C2008/2757, Transcript of Proceedings [2008] AIRCTrans 769 (2 December 2008)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 19416-1

SENIOR DEPUTY PRESIDENT KAUFMAN
SENIOR DEPUTY PRESIDENT RICHARDS
COMMISSIONER ROBERTS

C2008/2757

s.120 - Appeal to Full Bench

Appeal by Cochlear Limited
(C2008/2757)





Sydney

10.04AM, THURSDAY, 20 NOVEMBER 2008

Continued from 15/10/2008

PN508

SENIOR DEPUTY PRESIDENT KAUFMAN: Ms Howell, I think you're concluding your submissions. I might indicate that we've read the material that you filed.

PN509

MS C HOWELL: If it please the Commission I was addressing issues of the public interest test as it comes to be considered, if necessary, by the Commission in these proceedings. As your Honour has alluded to, we have filed some further submissions on the appeal proper and they were filed on 5 November and they deal with the issues raised by Mr Harmer in his detailed written submissions and also some of his oral submissions. We have nothing further to say about those submissions other than that we rely on all those matters to support the proposition that leave to appeal should not be granted, particularly in light of the fact that it is open to Cochlear to make a fresh application at any time, at which time the matters not raised below can be properly be raised and dealt with, preserving the AMWU's appeal rights.

PN510

Turning back to the question of the public interest, which was the matter I was partway through on the last occasion, just by way of overview, the matters I wish to further address are issues raised in Ms Fortescue's affidavit about what we say is further unconscionable conduct by Cochlear, which is both in breach of the agreement and in breach of the Act. More specifically, once that is dealt with I wish to address the issue of inconsistency between the individual contracts and the agreement, the consequence of which, we say, is that Cochlear is in ongoing breach of the agreement.

PN511

Then I wish to address the inconsistency between the individual contracts and the NAPSA which has the effect that, we say, if the agreement is terminated, it will tip Cochlear into immediate breach of the NAPSA unless the contracts are radically revised to the point where they would bear no resemblance to the current individual contracts. Of course, contrary to that path, the respondent Cochlear has indicated that it proposes to enter into a deed which will cement into place the terms of the contracts which, we say, are inconsistent with the NAPSA.

PN512

Finally, there are some brief issues about the deed itself and the two different contracts which are attached to that deed and how that measures up to the undertaking offered by Mr Howitt in the witness box because essentially, the terms and conditions have already been changed in the second contract as opposed to the first contract which was supposed to be guaranteed by the undertaking. Those are the issues I wish to address. Some of them are dealt with in our written submissions below and we rely on all of those submissions below.

PN513

The issues raised in Ms Fortescue's affidavit really go to what we say is further unconscionable conduct by Cochlear. I just remind the Commission that the Full Bench in the second Tristar decision, and that's at (2007) Full Bench 506, discussed various aspects of Tristar's unconscionable conduct, particularly its failure to meet obligations under a binding instrument, in one instance to negotiate and in the other to consult with the parties to the agreement. In Tristar the majority, at paragraph 33, said that:

PN514

To the extent that Tristar wilfully and persistently failed to meet its obligations in one instance to negotiate and in the other to consult with parties to the agreement, the effect on the public interest is an enduring one.

PN515

We say the situation is no different here. The context of Ms Fortescue's evidence is the matters which we referred to on the last occasion, firstly, the weak bargaining position of the workforce, the special cultural language and gender based characteristics which undermine the ability of the particular workforce to bargain individually about common law contracts.

PN516

The Commissioner below accepted this evidence and we submit that the Commission on appeal, likewise, would accept the factual material asserted in that evidence and I took the Commission to that on the last occasion. I'd remind the Commission that the conduct of Cochlear has included such things as refusing to permit the union and the union ballot to be discussed at work. Secondly, the conduct of Cochlear has included the unilateral imposition of the common law contracts which contained the very terms which had been rejected in the ballot by 75 per cent of the workforce.

PN517

It's really the combination of factors which we say particularly excites the public interest and that is strongly reinforced by Cochlear's habit of disregarding its existing obligations under the agreement and it's in that context that the Commission would have regard to the results of the ballot conducted by Commissioner Cargill which is referred to - it's appeal book 64. paragraphs 249 to 50. I think it was about 400 ballot papers were issued. The result was
11 employees were in favour of the termination of the agreement and 181 were against it.

PN518

In the context of the nature of the workforce and the history of Cochlear's conduct, we say that would assume significance in the public interest and ultimately, the Commission will consider what's going to happen if the agreement is terminated. We say the Commission can confidently expect that Cochlear will continue to impose its wishes on the workforce as it did with the individual contracts which the employees had rejected and it will continue to show disregard for the wishes and views of its employees even to the extent of being prepared to suppress discussion on union matters.

PN519

SENIOR DEPUTY PRESIDENT KAUFMAN: In one sense, is your submission that Cochlear will continue as it has?

PN520

MS HOWELL: Yes, your Honour.

PN521

SENIOR DEPUTY PRESIDENT KAUFMAN: So what does it matter whether the agreement is terminated or not?

PN522

MS HOWELL: Because the termination of the agreement firstly, will condone a situation where the respondent, where Cochlear has steadfastly refused to bargain and secondly, if we are right about Cochlear's conduct, which we say is inconsistent with the agreement, then one would hope that Cochlear, having heard the views of the Commission, would address those issues and not simply continue in breach. If it continues to disregard its obligations under the agreement, then consequences will inevitably follow in terms of disputation and litigation.

PN523

Really, that was the approach that the Full Bench in Tristar took. It's contrary to the public interest to terminate an agreement in circumstances where a party has been in breach of the agreement. That's the first point. The second point is the agreement gives some underpinning to the employees in terms of negotiation with their employer. Without that the employees have even less bargaining power and capacity to negotiate than they currently do.

PN524

We say that the maintenance of the agreement would at the very least encourage Cochlear to bargain for the first time, to bargain for the first time with its employees for a workplace agreement as defined under the Act, not a common law agreement, but a workplace agreement and we say that that's obviously something to which the Commission will have regard in light of the objects of schedule 8 which are to preserve existing agreements for a time and to encourage the parties to enter into workplace agreements as defined in the Act.

PN525

That's the context in which the evidence of Ms Fortescue is advanced without objection and without any demur from the contents. The first issue which we say is relevant to the Commission's deliberations is Cochlear's treatment of Mr Nguyen who is a delegate who gave evidence in these proceedings. Does the Commission have Ms Fortescue's affidavit? I will be taking the Commission to some material in that.

PN526

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. Go ahead.

PN527

MS HOWELL: The conduct of Cochlear towards Mr Nguyen, we say breaches the freedom of association provisions of the Act, firstly and secondly, has some relevance to the public interest test because the issue on which Cochlear acted to discipline Mr Nguyen was the very issue which is the subject of these proceedings, which is the form of regulation of the terms and conditions of the employees at Cochlear. In essence what happened was, Mr Nguyen made some comments publicly, some brief comments and fairly mild ones I would say, not that that's relevant, to the media in his role as an AMWU delegate. He was then subject to disciplinary action by Cochlear as a result of those comments and was the recipient of a final warning.

PN528

The events set out in Ms Fortescue's affidavit at paragraphs 6 to 12 - and I just take the Commission briefly to the relevant annexures. Annexure A, I'm sorry the pages are not numbered but annexure A is a Cochlear media policy issued on
18 October 2007. The first part deals with:

PN529

Only certain officers may provide comment to the media on Cochlear's behalf.

PN530

Fair enough, no difficulty with that. The second part, two-thirds of the way down the page:

PN531

Cochlear's employees should seek approval from the CEO, CFO or manager communications, local marketing prior to -

PN532

and the relevant part is the second dot point:

PN533

- offering any comment regarding Cochlear to any media source.

PN534

What then happened was that the policy was issued, it was circulated, Mr Nguyen went to Canberra with a delegation to speak to parliamentarians about the current industrial dispute and made the comments which are recorded in the transcript, which is annexure B, basically saying that:

PN535

The company was putting the employees on individual contracts. In the process we've been voting and also three times voting with the union but we telling the company that we want a union collective agreement, not common law individual contracts -

PN536

et cetera and the last paragraph:

PN537

Like today I have bring with me a petition from more than 200 Cochlear workers who want to see and talk to the Prime Minister and tell him their story and ask him what he can do for us.

PN538

As a result of those comments Mr Nguyen was suspended from work, a disciplinary process was instituted, there were proceedings in the Federal Court, which I don't need to trouble the Commission with at this stage. Ultimately - I should go back a step. The company then issued a statement which was
annexure C basically saying in the second-last paragraph:

PN539

It is unfortunate that the union has decided to use the career of one man as a political pawn.

PN540

The Commission will note that Mr Nguyen on the company's policy is banned from saying anything but the company can certainly make comment about Mr Nguyen in the media. There was a statement issued on 25 September. Then over the page at annexure D is the employee written warning which was issued to Mr Nguyen and the Commission will see that the whole matter relates solely to Mr Nguyen's comments in the media which are captured in the reports, which is annexure B, the conclusion being he has breached the terms and conditions of employment, that is to abide by the media policy. It's a first and final warning:

PN541

Any further breaches by you of your terms and conditions of employment is likely to result in a termination of your employment with Cochlear.

PN542

No doubt a lawyer has drafted the last bit, if not all of it:

PN543

Finally, it is important that you appreciate that your conduct has significantly undermined the level of trust and confidence that Cochlear currently have in you as one of tis employees.

PN544

Here's a message to the union, here's the message to employees in fact, don't make any comments publicly about anything you might not like about Cochlear because otherwise you might get sacked. That is the context in which Cochlear says, "Well, these employees, these migrant workers are free to bargain. They've got nothing to fear from us."

PN545

The AMWU and Mr Nguyen have commenced proceedings alleging breach of the freedom of association provisions, section 792(1)(a).

PN546

SENIOR DEPUTY PRESIDENT KAUFMAN: Ms Howell, speaking for myself, I'm not sure how all that goes to the public interest matters or to the appeal, quite frankly. Your point seems to be Cochlear's treatment of Mr Nguyen is a matter that should be taken into account in a public interest. You've told us what his treatment is. Do we need to know more?

PN547

MS HOWELL: Yes, your Honour, because Cochlear - the Commission has to consider what will happen and whether the objects of the Act will be served if the agreement is terminated.

PN548

SENIOR DEPUTY PRESIDENT KAUFMAN: That will affect how Cochlear deals with its employees, will it?

PN549

MS HOWELL: It illustrates how Cochlear will deal with its employees. Barring any intervention from the Federal Court, it will suppress any expression of dissent.

PN550

SENIOR DEPUTY PRESIDENT KAUFMAN: Terminating or not terminating the agreement will have an effect on that?

PN551

MS HOWELL: It goes back to the point I was trying to articulate before, your Honour, that in circumstances where Cochlear is putting every obstacle in front of the employees bargaining freely, it would be contrary to the public interest to simply whip away the safety net which currently exists to protect those employees because it will make the employees more vulnerable to changes which the company may choose to implement, and the deed simply doesn't address that issue and I'll get to why it doesn't. Essentially, it's an illustration of the fact that Cochlear can't be trusted to fairly bargain with its own employees.

PN552

SENIOR DEPUTY PRESIDENT KAUFMAN: I understand that submission, speaking for myself, though.

PN553

MS HOWELL: Not only that, but we rely on the reasoning in Tristar, and indeed in a sense, the situation was no different there. The company had a history of disregard for its legal obligations to negotiate and consult. That in itself on the reasoning in Tristar gave rise to a public interest negative in terminating the agreement because as the Tristar majority saw it, that would be to endorse or reward the conduct of Tristar in disregarding its obligations and that's why the Commission then said, to the extent that Tristar has failed to meet its obligations, the effect on the public interest is an enduring one. It's contrary to the public interest for Cochlear to breach the freedom of association provisions in respect of the very issue, that is the regulation of terms and conditions, which this application goes to.

PN554

We do say that there is a clear breach of section 792(1). I'll just hand up some extracts of authorities. Having regard to your Honour's comments, I'll be as brief as I can with this issue but I do want to explain briefly why we say Cochlear has breached the freedom of association provisions by applying its policy in the manner it has.

PN555

The Commission, of course, can form a view about this issue of whether the freedom of association provisions have been breached and indeed, Cochlear in its own submissions has invited the Commission to form a view as to whether the freedom of association provisions were breached by clause 1.4 of the agreement, notwithstanding that there are proceedings on foot in the Federal Court, the Commission can nonetheless form a view on whether Cochlear's conduct towards Mr Nguyen is in breach of the Act. We simply say it is a very simple issue in a sense. Mr Nguyen was acting in his capacity as delegate and representative of the Cochlear workers in going to Canberra and presenting a petition and in speaking to the media.

PN556

The three decisions which I've handed up extracts of - of course, we can provide full copies but they deal with a lot of issues and I tried to keep photocopying to a minimum. What they really deal with is that the freedom of association provisions don't just address the formality of membership, they address the substance of membership and membership activity. I hope I haven't handed up a highlighted set by mistake, have I, because I think my highlighted copy has gone missing.

PN557

SENIOR DEPUTY PRESIDENT KAUFMAN: No, you haven't.

PN558

MS HOWELL: The first decision is just an extract from the decision of Wilcox and Burchett JJ in the Davids Distribution case with which the Bench is probably familiar. Paragraph 106 is where the relevance analysis commences dealing with the predecessor provisions and the last sentence in that paragraph I'd emphasise:

PN559

The objects of section 298K is to ensure the threat of dismissal or discriminatory treatment ...(reads)... industrial interests of both employee and association.

PN560

Then in the body of paragraph 107:

PN561

That which is protected by such legislation is more than the right to be a member, it is the right to participate in protected union activities including the taking of collective industrial action.

PN562

Of course, it's not limited to industrial action. In similar vein, the Greater Dandenong case, his Honour Wilcox J discusses the same issue, that the provisions are designed to protect union activity as well as union membership and his analysis at paragraph 71 is relevant, even though a different subsection is under consideration:

PN563

In discussing the decision of Moore J concerning section 334 of the Industrial Relations Act -

PN564

and it's a reference to the CFMEU case:

PN565

- it is fundamental to the notion of freedom of association that employees should be free to join or refuse to join ...(reads)... once again, they must not be penalised for taking that course -

PN566

et cetera. The last extract is a lengthy extract where his Honour Moore J analyses the provisions in some detail and is really considering whether the provisions simply, particularly 298L(1)(a), which is the predecessor to 792(1)(a), whether that provision extends to union activity as well as the formality of membership. Paragraph 150 his Honour comes to the conclusion of the lengthy analysis, which is consistent with the other authorities to which I've referred the Commission:

PN567

It follows from the history of section 298L(1) the parliament intended
section 298L(1)(a) to cover conduct taken against employees because they had taken action as members of a union -

PN568

et cetera. To similar effect is the decision of Merkel J, which I haven't handed up, in ACFMA v Ansett Australia which is at (2000) 175 ALR, I think it's 33 where his Honour essentially reaches the same conclusion, that section 298K is designed to protect the employees rights both to join an industrial association and to take an active role in that association.

PN569

We say the facts are simple and the conclusion is simple, even without the reverse onus in section 809 of prohibited reason. The mere fact that Cochlear purported to apply a policy doesn't affect the fact that there is a breach of the Act. Cochlear could have a policy which bans membership of registered organisations. It would be no protection against an allegation of breach of the Act to say it was simply applying a policy. If the policy has the effect of preventing union activity, then punishment for that union activity is clearly, we say, in breach of
section 792(1)(a) and we say Cochlear has breached that provision by disciplining Mr Nguyen for speaking out publicly about the industrial dispute in his capacity as a union delegate.

PN570

To reinforce the point that Cochlear paid scant regard, in our submission, to its legal obligations, and we say that does excite the public interest and even leaving aside the technicalities of the freedom of association provisions, what it shows is Cochlear is prepared to take whatever steps are necessary to suppress dissenting views even where it's prepared to publicly label the employee a pawn. The employee himself, on Cochlear's policy, is simply muffled and that's not an environment in which people can bargain, in our submission. That is a matter, having regard to the objects in schedule 8, and the reasoning in Tristar that excites the public interest.

PN571

The second matter which Ms Fortescue's affidavit deals with is further failures to consult by Cochlear and we say failures to consult which are in breach of the existing obligations under the agreement and so it's really on all fours with the Tristar case.

PN572

Can I just ask the Commission to turn to volume 2 of the appeal book, please. This is a convenient place to find the agreement itself and the relevant provision is at page 553 of the appeal book. The parties to the agreement, of course, include the AMWU, Cochlear and its employees and clause 2.6.2 deals with communications:

PN573

Parties agree to work together, to listen to issues raised by the other party and to act on appropriate and reasonable suggestions in a reasonable timeframe. Cochlear will provide feedback on successes and failures and consultation on changes in the workplace -

PN574

and we emphasise those words, "Cochlear will provide consultation on changes in the workplace." We say that inevitably must mean consultation with the employees and the other party, which is the AMWU. Of course, we say the individual contracts were introduced or imposed without any consultation whatsoever and that's referred to in our submissions below.

PN575

That conduct in itself was inconsistent with clause 2.6.2.1 but there have been further examples of this since the hearing below and the first example which we give is the failure to consult re the abolition of afternoon shifts in the Paul Trainor room. the Paul Trainor room is just one of the different divisions, as it were, of Cochlear's production process, has a number of employees, about 12 of them work permanent afternoon shift and some others work the rotating shift pattern. Cochlear in August 2008 announced the shift would cease to operate - or at least the AMWU became aware at that time.

PN576

At no time was the AMWU notified of the proposal, let alone consulted about it. To the best of Ms Fortescue's knowledge, neither the AMWU delegates nor the members were consulted prior to the announcement so a major reorganisation of hours in that area affecting in the order of 20 employees, simply announced with no consultation whatsoever and complete disregard for clause 2.6.2.1. The AMWU wrote to Cochlear and notified a dispute to the Commission but as Ms Fortescue says, at no stage did Cochlear consult with the AMWU or its delegates about the abolition of the shift. We say clearly a breach again of clause 2.6.2.1.

PN577

Then the other example which is given by Ms Fortescue is Cochlear's refusal to consult on the matrix. I'll come to the matrix in a little bit more detail shortly, but essentially, the classification matrix, as it's applied in the contract, has variables which are entirely at the discretion of Cochlear and that is, the employees have to get a certain number of points and that involves performing particular tasks in a specified time which is specified by Cochlear so there's a large amount of discretion residing with Cochlear about what classification you can attain.

PN578

Ms Fortescue sets out a little bit of the history of lack of consultation but since the hearing before Commissioner Cargill Cochlear has made still further changes to the matrix system and the daily targets which these changes have further increased the productivity levels required of workers and also the speed of performance required in order to be assessed as competent and to attract points for reclassification. Essentially, reclassification under the matrix is a moving target and where it moves to is entirely at the discretion of Cochlear.

PN579

Ms Fortescue has given a specific example that the electrode clean room daily production targets increased in the order of 33 per cent about two months ago, and in the final clean room and the PTR external daily targets have also increased significantly. As Ms Fortescue says in paragraph 30, the assessment process has further been changed so that employees now have to maintain a cycle time. A cycle time is the time for completion of one unit, a cycle time over an extended period of up to three weeks in order to be assessed as competent, rather than the previous system where employees were required to meet the cycle time for a single unit in order to be assessed as competent. There have been some substantial changes as to how the matrix is applied or the very content of the matrix indeed, and yet Cochlear has not consulted with the AMWU or its delegates in respect of any of these changes to the operation of the classification system and the targets.

PN580

The members in the Paul Trainor room advised Ms Fortescue, as she describes in paragraph 32, that a meeting between management and a number of employees selected by Cochlear management was held to discuss the operation of the matrix as it applied in the Paul Trainor room. The AMWU delegate advised his team leader that the AMWU members wished to be represented by the AMWU at that meeting. On 30 September the AMWU wrote to Cochlear asking to be involved and they simply received no response. Cochlear has had meetings about the matrix with employees it hand picked which has denied AMWU delegates or any other representatives the right to participate in that process, again we say a clear breach of clause 2.6.2.1 and a breach which we say has an enduring effect on the public interest, a simple disregard for the terms of the very agreement that it's now inviting the Commission to terminate. We say it would be unfair to say the least, to say to Cochlear, "Well, here you are disregarding the terms of the agreement totally so we'll make it easy for you. We'll terminate the agreement." Of course, none of that evidence is challenged by Cochlear and we say the clearest possible breach of the consultation obligations in the agreement.

PN581

It's probably convenient now to move to the ongoing breaches which we say are involved in Cochlear applying its own classification matrix whilst it is still bound to comply with the agreement. We say this of itself is of significance to the public interest but it also reinforces the other issues about the difficulty of negotiating with a party which is prepared to simply ignore its legal obligations.

PN582

The classification system in the agreement is dealt with namely at page 555 and 556 of the appeal book. Clause 3.3 refers to the career development matrix:

PN583

The Cochlear career development matrix is the system of ensuring opportunities and skill development for employees. It provides employees with an open system of assessing skills and competencies.

PN584

I'll stop right there. The contract has no open system which provides for assessing its skills and competencies.

PN585

The matrix is broken into two areas, the core stream and the functional stream and the matrix will provide guidance ...(reads)... overlaid with salary ranges for each level of the matrix.

PN586

Then clause 3.4 refers to performance assessment. 3.4.1.1:

PN587

Employees will be graded by management into a classification identified under the matrix.

PN588

Then 3.4.1.2 refers to the employees' ability to seek reclassification "which shall be considered by management." I just draw the Commission's attention to that because it's actually inconsistent with the reclassification appeal procedure in the NAPSA which I'll come to in a little while.

PN589

If I can just take the Commission briefly to pages 582 to 583. That is the career development matrix which is referred to in the agreement. I don't think this is a full version of it because it only goes up to grade 3 and there should be a grade 4 and 5 but in any event, for present purposes that's all the Commission needs. There's a core stream which identifies skills of a general nature. I should say this is the career development matrix for production employees which is obviously the employees in question. Then over the page at 583 there's a functional stream and these functional streams are not exhaustive. They have a general description, that is, performing in a controlled environment; in the case of grade 1, low precision assembly using basic hand tools and equipment, et cetera and then examples of typical assembly operations are then given. They're not closed categories and one might be a little surprised to appreciate that, given some of the evidence and submissions about how Cochlear was striated, I think, by the agreement. In any event, that's the agreement provisions with which the company is to date bound to comply.

PN590

SENIOR DEPUTY PRESIDENT KAUFMAN: Where do we find the contracts that the employees have entered into in the appeal book, please?

PN591

MS HOWELL: I'm just about to take the Commission to the contracts right now. It follows immediately on from the agreement in the volume which we were just looking at, which is volume 2. It's page 585. Before I take the Commission to the provisions in the contract, I should just say that in order to understand the classification system, one has to look at documents outside of the contract and that's one of the ongoing difficulties with this arrangement is that Cochlear has effectively a hidden discretion which is not in the contract, is not touched by the deed but which can fundamentally affect people's ability to get a particular classification.

PN592

SENIOR DEPUTY PRESIDENT KAUFMAN: I don't understand, just again speaking for myself, what you mean by hidden discretion.

PN593

MS HOWELL: A discretion which is not on the face of the contract, your Honour.

PN594

SENIOR DEPUTY PRESIDENT KAUFMAN: Where is it?

PN595

MS HOWELL: It's found in the documents which apply the classification structure and I'll take the Commission to those. In any event, the first thing to note about the contract at page 585 is that Cochlear - the first page, I should say, is obviously a letter to production employees. It says:

PN596

The new classification structure which will apply from 1 August 2007and we will be using the period up until the classification structure is introduced to work with you in ensuring that the structure is fully understood.

PN597

I think the Commission will recall there was some slippage in the date of introduction but it certainly was introduced in 2007. Then over the page, the first point includes in the last sentence that:

PN598

The classification matrix in schedule B will apply to you.

PN599

SENIOR DEPUTY PRESIDENT KAUFMAN: Sorry, where is that?

PN600

MS HOWELL: Page 586. Before I take the Commission to the detail of the classification structure, I just briefly ask the Commission, still in the same volume, to turn to page 554 which is some transcript - I'm sorry, that's the wrong reference. It's appeal book 1, page 217 to 218. I'll turn back to that agreement shortly. At page 217 to 218 is some cross-examination of Mr Howitt about the new classification matrix which is contained in the contracts and it's paragraph 1168 - or perhaps starting a little bit higher up the page, point 1167:

PN601

So as far as you're concerned, at least, the classification matrix in the agreement and the classification matrix in the contract are not compatible, they can't co-exist.

PN602

Mr Howitt says, "That's correct." Then he says:

PN603

People received promotions under the matrix on 7 November.

PN604

I think that was his way of answering the question from when the contracts had applied and so over the page it's then put to him:

PN605

So from that time at least Cochlear has treated the classification matrix in the agreement as no longer applying?---It's not been valid to the way we work for quite sometime, hence the frustration for a number of people who thought they deserved opportunities and promotions and Ms Fortescue -

PN606

et cetera, unresponsive. Then:

PN607

So you've treated this as not applying to Cochlear effectively?---That's correct.

PN608

SENIOR DEPUTY PRESIDENT KAUFMAN: Did the Commissioner make a finding in that the new matrix disadvantaged people?

PN609

MS HOWELL: No, your Honour.

PN610

SENIOR DEPUTY PRESIDENT KAUFMAN: Mr Howitt seems to think that it enhanced their opportunities. Is there any finding as to that?

PN611

MS HOWELL: No, your Honour. There is evidence from employees which contradicts that. Essentially, there was a conflict of evidence but the first thing we say is, how do you assess disadvantage? When you're dealing with two systems which are really like chalk and cheese, completely different, it's almost like - - -

PN612

SENIOR DEPUTY PRESIDENT KAUFMAN: Isn't that your submission,
Ms Howell, that the introduction of the new matrix system is disadvantaging the members of your client?

PN613

MS HOWELL: That's part of our submission, your Honour, but we say even before you get to assessing disadvantage - - -

PN614

SENIOR DEPUTY PRESIDENT KAUFMAN: They just shouldn't have unilaterally implemented it.

PN615

MS HOWELL: Yes, your Honour, thank you. Even before you get to issues of disadvantage, there are still issues of breach because if you're applying a system which is inconsistent and not applying a system in the agreement, then already we say you're in breach of the agreement and it's no answer to that to say, well, people are getting more money, even if it were true, and that's not the evidence of the employees. A fundamental flaw in that argument is that Cochlear has its hands on the levers and can change at any time the level of productivity that you need because it's a productivity based classification system. If you don't maintain times over a three week span - it used to be one cycle but now it's a three week span, if you don't maintain target times, you can be downgraded.

PN616

SENIOR DEPUTY PRESIDENT KAUFMAN: Is that a discretion under the agreement or under the contracts?

PN617

MS HOWELL: Under the contracts, your Honour, not under the agreement. There is a capacity to downgrade under the agreement but the criteria are different. They're clearly identified and they're not at the discretion of Cochlear. Mr Howitt basically goes on to say at paragraph 1172 and 1173 that notwithstanding - he's applying a different classification structure - the fact that people have applied for regradings means they've consented to it and that disposes of any difficulty.

PN618

Over at page 219 at the top of the page we say:

PN619

The reality is that once you introduce the new classification system, the only way people could get any advance -

PN620

and that's in the context of promotion:

PN621

- was to submit to the assessment process. That's right, isn't it?

PN622

Mr Howitt agrees:

PN623

They no longer have the opportunity of being reclassified under the award or agreement structure?

PN624

Mr Howitt agrees to that and then he editorialises that he thinks it's easier to get reclassified and the parties are in dispute on that but the important point is he agrees employees, since the introduction of the matrix, no longer have the opportunity of being reclassified under the agreement.

PN625

SENIOR DEPUTY PRESIDENT RICHARDS: Can I just ask you, Ms Howell, just in summary, can you just revisit for me your argument as to the circumstances in which the employees became bound or signed the common law contracts. Just return to that context for me.

PN626

MS HOWELL: Yes, your Honour. The employees have not signed the contracts. The letter to which I took the Commission which - - -

PN627

SENIOR DEPUTY PRESIDENT KAUFMAN: Page 585.

PN628

MS HOWELL: Yes. That was what the employees received and they also received some explanation saying "This is what will apply," which I'll find the reference for. I think it's also in Mr Howitt's statement but essentially, the proposition put by Cochlear in its submissions is that by continuing to be employed, the employees have consented to the individual contracts. It couldn't be put any higher than that because Cochlear have simply - - -

PN629

SENIOR DEPUTY PRESIDENT RICHARDS: That's the extent of the engagement between the parties.

PN630

MS HOWELL: Yes, your Honour. The sequence of events was Cochlear twice put to a ballot of employees - - -

PN631

SENIOR DEPUTY PRESIDENT RICHARDS: That's right. I recall that sequence. There's been no other express indication of consent by the employees other than, in your view, these were terms and conditions which were effectively imposed on them for the purposes of their further employment. That was the extent of the interaction between the parties.

PN632

MS HOWELL: It was, and I don't think there's any dispute about that, your Honour. I'll just go back briefly to the terms of the contract as they deal with the classification structure by taking the Commission to - - -

PN633

SENIOR DEPUTY PRESIDENT KAUFMAN: Ms Howell, I don't want to stop you but is it necessary to do that? You've made your point, it seems to me, that Cochlear has imposed unilaterally different terms and conditions of employment that are arguably disadvantageous to employees. There's a dispute about that, but be that as it may, Cochlear has done that in breach of the terms of the agreement. Do you need to go into all of the detail? Isn't it sufficient that you make that point?

PN634

MS HOWELL: The reason I'm taking the Commission to the provisions, your Honour, is because, as I understand Cochlear's position, they deny that they're in breach of the agreement.

PN635

SENIOR DEPUTY PRESIDENT KAUFMAN: Is that a finding we have to make?

PN636

MS HOWELL: Well, yes, if it please the Commission we say so because we say that if the company has been in breach of the agreement since November 2007, which is about 12 months, knowing certainly what the issues were, that's a factor that would be relevant on the Tristar test to the public interest. I'll try now to go through the provisions as quickly as I can.

PN637

Page 602 is the actual classification structure and what's immediately apparent about this is that there's no description of the type of tasks or skills. There's no reference to skills. The different levels are divided based on proficiency in tasks in the team area. All these levels have to be proficient in 100 per cent of core tasks but the key variable is the percentage of tasks in the team area as per the flexibility matrix. Every individual area of Cochlear now has its own level matrix of tasks and people have to be assessed as capable of those tasks. And the tasks are not organised simply numerically, but they are organised on the basis of points. Some tasks might be more points than others. The question is then well how you accept this competence in those tasks and some documents were tendered which answers that question and one has to go to volume three to have a look at those documents. It's page 723 is the Cochlear documents produced under subpoena which has an explanation of the way in which the Cochlear structure works and page 76 is an example of a flexibility matrix and there are various tasks which identify which people get points if they are assessed as being competent at.

PN638

And can I just page 728 talks about the assessment process and the assessment is based on the following key criteria. Following work instructions, that's uncontroversial, but then meeting cycle time and that is the really sore point for employees because Ms Fortescue has indicated even since the hearing cycle times have been shortened dramatically so that the difficulty of achieving promotion has been increased even just since the hearing before Commissioner Cargill and there was a lot of evidence before her that there had been significant changes in the cycle time between when the contracts were introduced and the hearing.

PN639

SENIOR DEPUTY PRESIDENT KAUFMAN: Can you explain to me briefly how it is that shortening cycle times is in breach of the agreement.

PN640

MS HOWELL: The agreement doesn't - the agreement is based on skills, it's not based on tasks at all. So cycle times for tasks simply has no place in the agreement we say. The type of tasks which were identified in the example are simply things which are not dealt with in a skill based classification structure and this is also one of the difficulties with the NAPSA. If I can just ask the Commission to turn to page 735 that just shows you the level of proficiency in tasks that's required for each level, but again that's based on points. And if I can take the Commission to page 743, this is just an example of an assessment under reforms for which are in similar form for each classification.

PN641

The criteria for competency includes at eight and nine consistently meet the individual targets and consistently meet the cycle times. So those are effectively part of the criteria but not in the contract and can be and have been varied substantially by Cochlear and we say that that fact simply undermines any assertion by Mr Howitt that the new matrix is in any way more favourable to employees. And I won't take the Commission now to the submissions below, but at page 1462 of the appeal book we set out some evidence of the individual employees as to why the matrix didn't help them and why it was less favourable to them and why it was more difficult to get promotion.

PN642

And I would also refer the Commission in this regard to page 1139. It's a document produced by one of the AMWU's witnesses who is an employee,
Ms Ying, and it sets out changes to cycle times and targets in her area - I'm sorry, I withdraw that - in a couple of areas of Cochlear's operations. And what you see is changes to productivity requirements ranging from about 30 per cent to over 50 per cent changes just in the period since November, between November 2007 and the time of the hearing. So that's the level of leverage which Cochlear has in changing the beneficial or otherwise nature of the matrix. Now, there's no evidence from anyone other than Mr Howitt to say that this system is better. You've got a number of employees saying no it's not and the main reason being because the targets and the cycle times keep changing. Not a single employee was called by the company to say actually we like it, we think we're better off with it, only Mr Howitt.

PN643

So it's acknowledged by Mr Howitt that both systems can't be applied. It's acknowledged that the agreement system which is binding on the company is not being applied and we say Cochlear has simply disregarded its obligations under the agreement and yes this does matter to the public interest for a number of reasons. And I think we've covered those in our written submissions below and I won't traverse that again. I'll now turn to the issue of the conflict between the contract classification and the NAPSA classification system which is a separate but related issue because the same issues arise as to the fundamental inconsistency between the two classification systems and the uncertainty about what's going to happen if the agreement is terminated and the NAPSA becomes binding and the NAPSA classification system becomes binding.

PN644

And the company, for everything we know today, is going to continue to apply its competence, its task based matrix which bears no resemblance whatsoever to a modern skill based, competency based classification system such as is found in the NAPSA which reflects the Metal Industry Award.

PN645

SENIOR DEPUTY PRESIDENT KAUFMAN: That sounds awfully like your submission is well if the agreement is terminated nothing is going to change.

PN646

MS HOWELL: No, your Honour. No, your Honour, for a number of reasons.

PN647

SENIOR DEPUTY PRESIDENT KAUFMAN: I think we've dealt with that.

PN648

MS HOWELL: What will happen is that Cochlear will go from being in breach of the agreement - - -

PN649

SENIOR DEPUTY PRESIDENT KAUFMAN: To be in breach of the NAPSA, on your submission.

PN650

MS HOWELL: In even more substantial breach of the NAPSA because the classification system in the NAPSA, the Commission would probably be aware that the competency based system has been developed over a number of years to meet the demands of modern industry including issues such as transferability and it goes further than the agreement structure it being based on competencies rather than particular functions.

PN651

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. And not by a way of a devil's advocate question, but perhaps something that needs to be thought about, if the agreement and the NAPSA prevent Cochlear from operating in a manner that it considers necessary and increases its productivity, why is it not a public interest argument in favour of terminating the agreement?

PN652

MS HOWELL: The agreement doesn't - - -

PN653

SENIOR DEPUTY PRESIDENT KAUFMAN: Well, if the agreement doesn't - - -

PN654

MS HOWELL: If the agreement - the argument was that, that argument that Cochlear put, is that the company can not - I withdraw that - that the company needs the matrix classification structure to meet its business needs. The solution to that problem is not simply to disregard your legal obligations and if companies proceed on the basis that the solution to difficulties, if they exist, is to simply disregard their legal obligations, then there are going to be a lot of problems with the maintenance of a proper safety net, amongst other things, not to mention a lot of litigation. So we say - - -

PN655

SENIOR DEPUTY PRESIDENT KAUFMAN: And if I may interrupt. If the company says we don't accept that we're in breach of the agreement, but if we are it's preventing us from pursuing our legitimate pains to improve productivity and efficiency, therefore it would be a matter beyond doubt terminate the agreement, why is that not in the public interest?

PN656

MS HOWELL: Well, for a number of reasons, your Honour. Firstly if they're right that they're not in breach of the agreement then that argument for us goes away. We've got other arguments, but that argument goes away and they can continue - - -

PN657

SENIOR DEPUTY PRESIDENT KAUFMAN: If the Commission of course found that they were not, was not satisfied that they were in breach of the agreement, as I understand her finding - - -

PN658

MS HOWELL: Yes, your Honour, we take issue with that finding along with some of the other matters the Commissioner addressed.

PN659

SENIOR DEPUTY PRESIDENT KAUFMAN: Sorry, I keep interrupting.

PN660

MS HOWELL: I suppose the point is simply, your Honour, that - well, there's two different scenarios. If the company is not in breach then the argument about breach of the agreement becomes irrelevant to the public interest because they're not in breach. But if the company is in breach then there are obvious public interest considerations. Is your Honour asking me to address both situations or just one of those two?

PN661

SENIOR DEPUTY PRESIDENT KAUFMAN: Just postulating almost a hypothetical, but perhaps something that ought to be considered. That if the industrial instruments under which the company is working don't provide it with the flexibility that it asserts that it needs, can't it be argued that it's in the public interest to terminate that agreement or that instrument?

PN662

MS HOWELL: Well, sir, the first point is that doesn't raise a public interest necessarily. It raises the company's individual interest. The second point is if the company is in breach of the agreement then it would be wrong, in our submission, to sanction a breach by effectively when they simply disregarded the agreement by giving them effectively what they want. The third thing is it would be contrary to the objects of the Act which is to encourage negotiation for statutory workplace agreements under schedule 8. The best way to encourage an agreement between the parties as to what regime can both satisfy the employees and satisfy the company's needs is to encourage negotiation, not unilateral imposition of individual contracts.

PN663

So there is no public interest in simply saying well the company thinks this interest doesn't meet its needs, we'll just let it unilaterally impose its view of what should occur. It's contrary to the objects of the Act, we say, which is to give the employees something of a role in determining what terms and conditions are appropriate to the enterprise. And of course if we are right about the breaches, then the same issues are just at large with the NAPSA in any event and the solution to that problem is that Cochlear should do exactly what other employers do, which is negotiate some form of agreement. They can do it individually with their employees, they can do it as an employee collective agreement.

PN664

They have tried to do that and failed so that answer is we'll disregard the agreement, we'll impose our individual contracts. See, there's nothing to stop Cochlear at any stage negotiating an appropriate instrument. They just thought that was too hard because they couldn't persuade their employees, not the AMWU but their employees, of an outcome. Can I ask the Commission to turn to the copy of the Award which I handed up on the last occasion. Clause 5 of the Award deals with classifications and rates of pay. And clause 5.1.3 is the most important provision. The starting point is probably clause 5.1.1 of the NAPSA which says at (a):

PN665

Adult employees other than those specified in subclause (b) shall be entitled to receive the award rate of pay for the classification now set out in the table in 5.1.1(c).

PN666

And then turning to clause 5.1.3 which is the critical provision provides the procedure for classifying employees and then it refers to the procedures at subclause (a):

PN667

The procedures for classifying employees under this award are set out in the national Metal, Engineering Competency Standards Implementation Guide distributed by the Manufacturing, Engineering and Related Services Industry Training Advisory Body.

PN668

I'd just hand up a copy of that document because it's referred to and it's of some importance because it sets out how people - - -

PN669

SENIOR DEPUTY PRESIDENT KAUFMAN: Was this argued at first instance?

PN670

MS HOWELL: I'm sorry, your Honour?

PN671

SENIOR DEPUTY PRESIDENT KAUFMAN: Was this particular point argued at first instance?

PN672

MS HOWELL: We didn't make reference to the competency standards. No, your Honour. I think I've given my friends a copy.

PN673

SENIOR DEPUTY PRESIDENT KAUFMAN: Why should we allow you to do so now?

PN674

MS HOWELL: Well, if your Honour is going to exclude all arguments the respondent didn't raise, we'll withdraw reference to the competency standards.

PN675

SENIOR DEPUTY PRESIDENT KAUFMAN: This is now starting to get into a somewhat complex area of trying to compare NAPSAs with agreements and with contracts. Is it something that's appropriately done by this Full Bench?

PN676

MS HOWELL: Well, the first thing to say is the inconsistency of a classification system was squarely raised before the Commissioner and indeed we presented a comparison with the relevant clauses. But if the Commission is determining the merits of Cochlear's application .....

PN677

SENIOR DEPUTY PRESIDENT KAUFMAN: It might be easier if you just go to it and tell me. Are there two documents you've handed up or just you've handed up too many copies?

PN678

MS HOWELL: I think I handed up just that one your Honour.

PN679

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you. You've handed up six copies, but - - -

PN680

MS HOWELL: I'm sorry that was my fault.

PN681

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you.

PN682

MS HOWELL: They are all the same. As far as the importance of the issue, your Honour, it was squarely raised before the Commissioner that if the agreement was terminated it would immediately place the respondents in breach of the award with regard to classification and with regard to other matters. We handed up the award, we didn't hand up the competency standards which are referred to.

PN683

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. Well, just go it,
Ms Howell.

PN684

MS HOWELL: I'm still going to 5.1.3 at the moment. 5.1.3(a) refers to the classification procedures being those set out in the competency standards and over the page probably the most important provision is that (v):

PN685

All employees engaged under the award at the relevant classification levels shall be subject to the Metal and Engineering Competency Standards.

PN686

The competency standards themselves I haven't handed up because it's an enormous document and it's also a changing document depending on which is updated from time to time, but the Competency Standards Guide which I have handed up does explain what the competency standards are, gives some examples of them and talks about the procedure. And I'll just take the Commission briefly to the guide which is required to be used under the award. At point 1.1 on the first page the award clause is referred to and it's the same award clause which I've just taken the Commission to. It sets out what the competency standards are at 1.3. Then over the page on page 2, the last paragraph, the competency standards for the metal and engineering industry consist of nearly 300 separate competency units which identify the elements of skill and performance criteria necessary to perform the vast range of jobs in the industry.

PN687

And then page 4 third paragraph down I just highlight:

PN688

We consider that the classification structure based on skill is essential to reforming workplace, to recognise and make full use of employees' skills.

PN689

That difference I interpolate to a classification structure based on task. Competency standards and training at 1.5:

PN690

The first role of the National Metal and Engineering Industry Competency Standards is to form the basis for all national metal and engineering training, the metal and engineering training package.

PN691

Et cetera. At point 1.6 workplace recognition of skills:

PN692

The second role of the competency standards is to provide you with an objective tool to help you recognise the skills needed in industry and workplace. They do this by providing you with skill descriptions that are recognised industry wide.

PN693

We say not compatible with the Cochlear classification matrix. 1.7 on page 6, and I'm only going to this introduction. I can ensure the Commission I'm not going to great detail. Why implement standards ..... at point 7:

PN694

A number of the benefits are identified, but importantly opportunities for employees who will gain access to career paths, skill portability and work classification based on competency.

PN695

The respondent's, Cochlear's task says the matrix does not offer employees those benefits. And the last dot point:

PN696

Provide the basis for nationally recognised and portable qualifications that can be used in a wide range of industries and for industry leadership of the education and training system.

PN697

Et cetera. So this has been a long process of developing competency based classification system which is completely, in our submission, incompatible with the task based matrix, but that Cochlear has indicated it will continue to operate. And then there are also various procedures set out for resolution of disputes which involve consultative processes which Cochlear has not recognised and has shown no indication that it will recognise and which again are simply inconsistent with the approach taken by Cochlear, which is you can ask management to reconsider under the contract and that's the extent of your rights. No consultative process based on any representation by other parties or any objective process.

PN698

So we simply say that under the NAPSA Cochlear is obliged to apply the structure, is obliged under clause 5.1.3 and it's obliged to apply the competency standards. And that approach is fundamentally inconsistent with the contract and Cochlear has given no indication of any steps it will take to address the issue of compliance with the NAPSA in respect of the classification structure. And indeed we say it can not do so without simply abolishing the task based matrix and starting from scratch. And there is no room in light of those specific provisions on classification to say well we pay more than the rates in the award so it doesn't matter. In fact the Commission would probably be aware there would be very few employers who don't make over award payments, but that doesn't mean they're not bound by the classification systems and processes in the NAPSA.

PN699

And not only has Cochlear said nothing in the six months since this issue was raised about how it will comply with the NAPSA, it's offered to the Commission a deed which cements in place the task based classification structure until 2010. So Cochlear, far from saying we will meet these issues and we'll deal with them, is saying we'll put in place a legally binding agreement committing us to keep a competency based - I'm sorry, I withdraw that - a task based system in place until 2010. And we say Cochlear is effectively saying to the Commission we will ignore our obligations under the NAPSA at least until 2010.

PN700

So we say that's an important issue in considering the public interest whether the termination is going to result in breaches of that nature, particularly in light of the deed which Cochlear has indicated it intend, the deed poll, which it intends to enter into if the agreement is terminated. In our submission that demonstrates just the lack of recognition with the issues confronting it. I on the last occasion raised some issues with other inconsistencies between the NAPSA and the individual contracts and the same in principle difficulty arises. Cochlear has known about the issue with the NAPSA applying for at least a couple of months, but it doesn't offer any indication to the Commission as to how it will address these issues.

PN701

We have provided a table which was attached to our submissions below and which should be at the end of volume 4 and I don't canvass all those issues in any detail again, except to say the Commission is now in a position where it doesn't know whether rotating afternoon shift workers are going to get 10 per cent as per the contract or 15 per cent as per the NAPSA. It doesn't know whether Cochlear employees are going to get all the allowances which are set out in clause 5.9 of the NAPSA plus the existing rates of pay, or whether they're just going to get the allowances specified in the individual contracts. And I think there's only, I think there's two allowances in the contract versus the whole plethora of allowances in the NAPSA.

PN702

Is Cochlear going to apply the spread of hours which is in the NAPSA, or the spread of hours which is in the contract? We don't know. Is Cochlear going to apply the five hour meal break provision which is in the NAPSA but not in the contract? We don't know. Is Cochlear going to give all the public holidays which are in the NAPSA and all the public holidays which are in the contracts, or is it going to select one or the other? We don't know. Either way unless Cochlear says we're going to give all the holidays in both then there's going to be some inconsistencies or some breaches, either breaches of the deed poll or breaches of the NAPSA, because you can't comply with both.

PN703

There are other issues too. Under the contract higher duties is only available if employees act for five days or more. There is no such limitation in the agreement. Is that limitation going to continue to apply? We say that would be a further breach of the NAPSA. We don't know the answer. We might find out in
Mr Harmer's reply for the first time, but we say it's completely inappropriate that Cochlear has left addressing those issues to its reply in these proceedings. They have been raised again and again by the AMWU starting in June this year and we still don't have any clue of how Cochlear will apply the NAPSA if the agreement is terminated.

PN704

So we say it's a significant factor. It's contrary to the objects of the Act and to the public interest to have such uncertainty about what terms and conditions will apply in the event that the agreement is terminated. And the fact that's on our case we go from breach of the agreement to breach of the NAPSA we say has got no relevance to the question of public interest and the difficulty of going into a situation where the safety net is completely unknown, at least to us. And as I have already indicated one of the problems is the deed because the deed simply cements into place if we are right, cements into place all these difficulties and inconsistencies.

PN705

And secondly we say there is a much greater level of conflict between the NAPSA and the contract, vis-a-vis the agreement and the contract, because at least in terms of the agreement the non classification issues are much narrower. There aren't issues about the rostering and the span of hours, the public holidays. It's more confined, but not entirely confined, to the classification structure. So we say that situation will get worse if the agreement is terminated. And of course we rely on our submission that termination will condone and encourage breaches of the agreement, breaches of legal instruments. Finally I just want to make a couple of points about the deed.

PN706

The deed refers to Mr Howitt's undertaking to guarantee conditions contained in the individual contracts until some time in 2010. That was an undertaking
Mr Howitt gave orally in transcript and the respondent - I'm sorry - Cochlear, notwithstanding the deed, say really that's all you need, the deed should reassure everybody and put all concerns to bed about preservation of existing terms and conditions. What we find as it's relevantly attached to Ms Fortescue's recent affidavit is that even since Mr Howitt gave his undertaking to preserve terms and conditions, terms and conditions have already been changed for new employees. So we now have two categories of employees, employees under existing contracts and new employees coming on who face a number of disadvantages.

PN707

For example, and I'm referring here to schedule 3 of the deed, a new provision has been entered into the contract concerning a qualifying period. You now have a six month qualifying period, which is effectively a probationary period which didn't apply before. You now have new limitations on employees relating to intellectual property rights which did not apply to employees before. The intellectual property rights are dealt with at clause 26 of the contract and I have to say on my reading I've got no idea what they mean except that they're imposing further restrictions on employees. You, that is the employee, must promptly tell Cochlear and presently assign to Cochlear all intellectual property rights, you must acknowledge that because of this clause all intellectual property rights become Cochlear's property and all future property rights will become - all future intellectual property rights - will become Cochlear's property, et cetera.

PN708

So and then it goes on to define intellectual property rights, extremely broadly I would say. So that's another change which goes beyond the common law on intellectual property. And in addition to that there's a clause that provides that clause 28 if your employment is terminated then Cochlear may deduct from any amount it owes to you an amount you owe to Cochlear. So a further imposition on new employees not contained in the terms and conditions at the time
Mr Howitt gave the undertaking. Now, one could say those are relatively minor, the fact that you're on six months probation, or Cochlear has new rights on intellectual property or to deduct moneys it says it owes.

PN709

And maybe relatively minor perhaps, although if you're an employee on probation who gets sacked it's not a minor issue. But the point is here we have an undertaking, here we have Cochlear under the full glare of these proceedings busily changing people's conditions of employment. So we just say that's another factor which is relevant to the issues I raised at the start, which is you have to look at the industrial conduct of a party and you have to have regard to that in assessing how they will behave if the agreement is terminated and whether in the circumstances the termination of the agreement is going to assist in facilitating bargaining between parties for a workplace agreement as defined in the Act.

PN710

And we say that's just another issue which points to the fact that Cochlear will do whatever it sees to be in its interest without regard to the views of the employees or indeed its legal obligations. Those are the issues we wish to raise on the public interest. Beyond that we rely on everything which is contained in our written submission which was before the Commissioner. If it please the Commission.

PN711

SENIOR DEPUTY PRESIDENT KAUFMAN: Thank you, Ms Howell. Yes, we'll take a short break.

<SHORT ADJOURNMENT [11.34AM]
<RESUMED [12.02PM]

PN712

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, Mr Harmer.

PN713

MR HARMER: Yes, thank you. May it please the Commission. Just by way of agenda there has obviously been considerable material put forward by the union both in transcript on the last occasion and the interim by way of written submissions and further on transcript today. That material initially went by way of response to our appeal proper in terms of the areas that we raised within our submissions, both written and oral, and then has proceeded to a number of issues we raised in respect of this Full Bench exercise in should it find it necessary that the discretion, if you like, the narrow discretion under 170MH(3) to terminate the agreement and the issues specifically addressed by the union going to the public interest have ranged across what we have heard today and Ms Fortescue's affidavit.

PN714

The issue of the compliance with the underlying agreement, the issue of compliance with a NAPSA and the recent issues relating to compliance with the deed poll. And on transcript on the last occasion there was a number of submissions going to Cochlear's conduct that are also alleged to go on the union's submissions to the public interest. What we propose to do by way of order is to go back over our case outline and briefly deal in reply with the issues that the AMWU has raised on each of our matters going to error and the basis for overturning the decision at first instance and then to move through the various issues going to the public interest in roughly the order I have just referred to them.

PN715

SENIOR DEPUTY PRESIDENT RICHARDS: Just on that first issue,
Mr Harmer, you say going to error. Is that to address the submission that your grounds have gone to jurisdiction and they're not discretionary? Is that the issue, is it?

PN716

MR HARMER: That's correct, your Honour. I'm sorry.

PN717

SENIOR DEPUTY PRESIDENT RICHARDS: That's all right. I just wanted to - - -

PN718

MR HARMER: Shorthand phrase. We'll address our case as it's been responded to, if the Commission pleases. So if the Commission would bear with me we handed up at hearing on 15 October a case outline for the applicant on appeal and because that was a thumb nail sketch, if you like, of our submissions I'd just like to go through that and go to the points where the union has responded to it, either in its written submissions or on transcript and briefly note our reply.

PN719

SENIOR DEPUTY PRESIDENT KAUFMAN: Is that the document headed Brief Outline of Submissions of the Applicant? Or is it another document?

PN720

MR HARMER: No, your Honour, sorry. There's a document that we relied upon in our old submissions and it was headed Case Outline of the Applicant hearing 15 October 2008. I don't think it was marked.

PN721

SENIOR DEPUTY PRESIDENT KAUFMAN: No. I just need to turn it up. You go ahead in the meantime. I'll find it while I'm listening to you.

PN722

MR HARMER: I'll just give you another few seconds, your Honour. If I start off it might be hard to follow. I apologise for that.

PN723

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes I have it, thanks.

PN724

MR HARMER: Thank you. So this is a document headed Case Outline of the Applicant and in our opening it went to a number of introductory issues, including at 1.7(g) which is on the second page of that outline issues going to importance to have this matter resolved as quickly as practicable referring to relevant provisions of the Act. All we say in that is that whilst the union did in effect by default get the additional day of hearing that perhaps they were seeking they did in their submissions concede that it's in the interests of both Cochlear and its employees an the union that this matter be clarified as soon as possible to remove uncertainty from the site and that particular submission was made by the union on transcript on the last occasion at paragraph number 40.

PN725

Now, we come back to that because we think it is important, notwithstanding the volume of material before the Commission, that this issue be resolved as soon as possible obviously with respect to what the Commission has to deal with. The second point there we had is nature of the appeal and this is where we did on the last occasion contend that the section 170MH(3) as brought into play for these collective state agreements by schedule 8 of the Act splits into two essential components. One being a narrow discretion to be properly formed and that being a precondition, if you like, before a mandatory step whereby the Commission, depending on the consideration it reaches, must or must not terminate the agreement.

PN726

Now, the submissions of the AMWU, without going into or repeating what we put on the last occasion obviously, responding to this issue are found at the written submissions headed Supplementary Submissions for the AMWU in the Appeal at paragraphs 2 through to 5 and I simply just briefly reply to the issues raised there. The Commission will observe that at page 2 paragraph 2 of those supplementary written submissions the AMWU commences by saying that if Cochlear's submission were correct any error in respect of section 170MH(3) would be jurisdictional in nature. Now, we say with respect that that's not correct and it reflects a lack of understanding of what we were putting.

PN727

We just seek to clarify, as we see it, the interplay between different forms of error which may occur under 170MH(3) and whether they go to discretion or jurisdiction in respect of it. Now, the union goes on to say at paragraph 5 that what's replied in respect of the discretion, and it's a narrow discretion under 170MH(3), is that House v King be applied. Now, the union maintains that Cochlear, the appellant, hasn't met the requirements for error in the sense of House v King. I first want to briefly deal with that before going on to why we say the relevant errors are jurisdictional in nature. So without perhaps taking the Commission to it, the issue of House v King area is just summarised in the Full Bench in Tristar, the decision of the Full Bench on 13 April 2007 at paragraph 8 which was at tab 6 of our set of cases.

PN728

Basically as the Commission would be familiar they refer to the errors involving the decision maker either acting on a wrong principal influenced by relevant or extraneous matters, mistook the fact or failed to take material consideration into account or the decision was plainly unreasonable. Now, without going through all of the grounds of our appeal we certainly would press that the Commission, in our respectful submission, applying the incorrect test at first instance, which I'll come to, is certainly House v King error, the Commission failing to recognise that on a proper interpretation of the Act the NAPSA applied is certainly House v King error, failure to take into account the relevant consideration. The Commission, for example, failing to recognise departures from the Freedom of Association provisions we would also say would fall into the category of House v King error, although we acknowledge the point it made that predominantly that's being raised on appeal.

PN729

So they're the issues of House v King error, if you like, or the test that applies to what's described as narrow discretion under 170MH(3). But those form of errors are not mutually exclusive, if you like, when compared to the form of errors listed in Alton which we went through in some detail on the last occasion which are capable of constituting error in the nature of jurisdiction. Now, there are two areas of overlap between House v King, discretionary error and Alton, if you like, jurisdictional error that I wish to just touch on. The first would be a distinction between the exercise of a power and its consequence. By way of example here we have said that the discretion under section 170MH(3), the narrow discretion, rests hard up against a mandatory step under the Act.

PN730

So unless the Commission considers it's not contrary to the public interest to terminate, it must proceed mandatory under the Act to terminate. So if, for example, this Full Bench found House v King error, overturned or found it appropriate to displace the discretion narrowly exercised in first instance with its own discretion and found that it was not contrary to the public interest to terminate - - -

PN731

SENIOR DEPUTY PRESIDENT KAUFMAN: Then it must terminate you.

PN732

MR HARMER: That's correct. And so what the Commission would be finding as the consequence of the House v King error as a first instance is that in the Full Bench's view the Commission at first instance failed to exercise a statutory mandate which, as a creature of statute, this Commission can not do without running up against the grain of the Act.

PN733

SENIOR DEPUTY PRESIDENT KAUFMAN: But the Commissioner didn't find that it was not contrary to the public interest. Did she?

PN734

MR HARMER: That's what I'm saying, your Honour.

PN735

SENIOR DEPUTY PRESIDENT KAUFMAN: As I understand what you're saying - perhaps I'd better just leave you to expand it.

PN736

MR HARMER: What I'm saying, your Honour, is if this Full Bench takes the view after House v King analysis that it must itself and can exercise its own discretion under the Act and reaches a view contrary to that reached by the Commission at first instance, which is what we encourage and what we would strongly submit, and the Full Bench finds that it should terminate the agreement on proper exercise of that narrow discretion, the consequence of that finding will be that the error of discretion at first instance resulted in the Commission not exercising a mandatory requirement under the Act under which it is constituted. So I'm saying the issue of consequences goes to jurisdiction.

PN737

The second point I'd make about overlap between House v King and jurisdictional error is this, and this is perhaps more important, is the qualitative nature of the error. And this is the area of what's referred often to as constructive failure to exercise the discretion conferred by the Act and ultimately lists amongst this area again the wrong test for conduct inconsistent with the Act, which we say has certainly occurred here, it would also embrace in our respectful submission the failure by the Commission to properly interpret schedule 8 of the Act in the application of a NAPSA, it would also certainly embrace a situation whereby the exercise of the Commission's discretion at first instance furthers a breach of the freedom of association provisions of the Act whereby we say that in rely on clause 1.4 of the agreement and the notion that there can be nothing else in perpetuity other than to facilitate change under this agreement other than with the agreement of the AMWU.

PN738

So that, we say, is an exercise of discretion that does indeed further a breach of the freedom of association provisions and is a good example of what we'd ultimately describe as a tribunal constituted under an Act operating inconsistently with the very provisions of the Act under which it's created and therefore moving to jurisdictional error. Now, that doesn't change the fact that the Commission at first instance in failing to recognise the relevant consideration that the NAPSA applied or in taking into account the irrelevant consideration that there could be a form back to the AFPCS erred in the sense of House v King. We'd respectfully submit that's sematic. But the qualitative nature of that error is such as to also go to jurisdiction. So what we are saying is that both the consequence of error, because of the mandatory step required under 170MH(3), and the qualitative nature of the error can take matters which are House v King errors and nevertheless have them result in jurisdictional error properly under the Act.

PN739

And so where the union correctly says that look in Tristar the Full Bench says narrow discretion, let's apply House v King, and indeed there has only been as I understand it four appeal decisions under 170MH in the history of the Commission in Tristar, Kellogg Brown, Castricum and Mount Thorley. Now, none of those decisions - sorry - none of those Full Bench had been asked to assess this issue of was the error in the nature of jurisdiction. They have all just considered and all they were asked to consider error in the discretion. So there's nothing inconsistent with the Tristar Full Bench properly saying to assess error in the narrow discretion will be properly apply House v King as they would.

PN740

We say we agree with that, but there are these two areas of consequence and the qualitative nature of the error which can also ground the matter into jurisdiction and there was that overlap that we talked about on the last occasion and you might recall, and I won't take the Full Bench back through it, we went through the case of Alton which we said also involved a narrow discretion being up against a mandatory step under the Act and the Full Bench in that particular matter took the view that that brought into play jurisdictional error. We also went within the Alton decision to the High Court decision in Craig. Again I don't want to go back through the quotes, but it emphasised that a statutory tribunal is more at risk in this area than a court because it is a creature of statute.

PN741

And you will recall that there were statements to the effect that any legal error, particularly inconsistent with the Act under which the entity is constituted, could amount to an error of jurisdiction. Now, this distinction obviously is not without consequence, certainly on this appeal. The union says, and in some areas correctly so, Cochlear you're either taking a different emphasise from what you did at first instance or you're raising arguments that you didn't at first instance or at least you're presenting them differently and that goes as a matter properly to discretion on leave. We put forward cases on the last occasion that make it clear that this Commission has a practice that were reported new matters go to jurisdiction that they would nevertheless be entertained, and I'll come back to that issue.

PN742

But also it goes to obviously what other rights would be available to the parties to address this issue depending on the outcome of this particular proceeding. So it's an issue that does have consequence under the Act and we strongly commend to the Commission the submissions we made on the last time and with great respect we say that the response of the union at paragraphs 2 to 5 in its written submissions does not suffice to contradict what we put forward. Now, the next point in our outline - sot that's the nature of appeal. Now, we did at the end of that section - - -

PN743

SENIOR DEPUTY PRESIDENT KAUFMAN: Mr Harmer, just before you leave that. In paragraph 6 the union submits it's contrary to Cochlear - that contrary to your position the Work Choices objects must apply. In your submissions, written submissions at first instance, I thought I read somewhere that it was said that both parties and the Commission held that view, but it seems that Ms Howell was saying that the union at least doesn't hold that view. You did at first instance?

PN744

MR HARMER: That's correct, your Honour. I think in one of our earlier written submissions we said that all parties were of that view. You're quite correct - - -

PN745

SENIOR DEPUTY PRESIDENT KAUFMAN: You no longer hold that?

PN746

MR HARMER: No and Ms Howell made that clear last time and I think has done so in a couple of written submissions now.

PN747

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, I just wanted that cleared up, thank you.

PN748

MR HARMER: Yes. And I'll come to that point because we say it is important. But before moving to that, just in our outline we did assert that the union's contentions that we are changed or we're raising fresh positions is not accurate. We did that at 2.2(c) of our outline, our case outline that I'm going to. And you will recall that we address how properly the union raises that at first instance Cochlear wouldn't concede that the NAPSA applied but addressed what would happen if it did. It would be a greater public interest protection.

PN749

We also asserted that we raised issues of freedom of choice, but it must be conceded - and we do - that obviously the way that we've raised freedom of association on this occasion and quite extensive written submission is totally different and is a new issue raised in that sense. And to the extent that our table attempted to assert the contrary we must apologise and we withdraw that. But what we say about our extensive freedom of association point, as I’ve already gone to, is that it’s clearly in the nature of a jurisdictional error such that even if it’s raised for the first time on appeal, this Commission should rightly consider it. If the Commission was of the view that the freedom of association provisions were impinged, it would go to the core of the Commission’s jurisdiction.

PN750

So at point 3 of our case outline where we had the heading Section 170MH The Nature of Public Interest Test, and we said first of all that under Kellogg Brown v Geelong Wool Combing relied upon at first instance, the starting point is the scheme of the Act. The Commission will recall that the Commissioner at paragraphs 254 to 255 sets out the Geelong Wool Combing test, and the last point from that quoted test is that the starting point is the statutory scheme, and particularly those aspects of it which deal with the making of agreements. It’s on that basis that the appellant in our submissions put considerable emphasis on the scheme of the Act and the nature of the test to be applied. But before going to that test, at 3.2 we said that the current objects apply and at attachment D to this outline we set out and clarify that the only ..... of this Commission that have considered termination of a preserved collective state agreement have all adopted the view that it is the objects of the current Act that apply.

PN751

As the Commission properly notes at point 6 of its written supplementary submissions[sic], the AMWU continues to contend that it’s the pre-Work Choices objects that apply. The Commission might recall on the last occasion we went through and pointed out the distinction between schedule 8 of the Act and schedule 7, which is the schedule that picks up in one of its clauses a whole range of specified provisions of the pre-reform Act for the purpose of pre-reform certified agreements. Without going to it, our table D to this case outline clarifies that this Commission, when dealing with pre-reform certified agreements has said “Yes, the pre-reform objects apply when dealing with PCSAs”. Three decisions, the only three, have all said it’s the current objects that apply. The reasons for that are very clear on the face of schedule 7 when compared to schedule 8, which does not seem to have been addressed in any detail in these written submissions.

PN752

What we do, however, note is that the AMWU is so adamant in its contention that the Commission at first instance operated on the basis of the wrong objects that it contends that the Commission at first instance applied the wrong statutory test. It says that in the last sentence of paragraph 8 of its written submissions. Now what we say about that is that whilst we, clearly for the reasons we’ve already articulated, disagree with that conclusion on the objects, if we’re wrong on that and the AMWU is right then in both a House v King and sense and an altered jurisdictional sense the AMWU itself is contending that the decision at first instance was fundamentally flawed, and against the drive of the Act or the grain of the Act. So we just note that in passing, but as I say we have a contrary view and that’s supported by authority the AMWU’s position is not, and there’s nothing on the analysis there that suggests an alternative outcome.

PN753

So going back to our case outline from the last occasion, at 3.3 the Commission will recall that we went into some detail to say that the whole scheme of the Act is not neutral on this issue of termination. I won’t repeat the submission but we’ve set out there in the outline a number of provisions under Part VIII and Part IX of the Act that demonstrate that what we indicated was momentum towards termination, and the catalytic effect that the Act has on agreements which are past their term. That is, in summary, they lost their standing, they no longer prevail over the sorts of things they used to, they’re more susceptible to pressure for change and bargaining, the whole bargaining regime kicks in, et cetera, et cetera; and they’re certainly vulnerable to termination under provisions such as 170MH.

PN754

What the union in response, apart from taking issue with our reference to spirit and grain and momentum which are the phrases we used to illustrate the practical application of the many provisions that we went through on the last occasion, the union in terms of presenting provisions that counter that outcome comes up solely with the objects of schedule 8, when we re-read their written submissions. This appears at paragraphs 9 through to about 22 of the written submissions. With respect, the union places great emphasis on the objects in schedule 8, which we did go to on the last occasion, and the notion that under the objects set out in clause 2 they are to preserve the terms of these preserved collective state agreements and encourage the making of new agreements under the Act. We take no issue with that but we went through on the last occasion - and you’ll see this in our case outline - a number of clauses, remembering that this is a transitional arrangement to take these statement agreements into the Federal Act.

PN755

What the union says about this objective of trying to help the parties to move from the preserved collective state agreements to a new agreement, a workplace agreement under the Act, simply begs the question of what happens if the parties cannot? Yet that is the essential question that this Commission is dealing with. These parties tried twice through votes to get a workplace agreement up. The fact of the matter is that what schedule 8 is in fact adopt through its clauses the exact same regime for preserved collective state agreements as we analysed in the core of the Act as applying to other agreements on termination under 170MH. So as we pointed out on the last occasion, under schedule 8 after the nominal expiry date there is a change in the status of agreement; it is more vulnerable to termination, protected action kicks in, the clause picks up at clause 21 section 170MH.

PN756

So the whole regime is the same. The fact that a transitional set of objects aims to bring it in and get them onto other agreements under the Act makes no difference to the fact that if they can’t reach agreement, the Act throws the parties into bargaining, reduces the status of their agreement, and has momentum towards termination if they can’t get another agreement; and does not support outmoded, irrelevant agreements which have no longer any practical application to the site, as is the case here with the classification structure that we’ll come back to . So what we continue to say, notwithstanding the written submissions of the union in response, which as I say go to only one section in response, is that it is clear that the scheme of the Act recognised by Kellogg Brown as a ..... by Geelong Wool Combing as being the key, the starting point, and not just the general scheme; the scheme going to agreements is said on those cases to be the key. We have analysed that. We’ve got one section back in response.

PN757

We stand by what we say and we say that clearly the Commission at first instance, where it took the view that the scheme of the Act was neutral on this point, fell into error, and fundamental error of a House v King nature; but also error of alternate jurisdictional nature because it applied the wrong test and acted against the grain of the scheme of the Act. So without repeating what we said on the last occasion we certainly say that the union in its submissions does not counter adequately, in our respectful submission, sufficiently those submissions. Now the union, in dealing with this issue, contends that our suggestion that the spirit and intent of the Act is not such that outmoded agreements will continue to apply. I’ve already addressed that we say that clearly the scheme of the Act makes that clear. It also questions the evidence that this agreement is outmoded.

PN758

I’ll come back later to the evidence, but Mr Howitt illustrates that not only has the whole production regime at Cochlear changed in consultation with its employees, necessitating that the old classification structure be done away with, but also equipment, tools, technology have all changed since the 2005 classification structure. Not surprisingly; it’s a modern technology manufacturing setup and they’re three years on. We’re almost 18 months after the termination of the agreement. It’s not surprising that it’s outmoded. So we’ll go to the evidence and so what the union says there is incorrect, and there’s’ no question that agreement and its classification structure is no longer appropriate and is impeding and confusing for the Cochlear site. So the union makes those points at paragraph 16, 18 and 19 and that’s our response to that.

PN759

At paragraph 21 the union makes the point that Cochlear has not bargained a date but rather has imposed its views, and we’ll come back to that when we deal with conduct later. So that’s all we seek to say in response to what has come back on our issues about the test, and the importance under the proper test of the scheme of the Act. That brings us to point 4 on our case outline of the last occasion where we referred to errors in the decision at first instance and our first point was the test applied. In a sense I’ve already addressed that and I’ve addressed the union’s response, however the union makes further relevant submissions at paragraphs 23 through to 25. Basically the union says that where we were critical that in trying to pull together our submissions on this point we said that if you look at the Commission’s decision at first instance the Commission took the view that there was a level playing field; and if you found any purported negative public interest you then had to balance it up with a positive. What we said was that the Commission, in finding that the scheme of the Act was neutral on the question of public interest beyond termination, failed to apply the correct materiality test that it had to, to its purported public interest needs.

PN760

SENIOR DEPUTY PRESIDENT RICHARDS: Sorry, what is the materiality test?

PN761

MR HARMER: I’m sorry. We failed to weigh up those asserted negatives against the scheme of the Act, which we say carries this - we use the phrase momentum towards termination. What the Commission said at first instance was that the whole scheme of the Act was neutral on termination and that it could not find one public interest positive in favour of termination. Now in our respectful submission that in itself ignores the scheme of the Act that is said to be so vital in Geelong Wool Combing and Kellogg v Brown. So that’s the point that we made at first instance and we don’t disagree that the Commission is entitled to look for public interest negatives, but they have to be tested against the scheme of the Act. We said on the last occasion, and we repeat it, that any finding as the Commissioner did make at the first instance, that there are no public interest positives whatsoever in the termination of the agreement, or that the whole scheme of the Act is totally neutral on the issue, as the Commission also found, in our respectful submission falls into error.

PN762

The union then at paragraph 25 of its written submissions says that in fact the Commission carefully identified and had regard to the relevant objects. Well again I just note in passing that in fact the union submission is that the Commission had regard to the wrong object and applied the wrong test; and again I just emphasise that the union itself seems to take the view that the Commission fell into fundamental error on that front, although we disagree. So they were the submissions going to the test applied that the union in addition set out in its written submission. That brings us at 4.2 of our case outline on the last occasion to the first alleged public interest negative which went to industrial standards, undertakings, individual contracts and their enforcement. The Commission will see in our outline that we there refer to diagram 1 and table 1 in our written set of materials.

PN763

The Commission might recall that we handed up a coloured version of the diagrams on which we had mapped out on a grid the only decisions of this Commission in the last five years that had involved refusal to terminate agreement on the basis of failure to maintain proper industrial standards; which we quite acknowledge that in Kellogg v Brown and Tristar is a proper issue to be considered. But if one goes to that coloured version of diagram 1 we pointed out how starkly out of touch and how starkly in contrast to all the precedents this decision in the matter of Cochlear is, in that here you have a contention that proper industrial standards have not been maintained in circumstances where employees are paid above the agreement concerned, and some 40 to 45 per cent at least above the relevant award.

PN764

We said that the errors that brought about that inconsistency with the Commission’s precedents, which we say is itself a fundamental error in both a House v King and a jurisdictional sense, the two errors that led to that outcome were the lack of recognition of the undertaking whereby the Commissioner at first instance said “Well, Mr Howitt gave the undertaking. What if he’s not there?” and failed to recognise the Corporations Act, the principles of agency, the authorisation of a CEO that was here. That was an inconsistent approach to the undertaking. But the other error was that one relating to the failure to recognise that the State Award applied, or at least the NAPSA as incorporated under the Federal Act.

PN765

So it was those two errors that brought about such a fundamentally inconsistent position of the Commission; and we say that this ground alone should see the Commission as currently constituted reject the decision at first instance, and step in to properly exercise its discretion, and in so doing can have regard to the deed poll we have put on, if the Commission finds it necessary. But as I’ll go to, the undertaking at first instance was certainly from a publicly listed company and guaranteed the ongoing application of the contracts until mid-2010, those contracts carrying the very much increased rates of pay that we’ve referred to.

PN766

Now the union response to this area in its written submissions at paragraphs 26 to 28 and in defence of the position adopted by the Commission at first instance says that the Commission was justified in thinking there was uncertainty that Cochlear would apply the award. The union is quite correct and we went to the material on the last occasion, that certainly Cochlear in its submissions at first instance had a bet each way on this issue; in that it said “We don’t concede the award applies. The amending legislation has just come in but even if it does, it improves our case for termination because it puts a higher safety net below the employees”. The union notes that Professor McCallum, called by the union, also gave evidence that that would be the potential outcome, that the NAPSA would not apply.

PN767

But it wasn’t just Professor McCallum; also Mr Ayres, who was in fact the principal witness of the union, the state assistant secretary of the AMWU, at appeal book page 325 paragraph number 2031 - and I don’t need to take the Commission to it. In his evidence, both in his statement and in cross-examination, he took the view that the employees would fall back to the AFPCS, so there was confusion at a number of points. What we say is that the Commission nevertheless took the view that it was uncertain that the NAPSA would apply. That is clearly inconsistent with schedule 8 of the Act. We pointed that out on the last occasion and the AMWU shares that view, and with respect, it is not sufficient to say that the Commission was justified in having uncertainty. The fact of the matter is the Act says what it says.

PN768

Can there be anything more fundamental to assessing this issue of termination and the maintenance of proper industrial standards than understanding whether or not an underlying award applies? It’s core under the Act. It’s core under the test and it has to be applied. So whilst we quite acknowledge Cochlear and witnesses of the union all contributed to an equivocal position by the parties, the fact of the matter is that the conclusion reached by the Commission, having looked at schedule 8 of the Act, was an incorrect one; and that that is a fundamental both in a House v King sense and in a jurisdictional sense, for the reasons we have already gone to. So misinterpretation of the Act in a fundamental way by a tribunal constituted under that Act goes to both is jurisdiction and to failure to properly exercise its discretion. The attempt by the union to say that the Commission was justified perhaps in reaching that wrong view does not detract from that fact.

PN769

I understand that the union also contends that the Commission could have been justified in apprehending that Cochlear would not comply with the NAPSA. Well, apart from the fact that Cochlear made it clear that it would, if it did apply, and that’s clear on the transcript, that also does not justify an incorrect conclusion being drawn about the application of the Act. It does not change the fact that the decision reached as a result was so out of line with the Commission precedents that, with respect, it would create a most unsavoury industrial standard in respect of this issue of termination of agreements.

PN770

The union then goes on to address the issue of the undertaking, which occurs at paragraphs 29 to 30 of its supplementary submission, and makes reference to issues that Professor McCallum raised in his evidence about the undertaking provided. What we would say about the undertaking given at first instance, again perhaps without going to the appeal books, but we cited on the last occasion the paragraph where that undertaking was given and the context is that Cochlear said, and was not questioned during the matter at first instance, that it is an employer that pays at the top end of the market, it pays way over the award, and has to do that to maintain a skilled workforce. All of that is in the evidence and it wasn’t questioned on that. It has a long history of doing that, continues to pay at the top end of the market, and has a very low turnover rate of around five per cent. I can take you to all of this evidence but I’m just giving you the thrust of it.

PN771

In that context, Mr Howitt said that his CEO had authorised him to say on transcript, in evidence under oath before this Commission, that the contract rates and all the terms and conditions under them would not be changed, unless compelled by statute to do so, to mid-2010. Now Cochlear not only had that said in transcript, it picked it up. The instructed submissions put forward by the legal representative for Cochlear at first instance referred on a number of occasions, on a behalf of Cochlear the entity, to that undertaking and made submissions around its effect. How the Commission at first instance would say “Oh, there’s a problem with the undertaking because Mr Howitt is an individual and might not be in the company for that time” with respect, is so wide of the mark of proper construction of the Corporations Act or principles of agencies, as to render it a totally unreasonable decision; again in both a House v King and a jurisdictional sense.

PN772

So the fact of that undertaking from a public listed company was not sufficient - again, I would say in contrast to the way undertakings are normally treated by this Commission - to convince the Commission at first instance that there was not a prospect to fall back to either the NAPSA or the AFPCS, both of which were actually taken out of play if the undertaking was accepted, we say is again a fundamental error. What the union does in response does not change that, in our respectful submission, one iota. That concludes our submissions on 4.2 which was the first error, that going to maintenance of industrial standards and the undertaking.

PN773

At 4.3 of our submission we went to the second alleged public interest negative which related to the Cochlear workforce and bargaining power. In this area we took the Commission in some detail to our written submissions where we cited a number of cases that made it clear that this Commission in its decisions had taken the view that the Act was neutral, if you like, and did not favour any particular form of bargaining or bargaining power, or regulation, be it collective or individual; and that those were matters going to private interests not to public interest. Now the submissions of the union, its written submissions, don’t touch on this issue but on transcript on the last occasion the union certainly repeated some or all of its evidence about the issues going to the bargaining position of these particular employees. What we say is that that evidence and those submissions, again, do not and cannot detract from the fact that decisions of this Commission, including at Full Bench level, have made it clear that these are private interests; have made it clear that this Act is neutral on bargaining power and form of regulation, and you can go to Castricum and you can go to Kellogg Brown, two Full Bench decisions.

PN774

It is also the case, we pointed out there, that all of the avenues of bargaining available under the Act, which must be a good barometer of the public interest, surely is what the Act specifies as being bargaining arrangements, are available to these employees. Protected industrial action; the union tried to muster industrial action and couldn’t do it. Act as a bargaining agent; the union declined. It only wanted one form of agreement, a union collective agreement. It wouldn’t even represent these employees that it’s so concerned about, in an employee collective. It wouldn’t even talk to the company about the classification structure if it was going to be an employee collective - and I’ll come back to the evidence on this - but I’m giving you the gist of it. This issue, the nature of these employees who - and again, I will go to the evidence - have a long history through an employee consultative committee, which is in fact the centre of bargaining and consultation on their site and has been for years.

PN775

In fact in only the 2003 - 2005 agreement the AMWU didn’t even feature. They didn’t even turn up. In previous generations of agreements they turned up at the Commission to become a party, not having played any part. With the current agreement it was the employee consultative committee that negotiated it - and I will go to the evidence. But to say that supposedly these employees can no longer protect themselves without the AMWU, and that that’s a public interest issue is, in our respectful submission, not only contrary to the evidence but certainly contrary to those important decisions; and they have not been countered at all in what has been put in response by the union; purely private interests though they are. So we say also that that second public interest negative remains in the area of ..... error, fundamental and contrary to Full Bench decisions of this Commission in addressing, as a public interest, purely private interest issues.

PN776

At 4.4 of our outline we went to the third alleged public interest negative which is the material going to clause 1.4 of the preserved collective state agreement. In this area it is true that the appellant on the last occasion had put on considerable written material, and I certainly don’t intend to summarise or traverse that, but I do intend to briefly reply to what the union has put on in response. What we said on the last occasion was that clause 1.4 of the agreement - and the actual agreement itself appears in volume 1 - I think most conveniently, anyway, volume 1 of the appeal book. It’s the first document and it’s only on the third page of the agreement that one will find clause 1.4. The area of interest is that which says in the last two lines that it will “apply from 1 July 2005 and shall remain in force until 30 June 2007 and thereafter until varied or terminated or replaced by agreement of the parties”.

PN777

The Commission will recall that on the last occasion we took the view that the Commissioner at first instance erred by placing emphasis upon ground, which is not an appropriate emphasis for industrial parties, and not being their strength. We also noted that he subjective intentions of the parties were properly excluded but the key industrial context as a matter of interpretation was a scheme of the State Act, particularly section 44, and the fact that compared to the 2003 agreement the package of words at the end of clause 1.4, that being “replaced by agreement of the parties” were inserted as a lump sum in the 2005 negotiations; and should not be interpreted as changing the pre-existing words “varied on termination”.

PN778

The union responds to the various submissions of Cochlear in this area at paragraphs 46 through to about 73 of its submissions, the supplementary submissions, and commencing at about page 10 with the heading Clause 1.4. Now the first area where we differ with the union here, and want to emphasise in reply, is that - and we handed up the State Act on the last occasion - if you read the enterprise agreement provisions of the State Act and particularly section 44 of that Act, it is clear that the intent is to set out a code, and the only code, dealing with enterprise agreements under that Act. Section 44 of the State Act, subsection 1, says that “An enterprise agreement can be terminated only in accordance with this section”.

PN779

It then sets out a number of options and we say that that is clearly a scheme and exhaustive code and that the parties are not at liberty under their agreement to depart from that code or say “Look, you the legislator have set out a code in section 44 which has all these options, but we’ll adopt a narrower approach. What the State Act in section 44 permits, we will not permit under our agreement. Options available under the State Act to terminate, we will confine and remove under our agreement”. You cannot do that with a code for enterprise agreements set out in a State Act. The Commission at first instance made the mistake of saying, “Well you can do that under the federal system”, but there you have section 170MH which specifically confers the right on the parties to agree on modes of termination. In that context we say that the union’s written submissions to the effect that there’s nothing in the statutory scheme to preclude parties limiting on a narrower regime within their agreement is in fundamental error. So we strongly disagree and we have set forward the cases that take that view.

PN780

We also referred in our extensive written submissions to the principal that where a legislator does take the trouble to set out a clear code, self-contained, there are implications to be drawn about the ability to depart from it, and that it would take very clear language to so depart. The union takes the view that such clear language is available in clause 1.4. If you read it, in our respectful submission, you won’t find any such clear language at all suggesting - sorry, if you read section 44 you won’t find any right to do that. If you read clause 1.4 you certainly won’t find any clear intent of the parties to formally depart from the provisions of the State Act. What we say is that at paragraph 51 of their written submissions the union attempts to support the grammatical interpretation of the clause adopted by the Commission at first instance. We say, and we don’t depart from the fact, that relying on grammar for industrial parties is not the way to interpret industrial instruments. We say that again is fundamental but we won’t repeat that; we said it on the last occasion, and again there are many cases to that effect.

PN781

But even if one was going to rely on grammar, it is in fact the case that if this clause was going to try and cap at its end and pick up varied terminated with the notion that you had to have agreement of the parties, it would have not had varied or terminated or replaced. It would just have said varied, terminated or replaced; all picked up. It would have also had a comma after replaced so that by agreement of the parties clearly embraced all those matters. Now in a sense that’s a ridiculous submission by us because we’re getting into grammar, but we’re just trying to demonstrate that the attempt by the union to assert that the grammatical interpretation of the Commission at first instance was correct is even an error within itself. But we go on to say that certainly the approach taken is not correct. What we say is that the extrinsic materials - - -

PN782

SENIOR DEPUTY PRESIDENT KAUFMAN: Mr Harmer, before you turn to extrinsic materials, is this a convenient time?

PN783

MR HARMER: It probably is. Yes, your Honour.

PN784

SENIOR DEPUTY PRESIDENT KAUFMAN: Any idea of how long you might be, just to assist with aeroplane bookings and so on?

PN785

MR HARMER: With apologies, probably about an hour to an hour and a half. I will be quite some time on the alleged breach issues. I’ll be as quick as I can but I think I need to address what has been raised, so probably an hour to an hour and a half.

PN786

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you. We will adjourn until 2.15.

<LUNCHEON ADJOURNMENT [12.59PM]
<RESUMED [2.16PM]

PN787

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, Mr Harmer.

PN788

MR HARMER: Thank you. If it pleases the Commission, just before the break we were looking at the AMWU’s supplementary written submissions and particularly at paragraph 53 under the heading Relevance of Extrinsic Material relating to Cochlear’s annexure 3 written submission. The AMWU there notes that the Commission at first instance merely found it not necessary to go to certain extrinsic material, given the interpretation of the grammar that had been adopted. As we have said before, reliance on the grammar was itself an error. In our respectful submission, based on case law of both the High Court and the Federal Court which we have set out in our written submission, it would always be an error to rely on grammar alone; not to go to extrinsic material which would include the industrial context of the relevant agreement being interpreted.

PN789

We say that the relevant extrinsic material context includes certainly the scheme of the State Act and the code arguments we have gone to before. We also say that it includes the fact that if one looks at the 2003 agreement the new wording came in as a single batch and should be interpreted as being self-contained and relating solely to replacement by agreement of the parties. The AMWU at paragraph 57 of its written submission indicates that whilst the Commission didn’t rely on extrinsic evidence in the form of evidence going to the purported mutual intentions of the parties, or we would say more accurately their subjective intentions, it’s contended that certain evidence of Ms Fortescue on this issue was un-contradicted.

PN790

We, with respect, say that there was no aspect of the evidence on this matter that was not subject to contradiction in one way or the other, in that Ms Fortescue and the witnesses for Cochlear, particularly Mr McCarthy, were so far apart on this issue that there were differences as to who, indeed, had brought forward the clause; there were differences in terms of Ms Fortescue’s version that there was a flyer issued by the AMWU which suggested or contradicted her version, which she later had to disown in terms of saying it went out without her knowledge. So whilst we’re not wanting to traverse all of that material in detail we certainly don’t agree that the subjective intent evidence was not contradicted. Certainly, with respect, we would say the Commission appropriately did not enter into or give any weight to either side of that argument.

PN791

The AMWU in its written submissions then at paragraph 65 moves to the waiver of existing rights issue and acknowledges that the right to unilaterally terminate the agreement under 443 could not be lightly given up. We just repeat, as we said before, that the wording of clause 1.4 does not go near the sort of wording that the cases indicate. If I look at Kilpatrick Green the quote is that “The language intractably dictates that the right under the Act has been given away”. So what we say is that in this instance because it’s a code the parties cannot detract. Even if they can, as a matter of interpretation, the cases say that there would have to be language which intractably dictates the removal of the statutory right. We say that clause 1.4 simply does not get there.

PN792

SENIOR DEPUTY PRESIDENT KAUFMAN: Mr Harmer, is there any evidence that Cochlear at any time gave to the clause the meaning for which Ms Howell contends, at any time since the agreement was entered into?

PN793

MR HARMER: Since the agreement was entered into.

PN794

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes.

PN795

MR HARMER: We would say respectfully no.

PN796

SENIOR DEPUTY PRESIDENT KAUFMAN: Is there any evidence that would indicate that Cochlear, prior to the hearing before the Commissioner, took the view for which you contend, or is the evidence simply neutral as to that?

PN797

MR HARMER: No, your Honour. There is evidence from two Cochlear witnesses, one of which is Mr Howitt. His evidence only goes to reports as to what was the intent of the clause, which was basically that it was just paraphrasing the State Act or reflecting its intent. The evidence from the other Cochlear witness, who purported to be the source of the clause, was that that was the very intention that was put forward on behalf of Cochlear. That was Mr McCarthy, and it’s in his witness statement that he says “Look, I came up with it and it was for this very purpose”. The only other thing I would say about subsequent conduct is that as I say the AMWU, when an impasse started to develop between the parties, itself sent out a flyer saying “Cochlear can terminate this agreement. It could take it two to three months to do so”. Now that was issued by the union.

PN798

This argument about 1.4 and its meaning seems to have emerged once lawyers got hold of the agreement and started to put together evidence for this particular case. That’s the first time we’ve heard the union’s argument, but the flyer which predated it and which in cross-examination Ms Fortescue then had to say “Oh well, that must’ve gone out without me seeing it”. It clearly says that Cochlear has a right to terminate and could do it in that sort of timeframe. So we would say that certainly there was subsequent conduct by Cochlear, who purported they had the right to in any inhibit it, and the union who initially put out a flyer saying they had a right. It’s, as I say, when we got into the core of this dispute or this application that the union’s interpretation emerged strongly. I’ll come later to that evidence of the flyer and Ms Fortescue’s cross-examination where she indicates it went out without her knowledge.

PN799

So without dwelling further on that issue, as I say we simply believe that even if legally possible, which we say it is not possible because of the code argument, the language of 1.4 simply is not sufficient to waiver a legislative right on the basis of a case. That brings us to the final aspect of our arguments about clause 1.4 going to freedom of association. There’s no question a lot of emphasis has gone onto this clause because if it was correct that Cochlear made an agreement to do something, there’s certainly weight in the contention of the union that industrial parties should be ..... As we say, that wasn’t the intent. It can’t lawfully be the intent, but finally we say that even if this interpretation adopted at first instance by the Commission, as being the mutual purpose of the parties, was to lock the parties together in perpetuity until the AMWU agrees otherwise, which is the effect of the clause as interpreted, we say that that would constitute a breach of the freedom of association provisions. We included for the last occasion admittedly lengthy submissions going to that point, which I will just touch on very briefly, more in reply.

PN800

Going to paragraph 74 through to 91 of the AMWU’s written submissions. First of all as I mentioned before we quite concede that at first instance we didn’t raise this issue in the same fashion we are now; that is conceded. But the AMWU in relation to the two key elements of a freedom of association breach contends that number 1 there’s no actual injury or alteration of position for the employees concerned, and number 2 that even if there was, it’s not for a prohibited reason. I just want to very quickly touch on that without going back to the extensive written submissions in too much detail. What we say is that an injury can be constituted for the purposes of freedom of association by a reduction in the number of options available to employees in the area of bargaining or agreements. We say that’s consistent with what was established by cases such as ComSec, which we have referred to in our written submissions.

PN801

Now what the AMWU says is that “No, look there were options still available to these employees. They could have got an AWA which would prevail over the PCSA or if they got the vote up on an employee collective agreement that would prevail”. But what you will find is that when we get to the example of this application, whereby the view of this Commission could prevail, they say “Well, no, you can’t do that because of clause 1.4”. Or if Cochlear and its employees reached an unregistered collective agreement that didn’t involve the AMWU, they seem to say that no, you couldn’t remove the effect of the PCSA without the agreement of the AMWU.

PN802

So it seems that the AMWU says there are options left available through prevailing impact under the Act and yet there are certainly a number of things evident in this application where the AMWU purports that clause 1.4 operates to preclude Cochlear and its employees moving to certain other arrangements. All we put forward is that any narrowing of the options available whereby you can’t do certain things without getting the sign off of the AMWU is a reduction in benefits or options available, and therefore an injury within the term of the Act.

PN803

SENIOR DEPUTY PRESIDENT KAUFMAN: What do you say about Ms Howell’s submission that the ..... has to be by the employer?

PN804

MR HARMER: I’m sorry?

PN805

SENIOR DEPUTY PRESIDENT KAUFMAN: Ms Howell says at paragraph 78 that it’s the employer that must no inflict the injury; what do you say in relation to that?

PN806

MR HARMER: Well there are two things to say in relation to that, your Honour. The first is that because the Commission’s interpretation at first instance is that this is the mutual intent of the clause 1.4, that involved both the employer and the union. Secondly, there’s a parallel provision under the Act that picks up the union for engaging or being party to the conduct of the employer. So what we are saying is that we don’t agree with this interpretation but if that is the meaning and if that is what the parties are said to agree, then yes, it involves us. We’re a party to the agreement as much as the AMWU.

PN807

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, I see.

PN808

MR HARMER: What we are saying is that the parties in reaching that agreement definitely reached a position whereby the options are reduced in perpetuity until the AMWU agreed otherwise, and that’s an injury. Secondly, the prohibited reason has to relate to the fact that these people have the benefit of a particular industrial instrument. We say that it is sufficient for there to be a coincidence in time, that is a simultaneous conferring of the benefit of the instrument and the restriction. In other words this state agreement was a self-contained package. The AMWU said “We were fearing Work Choices. We wanted to head off the prospect of falling onto other options under Work Choices”. That was its intent, subjectively. Now it purports that that was a mutual intent, and that was the interpretation in fact adopted by the Commission at first instance.

PN809

So the parties simultaneously said “Here. Here’s a statement agreement”, but simultaneous in time and running concurrently throughout its entire life in perpetuity, said “Until the AMWU agrees, you cannot move to something else. You cannot replace, terminate or vary without the okay of the parties, the AMWU”. Was the reason for conferring the restriction the existence and the benefit of the state agreement, and does it matter that those two things occurred simultaneously? We say definitely not under the Act. Is it clear that that was the intention? Well it’s certainly the clear subjective intent of the AMWU and it’s the mutual intent that the Commission at first instance found and it conferred on the parties, if one adopts this interpretation. So you have this detriment operating in perpetuity, coextensive with the existence of the agreement, and we say that that is sufficient to excite the provisions of freedom of association under the Act.

PN810

We certainly say that that is an important factor going to the jurisdiction of this Commission. As we say, the fact that at first instance that interpretation was adopted and promoted by the Commission at first instance, by saying “On the basis of clause 4 and that effect I will not terminate this agreement. I’ll give it further life. I’ll keep these employees and Cochlear locked in to this arrangement where there is no out, but for the agreement of the AMWU”, we say that that is conduct contrary to the provisions of the Act, which is contrary to the jurisdiction of this Commission; and certainly an important public interest consideration for the Appeal Bench to take into account. That’s the essence of what we say there. As I say, that arise not because we think that’s the interpretation but because that’s the interpretation the Commission at first instance created for us.

PN811

That was the final area of our case outline that dealt with error at first instance. At 4.5 of our case outline for the hearing on 15 October we went to public interest positives. I won’t dwell on them but certainly an issue that came up today was that of the fact that the AMWU is alleging breach and impact by this agreement, inconsistent with the current Act in operation at the site, is actually a public interest positive in favour of its termination. At 4.5 we said initially that removal of outmoded regulation was important; removal of uncertainty and confusion on workplace regulation; removal of dual compliance, this alleged breach. Not the actuality of breach, because we say there is no breach. But the constant assertion of it in these proceedings and elsewhere in disputes before this Commission. All of that we say is relevant to removing the agreement.

PN812

You’ll see there that on the last occasion we set out in this outline a large number of clauses of the agreement, which we say actually support our view that the agreement itself contemplated progress and moving forward, and even moving beyond this classification structure. Commissioner Roberts in ....., amongst a list of relevant factors, certainly said that proper interpretation of the agreement is a factor to look at when you’re assessing these public interest issues. I’ll come back to it when we deal with the breach but we would certainly submit that the agreement itself points out for - calls for progress and change and it begs the question what - go way beyond the term and businesses keeping on moving forward, what do you do if you’re supposedly tied to the AMWU and it says “No, nothing can happen until you agree with us”. It just seems and industrial relations impracticality that the agreement itself does not seem to tolerate, so I’ll come back to that on a breach point.

PN813

At point 5 we then move to the second stage of our submissions. We have said there were fundamental errors at first instance; this Appeal Bench should set aside the decision and should step into the shoes of the Commission under 170MH and terminate the agreement properly, because it would not be contrary to public interest to do so. We certainly say that on application of the proper test, there are a lack of public interest negatives. There are clearly, we say on the scheme of the Act and on the detail of this particular circumstance, public interest under the scheme to terminate and private manifestations of that at this site which support termination. We certainly also say that the issues we have traversed definitely justify leave going importantly, amongst other things, to jurisdiction; and we continue to rely on our application which set out a number of grounds for leave to appeal.

PN814

That brings us then to the issue of reply to public interest submissions by the union, and they today have traversed the evidence of Ms Fortescue on the last occasion; they traversed the conduct of Cochlear; and they traversed two other areas being alleged breach of the agreement and alleged breach of the award. If the Commission will bear with me, I propose just to move through in order each of those areas. So today we have traversed the evidence of Ms Fortescue and the allegation that that involves further issues going to the public interest. Excuse me for one moment, I just have to find - sorry, I’m just finding the affidavit of Ms Fortescue as I speak. The AMWU started this morning by pointing to the second Tristar decision and the fact that unconscionable conduct in the area of breach is relevant. As an industrial concept we don’t quarrel with that per se. We certainly say, though, it has no relevant application in the public interest to this matter. The context they said was a weak bargaining position of the workforce. As we will come to, custom and practice on this site is a long history of a very effective employee consultative committee which includes the delegates or has included amongst its number delegates of the union. That's been the focus of consultation and bargaining. It's said that the other context is unilateral move to contracts which we say provide far superior terms and I'll come back to that.

PN815

Now, we certainly say that in respect of an answer to a question raised by the bench where the union address the issue of does it matter if the agreement was to be terminated and that properly a conduct would continue, we certainly say that that's the case, properly will continue on its path, subject to some points I'll come to about the allegations around breach et cetera, and essentially the parties will continue to have the employee consultative committee which is continued under the contracts. The parties will continue to have, including the union employees, all the bargaining power available under the Act, protect industrial action and all those things, bargaining agents.

PN816

The rights of the union, well, that's the increase because the NAPSA has increased roles for the union consultation et cetera. The rights of the union around right of entry which, as I will come to, is a major problem for it initially. They are actually already preserved now because of changes to the Act. So in our respectful submission if the agreement goes, apart from removing a lot of confusion, conjecture, alleges around breach and inhibition that it presents, it's not going to have much effect at all and certainly doesn't excite the public interest and it certainly won't be encouraging Cochlear to bargain or to enter in particular a bargain to the union for reasons I'll come to because the relationship in a practical industrial relations sense has been sacrificed on the mantel of an public relations campaign, a lobbying campaign and that's just a reality of what the union's chosen to pursue.

PN817

Now, when one goes to the evidence of Ms Fortescue it's alleged that the instance of Mr Nguyen, who had already been on a warning for breaching the company's policy, and that's in the documentation at annexure D, you've already been warned around the very issue. "At the behest and indeed induced by the AMWU in conjunction with their officers makes a number of statements in Canberra." That's his election. All right, the company investigates it, issues a further warning. That hardly excites the public interest. The union's attacking it under the Freedom of Association. If this bench removes the agreement, Freedom of Association provisions are still there. Nothing is going to change around that issue, but the fact that the company arguably took a restrained approach to the fact that someone already on a warning blatantly breached again is neither here nor there under public interest.

PN818

There's a careful balance to be struck there in terms of what seems to be a great blatant breach of company policy which on one reading is itself also a breach of the State agreement, as I'll come to. It's the subject of a cross-claim in the Federal Court from the company and really that just speaks more about the poor relationship between these parties who are held together under this agreement, almost in an unfortunate marriage that's gone beyond its time, but has nothing to do otherwise with the public interest.

PN819

The secondary was alleged failures to consult. Now, as we say the history of consultation on this site is through an Employee Consultative Committee which continues today under the State agreement. It was there under the 2005 agreement, the 2003 agreement, the 2001 agreement. The union flipped in and out, but this consultative committee has been a continuing of bargaining in consultation for the site. That's again as I'll come to it, there on the evidence. Now, one of the big areas of non-consultation is a shift change. Now, if you go to clause 4.1.4.7 of the agreement, as the Commission would expect, you can change a shift on 14 days' notice.

PN820

The Employee Consultation Committee was involved in that change and all of a sudden the sky is falling in around alleged breach of the agreement. It really seems to be a lot of noise over things that are important to the union outside of a site. There's not much going on the site about these issues. The matrix of moving targets, technology changes on this site, issues of work process change, down time changes result. Targets are constantly adapting in a modern technology site. Again, this is all there in the evidence. Of course production targets are changing. They did under the previous agreements as of right. I'll come to the clauses that talk about that.

PN821

Again, all of a sudden this is seen as a massive issue of breach. This whole issue of breaches of the matrix, the agreement, the State award of course was all argued at first instance and didn't warrant a decision from the Commission at first instance and I'd certainly encourage this Full Bench to take the view that there's nothing in these assertions of breach. But if I can just move in that context to the important assertion that somehow the classification matrix and the very agreement itself has been breached. Now, as I say, appeal book page 615, which is the evidence of Mr Howitt, he sets out how this classification structure is obsolete.

PN822

The site has moved from a single woe-to-go process for assessing pay to coordinated work teams as contemplated by the agreement. Certain equipment that was in place when the classification structure is put in, in 2005 is now moribund, it's no longer used. Certain tooling is no longer used. Things that were specified in the 2005 classification structure are no longer applicable. Indeed, it's whole tenure has no application relevantly to the site at all and that's not surprising with a modern manufacturing plant of this kind. So that that's the evidence and Ms Fortescue in her evidence, if you go to appeal book page 506, paragraph number 3607, recognizes the unions that the classification structure had to be changed, had to be updated, but refused to talk about in the context of an employee collective agreement.

PN823

So that's the context where the site's moved forward, the agreement itself contemplates this change. Cochlear had to move forward for the sake of its employees and itself. As the evidence indicates all the employees are now either eight per cent, up to 23 per cent above the PCSA, State agreement, because of a new classification structure under the contracts and in this context we've got this allegation of breach.

PN824

Now, apologies for the need to go to the detail, but given the nature of the allegations, if I can just take the Commission to the terms of the State agreement and, as I say, it's in the appeal book. If you go to page 2, volume 1 of the appeal book at page 2 and I'll very quickly, or as quickly as I can survey the clauses of the agreement which we say that, far from a breach, you've actually had a necessary change process contemplated by the agreement achieved in accordance with its terms and which has brought benefits to the site and to the employees concerned and as I'll come back to, the Commissioner at first instance asked the union when it was going on about all these issues about classification under the old agreement, has one employee, even one on the whole site at any time since this new classification structure came in, sought to be classified under the old system? One, not one.

PN825

So we're talking about some esoteric hypothetical purported breach that no employee on site wants to access. Now there's evidence that 130, now over 150 employees have been upgraded under a new structure. So they're all eight per cent up. Every time they get an upgrade, they go up another five per cent. Some of them are 23 per cent up. That's the evidence. So just to put in context how irrelevant this contention of breach is to the site. Now, in that context, which is the real context rather than the one that the union purported to create this morning, at clause 1.5 of the agreement, this is on page 3:

PN826

This agreement has been negotiated through an extensive consultation between representatives of Cochlear management and the employees.

PN827

And it refers to a consultative committee that was constituted for the purposes of discussion. That consultative agreement continues under this agreement. It continues as part of the contracts.

PN828

It goes over the page then to 2.1, it sets out that:

PN829

Cochlear is a leading player in this competitive market, has to maintain leading edge design and improve and develop new processes and strategies for manufacture. This whole agreement is set for rapid change to maintain competitiveness.

PN830

At 2.2.1 there's certain core objectives set out adopted by the parties:

PN831

To maintain the worldwide leader status, working environment and sustainable levels of profitability.

PN832

At 2.4, which is over the next page:

PN833

The core values that all the parties to commit to include continuous improvement and innovation including taking initiative to identify and implement innovative improvements, to work methods, systems, processes and designs.

PN834

As I'll come to, what is contemplated there is that those changes in work system and the job design et cetera will lead to a new classification structure. It's expressly contemplated under the agreement. At 2.5:

PN835

Employees commit themselves to assist in the process of Cochlear achieving its core values.

PN836

Including continuous improvement as I've set out. At 2.6, at the bottom of that page:

PN837

The parties agree to work together -

PN838

et cetera:

PN839

Cochlear will provide feedback and consultation on change in the workplace.

PN840

Now, in terms of change management we'll come to later a recognition of the right of Cochlear to manage under this agreement. A recognition that the ultimate decision maker ultimately at the site is Cochlear. Its obligation on site on change is to consult and the key consultative body is the Employee Consultative Committee which includes delegates of the AMWU. So when anything happens on site, if the union wants to be aware through its delegates, it's certainly part and parcel of the process in that sense. So the parties agree that suggestions can come from a number of levels including of course Cochlear through its executive structure.

PN841

Over the page at point 4:

PN842

What's contemplated include changes in the workplace are inevitable and we all accept responsibility for continuous improvement, constructive communication -

PN843

et cetera. 2.7.1, there's recognition of a flexible work environment and it's used the talents of employees. At paragraph 3.2 there's:

PN844

Recognition that Cochlear agrees to provide training and development of employees, recognition of the skills -

PN845

et cetera. Then across importantly to clause 4.1. Now, this is at the bottom of page 9. Clause 4.1:

PN846

It is the intention of Cochlear in seeking to reach an agreement in these matters to bring about change in the way work is performed at the workplace. In order to do this Cochlear recognizes there will need to be change in the work culture, both by Cochlear and the employees.

PN847

And in 4.1.1:

PN848

During the life of this agreement the following changes will be made, adoption of flexible work processes.

PN849

The second one:

PN850

Having employees work as part of production teams.

PN851

Now, I just pause there. Remember what's happened on site is that we've gone from one process, woe-to-go, to being split up into production teams, the very change that was contemplated and the classification structure in place at the start of this agreement was the woe-to-go version. It cannot operate consistent with these production teams. "Focus on achievement of production targets." All this noise about production targets. It's contemplated that that will change. Now, over at 4.1.2 there's reference to flexible roles and at 4.1.2.8:

PN852

The classification structure set out in schedule 8 of this agreement has been developed to reflect the work and the nature of work performed at Cochlear.

PN853

And then about seven lines down:

PN854

The parties agree to a periodic review of the classification structure set out in schedule A.

PN855

Now, if one goes then across to importantly clause 4.4, which is on page 14 of the agreement, this is a very important clause.

PN856

SENIOR DEPUTY PRESIDENT KAUFMAN: Sorry, which one is that again?

PN857

MR HARMER: It's clause 4.4 on page 14, your Honour.

PN858

SENIOR DEPUTY PRESIDENT KAUFMAN: Thank you.

PN859

MR HARMER: It's headed, Achievement of Efficient and Productive Work Performance:

PN860

As a result of measures in this agreement Cochlear envisages a continuing improvement in both the quality and product and the output of product for employees. In addition, during the life of this agreement, the division within Cochlear covered by this agreement is expected to institute informal arrangements for the self management of its operations, take overall responsibility for achieving performance targets described in this agreement. Initially this operation we've described is self management by work teams.

PN861

Again, the very change that has necessitated a new classification structure which, as I'll come to, is also contemplated, "And these teams will inform the work." At point 2, "Arrange to improve work coordination." At point 3, "Attribute consultative and specific issue committees and arrange and conduct meetings both internally between the teams and externally between management." And the next point, "Make recommendations for the redesign of jobs." And the last point, "Set internal productivity and quality improvement targets." Changing targets, imagine that.

PN862

All I say is that again it seems to be contemplated, not precluded by this agreement. If one goes over to clause 4.6.2 at page 15 and stage 5 of the dispute resolution procedure:

PN863

If the union disputed this change under the agreement it had the right to notify a dispute or to take it up. Any employee could.

PN864

No dispute has been taken up over this issue. Nothing has come to this Commission saying, "Stop these people implementing this change." I assume because everyone's so better off under the new classification structure, which is clear on the evidence, but certainly in that context ate 4.6.3 on page 16 we come to another element of important change to management:

PN865

In making the above commitments the parties recognize that in exercising Cochlear's right to manage and to decide finally on the operation of the plant.

PN866

So in a changed management context we're starting to put in place a few planks. The right to manage, the duty to consult with the Employee Consultative Committee, contemplation of change during the course of the agreement. Now, how does that find practical fruition in relation to first of all consultation? Well, we go to clause 4.7 and we see a consultative committee, equal numbers employees and management, and at point 2 there:

PN867

It will review and recommend further measures to be considered for implementation consistent with the commitment of the parties to bring about further structural efficiency with a view to modernizing this agreement.

PN868

Certainly my recognition of structural efficiency is that it had a lot to do with modernizing classification structures. It seems to be contemplated and perhaps we need to get more specific. We go to clause 5.1, page 18 of the agreement. This is getting to the nub, Recognition and Reward. 5.1, Job Classification and Wage Rates. 5.1.1.1, the last sentence:

PN869

This career development matrix may be reviewed by the parties and updated on an as needs basis during the life of this agreement.

PN870

This is the nub of this whole breach. We're talking about a matrix, not that some sort of paid rates set in concrete lock-in that you can't get away from, but one that even during the course of this agreement in its life, yet alone an all-up rates basis after its life is contemplated on its terms to be adjusted on an as needs basis. 5.1.1.5, it's clear it's a minimum rates arrangement. "Employees should be entitled to receive no less than the minimum rate prescribed under respective classification." So on an all-up rates basis, even if you take a breach case and say, "Apply the old thing, the old structure," someone's 23 per cent ahead, I don't think you're going to get too far, but that's a matter for the union.

PN871

5.1.1.6, Once Classified. There's a whole range of factors including, "Any other factor" - this is the last point - "Any other relative factor which in the opinion of management impacts upon the relative level of classification." 5.1.1.7, "The pay level for employee will be at the discretion of Cochlear and shall reflect individual work performance." 5.1.2, "The rates for all purposes." Now, that seems to contemplate actually this agreement varying within its own terms during its course. It's a State agreement, it can do that.

PN872

5.1.3 is the next clause. Talks about bonuses, "bearing with productivity targets." At 5.1.3.2, talks about production targets. Now, at 5.3, it talks about, "No variation during the term of this agreement subject other than the above variation." So it's certainly talking about varying itself during its terms. 5.4, this is the all important wage schedule, "Subject to the foregoing provisions including the right to change on an as needs basis the matrix to change production targets, to move to new teams, adapt." It seems consistent with a modern production site but not with the AMWU view of the world, it seems.

PN873

So in our respectful submission on a proper reading of this agreement as a whole consistent with the reality of a modern production site, this agreement contemplated during its term, as I say, yet alone, 18 months after its term, that it would have to move forward. It contemplated that the classification structure based on a whole of production line system would have to change to go to work teams. It contemplated that there would be consultation on that. Not a right of veto. That's not changed management under this agreement. It contemplated review of the matrix and it being changed on an as needs basis. No right of veto.

PN874

This structure was reviewed by the Employee Consultation Committee. The whole site moved. The evidence is that employees participated in up to 40 hours of meetings over 12 months over this issue. That's what consultation on this site by custom and practice is about. Not about this union stepping in from outside and exercising a purported veto. So if one reached an impasse, although the site moved on a consultative basis to the new system, certainly with involvement, but no right of veto, the ultimate decision maker recognized under this agreement is Cochlear.

PN875

Now, against this context, with all this agreement's intent to move forward if after two votes to get a new agreement Cochlear cannot, what does it do? Does it wait while the AMWU sits on its hands and say, "You can't change anything until we say so", or does it exercise the right conferred under this agreement to change management as it should in the interests of its business, its customers, its employees? Certainly, I must say, I'm strained to find anything that any court would recognize as a breach as opposed to some form of industrial campaign contrary to the obligations of the union under this agreement.

PN876

Now, as I say, the evidence in fact at first instance was that Ms Fortescue, and I repeat, this is the appeal book, page 506, paragraph number 3607, herself recognized the change was required. But the evidence is that Ms Fortescue would not discuss a new classification structure unless it was in the context of a union agreement, not an employee collective agreement, would not act as a bargaining agent for these employees that the union says bewail representation to protect their bargaining rights. Of course, that's again against the reality and the custom and practice of a site with a very strong employee consultative committee.

PN877

Now, the contracts that are so complained about actually pick up the terms of the State agreement, provide higher rates and that's set out at appeal book pages 609 to 610. The evidence is also that many employees were dissatisfied because under the old woe-to-go system people in some work areas couldn't go to higher grades. Now people in any area can go to the highest grade and people are getting regular increases it sees under assessments of which there's been many thousand since the new system came into place.

PN878

Now, as I said before, the evidence is also - and this came from a question from the Commission at first instance - that not one employee has applied to be re-classified under the old system that the union says is being breached, and of course the union can't bring anyone forward with that complaint. I'll go to that specific evidence. As I mentioned before also this site has a turnover of something in the vicinity of five per cent, a manufacturing site. That's at appeal book 261 at paragraph number 1529. So to the extent - well, not only are there no industrial disputes over this issue or brought forward under the DSP, there doesn't seem to be a high level of disallowed satisfaction in terms of people moving on, because as Mr Howitt indicated when he gave the undertaking, Cochlear pays at the top end of the market, and as I say, that wasn't seriously disputed.

PN879

I've already mentioned that the production targets have to change because of changes in technology et cetera and that's not unusual. Certainly the Commission, I would say, in its own experience wouldn't find it unusual that there would be above agreement arrangements and, as I say, between eight and 23 per cent above at a particular site which has moved on. Now, these arrangements, keeping in mind they're now being placed at 12 months, there's been no only no dispute over the alleged breach, but no court proceeding or otherwise brought and of course all of this was raised at first instance and found not to amount to anything that excited the public interest yet alone a breach of agreement.

PN880

So we say that's the proper context for the alleged agreement breach and the union then says, well, look, if you remove this agreement Cochlear runs into the issue of alleged award breach. Well, look, with respect, please bring it on because, as one would expect, the award which is on the evidence some 45 per cent at least below rates of pay at this site and is based on a very broad genetic classification structure across the whole metals industry, is a far easier clearer base above which to operate than the last agreement and all this talk about breach of its proximity.

PN881

So the union acknowledged this morning that across the metals industry there are of course many manufacturers who would be paying above award, who obviously have their own local arrangements and of course, as long as they're paying a rate well above the rate specified by the application of the classification structure would not be operating in breach. The award remains part of a statutory safety net of minimum conditions and, as I say, the evidence is that they're about 40 to 45 per cent above at least and that evidence was given at first instance before this eight to 23 per cent increase.

PN882

Now, the deed poll and the original undertaking given by Mr Howitt actually said that there will be no change to the contract unless required by statute. Well, obviously if a statute compels the applications award and that means that a certain condition needs to increase, then so be it. We don't concede that there is any need, but obviously the deed poll, rather than being a lock in, actually contemplates that form of change and that was the exact undertaking given by Mr Howitt. We won't change it to the detriment. We change it to the better. That's said in the deed poll. We'll change it if we're compelled to by law. So that again is something quite unremarkable and doesn't excite the public interest.

PN883

Now, the full context of the undertaking, as I said before at appeal book 174, paragraph number 802, starts with Mr Howitt saying that, "Cochlear pays at the top of the market way above of course the award," et cetera. It was in that context that we gave the undertaking, and again I think that's an important issue relevant to this case whereas this issue of alleged NAPSA breach doesn't excite the public interest at all. Again, it was raised at first instance and I think understandably the Commission didn't give it, it seems, a great deal of weight and in our respectful view that's the approach this appeal bench should take also.

PN884

Now, that brings us to the material which mainly appeared on transcript on the last occasion, but was a huge amount of material at first instance going to the alleged conduct of the parties and the first thing one has to say in prefacing comments on this issue is that the Commission at first instance took the view that none of the alleged conduct of Cochlear, whether it was a breach of alleged bad faith or otherwise, was either unfair or unreasonable, and in fairness to the union, the Commissioner took that view of the union's conduct also.

PN885

The union's given its perspective on the conduct. It would be our submission straight off to say this Full Bench, not having seen the evidence, but confronted with a morass of counter allegations and there's not been much material which isn't joined and countered one way or the other by the parties, our respectful submission this Commission should not itself attempt to make findings based on the conduct of either of the parties, or certainly not ones that would excite the public interest in terms of the alleged enormity of the issue.

PN886

Cochlear's approach to the conduct of the AMWU is perhaps indicated by way of example by the appeal book transcript at page 202, noting that the real genesis of this problem is that the AMWU, not having been party to 2003 agreement, faced Cochlear saying, "We want to do another employee direct agreement in 2007." At appeal book 2002 Mr Howitt, paragraph number 1042, when responding to why the AMWU wouldn't need an appropriate partner for an agreement from the perspective of Cochlear's customers, summarises that, "Because the AMWU has misled our employees over the last several months," and he says he refers to that in his second statement. "They've misled the public on a number of issues." Further down:

PN887

They've encouraged international unions to ask people to boycott our products. They've threatened us in a meeting. How would our customers feel if we partnered or continued to partner with an organization that threatened our business, particularly when they, the customers, depend on us for hearing for their life and their hearing depends on the viability of the business.

PN888

Now, that's the nub of why Cochlear chooses not to be in an agreement with the AMWU and I'll just go through the history with that context in mind and what we say is that far from exciting the public interest in a negative way against termination, I just raise the question, should these parties be tied together around this State agreement, as I say, like some sort of marriage that's gone horribly wrong, given the history I'm about to go through and I put the weight on the union's evidence on this front.

PN889

So our perspective on conduct of the parties very briefly is as follows. Agreement history here, generations, every two years, there's been a State agreement, 2001, 2003, 2005. 2001 the union turned out at the last minute to be a party, not having been involved in negotiations. 2003 it was an employee direct agreement. consultative committee negotiated it. 2005, consultative committee negotiated that the evidence is that the union came in late in the process. Mr Howitt's evidence is that custom and practice is that negotiations have occurred direct with employees predominantly through the Employee Consultative Committee. That's at appeal book 612, paragraph 4(a).

PN890

In that context in December 2006 the company decided to pursue an employee direct agreement for 2007. It's said that the AMWU lack sufficient understanding of its business. It wanted to deal with the consultative committee which operated on the site. It invited the AMWU to be a bargaining agent. So the next point is that the AMWU refused to act as a bargaining agent for the employees, even when invited to do so. That's at appeal book 940, appeal book 492 at paragraph 3487. That's where Ms Fortescue says, "We're a union. We're not a bargaining agent. We're not going to get into that." Despite the service it might have given to the supposed employees who lack bargaining power for representative selection.

PN891

The next point is that the AMWU, although recognizing the need for a new classification structure, refused to discuss that classification structure in the context of an employee collective agreement. That comes out of appeal book 217, paragraph number 1163. The next point is that is a key issue for the AMWU was right of entry. While the AMWU insisted to being a party to agreement was it was afraid that under Work Choices the NAPSA would disappear underneath it, it would lose any right of entry there and if it wasn't a party it wouldn't have right of entry. Now, that comes out of appeal book 317, paragraph number 1966 and 1967.

PN892

The next point is that Cochlear in fact in March 2006 had put in an above Work Choices right of entry code of practice. It said to the AMWU, "You comply with this code, you can come on to the site, no matter what the legislation says." The evidence of Cochlear is that the AMWU officials constantly breached that code of practice around right of entry and that that brought about the necessity to terminate that code of practice as part of the worsening relationship in around May 2007. That's at appeal book 264, paragraph numbers 1552 to 53.

PN893

Properly it took the employee collective agreement to two votes. Its evidence is that to try and stop the collective agreement getting up the AMWU actively misled its employees. Now the evidence on that is extensive. It includes flyers that Ms Fortescue for example had to disown in her evidence, or that Mr Ayers under cross-examination had to try and, with some embarrassment it seems, parry with. The evidence around that is at appeal book 612 at paragraph 4(c) and cross-examination appeal book 295 at paragraphs number 1795 to 1811, appeal book 319 at paragraph number 1980.

PN894

The next point is that the union alleged Cochlear conduct contrary to an industrial relations Commission - and I say this in quotes - "timetable", this is State Commission alleged timetable in May/June 2007. Cochlear says that the position was in fact clear, that there were discussions off transcript and it made this clear as soon as it came back to the Commission on the next occasion, that's at appeal book 897, and it comes up in cross-examination at appeal book 263 at paragraph number 1547 to 48. In contrast Cochlear says that the AMWU in fact misled its employees by putting out a flyer saying there was a State Commission timetable for a whole range of steps and Mr Ayers, in cross-examination, concedes that most of the steps are the union's steps. They weren't even discussed before the Commission.

PN895

So the alleged timetable that appeared in the flyer was not from the Commission. It wasn't from Cochlear. It was from the AMWU. That's acknowledged. That's appeal book 327 to 330 that cross-examination occurs. And so the parties are getting wider and wider apart with obviously these issues, while the union tries to stop the collective agreements getting up because they don't include the union. The next point is that the union canvass an industrial campaign of stoppages. It couldn't get support. It has rights under the Act. It has bargaining power. So do the employees. It couldn't get the numbers. So it didn't go to a ballot. That's at appeal book 303, paragraphs number 1857 to 1868.

PN896

Come June 2007 the AMWU flagged that Cochlear had a right to terminate, that it could occur in two to three months. All this stuff about clause 1.4 is not even mentioned. This is in a flyer to the employees. Ms Fortescue later in cross-examination has to say that it went out without her seeing it because it's so inconsistent with what she now alleges is the basis of the agreement. That's at appeal book page 499. Now, the next point is that after two collective agreement votes didn't succeed and in the context that I've taken you to and at a site that needed to move forward rapidly with continuous improvement and new technology and new work tools, Cochlear consistent with its right under the agreement, its right to manage, said, "How do we take this site forward? Well, we'll create a better system for our employees and, yes, we'd move without a collective agreement, having failed twice in a vote, to the new regime that's placed on site. So many employees get increases of eight to 23 per cent."

PN897

Now, in response to that the AMWU promoted, it's alleged by Cochlear, an international campaign which saw a boycott against Cochlear's products and that's at appeal book - I'll just give you an example of that and I will actually go to this material because I think it's very pertinent in this case. I'll just give you one example from an international union. If we go to appeal book, page 1242, this is volume 4 of the appeal book, page 1242, and a little bit into the material there. This is only a sample, but the Commission will find around this part of the appeal book a whole range of letters from international unions around the world.

PN898

Now, this letter, 21 August 2007, so this is going back a little bit, but it's in the middle of the breakdown I'd suggest in the relationship, so this is page 1242 of the appeal book. So this letter says, "Dear Affiliate, Cochlear workers fight for union representation." The first paragraph refers to the state of the art hearing devices at the manufacturer's site in Australia. The second paragraph, "The AMWU has represented Cochlear workers for over a decade delivering a high standard of wages and working conditions. This year Cochlear management initiated a union busting campaign." Next paragraph:

PN899

As part of the campaign to support Cochlear workers' rights to union representation. The International Metalworkers Federation to which the AMWU is an affiliate, and Public Services International which represent workers at clinics where Cochlear hearing devices are distributed are urging affiliates to take action in one or more of the following ways. Contact local clinics that distribute Cochlear hearing devices and urge them to press Cochlear to respect the workers' right to union representation. Pass out flyers at local distribution clinics to educate the public. Employees at clinics that distribute Cochlear hearing devices to wear badges in solidarity. Send letters of support to Cochlear workers fighting for the right of union representation. Publicise the campaign et cetera. The AMWU has prepared a list of all locations where Cochlear's hearing devices are distributed.

PN900

And on it goes. Now, that's an example of the material that came back to Cochlear about this campaign around the world to impact its international image as a viable Australian manufacturer that provides hearing devices to people around the world. So there's going to be - it seems at the behest of the AMWU which has given this list of locations where the devices are circulated. All I'd say about that is that one can understand that perhaps in amongst all this conduct Cochlear is hardly getting further enamoured with the AMWU as at - - -

PN901

SENIOR DEPUTY PRESIDENT KAUFMAN: Is this material by way of reply, Mr Harmer? Are these submissions by way of reply, this aspect of it?

PN902

MR HARMER: Your Honour, can I just put this, that the appeal breaks up into two stages. We argue there and say set aside the decision. The second stage, which is the stage of the appeal where the AMWU bears the practical onus to show public interest need is, is there area where the AMWU, not in any way a response to our material going to the appeal, put all this material forward about conduct on the last occasion and again today. So what we're responding to is the AMWUs onus, and I assume Ms Howell is going to say that at least on these public interest points, she had some sort of right of reply itself, I'll leave that to the Commission.

PN903

But certainly what I'm responding to is the AMWU material put forward for the first time here on the second stage of the appeal which is, we ask the Commission to do two things. Set aside and quash the first instance decision. Secondly, exercise the discretion in the public interest itself. That's where the union put forward this material. I'm responding to that. So it's certainly in reply to the union's assertions about conduct. It's certainly relevant to the public interest point, but what I'm also saying is that it's relevant to a finding that these parties shouldn't be held together in this agreement and, look, I'll very quickly move through the rest. I appreciate the Commission has been tolerant.

PN904

Our next point is that there is a letter which is at appeal book 495 which further summarises Cochlear's concern with misleading conduct by the union, misleading the public, misleading international unions and misleading its own employees. That's its assertion. Now, 12 months we've been under these contractual arrangements on site. Certainly the relationship with the union has only got worse, but the site itself has moved forward and there's no question that removal of the State agreement will remove an irrelevant and confusing piece of regulation. It will certainly take the two parties out of the lock-in they've got around that agreement, the unfortunate marriage, if you like, but all the rights available to the union will still be there. Rights of entry, consultation rights et cetera, as I said before.

PN905

Sir, what we say is that in respect of our main submission on error at first instance, the reasons we've gone to. We say that there's more than enough for the Commission to say that there is a necessary for the first instance decision to be satisfied. We also say that, again for reasons we've already gone to, there is a need for this Full Bench to terminate the agreement on the basis that it would not be contrary to the public. Indeed, termination would be consistent of the trust of the agreement itself as we've gone to. The site's moved on where we're reduced confusion, it'll reduce all this talk about breach. Employees' bargaining rights are still intact under the Act as is right of entry, consultation increases under the NAPSA and really an agreement that is now 18 months beyond its time and which serves no real additional purpose will be properly removed under the Act.

PN906

Now, the union has talked a lot about the conduct of Cochlear and said that in the Tristar sense this Commission should give that some weight. I just note that one thing that the Tristar Full Bench did, even when faced with the conduct of Tristar in that matter, when it finally came to its decision to terminate the agreement, it said, "Look, we actually find that your conduct has been, if you like, potentially something that excites the public interest, but you've paid enough of a penalty even though we found that." And so the majority of the Full Bench said, "All right, here you are way past where you could have had it terminated. That's a sufficient penalty. We'll terminate now as at the date of this decision."

PN907

What we say to this Full Bench is going back to a union's own concession on the need for expedition, the need for certainty for employees and Cochlear in respect of its site is that in our respectful submission it would be, in the interests of all concerned, for this agreement to be terminated now sooner rather than later and even if the Full Bench was minded to say, "Well, look, if there is anything adverse at all in the conduct of Cochlear," which obviously we deny, "surely enough is enough. We're approaching 18 months beyond the term of this agreement. We made the application over 12 months ago." I mean, how long does a company have to be locked into an agreement so far behind reality on the site with so little damage anywhere other than the interests of the union which has a particular agenda?

PN908

So in our respectful submission, similar to the James Hardie decision which is in the set of decisions we handed up I think at around tab 11 we would be indebted if this Full Bench went outside today and conferred and came back and said, "The decision is, we'll quash this decision and we will terminate this agreement. Union, you haven't addressed the draft order. Come back in seven days with something on the order. We'll hand down our reasons in due course. That understandably would take some time, but let's give some relief to Cochlear as the applicant from this far outmoded irrelevant agreement given the clear lack of public interest surrounding its termination." So that's our concluding point and unless there's any questions, that concludes our submissions.

PN909

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you, Mr Harman. Ms Howell?

PN910

MS HOWELL: If it please the Commission, there are some matters arising out of Mr Harman's submissions on the public interest test which we've heard for the first time today which we would seek to make some response to. The areas which I need to respond on are the issues about the evidence about the negotiation of the clause 1.4, some selective, on our case, presentation of the evidence has to be balanced and some evidence referred to. The history and role of the consultative committee and the extent to which it was involved in the proposed agreements that Cochlear puts which failed, there's some issues there relating to the conduct of the parties.

PN911

The submissions as to the clauses in the agreement which supposedly permit Cochlear to unilaterally jettison the whole of the classification system and replace it with a totally different one, there's some things that need to be said about that, and there's some things that need to be said about the various contentions about the AMWUs conduct and where again the evidence has been cherry picked and in some respects, with respect, embellished. There is not one skerrick of evidence, for example, that the AMWU ever requested or recommended that anyone boycott Cochlear, and that was squarely put to the Commission, that that was something.

PN912

So those are the issues which I could try and take the Commission to the evidence on that or could put in a short submission in writing. I'm in the Commission's hands on that.

PN913

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. Mr Harmer, do you accept that they're matters that have arisen today that Ms Howell has a right to reply to?

PN914

MR HARMER: Your Honour, in respect of the public interest element I'd have to acknowledge that the practical approach which this Commission has adopted is that the union does bear an onus. We've heard material for the first time today. We've responded to it. I acknowledge that the union's only just heard what we've put. If I can just say, with respect, I don't think there's any great issue that both parties have cherry picked the evidence to put their best foot forward in terms of conduct.

PN915

SENIOR DEPUTY PRESIDENT KAUFMAN: That's what advocates do.

PN916

MR HARMER: Exactly, your Honour, and look, there's a lot of material there. We don't dispute that the union would join issue with many things we've raised. As we say, a lot of that more demonstrates the need to finish the relationship rather than anything going to the public interest, but if the union seeks to require, I would have thought they could do it succinctly and briefly now and that this hearing come to a close, rather than yet another - - -

PN917

SENIOR DEPUTY PRESIDENT KAUFMAN: How long will it take you, Ms Howell?

PN918

MS HOWELL: I'm not sure, your Honour. The difficulty is Mr Harmer has gone through quickly a lot of the evidence and given a lot of references which I've tried to take down, but a lot of those - I suppose it's a little bit more than cherry picking in our submission, there was propositions raised which really ignore important and uncontradicted evidence, I suppose is the difficulty, and there is a lot of Ms Fortescue's evidence on the negotiations which was uncontradicted and that's what I have to take the Commission to if I can quickly find it.

PN919

SENIOR DEPUTY PRESIDENT KAUFMAN: We'll allow you to put it in writing. We've give you one week from today, Ms Howell.

PN920

MS HOWELL: Thank you, your Honour.

PN921

SENIOR DEPUTY PRESIDENT KAUFMAN: We will adjourn and reserve our decision, obviously.

PN922

MR HARMER: If it please the Commission.

<ADJOURNED INDEFINITELY [3.29PM]