C2005/4659, Transcript of Proceedings [2005] AIRCTrans 2451 (1 December 2005)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 13495-1

SENIOR DEPUTY PRESIDENT O’CALLAGHAN

C2005/4659

AUSTRALASIAN MEAT INDUSTRY EMPLOYEES UNION, THE
AND
TEYS BROS (NARACOORTE) PTY LTD
s.99 - Notification of an industrial dispute
(C2005/4659)

ADELAIDE

2.10PM, MONDAY, 21 NOVEMBER 2005

Reserved for Decision

PN1

MR G SMITH: I appear for the AMIEU.

PN2

MR J SALTER: I appear for the Teys Brothers (Naracoorte) Pty Ltd.

PN3

THE SENIOR DEPUTY PRESIDENT: My understanding of the position of the parties in this matter is that there is a single matter in dispute relating to the entitlement to annual leave for a given employee and the parties have agreed to some form of arbitration of the matter pursuant to section 111AA of the Act. Is that a fair summary, Mr Smith?

PN4

MR SMITH: Yes, that’s correct, your Honour.

PN5

THE SENIOR DEPUTY PRESIDENT: There’s only the one matter?

PN6

MR SMITH: Yes, there’s only the one matter.

PN7

THE SENIOR DEPUTY PRESIDENT: I see. Mr Salter, is that your position?

PN8

MR SALTER: Yes, I agree with that, Senior Deputy President.

PN9

THE SENIOR DEPUTY PRESIDENT: Thank you. All right. Now, Mr Smith, I can advise you that I have before me a copy of correspondence to you from
Mr Salter dated 31 August 2005. I have a copy of a memorandum to a
Mr Andrew Gibb from a Mr Steve Pitman, dated 6 July 2005. I also have copies of the two decisions referred to in the earlier advice of Mr Salter to yourself. That is, decisions of Commissioner Raffaelli and Commissioner Bacon. Additionally, I have a copy of the Federal Meat Industry Processing Award 2000, or I should say of clause 26 of that particular award. Armed with all that information, I am all yours, Mr Smith.

PN10

MR SMITH: Yes, thank you, your Honour. Just in respect to the letter of the thirty first. No, sorry, I withdraw that, your Honour, that’s for Mr Salter. Yes. The argument, essentially, is about whether or not an accrued entitlement to annual leave should have been recalculated following the termination of an AWA. I had some discussion with Mr Salter last week just about the process for today and it seems that the facts are not in dispute between us, it’s only an argument over technical merit, so we have not called any witnesses, on that basis.

PN11

Our argument is pretty simple, and we say that once an entitlement is accrued it remains intact notwithstanding the changes to the industrial instrument that governs the conditions of employment. That is to say, once you’ve accrued an entitlement it stays accrued. The employer, on the other hand, says they are entitled to recalculate an employee’s entitlements if they terminate, or, sorry, if the employee who is bound by that AWA terminates that AWA.

PN12

The brief history is this. Mr Gibb, who is the aggrieved employee in this matter, signed a Teys Brothers (Naracoorte) AWA in 2002. I’ll hand a copy of that particular AWA for the Commission. It is not - as far as I know, this is just a generic AWA. It does not disclose any particular employee, although the front cover does have the name of Teys on it. I can remove that if necessary, your Honour.

PN13

THE SENIOR DEPUTY PRESIDENT: Well, Mr Smith, I take it you’re acting with Mr Gibbs’ authority, is that the case?

PN14

MR SMITH: Yes, sir.

PN15

THE SENIOR DEPUTY PRESIDENT: I see. All right. You can hand me up a copy of that document.

PN16

MR SMITH: Thank you.

PN17

THE SENIOR DEPUTY PRESIDENT: I’ll mark this document. You say to me that it doesn’t - whilst it was applied to Mr Gibb, it doesn’t identify him anywhere in the document?

PN18

MR SMITH: No, your Honour, it’s just a generic AWA.

PN19

THE SENIOR DEPUTY PRESIDENT: Okay. I’ll call it A1, noting that it’s a generic AWA.

EXHIBIT #A1 GENERIC AWA OF MR GIBB

PN20

MR SMITH: This AWA governed his conditions of employment until the particular one that applied to Mr Gibb was terminated on 4 July and that was following an appearance before you, your Honour, on 1 July. The agreement provides for two types of entitlement to accrue. That is, annual leave, and sick leave. We’re only talking about annual leave today, but they are the two types of things that accrue under this agreement. The annual leave is prescribed in clause 5.1. If I can just take you to that. It’s on page 15, your Honour. Clause 5.1.1 provides the five weeks’ annual leave per twelve monthly cycle, 5.1.4 talks about the accrual of leave - - -

PN21

THE SENIOR DEPUTY PRESIDENT: Well, perhaps before we leave 5.1.1, can you tell me how you think that clause operates, Mr Smith?

PN22

MR SMITH: I think it’s a simple basis of if you have twelve months’ continual service then you will receive five weeks’ annual leave; although, I don’t think that it is the position that once you’ve twelve months you get five weeks’ annual leave, as such, you actually accrue it during the period of the twelve months. I think that becomes a little more obvious if you look at the other provisions such as clause 5.1.4. and clause 5.1.7.2.

PN23

THE SENIOR DEPUTY PRESIDENT: Even before we get that far, if an employee is working under this arrangement and is employed at the outset to work under this arrangement, so they commence working on a given date under this arrangement

PN24

MR SMITH: Yes.

PN25

THE SENIOR DEPUTY PRESIDENT: Should I take it that what you are saying to me is that they will accrue annual leave on the basis of five weeks’ annual leave in that first year of service the actual accrual is limited by 5.1.4, but there afterwards they work on the basis of a five week per annum accrual on the anniversary date of that start date?

PN26

MR SMITH: That’s exactly right, your Honour. With the meat works, accruals become rather important, because we do work in a seasonal business. That’s the purpose of clause 5.1.7. Clause 5.1.7, while it is not unique to the meat industry, is particularly useful in the meat industry, because it allows the employer to shut down a plant during periods where there is no ….. for whatever reason.

PN27

THE SENIOR DEPUTY PRESIDENT: You’ve run on ahead of me again.

PN28

MR SMITH: I’m sorry.

PN29

THE SENIOR DEPUTY PRESIDENT: You’re too quick for me today,
Mr Smith.

PN30

MR SMITH: That makes a change.

PN31

THE SENIOR DEPUTY PRESIDENT: Can I go back to a second scenario. That is, if an employee has been working under, say, for argument’s sake, the award, and has been accruing annual leave on the basis of four weeks’ annual leave per year then what do you say to me is the effect of 5.1.1.

PN32

MR SMITH: This is basically the core of your argument, I think.

PN33

THE SENIOR DEPUTY PRESIDENT: Well, it’s the reverse side of the issue that I understand the parties are arguing about, but it’s of relevance to me.

PN34

MR SMITH: It’s our position that, from the time you work under a particular instrument, the instrument may – or probably does – determine what rate you will accrue leave at and when you will take the leave, but once you’ve accrued it the instrument has no further bearing on it. That accrual goes to your credit and remains in your credit and that’s what we’re saying about this particular situation here.

PN35

THE SENIOR DEPUTY PRESIDENT: So that if an employee had been working under an award and then signed this particular agreement do you say that the entitlement they had under the award, that is, accrued at a rate of four weeks per year, is affected at all by this agreement?

PN36

MR SMITH: We would say that the only time that this type of agreement would affect an accrual under the award would be if there was a specific provision that said that those entitlements were to be recalculated in accordance with the new prescription. Otherwise, if an employee worked for a year under the award and he accrued 20 days’ annual leave then on the signing of an AWA he would still have 20 days annual leave accrued to his credit, even if the AWA then said you’ll get five weeks a year from now on.

PN37

THE SENIOR DEPUTY PRESIDENT: I see, all right, thank you.

PN38

MR SMITH: 5.1.7.2 also talks about the accrual of leave. This is where, on the annual shutdown basis, the employer has the opportunity to close the plant, because there may be seasonal factors that prevent him from continuing operating, livestock may not be available, or whatever. You can close the plant for a period of time. If an employee does not have enough service to have enough leave up then that clause then allows them to take proportional leave on a basis of that which has been accrued during the year, on a pro-rata basis. It entitles the employer to send someone on leave before they actually have leave due.

PN39

THE SENIOR DEPUTY PRESIDENT: Yes. If you went back one subclause to 5.1.6, 5.1.6.1 talks about the employee being paid for each week of annual leave at the weekly average of the ordinary time earnings earnt by the employee during the period since the employee last resumed work following annual leave. Now, is that limited at all to work that is covered under this agreement? That is, if the AWA was signed six months into an employee’s anniversary date, if they took annual leave to make it simple so that they finished leave on say 31 January, signed this agreement on 31 July, and sought leave again as of 31 January, then how is the payment calculated?

PN40

MR SMITH: In that case, in that particular instance, then this AWA would have the prescription of saying that all of the leave will be calculated at the average of the ordinary time earnings earnt by the employee during the period since the employee last resumed work, which would obviously take into consideration that period from January to June as well as the July to December period.

PN41

THE SENIOR DEPUTY PRESIDENT: Yes, thank you.

PN42

MR SMITH: The ordinary time earnings are defined in the definitions of this agreement as being the rates of pay contained in the schedule of rates and that is with no other bonuses or Commissions or incentives attached to it. I also note, your Honour, that the agreement doesn’t provide for any annual leave loading. On the other hand, the Federal Meat Industry Award provides for the four weeks’ annual leave with a seventeen and a half per cent leave loading. On the face of it, I guess it would be an easy thing to say, well, the AWA gives five weeks with no leave loading, the award gives four weeks with the leave loading, doesn’t it come up much the same? The answer to that question, in our submission, is that the AWA is a multi-faceted agreement. It must be treated in an overall fashion rather than just looking at one clause in isolation.

PN43

For example, if you go to clause 5.5 - clause 5.5. is on page 18, your Honour, and it is the clause that governs public holidays. Clause 5.5.1 provides for six public holidays under this agreement. The old agreement provided for ten public holidays. The award arguably provides for eleven public holidays. I’ll just address that, your Honour. There is an anomaly in the current Federal Meat Industry Award and there is an error. In the 1996 award - - -

PN44

THE COMMISSIONER: You’d better hurry up and fix it, Mr Smith, the clock is running.

PN45

MR SMITH: We are in the process of doing exactly that, your Honour. It’s only actually since this dispute came up that we realise that the error was even there, because under the old 1996 award - sorry, I’ll start again. Under the 1981 version of the award there were eleven public holidays specified in South Australia. In the 1996 Award one dropped out, the Adelaide cup day, by error; however, there was a further provision that provided for any other day that was gazetted as a public holiday and so the Adelaide cup never came into any contention. In the 2000 simplified award, unfortunately, that second provision got dropped out of the equation and so the ten public holidays that appeared in the 1996 version remained in the 2000 version, but not the provision for any other day that was gazetted as a public holiday.

PN46

Now, obviously, the simplification process was not charged with removing public holidays from workers and in our submission I am not aware from any employee in South Australia who does not get the benefit of the Adelaide cup holiday as per the award. So, as I say, it’s simply an error. We’re in the process of trying to fix it, but the award should have eleven public holidays. The whole point of this is, this agreement has six. The other five, I’m told, were transferred during the last round of negotiations to the annual leave period to give the extra week’s annual leave.

PN47

So, going back to my previous proposition, that one with the leave loading and one without the leave loading doesn’t necessary equal each other where you take into account such things as the public holidays where this becomes obvious. Essentially, it’s because of the removal of the other public holidays that they get the fifth week of annual leave. Now, Mr Gibb worked under this AWA - or an AWA exactly like it - until 5 July. The termination date was from 5 pm on 4 July, which was after the completion of his ordinary hours of work on 4 July, so effectively it was the fifth.

PN48

There was no work at the factory on 5 July, so he commenced under the award on 6 July 2005. Annual leave was scheduled for 15 July, so he was just sort of a few days short of completion of the period of the twelve month cycle on the AWA. At that point, 4 July, that is, he had accrued 177 hours of annual leave and I just seek to tender a copy of a pay slip.

PN49

THE SENIOR DEPUTY PRESIDENT: I’ll mark that as A2.

EXHIBIT #A2 PAYSLIP OF MR GIBB

PN50

MR SMITH: I should apologise, your Honour, I should have supplied Mr Salter with a copy of this; however, I don’t think it will be contentious, it only specifies the amount of annual leave he did accrue according to his pay slip. You’ll notice that the pay slip doesn’t have a specific company heading as to who it applies to, but if you note the fax transmission from the top it was sent to us by Mr Gibb.

PN51

If you just look down the left hand column where it says list paid, straight underneath that at the bottom it gives a leave entitlement, it’ll have the initials NAAN, it is annual leave, and then a total of 175.61H, which is 175.61 hours. That was up until 28 June. Between 28 June and the next period he had accrued another two hours, hence the entitlement to 177 hours annual leave.

PN52

Now, while he was working under the AWA he fulfilled his part of the deal and in return he accrued that amount of hours of annual leave and we say that that’s the amount of annual leave that he had to his credit that remains in accrual.

PN53

THE SENIOR DEPUTY PRESIDENT: Can I just go back to one of the issues we were discussing a moment ago? If I properly follow the argument you’re putting to me, it is to the effect that I need to treat an annual leave accrual as distinctly related to the instrument under which it accrues, so that the period prior to the operation of the AWA, if the award applies, then I need to regard that annual leave that might be accrued during that time and not taken as a discrete entity?

PN54

MR SMITH: Yes.

PN55

THE SENIOR DEPUTY PRESIDENT: But I should still pay it, but he should still be paid at the new rate?

PN56

MR SMITH: Yes, that’s essentially the argument.

PN57

THE SENIOR DEPUTY PRESIDENT: Why would you treat the accrual in the context of the instrument in which it accrued and yet the payment be determined on the basis of the rate applicable at the time at which it was taken.

PN58

MR SMITH: Okay, now this is one area where we say it does rely entirely on the industrial instrument at the time. In respect to the accrual itself, we say the accrual is something that is credited while you work. You perform the work and in return for performing the work you are credited with a period of annual leave and sick leave. Once that has been credited, that remains your credit, regardless of what happens from here on in.

PN59

The industrial instrument only governs the rate at which you will accrue it, whether or not you will accrue it at all, and possibly such things as how it will be taken, but the accrual once accrued remains your credit. If I could give a couple of examples of where I’m coming from, there, Commissioner. If, perhaps, there was an award based employee who was working under the Meat Industry South Australia Award then under that state instrument he would accrue sick leave at the rate of ten days per year. If he then worked for two years and never took a sickie then he would have to his accrued twenty days’ sick leave as an accrued entitlement.

PN60

The employer may chance respondency, he may become respondent to the Federal Meat Industry Award. The Federal Meat Industry Award, from that point on, will change the rate of accrual from ten days’ per annum to eight days’ per annum, because the Federal Meat Award has a different prescription. Would, then, the employer be entitled, at the point where he changed respondency, to say, all right, I’m now going to go back and recalculate the entitlements to sick leave under the new instrument in reference to that which has been accrued under the old instrument.

PN61

Another scenario that crops up is the complete opposite of that. You may have an employee working under a certified agreement, who accrues eight days’ sick leave per annum. He comes and negotiates a new enterprise agreement, or an agreement of whatever description, and during the course of negotiations they may work out a higher rate of accrual of sick leave or annual leave from that point on. Do you then go back and say, well, prior to that, we’re now going to recalculate all those entitlements that I had accrued already to the new prescription? Our answer to that would be only if the agreement prescribed that that be the case.

PN62

So, we say it’s a two-sided deal. The accrual or the entitlement becomes accrued as a result of the employee performing work. The employee performs the work, he accrues the entitlement. Once he accrues the entitlement, that’s his. On the employer’s side of the deal, he’s had the work performed. On the - sorry, I was just going to tender another pay slip, your Honour, just to see what happened the following fortnight.

PN63

THE SENIOR DEPUTY PRESIDENT: I’ll mark this as A3.

EXHIBIT #A3 SECOND PAYSLIP OF MR GIBB

PN64

MR SMITH: Once again, your Honour, it’s another pay slip of Mr Gibb. The fax transmission report at the bottom will show that it was sent to us by Mr Gibb. You’ll note that if you follow down the same column again on the left hand side of the page you come to the bottom where the annual leave entitlements total has reduced to 140.1. So, between one pay period and the next, the entitlements have been recalculated and 37 hours have been removed from his accrued entitlement.
On 21 July I wrote the company and I seek to tender a copy of that letter, your Honour.

PN65

THE SENIOR DEPUTY PRESIDENT: Just before you leave that document I’ve marked A2[sic], which is the pay slip for the pay period 27 June and dated
15 July 2005.

PN66

MR SMITH: A3?

PN67

THE SENIOR DEPUTY PRESIDENT: Sorry, A3. At the bottom of that payslip is a sentence, it says Teys Brothers would like to take this opportunity to thank you for your support and to wish you a safe and happy holiday, drive carefully. Can I take it that’s not referring to annual leave?

PN68

MR SMITH: I’m not quite sure what it refers to, other than to - - -

PN69

THE SENIOR DEPUTY PRESIDENT: It doesn’t appear to me to reflect a holiday time of the year.

PN70

MR SMITH: No, you’re right, but I imagine that is just referring to the period of shutdown. I think in the meat industry any time that the plants shut down is a holiday and a happy one at that, so - - -

PN71

THE SENIOR DEPUTY PRESIDENT: Except that if I look above that, against the hours taken, the equivalent of 140, in the line above that, there appears to be a start date for annual leave and an end date. It appears, on the face of it, that a start date for annual leave is 18 July 2005 and an end date is 26 August 2005. Now, how do I reconcile those dates with the position you’re putting to me.

PN72

MR SMITH: Okay, yes. The period of the shutdown was predicted to be seven weeks, as I understand it, notwithstanding the fact that employees only had five weeks’ annual leave. The rest of it was a stand down period. I think that what actually happened was it went another week or two longer than that, but the predicted time of the closure was seven weeks, in which case the employees would be paid for the amount of leave that they had accrued and the rest of the time they would not be paid, they would simply have a longer unpaid period of leave.

PN73

THE SENIOR DEPUTY PRESIDENT: Well, that may be the case, but are you saying to me then there was a shutdown for a period sometime from 18 July 2005 until, or for a further seven or eight weeks.

PN74

MR SMITH: Yes.

PN75

THE SENIOR DEPUTY PRESIDENT: Well, if it’s of a period of seven or eight weeks, then how do I reconcile that with the end date in this document A3, which talks about 26 August 2005? Five weeks.

PN76

MR SMITH: Let’s see.

PN77

MR SALTER: Senior Deputy President, I may be of some assistance in explaining this.

PN78

THE SENIOR DEPUTY PRESIDENT: Yes, I am happy to hear from you,
Mr Salter.

PN79

MR SALTER: The message on the payslip is a goodwill message to all employees because the plant was entering into a general shutdown at that period of time. The anticipated shutdown, as I recall it, I’m not sure if those dates correlate, because I haven’t got that exhibit A3 in front of me, but as I recall it that would approach the five calendar weeks.

PN80

THE SENIOR DEPUTY PRESIDENT: Yes.

PN81

MR SALTER: That was the period of anticipated shutdown. As is probably the norm, in the meat industry, and particularly in South Australia, the shutdowns tend to go longer than anticipated and in fact this year it did go longer than anticipated, but the reference on the payslip is simply the anticipated period of shutdown.

PN82

THE SENIOR DEPUTY PRESIDENT: I see, and can you help me at all,
Mr Salter, how will I determine whether this particular employee was paid in terms of annual leave for any amount of that shutdown?

PN83

MR SALTER: He was paid 140.1 hours at the award rate of pay existing as at
14 or 15 July which was the last day of work before shutdown.

PN84

THE SENIOR DEPUTY PRESIDENT: I see, thank you. Now, Mr Smith, first of all, do you agree with Mr Salter’s advice in this regard?

PN85

MR SMITH: Yes, I think so, your Honour, that would mean that he was paid for slightly less - - -

PN86

THE SENIOR DEPUTY PRESIDENT: If the employee was paid 140.1 hours then was that 140.1 hours of annual leave payment deducted from the 177.61 hours that was applicable to the employee on 1 July.

PN87

MR SMITH: Yes, however, between A2 and A3 the company had already removed 35.1 hours annual leave from his entitlement to leave him with 140. At the point of leave he was then paid for 140.1 hours, leaving him a balance of zero.

PN88

THE SENIOR DEPUTY PRESIDENT: Well, then, where do I read the balance of zero? See, I can read annual leave entitlements.

PN89

MR SMITH: Yes, that TOT, your Honour, stands for total.

PN90

THE SENIOR DEPUTY PRESIDENT: Yes, that talks about 140.1.

PN91

MR SMITH: That’s right. That’s the total of his entitlement as far as the company is concerned on the date of 15 July. They then paid him for that period that’s specified on the right hand side between 18 July and 26 August the 140 hours, one deducted from the other leaves you with a balance of zero.

PN92

THE SENIOR DEPUTY PRESIDENT: I see. All right, then, well if I can take you back to A2 for a moment, which is the pay slip for the pay date 1 July 2005. Now, that has the total annual leave entitlement of 175.61 hours.

PN93

MR SMITH: Correct.

PN94

THE SENIOR DEPUTY PRESIDENT: But immediately next to that it has another code, N51, 34. What does that N51, total of 34 refer to?

PN95

MR SMITH: I don’t know what that total of 34 refers to, your Honour.

PN96

THE SENIOR DEPUTY PRESIDENT: I see. Mr Salter, can you help me in that regard, too?

PN97

MR SALTER: No, I can’t, Senior Deputy President. I would suggest, though, that it has no relevance to the matter in dispute here.

PN98

THE SENIOR DEPUTY PRESIDENT: Yes, that may well be the case. It’s just so close to the figure that represents the difference between 175 and 140 that it’s prompting me to scratch my head a little.

PN99

MR SMITH: I don’t think it would be quite that simple, sir, because in between that period and the following pay period he would have accrued another entitlement to annual leave. Regardless of which instrument you looked at, he would have accrued another four or five hours’ annual leave.

PN100

THE SENIOR DEPUTY PRESIDENT: If that’s the case, then what you’re saying to me is that the amount of the entitlement removed, if you like, from
Mr Gibb, was greater than 35.5.

PN101

MR SMITH: Yes. In fact, we say it was 37.21. Had Mr Gibb gone on the following pay period he would have accrued, sorry, I said four a minute ago, but that was a bit lavish of me, it was about two hours.

PN102

THE SENIOR DEPUTY PRESIDENT: What do you say it was, 37?

PN103

MR SMITH: Yes, 37.21. We say that at 15 July he should have had an accrual of 177.31 hours instead of the 140.1, but that the other 37 hours had been removed between one pay period and the next.

PN104

THE SENIOR DEPUTY PRESIDENT: Yes.

PN105

MR SMITH: That left him with a total of 140. That’s what he went on the leave period with. They had leave for more than five weeks. Mr Gibb was paid for less than the four weeks, which is the twelve hours less than four weeks, which is the 140.1 hours. On 21 July I wrote to Mr Richter, who was the human resources manager at the plant, and I seek to tender that letter, your Honour.

EXHIBIT #A4 LETTER FROM MR SMITH TO MR RICHTER

PN106

MR SMITH: Can I just take your attention to the second paragraph, your Honour, or actually the third paragraph. The second is in relation to annual leave, as Andrew worked pursuant to the AWA until recently he accrued five weeks’ annual leave. The fifth week seems to have been eliminated from his accruals. The fifth week of leave, as I understand it, is a trade-off for working public holidays, etcetera. It shouldn’t just be removed from his entitlements. The AWA operated for him for a period and under it he did things in exchange for the supposed benefits. Teys have had their benefit already, he must still get his. This is exactly the same sentiment, or the same argument, that we’ve been stating all the way through this, your Honour. That is, that once you accrue something it remains accrued.

PN107

On 31 August I got a letter back from Mr Salter and that’s the letter that you already have before you that was sent by Mr Salter. That letter doesn’t dispute the arrangement in respect of public holidays being a trade-off for additional annual leave. The argument that Teys has, according to this letter, is that annual leave entitlements are only calculated at a point in time that the entitlement becomes due.

PN108

THE SENIOR DEPUTY PRESIDENT: For the sake of the record, I’ll mark that letter of 31 August from Mr Salter to yourself as A5

EXHIBIT #A5 LETTER FROM MR SALTER DATED
31 AUGUST

PN109

MR SMITH: That reference that I just read to you, your Honour, is just up from the bottom of the front page.

PN110

THE SENIOR DEPUTY PRESIDENT: Yes.

PN111

MR SMITH: Now, we disagree with that, with respect to both annual leave and sick leave, generally.

PN112

THE SENIOR DEPUTY PRESIDENT: So I take it you say, then, that as of the commencement of the AWA any amount of annual leave that Mr Gibb had or might have accrued under the award should in effect be identified and quarantined?

PN113

MR SMITH: Upon, I didn’t catch the end?

PN114

THE SENIOR DEPUTY PRESIDENT: I take it you say that as of the commencement of the AWA any amount of annual leave that Mr Gibb had that he might have accrued under the award should be identified and quarantined.

PN115

MR SMITH: Yes, the other way around in this particular case is Mr Gibb was never under an award until 5 July this year.

PN116

THE SENIOR DEPUTY PRESIDENT: I see.

PN117

MR SMITH: He commenced his employment, as I understand it, under the basis of an AWA.

PN118

THE SENIOR DEPUTY PRESIDENT: I see, well, let’s look at it from that perspective, then. What you say is that, as of the termination of the AWA, the accrual that Mr Gibb achieved under the AWA should be identified and quarantined.

PN119

MR SMITH: Yes.

PN120

THE SENIOR DEPUTY PRESIDENT: So, the AWA was terminated on 4 July. You say that Mr Gibb was entitled to an annual leave loading for that period of leave he took in late July?

PN121

MR SMITH: The leave loading I’ll deal with in a minute, your Honour, but I will get to that.

PN122

THE SENIOR DEPUTY PRESIDENT: I see, all right, thank you, I’ll be patient.

PN123

MR SMITH: I will get to that, but the simple answer to the question is yes. The accrual that he had to date should have been quarantined, notwithstanding the fact that from 5 July onwards he would accrue annual leave at a different rate. The very nature of an accrual is that it is something that you have to your credit. That is why it is put on the pay slips. The pay slips show you what you have to your credit. There would be absolutely no sense in reporting an accrual on a pay slip if it wasn’t actually an accrual until such time as some point later on down the track.

PN124

The letter of 31 August from Teys also refers to an agreed memo dated 6 July which is attached to that letter. This memo, as I understand it, or as I am instructed, was handed to Mr Gibb on the first morning of work after terminating the AWA, that being 6 July. It’s been signed by Mr Gibb, and I presume that
Mr Salter intends to rely on this arrangement in respect to leave entitlement as some sort of agreement. I have to make two observations to that, sir. The first is that Mr Gibb doesn’t agree to the terms of this document. That’s self evident from the fact that he’s complained about it. He advises me that he signed it because he was told that he had to or he couldn’t stay at work.

PN125

The other observation that I make is that the Workplace Relations Act provides for an employee’s employment to be regulated by an agreement. The Act provides several kinds, or in default the award. This memo doesn’t comply with any of the requirements in making an agreement and, therefore, can’t be given any weight as such. We’ve got no issue with the employer giving someone a memo that sets out start and finishing times and things like that, but this memo goes a lot further than that. It attempts to reach agreement on unpaid time during the day, it recalculates annual leave entitlements from days accrued, which is the argument in question, it attempts to limit the amount of public holidays to ten, and it also attempts to reach agreement on Saturday work.

PN126

Now, Mr Gibb had made it clear when he terminated his AWA that he wanted to work under the award. The employer is perfectly entitled to try and reach agreement on matters that the award gives the employee some choice in, but I say that this is not such an agreement and the employer is not entitled to rely on it as being any sort of industrial instrument.

PN127

What we say should happen from here is that Mr Gibb should get the benefit of the five weeks’ annual leave. Now, you quite rightly raised what happens with the leave loading. Well, on the outset, it sounds like a one way street, but we don’t think it is. Because the award is enforced at the time of the taking of the leave, Teys would be bound to pay 17.5 per cent leave loading in accordance with the terms of the award. We say, however, that the company is not disadvantaged by that, nor is it a double dip. We actually reject that it is a double dip, because the company had the benefit of work on the five public holidays as ordinary days as well as the lack of leave loading paid.

PN128

They’re not embarrassed in any way by crediting Mr Gibb with an additional week’s annual leave, because in fact he has had that time off, he just hasn’t been paid for it. It’s not a question of we’re forcing the company now to send someone on - or trying to force the company to send someone on - leave and then leave them short handed. That leave has already been taken. It’s just a question of payment. As I said before, your Honour, the balancing that we say should be taken into consideration here is the award has four weeks leave, 17.5 per cent leave loading, the agreement has five weeks annual leave, no leave loading, that’s pretty much of a muchness, but when you take into consideration the five public holidays that were traded off under the last agreement to give you a fifth week of annual leave then we say there is no double dip. That’s essentially our case, your Honour, unless you have any other questions.

PN129

THE SENIOR DEPUTY PRESIDENT: No, I don’t have any other questions. Thank you, Mr Smith. Thank you for being patient in terms of my questions as we’ve proceeded. Mr Salter?

PN130

MR SALTER: Senior Deputy President, our case is pretty straight forward and quite brief in reality. It is clearly, in my view, pointed out or described in exhibit A5, that is, the letter from myself to Mr Smith dated 31 August 2005. Our case simply is, and always has been in this dispute, that (1) and employee does not have an entitlement to annual leave until a number of events may occur, or a single number of a number of options may occur, that is, the employee’s services are terminated by either himself resigning, the employer terminating the services, or unfortunately a case of death. At that point in time then annual leave or pro rata annual leave would need to be calculated.

PN131

The other circumstance would be where the employee gives the required notice of wanting to take annual leave and actually does so. The third circumstance is that where the employer, as is the case in the meat industry, to which Mr Smith has referred, closes the plant for annual shutdown at which point all employees regardless of whether they actually have an entitlement to annual leave at that point in time are deemed to be on annual leave and are either paid their full entitlement or paid pro rata essentially in advance.

PN132

In Mr Gibb’s case, at the point of the annual shutdown of the plant this year, which was 16 July 2005, in fact, Mr Gibb had no entitlement to annual leave. He had a pro rata entitlement, which he was paid for, and which is contemplated by subclause 26.8 of the award. Up until that point in time, he had no entitlement to payment for anything of annual leave either under his previous AWA, which was terminated on 4 July, or the award. At the point of annual close down, for which subclause 26.9 of the award refers, the employer was bound to pay to Mr Gibb pro rata annual leave payments calculated in accordance with subclause 26.6 of the award, and that would be taking his then existing accrual and applying the ordinary time earnings that he would have earned had he not been on leave plus a 17.5 per cent annual leave loading.

PN133

So, our total case in this matter comes back to and refers to the point at which the entitlement became due. The only point that an entitlement becomes due is
16 July. The award and the AWA, or the terminated AWA, are inconsistent and incompatible in a number of areas. There’s no better example than this one about the annual leave. Under the award annual leave accrues at the rate of four weeks per annum and as the award has a standard ordinary hours of work of 38 hours that means that for each year of service employees accrue 152 hours of annual leave. Under the AWA, however, where the standard ordinary hours of work are a 40 hour week, there is five weeks accrued, and that creates an accrual of 200 hours.

PN134

Now, what I understand this argument to be is that the accrual that Mr Gibb accrued between his recommencement from work following the previous shutdown in 2004, and that was in the first week of September 2004, up until the point where his AWA was terminated, that the annual leave accrual hours accrued under the AWA should have been credited and preserved to his account then in the brief period, one fortnight, from the termination of the AWA to the annual close down of the plant he should have had some four hours, I think Mr Smith referred to, further accrual under the award and that should have been totalled together and then Mr Gibb should have been paid the award rate of pay existing at the time he went on annual leave plus a 17.5 per cent annual leave load.

PN135

Our contention simply is that at the point Mr Gibb became entitled to anything, ie., 16 July, one needs then to go back and recalculate his accrual under the award. Mr Smith has indicated that there was a trade-off situation with the new AWA. I was heavily involved in that and I don’t recall any such tradeoffs. The award prescribes that there are ten public holidays. That award variation came into place, as I recollect it, about twelve months ago by consent between the federal branch of the AMIEU and AMEC and it was on the basis that there are a number of Full Bench decisions that indicated that awards could and should only contain ten public holidays. That’s the Full Bench standing, as I understand it, and certainly AMEC does not agree with MR Smith’s contention that there’s any mistake in the award and indicates that the ten public holidays are there.

PN136

Regardless if there were eight, nine, ten, or twelve public holidays in the award, the situation under the AWA in our plant at Naracoorte, other than for Mr Gibb, is that there are six public holidays only inside the fence of Teys Brothers (Naracoorte) and the other public holidays are normal work days which are paid at normal rates. I don’t understand the argument at all about this trade-off mentality.

PN137

The only other point that I would wish to make is that in my submission
Mr Smith’s argument would have some validity if the award in fact contained an appropriate savings or preservation of rights clause. Now, it does contain a savings clause, and that’s in subclause 6.3, and it does cover the circumstances that Mr Smith was referring to before, where an employer perhaps changes award respondency and he used an example from a state meat award to the federal meat award where there are inconsistent rates of accrual of entitlements.

PN138

In my submission, any accruals in that circumstance, be they negative or positive for the employee, well might be covered by the existing subclause 6.3 in the Federal Meat Industry Award, but that savings clause in the Federal Meat Industry Award does not extend to Australian Workplace Agreements. It talks about rights, obligations, and liabilities accrued or incurred by an employer or an employee in accordance with the provisions of any awards superseded or replaced by this award, so it would be affected by the making of this award, I’m quoting there from subclause 6.3 of the Federal Meat Industry Award. If one then goes to the definition of award in the Act, the Workplace Relations Act, award is specified as something being reduced to writing under section 143(1). An AWA as defined in section 4 of the federal Act is defined as a separate entity to an award.

PN139

In my submission, for Mr Smith’s argument to prevail, in a technical sense, then subclause 6.3 would need to be amended to cover the situation that we now have. Mr Smith indicated that to do what he submits is correct to do, and that is, as I understand it, accredit Mr Gibb with 177 hours - or 181 hours if one adds the four hours that Mr Smith says were accrued between 6 and 14 July - and then pay him at the award rate plus 17.5 per cent leave loading is not double dipping. We would contend that it clearly is. We did not in any way seek to disadvantage
Mr Gibb.

PN140

There are numerous Full Bench decisions of this Commission, including one which the Commission as presently constituted would be well aware, that’s an appeal decision of a decision of y our Honour and that decision you chose to exercise your discretion not to cancel a number of AWAs upon application by
Mr Smith on behalf of a number of employees and that matter went to a Full Bench decision and the Full Bench decision makes it quite clear of the consequences that may arise from employees and unions seeking to terminate AWAs and it simply indicates that it swings in roundabouts, there can be pluses and minuses about that, and employees have to wear the consequences of that as do employers. It does not at least activate the public interest should any of those things occur.

PN141

Mr Smith also refers to the agreement, that is, the attachment to exhibit A5. As I’ve indicated, the award and our AWAs to which all of our other employees except Mr Gibb respond are hopelessly inconsistent. We thought it appropriate before Mr Gibb commenced work under the award that we pointed out to him what all the relevant changes to his conditions of employment would be and he agreed to those and it was signed off by the AMIEU representative or his employee representative Mr Malone. There was no attempt to dupe him. We made it quite clear verbally, before we put this in writing, but I’m the first to admit that no employee can sign away their rights. If the person is under an award and what we have there is an incorrect application in the end of the award then we would be bound to amend that.

PN142

We have no further submissions in this matter, Senior Deputy President.

PN143

THE SENIOR DEPUTY PRESIDENT: Mr Salter, can I take you to a couple of clauses in the agreement, that is, in the AWA.

PN144

MR SALTER: Yes.

PN145

THE SENIOR DEPUTY PRESIDENT: Go to clause 2.5, which relates to redundancy. Can I take it that you would say, consistent with the submission you put to me in terms of the treatment of annual leave, that redundancy entitlements are calculated at the time at which the redundancy occurs and as a consequence if Mr Gibb was for instance being made redundant you would now simply look at the award prescription in that respect?

PN146

MR SALTER: That would be correct, that would be in line with my submissions.

PN147

THE SENIOR DEPUTY PRESIDENT: All right. Then, can I take you back to clause 2.3, which relates to extra production days and banked leisure time.

PN148

MR SALTER: Yes.

PN149

THE SENIOR DEPUTY PRESIDENT: If Mr Gibb had accumulated some banked leisure time at the time of termination of the AWA what would you say happens?

PN150

MR SALTER: That banked leisure time is deemed to be ordinary time earnings which are simply held on the employee’s account. As they are ordinary time earnings I would suspect that legally they would be paid.

PN151

THE SENIOR DEPUTY PRESIDENT: Well, why would they be different to annual leave calculation?

PN152

MR SALTER: Because they’ve already been earned. They are payment for ordinary hours already worked and, therefore, there would be an entitlement to them, because it’s for work that has already been performed, but in respect to the annual leave, the annual leave only becomes an entitlement at a prescribed point in time.

PN153

THE SENIOR DEPUTY PRESIDENT: I see. Yes, thank you.

PN154

MR SALTER: There is no entitlement until that prescribed point in time is reached. It would be similar in respect to long service leave, Senior Deputy President. There may well be an accrual placed to the employee’s account, but there can be no entitlement until the employee has reached a prescribed point in time. That is, he terminates and he has had sufficient service to generate a pro rata payment or he has had sufficient service and goes on long service leave. It’s a contingent accrual.

PN155

THE SENIOR DEPUTY PRESIDENT: Yes, thank you. Mr Smith?

PN156

MR SMITH: Yes, just a couple of things, sir. In respect to 6.3, I submit that that only refers to the making of that award, displacing other awards, it wasn’t - it wouldn’t for instance, I wouldn’t say, take into consideration what would happen now if an employee transferred from a state award to a federal award. I’m just back in Australia from holidays. I didn’t think there was a dispute on the facts there, but the old agreement certainly had four weeks’ annual leave and ten public holidays and the new agreement has five weeks’ annual leave and six public holidays.

PN157

The last two issues that were just raised. In respect to redundancy, your Honour, I don’t submit that redundancy accrues. I agree that that is one of those things that is determined at the point of termination. The same with long service leave and in fact long service was tested in the same manner in a case, testing my memory, but I’m pretty sure it was Pinkertons meat store at Kingston and that determined that long service leave does not accrue, as such, it is simply an entitlement after a period of time. That becomes self apparent, because if an employee has for instance five years’ service with the company he has no entitlement nor accrual of long service leave at that point, he only has long service leave after 10 years or after 15 years in the federal award.

PN158

THE SENIOR DEPUTY PRESIDENT: What do you say about sick leave?

PN159

MR SMITH: Sick leave we is the same as the annual leave, we say that’s the exactly the same. Those are the two things we say that accrue.

PN160

THE SENIOR DEPUTY PRESIDENT: Yes. Mr Salter, I take it that you disagree with Mr Smith in terms of sick leave, too?

PN161

MR SALTER: I do, my understanding is with the sick leave the treatment of
Mr Gibb’s sick leave entitlement has not been in dispute, but our position is the same, and that’s exactly what we did. There is a different accrual rate under the AWA for sick leave than that which exists under the award and once again we went back and recalculated it. Under the award, there is no entitlement for example to annual payout of sick leave, whereas under the AWA that is the standard treatment of sick leave. An employee cannot normally access sick leave entitlements when he or she is absent due to illness or injury, but rather sick leave accruals are paid out in a cash form at annual shut down. Those are the terms of the AWA. In Mr Gibb’s case, we went back, recalculated his service under the award, and came up with an accrual of annual leave which continues to accumulate at his credit and was not paid out as it was to the other employees.

PN162

THE SENIOR DEPUTY PRESIDENT: Thank you.

PN163

MR SALTER: So, if there is a dispute about annual leave then I imagine the principles are exactly the same for sick leave so there must be a dispute about that.

PN164

THE SENIOR DEPUTY PRESIDENT: Yes, go on Mr Smith, thank you.

PN165

MR SMITH: That was really as far as I wanted to take it, your Honour, it was just that I was just making the point that in the case of the redundancy and the long service we don’t see that as being an accrued entitlement anyway, only the annual leave and the sick leave. The key difference being that there is a clear difference between entitlement and accrual. Once you’ve accrued something, we say it stays to your credit.

PN166

THE SENIOR DEPUTY PRESIDENT: Yes, thank you. I’m going to take the information the parties to have provided to me away and ponder upon it. I would hope that I could give you my conclusions in that respect within the next one to two weeks. I can’t guarantee that, but I’ll endeavour to ensure that’s the case. I’ll adjourn the matter accordingly.

<ADJOURNED INDEFINITELY [3.14PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #A1 GENERIC AWA OF MR GIBB PN19
EXHIBIT #A2 PAYSLIP OF MR GIBB PN49
EXHIBIT #A3 SECOND PAYSLIP OF MR GIBB PN63
EXHIBIT #A4 LETTER FROM MR SMITH TO MR RICHTER PN105
EXHIBIT #A5 LETTER FROM MR SALTER DATED
31 AUGUST PN108