AG2010/15362, Transcript of Proceedings [2010] FWATrans 1771 (20 December 2010)

TRANSCRIPT OF PROCEEDINGS

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Fair Work Act 2009 33557-1

COMMISSIONER HAMPTON

AG2010/15362

s.185 - Application for approval of a greenfields agreement

Application by Transfield Services (Australia) Pty Ltd
(AG2010/15362)





Adelaide

10.12AM, THURSDAY, 2 DECEMBER 2010

THE FOLLOWING PROCEEDINGS WERE CONDUCTED VIA TELEPHONE CONFERENCE AND RECORDED IN ADELAIDE

PN1

THE COMMISSIONER: Yes, good morning gentlemen.

PN2

MR G. GOSLING: Good morning, Commissioner.

PN3

THE COMMISSIONER: Mr Gosling, you join us from Melbourne?

PN4

MR GOSLING: Yes, thank you, Commissioner.

PN5

THE COMMISSIONER: Yes, and feel free to remain seated.

PN6

MR GOSLING: Thank you.

PN7

THE COMMISSIONER: Mr Whinnen, good morning.

PN8

MR A. WHINNEN: Good morning, Commissioner.

PN9

THE COMMISSIONER: I have convened a hearing in this matter because there's a number of issues I wanted to raise with the parties and given the nature of the agreement and the location of the parties I thought this was the most convenient way to do it. This is a greenfields agreement application and that obviously raises a number of issues, so perhaps I could invite one or both parties to tell me about I guess the status of the contract with the tie of relationship with what I suspect is an existing contractor, if any, so I can get a handle on the context in which the agreement is made.

PN10

MR GOSLING: I'm probably best placed to give you that information, Commissioner. If I could just take you through as you've asked for the background of the application. On 22 September Transfield Services received request for proposal from the Department of Transport of Energy and Infrastructure in South Australia for the provision of a bus service for the Adelaide Metro Public Transport System and its contract number 10C154. Appended to or available as part of that request proposal were various schedules which the parties needed to address and under schedule 13 of that request for proposal is an implementation and management outline and various issues that the parties need to address.

PN11

Riding in that schedule from the principle being the Department of Transport Energy and Infrastructure that any new contractor implement a seamless transition into the new contract. To give you some background on the broad terms for the contract, there are essentially two major operators in the South Australian or the Adelaide bus system at the present time. The government in its wisdom has decided to break up Adelaide into a number of locations, some six to eight different regions and it is requested from interested parties to tender for one or all of those various regions. So it's left to the parties to determine how much of the Adelaide bus system they may wish to tender for and then as of Tuesday of next week that request for proposal closes so we are very much from 22 September until Tuesday of next week, which I think is 7 December needed to go through quite an extensive evaluation of the bus system, operational requirements and all of the criteria detailed in that request for proposal.

PN12

Under, as I have indicated, schedule 13 at 13.1.4 is the issue of industrial relations and in the staffing criteria a part of that schedule 13 it outlines the issues that need to be addressed by the parties and in particular I take the point 13.6 which says, "Proposed award coverage." Point 13.7, "Provisions of detail, how the proponent will employ staff, e.g. enterprise bargaining agreements." 13.8 says, "Procedures to avoid and minimise industrial disputes," and clause 13.9, "Dispute resolution process," and various other matters dealing with training, retention, conduct of staff." But they are the essential elements that I as industrial relations manager needed to address.

PN13

Transfield Services determined that the best way to address this issue was be consultative and proactive. We approached the Transport Workers Union who we became aware had entered into enterprise agreements with Torrens Transport in particular and that they had admittedly entered into a new enterprise agreement which on 30 July 2010 was approved by the Commission by Deputy President Bartel. We entered into negotiations about how we could, if we are successful, offer the client a seamless transition and address all of the issues that were outlined and I've just briefly taken you to. The agreement reached between ourselves and the Transport Workers Union, given the recency of the new agreement, was to provide to the client a proposal from ourselves that we would have a new greenfields agreement in identical terms to the agreement that was recently put by the Commission and approved by the employees.

PN14

So the agreement you have before you today as a greenfield agreement, subject to some formatting changes, is an identical agreement to that which is covered under print number AG2010/12491 which is the previous agreement. We believe that that provided certainty for the employees in the areas where we propose to bid for work. We provided them with an agreement if they come across to our organisation if we are successful with an agreement that they fully understand. It has been recently endorsed by them and in our view would provide that seamless transition across from the current operators to Transfield Services should it be successful. So we saw that in the time frame available to us a very positive development and obviously received good cooperation from the Transport Workers Union in reaching an agreement with us.

PN15

We therefore decided we would seek to have that implemented by lodging it with the Commission as a greenfield agreement. We determined it to be a greenfield agreement on the grounds that currently we are only a proponent for these tenders, as I have stated they close on Tuesday of next week, and that we do not have currently any employees and we do not currently operate a bus transport system in South Australia or anywhere else for that matter. So we determined that the criteria for a greenfield agreement could be met and obviously agreement on that basis to the Commission. We believe that subject to questions you may have about it we believe it is a greenfield agreement and to address your issue about the status of the employer as a genuine new enterprise, I am not aware of your understanding of Transfield Services as an organisation. It is quite a large organisation, it's a major engineering services company and provides a range of services across Australia and internationally in various industries where it seeks to contract for work.

PN16

A decision was made, having set up a new state office in South Australia, to explore opportunities for work in South Australia and this bus opportunity came to our attention and we believe that we can provide benefits to the state of South Australia and that we could provide a competitive tender to the client and we could very effectively and efficiently run a bus service in South Australia. But in that circumstance we do not, as I've indicated, have a bus operation. We run various operations around Australia in mining and engineering services. We are involved in transport infrastructure maintenance contracts, mostly importantly in South Australia with the South Australian rail maintenance contract work and we are tendering for other new work in South Australia.

PN17

We therefore submit to the Commission that as an employer this is for it a genuinely new enterprise that it is seeking to undertake in South Australia and it has no employees performing these functions at this stage, other than us seeking to employ new senior managers who will be charged with the responsibility of running the contract should we be successful. So we do not believe there would be an opportunity for us to even consider talking to employees about approval of a normal enterprise agreement with our employees because there are none and hopefully we will be successful at this stage at setting the (indistinct).

PN18

THE COMMISSIONER: Of course.

PN19

MR GOSLING: Subject to questions you may have, Commissioner, we believe it is a new business that we are undertaking and therefore would be eligible to be considered as a genuine greenfield agreement, but I'm not sure what your concerns are in that regard and I will certainly try to test me on those issues about what your concerns may be.

PN20

THE COMMISSIONER: Thank you, Mr Gosling. There are some issues about the agreement itself which I will come to in a moment but perhaps, Mr Whinnen, just in terms of perhaps the nature of the business and the capacity for making a greenfield agreement, do you want to make any contribution on behalf of the TWU?

PN21

MR WHINNEN: Just on behalf of the TWU basically I wasn't involved in the initial approach from Transfield, but I have been in the last couple of weeks into getting this process to this point. With regard to that and with regard to the statements from Mr Gosling, we believe that this is a genuine greenfield agreement and we are in support of that and as per form F21 we entered this to provide a continuity of employment with the fair wages and conditions that were voted on by the employees at Torrens Transit just recently, so we have taken upon that agreement to be used and that's why we're in support of this agreement, Commissioner.

PN22

THE COMMISSIONER: Very well. Gentlemen, just in relation to the issues that arose with section 172(3)(b) and related provisions, I would indicate that based upon that explanation and the material before Fair Work Australia I am satisfied that what we are dealing with here is a genuine new enterprise, it has not employed any persons necessary for the normal conduct of that business as contemplated by the Act, therefore this is an appropriate use of a greenfield agreement. What I would like to do in that context is just also flag an issue with the parties and that's obviously section 311 of the Act which relates to the transfer of business and instruments.

PN23

This may have no work to do, depending on whether Transfield Services are successful; secondly, how the seamless arrangements are worked out in practice but I just draw that to the parties' attention that there are particular provisions of the Fair Work Act which deal with the transfer of business. It may be that none of the relevant connections between the outgoing contract in Transfield will exist. These are set out in section 311(3). If they do the only point in raising it with the parties - if the agreement is subsequently approved and if Transfield wins the business then you will need to keep an eye on that because it might require some action by the parties in order to clearly confirm which instrument applies. But look, I merely leave that out there. It doesn't affect the approval of the agreement or otherwise, given that the contracts haven't even been (indistinct) at this stage.

PN24

MR GOSLING: We weren't cognisant of that, Commissioner, when we started negotiations with the TWU and therefore having what we believe is an identical agreement we think the practical implications are minimal if there is a transfer of business and certainly there are still some question marks about that issue, we don't believe it would be a transfer of business but there is still some conjecture on that issue but we are very cognisant of the need to keep alert to that possibility and make sure that any requirements, if it is a genuine transfer of business, are properly met.

PN25

THE COMMISSIONER: Very well. If I can take you to the agreement itself. It seems to me there are a couple of difficulties that arise because you have used an agreement that is already in place with existing employees in that in the context of Transfield wining the contract and then employing the staff, reference to the different classes of employees, FT1, FT2, FT3 which clearly relate to service. Obviously in the context of an existing enterprise that makes sense. In the context of a new enterprise I mean what is the understanding that the parties have about how that should be applied?

PN26

MR GOSLING: The basic reason we included that in there, there was certainly some discussion around that point and it was included to cover the possibility of what you just raised of the transfer of business. What is not clear at this stage is if we are successful and it is a transfer of business what will be the arrangement for employees coming across from the current employer to Transfield Services and bringing with them their pre-existing entitlements and benefits and therefore considered the current working arrangements they have as to whether or not they should come across or whether they would want them to come across. As you rightly indicate, they all talk about employment periods, particularly FT1 of service prior to 1 July which pre-dates the arrangement we have. If there is no transfer of business it would be reasonably clear that that provision would not be reasonably operative as employees would likely come across Transfield Services as new employees somewhere in 2012, which I think the contract is due to take up around the middle of - sorry, 2011, not 2012.

PN27

But they're put in there, Commissioner, more for abundant caution around that whole question of transfer of business and as to what entitlements and what practical operations would transfer across for those current employees into Transfield Services, particularly given a range of those employees would work under that FT1 classification and whether or not that should transfer as well. Rather than try to revisit that issue should that be the case, there was a provision in the agreement all ready to deal with it.

PN28

THE COMMISSIONER: Because this is such a significant matter and on face value the agreement, it's unclear to me how the agreement would be applied. What I'm going to invite the parties to do is to actually provide some form of undertaking to the Tribunal as to how those provisions are intended to apply. I appreciate there are some issues here about the precise circumstances in which the employees come across is not known, but bearing in mind I've got to be satisfied about the public interest here. I think I'll have some difficulty in the public interest if the critical operation of the agreement is not understood between the parties that made it and how it's intended to apply.

PN29

I appreciate this is potentially a sensitive matter, I don't necessarily expect the parties to respond at the moment but I am looking for some confirmation to be relied upon as to how those service related provisions are going to be applied in the context of a greenfield agreement where employees may well - they will start with the new employer. I guess what's uncertain is whether the previous service is recognised. But there needs to be at the very least be an understanding as to how you're going to deal with that. Mr Whinnen, do you have any comments in that regard?

PN30

MR WHINNEN: Unfortunately because I wasn't involved in the initial approach with Transfield and the negotiation of bringing this agreement into force basically - unfortunately I can't comment too much on that, Commissioner.

PN31

THE COMMISSIONER: There's just a couple of other issues. The application doesn't cite matters that are inferior and superior to the modern award - I'm sorry, in relation to the superior, it cites the wages. In that context what classifications in the modern award are likely to be relevant here, given that you have basically got a single rate. I mean you've got a whole series of rates but you have got a single classification in effect.

PN32

MR GOSLING: Essentially it's a driving classification, classification levels. I'm sorry I haven't brought the copy of the modern award with me to give you the precise classification we would seek, it's certainly obviously driving classifications under that - - -

PN33

THE COMMISSIONER: If it's of any assistance I do note that the declaration was filed by Torrens Transit because I obviously did a bit of research for the preparation of the hearing and I found an agreement I suspected was used as the model without knowing the precise circumstances of the contract process. The indication given by Torrens Transit at least was that the relevant classifications were 4 and 5.

PN34

MR GOSLING: Sorry, I missed that?

PN35

THE COMMISSIONER: Grade 4 and 5 of the modern award.

PN36

MR GOSLING: Yes.

PN37

THE COMMISSIONER: It's also fair to say that that declaration also indicates that there are a number of conditions which are less beneficial to the reference instrument and on face value that looks right to me. There are different approaches to weekend work here. The defacto shift penalty for work, the (indistinct) after seven p.m. is not replicated. However the remuneration is higher than the remuneration is higher than the modern award and there are more beneficial shift provisions, particularly the split shift arrangements than the modern award. I appreciate the TWU would have access to that but Transfield may not have access to that. I will make some arrangements for that to be supplied to the parties just in case when you subsequently confirm your undertaking, you actually wish to reflect on any of that because clearly I've got to be satisfied, notwithstanding that the agreement is already approved, that the agreement meets the better off overall test. I am not pessimistic about that but I clearly need to understand the context. Yes, Mr Gosling.

PN38

MR GOSLING: The point I seek to raise with you about the grade levels out of the award. One of the difficulties we have as a proponent trying to tender for work is that Torrens Transit is also one of the proponents is looking to re-tender so obviously there is no cooperation from them and there is no access to their operations to fully understand how they operate in that environment at the present time. So we are in a sense in the dark and are trying to find obviously a way to provide a competitive tender to the government and having to make some assumptions about that from our previous knowledge and the senior managers we have who have some background in bus operation. So around the classifications and the like there hasn't been an ability to see practically on the ground what those people are employed under relevant to the modern award other than the driving classification detailed in the current agreement.

PN39

THE COMMISSIONER: Thank you. There's just a couple of other matters. As you point out when you opened, Mr Gosling, the agreement is not exactly a duplicate of the Torrens Transit agreement, there are some sort of formatting changes. There may well in that context have been a bit of a slip. Clause 7.4 which is sort of like two thirds of the way down on page 4 refers right at the end of 7.4 that clause 7.39 will not apply to the FT3 classification. There isn't a 7.39.

PN40

MR GOSLING: Yes, I appreciate it, thank you.

PN41

THE COMMISSIONER: Given that I am going to invite an undertaking in respect of what is clearly a more substantive issue about how the prior service would be recognised or otherwise for the purpose of the FT1, 2 and 3 classifications, you might also work out what that should be and deal with that in an undertaking as well.

PN42

MR GOSLING: We will do, Commissioner.

PN43

THE COMMISSIONER: The last question I have got, and you may want to take this on notice and this arises from both the currently approved agreement as well as this one, is I am not quite sure about what the agreement means for casuals on public holidays because there do seem to be some on the face value contradictory provisions. Perhaps if you start with clause 9. Clause 9 indicates that it doesn't apply to casual employees, so that's the start of the picture if you like. While I have got it there it actually says, because it's half way through the clause, it says, "When the employee works on the public holiday this payment shall be made," and obviously it refers to various payments, depending on whether it's FT1, 2 or 3 you're talking about, "plus the applicable rate as set out in appendix 1 for the hours worked." It is then not clear to me whether what is at the back is the rate that is paid on the public holiday or whether it's the additional rate that's paid on the public holiday. So that's an issue that applies to full time employees and that then leads to the question of what are the arrangements for casuals on public holidays. This is an unusual circumstance but even though in a sense this is academic for the moment because the contract hasn’t been won.

PN44

MR GOSLING: Hopefully not too academic.

PN45

THE COMMISSIONER: Well, exactly, that's the point I'm going to come to. If it's approved and the balls fall in a row as you would hope they would, Mr Gosling, then if the agreement is approved then it is legally binding and it has to be applied and it has to be understood by the parties. I would invite the parties just to have some discussions around that as well and perhaps just confirm some understanding about why that's meant to work so as to remove any potential ambiguity there.

PN46

MR GOSLING: I am in Adelaide next week, I will certainly make arrangements to meet up with the TWU and get these points clarified so we can certainly come back with the necessary undertakings to satisfy you there is no ambiguity or lack of clarity in there.

PN47

THE COMMISSIONER: Do I take it in that context that whether the agreement is approved by next Tuesday is not an issue?

PN48

MR GOSLING: No, we have indicated in our proposal that we have entered in an agreement with the union. We believe we still have an agreement subject to obviously satisfying yourself about the approval process, but we will be applying to the RFP on the basis that we haven't entered into an agreement with the union based on the existing terms and conditions that apply within Torrens Transit. We believe that will meet the requirements of the RFP and therefore approval today will not prejudice that approach. It would be obviously better for us if we could say there is an approved agreement but we can indicate to the client we have entered into an agreement based on the existing terms and conditions we believe that will be satisfactory.

PN49

THE COMMISSIONER: Very well. Obviously I don't want to buy into the commercial contract but I don't want Fair Work Australia to unintentionally buy into that contract process either. If the parties were able to meet, albeit perhaps over the phone or whatever, or in fact using these video facilities to make some progress on that and if you were able to supply some undertakings to me expeditiously I would deal with the application immediately and if that's before next Tuesday well so be it, but if it's after next Tuesday and if you need the time to get it right, get it right.

PN50

MR GOSLING: Yes.

PN51

THE COMMISSIONER: Subject to those issues I have already made some findings about the fact that this is a genuine greenfield agreement, I should also indicate that I am satisfied the TWU is entitled to represent the employees. I would indicate that proivding I get undertakings that satisfactorily deal with the issues that I have raised which are issues of clarity, it would be my view that the approval of the agreement would be in the public interest which is necessary in terms of a greenfield agreement and would meet the better off overall test. I have indicated that I will deal with the matter as expeditiously as I can based on any undertakings. Given that this is a greenfield agreement that's something that's done strictly between the representatives of the parties and it could well be done quite quickly, but as I said if it's necessary to get those understandings clear then I recommend you take the time to do that. That's really in the hands of the parties, for my part I will deal with it as soon as I receive the undertakings. If there are any remaining concerns about that I will make arrangements to raise those with the parties immediately.

PN52

MR GOSLING: Thank you, Commissioner.

PN53

THE COMMISSIONER: Anything further? Mr Gosling?

PN54

MR GOSLING: No, it's clear with me, no, it's all clear.

PN55

THE COMMISSIONER: I will adjourn the application on that basis.

PN56

MR GOSLING: Thank you for your time.

<ADJOURNED INDEFINITELY [10.41AM]