AM2010/99, Transcript of Proceedings [2010] FWATrans 1179 (22 July 2010)

TRANSCRIPT OF PROCEEDINGS

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Fair Work Act 2009 26825-1

DEPUTY PRESIDENT IVES

AM2010/99

s.158 - Application to vary or revoke a modern award

Application by ISS Facility Services Australia Limited
(AM2010/99)
Cleaning Services Award 2010

(ODN AM2008/20)
[MA000022 Print PR986363]]




Melbourne

2.00PM, FRIDAY, 9 JULY 2010

PN1

THE DEPUTY PRESIDENT: I'll take the appearances, please.

PN2

MS R. FRENZEL: If the tribunal pleases, Frenzel, R., seeking leave to appear on behalf of ISS Facility Services.

PN3

THE DEPUTY PRESIDENT: Thank you.

PN4

MR D. TRINIDAD: If the tribunal pleases, Trinidad, initial D. I'm a solicitor and I seek permission to appear for the Spotless Group.

PN5

THE DEPUTY PRESIDENT: Yes. And in South Australia?

PN6

MS L. HARRISON: I'm Harrison, initial L, on behalf of the Liquor, Hospitality and Miscellaneous Union, South Australian branch.

PN7

THE DEPUTY PRESIDENT: Thanks, Ms Harrison. There is no objection to permission to Mr Trinidad, I take it? Permission is granted, Mr Trinidad. I think given the choice, Ms Frenzel, I would probably rather be stabbed in the eye with knitting needles than deal with this further, but given that choice is not available to me, and in deference to my somewhat fragile mental state, will you walk me through this slowly and carefully please.

PN8

MS FRENZEL: Thank you, your Honour, I'll do just that. What I might do is firstly outline the fact that the Cleaning Services Award has, I believe, a unique transitional provision unlike any other modern award and those unique - - -

PN9

THE DEPUTY PRESIDENT: You're on fairly safe ground there, I think.

PN10

MS FRENZEL: Excellent. Those transitional rights were agreed between the bulk of the employer parties and the LHMU last year and were in fact approved twice by the award modernisation of the full bench, the last decision being on 17 November 2009, at (2009) full bench decision, 927. The parties have, over time, sought to ensure that the rates that cleaners get paid and employers are required to pay and therefore tender on are expressed in the award for the pure and simple reason that they wanted some surety about the rates to be paid, and more importantly, with respect to the employers. They needed surety with their clients to say, "Well, this is the labour cost component of our contract; that here it is in an award." So given those features, the award has had a number of variations made to it to reflect the parties' desire to make sure we get the rates modelled right.

PN11

Regrettably the rates model isn't quite right with respect to South Australia and with respect to the transitioning of rates of pay for part-time cleaners working shift work Monday to Friday who were translating from the Caretakers' and Cleaners' Award. So what I might do firstly, your Honour, is tender a copy of the draft orders that were sent to your chambers.

PN12

THE DEPUTY PRESIDENT: Ms Frenzel, can I ask you, is the issue - I think there was another issue regarding the savings provision, was there not, and the definitions in the savings provision?

PN13

MS FRENZEL: Yes. That matter has been resolved with LHMU.

PN14

THE DEPUTY PRESIDENT: That's resolved, is it?

PN15

MS FRENZEL: Yes.

PN16

THE DEPUTY PRESIDENT: Right.

PN17

MS FRENZEL: I'm able to advise, commissioner, certainly the LHMU can confirm this that the order that we are tendering is in fact a consent order.

PN18

THE DEPUTY PRESIDENT: Thank you. Is that the circumstances with the LHMU, Ms Harrison?

PN19

MS HARRISON: Yes, sir, that's correct.

PN20

THE DEPUTY PRESIDENT: Thank you.

PN21

MS FRENZEL: So what the order seeks to do is rectify some shortcomings with respect to the transitional provisions for cleaners - as I say, transitioning only from the Caretakers' and Cleaners' Award. I might make the observation, your Honour, that if it was a transitioning of those two South Australian health awards I too would join you in poking my eyes with knitting needles but that's not the case, thankfully. So the draft order is in two parts because the shortcomings were identified following the conference before your Honour with respect to the implementation of the minimum rates adjustment in 2010. There have been three variations to this award with respect to rates which are material to the draft order, but what I might do is take your Honour through the different rates and explain where they came from and then tender extracts of those orders so that in actual fact the rates will have a foundation and previous orders of the tribunal or the former commission. Firstly if we can deal with SA2.5.

PN22

THE DEPUTY PRESIDENT: I might just mark these at this stage, Ms Frenzel. I'll mark the draft order as exhibit EMA1.

EXHIBIT #EMA1 DRAFT ORDER

PN23

MS FRENZEL: Thank you, your Honour. Even on page 2 of the draft order, page 2, rule 2, page 3, deal with corrections to the transitional rates that the parties require to be made operative from 1 January and expiring on 1 July, and all of these rates, as I say, have their nemesis, if you like, from previous orders of the tribunal or the commission. With respect to SA2.5, and I'll tender these, I think, as we go, it might be a little bit easier, I'll tender an extract of an order of the commission dated 14 December, print P991646.

PN24

THE DEPUTY PRESIDENT: I think to the extent that they're documents either at this tribunal or its predecessor I won't mark them, Ms Frenzel.

PN25

MS FRENZEL: Very well, your Honour. The next extract that I would seek to tender is - - -

PN26

THE DEPUTY PRESIDENT: Unless it might help for identifying them.

PN27

MS FRENZEL: It probably might, your Honour.

PN28

THE DEPUTY PRESIDENT: All right. Well, in that case I'll mark this order of 14 December 2009 as EMA2.

EXHIBIT #EMA2 ORDER DATED 14/12/2009

PN29

MS FRENZEL: The next extract of the order is the order from 26 March 2010 which is print PR995393, and last but not least the 21 May order - - -

PN30

THE DEPUTY PRESIDENT: The 26 March order will be EMA3.

PN31

MS FRENZEL: Thank you.

EXHIBIT #EMA3 ORDER DATED 26/03/2010

PN32

MS FRENZEL: Last but not least the 21 May order, which really upset the applecart, and that's print P997366 - - -

PN33

THE DEPUTY PRESIDENT: The 21 May order, I will mark EMA4.

PN34

MS FRENZEL: Thank you, your Honour.

EXHIBIT #EMA4 ORDER DATED 21/05/2010

PN35

MS FRENZEL: It seems, and there's a common pattern emerging which I'll take your Honour to with respect to the application of these rates but SA2.5 is a part-time CSE level 1 cleaner grade 1 working at night or the early morning shift starting before 6 am and payment of time worked after 7.30 am was inserted into the 26 March order, that being EMA3, and also retained its life, if you like, on the 21 May order being EMA4. The award rates with respect to 15.34 as at 31 January is correct. The Cleaning Services' Award Rate, if the rate wasn't transitioned at 1994 was correct, the transitional amount is also correct and the amount of $17.64 constitutes 15.34 plus the 15 per cent part-time allowance to make the rate 17.64. If I can draw your Honour's attention to EMA3, what we have done is we have actually highlighted the rates in the extract to assist the parties and to assist the commission, and you will see it sitting there with the highlighted rate of 17.64. In the May order it's also there at 17.64. So that's fine.

PN36

With respect to 2.6, some of the rates that were in the 14 December order which were varied by the March order and the May order ceased to exist, if you like, in error on 26 March and then that error was further capitulated, if you like, by the 21 May order. So we also have in the LHMU and ourselves have also had discussions about the exact way these transitional provisions should operate, therefore the references that are highlighted in yellow are direct references from the way the Caretakers' and Cleaners' Award actually operated in South Australia prior to 31 December.

PN37

THE DEPUTY PRESIDENT: Sorry, run that by me again.

PN38

MS FRENZEL: SA2.6, part-time CSE level 1 cleaner goes on working an afternoon shift but regularly finishes before 10 pm for all time worked after 5.30 pm, the Caretakers' and Cleaners' Award had - well, it still has - this provision that time - where a cleaner is not regularly rostered to finish work at or before 10 pm, the shift penalty is 30 per cent.

PN39

THE DEPUTY PRESIDENT: Yes.

PN40

MS FRENZEL: The shift penalty for a cleaner that is regularly rostered to finish before 10 pm is 15 per cent.

PN41

THE DEPUTY PRESIDENT: 15.

PN42

MS FRENZEL: So what we are seeking to do, and what has been endorsed by previous decisions and the orders that were tendered today is to phase the shift penalty component off that rate because the part-time allowance cannot be phased because it's an allowance. So the 15.34 had the 15 per cent part-time allowance to make it 17.64 loaded onto it, but then arising out of the recent conference before your Honour about transitional principles for this award, the transitional amount was in fact $2.30 remaining but it was being phased, if you like, at a rate of 40 cents per year with, I think from memory, the 72-cent increase at the end of the transitional period. Now, the parties saw that as being undesirable but the parties also realised that employers have been complying with these orders and applying the rate of 18.04 since 1 January. So we have sought not to upset that because we can actually rectify that with the second part of the order which operates from 1 July. With respect to SA2.7 - - -

PN43

THE DEPUTY PRESIDENT: So hang on, the 18.04 is a lesser transitional amount in effect than should be the case to get an even spread over the five years.

PN44

MS FRENZEL: That's correct.

PN45

THE DEPUTY PRESIDENT: Yes.

PN46

MS FRENZEL: And we have sought to rectify that with the second part of the order operating from 1 July. If I can draw your Honour's attention to EMA2 and it's the last page of the extract, you will see the rate of 18.04 in the December order.

PN47

THE DEPUTY PRESIDENT: Yes.

PN48

MS FRENZEL: So all of these rates have been inserted into the award at some time or other but regrettably I think it is, given the size of the orders and the fact that we are so desperately trying to get it right, that we made a few errors along the way and we're now seeking to rectify those errors. SA2.7, once again this is a consistent rate because it was firstly inserted on the 26 March order and it found its way into the May order, and once again you'll see it's the rate of $18.04, and once again we have just been very specific about exactly what it's transitioning with respect to SA2.7 by referring to an afternoon or night shift where the employee is rostered to work before 5.30 pm a payment of hours worked up to 5.30 pm.

PN49

THE DEPUTY PRESIDENT: Yes.

PN50

MS FRENZEL: The reason, your Honour, that we are transitioning those rates is because the South Australian Award, if I can use the short term for it, provided for shift penalties to be paid between 5.30 pm and 7.30 am, so any work outside of that span of hours was in fact day work. The operation of cleaning services means that if you work on a shift you're paid the shift penalty for all time worked. So we needed to transition between the day rate and the shift rate to ensure that, firstly, the employees were not disadvantaged most importantly, but secondly, also most importantly, the employers were not, if you like, hit with part-time allowance plus the shift penalty in one fell swoop. The SA2.18 which deals with a part-time cleaner level 2, the only issues we have are with the part-time rates. That was inserted in the May order and that's at 2.18 in the May order.

PN51

SA2.19, which is the equivalent of 2.6, was in the 14 December order and got wiped out, if you like, by the March order. SA2.20 similarly was first inserted on 26 March with an offer to stay till 1 January and was still found in the May order at 2.19. Exactly the same occurred with SA2.32 which deals with part-time cleaner level 3, to use a shorter expression. It was a 26 March order and was also in the May order. With respect to 2.33, this is one of those rates that was in the 14 December order but then disappeared in March, and when it disappeared in March it was not well known that the rate had disappeared because it was an error by all the collective parties.

PN52

THE DEPUTY PRESIDENT: So it's not there at all, when you say "it has disappeared".

PN53

MS FRENZEL: No, it's not.

PN54

THE DEPUTY PRESIDENT: Right.

PN55

MS FRENZEL: It has gone and we need it back.

PN56

THE DEPUTY PRESIDENT: Yes.

PN57

MS FRENZEL: And SA2.34 was in the 26 March order and also in the May order. So we have done is we have lined up and we have highlighted where the rates come from. It isn't that we're trying to put a new rate or trying to do anything that the tribunal hasn't done before. It's just that, given the size of the job, there were some rates which were omitted by the March order and the May order.

PN58

THE DEPUTY PRESIDENT: It's probably not of great consequence either way given that the provision of the act as far as variation is concerned but these amendments that you seek are all by way of correcting error rather than - - -

PN59

MS FRENZEL: That's correct.

PN60

THE DEPUTY PRESIDENT: - - - removing uncertainty, aren't they. I mean - - -

PN61

MS FRENZEL: No, there's some certainty with respect to the yellow highlighted sections about exactly what is transitioning when an employee works because the way that the December order operated caused some grief with the LHMU which, with the benefit of hindsight, we understand a whole lot better now than what we did then.

PN62

THE DEPUTY PRESIDENT: Yes, but the reality is the rates are wrong.

PN63

MS FRENZEL: The reality is in that current award the rates are wrong.

PN64

THE DEPUTY PRESIDENT: Yes, so it's by way of a correction of an error rather than a removal of uncertainty.

PN65

MS FRENZEL: Yes.

PN66

THE DEPUTY PRESIDENT: I mean, as I say, it's probably a moot point given the provision of the act.

PN67

MS FRENZEL: Yes, that's right.

PN68

THE DEPUTY PRESIDENT: But it seems to me that's okay.

PN69

MS FRENZEL: I think you're right on that.

PN70

THE DEPUTY PRESIDENT: Yes.

PN71

MS FRENZEL: But anyway that's where we got to, so they are the rates that the parties are seeking by consent which are the rates either found in the December order, the March order or the May order which shouldn't have been removed or amended. The parties then looked forward and said, "Okay - - -"

PN72

THE DEPUTY PRESIDENT: So there is where you pick up the slack of the - - -

PN73

MS FRENZEL: That's it.

PN74

THE DEPUTY PRESIDENT: Yes, all right.

PN75

MS FRENZEL: So what we have done here is we have said, "Okay, we're going to have to transition these rates correctly. We have now got principles. We all understand what we're doing with this thing," and the basic recipe is that if the rate is $2 or less, the transitional amount, that is, that is, the transition by 40 cents per year over the five years. So if, for example, it's $1.80 then it would be 40 cents multiplied by four and 20 cents in the last year. If the amount is in excess of $2, the transitional amount, and all these amounts are in excess of $2, then the transitional amount is divided by five and applied to the rate and that's what we have done with respect to the rates of pay which are set out on pages 4 and 5 of the order.

PN76

So, for example, the rate of $18.89 is $15.34, which was the rate as at 1 January for a part-time - as at 31 December in South Australia for a part-timer, it has had the 15 per cent part-time allowance applied to it to bring it to 17.64. It has had the 46 cents applied to - sorry, it has had 23 cents applied to it because that $4.60 needs to be divided by two because half of that is the part-time allowance, it has had the 69 cents applied to it arising out of the minimum wage adjustment, and then it has had 15 per cent for a shift penalty on 69 cents applied to it as well to bring it to $18.89, and that principle has been applied right through the rates set out on pages 4 and 5 of the order, and with respect to the application of the minimum wage adjustment that was the outcome of the conference before your Honour and also it is now an agreed outcome as between the parties.

PN77

So the only difference in essence between the post-1 July rates which are currently sitting in the award and these rates is the correct application of the transitional amount and the correct transitioning of that amount taking into account that you cannot phase the part-time allowance and therefore that component must go straight onto the rate as at 1 January. Can I indicate that I certainly appreciate the assistance of my friend representing Spotless and also the LHMU. This matter came to our attention late last week. It was a matter to require rectification because of the fact that employers wouldn't have got the right rates. The award was in actual fact incorrect and was incorrect through nobody's fault, just the sheer size of the exercise that the parties chose to undertake. So on the basis of what I have put to you, your Honour, and the fact that the LHMU have supported the application, I would commend the application to you.

PN78

THE DEPUTY PRESIDENT: Thank you, Ms Frenzel. Do you have anything you wanted to add to that, Mr Trinidad?

PN79

MR TRINIDAD: Your Honour, on behalf of Spotless we certainly agree with the principles that have been expressed and we certainly support the tribunal in making any orders that fix errors. We agree with the principles as has been expressed. We haven't had the exercise ourselves of actually going through the calculations so we don't necessarily say from our perspective - we don't say they are wrong, we don't say they're right, but we certainly, as a major participant in the industry, take the view that we're very - I think we all understand the principles. I think we all agree that the principles are important and if the parties identify errors to the rates given how big a task it was and how many - I think we are the only modern award that has a hundred or so pages of tables at the end with rates for every single type of work you could imagine.

PN80

We think it's important that if the parties identify errors, that they come before the tribunal hopefully in a collegiate and collective way to try and have those resolved, so we certainly agree with the principles that have been espoused so whilst we can't certainly express our view that we agree wholeheartedly with the calculation because we haven't done the calculations, we understand the principle that has been applied and we agree with the principle that has been applied.

PN81

THE DEPUTY PRESIDENT: Thank you. Ms Harrison.

PN82

MS HARRISON: Sir, the LHMU in South Australia would obviously just consent to the views expressed by Ms Frenzel on behalf of ISS. We had the opportunity to go through the draft order prior to today's hearing and we consent to the amounts that are put forward in the proposed draft order.

PN83

THE DEPUTY PRESIDENT: So I can assume from that, Ms Harrison, that you don't press issues that you raised in submissions that were filed prior to this hearing today?

PN84

MS HARRISON: The views expressed in those submissions have been rectified and this draft order doesn't seek to put in place any of the errors that we raised concern.

PN85

THE DEPUTY PRESIDENT: Yes, good. Thank you. All right. Is there anything else? I think that covers it. Pursuant to subsection 160(1) of the act, I will make the order sought. It will be made in the form of the draft order marked as exhibit EMA1. That order should be able to issue in a fairly short time frame. It might take somewhat longer to get reasons for decision out but the order will issue in any event in the short term. There being nothing further, I will adjourn. Thank you.

<ADJOURNED INDEFINITELY [2.24PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #EMA1 DRAFT ORDER PN23
EXHIBIT #EMA2 ORDER DATED 14/12/2009 PN29
EXHIBIT #EMA3 ORDER DATED 26/03/2010 PN32
EXHIBIT #EMA4 ORDER DATED 21/05/2010 PN35