AG2011/1892, Transcript of Proceedings [2011] FWATrans 857 (12 August 2011)

TRANSCRIPT OF PROCEEDINGS

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Fair Work Act 2009 60137-1

DEPUTY PRESIDENT SAMS

AG2011/1892

s.318 - Application for an order relating to instruments covering new employer and transferring employees in agreements

Application by Westpac Banking Corporation
(AG2011/1892)
EDS (BPA) Credit Services Agreement 2004/2007

(ODN AG2003/9914)
[AG830789 Print PR941576]]




Sydney

9.33AM, MONDAY, 8 AUGUST 2011

PN1

THE DEPUTY PRESIDENT: Could I have the appearances.

PN2

MS V. BANKS: Yes, Deputy President. Banks, solicitor for Westpac, the applicant.

PN3

MS T. TALMACS: Talmacs, T, for the Finance Sector Union.

PN4

THE DEPUTY PRESIDENT: Thank you. Yes (indistinct)

PN5

MS BANKS: Deputy President, this is an application brought by Westpac for orders pursuant to section 319 of the Fair Work Act in relation to the transmission or non-transmission of an instrument. I'll give you some background. In 2001, Westpac and one of its subsidiaries outsourced certain of its loan processing services or functions to EDS, now known as HP, pursuant to the Loan Processing Services Agreement. The outsourced services included business processing, outsourcing services and call centre services. Now, the call centre services ceased to be provided by HP in about November 2010 and on 20 October 2010, Smith C ordered that the HP agreement which applied to those employees, who came across to Westpac at that time, would cease to operate in respect of those employees and not transfer with them under section 311(5).

PN6

Westpac and HP have no agreed that the other piece, the business process outsourcing services, will also come back into Westpac and cease to be outsourced to HP. The employees in respect of those services will be offered employment with Westpac, hopefully accept and transfer back in - or transfer to Westpac. It's intended that that happened in three tranches, one on 7 October, one on 30 November and one on 31 March next year. So as I said, Westpac will make offers to HP employees who are performing those services that are going to be insourced back to Westpac, unless they're serving a period of notice. So pursuant to the Fair Work Act - - -

PN7

THE DEPUTY PRESIDENT: What do you mean "if they're serving a period of notice"?

PN8

MS BANKS: Well, if they're terminating their employment with HP, they will not receive an offer from Westpac.

PN9

THE DEPUTY PRESIDENT: I see.

PN10

MS BANKS: So pursuant to section 311 of the Fair Work Act, absent an order of Fair Work Australia, the HP agreement currently covering the employees who will be made an offer by Westpac - if those employees come across, the HP agreement will come with them and this application is to seek an order pursuant to section 319 that that not occur. So if I take you to the orders, Deputy President. There are three orders sought. The first is that the EDS (BPA) Credit Services Agreement 2004/2007 will not apply to the employees who commence employment with Westpac on one of those three dates.

PN11

The second order is that the Westpac Group Enterprise Agreement 2010 will apply to any employee who accepts an offer from Westpac and commences employment with them on one of those three dates. The third order is that, for the purposes of any bargaining for a new enterprise agreement to replace the Westpac agreement, that the Westpac employees award will cover employees who commence employment with Westpac from one of the handover dates, unless the Westpac award is varied, terminated or replaced by another enterprise award or the Banking, Finance and Insurance Award 2010.

PN12

Now, Deputy President, there are a number of matters the Act sets out that you need to take account of in determining whether or not to make an order and they're set out in section 318(3) of the Act. I'll just take you through those matters, Deputy President. The first is that - the views of the employer who's likely to be the new employer and the views of the employees. In terms of the employees, a ballot was conducted and you'll see that referenced in paragraphs 21 to 24 of the affidavit of Michael Johnston, sworn 5 August 2011, and annexures E and F. Paragraph 24 notes that, of 497 employees who took part in the ballot, all but one agreed that the Westpac agreement should apply. So that was a 99.8 per cent result.

PN13

The second matter, excuse me, under 318(3)(b) of the Act that you need to take into account is whether the employees would be disadvantaged by the order in relation to the terms and conditions of employment. Again, the affidavit of Mr Johnston deals with that matter and I think the most convenient snapshot of that position or that issue is in annexure G, which is a document setting out key enterprise agreement award and policy provision differences between the Westpac conditions and the HP conditions. Taking a look through each of those matters, the Westpac position is either comparable or more favourable in respect of all but one or two matters.

PN14

The issue that I suppose Westpac focused on most closely was the issue of the long service leave. It was clear that remuneration-wise, the HP employees were going to be, by and large, much better off with the Westpac arrangements, particularly because the Westpac agreement has scheduled increases embedded in it, whereas the HP agreement has well passed its nominal expiry and doesn't have such certainty. In relation to analysis of long service leave, it was determined that, having regard to the increases - I should step back a minute. The HP accrual is at a greater rate than the Westpac accrual. The HP accrual is at the rate of 1.3 weeks per annum, whereas Westpac accrual is .87 weeks per annum.

PN15

Westpac had an actuarial analysis undertaken to determine, if you look at the increases in remuneration and sign-on bonuses that were going to be provided to employees, that no employee was going to be disadvantaged in respect of long service leave on a dollar-figure basis. So the effect of all of that is that no HP employee transferring to Westpac's employment will be disadvantaged by the order we're asking that you make today. The next matter under 318(3)(c) that you need to take into account, Deputy President, is the nominal expiry date of the agreement. The HP agreement expired on 28 March 2007. The Westpac agreement expires December 2012.

PN16

The next matter is whether the instrument that's transferring would have a negative impact on productivity. I actually think there's three things to lump in together here, that's D, E and F, effectively talk to issues of the impact on the business, whether Westpac would have an economic disadvantage as a result of the HP agreement coming across and the degree of business synergy that the instrument has to Westpac's operation. There are a number of matters in that regard, Deputy President, including the difficulty of payroll processing because of the different nomenclature of the HP agreement and gradings as opposed to Westpac and effectively Westpac would be unable to process pay for these people from the start date for each handover date.

PN17

It would take an investment of around 700,000 to adapt its payroll system to take account of the two competing classification structures and pay structures. The other point is that the work being performed by these people under the HP agreement was an outsourced service provider agreement and work that they were providing; this is in-house employees. There are differences arising in the agreement as a result of that. The other point to make is that new employees employed by Westpac on the go-forward after these employees transferred would be employed under the Westpac agreement and people working next to them would be employed, absent an order being made, under the HP agreement if they were transferring employees.

PN18

Westpac and the Finance Sector Union have pursued a strategy of simplifying and consolidating terms and conditions of employment and this would impact on that strategy that both parties were pursuing. The order, if it were made, Deputy President, is consistent with the order made by Smith C on 20 October last year in that he found that there was no disadvantage to employees and that the application met the tests under the Fair Work Act and for consistency, we think the order should be made.

PN19

THE DEPUTY PRESIDENT: Thank you.

PN20

MS TALMACS: Deputy President, I'll be brief because Ms Banks has clearly covered off a lot of the application. The FSU is the industrial organisation entitled to represent the interests of the HP employees. We do have members within the HP group of employees who are transferring over and also, as you would know, we are covered by the Westpac agreement. We do agree to this application. We sort of consent to the orders being made and would ask that you actually make those orders. We do believe those transferring employees will be better off under the Westpac agreement and we'd ask that they're made here today. I really don't have too much further to address, Deputy President.

PN21

THE DEPUTY PRESIDENT: Thank you. Yes. Well, having heard the submissions of the parties, I am satisfied that all of the requirements of section 318(3) have been met in respect to the application and I note in particular the extensive affidavit of Mr Michael Alexander Johnston in addressing those particular matters. Accordingly, the tribunal shall make orders as sought in paragraph 4 of the amended application and those orders shall take effect on and from today's date. I shall publish a short decision in due course, but the parties can be assured that Fair Work Australia has approved the application. I now adjourn.

<ADJOURNED INDEFINITELY [9.45AM]