C2005/3001, Transcript of Proceedings [2005] AIRCTrans 2501 (9 December 2005)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 12230-1

COMMISSIONER GAY

C2005/3001

ASSOCIATION OF PROFESSIONAL ENGINEERS, SCIENTISTS AND MANAGERS, AUSTRALIA, THE
AND
FORD MOTOR COMPANY OF AUSTRALIA LTD
s.170LW - Application for settlement of dispute (certification of agreement)
(C2005/3001)

MELBOURNE

2.19PM, TUESDAY, 17 MAY 2005

PN1

MR M GEORGIOU: I appear for APESMA, with me MS L BARLOW.

PN2

MR D MAHON: I appear for Ford Motor Company, with me MR P BOLTAN, also from Ford Motor Company.

PN3

THE COMMISSIONER: Yes, Mr Georgiou?

PN4

MR GEORGIOU: Commissioner, Mr Mahon and I spoke prior to the hearing and the intention would be for me to put a very rough outline of the reasons why we're here on transcript. Mr Mahon will respond to the pertinent points if he so chooses and then we'd like the assistance of the Commission in conference to try to set a program for resolving the disputes between us. Commissioner, the two matters that re before you, I'll handle the easier one first. Ford imposes an overtime ceiling cap for salaried employees, including members of my organisation, where no matter how much overtime they'd work, there is a cap on what they will receive in terms of remuneration for that overtime. We can find no industrial instrument, including the Ford Motor Company Vehicle Industry Consolidated Award 1998, that allows for the company to restrict the overtime payments for any employees or classes of employees.

PN5

The company claims that it was an old practice that had been around from the days when former Commissioner Merriman worked for the Ford Motor Company, former Commissioner McDonald worked for the company and former Commissioner Mahon worked for the company, who happens to be Mr Mahon's uncle. They all had advised the company that that was the practice that had applied to salaried employees and Ford relied on that to say that they were under no legal obligation to pay salaried employees overtime in accordance with the award, or similar to that which applied to the non-trades and trades employees. That's the first part of the dispute.

PN6

The second part of the dispute is relatively complex, Commissioner, in that the association states categorically in its application that the company, Ford Motor Company, does not apply the appropriate relativities to the classifications of professional engineers and scientists with regard to the classification pay scales. The association takes the Commission back, and I'm just trying to remember, Commissioner, whether you were on the Commission at the time that this was done, the 1989 national wage case decision. I'm just trying to recall whether that just preceded your being on the Commission, I can't remember. But the print number for that is print H200 and as you would be aware, Commissioner, the Full Bench of the Commission, in determining the structural efficiency principle also incorporated one of the applicant unions and the relevant awards that applied in that case was the Metal Industry Award 1971 Part III as it related to professional engineers.

PN7

The Commission, as you are aware, Commissioner, the Full Bench determined a number of classification levels and relativities with certain percentages to apply to the Metal Industry Award based on the old base tradesman being 100 per cent and 135 for graduate engineers, 160 for experienced engineers, going up to 240 per cent. The Ford Motor Company was respondent to a vehicle industry award at the time that applied to professional engineers and that award was never varied to incorporate the structural efficiency principle and therefore the relativities.

PN8

In 1991 my organisation and the Ford Motor Company reached an agreement, and I'm not going to tender any of this at this stage because I'm hopeful that we can resolve this without reliance on formal material, but in 1991 my organisation and the Ford Motor Company reached agreement to apply the structural efficiency principle from that Full Bench decision in the national wage case to professional engineering and scientists classifications at Ford.

PN9

Following that agreement, the company incorporated the professional engineering classifications in the Ford awards and did apply the relativities. Over a period of time the awards have been varied for the national wage case decisions and the minimum rates adjustments, but the actual wages of employees at the Ford Motor Company are now regulated by enterprise agreements. Those enterprise agreements started around 1991 and have continued every three years subsequent to that year and all of the actual salaries of employees are regulated by those enterprise agreements.

PN10

So that the award now forms the minimum with the adjustments for national wage case decisions or minimum rates adjustments or safety net adjustments. When the last safety net adjustment occurred some two years ago by application of the AMWU, who are the principle union at Ford and have carriage for the variation of the Ford award, there was an anomaly that was presented to the company with regard to the graduate entry rate where the actual relativity was lower than 135 per cent and was in the order of 129 per cent, and without putting words in
Mr Mahon's mouth or Mr Boltan who is more - - -

PN11

THE COMMISSIONER: Well, you would expect that, wouldn't you, with flat increases, Mr Georgiou?

PN12

MR GEORGIOU: Yes, yes, you would because some of them were flat increases and not percentages.

PN13

THE COMMISSIONER: Well, they've all been flat increases, haven't they, over recent years?

PN14

MR GEORGIOU: Yes, but it goes back to '89, Commissioner, that you'd have to apply it, but it's only a very small variation and during the EBA - - -

PN15

THE COMMISSIONER: Yes, and very substantial distortions in the relativities that you refer to as a consequence of the industrial parties not seeking to maintain relativities by applying a percentage approach, rather by insisting on applying money amounts.

PN16

MR GEORGIOU: Yes. That's not in dispute between us. This part of my submission really relates to a tidying up exercise. During the recent EBA negotiations I put to the negotiators at Ford that there should be a slight adjustment, and I did do all the figures, to the actual rate in the award for the graduate. The others were all okay. It was only the graduate that was slightly down and - - -

PN17

THE COMMISSIONER: Down on what, Mr Georgiou?

PN18

MR GEORGIOU: On what the actual rate should be had the National Wage increases been applied correctly. There's an anomaly somewhere and - - -

PN19

THE COMMISSIONER: But it's not based on restoration of relativities, but you say there's been a mistake in actually varying the award?

PN20

MR GEORGIOU: Yes, yes, and the company acknowledged that and said that they would not oppose a variation by my organisation to fix up the graduate - - -

PN21

THE COMMISSIONER: What was the dimension of that slip?

PN22

MR GEORGIOU: It's 10, 15 bucks, it's not - - -

PN23

THE COMMISSIONER: Adjustment - - -

PN24

MR GEORGIOU: Each weekly, it's about 400 or $500, from memory, but don't quote me on that. It's a couple of years since I looked at it, but that's not in dispute. Well, I hope it's not. The company did agree that there was an anomaly. I raised it at the time that the case was run and it would require an application by my organisation notifying the other parties and my understanding is, and they can speak for themselves, that Ford would not oppose that part of the matter that's before you. The substantial matter, though, goes to the application of the relativities with regard to actual rates of pay.

PN25

All of the vehicle manufacturing companies underwent the same variations and the same application of the structural efficiency principle at the time and I can say that I represented the vehicle builders at the time when Mr Mahon's uncle represented Ford Motor Company, and the application was universally across the then five manufacturers, and the rates, whilst not identical, were very, very close to each other.

PN26

Ford had a different structure to Toyota and Holden. I can't speak for Nissan or Mitsubishi because I'm not as familiar with them as regards to professional engineers, but Ford had a minimum rates award for professional engineers, but for the vehicle builders and the payroll employees had a paid rates award. It is of some significance in this matter because Ford, in 1991, moved to a merit pay system where the wage increases for salaried employees were not similar to the wage increases that applied to payroll employees.

PN27

So that if, for example, in the '97 EBA the payroll employees received a 5 per cent per annum wage increase, for salaried employees only half of that was guaranteed and the other half was based on merit, and there could be fluctuations and variations to the amount received by a salaried employee. It is something that has been subject to intense negotiation and enterprise bargaining, but has not been varied since 1991. So that all of the EBAs subsequent to that had this disparity between payroll and salaried employees' wages.

PN28

However the association contends that the structural efficiency principle still has relevance in terms of the work value of classifications and salaries as a minima as distinct from actual rates of pay and Ford has allowed those relativities, which they agreed to with my organisation and said that they would honour and obey, forever do us part, that those relativities have disappeared and for example, at Holden, which started off at exactly the same base, for example, Commissioner, a graduate entry rate at Holden is approximately $56,000. At Ford it's 44, and it's been adjusted slightly because Ford have had difficulty in attracting graduates so they've increased that to, I think - I don't know the exact figure - high 40s.

PN29

But if the principles remained and the relativities remained, all of the companies should be - because the salary increases had been fairly consistent across the industry, with very minor variation, of .5 per cent. They should all be very, very close to each other.

PN30

THE COMMISSIONER: The agreements should be, you're referring to now, are you?

PN31

MR GEORGIOU: Yes, the enterprise agreements and for there to be a discrepancy of $12,000 in the rate from Ford or Holden, given that they both started at exactly the same time in their application of the structural efficiency principle, there should not be that discrepancy.

PN32

THE COMMISSIONER: Wouldn't that reflect one of them as being agreed, Mr Georgiou?

PN33

MR GEORGIOU: No, that's what we say it doesn't reflect because there are no salary scales. Mr Mahon can put to you how Ford applies its salary structure. We would agree with you, Commissioner, that it should be reflected in the agreements. For some reason, going back to - - -

PN34

THE COMMISSIONER: But surely if the parties wanted to agree, but the parties had reached agreement to do something that you tell me or Mr Mahon will tell me about.

PN35

MR GEORGIOU: No, no. The agreements don't include a pay scale for salaried employees and Ford applies what they believe to be the market rates for salaried classifications. It's not fair to say it's just salaried. For example, the supervisors on the line are far more regulated in terms of their outcomes because they have a relativity of 15 per cent above the highest paid employee that they supervise. So that relativity will always be maintained regardless of the outcomes of the enterprise agreement. But we say that for our members, Ford is not obliged to apply the same relativity in actual rates of pay, but it should have some scale based on the structural efficiency principle that provides for a minima for professional engineering or scientific classifications and that hasn't occurred and that's highlighted mainly at the graduate level.

PN36

So the application before you, the talks between the company and ourselves, Commissioner, have been going on for about three years without the parties being able to come to any resolution. I did provide the company with a wealth of material in about August of last year that I'd discovered in some old files in the library at work which I wasn't aware existed, that deal with the actual application of the structural efficiency principle and the agreement reached between ourselves and Ford in February of 1990, and wrote to the company asking for them to take that into consideration as I'd provided further materials - - -

PN37

THE COMMISSIONER: Adjusting the rates, or in adjusting the structure of the existing agreement?

PN38

MR GEORGIOU: Yes, Commissioner.

PN39

THE COMMISSIONER: But I assume, and I don't say that you don't paint a compelling picture, Mr Georgiou, but I assume that whatever you've most recently agreed to, whether it's two years ago or three years ago, but whatever it is in the current agreement represents an agreed position. Now - - -

PN40

MR GEORGIOU: It doesn't deal with the question, Commissioner.

PN41

THE COMMISSIONER: Doesn't it?

PN42

MR GEORGIOU: No. The only agreement that deals with the question is the one that I've just referred to in 1990. I'll actually give the Commission a reference with regard to this. It's a decision of Deputy President Marsh at the time dated 28 February 1990 in print J1586 where the application of the structural efficiency principle was agreed to by a number of employers and my organisation. There were two parts to my organisation then. There was the Professional Scientists' Association and the Professional Engineers' Association. Subsequently we've amalgamated into one and that is the basis for the application of the principle.

PN43

No other matter that's been dealt with by the parties in enterprise bargaining has in any way disrupted the application of that principle. We've never dealt with it. So that principle and that decision still stands and is still binding on the parties, and to further enhance that, Commissioner - - -

PN44

THE COMMISSIONER: What is that that you're referring to?

PN45

MR GEORGIOU: That's the agreement between the parties to apply the 1989 National wage case decision in the print number that I - 8200, I think I even know it off by heart.

PN46

THE COMMISSIONER: This is in J1586?

PN47

MR GEORGIOU: Yes. That's the - - -

PN48

THE COMMISSIONER: Deputy President Marsh, as she then was, did something.

PN49

MR GEORGIOU: She applied the 1989 national wage case decision in H8200 to professional engineers and professional scientists and the Ford Motor Company as was a requirement of the national wage case in '89, that all awards were to be varied and agreements struck to apply those principles to each workplace and to each award and that's what happened, that's what Deputy President Marsh did at the time. There has been no subsequent agreement between my organisation and the Ford Motor Company that varies that and that's why there is never a schedule, there never has been, because if the company were to argue - - -

PN50

THE COMMISSIONER: Schedules, so that there's never been a schedule to the agreements that have - - -

PN51

MR GEORGIOU: That applied to professional engineers and scientists.

PN52

THE COMMISSIONER: From time to time. There's no pay rates in them?

PN53

MR GEORGIOU: No. We say therefore the company needs to, as a minima, because, as I stated, Commissioner, there are not the 5 per cent wage increases that automatically flow to salaried employees, but there is only a half of what applies and the other half is based on merit, but the parties, if they trace through those merit payments, would be able to come up with an actual rate of pay.

PN54

THE COMMISSIONER: For an individual?

PN55

MR GEORGIOU: Yes.

PN56

THE COMMISSIONER: So Professional Engineer Georgiou, if he or she was unhappy with the first movement, say, of the current agreement, that's assuming the current agreement provides more than one pay movement, if that engineer was unhappy with that portion which derives from the salaried schema that you've told me is applied by Ford, they'd be able to grieve, I take it?

PN57

MR GEORGIOU: Yes, and they could point to that 1990 decision or agreement between the parties to say, this is what you have to apply.

PN58

THE COMMISSIONER: Well, I understand that, Mr Georgiou.

PN59

MR GEORGIOU: Other than that, despite our best endeavours I wrote to the company in about August of last year asking for a response because I'd provided this material to the company that I'd come across, they didn't have this material. I'd given it to them just prior to August at a meeting and they were to respond. They didn't and they responded last week or the week before which has prompted the application to the Commission, they responded in the negative saying that they had fulfilled all of their obligations, there were no more, and they rejected the claim by my organisation. That's why we are before you today, Commissioner. If the Commission pleases.

PN60

THE COMMISSIONER: Yes, thank you, Mr Georgiou. Thank you. Yes, Mr Mahon?

PN61

MR MAHON: Commissioner, if it pleases, the company wishes to challenge the assertion from the union that the company is not correctly applying the SEP principles to professional engineering classifications and not paying APESMA members appropriate overtime rates. We're here today to attempt to resolve this matter as part of the conciliation process through an open and frank discussion. If these matters go beyond conciliation we reserve all our rights on any actions required beyond this point and seek leave to bring your legal representation if required.

PN62

THE COMMISSIONER: You seek leave to make an application for someone to have leave to appear, which you were against some hours ago standing in that very spot, Mr Mahon.

PN63

MR MAHON: Absolutely, but what we are committed to is a conciliation process leading up to that.

PN64

THE COMMISSIONER: Yes.

PN65

MR MAHON: At this point I'd like to hand over to my colleague, Phil Boltan, who has got the details to respond to this.

PN66

THE COMMISSIONER: Thank you. Yes, Mr Boltan?

PN67

MR BOLTAN: Thank you, Commissioner. We would like to take the two matters separately as Mr Georgiou did. Firstly, the matter in respect to the union's assertion that the company refuses to pay APESMA members appropriate overtime rates. Firstly, this part, sir, was included in the union log of claims in the 2003 enterprise bargaining process but was not included in the agreement reached in 2003. Therefore the company sees this as an extra claim under clause 1.6 of the 2003 EBA and we would be most concerned that this would potentially generate unplanned cost increases for the business for really for matters that should have been handled during that EBA discussion process.

PN68

Further to that, the company also contends that there is no legal basis for this assertion. The company's position is that the legal obligation is to pay the overtime based on the ordinary rate as defined in Ford Consolidated Award 1998, clause 5.5.1.

PN69

THE COMMISSIONER: I'd better have a look at that. Now, where is it, Mr Boltan?

PN70

MR BOLTAN: In the Consolidated Award 1998, clause 5.5.1.

PN71

THE COMMISSIONER: I've got a lot of awards and agreements here. Let's just see if I have the Consolidated Award. Yes, sorry, what is the clause number, Mr Boltan?

PN72

MR BOLTAN: It's 5.5.1.

PN73

THE COMMISSIONER: Thank you. Yes?

PN74

MR BOLTAN: The clause refers to overtime in excess or outside regular hours of work or outside the employee's rostered starting and finishing time, will be based on, for example, time and one half of the ordinary rate for the first three hours and double time after that and the ordinary rate is defined in clause 1.7.12 as the ordinary rate means the rate of pay for 38 hours in a week and the ordinary rate is obtained by dividing the award rate by 38.

PN75

THE COMMISSIONER: That's at 1.7.12?

PN76

MR BOLTAN: Correct.

PN77

THE COMMISSIONER: Yes.

PN78

MR BOLTAN: In Definitions.

PN79

THE COMMISSIONER: Yes.

PN80

MR BOLTAN: So the company tradition really hinges upon the view that the award sets the minimum terms and conditions for employees at Ford, and as Mr Georgiou has explained, that the actual rates really result from negotiations within the enterprise bargaining process over the last 13 or 14 years. So the obligation of the company is to pay the rates as defined in the award based on the actual rates that are adjusted from time to time to reflect the safety net adjustments, from time to time. So the company's obligation is more than fully met because the actual rates of overtime paid to APESMA members significantly exceed the award rates as defined in those clauses.

PN81

THE COMMISSIONER: The award doesn't mention any cap, does it?

PN82

MR BOLTAN: It doesn't, no. It simply defines the rates according to the ordinary rates contained in the - - -

PN83

THE COMMISSIONER: If you do the work you get paid at a loaded rate.

PN84

MR BOLTAN: At a?

PN85

THE COMMISSIONER: An increased rate, a rate other than the ordinary rate?

PN86

MR BOLTAN: That's right, yes, and the actual minimum award, the minimum rate specified in the award, as I said, is defined by the safety net adjustments incorporated in the award from time to time.

PN87

THE COMMISSIONER: Yes, and the rates you pay in agreement, Phil, here's the award down here and here's the agreement up there, you say the amount that you're paying exceeds the rate in the award adjusted from time to time - - -

PN88

MR BOLTAN: Yes, it would significantly exceed that in all classifications of employee. So really - - -

PN89

THE COMMISSIONER: What do you do in the agreement? If an engineer works additional hours, what happens?

PN90

MR BOLTAN: The ceiling rate that Mr Georgiou referred to is, as he pointed out, something that's been a long standing arrangement since the mid-'60s at Ford where at that time the ceiling rate or cut applied to overtime payments, was derived from the maximum award rate at that point in time. In recent years that rate has been adjusted each year by the amount of the enterprise bargaining total wages outcome. So it's an amount that is a cap, currently, specifically, it stands at $72,259 which is certainly significantly greater than any of the rates contained in the award.

PN91

THE COMMISSIONER: How does it work if you're on a rate higher than 72,259 you don't get paid overtime, or do you only get it for a little while?

PN92

MR BOLTAN: You get paid overtime but the difference is for any employee whose actual salary is higher than that ceiling amount, the overtime premium are applied to that rates. They would get time and a half or double time on that rate rather than an actual rate if it were higher.

PN93

THE COMMISSIONER: Yes, and are some engineers employed on a rate higher than 72,259 under your certified agreement?

PN94

MR BOLTAN: Some of them would be, yes, under the Ford salary ranges, yes.

PN95

THE COMMISSIONER: When they work additional hours they get some extra money and it's calculated not on their true rate, but on that rate, 72, 259?

PN96

MR BOLTAN: Exactly, yes.

PN97

THE COMMISSIONER: Thank you. You say that's part of an agreement, is this how it goes, I just want to understand the argument, I understand what custom and practice is, but do you say that it derives from an agreement with the APA as it then would have been?

PN98

MR BOLTAN: We can't say that. It's an arrangement that goes back to the 1960s and that's been in place for all of those years and I think until the log of claims in the 2003 EBA had, as far as I'm aware, been unchallenged up until that point.

PN99

THE COMMISSIONER: Yes, thank you.

PN100

MR BOLTAN: Moving to the second point which was the union's assertion that the company fails to correctly apply the structural efficiency principles. Again, there was some discussion of this matter during the 2003 enterprise bargaining process which again did not result in any element in the enterprise bargaining agreement as a result of those negotiations. So again the company takes the view that under clause 1.6 of the 2003 EBA this is an extra claim and certainly potentially, or generates additional costs to the business that we're not negotiating as part of that process.

PN101

Moving on from there again, the company further contends that there is no legal basis for this assertion that the structural efficiency principles as defined in the percentages prescribed by Mr Georgiou, should in fact be applied to actual rates, so if we go back to the structural efficiency - - -

PN102

THE COMMISSIONER: It says something else too. If I understand it, putting aside the second argument, he says there's been some sort of infelicity in calculating the actual rates. You might also invoke a slip rule that he says, if I understood him, that in a modest way, whether 10 or $15 can be regarded as a modest amount, I don't know, it's an amount, isn't it, of some substance. A couple of years of that you can buy a ticket to anywhere on the globe, possibly less than two years. But in any event he says that that arises from a miscalculation in the calculation of one rate. Have you gone back and crunched the figures to see if there has been a slip?

PN103

MR BOLTAN: Well, I'm not sure that it was a slip. Certainly if I look at the professional engineer figures that are defined in the award, again based on the safety net adjustments from time to time, each of the professional engineer figures, which are quoted in fact as annual salaries, each of them in fact are different from the SEP defined percentages. So if we start with a Level 1, Professional Engineer rate - - -

PN104

THE COMMISSIONER: Should I open the agreement to do this?

PN105

MR BOLTAN: Well, at this moment it would probably be helpful.

PN106

THE COMMISSIONER: All right.

PN107

MR BOLTAN: It's clause 4.1.5(a).

PN108

MR GEORGIOU: Commissioner, you can only do it if you've got the base Metal rate.

PN109

THE COMMISSIONER: I'll see how I go. I'm taking the 4.1, this is in the current agreement, 4.1 - Mr Boltan, what was it?

PN110

MR BOLTAN: 4.1.5(a).

PN111

MR GEORGIOU: No, in the award, Commissioner.

PN112

MR BOLTAN: In the award, I'm sorry.

PN113

THE COMMISSIONER: I'll go the award.

PN114

MR BOLTAN: Consolidated Award '98.

PN115

THE COMMISSIONER: 4.1.5, yes, and here they are.

PN116

MR BOLTAN: So these show a figure, for example, for a Level 1, Professional Engineer, the latest award I believe shows $33,784 for the rate for that particular engineer. One interesting difference perhaps in the Professional Engineers from some of the other classifications in the award is that the SEP percentage relativities are not actually contained in the award for Professional Engineers which may be - I'm not sure whether that was an oversight or whatever when the award was put together, but they're not specifically stated as percentage differences, but - - -

PN117

THE COMMISSIONER: Differences of what? It will be helpful if everyone is a little bit precise from this point on.

PN118

MR BOLTAN: So if we take the Level 1 Professional Engineer, it shows the $33,784 figure. If we go back to the structural efficiency principles, the indication there was that that level should represent 130 per cent of the Metal Industry base trade rate. So the 130 per cent, for the purposes of the award, effectively could be calculated based on the experienced trade rate contained within the award which is actually at 4.1.7(a) which defines, in this case, the latest update of the Vehicle Industry Tradesperson Level 1 Experienced.

PN119

THE COMMISSIONER: Yes.

PN120

MR BOLTAN: So that effectively is the base calculation.

PN121

THE COMMISSIONER: And what's that, 693.20, is that the rate?

PN122

MR BOLTAN: No, that's 542.70, it's the second from the bottom of that, Level 1 Tradesperson Experienced.

PN123

THE COMMISSIONER: Yes.

PN124

MR BOLTAN: This award was last updated to reflect the 2002 safety net adjustments and if we compare it for historical purposes, with the Metal Industry base trade rate at that time, those rates are within one or two dollars of each other. So for all intents and purposes we can say that that rate is equivalent to the Metal Industry base trade rate as that has been adjusted both in the Ford Award and the Metal Industries Award over time.

PN125

THE COMMISSIONER: Have you got the Metal Industry, the comparative figure?

PN126

MR BOLTAN: I don't have that.

PN127

THE COMMISSIONER: It doesn't matter, but you say it's one or two dollars difference?

PN128

MR BOLTAN: It's literally one or two dollars difference.

PN129

THE COMMISSIONER: So it's the 542.70. What happens when you apply your margin to that?

PN130

MR BOLTAN: Well, if you apply the 130 per cent to that, in fact, I haven't actually got that specific figure, but the way I calculate it was to say the actual figure shown for Level 1 Professional Engineer is actually 119.7 per cent of that figure rather than 130 per cent. So Mr Georgiou is correct, if you go back to the SEP percentages to say that that does not reflect the original intended percentage. If we move on from there, neither do any of the other levels reflect those percentage relativity that's defined in the structural efficiency principles and that would certainly be as a result of the flat rate increase as applied across all the classifications over time.

PN131

So it's really evident that those percentages will vary over time, not only for the base rate, Professional Engineer Level 1, which Mr Georgiou was concerned about, but indeed, for Level 2, 3B and 3A, as a result of the National Safety Net adjustments from time to time often being flat rate adjustments rather than percentage adjustments. So - - -

PN132

THE COMMISSIONER: There hasn't been too many percentage adjustments.

PN133

MR BOLTAN: Yes, exactly, so as a result of that, that the original percentages in the SEP could not have been preserved.

PN134

THE COMMISSIONER: I think the national wage case Bench has made comment about this of course, hasn't it, from time to time?

PN135

MR BOLTAN: Yes.

PN136

THE COMMISSIONER: Anyway, go on, Mr Boltan, yes?

PN137

MR BOLTAN: So really, that discussions concerns the minimum rates as defined in the award and the company view is that those SEP relativities were always intended to apply to those minimum rates based on the Metal Industry Tradesperson rate. The company is not aware of any legal obligation or any legal basis to support the union's contention that the structural efficiency relativities should be applied to actual rates which again, as Mr Georgiou has explained, really result from enterprise bargaining agreements over time so that we have a minimum rate as defined in the award. But the actual rates paid from the company's internal salary administration systems which arise from the enterprise bargaining negotiations and, as I mentioned in the first matter, those rates as applied by Ford significantly exceed any of the award rates.

PN138

THE COMMISSIONER: Yes, thanks, Mr Boltan. Is that all you want to put?

PN139

MR BOLTAN: Thank you, yes.

PN140

THE COMMISSIONER: Thank you. Mr Mahon, had you concluded your submission?

PN141

MR MAHON: Yes, thank you.

PN142

THE COMMISSIONER: Yes, Mr Georgiou?

PN143

MR GEORGIOU: I can't let any of that go through to the keeper, Commissioner. With regard to the overtime rates, to say that the only obligation the Ford Motor Company has is to apply the overtime penalties to the award rate is as novel a submission as has ever been made in this Commission. It applies to no other class of employees at the Ford Motor Company and if that were to be applied to any other class of employees, the resultant industrial action would be huge. To say that there is only an obligation on the Ford Motor Company to apply overtime rates to the rates specified in the award is a nonsense because the company has enterprise agreements that are to be read in lieu of the award where there is any inconsistency.

PN144

THE COMMISSIONER: Well, I should be looking in the agreement then, is that right, to see whether the agreement calls up any provisions or if the agreement deals in terms with overtime rates?

PN145

MR GEORGIOU: There are no provisions in the enterprise agreements dealing with overtime because the award stipulates the penalties to apply and Ford has no difficulty with any other class of employees in providing the overtime penalty to the employees' actual rate of pay. So that if I am a tradesperson on $50,000 and I work - and believe me, Commissioner, a lot of them work a lot of overtime - they get their overtime on Sundays at double time and a half on the 50,000 or whatever the hourly rate is and there is no ceiling cap.

PN146

You alluded to whether there was an agreement between my organisation and the Ford Motor Company with regard to this and Mr Boltan referred to some historical data about the 1960s practice. There is no instrument binding on any organisation because my organisation was not officially recognised at Ford until 1990 and we had no members or industrial instruments applying. Ford was respondent to a general vehicle industry award applying to professional engineers, but there was nothing specific. So there is no - and the onus would be on the company to demonstrate that there is an industrial instrument that would apply.

PN147

Can I then go to the structural efficiency - - -

PN148

THE COMMISSIONER: It struck me, Mr Georgiou, that what Mr Boltan was saying there was, I don't know if the transcript will reveal whatever he said, it always captures our exact words, so we're told, but what he said was, I thought, that the status quo has prevailed since some time in the 1960s and it might be that there's no one still standing who can say, it happened in 1953 and it happened in 1949, or something, but certainly that's how I took it, that the status quo has endured since some time in the 1960s. I thought that's what he was saying. You think he said there was an agreement behind it?

PN149

MR GEORGIOU: I thought he went to - because you asked the question of whether there was an agreement that reflected this.

PN150

THE COMMISSIONER: Yes.

PN151

MR GEORGIOU: And he answered not that he was aware of and not that I was aware of. This came up, Commissioner, just prior to the last EBA when one of the TSA division of the AMWU members actually checked his overtime and found that he wasn't getting it all. No one was aware that there was a ceiling cap imposed by the company until three years ago and that's when the negotiations between us, and that's why it was subject of a claim by both ourselves and the TSA division of the AMWU. Anyway, I've dealt with the overtime issue, and putting on record some material to counter Mr Boltan's submissions. The real question is, does the company apply the ceiling cap to any other group other than salaried, because payroll don't get it and a lot of those people are on far in excess of 72,259.

PN152

But I'll go to the structural efficiency principle and unfortunately Mr Boltan made one mistake. The Graduate Engineer rate under the structural efficiency principle is 135 per cent, not 130, but - and I'll quote from Mr Mahon's uncle in another matter. This is in print J0809, and it's a decision of Commissioner Smith with regard to the application of the structural efficiency principle for members of the Federated Clerks' Union of Australia at the time, 18 December '89, and it says in the fifth paragraph, and I quote from the decision:

PN153

In relation to the FCU -

PN154

That being the Federated Clerks' Union -

PN155

- Mr K Mahon on 19 September 1989 in file C number 36328 of 1989, (see pages 111 and 112 of transcript of that matter) it's absolutely clear -

PN156

There's either a word missing or Commissioner Smith made a mistake -

PN157

It's absolutely clear that internal relativities would not compromise the proper application of the structural efficiency principle. And so the commitment by the company and Mr Mahon, we say, was that they would apply the structural efficiency principle and that there would be no reliance on internal relativities.

PN158

Commissioner Smith then goes on:

PN159

The commitment given by Mr Mahon is consistent with the requirements in the preamble to the principles where it states inter alia, 'The principles provide that movements in wages and salaries and improvements in conditions - whether they occur in the public or private sector, whether they be award or over award and whether they result from consent or arbitration, must fall within the level allowable in accordance with the national wage case decision of 7 August 1989.

PN160

Commissioner Smith, as he always did, paraphrased what I said to you at the beginning of my submissions, Commissioner, and that is that the company has a legal obligation to apply those relativities as were determined by the national wage case principles in 1989 in print H8200. I think the company has had great difficulty in finding people who were around at the time who understand the issue of the relativities and how they are to be correctly applied. I don't think we're served any more unless I've said something to upset Mr Boltan or Mr Mahon that they want to rebut. I think we're best served going into conference. If the Commission pleases.

PN161

THE COMMISSIONER: Thank you. All right. Parties, are you ready to go into conference, are you conferring? Yes, we're off the record, we're in conference.

<NO FURTHER PROCEEDINGS RECORDED