(AG2005/6057)

MELBOURNE

11.15AM, MONDAY, 03 OCTOBER 2005

PN1

MR A MAHER: I seek leave to appear on behalf of J & TM Brady Trust also with me is MR FLYNN who is a colleague of mine but he won't be appearing this morning, if the Commission pleases.

PN2

THE COMMISSIONER: Thank you, leave is granted Mr Maher.

PN3

MR MAHER: Commissioner, again if the Commission pleases with respect to the programming of this mornings hearings, there is considerable overlap in the issues arising from each of the three agreements.

PN4

THE COMMISSIONER: Aren't they identical agreements?

PN5

MR MAHER: Virtually with the exception of the names and the processes themselves undertaken were also virtually identical, so I suspect that it might be the best use of the Commissions time if we deal with all the matters together and any issues that arise can be addressed individually if necessary.

PN6

THE COMMISSIONER: Well I'll ask my associate to call the numbers on.

PN7

MR MAHER: Thank you Commissioner.

PN8

THE COMMISSIONER: Yes Mr Maher.

PN9

MR MAHER: If the Commission pleases I also, as a result of calling on the other matters, I also seek leave to appear for Shelana Pty Ltd and Hayman Directions Pty Ltd.

PN10

THE COMMISSIONER: Leave is granted.

PN11

MR MAHER: Commissioner, I'm here this morning to seek certification of three certified agreements. I believe that these three agreements were filed in accordance with the Commissions requirements and were all within time. With respect to the provisions of the agreements themselves and the process undertaken, the former R29 statutory declarations that were filed with the Commission set out the processes undertaken, including the fact that the agreements were explained to the employees and the employees were provided a notice indicating the short term 170LK(2) and (4) that they could approach their employee organisation for assistance if they so desired.

PN12

I'm instructed that in no case was a union contacted or made contact with the employees. With respect to that right I believe that that 170LK(2) notice was provided along with the materials filed with the Commission prior to today's hearing. The only thing that I'd seek to the Commission could clarify this for me, was a copy of a comparison document provided in the materials to the Commission?

PN13

THE COMMISSIONER: Yes it was.

PN14

MR MAHER: If I could just clarify, that's not the comparison document that was provided last Friday to your associate.

PN15

THE COMMISSIONER: I see. No that's what I'm talking about.

PN16

MR MAHER: Okay. Just for the Commissions file, this is the copy of the comparison table that was provided to employees along with a copy of the agreement - - -

PN17

THE COMMISSIONER: Thank you.

PN18

MR MAHER: - - - prior to the 14 day period. This table sets out the relevant terms of the certified agreement and the equivalent or relevant terms in the underpinning Award and the underpinning Award is the Vehicle Industry Repair Services and Retail Award 2002 which operates under common rule in Victoria and we would submit is binding on console operators industry.

PN19

THE COMMISSIONER: Do you want to take me through that document if you would, just to satisfy me - - -

PN20

MR MAHER: Sure.

PN21

THE COMMISSIONER: Or can you satisfy me that it meets the no disadvantage test?

PN22

MR MAHER: Commissioner perhaps what I would propose to do is move onto that shortly in relation to the material that we provided on Friday. This is really to ensure that the employees were given a satisfactory explanation of the agreements pursuant to 170LK(7) of the Act. And in it's own way, I don't know if it's that illustrative in terms of the real nuts and bolts considerations that the Commission has to have in relation to the no disadvantage test, but rather it's giving employees the ability to be in a situation where they can actually make a genuine decision should they vote as to whether they wanted to vote the agreement up or not.

PN23

Prior to addressing the no disadvantage test issue's I have been instructed and I was actually under the mistaken impression that the agreement itself, it contained in the hours of work clause of this following provision, but instead of moving onto the no disadvantage test I propose to tender this in relation to each of the three agreements. It's an additional undertaking with respect to the operation of the agreements and the rostering patterns or the method of rostering which would be undertaken by the employers of the agreements.

EXHIBIT #M1 COMPARATIVE TABLE
EXHIBIT #M2 HYPOTHETICAL COMPARISON BETWEEN AGREEMENT & AWARD
EXHIBIT #M3 ADDITIONAL UNDERTAKING

PN24

THE COMMISSIONER: Yes go ahead.

PN25

MR MAHER: Yes Commissioner. Before I take the Commissioner to all those documents that were filed on Friday, I would just propose to read the proposed undertaking onto the transcript. You'll see it's under the title "Hours of Work":

PN26

My clients propose to provide a formal undertaking that subject to the operational requirements of the business...(reads)... evening and weekend work.

PN27

The key purpose which is probably self evident of this undertaking is to ensure that employees are not disadvantaged by being rostered for example, every Sunday where vis a vis the Award, we would see that they would probably be disadvantaged because as I suppose a little bit of background. Prior to the implementation of the Common Rule Award the beginning of this year, my clients were covered by the Minimum Wage Order and schedule 1A of the Workplace Relation Act. Accordingly because of the perhaps those owner requirements in schedule A of the Minimum Wage Order, the employees were paid a flat rate across all hours of work. With the implementation of the Common Rule Award obviously the higher weekend loadings in the Award came in. In the case of console operators that's time and a half after midday on Saturday and on Sunday as well.

PN28

Accordingly there has been a slight disruption in as much as employees who were previously, say for example only working a Sunday, or employees who are only working a week day, have been looking at their colleagues who are now entitled to higher rates and there have been a couple of issues in terms of wanting to get the plumber shifts. So what this proposes to do is provide a flatter rate structure where the rates during the week are higher than the Award including the rates between 12 pm and 6 am in the morning, which provide an additional dollar per hours which isn't reflected in the Award because the Award - and I'm quite happy to take the Commissioner through the Award cause it is a reasonably complex award as it applies to console operators. There's no additional loading for example, working at night under the Award, as I said unless actually it is after midday on Saturday or on Sunday or on a public holiday for example.

PN29

I am at to some degree at the Commissions pleasure in terms of how you'd like to approach this, whether you'd like me to actually go through that list of scenario's that we provided to you or perhaps go through the Award as it applies to console operators. In terms of the key provisions and perhaps actually talk about how they're reflected from the agreement.

PN30

THE COMMISSIONER: I'll let you do that, before you do that thought can I raise some matters with you in respect to these agreements.

PN31

MR MAHER: Certainly Commissioner.

PN32

THE COMMISSIONER: In respect of annual leave clause 9, that's an opportunity to cash out all annual leave in total?

PN33

MR MAHER: Yes Commissioner it's all paid annual leave, that is if I can take you Commissioner to clause 6 as is points out:

PN34

Permanent employees will have the choice ...(reads)... in lieu of accruing those benefits.

PN35

And the employee actually has a choice of that. So they would be entitled to take unpaid leave and unpaid sick leave but they wouldn't have the dollar accruals running from year to year if those chose to accept that additional rate per hour.

PN36

THE COMMISSIONER: In respect of the annual leave though, they also don't have the benefit of the recreation leave do they? Money can't replace the leave itself can it?

PN37

MR MAHER: No it can't Commissioner, the point is that we recognise that it is important that the employees do have access to that period of recreation and if I can take the Commission to the second paragraph in clause 9.

PN38

THE COMMISSIONER: Yes take it unpaid.

PN39

MR MAHER: They can take it unpaid and it will be recognised - - -

PN40

THE COMMISSIONER: Is that likely to happen though people on this wage level are they likely to do it?

PN41

MR MAHER: It's difficult to say Commissioner I couldn't say with any certainty.

PN42

THE COMMISSIONER: In respect of clause 12, public holidays, I might have missed something here. Would you explain that to me, the rate there doesn't seem to be anything like time and a half for a public holiday set out in clause 13 rate per hour.

PN43

MR MAHER: No that is lower than the public holiday rate in the Award.

PN44

THE COMMISSIONER: So they're only marginally working for more than ordinary hours.

PN45

MR MAHER: Yes that's correct Commissioner.

PN46

THE COMMISSIONER: Yes. And in clause 22 I know what you're getting at but I don't know what this clause really does or whether it says what it really does. The last paragraph of clause 22.

PN47

MR MAHER: Yes Commissioner, a majority of these, or I believe that all of these businesses are small businesses as originally conceived prior to now talk of 100 employees or less being small businesses, but with 15 employees or less. Should there be legislation introduced which I believe there will be providing different or exemptions to the current provisions for redundancies in the current test case standard, this clause would effectively import those changes. If there are no changes then the clause would not operate.

PN48

THE COMMISSIONER: But if the government brought in legislation it's a statutory provision isn't. How would this agreement do otherwise.

PN49

MR MAHER: With respect Commissioner what I anticipate and not having seen any draught legislation - - -

PN50

THE COMMISSIONER: None of us have had that benefit.

PN51

MR MAHER: No. I would assume that it wouldn't override existing certified agreements for example, it would provide an exemption to the operation of Federal Awards and State Awards as well, but wouldn't actually upset the terms of the bargain reached between employees and the employer. This clause seeks to provide the employer the benefit as small businesses if such a legislation is introduced. So in allowing that, it effectively it imports the operation of the legislation which I would anticipate wouldn't otherwise override the Certified Agreement term if the Commission pleases.

PN52

THE COMMISSIONER: It is anticipating that is that what you are saying?

PN53

MR MAHER: That's correct Commissioner.

PN54

THE COMMISSIONER: But it says of a certain size or number, I mean what's a certain size or number?

PN55

MR MAHER: The reason it says a certain size or number is that - - -

PN56

THE COMMISSIONER: Could be at anything though couldn't it?

PN57

MR MAHER: Well I would suspect it's really - because we don't want to say for example 15 or less, because you might have it as 20 or less, or they might have it 10 or less.

PN58

THE COMMISSIONER: Perhaps relevant might be a better word than certain, might it?

PN59

MR MAHER: If the Commission requires that that be read as meaning relevant I'm quite happy to have that - - -

PN60

THE COMMISSIONER: As I say, I know where you're going with this but I'm just worried about the wording that's all. I mean if there's any legislation that relates to any size or any number, the agreement seems to pick it up.

PN61

MR MAHER: Yes. That certainly wasn't the intention, it was literally to limit it as small business exemption if in fact it's 15 or 20 employees.

PN62

THE COMMISSIONER: Yes. Look, are these the first section 170LK agreements in respect to these employers, or are they follow ons from previous ones?

PN63

MR MAHER: I'm not certain. I know that there are quite a large number - we originally acted for ATCO who are the franchisors in this matter, and there are I believe, a number of at least as certainly one binding ATCO, but a number of these agreements are already in operation from prior years in very, very similar terms. And as I understand it and I haven't got instructions on these, perhaps these are new franchisees, but certainly these are actually a little bit more generous than the ones that were previously certified. But these are consistent with a number of agreements that are already covering ATCO franchisees around the Geelong area because they are a semi-rural regional operation.

PN64

THE COMMISSIONER: And the agreements are measured against an Award of course. Where does it say that in there, agreement - - -

PN65

MR MAHER: It's actually in clause 4, the agreement should be read in conjunction with the Vehicle Industry Award unless it's obviously inconsistent.

PN66

THE COMMISSIONER: Now are they respondents to that award.

PN67

MR MAHER: I don't believe they are named respondents but they are respondents by virtue of the Common Rule Application of that Award in Victoria.

PN68

THE COMMISSIONER: Yes, I see, thank you. Can you give me the voting numbers in respect to each of the three matters?

PN69

MR MAHER: Commissioner, I don't believe we've been provided instructions in relation to the actual voting numbers. The only confirmation that we got was the fact that they were voted on by a valid majority of the employees. I'd suspect in these situations, that these being sort of small melt idly family run operations in regional areas, I would suspect that - actually I probably won't proceed with this because I'm speaking without instructions. I don't know but we've been instructed that they were certainly validly approved.

PN70

THE COMMISSIONER: Is there a reason that there aren't any employees here this morning that I can question.

PN71

MR MAHER: It's certainly not intentional and certainly - - -

PN72

THE COMMISSIONER: It is the normal practice where there's an employee representative.

PN73

MR MAHER: It is. The problem is Commissioner that these service stations are in regional areas and a trip up to Melbourne for these employees would have been I guess, reasonably inconvenient and we believe that with - and based on our instructions - - -

PN74

THE COMMISSIONER: We probably could have done a telephone hook up though.

PN75

MR MAHER: I believe that would be possible if the Commission required it.

PN76

THE COMMISSIONER: If we'd have known in advance, we could have done that.

PN77

MR MAHER: We would have been happy had a request been made to try and organise that Commissioner.

PN78

THE COMMISSIONER: Anyway that's the questions I wanted to ask you. Do you want to now take me to the matters that you wanted to describe to me.

PN79

MR MAHER: Yes Commissioner I just - - -

PN80

THE COMMISSIONER: Because I'm having difficulty, that's why I asked you to provide me with the metrics of comparison, because I'm having difficulty being definite that they meet the no disadvantage test.

PN81

MR MAHER: Yes Commissioner. Certainly I'm quite happy to confirm on transcript that these are very, very close, well not very, very close but close to the no disadvantage test line. These - - -

PN82

THE COMMISSIONER: Well they can't be close they've got to get over it.

PN83

MR MAHER: No that's what I mean close on the upper side of it rather than on the lower side of it, but they aren't certainly in the schemes of the agreements we've done in the past, aren't particularly generous agreements but the nature of the industry is such, and I don't know if the Commissioner is actually on the panel of this.

PN84

THE COMMISSIONER: I'm not, but I'm familiar with the agreement you are talking about.

PN85

MR MAHER: But this is a very - - -

PN86

THE COMMISSIONER: It was done before Commissioner Gay I think or done before Commissioner Blair, were there not?

PN87

MR MAHER: I believe so, we weren't involved in the - - -

PN88

THE COMMISSIONER: You were with Commissioner Gay.

PN89

MR MAHER: We were involved with Commissioner Gay, but the ones before Commissioner Blair I was involved in that was my previous firm. There's some history, which the Commission may be aware of. This industry is one which as the Commission would be aware is a very low margin industry, and I suspect one in which adherence to the common rule award is probably a little bit hit and miss. What our clients are seeking to do is implement an agreement that their employees have seen, the employees perhaps unlike some of their colleagues across the industry are aware that they're covered by the common rule award, because it was provided to them in the comparison table, and they've been given the opportunity to look through the agreement.

PN90

They've all got copies of it. Also, do realise, that in these industries, if the penalty rate regime as it actually applies in the word is to continue to operate the owners of these businesses will probably work the Sunday shift, for example, because it's not economically viable for them to pay time and a half on Sunday. At those rates they would instead work it themselves. The agreements are not generous, but I believe that based on the matrices that we did provide - actually, it might be just a matrix - what we tried to do there is pick a number of scenarios, I think there were five or six of them and calculate it out. I believe those scenarios we used when formulating the agreement which I wasn't involved in, my colleague was, but based on those scenarios as you calculate it out, we’d submit the agreement does pass the no disadvantage test, but as the Commission would be aware, not by significant amounts.

PN91

THE COMMISSIONER: Not in all cases.

PN92

MR MAHER: Sorry?

PN93

THE COMMISSIONER: Not in all cases.

PN94

MR MAHER: I think one scenario, where - in scenario number five.

PN95

THE COMMISSIONER: That's right.

PN96

MR MAHER: That's correct, Commissioner. The point we would make in this, and this is why the equitable rostering undertaking is so important, is that as I understand it - and I'm certainly happy to be corrected - the no disadvantage test, it's intended operation is that when set against the award an employee will ultimately be no worse off than they would be under the relevant award in an overall sense, perhaps it's a global test is probably a better way of putting it.

PN97

THE COMMISSIONER: Yes.

PN98

MR MAHER: In this situation, provided that equitable rostering was provided, we would submit that there may be a couple of scenarios where if seen in isolation and that employee just worked that week they would be arguably disadvantaged against the award, but when you see it in the context of an equitably rostered work pattern, the situations where they are better off would ultimately balance out so overall they weren't disadvantaged against the award. That's the point. For the simple reason of not wanting to mislead the Commission we could have perhaps left out the example where the employee is worse off but I guess the point we'd be seeking to make is that it should be seen overall and there certainly will be circumstances where if you only just work that week and you didn't work any other weeks and you weren't equitably rostered you may be disadvantaged against the award, but ultimately when seen in terms of the overall operation and employees being provided a mix of different shifts so everyone gets a bit of a benefit of everything, the employees themselves won't be any worse off.

PN99

THE COMMISSIONER: That's the point that I was coming to. Are you prepared to give me an undertaking that individuals won't be disadvantaged in that regard?

PN100

MR MAHER: Commissioner, I certainly - - -

PN101

THE COMMISSIONER: The test that you say is right, it's a global test, but it's not just in my view a global test on the agreement, it's a global test in respect of employees. Do you get the distinction that I'm making?

PN102

MR MAHER: I do Commissioner, and - - -

PN103

THE COMMISSIONER: Are you able to provide the Commission with an undertaking that employees will not be disadvantaged on that basis?

PN104

MR MAHER: At this point in time, Commissioner, as I said, I haven't got any instructions, but I could perhaps talk hypothetically, I think that an undertaking of that sort, in itself, one that I've ever been required to make to the Commission before, but I believe - and I say this with respect - that it is relatively unworkable in the sense that you've got for example sort of thirteen employees and that would require ultimately the employer to sit down at the end of every week with the award and with the agreement and sit down and calculate to make sure the employee was not worse off, which ultimately and I say this with respect, is unmanageable.

PN105

THE COMMISSIONER: I understand that argument, and you're quite right, but the alternative applies as well, that he could sit down and work out that someone was perennially disadvantaged. That's my concern, and who knows that wouldn't happen?

PN106

MR MAHER: Commissioner, we hope as far as possible that the equitable rostering undertaking would, would - an obligation which is of course enforceable, because it will be read as part of the agreement, and we'd provide a copy of that undertaking to the employees in question so they'd be aware of that - if they believe they were being disadvantaged, and they have got a copy of that comparison table still where they can sit down and they know the award, they have access both firstly to perhaps go to the department and say I believe that my employer is not equitably rostering me so I'm not getting the benefit of a high weekly wage, a higher sort of Monday to Friday wage, instead I'm being made to work every Sunday, my employer is actually breaching their undertaking. They could arguably go to the appropriate union. They could also seek to have the matter referred to the Commission under the dispute mechanism. We believe there are sufficient safeguards - - -

PN107

THE COMMISSIONER: If they're going to refer it to the Commission then the Commission would like to have the undertakings to rely on. Otherwise it would be argued that the employer is applying the agreement.

PN108

MR MAHER: Yes, as I said, Commissioner, I believe, and I say this with respect, that with the safeguards in place the employees do have an option to ensure if they feel they are actually not getting the benefit of the undertaking and not being moved around they do have alternatives. I don't believe, and as I said I haven't got any instructions on this, but I don't believe it would be workable for the employers to provide the undertaking in the terms requested by the Commission as a hypothetical issue. The status quo, as it's represented in the agreement, is I think sufficient to provide the protections the Commission would require.

PN109

THE COMMISSIONER: You seem to be saying to me, and I think I'm right in saying this, there's no intention that that would be exploited in that way.

PN110

MR MAHER: I don't believe so. Certainly, as I said, perhaps in the absence of that equitable rostering undertaking there could be an opportunity for some abuse, I don't doubt, but the fact that that will be provided to employees and they can look at it and say I'm either getting a mix or I'm not getting a mix would make a very big difference I think. I suppose the other issue and this is clearly not a relevant matter for the Commission per se if the Commission doesn't believe the no disadvantage has been passed, but as the Commission would be aware there are changes coming through which would obviously create a far less onerous no disadvantage test and - - -

PN111

THE COMMISSIONER: We won't be reconsidering these at that point.

PN112

MR MAHER: No, that's exactly right.

PN113

THE COMMISSIONER: That's if they come through.

PN114

MR MAHER: That's right, but in this situation my clients have sought to proceed rather then waiting, apparently March next year is the indication. Instead of waiting until then, they're willing to lock into a three year agreement that passes the no disadvantage test - we would say - against the relevant award, instead of waiting for example six months and having to pass the no disadvantage, effectively it's schedule 1A and the minimum wage order.

PN115

We also believe, almost on public policy grounds, that the employees are going to be better off under our agreement than waiting for six months and going through and getting a sub standard agreement because the sort of jobs - it's usually university students and part time workers who might be able to do a day here and a weekend there - I suspect, in this industry, employees would vote up agreements that were probably substandard compared to this agreement. From that point of view, I believe going ahead on this agreement that is close to the no disadvantage test but does pass it will ultimately also be to the employees' benefit in the longer term when a lot of our competitors are probably going to be looking at the easy way out.

PN116

THE COMMISSIONER: Well, I accept your submission that it does pass it, but there is no argument whatever that university students by nature of the way they work, should be paid less than award rates or be disadvantaged, there is no argument whatever. Or, in respect of some hypothetical future legislation which may or may not be put upon us. However, are there any clauses in the agreement, any clauses at all, that constitute reductions?

PN117

MR MAHER: Yes, I believe they were set out in the R29, Commissioner.

PN118

THE COMMISSIONER: Will you take me to that on transcript?

PN119

MR MAHER: I'll be a moment, Commissioner. Commissioner, the probationary period in the award one day's notice for the first three weeks is provided and one week's notice until the end of the probationary period; however, in the agreement notice is one day for the duration of the probationary period. I'm not quite sure why bereavement leave is listed as a - I believe that's been an oversight, leaving that in there - I believe that the earlier version of some of these agreements had two days bereavement leave rather than three. I don't believe there's a disadvantage there. They both have three days bereavement leave.

PN120

Public holidays, there is a reduction. The agreements provide for a lower rate than the double time provided for under the award. The weekend penalty rates, the award provides that you get time and a half after midday on Saturday on Sunday. The agreement provides a rate that is not time and a half but it is higher overall because it's higher I think 3.6 per cent higher than the base award rate and then goes up to 10 per cent higher between the hours of midnight and six because there's no additional loading in the Award.

PN121

In annual leave loading, console operators under the award would receive 17.5 per cent annual loading, annual leave loading, and there's no separate annual leave loading entitlement because that's been factored into the wage rates. Something just came to my mind, Commissioner, that I think is a very key issue in all of this as well, is that another factor that does influence the operation of the no disadvantage test is the fact that paid breaks are provided under this agreement whereas they're not provided under the award.

PN122

Say, for example, I think it's for every six hours, there's half an hour paid, that actually increases substantially the overall remuneration to which the employee is entitled for the hours they actually work. The award provides that half an hour meal breaks should be provided but not counted as time worked, whereas in the agreement the half hour break is counted as time worked, which as the Commissioner can appreciate increases the rate by a sixth[sic] I suppose. You'll get about 12 or 13[sic] percent just on that because you are getting paid for your breaks, whereas under the award you're not getting paid for your breaks.

PN123

That really is an overarching benefit that actually operates across the whole agreement, because every shift that an employee works of six hours or more they're going to get that benefit of the paid rate that they wouldn't have got had they worked under the award. If you add that into the calculations it does change what is on the face of it, when you look at it before you realize the intricacies of the agreement, look at the rates and think that couldn't be sufficient to counter some of the benefits provided in the award, but when seen in the context of both the higher rates between 12 pm and 6 am in the agreement and also the fact that you get paid breaks, that does in fact we submit throw the balance in the favour of the agreement in terms of the no disadvantage test.

PN124

THE COMMISSIONER: Yes.

PN125

MR MAHER: I think that's born out in the calculations as well. If the Commission pleases.

PN126

THE COMMISSIONER: Thank you. In respect of AG20056057, in accordance with section 170LT of the Workplace Relations Act 1996 the Commission hereby certifies the written agreement. This agreement shall come into force from
3 October 2005 and remain in force for a period of three years. In respect of AG20056058, in accordance with section 170LT of the Workplace Relations Act 1996 the Commission hereby certifies the written agreement. This agreement shall come into force from 3 October 2005 and remain in force for a period of three years. In respect of AG20056059, in accordance with section 170LT of the Workplace Relations Act 1996 the Commission hereby certifies the written agreement. This agreement shall come into force from 3 October 2005 and shall remain in force for a period of three years. I'm going to have my associate order a transcript in respect of these matters and the transcript to be added to the files.

<ADJOURNED INDEFINITELY [11.49AM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #M1 COMPARATIVE TABLE PN23
EXHIBIT #M2 HYPOTHETICAL COMPARISON BETWEEN AGREEMENT & AWARD PN23
EXHIBIT #M3 ADDITIONAL UNDERTAKING PN23