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O0079 Dec 1489/94 S Print L4912
Industrial Relations Act 1988 s.170NA approval to implement an enterprise flexibility agreement Optus Administration Pty Ltd (C No. 22680 of 1994) Various employees Telecommunications services industry VICE PRESIDENT ROSS SYDNEY, 25 AUGUST 1994 Conditions of employment - enterprise flexibility agreement - s.170NA Industrial Relations Act 1988 - not contrary to public interest - benefits provided by agreement balance reductions and protections for employees - reasonable steps taken to consult employees - relevant statutory requirements met - changes to work arrangements to be dealt with in accordance with written undertaking - agreement approved. DECISION This matter concerns an application pursuant to subsection 170NA(2) of the Industrial Relations Act 1988 by Optus Administration Pty Ltd. The application seeks the approval of the implementation of an enterprise flexibility agreement. The applicant has complied with the requirements of rule 30G. By agreement between the applicant and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [the CEPU], a copy of the application was provided to the CEPU upon it being filed with the Commission and the CEPU was notified of the hearing. The application was listed for hearing on 22 August 1994. The application states that the relevant award is the Optus Interim Award 1994. The only organisation of employees bound by this award is the CEPU. In accordance with sec 170NB the CEPU is entitled to be heard in respect of the application. At the hearing on 22 August 1994 it was conceded by Mr. Douglas QC, on behalf of the applicant, that the CEPU has members employed by the applicant who are covered by the proposed agreement. Accordingly the CEPU is an 'eligible union' within the terms of sec 170LB. Enterprise Flexibility Agreement 1994 The agreement subject to the application in this case is proposed to operate from the date of its approval for a period of 3 years. The key features of the Agreement are as follows: . Relationship to the Award: clause 2.2 provides that the terms of the Agreement are to prevail over the terms of the Award to the extent of any inconsistency.
. Contract of Employment: the Optus workforce will primarily be full
time. Full time employees will be engaged on a monthly basis
provided that any employee may agree to be employed on a different
periodic basis. To accommodate Optus' operational flexibility
requirements less than full time employment will be available.
Provision is made for employment for a mutually agreed period or
project and for part time and casual employment.
. Hours of Work: ordinary hours will be 38 per week. Core hours shall be between 7.00am and 7.00pm. Any variation of core hours on a workplace or individual basis shall only be by agreement and in any case the length of the span (12 hours) cannot be varied. . Wage rates: the minimum rate for each classification incorporates a 2.5 percent increase from 1 July 1994. The minimum rates will be further increased at 1 July 1995 and 1 July 1996 on the basis of the May Department of Treasury forecast movement in the Consumer price Index for 1995/96 and 1996/97. In the event that in any year the Treasury projection is at variance with the actual Consumer Price Index movement by more than 0.5 percent, the adjustment for the following year will take such variance into account.
. Performance Based Remuneration Schemes: the Agreement provides for
the implementation of performance based remuneration schemes for
full time and part time employees. As part of the implementation
of these schemes Optus has committed to:
. Sick Leave: will not be bound by prescription. Optus will approve for payment all reasonable and legitimate requests for sick leave. . Parental Leave: employees shall be entitled to parental leave (maternity, paternity and adoption) in accordance with Optus policies which will always be maintained to provide legislated benefits as a minimum. Optus commits to provide a return to work entitlement to the position which the employee held immediately before proceeding on parental leave, or to a position comparable in status and not less in salary and in the same location as the position occupied immediately before proceeding on parental leave.
The parental leave benefits incorporated in the Agreement include:
In addition, where employees on maternity leave have declared their intention to return to work, a six week remuneration based payment will be made, half paid at the start of the maternity leave and half paid following the employee's return to work. Eligibility for these payments is dependent upon the employee being deemed by Optus to be a "fully competent employee" at the time of payment.
In other words the benefit is dependent upon management's assessment of
the employee's performance. In this regard Mr. Webster gave evidence that
the expression 'fully competent' was well understood by Optus employees and
that such performance assessment is based on a number of factors including:
Further Mr. Webster stated that during the July 1994 Remuneration Review some 95 percent of Optus employees were assessed as being at or above the level of 'fully competent'. Application of the Relevant Tests The statutory tests applicable to applications for the approval of enterprise flexibility agreements have been dealt with in detail in the IOF Modular Officers (Mfg) Pty Ltd Enterprise Flexibility Agreement Decision (Print L3367). I have applied the tests as set out in that decision. I have had the opportunity to read the Agreement and the statutory declarations filed. On the basis of the material filed, the submissions made by the parties in the proceedings and the evidence, I am satisfied as to the following matters: 1. The applicant is a constitutional corporation within the meaning of the Act as it is a body corporate that is incorporated in the Australian Capital Territory. 2. Each of the statutory requirements of sec 17ONC have been met, in particular: (i) sec 170 NC (1) (a): Optus Administration Pty Ltd is a business carried on by a single employer and hence is an "enterprise" within the meaning of sec 170 LC. The agreement only applies to Optus Administration Pty Ltd and is only about matters pertaining to the relationship between employers and employees. (ii) sec 170 NC (1) (b): the wages and conditions of employment of the employees covered by the agreement are regulated by the Optus Interim Award 1994. (iii) sec 170 NC (1) (c): the agreement covers all of the employees employed to perform work in the enterprise in respect of whom wages and conditions of employment are regulated by a federal award. Further clause 2.1 of the Agreement provides that it covers all employees whose salaries and conditions of employment are intended, but for the Agreement, to be regulated by the Optus Interim Award (1994) being those employees to whom the minimum rates in Appendix A(i), A(ii) and A(iii) are applicable.
(iv) sec 170 NC (1) (d): the means of determining whether or not the 'no
disadvantage' test is met is dealt with in ss. 170NC(2). The Commission
is required to decide whether approving the implementation of an
agreement would result in the reduction of any entitlements or
protections which the employees covered by the Agreement enjoy under:
If such a reduction would occur then the Commission must determine whether, in the context of the terms and conditions of the employees concerned when considered as a whole, the reduction would be contrary to the public interest. The CEPU submitted that the Agreement did not meet the 'no disadvantage test'. In this regard specific reference was made to the changes embodied in clauses 6.2(a); 6.2(c); 6.9(f); 6.9(h); 6.13(a); 6.13(c); 6.13(d); 6.14(b) and 6.12 of the Agreement. In relation to this application I have concluded, following an examination of the proposed Agreement vis a vis the relevant Award, that the approval of the Agreement would result in a reduction in entitlements and protections which the employees to be covered by the agreement presently enjoy under the relevant Award. These reductions were referred to in the submissions by the CEPU in these proceedings and are set out in Exhibit 2 to Mr. Webster's statutory declaration. The issue for determination now is whether these reductions are contrary to the public interest. Such a determination is dependent on my view of the overall package of terms and conditions of employment to apply to the employees covered by the agreement. The reduction in award entitlements contained in the Agreement need to be balanced against the benefits provided. In this regard I have concluded that in the context of the terms and conditions of the employees concerned when considered as a whole, the reductions in award entitlements and protections are not contrary to the public interest. I have reached this conclusion on the basis of my assessment of the reductions and benefit's contained in the Agreement vis a vis the Award. I have also had regard to the material comparing the proposed Agreement and the Award which was distributed by Optus to all employees. [Ref: Exhibit 2 to Mr. Webster's statutory declaration] I note that whilst the CEPU did not agree with this comparative material it was conceded that it was not factually incorrect or misleading.
The benefits in the Agreement which go to offsetting the reductions
identified include the:
The agreement does not, in relation to their terms and conditions of employment, disadvantage the employees who are covered by the Agreement. (v) sec 170 NC (1) (e): clause 9 of the Agreement sets out a procedure for preventing and settling disputes between the persons bound by the agreement about matters arising under the agreement; (vi) sec 170 NC (1) (f): clause 4(b) of the Agreement states that it is not appropriate for the Agreement to establish a process for the persons bound by the Agreement to consult each other about matters involving changes to the organisation or the performance of work in the enterprise;
(vii) sec 170 NC (g) & (h): the consultation process undertaken by Optus
during the course of negotiations for the Agreement was comprehensive.
The methods used included:
Within the M Mail system a special EFA mailbox was established to highlight and draw particular attention to all EFA related material and to facilitate the direct response by employees to the material. In this way use of the M Mail system enabled a two way communication process between Optus Management and employees. Some 70 EFA related queries from employees were received by management through the M Mail system. [Evidence of Mr. Webster, Transcript of 22 August 1994 at p.26] The operation of this aspect of the M Mail system was demonstrated during the course of the proceedings. On the basis of the foregoing I have concluded that during the negotiations for the Agreement reasonable steps were taken to consult employees who are covered by the agreement about the Agreement. In assessing the consultation process I have also had regard to the fact that a number of changes were made to the discussion draft version of the Agreement which was circulated to all employees on 22 June 1994. A summary of these changes is at Attachment H to Mr. Webster's statutory declaration.
At the conclusion of the negotiation phase and before application was
made for the approval of the Agreement employees were provided with a wide
range of information about the Agreement. This material included:
Number of % of eligible % of votes employees employees counted No. of employees eligible to vote 2400 No. of employees who voted 'yes' 1802 75.1 89.1 No. of employees who voted 'no' 205 8.5 10.1 No. of informal votes 16 0.7 0.8 Total number of votes counted 2023 84.3 100.0[Ref: Attachment N to Mr. Webster's statutory declaration] The voting procedure adopted and the steps taken to ensure ballot security are set out in detail in the statutory declaration of Mr. Leonard, Manager Audit and Advisory with KPMG. The procedures adopted were developed in consultation with Mr. Martin Boland, a Deputy Industrial Registrar of the Commission. In the context of the statutory requirement in paragraph 170 NC(1)(i) consent will be genuine in circumstances where it is 'informed' and there is an absence of coercion. There was no evidence of any coercion in this case. Further an M Mail was sent to all Optus Human Resource Managers asking that all Optus managerial and supervisory staff under their supervision be instructed not to coerce any Optus employee to vote on the question of being bound by the Agreement [Ref: Attachment M to Mr. Webster's statutory declaration].
In view of the extensive consultation process undertaken by Optus I am
satisfied that the consent of the employees was 'informed'. In this regard I
have had particular regard to the fact that all employees were provided with:
I have also had regard to the material about the proposed Agreement
distributed by the CEPU to Optus employees. A copy of this material is set
out at Attachment F to the statutory declaration of Mr. Webster. This material
was distributed in the following way:
As a consequence of reading the material distributed by the union, some Optus employees approached management to ask further questions about the proposed Agreement [Ref: statutory declaration of Mr. Webster at para 4.7(h)(x) and (xi)]. On the basis of the foregoing I have concluded that a majority of the employees covered by the agreement have genuinely agreed to be bound by the Agreement. (ix) sec 170NC (1) (j): clause 2.3 of the agreement provides that it will take effect from the date of approval by the Commission and shall remain in force for a period of three years. 3. The CEPU submitted that I should refuse to approve the implementation of the Agreement or adjourn the application to approve such implementation pursuant to sec 170ND. Two arguments were advanced in this regard. First, it was submitted that Optus had failed to meet it's obligations under ss. 170ND(7). This subsection is in the following terms: "Despite section 170NC, the Commission may refuse to approve implementation of an agreement, or may adjourn an application to approve such implementation, if satisfied that the employer: (a) did not, before or as soon as practicable after the time when negotiations for the agreement began, notify each organisation that was at that time an eligible union about the negotiations; or (b) did not give each such organisation a reasonable opportunity to take part in the negotiations and to agree, before the application for approval was made, to be bound by the agreement." It was conceded that paragraph 170ND(7)(a) had been met in this case. In relation to paragraph 170ND(7)(b) it can be implied from Attachment P to Mr. Webster's statutory declaration that the CEPU had been given a reasonable opportunity to agree to be bound by the Agreement before the application for approval was made.
The CEPU's primary argument was that it had not been given a reasonable
opportunity to take part in the negotiations for the Agreement before the
application for approval was made. On the basis of the evidence before me and
the submissions of the parties, I have concluded that a reasonable opportunity
had been given to the CEPU to take part in these negotiations. In reaching
this conclusion I have had particular regard to the following:
The second issue raised by the CEPU deals with an alleged breach of section 334. In this regard the Union notified a dispute on 14 July 1994 and a hearing was held before Commissioner Cox on 29 July 1994. Transcript in relation to those proceedings was tendered by the CEPU in this case. [Exhibit CWU3] The Union alleged that Mr. Flynn, a member of the Union, was counselled as a consequence of his activities as a union delegate. Arising out of the proceedings on 29 July 1994 Commissioner Cox made a recommendation in the following terms: "... the parties initially at a senior level should have private discussions as soon as possible on the issue of procedures and method of the union raising issues with management. That discussion should be fairly broad and frank between the parties and I would hope that arising from such discussions there could be a mutually satisfactory agreement reached between the parties on that particular issue". [Ref: Transcript C No. 32149 of 1994, 29 July 1994 at p.5] During the Course of the proceedings before Commissioner Cox a statement by Mr. Flynn was tendered by the Union. This statement details the circumstances which are said to give rise to the alleged breach of sec 334.
The CEPU submitted that, on the basis of the material before me, the
application for the approval of the Agreement should be adjourned. This
submission was made pursuant to ss. 170ND(5). Subsection 170ND(5) is in the
following terms:
On the basis of the material before me I am not persuaded to adopt the
course advocated by the CEPU. I have reached this conclusion for the
following reasons:
In conclusion there are no matters arising under s 170 ND which would lead me to refuse to approve the implementation of the agreement. 4. Pursuant to sec 170NG I have identified the employees (the 'relevant employees') who are covered by the agreement but whose interests may not have been sufficiently taken into account in the negotiations for, or the terms of, the agreement. There are 2400 employees covered by the agreement and of these approximately 1130 are women. There are 65 young persons and approximately 60 persons whose first language is not English. The 'relevant employees' were consulted about the agreement and informed about the matters referred to in subparagraphs 170NC(1)(h)(i) and (iv). Further the matters referred to in subparagraphs 170NC(1)(h)(ii) and (iii) were explained to the relevant employees. In the statutory declaration filed in support of the application Mr. Webster stated, at paragraph 8.2, that in his opinion female employee participation in the consultative process in relation to the Agreement was broadly proportionate to the overall representation of women among employees to be covered by the Agreement. Further at sub-paragraph 8.2(c) Mr. Webster states that there is no gender differentiation in the relevant remuneration levels and Optus' performance based remuneration system is applied without discrimination. I have also regard to the recognition given by the Affirmative Action Agency to Optus' "high level of commitment to improving women's access to equal employment opportunity" within its organisation [Ref: Attachment Q to Mr. Webster's statutory declaration]. This commitment is reflected in those provisions of the Agreement which may be regarded as 'family friendly', for example parental and family leave in clauses 8.3 and 8.8. In relation to those employees whose first language is not English each such employee was individually consulted in relation to the Agreement. Further, in his statutory declaration Mr. Webster expressed the opinion that Optus jobs require a high level of education, skill and comprehension and as a result Optus employees were proficient in English [Ref: sub paragraphs 8.2 (e)-(g) of Mr. Webster's statutory declaration].
There are some 65 employees covered by the Agreement who are under 21
years of age and of these:
In addition to the consultative process undertaken in relation to all employees special briefing/consultation sessions were held for young persons [Ref: paragraph 8.2 (i) of Mr. Webster's statutory declaration.] In all the circumstances I am satisfied that there are no employees whose interests were not sufficiently taken into account in the negotiations for, or the terms of, the agreement. Further, I am satisfied that the women, persons whose first language is not English and young persons covered by the Agreement were consulted in ways which were appropriate to their particular circumstances. Variation to the Agreement
Subsection 170NE(1) states that where an agreement (referred to as the
'main agreement') provides for any of its terms to be varied by a later
enterprise flexibility agreement applying to the same enterprise, the
Commission must refuse to approve implementation of the main agreement unless
satisfied that the main agreement specified:
In this case clause 3 provides for the variation of the Agreement by a later enterprise flexibility agreement. The terms of any identified clause can be so varied. The clauses identified in the Agreement as being capable of variation pursuant to clause 3 are clauses 6.2, 6.9, 6.13, 6.14, 7.2, 7.3 and 14.
The circumstances in which these terms can be varied is where agreement
is reached between the parties that the clause:
The terms may be varied in a way which subjects the variation to the same procedures and requirements as are required for the approval of this Agreement by the Commission. I am satisfied that clause 3 meets the requirements of ss. 170NE(1). Subclause 4(a) of the Agreement is in the following terms: "Optus and its employees agree that consistent with existing practices, Optus has the flexibility to conduct its operations within the full scope offered by this Agreement.
The obligations on Optus arising from Clauses 6.2(a), 6.2(b), 6.2(c),
6.2(d), 6.9, 6.12, 6.13, and 6.14, or any of them, may be changed by agreement
between Optus and any group of employees and be deemed part of this Agreement
provided that:
It was submitted by Mr. Douglas QC that subclause 4(a) falls within subsection 170 NE(2) as it is a means of specifying how obligations under the Agreement can change because of the terms of the Agreement itself. The provision was said to provide Optus with a mechanism for introducing a change in the work arrangements applicable to a group of employees without the need to secure the genuine consent of a majority of all employees covered by the Agreement. During the course of the proceedings the Commission and the CEPU raised a number of concerns with respect to subclause 4(a). The essence of these concerns was that subclause 4(a), as currently drafted, may provide a means of varying the Agreement in a fundamental way without any assessment of such a change by the Commission. Further subclause 4(a) does not contain any requirement to notify eligible union(s) nor does it provide that each such organisation should be given a reasonable opportunity to take part in the negotiations in relation to the changes. Mr. Douglas QC submitted that subclause 4(a) was not intended to operate in practice in a way that would avoid Commission scrutiny or exclude an eligible union from the negotiation process. This assurance was accepted by the Commission. In order to ensure that there was no misunderstanding in relation to his issue Mr. Douglas QC stated that Optus would give an undertaking in the following terms:
"Optus undertakes that, in the event that it proposes to change any work
arrangements identified in Clause 4(a) of the Optus EFA, it will do so through
the following process -
Where, at the conclusion of the above consultative process, the majority of employees in the group support the change, the approval of the Commission will be sought prior to its implementation, in the same manner as it was sought for the Optus EFA". [Ref: Exhibit Optus 3] Pursuant to subsection 170NF(2) the Commission accepts the undertaking given as meeting the concerns raised. In this regard I note that the CEPU also withdrew it's objection to subclause 4(a) on the basis of the undertaking given. I am satisfied that, on the basis of the undertaking given and consistent with the Commission's obligation under subparagraph 170 LA (i) (a) (ii), subclause 4(a) falls within the terms of ss. 170 NE (2). Parties Bound The CEPU has, by written notice given to the applicant employer, agreed to be bound by the Agreement if and when the Commission approves its implementation [Ref: Attachment P to Mr. Webster's statutory declaration]. Accordingly the CEPU will, pursuant to s. 170NP, be bound by the Agreement. Publication
At the conclusion of the proceedings on 22 August 1994 I raised with the
applicant the question of how the agreement should be published. In this
regard sec 170NH requires the Commission to determine how an enterprise
flexibility agreement approved under Division 3 must be published in order to
ensure that the contents of the agreement are:
In my view sec 170NH does not provide for the terms of an agreement to be kept confidential. Pursuant to sec 143(3)(b) such agreements must be publicly available. The only issue under sec 170NH is the manner of their publication. Each of the current employees has received a copy of the Agreement and it is in a form that is easily understood. Further Mr. Douglas QC, on behalf of the applicant employer, gave an undertaking that each new employee would be given a copy of the Agreement and the undertakings given in these proceedings upon commencement and that copies would be placed in the 'breakout rooms' at the workplaces covered by the Agreement. In view of the undertaking given I do not believe it is necessary for the agreement to be given a print number and published by the Commission. Accordingly, pursuant to section 170NH, I determine that a copy of the agreement is to be available for inspection at each Registry in accordance with section 143(3)(b). Conclusion On the basis of the foregoing I am satisfied that the relevant statutory tests have been met and I will approve the implementation of the enterprise flexibility agreement. Pursuant to sec 170NJ the agreement will come into force from the first pay period on or after 25 August 1994 and shall remain in force until 25 August 1997.
Appearances:
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