|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Fair Work Commission Transcripts |
TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 1052497
COMMISSIONER GREGORY
C2015/1139
s.739 - Application to deal with a dispute
Transport Workers' Union of Australia
and
Linfox Australia Pty Ltd
(C2015/1139)
Linfox and Transport Workers Union Road Transport and Distribution Centres Agreement 2014
Melbourne
9.26 AM, FRIDAY, 25 SEPTEMBER 2015
Continued from 24/09/2015
THE COMMISSIONER: Mr Williams.
<KRIS TALEVSKI, AFFIRMED [9.26 AM]
EXAMINATION-IN-CHIEF BY MR WILLIAMS [9.27 AM]
PN983
MR WILLIAMS: Mr Talevski, you're the general manager, Coles Retail, employed by Linfox?‑‑‑I am, yes.
PN984
And you've held that role since June 2014?‑‑‑Correct.
PN985
But you've had different roles with the company since 2000?‑‑‑Yes.
PN986
Mr Talevski, you've made a statement in relation to these proceedings?‑‑‑Yes, I have.
PN987
Do you have a copy of that with you?‑‑‑Yes, I do.
PN988
Mr Talevski, can I just direct your attention to paragraphs 74 and 75?‑‑‑Yes.
PN989
Mr Talevski, are those paragraphs in the right order?‑‑‑It's probably a mistake there. I think 74 was probably 75 and vice versa.
PN990
So we should read them in the reverse order: 75 first and then 74?‑‑‑Correct.
PN991
Mr Talevski, in your affidavit, you give detail of at least one of the initiatives that you've put in place to turn around the DC's fortunes since you've been the general manager. As a result of your initiatives, including those you describe here, have you been able to reduce the amount of overtime worked on weekends?‑‑‑Yes, we have.
PN992
And in what way have you been able to reduce?‑‑‑We've been able to increase the capacity of our full-time employees during the week, therefore eliminating the need for an additional shift on the weekend, namely, Saturday afternoon shift and Sunday subsequently.
PN993
So you've eliminated full shifts on the weekend?‑‑‑Correct.
*** KRIS TALEVSKI XN MR WILLIAMS
PN994
And before you eliminated those shifts, can you comment on the makeup of how those shifts were put together? Who was working on them?‑‑‑Previously, depending on the week and the individuals involved, typically it was a 50 per cent ratio mix between full-timers and casuals on those shifts.
PN995
When you say casuals, are they casuals employed by Linfox?‑‑‑Agency casuals mainly.
PN996
Those agency or external labour, are they engaged at all at the DC now?‑‑‑Yes, there is, to a reduced amount.
PN997
Mr Talevski, you've given some evidence about a study, done for the purpose of the matters before the Commission, by Mr Sutton?‑‑‑Yes.
PN998
Are you familiar with the methodology used by Mr Sutton?‑‑‑I am.
PN999
In your view, as the general manager, has that methodology achieved reasonable expectancy pick rates which the majority of your employees should be able to achieve?‑‑‑Correct. At the moment, there's only 40 individuals out of the 400 to 500 people, depending on the week, that are not able to meet 90 per cent of the standards, so they're well in excess of 90 per cent in the majority of the time.
PN1000
Mr Talevski, are the matters of fact set out in your affidavit true and correct to the best of your knowledge?‑‑‑Yes, they are.
PN1001
And to the extent that you've expressed opinions in that affidavit, are they opinions you genuinely hold?‑‑‑Yes, they are.
PN1002
MR BAARINI: Before it's accepted, I object to some paragraphs in that statement, Commissioner. The first is paragraph 8 of Mr Talevski's statement and paragraph 9. They are clearly hearsay paragraphs. We are unable to test the veracity of the claims that are made as to what Coles representatives have said to Mr Talevski in those meetings. And frankly, those two paragraphs are what the company says form the basis of their decision to institute this scheme. So we object on the basis that they fall foul of the hearsay rules. Paragraph 11 we object to because it's the question of Mr Talevski's opinion not a matter of fact. He says, "I understood from this meeting". And again, they are matters that he and only he can have an opinion about. Whether that is something that is of relevance to the Commission is certainly not, in my submissions, relevant at all.
*** KRIS TALEVSKI XN MR WILLIAMS
PN1003
THE COMMISSIONER: I understand the submission you make about that, but there's certainly been a lot, including cross-examination of the witnesses involved. They've been asked their opinion about a whole range of matters, including the interpretation of the agreement.
PN1004
MR BAARINI: That's correct, save to say that in relation to that, that could be dealt with as a matter of submissions as to the weight of the relevance, Commissioner. I just highlight that for today. But certainly, paragraph number eight, paragraph number nine, in which it is alleged that:
PN1005
Coles representatives indicated in blunt terms that the RDC was around 15 to 50 per cent more expensive than other DCs as a result of poor productively
PN1006
there is no way known that the union that the union can challenge the voracity or the reliability or anything in relation to that statement because it's based on what Mr Talevski says was told to him by a third party. The same could be said about paragraph 9, in which he says:
PN1007
We were told in direct terms that unless the situation improved, there was a high risk that we would lose the contract. At that time, our contract was up for renewal or extension in January 2015.
PN1008
It wouldn't have taken much for Linfox to have either called someone from Coles to give evidence to substantiate those statements being made to Mr Talevski or, at the very least, some documentation being produced in support of those two paragraphs, for the union, at the very least, to have some chance of challenging the veracity of statements that are being attributed to Coles that Mr Talevski includes in his statement. I'll leave it at that, Commissioner.
PN1009
THE COMMISSIONER: Mr Williams, in response?
*** KRIS TALEVSKI XN MR WILLIAMS
PN1010
MR WILLIAMS: Commissioner, the primary matter before you is a matter of interpretation; no doubt about that. If you accept the first submissions I'll make, then then evidence itself is not what we said to be relevant to the interpretation issue. There is, however, a possibility, and I hope it won't come to this, that if you don't accept my primary submissions, you'll have to consider what do best endeavours mean? And in that context, best endeavours, in the written submission we've made and I'll elaborate as necessary, would be interpreted in a way which does not require my client to take business instructive decisions. We do not put the evidence in paragraph 8 and paragraph 9 forward as evidence of what Coles will or won't do. We put it forward as evidence of what the responsible manager of this business was told by their only client. From there, a submission could be made about what a responsible business manager would do in the face of such a direct message from a significant client. It doesn't matter whether Coles was bluffing. Anyone with business experience would suggest they probably weren't. But it doesn't matter. What matters is whether that was a reasonable basis for Mr Talevski and others to take the steps they did. So we put it forward only as evidence of what they were told. Not the truth of it, just what they were told. And it is relevant in that sense, at least to the question of what reasonable endeavours or best endeavours my client should be required to make.
PN1011
In relation to paragraph 11, it really flows from the same principle. What was in Mr Talevski's mind is relevant to what the company ought to be required to do if we get to a best endeavours argument. So it's put forward on that limited basis and we accept that it is not otherwise directly of assistance to you in interpreting the clause, but it is background information which is relevant for you to hear.
THE COMMISSIONER: I note the submissions you make, particularly about paragraphs 8 and 9 and the inability or lack of ability to test that particular evidence, but I'll simply note those submissions and admit the witness statement at this stage.
EXHIBIT #LF2 WITNESS STATEMENT OF KRIS TALEVSKI
CROSS-EXAMINATION BY MR BAARINI [9.36 AM]
PN1013
MR BAARINI: Mr Talevski, you became general manager of Coles Retail since June 2014?‑‑‑Correct.
PN1014
Prior to that, what were you doing?
PN1015
I was the general manager of the line haul division at Linfox.
PN1016
So line haul is different to warehousing?‑‑‑Yes.
PN1017
Is this the first time that you've been involved in managing warehousing?‑‑‑No.
PN1018
When was your previous experience?‑‑‑Linfox for many years and Metcash for many years.
PN1019
Is this the first time that you've sought to introduce a KPI scheme that had an impact on overtime availability?‑‑‑No.
*** KRIS TALEVSKI XXN MR BAARINI
PN1020
Where else have you done it?‑‑‑Metcash.
PN1021
And did you seek to limit people's opportunity for overtime as a result of the KPI scheme?‑‑‑No.
PN1022
So this is the first time you've introduced a KPI scheme that sought to limit people's availability for overtime. Is that correct?‑‑‑I don't understand the question actually.
PN1023
Was it your idea to set up a KPI scheme?‑‑‑Yes.
PN1024
So you took ownership of it?‑‑‑Yes.
PN1025
And when you did that, you did that bearing in mind that you were required to comply with the national enterprise agreement 2014?‑‑‑Yes.
PN1026
When you have these ideas, you tend to make sure that they comply not only with the law, but with the relative enterprise agreement?‑‑‑Yes.
PN1027
Would you agree that the KPI scheme was set up - and you'd be the best person to answer this, given it was your idea - to respond to, rightly or wrongly, claims made to you by your customer to improve productivity at the RDC?‑‑‑It's along-winded question, but if I understand it correctly, can I paraphrase you?
PN1028
What do you understand the question to be?‑‑‑I understand the question to be there was an inefficiency problem at the warehouse and certain improvements needed to be made.
PN1029
Yes. And when did Linfox identify the inefficiencies that you've just made reference to?‑‑‑The inefficiencies, probably six months earlier, prior to my role.
PN1030
So January 2014?‑‑‑Yes, correct. Probably a little bit earlier than that. Maybe November.
PN1031
November/December 2013. So up until that point, the RDC was not deemed to be inefficient. It was only until six months before you joined the company that it was identified as being inefficient. Is that correct?‑‑‑No.
*** KRIS TALEVSKI XXN MR BAARINI
PN1032
Did you not just say moments ago that it was identified as being inefficient some six months before you joined the company?‑‑‑It was quantified in terms of its inefficiency at that point in time.
PN1033
What was the quantification?‑‑‑The quantification being benchmarked against other DCs in the Coles network.
PN1034
Have you got evidence of that today?‑‑‑Yes, I do, if someone can help me find it.
PN1035
Do you have your statement with you, Mr Talevski?‑‑‑Yes, I do.
PN1036
Is that the one that's marked KT1?‑‑‑Yes, it is.
PN1037
Do you accept this paragraph is not marked in time? Just a yes or no?‑‑‑No.
PN1038
Do you accept that this is not dated with time?‑‑‑(Indistinct reply)
PN1039
This graph that we've got at KT1, there's no specific time. Is that correct?‑‑‑There is a part time in there, in terms of a period, but it doesn't show the - correct.
PN1040
You also accept that this particular graph shows the only distribution site for Coles that is operated by Linfox?‑‑‑Sorry, was that a question?
PN1041
Yes?‑‑‑What's the question?
PN1042
Do you accept that this is the only distribution site of the 20 that you've shown that is operated by Linfox?‑‑‑We only operate one.
PN1043
So do you accept that the other distribution centres are not operated by Linfox?‑‑‑Correct.
PN1044
Do you also accept that it is made up of other distribution centres, serviced either by Coles or other service providers?‑‑‑Correct.
*** KRIS TALEVSKI XXN MR BAARINI
PN1045
Do you also accept that those distribution centres vary in size?‑‑‑There are a number of distribution centres that are similar and there are other distribution centres that are not so similar. So there are like distribution centres, yes.
PN1046
But not one that is exactly the same. Is that correct?‑‑‑There are three there that would be a very close parallel: Smeaton Grange SG and Goulburn GLB.
PN1047
Can you tell me on the graph which ones they are?‑‑‑Yes. Smeaton Grange is the black and green.
PN1048
Do you have a colour copy, there do you?‑‑‑I do.
PN1049
It would assist us if we all had colour copies?‑‑‑If you'd like to come over here or I can come over there.
PN1050
No, that's okay. The point that I'm making is this: would you accept that the RDC site is different to the other distribution centres?‑‑‑Yes. It is the biggest and therefore, should attract the most efficient - much more efficient efficiency than the others.
PN1051
When you say it is the biggest, it is the biggest in what?‑‑‑In terms of throughput and economies of scale.
PN1052
So the value of work that goes through that distribution centre is the highest?‑‑‑Yes.
PN1053
The number of full-time employees on that site, is that the highest?‑‑‑As a ratio, yes.
PN1054
Does it also have the most number of product lines?‑‑‑I couldn't tell you that.
PN1055
Does that site require more products, a variety of products?‑‑‑Not necessarily so.
PN1056
Not necessarily so, but given that it does a high volume, do you accept it is possible that it has a variety of lines that need to be serviced?‑‑‑So you went from one question to another, so you're confusing me. You're saying more or a variety.
PN1057
You're doing more volume?‑‑‑Yes.
*** KRIS TALEVSKI XXN MR BAARINI
PN1058
It's not of the same line, is it?‑‑‑ They have different product lines across the country, yes.
PN1059
Let's just focus on the RDC. How many product lines are there?‑‑‑About 5,000-odd.
PN1060
Five thousand-odd product lines?‑‑‑Yes.
PN1061
And some are small sizes and some are big?‑‑‑Yes.
PN1062
That requires different capacities of employees to be able to service those lines. Is that correct?‑‑‑I don't understand the question.
PN1063
A person who is working on a line that is small packages has a different need/capacity to fulfil that line, compared to someone who is working on large bulk products. Is that correct?‑‑‑Again, I'm seriously confused with the question.
PN1064
If I was to pick up, all day, every day, toothpaste as part of the order, would that be any different to picking up 24 cans of Coca Cola bottles all day, every day?‑‑‑Yes.
PN1065
So the requirement for me as an employee to fulfil my capacity, is it the same or different if I was working picking up a toothbrush, as opposed to Coca Cola bottles?‑‑‑It would be different if you were doing that only.
PN1066
So the capacity could vary, depending on what you do. You accept that?‑‑‑Yes.
PN1067
And it could vary, depending on how many times you do it?‑‑‑Correct.
PN1068
And it could vary, depending on the mix of product lines that you're required to do in any one week. Is that correct?‑‑‑Correct.
PN1069
Does capacity also mean that it might vary, depending on my physical ability?‑‑‑That could be an interpretation.
*** KRIS TALEVSKI XXN MR BAARINI
PN1070
It's not that hard, Mr Talevski. You look like a pretty fit man compared to me. Do you think that you might be able to pick up more than me, capacity wise?‑‑‑In that question, yes.
PN1071
Do you think that ability also depends on whether you carry some injuries?‑‑‑Yes.
PN1072
Whether you are on a return to work plan?‑‑‑Yes.
PN1073
Whether you are fit for duty, but your health isn't necessarily the best?‑‑‑Yes.
PN1074
So there are a myriad of factors that determine your ability to complete a job. Is that correct?‑‑‑Correct.
PN1075
It also depends, does it not, on the number of hours that you might be required to do?‑‑‑Yes.
PN1076
So someone who is working more hours in a week, beyond 38, if they're a full-time employee doing overtime hours on a weekend and they do that consistently, fatigue might be a factor, compared to those that don't do additional hours on a weekend. Is that correct?‑‑‑Yes. Fatigue is built into these numbers.
PN1077
So would you also accept that if you don't meet your designed pick rates that you are still complying with your lawful and reasonable directions as an employee of the company?‑‑‑Not necessarily.
PN1078
So are you saying that Mr Vassallo, who has given evidence in this proceeding - and I know you didn't have the benefit of hearing him, but you've probably read his statement, I assume. Is that correct?‑‑‑Yes, I have.
PN1079
That he, who says openly, "I am unable to meet those pick rates week in, week out" is not necessarily complying with lawful and reasonable directions given to him by the company?‑‑‑In the case of Mr Vassallo, it might be a training, aptitude or cultural, being the want.
PN1080
So just on that cultural, because I know you've mentioned that a number of times in your statement, Mr Talevski, can you just explain to the Commission what you mean by cultural?‑‑‑In any workplace a team is built by certain elements of individuals to come up with a certain way of working, a certain culture. That might be one of quality, it might be one of high productivity, high safety, or all of the above. It's just, I suppose, the fabric that makes that team.
*** KRIS TALEVSKI XXN MR BAARINI
PN1081
It's your evidence, is it not, that you believe that it's obvious that employees are deliberately working below capacity?‑‑‑Which paragraph are you referring to?
PN1082
Paragraph 53 of your statement?‑‑‑Yes.
PN1083
So is it your evidence that it's possible that Mr Vassallo might be one of those people to fall in that cultural group that you've just described to the Commission?‑‑‑I'm not sure.
PN1084
You did mention it in your response to Mr Vassallo, did you not?‑‑‑I said that there's three possibilities as to why his ability to pick the rate may be impaired.
PN1085
Impaired. So are you saying that because an employee like Mr Vassallo is unable to meet your pick rates, he is somewhat impaired from his ability to meet them?‑‑‑He's not able to meet them. It could be for a number of different reasons or a combination of those reasons. If you like, I'll repeat them again.
PN1086
Do you accept that Mr Vassallo does meet them from time to time?‑‑‑Yes, he does.
PN1087
So he is not impaired or culturally unable to meet them, is he?‑‑‑Consistently, yes.
PN1088
Consistently he is unable to?‑‑‑He's not been able to prove consistently he can do that.
PN1089
If he says to you, as he has to the Commission on oath, that he is openly unable to meet them week in, week out, so he can qualify for overtime on weekends, are you saying that he falls below the lawful and reasonable directions of an employee of the company?‑‑‑No, I'm not saying it at all.
PN1090
So he continues to maintain the trust and confidence of the employer. Just answer the question. Does he continue to maintain the trust and the confidence of the employer?‑‑‑I can't answer that.
PN1091
He's still currently employed by you, so I assume that he's - - -?‑‑‑I haven't seen the specific reasons why he can't meet these. So we have processes whereby we complete ATRs and at that point, we then ascertain whether it's knowledge, application or an attitude. So his specific supervisor or team manager should be able to determine that in a much more lucid way or clearer way.
*** KRIS TALEVSKI XXN MR BAARINI
PN1092
You've had the benefit of knowing well in advance of today's hearing that Mr Vassallo would be giving evidence?‑‑‑Sure.
PN1093
You also would have had the opportunity to check on Mr Vassallo's ATRs and history before today?‑‑‑Sure.
PN1094
And you didn't?‑‑‑All I'm saying is I can see that he does improve from one week to the other. I also see that he has an improvement in the ATR, so from the previous week to the next week he has an improvement. As to why that occurs from week to week, that is unknown to me.
PN1095
It hasn't been put to you through the local managers that he is unable to meet the consistency that you expect for him to qualify for overtime because of cultural or deliberate reasons?‑‑‑I really can't answer that question.
PN1096
It's either you have or you haven't?‑‑‑I don't know.
PN1097
No?‑‑‑I can't remember having that conversation with anyone.
PN1098
And in relation to Mr Taplin, who has also given evidence, he has become your star employee for the KPI scheme, Mr Talevski. Is that right?‑‑‑Yes, he has.
PN1099
So he received the monthly award or weekly award?‑‑‑The weekly award.
PN1100
Yes, for meeting the KPI objectives?‑‑‑Yes.
PN1101
Is he a better employee for the company than Mr Vassallo in relation to complying with his duties of employment?‑‑‑I think yes is the answer. I think his capacity is where it needs to be.
PN1102
Have you or the company expressed to the full-time employees at the Coles RDC that because they are unable to meet the inherent - I should ask you that. Is the KPI scheme part of the inherent requirements of the job?‑‑‑Yes.
PN1103
It is, is it?‑‑‑Of course it is, yes.
*** KRIS TALEVSKI XXN MR BAARINI
PN1104
When did you notify the employees of that?‑‑‑Through many JCCs that we've had along the way.
PN1105
So you've expressly said to them that the KPI now is the inherent requirements of the job. If you fail to meet the pick rate you are no longer meeting the inherent requirements of the job. Is that correct?‑‑‑Yes.
PN1106
And as a result, if you're not able to meet the inherent requirements of the job, you face termination. Is that correct?‑‑‑We've not gone down that track as yet, because we believe we've still got some time to train and bring people up to where they need to be. Our view is that we would like to bring employees with us so as to not have those sorts of negative discussions.
PN1107
When were you going to tell the employees or the union that represents the members that that is a consequence of not meeting the inherent requirements of the job?‑‑‑When we put in our performance plans. I'm not sure of the exact date when the performance plans were enacted. So any individual that is below a certain criteria, and it is probably the bottom 20 per cent, those people are put on a performance plan to ascertain what are the issues that are prohibiting them from getting to that level. So there is training. There is knowledge gaps. There is further training. Then we ascertain whether there is time wasting going.
PN1108
So in relation to Mr Taplin, would you accept that he's a reasonably fit man?‑‑‑Is that a trick question?
PN1109
No. He says, in his statement to the Commission:
PN1110
I take my fitness very seriously. I train three nights a week in various forms of martial arts and I consider myself in a better physical shape than many of my co-workers.
PN1111
Would you agree with that?‑‑‑That's his statement, yes.
PN1112
Would you accept that that might mean that he is able to meet the pick rates, more so than, say, Mr Vassallo, who doesn't have the same physical fitness that, say, Mr Taplin is so proud of?‑‑‑NO. I think both should be able to meet it.
*** KRIS TALEVSKI XXN MR BAARINI
PN1113
So under your scheme, despite what you've earlier said about there being variations to capacity based on a number of factors including physical attributes and fatigue and number of hours, you still are of the view that all of them should be at that level?‑‑‑Yes. So the variation is above the minimum criteria. It's a minimum, not a maximum.
PN1114
And if they're not at that level, they're not meeting the inherent requirements of the job?‑‑‑They're not working to capacity. And there are a number of factors that might contribute to that.
PN1115
If you could just answer the question?‑‑‑I'm trying to contextualise it for you.
PN1116
That's all right. If I want context, I'll ask you. But they're not meeting the inherent requirements of the job?‑‑‑Yes.
PN1117
And possibly, not that you've taken this course for the moment, that could lead to termination?‑‑‑Possibly. We've not dismissed anyone for poor performance.
PN1118
And you've never dismissed anyone for, as you say, deliberately working below capacity, have you?‑‑‑No.
PN1119
And you haven't dismissed anyone for longstanding cultural or behavioural practice of not carrying out work during the week so that weekend work is maximised?‑‑‑I'm not sure I understand the question, that last bit.
PN1120
You've given evidence of a belief that there is a longstanding cultural and behavioural practice of not carrying out work during the week so that weekend work is maximised. Do you see that in paragraph 53 of your statement?‑‑‑Yes.
PN1121
But there is no evidence of anyone being terminated for that very reason, is there?‑‑‑No.
PN1122
In fact, there is no evidence of anyone being disciplined for that reason?‑‑‑Correct.
PN1123
So in fact, there is no evidence that supports your belief in any way in paragraph 53. Do you accept that?‑‑‑No.
PN1124
Are you assuming that that is the case because of - - -?‑‑‑No, so I work on - did you want me to answer the question or - - -
*** KRIS TALEVSKI XXN MR BAARINI
PN1125
Can I ask it a different way; you've brought no evidence to the Commission today to support the propositions that you've made in paragraph 53. Do you accept that?‑‑‑No, not at all.
PN1126
Sorry, have you brought any examples, specific examples, or patterns of discipline or people being investigated for any deliberate actions taken by people to work below capacity?‑‑‑Well, there's two different - - -
PN1127
No, no, have you - - -?‑‑‑- - - Well you - - -
PN1128
THE COMMISSIONER: Mr Baarini, it might be just perhaps reasonable to some extent if we give Mr Talevski some chance to perhaps respond to the questions being put to him?
PN1129
MR BAARINI: Sure.
PN1130
THE WITNESS: I think there's two aspects to I think your question I believe. Have we disciplined or dismissed anyone for poor cultural behaviour that led to additional overtime? No. Has there been some cultural aspects - and it's not all - has there been some cultural aspects that have led to overtime on - during the week and the weekend that we have eliminated? And yes it is in my evidence that we have substantially improved the efficiency dollars, as the statement says. Namely because we have overtime out during the week and also now during the weekend.
PN1131
MR BAARINI: And so - - -?‑‑‑So that shows or demonstrates that there has been an alignment or realignment of culture.
PN1132
And so would you put that down to better management at the RDC as opposed to addressing what you say is a longstanding cultural and behavioural practice?‑‑‑I think it's a combination of improved management and improved engagement with the union. I'm - we have been working with the TWU since June of last year and been articulating the problems that we need to address. So it's a combination of working together to improve the capacity, absenteeism, but certainly the capacity of employees.
PN1133
Do you accept that there is an element of discrimination between say Mr Vassallo and Mr Taplin who are full‑time employees?‑‑‑No.
*** KRIS TALEVSKI XXN MR BAARINI
PN1134
Do you accept that you have an obligation in clause 16 of the enterprise agreement? Do you have a copy of the enterprise agreement?‑‑‑No, I don't.
PN1135
Do you accept or are you aware of what the nature of the dispute is for this proceeding?‑‑‑I do.
PN1136
And do you accept that clause 16 is the subject of dispute as to what it might mean?‑‑‑Mm‑hm.
PN1137
Do you accept that clause 16 of the enterprise agreement creates an obligation on Linfox to use its best endeavours to achieve the following: maximising of the full‑time proportion of its workforce?‑‑‑So I think - yes my - are you asking for my opinion, or?
PN1138
Well no, bearing in mind that you authored the KPI scheme, did you turn your mind to your obligations in clause 16?‑‑‑Yes, I mean the enterprise agreement was not only in itself just clause 16. There are many aspects to the enterprise agreement that we had covered with Luke and others.
PN1139
But you - - -?‑‑‑So no, looking at it specifically on its own it wasn't an overriding factor. There is productivity clauses, there are continuous improvement clauses, there are capacity requirements.
PN1140
And so would you accept that clause 16 is a clause that applies to the RDC employees?‑‑‑Not on itself. Yes it does but there are other clauses that the enterprise agreement all - it all intertwines into the requirements of the two parties to work together to improve the capacity and the efficiency of the DC.
PN1141
And can you off the top of your mind just tell us what some of those other clauses might be?‑‑‑It's - - -
PN1142
THE COMMISSIONER: Well no - - -
PN1143
MR WILLIAMS: I think he should be given a copy. It's not a memory test.
PN1144
MR BAARINI: All right.
PN1145
THE WITNESS: Or just - I mean there's productivity clauses. There is - yes. Yes.
PN1146
MR BAARINI: So with the productivity clauses - - -
*** KRIS TALEVSKI XXN MR BAARINI
PN1147
THE COMMISSIONER: I think this is all very well to ask the witness his opinion of provisions in the agreement and how they're to be interpreted, but ultimately that's what this matter is all about and ultimately it's going to be a matter for the Commission to determine on.
PN1148
MR BAARINI: That's correct, Commissioner.
PN1149
THE COMMISSIONER: I'm not saying this critically of Mr Talevski but what relevance are his views about how the agreement should be interpreted? What expertise does he bring to the task?
PN1150
MR BAARINI: I'm not asking for interpretation. I'm asking him whether he understands it to be an obligation, Commissioner.
PN1151
MR WILLIAMS: And I didn't object because I could see that that's a fair question to ask. We will certainly be making a submission that Mr Talevski's belief about what it means and even if it applies is irrelevant.
PN1152
MR BAARINI: So in relation to clause 16 you have said that it was an obligation imposed on you in your decision making for the setup of the KPI?‑‑‑Yes.
PN1153
You also accept that the obligation of using best endeavours is a positive obligation on you to make sure that you are working to maximise the use of your workforce?‑‑‑Yes, so - and how that's interpreted is different obviously but, yes.
PN1154
And so do you also accept that by introducing a qualification for overtime limits your opportunity to use your best endeavours to maximise the full‑time proportion of your workforce?‑‑‑I disagree.
PN1155
And so do you accept that by having introduced the KPI scheme that people that are otherwise eligible and are able to work overtime like Mr Vassallo are now losing overtime?‑‑‑I mean that - the scheme was put in to maximise the capacity of full‑time employees by increasing their capacity. Where their capacity is well below any standard for us to one, accept but also two, to plan to it then jeopardises many other people, firstly, but secondly it doesn't allow that person to work at capacity and therefore us to plan the day correctly. So I disagree to the notion that we're I suppose cutting him out because of cultural issues. But I agree that he's not working to capacity and therefore he's unreliable in that - in some respects.
*** KRIS TALEVSKI XXN MR BAARINI
PN1156
And so why I was wanting to take you to the provisions of our Productivity Enterprise Agreement is that those provisions allow you to work with the employees hand in hand and, if they're members, with the union to address any of those issues so that there is greater output and productivity, do they not?‑‑‑Yes.
PN1157
And so they are instruments that allow an employer with the union and employees to address those issues about unreliability and output. Is that correct?‑‑‑Yes, and including the allocation of overtime.
PN1158
And clause 16 is a clause that goes beyond that insofar as creating an obligation directly on Linfox, does it not?‑‑‑It cannot be read singularly.
PN1159
Well, do you accept that had it not been for the KPI scheme that you introduced, employees like Mr Vassallo who would otherwise be doing overtime and have been doing overtime would not be missing out today?‑‑‑No I disagree.
PN1160
Do you accept that what the likes of Mr Vassallo or Mr Vassallo specifically has lost around $3500 over the last 12 months because of him not being able to qualify for overtime on weekends?‑‑‑I'm not sure that he was available or he wanted to work overtime. But just going back on your first point, Bill, that this criteria is much more transparent versus the previous systems that were in place. So he may have not - may not have qualified or he may have qualified under the previous systems but this is much more transparent and was done in conjunction with the employees on many different fronts.
PN1161
I put it to you that there was no system for eligibility of overtime previously?‑‑‑Well, the system was to people's discretion, which then is very discriminatory in my view.
PN1162
And so I think you've said previously the control of overtime was in the hands of the employees?‑‑‑Essentially yes.
PN1163
So there really was no system for the employer but this was a system that the employer had set up so as to take control of overtime hours. Is that correct?‑‑‑Correct.
PN1164
And you did so with a specific purpose and that was to reduce labour costs?‑‑‑To improve capacity and reduce labour costs, to improve the efficiency of the warehouse, to then retain jobs.
*** KRIS TALEVSKI XXN MR BAARINI
PN1165
Coles isn't here to answer some questions but Coles wasn't about capacity, it was - - -?‑‑‑Well, I'm - - -
PN1166
It was about - - -?‑‑‑I'm their representative.
PN1167
You're their representative?‑‑‑Well, I mean I represent them as a Linfox employee. That is my job.
PN1168
Your job was about cutting - saving money under the budget for Coles, was it not? The bottom line?‑‑‑My job is to - that's not my only part of the job. My job is to ensure that sustainability - the safety, the sustainability, the quality and the efficiencies are at the optimal peak performance levels.
PN1169
And one of the ways of doing that primarily was to reduce the amount of overtime that's available to full‑time employees?‑‑‑No.
PN1170
And one of the ways - - -?‑‑‑It is to improve the capacity of employees.
PN1171
And is it fair to say that outside labour hire are also subject to this scheme?‑‑‑Yes.
PN1172
And so that if they're not meeting the KPIs what happens to them?‑‑‑With regards to overtime are you talking about?
PN1173
With regards to hours that might be offered to them?‑‑‑There are - so yes. So if you're relating to overtime they also are subject to the same scheme.
PN1174
So if an outside labour hire worker was not meeting pick rates would you re-use them?‑‑‑We put a lot of money into training individuals so our view is to ensure that we one, pick the right individual, Bill, but secondly to continue to work with them to get them up to speed. If at some point they are unable and they are well below the standard we would need to part company.
PN1175
And so it's easier to part company with a worker that is outside labour than it is for a full‑time employee engaged to work up to 38 hours or at the very least be paid for 38 hours?‑‑‑What's the question?
PN1176
Is it not easier to not call - - -?‑‑‑For who? For who?
*** KRIS TALEVSKI XXN MR BAARINI
PN1177
For Linfox not to use the same outside labour people if they're not meeting the pick rates than it is with a full‑time employee?‑‑‑No, not necessarily. We - no, not necessarily. We - I am proud of the workforce at - the full‑time workforce at Linfox because they have come up to standard very well. So I haven't - I have not - no one has been dismissed. They have been - there's been discussions and counsellings and continual discussions about how individuals should improve, but I am genuinely proud of the position that we are in currently in terms of the full‑time employees.
PN1178
Are you proud of the fact - - -?‑‑‑So I'm not - I don't think it's been easier with casuals versus - I think it's been very easy with the full‑time employees to ask them to come along to - for the journey.
PN1179
Are you proud of the fact that employees like Mr Vassallo have lost $3500?‑‑‑I - no, it - you know, it's very rude to say that but I'll accept - I accept your question as being would I want him to improve his conditions from a financial perspective? Why not? Yes.
PN1180
Would you accept that people that work these jobs rely to some extent on the overtime hours to boost up their base salaries?‑‑‑Yes.
PN1181
Would you accept that working to capacity in those circumstances includes or may include the capacity to work overtime if required by an employer?‑‑‑Sorry, could you repeat that question one more time?
PN1182
Well, working to capacity for an employee in those circumstances may include working overtime if required by an employer?‑‑‑Work - for me working to capacity is to the standards being set at the DC and the standards being set by the DC were requested by the union I believe in terms of how those numbers were derived.
PN1183
But if I put it to you that it's not unusual for unions and employers to reach industrial instruments, is it unusual? Or industrial agreements or - - -?‑‑‑Such as the NEA?
PN1184
Well, such as the NEA, such as local agreements, such as resolving disputes locally?‑‑‑Yes.
PN1185
It's common?‑‑‑Yes. Yes.
*** KRIS TALEVSKI XXN MR BAARINI
PN1186
It happens every day of the year?‑‑‑Yes.
PN1187
And parties can do that, including unions and employers, without conceding ground on the legal principles. Is that correct?‑‑‑I suppose, yes.
PN1188
And so if Mr McCrone or the TWU was engaged with Linfox to negotiate a system which was more beneficial to the members, but at the same time helping the company meet its productivity objectives, you wouldn't hold that against the union or Mr McCrone would you?‑‑‑No.
PN1189
And you wouldn't be saying that he was acting outside his obligations or your obligations in the NEA, is that correct?‑‑‑No.
PN1190
So would you accept that the $3 million savings that you put to Coles in your budget which was accepted, at paragraph 12 of your statement - - -?‑‑‑It was - that's the re‑cutting of the budget, you mean?
PN1191
Yes, so paragraph 12 and 13?‑‑‑Yes.
PN1192
Would you accept that by your own admission the reduction in the budget by 3 million was entirely to be funded by a reduction in labour costs?‑‑‑Ninety per cent of our costs are labour costs.
PN1193
And the labour costs in that was by consequence the overtime hours, is that correct?‑‑‑Primarily overtime hours during the week and subsequently some overtime hours on the weekend and a reduction of agency labour as a result of improved capacity of full‑time employees.
PN1194
And so why would you want to reduce outside labour at all?‑‑‑I - - -
PN1195
Why have a goal to reduce the use of outside labour?‑‑‑Because it - it's - we have full‑time employees improving their capacity therefore reducing the need for outside labour hire and therefore not needing to pay for the outside labour hire. It's simple.
PN1196
Yes, and so do you accept then there is a difference between those that you employ permanently and those that you use for outside labour?‑‑‑I'm not sure what I'm accepting.
PN1197
Do you - - -?‑‑‑What's the difference that you're noting?
*** KRIS TALEVSKI XXN MR BAARINI
PN1198
Well, do you accept that you have an enterprise agreement with employees of Linfox and not outside labour?‑‑‑On the outside labour - well, I mean the outside labour is also covered under the NEA in terms of who, what, what numbers and all that sort of stuff, yes, in terms of what rates we should be paying them as well.
PN1199
Yes, and so do you accept that there's a ratio, a full‑time proportion ratio versus a non-full‑time proportion ratio?‑‑‑Yes.
PN1200
Yes, and is that 80 to 20?‑‑‑I can't remember. Yes, maybe read it out for me.
PN1201
That's okay. We'll take that as it is. But do you accept that therefore there's an obligation on you to maximise the work that is given to the full‑time proportion of your workforce over outside labour?‑‑‑So I think it needs to be - and I know that you don't like context but it needs to be financially viable as well, and there's a number of provisions in the EA that talk about "where financially viable".
PN1202
Yes?‑‑‑So I think that - as I said there is not one clause in the EA I believe can be read in isolation.
PN1203
Can you tell me whether the financial viability is included anywhere in clause 16?‑‑‑No, it's included in the EA somewhere, Bill.
PN1204
Yes, and there's also included in the EA about job security for employees?‑‑‑Yes, I'm sure there's many other clauses as well.
PN1205
And is there also included that:
PN1206
The objectives are to maximise the efficiency and prosperity of Linfox for the benefit of employees.
PN1207
?‑‑‑Correct.
PN1208
And so - - -?‑‑‑So we're in agreeance.
*** KRIS TALEVSKI XXN MR BAARINI
PN1209
And so you agree that by having a KPI scheme which qualifies the inherent requirements of the job is really not advancing that objective but really starting to qualify it, is it not?‑‑‑The scheme actually is devised to maximise the prosperity of individuals that are employed at the RDC over a sustained long period. That is the objective of that.
PN1210
And so the sustained long period and financial viability, because you like talking - - -?‑‑‑For individuals I'm talking about, yes?
PN1211
But you keep on telling me about context. The financial viability is the context that you keep on referring to about the business, that it has got to be financially viable. Is that correct?‑‑‑Yes. So it needs to be self-sustaining. Yes, absolutely.
PN1212
So would you accept, picking up that context of financial viability for Linfox, that if all your full‑time employees were not able to meet the pick rates that you could use that as a justification for using outside labour for all overtime?‑‑‑Well, I would then - I would probably mount an argument to say if individuals were at one per cent of the standard - - -
PN1213
Sorry?‑‑‑One per cent of the standard and are not producing production to service our customer, I have more issues than just financial viability. I have legal obligations under my contract with Coles.
PN1214
And so the - - -?‑‑‑So therefore in itself then the contract becomes - my contract becomes broken.
PN1215
Would you accept that based on your context of financial viability and the application of the KPI scheme, if employees were like Mr Vassallo who openly say "I'm not able to meet the pick rates week in, week out", that full‑time employees would miss out on all the overtime to outside labour?‑‑‑That's however very theoretical, Bill, but it's not happening today. Ninety per cent of the employees are currently meeting the standard.
PN1216
Yes, but some of them like Mr Vassallo can't meet them week in, week out?‑‑‑Yes, and we will deal with Mr Vassallo's case I suppose over a longer period of time and hopefully get him up to where he needs to be and then we can deal with it separately.
PN1217
Would you accept that - - -
PN1218
THE COMMISSIONER: I must say, Mr Baarini, I feel a little sorry for Mr Vassallo and the way his evidence is being categorised - - -
*** KRIS TALEVSKI XXN MR BAARINI
PN1219
THE WITNESS: Yes, so do I actually.
PN1220
THE COMMISSIONER: The way you're representing his evidence is not the way I recall it. The transcript will obviously verify it, but as I recall I think Mr Vassallo is reaching I think the 90 per cent target on a regular basis but not all the time, and his rate has improved and I think that reflects the evidence of Mr Vassallo. I'm not exactly sure that this application is all about Mr Vassallo but I do just interject at that point, I think particularly for two reasons. One, that I do have a degree of sympathy for Mr Vassallo but I think secondly that his evidence is not necessarily being accurately represented in the line of questioning that you're putting to the witness at the moment.
PN1221
MR BAARINI: It would be fair to say that he said he wasn't consistently doing it week in, week out. Now if that's not the evidence that he gave, I'm happy to go back and look at the transcript and the witness statement, and the point that I'm making to the witness is this - - -
PN1222
THE WITNESS: Well maybe just read it out. Yes, help us all out, read it out.
PN1223
MR BAARINI: Well, the point that I'm making is this, that Mr Vassallo at the very least was saying that he's not able to consistently meet your objectives week in, week out?‑‑‑Could you read out verbatim then please?
PN1224
No I'm asking you, the witness, would you accept that there are witness - - -?‑‑‑Well, I can't remember it. I don't have it here.
PN1225
I'm not asking you about Mr Vassallo. Would you accept - - -?‑‑‑Well, you just did.
PN1226
Would you accept that there are employees that are unable to meet the pick rate week in, week out?‑‑‑Yes.
PN1227
And in those circumstances those employees are not qualifying for overtime?‑‑‑Correct.
PN1228
And therefore losing money?‑‑‑Yes.
PN1229
Now would you also accept that your two productivity measures is based on an overall work rate measurement? Do you accept that?‑‑‑Yes, so there's an overall - yes, there's an OWR.
*** KRIS TALEVSKI XXN MR BAARINI
PN1230
And that - - -?‑‑‑Yes, that's a DC - that's an overall productivity measure. Yes.
PN1231
And it includes direct hour activities?‑‑‑Yes.
PN1232
Which includes receiving, replenishment, picking and despatch, at paragraph 20 of your statement?‑‑‑Yes.
PN1233
And of those direct hours, picking makes up 50 per cent of the AWR?‑‑‑Correct.
PN1234
So if you are achieving your targets with receiving, replenishment and despatch, your hours or the rate could be skewed by the very fact that 50 per cent is made up of picking. So if you fall below on the picking rate that affects your overall direct hour activities, does it not?‑‑‑Correct. So the picking is the majority of the - of where the hours are allocated and therefore have a much larger bearing, larger influence on the efficiency of the DC.
PN1235
And so if you fall over, fall short of your picking rate that will have an impact overall on the direct hour activities for the AWR?‑‑‑Correct.
PN1236
And so do you accept that if you're otherwise doing a reasonably good job with receiving or replenishment or despatch and you are - inability to meet your picking rate, that that will somewhat skew the outcome of the AWR?‑‑‑Yes.
PN1237
Do you also accept that your rate that you've developed through your studies is an average?‑‑‑No.
PN1238
Do you accept that it was made on a sample of four or five people in each of the areas?‑‑‑So if we - are we talking about how the numbers were derived?
PN1239
Well, I'm just asking you do you accept that the pick rate is only an average?‑‑‑No.
PN1240
Would you accept that it was based on a sample of four or five people in each of the areas, work areas?‑‑‑So are you talking about - let me just clarify your question. Are you talking about an average of a person or an average of a task time?
*** KRIS TALEVSKI XXN MR BAARINI
PN1241
Average in relation to those four or five people that were doing those tasks under the study?‑‑‑Sorry to ask you the question again because it's not clear for me what you're asking. Are you talking about it being an average time taken for individuals A, one to four or an average of elemental tasks completely by those individuals?
PN1242
You tell me, and what difference does that make?‑‑‑Well, then we could talk here for hours on all this. But if the specific question is about an average of a person, no it's not. It is average - so the way that the engineered standards were - or the reasonable expectancies were derived, Bill, were around as you rightfully pointed out, you have toothpaste and you have Coke. So it is the - based on the ratio of products within the warehouse, then there is a ratio or an average if you like of the time element taken to pick a toothpaste - and this was a - they're extreme examples. Toothpaste and Coke. So there is the time taken to pick those time - those specific products. There is a blending of that rate based on the number of products that are in the warehouse that fit into each of those types of categories.
PN1243
So the blending, you'd accept, makes an average outcome of - because it's not an exact figure, is it?‑‑‑So there - I would suggest it is a very accurate figure on the basis that those products do not change from week to week. The buying patterns of the supermarkets do not change from week to week. So the same ratio is then enacted from week to week.
PN1244
Do the product lines change?‑‑‑No. Not - as in do they change from day to day? Yes. From week to week? No. Do we - in terms of the ordering - - -
PN1245
And so - sorry, go on?‑‑‑So in terms of the ordering, it does change, but over a period of time. The ratio of how much soap buy you for home, Bill, is the same.
PN1246
So would you accept that seasonal change affects the product lines that might be required for Coles?‑‑‑Yes and where the company does miss out on productivity improvements as a result of us not recalculating the standards, but we are happy for that to remain as a benefit for the employees, as that time goes on. So you're right. So what happens is rather than us buying one - because we did this study in winter time. When it comes into summertime when the peak period hits, rather than the individual stopping once and picking one carton, the individual stops and picks three cartons, therefore reducing the travel. 50 per cent of the standards are - the reasonable expectancies relate to travel. During the peak - peak period time that travel is shortened up and there is a marked improvement in the profile that is to the benefit of the individual. We do not penalise individuals for that. We allow that to continue.
*** KRIS TALEVSKI XXN MR BAARINI
PN1247
And yet for some people, they're unable to meet the pick rate that would qualify them for the overtime?‑‑‑We've determined that.
PN1248
So, for example, in summer there would be more orders for drinks?‑‑‑It's easier.
PN1249
I'm just saying - is there more orders for drinks?‑‑‑Yes.
PN1250
And so from a capacity perspective, it would be harder, would it not, then to pick up drinks than it is a toothpaste?‑‑‑No. So you're mixing two different things here and I think it's very misleading, completely misleading, Bill, because there is more orders for drinks, tick. That means there is a reduction in travel and the person rather than travelling and stopping once and picking one carton, stops and picks five cartons and therefore is able then to meet the standard in an easier way. As it is, because there are two different areas for - for toothpaste and then there's drinks, same - I'm not sure that toothpaste goes up in summer, but during the peak period or the seasonal improvements, the standards become easier to meet and that is something that, unfortunately, we don't have the system right at the moment to - but we're -
PN1251
So you don't have the system that could properly reflect those changes, is that correct?‑‑‑So we - - -
PN1252
I'll allow you the time to answer the questions, but can you just answer - - -?‑‑‑I just want to make sure that you're not misleading people here, because we did this study in June at the lowest period, so at the worst profile and the reason why we did that is because we had two things going; we had the PIN notice that one of our employees asked us to complete - provisional improvement notice - and secondly it was - we've given the employees the benefit of the doubt, at the lowest period, the hardest time, so therefore we've reflected those standards in the most - the lowest period.
PN1253
But you'd accept that it's not a perfect regime?‑‑‑It could - yes, it could be better, yes.
PN1254
And as a result, there are full-time employees missing out on overtime?‑‑‑No, you're drawing a parallel that's incorrect.
*** KRIS TALEVSKI XXN MR BAARINI
PN1255
Right. Can I just ask you this; given that you're proud of the turnaround in the productivity at that Coles RDC, because of the pick rates, there's really no need to qualify weekend overtime, is there? If capacity, from your perspective, has gone up and productivity has gone up, there's no need to tackle the qualified people for overtime on weekends, is that correct?‑‑‑The eligibility of overtime is a transparent system where people understand the requirements and then there's allocation of overtime, based on a transparent criteria.
PN1256
Yes, I've heard that. I think you've said that before. But can I just - - -?‑‑‑Yes, but that's important though.
PN1257
Can I just say this to you, that improving productivity and output in the workforce doesn't have to be connected to eligibility for overtime hours?‑‑‑The decision - no, it doesn't but that was our decision collectively with the work group, including the union.
PN1258
A few moments, if I can, Commissioner.
PN1259
I've just been instructed to pick up the point about your answer to not being - the pick rate not being an average, if I can go over that with you, Mr Talevski - - -
PN1260
THE COMMISSIONER: I've got to say, Mr Baarini, and I'm certainly not wanting to influence in any way the - or limit the extent of questions that you ask of the witness, but I must say and this perhaps will become clearer in terms of submissions that you make, but I'm not entirely sure of the relevance, but there's been time spent in terms of cross-examination about whether the changes were required to be introduced into the distribution centre in the first place and then there now seems to be detailed question going to the validity of those processes and systems. In terms of the matter that is up- that is to be determined in regard to this application, I must say I'm not entirely sure of the relevance of the detailed cross‑examination that's now occurring about those particular matters.
PN1261
MR BAARINI: Look, it feeds into the best endeavours clause at the beginning of the clause 16, Commissioner, because if we - if clause 16 is said to apply, which we say it does, then we say that the regime that the company has put in place with all its flaws, which have been identified up until today and including today, cannot serve the best endeavours for the purposes of the objective of that clause. So sorry to harbour on the point, but it's - - -
PN1262
THE COMMISSIONER: No, thank you for that explanation.
PN1263
MR BAARINI: So I think you accepted, moments ago, that given the demands from your client, Coles, and your need to improve the productivity and output of the RDC, that you could have done so without necessarily attaching any requirement for available overtime for full-timers, is that correct?‑‑‑Sorry, Bill, one more time?
*** KRIS TALEVSKI XXN MR BAARINI
PN1264
You accept that because productivity has improved, and you've sought to put in a system to improve productivity, that you could have done so without necessarily introducing a requirement to qualify full-time employees for overtime on a weekend?‑‑‑Yes, but that was a collective decision that we took with the union to have it much more transparent than it previously was.
PN1265
And given that we are now in dispute, the union and the company, you'd accept that the detail of that understanding, is obviously not agreed to and that this how it affects employees' eligibility for overtime?‑‑‑Sometimes I get confused, Bill, in terms of - the union, I think, originally didn't agree with the engineering standards, that was the original argument. Subsequently the argument has now been the allocation of overtime.
PN1266
So in relation to the engineering standards, you've obviously - you commissioned the report. Have you got a copy there?‑‑‑Yes.
PN1267
It's the one headed "Reasonable Expectancies Study" 29 July 2014?‑‑‑Yes.
PN1268
Do you accept that at table 1 of that report it talks about averages?‑‑‑Yes and elements, not people.
PN1269
And it talks about the average in relation to each of those picking sections?‑‑‑Yes.
PN1270
And it also includes how much time was spent on all aspects of picking activity, including travel, being delayed, pallet handling and wrapping?‑‑‑Mm-hm.
PN1271
But it also says that it does not include the time a team member is on breaks or engaged in other valid warehouse functions?‑‑‑Correct.
PN1272
And it does not include activities at the start and end of each of the picking tasks, like collecting empty pallets, wrapping and staging pallets?‑‑‑Yes.
PN1273
Then it says, "To expand on the definition of a pick rate is the average number of units picked per hour worked"?‑‑‑Correct.
*** KRIS TALEVSKI XXN MR BAARINI
PN1274
So would you accept that in coming to these averages, that the data was collected from a small number of workers measured over a few days in July 2014?‑‑‑So could we just go back to where you were reading from, where it doesn't - where you say it doesn't have the start and end - I've got "start time" here and "end time" here as well, so in terms of data, yes.
PN1275
So would you accept that the average - the rate that's proposed is a weighted average derived from data collected from a small number of workers whose performance was measured only in a few days in July 2014?‑‑‑So the question is is the basis of the standards on those four individuals, as an example or in terms of your reference. No, it's actually derived from applying the element data, being the specific elements that they complete, ie pick a case, stage a pallet, understanding what that time is and then extrapolating that across many, many orders - in this case, I think it was a million-case in a day orders - a million cases derived from those orders for that period of time. So it wasn't about how fast Bill completed the entire task, it was about what is the time taken to complete the pick, the stage and then it was extrapolated, and then inclusive on that.
PN1276
Yes, and that - go on?‑‑‑Including on top of that, we had delay data that was separately collated and/or derived, fatigue data, et cetera et cetera and that built that up.
PN1277
And so there was taken from a selected group of workers whose tasks were calculated on an average time for each of those tasks, over a four-day period, is that correct?‑‑‑The observations were taken over a number of individuals, and the tasks were broken into individual tasks, not the overall - - -
PN1278
Yes, but in developing the average for the pick rate, it's based on those individual task averages that were built up with all those adjustments that you've just identified?‑‑‑That was - yes, a very small part. Yes.
PN1279
Yes, okay. Not much longer, Commissioner.
PN1280
THE COMMISSIONER: No, Mr Baarini, take your time, please.
PN1281
MR BAARINI: So would you accept that the absenteeism was also a significant turnaround to improving productivity in the workplace?‑‑‑Yes.
PN1282
You'd also accept that the overtime policy was a significant departure from the method previously used to allocate overtime?‑‑‑Yes.
*** KRIS TALEVSKI XXN MR BAARINI
PN1283
Would you also accept that in some of your evidence in your witness statement again today, there's this notion of employees if they wanted to increase their capacity , then they'd be the ones that could and should get allocated overtime on weekends?‑‑‑Are we talking about absenteeism or are we talking about productivity?
PN1284
So in relation to the overtime policy, it's about giving an incentive for employees to increase their capacity so they're working full-time - at full capacity, is that correct?‑‑‑Yes.
PN1285
And that is - full capacity, that is 100 per cent of their reasonable expectancy pick rates, is that correct?‑‑‑Well, no, at the moment it's sitting at about 90 per cent.
PN1286
Yes, but at paragraph 72 of your statement, and I'm happy for you to go there, just the first paragraph - paragraph 72 to 73 if you can?‑‑‑Paragraph 72 and 73, yes.
PN1287
So you would accept that the purpose of it was to increase capacity so they're working full-time at 100 per cent of their reasonable expectancy pick rates?‑‑‑Correct, except that we've not reached level at the moment.
PN1288
Yes, and you accept that it's - did you say 90 per cent at the moment?‑‑‑Yes.
PN1289
You accept that over the last 12 months that the pick rate - the expectancy pick rate has actually increased. You've started at a lower rate to where it is today?‑‑‑Yes.
PN1290
To allow people to adjust?‑‑‑Correct, yes.
PN1291
So therefore with a turnaround in the performance of the RDC overall, I think you've gone from saving three million in the budget to well over three million?‑‑‑Yes.
PN1292
You don't actually necessarily have to have employees reaching 100 per cent of the reasonable expectancy pick rates, is that correct?‑‑‑I'm unable to understand the parallel, because the three million dollars is specifically a budgetary requirement that Coles had, versus the actual number that we've achieved is different. So that's a budget and that's actual.
PN1293
All right, but with the actual, you've actually surpassed the budget, despite not actually being at 100 per cent of the reasonable expectancy pick rate?‑‑‑Yes.
*** KRIS TALEVSKI XXN MR BAARINI
PN1294
And so therefore, your notion of having to have everybody fulfilling the inherent requirements of the job working at the reasonably expectancy pick rate is an unreasonable target, is it not, given that you're already meeting budget and exceeding it?‑‑‑So the budget that was derived in 2014 - June 2014 - was my best guesstimate as to what we could achieve by me quickly, within two weeks of starting the job, understanding that the contract was in jeopardy, and I had to quickly ascertain what was reasonable to provide them, Coles, in a two-week period that I started the job. As time went on and we completed the studies, it was very evident, very clear that there was latent capacity in excess of three million dollars.
PN1295
Yes, but you haven't answered the question, Mr Talevski, with respect. The question was that given that you are surpassing the budget, and you haven't - and you are not working at 100 per cent of the reasonable expectancy pick rate - - -?‑‑‑Yes.
PN1296
Is it an unfair expectation of employees, as you say, to meet the inherent requirements of the job to meet the 100 per cent pick rate when you are well above the budget?‑‑‑NO.
PN1297
And so from your position today as a senior manager at Linfox, that it is not the budget that dictates the pick rate or the rate that the pick rate should be at, but you actually have the pick rate in mind as to the capacity that you want these employees to be working at all day every day?‑‑‑No, the pick rate is determined by what is the actual capacity of the warehouse, the individuals, the layout; that determines the capacity and the pick rate, not budget.
PN1298
Do you accept that there is an element of unfairness that you would be able to exceed your budget with Coles, and at the same time - and turn around the fortunes of the RDC, and at the same time have full-time employees losing dollars, and significant dollars, because they're not able to do weekend work overtime?‑‑‑And it is only in a minority of the cases that that occurs. The majority of the people, by and large are happy contented, and earning overtime dollars week-in, week-out.
PN1299
Would you accept that when a ballot was made or members of the Transport Workers Union the despite any attempts that the union that company made to try to resolve this at a local level that the members overwhelmingly rejected it?‑‑‑So what was the ballot for, Bill?
PN1300
Do you accept that there was no agreement or endorsement for whatever the ballot was by the members - - -?‑‑‑There's been many ballots about Christmas rosters - - -
*** KRIS TALEVSKI XXN MR BAARINI
PN1301
In relation to this dispute?‑‑‑It wasn't in relation to this dispute, no. We've never had a ballot in relation to this dispute, have we? Can you read out the - - -
PN1302
If you're not aware of the ballot, I won't go - take you down there?‑‑‑Well, no, I actually disagree, because there wasn't - it was about the pick rates and a bonus system, the ballot. I'd like to - I think that was the right ballot that we're talking about, Bill.
PN1303
Do you accept that given that you've made mention of the layout of the distribution centre and size and volume that they are all factors that play a part in the ability to achieve the pick rate?‑‑‑Correct.
PN1304
And that is why it's not at 100 per cent today?‑‑‑No.
PN1305
And that is why you started at a lower rate and gradually built it over time, over the last 12 months?‑‑‑No.
PN1306
Well, do you accept that if you were able to bring it in at 100 per cent, it would have been easy to do so without consideration for those things?‑‑‑So 90 per cent of the people are either well in excess of, say, 90 per cent of the standard, well in excess, and if I have a look at the overall numbers, we are hitting the overall numbers in terms of the average numbers. So there are people surpassing that. Our want is to be a consultative employer and allow people to, one, adjust; two, be trained and understand, and slowly improve productivity and we are not in the game of dismissing people, because I would rather people with experience that continue to grow with us in a productivity sense.
PN1307
Well, do you accept that the changes and the improvements - sorry, do you accept that the improvements that you've made to the RDC are not just solely because of your KPI policy?‑‑‑So there is the overtime - so there is the absenteeism, there is the productivity policy. So those two absenteeism and the productivity are the bulk of the improvements that have been made.
PN1308
Well, do you accept that there's been an introduction to something that hasn't occurred in the past, and that is ATRs, where people are trained and they're technique is reviewed and managed?‑‑‑That is to support the pick rates.
PN1309
And that didn't exist before either?‑‑‑Yes.
*** KRIS TALEVSKI XXN MR BAARINI
PN1310
That didn't exist previously?‑‑‑No.
PN1311
You also accept that there is what they call the effect of - the Hawthorne effect of having to - have you heard of the Hawthorne effect?‑‑‑Luke has mentioned it a couple of times to me?
PN1312
So do you accept that there is - - -
PN1313
THE COMMISSIONER: Is this the Hawthorne effect?
PN1314
MR BAARINI: Not the footy club, Commissioner, although it - the effect of being supervised and surveyed, and observed in relation to studies that people have undertaken to determine and take observational facts and determine averages. So that the people who are being observed for the purposes of determining pick rates for specific tasks might work differently or to a different standard to those that are normally going about their business day-in, day-out. Do you allow some concession for that, that that might be a factor?‑‑‑In what - concession? How would you concede to that?
PN1315
Well, in relation to improvements, changes that have been made and things that have occurred to bring about these improvements in the workplace?‑‑‑That's probably a question for the engineer. There is personal time, fatigue time, delay time, all that time that's not really observed whilst the study is done is then put on top. So I think, in a sense, maybe yes. We do make concession for that.
PN1316
You also accept that there's been changes to the layout at the RDC?‑‑‑Yes.
PN1317
You also accept that there's been changes to the nature of the allocation, how overtime is actually allocated? Not the qualification, but how it's actually allocated?‑‑‑Can you help me understand that?
PN1318
Well, in relation to overtime, you said that the afternoon shift - there is no afternoon shift overtime on a Saturday?‑‑‑That's not about an allocation, that's just about our improving capacity and therefore no requirement.
PN1319
Yes, so therefore the requirement for overtime for that afternoon shift on a Saturday isn't about how the allocation occurs. There is no longer a requirement for overtime at all?‑‑‑Correct, yes.
*** KRIS TALEVSKI XXN MR BAARINI
PN1320
So do you accept that these things, as well as the policy that you've brought about for absenteeism and the KPI have helped bring about positive change to the workplace over the last 12-odd months?‑‑‑I believe - I sincerely believe so, yes.
PN1321
Do you accept that those productivity gains that you've achieved can continue to be achieved without the need to bring about qualification for overtime hours for weekend work?‑‑‑So your question is if we stop the allocation - sorry, the eligibility programs that we could still make those productivity levels?
PN1322
Yes?‑‑‑Well that's - I don't know that to be a fact, except that this is a decision that we made collectively to put in, so it becomes much more transparent.
PN1323
And you could continue to improve productivity in the workplace through a variety of means that doesn't have to do anything with qualifying people for eligibility for overtime work on weekends?‑‑‑Well, I'm not sure to be honest.
PN1324
But you won't say that that's not able to be done from a managerial perspective, introduce different ideas and think about new ways of continuing to improve, continuous improvement?‑‑‑And we are now on a journey of other areas.
PN1325
Would you accept that since you inherited - Linfox inherited this contract back in 2007 from Westgate Logistics, that these changes are a wholesale change that the RDC hasn't seen since you have got into the place some seven or eight years ago?‑‑‑Which I believe that the majority of the workforce deep down believe are the right changes for sustainable renewal of the contract.
PN1326
And credit must be to the new management down there, including yourself who came in in June 2014 and saw that change needed to occur for this place to be turned around?‑‑‑Well, not only myself. I mean, certainly the individuals sitting to your right also understood change needed to happen. Luke McCrone.
PN1327
And so given that the change that needed to have occurred did actually occur in 2014 and one of those things that was used was the KPI scheme, not exclusively or solely meant that productivity was, for the first time, being challenged directly by the company, the union and employees and hence in the last 12 months you've seen a change?‑‑‑So - well, no, not so much challenge. I think the one of the articulation of productivity requirements is was done transparently, but also then the professional calculation of what that level should be was also conducted by qualified engineers by the request of shop floor individuals, HSRs.
*** KRIS TALEVSKI XXN MR BAARINI
PN1328
And so if you continue to turn your mind to improving productivity moving forward at the RDC and continuing to improve the workplace, you could continue to find savings and improve efficiencies without needing to resort to qualifying employees for overtime on weekends?‑‑‑That's a - I think a managerial decision that needs to be taken in context of what is going on at the time. At this point in time, I see it as a relevant managerial tool.
PN1329
Do you accept that there is sufficient overtime hours for continuing to provide full‑time employees that want to do overtime on weekends and still use outside labour hire?‑‑‑So there are only, you know, 30 to 40 individuals out of, call it, 500 that do not qualify.
PN1330
Do you accept that there is sufficient overtime hours for you to continue to provide for those that want it, whether they qualify or not, overtime hours and still use outside labour hire?‑‑‑There is a requirement to use outside, yes.
PN1331
And that there is still additional hours available for you to provide reasonable overtime for those that seek it from the full‑time proportion of the workforce?‑‑‑Yes, seek it or qualify or ‑ ‑ ‑
PN1332
Not qualify?‑‑‑Yes, yes. Well, I think so. I think generally, yes.
PN1333
You keep on mentioning 30 or 40, but that 30 or 40 of the 500 that you make mention of aren't necessarily the same 30 or 40 people, is it, Mr Talevski?‑‑‑I don't have that information.
PN1334
Well, you've attributed it, so I thought you might be able to tell me?‑‑‑Well, I can't tell you the individual names from week to week. It would be ‑ ‑ ‑
PN1335
That's the point that I'm making?‑‑‑It would be unreasonable for you to ask me that question, really.
PN1336
That's the point that I'm making, which I think you accept, that that 30 or 40 does vary from week to week?‑‑‑No. Look, I really don't know, but I would suggest my gut feel, it would probably be the same core people.
PN1337
That's the gut feel, not the evidence?‑‑‑Well, I mean, we have opinions that are very similar, aren't they?
PN1338
So it's possible that that 30 or 40 over a four-week period so it's 30 or 40 in any week over four weeks. It could be 100 plus or in the hundreds. Is that correct?‑‑‑No, no, no. No, you know what, rather than saying "gut feel" I'm going to say it is in my opinion that I believe it would be the same or very 90 per cent of them would be the same people.
*** KRIS TALEVSKI XXN MR BAARINI
PN1339
If people are meeting the pick rates in the majority and are therefore qualified for overtime based on your regime, and you're meeting your budget and surpassing it, and there's sufficient hours for you to provide overtime for those 30 or 40 that are missing out, why not just provide it to them?‑‑‑Because I would like to be transparent and the programs that we've put in place are designed to be transparent and allow people to work at the capacity allow people to come up to capacity.
PN1340
Yes?‑‑‑So I think they're programs that we made as a as a management group and as a consultative group to meet the best fit for that warehouse.
PN1341
Even if the union believes that it's contrary to their obligations to maximise their capacity?‑‑‑Well, this is the discussion today, but the discussion - we collectively came up with that regime and we consulted.
PN1342
No further questions.
THE COMMISSIONER: Thank you, Mr Baarini. Mr Williams, is there anything further?
RE-EXAMINATION BY MR WILLIAMS [11.04 AM]
PN1344
MR WILLIAMS: Just one question, Mr Talevski. Mr Talevski, early on in cross‑examination this morning, Mr Baarini made a comparison between and a hypothetical one what his capacity might be and what Mr Taplin's capacity might be based on levels of physical fitness?‑‑‑Yes.
PN1345
Mr Baarini might have been a little hard on himself there. Do you believe that ‑ ‑ ‑?‑‑‑Or he was extra complimentary to me.
PN1346
Do you know firsthand ‑ ‑ ‑
PN1347
THE COMMISSIONER: Has this got anything to do with the Hawthorn effect, Mr Williams? I'm having trouble keeping up at this stage.
PN1348
MR WILLIAMS: Henceforth to be known as the Fremantle effect, Commissioner.
*** KRIS TALEVSKI RXN MR WILLIAMS
PN1349
Mr Talevski, do you have personal knowledge of individuals in your workplace who do not have the same level of physical capacity as Mr Taplin, but nonetheless are able to meet their pick rates, their reasonable pick rates?‑‑‑Oh, yes.
PN1350
Could you give me an example of somebody who would be a good example of that?‑‑‑So Leonie is a 63‑year‑old woman much more frail and petite and obviously 30 or 40 years older than Jamie and she would regularly meet and exceed the pick rates and there are a number of individuals that fall in to that category, but that one specifically sticks out in my mind.
PN1351
Does your system have the capacity for modifications in the case of situations where employees either temporarily or permanently are genuinely physically incapable of meeting the pick rate?‑‑‑Absolutely.
PN1352
And how does that work?‑‑‑So that works in a couple of different ways. So it is our duty we have a duty of care and we have an obligation to ensure that if a person is injured, we would not put them in the pick. We would grade them into the pick firstly and not only we would grade them into the pick in terms of hours, we would regrade them over a period of time to get up to standard.
PN1353
Yes?‑‑‑So that occurs that way. If and there's been many occasions where people are not eligible for overtime for whatever reason and they believe that there was a couple of times during that week, whether they've had delays that are not directly attributed to their fault, and they've approached their supervisor and the decision to allow them to come into overtime has been overturned to the positive, ie, "You can come in because we saw that there was a problem that week, whether it be in the orders or there's been a spill of some description," that has inhibited them from getting the standard so we make concessions every week.
PN1354
Thank you. No further questions.
PN1355
THE COMMISSIONER: Thanks very much, Mr Williams.
PN1356
Thank you very much, Mr Talevski?‑‑‑Thank you.
You may now stand down. You're obviously free to remain in the room now if you choose.
<THE WITNESS WITHDREW [11.07 AM]
*** KRIS TALEVSKI RXN MR WILLIAMS
PN1358
THE COMMISSIONER: Mr Williams, that completes the evidence that you seek to rely upon?
PN1359
MR WILLIAMS: That's the company's case, Commissioner.
PN1360
THE COMMISSIONER: Thank you very much. Mr Baarini, are you in a position to continue with your closing submissions at this point or would you like a brief break?
PN1361
MR BAARINI: I am.
PN1362
THE COMMISSIONER: Yes, thank you.
PN1363
MR BAARINI: Thank you, Commissioner. Commissioner, there's been a lot of evidence, including this morning, about the KPI scheme itself and you're right to ask the question: why would we press the issue under cross‑examination. The point that we make is this that clause 16 does apply full stop. We see it as a positive obligation on Linfox. It's not like the 2007 and 2000 local Westgate agreements that provided some aspirational wishes of Linfox as it relates to the trucking division or operations of its drivers.
PN1364
I'm not sure whether you've seen a copy of the 2007 or 2008 Westgate Linfox agreements for the RDC site that I took Ms Neill to, but I'm happy to show you that, if that assists, which was handed to Ms Neill. You might recall Ms Neill referred to those agreements in her statement as being the basis upon which the utilisation clause came into being and talked about the genesis being the trucking division of Linfox and really they needed to manage the allocation and the efficiency of the use of their drivers more properly and therefore utilisation clause.
PN1365
If you look at the 2007 document that I've just given you, that's headed under Other Matters and it's also a wish of Linfox as to what it wishes to do in relation to those drivers. That is a completely different clause, in my submission, to the clause that is now before us in clause 16 of the national enterprise agreement. They were local agreements. They were state based agreements and what occurred in 2011 and then 2014 under the current national agreement is for the if you like, an overhaul of the provision in its entirety at clause 16.
PN1366
Now, clause 16 of the enterprise agreement, which is the subject of the dispute, is unlike that provision that you've just read because it actually doesn't qualify or limit who it operates to. My friend for the company sought to say that there are some provisions like clause the drive on, which I'm about to find 29 of the EBA, which is headed Driver Policy are some examples in the enterprise agreement that talk specifically about who it is to apply to. But even when cross‑examination occurred, either Mr Aird or Mr McCrone didn't concede that it may not actually apply, depending on how it's used, may not necessarily apply just to drivers, particularly clause 31, which talked about truck monitoring devices or:
PN1367
Employees will fully cooperate, following appropriate training in relation to new technology.
PN1368
Because as Mr McCrone said, sometimes it could be a forklift driver. It could be a number of people. The point that we make, that even if Mr Williams is correct that some provisions in the enterprise agreement by their very wording is limited to specific categories or clarifications or jobs in the enterprise agreement, clause 16 has no wording that would identify it as being limited to just drivers. Even if Ms Neill is right that its genesis and its history is about utilisation of truck drivers, that's not reflected in the current words that are before you today, Commissioner.
PN1369
This is even so more evident, given that we're talking about productivity, KPIs and overtime because some of the things that are included just before clause 16 is clause 15, which are the objectives of this agreement, one of which at 15.1E says:
PN1370
Remove inefficient work practices and processes in all areas.
PN1371
And I think I took Ms Neill yesterday to accept that it applies in all areas of Linfox's operations not necessarily to drivers or to warehouse employees to ensure flexible, timely, reliable delivery of services to Linfox and its customers. So it's pretty clear that this agreement, which was accepted under cross‑examination from Ms Neill, that this is an agreement that applies to all employees of Linfox, whether they are drivers or warehouse employees.
PN1372
Clause 16 is headed Obligations of Linfox. It isn't headed Linfox Wishes. It's not headed, you know, Aspirational Goal. It's not headed Utilisation Clause, for that matter. It's not headed Maximum Capacity to 38 hours. It's not headed Ordinary Hours Maximum Capacity. It is headed Obligations of Linfox and we say that the words, the actual words, as has been determined in previous case law, which I've referred to in my earlier submissions in writing, TWU v Linfox [2012] FWAFB, the actual provisions of the agreement are determinative.
PN1373
My friend will try to play it both ways. He'll say, as he's already said in his submissions, that this provision does not apply to truck drivers, but if we're wrong about that if we're wrong, well, there is some ambiguity as to how it applies and that ambiguity arises as to what best endeavours means, what maximisation of full‑time proportion means, what "to their full capacity" means, the implication of the word "contract carriers" in that provision and, therefore, we move on to the Golden Cockerel principles that everyone is well aware of.
PN1374
The point that we make is Linfox needs to be clear as to what its position is in relation to clause 16. You can't say that it's clear on one hand that it doesn't apply to warehouse employees, but guess what, if we're wrong, it's now unclear as to how it actually applies to warehouse employees. We say the line is so clear that the clause must, and does, apply to warehouse employees and it applies because it's been conceded, despite the submissions made by my friend in writing and verbally, that it's conceded by Ms Neill and again I think Mr Talevski today, that clause 16 clearly applies and covers warehouse employees.
PN1375
The question is though if Linfox falls over that hurdle to say that it doesn't apply and therefore it does apply, which we now move on to, the question is how does it actually apply? And much of the evidence before you, Commissioner, either evidence‑in‑chief or cross‑examination, was pretty clear from the union's perspective, but I make this observation for your own thinking, Commissioner, Mr Aird was unshaken in cross‑examination. His evidence was clear. It was clear in his witness statement and again it was consistent and clear in his evidence before you yesterday.
PN1376
He was asked some pretty tough questions and he was pretty clear as to what the principles were of the union and their values in relation to job security, in relation to trying to protect people's work rights and conditions and, sure, as he said, it's not drafted legally so that it answers every question and every scenario, but he said it was pretty clear from his perspective, given that New South Wales had a history of disputes, not necessarily disputes that might have been lodged at the Fair Work Commission, but there were disputes locally that meant that overtime had been an issue and therefore they were pretty clear when he introduced the 2004 template as to the origins of this particular provision that is before you today as to what that particular provision meant and how it was to be applied.
PN1377
From his perspective, and I think his evidence was unbroken, he was pretty clear that not only included protection in relation to putting an obligation on Linfox to use its best endeavours. Now, I think he said that they wanted to make it an absolute obligation and I think there was some compromise, he said, after some tough negotiations to change the word from a "must" to "use best endeavours" because I think he recognised that that absolute obligation was going to be very tough and he couldn't get over the line for the purposes of the EBA negotiations, so he was happy to go back to using best endeavours, but what he was pretty clear on, unequivocally, was the maximisation of the full‑time proportion of its workforce, including utilisation of full‑time employees to their full capacity; one included job security.
PN1378
We've heard today from Mr Talevski and I think Ms Neill to my surprise yesterday, that people, Ms Neill said, could be disciplined and could be terminated, unless I'm mistaken about that evidence, but I think she was I said to her, "Well, that's the first we've heard about it," and she was as surprised as we were, but even more surprising this morning, Commissioner, is this: it now also means from Mr Talevski's evidence that it the KPIs are now an inherent requirement of the job.
PN1379
If that evidence is accepted, that challenges the obligation directly that is imposed on the company in clause 16 as to its obligations to use its best endeavours to achieve the maximisation of the full‑time proportion of its workforce, including utilisation of the full‑time employees to their full capacity. I'll tell you why it challenges it, because these employees up until this scheme was introduced had been working uninterrupted. There's been no evidence about performance specifically to any employee. No one has been pulled up and said, "Hey, your performance or capacity has been below standard." There's been no evidence other than what we've heard from Mr Talevski about his assumptions about some cultural behaviours about people deliberately he says deliberately and there's been no evidence about that at all to suggest that.
PN1380
We've got now for the first time people being challenged directly. The security of their employment is now being challenged directly by virtue of the KPI scheme, which we say totally contradicts what the obligation is of Linfox because clause 16, by the evidence that's been given by Mr Aird is about the values that the union takes very clearly into EBA negotiations and that is job security, protection of current terms and conditions, enhancement of those terms and conditions, which includes reasonable overtime.
PN1381
THE COMMISSIONER: Mr Baarini, that's looking at the matter on an individual employee basis. I mean, there's been, I think, evidence in this matter and I think it's pretty much uncontested evidence and in fact I think Mr McCrone might have indicated in cross‑examination that - I think he might have used the word "massive" in terms of the productivity improvements that have resulted from the changes that have been introduced at the distribution centre. Is it not a possibility that if those changes hadn't have been introduced that the contract may have been lost and there could have been significant job losses at the distribution centre.
PN1382
So on the one hand, I accept what you say about the previous practices no long necessarily having application in terms of full‑time employees having a walk up start to overtime and some employees impacted by those changes, but couldn't possibly if the other scenario that I've just spoken about if that have had panned out there could have been massive job losses and a loss of contract at the site?
PN1383
MR BAARINI: I appreciate the point and that's always a matter that hangs over our head every time we're before the Fair Work Commission a company, whether it be Linfox or somebody else, will often use that as the basis of their operational requirement to bring about some change. The point that we'd make and I think Mr McCrone said it when challenged directly was this ‑ ‑ ‑
PN1384
THE COMMISSIONER: Yes. I'm not trying to make the point as a threat. I'm just simply saying that if you're looking at what is in the interests of the workforce at the distribution centre, then okay the previous and I'm not saying it necessarily was going to be the logical conclusion, but the previous practices may have remained in place. The contract might have been maintained. I don't know, but there's been some evidence, or at least some opinion, that suggests the contract might have been lost and job losses could have resulted.
PN1385
MR BAARINI: A couple of things I'd like to say about that. As I said, Mr McCrone did dispute that in his evidence about Linfox and other employees using that as a basis for bringing about change. (2) I think I've objected to those two paragraphs in Mr Talevski's statement about what comments Coles allegedly said to him in those meetings about, you know, losing the contract and the need to bring about significant change. We didn't have a chance to obviously challenge the veracity of those statements that are attributed to Coles. There was no evidence brought by Linfox today to support Mr Talevski's statements, so we'd ask the Commission, invite the Commission, to really not give them any significant weight in the absence of supporting evidence about those matters.
PN1386
Thirdly, and I think it was conceded from Mr Talevski today under cross‑examination that you could continue to bring about those productivity changes. You don't necessarily need to connect it to people's job security. You don't need to connect it to their overtime. You don't need to connect it to the inherent requirements of the job.
PN1387
THE COMMISSIONER: As you said, I don't think that there's any evidence yet that employees are being disciplined and ultimately terminated for not meeting the standards that are currently placed. I accept all that you say as well about the evidence that relates to the contract and whether that might have been in jeopardy. I think the one piece of evidence, though, that does seem to be uncontroverted is the fact that there had been significant productivity increases, improvements, at the distribution centre over the past six or 12 months.
PN1388
MR BAARINI: And we've welcomed them. I think you might have heard Mr McCrone say that in his evidence and as I said to Mr Talevski, much to his appeasement, you know, "Take the glory. Take the credit for bringing about change," because it was only when Mr Talevski and the new managers came in that there was a wholesale change to the RDC site since Linfox bought the business back in 2000. No wonder there's going to be productivity gains and we're all support of it, Commissioner.
PN1389
The point that we make is the obligations in the enterprise agreement that require the union and the company to consult about bringing about efficiencies and productivity gains, but there is also, unfortunately for Linfox in this case, an obligation in clause 16 from the union's perspective that says you must use your best endeavours to maximise the full proportion of your workforce. Now, if maximising the full proportion of your workforce means introducing pick rates, well I think the evidence has been that Mr McCrone and the union has been supportive about bringing in pick rates at an industrial local level without conceding the legal principle.
PN1390
I think Mr Talevski said, "Sure. Local agreements get done all the time without people conceding their legal principle. The point is that the company in this case, unfortunately, Commissioner and this is a very important point actually went one step too far. They actually tied the pick rates to a fundamental right collectively to overtime that's available to the full‑time employee proportion of its workforce and clause 24 of the enterprise agreement makes that very clear that there is to be a ratio of full‑time employees to non-full-time employees, including casual, permanent or part‑time employees, shall remain four to one.
PN1391
So there is some clear indication in the enterprise agreement in the two binding parties that there is to be a ratio for job security purposes. More importantly reflected, as we say, in clause 16 which says: look, if you want to bring about those changes in the other areas of the EBA, productivity gains, we'll help you do it. We'll help you, you know. We'll consult with you. You consult with us. We'll reach agreements. We'll help you meet the continuous employment obligations that are provided in clause 17 immediately after clause 16 of the enterprise agreement and that is:
PN1392
To maximise the efficiency and prosperity of Linfox for the benefit of their employees
PN1393
Commissioner. That's important, not to the benefit of outside labour hire, to their employees
PN1394
customers, shareholders and the community.
PN1395
And C:
PN1396
To continue to develop and maintain the most productive, safe cooperative, harmonious working relationship possible by promoting trust -
PN1397
trust
PN1398
and continually striving to improve communication at all levels.
PN1399
Yes, the union is not objecting to that at all. We in fact support it. The union has been out there trying to as it's been provided in Mr McCrone's statement - in appendices and certainly in evidence, there's been newsletters going out saying, you know, "Let's try to resolve this." There's been ballots that have been had. Despite the NUW canning the TWU's approach this, the union has actually complying with the rest of the enterprise agreement in relation to proving productivity and efficiency, Commissioner.
PN1400
But what clause 16 does, in my submission, is it creates the obligation it doesn't create the obligation on the TWU. It doesn't say, "Obligations of Linfox or the TWU." It doesn't say, "Obligations of the parties." It says, "Obligations of Linfox." When you think about it, if you take out that clause, how else is the union going to tackle this issue about people losing overtime because we say clause 16 says it's got to use its best endeavours. You could continue and I think Mr Talevski at the end conceded this, you could continue to bring about productivity gains, Commissioner, which the company has been doing at a rate expectancy pick rate less than 100 per cent.
PN1401
So the company hasn't even hit 100 per cent and they're achieving their productivity gains. Can you imagine if they went to 100 per cent? We don't know what the outcome might be for more than 40 employees. So the point that I'm making is you can still support productivity gains and efficiencies without penalising those that are unable to meet the expectancy rate because when the employees became employees of this company, or its predecessor, no one said to them, "Hey, forget about your overtime unless you meet some KPI."
PN1402
You could be great and everything else like Mr Vassallo and that's why Mr Vassallo became such an issue in this debate because the company sought to portray Mr Jamie Taplin, our witness, as a star candidate for the KPI. The point that we're making is don't use him as the star when he and Mr Vassallo from the union's perspective are the same. They work 38 hours a week. They work their ordinary hours. They get paid for it. There is no performance issues. There is no misconduct issues. They have been there for eight or nine years. For all equal purposes, they are complying with their duties as employees of the company. Since when did it become an issue that the KPI is so serious enough for the company to say, "Well, guess what? You're not actually working to capacity any more. You're actually not within the 38 hours working to capacity and despite us not issuing you with any warning letters, despite us not bringing you and counselling you individually, despite us not telling you we've got a problem with you, we might have a problem with the whole place, despite us trying to help you with the ATRs and trying to improve your techniques, guess what? If you're still not up to the standard," it was conceded by Ms Neill yesterday and again Mr Talevski, "guess what? Your job might be on the line."
PN1403
THE COMMISSIONER: I think the company has made the point it's gone down a constructive path in terms of making the changes that it has rather than adopting a punitive approach. It could have gone down that path. Can I just, in terms of understanding your submissions - I'm not by any means being critical about them, I'm just trying to understand them, in terms of the wording in 16(1)(a), your submission, as I understand it is simply that that provision is essentially about employees having - full‑time employees, and that's 80 per cent of the total workforce - full‑time employees having an unlimited ability to work ordinary time hours and to work available overtime hours if they choose to do so. Am I correct in understanding your interpretation of that?
PN1404
MR BAARINI: The way you've characterised it, Commissioner, with respect, is too broad and is fraught with danger because if I answer in the positive, that may be a reading that you may not necessarily read into that clause. What I say is this: the obligation on Linfox is (1) an obligation on Linfox. That's the heading. (2) "Linfox shall use its best endeavours to achieve" - so it's in the positive, not in the negative. It's about achieving, not disempowering, right - "the following." It's pretty clear. "(a) maximisation of the full‑time proportion of its workforce."
PN1405
It goes on and says, comma, "including". That's an inclusive, not an exclusive, so it includes; it doesn't limit it to. It may include other things, but it specifically says "including". It doesn't override the maximisation of the full‑time proportion. In fact you probably don't need to state "including utilisation of full‑time employees", but the fact that it is added in is an additional point that supports what we say the first sentence means, or the primary objective, which is maximisation of the full‑time proportion of its workforce.
PN1406
THE COMMISSIONER: So in terms of the explanation of my understanding of your position, you're saying, are you, that it goes further than my understanding? It's not just about hours of work and access to ordinary time and overtime hours. The maximisation of the full‑time proportion of its workforce could go to other matters, as well.
PN1407
MR BAARINI: That's correct.
PN1408
THE COMMISSIONER: So it's a more expansive interpretation than the one I was indicating.
PN1409
MR BAARINI: Correct.
PN1410
THE COMMISSIONER: Yes, I understand that. What would be some other examples of things that would fall under the category of maximisation of the full‑time proportion of its workforce?
PN1411
MR BAARINI: Well, maximisation of the full‑time proportion of its workforce might mean that they seek to engage them in work other than the work they're doing.
PN1412
THE COMMISSIONER: Additional training.
PN1413
MR BAARINI: Additional training.
PN1414
THE COMMISSIONER: Or additional work opportunities.
PN1415
MR BAARINI: Correct. The other point to make is this - and I think I put it to Ms Neill - it would be absurd to read "maximisation" as being maximisation of the 38 hours that employees are working to. You can't have an obligation on Linfox - - -
PN1416
THE COMMISSIONER: You don't accept that it can be categorised as simply limiting the obligation to ordinary time hours? It has got to extend beyond that if you're talking about hours?
PN1417
MR BAARINI: Correct.
PN1418
THE COMMISSIONER: Yes. I'll let you make further submissions about this if you choose, but I think I understand your position in regard to 16(1)(a). You have already made reference to the fact then that it doesn't talk about "Linfox must achieve the following. It must use its best endeavours". Presumably that introduces some discretion. It can mean that there could be a range of considerations that are taken into account when Linfox considers how it's going to best maximise the full‑time proposition of its workforce.
PN1419
Doesn't that open up, I guess, some of the comments that I was making earlier, that Linfox might decide to take a long‑term view that rather than leave things as they are which might be a business that's deteriorating and is on a downward path, it might decide, "Well, we're going to make changes in terms of our best endeavours which we believe in six, 12, two years' time are going to deliver a business that is much more profitable, much more productive, is going to create a lot more jobs and a lot more job opportunities for those that are working for that business."
PN1420
MR BAARINI: The union is very supportive of that. There has been the evidence that's before us - - -
PN1421
THE COMMISSIONER: Unfortunately, I've got no doubt that you are - and I appreciate the comments that have been made, particularly about Mr McCrone's involvement in working to assist in some of the outcomes and obviously the employees, as well. We've got to interpret the words in this clause.
PN1422
MR BAARINI: Yes. I guess to help you interpret it, Commissioner, is this - and that's why it was important to read the entire provision in its entirety. That is, it actually has the words "to their full capacity". It doesn't have it "to their capacity", so there has got to be some weight given to the word "full". "Including utilisation of full‑time employees to their full capacity," not "to their capacity", because full‑time employees to their capacity is 38 hours.
PN1423
If you want to achieve, you know, productivity, well, of course you introduce big rates and you get them working to capacity; but full capacity adds an additional dimension, if you like, as to what the word "full" means and why it's actually in there. What we say is it adds more credence to our argument that it has got to be more than just the ordinary hours that they're engaged to work to, Commissioner. The other point is this: it says "before", so it gives an objective and then it says - - -
PN1424
THE COMMISSIONER: Sorry, where are we now?
PN1425
MR BAARINI: Now it says "before".
PN1426
THE COMMISSIONER: "Before"?
PN1427
MR BAARINI: "To their full capacity before".
PN1428
THE COMMISSIONER: Yes, I see "before".
PN1429
MR BAARINI: It says -
PN1430
before casual, part‑time, labour hire employees or contract carriers are engaged or work is contracted out to other companies or businesses.
PN1431
So you've got to use your best endeavours and I think my friend has already provided some case law as to what "best endeavours" might mean objectively and subjectively. The point that we make about that is "best endeavours" at any reading has got to be reasonable. I accept that. we accept that the company is using best endeavours to achieve a productivity outcome that is in the interests of the company and the interests of the workforce, and the interests of their customer.
PN1432
It's not in the interests of the workforce to the extent that it doesn't actually provide the job security that Mr Aird was talking about and it doesn't actually provide "before casual, part‑time or labour hire employees", because those people are actually being used to replace the full‑time proportion of the workforce to do reasonable overtime hours that might otherwise be available to the full‑time employees at a cost. I think we've given some examples as to how much money is being lost by one of our members at the very least.
PN1433
The 30 and 40 people that are missing out week in/week out, are not necessarily the same 30 or 40 people, so the implication might be to those 30 or 40 individually, but it affects the group overall. "Best endeavours", Commissioner, could mean and should mean that, yes, go for it, Linfox. We'll support you, but don't do it at the expense of your full‑time employees who are otherwise complying with their obligations of employment. Don't do it at the expense of those people, because that is clearly created in the - - -
PN1434
THE COMMISSIONER: But that's expense if you only judge it on the loss of overtime for those - and I don't say that that's not significant. The evidence obviously of Mr Vassallo is that it is, but the evidence of Mr Vassallo and Mr Taplin is also that their performance seems to have quite significantly improved in each case, as I understand it has for other employees.
PN1435
MR BAARINI: We're not discounting that. In fact the company should have probably done something about it years ago to help improve the capacity and the performance of those people in years gone by; but we're not anti or against bringing in measures to help workers achieve it. The point that I'm making is, as Mr Vassallo said in paragraph 6 of his witness statement:
PN1436
I don't believe I'm capable of picking at 100 per cent of the target week in/week out and the inability to work any overtime will make life a lot harder for me.
PN1437
So the point I'm making is they have introduced a qualification to eligibility for overtime which didn't exist previously and attached it to productivity. What we say is - and I think it was conceded by Mr Talevski - you can actually achieve productivity or continue to achieve it without associating it to overtime, because the overtime, whilst it's not worded in clause 16, is what you would get and what the company has been doing to get outside labour hire. This says you've got to maximise it before you do that.
PN1438
THE COMMISSIONER: I accept that. There are obviously a whole range of ways in which productivity can be improved. It doesn't seem to be in doubt in this case that the changes that have been made in terms of, as you say, qualifying an entitlement to overtime, have been a fairly powerful measure that has been certainly a significant part of the changes that have been - the outcomes that have resulted at the distribution centre.
PN1439
MR BAARINI: I'm asking the Commission not to fall into the trap of believing, based on a gut feeling that Mr Talevski might have, as to what might happen if the KPI was to be taken away or these changes were to somewhat stop. The point we make is that we're not asking for those changes to stop. What we're asking is that it not be associated to eligibility for overtime.
PN1440
THE COMMISSIONER: Well, yes, it is one and the same thing though, isn't it?
PN1441
MR BAARINI: No, you can continue to encourage people to do ATRs. Give them training, support them, counsel them, help them achieve their productivity, as Mr Talevski said that he would do over the next, you know, period of time, as opposed to taking a punitive approach; they would continue to support their employees because they're very proud of the turnaround and that's great.
PN1442
The point we make is you can't give them a carrot and stick, and they're actually putting a stick at the same time by limiting their opportunity to do overtime that is still otherwise available today, Commissioner. If all the people that wanted to do overtime, the full‑time employees - it was made available to them - there would still be that and some to the outside labour hire employees.
PN1443
The final point that I'd want to make is that in relation to the history and the construction in your consideration as to clause 16, with respect to Ms Neill, I'd ask the Commission to treat her evidence as not very convincing, as opposed to Mr Aird who was fairly strong as to the evidence that he gave about the genesis and the insertion of that particular clause. There was, for whatever reason, in relation to TW5, the deleted box. No‑one could give an explanation as to how it came in or how it came out. Nevertheless, what is not contested is there is a box at that particular clause in that draft, the TWU5, which says those words are to be deleted -
PN1444
except where doing so is commercially unviable and not in the best interests of the company.
PN1445
Now, despite Ms Neill's evidence that in the negotiations Linfox sought to change or propose re‑wording, she couldn't actually tell us what the proposal was going to be. Really it was based on trying to remove some ambiguity. The point is if there was ambiguity, it still remains because they were unable to clear it and we don't know what the proposed change was going to be.
PN1446
THE COMMISSIONER: I haven't drawn any conclusions at this stage from that. I mean, without looking at the exhibit now, the box is attributed to the TWU legal officer in New South Wales, isn't it?
PN1447
MR BAARINI: That's correct. The point we make is that if it's deleted, it's obviously not included in the clause. In the absence of Linfox then or even in the witness box yesterday saying, "Well this was our proposal. This is how we were going to change it," all we've got is a log of claims from Ms Neill's statement that says "proposed re‑wording of clause 16", but it doesn't actually say what the proposal is and nor could Ms Neill yesterday actually tell us what the proposal is.
PN1448
She couldn't tell us what the ambiguity is. She couldn't tell us what the proposal was that Linfox has and she can't explain why that particular box was included and deleted in the draft agreement. The point that I'd make is that her evidence at the very least was unconvincing and unclear. Mr Aird's was consistent and strong as to how that clause came about, and any predecessor that might have occurred in 2007 or 2008 or, even as Linfox says over the last 20 years that's what they understood that utilisation clause to mean, well, that might be great but that relates to a clause that was replaced in a new national enterprise agreement in 2011 by clause 16, Commissioner. Thank you.
PN1449
THE COMMISSIONER: Thank you, Mr Baarini.
PN1450
MR WILLIAMS: Commissioner, there is a written submission so I can take that as read and I need not repeat it. This is a private arbitration and your jurisdiction comes from section 739 of the Fair Work Act. I only make one point about that. That is that under section 739(5), it's very clear that the Fair Work Commission must not make a decision that is inconsistent either with the Act - must include the NES - or a fair work instrument that applies to the parties, which obviously includes the Linfox National Agreement.
PN1451
Your task is obviously to resolve the dispute before you, but you have to do so in a way which is not inconsistent with the enterprise agreement. That's the only point I want to make about the jurisdiction of the Commission. I do want to dwell on the true implication of the relief which the TWU seeks. The position is that Linfox has no positive obligation to offer overtime to any employee. The only qualification to that principle is that the Fair Work Act obviously would prevent Linfox from withholding it for an unlawful reason. No unlawful reason is suggested.
PN1452
The national enterprise agreement doesn't deal with overtime. It defaults back to the Transport and Distribution Award which is a wholly unremarkable clause. It certainly says nothing about Linfox's obligation to offer overtime. It doesn't suggest it has such an obligation, but simply provides for payment terms if it does offer it and if it's worked. The position under the enterprise agreement plainly is that Linfox is not required to offer overtime in any circumstances to any employee.
PN1453
What is now suggested in these proceedings is that Linfox should be required, as a positive obligation, to offer overtime to employees to whom currently in accordance with the scheme - which we've heard about - for very good business reasons it is not offering overtime. In other words, to convert what should be and is, we say, a Linfox discretion into a mandatory obligation in the nature of an injunction. Linfox hasn't accepted that obligation. What it negotiated for in its enterprise agreements was to provide for no more than what the Transport and Distribution Award says.
PN1454
Employees also, even if offered overtime, have a qualified right to refuse the overtime certainly if it's not reasonable; and there is evidence that in relation to Saturday overtime for employees who have worked a Monday to Friday week, the assertion at the site is that they can only be required to work what they volunteered for. That may well be right in the context of employees being required to work on a different day to their normal days. In any event, Linfox has never suggested it has the right to direct employees to work on Saturdays if they don't want to.
PN1455
The orders are sought in the nature of a mandatory injunction which requires Linfox to offer overtime against its will to employees who are not meeting its reasonable business requirements - or its performance standards, to adopt the language in clause 22 - and that is in circumstances where almost certainly if the employees wanted to, they could refuse to work the overtime with at least substantial impunity. Under section 739(5), you would only impose that result on Linfox if it was consistent with the enterprise agreement.
PN1456
If that's what this enterprise agreement means, then experienced negotiators - some of them are in this room; Ms Neill, Mr Jones, their predecessors - will have to hang their heads in shame because it would approach the most uncommercial and unlikely obligation ever accepted by an employer in the history of this jurisdiction. They will have to go cap in hand to Mr Talevski to whom they are accountable, and his team at Truganina, and they'll have to say to them that measures which they have put in place to address what is demonstrably a significant problem of under‑performance and poor utilisation against capacity in order to maintain the business for their benefit and, I suggest, for the 500 employees' benefit - they will have to say to them they can't do that because they've negotiated for an obligation which prevents them from doing so.
PN1457
They will have to explain to Mr Talevski that all of what's implied and explicit in clauses 15 and 17 relating to productivity, viability, efficiency and prosperity, the entitlement which Linfox has in clause 22 to set performance standards and for employees to be required to meet them, are to be set wholly to one side in this particular instance because they are overwhelmed by clause 16.
PN1458
Now, that is an absurd proposition, unsupported by common sense, unsupported by the words of clause 16 which one will have noted contains no mention of overtime, wholly inconsistent with the rest of the enterprise agreement which is context readily available to you to assist in this task and not supported, as I come to, by any interpreted principle applied by the courts or by this Commission. This is in circumstances where, as Mr McCrone gave evidence, the TWU supported a proposal for an incentive scheme at the site which, if it had been accepted, would have entrenched the overtime qualifier which was apparently so controversial and said to be so unreasonable in these proceedings.
PN1459
Commissioner, my client does not criticise the TWU for bringing the matter before you. We operate in a slightly surreal world here. Common-sense industrial solutions are plainly being made far more difficult by the approach of another union who, for reasons which they might have to explain in some context, are not here and have made statements and created expectations which they have not brought to the Commission for examination.
PN1460
In another circumstance, in another world, a world which is less surreal, the TWU and Linfox might be going hand in hand to an award ceremony to receive an award for one of the most productive and business‑enhancing, employee‑enhancing turnarounds which the country has seen, but unfortunately we find ourselves in this Commission fighting about my client's capacity to put the initiative in place. There are some reasons for that, as I've said, for which we do not blame the TWU.
PN1461
It must be said, too, there is evidence that many of their members - for reasons which may not be good reasons - are unhappy with some aspects of the program that Linfox has undertaken and change, cultural change or change of any kind, is often difficult. Most people don't like to be told that their performance is not up to scratch. Most employees do not like to be told that they've got to improve and that there is a consequence if they don't.
PN1462
Most employees, dare I say, probably don't like submitting themselves to the ATRs; the efforts that the company has taken to improve their performance to an acceptable standard. No‑one likes being measured and reviewed to ensure that they are working hard enough. No doubt for some it has been a painful adjustment, although it must be said that as we've heard, the vast majority of employees are meeting the standard now and it also must be said - despite some criticism from Mr McCrone - that Linfox's consultation and communication process which has been a very mutually collaborative one, has been first class.
PN1463
It has not been helped by an apparent Guerrilla campaign conducted by a different union which has behaved in some ways quite poorly by inflaming unreasonable expectations and interfering with the process. So the TWU can at least be proud of the fact that it is they and not the NUW which brings the matter before you and it must be resolved. It is an issue which does have to be resolved and, as it turns out, has to be resolved by you.
PN1464
If you agree with me that the TWU claim, however and why it has been brought before you, is misplaced - or their claim in these proceedings - then the best way to assist all the parties, and I dare say the TWU, is for your decision to make it plain that Linfox has acted lawfully and appropriately. The proper expectation which this Commission has of all industrial parties at Truganina, is to accept that position and to cooperate in a manner consistent with the enterprise agreement - I point particularly to clauses 15 and 17 - and complete the journey of this company, and I include all its stakeholders, has embarked upon in the mutual interests of all concerned.
PN1465
The clause, Commissioner, which is said to require Linfox to offer overtime to under‑performing employees is clause 16, but the answer to the issue is actually not clause 16. The authority which Linfox has to identify under‑performance, to get performance standards and then to administer them in a reasonable way, comes from clause 22. There is an obligation in clause 22 for every employee -
PN1466
to comply with Linfox policies, procedures and rules in operation at the time.
PN1467
In clause 22.2, it is explicit that Linfox can have policies in relation to performance standards. The employees that we're talking about - now the significant minority at Truganina - are in fact obliged to meet these standards. The standards before you have been criticised to an extent, but they are not seriously in contest. The reasonableness and the appropriateness of them are not substantially in contest and, if they were, then one would have thought the TWU would not have supported the incentive program a few months ago.
PN1468
THE COMMISSIONER: I think when you say that - I mean, the evidence of Mr Vassallo is pretty clear in terms of the significance of the changes for him as an individual.
PN1469
MR WILLIAMS: There has been a change for Mr Vassallo and for some others. I contrast that to the obvious pride with which Mr Taplin has been able to meet the requirements. I would say this without wanting to sound at all patronising, but there are plenty of studies which demonstrate that when employees are told what the expectations are, given reasonable assistance to help them meet those expectations and then recognised and acknowledged when they do - which is what Linfox has tried to do - then that's the happiest place for an employee to be.
PN1470
We are at a particular snapshot in time. There is evidence of course that Mr Vassallo will, with more assistance, make it. One would hope he does. My client certainly wishes he does. It has taken no other action in relation to any issues he might have and it will share in the pride which no doubt he will have, as well. But, yes, it has had an impact, but I do maintain that Mr Vassallo's obligation under clause 22 is to comply with that performance standard and my client is trying to deal with that in the most mutually beneficial way possible.
PN1471
If an employee - and I suppose this happens - knocked on the door of Linfox Truganina and said, "Can I have a job here and what are the expectations I've got to meet?" there wouldn't be any controversy about them meeting the reasonable pick rates. They would just be required to meet them and no doubt they would accept that. What we are is a snapshot in time of a position were those standards were not being enforced or even articulated, and a situation where one hopes that the vast majority of employees there will be meeting them. We hope Mr Vassallo is in that category.
PN1472
In relation to clause 16, a clause which has nothing to do with overtime but is said to be the legal impediment, one thing that is abundantly clear - despite what my learned friend said about Mr Aird's evidence - is that it was not negotiated with a DC environment in mind. Mr Aird concedes that. Well, he doesn't concede it, but he says he's unable to comment on Ms Neill's evidence that it was negotiated originally in a trucking environment. You only have to read it to see that is so.
PN1473
When it was negotiated, firstly at least by Linfox, Linfox didn't operate any distribution centres. It was exclusively a trucking business. All witnesses will agree, I'm sure, that it does make perfect sense in the context of a trucking business. We certainly accept that the agreement applies in distribution centres, but - and Mr McCrone and I had a lengthy discussion about this - when you read the enterprise agreement, you do have to read it intelligently and with an eye, accepting that not all clauses apply in each context. There are clauses in the enterprise agreement which very obviously do not apply to distribution centre employees.
PN1474
Clause 16 is a little bit more difficult and of course that's why we're here. We do know that it wasn't drafted with a distribution centre workforce in mind. Despite the support from Mr Aird's evidence, it was essentially empty. It was a mixture of general statements which, when challenged, were very clear they should not have been said. Statements, for example, that there has been disputation about this clause in New South Wales. That turned out to be empty, unsupportable evidence to give and it was an attempt to mislead this Commission, in my view, and a number of what I described as political statements.
PN1475
He didn't give you any evidence of any admissible context which would suggest that it was drafted with the distribution centre in mind or certainly that it was drafted with the issue of overtime in mind. Mr Aird and his negotiation team had opportunities to make claims to that effect if they wanted to. They didn't. They have not suggested how it might done.
PN1476
Mr Aird said in his evidence that if Linfox had suggested the clause did not apply to DCs - which, by the way, we don't suggest - then agreement in relation to the enterprise agreement may not have been reached. One might also take for granted that if the TWU had suggested that the clause required Linfox to offer overtime to all employees irrespective of performance, agreement would not have been reached either. They have just passed each other in the night in relation to this particular issue.
PN1477
We accept that the clause applies. We accept that Linfox is required to use its best endeavours to maximise the full‑time proportion of its workforce, including in distribution centres, but we don't accept the rest of the TWU's proposition about how the clause should be applied.
PN1478
THE COMMISSIONER: Is that a side shift in your position, Mr Williams? I think your principal position was in those written submissions that the clause didn't have application to distribution centres. I take it you acknowledge it does have broad application to employees generally. I understand the submissions you make about the genesis of the clause, but - - -
PN1479
MR WILLIAMS: Commissioner, you're absolutely right. The written submission was a little bit - well, it did, I think, suggest that the clause might not or did not apply in distribution centres. We didn't intend to say that. What we intended to suggest was that the strategy in subparagraph (a) does not apply. We still maintain that, but the obligation to maximise the full‑time proportion of its workforce, which is the only positive obligation in clause 16.1, we accept does apply in the distribution centre. My witnesses all accept that, as well.
PN1480
If you look at the architecture of the clause, it is a clause of complexity. It's very short, but of some complexity.
PN1481
THE COMMISSIONER: I'm glad you acknowledge that, Mr Williams, because I think again your written submissions might have suggested that maximisation of full‑time - I think you might have said that this is a straightforward concept. That's one that I've been grappling with since - - -
PN1482
MR WILLIAMS: Well, it is - - -
PN1483
THE COMMISSIONER: It may well be. I'm open to - - -
PN1484
MR WILLIAMS: It is a straightforward concept in this sense: the full‑time proportion of the workforce is a question of high school mathematics. You have a full‑time workforce and then you have other people who are engaged in the business who are not in that category. You divide one by the other and you have - or one by the total number, if you like, and then you have the proportion - - -
PN1485
THE COMMISSIONER: Yes. I suppose it's not so much the numbers. It's more the word "maximisation" that I'm grappling with.
PN1486
MR WILLIAMS: Well, it's not a straightforward clause and I'm not suggesting that it's straightforward either in its wording or - certainly not in its application. This is not a situation where Linfox could even credibly be said not to be meeting the obligations under the clause. I will make a submission about that now on the basis of the mathematics. There may be some - I'm not sure if "irony" is the right word, but we have a situation where because of the increased productivity of the workforce - we say they practice in their full capacity - because McCrone agreed with me here. In fact he told me this. They have done away with their - some of the overtime which was worked during the weekend and they have eliminated at least one shift on Saturday.
PN1487
THE COMMISSIONER: Afternoon shift?
PN1488
MR WILLIAMS: That's right. And Mr Talevski's evidence is that extra shift was made up of, I think 50-50, between the permanent workforce and external labour and that shift doesn't exist anymore but the permanent cohort - if you like - the full time cohort who worked in that shift they're still there. So they're still the numerator or denominator or which one it is. But the casual employees who were engaged in that shift are not part of the business anymore. I think Mr Talevski said some of them are working on other shift but they don't work on that shift.
PN1489
So we can see that immediately that through this initiative if you take a high school mathematics approach to it Linfox has increased the full time proportion of its workforce. And it's not - there may be - I'm not sure if that's a powerful submission or not and that certainly doesn't answer all of the questions you have to ask yourself but it is notable that through this initiative that Linfox has met the primary obligation of clause 16. It cannot be said to have acted in any way inconsistent with it.
PN1490
Whether you take a short-term view or as you have suggested there might be another way to look at it - a long-term view. Even the current snapshot suggests that the full time proportion of the workforce has increased via this initiative.
PN1491
Now, our first position, which we say is the correct position is that although the clause does have application at the DC, the architecture of the clause is to impose an obligation and it is qualified by reference to the - thank goodness by reference to the qualified best endeavours - but that everything after the word "including" in the first line of sub-paragraph (a) is an example of a strategy and only that. An example of a strategy which neither diminishes nor increases the obligation which Linfox has to use its best endeavours to maximise the full time proportion of its workforce.
PN1492
And we say that is a strategy which was conceived and drafted purely in the concept of a trucking environment and makes sense only in the context of a trucking environment and that you could - it would be entirely open to you to construe clause 16.1, to acknowledge we concede the obligation to maximise or use best endeavours applies in the DC. But the example of a strategy which is no more than that does not. And that utilisation of employees - full time employees to their full capacity does not have a sensible application in the DC environment.
PN1493
But let's assume you don't accept me on that proposition and that we do have to give that clause or the strategy after the word "including" some meaning in the DC environment. At the very least in giving meaning to terms such as "utilisation" and "capacity", you would have regard to the genesis of the clause and the context in which it was negotiated, which Ms Neill has set out in her statement in significant detail and which Mr Aird does not challenge.
PN1494
That is that the context in which the strategy was conceived was in the context of a trucking business where the obligation which is - sorry the aspiration which is a mutual one between driver and employer is for the company's equipment and the company's employees to be utilised to their capacity, having regard to variable features which do not exist in the DC environment, such as the fact that there are variable runs which the truck drivers do.
PN1495
Fatigue guidelines are the legislation which lies behind them, which requires as Ms Neill gave evidence, good rostering practices to make sure that the equipment and the drivers are properly utilised and that you don't have drivers sitting for two hours in the depot while a contract carrier which still a concept recognised in the clause - certainly nothing to do with the DC - while a contract carrier was out doing the last run of the day. And that requires attention to rostering practices and strategies to ensure that the drivers are fully utilised.
PN1496
So let's try and give that a meaning. Sorry, I should say that I think we can take it for granted that clause 16.1 when negotiated and agreed in the trucking environment was not about sweating drivers, not about the sweating the drivers to work the maximum amount of time which they could lawfully work and that just is not a credible way to look at the clause. And it certainly wasn't about overtime when it was drafted.
PN1497
But if you try and move the concepts in that clause into the DC environment and not about overtime. It's to make sure similar in the trucking environment that the employee - and 500 of them - the employee and their forklift are best utilised in the most efficient and productive way up to their full capacity.
PN1498
And I'll come back to this in more detail but it's not about the hours that they work in the day or we might conceivably and hypothetically work in overtime. Capacity is not about that. Capacity is about utilisation. The word "utilisation" obviously appears. Utilisation of the employee and their equipment in the most productive way.
PN1499
And that's completely analogous to the way that it was conceived in the trucking industry. Always with the objective - the only positive obligation - of maximising the full time time proportion of the workforce. And we have a real life example of how the measure is taken to improve utilisation and improve the performance of employees to their full capacity has, in fact, enabled Linfox in this workforce to increase the proportion of its directly and full time employed workforce on a full time basis.
PN1500
THE COMMISSIONER: So you're saying are you, that it is more about training, that it's about the most effective utilisation that it's about improving the layout of the distribution centre to enable full capacity, full potential to be utilised. Are they the sorts of measures that you suggest that it's referring to?
PN1501
MR WILLIAMS: Yes. Yes, but my client wouldn't be in breach of the clause unless it had let that proportion slip. So it's not a positive obligation to go round and - you know - to be completely perfect in every aspect of those matters but it's an obligation not to fail in that way, in a way which means that you have to use external employees.
PN1502
So it's not about - it's not a command to the employer to be the most efficient DC manager. It is a command to make sure that it manages its business in a way which maximises the proportion of full time employees. As it turns out in the particular example that's what it's done.
PN1503
THE COMMISSIONER: Does it follow from that in that it provides some sort of safeguard to employees as well? Is that your submission that it's there to say that rather than - and I don't say it uses it critically or whatever - but rather than perhaps taking shortcuts or cost-cutting measures by utilising casual part time labour hire employees or whatever else that it's saying that the focus should be on maximising the capacity of full time employees.
PN1504
MR WILLIAMS: Yes.
PN1505
THE COMMISSIONER: So that that's where the focus should be. So that everything's done to ensure that they are the 80 percent.
PN1506
MR WILLIAMS: That's right.
PN1507
COMMISSIONER: That are being utilised as to require there to be to their full capacity as far as possible without those other options being utilised.
PN1508
MR WILLIAMS: That's correct. So that - and always of course with the qualifier of best endeavours.
PN1509
THE COMMISSIONER: Yes. Yes, right.
PN1510
MR WILLIAMS: Yes.
PN1511
THE COMMISSIONER: I mean whatever makes the best endeavours maximising the full time proportion they're not - they're always going to be discretionary, subjective views about what are best endeavours? What is maximisation of the full time proportion of the work force?
PN1512
MR WILLIAMS: That's correct.
PN1513
THE COMMISSIONER: Yes.
PN1514
MR WILLIAMS: And there's a point which needs to be made in that context and that is if Linfox had dealt with this problem that it had - and it most certainly had a problem - if it had dealt with it by deciding that in a particular area of the workforce where it might - let's say it might have identified that most of the problem existed of making them redundant - making that area redundant - and manning the forklifts with casuals or part timers without making a reasonable effort to get them up to full capacity - that might have been a breach.
PN1515
THE COMMISSIONER: Well, wouldn't it be precluded from doing that anyway by clause 24?
PN1516
MR WILLIAMS: Well, it might be if the proportion was breached.
PN1517
THE COMMISSIONER: Yes.
PN1518
MR WILLIAMS: Clause 24 is just a bright line you can't go over.
PN1519
THE COMMISSIONER: Yes.
PN1520
MR WILLIAMS: But let's assume they did this without getting above that proportion.
PN1521
THE COMMISSIONER: Right.
PN1522
MR WILLIAMS: Then then they might still be - have a problem under clause 16.
PN1523
THE COMMISSIONER: Yes.
PN1524
MR WILLIAMS: If they hadn't used best endeavours to try and solve the problem in a way which maintained that workforce. And that's what they're doing. They're using their best endeavours to get these employees up to capacity, their full capacity, so they don't have to look at those kind of measures. And for the benefit of everyone in this room they are succeeding. And it's a succeeding in a very profound way.
PN1525
The alternative of - perhaps, the four possibilities, one is which we I think unwittingly suggested in that clause 16 has no application at all. We don't press that. Didn't mean to press that. The second one is that the strategy in clause 16(1)(a) has no relevance to the DC. The third one is the one that I've just postulated, that is that capacity is about employees and their equipment working to their capacity or the utilisation. And then the fourth one is the one that the TWU presses on you, and that clause 16.1 has some reference or some relevance to overtime.
PN1526
There's no mention of overtime in clause 16.1 although there is another provision referred from the underlying award which does deal with overtime. We've made - said in our written submissions - and I gave Mr McCrone a good opportunity to understand my thinking and change my mind about this and he's been unable to do this, unable to change my mind.
PN1527
Any attempt to find a concept of overtime or overtime offering in clause 16 is unworkable. How do you judge an employee's capacity to work overtime when the employer has no obligation to offer it. And with some qualification the employee has no obligation to accept it.
PN1528
THE COMMISSIONER: I accept what - I understand the submissions you made in regard to that and I think they're included in the written submissions as well but is it not simply possible in response to that submission for the employer to simply approach arguably every full time employee and say, "Are you able to available to work overtime next Saturday?" And then that employee either says, "Yeh" or "Nay".
PN1529
MR WILLIAMS: Well - - -
PN1530
THE COMMISSIONER: Is it not possible for the matter to be dealt with in that way? In terms of - okay - their full capacity may vary depending upon, I guess, their desire, their availability to work overtime that's offered to them. Others may have other commitments of a weekend and say, "No" - they've got a different capacity. But their full capacity in each case is different but that is their full capacity. Whether they're available or not.
PN1531
MR WILLIAMS: It's very problematic to talk about an employee's capacity - full capacity - beyond the 38 hours that they've contracted to work. It's very problematic. An individual employee and, of course, clause 16 is short clause which applies in 150 sites but to be taken down to the individual level that means that you have to go. And sorry let me preface this with another submission. It is completely incorrect for Mr Baarini to suggest that clause 16 is an obligation on Linfox only. It is headed, "Obligations of Linfox" but if Linfox has an obligation to use best endeavours to utilise full time employees to their full capacity there must at least be an inferred obligation for employees to work to their full capacity.
PN1532
So that postulation - I know that's what Mr Baarini says and the argument deserves respect and it deserves a response but that would carry with it the concept that the employer has to go each employee and challenge them on what that full capacity is and then if the employee then says, "Well, my capacity is 38 hours. That's all I've agreed to work. That's all I want." Where does Linfox go from there? Is one employee's full capacity to be different to another? Does it make sense to interpret that clause? To place an obligation on Linfox on an ongoing continual day by day over 500 employees to keep challenging them on what overtime they can work, which as Mr McCrone accepted might change from day to day - week to week - in accordance with the personal or family circumstances.
PN1533
It's just an interpretation and if it wasn't an interpretation even the TWU wouldn't have been so bold as to make the argument to you. But it's not an interpretation which makes commercial sense and it's not an interpretation which - even reaching back into the history of this - and I've said that the clause wasn't about sweating truck drivers to work more than their standard days. It's just not an interpretation you'd give it. It wouldn't be the interpretation most apt to the industrial and commercial circumstances of this business and the objectively ascertained intention of the parties.
PN1534
So I'm not saying it's not an argument but it would be one with untold difficulty. It has other logical hurdles as I've said. Well, I think I've made my point about that.
PN1535
Commissioner, you have to resolve these issues and they're not easy but you do have some assistance. I have a volume of authorities which I think contains all of the ones we've referred to in our submissions on there. Sorry, and there's another binder as well I think.
PN1536
THE COMMISSIONER: Thank you.
PN1537
MR WILLIAMS: Commissioner, our written submissions dealt with the interpretative principles so I'm not going to dwell on them. I'm sure I don't need to but you do have some assistance to resolve that issue, that is, Mr Baarini's right or is my client's right and my right, so what's before you is a folder with authorities and all the ones we could find which were of any use. I only want to refer to a couple and I think I can refer to them simply from the index because the index extracts some of the relevant principles.
PN1538
Now, Commissioner, if we could go to page four of the index and the decision of Newey v Westpac Banking Corporation?
PN1539
THE COMMISSIONER: Sorry, which tab is it?
PN1540
MR WILLIAMS: Yes, I'm sorry.
PN1541
THE COMMISSIONER: No, no.
PN1542
MR WILLIAMS: There's an index which actually contains some of the passages I wanted to take you to .
PN1543
THE COMMISSIONER: Right. I've got that, thank you.
PN1544
MR WILLIAMS: Yes. It's on page four.
PN1545
THE COMMISSIONER: Yes, thank you.
PN1546
MR WILLIAMS: Case 1.9 is Newey v Westpac Banking Corporation.
PN1547
THE COMMISSIONER: Yes, thank you.
PN1548
MR WILLIAMS: It's a simply a statement from the Electricity Generation case, accepted in the Westpac decision and which endorses and requires a contextual approach to the construction of commercial contracts. Ambiguity is to be evaluated having regard to the surrounding circumstances and the commercial purposes or objects. We point here to the commercial purposes or objects which are set out in plain unambiguous detail in clauses 15 and clause 17. Clause 16, I am sure it's a coincidence happens to be right between.
PN1549
The next decision and I think one which is of some real significance is the Short v Hercus decision. This won't be the first time you've been referred to it. But I think it is relevant on page five - the passage - "Where the circumstances allow the court" - or in this case the Commission - "to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language."
PN1550
Well, we do have a certain amount of obscurity in the language here because that concepts of capacity and utilisation are capable of bearing different meanings. But I've made the point that this clause was conceded in the trucking environment and it wasn't conceded in an environment where the truck drivers were expected to sweat themselves to work the maximum amount of overtime which they could lawfully be required to work.
PN1551
Over the page, at page 6 - Watson's case - extrinsic evidence as to the context in which the agreement was made, including the historical concept will be - context will be admissible. It doesn't add very much to the Short v Hercus decision.
PN1552
And then I want to refer simply to two more cases, maybe a couple more than that. But the Amcor case - page 13 of the index - "A court and a Commission is entitled to have regard to the industrial purpose of the agreement and mentioned again clauses 15 and clause 17." And the commercial and legislative context in which it applies. It isn't irrelevant that my client that it was conceded in an environment where my client must have been expected to have to meet commercial obligations, productivity obligations, and in recognition of that the parties have mutually agreed that for the purposes of the agreement will be directed towards achieving those ends. And, therefore, an interpretation which gave my client no discretion in relation to offering of overtime at expensive rates to employees who have demonstrated that they are not capable of working in a productive way would be inimical to the object of this enterprise agreement.
PN1553
The Maritime Union case on page 15 mentions, "Context is to be approached broadly. It may appear from the text of the agreement, taken as a whole, its arrangement and the place in and of the provision being construed." And it really just emphasises the force of the objects of clauses 15 and 17 and the juxtaposition of clause 16. There is a drafted clause 16 and put it in there could not have failed to have regard to the objectives in clauses 15 and 17.
PN1554
And then the advice from his Honour - as he then was - Justice Madgwick in Kucks v CSR Limited which continues to be a source of wisdom and good guidance in these situations that is justifiable to read that the award - and it's been held - the principle to extend to agreements - to give effect to which evident purposes. And there are purposes expressed in the agreement. "Having regard to such context despite mere inconsistencies or implicities of expression which might tend to some other reading". And then of course, the famous phrase, "Meanings which avoid inconvenience or injustice may reasonably be for."
PN1555
It would be both inconvenient and unjust if my client had to run the ruler over this workforce every day or every week to ascertain what their capacity was and by reference to their stated preparedness to work overtime. That would be inconvenient and it would most certainly be unjust.
PN1556
And that leaves me only to say a couple of points about best endeavours, Commissioner. You've got my - we make our submissions about that in writing. Best endeavours can be likened to reasonable endeavours. They've been read the same way. You do not have to act in a business destructive way in order to - - -
PN1557
THE COMMISSIONER: Sorry, in a?
PN1558
MR WILLIAMS: Business destructive way. Commercially unrealistic way in order to comply with the best endeavours clause and the objects of the agreement are relevant to what involves best endeavours. And if you're making endeavours which are consistent with the objects of the agreement then, in my submission, a court or a Commission would be very slow to say that they're compliant.
PN1559
And in that regard, Commissioner, let us not forget that the TWU and Linfox jointly proposed to its workforce a solution to this problem which would have entrenched overtime qualifying rates and it would be difficult, I think, for Mr Baarini - in my submission at least - to persuade you that my client would be breaching clause 16.1 or breaching its obligation to take best endeavours in relation to a proposal which they jointly tried to take to the work force. It just wouldn't seem to make sense.
PN1560
THE COMMISSIONER: In your submission is that the uncontested evidence in this matter that this proposal regarding a qualified overtime, if I can describe it in that way, was at the time it was introduced supported by both the company and the union?
PN1561
MR WILLIAMS: That was Mr Talevski's evidence. I probably wouldn't say it was uncontested. But what I would say is that Mr Talevski's evidence which Mr McCrone agreed with was that the incentive program which had some different aspects to it. It wasn't just about qualifiers. But if it had been agreed then that would have been - there would have been a qualifier for overtime - and so what the TWU now - it must to attempt to persuade you - is in breach of clause 16.1 because it still would have affected employees. There still would have been most likely a proportion of employees who wouldn't need it and therefore would have been excluded from overtime. They support it.
PN1562
A scheme which if accepted would have that effect. And I don't want to be critical of them but it's difficult for them to say to you that my client is not making reasonable endeavours here when, at least, in that respect they supported it. They supported what they were trying to do and they have acted in many ways - in a way which deserves significant credit.
PN1563
There may, of course, come a time when a hundred percent of employees will meet the objective. We hope that's the case. In that case any concern about clause 16 drops away. The evidence is that the pick rates are achievable. We're just somewhere along the journey to getting there. I don't suppose my client or Mr Talevski did not rule out the possibility that there may come a point when all of the measures they're taking now in relation to some individuals fail. And it may be that some of those employees leave the business, as it appears employees who were not able to meet reasonable attendance rates who left the business. But that's not on the table at the moment. My client is trying to get 100 percent of its current full time workforce above that line.
PN1564
THE COMMISSIONER: Yes. I don't want to get any rumours running in terms of an outcome there but it seems to indicate to me that while - well, the evidence that seems to be before the Commission in this matter is that while there are some - a proportion of the employees who are still not meeting the standard that is at 90 percent at the moment, as I understand it, that despite that fact progress is being made.
PN1565
MR WILLIAMS: Very - - -
PN1566
THE COMMISSIONER: Improvements are still being made by those that are still not achieving that target and there is no suggestion from the evidence that I have seen that employees that are not meeting that 90 percent standard at this time are to be disciplined or if I can describe it in that way, subject to any sort of punitive response at this point in time.
PN1567
MR WILLIAMS: Mr Talevski gave evidence that that was not the pathway that the company was on. And my point only about that is that we're on a - it's a snapshot here. We're on a trajectory. And whether or not my client has taken reasonable endeavours or to make the submission more clear, my client should not be said to have failed to have taken reasonable endeavours when those endeavours are still a work in progress. Commissioner, unless you've got questions for me they're my submissions.
PN1568
THE COMMISSIONER: Nothing further at the moment, thank you, Mr Williams. Thank you very much. Mr Baarini? Anything further?
PN1569
MR BAARINI: I do. If I can, Commissioner, just to address a few points. The first is that the union did not recommend the bonus scheme. What the union did recommend for Mr McCrone's evidence was an earlier proposal to have the pick rate set at about 75 percent. So I just wanted to clarify that. The other point to make is that there's been no evidence - - -
PN1570
THE COMMISSIONER: No. There was some discussions about setting an appropriate pick rate but no agreement about what that figure should be.
PN1571
MR BAARINI: Yes.
PN1572
MR WILLIAMS: Well, I don't want another go but Mr McCrone's evidence should be examined.
PN1573
THE COMMISSIONER: Right, thank you.
PN1574
MR WILLIAMS: And Mr Talevski's - the evidence he gave of the scheme which was put to the workforce.
PN1575
THE COMMISSIONER: It will be examined.
PN1576
MR BAARINI: Just to add that there's been no evidence that there has been a decrease in the proportion of the casuals and that obviously with the increase use of outside labour on weekends it means that there's more casuals now being used than would have otherwise have been the case for this system in place.
PN1577
And just to add to the point because I know that my friend referred to Mr McCrone's evidence about some concession that he made about the reduction of those hours on the casuals on the weekends. It's because and I think Mr Talevski conceded that there has been a rearrangement in the shifts, one of which was the deletion of the afternoon shift on the weekend. And what's occurred is that it's been replaced with the Saturday and Sunday after overtime. Sunday night shift made up of 95 percent of the casuals.
PN1578
The point that I want to make and that's in relation to some of the evidence that's been touched on is this that my friend from the beginning of the case to now, and even in his closing submissions refers to - intelligently and sensibly reading the enterprise agreement. Well, that's not the test that the Commission is invited to use to determine whether the clause applies. The test that's to be - - -
PN1579
THE COMMISSIONER: That's a relief.
PN1580
MR BAARINI: Yes. Because what's intelligent and sensible for Minter and Ellison may not be the case for Linfox or the Transport Workers Union or for the Commission for that matter. You've got to read it as the case laws determine and the primary case law at the moment is not - with respect to my friend's brief of authorities - dealing with interpretation of commercial or contractual law - the contracts that require the certain objectives to be met by commercial contracting parties.
PN1581
It's to be determined by industrial principles developed in an industrial framework under industrial law. And the leading principle at the moment is the Golden Cockerel case that really directs this Commission to determine how an instrument is to be interpreted if there is ambiguity. If there's no ambiguity well you read it in the ordinary and the usual meaning of the words and we say that the clause 16 is to be afforded its ordinary and usual meaning. There has been some contest about what best endeavours means. A lot of it under cross-examination of Mr Talevski today has been about the pick rate and how that was developed. And there remains some contest about the credibility and the integrity of the pick rate and the averages that are used. And Mr Talevski himself said - - -
PN1582
THE COMMISSIONER: Talevski.
PN1583
MR BAARINI: Talevski said that there is some issues about it not being either perfect and that it needs continuous improvement to make sure that it reflects the situation on the ground so that there is going to be people that will miss out because of the system that is in place in relation to the overtime.
PN1584
The other point that I want to just quickly make about the word "maximum" that you've used, Commissioner.
PN1585
THE COMMISSIONER: Yes.
PN1586
MR BAARINI: And sure clause 16 isn't about specifically refers to overtime but it does feed into the point about how to read the word "maximisation" because my friend tried to - first in his written submissions say that if clause 16 doesn't apply to DC workers - now, today - the second day of hearing Linfox is saying that Minter Ellison is now conceding on their behalf it does apply. So there's been, we say, a huge shift in so far as their concession about the application of the clause to the RDC workers. But what we do say that putting aside what views people might have about the evidence of Mr Aird or Mr McCrone, their evidence was not - and cannot be said to be seriously challenged as to how this clause and why this clause from the union's perspective came about.
PN1587
There might be a different view as to why it exists and Linfox spent a lot of time even in closing submissions telling us well, it's borne out of the trucking division and - well, that might be great - but we're not actually talking about the utilisation clause in those old agreements dealing with the trucking division.
PN1588
So I'm inviting the Commission to ignore all that and really focus on the actual words which are determinative of the dispute and to give it their ordinary and usual meaning. Now, Mr McCrone in his good evidence referred to the National Employment Standards and the fact that that dictates the maximum hours that an employee can work and if you look at the National Employment Standards at Section 62, under "maximum weekly hours" - the subsection (1) - "An employer must not request or require an employee to work more than the following number of hours in a week unless the additional hours are reasonable." All right. And the full time employee is 38 hours. And then it goes into subsection (2) - "An employee may refuse to work additional hours if they are unreasonable."
PN1589
And so there is some stipulation in section 62 as to what a maximum might mean in relation to an employee and that is it provides that "an employee cannot be required or requested to work more than 38 hours plus reasonable or additional overtime."
PN1590
Now, if you're looking at what "maximum" means well, clearly the National Employment Standards gives some guidance as to what maximisation of an employee's capacity might mean. It's not just limited to 38 hours. Clearly, there is some provision for additional or reasonable overtime which an employer can ask an employee to do. An employee equally may refuse it if it's unreasonable to make the request of them.
PN1591
So if we're looking at what is ordinary and what is usual in the context of not Westpac. Not some commercial dispute in the Supreme Court of Victoria or what the commercial objectives are of Linfox. We are talking about an industrial instrument that determines the industrial relationship, rights and responsibilities of both the union and the members of the employer.
PN1592
We're not talking about what is the commercial imperative of Linfox in the industrial instrument. Sure, in the background they might have a commercial imperative, sure they might have commercial objectives. Of course we want them to succeed. We want them to grow. The union has a view to share that obviously.
PN1593
But the point is the industrial instrument is not a contractual contract in the same way that my friend has taken you to. It's an industrial instrument that sets out the mutual obligations of both parties. And we say the maximisation is about maximisation of the full time proportion of its workforce, including the utilisation of employees to the their full capacity. Before you go and look outside, Commissioner - before you go and look outside.
PN1594
And the maximisation if there's any guidance to be given to what the definition what mean as to the usual and ordinary meaning well you go to the National Employment Standard and the National Employment Standards clearly envisages maximum weekly hours to be not just 38 but any additional hours that might be reasonably requested by an employer of an employee.
PN1595
Now, my friend said, "Well, you know, when do we measure capacity and when do we measure - you know - there's 500 employees. It might be a difficult to measure it." Well, frankly, that's what the rest of Australia does. You know - you look at people's roster. You look at what hours they're doing and you see whether there's additional hours to be done on the weekend and you offer it. It's not very hard, in this case, to be honest, Commissioner and Mr Talevski said there is sufficient hours anyway provided to their full time employees.
PN1596
So there's sufficient plus more. So they're actually - not only - is there enough hours to give to those that are missing out anyway but they're actually going and getting outside labour anyway. So we ask the Commission not necessarily to read that there is a specific obligation to provide overtime in clause 16. That's not what we're asking. We're asking the Commission to read the clause to say that - not to dismiss the KPI's and the productivity gains in accordance with winning the contract with Coles. I mean they're all given facts that the union doesn't dispute, and in fact encourages.
PN1597
What we're asking the Commission to do is to read the clause to say, "Well, yes, there is an obligation here to use your best endeavours to make sure that you use these employees to their full capacity and you've got to determine how it is operationally." Not the 38 hours. The 38 hours plus additional overtime. Because if the company is now saying openly in this Commission in public view to Australia that they've had seven years.
PN1598
THE COMMISSIONER: It's not that many people listening are there?
PN1599
MR BAARINI: Well, they've had seven years with the Coles RDC of employees that have not been meeting their standard and they've done nothing about it but all of a sudden introduced the KPI to weed out who is good and who is bad. Well, it's taken them seven years to get there but, secondly, nowhere in anywhere of the industrial instruments that we have seen a person's performance is predicated on meeting the KPI's.
PN1600
The policy introduces KPI's and we're all for it. The union is not shying away from supporting some sort of system to improve productivity to continue to secure the contract but where we're against it is we say that it then - it's not so far as giving an incentive because what they could have done is just left the incentive and said, "If you meet the KPIs not only will you continue to be offered overtime but we'll pay you the bonus." So they're offering not only a bonus but they're actually saying, "Well, you can forget about - if you don't meet the pick rates - you are being disqualified in a form of a penalty."
PN1601
Now, it might not be discipline in so far as being counselled and given a first and final warning for being under performance but we say that is a significant economic penalty that this clause was designed to avoid for the purposes of the job security maintaining rates and conditions but also allowing the company to use its best endeavours to achieve their full capacity before they go and use outside labour. And what they're saying is we're not going to give you a chance - if you can't meet your pick rates during the week we're not going to give you a chance to improve your pick rates during the weekend either.
PN1602
And so therefore we're actually going to give that opportunity to outside labour hire. And we say that is not something that the company can do and by virtue of the obligation in clause 16. Thank you, Commissioner.
PN1603
THE COMMISSIONER: Thank you, Mr Baarini. And thank you and Mr Williams for the submissions on evidence that you have provided in regard to this matter. I am sure it comes as no surprise I don't intend to hand down a decision right now. I do intend to take some time to consider the submissions and evidence that have been provided in the matter. I will endeavour to do that as soon as possible and to hand down a decision when I have concluded that process. But until that time the matter is adjourned.
PN1604
MR WILLIAMS: Thank you, Commissioner.
ADJOURNED INDEFINITELY [12.36 PM]
LIST OF WITNESSES, EXHIBITS AND MFIs
KRIS TALEVSKI, AFFIRMED......................................................................... PN982
EXAMINATION-IN-CHIEF BY MR WILLIAMS.......................................... PN982
EXHIBIT #LF2 WITNESS STATEMENT OF KRIS TALEVSKI.............. PN1012
CROSS-EXAMINATION BY MR BAARINI................................................. PN1012
RE-EXAMINATION BY MR WILLIAMS..................................................... PN1343
THE WITNESS WITHDREW.......................................................................... PN1357
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/other/FWCTrans/2015/568.html