Before dealing with the merit argument put to the Commission I believe it is necessary to briefly highlight clause 36 of the award.

Clause 36 covers special provisions which an employer may elect to take up in respect to newspaper, delicatessen, fish, cake, bread, fruit, confectionery, take away cooked food, cool drinks, milk bars and video hire establishments and to like sub-departments in general stores.

The main effect of the clause is to provide for very flexible ordinary working hours without incurring the penalties that apply to general retail stores e.g. clause 36 states inter alia:

"(i) The ordinary hours of work shall not exceed 38 per week.

(ii) The ordinary hours may be worked on any day of the week provided that:

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(1)Print F9125 (R018) (2)Print G6800 (1987); 304 CAR 378

(b) the number of hours to be worked in any one other day, the employee's half day off shall not exceed four;

(c) the number of hours worked on the remaining days shall not exceed eight per day except on one day per week when the hours may not exceed ten within a span of not more than

twelve hours calculated from the time of commencement on that day."

Note: Ordinary hours of work on a Sunday attract a penalty of time and one half with a minimum of three hours whereas for retail establishments not

in special categories it is double time with a four hour minimum.

Prior to primary submissions being made Mr Lyons who appeared for the confederation called four witnesses representing a small supermarket, a newsagent, a fast food franchise and a chemist. The first three operated under clause 36 while the latter came within general award conditions.

Mr Lyons sought the reaction of each witness to the following offsets put forward by the association in their letter of 9 November 1988, exhibit L1 in return for the 4 increase.

2. Extension of spread of hours by 30 minutes Monday to Friday.

3. 38 hour week to be worked on four x 9-1/2 hour shifts.

4. Tea money only to be paid where less than 24 hours notice of overtime is given.

5. Part-time minimum to be reduced from eighteen hours to twelve

hours per week with a minimum shift of three hours for a maximum of five days per week.

A savings clause would apply to existing part-time staff.

In summary the evidence adjuced from the four witnesses during examination and cross-examination was as follows:

All four stated that they could see little or no savings in moving to

Several said they doubted whether their employees would accept the change while the franchise operator said his interstate company required weekly financial status reports and therefore it would not be possible to pay fortnightly.

On the question of investing the weeks wages held in hand in the short term money market all said that while it was possible it was also highly improbable that they would take the trouble to do so.

Some said they would most likely use the money to pay off creditors who were now operating on weekly credit terms for goods supplied and thus possibly create a cash flow problem in the second week.

The three who operate under the special provisions of clause 36 flatly rejected that the extension of the daily spread of hours by 30 minutes Monday to Friday would lead to any financial saving.

The chemist who operates under the general award estimated that in his day-night pharmacy the saving would be just under 4.

All four rejected the working of the 38 hour week in 4 x 9-1/2 hour shifts as being a potential saving and in fact several said they would have to put on additional staff if this method of working was adopted.

The three establishments working under clause 36 stated that there was no value in this offset because they did not work overtime while the chemist estimated that it would save him $4 per week.

In respect to the part-time offset the supermarket operator and the newsagent stated that they did not employ part-time permanent employees and that it was more advantageous to balance staffing levels with casuals.

The franchise operator stated that the Alice Springs branch of the operation estimated a potential saving of 1.66 and he believed the Darwin operation would be the same.

The chemist who employs one part-time employee could see no advantage in the offset and believed his method of operation was better served by casuals.

On the question of traineeships being introduced into the award the supermarket operator said he would probably take one on but did not see any financial advantage in doing so.

The newsagent did not believe his industry lent itself to traineeships and the franchise operator said his organisation already had a cadet scheme in operation tailored to in-house international standards of his parent company.

The chemist could see no role in his operation for the type of traineeship envisaged by the scheme.

Mr Farrell who appeared for the association elected not to call any witnesses and moved on to his primary submission.

In opening Mr Farrell reminded the Commission that of the approximate 8000 retail employees employed in the Northern Territory some 4000 employed under the Automotive Services Award and the Supermarket and Chain Stores Award had already received the 4 second tier increase.

He further submitted that the offsets given in return for the increase in those two awards were almost identical to those offered in the subject case

and to other relevant retail groups throughout Australia who had been awarded the 4 increase.

Mr Farrell went on to emphasise that the employees under consideration should not be called upon to give offsets in excess of those already accepted in other relevant awards in return for the 4 increase.

He complained that the employers while refusing to accept the offsets

that had been offered would not be specific on what offsets they want other than a reduction in penalty rates which in his opinion would not contribute to an increase in efficiency or productivity as envisaged by the March 1987 national wage principles.

As an example Mr Farrell submitted an exhibit F2 which demonstrated that to comply with an employer suggestion that chemists and other stores operating under the general award be included in the special provisions of clause 36 would on an eight hour Saturday shift result in a wage reduction of $43.47 for that day even after allowing for the 4 increase.

Such an offset he submitted was not in keeping with the intent expressed at page fourteen of the 1987 National Wage Case.

"We stress in relation to the operation of the restructuring and efficiency principle that the change must be genuine and designed to improve efficiency and enhance productivity and generally be consistent with the needs and requirements of the industry and enterprise

Mr Farrell also relied on a decision of Mr Justice Munro(3) (exhibit F3) for further support.

At page nineteen of the roneod decision his Honour stated:

"The conclusion I have reached is that the restructuring and efficiency principle should not be interpreted to require a shaving of the award entitlements of existing or future employees to fund a capacity for a general pay increase. While award entitlements are not to be treated as sacrosanct, the emphasis of that principle is upon the achievement of measures to improve efficiency. In the arbitration of changes to award conditions, it is necessary also to have regard in more than a perfunctory way to the arbitral history of the award provision in issue, to any change in circumstances since the insertion of the provision in the award, and where appropriate, to the overall function of a particular provision in the award."

He also referred the Commission to a decision of Deputy President Riordan in the meat industry(4) - exhibit F4 - who at page 60 of the roneod version stated:

"My observation of work in the various sectors has led me to the conclusion that there is little scope for the type of restructure of work practices which are found in some other industries.

Variation to existing award provisions which reduce the income of employees as a cost offset to the grant of reduced working hours or increased wages could result in either no net gain to employees or in some cases result in an actual after tax reduction in earnings. Such a

result would be unfair and could not be justified by the reasons given in the relevant national wage cases, when the whole thrust has been to achieve greater efficiency and the elimination of restrictive work practices which inhibit flexibility and efficiency."

_______________________________________________________________________________ (3)Print H5871
(4)Print H5521

Turning next to the offsets put forward by the association - exhibit L1

• Mr Farrell submitted that while it was not possible to specifically quantify them because of the varied and widespread nature of the industry they considered the overall package to be sufficient to warrant the 4 increase.

Moving through the offsets he submitted that notwithstanding the views expressed by the four employer witnesses there were savings to be had in both time and investment by going to fortnightly pays and if an employer chose not to take up the potential savings offered by this offset then this should not be held against the employees.

On the question of increasing the spread of ordinary hours by 30 minutes Monday to Friday he conceded that this offset would be of no benefit to those establishments operating under the special provision clause 36.

However for those operating under the general conditions of the award he considered there was a significant advantage when one took into consideration

that there was little or no regulation of retail trading hours in the Northern Territory.

Mr Farrell submitted that the offset which provided for working the 38 hour week in 4 x 9-1/2 hour shifts could be of significant benefit to an employer because it enabled him to match staffing with the periods of greatest demand.

He noted that it had been awarded as an offset in the South Australian Retail Award.

Moving on to the tea money offset it was submitted that there was a potential saving if employers took the trouble to plan ahead to meet known overtime requirements.

The offset in respect to part-time employees would, Mr Farrell submitted, enable employers to convert casual employees who worked between twelve and eighteen hours per week to permanent part-time.

This would be cheaper than paying the 20 casual loading and in addition there would be a spinoff in increased efficiency by the employees concerned because of greater job security and identification with the establishment.

Such an offset was awarded in both South Australia and New South Wales 4 negotiations.

Mr Farrell went on to say that traineeship had been recognised as an offset in New South Wales because it provided employers with the opportunity to have better trained employees while at the same time enjoying the significant financial benefits available in respect to employing trainees.

He summarised this segment of his submission in the following terms at page 52 of transcript:

"We would say that taken together, all of these offsets will provide greater efficiency to the employers and provide them with greater

productivity if they are prepared to bite the bullet and to use them. We would say that it is impossible to precisely mathematically put a value on the offsets in advance of their implementation. We have clearly seen today that there is a difference between the clause 36 employers and the general employers.

It was quite obvious to me, Mr Commissioner, that the employer under the general part of the award was going to get greater benefits in terms of offsets. The witness from the pharmacy was going to get some benefit from the fortnightly pays; he was going to get benefit from the extension of ordinary hours. He was going to get benefit from the tea money clause; I would suggest he would have got some benefit from

part-time provisions if he was able to organise his staff in such a way to take advantage of that.

It is clear that those employers are getting greater benefits than the clause 36 people, but in an industry that is characterised by diversity."

Mr Farrell submitted that the above contention was supported by the following extract from page 55 of the decision of Deputy President Riordan previously referred to:

"There is considerable difficulty in determining what appropriate cost offsets should be awarded. Although various suggestions have been made the benefit to employers of these various proposals varies greatly depending on the section of the industry in which the business operates and the size, nature and circumstances of the enterprise concerned."

On the question of statements by the four witnesses that they had no tangible restrictive work practices Mr Farrell submitted that if this was so the employees should get the 4 because they had nothing to give up in return.

He postulated that it would be inequitable for an employee to be denied the 4 increase because he was efficient and in this regard turned to a decision of Mr Commissioner Smith in the vehicle industry(5) where at page six of the decision the Commissioner stated:

"The test of the 'best possible result' will, of course, always be

a matter of judgement, however, it should be clearly understood that this test is totally consistent with the giving up of practices far in excess of the 4 per cent increase in wages."

Following on from the above extract Mr Farrell stated at page 54 of transcript:

"So if it is sufficient for some employees to be giving up more than 4 to get their 4 wage rise, then it must also be the case that some employees will not give up anything like 4. So we would see that as being quite consistent with our approach, and it may be in some circumstances where the offsets that we have offered for peculiar reasons may be worth more than 4, it has to go both ways.

Now, on this question of whether employees who are working in a particular establishment which is very efficient should then be denied the 4, Commissioner Smith also has something to say about that at page 4 of that print I have just handed up. He says its about half way down

'This is a difficult area because the Commission does not want to be perceived as constructing the principle of wage and salary determination which reward the inefficient and punish the

efficient.' _______________________________________________________________________________ (5)Print G9683

Now, I would suggest that that would be precisely the result of a rejection of the 4 claim. That would be the precise result of the rejection of a claim for employees in, for instance, Mr Moyle's supermarket: very efficient; he has admitted that; no work practices there to be achieved.

He runs it as efficiently as he possibly can. There is nothing he

wants from the union by way of offsets to make it more efficient, and yet the employees in his shop would be punished because they are operating an efficient business, and again we say that that should not be the result of the 4 wage arrangement; that that was not the intention, and that the Commission has to take a broad brush approach."

In the same vein he referred again to the decision of Deputy President Riordan in the meat industry where at page 51 of the roneod version the Deputy President stated:

"The overwhelming majority of employees whose conditions of employment are covered by awards of this Commission have received an adjustment in wages in accordance with the restructuring and efficiency principle. It was clearly never intended that some employees should be excluded from the benefit of that wage increase except perhaps where it was shown that there was a refusal to cooperate in achieving greater efficiency. It could not have been intended that those who had reached a level of acceptable efficiency should be denied an increase which was available

to others who had developed work practices which inhibited efficient procedures and processes. To do so would be a severe injustice. This aspect is referred to elsewhere in this decision."

Mr Farrell concluded his submission by handing up a schedule of offsets awarded by consent in the Supermarket and Chainstores (NT) Award in return for the 4 second tier increase - exhibit F6 - and at page 55 of transcript he concluded:

"A quick perusal of that document will show that with the exception of point 2, the ordinary hours for storemen, which was brought into line with the retail industry, all of the other offsets were identical with the ones being proposed here, with the exception that we have added traineeships as an offset, so in a sense we have gone perhaps one step further and given traineeships as an offset, but for the rest, the

offsets are identical, and we make the point that if it is good enough for those 2000 employees to be operating pursuant to those offsets - have that 4 - then there is no reason why the same benefits should not accrue to the employers under these offsets, as offered by the union."

In opening his reply Mr Lyons for the employers commented on the query raised by Mr Farrell on the applicability of the special provisions of clause 36 to small type supermarkets like the one operated by one of the witnesses and he stated that the Arbitration Inspectorate in Darwin had confirmed that such stores were rightfully covered by the clause.

Mr Lyons then went on to say at page 57 of transcript:

"When my friend says that we are not prepared to offer anything against his offer in terms of offsets, then he is correct in that there is nothing in writing. There have been numerous conversations, and the reasons why we did not ever progress any further was that firstly I believe we have made it clear to you today that there is very little area available to retailers in the Northern Territory to reform or restructure, apart from going to matters within the award; in other

words, the old favourite, penalty rates over the weekend, or something like, for instance, the absorption of a morning tea break which I believe Mr O'Connor raised.

These are award matters, and it has been our firm understanding that the union is not prepared to tamper any further with award matters in this particular award, and if I am wrong in that, then I will certainly take any offers that are forthcoming. We would say to you, sir, that we could put to you that there should be some additional

concession, for instance, a reduction in overtime rates during the weekend. It is arguable that this can actually apply under this restructuring and efficiency principle, and it certainly must be provided that such a provision is without merit or obsolescent, and it would be difficult, I would have thought, for me to put to you that overtime conditions over the weekend are obsolescent, given their current prevalence throughout the award."

Before giving a history of how clause 36 developed Mr Lyons conceded that there was at least some notional value in the offsets put forward by the association he estimated that because of the prevalence of establishments operating under clause 36 such value could not go beyond 2.

He estimated that approximately 50 of the retail outlets under the award operated under clause 36 and while it could be argued that pharmacies were a convenience store such a belief should possibly be the subject of a separate application.

On the question of additional offsets Mr Lyons said that apart from expanding the range of retail outlets under clause 36 and reviewing award penalty rates his clients were bereft of ideas.

In his reply Mr Farrell reiterated that employees should not be denied

the 4 second tier increase because they were efficient as that was not the intention of the National Wage Case Full Bench.

There then followed an exchange between the Commission as now constituted and Mr Farrell on the applicability of the offsets to establishments operating under clause 36 and I will deal with this aspect later in this decision.

Mr Farrell then went on to make a lengthy submission as to why any move to extend the range of establishments that could operate under clause 36 should be the subject of a separate application to this Commission.

Accordingly as I agree with this submission I do not propose to deal with that aspect any further in this decison.

The following exchange then took place at page 66 of transcript:

"THE COMMISSIONER: And what about the requirement for the Commission to pay attention to the economic consequences of its decisions when at least three of the witnesses here this morning said if the 4 was not offset they would pass it on to the public?

MR FARRELL: Well, I concede that the offsets are not going to be of greatest value to those employers under clause 36, but there is nothing that the employees can do to change that circumstance and there is

nothing that the employers want. I mean, I think it has to be balanced. We are proceeding with this 4 claim on the basis that shop assistants round the country have now all got the 4.

The shop assistants in these particular type of convenience stores round the country have also got it, for offsets which may not have been as valuable to them as the general shop assistants, but if the Commission is now going to say, 'One small group of shop assistants in the country are not going to get the 4 because the offsets are not sufficient,' then the Commission in my view is doing exactly what the

principle says it should not do; it should not punish the efficient.

THE COMMISSIONER: But the principle also says we should not punish the public.

MR FARRELL: Well, in my view, Mr Commissioner, it is a case of balancing

all of the considerations, taking into account all of the considerations. We are talking about, at most, if you are talking about 50 per cent of the employers, 2000 employees, so we are talking about 2000 employees in the whole of Australia who are not going to get the 4 because they are so efficient.

Now, in my view, that is not the purpose of the guideline, to deny to those employees the 4 wage rise. It is doing what the Commission clearly said it should not. It should not punish the efficient. They are efficient. There is nothing the employers want, short of a wholesale attack on penalty rates, but there is nothing that the employers can do to make themselves more efficient. That is not the fault of the employees. The employees ought to be applauded for the fact that they are operating in such efficient establishments. They are doing the right thing; they are cooperating."

Mr Farrell concluded his reply by reiterating that notwithstanding the special provisions of clause 36 the offsets were of benefit to all respondents under the award and the application for a 4 increase should be granted.

In deciding this case I am concerned at the generalised approach the association has adopted towards the offsets offered.

They have in my opinion adopted a very casual approach to the intent of the restructuring and efficieny principle by trotting out the same old offsets that had been used around Australia without taking into account the

peculiarities of the award in question such as the special provision of clause 36 and the fact that retail trading in the Northern Territory is in the main unregulated.

They have in effect applied to the award the Chinese theory which states that "because Chinese have black hair everybody with black hair is Chinese."

I believe that when it comes to offsets going to restructuring and efficiency the make-up of each award should be considered separately.

This the association did not do and while they may have been able to gloss over it with the consent of the employers the application had no hope once it was objected to and the peculiarities of the award examined.

The above conclusion is borne out by the following exchange which is recorded at page 61 of transcript:

"THE COMMISSIONER: Could not the point be taken that your offsets are being negated by clause 36 in many instances? They have all come up and said "It doesn't apply to us because of clause 36."

MR FARRELL: Yes, that is correct. I think you could see from the witnesses that those that were operating in the general area got greater value out of the offsets than those operating under . . .

THE COMMISSIONER: Well, my impression is that there is more under clause 36 in the Territory than there are under the general, and that is not counting your Coles and all that crowd, because they are under a separate award.

However in looking at the offsets put forward I am satisfied with the exception of traineeships that there is to a varying degree value in the remainder if employers wish to take them up.

In quantifying that value I must accept the employers' estimate of 2 as no finite substantiation was put forward by the association except to say they considered the offsets to be sufficient to warrant the 4 increase.

In coming to this conclusion I do not believe that the employees under the award are being punished for being efficient, it is more one of their being neglected in that a proper case has not been made out for the 4 increase because of the generalised approach that was taken to the question of offsets.

Such an approach encouraged the employers to take the somewhat negative position that they did without the need to properly consider all aspects of the award.

Notwithstanding what may have happened in State jurisdictions I am unable to accept the provision for traineeships in an award as being a bona fide offset.

To me the whole purpose of introducing traineeships into industry was a joint effort by government, trade unions and employers to enhance the skills of the workforce in the long term while at the same time in the short term providing employment and training opportunities for the young that would not normally be open to them.

To tout a preparedness to vary an award to permit traineeships and

consequential financial subsidies available to employers as an offset is in my opinion nothing short of prostituting the scheme and inferring that it is a source of cheap labour.

Accordingly while I am prepared to grant a 2 increase with effect from

the first pay period to commence on or after today on the basis of the offsets set out in exhibit L1 I recommend to the parties that they give further consideration to the special aspects of the award under consideration with a view to being able to substantiate a further 2 increase.

The Commission will keep the file open and the parties are requested to prepare a draft order giving effect to this decision. ** End of Text **