Tenth Anniversary Conference
Enterprise Flexibility Agreements:
The Experiences of Tweed Valley Fruit Processors Pty. Ltd.
Tweed Valley Fruit Processors is a small business employing approximately 50 people in the north east corner of New South Wales. It is located in the sub tropical area and has a business based on the processing of sub tropical fruits; the main ones being passionfruit, mango, guava, banana, pineapple and avocado. It started business in 1978 and has had the same ownership since that time, the Moran family.
When it started business it was only processing passionfruit and now processes about 10 fruits into industrial food ingredients and makes other specialist ingredients from bought in processed fruits which it supplies to about 200 food companies in Australia, New Zealand, South East Asia and the United States. It is the largest grower of passionfruit in Australia.
It has grown from a turnover of about $90,000 in the first year of trading to about $7.5M today.
History of the Award---The Need for Change
The bulk of the employees of the company work under the Food Preservers Interim Award 1986 and most are not union members.
Up until 1993 this was a 40 hour per week Award and it was altered to a 38 hour a week Award during 1993 with our company as an exemption.
During the 80s the union, as it was its tactic in those days, convinced all respondents to the Award to operate under 38 hour a week conditions by either threatening to or participating in industrial action to achieve this end. The union at that time was the Food Preservers Union which was controlled pretty much by the Federal Secretary, Mr. Tom Ryan. He preferred to work outside the arbitration system to effect change.
In July 1990 Commissioner Merriman altered the Award and inserted the new clause under the title of "structural efficiency". A month later our company entered into an unregistered agreement with its employees to utilize the flexibility that was allowed by Commissioner Merriman. Under his decision pay increase was allowed only after improvement under the "structural efficiency" clauses was made. Timing of Commissioner Merriman's order was very important for the company as in July 1990 the company was being adversely affected by the recession and for the first time in its history had falling sales. The position negotiated between the company and its employees at that time was that it would revert to a 40 hour week with Tuesday, Wednesday Thursday and Friday being the normal working days and each of these would be a 10 hour day. If work required, Monday would be worked as an 8 hour day at overtime rates and employees were given the option to either opt in or opt out of this Monday arrangement.
This helped the company survive in the recessionary conditions at the time as it often worked the 4 day week, it got 40 hours work done in those 4 days at normal rates. It also helped the employees as it enhanced their job security.
As the company came out of recession in 1991 and 1992 the need to work the overtime day on Monday increased and by the time 1994 came around this was the norm. Thus most of the employees on our site were working 48 hours as a normal pay week and were receiving 54.5 hours pay at Award rates for this 48 hours of work. Between 1990 and 1994 the company's business effectively doubled and even though our employees were getting good take-home pays, the position with the company was getting to the point where productivity was dropping because of the long hours worked and the cost per hour was becoming excessive. The company's productivity dropped sharply in 1994.
From late March 1994 the Industrial Relations Reform Act became law and this allowed the possibility of Enterprise Flexibility Agreements being negotiated at the workplace.
To assist enterprises to "get up" some good Enterprise Agreements the Federal Government put out an information brochure entitled "Making Workplace Agreements---Its Your Job, Its your Agreement" and we used this as a step by step checklist in the making of our Agreement. To further assist, the Federal Government offered cash incentives to meet the funding necessary to negotiate these Agreements to companies and other organizations and our company put in an application which was approved around July 1994. On the night of our funding approval I vividly remember Martin Ferguson complaining bitterly on P.M. that the Labor Government was funding companies to break award conditions through enterprise bargaining and that this was against everything the union movement stood for.
During the rest of 1994 our company actively embarked on the consultative process in getting an Enterprise Flexibility Agreement established and most of our staff approached this with a measure of enthusiasm.
By the time the last quarter of 1994 came around the union had, without consulting the company, taken exception to our approach and instigated proceedings in the Industrial Relations Commission to have the company's exemption from the 38 hour clause in the Award removed. Hearings were held on the 7 and 16 December 1994 before Commissioner Merriman and, in his final decision, he stated that the exemption would be removed as from 1st February 1995 if there were no further submissions. This took place in the thick of our consultative process to get our EFA established. Such was the level of union co-operation in the process.
This would have, of course, thrown the existing Agreement that we had with our employees into chaos and would have severely disadvantaged them. We had told our employees that the days of getting 54.5 hours pay for 48 hours work were over and that the Enterprise Flexibility Agreement that we would strike would fall somewhere between their current take home pay level and strict Award conditions. However, returning to the Award and the 38 hour a week conditions would have severely disadvantaged our employees at that time and on 23rd December 1994 100% of our employees who were recipients under the Food Preservers (Interim) Award 1986 signed a petition which read,
- "We the undersigned are employees of Tweed Valley Fruit Processors and are actively supporting the company's position to get a Flexibility Enterprise Agreement applicable to the company's Murwillumbah site and recognize this as the appropriate mechanism for workplace reform. We ask the A.F.M.E.U. to agree to delay any proceedings covering an application for a 38 hour a week to June 30th 1995. This will give time to the Commission to consider our Enterprise Flexibility Agreement and its implementation. If this is not done by June 30th 1995 then we will reconsider our position. We also ask the A.F.M.E.U. to withdraw any other actions instigated in the Arbitration Commission."
The union wrote to the Commission in mid January as a result of this petition and agreed to postpone the action to bring in the 38 hour week until such time as the E.F.A. could be considered by the Commission. Prior to writing to the Commission the union had visited our site in December and addressed our Consultative Committee. That was the last contact the company had with the union up until the hearing before Commissioner Redmond on the 27 July 1995 on this issue.
Such was the unions interest in our Employees.
Why did the company need an Enterprise Flexibility Agreement?
There are many inflexibilities in the Food Preservers Interim Award which cause operational difficulties on our site.
Rather than go through them all, I will just mention a couple of important ones. As the business has grown it had become necessary for us to work a 6 day week for 4---5 months a year. The only way the Award allows this to be done is to employ people for 5 days on Monday to Friday and then work Saturday as an overtime day. For people to work continuously for 6 days a week for 4---5 months is excessively demanding on them and we needed flexibility to change the normal working days of the week to make the 40 hours less specific than the Monday to Friday rigidity in the Award.
Further, we have an incremental operation in our company which we do up to 3 days a week which requires the employment of 9 additional people. The ideal situation is to have a team of casual workers who come in and perform these duties. The Award only allows the employment of 15% of the permanent workforce as casuals and in our case, with about 24 permanent employees under the Award, that meant that we could employ 3 casuals. This did not allow for the efficient operation of the company. Further, the Award has restrictions on the employment of permanent part time workers where only 10% of the full time workforce can be employed as permanent part time. These are examples of some of the inflexibilities but there are many others.
Because we had a fall in productivity, we felt it extremely important to have our Agreement productivity related so that the employees and the company could share in the benefits achieved. I laid down to the Consultative Committee a few guidelines for the Agreement, all of which are productivity related, and these were as follows:
1. Apply the K.I.S.S. Principle wherever possible---Keep It Simple Stupid
2. Apply as much as possible the principle that you are paid while you are at work
3. Devise a mechanism for protection of the company's investment in training
Training of employees for specific tasks in a highly technical and complex factory such as ours is very expensive and unless we get return from that training, the productivity will drop. The mechanism developed to protect this investment was to bank the pay increment of an employee received due to reclassification from on site training for 12 months and pay as a lump sum at that time if the employee was still with us.
The most glaring example of the application of the K.I.S.S. principle was in our Agreement going to fortnightly pays over weekly pays which gave us an improved administrative position. We reduced the number of job classifications from 6 to 3 and made these descriptions simpler and relevant to our operation.
With regard to the proposition of you are paid while you are at work, it is my personal view that a major problem with this country has been all levels of government ever increasing the effect of "big brother" whether that big brother is a government agency or the employer. The rugged individualism of Australians is being progressively eroded by the intervention of governments into the private affairs of individuals. There seems to be no end to this at all levels of government. The hand out mentality produces votes, or so the theory goes.
Why should governments lay down laws and take the responsibility away from the individual and transfer it to another party, in our case the employer. Fringe benefits tax is one of the more recent actions by government to do this but, going back over time, issues such as the payment of income tax, workers' compensation insurance, sick leave, annual leave etc. really fall into this specific category where the employer is, in fact, managing the private affairs of the employee under regulations laid down by government.
If an individual has his ability of work to sell to a potential employer he should take with him the responsibility of all necessary protections and obligations needed to provide that work. After all we have an employment contract, yet one party to the contract is abrogating most of the responsibilities of the contractor and forcing these onto the other party to the contract because of the historical erosion of individuality.
The guidelines put out by the government do specifically mention certain "community standards" and sick leave is not one of these discussed. It was also not discussed by relevant Minister Brereton in his second reading speech. Yet it was a major basis of attack by the Government at the full bench hearing.
During the first half of 1995, the consultative process resulted in preparation of an Agreement which had genuine relevance to our specific site and genuine relevance to the history of the site.
The issue of sick leave has got a lot of publicity in our case but really it was a minor part of the Agreement. In the five years prior to the Agreement, the average sick leave taken by our permanent employees was between 2 and 3 days a year. The Award allows for 8 days sick leave per year with 5 days in the first year. Thus by cashing sick leave into the hourly rate, we were in effect giving our average "employee" an additional 5---6 days pay per year as well as allowing for it fully in the hourly rate. Another advantage in increasing the hourly rate for such cashing in of this and other items is that a higher base applies to the calculation of all issues such as holiday pay and workers' compensation payments. The treatment of sick leave had good support on site.
As we show later, there was nothing novel on the way we treated sick leave. In fact there was nothing really novel that we did in our agreement at all---we took the best of what was being done both here and in New Zealand. We cashed in sick leave, paid meal breaks and holiday loading. We discussed cashing in annual leave but had to drop this as a case had previously disallowed it. I don't understand why.
The Consultative Committee was fully in accord with the Agreement that was drawn up and put to the vote in May 1995.
As commented above, we did not see the union from December 1994 up until the vote which showed the level of interest they had in the Agreement. The site union delegate was on the Consultative Committee and with the Committee's blessing he was giving the union all minutes of Consultative Committee meetings and details of discussions. The union was kept fully informed.
Unbeknown to me, at the time of the first vote the union had circulated an unsigned false document comparing the conditions under the E.F.A. to Award conditions. This was known by the union delegate on the Consultative Committee prior to the vote and he did not bring it to the attention of the Consultative Committee which I regarded as his clear responsibility. Had I known of the circulation of this document, the first vote in May 1995 would not have taken place but the document would have been referred back to the Consultative Committee for them to fully investigate and report to employees. This dirty union tactic resulted in the first vote being defeated. When this occurred, we informed the Industrial Relations Commission of the vote and advised we had no objection to the removal of the exemption clause thus bringing the site onto 38 hour Award conditions. This meant a removal of the August 1990 agreement and a return to a Monday to Friday working week at normal rates.
On the 25 May 1995 we received a "notice of intended industrial action" from the now renamed Australian Manufacturing Workers' Union. This was sent without knowledge of anyone on the site and when I showed the letter to the union representative he knew nothing of it and advised me that there was no intention of any industrial action. I mentioned this as this highlights the position that union officials in Sydney, some 900 kilometres away, were actively causing difficulties for the company which had not only no approval from employees on the site but the employees of the site had no knowledge of their actions. In other words, there was an orchestrated campaign by some union officials to cause our company difficulties. This was a portent of what was to follow.
Reaction by employees to Award Conditions
The company was running its site strictly under 38 hour a week Award conditions from the second half of May onwards. Several employees approached me in the first half of June and told me that the people who voted against the EFA did so because they were told to by the union and didn't understand the issues and that now the issues had been better canvassed on the site, the employees wanted an option of another vote. This is of course allowed under the legislation. I had time to reflect on some aspects of the Agreement and felt it could be improved and with a couple of key employees discussed improvements and drew up some amendments to the original Agreement. These were not lengthy and not really material but they were, if you like, around the margins of the original Agreement and helped in producing the win-win requirement to pass the no disadvantage test.
As a result of this employee instigation, a second vote was taken in June which passed overwhelmingly 26---4. With this vote behind us we went to the Commission with our Agreement on the 27 July 1995 and the Agreement was approved by Commissioner Redmond some 2 weeks later.
For those that have had the benefit of reading the transcript of the Redmond Hearing you would rightly draw the conclusion that Commissioner Redmond did ask questions that got to the key issue of "no disadvantage test". Further, Commissioner Redmond asked for clarification from us on some issues relating to our EFA versus Award conditions after the Hearing in his required investigatory role. The order that was handed down by Commissioner Redmond by approving our EFA was succinct but covered all issues required under legislation. Commissioner Redmond did not go into detailed reasons why he made his decision but simply stated that he had done so in accordance with the requirements of the act and drew the conclusions that he did. It may be significant to note that this was Commissioner Redmond's first EFA.
So at this time we had an approved EFA drawn up by all the correct procedures and processes, funded by the Commonwealth Government, approved in accordance with legislation that genuinely reflected a win-win situation to the company and employees and specifically related to the conditions on the site of our operations. This is what the legislation was supposed to produce. But it did not have the blessing of the union and this it seems by definition meant it did not have the blessing of the Federal Government.
The ACTU and their puppets, the Federal Labour Government, did not want to see meaningful workplace Agreements produced without union involvement that were as comprehensive as the one that we produced carefully and properly over a period of some 12 months. Just think what this would mean for the rest of the country?
The fundamental premise of the union movement is that employees can't think for themself and therefore need the union and if our employees could come up with such a detailed meaningful document without their assistance what would happen in the rest of Australia?
I will discuss below the role of some of the participants in the actions that followed but I will simply state here and comment on the chronology of events.
In September 1995 the union decided to appeal a decision to the Full Bench of the Industrial Relations Commission. They were joined in this appeal by the ACTU and the Federal Government of the time. The Legislation provided no grounds for appeal against a successful EFA, yet the Full Bench gave leave to appeal and my understanding is that it is also traditional that no fresh evidence can be admitted in an appeal but the matter below can simply be discussed yet the Full Bench allowed the union to bring in fresh evidence. The union provided no evidence in the Hearing in front of Commissioner Redmond, the proper forum.
In handing down its decision on the appeal, the Full Bench was critical of the union's performance at the lower level hearing yet allowed the matter to proceed. The Full Bench of the Commission basically made its decision based on the fresh evidence submitted and from that ruled that the view reached by the Commissioner had constituted an error of law and that the Full Bench had the jurisdiction to overrule the Commissioner's decision.
In the second last paragraph of the decision the Full Bench states "the Commissioner erred in thinking that the implementation of the Agreement would not result in a reduction in Award entitlements of protection and therefore that section 170 NC (1) (d) was satisfied. The Commissioner then gave effect to what he wrongly thought was the duty imposed on him by section 170 NC to approve the implementation of the Agreement.
In our view on either of the bases set out above, there was a constructive failure to exercise jurisdiction."
Put in simple terms the entity which is the Industrial Relations Commission, if the Full Bench is correct in its judgement, allowed untrained operators out in the field to investigate EFAs and therefore is responsible for the actions of those operators ie. Commissioners. If the "umpire" of our Industrial Relations system does not train its operatives to produce the right results then what hope have the entities being umpired.
In business we would collapse if we behaved with the same reckless abandon as the Industrial Relations Commission did in this case.
After reading the Full Bench decision we were convinced that the Full Bench had overstepped the mark and gone beyond its jurisdiction and thus appealed to the Federal Industrial Court. We lost that appeal basically because of the simple terms in which the original Commissioner Redmond wrote his judgement. That court ruled that the Full Bench had jurisdiction because Redmond had failed to appreciate his need to consider the issue posed by paragraph (b.) of section 170 NC (2). In neither case did the Full Bench or the court ask Commissioner Redmond if in fact he had considered paragraph (b) of 170 NC (2) which is the paragraph which requires public interest to be considered. Had Commissioner Redmond said in his decision that he had considered paragraph (b) of this section then the Federal court would have ruled that the Full Bench did not have the jurisdiction to hear the appeal and we would have won the appeal.
It is our view that Commissioner Redmond did consider this section and weighed it up carefully against the other advantages of the Agreement and made the correct decision. He was not required to expand at length the reasons that led to his decision.
Our Agreement operated from 27 July 1995 to 24 April 1996, nearly 9 months. In that time it stopped the downward slide in productivity which increased slightly. The Agreement worked.
I now turn my attention to some comments on several of the players involved in this issue.
1. Our ex local member
In our local area the issue got quite lot of press and it was grasped willingly by the then local Federal member, Mr. Neville Newell, in an attempt to improve his waning electoral chances. He refused to come and meet with the company and discuss the issue and refused to come and meet with the company employees. Instead he allowed his office to be used as a local conduit for misinformation that generated from the union movement and for blatant and malicious lies which are now the subject of a strong defamation case against him. To understand his complicity in this issue I quote in full from a letter written willingly by Mr. David Byrne on 1 December, 1995:
- "Since late June I have attended a small number of union meetings with other employees of Tweed Valley Fruit Processors.
- These meetings were poorly attended with usually no more than 3 or 4 people and maybe occasionally up to 6 or 7.
- Since the vote on the EFA in June the union meetings were encouraging someone to go to the media to make a statement against the EFA.
- "What we really need is for someone to go to the media."
- Around October 1995 there was a union meeting at the Riverview Hotel where there were approximately 4 employees of Tweed Valley Fruit Processors, Mr. Neville Newell and another official who I did not know. At that meeting I was handed a piece of cardboard with the name Madeleine and the phone number 008 812 125. I was subsequently encouraged to speak out against the EFA and to contact Madeleine.
- I have enjoyed working for most of my time with Tweed Valley Fruit Processors and in late October had a short term dissatisfaction with the company due to my lack of understanding of some conditions of the EFA. When this was explained to me I accepted that the company's position was correct. However, over this and other personal reasons I chose to resign from the company finishing on November 3rd.
- On November 1st after I picked up my pay my dissatisfaction was heightened due to the circumstances mentioned above and I rang Madeleine. Within an hour she arranged for a TV crew (NBN) and a newspaper crew (Gold Coast Bulletin) to be at my home. Since resigning from the company 4 weeks ago I have had time to reflect on the issues and now believe the EFA is worth a try and would produce a higher personal income for me.
- I have subsequently found out that the Madeleine referred to above works for Neville Newell and the phone number is Mr. Newell's office number.
- David Byrne"
It is noteworthy that during the same period, which lead up to the Federal Election, the National Party candidate, Mr. Larry Anthony, and Liberal Party candidate, Mr. Keith Johnson visited me and kept in touch with the company on the issue and were supportive.
It is interesting to note that in the Federal seat of Richmond the swing against Mr. Newell was about twice the national average. I understand that a similar situation, although more marked, occurred at Weipa. Where there was a significant local industrial relations issue, the voting public came out against the union position. By their recent huffing and puffing they still haven't learned.
2. The ACTU
The ACTU got involved in this issue not only as a party in the appeal before the Full Bench of the Industrial Relations Commission but also in several current affairs programmes in the media.
Members of the ACTU and other unionists made statements to the media which were totally unsubstantiated and never repeated inside the precincts of the commission or the court as they knew the statements were simply false. ACTU vice president, George Campbell, stated that the company was guilty of intimidation and coercion and this was repeated by official Rubenstein. The claims were made on several occasions and are being investigated as a basis for defamation. The company did not engage in any intimidation; in fact its whole approach on the issue was to be open and fair at all times. It is refreshing to see ex senior politicians coming out at long last telling us the truth about the ACTU's strangle hold on the Australian Labor Government and I thank Bill Hayden for his recently published revelations.
3. The Australian Manufacturing Workers' Union
The union has since day one on this issue attempted to destabilize and disrupt our workplace and to confuse legal hearings. The evidence that the union presented to the Full Bench of the Industrial Relations Commission can at best be described as confusing. When you read the transcript you can see that they did not really understand or analyse the issues involved and managed to confuse the umpires.
In attempting to destabilize our workplace, several attempts were made to enter the workplace which were rejected by me. The most notable occurred in late January this year when the union had previously contacted the N.S.W. Police Association (the Police Union) to try and get them to provide a red carpet treatment for entry onto our premises. The local police inspector. when made aware of this, personally involved himself, 2 sergeants and 2 constables in the removal of the union officials from our site. The union will not be welcome on our site and they have been formally told so until such time as they apologize publicly for the false statements made by Messrs. Rubenstein and Campbell and more recently and verbosely by their own Mr. Doug Cameron. They will also have to withdraw from any action in the IRC or Industrial Court in which they are involved before I will meet with them.
In the week leading up to the industrial court hearing on Friday, 15th March Mr. Cameron actively sought audiences with the media and used the hearing to further his own political ends. He consciously involved two employees from our company by subpoenaing them to the hearing when their issue had nothing at all to do with the matter before the industrial court and these employees were simply used as publicity props by Mr. Cameron. His tactic was to paint our company and myself as pariahs. This has caused some difficulty locally in our workforce but the vast majority of our employees are happy working with us and have the company's interests at heart. There are always a few bad eggs in a workforce of 50 and the union successfully used some of these to destabilized the situation.
During the EFA consultative process the union consciously avoided participating and this was noted by the Full Bench of the Industrial Relations Commission. In granting the right to appeal to the full bench they observed "we have reached this conclusion with some reluctance given the wholly inadequate nature of the case presented by the union at the first instance. In other circumstances the appellants failure to debate the matter at the first instance would have lead us to refuse to grant the application for leave to appeal."
Why not in this case, I ask?
To destabilize the EFA process, the union pursued the diversionary tactic of pushing for the 38 hour week in spite of knowledge that this was not in the best interest of our workforce as was witnessed by the 100% rejection by employees in signing the petition mentioned above.
The union has adopted and continues to adopt the tactic of running to the Commission with all sorts of irrelevant and insignificant complaints. They are now taking matters to the industrial court rather than to the Commission as the Commission, I think, has got sick of them. I daresay the Federal Industrial Court will soon get sick of their antics as well.
The company's position with the union now is that it has no contract with them and will not be a party to any discussions with them. All matters of a controversial nature are formally referred to the Federal Department of Industrial Relations who we are using as our reference point.
In all actions taken by the union in front of the IRC they acted without any support from our site. At no time did they represent any of our employees at the IRC.
4. The Former Labor Government
The Federal Labor Government's position is also questionable. Brereton was the Minister at the time of all matters relating to our EFA yet this person was involved in two previous agreements which treated sick leave in exactly the same way that we did in our Agreement. The first of these related to the construction of the Glebe Island bridge and the second to the third runway at Sydney Airport. Both were federal agreements. Thus this Minister who intervened on the side of the union because sick leave was not treated as a community standard in our agreement had been a conscious party to two union endorsed agreements which treated sick leave in exactly the same way.
Brereton's department also published the book on setting up enterprise agreements and nowhere in it does it require sick leave to be considered. I quote from page 10 of this book under the heading "the no disadvantage test":
- "the test is intended to protect well established and accepted standards across the community such as maternity and parental leave, hours of work, minimum wages, superannuation, and termination, change and redundancy provisions."
No mention of sick leave.
The same document on page 15 says "No union can veto an agreement approved by a majority of employees". What hollow words! I understand that Keating also got in the act in parliament making statements about us but if the truth was put before the Commission by the Federal Government then there would be no basis for the appeal being heard or their giving support to it.
The ACTU would also have had knowledge of these two former agreements that treated sick leave in the same way and at the time Vice President Ross was an ACTU official whose job in that organization would have ensured that he had knowledge of these issues.
After the full bench IRC hearing Brereton and another Federal Labor politician made statements to cut off further funding to us and demand return of moneys paid---this for simply following the rule book Brereton's department had produced.
I have written 4 letters to get this clarified, October and December 1995 and March and May 1996 and have not had an acknowledgement from the department, let alone an answer.
5. The Media
Needless to say this whole exercise produced a lot of contact with the media. In the main these are an arrogant, discourteous and uninformed mob. There are, of course, exceptions but unfortunately the rule tends to cloud the exceptions. As the various phases of this matter took place over several months various parts of the media had contact with us on several occasions. As a result of this I draw the following general conclusions:-
(a) I would not have anything to do in future with ABC current affairs radio. Within the ABC they are known as cowboys but I wouldn't lend them my horse.
(b) The Fairfax Group of newspapers leaves a lot to be desired in the standard of some journalists---there are two solid defamation actions against two Fairfax publications. Most other newspapers were only marginally better.
(c) Commercial radio in the main treated us fairly.
(d) Local newspapers and radio treated us fairly.
(e) ABC television news treated us fairly.
(f) Commercial television had no real grasp of the issues involved.
On page 3 of the recent Industrial Court judgement of Justices Wilcox, Moore and Marshall they state---p3 "This case has generated considerable comment and publicity, not all of it accurate". What an understatement. I would put the overall accuracy level well under 50%---probably as low as 20%.
The misinformation propagated by the union through the uninformed and shallow media has lead to misrepresentation reaching such heights as Hansard in both the federal and state level. Less than a month ago, on 24 April this year, the Honourable J.W. Shaw, Minister for Industrial Relations in the State Government of N.S.W. propagated several myths that have resulted from false statements made by union officials. Mr. Shaw says and I quote from Hansard "Despite evidence of intimidation and lack of candour on the part of the employer, Mr. Reith decided that this was the sort of agreement for which the coalition government should go into bat". Had Mr. Shaw, a state minister, bothered to read the evidence that he refers to in any of the hearings he would not have found an ounce of mention of any intimidation or lack of candour. Such individuals are not worthy of the position of minister of the state in which I reside. I hope he repeats his comments outside parliament.
6. The Full Bench of the I.R.C.
The Full Bench of the Industrial Relations Commission has a lot to answer for. They accepted evidence from the union which should have been presented to the lower court and the evidence was not given under oath. They admitted that the union's evidence was flawed yet they still accepted it. They prepared their own comparison of the EFA versus the award and published it in their decision without giving the company the opportunity to examine it. The comparison was very badly flawed. This is plainly a denial of natural justice.
Had the Full Bench wanted to find more about the flawed evidence submitted by the union they could have assigned a Commissioner to carry out an investigation but they chose not to do so. They chose instead to draw conclusions about a site agreement without consulting the site.
We did not admit any new evidence at the Full Bench Appeal Hearing of the Industrial Relations Commission---we simply played the rules which are that such new evidence is not normally admissible. In our statement to the Federal Industrial Court for the hearing on 15 March this year we gave details showing how the table on which the Full Bench of the Industrial Commission made its decision was flawed.
The Full Bench allowed the union to appear as an "aggrieved party" when they were not even a party to the agreement. There is a logical inconsistency here.
The Commission abrogated its responsibility as it did not manage the enterprise agreement process. In fact, their performance on this whole issue has really been pro union.
The bargaining unit of the Industrial Relations Commission is headed up by Vice President Ross and this position was created in the new legislation that came into power on 1 April, 1994. In fact, Mr. Ross' appointment preceded the operation of legislation by a couple of days. Mr. Ross lead the EFA test case which was designed to assist Commissioners in reaching the right conclusion but the test case gave no guidelines on any of the issues involved with us. As far as we are concerned the test case performance was an exercise in futility and a weak performance. We submitted in our evidence to the Full Bench that the matter should be referred back to a test case hearing for clarification and this representation was simply not heeded in the decision. In fact nothing we said at the full I.R.C. bench hearing was heeded in the decision.
I have been told on several occasions by senior legal people in the Industrial Relations field that the so called Reform Act that became law on 1 April 1994 had significant input from the ACTU. Prior to the Reform Act becoming law, Mr. Ross was an Assistant Secretary of the ACTU from 1991 to his appointment to the Commission and from 1988 to 1991 was a legal officer with the ACTU. Prior to that he was an industrial officer with the ACTU. I have heard Mr. Ross described as Kelty's industrial law brains.
With this background it is inconceivable to me that Mr. Ross was unaware of the detail of the Glebe Island bridge agreement and this Sydney third runway agreement which had approved, with union endorsement, the treatment of sick leave in the same way as our agreement. Surely he should have produced this as a reference in his decision.
In September 1994 Mr. Ross presided over and approved the NCI plastics agreement. This agreement treated sick leave in a curious way in that if there was any sick days taken in any one pay week then there would be no overtime rates paid until a full 38 hours had been worked even if some of these were on a Saturday. In this decision, I understand, the question was asked "does this reduce the entitlement to sick leave" but didn't answer it. Surely the NCI case, over which Mr. Ross presided, clearly is a reduction of a community standard if in fact ours was in his decision in this case.
Further in evidence we gave details of the Vegco agreement where sick leave was reduced to 5 days only and it was put in a pool and could be used by any of the employees. Thus any individual employee could finish up with no sick leave under this system; a position that would be known to the bargaining unit of the I.R.C. Having read the transcript of the Full Bench of the Commission Hearing it becomes obvious that our counsel, Mr. Peter Newell, was given a much tougher time by the bench and in particular Mr. Ross than any other participant in the hearing.
We knew that once the Full Bench decided that the matter could be heard and granted leave to appeal and admitted new evidence that the hearing was a political show trial and a farce.
We have commented above on what could have been done had the Full Bench fully investigated the relevant issues. By this I mean they should have taken steps to find out the facts before printing flawed comparisons and decisions.
Vice President Ross is on a package of approximately $200,000 per year and for such a highly paid person to have acted in the way that they did shows scant regard for the rights of a small struggling business. One of the most important things in our agreement was that it improved the potential for pay increases through productivity improvements but, more importantly, gave job security. None of any of the comparisons made by the Full Bench brought out the point of job security as the sole purpose of the agreement was to improve the stability of the company and hence job security of its employees.
I cannot emphasise strongly enough that the Industrial Commission, the union movement and the Federal Government had previously been party to or approved agreements that treated sick leave in exactly the same way that we did. The previously approved agreements were all union endorsed and ours wasn't and that can be the only reason that the Federal Government, the ACTU and the union movement came down heavily on us.
Some Final Observations
Graeme Haycroft, who addressed one of your former conferences, wrote to me after the Full Bench of the Industrial Relations Commission decision came out in October and I quote:
- "I followed your attempt to introduce sanity into an insane system, and was heartened to see the penny may have dropped' if the report in the Australian of today's date is correct.
- "No doubt you have Industrial Relations advisers and by the report you appear to be pursuing a form of strategy to implement your simple workplace reforms. But history suggests you won't succeed in doing anything other than enriching your advisers and proving that once again that legislation written for the express purpose of not being implemented usually succeeds in that purpose".
What prophetic words!
Having gone through the full process of hearings and appeals, it seems to me that Graeme is right unless the initial Commissioner was so versed in all the complications that could arise by inserting and leaving out certain words in their judgement. Or is it just possible that the architects of the legislation which allowed EFAs to "be instigated" had checks in there to stop someone actually pursuing the legislation and its announced intent wholus bolus.
The case has probably had a desirable effect as it has possibly speeded up the changes needed under the new government to get genuine workplace reform instigated. It highlighted the need to reduce the powers of the I.R.C. The NFF, who financially supported the appeal to the Industrial Court said after that Court announced its decision:
- "once all the legal complexities are stripped away this matter is essentially about giving employers and employees the ability to examine the options as they relate to their working conditions.
- "A system that does not allow this to occur is in need of reform. There should not be a myriad of institutional barriers standing in the way of employers and employees once they have reached an agreement."
The ACCI, whose performance all the way through this issue I can best describe as weak, tried to jump on the bandwagon in the end. Whereas the NFF put up money to help fund the high cost of the Industrial Court challenge, the ACCI had problems replying to letters. In fact I had many phone conversations and had sent them six letters or faxes on this issue before receiving any reply. They made no financial contribution.
My observations are that the country is not well serviced by an organization such as the ACCI who are not prepared to stand up and be counted when it counts. There was obviously a need for change in the system. The Labor Government introduced legislation which now appears totally unworkable when taken to anything like its limits and the ACCI's solution to the problem was to compromise rather than fight when we had done nothing wrong.
Individual small businesses financially supported the case through a trust fund administered through a local firm of certified practising accountants.
I think the issue also guaranteed the unseating of the Labor Member for Richmond, Mr. Neville Newell, as mentioned earlier and may have assisted in the swing nationally against the Federal Labor Government.
Some years ago I had a meeting with the Treasurer of one of our state governments about a payroll tax issue. This related to our farm where payroll tax was payable on 100% of the wages as it was part of our group. Such imposts war against the corporate sector going into farming and I wanted to point this out to him. I vividly remember him advising me to find a way to go around the system so that the farm had a different shareholding and therefore would not be subject to payroll tax. The approach of our company has never been to find diverse ways to avoid an issue. If something's wrong we will go in and fight for it. There is something wrong with the payroll tax system in N.S.W. and something has to be done about it. We are still paying payroll tax on 100% of the wages at our farm which is an extremely difficult impost. That needs to change and we are continuing our fight right up front on the issue---no back door methods.
Would I do it again?
In the scheme of things I believe there is a place for naive pragmatists such as us to expose the indefensibly one sided pro union system.
Yes I would do it again but I would hope to get more help from industrial organisations.