Application for Variations to Transport Industry – Excavated Materials, Contract Determination [2022] NSWIRComm 1054 - NSWIRComm 2022 case summary

Judgment (7 paragraphs)

[1]

decision

This decision is made arising from an application under s 320 of the Industrial Relations Act 1996 ("Act") filed on 16 June 2022 ("Application") by the Transport Workers Union of New South Wales ("TWU") to vary the Transport Industry - Excavated Materials, Contract Determination ("Determination").
The application sought to vary the rates in Part B of the Determination in accordance with a procedure set out in Part C of the Determination. Part C permits parties to apply to the Commission each year to adjust the rates in accordance with a 'rise and fall formula'.

[2]

Background

On 21 June 2022 the Application was listed for direction and a conference as required by section 315 was programmed for 30 June 2022.
During the course of the conference on 30 June 2022, Mr Ward of NSWBC informed the Commission that there had been agreement reached with respect to the rate variation in accordance with the 'rise and fall formula'. In addition, he informed the Commission that the parties had agreed to introduce temporary fuel levy to compensate contract carriers for the sudden increase in the price of fuel. Mr Rasmusseun of the TWU and Ms Valaire of the CCF who appeared on the day, concurred with this approach.
The proposed fuel levy variation was said to be one which was approved, albeit in a slightly different manner, by Commissioner Sloan in Application to Vary the Transport Industry - General Carriers Contract Determination 2017 and Transport Industry - Courier and Taxi Truck Contract Determination [2022] NSWIRComm 1029 (the "GCCD Decision").

The Submissions

In relation to the principles to be applied in applications to vary contract of carriage the following submissions were made: 16.In the GCCD Decision, Commissioner Sloan referred to his prior decision in Applications to Vary the Transport Industry - General Carriers Contract Determination 2017 and Transport Industry - Courier and Taxi Truck Contract Determination3 in which he set out the principles to apply when dealing with applications such as the one before him. 17. These principles adopted the view of Commissioner Newall in Transport Industry - General Carriers Contract Determination 20174, when he observed that: like an award, a contract determination ought to set fair and reasonable rates. The overarching duty of the Commission when it is dealing with the setting of rates and conditions is that it must make rates and conditions which are fair and reasonable; and the consent of the parties to an application to make or vary a contract determination is important and relevant but is not of itself determinative.
The variation to the rates and the formula were explained as follows:

Rates 4. The Determination prescribes minimum rates of remuneration for contract carriers. These are set out in Part B of the Determination (Rates). 5.Part C of the Determination contains a procedure for adjusting the Rates. Parties can apply to the Commission each year to adjust the rates in accordance with a 'rise and fall formula' (Formula). 6. The Formula takes into account increases or decreases in various benchmarks, representing the following components of the Rates: Wages; Capital; Insurances; Registration; Repairs & Maintenance; Tyres; Fuel; and Administration. 7. The benchmarks used include modern award wages, various CPI subindexes and average fuel prices. 8. Each component is given a weighting, indicating the percentage contribution it makes towards the total Rate. 9. The increase or decrease to each benchmark is adjusted according to the relevant weighting, resulting in a percentage increase or decrease that is applied to the Rates.

Since the Determination was made in 1996, the Rates have been regularly amended in accordance with the Formula, generally on an annual basis.
It was then submitted that the variation to the Rates and the Formula was fair and reasonable on the following basis: 21. The amended Rates are fair and reasonable as: they have been calculated in accordance with methodology that: (i) forms part of the Determination, having already been approved by the Commission; and (ii) has historically been used to review the Rates on a regular basis; and have been increased with reference to a variety of relevant benchmarks and are therefore indicative of the actual cost increases faced by contract carriers.
As to the fuel levy variation, the following submission weas made in support of the variation: 23. The Levy is an additional amount, payable as a percentage of total payments made to a contract carrier. 24. The proposed variations also include procedures for calculating and updating the Levy. In summary: (a) a party must apply to the IRC to vary the Levy by the second Monday in any calendar month; (b) the new Levy is calculated in accordance with a formula that takes into account the NSW state average retail diesel price over the prior calendar month; and (c) the new Levy applies from the first of the following month. 25. The Levy is a fair and reasonable rate as: (a) it is calculated with reference to the difference between actual fuel prices and the benchmark fuel price used to calculate the Rates - this means that it is proportional to the actual increase in fuel costs faced by contract carriers; (b) it allows for regular review, recognising the current volatility in fuel pricing; (c) it has been introduced as a temporary measure and can be varied or removed as required - this prevents repeated fluctuations to the 'base' Rates payable to contract carriers; (d) the timeline for variations allows adequate time for: (i) parties to calculate the varied Levy and apply to the Commission for a variation; (ii) the Commission to handle any applications and make the required variation; and (iii) contract carriers and principal contractors to implement the changes; and (e) leave is reserved for parties to apply in circumstances where principal contractors are already compensating contract carriers for fuel costs (be it by providing fuel, reimbursing fuel costs or by some other method). 26. The proposed Levy is very similar to the temporary fuel surcharge that was inserted into the GCCD as part of the GCCD Decision. Both the Levy and the GCCD's temporary fuel surcharge: (a) are calculated with reference to the monthly average fuel price; (b) may be varied on a month by month basis; (c) require approval from the IRC before taking effect; (d) apply as a safety net, and may be offset by above-determination payments; and (e) provide leave for parties to apply if already compensating for fuel elsewhere.

Application for Variations to Transport Industry – Excavated Materials, Contract Determination [2022] NSWIRComm 1054

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Judgment (7 paragraphs)

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