C2005/5349, Transcript of Proceedings [2005] AIRCTrans 2368 (18 November 2005)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 13364-1

COMMISSIONER SPENCER

C2005/5349

KILCOY PASTORAL COMPANY LIMITED
AND
AUSTRALASIAN MEAT INDUSTRY EMPLOYEES UNION, THE
s.127(2) - Appln to stop or prevent industrial action
(C2005/5349)

BRISBANE

9.06AM, FRIDAY, 04 NOVEMBER 2005

PN1

MR A HERBERT: I seek leave to appear for the Kilcoy Pastoral Company Limited, the applicant.

PN2

MR L NORRIS: I appear on behalf of the Australasian Meat Industry Employees Union and there is no opposition to leave being granted.

PN3

THE COMMISSIONER: Thank you. On that basis I'll grant leave Mr Herbert.

PN4

MR HERBERT: Thank you Commissioner. Commissioner there should be before the Commission, a copy of an application under section 127 of the Act, a statement of Sherryl Barber and a formal draft order that we seek.

PN5

THE COMMISSIONER: Yes, I have those documents. Mr Norris has all those as well?

PN6

MR NORRIS: Yes.

PN7

MR HERBERT: Mr Norris is very - I'm grateful for the fact that he's indicated that he does not require Ms Barber to be cross-examined and I'd ask to tender the statement of Ms Barber as evidence in these proceedings. She's present in the Commission but she's not required for cross-examination and I don't require any further evidence-in-chief of her.

PN8

THE COMMISSIONER: Is that a signed copy - no.

PN9

MR HERBERT: The copy you have may not be signed because of the haste of the matter, but we are able to provide the Commission with a signed copy.

PN10

THE COMMISSIONER: All right, on that basis you have no objection to accepting it as a sworn statement?

PN11

MR NORRIS: I might just, without being pedantic, it's accepted without any challenge for the purposes of these proceedings. I simply haven't had an opportunity to take instructions on the matter. But for today's proceedings we're prepared to let it be tendered into evidence without challenge.

PN12

THE COMMISSIONER: Well, do you require an adjournment Mr Norris in relation - no.

PN13

MR NORRIS: No Commissioner. On my present instructions in relation to this matter there is nothing in the witness statement that I can see requires challenge. I'm just wary of perhaps at some later date or later proceedings it will be used as evidence to support some other claim or defend some other claim and I'm just concerned to place on the transcript that our future rights are reserved.

PN14

THE COMMISSIONER: It is accepted within the confines of this statement.

PN15

MR NORRIS: Yes.

PN16

THE COMMISSIONER: This matter, I should say.

EXHIBIT #1 STATEMENT OF MS SHERRYL BARBER

PN17

MR HERBERT: Commissioner, can I hand up a number of documents to which reference will need to be made, or may need to be made in the course of proceedings. The first is a copy of the certified agreement, the agreement certified by yourself Commissioner, on 15 November 2004. There are two copies of decisions of the Commission, one of Commissioner Bacon, which is for the record PR913621 which is the certification of the predecessor to the present agreement and a decision of the Full Bench of the Commission, again for the record PR916582, which is a Full Bench decision of the appeal against the decision of Commissioner Bacon to certify the present agreement.

PN18

Copies of the decision of the Federal Court at first instance, being Kenny J in Emwest Products Pty Ltd v AMU and the decision of the Full Court of the Federal Court on appeal in relation to that matter, I have copies of each of those decisions. A copy of the decision of a Full Bench of this Commission; Munroe J, Senior Deputy President Harrison and Commissioner Leary in the matter of Coal and Allied v AMWU, which decision is I think accepted as the locus classicus on the principles to be applied in 127 applications. Finally, a photocopy of the title page and clause 16 of the Federal Meat Industry Processing Award 2000.

PN19

THE COMMISSIONER: Mr Norris, again you have copies of all those documents?

PN20

MR NORRIS: Yes thank you.

PN21

THE COMMISSIONER: That Full Bench was on the appeal from Commissioner Bacon's decision on the certification of the previous agreement, wasn't it?

PN22

MR HERBERT: Yes. The previous agreement was in almost identical terms.

PN23

THE COMMISSIONER: You said in relation to the current agreement, but you did mean the previous agreement?

PN24

MR HERBERT: The previous agreement. This agreement - the agreement which, Commissioner you certified, is almost a complete copy of the previous agreement with obvious changes in relation to hourly rates of pay in the time provisions, but otherwise - and both of those agreements are almost exact copies of the Federal Meat Industry Processing Award with the relevant changes necessary in order to convert the terminology from one of an award to that of an agreement. But the 2004 agreement is essentially identical to the 2002 agreement for all relevant purposes.

PN25

Clause 16 in both agreements is, with one exception, identical to the award provision, the change being that the reference to the union in the relevant processes is omitted on the basis the agreement is an LK agreement and that union membership, on my instructions, is relatively very low from the plant. But, other than that, the clause 16 referred to in the decision of Commissioner Bacon and in the decision of the Full Bench is the same as the clause 16 in the current agreement. So the observations made by Commissioner Bacon and the Full Bench relate as much to that clause in the agreement that you certified as they do to the 2002 agreement, which they certified.

PN26

Commissioner as I understand matters, the application sets out in some detail the facts and circumstances relied upon and that there appears to be little or no issue with the factual matters and with the fact that the relevant jurisdictional requirements for section 127 orders are met. Save and except for a single issue as I understand it and that single issue is whether the action which is proposed, the industrial action which is proposed for next Monday is protected action or is not. And that really as I understand it comes down to an issue that is to be argued before you as to whether section 170MN prohibits such action.

PN27

If 170MN prohibits the action then of course it is not only unprotected, but unlawful and in those circumstances and the normal course of the proceedings of this Commission, it is almost invariably considered to be the case that unlawful industrial action of that kind will almost always be amendable to section 127 orders. They're certainly a very powerful persuasive factor in relation to the exercise of the discretion which the Commission has once the jurisdiction aspects of section 127 have been satisfied. The issue as to whether section 170MN applies is ventilated in the attachments in the correspondence which is attached to the statement of Ms Barber. Has the Commissioner had an opportunity to read that?

PN28

THE COMMISSIONER: Yes I have Mr Herbert.

PN29

MR HERBERT: Then Commissioner you'll have a good outline of what it is that we say about the matter because we took the trouble to explain at great lengths what the position is in order to head off what has now happened. It turns out we are unsuccessful in that regard but we essentially make the same arguments in relation to the matter in these proceedings. As I understand it the union relies upon the decision of the federal court in the Emwest matter and you have those Emwest decisions. Can I take you to those decisions so that I can explain to the Commission the basis upon which we put this matter. Perhaps before I do that though in logical order I should take the Commissioner to the certified agreement and then take you Commissioner to the Emwest decision.

PN30

The certified agreement in clause 14 sets out wages and related matters - I'm sorry part 4 sets out wages and related matters, clause 14 sets out classifications and rates of pay. Those rates of pay that are set out for those classifications in clause 14 are time work rates of pay, that is there is an hourly rate which obviously means that that is the rate of pay one is paid in accordance with the time one spends at work. Those classifications that are set out in 14.2 cover on the page 19 of the copy of the Award that I have, the beef boner, beef slicer, beef boning production worker, production labourer, miscellaneous worker, miscellaneous worker et cetera. Those classifications cover each of the employees who was a subject of this application and there is a rate of pay prescribed for each of those employees.

PN31

In clause 14.3.1 there is a provision for a wage increase after 12 months, the third sentence of that clause says:

PN32

It is a term of this agreement that for it's duration employees undertake that no further claims would be made upon the company with respect of any industrial matter.

PN33

Absolutely clear, comprehensive all encompassing no extra claim clause, no extra claim will be made. On that basis the a making of an extra claim, that is the making of a claim for a benefit additional to those already prescribed already in this agreement, is itself a contravention of the agreement. The normal import of a clause like that is that the agreement is taken then to be in full and final settlement of all industrial matters whether or not they are actually specifically set out in this agreement. And there's plainly, one of the plain consequences of the Emwest decision is that if a matter is not the subject of a certified agreement in the sense that it hasn't been dealt with and the agreement isn't intended to cover that matter then the parties retained in a residual capacity to initiate a bargaining period and to initiate protected industrial action in relation to those matters that stand outside that agreement at section 170MN doesn't apply to those other matters.

PN34

THE COMMISSIONER: Inherent in your submission though, that specifically stipulated between the parties at the point of negotiation and certification is that correct?

PN35

MR HERBERT: At the point of negotiation and certification it was specifically stipulated between the parties and agreed that no extra claims would be made and if no extra claims would be made - - -

PN36

THE COMMISSIONER: No I mean the reference to an outstanding issue that requires further negotiation.

PN37

MR HERBERT: There was no - - -

PN38

THE COMMISSIONER: No, if that's the case in terms of Emwest, inherent in your submissions reliance and Emwest will require that particular situation where the parties would point to a matter that would require further negotiation, is that your submission?

PN39

MR HERBERT: The parties would have to either point to a matter and say in effect we don't include that in what we're doing now or by some other means where necessary, to show that that was a matter that was simple left out of the entire process. On the facts in Emwest the parties specifically put the redundancy issue to one side. It was the subject of another certified agreement, which at the time of the negotiations for the primary agreement the other certified agreement which contained redundancy provisions was within its nominal term. And the parties agreed that they wouldn't talk about redundancy because it was already contained in another agreement. So that the evidence in that case was clear that the parties have expressly put that issue to one side.

PN40

I would concede that it is possible for a matter to be simply left out of the equation in circumstances where, for example, the parties agree on a single issue such as we'll enter into a certified agreement in relation to wages and wages only. By necessary implication they have left out of that agreement everything else and therefore those other issues on the Emwest principle would remain capable of being the subject of some form of industrial action or the initiation of a bargaining period. But in this case there are two reasons why that cannot be the case, firstly the notice of initiation of a bargaining period which is an attachment to the statement of Ms Barber, its attachment one.

PN41

The matters to be dealt with in the agreement are incentive schemes payment by results arrangements on the second last line. Incentive schemes and payment by results arrangements are in fact means of calculating levels of income that's all they are, that's all they're intended to be. They don't have a life apart from simply being a mechanism by which ones income is calculated. So it's intended by the notice of initiation of a bargaining period to create a bargaining period in relation to the quantum of income of employees and the means by which that income is to be assessed in the plant. Now that is the subject matter, that is the remuneration of the employees and the methodology acknowledged that remuneration will be assessed.

PN42

The industrial action which is mooted can only be in support of that claim and that is an industrial matter pure and simple. In this case the certified agreement itself in 14.3.1 says that there will be no extra claims in relation to any industrial, any industrial matter. In plain practical terms then the parties have agreed that they will make no extra claim in relation to any industrial matter. That is put another way, this agreement settles all of our current claims in respect of all industrial matters. Therefore the fact that an industrial matter may not be dealt with in this agreement doesn't mean that it is unresolved or doesn't mean the parties have ignored it, it means the parties have taken into account the non-inclusion of that matter as part of the consideration for this agreement.

PN43

We will agree to what's in here so long as you don't ask us for anything else. Now the role of the no extra claims clauses in this respect was dealt with in the Full Bench decision in Emwest, the full court of the Federal Court in Emwest at paragraph 38. And I briefly take you to that Commissioner and paragraph 38 of the Full Bench decision. The Full Court said:

PN44

It is of course possible the parties to an agreement may seek to abuse section 170MN by confecting some issue not explicitly ...(reads)... terms and conditions of the relevant employment relationship.

PN45

And so it is here if no extra claims can be made, as I've submitted that is simply another way of saying all the terms and conditions that are in here are exhaustive of the matters pertaining to the employment relationship with which the parties intend to have dealt with during the nominal term of this agreement.

PN46

THE COMMISSIONER: Mr Herbert what mud is the water here, isn't that there were and on the reading I've had of the documents, there were some discussions initiated on these points.

PN47

MR HERBERT: Yes that's in fact - - -

PN48

THE COMMISSIONER: You coming to that?

PN49

MR HERBERT: Yes I'm coming to that because I'm going to move to clause 6.

PN50

THE COMMISSIONER: Well go through as you - - -

PN51

MR HERBERT: Yes I was going to move - that disposes really of this matter with respect but it appears that the union proposes to argue that clause 16 has another effect. That is, clause 16 in effect opens the door to industrial action in perpetuity during the nominal term of this agreement and props it open so that in effect it can't be closed. And that is plainly, in light of clause 14.3.1 it simply can't be interpreted that way, but in fact clause 16 can't be interpreted that way in any event.

PN52

THE COMMISSIONER: Mr Herbert just before you go on, just so I've got a proper understanding of that actual clause. You say that the wages that were to be payable under this incentive scheme were completely settled?

PN53

MR HERBERT: No. The clause 14 - - -

PN54

THE COMMISSIONER: Sorry the clause 16.

PN55

MR HERBERT: Clause 14 deals with the time work wages, clause 16 as Commissioner Bacon's decision and the Full Bench decision on appeal make it clear and as the clause itself says. It makes provision for an alternative system for remuneration in the event that the time worked wages are not considered appropriate for whatever reason, that if the time work system of wages aren't considered appropriate for a given situation, clause 16 allows the employer at the employer's election to introduce an alternative system. Subject to a whole range of constraints and limitations, the employer can introduce an alternative system which once implemented is substituted for the time work wages system in clause 14. You no longer get $16 an hour you get so many cents per kilo or so many dollars per side or as the case may be.

PN56

THE COMMISSIONER: Perhaps I should have been more specific in the question. Is it your submission that all of the detail associated with the implementation of that alternative system was agreed between the parties as per clause 16?

PN57

MR HERBERT: Yes.

PN58

THE COMMISSIONER: That is nothing needed to be further negotiated for that alternative system to be implemented as per clause 16, all of the detail was available and agreed between the parties in that clause to make it workable.

PN59

MR HERBERT: All of the detail as to how you go about the implementation of a scheme is in clause 16. All of the mechanisms to be applied, the standards to be observed, the effect of it, how you modify it, how you terminate it, how you change it, who's got the right to implement it, who's got the right to terminate it, all of those details are included in clause 16. All of the rights of the parties in respect of that are settled. The results of the exercise of the rights of the parties are of course not included in the agreement because essentially they can't be without losing all of the flexibility that such an arrangement would bring. And it is no different for example from a situation that says, the employer shall have the right to require an employee to work reasonable overtime.

PN60

The number of hours overtime that an employee may be ultimately called upon to work by exercise of that power by the employer can't be set down in the agreement. You'd have to put the rosters week by week into the agreement but nonetheless the parties have agreed that the employer shall have the discretion to direct certain things to happen and the employee is bound to do them in the quantum's that the employer directs.

PN61

Now, you cannot then say that the question of the working of reasonable overtime is not the subject of this agreement simply because the quantum of reasonable overtime and the number of hours that might fit within that notion, and the number of hours that are in fact directed from time to time, isn't in the agreement. Nobody could ever argue that. Yet that is precisely what is being argued, as I understand it, by the union in these proceedings. The parties have agreed as to how it is that the employer can introduce and modify an incentive payments scheme in default of which, if the employer doesn't do that thing, ie. doesn't implement such a scheme, or the scheme once implemented is terminated by either of the parties or by the Commission, then clause 14 applies; the time work wages apply, because there is no alternative under this agreement.

PN62

There are only two possible alternatives in this agreement; time work or an incentive scheme which must meet the strict criteria in clause 16. Can I take you to what they are, to show the level of detail to which the parties have descended, and can I say as well that this clause being almost a precise copy, subject to omission of reference to the union, of clause 16 of the Processing Award. That award was arbitrated extensively before a Full Bench of the Commission in the award simplification proceedings. The Full Bench of the Commission headed by Munro J with Leary SDP in particular being involved in this aspect of the matter, arbitrated the content of this clause.

PN63

So this is in fact a direct copy of an arbitrated clause. So it can't be characterised as some sort of 3P trick that the employer may have imposed on employees in an LK agreement, and has been the subject of contested proceedings before Commissioner Bacon and a Full Bench appeal and passed muster as being a legitimate clause in an agreement, in both of those proceedings. Such that there was no further challenge brought when the matter came before yourself for an identical clause to be included in the current agreement.

PN64

So, one would have to say this particular clause has been massively fought over, as it were, by two Full Benches of the Commission and a couple of members of the Commission at first instance and has, as it were, passed muster on each occasion. But the important part of the clause, the most important part of the clause for the present purpose is clause 16.1. Subject to the provisions of this clause, the employer must - - -

PN65

THE COMMISSIONER: Just a minute. Thank you.

PN66

MR HERBERT: 16.1:

PN67

Subject to the provisions of this clause, the employer may, at the election of the employer, remunerate employees under an incentive payment system as an alternative to the time work payments system provided in this agreement.

PN68

So the employer can elect to pay under an incentive payment scheme if the employer wishes to. If the employer doesn't elect, it doesn't happen. That's the employer's entitlement. It's specifically granted in this agreement, just as it was granted in the award:

PN69

An incentive payment scheme may apply to part of the workplace -

PN70

Et cetera. That's a mechanical provision and in this case, it applies to the boning room. 16.3:

PN71

The terms and conditions of any incentive payment system and any remodification of the system shall be fully explained -

PN72

Et cetera:

PN73

- committed in writing -

PN74

Et cetera:

PN75

- made available by the employer in a written form to all employees covered by the system -

PN76

Et cetera. 16.4:

PN77

The information upon which payments under the incentive system are calculated, all payments are made and other benefits provided -

PN78

Et cetera:

PN79

- shall be recorded in writing in the time and wages records of the employer kept in accords with the regulations.

PN80

16.5:

PN81

Subject to this clause, all wages and other entitlements payable to an employee in accordance with the incentive payment system under this clause shall be payable to the employee as if the terms of the incentive payment system were terms of this agreement.

PN82

That clause was challenged on appeal. The Full Bench interpreted that clause in the way in which, with respect, it had been plainly drafted, and that is that the moneys payable under the incentive payment scheme, although the scheme itself is not part of the agreement, that clause has the effect of making the moneys recoverable in the same way as if they were part of the agreement so that proceedings can be brought under the Act to recover such amounts of money as the scheme produces. So that they become moneys payable under this agreement, although the scheme itself is not under the agreement. So there is absolutely security for employees' entitlements.

PN83

Moving on, 16.6:

PN84

Once implemented, any incentive payment scheme system may only be modified by agreement by the employer and the majority of employees covered by the system.

PN85

That's material here because the evidence discloses that the employer - Ms Barber's statement discloses, that the employer implemented an incentive payment scheme upon the certification of the agreement in 2002. That scheme was maintained in place upon the certification of the current agreement in 2004. Thereby, as Ms Barber says, the employer elected to implement the scheme which had then been in place for two years. That is, elected to continue the same scheme under the new agreement. However, in due course, as was mentioned in the course of negotiations, a modification of that scheme would be sought in the light of the current agreement.

PN86

A modification of that scheme was sought by the employer, a proposal was put, and it was dealt with in a particular way that's set out in Ms Barber's statement. That is a requirement of the certified agreement. That is, that the incentive payment system may only be modified by agreement between the employer and the majority of employees covered by the system. So once the employer has implemented a system, it can only be modified with the agreement of the relevant employees. So that will answer your earlier question, Commissioner. That's why there are discussions; because the agreement requires that there be discussions as a mechanism for introducing a new system.

PN87

This isn't an extra claim by anybody. This is the mechanism which the agreement itself provides. This is observance of the agreement, not making a claim for a matter or a right or an obligation or a benefit outside the agreement:

PN88

Unless expressly agreed by the employer and majority of employees, no modification system shall operate so as to detract from -

PN89

Et cetera:

PN90

- if a modification is proposed by the employer or a majority of employees and not promptly agreed, the following process shall be adopted before any party can exercise its right to terminate the system under 16.10.

PN91

Now, set down there in 16.6.1 to 16.6.4 is a process by which some form of conciliation can occur in order to see if the proposed modification can be agreed, and it deals with communication of the dispute and modification:

PN92

A conference to be convened as soon as practicable. If agreement cannot be reached at the conference, a party may refer the disputed modification to the AIRC for conciliation purposes only.

PN93

So there is a process here. Now, on the evidence that you have of Ms Barber, the process has gone to step 1, that is, communicate; step 2, there were conferences held. There has been no agreement beyond step 2. There has been no reference to this Commission by any party as yet for conciliation purposes. Instead, we had a notice of initiation of a bargaining period and a notice of intention to take industrial action, rather than bringing the matter before the Commission, without exhausting the steps here. That in itself, of course, would be grounds for a section 127 order in the ordinary course. 16.6.4:

PN94

If agreement cannot be reached after conciliation under the auspices of the Commission, or if no party has referred the disputed alteration to the Commission under 16.6.3 within seven days of the conference, any party is entitled to elect to give notice of termination of the incentive payment system as provided in 16.10, or continue working in accordance with existing system.

PN95

So there is a comprehensive methodology whereby, firstly, the employer elects to introduce the system, if that's what the employer wants to do. Having done that, that system then can only be modified by a process of seeking agreement of a majority of the employees. If agreement cannot be reached, then either party can either terminate the existing system or put up with the existing system without modification. 16.10, which is referred to, just jumping forward for a moment:

PN96

Subject to 16.6, the employer or the majority of employees covered by an incentive payment system may elect at any time to terminate such system in force either in relation to the whole establishment or any part thereof upon giving not less than two months' notice of intention to do so.

PN97

So anyone bound by an incentive payment system they don't like can terminate it at any time. When I say anyone, the employer or a majority of the employees. Now, 16.7:

PN98

Nothing in 16.6 shall affect the right of the employer or majority of employees to terminate the incentive payment system under 16.10 in cases where no modification system is sought.

PN99

That clause makes it clear that you don't have to go through the modification process before you endeavour to terminate. You can just terminate outright and say, look, we don't want a modification of this system. We just don't like it. We don't think it's fixable. We don't want it. And that allows, for example, an employer who is elected to introduce an incentive scheme who finds out that it's completely unworkable and uneconomical and can't function under such a scheme can simply terminate it and walk away. As can a majority of the employees. If they say, we don't want this incentive scheme, we don't want to work that hard, we want to go back to time work wages, they can simply terminate and there's nothing can be done about that.

PN100

Then 16.8 sets out the minimum rates of pay, that is a minimum of ordinary time earnings for a day or a week for employees working under an incentive payment scheme shall be - and then there are the rates which are over and above the agreement classification rates. For daily hire employees, it's 20 per cent plus 10 per cent above. For casual employees, 20 per cent plus 20 per cent. All other employees, an incentive loading of 20 per cent above the classification rate. So it's time work plus each of those percentages for those categories of employees is the minimum amount of pay they can earn under an incentive payment scheme before the scheme qualifies as an incentive payment scheme.

PN101

16.9 deals with overtime provisions and the effect of the incentive payment rates of pay in relation to hours of work and overtime and public holidays and things of that kind so as to adjust the fact that those provisions relate to time work arrangements. 16.10, I have dealt with. 16.11 gives to the Commission the ability to terminate an incentive payment system forthwith, or upon any period of notice determined by the Commission on the ground the system is harsh or oppressive or operates in a manner which contravenes the Act. So at the end of the day, if a party is saddled with an oppressive scheme, they don't have to give two months' notice to get out of the oppressive scheme.

PN102

If it's harsh or oppressive, they can apply to the Commission who can terminate it immediately. So there is another safety measure. 16.12 provides:

PN103

Payments made to employees working under an incentive payment scheme for work performed during ordinary hours will be treated as the ordinary time rate.

PN104

And that's part of the substitution mechanism, whereby once a scheme fits all of the criterion in here and is in place on the election of the employer or as modified with the agreement of all parties, it then operates as the replacement of ordinary time rate under 16.12. 16.13 deals with representation, doesn't proscribe the union, as I've mentioned. And 16.14 deals with definitions as to what is an incentive payment system. It's a system of payment whereby the rate or quantum of wages is calculated for each dayshift or week by direct reference to the amount of work performed by the employee, either individually or as a member of the team.

PN105

The time work payment system, of course, is that for which clause 14 makes wages provision. Then the note at the end of that clause 16.14.2 deals with any conflict, as it were, between the provisions of clause 11, which is the grievance procedure, and clause 16.6 which is the mechanism for resolving disputes about modifications. That clause makes it clear that where there's an inconsistency between clause 11 and this clause, the provisions of this clause shall prevail over clause 11. On the belt and braces approach, clause 11 says the obverse, that is that clause 11.3 says:

PN106

The provisions of clause 16, payment by results, prevail over this clause.

PN107

Now, the only material difference in that regard is that clause 11.1.4 says if the matter cannot be resolved, it may be referred to the Commission, full stop. Clause 16.6 says that if the matter cannot be resolved, it can be referred to the Commission for conciliation only. So the relevant inconsistency in that regard would be that in the event it be construed that the Commission has the ability to make some arbitral determination under clause 11, because it's simply referred to the Commission, clause 16 makes it clear the Commission has no power, is not being given power to arbitrate in relation to the - - -

PN108

THE COMMISSIONER: Confined to conciliation.

PN109

MR HERBERT: A conciliation only in relation to a dispute modification of a scheme. And of course, that is consistent with the fact that very, very consciously, both the Full Bench in relation to the award and the parties under this agreement, have conferred the overriding discretion in relation to whether such a system will exist at all on the employer. And it is absolutely plain that they have given that discretion to the employer and given the discretion to the employer to bail out of, by terminating any system; once they have elected to implement, they can un-elect and have none at all. Of course, terminating the agreement can be done by the employees and by the Commission as well.

PN110

But to have a system whereby the fact of whether there should be an incentive scheme, that is, whether the employer in effect should elect or not, to confer that right on the Commission, the right to decide that issue on the Commission would be to take it away from the employer. Similarly, to give the Commission an arbitral entitlement to decide what the content of that system should be, or whether there should be one at all, would also be to take it away from the employer. Which brings us to where we are in relation to this matter. This agreement contains - and I'm sorry to go through it at a little length, but so the Commission understands - comprehensive, detailed prescription as to, firstly, the remuneration of employees, the primary system being by way of time work.

PN111

Secondly, if the employer so choose, and in the terms the employer chooses, the employer can remunerate the employees in a different way, and this is how you do it, and this is how you get into it, this is how you get out of, this is how you modify it and this is how you would terminate it. Because there is comprehensive provision as to how you substitute the time work system, if that provision is not observed, then you don't get an incentive payment system at all and therefore the time work remuneration provision under the agreement prevails, being the primary or default system of remuneration. And if clause 16 isn't complied with, then the thing that you've produced, if you've produced anything at all, is not an incentive payment system in accordance with that clause, and if it's not in accordance with clause 16 then it cannot be taken in substitution for clause 14.

PN112

So if it doesn't meet clause 16, clause 14 continues to apply and anything you've written down on a bit of paper doesn't matter. Now, the union's contention, as I understand it, is that they are seeking neither of the two mechanisms provided under the agreement to apply, but they are seeking a third system.

PN113

THE COMMISSIONER: Or a modification?

PN114

MR HERBERT: No. A new system. The system that they are seeking is that the election of the employer to implement or propose a modification is taken away from the employer. The employer no longer has the election. The terms of any incentive payment system, in effect, can be imposed upon the employer by the taking of industrial action and other mechanisms. The free election provided under clause 16 no longer exists. That is, the free election protected by section 170MN, and clause 14.3.1. No extra claims will be made and that there will be - that the employer will have the free election as to whether to decide to implement or not.

PN115

Because the whole purpose of industrial action in this context, coercive action of that kind, is to overbear the free choice of the employer, because the employer has said in the correspondence that you have seen, "There will be no further negotiations in relation to this matter. That is, a certified agreement different from the one we already have." Because under that certified agreement, as I say, the employer as a free choice as to whether a system of this kind will be implemented, and therefore substituted for clause 14. Under the union's proposal, the employer isn't to retain that election. In addition to that, the mechanism by which the existing incentive scheme is to be modified has been agreed by the parties already. It's set out in clause 16.6; very, very clearly, in very great detail.

PN116

The union is saying - assuming, in the response, Commissioner, you just gave, if the union were to characterise its claim as simply being a claim for a modification, despite what they've said in their notice of initiating a bargaining period, if it is simply a modification, the parties have already dealt with how you modify an agreement. There is a very clear and detailed prescription as to how you go about that, and the parties have agreed the matter can go to the Commission for conciliation only, and if you can't deal with it in some conciliatory way within the parties to the agreement, then you either terminate the existing system or you put up with the existing system. That's what they have agreed to do.

PN117

The union proposal is, no, we want something else. We want a few more clauses on the end of clause 16.6. If we can't agree, we want to be able to take industrial action and force the employer by economic duress, or as the case may be, to give into something which they haven't otherwise agreed to under conciliation, and of which they would never have agreed to in the ordinary course of things, and which they don't want. The employer has already said, "We have put on the table what we want. If we can't have that, then the agreement requires us to sit there and put up with what we already have". The union is proposing something quite remarkably different, and anything they propose which is in excess of what is in clause 16.6 is more and different from what the parties have already agreed as being the means by which they will go forward.

PN118

That is, the respective rights and obligations of the parties in relation to the subject matter of the modification of an incentive payment system. Those respective rights and obligations of the parties are already agreed. They haven't agreed - the agreement, as I said before, doesn't provide what the results of that process will be, as it obviously is not intended to do, but as I have submitted earlier, that is no different from a provision in an agreement that says that an employer can direct an employee to perform a range of duties or perform reasonable overtime or to travel in the bush pushing the employer's wares or anything else of that kind.

PN119

The results of that direction, the amount of travelling to be done, the amount of overtime to be done or the content and the nature of the duties to be performed and the quantum of the duties to be performed, are never proscribed in agreements and cannot be. And as it is in this case, the parties have agreed on who has the right to direct. They have agreed who must follow what directions and under what circumstances and the parties have agreed as to how that is all to be done and what their respective rights and obligations are in respect of that subject matter. The only thing they haven't agreed and that they can't agree on in advance is what will be the outcome of a process which the parties have agreed that they will go through.

PN120

So for that reason, it cannot be said that this is an Emwest case. It cannot be said that the parties have put to one side the question of who has the right to propose and implement an incentive payment system to take the place of the existing payment system. It cannot be said that the parties have not agreed as to how you go about modifying what is there now, because they have. It cannot be said that the processes to be gone through and the results of a modification process haven't been agreed, because they have, and it cannot be said, if the parties haven't agreed, as to what's to happen in the event that that process is unsuccessful; namely, the conciliation doesn't work because the parties have agreed what's to happen then as well.

PN121

THE COMMISSIONER: So, Mr Herbert, in Ms Barber's statement at paragraph 10 there is reference made to discussions about proposed modifications and reference made to a vote that was taken where there wasn't majority support for the modifications. On the basis of your submissions, as I understand it, the provisions of the agreement, you say, envisage that such discussions can
occur - - -

PN122

MR HERBERT: Yes.

PN123

THE COMMISSIONER: - - - on proposed modifications - - -

PN124

MR HERBERT: They require it.

PN125

THE COMMISSIONER: - - - and the parties then have options, either agreement can be reached, or as it wasn't in this case - - -

PN126

MR HERBERT: They keep talking, come to the Commission - - -

PN127

THE COMMISSIONER: They keep talking and there's a series of steps, three I think, where the third one is a reference to the AIRC for conciliation.

PN128

MR HERBERT: Yes.

PN129

THE COMMISSIONER: If all of that fails, they can take an option to terminate within two months.

PN130

MR HERBERT: Yes.

PN131

THE COMMISSIONER: Or in fact can refer it to the Commission for termination on harsh grounds.

PN132

MR HERBERT: For immediate termination.

PN133

THE COMMISSIONER: That is the system that you envisage. So there's nothing - - -

PN134

MR HERBERT: Or they simply leave the existing system in place, unmodified.

PN135

THE COMMISSIONER: As implemented. As it's been implemented for the last two years, you say?

PN136

MR HERBERT: Yes. Yes.

PN137

THE COMMISSIONER: So these discussions that are raised and proposed modifications were totally legitimate - - -

PN138

MR HERBERT: Yes.

PN139

THE COMMISSIONER: - - - but on the basis of your submission, the course, the disputes procedure as envisaged in clause 16 specific to this system has not run its course.

PN140

MR HERBERT: No.

PN141

THE COMMISSIONER: And even if it had run its course there are then legitimate fall-back provisions under clause 16 in which the parties can - either party can take, to resolve such a dispute?

PN142

MR HERBERT: Yes. Yes. And the outcome sought by the union is something in addition to those steps. That is, something - that is, that they now be at liberty to re-visit these steps and say - - -

PN143

THE COMMISSIONER: I don't have a lot of detail on that specific issue in relation to this dispute, in terms of - - -

PN144

MR HERBERT: Well, it's the only possible - if they only wanted what is in here, why do they want a separate certified agreement to encapsulate what's already in this agreement? If they want another certified agreement dealing, as the notice of initiation of bargaining period says - - -

PN145

THE COMMISSIONER: You see, it's been termed a proposed modification, which is the term of the clause.

PN146

MR HERBERT: Yes.

PN147

THE COMMISSIONER: But you say it's something completely to supplant this particular - to substitute again this proposed system?

PN148

MR HERBERT: What is said in the notice of initiation of bargaining period within which this action is brought, the bargaining period within which the only subject matter of that bargaining period and the only proposed subject matter of the negotiations involved a subsequent agreement is incentive schemes, payment by results arrangements. That means another scheme, that means another scheme reached by a mechanism - - -

PN149

THE COMMISSIONER: Why does it mean another scheme? Why can't it mean something in relation to this scheme?

PN150

MR HERBERT: Well, a modification of the scheme.

PN151

THE COMMISSIONER: And thereby you say it falls back to the wording and the processes inherent in this clause?

PN152

MR HERBERT: That matter, if that's all they're after, that matter has already been dealt with in this agreement, and 180MN says you can't bring industrial action in support of a matter which has already been agreed, which is already the subject of the agreement. It's been settled by the agreement. You can't say, we want another step in the process. We want to be able to take industrial action - you see, clause 16 makes it clear that there is no mechanism by which there can be either an arbitration or industrial action, because all of the available options are closed off and the penalty for the employer is if the employer can't secure the agreement of the employees, then the employer can't gain the benefit of the new scheme, full stop.

PN153

The employer has to live with the old one or get out of it altogether, and it might be completely uneconomical. This isn't a one-sided, you do as I say or else, because if the existing scheme has become uneconomical for the employer and they want to modify it accordingly, they can't do it without the consent of the employees. But as I say, if the unions are seeking an incentive payment scheme or a payment by results arrangement and they want to have a separate agreement, then that means that they want to be able to take steps which are not envisaged in this agreement. The point of 170MN is very, very simple.

PN154

That if the - there is a certified agreement within its nominal term that contains the matters, or contains agreement about the subject matter in respect of which action is proposed to be taken, that action is prohibited. The subject matter of incentive payment systems and how you get them and how you go about getting them is comprehensively dealt with. If there's to be another proposal put and a mechanism which isn't contemplated in the agreement, then that other proposal, that other mechanism and that other outcome is over and above that, that the parties have already agreed, because the mechanism by which you reach the result is just as important as the result that you reach, in many cases.

PN155

Can I briefly then just refer to the gravamen of the decision in Emwest? The decision of Kenny J at first instance, paragraph 42, her Honour recites:

PN156

The effect of section 170MN is straightforward enough. Where there is on foot a certified agreement, the nominal expiry date not yet passed, 170MN(1) prohibits industrial action by an employee as employed subject to the agreement -

PN157

Et cetera:

PN158

- for the purposes of supporting or advancing claims against an employer in respect of the employment of employees whose employment is subject to the agreement.

PN159

And then further down the page:

PN160

This aspect of the provisions operations reflects the statutory assumption that when parties make an agreement with respect to employment, they do so on the basis that they will not resort to industrial action during the currency of the agreement in respect of the matters upon which they have reached agreement.

PN161

In respect of the matters upon which they have reached agreement, and that in my submission must have a broad - the question of in respect of the matters must have a broad application or the section will be, as the Full Bench said in the same matter, open to abuse. Then at the end of paragraph 43 in the same judgment, the expression, referring to "where the employment is subject to the agreement:

PN162

The expression may refer to only the matters actually agreed upon by the parties to the agreement. If so, the prohibition would relevantly extend only to industrial action taken for the purposes of advancing such agreed matters. The union contends this is the correct construction of MN(1).

PN163

And that was the subsequent decision of her Honour, confirmed on appeal. The relevant passage is in paragraph 55 of the decision, line 4:

PN164

Assuming the policy behind 170MN is to encourage parties to adhere to the bargain they have struck ...(reads)... certified agreement, if its nominal expiry date has not passed.

PN165

This action is intended to undo the matters that have been agreed in this agreement. That is, to take away the election of the employer and to take away the question as to whether discussions without resort to industrial action are to be the means by which these matters are to be resolved, or whether we are to throw that agreement in the bin and resort to what are said to be negotiations backed up by the industrial action which is proposed for Monday. The employer had the umbrella protection, the 170MN and an agreement that says that these are the steps that will be followed and if you don't follow them, this is the consequence, and 170MN says, well, once that's been done, you've gone through your agreed process, you can't take industrial action in support of another step in the process.

PN166

To do anything else would be, as Kenny J said, to undo what the parties have agreed. The Full Court of the Federal Court concurred in the judgment of Kenny J and confirmed the correctness of that decision. It's not necessary to go to any particular parts of that passage, but I have given you a copy of that judgment.

PN167

THE COMMISSIONER: Yes. Thank you.

PN168

MR HERBERT: I have also provided you with a copy of Coal and Allied which is, as I say, the principal decision on section 127. The relevant passages in that judgment are on page 16 of 40 of the copy that you have, at about point 7 or 8 of the page:

PN169

Viewed in perspective with the provisions of the Act generally and the common law, the power in section 127 of the Act creates a discretion for the Commission to intervene where it considers appropriate to itself prohibit industrial action. Any such intervention directly restricts whatever freedom to take such action may exist in -

PN170

Et cetera:

PN171

The exercise of such discretion requires the Commission be satisfied it is appropriate to direct that the relevant industrial action cease or not occur. The exercise of the discretion ...(reads)... should be unlawful, as a contravention of the Act.

PN172

As I have submitted earlier, this action is already unlawful if it is undertaken, and we ask the Commission to express a view to that effect and reinforce that expression of that view by an appropriate order under section 127. I have provided the Commission with a Full Bench decision, dealing with the appeal against the certification of the identical agreement in 2002, effectively identical agreement in 2002. Because I am not certain the argument that might be put in relation to this matter, but I will perhaps leave any submissions I make in relation to the effect of that decision on what is to be put for another time.

PN173

But can I say there cannot be raised at this point any question as to the validity of the certification of the agreement. The validity of the certification of an identical agreement was confirmed on appeal in 2002, and the identical agreement certified by yourself in 2004 has the force of law upon its certification and as there was no challenge on appeal and it stands, there can be no collateral attack on its validity in these proceedings by suggesting in some way the agreement shouldn't have been certified. But I'm not sure if that attack is to be made, so I won't say anything more about that now.

PN174

But having regard to all of those considerations, it's my submission that the principles underpinning section 127 have been made out clearly. This is work which is the subject of a certified agreement. There is plainly notice of proposed industrial action on Monday, so the Commission can be satisfied that is to occur, and it is plainly, on the face of it, not protected - or will not be if it occurs - protected industrial action and it is plainly action, in my submission, which is prohibited by section 170MN because it is action which is taken or intended to be taken in support of claims which are the subject of an existing certified agreement, or matters which are the subject of an existing agreement between the parties, and that is claims which involve a departure from the agreed processes by which a system of remuneration might be formulated which is to be substituted for the default system under this award, namely the time work system, and by definition, that must involve a departure from the results that would be achieved by the ordinary application of the processes which the parties have agreed so as to produce, in effect, a different outcome by the use of the coercive powers of protected industrial action.

PN175

For all of those reasons, it is, as Kenny J characterised it, an attempt by industrial action to undo the agreement that the parties have reached in relation to how one goes about introducing an incentive payment system and how one goes about modifying that same system. For those reasons, in my submission, the order should be granted today.

PN176

THE COMMISSIONER: It has got from tomorrow, I think, on the order. Take effect from tomorrow, 5 November.

PN177

MR HERBERT: We would - yes. It would - - -

PN178

THE COMMISSIONER: Because that is what I was going to ask you about, service, and this is so Mr Norris can respond in full. They are matters that can be amended between the - - -

PN179

MR HERBERT: Yes. If the order is made today, it can take effect tomorrow because the action isn't intended to start until Monday. We will need a little while to get copies of orders, et cetera, to members of the crew who will be working during the relevant period. They're not on straight away, but so long as the order - we ask the order be made today, but so long as it take effect before Monday, that would prevent any pre-emptive action of any kind.

PN180

THE COMMISSIONER: Right, because the service of the order is by 5.1, replacing a copy of the order on the noticeboard on the site. Are there employees that actually work over the weekend, the crew?

PN181

MR HERBERT: We are already putting in place arrangements to make sure that a copy is in fact handed to every employee, or put in a place where every employee will have access to it. We can give the Commission some detail of how that might be done, if the Commission is concerned about service.

PN182

THE COMMISSIONER: The stoppage is proposed for Monday at 12 o'clock, is that correct?

PN183

MR HERBERT: Yes.

PN184

THE COMMISSIONER: For the period of?

PN185

MR HERBERT: 12 hours. Well, a couple of minutes less than 12 hours.

PN186

THE COMMISSIONER: All right. Thank you, Mr Herbert.

PN187

MR HERBERT: Thank you.

PN188

THE COMMISSIONER: Mr Norris?

PN189

MR NORRIS: Yes, thank you, Commissioner. Commissioner, can I start by referring to the Emwest litigation? The Commission may be relieved that I don't propose to traverse over it in any great detail. There are some salient points that I do seek to amplify, however. If I can hand up a copy from the Industrial Reports of both the decision at the first instance, and indeed, on appeal.

PN190

THE COMMISSIONER: Thanks, Mr Norris.

PN191

MR NORRIS: Can I refer to the decision at first instance of her Honour, Kenny J, and in particular at or about the commencement of paragraph 54. The glitch rule has unfortunately crept into the photocopying, Commissioner. You may have to spin it around. Now obviously, her Honour was faced with two possible constructions of section 170MN of the Act. Her Honour resolved it by recourse to various things; the objects of the Act, the overall scheme of the Act, et cetera, et cetera. In meeting a submission of Emwest, that if their construction were upheld it wouldn't preclude the members of the union from negotiating in respect of the matters in dispute, her Honour actually cited an academic reference in paragraph 54 which reads:

PN192

The facilitation of bargaining necessarily requires the recognition of a right by the bargaining parties to take lawful industrial action. Under a bargaining regime, unless labour and management do have recourse to the work stoppage, it is unlikely that bargaining would be fruitful, for there would be no reason for a party believing it would be disadvantaged by making a particular concession to do so.

PN193

Et cetera, et cetera. Now, it was one of the factors that swayed her Honour in concluding that the construction she ultimately reached was one that was the most efficacious to give effect to the various parts of the Act, the objects, the overall structure, and one that did allow protected industrial action to occur was going to be one which ultimately may prove more efficacious. That particular observation, of course, was not disturbed on appeal, and can I refer to the appeal decision which is recorded at (2003) 125 IR 449. The particular paragraph that we seek to emphasise is paragraph 37.

PN194

I believe my learned friend actually went through it, so I don't propose to unduly delay these proceedings, but the substance of the paragraph is in effect the Full Court recognised there were two competing constructions and both had merit. In the end, the Full Court endorsed the manner in which her Honour Kenny J resolved the construction of 170MN. And substantially on the grounds that it would be a construction that would, in the most efficacious manner, be consistent with the Act, its objects, its overall structure, the regime of bargaining that it in fact entrenches.

PN195

They are the salient points we rely upon in terms of Emwest at this particular point in time, and they'll become more relevant as we move through, Commissioner. Now, my learned friend referred of course to clause 16 of the certified agreement. In so doing, the submission was put that it substantially is lifted from the terms of clause 16 of the award. Indeed, it was - - -

PN196

THE COMMISSIONER: I don't think I marked it. Certainly I have it.

PN197

MR NORRIS: Yes. Clause 16 of the award was actually tendered as an exhibit, and we essentially agree with the submissions that were put. Apart from a few modifications to a few words, it's almost verbatim clause 16 from the award. Now, that's an important point, Commissioner. When one is construing an industrial instrument, you cannot disregard the history, the origin, the way it travelled, the way - to use the words of his Honour, Burchett J, although I can never do it as well as his Honour - the fruit, the soil in which it was planted, and the fruit from whence it grew. Those words, of course, come from Short v Hercus.

PN198

So it's abundantly clear that this clause was lifted from the award. Now, in so arbitrating this provision, the Full Bench conferred an election on the employer to introduce an incentive scheme, payment by results, however one might want to characterise it because the clause is headed, "Payment by Results", but the term, "Incentive Payment System" is used. Neither here nor there. So an election was conferred upon the employer to introduce such a scheme under the award, but importantly in my submission, there was no prohibition whatsoever placed upon the union or employees respondent to the award from seeking a payment by results incentive scheme as well, of their own volition.

PN199

The reason is, of course, commonsense and logic; the Commission wouldn't be able to do that. Employees and the union have various rights under the Act to seek - subject to the constraints that it must be a matter that pertains to the employment relationship, employees and the union have a right to seek whatever they like through a certified agreement and through the bargaining process and the regime. So it was never inserted into clause 16 that employees or the union could not seek a payment by results system for that reason. So an election was granted on the employer subject to clause 16, and compliance therein, to introduce a payment by results scheme.

PN200

But importantly, there was no express prohibition upon the other parties to the award from seeking it also, because such a prohibition couldn't have been made. Indeed, given that this has been uplifted and transplanted into this certified agreement, a similar construction must prevail, in my respectful submission. To say that because an election is conferred on one party, it absolutely divests and strips any other party of their rights, is a fallacy, with respect. Now, what we are talking about here is the potential, statutory rights of the union and its members. If we do have them, very clear words will be required to take them away, under the normal principles of construction.

PN201

It would not be taken away by inferences, by loosely implicit notions of the type that's being urged upon you, in my respectful submission, Commissioner, because that's the thrust of the submission. Because a discretion is conferred upon the employer, nobody else has any other rights at all relating to this particular issue. Nowhere in clause 16.1 does it say explicitly that all other parties have no right to seek such schemes.

PN202

THE COMMISSIONER: So as I understand it, the parties, in reaching this agreement - that's the employer and the employees under this LK agreement - picked up the same provision in clause 16 as was in the prior certified agreement which, on your submission, virtually mirrors the award provision and via that agreement they confirmed a discretion of the employer to elect to implement this system?

PN203

MR NORRIS: Correct.

PN204

THE COMMISSIONER: So there was an express agreement of that particular provision?

PN205

MR NORRIS: Correct, but it's - - -

PN206

THE COMMISSIONER: Now, you're saying that the - just so that I understand the submission - fact that there is no alternative there covered in that particular agreement where employees have a similar election and that election - in fact, the prohibition on that election was not covered in this agreement, means that that election is at large and is able to be pursued via protected industrial action?

PN207

MR NORRIS: Correct, for reasons which we will develop progressively.

PN208

THE COMMISSIONER: All right.

PN209

MR NORRIS: But that is the gravamen of the position, yes, Commissioner. What the position of the applicant requires is for the Commission to effectively re-write clause 16.1 by inserting the words, "The employer may, and nobody else can, elect to remunerate employees on the basis of a payment by results system". Now - - -

PN210

THE COMMISSIONER: But aren't you effectively also asking that those words be implicitly read into that particular provision? That not necessarily that the Commission re-write it, but the submission is that the parties in fact, between the lines, part of the agreement was - and I'm putting this back to you and I haven't heard your submission yet, Mr Norris, but that part of that agreement is that there is, by default, a similar election there for the employees, even though it is not contained within clause 16? It's not covered off by the explicit words of the provision?

PN211

MR NORRIS: It's not dealt with at all. It's not dealt with by way of explicit words. There is no need to argue that it's implicit that employees can do it. To sum our position up partly in a nutshell, we say that the parties, through clause 16, did not deal whatsoever with the precise terms and nature of the particular - - -

PN212

THE COMMISSIONER: Employee - - -

PN213

MR NORRIS: - - - incentive scheme. Now, flowing from that is that these were matters that the parties left for a later time.

PN214

THE COMMISSIONER: The scheme was actually in place, wasn't it?

PN215

MR NORRIS: That's correct. That is correct, but there is also evidence, very significant evidence at paragraph 6 of Ms Barber's statement:

PN216

During the 2004 negotiations, boning room incentive employees were advised that any negotiations for a new or modified incentive arrangement would not take place until February 2005.

PN217

So later negotiations were envisaged.

PN218

THE COMMISSIONER: But the scheme does specifically contain a process as to how those modifications would proceed?

PN219

MR NORRIS: Precisely, but that is all it is; a process. When one examines clause 16 the balance of it is directed merely at process, with a few clauses that deal with minimum entitlements.

PN220

THE COMMISSIONER: But is it - and I'll certainly let you develop your argument, but Mr Herbert has advanced that there is a specific process advanced in there, that the parties have put to one side, on your submission, this issue that there may be modifications and that they will look at those particular modifications through the process that is explained in clause 16. Is that right?

PN221

MR NORRIS: Well, the problem with the point, and it might be - - -

PN222

THE COMMISSIONER: All right. You proceed as you have planned.

PN223

MR NORRIS: It is better for me to proceed to develop more comprehensively, but can I just say that that's our initial point. That the election which is said to be total and comprehensive and exclusive of any other party's rights, should not be construed in that fashion, for the reasons that I have submitted. Now, there is an absolutely critical part of clause 16 to which no reference was made, or pleading reference by my learned friend, and it's in clause 16.6, or subclause 16.6, however one would characterise it. If I could just ask the Commission to turn over to that particular - - -

PN224

THE COMMISSIONER: Thank you.

PN225

MR NORRIS: Now, it's the last sentence that I wish to emphasise and it reads:

PN226

If a modification is proposed by the employer or a majority of employees -

PN227

Now, these are the words we emphasise:

PN228

- and not promptly agreed, the following process shall be adopted before any party can exercise its right to terminate the system under 16.10.

PN229

It is explicit that it is envisaged by this certified agreement that employees, at the very least, can seek a modification to an existing system. Now, it was said during the course of my learned friend's submissions, the company is seeking a modification in the manner which it has would not be a breach of the no extra claims clause, and we agree and adopt the submission. Because it's specifically envisaged by the agreement that that is something you can do. Now, being far more and overwhelmingly specific than the broad brush of a no extra claims clause, it is the only sensible way in which to construe it.

PN230

So at the very least, we don't detract from our primary submission on clause 16.1, but at the very least, it is explicitly recognised in this agreement that employees may seek a modification to an existing system. Now, reference was made to the Full Bench decision in 2002. We don't wish to quibble about it. They're matters that are done and dusted. You get up off the canvas and keep moving on.

PN231

THE COMMISSIONER: It's not how many times you get knocked down, but how you get up, Mr Norris.

PN232

MR NORRIS: It's how you get up, Commissioner. We accept the decision, and we do not seek to ventilate any collateral arguments in this particular proceeding about it, but if the Commission has had the opportunity to peruse the decision, one of the critical points that emerges out of it is that the precise detail as to incentive scheme arrangements does not form part of the agreement. Mr Herbert had a comprehensive victory on the matter.

PN233

THE COMMISSIONER: Settle down, Mr Norris.

PN234

MR NORRIS: But the result is, the result being, that they are matters extraneous to the agreement. Obviously. It flows as a matter of commonsense, and all that clause 16 does is sets out a process whereby those extraneous matters might be arrived at, and it incorporates a few minimum conditions. One must concede that. Indeed, there is a minimum rate of pay which must be achieved under any incentive arrangement. There is a stipulated rate of pay for the purposes of leave and so on - all forms of leave - and there are certain entitlements regarding the termination of the scheme and so on and so forth.

PN235

But by far and away the whole of clause - well, I withdraw that. The large part of clause 16 is directed merely at process. 16.6 explicitly recognises employees have the right to seek a modification of an existing scheme, which is extraneous to and not part of the certified agreement. So there would be no question of seeking something which would be in conflict with the agreement. Now, the flank that was attempted to be raised to that is, well, the parties have agreed exhaustively on the process, therefore you can't change anything unless it's envisaged by that process.

PN236

Well, it would require, in my respectful submission, given that this agreement was certified in 2004, and the Emwest litigation was notorious, it would require explicit words to deprive the employees subject to this agreement of their statutory rights to engage in what has been described in the Emwest litigation as "effective bargaining". It would take something more than just the fact that a mere process appears in the terms of clause 16 which says, "Well, if you have a dispute about a modification, this is the process that you follow".

PN237

It would require explicit words to the effect that it is a term of the agreement that neither party would resort to protected industrial action in support of any proposed modification. It is a longstanding principle of construction of both statutes and indeed industrial instruments; when statutory rights are involved, it takes very clear words to take them away. Mr Herbert's submission, with respect, invites the Commission to re-write the agreement and infer that there is a clause in there that says, "Because this is the process that we agreed upon, that means that nobody can take effective protected industrial action for effective bargaining". Well, it's just not warranted, with respect.

PN238

Now, there was a considerable amount of reference to what the union was seeking. The company doesn't know what the union is seeking on behalf of employees that it represents, and might I just pause there to draw the Commission's attention to the fact that under the terms of clause 16, 16.1.3:

PN239

An employee may be represented in meeting and conferring with the employer about the implementation of this clause.

PN240

And so on and so forth. Indeed, 16.6.2:

PN241

A conference shall be convened as soon as practicable between the parties and their representatives.

PN242

So the union has, despite the deletion of specific reference to the union, the union undoubtedly has a capacity to represent the employees to whom this agreement applies.

PN243

THE COMMISSIONER: And do you say that conference has occurred?

PN244

MR NORRIS: No. The union has - it's apparent in the evidence, appended to the statement of Ms Barber, that the union wrote to Mr Tony Munns on 30 September 2005, where the bargaining period, or the notice initiating a bargaining period was served, and in the penultimate paragraph:

PN245

I seek your response within seven days of the receipt of this letter as to whether you are willing to set meetings with the union to discuss the claim.

PN246

Now, the responses, I don't propose to go through them, but - - -

PN247

THE COMMISSIONER: No, I have read them.

PN248

MR NORRIS: - - - it is abundantly clear the answer was, no way, Jose. We will not be meeting with you, we won't be talking to you about it. We've got arrangements in place, that's it, and you know, the company was quite strident about it. That's a position that's open to them. I don't mean any implicit criticism. That's a position that they're open to take. Now, however it is relevant to the consideration as to the process on a disputed modification. 16.6.2, "A conference shall be convened", well, that's impossible because the representative of the employees, the employer simply won't meet with them. 16.6.3:

PN249

If agreement cannot be reached at the conference or any agreed adjournment thereof or one party does not attend such conference, any party may -

PN250

May:

PN251

- refer the disputed modification to the Australian Industrial Relations Commission for conciliation purposes only.

PN252

"May". It is not mandatory. Now, we don't take issue with what my learned friend said about a party's rights in the event that you can't reach agreement on a disputed modification. You either have to put up with it or you terminate it, on two months' notice. That's the very clear provisions of clause 16. But there is nothing in clause 16 which effectively deprives the employees of their bargaining rights, in addition to this. Now, in my respectful submission, this situation is squarely within the type of situation contemplated by the Emwest litigation. You have a certified agreement, it has a no extra claims clause, however one clause in substance, read globally, clause 16 in my respectful submission is to be construed as an agreement to agree about things in the future. At best.

PN253

It gives the employer a right to introduce an incentive scheme that is extraneous to the agreement, but as we've already submitted, that doesn't by implication deprive other parties of their rights to seek such matters. Now, it is abundantly clear that despite the no extra claims clause, generally speaking, the substance and precise details of how employees would be remunerated under incentive schemes or payment by results, was never reached. All the parties agreed upon was a process whereby they might be reached. So it is clearly a situation within the contemplation of the decision, both at the first instance on appeal in Emwest, in my respectful submission.

PN254

THE COMMISSIONER: When the 2002 system was implemented, how were the precise details of the system then - how were they negotiated between the parties?

PN255

MR NORRIS: They weren't negotiated. I can only advise the Commission from the bar table as to the best of my recollection, but what essentially occurred was in the latter part of 2001, the company was seeking to have a 170LK agreement approved by its workforce. Effectively, it had fallen out in negotiations with the union. It made an initial attempt to have such an agreement certified. That was unsuccessful for reasons which we don't need to go into. It then attempted a second time and it sent out a package to employees which contained the certified agreement and proposed incentive schemes, which weren't part of the agreement, as we are now told by the Full Bench, but are extraneous matters thereto.

PN256

So it sent out a package saying, "This is both the certified agreement that we want you to vote on, and by way, in case you're curious, these are the incentive schemes that we seek to introduce". Now, the agreement was approved and the company recommenced operations either late in January or February 2002. Late January 2002. Now, a short time after that, the company maintains that it made a modification to the incentive scheme that it had forwarded on to employees prior to the vote. That's a matter that's still in dispute, but that's essentially how this existing incentive - incentive - I hate the fact they use two different terms to describe - this payment by results scheme is in place. That's essentially the story, Commissioner.

PN257

THE COMMISSIONER: That particular scheme that was implemented in 2002 is basically that it's now operating and reflected in this particular clause?

PN258

MR NORRIS: Correct. It's been subject to some changes. I think it would be fair to say they haven't affected the substance or the mechanisms by which the remuneration is calculated.

PN259

THE COMMISSIONER: So were those changes - are they the modifications reached by agreement between the parties?

PN260

MR NORRIS: One would assume on the face of it. There is one modification that the union has disputed and still reserves its position on and that's the one that occurred just after operations recommenced in '02, the one to which I've just referred. The others, I have no instructions on.

PN261

THE COMMISSIONER: All right.

PN262

MR NORRIS: So clause 16 clearly, read as a whole, indicates the parties hadn't arrived at any agreement as to what the detail of incentive schemes were and agreed to agree in the future. It's squarely within Emwest. Even if that particular point is not accepted, when one looks at the terms of 16.6 it is irrefutably within the terms of the Emwest decision because a specific right or - yes, a specific right was conferred upon employees, a majority of employees, to seek a modification, to something in the future. And it would not be a breach of the no extra claims clause. And Emwest tells us that if you have left a situation like that, why should the bargaining process be made ineffective by the curtailment of resort to things like protected industrial action?

PN263

That's the balance of my submissions in terms of the merits of the matter. I do want to turn to the terms of the order that is proposed, merely to take a couple of points. Commissioner, can I just say it is not the intention of this particular organisation to encourage its members, or any other employees, to engage in any unlawful activity whatsoever. If we're told that we're wrong, well then we're wrong, and we will desist from the course of action that we propose, and that is the way that we have always operated; at least in the last decade perhaps might be a fairer way of expressing it. Yes, the stoppages in the meat industry figures from the ABS may lend some argument to the contrary view to that, but at least in the last decade, it's the way we've operated.

PN264

So if we're told that we have it wrong, we'll accept it, and again perhaps get off the canvas again, but so far as the terms of the order are concerned - - -

PN265

THE COMMISSIONER: Why is it that the union, whilst you refer to this directory language rather than mandatory in terms of "may refer it to the Commission", why has there been not a usage of that particular provision of the disputes procedure?

PN266

MR NORRIS: Well, from the union's point of view, it seems pointless to refer the matter, the disputed modification, to the Commission when the employer effectively won't even come to the table to discuss it.

PN267

THE COMMISSIONER: But even if there is industrial action taken, you would expect that the corollary with that is that you expect at some time it's going to be discussed and resolved.

PN268

MR NORRIS: Correct. At this stage, faced with a situation where we're told in a five-page letter under the hand of Ms Barber a number of reasons why they won't even come to the table and meet with us, and then it's reaffirmed by Mr Munns, the union's view is there does seem to be little point in terms of conciliation. The parties - - -

PN269

THE COMMISSIONER: But just as there's no history of the AMIEU in terms of, you know, irregular or inappropriate conduct before the Commission, I don't think there's any history that this employer won't come to the Commission and appropriately discuss things within the confines of a conference.

PN270

MR NORRIS: Correct, but that's not what is guiding us. What is guiding us is the fact that we haven't got a situation where the parties have discussed things and have come close, but are still essentially apart on some of them. We have a situation where an employer is saying, we aren't going to discuss it. No way. Full stop. Do not bother coming. So - - -

PN271

THE COMMISSIONER: But that's not to suggest that they wouldn't come to a conference, is it?

PN272

MR NORRIS: Well, if one takes their communications to the union on face value, there seems little point. That's essentially the position of the union. With respect, and I don't mean to be pejorative, but the company appears quite strident and that it will not negotiate with the union. Now, there's one particular part of the order that we do object to, in the event that the Commission is disposed to make this order or something like it, and it's (ii) of paragraph (b) of 3.2. It appears on page 2.

PN273

THE COMMISSIONER: (ii) of paragraph?

PN274

MR NORRIS: (b) of 3.2. It's on page 2 of the draft order.

PN275

THE COMMISSIONER: Yes. Yes.

PN276

MR NORRIS: Now, it's effectively - it defines industrial action as:

PN277

The taking of action to harass, beset or intimidate workers engaged by the employer, or contractors of the employer, or to require, encourage or demand that workers engaged by the employer, or contractors of the employer, cease performing work and/or leave the site.

PN278

Now, there is absolutely not one scrap of evidence that there is any harassment, intimidation, and I'm not sure how - "besetive", I'm advised from the bar - besetting actually occurring, nor is there one scrap of evidence to suggest that it will happen. That is literally a draconian measure to seek and there has been no evidence led as to this particular matter affecting any contractors. In that regard, it's cast far too wide. We would respectfully submit that that particular paragraph is not necessary. Subject to any questions, that's my complete submissions on the matter, Commissioner.

PN279

THE COMMISSIONER: All right. Thank you, Mr Norris. Mr Herbert, we
have - - -

PN280

MR HERBERT: I will be about three minutes in reply, if I may?

PN281

THE COMMISSIONER: Let's go. All I was going to say is that we - - -

PN282

MR NORRIS: We'll keep you to that.

PN283

MR HERBERT: Nobody turn their clocks on.

PN284

THE COMMISSIONER: Well, the reason, I'll just say, is that we have agreements at eleven, I know, that I'm trying to break a little bit earlier, but there's some complicated - at 10.55 we have some phone hook-ups, but anyway, we'll see how we go.

PN285

MR HERBERT: That clause just referred to by Mr Norris, we don't press that. I accept there is no evidence of conduct of that kind having occurred to date, and the pro forma used as an initial basis for making that order, that is a common order that's made, but we don't press it. Could I deal with - - -

PN286

THE COMMISSIONER: You don't press the second paragraph?

PN287

MR HERBERT: Yes, that second Roman - 3.2(b)(ii). In relation to the submissions put by Mr Norris, the notion that this clause 16 is an agreement to agree is just wrong. It is no such thing. What it is, it is an agreement which confers the unilateral right on an employer to decide for himself or herself or itself to remunerate employees in a different way to that prescribed in the agreement. That there is no agreement required for the implementation of a system. It is not an agreement to agree, it is an agreement to give to the employer the unilateral right to implement, and that, in answer to something that you said, Commissioner, as to how the negotiations for the original scheme were conducted, there is no negotiation required for the employer to implement.

PN288

That matter was dealt with by the Full Bench in the Award Simplification case, as to why those words are the way they are. It is meant to be a unilateral entitlement solely vested in the employer. Secondly, so there is no agreement required for implementation. There is agreement required for modification, but if the agreement isn't reached, then there's no agreement required to keep the matter in place and there's no agreement required to terminate the system. So of the four major elements of the clause, that is, the implementation, the modification, the maintenance and the termination, three of the four do not require any agreement or consent.

PN289

They can be done unilaterally either by the employer in the case of the implementation, or by either party in relation to the other matters. The only issue in relation to consent is the modification issue. No agreement is required to propose modification, there's only agreement required to effect the modification and that is the only thing that can be said about clause 16 that amounts to an agreement to agree. That issue was dealt with by the Full Bench in a Full Bench decision at paragraph 11, and also dealing with then running into the other issue raised by Mr Norris, the second issue, or the first issue, but the other issue raised by Mr Norris, and that is the question as to whether, under clause 16.1, there is a unilateral entitlement on the part of the employer to the exclusion of the employees seeking to implement - paragraph 11 of the Full Bench decision on a certification appeal:

PN290

The agreement provides for two alternative systems of remuneration. There are numerous examples of provisions in individual agreements where a discretion is conferred on an employer. For example, clause 8.3 in the agreement grants the employer the right to direct an employee to perform any duties within the employee's skill, competence and knowledge. The employee is obliged to follow such directions.

PN291

It's implicit in that, in my submission, that where the clause says:

PN292

The employer can elect to remunerate employees differently -

PN293

- the fact that it doesn't say, and the employees can elect to force the employer to remunerate the employees differently, doesn't mean that the employees can't do that thing. That's as much as to say that if an agreement says your wages are $500, it doesn't say, your wages are not $600, therefore you can bring industrial action to get $600 because it doesn't say that they're not $600, if there is an affirmative entitlement or discretion conferred expressly on one party, by necessary implication it excludes the negative entitlement or any other affirmative entitlement being granted to any other party.

PN294

There would be no point in saying this can be done at the election of the employer if it meant, well, it can also be done by the employees. It is simply a nonsense, with respect, to say that 16.1 admits of that possible interpretation, that the negative hasn't been excluded or the words of the agreement gave a specific right, using the words, "At the election of the employer" to employer, but because they didn't mention the employees, then the employees also have a similar right. That would completely throw out the entire structure and purpose of the agreement.

PN295

I think Mr Norris actually gave the game away, with respect to him, when he said and conceded that clause 16.6 actually clearly and expressly provides that the employer can propose a modification and also that a majority of the employees can propose a modification. Absolutely clear, that clause 16.6 allows that, and I understood that to be his submission. What that means is that the question of the proposal and the dealing with a modification to the agreement is the subject of the agreement - of an incentive payment system, I'm sorry, is the subject of the agreement, because it's the subject of the agreement, Emwest doesn't apply.

PN296

Emwest doesn't say what the results have to be. Emwest just says if the subject matter was contemplated by the parties and intended to be, as it were, rolled up in the agreement, the resolution of that matter was intended to be achieved by the making of this agreement, then that's the end of it, you can't take industrial action in respect of that matter, even if it's not even mentioned in the agreement, so long as it's intended to be subsumed in the agreement, as it was.

PN297

THE COMMISSIONER: So the pursuit of the modification is a matter that has been left to a side, but specifically how that pursuit will occur has been agreed between the parties, in terms of the negotiations, or the process of reaching agreement on a modification?

PN298

MR HERBERT: The outcome of a modification has been obviously left to a future date, because you can't proscribe it in advance, but who has the right to pursue a modification once a scheme is implemented, and the method by which they pursue that modification has been dealt with, to death, with respect. And what's happened is, Mr Norris says, "Well, in order to pursue something like this, you have to be able to take protected industrial action as part of the system of robust industrial relations."

PN299

With respect, that is also fundamentally wrong because if the parties agree that this is an end to our respective rights and entitlements, you give us the right to propose a modification, you give us a veto to your modification and we will agree to the scheme which does not include the taking of industrial action, and which notoriously means 170MN will stop us taking industrial action, well then that's an end to the rights and obligations of the parties, and 170MN applies, because the parties have agreed that they will go through a particular form of a process, absent which if it doesn't achieve a result, well then in effect that's the bad luck of the parties, but that's what they've agreed to do.

PN300

So on that basis, in my submission, the whole of Mr Norris's submission in opposition to this matter can be disregarded. Clause 16 has the effect for which I have contended. There was one matter raised, and that is, I am reminded by
Mr Copelin, that's the question about meeting and conferring. Can I say the company has been meeting with the other party to this agreement, namely the employees, since February, as the material discloses. The meeting and conferring that was apparently proposed in the correspondence and was dealt with in correspondence was negotiations for the making of a certified agreement under the auspices of a bargaining period.

PN301

As the correspondence shows, that is just simply not on. The company can't and won't put its foot on that particular piece of sticky paper because that in itself, engaging in negotiations under that pretext would suggest that the company accepts that there is a legitimate bargaining period on foot, it is a negotiating party in relation to a possible certified agreement and that all the rights and consequences, including 170MT and protected action, et cetera, all flow from that, and the company was at very great pains to point out that it wasn't going to go down that track.

PN302

However, it has been meeting and talking to the employees since February. If any party, through their representative, if it happens to be the union, invokes the processes of the certified agreement to call for a conference and/or refer the matter to this Commission, the company will be obliged and will cheerfully comply. It may be the company will exercise its own entitlement to refer this matter to the Commission in due course. At the moment it hasn't done that, it's been a bit distracted by this, but that's all in the future and one can't say that the union has tried desperately to get the company to the bargaining table.

PN303

What it did was try to get the company to the wrong bargaining table under the wrong auspices, with legal implications adverse to the company if it were to agree. That isn't to say that it won't talk; it just won't talk there and under that umbrella.

PN304

THE COMMISSIONER: Right. Thank you, Mr Herbert. We'll go off the record there.

OFF THE RECORD

PN305

THE COMMISSIONER: The following ex tempore determination is provided with further reasons and editing provided if required in due course if necessary. This matter predominantly turns on whether the proposed industrial action to be taken in pursuit of a negotiation of a modification or an issue in relation to an incentive scheme of payment as covered in clause 16 of the relevant certified agreement is protected action within the meaning of the Workplace Relations Act 1996. The work subject of these proceedings is regulated under a certified agreement, the Kilcoy Pastoral Limited Processing Plant 2004 Agreement. This agreement has not yet reached its nominal expiry date.

PN306

The union has lodged a bargaining notice with respect to negotiations in pursuit of matters as covered on that notification, incentive schemes payment by results. Industrial action has been notified to be taken on Monday, 7 November at midday for a period of 12 hours. It is agreed between the parties that clause 16 of the agreement, the focus of this matter, is a clause that is in the same terms as it appeared in the previous certified agreement. The union in their submissions, genuinely made, are not encouraging unprotected industrial action and considered that the proposed action is in accordance with what has been termed generally, Emwest-type action, where in line with the facts of that matter generally stated as referred to, a matter of redundancy in those facts was left to one side for further or future negotiation.

PN307

In this matter, clause 16 of the agreement is an agreed provision for an alternative scheme of an incentive payment system entitled "Payment by Results". Clause 16.1 states:

PN308

Subject to the provisions of this clause, the employer may, at the election of the employer, remunerate employees under incentive payment system as an alternative to the time work payment system provided in this agreement.

PN309

The clause; the nature and rates of which of this system are delineated in the clause on which and how the system will operate is detailed in the clause and the process that is to be applied in the implementation. Furthermore, what is expressly detailed is the process for modification to the system, or if required by either party, the termination of the system. The union contends that the statutory entitlement of employees to pursue an election to substitute or negotiate an alternative system is a right that is not denied, as it has not been expressly dealt with or covered or denied in the agreement, and therefore it survives, and therefore protected industrial is able to be taken in pursuit of such.

PN310

Looking briefly at the construction of the clause 16, where it has been agreed between the parties that they have a specific entitlement or right, this has been dealt with and so has the specific process. For example, the rights of both parties to modify or terminate the system is covered in the agreement. But in contrast, only the right of the employer to elect to introduce the system has been specifically dealt with. In fact, the employer has implemented such a scheme previously in 2002. Clause 16, as stated, is in the same terms as per the previous agreement and has been conceded by the parties that it mirrors the provision in the Federal Meat Award.

PN311

The agreement contains a no extra claims provision as agreed between the parties at clause 14 and the subject matter as set in the bargaining period is covered in clause 16 of the agreement, and it is also clearly an industrial matter as per the bargaining period and as per clause 16 that is relevant to the provision in section 127. This is a provision that has been subject of determinations by the Full Bench on the arbitration of the Award Simplification matter of the Federal Metal Industry Award, and has been the subject of proceedings on appeal by a Full Bench in a deliberation of Commissioner Bacon in regard to this particular provision.

PN312

It is not a new provision or a new subject matter to the parties present before the Commission today. If in fact employees' rights were to be retained or exercised in the matter, explicit wording would indicate so. To allow the pursuit of such matters would allow further agitation of matters forming part of an agreement where the scope and process and delineation of such matters has been defined in the agreement. If the matter were to fall in line with the conclusions reached in the Emwest decision, a specific right would be conferred on employees as part of the agreement as to a future separate negotiation and then no curtailment of the taking of industrial action, the process being open to the employees to take protected industrial action.

PN313

However, in this matter, the parties turned their minds to a specific process and as to how to modify the agreement and if the agreement could not be reached, how the parties were, if they are not in approval of the implemented scheme - and its explicit process as to how either could terminate the scheme. This does not present a matter left to one side for further negotiations at large. Accordingly, as per section 179MN of the Workplace Relations Act with regard to industrial action, such must not be taken until after the nominal expiry date of the agreement, where matters have been covered in the particular agreement.

PN314

Furthermore, as per section 170MN(3), if the employee organisations take such action, the action concerned is not protected industrial action. As set out, the jurisdictional prerequisites for section 127(2) orders have been met in terms as summarised. It is not denied between the parties that the industrial action proposed for Monday, 7 November at 12 pm is to occur. Accordingly, the orders as sought are issued, except for the delineation of clause 3(b)(ii) which has not been pressed in these proceedings, and for the term, which will be effected from today's date for a period of one week.

PN315

In conclusion, I emphasise the agreement refers to an expressly agreed process between the parties in clause 16.4, processing such matters as are the matters in dispute and being sought orders for today as per this section 127 application. It is expected that the process, as agreed between the parties, will be discharged in endeavouring to resolve this matter. If the Commission's assistance is sought, the matter will be urgently listed. On that basis, I adjourn.

<ADJOURNED INDEFINITELY [12.42PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #1 STATEMENT OF MS SHERRYL BARBER PN16