B2013/1264, Transcript of Proceedings [2014] FWCTrans 408 (30 July 2014)

TRANSCRIPT OF PROCEEDINGS

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Fair Work Act 2009 1050321-1

DEPUTY PRESIDENT GOSTENCNIK

B2013/1264

s.242 - Application for a low-paid authorisation

United Voice
and
SECOM Australia Pty Limited T/A SECOM Security; Sydney Night Patrol and Inquiry Co Pty Ltd T/A SNP Security; MSS Security Pty Limited; Wilson Security Pty Limited; The Trustee for the Secom Australia (ACT) Unit Trust
(B2013/1264)
Security Services Industry Award 2010

(ODN AM2008/11)
[MA000016 Print PR985126]]




Canberra

9.29AM, TUESDAY, 15 JULY 2014

Continued from 22/05/2014

Reserved for Decision

PN4437

THE DEPUTY PRESIDENT: Yes, good morning, Mr Russell-Uren, you’re going to open the batting?

PN4438

MR RUSSELL-UREN: Yes, so I propose to deal with the respondent’s submissions in some detail. I suppose the point I would make at the outset is to set out the way in which the respondent has approached the issue of the authorisation; that is to say this, and it’s very basic to say this, but I think it’s important in context and that is that the absence of regulation of the labour market to that end through the NES and the modern awards sets the minimum conditions. Those conditions can be exceeded by EBAs.

PN4439

What Division 9 recognises is that for a number of reasons, a range of factors, a group of people or a group of employees, may not have access, practical access, to collective bargaining and, as a result, end up absolutely reliant on the modern award and on the NES set their terms and conditions of employment. That difficulty may permeate across enterprises. It might be confined to a particular market or a subset of a larger industry in which the same difficulty has not been present and, other than Division 9, a number of factors are taken into consideration to see whether or not that difficulty exists.

PN4440

The point that I would make in relation to what I’ve just said is this, and that is the low-paid authorisation is deployed for a purpose, and I go on to say this, that contrary to the respondent’s submissions the Act, we say, evinces no preference for enterprise-level bargaining. That proposition, we say, is confounded twice over. Section 172(3)(a) provides for multi-enterprise agreements subject to no restriction. There’s no practical distinction in the Act between multi and single enterprise bargaining, sort of with some exceptions around the availability of bargaining for the majority support determinations. That is how you get to that point. Multi-employers can elect to participate in multi-enterprise bargaining at their discretion.

PN4441

Now, section 172 subsection (3)(a) was not considered in either of the aged care cases or the practice nurses case but the focus throughout the respondent’s submissions, and I think to some extent in the way that the applicant was conducting its way as well, is that there has been an intense focus on the multi-enterprise bargaining aspect of the LPB scheme. That focus, we say, sort of obscures more than it reveals. Multiple employer bargaining is an aspect of a total scheme which includes employers being compelled to bargain, active assistance from the Fair Work Commission in addressing difficulties in bargaining, access to low-paid work place determinations, both special and consent. In the case of either, there’s an absence for an employee vote, the availability of bargaining or, despite multi-enterprise bargaining, an expanded coverage of the applicant as a representative.

PN4442

Now, we say that the total scheme is set out as a remedy to a problem; that is it is deployed for a purpose. That problem is identified through the range of factors in 243 and the remedy, we say, is the availability of a scheme which does all it can to increase the chance that an agreement will come into existence. The respondent has cited a number of prior cases at pages 9 and 10 of their submissions. Each matter was determined under the Workplace Relations Act and, of those, the relevant cases turned upon section 170LC of the Workplace Relations Act 96. That provision was unaltered by a multitude of amendments which applied in the intervening period.

PN4443

Section 170LC limited the certification of a multiple business agreement to the full bench of the AIRC. The test for approval was set out in subsection (4) of 170LC. Relevantly, the subsection prohibited the bench from approving an agreement unless it was satisfied that it was in the public interest to do so. Now, like section 243, the public interest took into account a range of factors but under 170LC. The critical question was whether the matters dealt with by the agreement could be more appropriately dealt with by an agreement other than a multiple business agreement. What we say is that that was restrictive and that it wasn’t deployed for a purpose. Instead it was designed as an exception to a general rule.

PN4444

I’ve mentioned the operation of section 172 subsection (3)(a) and say that the same rule does not apply in the context of the Fair Work Act. The respondent and the prior cases direct the commission’s attention to two reference points in determining the low pay. Those reference points are C10 rate of pay in the manufacturing award and two-thirds of the average weekly ordinary time earnings, which I will refer as the AWOT. At present, the former sits around 746.20 per week or roughly around $39,000 per annum; the latter sits at $945.78 per week, around 49.5 per annum.

PN4445

The applicant notes that the prior cases determine that there’s no strict cut-off point but a broad view must be taken but the respondent submits that the term “low paid” should take into account all earnings. If accepted, the commission would take into account overtime penalties, annual leave loading, night-shift loadings. We note that a similar submission was put, and rejected, in the aged care case in relation to salary packaging. Now, we accept that there’s some distinction between the respondent’s submissions for loadings and penalties and the salary package when it was considered by the full bench in that case. The applicant submits that the respondent’s submission, if accepted, would be illogical taking into account the purpose of the legislation and ultimately an error.

PN4446

In order to address this, it’s necessary to avert to the purpose of some of the more pertinent loadings which inflate the guard’s income. Overtime under the award was paid on hours exceeding 76 and, with some exceptions, hours exceeding 10 per shift. The night-shift loading, which was paid to Trevor Bennett for example, was paid for hours worked between 6 pm to 6 am Monday to Friday. Both additional amounts reflect the fact that the hours fall beyond community standards considered in the 40 Hour Week case or in the Working Hours case. Those amounts are in part compensation for working beyond the hours expected by the community and in part penalised the employer to discourage him from requesting those hours be worked.

PN4447

The evidence had demonstrated that, because the base rate of pay is so low, the employees work in patterns which attract these additional loadings. We say that to accept the respondent’s submission would be to find that behaviour consequent upon a state of low pay is a fact supporting the conclusion that those exhibiting that behaviour are not low paid. In the respondent’s view, if workers make the sacrifices which the community do not expect of them and those sacrifices are made to earn a living wage, then that fact means that they’re not low paid. In our submission, this will be logical and demonstrably so.

PN4448

The respondent’s submission, if accepted, would have anomalous conclusions - lead to anomalous conclusions. For example, employees who are engaged at the C14 rate in the Miscellaneous Award but routinely work 50 hours week would be entitled to $640.90 for the first 38 hours, $50.58 for the first two hours of overtime, $337.20 for the next 10 hours of overtime and in total would be paid $1028.68 per fortnight. That would result in an annual income of $53,666.38 per annum. If a strict cut-off point were then applied, this would be in excess of the C10 rate of pay and the two-thirds of the AWOT.

PN4449

In the applicant’s view, the broad approach in determining low pay should take into account the need to work overtime. The applicant submits that this fact that was reflected in the evidence supports the conclusion that the employees of the respondents are low paid but we say that there is a distinction, and an important one, between the need to work overtime, which should be considered, and the income received for doing so which it had not. The respondent pressed a number of submissions in relation to access to collective bargaining. The applicant will deal with those matters briefly but in a disjointed order. It’s clear on the past cases considering Division 9 that the division is concerned with practical access to collective bargaining other than legal or theoretical access. That’s almost a direct quote.

PN4450

The respondent repeats the past submissions in relation to that point and those submissions bear on the paragraph 66-67 of the respondent’s submissions. The respondents posit between paragraph 63 to 65 of the respondent’s submissions that Division 9 is limited to those employees who have not been covered by an enterprise agreement. The question is similarly put by the respondent as to whether Secom and MSS should be excluded from the scope of the authorisation if one is made. We submit that there is no warrant for doing so and two points should be made in relation to this.

PN4451

Reference is made at paragraph 65 of the respondent’s submissions to section 263 subsection (3) which provides that no employer covered by a low-paid determination can be covered by a determination if they’ve ever had an enterprise agreement which covers the employees. The agreement which applies to MSS is a pre-reform certified agreement. It was made in 2004. Within the meaning of schedule 3 sub-item (5)(c)(iv) to the Transitional Act that means that the pre-reform certified agreement is a collective agreement based transitional instrument. The agreement which applies to Secom Australia is of the same character. That was demonstrated by exhibit UV18 to 20.

PN4452

The interaction between these agreements and the provisions of the FW Act are controlled by the Transitional Act. Relevantly schedule 7, item 22, applies and that provides that if one of these instruments ceases to operate and the commission considers it appropriate to make the determination, taking into account section 241 of the Fair Work Act, then the low-paid determination can and should be made. United Voice submits that, in determining the scope of the authorisation, both Secom and MSS should be included.

PN4453

Now, at paragraph 64 of the respondent’s submissions reference is made to the explanatory memorandum. The paraphrasing is incomplete in the way in which paragraph 997 of the memorandum has been inserted into the agreement leads to the conclusion that the authorisation is intended to be limited to employees who are bargaining for the first time. That paragraph in co-location with points made in paragraph 63 and 65 makes the author’s intention plain in that respect. The second sentence in paragraph 997 in full reads:

PN4454

The purpose of the low-paid authorisation is to limit access to the stream and to those additional benefits associated with it to those employers and employees who meet the criteria in clause 243.

PN4455

Now, those last six words have been omitted in the submissions but they fundamentally alter the conclusion which can be drawn from that paragraph. Now, a question was raised in proceedings as to whether the provisions in mind are directed towards facilitating bargaining resulting in the making of an agreement or the making of an agreement which is approved by the commission. We say that the scheme as a whole is obviously directed towards the making of an agreement which is approved.

PN4456

The purpose of Division 9 is to identify whether the problem exists. If it does, then it gives rise to the availability of Division 2 to Part 2.5 and subsections 176(1)(c) and 229(2). Those additional provisions are intended to remedy the problem that’s identified through the consideration of factors set out in 243 but I averted to that earlier. Sections 261, 262 govern in part the creation of agreements once that authorisation has been made. Those provisions permit the commission to create an agreement if there is no reasonable prospect that that agreement can be reached between the representatives and that determination does not require advice.

PN4457

Division 2 to Part 2.5 operates in conjunction with Divisions 5 to 7 which govern content and includes a consideration of whether the determination would pass the BOOT. The authorisation leaves open the possibility of the parties actually agreeing and the agreement being put to the vote. It also leaves open the possibility of multiple - well, in part, multiple single enterprise agreements being reached or a combination of multiple enterprise agreements and single agreements being created.

PN4458

A further issue is whether access to bargaining is directed towards EBAs which are made and approved, simply made or not approved or not even made. If there’s a question, we say, as to the meaning of a term in the Act, that term should be given a meaning which best achieves its object. The object specific to Division 9, as has been set, and it is that object, we say, which must take primacy. Now, the object stated in subsection 241(a) bears an immediate correlation in subject matter and language to subsections 243(2)(a) and 243 as a whole. That correlation does not appear in the remainder of 243.

PN4459

The scheme is designed to deliver the benefits of collective bargaining for low-paid employees who have not received those benefits. Implicit in this is an expectation that collective bargaining lifts wages by identifying productivity gains. The word “benefit” in 241(a) refers to this. The scheme is designed to open up that means from improving income to people who could not access it. So to just construe a term “access to bargaining” as meaning bargaining which results in an agreement which is made but not approved or bargaining which does not result in an agreement being made would confound that stated object.

PN4460

THE DEPUTY PRESIDENT: Isn’t the proper reading of the object this, that the object is of the division, at least as expressed in paragraph (a) of 241, that it’s to assist low-paid employees and their employers to make an enterprise agreement that meets their needs, that employers and employees who are to receive such assistance of those who have not historically had the benefit of collective bargaining per se, so that it is relevant to determine whether or not these are the proper class of employees and employers to ask whether they’ve had historical access or benefit of collective bargaining per se, whether or not that’s in the form of an agreement that’s been approved by this commission or certified by its predecessor.

PN4461

So the object is to assist that class of person to then make an agreement that meets their needs. That agreement is one that is approved by this commission. So when one looks at the concept of whether or not historically that class of persons is to be assisted, one can look at the history of collective bargaining, whether or not that has resulted in any form of breach to the agreement. But the object is to assist that class of persons once identified to make an agreement which is an agreement under the Act.

PN4462

MR RUSSELL-UREN: Yes.

PN4463

THE DEPUTY PRESIDENT: So I think that the thrust of the respondent’s submission is that historically these persons, the employers and the employees, have had access to collective bargaining per se and there it’s permitted to consider both, whether or not there was an agreement that’s registered or certified or approved and one that’s not.

PN4464

MR RUSSELL-UREN: Well, it’s our view that the relevant subsection directs attention towards agreements which are approved.

PN4465

THE DEPUTY PRESIDENT: Insofar as it relates to the provision of assistance and encouragement.

PN4466

MR RUSSELL-UREN: Yes.

PN4467

THE DEPUTY PRESIDENT: But one needs to give the word “historically” some meaning and it would be odd if “historically” meant only for the purposes of an enterprise agreement under this Act.

PN4468

MR RUSSELL-UREN: Yes - no, and I accept that. We accept that. I think that was pressed in our earlier submissions where access to collective bargaining was restricted to, you know, practical access under the Fair Work Act. We abandoned that submission to the extent that it was put earlier but, nonetheless, this point has most bearing obviously in relation to the attempt to create an agreement within MSS.

PN4469

THE DEPUTY PRESIDENT: Yes.

PN4470

MR RUSSELL-UREN: It’s our view that the purpose of the division as a whole is to deliver the benefits of bargaining to the employees, provided they meet the relevant criteria. If they have received benefits from collective bargaining before, and that would obviously flow from an approved agreement rather than one that’s being made, then that would alter the commission’s decision - - -

PN4471

THE DEPUTY PRESIDENT: Well, what do you say are the benefits of collective bargaining?

PN4472

MR RUSSELL-UREN: Well, the benefits of collective bargaining are the increased income that flows from the trade-off for productivity benefits and the like but, if no agreement comes into place, what benefit flows from the process? I mean, taking the example of employees of MSS, they are in precisely the same position now as they were before they attempted to negotiate - nothing. Nothing was changed so it could not be said we say as a matter of fact they’ve received any benefit from the process other than some intangible benefit, for example, that they know that bargaining exists. But nothing flowed from that process which has changed their circumstances and it’s their circumstances which are under consideration here.

PN4473

THE DEPUTY PRESIDENT: So you say that in order for there to be benefits of collective bargaining there must be an agreement made which results in an improvement to the employees’ terms and conditions of employment?

PN4474

MR RUSSELL-UREN: No, we don’t press submissions to that effect. What we say is that in order for there to be a benefit there must be an agreement, not so much in terms - I mean, to some extent to say that an agreement improves the terms and conditions is both subjective and sort of somewhat irrelevant because if it passes the no disadvantage, if it passes the BOOT or any prior test, then for the purposes of a Division 9 application we don’t say that it’s opened the question as to whether or not it improves their terms and conditions. But we do say that an agreement needs to be in existence and needs to have been approved.

PN4475

The respondent has attempted to characterise the term “substantial difficulty in bargaining” as requiring an attempt to bargain attended by substantial difficulty in doing so. We say that the term “substantial difficulty in bargaining” refers - we should say this - refers to the difficulty faced by low-paid employees. It was in evidence, and as part of common industrial knowledge I would think, that union members delegate their industrial advocacy to their union. I mean, it’s obvious to state that. To that end, the actions of United Voice in pursuing and failing to create an enterprise agreement are relevant but it doesn’t complete the answer. The difficulty faced by non-members or by members in their own right are equally relevant.

PN4476

Now, as to the respondent’s submission, the point that we’d make is how much difficulty is demonstrated by an absence of an attempt. Mr Georgio noted that no employee of SNP had ever attempted to bargain with them and that’s explained by the paucity of industrial understanding demonstrated by each security guard who gave evidence. Mr Sankey couldn’t identify what instrument applied to his employment. Mr Lupeitu’u was confused by the notion of overtime and a series of suggestions were put to Mr Stewart around the majority of support determinations, single enterprise agreements and the like, and each was met with confusion.

PN4477

To accept the respondent’s submission in this respect would sort of go against the object of a division. It would mean that if a group of employees lacked the capacity to bargain and that was demonstrated by an absence of attempts to bargain, then that would count against them in the consideration of the facts demanded by section 243. That is, if they have such an inability to understand their industrial rights that they cannot even attempt to bargain, then in the respondent’s submission this would mean they have not faced substantial difficulty in doing so.

PN4478

The respondents submit that the authorisation not assist these low-paid employees and that was submissions advanced on two bases. First, the respondents say that they are not prepared to bargain on a multi-employer basis. The question poses whether or not the employees of course are assisted by the authorisation. To say that the respondents don’t want to bargain in answer to that is simply, we say, not to the point. If grounds are made out, the authorisation is given, the employers will be required to bargain. In any event, if the position taken to bargaining is sort of a belligerent attitude to the process, it’s difficult to see how the commission’s assistance not be beneficial and, particularly bearing in mind, that under the LPB scheme the availability of bargaining orders is specifically designed to remedy that recalcitrance.

PN4479

THE DEPUTY PRESIDENT: The view of the employers is obviously a relevant consideration under subsection (3) of 243. It’s not the case that one takes no account of the employer’s wish that it doesn’t want to engage in multi-enterprise bargaining.

PN4480

MR RUSSELL-UREN: No, or course not, but as to the question of whether or not the authorisation would assist the employees is still not to the point. Now, the reference to the assistance for the low paid is direct reference to the powers under section 246. Those powers are an aspect of the authorisation once in place. The multi-employer bargaining is another aspect of that - my apologies. I might just repeat that in that I’ve lost my point.

PN4481

THE DEPUTY PRESIDENT: Sure.

PN4482

MR RUSSELL-UREN: The reference to assistance to the low paid is direct reference to the powers under section 246. Those powers are an aspect of the authorisation once it’s in place. Multi-employer bargaining is another aspect of the authorisation. The respondent’s submission proposed that one aspect of the authorisation is a reason for which another aspect of the authorisation would have no utility, so in our view that’s a bit illogical.

PN4483

THE DEPUTY PRESIDENT: One doesn’t need a low-paid authorisation to access the assistance of the commission in bargaining. There are existing provisions which can be accessed by a bargaining representative in relation to requesting that the commission assist.

PN4484

MR RUSSELL-UREN: Of course if I may return to that point.

PN4485

THE DEPUTY PRESIDENT: Yes, the obvious difference being is that the commission can, once a low-paid authorisation is made, intervene on its own initiative which is not a power available otherwise.

PN4486

MR RUSSELL-UREN: Of course. The respondent has pressed a number of submissions for comparison between security guards and public sector security guards. It’s irrelevant. Those submissions are based on the view expressed by Watson VP in the ANF case. The applicant notes that at paragraph 26 of the aged care case the full bench took into account a comparison between the aged care sector and comparable occupations in other industries. If the comparison between - - -

PN4487

THE DEPUTY PRESIDENT: Which paragraph?

PN4488

MR RUSSELL-UREN: My apologies, paragraph 26 where it refers to other sectors. If the comparison between private and public security guards is not a comparison demonstrating industry standards, that is, if Watson VP’s view is accepted, then we say that it remains to be considered within the community standard element. To be clear, where Watson VP dealt with the comparison that was put forward he didn’t find the comparison was not relevant but in some detail - well, in some detail found that it was not an industry standard. He did not continue to consider whether it was a community standard.

PN4489

To the extent that there is a difference between the approach taken in the ANF case and the approach taken in the aged care case, if your Honour is convinced that there is a difference, we say that the full bench should certainly be followed. The applicant notes the respondent’s submission in relation to a community standard being that contained in the modern award but they repeat their earlier submissions in relation to this. We say that - it sort of runs counter - I mean, if the industry standard is the standard which applies to the industry in which the employees work and that in part in the respondent’s earlier submissions at least it was said to be reflected by the modern award, then for both words, industry and community, to have real content they must refer to different things.

PN4490

The respondent has elicited from Messrs Cheatham and Georgio evidence to the effect that the only security guards employed by the public sector were ASAs or agency security advisers and that those people did not perform work which was comparable. On the face of Mr Georgio’s evidence which was the most detailed the bulk of it was generally hearsay and no direct evidence was led.

PN4491

MR McDONALD: I object to that.

PN4492

THE DEPUTY PRESIDENT: You can rely on it. It’s just a submission so you can reply to it. There’s no need to object. Yes, proceed.

PN4493

MR RUSSELL-UREN: If despite that, the evidence is accepted and given considerable weight, it should be noted the rate of pay for ASAs was in the order of 120,000 and that they provided high level security advice. We draw the commission’s attention to page 14 of Dr Horton’s report to which I’ll return shortly and there it’s made plain that only 3 per cent of public sector security guards are paid that wage. In terms of the actual terms and conditions afforded to the employees we draw the commission’s attention to paragraph 26 of the aged care case and there what was said was that the employees in that case are covered by a modern award and protected by the NES - I’m paraphrasing. When it comes to the actual terms and conditions it’s clear that with the exception of the employees to whom an enterprise agreement applies, the minimum terms and conditions generally constitute the actual terms and conditions. It follows that earnings in the sector tend to be below sectors in which enterprise bargaining is more prevalent.

PN4494

The position of the employees covered by this application we say is actually stronger. The employees of SNP and Wilson’s are at the modern award and the NES. The employees of MSS and Secom are at the NES and below the modern award, in the case of Secom significantly so. The applicant submits that by applying the reasoning in the aged care case, the evidence contained in Dr Horton’s report and the uncontested evidence in relation to the terms and conditions actually afforded to the employees, the only conclusion available is that they fall well below both industry and security standards and we also submit that the comparison with public sector security guards is relevant.

PN4495

Section 242(3) subsection (a) requires a consideration of whether granting of the authorisation will assist in identifying improvements of productivity and service delivery. Now, the respondents asserted in their submissions that the applicant has not put forward any proposals which would deliver these improvements. That assertion is confusingly fleshed out by reference to the proposed agreement from 2010. We say that that approach is premised on a misunderstanding of the subsection. The relevant subsection requires consideration of whether the authorisation would assist in identifying those improvements.

PN4496

That’s fundamentally different from requiring an applicant to demonstrate a log of claims which would result in those improvements and that much was recognised in the aged care case where at paragraph 29 the bench described the test as a prediction with reference to the objects in section 241. So what we say is that the relevant question is whether the consequences of the authorisation will assist in identifying those improvements but we recognise and concede that there’s little evidence in the transcript to conclusively determine that question one way or another.

PN4497

In relation to the security profile I made three short points. The first is that the respondents led no credible evidence to contradict Dr Horton’s detailed report and testimony. The only evidence before the commission to the contrary is set out in pages 62-3 of the submissions. That would be attachment F to Mr Cheatham’s statement and, while I certainly don’t mean to be disparaging to Mr Cheatham, we say that the commission should certainly give more weight to the view of an economist with a doctorate over an ex-policeman’s view of an article which cites what is essentially a Wikipedia article.

PN4498

Now, just for point of the high qualifications, due to the absence of any contradictory evidence the respondents in their submissions seek to attack the base upon which some of Dr Horton’s views were expressed, so I’ll just briefly address a few of those points. The first is that between paragraphs 4 to 5 of the annexure which addressed the prevalence of security employees who hold qualifications significantly higher than that required for the job itself, in paragraph 5 the respondents submit that it leads to the inference those employees are ASAs or agency security advisers. (indistinct) demonstrate the exact opposite and that is there are quite a number of security guards, or at the very least he is one, who do the work despite holding significant qualifications, normally from foreign countries which aren’t recognised in this city. That we say tends to go against the point made by the respondents.

PN4499

Between paragraphs 8 to 10 there is a supposed inconsistency between the division of public and private sector workers. This is based on, we say, no credible evidence before the commission. Mr Georgio gave estimates of guards employed by other companies which were not based on personal knowledge. If I recall correctly, he had estimated that I think Secom had 100 or so employees when in fact they had 45. And they weren’t based on any direct knowledge but, even accepting that there are only 250 public sector guards, for reasons I’ve set out earlier we say they still fall to be considered.

PN4500

The only point that we’d make in relation to short member survey which was addressed and it will be my final point in relation to the security profile, the only point we’d make in relation to that is that cited in the submissions, transcript cited in the submissions of the respondent, that Dr Horton did not regard the survey as representative. He went on in the same paragraph to say, and this isn’t included in the submissions, that the survey was indicative, but we say it supports the proposition or, well, the points that are put out in the survey, but it shouldn’t be given conclusive weight. It’s merely indicative.

PN4501

I would seek to address finally the evidence in relation to Secom being that no employee was called. We say that there is evidence supporting the extension of the authorisation to both entities, that is Secom Australia Pty Ltd and Secom ACT. The pay slips put to Mr Gillani indicate that the rate of pay whether base or total is substantially lower than the award. If the commission finds that the employees of Wilson’s and SNP are low paid, then it follows we say as a matter of logic that the employees of Secom are also low paid, if not more so. Any conclusions as to the bargaining strength of the employees we say must also necessarily extend from that which is found in relation to the employees of other respondents. That’s because we say the bargaining strength is borne from the class of employees as much as it is from the individuals themselves.

PN4502

The terms and conditions of those employees of Secom ACT are as set out in attachment B to Mr Gillani’s statement, the same as for Wilson’s and SNP. The terms and conditions of Secom Australia are set out in the annexure, the further statement of Mr Gillani. On any view they’re well below the award, and I’ve already said that. The commonality between all enterprises has been demonstrated by the evidence of pretty much each witness, apart from the expert witnesses and I wouldn’t think that’s seriously in dispute.

PN4503

In attachment E to Mr Gillani’s statement which Mr Gillani adopted in full, Mr Campagna had asserted that the terms and conditions with regards to Secom ACT were set by the client. That we say goes to whether or not the terms and conditions were influenced or directed by a third party. This we say is enough evidence to extend the authorisation of the employees of those respondents. Unless your Honour has got any further questions I’d propose to leave that there.

PN4504

THE DEPUTY PRESIDENT: No, thank you. Yes, Mr McDonald.

PN4505

MR McDONALD: Your Honour, we filed an outline of final submissions and we rely upon those generally.

PN4506

THE DEPUTY PRESIDENT: Yes, I’ve read them.

PN4507

MR McDONALD: I won’t take the commission through those but I do wish to make some submissions in response to United Voice. I also want to make some observations about the factual background and the evidence in the case, make some observations in relation to the operation of the low-paid bargaining provisions and briefly address the criteria to be considered under section 242 and section 243.

PN4508

THE DEPUTY PRESIDENT: Yes.

PN4509

MR McDONALD: There’s a fundamental difference between the security companies and United Voice in terms of obviously the role of these low-paid authorisations has been and the union in its submissions up-front made it very clear that in their view the Act has no preference for enterprise level or multi-employer bargaining and that’s where the fundamental difference between us is.

PN4510

We say that the inclusion of these low-paid bargaining provisions of the Act don’t mean that enterprise bargaining is a thing of the past. We’re not now moving into a regime of industry based bargaining where unions don’t have to pursue enterprise agreements. They just get an industry together, they get an authorisation and then, if they don’t reach agreement, the terms of the industry over-award agreement is the determined by the Fair Work Commission. That would be winding the clock back many decades in Australia industrial history we suggest.

PN4511

We suggest that the very clear preference of the legislation, and I’ve quoted the various sections and authorities in the submissions, is a preference for enterprise level bargaining and that, even in the low-paid authorisation provisions, there is still that preference for enterprise bargaining and in some ways the purpose of low-paid authorisation provisions is not to encourage industry bargaining but, in a sense, to kick-start enterprise bargaining on a single enterprise basis. Just by way of a broad sort of factual background to this case, this is an application made by United Voice. Obviously United Voice is one of Australia’s largest and most powerful unions. There’s certainly no shortage of bargaining skills or resources that can be brought to bear.

PN4512

THE DEPUTY PRESIDENT: Mr McDonald, just on the question of preference to a particular form of bargaining, I’m assuming you accept the proposition of the full bench in the aged care case at paragraph 11 where they said:

PN4513

When the provisions are considered as a whole it’s apparent that the legislative policy underlying the low-paid authorisation provision is that, while bargaining on a single enterprise basis is a preferred approach, multi-enterprise bargaining is permitted, et cetera.

PN4514

That’s consistent with the submission you’ve just put?

PN4515

MR McDONALD: It is, your Honour, so we say there’s a preference for bargaining on a single enterprise basis but there’s this very confined provision in relation to low-paid authorisations and that’s for a very sort of specific purpose and there are big fences put around that, if you like, the most important one being that it would be in the public interest because there will be circumstances where multi-employer bargaining may be in the public interest in a particular circumstance. It would be the exception rather than the rule but then a lot of circumstances, if there was not employee bargaining, would be very much contrary to the public interest because it would result in (indistinct) bargaining for over-award payments across industries and the benefits that might accrue from enterprise bargaining in terms of productivity and efficiency benefits at an enterprise level would be lost.

PN4516

In the application made in relation to employees who wouldn’t generally be regarded as low paid, on any view of it, once someone is above the C10-type rate we would submit that they haven’t traditionally be regarded as low paid. The term “low paid” has generally been expressed to apply to people who are the bottom award classifications and I’ll talk about that a little bit further away, but generally the security guards here are not your most basic level security guards, so there are some who might be at level 1 who might just stand and guard a particular place but that’s not the people who are generally covered by this application. These security guards are more around the grade 3 level. All the security companies have said that’s the vast majority of people and those people are all post-trades levels and the level of earnings vary a bit but we say they’re generally around the 55 to 60,000 per annum mark.

PN4517

Thirdly, the application is very much aimed at the larger security companies and the most sophisticated security companies industrially and, from the evidence, that seemed to be a clear purpose. They didn’t want to have to deal with all security companies and so forth. They wanted to deal with the major companies who would know what they were doing. Those companies in terms of employee numbers are extremely large, Wilson Security with over 5000, MSS Security with over 5000, SNP with over two and a half thousand, even Secom had over 300 employees, so we’re not dealing with types of people who are under resourced in the sort of way we see is - which are the sorts of employers really that these low-paid bargaining provisions are directed but I’ll talk about that a little bit further.

PN4518

United Voice, in terms of their approach to bargaining, very clearly did not make any attempt to bargain at a single enterprise level. They simply bypassed that. They sought a multi-employer agreement. They wanted a 20 per cent increase. They wanted various other increases after that, various restrictions on flexibility and so forth, but they never actually really sought to engage at an enterprise level with any of these companies. They’ve extracted the industry campaign and in effect they sought a similar type of claim to what they’ve pursued in Victoria with their safeguard industry campaign there.

PN4519

It certainly couldn’t be characterised as a situation where there have been lots of efforts to try and bargain with a particular employer and it came to no avail. There was simply no effort whatsoever. And the rationale of the union seems to be that, with these claims, they would sit around at the major security companies, agree on the increase of 20 per cent or whatever it might be, and then the government would simply pick up the tab. We say that sort of logic is somewhat naïve but, in any event, the federal government doesn’t appear to be interested in any way whatsoever in involving itself in that type of thing or being singled out to pay more than other employers in security services.

PN4520

And there’s a real concern that was expressed by each of the security companies as to its competitive position. There were four or so companies that are covered by this application but they’re only a small minority of the overall number of security companies that operate. Mr Rogers, for example, talked about his international competitors. G4S, for example, who operate in Australia, they were removed from the application initially. He said how two of the world’s largest security companies, Polk and Prosegur, are just starting in Australia and they’re expecting to have to tender against these companies, and these companies aren’t included in the application.

PN4521

Even the two particular tenders that the union identified in the evidence of Prof Hardy indicate that there’s a large level of competition with the ACT tender about the locking of gates. There were some 30 companies that tendered for that. In relation to the National Library there were some eight companies. It was clear from our submission and from the evidence that there were strong commercial imperatives. It was a very competitive industry. It was very hard to maintain contracts and win contracts and, if the circumstances are such that these employers are put in a position where they’re not competitive with the other companies, they will simply lose contracts or not win new contracts and their employees will lose their jobs.

PN4522

Now, that might be a submission that the commission hears from time to time but in this case it was a very real concern, we say, that there was evidence put by Ms Travis about what’s happened in Victoria as a result of the Safeguard Campaign. In her evidence she listed the various places where MSS had had contracts and lost them, various places that they expected to win them and didn’t and the extent of job losses that arose in Victoria as a result of that campaign. So we say it’s not a concern that doesn’t have some very valid basis. We say that evidence has been put forward to very much support that concern.

PN4523

If I can make some observations about the operation of the low-paid provisions, the first point that we’d make is that while there has been some debate over the years about the role of awards and so forth it’s clear since the Fair Work Act that the Act establishes a system of a fair and enforceable safety net of awards and the National Employment Standards and, setting what the rates and conditions are in those awards, the commission clearly has regard to the needs of the low paid in doing so. It’s not necessarily the case that for someone to have a fair wage that enterprise bargaining is required. That’s not to say that we don’t say that enterprise bargaining is encouraged by the Act and it clearly is.

PN4524

But we do say that there’s not a level of compulsion in the system in relation to bargaining so it’s quite open, for example, for an employee to say, “Look, in terms of going down the path of an enterprise agreement what the employer wants from me is too much and I’m not prepared to enter into an enterprise agreement on that basis.” An employee has that right and if an enterprise agreement doesn’t result, then there’s no particular problem with that under the Act. The Act does want to make sure that people have access to bargaining. Similarly an employer doesn’t necessarily have to jump into bargaining. An employer can make a decision about whether the award suits them and they can make a decision about whether what’s on offer from its employees or a union in terms of an enterprise agreement is going to suit its circumstances and it can make a decision about whether it’s ultimately going to be to its benefit and its employees benefit.

PN4525

We’ve recorded in our submissions, and it’s referred to in paragraph 11 of the aged care case about the preference for single enterprise bargaining under the Act, we do recognise that there are exceptional circumstances where multi-employer bargaining is allowed but we do say it’s very much the exception rather than the rule. There’s been a few examples over the years where there has been single enterprise bargaining but they’ve normally been restricted to circumstances where there are employers who are very small employers or who lack the sort of resources necessary to have agreements. They’re not competing with each other and the ability to bargain together is going to assist them in terms of productivity and efficiency gains.

PN4526

One matter that comes to mind is in relation to Pizza Hut and Pizza Hut is made up of lots of small franchisees that each might have a handful of employees. In that circumstance they’ve been permitted to have agreements together because by that way they can all band together. They can have more sophisticated human resources and policies. They can band together in terms of making sure that they can deliver staff training and so forth which, by themselves, they really wouldn’t be able to do. But the difference there is that those little Pizza Hut franchisees aren’t operating in competition with each other. They each have their own territory and they’re relying upon each of the other Pizza Hut franchisees to do their bit to build the plan there. They’re working as a common enterprise.

PN4527

That’s far from the situation here though where you’ve got these very large companies that are very well resourced, that are in strong competition with each other and we say that, in those sorts of circumstances, multi-employer bargaining simply wouldn’t be allowed. We say that, using the Pizza Hut type example, one might be able to establish an argument that it’s in the public interest but in relation to - - -

PN4528

THE DEPUTY PRESIDENT: That’s not so because, putting aside the Pizza Hut example, the provisions which those types of employers use are the single interest employer authorisations in Division 10 and they’ve been used, for example, to permit public hospital nurses in Victoria and their employers to bargain collectively and the essential issue there is that there is some commonality of interest between the employers which makes it more efficient for the purposes of bargaining that bargaining occur on a multi-employer basis. But provisions in Division 9 are not concerned with commonality of interest and, indeed, it would be surprising if they were somehow to be read down by reference to the fact that employers who might be the subject of an authorisation are in competition with one another. I don’t see how one could get that from those provisions.

PN4529

MR McDONALD: We say that it is possible to get that from those provisions in relation to the public interest aspect because what the commission is required to do is to identify when something is in the public interest.

PN4530

THE DEPUTY PRESIDENT: You say this is an additional consideration that goes to public interest not one that arises from either subsections (2) or (3) of 243?

PN4531

MR McDONALD: Not necessarily, your Honour.

PN4532

THE DEPUTY PRESIDENT: Well, can I put this to you, that United Voice’s submission - I can’t remember whether it’s the first submission they filed or the subsequent one - but they make a point that the matters to which regard must be had are not confined for the purpose of identifying the public interest to those in subsection (2) or (3). That’s a non-exhaustive list of matters. The public interest can be informed by other considerations so long as they’re relevant. That’s their submission. Do you agree with that proposition?

PN4533

MR McDONALD: We don’t disagree with that proposition but we say that these types of notions I’m referring to are implicit in the provisions of Division 9, in particular the objects in section 241 and in terms of ascertaining where the public interest lies, we submit that one would have regard to the objects of the Act and seek to delineate from the objects of the Act where the public interest is - - -

PN4534

THE DEPUTY PRESIDENT: Indeed, and to the extent that a consideration which might otherwise form the basis of a public interest consideration where it was inconsistent with the objects would clearly not be relevant.

PN4535

MR McDONALD: Yes.

PN4536

THE DEPUTY PRESIDENT: And the difference in the matters identified in 243 subsections (2) and (3) is that those matters must be taken into account whereas other matters which might be identified may or may not be taken into account.

PN4537

MR McDONALD: Yes, your Honour.

PN4538

THE DEPUTY PRESIDENT: But getting back to your point then that the question of the competitive nature of the industry and how that is relevant to the public interest, do you say that arises from one or more of the enumerated factors in subsections (2) or (3) or is it a separate consideration which you say I should take into account?

PN4539

MR McDONALD: No, we say particularly when regard is had to the objects that the low-paid authorisation provisions are directed at a particular type of employee and employer, particular circumstances, and in those types of circumstances there may be an argument about there being a public interest in those circumstances for there to be a low-paid authorisation but that doesn’t mean that there’s a public interest in other circumstances so that - - -

PN4540

THE DEPUTY PRESIDENT: The fact that a group of employees are low paid per se doesn’t result in a low-paid authorisation.

PN4541

MR McDONALD: No, your Honour.

PN4542

THE DEPUTY PRESIDENT: Yes, but my question is in this particular case how does the fact that the employers who are the subject of this application are in competition not only with one another but also with both large and small employers in the industry who are not subject to this application; how is that a relevant consideration in relation to public interest?

PN4543

MR McDONALD: Because in part those employers are in a position, if they wish and approaches are made and so forth, to be able to bargain. What the low-paid provisions are directed to are those employers who lack skills and resources maybe due to their size. It means that they can’t bargain. They can’t find where productivity and efficiency benefits might be able to be ascertained. That’s not this type of employer and, in terms of someone coming in and trying to help these employers to find where there are productivity and efficiency gains, that’s not something that really needs to be done with employers with 5000-odd employees and the market tends to be able to operate to enable those employers in a positive way to compete and seek to unlock the productivity and efficiency in their organisations. Now, if it is the case - - -

PN4544

THE DEPUTY PRESIDENT: So your submission is that it’s relevant in the context of considering whether there would be assistance in identifying improvements in productivity and service delivery at an enterprise level?

PN4545

MR McDONALD: In part, yes.

PN4546

THE DEPUTY PRESIDENT: In part, yes.

PN4547

MR McDONALD: But we say that there are, in effect, two sets of rules: the low-paid bargaining which is for a very confined group and that’s got its own rules around it and its own fences around it. If it didn’t, then there would be a real problem if simply any industry could have industry agreements and that was considered to be in the public interest and the term “in the public interest” is obviously a broad term but, to give it meaning, reference has to be had to the low-paid bargaining provisions, we submit, and in particular the objects and those objects seem to make it clear that the intention is that the low-paid bargaining provisions operate up to a confined class, and that’s not only in relation to employers but also employees.

PN4548

I’ve referred to the cases in our submissions but the hurdle of something being in the public interest we say is a very high hurdle. There are other provisions that there have been legislation about looking in relation to the approval of an agreement; that it wouldn’t be contrary to the public interest. That’s a much easier test because it would be more focused on the issue of the particular employers and employees but, in this case, it’s really looking at whether there’s some public interest to be served outside of the interests of really the immediate parties by granting a low-paid authorisation and we submit none has been demonstrated.

PN4549

Just looking at section 241, the objects of the division, I make a few observations about how those objects are drafted. First off, we notice in 241(a) that it’s dealing with encouraging low-paid employees and their employers. So it’s not just something that’s confined to employees, it’s also seeking to address those employers that have a lack of resources and skills and so forth. And it also looks at those who have not historically had the benefits of collective bargaining. Implicit in that is the idea that there’s going to be some benefit out of collective bargaining and then that’s reinforced by the idea that it will then lead to making an enterprise agreement that meets their needs.

PN4550

So the purpose of these provisions is not to make an industry agreement or a multi-employer agreement, the purpose of these provisions is to make an enterprise agreement on a single enterprise basis. We say the union’s fundamentally in error in seeing this as a way to have industry agreements rather than enterprise agreements. It’s all about trying to make enterprise agreements. And then it’s also an enterprise agreement that meets their needs so there’s the suggestion that in some ways there will be a focus on the needs of those parties immediately concerned what the employees want, what the employer needs, as part of that agreement, and we say that in the context of an industry agreement of the type proposed by the union there was no regard whatsoever to that. It was simply, “We want the 20 per cent increase. We want paid union delegate training leave,” and various other union rights and a few restrictions on productivity and efficiency but that’s not the type of thing that this is really aimed at.

PN4551

And then in (b) it talks about again the reference to employees and their employers being assisted to identify improvements to productivity and service delivery and we say that type of assistance, while for a small under-resourced employer, perhaps the security companies that aren’t covered by this application, they may be assisted by that but for these very large businesses we say that those employers don’t really need that type of assistance. We say that there’s no reason really why, if the union sought to negotiate on a single enterprise level, it couldn’t assist the employees to bargain and for productivity and efficiency benefits to be considered but the whole thrust of this seems to be to make sure that we avoid any reference to the particular enterprise or the particular employees in favour of this sort of industry-type approach.

PN4552

And then in (c) it talks about - and I think this gives a further clue to the types of people who this is directed at - to address constraints on the ability of low-paid employees and their employers to bargain at an enterprise level. Now, we say that’s always been a consideration, for example, in relation to multi-employer bargaining about whether people can bargain themselves at an enterprise level and there’s no question, in our submission, that the companies concerned wouldn’t be in a position if appropriate to bargain at an enterprise level and, in terms of the types of constraints that have been looked at, it’s constraints such as a lack of skills, resources, bargaining strength or previous bargaining experience, so there seems to be no question about these companies having a lack of skills or resources.

PN4553

They generally had human resource departments. They’ve generally exhibited previous bargaining experience, if not in the ACT, elsewhere, so we say that it couldn’t be said that at least those employers are people who lack skills, resources, bargaining strength or previous bargaining experience. In terms of the employees, the same might go as well. There have certainly been agreements at MSS, the old Chubb agreement, and also an agreement at Secom. And then (d) seems to suggest that the Fair Work Commission would provide that assistance for those employees and their employers, those who have these constraints because of lack of skills and so forth, to make enterprise agreements.

PN4554

We say that’s really sort of directed at those small unsophisticated employers who don’t have the resources or the skills to bargain for themselves and, when we were referring to some of those other cases under the Workplace Relations Act and so forth about employers who might be regarded as being able to bargain for themselves, we say that’s entirely relevant to the provisions here because in particular when one looks at paragraph 241(c) we say that these employers are not ones that are of sufficient size and sophistication that they wouldn’t lack those things.

PN4555

Now, in our submission we’ve referred to various of those cases and one of them is in relation to some aged care providers in Tasmania and I refer to paragraph 29 of our submissions, Aging Community Services of Tasmania v Ors re Multiple-Employer Agreement where the full bench said in that case that there were two particular matters that weighed against the application, the first being that at least two of the employers have a large number of employees, OneCare with 123 employees and Southern Cross with 145 employees. Well, compared to the companies in this application with over 5000 employees, we say that the observations of the full bench there certainly hold true.

PN4556

These companies are in a position, if appropriate, to be able to bargain for themselves. They’re not the type of employers that are being referred to in section 241 and in the Independent Supermarket Agreement case, which is cited at paragraph 28, in that case the full bench said that employers employing an average of 70 employees at the award level might be well capable of reaching an enterprise agreement.

PN4557

So we say in construing the public interest, that there may be a public interest in dealing with those types of employers who are envisaged by section 241. That doesn’t mean that there’s a public interest in looking at other employers. In fact, in our submission we would say it’s against the public interest because it really moves away from the concept of single enterprise bargaining and overwhelms the preference under the Act for bargaining to occur on that basis. I’ve spent a little time on section 241 though because we say that, looking at the criteria that are referred to in section 242 and 243, they have to be viewed through the lens of the objects in section 241. In particular, that’s made clear when looking at the considerations in section 243(2) and particularly 243(2)(a) dovetails very much with section 241 about whether granting the authorisation would assist low-paid employees who have not had access to collective bargaining or face substantial difficulty bargaining at the enterprise level.

PN4558

In relation to the reference to low-paid employees we say that’s extremely important. It was established I think the aged care case that you don’t necessarily look at that as a preliminary issue in relation to jurisdiction. A similar approach was taken by Watson VP in the ANF case but that’s not to say that it’s an important consideration and, looking at a low-paid authorisation ultimately - we submit on the look at the evidence - but ultimately if at the end of the day the employees who are affected by the application aren’t substantially low paid, then the application couldn’t go anywhere because the application wouldn’t be one that’s assisting low-paid employees.

PN4559

Maybe a poor analogy but it’s a little bit like unfair dismissal, if there’s not a valid reason for the dismissal, it’s sort of whether or not the other factors are ticked off or not it doesn’t really make a lot of difference. It’s whether it’s going to assist low-paid employees is a very fundamental aspect of the low-paid bargaining scheme. If it doesn’t then, in our submission, any application would fail. Now, the union in its submissions refer to the traditional benchmarks that have been established in annual wage review benches. I don’t think there’s really any debate about what the meaning of low paid is. Benchmarks are used such as whether it’s C10 or above.

PN4560

THE DEPUTY PRESIDENT: Well, except that, United Voice, I understand in their submission they say one ought not take into account anything other than effectively the base rate of pay so there’s a substantial difference between you two about what is measured. You say, well, you should look at the totality of the
pay - - -

PN4561

MR McDONALD: Yes.

PN4562

THE DEPUTY PRESIDENT: - - - which includes a component of overtime and United Voice says what you need to look at is the base rate of pay.

PN4563

MR McDONALD: I think on that point, even if one accepted the union’s proposition on established standards, the employees would still not meet the measure of low paid. But in terms of looking at what employees earn we say that that is a relevant consideration and it shouldn’t be simply an artificial exercise. In the evidence, the employees would come along and they’d identify the hourly award rate of pay but, for many of those people who gave evidence, they never received that rate of pay. They were always receiving a different rate of pay which was voted in some way.

PN4564

So we say that it’s appropriate to look at the reality of what people earn. I think you know in the context of when the employers have been challenging penalty rates and the like, United Voice have been at pains to make it clear that you’ve got to look at the overall package of what people receive. But it shouldn’t be an artificial thing. In terms of the low-paid authorisation, it’s looking at the needs of the low paid and you can’t look at the needs of the low paid unless the earnings that they receive are taken into account.

PN4565

None of that relates to issues such as affordability and the like so annual wage reviews, cost of living and that type of thing are certainly things that the Fair Work Commission, or the annual wage review bench takes into account. Reference was made by the union in relation to the aged care case and that that stood for some proposition that you don’t take into account overtime and penalty rate earnings. We say it doesn’t stand for that proposition. In the aged care case there was a position put by the employers that it should have regard to lower tax rates deal, particular tax benefits that might arise - - -

PN4566

THE DEPUTY PRESIDENT: Salary sacrifice, yes.

PN4567

MR McDONALD: Yes, from salary packaging and I think that the
Fair Work Commission wasn’t really - - -

PN4568

THE DEPUTY PRESIDENT: I think it was actually salary sacrifice which is unusual or limited to the not-for-profit sector as opposed to salary packaging so the benefit is taken out of the before-tax income and tax is applied to the remainder only and the commission rejected that proposition.

PN4569

MR McDONALD: Yes, and that’s certainly not a proposition that we’re putting and I think the commission generally has been reluctant to start delving into what after-tax income is and the tax is generally a matter for the government. In relation to whether these employees have had access to collective bargaining or face substantial difficulty bargaining, the simple point is that the union has deliberately not tried to bargain on - - -

PN4570

THE DEPUTY PRESIDENT: Sorry, I’ll just go back to that point. If you look at the decision of Watson VP in the ANF case, at paragraph 94 he deals with the notion of the meaning of low paid. He acknowledges that the concept is a matter of degree. It’s imprecise. He proposed to take a broad view of the term, although adopting the full bench’s view in the aged care case and the annual wage case and he says that he’ll take a broad view in the context of the evidence of pay of the employees. And you read that in combination with what his Honour says at paragraph 102. He says:

PN4571

In my view the evidence reveals that very few employees, subject of the application, are paid below $19.30 per hour.

PN4572

And he refers to some of the evidence in the proceedings. It seems on that basis that his Honour is actually looking at the actual rate received rather than the base rate provided for in the award to form that conclusion.

PN4573

MR McDONALD: Yes, it seemed to have been the practice in that industry to sort of talk about an hourly rate and it didn’t seem to distinguish about whether that was for in excess of 38 hours or involved shift work and so forth. I should say though that in that case the evidence generally was that the nurses were working day work Monday to Friday so it didn’t really arise so much for consideration.

PN4574

THE DEPUTY PRESIDENT: Yes.

PN4575

MR McDONALD: But I suppose one aspect of his Honour’s decision about not being able to be too exact is that there will be various different employees, some who earned quite well, some who don’t earn as well, different levels of qualification, depending on the scope of the low-paid authorisation sought so one couldn’t be overly precise. I think in this case it is a lot more targeted in terms of where the security guards are graded. As your Honour would know, with nurses there are different levels, instructors and so forth, based on experience and so forth, whereas in this case we are really dealing primarily with that grade 3 level security employee and we can fairly certain about the types of earnings that that grade 3 employee would receive.

PN4576

In terms of the criterion at 243(2)(a) in relation to access to bargaining or facing substantial difficulty in bargaining, it’s at the enterprise level. It’s not at the industry level so the applicant in this case has not made any attempt to bargain at the enterprise level so, first off, they’re not low-paid employees but, secondly, that there hasn’t been any attempt at bargaining at the enterprise level and we would say that would be a very negative factor towards the union’s case.

PN4577

We say too that that criterion is directed at people being able to have access to bargaining. We don’t say that we go so far as requiring that people have to ultimately reach an enterprise agreement if, ultimately for example, the employees decide, as I mentioned before, that they don’t think it’s in their interest to vote in favour of a particular enterprise agreement because they believe they have to give up too much. That’s very much open to them to do so.

PN4578

Perhaps they’re just going off the track for a moment but there is however one thing to keep in mind with these determinations that, unlike many other provisions of the Act which are very much voluntary-type provisions, the effect of these provisions is really one to take things out of the hands of the parties themselves and care should be taken in doing that. There’s really a deprivation of the rights of people to determine their fate. Now, the union, for example, has a considerable membership. I don’t think it’s a majority membership in the industry but, for all those other employees, they’re no longer going to have - if the low-paid authorisation is granted - they’re not going to get a say in what conditions are suitable for them, whether the enterprise agreement or the industry agreement that’s being proposed by the union suits them. Similarly for the employers, they’re not really going to have a say into this as well. In terms of those people who are already under agreements, such as those at Secom or at MSS, they will lose control over those agreements.

PN4579

One thing that came up of course in evidence was voluntary overtime, for example, and that’s something that there’s been some debate about. It was conceded that there are employees at MSS that really like voluntary overtime and it very much suits their circumstances, there are some that are not, and there’s been sorts of issues about trying to work out how to best balance it and to some extent they’ve worked it out. There are other things in the MSS agreement that advantage employees such as increased penalties for an afternoon shift but what we say is that, for those employees, they can determine what sort of arrangements they have.

PN4580

They can vote in favour of those arrangements or they can vote against those arrangements and, in the context of a low-paid authorisation or an industry agreement, something like voluntary overtime is unlikely to surface there. It’s unlikely that the union is going to support that. It would be very much dependent upon what perhaps other companies or what other employees think. And then there are also things that the parties are giving up as part of a low-paid authorisation. I mean, just in terms of the process of bargaining itself, the idea of bargaining is for employers and employees to come together.

PN4581

You hope that process will be a very positive one, that there will be engagement between the employer and employees about things that matter to their enterprise that are going to make that business more successful, that are going to make the working lives of the employees who work there better. Everyone has an opportunity as part of that process to have input into that and, even just looking at what happened at MSS with the agreement which unfortunately didn’t ultimately get approved, but there was this level of communication.

PN4582

Mr Cheatham, for example, went around and saw all the particular security guards at each of the sites and they discussed matters of concern to them. There was a level of communication between the employer and employees. Everyone had a say, everyone had an opportunity to come to the bargaining table, not everyone agreed, but they all had an opportunity to come to the bargaining table and say what mattered to them. All those sorts of things will simply be swept aside if there’s a low-paid authorisation. It won’t really matter if they’ve had an enterprise agreement or they’ve been used to certain things because, at the end of the day, the low-paid authorisation and any workplace determination that might arise from it will simply sit over the top and override the provisions of the enterprise agreement that they voted in favour of.

PN4583

The other point of course is that a low-paid authorisation prevents people from being able to take industrial action in support of their aims. It would be quite open to employees to seek majority support to determinations. The union could inform them about that. It would be quite open to them to seek to take protected action or at least make a vote about a ballot. All those rights would be taken away from the employees in favour of this low-paid authorisation.

PN4584

One would have thought that it wouldn’t be all that difficult, and the union has certainly been able to do it elsewhere, to approach employees, seek an agreement. If they can’t get an agreement to take - advise employees about the steps that they can take under the Act in order to achieve that. So we say in terms of is it going to assist, one has to do some comparison in terms of what would be the other avenues open to low-paid employees and, at least as a starting point, one would have thought that the best way to assist low-paid employees would be they want an agreement to enable that to occur on a single enterprise basis because maybe the more conventional approach may well be the more successful approach than what is being proposed here.

PN4585

Because what is being proposed here is a process that will certainly turn to failure in terms of reaching any agreement out of a low-paid authorisation. The low-paid authorisation in this case would simply be a step to a workplace determination occurring because it’s very clear that the differences between the parties are such that there’s not going to be any interest in the employers sitting around a table and coming together with an agreement with their competitors. They’ve all made that entirely clear; the process is not going to succeed. So it’s really just going on a trajectory of some sort of arbitrated outcome, it would seem.

PN4586

In terms of criterion (b) in 243(2)(b) we say that the ACT branch of the union seems to have taken this line that they would prefer to have industry agreements in the ACT. It would’ve been open to the union to come into these proceedings and talk about all the enterprise agreements that they had successfully negotiated in the ACT and the sorts of productivity and efficiency gains that have been made as a result of those agreements but we don’t get that.

PN4587

The union comes to the commission and says, “We’re not prepared to bargain on a single enterprise basis. Where enterprise bargaining has occurred, and we’re aware that it has occurred at Secom, we’re simply not going to bargain. We’re going to seek an exclusion for the ACT from any negotiated Secom agreement.” Of course another approach would have been for the union to engage with it and say, “That’s great. Here’s an employer that wants to bargain. They’re sending out these draft agreements and so forth. Other representatives of the union are negotiating with them,” but instead the union here says, “We don’t want to bargain. We’re not prepared to bargain and we want to be excluded from that agreement.”

PN4588

And they did bargain with MSS but they really didn’t have any choice. There was an existing agreement and MSS initiated the bargaining. If you look at the situation with the respondents elsewhere, they all have loads of enterprise agreements with United Voice and other unions in all different parts of Australia. Wilson Security, for example, have agreements in all the different states so, in terms of their Commonwealth contracts like for the Tax Office in Canberra, in every other state the Commonwealth contracts are governed by enterprise agreements but not in the ACT and, in part, that seems to be because the union has really never taken any steps here to have enterprise agreements.

PN4589

In relation to the criterion in 243(2)(c) about the relative bargaining strength, in our submission the union is very organised here. It has got a regime of licensing that’s been put in place. It has recently achieved portable long service leave. It was able to organise protests from security guards in support of this application and the industry agreement so there’s no issue about the union being a weak union or employees not having bargaining strength.

PN4590

The employers on the other hand, they’re large and I suppose that gives them a level of bargaining strength, but it’s certainly been put that they’re very vulnerable in terms of competition. A lot of the areas in which they work are in the nature of an essential service in that to operate they really need to have a security presence and so, if there was any industrial action or other difficulties, that could create problems for those employers but, if there’s any inequality of bargaining strength, we don’t say it’s the employers necessarily having the upper hand.

PN4591

In paragraph (d) about the current terms and conditions of employment, it would’ve been open to the union if it wanted to compare public sector security guards to private sector security guards to bring those people forward to give evidence about what they do, what they get paid, whether the work is similar, but we didn’t really get any of that. We had an economist who wasn’t professing really to know anything about the security industry, try and get some data from the ABS about where people worked. We say that that data didn’t really ring true to us. It didn’t seem to be consistent with the evidence but, putting that aside for a moment, the union’s case didn’t really put the position in any position in which it was able to do a proper comparison between the work performed and the industries and so forth.

PN4592

At least in the ANF case, while the comparison was ultimately rejected, you had nurses from the public sector saying, “This is what I experience. This is what people get in the public sector. This is what people get in the private sector,” and Watson VP was able to consider that issue but the first point of comparison should be one with other people in the industry. There’s been no comparison with what other people in the industry get and then, in relation to community standards, that’s a rather sort of broad notion but community standards, in our submission, are personally found in the modern awards and the National Employment Standards so when the union talks about community standards it’s not something that sets aside a community standard, for example, in relation to wages. It’s the wages that are set out in modern award, in our submission, or the community standards in relation to - - -

PN4593

THE DEPUTY PRESIDENT: Mr McDonald, what do you say that the word “relevant” before industry means? Is the word “relevant” referable to the terms and conditions or does it mean - compared to relevant industry or community standards? Does the “relevant” refer to the standards that are relevant or is it confined to a relevant industry and not necessarily the security industry?

PN4594

MR McDONALD: We would submit that it’s related to the security services industry so that would be the industry standard and it would be looking at other people in that industry to determine whether the current terms and conditions of employment compare favourably or otherwise. So in the nurses case, for example, Watson VP was looking at, say, clerical people in a doctor’s practice as compare to what the nurse would receive. It would be open in this case, for example, to look at what the people who install security devices for the security services industry, what they get paid is compared to what a security guard gets paid or other people in the office.

PN4595

THE DEPUTY PRESIDENT: But not a public servant who performs security services?

PN4596

MR McDONALD: No.

PN4597

THE DEPUTY PRESIDENT: Because you say that’s a different industry and on Watson VP’s approach that’s not an industry in which these employers operate?

PN4598

MR McDONALD: Yes, your Honour.

PN4599

THE DEPUTY PRESIDENT: I understand.

PN4600

MR McDONALD: No doubt in that regard if one takes the evidence, for example, of Secom there were any number of agreements that were listed in an attachment to Mr Gallini’s statement of agreements they had with the CPU and so forth in relation to the technical side of their work. There are other people who potentially there could have been some comparison attempted at but there was no such comparison.

PN4601

In terms of criterion 2(c), the degree of commonality and the nature of the enterprises, we would say could go either way. The union says there’s a degree of commonality and so that favour the grant of a low-paid authorisation but we point to the degree of commonality as being one that means that there’s a degree of ease of substitution for security services so that if, for example, one of the companies that are subject to this application is tendering against G4S or Prosegur or the other companies who are not part of the application, it’s not really too difficult perhaps for the person who’s considering the tender to say, “Well, look, we’ll let that company go. That’s part of the low-paid authorisation. This other company seems to be somewhat less expensive and also has a lot of experience in the security industry.”

PN4602

But in terms of looking at the degree of commonality, we say that all security companies bear some similarity with each other. Of course there are important distinctions between them. At a very basic level they all provide security services but they all do it in their own different way and that’s the way that the market works and they all compete with each other. They’re constantly trying to do things better to make those enterprises more successful and we say that that’s entirely appropriate. But one other point that does arise is that it was clear from the evidence that the settings in which security guards work, even in the Commonwealth public service, are widely variable so you have some people who are at the National Portrait Gallery - I can’t recall the gentleman’s name but he was at the National Portrait Gallery educating people about art and art storage and you had other people who were working at ASEO and presumably had quite different imperatives.

PN4603

Then you have other people in sort of more touristy-type situations, the National Museum. You had a range of operational requirements that were different so some places were day work, 9.00 to 5.00, Monday to Friday. Other places it was really working outside of normal Monday to Friday day work hours. So it would be not difficult to see why you wouldn’t have separate consideration about terms and conditions of employment at particular sites. I think Ms Travis made this point very strongly in her evidence that MSS has been able to achieve increases for guards at particular locations because the client is able to identify the benefits which those security guards are able to offer at those particular enterprises.

PN4604

It makes it much easier looking at a particular site to negotiate improved terms and conditions of employment, whereas if one is just doing it on an overall basis, it seems as though cost is very much a major factor and, the idea of what particular security guards are doing or the particular operational requirements, to some extent get lost in the mix. In terms of matters relating to the likely success of bargaining in the criteria set out in section 243(3), the first of the criteria is where the granting of the authorisation would assist in identifying improvements to productivity and service delivery at the enterprise to which the agreement relates.

PN4605

There was nothing put in the evidence, and I think the union accepted this in its final submissions, about how productivity and efficiency could be improved. It was very faintly asserted by Lyndal Ryan that if the union is successful in getting the industry wage increases through that it might help with retention but that was not really sort of followed up in a significant way. But there was nothing put forward about what productivity and efficiency gains might be achieved by having an industry-wide agreement.

PN4606

And going back to the Pizza Hut example, for example, not the best example perhaps but you could see how all these sorts of little franchisees might be able to get some support and better human resources practices if they all banded together but that’s not the situation here. There are simply no productivity and efficiency gains proposed. In fact, the things that were proposed were all restrictions on productivity and efficiency on top of the wage increases that were proposed.

PN4607

So looking at that, one could not form the view, in our respectful submission, that this was going to improve productivity and efficiency at all and the other thing is that, where there were existing enterprise agreements such as at MSS or at Secom, it’s proposed that the low-paid authorisation would simply override those agreements. I mean, presumably if there was a workplace determination that would override those agreements as well. So not only is it sort of saying, “Well, we don’t want to have to bargain on an enterprise basis but we want to use this to make sure that, where it has occurred, we stop that from happening as well.”

PN4608

Just in terms of the claims that have been made by the union that are set out in paragraph 119 of submissions, there are things like a job security clause which would limit the use of casual employees, enhance redundancy pay up to 56 weeks, the provision of employee wages information to the union, increased overtime penalties, various industrial relations matters like paid trade union training leave up to eight days and restrictions on the use of labour hire and subcontracting. There was nothing at all in the proposal that went to productivity and efficiency.

PN4609

In terms of 243(3)(b) about whether the likely number of bargaining representatives would be consistent with a manageable collective bargaining process, we did hear evidence from MSS about what happened in its bargaining process and how that was rather difficult because there were various views, various different representatives, not just those of the union, and they’ve really made that process a very difficult one. If that was to occur in relation to all the companies, we would say that would simply compound those difficulties.

PN4610

In terms of the views of employees and employers who will be covered by the agreement, I think in terms of the views expressed by employees it would be hard to disagree with what the union was saying about the employees perhaps not having a very good understanding of the ins and outs of the different types of industrial regulation and so forth. It seemed clear that they would probably like a wage increase but, the form that that would take and so forth, it wasn’t clear that they really understood all of that and it didn’t seem to say there had been any attempt by the union to explain the different options that might have been available to the employees.

PN4611

And your Honour might recall that I put questions to some of the witnesses about other approaches that might’ve been able to be taken, like a majority support determination of a particular site level and whether those sorts of things had been explained by the union and they hadn’t been. So on the one hand you do have these surveys about whether people would want an increase in pay and generally people said yes. There was the MSS agreement which was a very substantial agreement and it was said that 77 per cent voted in favour of a single enterprise agreement there.

PN4612

Obviously the union represents a certain proportion of the workforce, not a majority of the workforce, and the views it expresses are in large part the views of the employees that are represented but I don’t think any view can be taken that the application reflects the views of all the employees who would be covered and certainly, for example, in relation to Secom the proposal is that they lose the enterprise agreement that they’re covered by and the union not be involved in any enterprise bargaining and that’s a fairly significant effect on the employees concerned and none of those employees were called to give evidence and the union say, “Well, look, you can simply infer what their evidence would be because you’ve heard evidence from security guards from other companies.” We say that’s not an appropriate approach.

PN4613

We do have the very clear views of the employers that they don’t believe that they should be treated differently to any other employer in the sense that they should be able to determine for themselves what above-award terms and conditions of employment they’re prepared to offer and whether they want to negotiate with their employees, obviously subject to the provisions of the Act, but all of that does mean that the likelihood of this industry bargaining being successful, as we mentioned, is rather remote.

PN4614

The other point that has been raised is about the extent to which terms and conditions are controlled or directed or influenced by a third person and the union seems to say, “Well, the government simply funds the security industry.” Well, we say that’s very much a misunderstanding of what the position is. It’s quite different to the situation in the aged care case where the commission might recall there was a load of money, an aged care plan, and part of the plan was to look at conditions of employment and wages in the industry, training and so forth, so the government was coming to the table with that money to the employers who weren’t in a competitive environment and the question was could they talk about how that money would be utilised.

PN4615

I’m sure the security companies would be happy if the government came to them with that sort of package but unfortunately that’s not happening and Senator Abetz made that view in his correspondence that they don’t see themselves as having to pay anything more than anyone else should and they don’t want to be involved in any enterprise bargaining or industry bargaining with the security companies. In any event, it’s hard to see that there’s any public interest served, even if the security companies wanted to, by agreeing, “We’ll charge the government 20 per cent more,” and then the government simply having to foot the bill and it having to be absorbed by taxpayers without any regard to productivity and efficiency. In terms of the public interest test, in our submission it must really fail that.

PN4616

It may well be that the union referred to it a little bit in its case that in some circumstances such as in cleaning they’ve been able to control the market to some extent by having the government to agree to contract on a certain basis but, in newspaper articles attached to Mr Cheatham’s statement. it seemed clear that if there was any ability to control the market that’s very much stopped now and if there are employers who are left with those cleaning staff agreements then they’re in some difficulty now given the change of government.

PN4617

The last criterion that the commission has to address is the extent to which the applicant for the authorisation has prepared to consider and respond reasonably to claims or responses to claims made by a particular employer. Now, the union of course says, “Yes, of course we’re always reasonable,” but the commission can’t decide the criteria simply based on those statements. In terms of making some prediction about what the union’s behaviour is going to be, the commission has to look at what the behaviour of the union has been so far in relation to the companies affected by the application.

PN4618

And the obvious one is Secom. They’re simply refusing to bargain with Secom in relation to the ACT, although elsewhere the union is prepared to in relation to a single enterprise agreement. There’s nothing that is suggested that there’s any inclination by the union whatsoever to have a single enterprise agreement. Indeed, they made a clear election not to approach employers on a single enterprise basis in favour of this industry agreement approach.

PN4619

The last point I make is that the application is not one that would necessarily be decided simply in the broad. The commission would have to have regard to the individual employers who are subject to the application and it may be that it accepts that no-one should be subject to the application. We hope that’s the case or that some should and some shouldn’t but either way what’s left is really just four employers, a minority of the security industry in the ACT. Even if some of those dropped off, then you’re leaving, you know, maybe one or two security companies having to be part of this low-paid authorisation. It doesn’t really make a lot of sense, in our submission.

PN4620

It might be quite different if the union had perhaps looked at those smaller security companies around the ACT who might be assisted by low-paid authorisation. They may not have had the resources and they may have had employees in sort of lower skilled type areas and receiving lower pay than this application but it hasn’t done that. It’s really just targeted these large industrial and sophisticated employers but the problem with doing that is that they really leave those employers very exposed in relation to competition by having them as part of this application. That will conclude our submissions unless there are any questions your Honour might have.

PN4621

THE DEPUTY PRESIDENT: No, thank you, Mr McDonald. Mr Russell-Uren, anything in reply?

PN4622

MR RUSSELL-UREN: Your Honour, by and large we rely on what we’ve already said. The only point that I’d like to pick up on is this: in the course of Mr McDonald’s argument that he presented just then he said that - and I may be mistaken - he said that in effect contained within various considerations in section 243, specifically subsections (2) and (3), that there is some form of priority, that some considerations are more important than others. In our submission, this is a holistic question. It takes into account the totality of the considerations and one of itself is no more important than the next but it is the totality of the facts which go towards - - -

PN4623

THE DEPUTY PRESIDENT: I think the effect of his submission was that if ultimately there is a conclusion that the employees who are the subject of the application are not low paid, the applicant must fail and so, to that extent, that consideration in paragraph (a) of subsection (2) is paramount. Without a positive finding about that, the rest of the application must fail otherwise it would make no sense. I think that was the effect of his submission rather than suggesting that, assuming that the employees are low paid, that any particular consideration takes precedent. That’s so, isn’t it, Mr McDonald?

PN4624

MR McDONALD: It is, your Honour.

PN4625

MR RUSSELL-UREN: Yes, well, then we certainly accept that. Unless your Honour has any further question, the applicant has nothing further.

PN4626

THE DEPUTY PRESIDENT: No, thank you, Mr Russell-Uren. Mr McDonald, in your covering email which you filed your final submissions you referred to paragraphs 40, 50, 51, 52, 117, just the quote, 123, the quote, of the outline and 9 - - -

PN4627

MR McDONALD: Yes, thank you for reminding me, your Honour. Could we have those matters treated as being confidential, your Honour?

PN4628

THE DEPUTY PRESIDENT: Yes. Mr Russell-Uren, do you have a view about those?

PN4629

MR RUSSELL-UREN: No, your Honour.

PN4630

THE DEPUTY PRESIDENT: All right, well, I’ll treat those paragraphs of the submissions and the annexures identified in the email from Mr McDonald of 27 June 2014 as subject to the earlier order that I made about confidentiality.

PN4631

MR McDONALD: Thank you, your Honour.

PN4632

THE DEPUTY PRESIDENT: Is there anything else? Can I thank both parties for their written and oral submissions. I’ll reserve my decision.

<ADJOURNED INDEFINITELY [11.36AM]