C2006/2790, Transcript of Proceedings [2006] AIRCTrans 924 (31 July 2006)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 15414-1

SENIOR DEPUTY PRESIDENT KAUFMAN

C2006/2790

NATIONAL UNION OF WORKERS
AND
MAYNE PHARMA PTY LTD
s.170LW pre-reform Act - Appl’n for settlement of dispute (certified agreement)
(C2006/2790)

MELBOURNE

11.37AM, MONDAY, 17 JULY 2006

PN1

MS S ALLISON: I appear with MR C CALVERT on behalf of the NUW. Your Honour, today with us is MR I BARBER who is the union delegate on site.

PN2

MR D GRISS: I appear as human resources manager with Mayne Pharma with MR W COMERFORD, the operations manager for our Mulgrave site and MS A RICHARDS, also with the company.

PN3

THE SENIOR DEPUTY PRESIDENT: Thank you. Yes, Ms Allison. I don't know anything about it.

PN4

MS ALLISON: Thanks, your Honour. The dispute is about the use of casuals to fill permanent positions in the context of the company planning to make a significant number of permanent employees redundant in September this year. Your Honour, it's probably worthwhile me giving you a bit of background. In December 2003 the company indicated to the employees and the union that the company would be restructuring and contracting out a number of its current production lines.

PN5

Your Honour, in essence, what that decision was was that the company would concentrate on its production that related to cancer prevention drugs, but other production lines would be outsourced. As a result, the positions in the other production areas would largely become redundant. Your Honour, there have been some redundancies prior to now, but the body of redundancies are to occur in September this year. At the time that the company initially announced the restructuring, discussions that occurred then and around the enterprise agreement and have indeed been ongoing, the NUW sought a commitment from the company that any permanent positions that became available in the cancer prevention production area would be filled by permanent employees as opposed to casual employees to minimise the impact of redundancies on permanent employees.

PN6

This commitment we say was agreed to by the company. However, since the time that it's first been raised with the company, five permanent employees have left the cancer prevention area and those five permanent positions have been filled by casual labour. In fact, there are now seven casual employees in that cancer prevention area who are working permanent full-time hours, so they are working - it's a 36-hour week at the site and they are in fact working in excess of 38 hours a week, including overtime, five days a week, so in other words they are working permanent positions.

PN7

Some of them have been in those positions for up to two years, but it's between eight months and two years, the duration that those positions have been filled by casuals. The NUW seeks that the permanent positions that are currently filled by casual employees are advertised and opened up to the current permanent workforce in other areas of production and these current permanent employees are given the opportunity to apply for these positions so they can avoid redundancy.

PN8

Your Honour, I will note that in relation to qualification in these areas or in the cancer prevention unit, we note that none of the casuals have specific skills in relation to that area prior to coming to the company and they were all trained up by the company. We say that the company is obliged to train up permanent employees in these positions and there are no major impediments to why that cannot occur. We say that in failing to offer the positions in the cancer prevention area to other permanent employees, the company is breaching the enterprise agreement in a number of significant ways. Your Honour, do you have a copy of the enterprise agreement?

PN9

THE SENIOR DEPUTY PRESIDENT: Yes, I do.

PN10

MS ALLISON: If I can take you firstly to the redundancy provisions at clause 20. Your Honour, you will see at clause 20.1, it is the standard discussions before termination provision. At 20.1.2 there is an obligation on the company to have discussions including measures to avoid or minimise terminations and measures to mitigate any adverse effects of any termination on employees concerned. We say that the company is breaching that provision by not having real and meaningful discussions about the reasonable steps to mitigate redundancies which we would say would include ensuring that permanent employees have the opportunity to be redeployed and retrained in permanent positions.

PN11

Your Honour, the next provision which is important is the casual provisions that you'll find at clause 22. Your Honour, you'll see there at 22.1 that it states very clearly the role of casuals is to cater for peaks in demand for labour, so in other words they're there to cater for peaks and troughs, certainly not to fulfil full-time positions and that's made even clearer in the second sentence:

PN12

Casual employment will not be used to replace full-time or part-time permanent employment.

PN13

And we say that is exactly what is occurring at the moment, that casual labour is being used in full-time permanent positions.

PN14

THE SENIOR DEPUTY PRESIDENT: What do you say about clause 22.3.1?

PN15

MS ALLISON: Your Honour, I am just coming to that one. You'll note there that there is a clause regarding conversion of casuals to permanent labour after six months. If you flip over the page, you'll see at 22.3.5:

PN16

A casual employee may only work a period of longer than six months without being offered permanent employment in the following circumstances.

PN17

And at 22.3.7:

PN18

In other exceptional circumstances.

PN19

And it has been agreed between the company and the union at the time redundancies were first notified that it would be inappropriate to convert any casuals to permanent labour. Now, the reason behind this is because we were trying to minimise the impact of redundancies on the current permanent workforce and that's why that provision has not been enforced. Your Honour, we do have some further documentation relating to that that I will come to in a moment. I would just also point out to you that there is at 10.1 of the agreement aims and objectives of the agreement, 10.1.1, one of the aims is to develop and maintain a flexible, highly skilled and committed workforce to achieve sustainable productivity improvements.

PN20

We just raise that because currently we have a situation where these seven casuals in the cancer prevention unit are receiving ongoing training, whereas we have permanent employees in other areas that are flagged to be contracted out who have been left for long periods more or less twiddling their thumbs and we say there is under the agreement an understanding that permanent employees will be trained up. Your Honour, there are some other relevant documentation that I will hand up. Your Honour, what I have handed up there is a memorandum of understanding that was handed up to the Commission at the time the enterprise agreement was certified. Now, we recognise that the MOU itself does not form part of the enterprise agreement. However, it does reflect the parties' intentions in relation to how redundancy will be applied.

PN21

THE SENIOR DEPUTY PRESIDENT: Are you tendering that?

PN22

MS ALLISON: Yes, your Honour.

EXHIBIT #A1 MEMORANDUM OF UNDERSTANDING

PN23

MS ALLISON: Your Honour, in particular we point out clauses 20 and 21 of that memorandum of understanding that relate essentially to redeployment and to providing reasonable training, provided the retraining would not involve significant time and/or cost commitments. Again we say that the training won't involve significant time and/or cost commitments and, indeed, those factors can be mitigated and we're willing to have discussions with the company in relation to that. Your Honour, the second document that you'll see there that we'll also tender titled Mayne Pharma Mulgrave use of casual labour - - -

PN24

THE SENIOR DEPUTY PRESIDENT: Yes, what is that?

PN25

MS ALLISON: That is a supplement to the MOU so it wasn't handed up at the date of certification. However, it was an arrangement reached by the company and the union later down the track in relation to redundancies again to supplement the original MOU.

EXHIBIT #A2 MAYNE PHARMA USE OF CASUAL LABOUR DOCUMENT

PN26

MS ALLISON: And, your Honour, we note in particular the second paragraph under the heading during retrenchments that in the context, Mayne agrees not to employ casuals in permanent positions while the outsourcing of ampoule manufacturing is in progress subject to the following:

PN27

There is sufficient number of permanent employees applying for available permanent positions.

PN28

And we note there that the positions we talk about have never been made available or advertised. We say there are enough permanent employees who would apply, but to date they have not been advertised. The second dot point there:

PN29

Permanent employees satisfying competency and occupational health and safety requirements of the role, Mayne will provide reasonable training to allow for permanent employees to achieve required competency associated with that position.

PN30

Point 3:

PN31

The union providing an undertaking to Mayne that it will not seek to enforce any obligations under the agreement that Mayne may have with respect to the conversion of casual employees to permanent employment.

PN32

That's what I touched on before. That undertaking was given so those casual positions, if they were filling permanent positions, could be filled with permanents and dot point 4:

PN33

Mayne does not forego its right to use casual employees to meet peaks and troughs in business activity.

PN34

Which again we do not dispute, but we do dispute casual labour being used to fill permanent positions. Your Honour, the other important provision is on the next page under the heading gradings of classifications of casuals. That first paragraph:

PN35

Mayne is committed to progressively working towards utilisation of casuals in less complex roles. We are further committed to developing and extending the skill base of our permanent workforce to allow for less reliance on casual workers.

PN36

Now, I note that currently the casuals in the cancer prevention unit are performing some of the more complex roles in relation to production on site and we say that goes directly against that agreement between the company and the union. Your Honour, as indicated, we seek that the positions that are currently filled by casual labour are opened up for permanent labour in other production units, to be able to apply for and therefore to minimise the impact of redundancies on the permanent workforce. Your Honour, we would be happy to go into conference to try to further this matter.

PN37

THE SENIOR DEPUTY PRESIDENT: Thank you, Ms Allison. Let's see what the company has to say about this.

PN38

MR GRISS: Thank you, Commissioner. Just by way of further background to the company's operations, the Mulgrave site has approximately 650 staff based at the manufacturing facility. We develop, manufacture and supply injectable pharmaceuticals to hospital markets globally. We export around about 70 per cent of the product that we make. As the union points out, we are an oncology focused company, but we also supply pain management and other antibiotic products in injectable form to the hospitals market.

PN39

We've been going through a period of review of our manufacturing operations. As I said, we expert 70 per cent of what we manufacture. We also are largely a sole supplier for our global businesses based in the Asia Pacific, Europe and American regions and are responsible for supplying to our commercial sales and distribution businesses around about 85 per cent of the product that goes to our customers, so we're a significant part of the Pharma organisation.

PN40

Part of the review of our business has been looking at a rationalisation of our manufacturing operations to not only source product to reduce risk to the business, but also to source it from more competitive operations in other parts of the globe and to make our own Mulgrave facility more competitive. Part of that rationalisation is occurring in a number of forms. As the union points out, we made an announcement some time ago to outsource our ampoules business.

PN41

We have an ampoules and a vials business. The ampoules equipment was 1960s type equipment, outdated and a decision was made to move to a contract manufacturer based in Germany. The original target date for completion of the project was mid-2005 and for a range of reasons, one being that this was the first significant outsourcing exercise our business has been through, there have been delays, mostly due to some of the complex requirements associated with transferring the technical expertise associated with the manufacture of those products and gaining registration in various countries around the world for sale of pharmaceutical products.

PN42

There are some quite different registration requirements required and often the decisions concerning registration made by the various regulatory authorities are beyond the control of the company, hence delays. Unfortunately, that has not only for employees, but for management, senior management of the company, has led to a great deal of uncertainty at Mulgrave and frustration for people who are directly affected and we certainly acknowledge that.

PN43

We right from the outset have been committed to being transparent, providing employees with information as soon as a decision has become available. We did that back in December 2003 with a target completion date of 2005. We've stood by that commitment the whole way along. Unfortunately, the delays in getting to the target date of completion have made that more difficult and I think sometimes the mud has sort of come back in our face when we've said it's going to happen and it hasn't and we certainly acknowledge that.

PN44

However, a few years down the track, we're getting to the pointy end and it's becoming clearer that we will be in a position to provide more definite information about the level of permanent jobs available on the site. It's not just a simple case at the moment of looking at our ampoules business and saying that's going, how many jobs are left. We've also invested significantly over the last few years in a new oncology manufacturing line with $60 million worth of investment which is producing larger batch sizes.

PN45

We're going through a product rationalisation, reducing the number of drug presentations that we manufacture and this is all going into a melting pot, if you like, to determine how much manufacturing activity we're going to have going forward. From a global perspective, we're also going into a number of joint ventures where some of the products will go from the Mulgrave site to international operations and that's also having a bearing on determining the mix and the volume of product that will go through the facility, so for those reasons, it's been quite hard to determine what our permanent labour needs are.

PN46

To give you a sense in terms of our use of casuals, we've got approximately 300 permanent employees working in production areas and in warehouse areas. The production end of the operation where they dispense raw material, mix that raw material and then fill it into vial and ampoule presentations and then also the packaging end as well. We have currently on site approximately 15 casuals as compared to a permanent workforce of 300, so it's not a case where we've got a disproportionate relationship between - or an inappropriate relationship between the number of casuals on site and the permanent workforce.

PN47

THE SENIOR DEPUTY PRESIDENT: Are seven of those 15 in the oncology area?

PN48

MR GRISS: I don't have the exact figures, but I certainly wouldn't dispute it. Perhaps when we go into conference, I'd be able to clarify that. Part of the issues raised by the union I think can be effectively dealt with probably by breaking into conference. We put a great deal of effort through the last enterprise agreement into establishing the memorandum of understanding which set out our processes for managing retrenchments. When they get to the time of that occurring, we stand by our commitment to solicit expressions of interest because there was a great deal of interest in the longer serving employees leaving the business and we made a commitment to consider those expressions of interest.

PN49

There are strong commitments to redeployment and we stand by those commitments to redeploy people where they have the appropriate capability to be retrained in front of those casuals and we stand by those commitments. Part of the issue has been in the ampoules area that the equipment is outdated. We've got people who've been working with it for many years. We weren't in a position to take those people out of that facility and retrain casuals and in some cases it takes up to 12, 18 months for them to become familiar with particularly that old style equipment. It would put us too much at risk to do that. I would like to tender one document, a letter to Paul Richardson, national industrial officer, dated
28 July 2004.

EXHIBIT #R1 LETTER TO PAUL RICHARDSON DATED 28/07/2004

PN50

MR GRISS: Sorry, I missed that.

PN51

THE SENIOR DEPUTY PRESIDENT: R1.

PN52

MR GRISS: For the sake of expediency, I'd refer you to the position at the bottom. The IVL area is not the oncology area. It's the area that manufactures non-oncology vial products. It's one of our more modern production lines which talks about at the time when we had a sense of the permanent positions that were available in the workforce, advertising those roles. We had applicants internally.

PN53

Seven of the persons who were successful in obtaining those positions were coming from the affected areas and you can see a range of dates from
6 August 2004 through to the estimated end date as you can see of 2005 where we would hold those positions open, back-filling, if you like, those roles with casuals until the project is completed. Again, some of those people have moved across and some of those positions remain held open for those individuals, so we stand by those commitments.

PN54

The only other thing, I think, is worth putting on the record is the application of clause 22 and for clarity, the casual workers on site are engaged through a third party labour hire company. We have a long-standing relationship with a third party labour hire company since 1997.

PN55

THE SENIOR DEPUTY PRESIDENT: Are you saying they're not Mayne Pharma employees?

PN56

MR GRISS: They are not Mayne Pharma employees. We just reserve our rights to dispute the application of that provision to those employees.

PN57

MS ALLISON: Your Honour, I might be able to assist with that.

PN58

THE SENIOR DEPUTY PRESIDENT: Well, let the company finish and you can put whatever you want to put on the record after that.

PN59

MR GRISS: In summary, I think we're just getting a bit ahead of ourselves. We're close to understanding what the permanent workforce needs are. We've got an MOU in place and an enterprise agreement in place which requires us to consult. We've got a history of doing that. We do it once the information is available and we will stick to our obligations which is to our permanent workforce.

PN60

THE SENIOR DEPUTY PRESIDENT: Have you made any decisions as to redundancies yet?

PN61

MR GRISS: We are close. As I've indicated to the union in prior discussions before today, we plan to make an announcement this week with further announcements by 31 July. It's not helpful for me to provide specific information because as you would know, unless we - and we know from past history, unless we have firm decisions in place, that can lead to further frustration and uncertainty amongst employees if we make decisions and then don't follow through on them, but we're certainly not about a surprise attack. As soon as we've got the information, it's firm and clear, we will be consulting and we'll stick to our obligations under the MOU. That is all I have to say. If the Commission pleases.

PN62

THE SENIOR DEPUTY PRESIDENT: You wanted to say something, Ms Allison?

PN63

MS ALLISON: Thanks, your Honour. Look, I will just be very brief, because I do think it would be of most assistance going into conference, but I just want to clarify that our essential is the company is certainly making the right noises, but with these seven positions that are currently being filled by casual labour, as the company indicated, there is significant training that has occurred for the casuals to perform that role. We're concerned that it will come to the date where the company announced redundancies and the company has said we're happy to look then at redeployment on the basis that people have the right skills.

PN64

However, these casuals have been trained up for the last 12 months to have the right skills and we're saying what needs to occur here is a bit of forward thinking so that the permanent employees are actually trained up with the right skills so they can take over those positions, instead of getting to the date where the company announces redundancies and not having any permanent employees who have been trained up with the appropriate skills to take over. Your Honour, I also just wanted to mention in relation to the company raising concerns that the casuals are employed by Forstaff.

PN65

Your Honour, as you're aware, this is an agreement certified pre the recent amendments to the Workplace Relations Act and at 22.2 there is a provision that provides that persons who are not directly employed by the employer and would otherwise be covered by this agreement will only be accepted by the employer of those persons who perform the work receive the same rates of pay and conditions applicable to employees. So we say in terms of conditions, the clause relating to casuals not fulfilling permanent positions also applies to indirectly employed casuals.

PN66

THE SENIOR DEPUTY PRESIDENT: That's debatable, but, anyway, I understand your point. We will go into conference.

<OFF THE RECORD

PN67

THE SENIOR DEPUTY PRESIDENT: Yes, Ms Allison, you wanted to say something.

PN68

MS ALLISON: Thanks, your Honour. The parties have agreed to a few steps to progress this matter. The first is that by 31 July, the company will confirm with the union the number of positions to be made redundant and also the number of permanent positions available for employees affected by redundancy to have the opportunity to be redeployed to. Your Honour, the company has indicated that they're happy to undertake that no redundancies will occur until we have reported back to the Commission in relation to this and, your Honour, I understand the report back date - - -

PN69

THE SENIOR DEPUTY PRESIDENT: That will occur at 10.15 on 11 August.

PN70

MS ALLISON: Thank you. Your Honour, we've also agreed to the following position, that any current permanent production employees affected by redundancies who have not expressed an interest in a redundancy will have the opportunity to be redeployed to one of the recognised available permanent positions and that all reasonable steps including retraining will be taken to facilitate redeployment so, your Honour, I would just simply seek that the company agree to this position and also undertake on the record that redundancies will not occur before either report back to the Commission or the matter is resolved, discussions with the union.

PN71

THE SENIOR DEPUTY PRESIDENT: Thank you. Yes, Mr Griss.

PN72

MR GRISS: Thank you, Commissioner. Yes, we agree with the position that has just been put on the record by the union and undertake that no redundancies will occur before report back to the Commission on 11 August.

PN73

THE SENIOR DEPUTY PRESIDENT: Thank you. I will adjourn the matter until 10.15 on 11 August and if you would let me know if that hearing is not required, please.

<ADJOURNED UNTIL FRIDAY 11 AUGUST 2006 [1.24PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #A1 MEMORANDUM OF UNDERSTANDING PN22
EXHIBIT #A2 MAYNE PHARMA USE OF CASUAL LABOUR DOCUMENT PN25
EXHIBIT #R1 LETTER TO PAUL RICHARDSON DATED 28/07/2004 PN48