EM2013/111, Transcript of Proceedings [2015] FWCTrans 257 (5 May 2015)

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Sch. 6, Item 4 - Application to make a modern award to replace an enterprise instrument.

PN1

VICE PRESIDENT WATSON: Can we have the appearances, please. Mr McKenna.

PN2

MR J McKENNA: As the Full Bench pleases, my name is McKenna, initial J. I seek permission to appear on behalf of the Union Applicant.

PN3

VICE PRESIDENT WATSON: Thank you, Mr McKenna.

PN4

MR D PERRY: Yes, may it please the Commission, Perry, initial D. I seek permission to appear for the respondent entities.

PN5

VICE PRESIDENT WATSON: Mr Perry, thank you. Permission is granted to counsel in this matter. Yes, Mr McKenna.

PN6

MR McKENNA: Thank you, your Honour. The relevant factors in this proceeding will be well known to the full bench. I don’t propose to make a comprehensive opening. The jurisdictional issues that must be met before this full bench has its discretion under schedule 6, item 4 to the Transitional Act are dealt with in the written outline of submissions filed on behalf of the union.

PN7

There is only one further matter that I would seek to touch upon briefly and that is the identity of the respondents in the matter. Now, the application as filed by the union lists two respondents. The first being the Commonwealth Bank of Australia with the relevant ABN, that being the entity, not the group. Secondly, BWA Group Services Proprietary Limited trading under the name of the business BankWest.

PN8

Now, the submissions filed by the respondent purports to do so on behalf of those two entities only. However, what the legislation requires in terms of this full bench having jurisdiction, is at 2(1). So schedule 6, item 4, sub-item 2.

PN9

On application the Fair Work Commission may make a modern award to replace the enterprise instrument. The application may be made by a person –

PN10

and so on and so forth. The application, on its face, lists the four enterprise awards that are the subject of this application. In those circumstances it matters not who the particular respondents are. I don’t believe there’s an issue with service and so there is a valid application for the full bench in respect of each of the four enterprise awards.

PN11

What is sought by the union is the making of a single modern enterprise award to replace each of those four instruments, and what is sought is a modern enterprise award substantively in the terms filed. The respondent takes issue with some of those terms and this may be a case where the draft could be improved by further discussions between the parties but for the reasons that will be addressed specifically in closing, in particular each of the prescribed criteria to which this full bench must have regard.

PN12

It’s the union’s case that a modern enterprise award can and should be a made to replace the four enterprise awards for the CBA Group Enterprises. The union has one witness, Mr Donald Hugh Peddie who is the national industrial officer of the union, and unless there are any other further issues, I propose to call Mr Peddie. I should say I would seek an order for witnesses out in event that the two witnesses to be called by CBA Group Enterprises are in the courtroom. Otherwise, I would propose to call Mr Peddie.

PN13

VICE PRESIDENT WATSON: Just before you do so, can I ask you about the point of how many awards. You say there can and should be one award to replace the four awards.

PN14

MR McKENNA: Yes.

PN15

VICE PRESIDENT WATSON: The CBA makes a point that the effect of the application would be to have several awards apply into the future, compared to one which is he industry award.

PN16

MR McKENNA: Yes.

PN17

VICE PRESIDENT WATSON: Why do you say that the Commission can and should make one award from four that are made? What’s the legal basis for that submission?

PN18

MR McKENNA: To the second point, whether it should, that would require an application of the schedule 6, item 4, 5 factors. Whether it can, the power granted to the full bench under item 4 that it may make a modern award to replace an enterprise instrument, sub-item (3) here, in my submission having been satisfied by the nature of the application.

PN19

VICE PRESIDENT WATSON: It seems like the argument between you revolves around that subsection, subsection (2) in terms of power.

PN20

MR McKENNA: Yes, and it provides a discretion and there is nothing in that discretion, in my submission, that would limit the manner in which it is exercised, so as to combine existing enterprise awards into the one modern enterprise award. Indeed, precisely for the reasons that the respondent complains about, it ought to be one modern enterprise award, rather than four.

PN21

Although the alternate application is made and if the full bench were of the view that it did not have the power to make a single enterprise award, an alternate application would be for four separate enterprise awards. If it were done in a manner similar – simply separating out the schedules, there would be little additional administrative burden imposed by the course.

PN22

VICE PRESIDENT WATSON: In terms of the legal argument you simply say that singular includes the plural, so the Commission may make a modern award to replace more than one enterprise instrument?

PN23

MR McKENNA: I do, your Honour.

PN24

VICE PRESIDENT WATSON: Or vice versa?

PN25

MR McKENNA: I do, your Honour.

PN26

VICE PRESIDENT WATSON: Thank you. Mr Peddie is required for cross-examination?

PN27

MR PERRY: Yes, he is, your Honour.

PN28

VICE PRESIDENT WATSON: Yes. Do you have any objection to witnesses being out of the room?

PN29

MR PERRY: No, your Honour.

PN30

VICE PRESIDENT WATSON: No. Very well. I think you can call Mr Peddie.

PN31

MR McKENNA: I call Mr Donald Hugh Peddie.

<DONALD HUGH PEDDIE, AFFIRMED [10.09 AM]

EXAMINATION-IN-CHIEF BY MR MCKENNA [10.09 AM]

*** DONALD HUGH PEDDIE XN MR MCKENNA

PN32

VICE PRESIDENT WATSON: Thank you, Mr Peddie. Please be seated. Mr McKenna.

PN33

MR McKENNA: Mr Peddie, can I just ask you to again please state your full name?‑‑‑Donald Hugh Peddie.

PN34

Please feel free to be seated unless you need to stand up to access the materials. What is your role with the applicant union?‑‑‑My role at present is National Industrial Officer.

PN35

Have you prepared a witness statement in this matter?‑‑‑I have.

PN36

Have you had a chance to review that witness statement recently?‑‑‑I have.

PN37

Are there any changes, corrections or clarifications that you would like to make to that statement?‑‑‑Yes, there are.

PN38

Would you direct the full bench to each of those in turn, please?‑‑‑Yes, I will. Page 14 of my statement, at paragraph 20, third line.

PN39

“Discussions about a new award” – that’s the sentence?‑‑‑Correct. Yes.

PN40

What is the change that you would make there?‑‑‑There are two words to be added after the acronym CBOA. It should read “The CBOA and ABEU” which is an acronym for the Australian Bank Employees’ Union.

PN41

Any further changes, corrections or clarifications?‑‑‑Yes, there are. On page 32, paragraph 115. In the first line the number 15 or the word fifteen should be replaced by the word sixteen to reflect 16 dot points that follow.

PN42

Perhaps some difficulties in counting of somebody assisting you with the statement. Any further changes, corrections or clarifications?‑‑‑Yes, there is one more on page 33 at paragraph 116, second line, the word “eight” should be replaced with the word “sixteen” again to match the 16 dot points referred to.

PN43

Any further changes, corrections or clarifications?‑‑‑No, that is all.

*** DONALD HUGH PEDDIE XN MR MCKENNA

PN44

Whilst you’re in the document can I ask you to turn to page 36 of 36?‑‑‑Yes.

PN45

Can I ask you to confirm that your statement that you have in front of you is a statement that runs to 136 paragraphs?‑‑‑Yes, I confirm that.

PN46

The contents of that statement are true and correct?‑‑‑To the best of my knowledge and ability, yes.

PN47

To that statement you also annexe a number of additional documents?‑‑‑I do.

PN48

I see that you have a large number of lever arch folders in the witness box with you. Can you confirm to the full bench what those folders contain?‑‑‑Those folders contain both a copy of my statement and a copy of each annexure to that statement. There are a sum total of 78 annexures.

PN49

Have you had a chance to review those annexures prior to today’s hearing?‑‑‑I have in the last week reviewed them, yes.

PN50

Can you confirm that those annexures are true copies of the documents that you refer to in your witness statement?‑‑‑I can, yes.

PN51

May it please the full bench, I tender that.

PN52

MR PERRY: There’s no objections.

PN53

VICE PRESIDENT WATSON: The witness statement of Mr Peddie, together with the attachments will be exhibit M1.

EXHIBIT #M1 STATEMENT OF MR PEDDIE TOGETHER WITH ATTACHMENTS

PN54

MR McKENNA: With the leave of the full bench, there is on further issue that I would seek to pursue through this witness. (To witness) Mr Peddie, can I direct your attention to paragraph 135 on page 36 of your statement?‑‑‑Yes.

*** DONALD HUGH PEDDIE XN MR MCKENNA

PN55

You there refer to the Commonwealth Bank Section National Enterprise Council meeting on 11 December 2003. Can you explain to the full bench what is the Commonwealth Bank Section National Enterprise Council?‑‑‑The National Enterprise Council of the CBA Section is explained in terms of the union’s rules. In brief, it comprises of Commonwealth Bank employees who are members of the union and who are elected by CBA members in each State from which each NEC member comes from to reflect their views as a representative group of CBA employees and members of the union.

PN56

Mr Peddie, you’ve referred to the rules. If the witness might be shown this document, and I have copies for the – sorry. Mr Peddie, are you able to identify that document?‑‑‑I am, yes.

PN57

We were just discussing the Commonwealth Bank Section National Enterprise Council. Are you able to identify the particular rule that deals with that body?‑‑‑Yes, I can. It appears under number 31(3) on page 40 of the rules.

PN58

At paragraph 135 of your statement you also refer to the Mid-sized National Enterprise Council?‑‑‑Yes.

PN59

Can you explain to the full bench what that body is?‑‑‑The Mid-sized National Enterprise Council represents – they are formed of employees who are union members from what the union terms the mid-sized bank and employers amongst - - -

PN60

The mid-sized bank and employers?‑‑‑Amongst those are BankWest. BankWest before its merger with the Commonwealth Bank was considered to be a separate entity for the membership rules of the union and that still continues.

PN61

Are you able to identify the number of the rule that particularly deals with that body?‑‑‑31(2) covers the National Enterprise Councils generally. CBA. RBA.

PN62

I think is it the case that there is no separate rule that deals with the Mid-sized NEC in the same way that there is for the Commonwealth Bank?‑‑‑That is correct, yes.

PN63

VICE PRESIDENT WATSON: The employers are mid-sized, not the council?‑‑‑Yes, your Honour. Yes. Yes.

PN64

MR McKENNA: This document is obviously not a complete copy of the rules. It is an extract of a number of provisions, and to the extent it’s necessary, I’d seek to tender that.

PN65

VICE PRESIDENT WATSON: Exhibit M2.

*** DONALD HUGH PEDDIE XN MR MCKENNA

EXHIBIT #M2 COPY OF EXTRACTS OF THE RULES

PN66

MR McKENNA: Nothing further, your Honour.

PN67

VICE PRESIDENT WATSON: Thank you. Mr Perry.

PN68

MR PERRY: Thank you, your Honour.

CROSS-EXAMINATION BY MR PERRY [10.17 AM]

PN69

MR PERRY: Mr Peddie, in these proceedings the union seeks the creation of a single modern enterprise award. That’s right, isn’t it?‑‑‑That’s my understanding, yes.

PN70

A draft award proposed by the union has been prepared?‑‑‑Yes.

PN71

You’re familiar with that document?‑‑‑Generally familiar, yes.

PN72

That document, Mr Peddie, contains a body of what are called common provisions that apply to all of the four employers?‑‑‑Yes.

PN73

That runs to about 20 or so pages?‑‑‑Yes, from recollection.

PN74

Then there is a separate schedule for each of the four employers who are proposed to be bound by the award?‑‑‑Yes.

PN75

Those schedules, for example in the case of the Commonwealth Bank, is about 50 pages long?‑‑‑Yes, to the best of my recollection.

PN76

There are lengthy schedules for the other three employers as well?‑‑‑Yes.

PN77

So you would agree, Mr Peddie, that the vast bulk of the proposed award is found in the schedules rather than in the common terms?‑‑‑The schedules certainly make up a sizable portion of the award, yes.

PN78

They make up most of it, don’t they?‑‑‑From recollection, they probably do.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN79

There are differences in the terms and conditions set out in each of the four schedules?‑‑‑Yes, there are.

PN80

The intention of the union is to in effect grandfather the existing enterprise awards into those schedules?‑‑‑Only to some extent.

PN81

The majority of the provisions in the existing awards are replicated in the schedules to the proposed award, aren’t they?‑‑‑My general understanding is, yes, they do reflect the existing awards to a large degree.

PN82

If the award were to be made by the Commission, there would be four different sets of terms and conditions that would apply to the employees?‑‑‑As well as common terms, yes.

PN83

What I’m putting to you, Mr Peddie, is that although what has been prepared is one award, it’s really four sets of terms and conditions, isn’t it?‑‑‑It’s one award with subsections of conditions, sub-sets of conditions, yes.

PN84

The majority of those conditions are the different conditions which are found in the schedules, aren’t they?‑‑‑A sizeable portion. I will take your word that it is the majority but, yes, a sizeable portion.

PN85

So really there’s no difference between the draft award and four separate awards, for example?‑‑‑Well, yes, it’s one instrument with a set of common terms plus a sub-set of varying terms for each business within the CBA group.

PN86

Yes. So what the union hasn’t attempted to do is to prepare a common set of award conditions for the CBA Group, has it?‑‑‑The content that the union has proposed reflects to a large extent the existing awards, yes.

PN87

In the draft award which the union has prepared, there are references to allowances?‑‑‑Yes.

PN88

A number of those allowances are no longer relevant, are they?‑‑‑A number of allowances may not be actually paid because of enterprise agreement arrangements and terms.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN89

For example, the cardigan allowance is not a relevant term in the contemporary workplace, is it?‑‑‑I’m not exactly certain. The cardigan allowance applied only to concierge type staff or employees which aren’t numerous at the moment.

PN90

There’s less than four, aren’t there?‑‑‑I think there is only a small number. I’m not sure of the exact number.

PN91

There are references in the union’s draft award to business units that no longer exist, aren’t there?‑‑‑I think a number of business units have been re-titled. The business unit names that are used as the ones reflected in the current awards.

PN92

Yes. So there has been no attempt undertaken to correctly name the business units in the draft award?‑‑‑I think we’ve attempted to reflect the existing award content. We have indicated to the bank that, you know, we’re willing to discuss those sorts of details in a final version of the award.

PN93

So what you’ve fundamentally done is a copy and paste from the existing enterprise awards, haven’t you?‑‑‑I think the intention was simply to reflect the current content of the awards as best we could.

PN94

Yes, and you’ve made no attempt whatsoever to tailor the drafting of the award to the contemporary business of the CBA Group, have you?‑‑‑The wording again reflects the current wording in the current awards but we have indicated to the bank that we’re certainly willing to discuss changes to the terminology to reflect the current business groupings or units within the group.

PN95

Mr Peddie, you’ve worked in the banking industry either as an employee of a bank or for the Finance Sector Union since about 1972?‑‑‑Yes. 1971 exactly.

PN96

1971. So you’ve got more than 40 years’ experience in the industry?‑‑‑Yes. About half of that was with the banks, predominantly the Reserve Bank, and the latter half with the union.

PN97

So you’re familiar with the industry?‑‑‑Generally familiar.

PN98

You’re familiar with the employment arrangements which are in place in the industry?‑‑‑Generally so, yes.

PN99

You’re familiar with the system of industrial awards that have applied to the industry in your 40 or so years?‑‑‑Yes, I am.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN100

You would be aware that until 2010 those awards only applied to named respondents. So named respondent employers?‑‑‑Yes.

PN101

So that what historically one did is served a lot of claims and sought a finding of an industrial dispute?‑‑‑Yes.

PN102

An award could be made in settlement of that dispute between the parties to it?‑‑‑Yes.

PN103

You’ll be aware, Mr Peddie, that during your career in the industry, there has increasingly been a shift towards negotiating terms and conditions at the workplace level?‑‑‑Yes.

PN104

What the banks did in order to achieve workplace level terms was they negotiated enterprise awards?‑‑‑Yes.

PN105

That avoided the need for them to seek to vary, for example, an industry-wide award that may have otherwise applied?‑‑‑Yes, that was one effect.

PN106

So that in the case of the Commonwealth Bank, there was an award made in 1986 which is referred to as the Salaries Award?‑‑‑Yes. Yes.

PN107

That was the first enterprise award for the Commonwealth Bank?‑‑‑As far as I’m aware, yes.

PN108

What then occurred was the bank and the union negotiated changes to that award over time?‑‑‑Yes. Yes.

PN109

So it included managers into the classification structure in about 1990?‑‑‑Yes.

PN110

Then following the acquisition of the State Bank of Victoria in 1990, the award was beefed up to be made more comprehensive?‑‑‑Yes.

PN111

There were then in 1992 some further variations to the award which were referred to as the enterprise bargaining awards?‑‑‑Yes.

PN112

You’ve attached those to your statement?‑‑‑Yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN113

What the CBA award was at around that time, that is the early 1990s, was a de facto enterprise bargaining arrangement?‑‑‑Partly but not entirely.

PN114

In what respect was it not?‑‑‑The main or underlying core conditions of employment, hours of work, salaries reflected the bank’s earlier policy manual detail, but there were elements of enterprise bargaining as well.

PN115

The award was a consent award, was it not?‑‑‑It was, yes.

PN116

It was negotiated between the bank and the union?‑‑‑Yes.

PN117

The other awards, that is the BankWest award, the Colonial award and the CommSec award, have that same characteristic. They were negotiated between the employer and the union?‑‑‑Yes.

PN118

You will be aware, Mr Peddie, that in 1993 there was what was referred to as the Brereton legislation. Do you recall that?‑‑‑I do, yes.

PN119

That legislation made it possible for the first time to have an enterprise agreement made?‑‑‑Yes.

PN120

In the case of the CBA and the FSU, they embraced that reform?‑‑‑Yes. We accepted it and looked at ways to use it.

PN121

In fact, the parties were very early adopters of that legislation and made an enterprise agreement in 1993, didn’t they?‑‑‑Yes.

PN122

There were then subsequent rounds of bargaining in 1995 and 1998?‑‑‑Yes.

PN123

In 1998 the CBA agreement because four separate agreements?‑‑‑Yes. Yes. There were four separate business units that the bank wanted separate agreements for.

PN124

Can I ask you this. In the period in which those first three rounds of enterprise bargaining occurred – so that’s 1993 through to 1998 – the CBA award continued to be in place?‑‑‑It did, yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN125

There were some safety net adjustments made to it?‑‑‑Yes.

PN126

So that wage rates were adjusted for the test case wage outcomes?‑‑‑Correct. Yes.

PN127

Allowances were adjusted in the same way?‑‑‑Yes.

PN128

Other than those safety net adjustments in that period, there were not substantial changes made to the award?‑‑‑No. That’s my understanding.

PN129

That is because what the parties were now doing was bargaining in the enterprise agreement stream?‑‑‑Yes, that was certainly a large factor.

PN130

So that it was no longer necessary for those enterprise specific agreements to be reflected in the award, was it?‑‑‑No. The enterprise agreements were separate instruments and negotiated outside the award.

PN131

Yes. In a sense what occurred was the enterprise agreements – I withdraw that. The negotiation of enterprise agreements replaced the negotiation of the enterprise award?‑‑‑Yes, I believe that was common across a number of industries.

PN132

In fact, one of the things you say occurred was that there was some enterprise specific award terms that were actually put into the enterprise agreements?‑‑‑The enterprise award was used as a basis for negotiation of agreements and some of the terms in the award did flow across to the agreement.

PN133

What happened during the 1990s is the award became more of a safety net rather than something that governed the terms and conditions of the employees?‑‑‑Some of the agreements incorporated the award or referred to the award continuing in conjunction with the agreements but the agreements contained a number of both improvements to conditions and perhaps reductions to conditions as far as employees were concerned, yes.

PN134

That was part of the cut and thrust of enterprise bargaining, wasn’t it?‑‑‑Yes, I think that’s a - - -

PN135

Some compromises made on both sides?‑‑‑Yes, that was bargaining, yes.

PN136

They were reflected in the enterprise agreements that were negotiated over a number of rounds?‑‑‑Yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN137

They weren’t the subject of variations to the underlying award?‑‑‑No.

PN138

The bank and the union have continued to negotiate enterprise agreements from the period from 2000 and onwards?‑‑‑Yes.

PN139

In fact, one of the things which occurred was the reference to the enterprise agreement being read in conjunction with the award was removed?‑‑‑Yes, in later agreements.

PN140

The current position is that in 2014 there was a single enterprise agreement negotiated for Commonwealth Bank, Colonial and CommSec?‑‑‑Yes.

PN141

It also applied to Commonwealth Insurance Limited?‑‑‑Yes.

PN142

That award is a comprehensive award that entirely displaces the enterprise awards?‑‑‑The agreement is couched in those terms, yes.

PN143

If I just suggest this to you, Mr Peddie, that as at the early 1990s the enterprise awards were the instruments from which the actual terms and conditions of employees were derived?‑‑‑Yes.

PN144

After that time they have changed very little, that is the awards?‑‑‑Yes. Yes.

PN145

What has occurred is changes in terms and conditions have been reflected in enterprise agreements?‑‑‑Yes, to a major extent.

PN146

Yes. Those enterprise agreements have changed over the years?‑‑‑Yes, they have.

PN147

In some cases, changed quite significantly?‑‑‑They have changed some elements of the award quite significantly, yes.

PN148

So that if I can ask you this, in the context of the Commonwealth Bank, really the Commonwealth Bank award really reflects the business or enterprise of the Commonwealth Bank as at the early 1990s?‑‑‑It reflected the terms that were in place then, yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN149

It, over the last 25 years or so, has not really changed very much at all, has it?‑‑‑Not to a large degree, no.

PN150

No. You would be familiar with the industry – I withdraw that. You’ve said you’re familiar with the industry and you would agree that the business of banking has very significantly changed in the last 25 years?‑‑‑The delivery of services to customers has changed in terms of electronic delivery.

PN151

Yes?‑‑‑Yes.

PN152

There has been a proliferation of ATMs?‑‑‑Yes.

PN153

A significant decrease in over the counter transactions?‑‑‑Yes.

PN154

A very significant increase in the use of EFTPOS?‑‑‑Yes.

PN155

An increase in focus on technology?‑‑‑In terms of electronic delivery primarily to customers, yes.

PN156

In the last five years the Commonwealth Bank Group has very substantially restructured its technology arrangements?‑‑‑My understanding, it has been restructuring technology arrangements for perhaps longer than five years but certainly - - -

PN157

There’s been a project the last five years that’s focused on that, hasn’t there?‑‑‑My general understanding is yes.

PN158

The technological change in the industry is accelerating?‑‑‑I think it probably is, yes.

PN159

Customers are increasingly transacting their business using technology rather than coming into a bank branch?‑‑‑Yes, that is a trend that has been growing.

PN160

Because of the changes in the way customers and the bank interact, the functions within the bank that support the client facing business, the customer facing business, they have changed as a result as well, haven’t they?‑‑‑Yes. The techniques used have changed.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN161

We have more multi-skilling of the front-line customer service staff?‑‑‑My understanding is generally, yes, they’re required to know a wider range of products and options.

PN162

Perhaps management structures that are flatter than they had been historically?‑‑‑Probably but – probably.

PN163

More sophisticated financial products that are now offered to the public by the bank?‑‑‑There’s certainly a greater range of products, yes.

PN164

There’s been a growth in call centres?‑‑‑Yes.

PN165

A broadening of opening for business on weekends?‑‑‑Yes. Weekend trading has increased.

PN166

The change in the industry has been particularly rapid in the last 10 years or so, hasn’t it?‑‑‑The technological changes certainly have, yes.

PN167

That has meant significant change to the business of the bank, hasn’t it?‑‑‑The actual tasks and skills required of employees have certainly changed to match the technological changes. I’m not sure whether the business in general has changed.

PN168

So the work the employees do has significantly changed?‑‑‑The nature of the tasks has and the knowledge to perform those tasks has.

PN169

So you’d accept this proposition, Mr Peddie, wouldn’t you, that the award has not changed significantly in the last 25 years or so. I think you’ve accepted that. Is that right?‑‑‑Yes.

PN170

But the work done by the employees in that period has very significantly changed?‑‑‑The nature of the tasks has, yes.

PN171

The tasks employees perform is work, isn’t it? We’re talking about the same thing?‑‑‑Yes. Yes.

PN172

So that the award really no longer reflects the nature of the work which is done by the employees, does it?‑‑‑Not in entirety.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN173

No. Would you accept that it’s rather out of date?‑‑‑Not entirely, no.

PN174

No, but it has changed very little in the last 25 years, you’ve accepted?‑‑‑Yes.

PN175

Much has changed in that 25-year period in the business of the bank, hasn’t it?‑‑‑There certainly has been significant change.

PN176

So that at best all that could be said now is that the award is a safety net for bargaining?‑‑‑Yes, generally for the majority of employees.

PN177

The terms of the awards have not been adjusted to reflect changes agreed in enterprise bargaining?‑‑‑They haven’t.

PN178

The awards have become less relevant to the actual conditions of employees?‑‑‑Yes, other than setting a floor for bargaining.

PN179

They continue to become less relevant to those actual conditions?‑‑‑Probably.

PN180

The true position is that the awards are more directed towards the business of the bank at the time the awards were made?‑‑‑Yes, they did reflect the general business needs back in time, yes.

PN181

Other than safety net increases which you talked about, the awards have been fairly stagnant since enterprise bargaining commenced. That’s right, isn’t it?‑‑‑Yes.

PN182

In your evidence, Mr Peddie, you say that the four awards contain some enterprise-specific terms?‑‑‑Yes.

PN183

By that I take it you mean that the terms are different to the BFI award?‑‑‑Yes.

PN184

So that when you’re talking about an enterprise-specific term, you’re just talking about something which is different to the BFI?‑‑‑Yes, and which applies to the specific business in question.

PN185

In your statement you refer to what you call the unique nature of the Commonwealth Bank?‑‑‑Yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN186

But nowhere in your statement do you say what is unique about the Commonwealth Bank, do you?‑‑‑Not in direct terms, no.

PN187

You’d be aware, Mr Peddie, that the bank provides similar products to the other major banks?‑‑‑In general, yes.

PN188

It is in direct competition with those other banks?‑‑‑Yes.

PN189

It largely offers the same products and services that they offer?‑‑‑It offers similar. I can’t say whether they would be exactly the same.

PN190

They’d be very similar?‑‑‑Well, they’re certainly similar, yes.

PN191

Yes, and the bank also offers products which are competitive with some of the smaller banks as well, doesn’t it?‑‑‑Yes.

PN192

So you can get a home loan from Bendigo Bank or from Suncorp Bank, can’t you?‑‑‑Yes.

PN193

Those entities provide similar products and services to the bank, don’t they?‑‑‑To some degree, yes.

PN194

There are foreign banks who do as well, so ING, for example?‑‑‑Yes, it offers some products that CBA would offer.

PN195

The bank is competing with the other three major retail banks, with some smaller bank and also some foreign banks?‑‑‑Yes.

PN196

Some of those companies have enterprise awards?‑‑‑A small number do.

PN197

Most don’t, do they?‑‑‑Most don’t, no.

PN198

They’re covered under the industry award?‑‑‑Yes, that’s my understanding.

PN199

So there’s really nothing particularly unique about the Commonwealth Bank, is there?‑‑‑I think it does differ somewhat from the smaller and medium players, yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN200

Nowhere in your statement do you refer to a unique product which is offered by the Commonwealth Bank Group?‑‑‑No, that’s - - -

PN201

Nowhere do you refer to a unique line of service which is offered by the Commonwealth Bank Group?‑‑‑No.

PN202

Nowhere in your statement do you point to any position of employment which is unique to the Commonwealth Bank?‑‑‑No.

PN203

The fact is that there’s nothing particularly unique about its business in this day and age, is there?‑‑‑It certainly indicates to its staff, customers and the union that it does try to differentiate its products and services to a degree.

PN204

It’s doing that to compete, isn’t it?‑‑‑Yes.

PN205

As are its competitors?‑‑‑Yes.

PN206

They’re trying to do the same thing, aren’t they?‑‑‑Yes, I assume so.

PN207

Yes. Really at the end of the day, Mr Peddie, what you’re really saying is that the enterprise-specific terms are specific simply because of their history. That’s right, isn’t it?‑‑‑Partly so, yes.

PN208

Those terms are specific to the business that existed at the time the terms were agreed?‑‑‑Yes, it did reflect the particular situation of the bank at the time.

PN209

You don’t, in your statement, point to any unique feature of the enterprise of the bank to which those terms are tailored, do you?‑‑‑Not specifically, no.

PN210

In fact, you couldn’t because the fact is that the enterprise has changed so much since the terms were agreed. That’s right, isn’t it?‑‑‑It has changed significantly, yes.

PN211

What you’re saying to their Honours is that the awards in question are tailored to the needs of the businesses in question, aren’t you?‑‑‑In essence, yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN212

Can I take as an example CommSec. Are you familiar with the CommSec business?‑‑‑Yes, in general terms.

PN213

It’s an online stockbroking business, isn’t it?‑‑‑Mainly, yes.

PN214

Could I just hand up – if I could just ask you to have a look at that document, Mr Peddie, and do you see that it refers to head count?‑‑‑Yes.

PN215

So that’s numbers of employees, yes?‑‑‑Yes, I accept that.

PN216

You can see that it refers to in the case of CommSec, 6,544 employees?‑‑‑Yes, that’s the number there.

PN217

They’re covered by that award?‑‑‑Yes.

PN218

MR McKENNA: Well, I’m not sure if this witness is – if that’s a proposition being put to this witness that it’s - - -

PN219

MR PERRY: I’m just asking him what the document says.

PN220

MR McKENNA: On that basis, no objection.

PN221

MR PERRY: If I need to prove it as part of my case, I’ll attend to that.

PN222

VICE PRESIDENT WATSON: Yes.

PN223

MR PERRY: You’ll see, Mr Peddie, on the bottom half of the page there’s then a breakdown of the employees by different business units?‑‑‑Yes.

PN224

You’ll see that – if I can just ask you to stick with the CommSec example, there’s an indication that there are CommSec employees spread across most of those businesses?‑‑‑Yes, according to these figures.

PN225

You would accept, would you not, Mr Peddie, that CommSec employees can be found outside of the online stockbroking business?‑‑‑Small numbers, yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN226

They can be found in – if I could just perhaps – there’s a small but potentially significant typographical error.

PN227

VICE PRESIDENT WATSON: Yes. The headings are wrong.

PN228

MR PERRY: Colonial and CommSec are the wrong way around.

PN229

VICE PRESIDENT WATSON: Yes.

PN230

MR McKENNA: I apologise for that. So if I could just ask you, Mr Peddie, the column which is headed “Colonial Award” should read “CommSec Award” and vice versa. Can you see that?‑‑‑Yes.

PN231

So the 6544 is actually the CommSec award?‑‑‑Yes.

PN232

You’d agree that large numbers of CommSec employees are found in the retail bank?‑‑‑Well, certainly a significant number, yes.

PN233

Yes. Over 2,000. The online stockbroking business is not located in the retail bank, is it?‑‑‑I’m not sure how the actual operation occurs. There are substantial CommSec employee numbers in enterprise services as well?‑‑‑According to these figures, yes.

PN234

Yes. So you would accept, would you not, Mr Peddie, that there is in each business unit a mix of the enterprise awards applying?‑‑‑To some degree, yes.

PN235

Yes. To quite a significant degree. Would you not accept that?‑‑‑Significant, yes.

PN236

So that in any part of the business of the CBA Group one might find employees working together who are covered by different awards?‑‑‑It’s possible, yes.

PN237

In some businesses it may be that they are covered by each of the four enterprise awards?‑‑‑That’s possible, yes.

PN238

They may also be covered by, in some cases, the BFI award as well?‑‑‑So I understand. Small numbers.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN239

Yes. So what you have is a mix of different awards that apply to each business?‑‑‑Yes, that’s possible.

PN240

In the case of CommSec, its employees are found in business outside of the online stockbroking business?‑‑‑Outside of the main business. It would seem so, on these figures.

PN241

Yes. So it couldn’t possibly be said that in this day and age the CommSec award is tailored to the needs of that online stockbroking business, could it?‑‑‑To some extent, yes, the majority of CommSec employees would appear to be employed within the CommSec group.

PN242

But there’s thousands who aren’t?‑‑‑Well, there are certainly a number who aren’t, yes.

PN243

Yes. It couldn’t be said that the CommSec award is tailored to those businesses?‑‑‑To that lesser group of employees or smaller group of employees, probably not.

PN244

In fact, it’s not the lesser group of employees, Mr Peddie, is it?‑‑‑No, it would seem that there are blocks outside of the main wealth management category, if that’s what we’re looking at.

PN245

Could I just ask you to assume for the moment that the stockbroking business is found in the business and private banking business. About one-third of the CommSec employees are found in there. Would you accept that?‑‑‑Roughly, yes.

PN246

The position is similar with the Colonial award as well, isn’t it? There’s a scattering of employees around the different businesses?‑‑‑Yes, there seems to be that.

PN247

So what you have, Mr Peddie, is a mixture of different awards applying in all of the businesses of the CBA Group, don’t you?‑‑‑In general, yes.

PN248

So in the BankWest business for example, there is the BankWest award?‑‑‑Yes.

PN249

There’s also some CBA employees?‑‑‑Yes, that’s my understanding.

PN250

There’s also some employees who are covered by the BFI award?‑‑‑Possibly.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN251

I’m just asking you to accept this proposition, Mr Peddie, that it cannot possibly be said that these awards are tailored to the specific needs of these businesses when so many of them apply?‑‑‑My understanding is that in general employees who are covered by a particular award have employment conditions that still reflect those awards to some degree.

PN252

Yes, but those awards don’t reflect the businesses anymore, do they?‑‑‑The awards were the basis for the current enterprise agreement which does contain a range of conditions that apply across the whole business.

PN253

Yes, that’s the enterprise agreements though; not the awards?‑‑‑Well, the awards, we say, are the sort of general basis for where the agreement is at the moment.

PN254

So when you talk about enterprise-specific conditions you’re really talking about the terms and conditions of employment being different for each of the employers, aren’t you?‑‑‑Yes.

PN255

That’s what you mean by that, don’t you?‑‑‑Yes.

PN256

You’re not talking about how those terms and conditions relate to the particular business activities of those employees, are you?‑‑‑Given that the bank has agreed the content of the current agreement, we think that - - -

PN257

I’m asking you about the awards, Mr Peddie?‑‑‑Yes, the awards in total, no, I accept that they don’t, in total reflect the current business requirements.

PN258

In the case of the Commonwealth Bank, they really reflect, if anything, the requirements of about 25 years ago, don’t they?‑‑‑That’s when the majority of terms were set.

PN259

Yes. You’ve already agreed that things have changed a lot since then?‑‑‑Yes. Yes. The work has changed somewhat.

PN260

You’re familiar with the BFI award, Mr Peddie?‑‑‑Yes.

PN261

The FSU was very heavily involved in the process that led to the making of that award, wasn’t it?‑‑‑We certainly put in some detailed submissions, yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN262

Some very detailed submissions, in fact?‑‑‑So I understand, yes.

PN263

That was in 2008 and 2009?‑‑‑Yes, that’s my recollection.

PN264

At that stage in the process, the FSU was concerned to protect enterprise award terms and conditions of employment?‑‑‑We tried to provide – our submissions provided for many conditions in the main bank enterprise awards to be incorporated in the new award, yes.

PN265

One thing you said was that there should be one award for the whole industry, both large and small players?‑‑‑In terms of the proposals and the draft award that we put, yes.

PN266

I think you made that submission in the context of the Bank of Queensland?‑‑‑I’m not absolutely certain which bank we were focusing on at the time.

PN267

The FSU said that in making award terms and conditions, enterprise awards must be taken into account to truly reflect the minimum terms and conditions prevalent in the industry?‑‑‑Yes, I think that was part of the submission.

PN268

Yes. So that submission was put to the Australian Industrial Relations Commission, as it then was?‑‑‑That’s my understanding, yes.

PN269

The FSU was very forcefully putting an argument that the content of the industry award should be informed by the content of the enterprise awards?‑‑‑I think that was one of our basic submissions, yes.

PN270

That was put to the Commission and considered by the Commission?‑‑‑Yes.

PN271

One illustration, for example, was about cashing out annual leave. Do you recall that?‑‑‑Not specifically, no.

PN272

Perhaps I could be more specific that a submission was put that there should be no clause for cashing out of annual leave because it was not contained in the enterprise awards?‑‑‑I can’t say with certainty but I wasn’t involved in making those submissions.

PN273

Yes. That submission was accepted by the Commission?‑‑‑Apparently so.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN274

Yes, because there’s no annual leave cashing out clause in the award, is there?‑‑‑No.

PN275

So an integral part of the case put by the FSU was that the enterprise awards should inform the content of the industry award?‑‑‑That’s my understanding, yes.

PN276

That argument was put and considered by the Commission?‑‑‑Yes, that’s my understanding.

PN277

The union participated in a number of conferences?‑‑‑Yes, that also is my understanding.

PN278

And some hearings?‑‑‑Yes.

PN279

The respondents in this case, the Commonwealth Bank group of companies, they were very involved in that process as well, weren’t they?‑‑‑My understanding was, yes, they did make submissions.

PN280

Yes. As did the other major banks?‑‑‑Yes.

PN281

One of the things you refer to in your evidence, Mr Peddie, is the – just perhaps before I move on, your Honours, if I could just ask you just to mark the table for the moment and I’ll seek to tender it with Mr Maroun, but just note that the – in the bottom half “CommSec Award” should read “Colonial Award”.

PN282

VICE PRESIDENT WATSON: Yes. We’ll mark it MFI1 at this stage.

MFI #MFI1 DOCUMENT WITH COMMSEC AND COLONIAL DETAILS

PN283

MR PERRY: You expressed some opinions about the BFI award as a safety net in your statement, Mr Peddie?‑‑‑Yes.

PN284

You would accept that in some respects the BFI award is more favourable to employees than the enterprise awards?‑‑‑In a small number of cases, yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN285

Perhaps if I could just give you some examples. So I’m talking about the Commonwealth Bank award at the moment. The BFI has a higher first aid allowance. Would you accept that?‑‑‑It has a percentage quoted, I think, rather than a dollar amount. Yes, and it might be higher in some circumstances.

PN286

Under the BFI award, public holiday work attracts a 250 per cent loading?‑‑‑Yes.

PN287

Under the CBA award it’s only 200?‑‑‑I – yes.

PN288

Under the BFI award, an employee can take time off in lieu of overtime?‑‑‑Yes.

PN289

Under the CBA award it may only do that to provide care to a family member?‑‑‑Yes.

PN290

There are a number of other examples you would accept, Mr Peddie, of the BFI being more favourable than the CBA award?‑‑‑I think there are a smallish number, yes.

PN291

You’ve just accepted there’s – I think it was three just then, but you would accept there’s another 10 or so?‑‑‑I couldn’t say. 10 doesn’t seem to be a small number to me but - - -

PN292

Something like that though?‑‑‑Possibly but I really can’t say the exact number.

PN293

If I could ask you about the Colonial award, there are aspects in which it is less favourable than the BFI award?‑‑‑Yes, in a similar vein to the CBA award.

PN294

In fact the coverage of the Colonial award ceases at $71,000. That’s right?‑‑‑My understanding is 70,000 but – yes.

PN295

The BFI doesn’t have such an exclusion?‑‑‑No.

PN296

The Colonial award doesn’t have a first aid allowance in it?‑‑‑No.

PN297

The BFI does?‑‑‑Yes, the BFI does have a first aid allowance.

PN298

The Colonial award does not have provisions that provide for on-call payments?‑‑‑No. That’s my understanding.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN299

The BFI does?‑‑‑Yes, it does.

PN300

The Colonial award has a broader span of hours than the BFI?‑‑‑Yes, it probably does.

PN301

It can include ordinary hours on a Sunday, for example?‑‑‑Yes.

PN302

And the BFI does not?‑‑‑That’s so, yes.

PN303

There are employees under the Colonial award who are not entitled to overtime payments?‑‑‑Yes.

PN304

There is no such restriction under the BFI?‑‑‑No.

PN305

Again, there is no time off in lieu of overtime provision in the Colonial award?‑‑‑No.

PN306

There is in the BFI?‑‑‑Yes.

PN307

So you’d accept there’s a number of respects in which the BFI award is more favourable than the Colonial award?‑‑‑Well, it’s different, not necessarily favourable. I suppose that depends on the view of the - - -

PN308

In each of the examples I’ve just given you are more favourable to the employee, are they not?‑‑‑Well, some employees may prefer to be paid for overtime rather than taking time off, so - - -

PN309

How could it possibly be less favourable for them to have the ability to choose?‑‑‑Well, if they’ve got the ability to choose and it’s entirely their choice.

PN310

I’m going to ask you now about the CommSec award, the casual loading is 20 per cent?‑‑‑Yes.

PN311

Under the BFI, it’s 25 per cent?‑‑‑Yes.

PN312

The CommSec award doesn’t contain a first aid allowance?‑‑‑No.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN313

The BFI does?‑‑‑Yes, it does.

PN314

The CommSec award does not contain clauses for on-call payments?‑‑‑No.

PN315

The BFI award does?‑‑‑Yes.

PN316

The CommSec award does not provide for payments for employees performing higher duties?‑‑‑No.

PN317

And the BFI does?‑‑‑Yes, it does.

PN318

The meal allowance under the BFI is higher than the CommSec award?‑‑‑Yes.

PN319

So there are aspects in which the BFI award is more favourable than the CommSec award, aren’t there?‑‑‑Yes, there are some aspects.

PN320

The same is true for the BankWest award as well, isn’t it?
---I think so, in some terms, yes.

PN321

So one example is managerial employees have longer ordinary hours of work than under the BFI?‑‑‑As written, yes.

PN322

Under the BankWest award, the first six hours of overtime in a four-week cycle are paid at single time?‑‑‑Yes, yes.

PN323

Where, under the BFI, all overtime attracts a penalty?‑‑‑Yes.

PN324

Under the BankWest award, public holiday work is paid at double time?‑‑‑Yes.

PN325

Under the BFI, it’s double time and a half?‑‑‑Yes.

PN326

Under the BankWest award, there are some employees who are not entitled to overtime?‑‑‑Some of the more senior employees, higher paid, yes.

PN327

And there is no such limitation in the BFI award, is there?‑‑‑No.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN328

So it’s true to say, is it not, Mr Peddie, that in some respect, the BFI is more favourable than those enterprise awards?‑‑‑Yes.

PN329

And in some respects, it’s not?‑‑‑Yes.

PN330

So it’s a bit of both?‑‑‑Yes.

PN331

Some terms are better, some terms are worse?‑‑‑Yes.

PN332

So whether the awards provide a better or worse safety net will depend upon what the parties are bargaining for, won’t it?‑‑‑To some extent, yes.

PN333

So if the employers were looking to reduce penalty rates on public holidays for example, they would be in a worse position if the BFI applied than if the enterprise awards apply, wouldn’t they?‑‑‑Yes, it would seem so.

PN334

So it just depends, doesn’t it?‑‑‑Yes. Yes.

PN335

You’re familiar with a case involving the Bank of Queensland Enterprise Award?‑‑‑Yes.

PN336

In that case, the FSU came along to the Commission and suggested that the BFI was the appropriate safety net, didn’t it?‑‑‑That’s my understanding, yes.

PN337

That’s because the FSU regarded, in that particular case, that that was a better outcome for their members?‑‑‑Apparently so, yes.

PN338

In this case, you take a different position, don’t you?‑‑‑In this case, our view is that the existing enterprise awards should continue to form a safety net in some form.

PN339

So what you do in any given case is you come to the Commission and you pick the award that you think is the most favourable; that’s what you’ve been doing, isn’t it?
---Well, there’s only one other occurrence with an award that provided for very low safety net conditions, in our view.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN340

You’re not coming to the Commission and suggesting which award is appropriate based upon the particular needs of the business of the employer, are you?‑‑‑In our view, we are including that, given that these conditions were negotiated over quite a range of years for Commonwealth Bank, in particular.

PN341

Yes, a very long time ago?‑‑‑The history of the Commonwealth Bank does extend back a long time, yes.

PN342

The award hasn’t changed much for 25 years, I think you’ve accepted that?‑‑‑In basic format, no.

PN343

Now, you’d be aware, Mr Peddie, that there are some subsidiaries of the Commonwealth Bank who are not covered by enterprise awards?‑‑‑Yes.

PN344

So one of those is Commonwealth Insurance Limited?‑‑‑Yes.

PN345

It is covered by the industry award?‑‑‑It is, yes.

PN346

It always has been?‑‑‑As an insurance business, yes.

PN347

Yes. So the old Insurance Industry Award applied to it and then when the BFI was made, it took over?‑‑‑Yes.

PN348

There’s around 400 or so employees in that business who are covered by the BFI?‑‑‑That’s my general understanding, yes.

PN349

There are subsidiaries of the bank such as AHL Investments and National Mortgage Brokers Pty Ltd who are covered by the BFI?‑‑‑Yes, that’s my general understanding. They were acquired reasonably recently.

PN350

Yes, and a company called Avantios(?)?‑‑‑Yes. I’m not overly familiar with a lot of these small businesses.

PN351

Acadian Asset Management?‑‑‑Yes, I accept that’s - - -

PN352

So all of those subsidiaries are covered by the industry award?‑‑‑Yes, and I think one of the reasons was that they’re not in a - they’re not providing mainstream banking products or services.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN353

Well, Commonwealth Insurance Limited is a general insurer, is it not?‑‑‑Yes, it always has been.

PN354

Because of the $70,000 cut-off you referred to in the Colonial award, there are a quite significant number of Colonial employees who are covered by the BFI award?‑‑‑Yes, that is a result of that $70,000 limit which was set some time ago.

PN355

There’s over a thousand of them?‑‑‑I’m not sure.

PN356

You’d accept that there’s a substantial number, though?‑‑‑There could be, yes.

PN357

There are also employees of the BankWest Group Services Company who are covered by the BFI, aren’t there?‑‑‑There are a small number, yes.

PN358

Yes, about 160?‑‑‑That’s my understanding.

PN359

So you have two things; you have employers in the group who are wholly covered by the BFI award?‑‑‑Yes, the smaller employers.

PN360

And then in the case of BankWest and Colonial, you have employees who are covered by a combination of the enterprise awards and the BFI?‑‑‑Yes. My understanding is BFI coverage is relatively small.

PN361

Well, it’s more than 2000 employees, isn’t it?‑‑‑It may be, I’m not certain.

PN362

You don’t know?‑‑‑But it’s still the minority.

PN363

And the BFI has applied to those people since it was made, in 2010?‑‑‑Yes, that’s my understanding.

PN364

You don’t refer in your statement to any of those employees complaining about being covered by the BFI?‑‑‑No. I don’t refer to that in the statement.

PN365

In any event, enterprise agreements have been negotiated

PN366

that cover many of these employees?‑‑‑Many, but not all.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN367

So Colonial is covered by the Group Enterprise Agreement?‑‑‑Yes.

PN368

And Commonwealth Insurance is covered by the Group Enterprise Agreement?‑‑‑Yes, this current agreement.

PN369

So that the Colonial employees who are covered by the BFI award get the same terms and conditions under the enterprise agreement as those employees who are covered by the enterprise award?‑‑‑Probably.

PN370

Well, they do, don’t they?‑‑‑That’s my understanding, yes.

PN371

There’s nothing in the Commonwealth Bank Group Enterprise Agreement that says if you’re on the Colonial award, you get one thing, and if you’re on the BFI, you get another, is there?‑‑‑No. To my recollection, there’s not.

PN372

So there was absolutely no advantage to those employees in the bargaining for the group-wide agreement, was there?‑‑‑Not in the current agreement, no.

PN373

Never even came up as a topic, did it?‑‑‑I can’t say that for certain. I wasn’t involved in all negotiation meetings.

PN374

No, you weren’t involved in any of them, were you, Mr Peddie?‑‑‑I was involved in a small number.

PN375

I see. So that when one has regard to the group-wide enterprise agreement, you cannot point to any disadvantage that the employees covered by the BFI have suffered, have you?‑‑‑No.

PN376

Now, in your statement, Mr Peddie, you talk about the classification structure in the BFI award?‑‑‑Yes.

PN377

It has a six level classification structure?‑‑‑Yes.

PN378

When the award was made, one of the submissions the banks made to the Commission was that there should only be five grades?‑‑‑Yes, that’s my general understanding.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN379

The union submitted that the award should capture employees who were already award covered?‑‑‑Yes. Again, that’s my general understanding, that was - - -

PN380

That is why the FSU should the inclusion of the level 6 classification?‑‑‑Again, that’s my general understanding.

PN381

The banks in the most recent review of the award sought some changes to the way that classification is expressed?
---Yes, I have a general understanding that that is so.

PN382

There were some changes made by Smith DP?‑‑‑Yes, yes.

PN383

But the classification was retained?‑‑‑Yes.

PN384

The classification is expressed in such a way that it picks up the notion of employees who have historically been award‑covered being covered and employees who have historically not been award-covered not being covered?‑‑‑Yes, that’s my general understanding.

PN385

Despite that, Mr Peddie, in your statement you say at paragraph 92, that you’re unable to say with any degree of certainty whether some persons within the managerial classifications under the awards fall outside of level 6?
---Yes.

PN386

But you’re not coming to the Commission and saying that those persons are not covered by level 6, are you? You’re just saying you’re not sure?‑‑‑That’s correct. I’m not sure.

PN387

And that’s as high as you’re putting it?‑‑‑Yes.

PN388

Yes. You make the same comment, or a similar comment, I should say, in paragraph 95 about BankWest?‑‑‑Yes.

PN389

In paragraph 97, in respect of the Commonwealth Bank?‑‑‑Yes.

PN390

If that lack of clarity you refer to is of concern to the union, you’re aware that there is a four-yearly review of the BFI award occurring at the moment?‑‑‑Yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN391

You could raise that concern in that context, couldn’t you?‑‑‑That’s my understanding, yes.

PN392

That’s a proper place to do that, isn’t it?‑‑‑It’s certainly the relevant place at the moment, yes.

PN393

So there’s nothing to stop you raising that concern and having it addressed by the Commission independent of this proceeding?‑‑‑I suppose not.

PN394

So that if the enterprise awards are terminated, you can still run that point if you want to run it, can’t you?‑‑‑I suppose so.

PN395

But it’s not an important point for you, is it? It’s just not clear; that’s what you’re saying, isn’t it?‑‑‑To my own knowledge, it’s not clear to me. I’m not sure about others in the union.

PN396

So it’s just your opinion, is it?‑‑‑On that particular point, yes. It’s unclear to me.

PN397

Right. Now, Mr Peddie, one of the things you talk about in your statement is the Hay Methodology?‑‑‑Yes.

PN398

You’d be aware that - I withdraw that. You say that the Hay Methodology informed the classification structure in the Commonwealth Bank award?‑‑‑Yes.

PN399

You would be aware that, subsequently, in the late 1990s, the bank started to use a concept of levels of work?‑‑‑Yes.

PN400

You agree with that? Then there’s seven levels of work?‑‑‑Yes, I’ve got a general understanding of that.

PN401

That approach draws on what you may have heard call “Stratified systems theory”?‑‑‑Yes.

PN402

What the bank did in the late 1990s and early 2000s was it looked to structure work within its organisation, having regard to that seven-level model?‑‑‑That’s my general understanding, yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN403

So that that is the way in which the bank, as an enterprise, has come to look at the categorisation of work?‑‑‑I haven’t got any detailed knowledge of that, but that’s, again, my general understanding.

PN404

So that the Hay-based classification structure might be said to not reflect the current position?‑‑‑I’m really not sure how close they are related.

PN405

But you accept that the methodology the bank has used has changed?‑‑‑I think it has changed to some extent, but I know no more than that.

PN406

Yes. Now, in your statement, Mr Peddie, you refer to enterprise bargaining between the parties and it’s right to say, is it not, that when the bank and the union sits down to negotiate a new enterprise agreement, what you tend to do is you start with the current agreement, don’t you?‑‑‑Yes, that’s the starting point generally.

PN407

That is because unless the parties reach a new agreement, that old agreement will continue to apply?‑‑‑That’s one reason, yes.

PN408

And what the parties will do is provide each other with a list of things they’d like to change in the agreement?‑‑‑Yes.

PN409

There’s a degree of ambit in those claims?‑‑‑Quite often.

PN410

What occurs before agreement is reached, is there a compromise is reached?‑‑‑On some items, yes.

PN411

So what happens is you start with the existing agreement, you have your respective claims, and then you negotiate that out?‑‑‑Yes, that’s in very simple terms.

PN412

You don’t put the awards on the table and start negotiating from them, do you?‑‑‑We are mindful of award content if there are significant changes to agreement conditions.

PN413

Yes, but the key thing for you and your members is to retain the conditions in the existing agreement where possible?‑‑‑That’s the first priority.

PN414

And then hopefully to improve those as well?‑‑‑Yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN415

That’s done using the existing agreement as a floor for the bargaining, if you like?‑‑‑As the first document that we rely on, yes.

PN416

Mr Peddie, would it be the union’s view that where it represents employees in bargaining, they get better results in bargaining?‑‑‑Generally, yes.

PN417

The union has, at various times, run campaigns against some of the banks?‑‑‑Yes.

PN418

There have been examples where it has recommended no votes on enterprise agreements?‑‑‑Yes.

PN419

And the employees have voted “no”?‑‑‑In the event, yes.

PN420

So that what I’m putting to you is that if - I withdraw that. One of the things you say in your statement is that you’re concerned that the CBA group will try and take advantage of a lesser safety net?‑‑‑That is a concern, yes.

PN421

Yes, and you’re speculating about that, aren’t you?‑‑‑In the last two agreements, the bank has certainly put proposals which are less - of a lesser standard than the CBA award.

PN422

Yes, and in many cases, the FSU has not agreed with those changes?‑‑‑In many cases, yes.

PN423

And as a result, those changes have not been included in the new agreement, have they?‑‑‑Not in entirety, no.

PN424

So you’re just simply speculating about what might happen in the future, aren’t you?‑‑‑Not entirely, no.

PN425

I’m putting to you that you are?‑‑‑Well, I don’t accept that.

PN426

You don’t refer to any conversation which you’ve had with a negotiator at the CBA saying that, well, we’d like to have different arrangements for the people covered by the BFI, because their safety net is different, have you?‑‑‑Not in those terms, no.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN427

No. I think you’ve accepted that the employees covered by the BFI get exactly what the employees covered by the enterprise awards get under the enterprise agreement, don’t they?‑‑‑In the latest agreement, that seems to be so, but again, the future is not clear.

PN428

It doesn’t make a difference what award they’re covered by to the bargaining outcome, does it, Mr Peddie?‑‑‑It may well do, in our view.

PN429

That’s just an opinion, though, isn’t it?‑‑‑It’s an opinion that I formed over a number of years, observing bargaining with CBA.

PN430

Well, it’s not anything which has ever actually happened, is it?‑‑‑To date, no.

PN431

No. Now, Mr Peddie, you refer in your statement to a survey of employees which was undertaken?‑‑‑Yes.

PN432

I think in some of the documents, you’re at pains to point out that that was an independent survey?‑‑‑It was conducted by an independent company from the union.

PN433

Yes. If I can just hand to your Honours and the witness a bundle of documents. These are the documents that were produced by my learned friend’s side in response to an order for production which was made by your Honour, Watson VP. I appreciate that there’s some information in this material, your Honours, where my friend has a concern about confidentiality and we have no objection to an appropriate protective order being made. I will try and not refer to specific numbers where I can possibly do so.

PN434

Now, at the time that the union authorised the commencement of these proceedings, the survey had not been conducted, had it?‑‑‑I’m not entirely - in terms of the application for award modernisation?

PN435

Yes?‑‑‑Look, I’m not entirely sure. I wasn’t directly involved with the commissioning of the survey or the lead‑up to that.

PN436

Well, you say in your statement that the resolutions approving these proceedings were passed on 5 and 11 December 2011?‑‑‑Yes ,I do.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN437

I can take you to the survey results themselves which you’ll find at attachment DP76 to your statement. It’s in the third volume of my copy. You can that at 76.1, there’s a document in respect of BankWest, and at 76.2, a document in respect of Commonwealth Bank?‑‑‑Yes.

PN438

Do you see that those documents are dated March 2014?‑‑‑Yes.

PN439

So you would accept, Mr Peddie, would you not, that the survey was not available to the union councils that approved the bringing of these applications?‑‑‑I’m not certain. I wasn’t involved in the process of arranging those meetings or providing information to them.

PN440

Well, you say in your statement that those meetings occurred on 5 and 11 December 2013?‑‑‑Yes.

PN441

You will see that the survey results I’ve just taken you to are dated March 2014?‑‑‑Yes.

PN442

So they came later?‑‑‑Apparently so.

PN443

Yes. So the union hadn’t taken any steps to seek the views of its members in a formal way before the proceedings were brought?‑‑‑Not in a formal way, most likely, is my understanding.

PN444

Now, were you involved in the commissioning of the survey, Mr Peddie?‑‑‑No, I wasn’t.

PN445

Now, if I can just ask you, in the bundle of documents I’ve just handed to you, you’ll see at the bottom of each page there’s a page number.

PN446

I’ve sort of paginated the bundle, your Honours, just in the middle at the bottom.

PN447

VICE PRESIDENT WATSON: Yes.

PN448

MR PERRY: Can I ask you to look at the page which is numbered 4?‑‑‑Yes.

PN449

You’ll see that this is an email - - - ?‑‑‑Yes.

PN450

- - - dated 2 December?‑‑‑Yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN451

If I could just ask you to look at the bullet points and the third, fourth, fifth and sixth bullet points, you will see there that there’s a reference to the number of employees that the union has as members?‑‑‑Yes.

PN452

And a reference to how many email addresses that the union has for those employees?‑‑‑Yes.

PN453

So that was the population of employees which was surveyed?‑‑‑I can’t say for certain.

PN454

Okay. But you’re reasonably sure that that’s the numbers we’re talking about?‑‑‑Going on this email, I have no reason to say that they’re incorrect, but I just don’t know, I wasn’t involved in this process.

PN455

I see. Could I ask you now to turn to page 12 of the bundle. You refer to this survey as being an independent survey, is that right?‑‑‑That’s my understanding, yes.

PN456

The document I’ve just asked you to look at, that’s an FSU update to Commonwealth Bank members, is that right?‑‑‑Yes, apparently so. Yes.

PN457

If I can just ask you to, at the bottom of that page, you’ll see it says:

PN458

Overall, the pay and conditions in your enterprise award are superior to the pay and conditions in the BFI award.

PN459

?‑‑‑Yes.

PN460

So it’s important to keep your enterprise award in play as a buffer between the industry award and your enterprise agreement?‑‑‑Yes.

PN461

Then over the page, the document goes on to set out some aspects in which the enterprise award is superior?‑‑‑Yes.

PN462

You see that?‑‑‑Yes.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN463

And it doesn’t say anywhere, does it, in what way the BFI might be superior to the enterprise awards, does it?‑‑‑Not in this particular update, no.

PN464

No. So it just told one side of the story?‑‑‑Well, it tells a story.

PN465

It tells one side of a story, doesn’t it?‑‑‑In terms of the CBA award improvements over BF&I, yes.

PN466

Yes. The document then goes on to say, in the third main paragraph on that page:

PN467

The FSU has made application to make a modern award to replace the Commonwealth Bank Employees Award so there will be no downward pressure on conditions in enterprise bargaining.

PN468

Then, towards the end:

PN469

Your views are important in convincing the Fair Work Commission to make a new modern award to cover you.

PN470

So would you accept, Mr Peddie, that what the union was doing was telling its members that it was important that the enterprise awards be retained?‑‑‑It was setting out an argument to retain it.

PN471

Yes, and it was asserting that the enterprise awards were - or this particular enterprise award, was superior in some ways?‑‑‑Overall, yes.

PN472

And it said nothing about ways in which the BFI was superior to the enterprise award?‑‑‑It didn’t, no.

PN473

It’s a very misleading document, isn’t it, Mr Peddie?‑‑‑No. It does say that overall, the union’s view was the enterprise awards were superior.

PN474

So is the practice of your union to tell your members one side of the story? Is that what you’re saying?‑‑‑No, not - not precisely or exactly, in terms that’s not what we’re saying. Our view expressed in this is that on an overall basis, the enterprise awards were superior.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN475

But you say you were seeking an independent survey?‑‑‑Yes, that’s my understanding.

PN476

And you were seeking the views of your members?‑‑‑The independent survey was to determine that precisely.

PN477

What you’re doing in this document is effectively telling your members what they should say?‑‑‑We’re giving them our opinion of, overall, which appeared to be the best set of conditions for them.

PN478

Without even referring to the other set of conditions at all?‑‑‑Again, this is couched in terms of an overall effect.

PN479

Yes. What you were trying to do, it’s push-polling, isn’t it?‑‑‑I’m not sure, I’m not a pollster.

PN480

What you’re trying to do was to get as many of your members to complete the survey and say that they preferred the industry awards so you could put that information in front of their Honours today; that’s right, isn’t it?‑‑‑We certainly wanted people to be aware of the survey and to participate. We also gave an opinion about the overall situation between the enterprise awards and the BF&I award.

PN481

Yes, an opinion based only on the analysis of the superior conditions in the enterprise award with no reference to the superior conditions in the BFI award.

PN482

MR McKENNA: I think there’s a number of propositions rolled up in that question, if it can be broken up.

PN483

MR PERRY: I’m happy to rephrase the questions.

PN484

So what you said was you expressed an opinion about which award was preferable?‑‑‑Yes, that update does that.

PN485

You set out some areas in respect of which the enterprise award was superior to the BFI?‑‑‑Yes.

PN486

You didn’t set out any areas in respect of which the BFI award was more favourable?‑‑‑No.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN487

And you’ve accepted in your evidence earlier that there are in fact some such respects?‑‑‑Yes.

PN488

So what you were doing, Mr Peddie, was telling half the story, weren’t you?‑‑‑No. We were expressing an opinion that, overall, the enterprise award was superior to the BF&I.

PN489

Without disclosing to your members that the BFI was in fact superior in some respects?‑‑‑Yes, but this was done on an overall basis.

PN490

In the survey itself, the question which the employees are asked was:

PN491

In your opinion, which of these benefit you more?

PN492

And there’s a listing of the awards?‑‑‑Yes.

PN493

That was the question the employees were asked?‑‑‑That’s my understanding, yes.

PN494

If you look at the CBA document which is at DP76.2 on page 9, that is in fact the question, isn’t it?‑‑‑Yes.

PN495

Of the employees who were sent the survey, there was about a thousand who responded?‑‑‑Yes, in rough numbers.

PN496

Of that thousand, 409 favoured the CBA award?‑‑‑Yes. I’m not sure of the exact numbers, but that sounds - - -

PN497

Well, if you look at page 9, can you see that there? 39 per cent?‑‑‑Yes, yes. I’ve got the percentages. Yes.

PN498

And 55 per cent of them didn’t even know what they preferred?‑‑‑Apparently so, from those results.

PN499

So even though the union had in its communications to its members expressed a very firm opinion, the majority of the employees who responded to this survey didn’t know which benefitted them more?‑‑‑Going on those survey results, apparently so.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN500

The 409 employees who favoured the CBA award is less than - it about 1 per cent of the total employee population we’re talking about here. Would you accept that?‑‑‑In rough numbers, yes.

PN501

So that using this very misleading survey, you were only able to have 1 in 100 - - -

PN502

MR McKENNA: I think my learned friend is probably well aware of the basis of the objection, but the question has a loaded proposition in it, but then a whole lot of questions - - -

PN503

MR PERRY: Some might the survey does as well, your Honours, but - yes.

PN504

MR McKENNA: I’m objecting to the question on the basis that it’s not fair.

PN505

VICE PRESIDENT WATSON: I think it should be broken up, Mr Perry.

PN506

MR PERRY: Yes. I’m just, in the interests of time, rolling it together, but I will break this down.

PN507

VICE PRESIDENT WATSON: Yes.

PN508

MR PERRY: So you accept that about 409 employees expressed a preference for the Commonwealth Bank award?‑‑‑Yes, on the figures that have been provided to me.

PN509

The total award-covered employee population is around 35,000 employees?‑‑‑Yes. In general, yes.

PN510

So that the number of employees who expressed a preference for the CBA award is slightly more than 1 in 100 of that population?‑‑‑In terms of how the survey was run and the survey population, yes.

PN511

Yes. So about 1 per cent?‑‑‑Yes, in rough numbers.

PN512

A greater number of employees said they didn’t know?‑‑‑Yes, on the survey result.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN513

The surveys did not even deal with the CommSec award at all, did they?‑‑‑No.

PN514

They didn’t deal with the Colonial award either, did they?
---No. My understanding is no.

PN515

The employees covered by the Colonial and the CommSec award were simply asked to participate in the CBA survey?‑‑‑Yes, they were. My understanding was it was difficult for us to differentiate which members were employed by which employer.

PN516

So for those CommSec and Colonial employees, the survey was meaningless for them, wasn’t it?‑‑‑Possibly.

PN517

Now, around a thousand employees responded to the survey?
---A thousand of our members did, yes. Who were employees.

PN518

Yes. Well, non-members weren’t asked to participate, were they?‑‑‑No.

PN519

No. So around a thousand people participated?‑‑‑Yes.

PN520

Out of a population of 35,000?‑‑‑Yes, that’s my understanding.

PN521

So for the 34,000 or so who didn’t participate in the survey, you have no idea what their view is, do you?‑‑‑Not directly. We sought the views of our members as best we could.

PN522

You’ve not come to the Commission with any employee expressing a view?‑‑‑No. We relied on the survey results.

PN523

I put to you, Mr Peddie, that the participation in this survey was very low, as a total percentage of the employees concerned?‑‑‑Of the total employees, yes.

PN524

What that demonstrates is that this topic is not of any real concern to those employees?‑‑‑I can’t say that for certain either way.

PN525

No, because you don’t know, do you?‑‑‑We certainly had an indication from a significant number of those surveyed that it was of interest to them.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN526

Well, more than half of them didn’t know?‑‑‑Well, a little over half indicated they didn’t know, yes.

PN527

What is important to your members is the enterprise agreement, isn’t it, Mr Peddie?‑‑‑Primarily, yes.

PN528

Rather than some awards which reflect a position of about 25 years ago?‑‑‑I think they focus on the enterprise agreement because it sets their current terms and conditions. We don’t dwell on the fact or the effect of the underlying awards often with members.

PN529

No, it’s because it doesn’t really matter anymore, does it?‑‑‑The union’s view is that it does matter.

PN530

Yes, that’s the union’s view?‑‑‑Well, and our members generally when that matter is discussed in some detail, indicate a similar view.

PN531

But you can only point to 409 of them completing a survey in a particular way; that’s the best you can do?‑‑‑In this particular survey, yes.

PN532

I have nothing further, your Honour.

PN533

VICE PRESIDENT WATSON: Mr McKenna?

PN534

MR McKENNA: Thank you, your Honour.

PN535

MR PERRY: Sorry, I apologise. I should tender that bundle which I handed up a moment ago.

PN536

VICE PRESIDENT WATSON: Is there a desire for confidentiality?

PN537

MR McKENNA: Yes. I note firstly, that I’m not sure that this document has been formally proofed, that it’s witnessed, but in the interests of expediency, I don’t object on that basis, but I would seek a confidentiality order over using the page numbers in the document. Page 4 and the final page, page 50, and I don’t understand that position is opposed.

*** DONALD HUGH PEDDIE XXN MR PERRY

PN538

MR PERRY: We don’t oppose that course, your Honour.

PN539

VICE PRESIDENT WATSON: Yes. We’ll mark the bundle of documents exhibit P1 in these proceedings and we’ll order that pages 4 and 50 be regarded as confidential and not be part of the public record.

EXHIBIT #P1 BUNDLE OF DOCUMENTS

PN540

VICE PRESIDENT WATSON: Mr McKenna.

RE-EXAMINATION BY MR MCKENZIE [11.40 AM]

PN541

MR McKENNA: Mr Peddie, you were asked a number of questions about the comparison of terms between the BFI and each of the enterprise awards; you recall that question?‑‑‑I do, yes.

PN542

You focused particularly on the BankWest award. It was put to you that it’s true to say that the BFI is more favourable in some terms and less favourable in other terms. You recall that?‑‑‑I do, yes.

PN543

It was put to you that some were better and some were worse; you recall that?‑‑‑I do, yes.

PN544

Have you conducted an overall comparison of the BFI as against the - starting, firstly, with the BankWest award?
---Yes, yes. There are a number of tables in annexures to my statement.

PN545

And do you express an opinion of that comparison?‑‑‑Yes, in overall terms, those tables indicate to me that the - in this case, the BankWest award, overall does offer a better set of conditions in terms of dollar values, et cetera.

PN546

Have you formed a view conducting a comparison in respect of Colonial?‑‑‑Yes, a similar exercise was done, as a table - as an annexure to my statement.

PN547

What was the outcome of your review?‑‑‑Again, overall in dollar terms, salaries and the other conditions, that the enterprise award offers a better set of conditions in terms of value than does the BF&I.

PN548

Did you reach the same conclusion with respect to both CommSec and the CBA?‑‑‑Yes. There are tables for those employer entities, too.

*** DONALD HUGH PEDDIE RXN MR MCKENZIE

PN549

Excuse me for one moment. Nothing further. Might the witness be excused?

PN550

VICE PRESIDENT WATSON: Yes. Thank you for your evidence, Mr Peddie. You can step down.

<THE WITNESS WITHDREW [11.41 AM]

PN551

MR McKENNA: Now, subject to putting into evidence a number of - or at least, formally relying upon a couple of documents, that is the applicant’s case. The documents which I would wish to rely on - perfect timing. There is a table that’s prepared as an aide memoir that was filed with the Commission, copies of which my learned instructor now has just - and if I might hand that up? As I say it’s not tendered as evidence, but relied upon as an aide memoir and if it is the Commission’s practice to mark it, I’d seek that it be marked, otherwise I’m content to rely on it in submissions.

PN552

VICE PRESIDENT WATSON: Yes. I understand the basis on which it’s tendered, but we might mark it as an exhibit anyway, with that understanding. It will be exhibit M3.

PN553

MR PERRY: I’d like to be heard on the relevance of the document if it’s to be tendered, your Honour.

PN554

VICE PRESIDENT WATSON: Yes, you can.

PN555

MR PERRY: It’s handed up by my friend without any context and if it simply - it’s just unclear what - - -

PN556

VICE PRESIDENT WATSON: First time you’ve seen it?

PN557

MR PERRY: It is the first time I’ve seen it.

PN558

VICE PRESIDENT WATSON: Yes. Would you like to have some discussions with Mr McKenna - - -

PN559

MR McKENNA: Well, it’s available through the Commission website. It’s been filed and served.

PN560

VICE PRESIDENT WATSON: Well, perhaps you’re not ready to make a submission on it, but maybe you could - - -

PN561

MR PERRY: No. Perhaps if my friend could just indicate the basis on which it’s - - -

PN562

VICE PRESIDENT WATSON: - - - reserve your rights at this stage and perhaps you could clarify with Mr McKenna over the lunch break - - -

PN563

MR PERRY: That’s a convenient course, your Honour.

PN564

VICE PRESIDENT WATSON: - - - the use of it, et cetera. Yes. So with that piece of foreshadowed evidence, or aide memoir, I think, Mr McKenna, that’s your case?

PN565

MR McKENNA: Yes. Please the Full Bench.

PN566

VICE PRESIDENT WATSON: Yes. Mr Perry?

PN567

MR PERRY: Your Honours, we have two witnesses, Mr Maroun and Mr Dasey. I propose to call Mr Maroun in a moment. We have provided to the Full Bench a short chronology late on Friday which perhaps I can deal with in submissions, but as to the evidence, we rely upon it, is those two witnesses. So I call Tony Maroun.

PN568

VICE PRESIDENT WATSON: Perhaps before that commences, we’ll have a short 10-minute break.

PN569

MR PERRY: If it please, your Honour.

SHORT ADJOURNMENT [11.44 AM]

RESUMED [12.02 PM]

PN570

VICE PRESIDENT WATSON: Mr Maroun, my associate will administer the oath or affirmation.

<TONY JOHN MAROUN, SWORN [12.02 PM]

PN571

VICE PRESIDENT WATSON: Thank you, Mr Maroun. Please be seated. Mr Perry?

PN572

MR PERRY: Thank you, your Honour.

EXAMINATION-IN-CHIEF BY MR PERRY [12.03 PM]

PN573

MR PERRY: Can you please state your full name for the record?‑‑‑Tony John Maroun.

PN574

What is your position of employment, Mr Maroun?‑‑‑I work for the Commonwealth Bank in the position of executive manager, workplace relations.

PN575

Have you caused to have prepared a statement for these proceedings?‑‑‑I have.

PN576

Does that statement have 45 numbered paragraphs and two schedules?‑‑‑Yes.

PN577

Is it dated 23 December 2014?‑‑‑Yes.

PN578

Do you have that statement with you?‑‑‑I do.

PN579

Yes. I tender the statement, your Honours.

PN580

VICE PRESIDENT WATSON: That statement will be exhibit P2.

EXHIBIT #P2 STATEMENT OF TONY JOHN MAROUN DATED 23/12/2014

PN581

MR PERRY: Your Honours, might the witness be shown the document which has been marked MFI1?

PN582

Is that a document you’re familiar with, Mr Maroun?‑‑‑Yes, it is.

PN583

Could you tell their Honours what it tells you?‑‑‑Yes. The document actually defines the employee numbers we have by award coverage and business unit. It excludes our BankWest New Zealand employees and persons of interest. Our Australian Workplace Agreement employees are allocated by the primary employer being the Commonwealth Bank of Australia Employees’ Award, CommSec Award. and the Colonial Group Enterprise Award.

PN584

Are there any corrections that need to be made to the document?‑‑‑No.

*** TONY JOHN MAROUN XN MR PERRY

PN585

Well, perhaps if I could just - my friend has given me some indulgence to lead on this topic. In the table, the second table, are the references to Colonial Award and CommSec Award possibly the wrong way around?‑‑‑Yes. I’m going by the arrows which have reversed it, so I wasn’t sure if the correct - if that had been provided.

PN586

Your Honour was very kind.

PN587

So with that - - - ?‑‑‑Yes. That would be - that would have to be reversed.

PN588

Yes, so the correction had been made when you had made the comment that no change was necessary?‑‑‑Correct. Yes.

PN589

So with that correction, is that an accurate document?‑‑‑Yes.

PN590

Your Honours, I tender that.

PN591

VICE PRESIDENT WATSON: The document will be exhibit P3.

EXHIBIT #P3 SECOND TABLE ATTACHED TO TONY JOHN MAROUN'S STATEMENT

PN592

MR PERRY: I also make application under section 594 that the document be received as confidential evidence. Your Honours will appreciate that other employers in the industry are involved in related proceedings and have an interest in these proceedings, and the information in the document does have a degree of commercial sensitivity about it. Given the regime which has been agreed to accommodate the confidentiality of the union’s internal information, if you like, we make application on a similar basis. I understand my friend doesn’t consent to that application, but we do make it. The information has some sensitivity and is brought forward in proceedings which other competitive parties are interested in, and on that basis, we would submit that the appropriate course is that it be not be made available to other parties.

PN593

VICE PRESIDENT WATSON: Mr McKenna?

PN594

MR McKENNA: It’s not opposed, the Full Bench pleases.

PN595

VICE PRESIDENT WATSON: Very well. We’ll receive it on that basis.

*** TONY JOHN MAROUN XN MR PERRY

PN596

MR PERRY: Yes. Thank you, your Honour. There’s nothing in-chief, your Honours.

PN597

VICE PRESIDENT WATSON: Can I just ask you, Mr Maroun, you’ve got that document, exhibit P3, in front of you. Are you able to tell us, in the bottom table, which business units are covered by which award? We can’t tell from the document itself, but are you able to advise us of that position?‑‑‑Yes. Sorry, I don’t pick up on the question, sorry?

PN598

Yes. Apparently some of the employees under some of the columns are not necessarily covered by one award, they’re covered by a number of different awards. So if one looks at the third column which is in relation to CommSec, are all of the employees covered by the CommSec award under that column?‑‑‑Yes.

PN599

So the 6544 - - - ?‑‑‑That’s correct.

PN600

Yes. Very well. Thank you. Mr McKenna.

PN601

MR McKENNA: Thank you, your Honour.

CROSS-EXAMINATION BY MR MCKENNA [12.08 PM]

PN602

MR McKENNA: Now, Mr Maroun, as part of preparing for your evidence, you had cause to review the draft enterprise award filed by the union, didn’t you?‑‑‑Yes.

PN603

You’re aware that prior to filing that document, there were discussions between the Commonwealth Bank and the union about an award, the terms of an award, indeed?‑‑‑Briefly, yes.

PN604

The parties met in late 2013, I think on about three occasions to discuss this application and the possibility of working towards a consent position?‑‑‑Yes.

PN605

In about May 2014, it became apparent that it wouldn’t be possible to reach an agreement on a consent award?‑‑‑I would say that’s correct.

PN606

At that point, the parties alerted the Commission to that effect?‑‑‑Yes.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN607

Upon reviewing the draft that was filed on 1 October - and you’re aware of the document I’m talking about, aren’t you?‑‑‑Yes.

PN608

Your evidence is that a number of the clauses contained in that are either obsolete or irrelevant; that’s your evidence?‑‑‑That’s correct.

PN609

You are aware, aren’t you, that the solicitors for the union wrote to the solicitors for the bank, inviting discussions to work through some of those terms?--No.

PN610

So you’re not aware that on about - so it’s your evidence that you’re not aware that on about 18 February - - - ?‑‑‑Yes, sorry. No, no. Yes.

PN611

And to the effect that the union noted the bank’s concerns - - - ?‑‑‑Yes.

PN612

- - - about some of the content of the draft award, including for example in relation to allowances, job titles and references to obsolete instruments. “While our client does not concede each of your client’s concerns are justified, it is prepared to engage in good faith consultation with your clients in an attempt to resolve such content issues before the hearing of the application.” You were made aware of that correspondence?‑‑‑Yes, I was.

PN613

No meeting occurred, did it?‑‑‑Not that I’m aware of. I was actually on leave at the time.

PN614

Right. So are you aware that the solicitors for the bank responded to the solicitors for the union, to the effect that there had been previous discussions and those discussions didn’t result in any agreement being reached and that the bank’s position was that they opposed the making of a modern award or modern awards?‑‑‑Yes.

PN615

There was a refusal to meet to discuss those what you describe as obsolete or irrelevant terms, wasn’t there?‑‑‑I would say so, yes.

PN616

You’ve been involved in negotiations with the union on many occasions before?‑‑‑That is correct.

PN617

You’re not aware of any particular reason why it wouldn’t be possible to work through those terms and clarify them where required?‑‑‑Not specifically.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN618

In particular - do you have your statement in front of you?‑‑‑Yes.

PN619

Can I direct your attention to paragraph 28 which is on page 7. You there refer to the CBA - sorry, the draft award containing provisions for allowances as an ongoing entitlement which have been in the applicable enterprise agreement, and you refer to, for example, field staff allowance, inter-suburban travel allowance and a premises renovation allowance?‑‑‑Yes.

PN620

It’s correct, isn’t it, that those allowances are dealt with in part in the current 2014 Group Enterprise Agreement?‑‑‑Yes.

PN621

Those allowances are directly relevant for the application of a BOOT, aren’t they?‑‑‑Yes.

PN622

So they are matters, that if the enterprise agreement were to exclude, then there would need to be a commensurate offset somewhere else such that the enterprise agreement is better off overall?‑‑‑Yes.

PN623

In those circumstances, do you accept that those clauses are not irrelevant?‑‑‑To an extent, yes.

PN624

Indeed. They’re directly relevant to the application of a BOOT, aren’t they?‑‑‑Yes.

PN625

Now, in your evidence, you also refer to a significant increase in the use of internet banking and the introduction of - and significant uptake in banking from mobile phones, and you describe that as one change to the enterprise of the Commonwealth Bank? I’m afraid you’ll have to verbalise your answers for the transcript?‑‑‑Yes.

PN626

Similarly, at paragraph 25, you refer specifically to the technology replacement program and overhaul of the IT system?‑‑‑Yes.

PN627

You accept, don’t you, that notwithstanding those changes and possibly many other changes, staff remain a critical part of the CBA group operation?‑‑‑Yes.

PN628

In fact, would you accept that since about 1999, the percent of employee expense as a portion of the total operating income for the group has changed very little?‑‑‑Yes.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN629

I suggest, extracting figures from the CBA group annual reports, in 1999, employee expense was approximately 29 per cent of total operating income; does that sound about accurate?‑‑‑Without the document in front of me, I can’t make comment.

PN630

You don’t have any cause to dispute that?‑‑‑No, no.

PN631

I suggest to you that as at 2014, that figure was at about 25 per cent?‑‑‑No reason to argue that.

PN632

Staff are and will always be a significant part of the operating expense of the group?‑‑‑Yes.

PN633

It’s not the case, is it, that the introduction of technology has replaced the need for staff?‑‑‑No, but it’s changed the way we work and they work.

PN634

It’s changed the way you work and they work?‑‑‑Correct.

PN635

You don’t point in your evidence, do you, to any particular examples of how those changes make any parts of the enterprise award obsolete, do you?‑‑‑No.

PN636

I suggest to you that’s because those changes do not make parts of the enterprise awards obsolete?‑‑‑To an extent, yes.

PN637

So changes are occurring?‑‑‑Yes.

PN638

Changes in IT, changes in technology?‑‑‑Yes.

PN639

Changes in the way the bank does business?‑‑‑Yes.

PN640

Notwithstanding those changes, the terms of the enterprise award continue to have significant relevance, don’t they?‑‑‑Well, to an extent. Our enterprise agreements have - as an organisation, we rely - we hardly rely on the enterprise awards for clarification. The enterprise agreements have taken precedence over those awards.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN641

And what I’m putting to you is that, notwithstanding that, the enterprise awards are still on foot, we all agree with that?‑‑‑Yes.

PN642

And the terms and conditions contained in the enterprise awards remain relevant, notwithstanding changes to IT, changes to the use of technology?‑‑‑Yes.

PN643

There is no direct connection, is there, between changes in IT and changes in technology and the terms of the enterprise awards becoming obsolete?‑‑‑To an extent, I would say that there are terms within the enterprise or around classification - around certain roles that have changed as a consequence of changes to technology.

PN644

Yes. So specific roles will change?‑‑‑Correct.

PN645

Specific duties that people perform will change?‑‑‑Correct.

PN646

The enterprise awards for each of the Commonwealth Bank, Colonial and CommSec refer to a classification scale based on the Hay Methodology; that’s right, isn’t it?‑‑‑Correct.

PN647

That classification scale, classification scales from each of the enterprise awards, are largely replicated in the Enterprise Bargaining Agreement, the 2014 Agreement?‑‑‑Yes.

PN648

So notwithstanding what you say about changes to classifications, the group enterprise agreement picks up what is in the enterprise awards for classifications?‑‑‑Yes.

PN649

So to the extent that you say that those changes made the classifications obsolete or irrelevant, the agreement that the bank has recently reached reiterates those classifications?‑‑‑Yes.

PN650

You also accept, don’t you, that the number of branches for the CBA group has remained relatively stable since - well, for around the last 15 years?‑‑‑Yes.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN651

If the Full Bench pleases, given the answers that I’ve received, I don’t propose to use this document further with this witness, but I would seek that it does find its way in as an aide memoir, if not as evidence, and so I would seek either for it to be marked or - sorry, I am referring to the document entitled “EM 2013/111 application by Finance Sector Union of Australia Commonwealth Bank Annual Report Data.”

PN652

VICE PRESIDENT WATSON: Any objection to it being marked as an aide memoir?

PN653

MR PERRY: No, your Honour. I probably want to be heard on it being received as direct evidence.

PN654

VICE PRESIDENT WATSON: Yes.

PN655

MR PERRY: But as an aide memoire, there’s no difficulty with that. I’m content with that.

PN656

VICE PRESIDENT WATSON: Yes. We will mark it on that basis, exhibit M4.

EXHIBIT #M4 AIDE MEMOIRE – EM2013/111 APPLICATION BY FINANCE SECTOR UNION, AUSTRALIA COMMONWEALTH BANK ANNUAL REPORT DATA

PN657

MR McKENNA: At paragraph 15 of your statement – do you have that there? It’s page 5?‑‑‑Yes.

PN658

You give some evidence about your estimate of the current number of CBA Group employees covered by the BFI?‑‑‑Yes.

PN659

You estimate that 1,200 Colonial Services employees would be covered by the BFI?‑‑‑Yes.

PN660

That’s because, for at least the majority of those employees, they fall within the classification structure of the BFI?‑‑‑Yes.

PN661

They also fall within the classification structure of the Colonial award?‑‑‑Yes.

PN662

But they earn over $70,000?‑‑‑That is correct.

PN663

It’s true, isn’t it, that a great per cent or a great number of those 1,200 employees, would earn between 70,000 and 87,000. Do you accept that?‑‑‑Yes, I do.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN664

Such that if the income threshold were varied from 70,000 to 87,000, it would bring back into the fold the majority of those employees?‑‑‑Yes.

PN665

You have been employed by the Commonwealth Bank for quite some time?‑‑‑Yes.

PN666

You have extensive experience as an industrial relations practitioner?‑‑‑Yes.

PN667

You have had close involvement in a number of rounds of enterprise bargaining negotiations?‑‑‑Yes.

PN668

Indeed, you’ve been with the bank since May 2000; a long time?‑‑‑That’s correct.

PN669

As a result of that, you are familiar with how the enterprise bargaining negotiations work?‑‑‑Yes.

PN670

You’re also familiar with the approach by the Commonwealth Bank to enterprise bargaining?‑‑‑Yes.

PN671

You were an active participant in the 2013/2014 enterprise bargaining negotiations?‑‑‑Yes.

PN672

The outcome of those negotiations was the 2014 CBA Group Enterprise Agreement?‑‑‑Yes.

PN673

That document is not in evidence. I propose to provide a copy of that to this witness and have him identify it and tender it through him. I do have copies for the full bench as well. Could I just ask you to have a quick look at that document and perhaps identify it for the full bench, if you describe what you have in front of you?‑‑‑I have the Commonwealth Bank Group Enterprise Agreement 2014.

PN674

That’s a document you’re familiar with, I presume?‑‑‑That’s correct.

PN675

I tender that.

PN676

VICE PRESIDENT WATSON: We’ll mark it exhibit M5.

*** TONY JOHN MAROUN XXN MR MCKENNA

EXHIBIT #M5 COMMONWEALTH BANK GROUP ENTERPRISE AGREEMENT 2014

PN677

MR McKENNA: You were directly involved in the process of negotiation leading to that agreement?‑‑‑Yes.

PN678

At the start of that agreement presumably the bank identified a number of its objectives in the bargaining round?‑‑‑Yes.

PN679

That’s something that has historically been the case with your involvement with negotiations with the bank?‑‑‑That is correct.

PN680

At the start of the process there will be something of a shopping list at the bank of what you hope to achieve?‑‑‑That is correct.

PN681

That may or may not be provided to the union in negotiations?‑‑‑That is correct.

PN682

I suggest to you that the analysis done by the bank goes beyond a simple list of things. You agree with that?‑‑‑Yes.

PN683

There in fact is an attempt to evaluate the priorities in any particular bargaining round?‑‑‑Yes.

PN684

That evaluation process is predominantly based on achieving the greatest productivity improvements for the bank?‑‑‑Yes.

PN685

You generally seek to achieve a dynamic enterprise agreement that allows this to operate effectively?‑‑‑Yes.

PN686

That is based upon the bank’s, and indeed your, assessment on the needs of the enterprise?‑‑‑That is correct.

PN687

As the bargaining process unfolds, there’s invariably a degree of give and take between the parties?‑‑‑Absolutely. Yes.

PN688

The bank will agree to some of the things that are sought by the FSU, by the union, and likewise the Commonwealth Bank Group will agree to some of the requests by the union?‑‑‑Yes.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN689

Other things will be rejected by one side or the other?‑‑‑Yes.

PN690

You provide the specific example at paragraph 37 of proposed changes to taxi entitlements?‑‑‑Yes.

PN691

That was something that was put up by the bank in this round of enterprise - - -?‑‑‑No.

PN692

In a previous round?‑‑‑2010.

PN693

Thank you for the clarification. Similarly the annualised salaries for certain managerial employees was also something that was put up in 2010?‑‑‑No. 2014.

PN694

Thank you. In both those cases, they were matters that ultimately weren’t pursued by the bank?‑‑‑That is correct.

PN695

That’s because an assessment was made to say, well, although we would like these things, they’re not as important as some of the other things we’re trying to achieve from this negotiation?‑‑‑No, that is not correct.

PN696

So - - -?‑‑‑Can I elaborate on that point?

PN697

Please?‑‑‑Yes. So if I can go back to both taxis and also annualised salaries, whilst they were a priority for the group at the time, essentially we sought feedback from our employees and we also received feedback directly from the union and their members around how they felt around the changes that we were proposing. When it came back to us that there was strong opposition or that there was great uncertainty, the group was prepared to – in the case of annualised salaries, we were prepared to park those discussions for the next round of enterprise bargaining negotiations. With respect to taxis, it was a clear outright, our people have spoken. Our employees have spoken. This is something that whilst we know the agreement will get voted in favour, it is something that has come back – we’ve got a strong message from our employees that this is something they are opposed to, and we weren’t talking about a large portion but the group executive who was involved in those enterprise bargaining negotiations at the time, she felt it was something that was near and dear to the employees and she made a call at the time that we will not pursue that, those changes that we were looking to propose.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN698

So an assessment ultimately was made that these are items of greater significance to the employees and the union, than they are to the bank?‑‑‑We acted in the best interests of our employees, and a decision was made on that basis.

PN699

There would have been – and, indeed, I think your evidence is that there was – significant pushback on those items?‑‑‑to the 2010 enterprise agreement, I would not say that there was – on the taxi provision, I would say that there was significant push-back but there was concern in a particular part of Queensland, in our direct channels call centre that there was a group of employees that this affected. In the overall scheme of things when I look at the entire voting population of that enterprise agreement at the time, it was a minority group, however, in the eyes of our group executive it was enough for her to warrant – to say, well, you know, it’s something that affects them and it did not – from a – ultimately the decision in the end came down to the fact that there was more of a – she felt it didn’t sit comfortably with her from an occupational health and safety perspective, to change the entitlements to taxi allowances, and so she made the decision to overturn that. But in answer to your question, was it a significant number of employees? No. It was more just doing the right thing as an employer, and that’s what our group executive chose to do. We could have pursued that matter and we probably – in light of what would happen, we probably would have got the agreement up and that more than likely would have occurred. In fact, I specifically recall the discussions with the union at the time. They said to us at the time, “Look, we don’t think this is going to affect the outcome of negotiations but from our feedback there’s clearly resistance from this small patch up in Queensland.” It was just ultimately a decision that was made by doing the right thing, as an employer, by our people. That’s ultimately where we landed with that matter.

PN700

So ultimately what occurs during the negotiation process is that there is a degree of give and take. That’s right?‑‑‑That is correct.

PN701

The bank will identify certain priorities that it will pursue with greater vigour than others?‑‑‑Yes.

PN702

I wish to put a document to this witness which has been agreed with the bank would be kept confidential. So it might be appropriate at this time for the transcript to be marked to reflect that. If I can perhaps hand up copies for the assistance of – I’m sorry, the 2014.

PN703

VICE PRESIDENT WATSON: Thank you. Until further notice we’ll direct that this transcript be confidential to the parties.

(Continued in-Confidence)

*** TONY JOHN MAROUN XXN MR MCKENNA

(Transcript-in-Confidence)

PN723

I think we can safely come back on the record.

PN724

VICE PRESIDENT WATSON: Very well.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN725

MR McKENNA: In the event that we need to step backwards, I’ll certainly endeavour to raise that before I put the question.

PN726

VICE PRESIDENT WATSON: Yes. You don’t propose to tender that document?

PN727

MR McKENNA: I do. Thank you for the reminder.

PN728

VICE PRESIDENT WATSON: I think we might have missed out an M3. I think we’ve got a 4 and a 5. Is that correct?

PN729

MR McKENNA: I would have to defer to my learned instructor, I think.

PN730

MR PERRY: We’re up to M6, I think, your Honour.

PN731

VICE PRESIDENT WATSON: Do we need 3?

PN732

MR PERRY: I think the same document was marked as M3 and M4, which was the aid memoire document. I think your Honour has marked it before the adjournment as M3, and then it was marked as M4 after the adjournment. So if perhaps this document could become one of those.

PN733

VICE PRESIDENT WATSON: Well, the document of – table of figures we’ll leave as M4, and we’ll mark the three-page confidential document exhibit M3.

EXHIBIT #M3 THREE-PAGE CONFIDENTIAL DOCUMENT

PN734

MR McKENNA: As the full bench pleases. Whilst we’re talking about exhibits, could I direct your attention to M5, which is a copy of the 2014 agreement. Do you have that in front of you still?‑‑‑Yes.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN735

What that agreement provides is for a set of common terms and conditions in the first division. That’s correct?‑‑‑That is correct.

PN736

The first division runs to some 25 pages?‑‑‑Yes.

PN737

Thereafter there are separate divisions relevantly for the Commonwealth Bank, CommSec and Colonial?‑‑‑That’s correct.

PN738

It’s correct, isn’t it, that each of those divisions contain terms and conditions which are also contained in division A. There is overlap?‑‑‑Yes.

PN739

To the extent that there is overlap, divisions B, C and D relating to the specific enterprises provided?‑‑‑Yes.

PN740

You accept that division B runs to some 45 pages? I’ll certainly stand to be corrected on that?‑‑‑That appears to be the case, yes.

PN741

You would accept that the majority of the terms and conditions of employment for CBA employees are contained in division B?‑‑‑Yes.

PN742

Would you accept – leaving to one side the number of pages, we can come back to that if you wish, but division C contains the majority of terms and conditions for CommSec employees?‑‑‑Correct.

PN743

Division D contains the majority of terms and conditions for Colonial employees?‑‑‑Yes.

PN744

It’s correct, isn’t it, that in – well, I will withdraw that. In negotiating this document, is it your evidence that the primary document relied upon was the previous enterprise agreements?‑‑‑Yes.

PN745

It’s also true, isn’t it, that where there is a derivation from the previous enterprise agreement, that active consideration is given to the relevant term in the enterprise award?‑‑‑Yes.

PN746

The enterprise award for Colonial – I’ll withdraw that. The enterprise award for CommSec was of particular significance in the preparation of division C?‑‑‑Yes.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN747

That’s because there wasn’t a pre-existing enterprise agreement for CommSec?‑‑‑That’s correct.

PN748

So in negotiating this, a starting point for both parties was in fact the existing enterprise award?‑‑‑Yes.

PN749

I think you’ll agree, and I think you’ve perhaps touched upon this very recently but it’s not always clear to delineate between which employees are covered by which terms and conditions?‑‑‑That’s correct.

PN750

Based upon your table or the table that you have confirmed to be correct, which is exhibit P3, it’s the case, isn’t it, that within a division there may well be a person employed by the Commonwealth Bank, sitting next to a person employed by Colonial, sitting next to a person employed by CommSec?‑‑‑Yes.

PN751

It may well be that each of those three people are subject to different terms and conditions?‑‑‑Yes.

PN752

You, in your statement, don’t point to any particular examples where that’s not working, do you?‑‑‑No.

PN753

You don’t say, well, this causes this problem. This is the additional administrative burden that it creates?‑‑‑No, I don’t.

PN754

In fact, it’s the position that the current position under the EBA is something that was actively agreed to by the bank?‑‑‑Yes.

PN755

I’d suggest, pursued by the Bank?‑‑‑Yes.

PN756

It’s the case that there are also some employees who would be covered by the BFI award?‑‑‑Yes.

PN757

Some of the Colonial employees that we’ve already referred to?‑‑‑That’s correct.

PN758

A number of BankWest employees?‑‑‑Yes.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN759

Employees of some of the smaller entities more recently acquired by the Commonwealth Bank Group?‑‑‑Yes.

PN760

Again, in your evidence you don’t point to particular problems that arise from that, do you?‑‑‑That’s correct.

PN761

You were working within the department that you’re now in back in 2002 when a decision was made to establish CommSec?‑‑‑Yes, I was in my department.

PN762

You were there when – that decision involved using CommSec as the employer of employees engaged under individual contracts in the premium financial services unit of the bank?‑‑‑Yes.

PN763

At that time you accept that the bank was actively pursuing a policy of giving primacy to individual contracts?‑‑‑Yes.

PN764

One of the key reasons for that is that the legislation at the time provided for such individual agreements?‑‑‑Yes.

PN765

Given the opportunity, the bank exercised that opportunity?‑‑‑Yes.

PN766

It went further, didn’t it?‑‑‑To what extent?

PN767

Do you accept that the decision to use CommSec as the employer of the premium financial services employees ultimately amounted to an industrial relation avoidance scheme?‑‑‑Sorry, I don’t understand.

PN768

Do you accept that the decision to use CommSec as the employer or employees engaged under individual contracts in the premium financial services unit of the CBA was an industrial relations avoidance scheme?‑‑‑That was the matter that was brought at the time.

PN769

Yes. That was the finding of the court. You accept that?‑‑‑Yes.

PN770

Do you accept that it’s correct?‑‑‑Not necessarily.

PN771

Do you accept that it was deemed to be unlawful?‑‑‑Yes.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN772

But you don’t accept that it was an industrial relations avoidance scheme?‑‑‑Not at the time, no.

PN773

It was simply utilising the opportunities in the existing legislation?‑‑‑That is correct.

PN774

As an proactive employer, they are representative – that’s what one does, isn’t it?‑‑‑That is correct.

PN775

One looks for opportunities?‑‑‑That was the decision that was taken at the time by the business. If I can just clarify, I wasn’t in that part of the business at the time. I actually wasn’t representing that particular part of the business, but I do recall what happened in that part of the business at that time. My role – I’ve been in this role since 2006, my current role, which looks at the entire group function and our strategy there, but at that time I was not involved in that particular piece of work. It was held by our – it was actually under the control of our group HR, human resources function.

PN776

There was no new enterprise agreement reached by the Commonwealth Bank Group between 2002 and - - -?‑‑‑That’s correct.

PN777

Do you accept that during that period there was a general policy in the bank to pursue or to give individual contracts?‑‑‑Yes. Yes, I was aware of that.

PN778

That’s because the legislation provided for it?‑‑‑Yes.

PN779

Then in 2009 that opportunity closed down, didn’t it?‑‑‑That’s correct.

PN780

In 2010 there was a new EBA reached?‑‑‑That’s correct.

PN781

One of the reasons for that was the individual contracts were no longer available as AWAs?‑‑‑No, not necessarily.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN782

Not necessarily?‑‑‑I got involved in enterprise – my first involvement in enterprise agreement negotiations was in around late 2007, early 2008, and the decision was taken by the group executive at the time that we should look at our enterprise agreements. What the organisation had been doing every year is just been giving unilateral pay increases, and there was a decision taken by the organisation at the time to enter into negotiations with the union to look at entering into an enterprise agreement because there was a fair bit of discussions between the bank and the union that we should look at coming back to the table, and the group executive at the time felt that now was the time to sit down and possibly look at trying to nut out an enterprise agreement.

PN783

So you were directly involved in that return to the table in 2010?‑‑‑Yes, I was.

PN784

Were you directly involved in the discussions that led to the initiation of those?‑‑‑I wasn’t directly involved. I was brought in at the start of negotiations. I understand that there were discussions between our group executive and a gentleman by the name of Glen Fredericks. They held the discussions with the union at the time.

PN785

So you were involved in the 2007 negotiations?‑‑‑I was in the background but I wasn’t involved directly in the initial discussions with the union. I was brought to the table, because obviously I assumed the role of Executive Manager Workplace Relations in late 2006, and I was brought into this particular role, saying that once we formally kick off negotiations with the union you’ll be directly involved in those discussions.

PN786

You were personally involved in setting the agenda for the bank for those 2007 negotiations?‑‑‑I wasn’t personally involved in them but I was aware of them at the time.

PN787

I want to put a further document to the witness, and this is another document which has been agreed with the Commonwealth Bank that it will be produced on a confidential basis. Similarly, the transcript would need to reflect that.

PN788

VICE PRESIDENT WATSON: Yes. The transcript from this point will be confidential to the parties. Thank you.

(Continued in-Confidence)

*** TONY JOHN MAROUN XXN MR MCKENNA

(Continued in open session)

PN811

If I may tender that before I forget, please.

PN812

VICE PRESIDENT WATSON: That document will be marked Confidential and confined to the parties and we will mark it exhibit M6.

EXHIBIT #M6 CONFIDENTIAL DOCUMENT

PN813

MR McKENNA: I’m conscious of the time. I don’t have far to go but I think I will be more than seven minutes. I’m content to proceed or - - -

PN814

VICE PRESIDENT WATSON: Very well. We’ll adjourn now, I think until 2 pm.

<THE WITNESS WITHDREW [12.53 PM]

LUNCHEON ADJOURNMENT [12.53 PM]

RESUMED [2.00 PM]

<TONY JOHN MAROUN, RECALLED [2.00 PM]

CROSS-EXAMINATION BY MR MCKENNA, CONTINUED [2.00 PM]

PN815

VICE PRESIDENT WATSON: Mr McKenna.

PN816

MR McKENNA: Thank you, your Honour.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN817

Mr Maroun, you accept, don’t you, that the Commonwealth Bank holds a unique position in the banking marketplace in Australia?‑‑‑Yes.

PN818

It is – I think it has the largest market share for home loans?‑‑‑Yes.

PN819

It is a leader in consumer business?‑‑‑Yes.

PN820

In consumer banking, I should say. Also leading in personal banking?‑‑‑Yes.

PN821

It is at the cutting edge of technology developments?‑‑‑Yes.

PN822

Use of iPhone apps and what-not; it’s right out there with those things?‑‑‑Yes.

PN823

DEPUTY PRESIDENT SMITH: Is that a question or an advertisement?

PN824

MR PERRY: We’ll take all the help we can get.

PN825

MR McKENNA: Which bank? It has a unique history, doesn’t it?‑‑‑Yes.

PN826

You would of course accept that it is a large and iconic employer?‑‑‑Yes.

PN827

A unique one?‑‑‑Yes.

PN828

You, in your evidence, refer to the fact that the war for talent is high, and that is something that would prevent wages being undercut if an award threshold were lowered?‑‑‑Yes.

PN829

You accept, don’t you, that there are several different things which underpin the terms and conditions of employment?‑‑‑Yes.

PN830

One of those is the market?‑‑‑Yes.

PN831

There is a need to attract and retain the best and brightest employees. You accept that?‑‑‑Yes.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN832

You accept that awards themselves impose another basis for terms and conditions?‑‑‑Yes.

PN833

It’s true, isn’t it, that both of those things – both the market and industrial regulation – limit the flexibility of the bank as to decipher terms and conditions upon which employees are engaged?‑‑‑Yes.

PN834

It’s also true, isn’t it, that the inherent nature of awards imposes inflexibility?‑‑‑Yes.

PN835

There are ways in which that inflexibility can be limited?‑‑‑Yes.

PN836

You can add flexibility by entering into individual IFAs – individual flexibility agreements?‑‑‑Yes.

PN837

By, indeed, the use of enterprise agreements allows a variation from an award standard?‑‑‑Yes.

PN838

The Commonwealth Bank also uses Commonwealth contracts above award and above agreement contracts?‑‑‑Yes.

PN839

So there are a range of different terms and conditions upon which employees are engaged?‑‑‑Yes.

PN840

You don’t give evidence that that’s causing any particular difficulties for the bank at the moment?‑‑‑No.

PN841

You accept, don’t you, that if the war for talent were less intense, then the market rates and the market terms and conditions would fall?‑‑‑Not necessarily.

PN842

I’m certainly no economist but if there’s an increase in supply of employees and/or a drop in demand, then that would take the heat out of the market, wouldn’t it?‑‑‑Yes, it would take the heat out of the market.

PN843

The war would be less intense?‑‑‑Yes.

*** TONY JOHN MAROUN XXN MR MCKENNA

PN844

Similarly, you accept that if across the board a safety net, an award safety net were lowered, that would also contribute to a potential reduction in market terms and conditions?‑‑‑Yes, potentially it could.

PN845

Indeed, ultimate flexibility would be an unregulated market, wouldn’t it?‑‑‑Yes.

PN846

If the full bench pleases, there’s nothing further.

PN847

VICE PRESIDENT WATSON: Thank you. Mr Perry.

PN848

MR PERRY: Thank you, your Honour. Just two matters arising.

RE-EXAMINATION BY MR PERRY [2.04 PM]

PN849

MR PERRY: Might the witness be shown the document which was marked as exhibit M6.

(Continued in Transcript-in-Confidence)

(Continued in open session)

PN853

MR PERRY: You can return that document now, Mr Maroun?‑‑‑Yes.

PN854

You were asked some questions by my friend about paragraph 28 of your statement and, in particular about the grandfathered allowances you referred to in paragraph (c) of paragraph 28. Do you have that there? What is it about those allowances that you regard as obsolete or irrelevant?‑‑‑Sorry, just let me get to it. Okay. So I guess in terms of those particular allowances, they only really tend to apply to a handful of staff. When I think about the enterprise agreement discussions we’ve had over the years, it’s really been about trying to remove those allowances out of the agreement because a number of those allowances do take up a fair bit of space in those agreements, and we’re talking about they would apply to a handful of employees, not the majority of employees who this agreement applies to. So in terms of where we’ve sort of sat as an organisation and in our discussions with the union it’s been about tidying up the agreement and where we feel that these allowances no longer apply or they’re irrelevant. Because, you know, they may apply to two or three staff members, there’s a good opportunity to either buy them out or move them into policy.

PN855

Yes. That was what you were referring to about them being obsolete or irrelevant?‑‑‑That’s correct.

PN856

Was that they applied just to a very small number?‑‑‑A very small number of employees.

PN857

Yes. There’s nothing further.

PN858

VICE PRESIDENT WATSON: Thank you for your evidence, Mr Maroun?
‑‑‑Thank you.

*** TONY JOHN MAROUN RXN MR PERRY

PN859

You can step down.

<THE WITNESS WITHDREW [2.08 PM]

PN860

MR PERRY: Your Honours, I now call Joel Dasey.

PN861

VICE PRESIDENT WATSON: Come to the witness box, Mr Dasey, thank you. Remain standing while my associate administers the oath or affirmation

<JOHN NOEL DASEY, AFFIRMED [2.09 PM]

EXAMINATION-IN-CHIEF BY MR PERRY [2.09 PM]

PN862

VICE PRESIDENT WATSON: Please be seated. Mr Perry.

PN863

MR PERRY: Thank you, your Honour. (To witness) Can you please state your full name for the record?‑‑‑John Noel Dasey.

PN864

Mr Dasey, what is your position of employment?‑‑‑I’m Executive Manager Employee Relations and HR Operations.

PN865

Who do you work for?‑‑‑I work for BWA Group Services.

PN866

For the purpose of these proceedings, Mr Dasey, have you caused to have had a statement prepared?‑‑‑I have.

PN867

Is that statement dated 23 December 2014?‑‑‑Yes, it is.

PN868

Do you have that statement with you?‑‑‑Yes, I do.

PN869

Are there any corrections that you’d like to make to that statement?‑‑‑Just one. In paragraph 37(b) in the first line, the word “employee,” the second-last word, should be “employ”. That’s all.

PN870

With that correction noted, Mr Dasey, are the contents of the statement true and correct?‑‑‑They are.

PN871

Yes. There’s nothing further.

PN872

VICE PRESIDENT WATSON: That statement will be exhibit P4.

EXHIBIT #P4 STATEMENT OF JOHN NOEL DASEY DATED 23/12/2014

PN873

VICE PRESIDENT WATSON: Mr McKenna.

PN874

MR McKENNA: Thank you, your Honour.

*** JOHN NOEL DASEY XN MR PERRY

CROSS-EXAMINATION BY MR MCKENNA [2.10 PM]

PN875

MR McKENNA: Mr Dasey, as I understand your evidence, in about 2007 there were – in 2007 there were about 400 persons working in BankWest stores, employed through the HBOS Group Services enterprise, that corporate entity?‑‑‑That would be correct, yes.

PN876

Those persons were largely in the eastern States in the concept stores. Is that right?‑‑‑They were.

PN877

In about 2012 when BankWest ceased holding its own authorised deposit-taking institutional authority, a large number of employees transferred across from the BankWest entity to BWAGS?‑‑‑That’s right.

PN878

Several thousand?‑‑‑Yes, it would have been around four, four and a half.

PN879

At that point, applications were made both by BankWest and by the union for orders under section 319, such that new non-transferring employees of BWAGS would be covered by the BankWest enterprise award?‑‑‑There was an application by BankWest or BWAGS, I guess, that the enterprise agreement should apply and an application by the FSU that the award should apply in the way you’ve described.

PN880

Right. I’m sorry, and so the application by the union for the award to apply was supported by BankWest?‑‑‑Yes, it was.

PN881

It was ultimately a consent application was that granted?‑‑‑That’s correct.

PN882

I think you also give evidence about the statutory effect of the transfer of business provisions?‑‑‑Yes.

PN883

Such that the 4,000 persons transferring across to BWAGS took with them the BankWest enterprise award?‑‑‑That’s correct.

PN884

So as at that time there was a – the majority of people employed by BWAGS were employed pursuant to the BankWest award?‑‑‑Yes.

*** JOHN NOEL DASEY XXN MR MCKENNA

PN885

To the extent that persons employed by BWAGS were covered by a different award, would you agree that there was no statutory mechanism for those persons to be covered by the BankWest award?‑‑‑I don’t think so.

PN886

So we have the transfer of business provisions for the people come across are picked up by the transfer of provisions – the order under 301 picks up new employees?‑‑‑That’s correct.

PN887

You accept there’s no capacity under the Act to pick up the existing employees?‑‑‑That’s correct. They remained covered by the Banking Finance and Insurance Award?‑‑‑One of the reasons that BankWest supported the union’s application for the BankWest award to apply to new employees was that a view was taken that it was appropriate that persons working in the BankWest business be covered by that award?‑‑‑Yes.

PN888

That’s so, whether or not they were working in the west, or indeed even in the east in the concept stores?‑‑‑That’s correct.

PN889

That group has now reduced somewhat?‑‑‑The group covered by the Banking Finance and Insurance Award?

PN890

Yes. So the 400 persons who were outside the BankWest award coverage, that is now reduced?‑‑‑Yes.

PN891

I think your estimate now is 120, plus some managers?‑‑‑That’s correct.

PN892

You accept, don’t you, that that is a confined group. No new person can be added to that group?‑‑‑That’s correct.

PN893

They’re the people who were employed prior to 2012 either in the eastern States concept stores, or the managers?‑‑‑Yes. Indeed.

PN894

There has been a significant reduction in that number?‑‑‑Yes. Just normal turnover.

PN895

You’d expect that number to continue to reduce with normal turnover?‑‑‑Yes, you would.

*** JOHN NOEL DASEY XXN MR MCKENNA

PN896

In respect of the 40 management level employees – sorry. The 40 management level employees, it’s your evidence that they are BFI covered currently?‑‑‑That’s correct.

PN897

They would otherwise be covered by the BankWest award. They fall within the classifications of the BankWest award?‑‑‑They would, yes.

PN898

But simply because of the time at which they were employed, they fall outside?‑‑‑That’s correct.

PN899

That’s also a finite and diminishing group?‑‑‑Yes.

PN900

I understand there’s a degree of cross-over between the CBA enterprises and the manner in which employees are engaged to work?‑‑‑Yes, there is.

PN901

So it’s possible for a BankWest employee to work side by side with a Colonial employee, doing similar work?‑‑‑Yes.

PN902

In those circumstances, it’s your evidence that the BWAGS enterprise agreement has application only to the BWAGS employees working in the BankWest division of the CBA?‑‑‑That is the scope of that agreement, yes.

PN903

The award provides similar coverage. Is that right?‑‑‑The award of course only exists for people through the two mechanisms. One is transmission so that’s a finite group of people or work, and the other is the order made by the court. So in terms of the scope, if you like, of that award, it doesn’t have a scope in the sense that you can pick up a document and read it, but it has a scope through those one legal mechanism and one order, is probably the best way to describe it.

PN904

Yes, and it applies to new employees performing the transferring work?‑‑‑That’s correct, yes.

PN905

Which is the work of the business of BankWest?‑‑‑Yes. Yes.

PN906

Employees of BWAGS can be seconded to other Commonwealth Bank Group enterprises?‑‑‑That’s correct.

PN907

Indeed, are seconded?‑‑‑There are some, yes.

*** JOHN NOEL DASEY XXN MR MCKENNA

PN908

People employed by BWAGS can simply work in other businesses without a formal secondment in place. That’s right, isn’t it?‑‑‑That’s correct. The labour supply agreement is with the Commonwealth Bank; not with any particular aspect of that.

PN909

IN respect of an employee who is seconded from BankWest to another employer, I understand that both the enterprise agreement and the BankWest award would apply. Is that your understanding?‑‑‑I think if they were an enterprise agreement employee, yes, and I think the award would in other cases, yes.

PN910

With respect to persons who are working in a different CBA group enterprise, the position is much less clear, isn’t it?‑‑‑It is, yes.

PN911

In fact, it’s where one would look to find the source of their entitlements?‑‑‑My understanding is that you would look at the award that applied to a labour supply company operating in the industry, and given it’s the industry of banking and insurance, it would be that the Banking Finance and Insurance Industry would apply. That’s my understanding of how the mechanism works for labour supply companies.

PN912

You accept, don’t you, that – have you had a chance to review the draft award proposed by the union?‑‑‑I have.

PN913

Do you accept - - -?‑‑‑Could I say, in terms of the common perspectives and the BankWest perspectives. I didn’t look wider than that. So I haven’t reviewed in detail the CBA schedules, et cetera.

PN914

Certainly?‑‑‑Yes.

PN915

You accept, don’t you, that the award, as proposed, would create consistency across persons engaged by BWAGS? It would provide consistent terms?‑‑‑If it was granted in the way that the application is where all employees of BWAGS, regardless of where they work, receive the BankWest conditions, then yes it would. That would be a different situation that may in fact interfere with the business, if you like, of that labour supply company.

PN916

Are you familiar with the coverage provisions under the 2014 CBA Group Enterprise Agreement?‑‑‑I am.

*** JOHN NOEL DASEY XXN MR MCKENNA

PN917

You’re familiar that the divisions to that agreement will apply to persons employed by Colonial, CBA and CommSec?‑‑‑Yes.

PN918

In the precise manner that the union seeks to apply to the BankWest employees in their draft?‑‑‑I don’t know the precise matter but it does have schedules, yes, the same as the union’s draft award.

PN919

It has schedules and would provide for coverage for employees employed by the relevant entities within the classifications in the schedules or in the divisions?‑‑‑That’s my understanding, yes.

PN920

It’s your evidence that the draft award contains clauses which are significantly out of date and not applicable to the operation of the business in 2014. You certainly haven’t discussed that with any representatives – I withdraw that. You haven’t discussed your particular concerns with representatives of the union, have you?‑‑‑No.

PN921

You’re aware that there has been an opportunity to do so?‑‑‑No, I’m not aware.

PN922

You’re not aware that the solicitors for the union wrote to the solicitors for the Commonwealth Bank Group inviting a discussion of terms identified as obsolete or irrelevant?‑‑‑I may have received correspondence on that. I don’t recall.

PN923

You’re not aware. Certainly. It’s open for a manager to either accept or reject a remuneration package that’s offered in accordance with the packaging of managerial salaries memorandum of agreement 1990, isn’t it?‑‑‑Yes.

PN924

I think it’s your evidence that all employees have accepted that?‑‑‑Yes, indeed.

PN925

You’re aware though, aren’t you, that there are – well, I suggest to you that there are in fact employees, managers, who have not accepted that packaging?‑‑‑Who are you referring to, sorry?

*** JOHN NOEL DASEY XXN MR MCKENNA

PN926

I suggest that on an annual basis, by reason of at least one employee who falls outside that memorandum, you’re required to undertake – well, let me put it to you. Do you go through the process of bearing any manager’s salaries with regard to the enterprise bargaining?‑‑‑Sorry, yes, there are. Within the enterprise agreement there is a group of employees who have a background in 2001. The enterprise agreement at that point covered the range of managers. The enterprise agreement was changed so the managers could opt out by way of seeking a management contract. Most of them did that. There was a group who remained on the enterprise agreement at that time, and although the scope has been changed so that it now only covers the remnants of that group, that group has continued to be covered by the enterprise agreement and has diminished over time. There are currently three of those. I think two are at level 3, one at level 4, who remain covered by that agreement. There’s also a group of assistant store managers from the east coast who are another grandparent group under the enterprise agreement. So, yes, there are three that I think come within the category you’re talking about.

PN927

So does that mean that you would wish to vary your evidence at paragraph 34?‑‑‑Or 32 where I say, “All award M grade employees who are not on the enterprise agreement have been” – no, I don’t change that because it is only those on the enterprise agreement that are in the category you’ve described.

PN928

It remains open to managers who have accepted a remuneration package in accordance with the memorandum of agreement to withdraw from that?‑‑‑No, it doesn’t. I think they can request but my understanding of the memorandum of agreement is it specifically says we don’t have to agree.

PN929

So when you say at 37(b):

PN930

BWAGS does not employ any non-packaged managers –

PN931

you accept there are a group of managers who are not subject to the memorandum of agreement?‑‑‑No, once again I don’t simply because if they’re covered by the enterprise agreement, the award does not apply to them and, therefore, I don’t put them in that category.

PN932

So it’s simply the operation of the enterprise – no, let’s go back a step?‑‑‑Yes.

PN933

You accept that BWAGS employs non-packaged managers who fall within the coverage of the BankWest award?‑‑‑Coverage but not application, yes.

PN934

So that’s the typical distinction that you draw?‑‑‑I do.

PN935

So to the extent that you say clause 35(3) is not relevant, it’s only not relevant because of the operation of the enterprise agreement?‑‑‑At this point for those three people, yes.

PN936

So it’s directly relevant for those three people for the purpose of the better off overall test?‑‑‑Yes, it would be, yes.

*** JOHN NOEL DASEY XXN MR MCKENNA

PN937

So you accept that it is a relevant clause for the purpose of determining the better off overall test?‑‑‑I’m not sure that I’ve ever had to use it in the better off overall test, given the level of salary those people are on, which are significantly above the rates in the award and in the enterprise agreement.

PN938

At paragraph 37(c) you refer to the temporary duty expenses and reimbursements?‑‑‑Yes.

PN939

And the practice of BWAGS for recovering those business-related expenses. You accept the difference between a policy, don’t you, and a legal obligation?‑‑‑Yes, I do.

PN940

So you say that clause of the enterprise award is not relevant because it has been superseded by a practice?‑‑‑Yes.

PN941

That’s a practice which BWAGS would be free to depart from without legal consequence?‑‑‑Yes, I accept that.

PN942

Similarly, paragraph 37(d), that’s in the same category, isn’t it? That is something that’s relevant for the purpose of the boot. It’s simply the case that the EBA provides for something in a different manner than the award?‑‑‑Yes.

PN943

The full bench pleases.

PN944

VICE PRESIDENT WATSON: Mr Perry.

PN945

MR PERRY: Yes. Thank you, your Honours.

RE-EXAMINATION BY MR PERRY [2.28 PM]

PN946

MR PERRY: Mr Dasey, my friend asked you some questions about the coverage of the BankWest Enterprise Agreement?‑‑‑Yes.

*** JOHN NOEL DASEY RXN MR PERRY

PN947

Just so we’re clear on that, could you perhaps indicate to their Honours which employees that agreement applies to and which employees it does not?‑‑‑Yes. Certainly. It applies to what we term level 1 and 2 employees, which are A and C grades in the award. Basically, to give you a picture, they run up to the level below a store or branch manager. They would be an assistant store manager and below. It covers the three remnant people from – I don’t mean that disrespectfully to those colleagues, but the remnant people from 2001, and it also applies to about 40 assistant store managers who are in our east coast stores who came into the agreement with that classification maintained last year. It doesn’t – so that’s probably a bit over half of the workforce. The remaining people from store manager level up, are not covered by the enterprise agreement.

PN948

You mentioned in respect of the three managers who are continuing under the 2001 arrangement, you partially made a statement to the effect of the amount they were paid being well in excess of the award. Can you indicate to their Honours in rough terms - - -?‑‑‑Yes, in rough terms, I think when I last looked the lowest paid had a salary of around 100,000, and the other two were higher than that.

PN949

Yes. There’s nothing further.

PN950

VICE PRESIDENT WATSON: Thank you for your evidence, Mr Dasey. You can step down.

<THE WITNESS WITHDREW [2.30 PM]

PN951

MR PERRY: That completes the evidentiary case for the respondents.

PN952

VICE PRESIDENT WATSON: I think Mr Maroun might still have my copy of exhibit P3 in his papers that I might get back from you at some stage, Mr Perry. Is it convenient we move to submissions, Mr McKenna?

PN953

MR PERRY: Perhaps if I could just return your Honour’s copy of P3.

PN954

VICE PRESIDENT WATSON: Thank you.

PN955

MR PERRY: With your Honour’s arrow.

PN956

VICE PRESIDENT WATSON: Yes.

PN957

MR McKENNA: If the Full Bench pleases. I have had a brief discussion with my learned friend and he will, I am sorry - - -

PN958

MR PERRY: I will see how long you take before I commit.

PN959

MR McKENNA: Sorry?

PN960

MR PERRY: I will see how long you take before I commit.

PN961

MR McKENNA: He will see how long I take before he commits. I will endeavour to be as brief as possible. I anticipate about 45 minutes. The matters under consideration are things well familiar to this Full Bench so I don’t propose to either take the Full Bench through chapter and verse of the written submissions that have been filed, nor chapter and verse of the relevant authorities. I do, however, propose to make some submissions particularly relevant to this application and submissions which support the making of the modern enterprise award that is sought by the union.

PN962

The issue for contention is put by the CBA is whether or not there ought to be one safety net or five. It is submitted that the answer to the contention put is that there ought to be one primary modern enterprise award covering the vast majority of award-based employees in the CBA Group enterprise. In circumstances where that modern enterprise award is based on terms and conditions developed between the parties over a number of years and which properly reflects the agreement reached over decades and in some circumstances particularly in respect of CommSec much more recently.

PN963

The structure of the agreement sought by the union reflects very closely the structure of the enterprise agreement, the 2014 group enterprise agreement, which was pursued and agreed to by the bank. To the extent that persons, employees, will fall outside the coverage of that agreement that is regrettable. But it is minor and it ought not derail what is otherwise a proper and necessary application to make.

PN964

If I can turn directly then to the relevant criteria at item 5(4) of schedule 6 commencing with: “The circumstances that led to the making of the enterprise instrument, rather than an instrument of more general application.” The bank is critical of the union for putting forward a historical story. It is accepted that a substantial amount of material has been filed by the union and it does tell a story. But, in my submission, it tells a very compelling story that provides the background to how it is that we got to where we are which is what this subitem is directly concerned with.

PN965

There is a long history of negotiation of terms of enterprise awards, particularly in respect of the Commonwealth Bank and, as I mentioned, there is a much more recent consent application in what were very difficult circumstances relating to CommSec. So far as I understand the bank’s case, they don’t directly challenge the story, as they describe it, which led to the making of the enterprise instruments. But, rather, suggests that those instruments are no longer relevant because of the changes that have occurred within the relevant enterprises.

PN966

It is acknowledged that there have been changes. There have been changes to the technology. There have been changes to the information systems that are used. But there is no evidence, in my submission, that any of those changes have undermined the basis for the making of the enterprise awards and the enterprise awards remain relevant and persuasive.

PN967

The way that the bank puts its case in its written submissions is to say that there is or to suggest that there is an onus upon the union to show that the rationale for making the enterprise awards remains relevant and persuasive and they rely upon District Health at 12 in support of that proposition.

PN968

In my submission, neither that authority nor the criteria at 4(5) of schedule 6, operates in that way. There is nothing that says that there is a particular burden upon either party to show the ongoing relevance of the circumstances that led to the making of the enterprise instrument. However, it is submitted that the Full Bench can be satisfied in this case that there is an ongoing relevance or that the rationale that led to the making of the enterprise awards remain relevant and persuasive.

PN969

That is particularly so when the vast majority of the changes and the evolution of the enterprise awards arose in a consensual context. That is something that has been discussed by previous Full Benches and I refer in particular to the Pizza Hut decision at paragraph 39 as referred to in the outline of submissions.

PN970

But turning to the particular four enterprises and the circumstances that led to the making of the enterprise instruments, the terms of the Commonwealth Bank Enterprise Award have deep roots in history. They evolved over a period of some 75 years developing through the staff instructions and particular changes imposed or agreed to as the needs of the enterprise developed and changed.

PN971

One such change was the introduction of the Hay job evaluation methodology for determining classifications. That has been something which has continued to be applied for the Commonwealth Bank employees in the enterprise agreement.

PN972

Further changes, variations and amendments arose by consent in response to the structural efficiency principles and again in circumstances where it is submitted that the parties and, in particular, the bank agreed to things that were in the interests of the enterprise to achieve structural efficiency.

PN973

The background to CommSec is different and, in my submission, extremely unique. Prior to 2012, CommSec provided only stockbroking and associated services and in 2007 a decision was made by the Commonwealth Bank to use CommSec as a vehicle to employ persons engaged in a premium financial services business unit of the Commonwealth Bank. That was a decision that was ultimately found by the Federal Court to be unlawful. It was described - no, I will withdraw that. I will come to that in a moment.

PN974

The initial agreement that was reached between CommSec and employees which did not cover the union was ultimately found to be invalid and in those difficult circumstances the parties met and worked together to reach a consent position. The outcome of that was described by Drake SDP in the following terms: “I felt it might be an impossible task.” Her Honour went on to note that the parties adjusted their positions a huge amount in the course of the negotiations.

PN975

That was an agreement reached in February 2006. The Full Bench has heard the evidence of Mr Maroun of the use of that enterprise award in negotiating the recent 2014 group enterprise agreement. It was the primary document for the division which now relates to CommSec. It had, and continues to have, very contemporary, direct and immediate relevance to the terms and conditions applying to persons engaged through that entity.

PN976

With respect to Colonial, the Colonial Award 2003 is derived from the Colonial Enterprise Award 1996. That was a consent award. The purposes for making that award were relevantly identified by Commissioner Whelan, as Her Honour then was, as being threefold. Firstly, to better reflect the broad based financial services business of Colonial. Secondly, to embrace the concept of enterprise bargaining by severing formal industry ties with the insurance industry. And, thirdly, to allow future developments to be more readily incorporated into industrial regulations so as to enhance business success and employee benefits.

PN977

In my respectful submission, each of those criteria remains directly relevant, in particular, when one is considering the alternative for Colonial which would be if a modern enterprise award is not made and the existing Colonial Enterprise Award is terminated, a return to an industrial instrument which is, in large part, concerned with the insurance industry, something which was the severing - the ties with which was an express purpose for the making of the enterprise award.

PN978

Turning then to BankWest, the existing BankWest award has had a lengthy and complex history with a large amount of consent variations, in particular, in the early 1990s to reflect the structural efficiency principles under the auspices of productivity bargaining between the union and the bank. It did evolve to the current instrument which applies to the BankWest division of the Commonwealth Bank.

PN979

In my submission, this case can be clearly distinguished from the type of situation that arose in Norske Skog. If I have mispronounced that, my apologies. But notwithstanding the obvious existence of some changes to the nature of the businesses, there is no basis for the Full Bench to form a conclusion that those changes undermine the circumstances that led to making of the enterprise awards.

PN980

The increase in internet banking and EFTPOS changes the way the bank does business or the banks do business in some circumstances. It doesn’t, in my submission, or there is no evidence to suggest that it makes the enterprise awards or parts of them irrelevant or obsolete.

PN981

It is unsurprising that there are some terms of those instruments which could do with modernising, updating and refreshing and, as has been indicated, the union is quite open to working with the bank to achieve that. As I understand the evidence of Mr Maroun, he doesn’t see any reason why that ought not be possible to be achieved.

PN982

It is also said by the bank that there has been a change to legislative regime which changes the statutory role of awards and so much is obvious; that is apparent. But, again, the fact that awards may now have a different legislative role, each of the enterprise awards remain directly relevant as an applicable safety net and in a number of ways, one of which for the purpose of a negotiation of enterprise agreements. Secondly, in circumstances in the event there is no enterprise agreement. They are there, they would be there, to provide the safety net protection.

PN983

Moving then to item 4(5)(b) whether there is a modern award other than a miscellaneous award that would but for the enterprise instrument cover the persons who are covered by the instrument. The subitem calls for a comparison between the coverage of the CBA group enterprise instruments in the BFI award.

PN984

There is, on the evidence, some uncertainty about whether there will be a loss of award coverage. It is submitted that if one reviews the managerial classifications under the CBA award, they have been considered by the Federal Court and been found to be broad enough to cover executive managers of the CBA. They are persons who have traditionally been award covered and, in my submission, there is, at the very least, a very real risk that those employees will fall outside or would fall outside award coverage of the BFI award. Similar submissions may be made with respect to BankWest and other CBA enterprises.

PN985

The consequence of award coverage is that employees would firstly lose the benefit of a safety net and I will deal further with some of those consequences in respect of subitem 4(5)(f).

PN986

Just briefly dealing with the argument put forward by the bank that the effect of schedule 6, subitem 8(8) would prevent persons employed at managerial levels which rise above the BFI from being covered by a modern enterprise award. My submission is that that is a false reading of that subitem. Item 8(8) which relevantly mirrors section 143A(8) of the Fair Work Act. It relates specifically to enterprise instruments.

PN987

So to the extent that it provides that a modern enterprise award must not be expressed to cover classes of employees who, because of the nature or seniority of a role traditionally not been covered by awards or who perform work that is not of similar nature to the work that have traditionally been regulated by such awards. The reference there, in my submission, to classes of employees must be references to persons within the enterprise.

PN988

It is the particular enterprise to which schedule 6 is directed and similarly section 143 arises specifically related to modern enterprise awards. It is submitted that historically but particularly when one has regard to the coverage under the CBA award, historically those persons, managerial employees covered by the classification, have historically been award covered and accordingly those employees have also traditionally performed work regulated by such awards and in those circumstances it is the employees within the enterprises of the Commonwealth Bank to whom subitem 8(8) is directed.

PN989

If I can deal then with item 4(5)(c), the content or likely content of modern awards, and if I can deal firstly with a submission or suggestion made on behalf of the bank that the union has abandoned its submission about the appropriateness of the BFI for CBA Group employees. If I can be clear, the union maintains its submission that each of the CBA enterprise’s awards provides a more appropriate and more relevant award for each of the enterprises.

PN990

That is so in part because the CBA awards were specifically created to and did, indeed, facilitate changes to accommodate the interests of the both the employers and employees. It is noted that the BFI was - it is submitted that the BFI was substantially derived from the Credit Union Award 1998 which is a document which has far less direct relevance to both the employers and the employees who would be covered by the proposed modern enterprise award.

PN991

As to the content of the BFI award, that is now well established. The banking, finance and insurance industry is defined in clause 4.2 and it is defined very broadly. It is noted that when made, the BFI Award did not and to date does not cover employees covered by enterprise instruments, as a result of which each of the four big banks and their employees fall outside the BFI and it is my submission that particularly in relation to the Commonwealth Bank it is appropriate that that status quo be maintained.

PN992

DEPUTY PRESIDENT SMITH: That was derived from the legislative scheme of the Act at the time.

PN993

MR McKENNA: The BFI was?

PN994

DEPUTY PRESIDENT SMITH: No, the exclusions.

PN995

MR McKENNA: Yes, certainly. It was a necessary part of it and, as I indicate, it is my submission that that is something that ought to be maintained.

PN996

DEPUTY PRESIDENT SMITH: Yes.

PN997

MR McKENNA: Subitem 4(5)(d), the terms and conditions of employment applying in the industry. Now, the meaning of ‘industry’ for the purpose of 4(5) is not constrained to industry as defined in the BFI Award and that is something which was considered by the Full Bench in the KFC decision. In the BOQ decision, the Full Bench noted that the BFI Award applies to a broad range of businesses of which the banking industry is only a part. It is my submission that each of the enterprise awards and the proposed modern enterprise award is concerned with the banking industry as a subset of the banking, finance and insurance industries.

PN998

That banking industry is an industry dominated by the big four banks. Mr Peddie in his witness statement refers to some of the statistics dealing with the coverage with the instruments which provide the relevant safety net for the purpose of a BOOT test for enterprise agreements in the banking industry and notes that the big four banks and their subsidiaries cover approximately 66 per cent of the employees where the union is also covered.

PN999

So it is also submitted that being so the role of the enterprise instruments that the enterprise awards relating to the four big banks of having such a position of relevance in the terms and conditions in the banking industry. If one then is to determine what are the terms and conditions of employment applying in the industry, one must have regard to the actual terms and conditions that do apply to the big four banks. To the extent that the Commonwealth Bank is a significant player in that. Mr Peddie has conducted some analysis of situations or circumstances where particular terms of enterprise awards are picked up and adopted and replicated or at least reflected in the enterprise agreements that have been reached. That analysis is at DP68 with respect to the CBA Group Enterprise Award and at DP69 with respect to the BankWest Enterprise Award.

PN1000

DEPUTY PRESIDENT SMITH: Mr McKenna, you don’t have to answer it now but I would be interested in your client’s view. We have specifically considered all the banks. Each case will stand or fall on its own merits. Does your client have a view as to whether or not a success or a failure in these proceedings by one or any of the banks impacts upon regulation in the banking sector? I know you seek to have everybody regulated. But what, for example, if this one isn’t regulated and everyone is - everybody else is? Or what do you say if this - - -

PN1001

MR McKENNA: You mean regulated by an enterprise instrument?

PN1002

DEPUTY PRESIDENT SMITH: Yes.

PN1003

MR McKENNA: I suspect I am going to have to take that on notice.

PN1004

DEPUTY PRESIDENT SMITH: That is all right.

PN1005

MR McKENNA: Perhaps I can discuss with my learned friend the timing for putting in a very brief note on that.

PN1006

DEPUTY PRESIDENT SMITH: Yes. He will get the same question.

PN1007

MR McKENNA: He might answer more directly than I. But what I do say, just to round out that submission about the terms in the enterprise awards of the CBA Group being reflected in industry terms, highlights the fact that the enterprise awards are and remain directly relevant and highlights the basis on which they ought be retained.

PN1008

Turning then to subitem 4(5)(e), the extent to which the enterprise instrument provides enterprise specific terms and conditions of employment. The meaning of enterprise specific terms and conditions has been considered by the Full Bench and I rely upon the discussion in the Pizza Hut decision particularly where the concept or the suggestion that enterprise specific terms and conditions - I withdraw that - where the Full Bench rejected what was proposed as an overly technical approach to the term and found that the concept of enterprise specific terms and conditions so far as it bears upon the discretion to modernise and retain an enterprise award, was found to involve the extent to which specific provisions were developed to suit the need for an enterprise and would be lost if the award was not modernised and retained.

PN1009

In my submission, what flows from that is two things. One is the identification of a particular enterprise’s specific terms and conditions which is a process which has been undertaken by the union and annexed in the material of Mr Peddie. Secondly, again, consideration of the circumstances in which those enterprise’s specific terms and conditions arose. To summarise, it is submitted that those circumstances with respect to the CBA Award 1999 include a combination of terms which evolved to reflect the employment arrangements within the enterprise since approximately 1920 so an exceptionally long period of incubation, such terms which were ultimately reflected, modernised and varied largely by consent to achieve structural efficiency.

PN1010

The terms of the CommSec Award which were made recently and made by consent in highly unique circumstances where, as noted by Drake SDP, one might otherwise have thought the consent position to have been impossible. The Colonial Award which evolved in circumstances where Colonial sought to sever its formal ties with the insurance industry and to facilitate the incorporation of future developments and industrial regulation in enhanced business success. Finally, where the BankWest Award 1998 incorporates the agreement between the bank and the union to facilitate structural efficiency.

PN1011

The key differences between the Banking, Finance and Insurance Award and the CBA Award and each of the CBA Group Enterprise Instruments are considered and dealt with at annexures DP72 through to DP75. It is submitted that each of those terms identified by Mr Peddie in those annexures properly fit the description of an enterprise specific terms in the manner discussed by the Full Bench in the Pizza Hut decision and, particularly, when one has regard to the genesis of those terms, are terms such that they ought be retained.

PN1012

To the extent that it is said against us, against the union, that the FSU draft has been drafted through a desktop analysis, I understand that the specific criticism takes two forms. Firstly, that the terms have been superseded by EBA terms or apply only to a small number of people or otherwise it dealt with in policy. Secondly, are obsolete in that the language used or the positions that they refer to are no longer relevant.

PN1013

It is submitted that the first of those, that terms have been superseded by EBA terms or otherwise dealt with in policy, fails to appreciate the role that an enterprise award does as a safety net. It may be that the terms are no longer directly governing or directly applicable to employees. But the fact that they are there and if there is to be any departure from them will be relevant for the purpose of a BOOT, gives those terms and conditions direct relevance.

PN1014

Secondly, to the extent that it said that the terms are obsolete, the Full Bench had heard evidence about an approach on behalf of the union to work with the bank to try and address some of its concerns. To date that approach hasn’t been accepted but it remains a position that the union takes. It is quite prepared to work as closely as it can with the bank to resolve any concerns that it may have.

PN1015

Also in respect of this subitem, the modern awards objective provides that the Commission must recognise that the modern enterprise award may provide for terms and conditions tailored in relation to the relevant enterprises. It is submitted that there are for each of the four enterprise awards significant terms and conditions which are tailored to the needs to the enterprise and an analysis, a particularly analysis of those terms has been prepared by the union and is annexed as set out in annexure A filed with the outline of submissions. I presume that that is a document which the Full Bench has. I won’t go through it now but we do rely upon those as direct evidence of the enterprise specific nature of those terms and conditions.

PN1016

Moving then to the likely impact if a person is covered by the enterprise instrument, that requires consideration of three persons or entities or groups: firstly, the employers; secondly, the union; and, thirdly, the employees. As to the impact on the employees I will come back to this in a minute but it is my submission that there is no real evidence that there will be any impact of any ongoing viability or issues with competitive of the enterprises.

PN1017

The bank, the respondent, is critical of the failure by the union to identify any single employee who will earn less money or suffer inferior terms and conditions if the enterprise awards are terminated. Again, in my submission, that position fails to recognise the role of enterprise awards and the role of awards generally as safety net provisions. It is a matter which was indirectly dealt with by the Full Bench in Telstra where the Full Bench considered an argument by Telstra that the existence of the agreement and the history of bargaining means that such an outcome will not occur; the outcome being the potential to reduce terms and conditions of employment of the safety net is lowered.

PN1018

The Full Bench noted that:

PN1019

It is not an answer to say that the content of the current enterprise agreement means that there would be no change to the terms and conditions of employment of employees at Telstra and that the history of bargaining would support such a conclusion. Such an approach misunderstands the roles of an enterprise award. Its role is to provide base terms and conditions of employment which are relevant to the enterprise.

PN1020

To the extent that that approach was also considered by the Full Bench in Coleambally at paragraph 103, it is my submission that unlike the position in Coleambally, this is not a case where the Full Bench is able to have a high level of confidence that the enterprise agreements will continue to be made on a regular basis and will continue to provide the principal source for the employees’ terms and conditions of employment.

PN1021

Further, it is the union’s position that the BFI provides a lower and less relevant safety net to employees engaged in the CBA Group enterprises. The analysis of the BFI as opposed to each of the enterprise awards has been conducted by Mr Peddie and are set out as exhibits to his witness statement; relevantly being DP71 to 75 and my instructor, I think, suggested to me that I was referring to a comparison between the BFI and the enterprise agreements. I am referring, I am sorry, to the comparison between the BFI and the enterprise awards and that is set out at DP71 through to 75.

PN1022

So far as I understand the position put by the bank, it may be that something is put in closing to the contrary. But save that there has been some cross-examination of Mr Peddie there has been nothing, so far as I understand it, put which would lead to a contrary conclusion. I think the Full Bench can and ought take some comfort or ought be comfortable in reaching the same conclusion as Mr Peddie that the BFI provides a lower safety net than does the relevant enterprise awards.

PN1023

The confidence which the Full Bench might have in the parties to continue to make enterprise agreements and continue to make enterprise agreements which provide for beneficial terms and conditions for employees needs to be understood in light of the history of bargaining between the parties. Firstly, a significant EBA drought between 2002 and 2009. Secondly, the approach by the Commonwealth Bank taken in respect of CommSec described by Justice Merkel of the Federal Court as a scheme to establish individual unregulated contracts of employment in the part of a business.

PN1024

The CBA scheme, which is essentially an industrial relations avoidance scheme, possesses an ingenuity which is reminiscent of the tax avoidance schemes of the 1970s. That conduct by CommSec which His Honour found to have been driven by the CBA itself, attracted initially a penalty of $750,000 reduced on appeal to $450,000. It is, in my submission, apparent from the evidence of Mr Maroun that the CBA had a strong preference for individual agreements and when the opportunity presented itself to utilise that opportunity to enter into ABAs, it did so and it did so aggressively.

PN1025

In my submission, if it were the case that the safety net of the EBA or the enterprise agreement were lowered, the Full Bench could have no confidence that the Commonwealth Bank would not take the same approach there, that it would not utilise that opportunity to lower the terms and conditions of employment through an enterprise agreement.

PN1026

To the extent that it is said that Mr Maroun says, “Well, we are also beholden to the market,” firstly, markets fluctuate. Secondly, in the event that there is an industry wide reduction in the safety net and, in my submission, that can and would flow from the enterprise awards of each of the big four banks being terminated and each of those banks falling back on the BFI.

PN1027

In my submission, that would lower across the board, across a very substantial part of the banking industry the safety net that would be applied which could, would, and, in the case of CBA, in my submission, will, lead to downward pressure on the terms and conditions of employment expressed through an enterprise agreement.

PN1028

In terms of other impacts upon employees, if it is the case that an employee engaged as a manager but falling within the coverage of an enterprise award falls outside the coverage of the BFI Award that person will obviously lose the benefit of a safety net and access to unfair dismissal entitlements and the Commission’s dispute resolution mechanisms.

PN1029

It is also submitted that the likely impact upon the union of not making the proposed CBA Group Enterprise Award would be a reduction of its bargaining power. It is submitted that this would fail to encourage collective bargaining contrary to the modern award’s objective.

PN1030

By contrast, it is submitted that the retention of a modern enterprise award would have no impact on the viability of the Commonwealth Bank or the other employees in the group. It is accepted that the granting of an application would mean that the CBA Group would be covered by more than one award. It is also accepted that there would be different terms and conditions that would apply to employees, different safety net provisions that would apply for employees in the different enterprises.

PN1031

A person employed by Colonial may have a different safety net entitlement to a person employed by CommSec. However, that must be put in context because what is proposed by the union bears a very strong resemblance to the mechanism which was agreed in the 2014 enterprise agreement being something which was, in my submission, pursued by the Commonwealth Bank and agreed to by the Commonwealth Bank.

PN1032

There is no evidence put before the Full Bench that that is an arrangement which is causing particular difficulties and it is my submission the fact that a similar arrangement will be put in place if the modern enterprise award sought by the union is made, that ought pose no concerns to the Full Bench.

PN1033

Finally then dealing with the views of persons covered by the enterprise agreement, the Full Bench has the results of the McNair Ingenuity survey of the CBA employees which it is acknowledged includes CommSec, Colonial and the Commonwealth Bank. Over a thousand members responded to the survey and 39 per cent of those expressed a view that the CBA Award 1999 was more beneficial than the BFI Award.

PN1034

It is acknowledged that that there is a higher degree of uncertainty but there was undoubtedly a very low support for the BFI and similar results were expressed through the BankWest survey. It is also noted that on 5 December the union national executive passed a resolution with the effect that subject to approval by the respective NECs, the union would make the present application.

PN1035

It is submitted that there is strong authority from the High Court which allows a conclusion to be drawn that the decisions taken and the position put by the union can be and is reflective of the intentions of the members and I refer specifically to the decision in Burwood Cinema Ltd & Ors v Australian Theatrical and Amusement Employees Association [1925] HCA 7; [1925] 35 CLR 528 and the decision in R v Dunlop Rubber Australia [1957] HCA 19; [1957] 97 CLR 71.

PN1036

The ability of industrial associations to represent and stand in place of its members is well established at Australian common law and it is also generally open to the Commission to rely upon a union such as the FSU to represent the views of a majority of employees for the purpose of taking into the account the views of employees upon an application to terminate an enterprise agreement and this situation is analogous to that.

PN1037

But even if the Full Bench were not satisfied of that, there is another level of approval that was made and that is the approval by the NECs, by the National Enterprise Councils and if I can just refer briefly to one part of the rules which deals with the functions and powers of the National Enterprise Council. Rule 31.2 relates to National Enterprise Councils. 31.2.1:

PN1038

An NEC and its NEC members shall, subject to these Rules, have the following responsibilities, functions, powers and duties.

PN1039

Relevantly, at 31.2.1.2:

PN1040

To ascertain and identify the concerns, ideas and interests of the members allocated to that NEC (its Union members).

PN1041

The NEC is comprised of employees. For the Commonwealth Bank it is only comprised of Commonwealth Bank employees. Its specific purpose under the rules is to ascertain and identify the concerns, ideas and interests of members and, in my submission, it has done that this here and maybe taken to be speaking on behalf of the members.

PN1042

That rule applies to both the mid-size bank NEC and the CBA NEC, although it is acknowledged that there is no particular evidence before the Commission as to the specific composition of the mid-size bank’s NEC. Failing which, it is open to the Commission to make its own enquiries. I have made the submission before in alternate proceedings, but section 590(2)(f) and (g) of the Act provide the Commission with the powers to conduct its enquiries or commission its own research. Should the Full Bench still not be satisfied as to the views of the employees, the union invites the Full Bench to ask.

PN1043

Part D to the written outline of submissions deals with the approach to drafting the proposed CBA Group Enterprise Award. I won’t repeat that here, save to say that, again, the union would welcome the opportunity to work with the Commonwealth Bank Group to resolve any concerns it has about obsolete or out of date terms.

PN1044

Unless there is anything further, those are the submissions for the union.

PN1045

VICE PRESIDENT WATSON: Mr McKenna, can I just ask you, at paragraph 60 of your outline you make a submission about the consequences on unfair dismissal rights if an employee loses award coverage. Is that also on the basis that an enterprise agreement doesn’t survive?

PN1046

MR McKENNA: I am sorry, and I think - - -

PN1047

VICE PRESIDENT WATSON: Wouldn’t that also depend on the application of the BFI Award?

PN1048

MR McKENNA: It certainly would depend upon the application of the BFI Award. So if an enterprise agreement is terminated, well, then the employee covered by that agreement loses the benefit for a transferable instrument. With respect specifically to unfair dismissal entitlements, if an enterprise award is terminated but they would otherwise be covered by the BFI or another then there is no loss, I accept that.

PN1049

If the enterprise award is terminated and they are of a position such that they fall outside the BFI and outside other enterprise awards, other modern awards, then they will have no access to the unfair dismissal regime if there is no agreement that applies. So perhaps strictly it ought be said or it would be better to say that the termination of an enterprise award weakens an employees’ access to unfair dismissal remedies.

PN1050

VICE PRESIDENT WATSON: It is a limited class of people, isn’t it?

PN1051

MR McKENNA: Yes, yes. No, I accept that, certainly.

PN1052

VICE PRESIDENT WATSON: So insofar as the enterprise award might have broader application than the BFI Award.

PN1053

MR McKENNA: Yes.

PN1054

VICE PRESIDENT WATSON: If the enterprise agreement- - -

PN1055

MR McKENNA: Covers the person anyway.

PN1056

VICE PRESIDENT WATSON: - - - goes out of existence so it is not as if it is simply not renegotiated, it ceases to exist, then it might have an impact on that class of employees.

PN1057

MR McKENNA: Yes, or it may be that a person that falls outside the agreement coverage; covered by the enterprise award but not by the enterprise agreement. In which case, if the BFI doesn’t cover them then they will be outside the unfair dismissal regime.

PN1058

VICE PRESIDENT WATSON: Where is the evidence of what that class of employee is?

PN1059

MR McKENNA: It is vague. I think as high as I could put it is that there is, I would say, a significant degree of uncertainty about certain employees, particularly employees with the higher classifications under the CEA enterprise award. But it is uncertain.

PN1060

VICE PRESIDENT WATSON: Yes. We will mark your outline of submissions and the attachments there to, exhibit M7.

EXHIBIT #M7 APPLICANT’S OUTLINE OF SUBMISSIONS WITH ATTACHMENTS

PN1061

MR McKENNA: If the Full Bench pleases.

PN1062

VICE PRESIDENT WATSON: Thank you, Mr McKenna. Mr Perry.

PN1063

MR PERRY: Thank you, your Honours. We had dealt with the matters in our written outline in some detail so I will rely on those written submissions and speak to some particular aspects of them. Can I start by - - -

PN1064

VICE PRESIDENT WATSON: We will mark that outline exhibit P5.

EXHIBIT #P5 RESPONDENT'S OUTLINE OF SUBMISSIONS

PN1065

MR PERRY: Thank you, your Honour. Given the relatively bulky nature of the evidence of the history, we thought it would assist your Honour’s to prepare a chronology of the making of the different awards and agreements across the four entities and I can just hand that up to your Honours. We hope that that does assist you in considering the history. The evidence in these proceedings largely addresses matters of history and the key point we seek to make on the basis of that history is that the enterprise awards were at a point in time effectively a de facto enterprise bargaining regime.

PN1066

Since agreement making has been introduced into the legislation, they have ceased to perform that role and have largely stayed in the form in which they were found at that point in time. So that their role has very significantly dismissed over time and the history demonstrates that.

PN1067

My friend has taken your Honours to the applicable provisions of the legislation and could I just in starting off also refer your Honours to item 6 of schedule 6 of the transitional Act which is another matter which your Honours will need to consider and, in particular, I just wish to draw your Honours’ attention to the minimum wages objective.

PN1068

The BankWest, Colonial and Commonwealth Bank awards all went through the award simplification process in the late 1990s where the fixing of proper minimum rates of pay was a matter to be considered. So they had been through that process. But I just wish to just note in relation to the minimum wages objective that the evidence your Honours have received does suggest that there are employees working side by side in the Commonwealth Bank Group in circumstances where there are multiple safety nets applying to them and your Honours will see when you look to those enterprise awards that they have different classification structures and different minimum rates of pay. So that is an issue which requires some attention when your Honours turn your minds to the task which is before you and I just thought it important to draw your Honours’ attention to that at the outset.

PN1069

In terms of what your Honours are being asked to do, in our submission, it is to perpetuate a situation where there are five safety nets that apply to a large group of employees, those safety nets being made up four enterprise awards and the relevant industry award. The evidence does not demonstrate, in our submission, that those five different safety nets are in any way tailored to the specific needs of those businesses in the form in which one finds them today.

PN1070

So that the FSU’s case at best shows an historical explanation of how the instruments came to be and it really rises no higher, in our respectful submission, to show that there were circumstances which justified the making of the enterprise awards at the time they were made. As Mr Peddie readily accepted this morning, from the commencement of enterprise bargaining the awards have changed very little and the parties have used enterprise bargaining as a way of making agreements.

PN1071

The enterprise agreements are the dynamic instruments. They have continued to evolve but the awards have to, to perhaps use this expression, in a sense, withered on the vine and - - -

PN1072

DEPUTY PRESIDENT SMITH: But, Mr Perry, what do we make of the fact that the agreement distinguishes between various operations?

PN1073

MR PERRY: Yes, perhaps if I can just deal with that. It is a matter my friend did place some weight on.

PN1074

DEPUTY PRESIDENT SMITH: Yes.

PN1075

MR PERRY: Our core response to that proposition is that the structure of the enterprise agreement is not itself a relevant consideration when your Honour’s come to assess the criteria in item 4(5) of schedule 6. So that when one looks at each of the individual matters which must be taken into account they are matters that relate to the awards themselves and what is in those awards. Is it enterprise specific? What is the alternative award? There is nothing, in our respectful submission, to call that enquiry into action as it were.

PN1076

VICE PRESIDENT WATSON: What about paragraph (d)?

PN1077

MR PERRY: That, again, your Honour, requires an assessment of terms and conditions in the industry. They may, of course, be derived from agreements in part or awards, but there is no evidence before your Honours of conditions across the industry. The applicant has put before your Honour’s the Commonwealth Bank Enterprise Agreement. It hasn’t put other enterprise agreements before your Honours, nor has it in fact put other enterprise awards. So as to that specific item we would submit that there is simply not evidence that enables your Honours to make any definitive assessment of the nature of terms across the industry.

PN1078

VICE PRESIDENT WATSON: The Commonwealth Bank is part of the industry.

PN1079

MR PERRY: Yes, yes, it is, your Honour, and the evidence - - -

PN1080

VICE PRESIDENT WATSON: The terms and conditions are contained in the enterprise agreements.

PN1081

MR PERRY: Yes.

PN1082

VICE PRESIDENT WATSON: That is what we are required to have regard to.

PN1083

MR PERRY: Yes, and when your Honours look to the Commonwealth Bank enterprise agreement itself, as my friend has suggested, it has a structure which is not dissimilar to the enterprise award which he seeks to have made by your Honours. But what he hasn’t done is gone to the actual terms and conditions themselves. So that the submission is put at the superficial level of saying: “We seek an award that has a particular structure. There is then a comparison to the structure of the enterprise agreement that applies.” But he hasn’t actually taken you to the terms themselves.

PN1084

DEPUTY PRESIDENT SMITH: My question was not so much to the terms, but it was to the structure, that if the parties themselves have a view that there is a need for a structure in that form in the agreement, doesn’t that mean weight - the need for some sort of structure of a similar kind in a modern award if one is to be made?

PN1085

MR PERRY: Yes, and your Honour quite rightly says: “If one is made.” Of course, that is a separate and preceding consideration that must be determined having regard to the criteria in item 4(5). As to what the structure of the award if one were to be made might be, then I don’t think we would contest the fact that it would be a factor for your Honours to consider in making that award.

PN1086

DEPUTY PRESIDENT SMITH: In looking at it in that light, does that give any force to the contention that it is in view enterprise specific because of the different structures?

PN1087

MR PERRY: As to the structure, perhaps, your Honour, perhaps. But as to the terms, it is a matter of looking at the terms themselves.

PN1088

DEPUTY PRESIDENT SMITH: Yes.

PN1089

MR PERRY: The point we wish to make about the terms themselves in the awards is that they have really changed very little other than by way of safety and adjustments for a significant period of time in circumstances where the enterprise to which they relate has very substantially changed.

PN1090

DEPUTY PRESIDENT SMITH: The other thing that I think know the answer to but I will put the question anyway, in making submissions about the historical content of awards, are you focusing on that or are you against any form of enterprise award which may rationalise and update that historical structure.

PN1091

MR PERRY: Yes. Our position, your Honour, is that the relevant industry award should be the applicable safety net and I will seek to address your Honours on that this afternoon. So we are opposed to the applications in their entirety. So if I could just, perhaps, capture what we say the evidence shows about the history. That is, that the enterprise awards arose out of what was in a sense de facto enterprise bargaining.

PN1092

Once agreement making became possible, the parties embraced agreement making and the awards started to become a more stagnant range of instruments and that they have long ago served the purpose for which they were created and really been nothing more than a safety net with the exception of CommSec, 20 years or so.

PN1093

As a safety net, we say that they no longer serve a purpose when the criteria are applied because the employees covered by them are spread across a diverse range of businesses and activities. Your Honours will have seen the information which is contained in exhibit P3 which demonstrates that there are employees in businesses who, as a group, are covered by multiple safety net awards and there is no rational or proper reason why employees who perform similar work in a business should have multiple safety net conditions applying to them, in our respectful submission.

PN1094

The Banking and Financing Industry Award is now in place and applies to employees located in different parts of the CBA Group and there is no evidence to suggest that that has presented any particular problem for those employees or for those businesses. As Mr Peddie accepted this morning, the employees under the current group enterprise agreement who are covered by the BFI Award, get exactly what their colleagues get under that agreement.

PN1095

Can I move on now, your Honours, to deal with the submission which my learned friend made about the question of onus and I think he referred to the District Health case in that case. If I can just give your Honours a reference to the Bank of Queensland case [2010] FWAFB 3906 at paragraph 28 where the Full Bench in that matter say that, like any applicant, the agents bear the onus of making a case for the modernisation of the agent’s award. So that that is authority for the proposition, in our submission, that it is a matter for the applicant to demonstrate a case for the making of a modern enterprise award or awards having regard to the criteria which are contained in the legislation.

PN1096

In our outline of submissions, your Honours, at paragraphs 11 through to 21, we set out some background information about the Commonwealth Bank Group of Companies, the structure of its businesses, the employing entities and the industrial instruments that apply to the entities. If your Honours look at paragraph 18, in particular, you will see the full overview of the awards that apply to the employing entities in the Commonwealth Bank Group.

PN1097

Some notable aspects of the background are, firstly, that the BFI Award applies to groups of employees in BankWest and Colonial already and the numbers of those are 1200 and 160 respectively. The second notable aspect is that there are subsidiaries of the Commonwealth Bank that are not covered by enterprise awards at all and Commonwealth Insurance Limited is an example of that.

PN1098

All up there are approximately 2000 employees who are covered by the BFI award as we speak and the other thing that is clear is that award coverage is not neatly split along lines of business. So if your Honours look at schedule 2 to Mr Maroun’s statement and also the document which has been marked as exhibit P3, your Honours will see that there is really very much a patchwork quilt of employees having different awards in different businesses but without any clearly linkage between the identity of those business and the identity of the awards.

PN1099

Perhaps to look at it another way, the awards were negotiated to apply to businesses that those legal entities had at a point in time and what has then subsequently happened is there has been a mixing of the businesses and the employing entities and the groups of employees as the business of the group has evolved. I will turn to the specific criteria in item 4(5) in a moment.

PN1100

DEPUTY PRESIDENT SMITH: Those matters, by the way, are curable that you refer to.

PN1101

MR PERRY: But perhaps other than in respect of the BankWest position, your Honour, because what you are asked to do is to expand the coverable of the BankWest Enterprise Award to pick up people who are not currently covered by it and who are currently the subject of the industry award. So that is not an approach which is open on this application, in our respectful submission. So what you are being asked to do is, in a sense, expand the coverage of that award so to modernise an award in such a way that it has greater work to do than it does previously.

PN1102

DEPUTY PRESIDENT SMITH: Yes.

PN1103

MR PERRY: But as to the Colonial employees, the $70,000 threshold is, on one view, a curable problem because it could simply be removed. But it is in many respects a coverage term and - - -

PN1104

DEPUTY PRESIDENT SMITH: Depending upon what the parties want to achieve.

PN1105

MR PERRY: Yes, yes.

PN1106

DEPUTY PRESIDENT SMITH: I mean, if you look at what happened at Telstra, you look at what happened at the Commonwealth Public Service.

PN1107

MR PERRY: Yes, yes. So curable to an extent potentially, your Honour.

PN1108

DEPUTY PRESIDENT SMITH: Yes.

PN1109

MR PERRY: Before I move onto the specifics, can I just deal with some more global topics. The first is the BFI Award itself and what is notable about that award is that the employer parties who are before the Commission as well as the union were heavily involved in the making of that award and that can be contrasted to the Telstra, Optus and News Limited cases where the non-participation of the parties in the industry award making process was a matter which was found to support the modernisation of enterprise awards and the case references are in paragraph 25 of our submission.

PN1110

Similarly, in the Yum case, the fact that the employer had, in fact, participated in the making of the industry award was a factor that counted against modernisation. The references can be found at paragraph 26 of our outline. So we find ourselves in a position here where the parties have had very significant input into the making of the award. The submissions that were put by the FSU in the process were that a fair safety net could be derived from the enterprise awards that one found in the industry. That was an argument that was forcefully put, debated with the banks and the Commission made a decision with that material before it.

PN1111

We say that this makes the current applications very different to the Telstra, Optus and News Limited cases where in a sense the employers and the unions in those cases had opted out of the industry award regime entirely.

PN1112

My learned friend also sought, in his submissions, to characterise the part of the industry which we are concerned with here as ‘the banking industry.’ That submission, of course, ignores the fact that the CBA Group is a stockbroker and it is an asset manager. It is a fund manager. It has equities funds, property funds, and it is not right, in our respectful submission, to simply treat it as being a part of the banking industry. It is involved in the industry in a more fulsome way. It has an insurance business. It has various financial advisory and other businesses which can’t be pigeon-holed as being just banking businesses.

PN1113

So that now that the BFI Award is in place to deal with all those industries, in our submission, it is an appropriate safety net to have regard to the needs of the Commonwealth Bank Group of Companies and the Bank of Queensland decision, in our respectful submission, reinforces the appropriateness of that award as a safety net for this industry.

PN1114

So it is not a case such as Telstra where without the employees of the Commonwealth Bank in the industry award, there is a lack of what the Bench referred to as a critical mass. There are a large range of employees and employers who were considered in the making of the BFI Award including the employees to whom the enterprise awards in this matter relate.

PN1115

The second more global issue we wish to raise at this stage is to have a look at the consequences of what it is that the FSU is actually seeking. It says it is seeking a single award but, really, what is sought is four. If your Honours look at the structure and content of the draft award which has been provided, it is not really a single safety net at all and it is, in substance, a continuation of the existing arrangements.

PN1116

The evidence is that a range of the terms and references in the document are out of date or obsolete and, of course, they are matters that can be the subject of discussion and there were discussions between the parties in late 2013 about these matters. But what those obsolete references do seek to emphasize is that the provisions are largely lifted out of the existing enterprise awards and they are directed towards businesses which are very different to what they are today.

PN1117

The situation that one would be left with if the application were to be granted are set out at paragraph 34 of our outline. In the case of Colonial, it would be left with an enterprise award that covers not everyone so that there would be coverage of the BFI as well. In terms of BankWest, the position would be the same. In terms of Commonwealth Insurance Limited and the other subsidiaries, the BFI Award would apply.

PN1118

So that what you would be left with is five sets of safety net conditions and some of those, and in many cases all of those, applying to single areas of business within the group’s operations. So you will be left with a patchwork quilt of legacy safety nets in the face of the existence of a contemporary and coherent industry safety net which has been determined with input from the parties in around 2009. In our respectful submission, that is simply not consistent with the modern awards objective.

PN1119

VICE PRESIDENT WATSON: It is not much different to now, though, is it?

PN1120

MR PERRY: Perhaps I just couldn’t follow your Honour’s question.

PN1121

VICE PRESIDENT WATSON: The current situation involves a patchwork of different awards.

PN1122

MR PERRY: Yes.

PN1123

VICE PRESIDENT WATSON: There might be some rationalisation by bringing some of them under one umbrella, albeit with different parts. But it is broadly consistent with the status quo.

PN1124

MR PERRY: That is right, your Honour, yes, yes. In fact, in circumstances where the applicant needs to demonstrate the appropriateness of that status quo, in our submission, one would not continue with it for the reasons that we set out in the submissions. It is not a matter of comparing the before and after situation. It is a matter of looking at the particular criteria in item 4(5) and applying those to the circumstances.

PN1125

Can I move on now to deal with the specific criteria, starting with item 4(5)(a) which calls into consideration the circumstances that led to the making of the instrument. As I have already said to your Honours, the awards all have one common feature and that is that they were used as a de facto enterprise bargaining regime and the union has told a fairly fulsome narrative of that history. At best, in our submission, it supports a proposition that there were circumstances that justified the making of those awards at the time they were made and that is as far as the matter rises, in our respectful submission.

PN1126

What the case put by the union doesn’t do is travel into the 21st century with those awards. There is no attempt at all to demonstrate that the circumstances in which the awards were made continue to hold true today and as the Yum case and the various Qantas decisions, all of which I think have been made by this Bench, make clear, the adoption of enterprise agreements diminishes the significance of the history of the award and we rely on those decisions.

PN1127

The evidence is that the enterprises that are covered by the instruments have significantly evolved and your Honours heard evidence about the rise of technology, changes in management structures, changes to the way that the bank interacts with its customers, and all of those changes are quite starkly contrasted against the amount of change that one sees in the awards themselves; it is chalk and cheese.

PN1128

So that the retention of the awards is not supported by history alone. In our respectful submission, there must be something more than there having been at some point in the past been an appropriate basis to make the awards.

PN1129

If I can move on now to paragraph (b) and we deal with it at paragraphs 51 to 56 of our submissions. The BFI, of course, if these applications are not granted will cover the employees in the group it does not already cover who are within its classifications. I have said that the parties were very involved in the making of the award. The Commission was asked to have regard to the enterprise awards in making the BFI and that happened.

PN1130

One concern which has been raised by the union relates to the level 6 classification and, I think, the evidence really rose no higher than to say there was some lack of clarity about that. There was no position descriptions that were brought before your Honours or no employees who were able to say: “My work is made up of the following and it is not within the level 6 classification.” So, in our submission, the evidence on that topic is weak and can be put to one side.

PN1131

But, in any event, if the issue is the coverage of the BFI Award itself, there is a process which is currently on foot to review that award and the matters which are of concern can be dealt with in that forum.

PN1132

DEPUTY PRESIDENT SMITH: Your client is making submissions in relation to level 6 there.

PN1133

MR PERRY: As in the respondents to this application?

PN1134

DEPUTY PRESIDENT SMITH: Not this application but in the four-yearly review I thought you were referring to.

PN1135

MR PERRY: Yes, and what we wish to say is the union can quite properly raise any issues it has with coverage of level 6 in that forum.

PN1136

DEPUTY PRESIDENT SMITH: Yes.

PN1137

MR PERRY: The refusal of these applications would not prejudice their ability to seek to address any inadvertent falling out of award coverage by reason of the expression of the language in level 6. So that point really doesn’t take us anywhere and it is the basis upon which the submission around unfair dismissal access which Watson VP asked arises. So it is clear that there is an appropriate industry award which is in place which will pick up these employees if these applications are refused.

PN1138

Dealing with the content of that award, it is well understood. We deal with that in paragraphs 57 through to 59 of our written outline of submissions. It is fair to say the BFI Award is a comprehensive award. It was made taking into account the views of the key stakeholders across the various aspects of the industry. The FSU itself has embraced it in the Bank of Queensland case as being an appropriate safety net and what the Bench said at paragraph 26 of that decision is worth just having a look at which is:

PN1139

It is clear that the legislative scheme contemplates departures from the safety net in modern enterprise awards subject to other considerations specified in item 4(5), departures from the safety net should be limited to cases in which cogent reasons are advanced based on the history of coverage and the needs of the employers and employees in the enterprise concerned. Although in this case we are concerned with conditions which are below the safety net, similar considerations would be likely to apply in relation to conditions which are above the safety net.

PN1140

So the approach which one should take to considering whether grounds to depart from the industry award are made out is the same, in our respectful submission, whether the industry award is less or more beneficial than the enterprise awards which the subject of the application. In our submission, no issue has been raised as to any inappropriate content in the BFI Award and it should simply be left to do the work that it was created to do.

PN1141

In terms of terms and conditions in the industry as to paragraph (d), as I said a little while ago the evidence put forward by the applicant doesn’t rise to the level of demonstrating that there are particular matters in the banking industry which are commonly found across participants in the industry. There is really a lack of evidence on that particular topic.

PN1142

All your Honours really have been provided with is the terms of the Commonwealth Bank’s most recent enterprise agreement itself and, in our submission, this link of the criteria is, at best, neutral because there really isn’t any evidence before your Honours to make findings as to the prevalence of any particular terms across the industry.

PN1143

DEPUTY PRESIDENT SMITH: Mr Perry, does your client have any interest in what we do with the other banks?

PN1144

MR PERRY: I am happy to deal - - -

PN1145

DEPUTY PRESIDENT SMITH: To give you a good example, the NAB has come before us with complete consent.

PN1146

MR PERRY: Yes, and we are conscious and familiar with the status of the other applications which have ranged from agnosticism to consent to staunch opposition I think is, perhaps, doing the best I can to capture it. Our interest is in the applications which are before your Honours now. Of course in each of the other applications different evidence has been led, different arguments have been advanced. In some of them the evidentiary material is quite confined; in others, more extensive.

PN1147

I wouldn’t say we have no interest in those other applications, but our focus is primarily on the criteria as they apply to the enterprise awards we find our businesses and that is what we are seeking to address and as to the other applications - - -

PN1148

DEPUTY PRESIDENT SMITH: So if we made awards for the others and didn’t make it for you if we made one for you and not for the others it wouldn’t matter.

PN1149

MR PERRY: The former scenario would be a regrettable one, Your Honour, if I could describe it that way. But we simply invite the Full Bench to determine each application on its merits.

PN1150

DEPUTY PRESIDENT SMITH: Why was there great hesitation at the beginning of all of this case then for us to hear the banking industry in its totality?

PN1151

MR PERRY: I wasn’t in the case at that point, your Honour, but perhaps a little bit of a fear of the unknown as to what arguments were going to be put in those other matters. I mean, it would be of concern to my clients if evidence were to be put forward without contest as to a position across the industry which would have any bearing upon the outcome of these applications. If evidence received in each application is simply dealt with within the four corners of those applications there is nothing we want to have to say about that matter further.

PN1152

DEPUTY PRESIDENT SMITH: Thank you.

PN1153

MR PERRY: Turning now to paragraph (e) of the criteria which we deal with at paragraphs 62 to 66 of our outline and as Mr Peddie readily accepted this morning, it seems to be the position of the union that a term is to be regarded as enterprise specific if it is different to what one finds in the BFI. In our respectful submission, there are some fundamental issues with that position. One is that there needs to be a demonstration, in our submission, of the tailoring of the relevant terms and conditions to the specific business. That is to say, to demonstrate that there is some relevance as to why those terms exist which can be linked back into the needs of those businesses and their employees, rather than simply being an outcome of history.

PN1154

So, in our submission, it cannot possibly be said here that the terms are tailored to the needs of specific enterprises simply because of the fact of the multiple coverage of the different awards so that what your Honour’s find is particular businesses have three or four awards which apply in them and they are all different and how it could possibly be said that those awards are each tailored to the needs of those business which is the same business is at a conceptual level difficult to accept.

PN1155

So, in our respectful submission, the differences are purely anchored in history rather than any demonstration of particular enterprise specific issues which have arisen. The union needs to do better, in our submission, than just to say that the terms are to be given weight under this limb of the criteria simply because they are different to the BFI. Of course they are; that is why we have an enterprise award in place and that is why we are all here. Of course they are different.

PN1156

There is an abject failure on the part of the union, in our respectful submission, to link the terms to particular features or characteristics of the business. The only explanation which is given is that the history explains why the provisions are different.

PN1157

COMMISSIONER LEE: But do they need to do that to link them to particular characteristics? Mr McKenna took us to Pizza Hut and the approach that was taken there which was to simply acknowledge that they were developed to suit the needs of the organisation.

PN1158

MR PERRY: Yes, yes, the submission we are seeking to make is that there needs to be a demonstration of more than a difference in the conditions between the enterprise award and the modern award. What needs to be shown is that the terms are enterprise specific which involves an assessment of what it is about the enterprise that makes them so.

PN1159

DEPUTY PRESIDENT SMITH: You have got a myriad of awards to start off with.

PN1160

MR PERRY: Yes, that is really the point we are seeking to make.

PN1161

DEPUTY PRESIDENT SMITH: Which in itself could have been curable as a result of this exercise.

PN1162

MR PERRY: Potentially so. So what may have been the case is that when the Colonial Award was made, we have heard evidence about, you know, breaking ties with the insurance industry and so on and so forth and one could see how certain terms might be appropriate to an employer looking to make that break away from that past. But when one winds forward to the present and sees where the Colonial employees are and what they do, they are all over the place. They are in IT. They are in retail banking. They are in funds management. So that the linkage between the terms and the characteristics of the enterprise has evaporated and that is the core.

PN1163

That is the core proposition that we are really putting to your Honours is that the awards, while once enterprise specific, are only in the loosest possible way capable of being described as such now and that is because the terms are simply different. But there is not a demonstration of what that difference actually means or requires and, in our submission, that is a matter that your Honour should have regard to.

PN1164

If I can move on now to paragraph (f) of the criteria in item 4(5), which is the impact on persons covered, we addressed that at paragraphs 67 to 77 of our submissions and start by noting that great lengths have been taken to demonstrate the inferiority of the enterprise awards as a safety net where a proper analysis shows that it varies greatly from award to award and that in each award some things are better than the BFI and some things are worse. In some of the awards there are more things that are better and less things that are worse, but it is a mixed bag.

PN1165

That is about as much as you get from that so there are things that are better and things that are worse and that depends on which of the four awards that you are looking at. The test, of course, in the legislation is not to select the most favourable safety net for employees, nor is it to select the most favourable safety net for employers. It is simply to determine whether the enterprise modern awards objective is met having regard to the criteria.

PN1166

So one needs to be careful about getting too involved in comparing safety nets against each other. The fact is they are different; everyone accepts that. But as to what the impact of the termination of the enterprise agreements would be - - -

PN1167

DEPUTY PRESIDENT SMITH: Enterprise awards.

PN1168

MR PERRY: Yes.

PN1169

DEPUTY PRESIDENT SMITH: Sorry.

PN1170

MR PERRY: Yes, yes. No, we are certainly not talking about terminating any enterprise agreements here your Honour. Is that the we have some recent experience of employees who are under the BFI being involved in collective bargaining and they have got all of the fruits of the outcome of that process that their co-workers did who were covered by the enterprise awards.

PN1171

DEPUTY PRESIDENT SMITH: Let me ask you then directly, would that be largely as a consequence of the differing levels of safety net and if there was one safety net are we handing you a bargaining advantage in that regard?

PN1172

MR PERRY: If I could perhaps deal with that in a couple of different ways.

PN1173

DEPUTY PRESIDENT SMITH: Yes.

PN1174

MR PERRY: The first is to say this, that what the evidence shows is that the floor for bargaining in a practical and real world sense is actually the existing enterprise agreement. It is not the awards and, of course, there is a statutory test which has to be undertaken to compare the agreement to those awards. But when one actually looks at what these parties have been doing industrially, they have been taking the existing agreement, putting in a claim respectively for changes they want to have made to it and then negotiating that. So that the real bargaining advantage, if there is one, is to be found in the enterprise agreement that one starts with because unless the parties can do a new deal, absent an application to terminate, well, they are stuck with it. So there is that.

PN1175

DEPUTY PRESIDENT SMITH: Not necessarily. I mean, the Act permits you to invite your own employees to vote on an agreement without an agreement with the union.

PN1176

MR PERRY: Yes, yes. But the point I was making, unless there is steps taken to terminate it, it will continue.

PN1177

DEPUTY PRESIDENT SMITH: It wouldn’t be an unusual occurrence.

PN1178

MR PERRY: I am sorry, your Honour?

PN1179

DEPUTY PRESIDENT SMITH: It wouldn’t be an unusual occurrence.

PN1180

MR PERRY: One can speculate

PN1181

DEPUTY PRESIDENT SMITH: Indeed.

PN1182

MR PERRY: That is what my learned friend’s case really does is it speculates about those matters. As to whether the companies would receive some bargaining advantage, if I can just make this observation, that is not obviously the test here. The test is not to give either the best or worst safety net available. The test is to apply the criteria that one finds. I think it is fair to say also, your Honour, that a lot of the differences between the instruments will have different impacts depending upon what is actually sought to be negotiated.

PN1183

So, for example, the BFI Award, I think, is universally more favourable on public holiday work. So that if that were a topic for bargaining, what is the best safety net might be different to if the topic was something else So what one really has is a set of awards that are before the Commission which have differences and advantages and disadvantages over each other and how those play out will really be a matter for how the parties bargain is the point we wish to make. The real floor for bargaining, as I have said, is the most recent enterprise agreement itself.

PN1184

The reference to the CommSec experience, if I can just deal with that, that was over 10 years ago now. The CommSec employees are now within the enterprise agreement and it would be simply speculative to use the evidence of what happened 10 years ago as some form of tendency evidence to suggest that the organisation might act or behave in a particular way. Ten years ago is a long time ago and we say that really very little weight should be placed on that and the mechanisms which were the subject of that dispute, of course, are no longer features of the legislation.

PN1185

Dealing further with the current agreement being the floor for bargaining, your Honour has heard Mr Peddie’s evidence about the role that the union takes on in the enterprise bargaining and how it will run campaigns where it sees fit. It will advise its members and, in fact, has been successful with other employers in the industry in securing a ‘no’ vote on agreements that it didn’t think were in it or its members’ interests. It will remain able to do so in the future if proposals are put forward that are not acceptable to it.

PN1186

So in terms of the impact on employees, in our submission, the impact is illusory and the real protection can be found in the current enterprise agreements rather than the safety net awards which sit very much in the background and serve more of a legal compliance type of function, in our submission.

PN1187

As to paragraph (g), the views of persons covered by the awards, the views of the employer parties are fairly clear that there is a preference for an adoption of the industry safety net, an industry safety net which was developed with involvement by the parties who are before the Commission on both sides. What the views of the employees are, is much less clear and, in our submission, the McNair survey which was conducted was a self-serving and misleading one. It suggested a view to the employees that pointed to the benefits of retaining the enterprise awards but not the detriments of doing so. It told a one-sided story.

PN1188

Ultimately, of course, the survey was only something which the members of the union were asked to participate in and the numbers of those members is in the material which comprises exhibit P1 and I won’t mention the numbers on transcript but your Honours can see those. But as to the employees who actually came back and said, “Yes, we would like to retain this EBA award,” there was only 409 of those out of a population of about 35,000 employees. So it is a very small group of persons who have been asked first of all to express a view and, secondly, who have actually expressed one. In fact, more employees who responded said they weren’t sure than answered the question the union asked them to which was to express a view favourable to the union.

PN1189

From the survey we get absolutely no insight at all as to the views of the CommSec and the Colonial employees. They weren’t asked the question. It appears that they were included in the CBA population even though the CBA Award, of course, has no application to them. So there is no evidence at all as to the views of those persons and we simply say that the vast majority of the employees haven’t had a voice and the evidence doesn’t provide any firm basis on which a conclusive view can be taken as to the views of the employees and is of marginal or, perhaps, neutral weight in the context of this exercise.

PN1190

The submissions my friend makes about the Burwood Cinemas case, of course, can only take him so far as to have the union speaking on behalf of its members. I don’t think it could be suggested that the union is the oracle of the other group of employees who are not its members and whose industrial interests are not represented by it. What the survey shows - - -

PN1191

DEPUTY PRESIDENT SMITH: I thought Burwood Cinema was for members and those were eligible to be members, but I understand the point that you make.

PN1192

MR PERRY: Yes, yes. The point I make, your Honour, is that there is a very large group of employees whose views haven’t been tested or put forward in any way. It is, perhaps, unsurprising that there is that antipathy, I guess, that the real issue for the employees is what happens in their enterprise agreement and what their enterprise agreement says. It is what regulates their terms and conditions and I think the low and perhaps slightly confused responses from the survey demonstrates that this particular topic hasn’t been terribly high on the agenda for the employees.

PN1193

So we submit that the application should be refused. We say that the enterprise awards are legacy instruments that no longer have any meaningful connection with the contemporary business of the CBA Group. The work that they once did has been taken over by enterprise agreements and the proper safety net is the industry award, an industry award which the parties had very extensive involvement in the process of it being formulated by the Commission. In our submission, it should be left to do its work in the place of a complex patchwork quilt of legacy instruments that have no demonstrated bearing upon the current business of the CBA Group.

PN1194

Those were the submissions we wish to make orally. We rely on the written submissions and the material which has been tendered in our case and subject to any further questions that the Full Bench has, they were the matters we wish to raise.

PN1195

DEPUTY PRESIDENT SMITH: The involvement you say in the original fixation of the BFI Award, I would have to go by some recollection but I thought when we looked at the critical mass, as it were, that the enterprise agreements didn’t get a look in. I thought the enterprise awards didn’t get a look in because they were slated for another day.

PN1196

MR PERRY: I think it is fair to say that at the outset of the process what was actually going to happen to enterprise awards was not completely clear because the transitional legislation had not been finalised.

PN1197

DEPUTY PRESIDENT SMITH: Yes.

PN1198

MR PERRY: But what is fairly clear is putting to one side what decision was made by the Commission is that the union and the employer parties had cause to put forward some fairly comprehensive material in the enterprise awards and I have just got here, your Honour - - -

PN1199

DEPUTY PRESIDENT SMITH: I think the presiding vice president and myself are doing our best to forget that period.

PN1200

MR PERRY: I will do my best to move on and there are multiple pages of submissions that were put forward on the topic and I don’t think I need to take your Honour back to that period in your life.

PN1201

DEPUTY PRESIDENT SMITH: Thank you.

PN1202

MR PERRY: But one important feature of the enterprise award modernisation cases has been to look at the extent to which the parties did participate in the industry award process. Telstra, Optus, News Limited, didn’t go near it. That had a particular outcome and in the case of Yum Restaurants they did, a different outcome, and it is a very important aspect of the cases which have been decided by the Commission, in our respectful submission, and we do rely upon them in this matter.

PN1203

VICE PRESIDENT WATSON: Thank you, Mr Perry. Mr McKenna.

PN1204

MR McKENNA: Thank you, your Honour. Three matters arising. The first of those, my friend referred again to the numbers of Colonial and BankWest employees who it said are outside the coverage of existing enterprise awards and I think the comment from Smith DP was perhaps that may be curable. If I may be clear, the award that has been proposed, the draft award put forward, does in fact seek to cure it. It does it quite simply with respect to the BankWest employees of bringing that group of 160 or so employees, that is a fixed and diminishing group because they were only the employees who pre-existed the 2012 transfer. They would be brought under the coverage of a modern enterprise instrument on the union’s draft.

PN1205

With respect to the Colonial employees, the 1200 or so employees who fall outside the enterprise award because of the $70,000 cap, the genesis for the $70,000 cap was dealt with in the transcript of the application to make the Colonial Group Enterprise Award 1996. It is at DP37. I will read it rather than ask given the density of the volume of documents. Paragraph 109 of that transcript which is Mr Peddie makes the submission:

PN1206

The issue of coverage is that the award as it now stands simply mentions it covers all employees of the old Colonial Mutual Insurance Company. There is no limit on coverage in terms of the definition. However, we in Colonial have now accepted a position where there should be a limit on coverage on coverage of employees and that limit on the award, the draft award, is set at $70,000 remuneration per annum and that, again, it accords with the limits of the 1999 certified agreement.

PN1207

Mr Peddie goes on at paragraph 110 to note that the $70,000 is well above the limit and provides further that, “It is our view,” speaking on behalf of the union:

PN1208

That as we move forward in the future, the parties ought revisit that $70,000 limit to see from time to time whether it should be adjusted as a minimum salary for the maximum grade increases year by year for the safety net adjustment.

PN1209

What the draft award provides at clause 2.1.2 of the definitions of interpretation that there is a definition of Colonial employee meaning:

PN1210

And including all the administrative, clerical and managerial staff of Colonial, together with employees who work in connection with Colonial information technology requirements whose remuneration is up to and including $87,141 per annum.

PN1211

The note to that in the marked up version of the union’s draft award provides that the threshold rate adjustment by the safety net review 2002 to 2005, minimum wage decision 2006 to 2011 and annual wage review decision 2012 to 2014. So the $87,141 is essentially the indeed $70,000 and, as I understand Mr Maroun’s evidence, the figure of $70,000 would bring the majority of those 1,200 employees back into the fold. In my submission, that anomaly is, to use your Honour, Smith DP’s language, curable, and can and should be cured in accordance with the union’s draft.

PN1212

The second mater by way of reply relates to my friend’s submissions on subitem 4(5)(e). The terms of 4(5)(e) require consideration of the extent to which the enterprise instrument provides enterprise specific terms and conditions of employment. As I understand my learned friend’s submission, he says what is meant by that is there needs to be a demonstration that those terms and conditions are tailored to the needs of the enterprise.

PN1213

That is not what item 4(5)(e) provides. In my submission, what my friend is doing is conflating or reading together 4(5)(e) with the modern enterprise awards objective which requires the Commission to recognise that modern enterprise awards may provide terms and conditions tailored to reflect employment arrangements that have been developed in relation to relevant enterprises.

PN1214

To the extent that the enterprise’s specific terms and conditions are tailored to reflect the employment arrangements, well, that is something which would add significant weight to consideration under 4(5)(e). In my submission, that is precisely the case here but it is not and it would be a misreading of the criteria to require enterprise specific terms and conditions to also be tailored to reflect the employment arrangements that have been developed in relation to the relevant enterprises.

PN1215

That leads me to my final point and my learned friend’s submission that the linkage between the terms and conditions what, in my submission, are the enterprise specific terms and conditions under the enterprise awards with the needs of the enterprise, it is put on behalf of the bank that that linkage has evaporated. What is not said is what is no longer relevant and how particular terms and conditions are no longer relevance.

PN1216

As high as the evidence rises, my recollection is that Mr Maroun suggested that classifications were no longer relevant and then accepted that, in fact, the classifications under the enterprise awards are still being used in the enterprise agreement. So to the extent that it said that the linkage has evaporated, there is no evidence of that and, in fact, in my submission, evidence to the contrary.

PN1217

DEPUTY PRESIDENT SMITH: Perhaps the cardigan allowance is no longer a fashion statement.

PN1218

MR McKENNA: I was wondering about the cardigan allowance; the patches on the elbow allowance.

PN1219

MR PERRY: There is $27.83 available from that.

PN1220

MR McKENNA: Yes, and my instructor points out, there was the issue raised by your Honour, Smith DP, about the note. Perhaps my learned friend and I could discuss that and provide - - -

PN1221

DEPUTY PRESIDENT SMITH: I think he has given me an answer. I don’t press you for one if you wish to give one.

PN1222

MR McKENNA: Would it be appropriate to file something within perhaps seven days?

PN1223

DEPUTY PRESIDENT SMITH: Yes, yes.

PN1224

MR McKENNA: Of course, I am grateful.

PN1225

VICE PRESIDENT WATSON: Thank you, Mr McKenna. We will reserve our decision in this matter and now adjourn.

ADJOURNED INDEFINITELY [4.25 PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

DONALD HUGH PEDDIE, AFFIRMED............................................................ PN31

EXAMINATION-IN-CHIEF BY MR MCKENNA............................................ PN31

EXHIBIT #M1 STATEMENT OF MR PEDDIE TOGETHER WITH ATTACHMENTS PN53

EXHIBIT #M2 COPY OF EXTRACTS OF THE RULES................................ PN65

CROSS-EXAMINATION BY MR PERRY......................................................... PN68

MFI #MFI1 DOCUMENT WITH COMMSEC AND COLONIAL DETAILS PN282

EXHIBIT #P1 BUNDLE OF DOCUMENTS.................................................... PN539

RE-EXAMINATION BY MR MCKENZIE...................................................... PN540

THE WITNESS WITHDREW............................................................................ PN550

TONY JOHN MAROUN, SWORN..................................................................... PN570

EXAMINATION-IN-CHIEF BY MR PERRY.................................................. PN572

EXHIBIT #P2 STATEMENT OF TONY JOHN MAROUN DATED 23/12/2014 PN580

EXHIBIT #P3 SECOND TABLE ATTACHED TO TONY JOHN MAROUN'S STATEMENT................................................................................................................................. PN591

CROSS-EXAMINATION BY MR MCKENNA............................................... PN601

EXHIBIT #M4 AIDE MEMOIRE – EM2013/111 APPLICATION BY FINANCE SECTOR UNION, AUSTRALIA COMMONWEALTH BANK ANNUAL REPORT DATA PN656

EXHIBIT #M5 COMMONWEALTH BANK GROUP ENTERPRISE AGREEMENT 2014................................................................................................................................. PN676

EXHIBIT #M3 THREE-PAGE CONFIDENTIAL DOCUMENT................. PN733

EXHIBIT #M6 CONFIDENTIAL DOCUMENT............................................. PN812

THE WITNESS WITHDREW............................................................................ PN814

TONY JOHN MAROUN, RECALLED............................................................. PN814

CROSS-EXAMINATION BY MR MCKENNA............................................... PN814

RE-EXAMINATION BY MR PERRY.............................................................. PN848

THE WITNESS WITHDREW............................................................................ PN859

JOHN NOEL DASEY, AFFIRMED................................................................... PN861

EXAMINATION-IN-CHIEF BY MR PERRY.................................................. PN861

EXHIBIT #P4 STATEMENT OF JOHN NOEL DASEY DATED 23/12/2014 PN872

CROSS-EXAMINATION BY MR MCKENNA............................................... PN874

RE-EXAMINATION BY MR PERRY.............................................................. PN945

THE WITNESS WITHDREW............................................................................ PN950

EXHIBIT #M7 APPLICANT’S OUTLINE OF SUBMISSIONS WITH ATTACHMENTS PN1060

EXHIBIT #P5 RESPONDENT'S OUTLINE OF SUBMISSIONS................ PN1064

Fair Work Commission Transcripts

EM2013/111, Transcript of Proceedings [2015] FWCTrans 257 (5 May 2015)