(i) Notification under s130 by Kellogg (Aust) Pty Ltd of a dispute with the National Union of Workers, New South re alleged breach of Award. (ii) Application by National Union of Workers, New South Wales Branch for declaratory relief under s154 of the Industrial Relations Act 1996. (iii) Application by the National Union of Workers, New South Wales Branch for variation re casual labour. [2003] NSWIRComm 167

KELLOGG (AUST) PTY LTD Ms H MacKenzie Blake Dawson Waldron

NATIONAL UNION OF WORKERS, NSW BRANCH LEGAL REPRESENTATIVES: Mr A Joseph National Union of Workers, NSW Branch

LINFOX PTY LTD: Mr K Brotherson Blake Dawson Waldron

Matter No. IRC 2253/2002: Notification under s130 by Kellogg (Aust) Pty Ltd of a dispute with the National Union of Workers, New South Wales Branch re alleged breach of Award

Matter No. IRC 3294/2002: Application by National Union of Workers, New South Wales Branch for declaratory relief under s154 of the Industrial Relations Act 1996

Matter No. IRC 5357/2002: Application by the National Union of Workers, New South Wales Branch for variation re casual labour Decision NSWIR Comm 167

1 The trigger for these three matters was the filing by Kellogg of a dispute notification pursuant to s130 of the Industrial Relations Act, 1996 (the Act) on 19 April 2002. That dispute notification is Matter No. IRC 2253/02 - one of the matters currently before me.

2 The parameters of the s130 dispute filed by Kellogg can and should be shortly outlined at this point. 3 Kellogg had for a number of years contracted out a range of its non-manufacturing functions to external third party providers, particularly its freight and distribution services. Initially, those services had operated out of the Company's premises at Minto but, in 1998, following significant capital expenditure and restructuring, Kellogg transferred some of its distribution activities to its Botany site. In 2001 Kellogg called for new tenders for the delivery of those services. At that time that service was being provided by MJS Logistics who, in turn, utilised the services of the labour hire company Adecco to provide the employees to work in the distribution area of Kellogg's operations. In undertaking that work, Adecco paid its employees in accordance with the rates applying in the Consent Award as between Kellogg and the National Union of Workers, New South Wales Branch (the NUW) applying to Kellogg employees at its Botany site - specifically the rates for casual employees in Clause 13, Casuals of that Award. The background to the decision by Adecco to pay those rates and the relevance of it to the issue before me will be elaborated upon in due course in this judgment.

4 In early 2002, the new contract for the provision of Kellogg's distribution services was awarded to Mayne Logistics who stated an intention to use the labour hire company Transistics Ltd to provide the employees in the distribution services area.

5 As part of the appointment of Mayne Logistics as the new third party provider for its distribution services with Transistics in tow, it was announced in early 2002 that those employees engaged under the Mayne/Transistics arrangements in the distribution area of Kellogg's operations would be employed under Australian Workplace Agreements (AWA's) pursuant to s170LK of the Commonwealth Workplace Relations Act 1996.

6 That decision was greeted with hostility by the NUW and it's members at Kellogg's Botany site. The NUW saw that decision as a provocative one by the Mayne/Transistics consortium, aided and abetted by Kellogg who, the NUW believed, were fully aware of the proposed move to AWA's when it awarded the contract to Mayne Logistics in the first instance. The NUW saw the decision as an intention to undermine the 'arrangement' that was in place in relation to those employees engaged by the MJS/Adecco agreement in the distribution services area at Kellogg's Botany operations. That was, that those employees were paid in accordance with the casual rates in the Consent Award. The NUW saw the action by Kellogg as undermining what it described as the 'status quo' at the Botany site and accordingly threatened industrial action. That threatened industrial action precipitated the s130 dispute notification by Kellogg in April last year.

7 That dispute was initially dealt with by Commissioner Patterson and subsequently transferred to Kavanagh J. During a substantive part of 2002 there were ongoing conciliation proceedings particularly before Kavangh J. In the course of those proceedings a number of parties were joined. That is, Michael Henry Services t/as Transistics and Mayne Group Ltd t/as Mayne Logistics. Of those parties, and for the purposes of the proceedings currently before me, I now have by way of intervenor, Linfox Pty Ltd. That comes about because, since this matter was before Kavanagh J, and to the extent of the involvement of Mayne Logistics, their interests have now been taken over by Linfox.

8 Kavangh J issued a certificate of attempted conciliation pursuant to s135 of the Act on 11 November last in Matter No. IRC 2253/02. That matter then came before me by way of an application by the NUW for interim orders pursuant to s136(1)(d) of the Act. I gave a decision in that matter on 18 November last in which I refused the Union's application. I do not propose to revisit that decision except as necessary for the purposes of the proceedings now before me.

9 During the somewhat protracted conciliation proceedings relating to the s130 dispute, the two other matters now before me were filed by the NUW and were initially listed before Kavanagh J.

10 Following my decision concerning the application for interim orders pursuant to s136(1)(d), the s130 dispute matter remained with me. As a consequence, the declaratory relief application (Matter No. IRC 3294/02) as well as the application for variation of the relevant Consent Award (Matter No. IRC 5357/02) were transferred to me by way of consolidation of all of the issues between the parties.

11 At the commencement of the hearing of these matters, the Union sought leave to withdraw its declaratory relief application (Matter No. IRC 3294/02). Leave to do so was granted subject to the question of costs of that matter to be later determined at the conclusion of these proceedings.

12 Following the withdrawal of the declaratory relief proceedings the remaining matters have proceeded before me, coalesced into the respective orders sought and questions raised.

13 An inspection was undertaken by me on 13 March last at the Kellogg site at Botany in Sydney. This was requested by the Union in order that I obtain, by visual inspection, a proper appreciation of the physical layout of Kellogg's operations at Botany, particularly that area designated as the distribution area at that site. That inspection was very helpful to me in understanding one aspect of the Union's contentions that I will elaborate upon in due course.

14 As earlier mentioned, Linfox Australia Pty Ltd was an intervening party to these proceedings. The NUW did not oppose their intervention. Their appearance is a direct consequence of the acquisition of Mayne Logistics by Linfox in February of this year. Mayne Logistics was a party to the s130 dispute conciliation proceedings brought before Kavanagh J during 2002 - they having been brought into the dispute by dint of the agreement earlier referred to between Kellogg and Mayne Logistics to take over the operation of the distribution centre at Kellogg's Botany plant. That agreement, which Linfox has inherited, has been put on hold pending the resolution of the issues between the parties in the proceedings before me.

15 Prior to hearing, the major parties to the matters before me filed orders sought and questions to be answered. They were respectively: National Union of Workers, New South Wales Branch Draft Orders 1. Delete sub-clause 5(a) of the Award and replace with: (a) The Award shall apply to the Company, the Union and all employees employed or engaged at the Company's premises at Swinbourne Street, Botany, in the manufacture and distribution of ready-to eat cereals. 2. Delete sub-clause 6(b) and replace with: (b)(i) This Award applies to all employees employed or engaged at the Company's Swinbourne Street, Botany site (whether directly by the Company or indirectly through another employer) in the manufacture and distribution of cereal production in the processing, packaging, materials handling, shipping and distribution departments. (ii) Persons Not Employed Directly by the Company: It is a term of this Award that work: · that is performed by employees who are not directly employed by the company, at Kellogg (Australia) Pty Limited; and

will only be accepted by the company if those employees who perform the work receive the rates of pay and conditions as set out in this Award. 3. Add new sub-clauses 13(h) xiii, 13(h) xiv and 13(h) xv respectively as follows: xiii shipping (outbound facility), xiv distribution and despatch functions, xv unloading pallets / de-stuffing containers 4. These variations shall take effect from date of order by this Commission and to remain in place until the nominated expiry date of the Award. Kellogg (Australia) Pty Limited: A. Draft Orders 1. Amend clause 6 of the Kellogg (Australia) Pty Ltd Botany (NUW) Consent Award (the Award) 2001 to insert a new sub-clause (c) after sub-clause (b) as follows: (c) this Award does not apply to any persons working at the Botany site who are not employees of Kellogg (Aust) Pty Ltd. 2. Renumber the existing sub-clause 6(c) as sub-clause 6(d). 3. Delete sub-clause 13(f) and add the following sentences to sub-clause 13(a): Casuals utilised by Kellogg in these circumstances may be provided to Kellogg by an outside agency. 4. Renumber sub-clauses 13(g), (h), (i) to (f), (g) and (h) respectively. 5. Insert a new sub-clause 13(i) as follows: 13(i ) This clause does not apply to casual labour engaged by or provided to any contractor who provides services to Kellogg . B Questions The questions which Kellogg requests be determined by the Commission are: (i) Do the rates of pay and terms and conditions of employment contained in the Award apply to the employment of employees of a third party who provides labour and /or other distribution services to Kellogg pursuant to a contract for services either directly with Kellogg or with a contractor to Kellogg? (ii) Does clause 35 of the Award apply to disputes about the terms and conditions of employment of employees who are not covered by the Award?

16 In submitting the draft orders and questions raised, it was stated on behalf of Kellogg that I should answer the questions posed before proceeding to consider the draft orders filed by them. I would agree with that approach.

17 On behalf of the parties before me I received affidavit evidence as follows: NUW New South Wales Branch:

· Mr Ron Herbert, an organiser of the Union responsible for the Botany site of Kellogg from 1972 until 1984 and again from 1998 until the end of 2002. · Mr Michael Stanbury, the Managing Director of MJS Logistics Consultancy Pty Ltd. Kellogg (Australia) Pty Limited:

· Mr Clyde Morgan, Director of Human Resources of Kellogg (Australia) Pty Limited.

· Mr Elvin Freeman, at all relevant times the Manager, Employee Relations for Linfox for NSW and Queensland, currently in a similar position with Mayne Health. 18 All of the above persons gave additional oral evidence in the proceedings before me.

19 In considering this matter it was my view that I was required to consider the application to vary the current Consent Award having regard to the State Wage Case 2002: Wage Fixing Principles.

20 Accordingly, on 22 April I issued a Statement to the parties to that effect noting in part: (1) The draft orders filed by the NUW seek a variation to the relevant Consent Award, that included, inter alia , provisions that would vary the scope and operation of the Award such as to potentially bind 'employees and employers' not currently parties to the said Consent Award. (2) As such, I am of the view that the application to vary the relevant Consent Award as sought by NUW is not an application to vary an Award as contemplated by Principle 2 of the State Wage Case 2002: Wage Fixing Principles . (3) To the extent that the application by the NUW seeks a change in conditions of the Consent Award, particularly as to its scope and operation and therefore its application, it requires to be considered as a Special Case in accordance with Principle 10 of the State Wage Case 2002: Wage Fixing Principles . (4) If that is to be the case, the application is required to be processed as a Special Case before a Full Bench of the Commission, unless otherwise allocated by the President. (5) In accordance with the provisions of s193 of the Industrial Relations Act 1996 (the Act) I propose to refer to the President for his initial consideration and determination as to processing, that part of the matters before me that go to the application to vary the Consent Award as sought by the NUW. (6) Before I do that, I would wish to give the parties the opportunity to make any submissions on this issue should they so wish. (7) Accordingly I would request that the parties lodge any written submissions they consider necessary covering my proposal to refer by no later than 5:00pm Wednesday 30 April next.

21 One submission was received on behalf of Kellogg. Having advised the President, the following determination was made by him: Determination Pursuant to s 193 of the Industrial Relations Act 1996 and Principle 10 of the State Wage Case 2002 Principles Notification under s 130 by Kellogg (Aust) Pty Ltd of a dispute with the National Union of Workers, New South Wales Branch re alleged breach of Award - Matter No IRC 2253 of 2000 and Application by National Union of Workers, New South Wales Branch for variation re casual labour - Matter No IRC 5357 of 2000 Having considered the reference to the President of the Commission by the Honourable Justice Staunton in these matters dated 30 April 2003 (including her Honour's Statement of 22 April 2003 and the submissions filed since then), I determine that the proceedings, including any Special Case aspect of them, are to be dealt with by her Honour. Dated 5 May 2003

22 This application will therefore be determined in accordance with the Special Case principle. In accordance with the Preamble to the Wage Fixing Principles, State Wage Case 2002 I will apply structural efficiency considerations.

23 The onus that falls on an applicant in special case proceedings was expressed by Schmidt J in Re Dispute: NSW Office of the Board of Studies and the NSW Teachers' Federation (unreported; IRC 99/6190; 17 December 1999) as follows: In Occupational Health Nurses' Superannuation (State) Award (unreported; Bauer J, Schmidt J and French C; 6 November 1996) the Commission discussed the onus which fell on an applicant in special case proceedings, which was that described by the Commission in Court Session in Teachers (Non Government Schools) (State) Award and other Awards (unreported; Fisher P, Sweeney J and Varnum DP; 17 August 1990). Applicants in a special case must meet the ordinary requirements that a case must be made out on the evidence and matters of the cost of the claim and the public interest also arise for consideration.

24 Significant to the NUW's position in the proceedings before me was that the variations sought by it were not applicable to Special Case considerations under the Wage Fixing Principles but were 'remedial' in nature. That is, that the current Consent Award as between the NUW and Kellogg did and was intended to cover those employees in the distribution area of the Company's operations at Botany. In the alternative, as I understood the NUW's position, if the Consent Award did not cover such employees then, as a matter of industrial fairness, it should. The variations as sought by the NUW were, as I would characterise them, designed to remove any ambiguity as to the scope and operation of the Consent Award for future purposes.

25 Against that background, the issues in dispute between the parties requires a determination as to the scope and operation of the current Consent Award. The determination of that depends upon proper conclusions to be drawn from factual circumstances and as a matter of law, the true construction of the relevant provisions of that Consent Award. There is a longstanding and settled approach to the task of considering the true construction of the provisions of an award. For the purposes of the matter before me, it is appropriate I believe to re-state that approach as enunciated by Glynn J in Re Hospital Employees Administrative and Clerical (State) Award (1982) 2 IR 123 at 125 where her Honour adopted the view expressed by Street J as he then was in Geo. A. Bond & Company Ltd (in liquidation) v McKenzie (1929) AR (NSW) 498 at 503-504 as follows: Now speaking generally, awards are to be interpreted as any other enactment is interpreted. They lay down the law affecting employers and employees in their relations as such and they have to be obeyed to the same extent as any other statutory enactment. But at the same time, it must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result, as this award in fact did, from an agreement between parties, couched in terms intelligible to themselves but often framed without that careful attention to form and draftsmanship which one expects to find in an Act of Parliament. I think, therefore, in construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award. (my emphasis)

26 In referring with approval to the above passage, the settled and longstanding approach to the true construction of an award has also been extensively dealt with by a Full Bench of the Commission in Bryce v Apperley (1998) 82 IR 488 and Hungerford J in Kellogg (Australia) Pty Ltd v National Union of Workers (1998) 89 IR 391.

27 In adopting the above approach as enunciated, it is necessary at this point to detail the relevant award history between the parties having regard not only to the words that appear in the Award but also to the historical context in which certain provisions are expressed.

28 The Award currently applying as between the Union and the Company is known as the Kellogg (Australia) Pty Ltd, Botany (NUW) Consent Award, 2001: Industrial Gazette Vol 335 at 371. It was approved by Kavanagh J on 21 November 2001 and its nominal term expires on 21 November 2003.

29 Inclusive of the current Consent Award, the history of Award coverage at Kellogg's Botany site commencing with the 1993 Consent Award, is as follows: (i) The Kellogg (Australia) Pty Limited (Botany) Consent (Enterprise) Award 1993: IG Vol 279 at 482: · Clause 1, Parties to Award, identifies the parties to the Award as Kellogg and eight nominated unions including the NUW.

· Clause 2, Area, Incidence and Duration, says at sub-clause (a): The Kellogg (Australia) Pty Limited (Botany) Consent (Enterprise) Award 1993, shall apply to the unions contained in Clause 1, Parties to Award, and to their respective members, employed by Kellogg (Australia) Pty Limited, employed at Kellogg (Australia) Pty Limited.

· Clause 4(b), Purpose and Application, says: This Award is applicable only to employees of Kellogg (Australia) Pty Limited, employed in the manufacture and distribution of cereal products at the Swinbourne Street, Botany plant and any other location in the State of New South Wales. (my emphasis) (ii) The Kellogg (Australia) Pty Limited (Botany) Consent NUW (Enterprise) Award, 1995: Industrial Gazette Vol 291 at 186:

· Sub-clause (a) of Clause 2 - Area, Incidence and Duration provides that the Award shall apply to the members of the National Union of Workers: employed by Kellogg (Aust) Pty Limited at Kellogg (Australia) Pty Limited, Swinbourne Street, Botany, New South Wales, 2019.

· Sub-clause (b) of Clause 5, Purpose and Application, states that that Award: is applicable only to NUW members employed by Kellogg (Australia) Pty Limited employed in the manufacture and distribution of cereal products at the Swinbourne Street, Botany plant and any other locations in the State of New South Wales. (my emphasis) (iii) The Kellogg (Australia) Pty Ltd Botany (NUW) Consent Award 1996: Industrial Gazette Vol 301 at 128:

· Clause 2, Introduction - A Partnership in a Quality Future states at para [3]: For the first time in the history of Botany, manufacturing employees (comprising production, distribution and material handling personnel) at Botany, are covered by a single union. This relationship has many advantages, including the opportunity for both parties to design a document which builds a partnership for the future.

· Clause 7, Purpose and Application says at sub-clause (b): This Award applies only to NUW members employed by Kellogg (Australia) Pty Limited in the manufacture and distribution of cereal products at the Swinbourne Street, Botany premises. (my emphasis) (iv) The Kellogg (Australia) Pty Ltd, Botany (NUW) Consent Award 1999: Industrial Gazette Vol. 321 at 106:

· Clause 5 - Operation, of that Award says at sub-clause (a): The Award shall apply to the Company, the Union and its members employed by the Company at Swinbourne Street, Botany in the manufacture of ready-to-eat cereals.

· Clause 6, Purpose and Application at sub-clause (b) states: This Award applies only to employees employed by Kellogg (Australia) Pty Limited in the manufacture of cereal products in the processing, packaging and materials handling department at the Company's Swinbourne Street, Botany premises. (my emphasis) (v) The Kellogg (Australia) Pty Ltd Botany (NUW) Consent Award 2001: Industrial Gazette Vol 335 at 371:

· Clause 5, Operations of the Award states at sub-clause (a): The Award shall apply to the Company, the Union and its members employed by the Company at Swinbourne Street, Botany in the manufacture of ready-to-eat cereals. · Clause 6, Purpose and Application states at sub-clause (b): This Award applies only to employees employed by Kellogg (Australia) Pty Limited in the manufacture of cereal products in the processing, packaging and materials handling departments . (my emphasis)

30 The above Award history is not disputed by the parties as it stands although, as is clear given the issues before me, the NUW disputes the intended scope and application particularly of the 2001 Consent Award but, given its primary contention, extending also to the 1999 Consent Award.

31 The Award history that I have detailed above identifies a number of pertinent changes that are relevant to the matter before me:

· Following the 1993 Award and particularly by the finalisation of the 1996 Award, the NUW became the sole union for the purposes of negotiating a Consent Award for Kellogg employees at its Botany site. That remains the situation under the current Consent Award.

· As can be seen by reference to the relevant provisions, the respective Consent Awards have only ever been expressed to apply to those persons employed by Kellogg. (my emphasis)

· There was a significant change made within the Operations provisions of the later Awards, identified by reference to them, such that the 1999 and 2001 Consent Awards covered the Union and its members 'employed in the manufacture of ready-to-eat cereal' in the 'processing, packaging and materials handling departments.' Those provisions are significantly different from Clause 7(b) Purpose and Application of the 1996 Award which states that the Award applies in all other respects to NUW members employed 'in the manufacture and distribution of cereal products.'

32 The relevance of the above differences between the 1996 Consent Award and the subsequent 1999 and 2001 Consent Awards is the starting point for the series of events that brings these matters before me for, one can only hope, final resolution.

33 In addition to those changes that I have highlighted, peppered throughout the Award history for the Botany site as between the NUW and Kellogg is both reference to, and agreement between, the parties to acknowledge the input of technological change, the recognition that an employee's job may be displaced by new technology and the consequent need to look at alternative positions with requisite training, and in the final analysis, redundancy payments. There is little doubt that, like many industries in the manufacturing sector, Kellogg has seen fit to invest heavily in technology as a means of improving productivity and streamlining its core business of manufacturing cereals and associated products. That investment in technology has brought significant changes in the Company's operations at its Botany site. Not surprisingly, those changes have not been introduced without some conflict and disputation as between the Company and the NUW.

34 As part and parcel of the Company's restructuring arising from technological change, the Company has also seen fit over the past decade or more to reduce its full time employees to that process that it sees as its main core activity, that is, the manufacture of ready-to-eat cereals. To that end, the Company has systematically out-sourced a significant range of its support services. For example, cleaning, maintenance, security and catering have for some years been outsourced by Kellogg to diverse labour hire companies that specialise in providing services in those particular areas. Parallel with that, Kellogg has concentrated on having as its permanent employees, with requisite skills and competencies, those workers specifically and directly involved in the business of manufacturing its products.

35 As earlier indicated, the changes brought about by technology and re-structuring at the Botany site have led to redundancies and consequent disputation between the NUW and Kellogg. Those matters particularly surfaced during the life of the 1996 Consent Award and came to a head in 1998 when Kellogg further restructured what is now known before me as the distribution section of its operations. Following significant capital expenditure at its Botany plant, Kellogg transferred a part of its distribution services from its Minto site to Botany. Up to that time the Company's distribution services had been operating from its premises at Minto and, since 1992, Kellogg had outsourced that function to a third party provider, initially PGA Logistics. When Kellogg transferred part of its distribution activities to Botany, it sought to render some eight employees at that site redundant and to maintain its previous arrangements to outsource its distribution operations to an external contractor accepting that that arrangement would also extend to its Botany site. Disputation between Kellogg and the NUW arose and led to a notification of dispute by Kellogg under s130 of the Act on 1 July 1998 and, subsequently, the seeking of a declaration by Kellogg pursuant to s154(1) of the Act.

36 The outcome of that matter can be found in the decision of Hungerford J in Kellogg (Aust) Pty Ltd v National Union of Workers, New South Wales Branch (1998) 89 IR 391. In determining that matter his Honour stated at p406: I conclude that the proposal by Kellogg for the distribution function to be contracted to PGA to be performed by that Company's employees at the Botany site using the new technology and equipment is not prevented or prohibited by the Award.

37 Further, his Honours declaratory order in those proceedings was: That on the true construction of the Kellogg (Australia) Pty Limited, Botany (NUW) Consent Award, 1996 and in the events which have happened, Kellogg (Australia) Pty Limited has complied with the provisions of the Consent Award in relation to the introduction by it of the proposed changes to the materials handling operations at its Swinbourne Street, Botany plant and is not prevented or prohibited from introducing such changes.

38 The above statement and declaratory order by Hungerford J saw a distinction drawn at the Botany site as between 'distribution' and 'materials handling' as subsequently organised within that site.

39 Following the above decision, changes were made in the next Consent Award, the 1999 Consent Award, to reflect the import of his Honour's decision. The change is evidenced in Clause 5, Operations of the Award, where there was a removal of any reference to the word 'distribution.' In other words, where it had read that the Award was to apply to the Union's employees in the 'manufacture and distribution of cereal products' in the 1996 Award, the wording had changed such that Clause 5 (a) stated that the Award shall apply to 'member's employed in the manufacture of ready-to-eat cereals.' Further, in Clause 6 - Purpose and Application, the Award was to apply to employees in the 'processing, packaging and materials handling departments' whereas the counterpart clause in the 1996 Award stated that the Award applied to Kellogg employees in the 'manufacture and distribution' of the company's products. Those changes were, on any view, a direct consequence of the decision of Hungerford J referred to above arising from the Company's capital investment and restructuring that impacted on the distribution functions of the Company's operations at its Botany site outsourced to an external contractor. As a consequence, those persons engaged by the external contractor to work in that area were not employees of Kellogg. Further, neither on the face of the relevant provisions, or on the basis of all that had gone before in relation to the distribution area of Kellogg's activities and subsequent Award changes, could it be said that they were intended to be covered by the 1999 and 2001 Consent Awards as between the NUW and Kellogg.

40 In addition to Hungerford J's decision, the changes to the 1999 and 2001 Consent Awards were clearly made in the context of considerable negotiation between the parties leading to agreement in the making of the Consent Awards. For example, in relation to the 1999 Consent Award, the approval of the Commission was dealt with by Walton J. In his decision to approve the Kellogg (Australia) Pty Ltd Botany (NUW) Consent Award 1999 (Matter No. IRC 5672 of 1999: 15 March 2000) his Honour had this to say at para [7]: Negotiations for the proposed Award commenced in or about October 1998. The new Award was negotiated through the operation of a consultative committee which consisted of representatives of management and employees. A number of the employee representatives attended the proceedings before the Commission. The consultative committee met on a full time basis from early October until late 1998. The final version of the proposed award was the subject of voting by employees on three occasions.

41 At the hearing of the application for the approval of the 1999 Consent Award the Union was legally represented. In his evidence before me Mr Herbert, the NUW organiser for the Botany site, stated that he had had only peripheral involvement with the negotiations for the 1999 Consent Award, the major role being undertaken by the Secretary of the Union.

42 Given the extensive negotiations that took place preparatory to the making of the 1999 Consent Award and the views expressed by Walton J as to the steps taken to secure the agreement of the members to be covered by that Award, it is untenable for the NUW to suggest it believed the 1999 Consent Award applied to employees in the distribution area at Botany or that it had no knowledge of the changes, or understanding of the impact of the changes, being made to the 1999 Consent Award as far as the distribution area of the Company's operations at Botany were concerned.

43 In relation to the 2001 Consent Award Mr Morgan, on behalf of Kellogg, gave evidence as follows: Q. Could you briefly describe your understanding of the negotiation process that was applied in relation to the current Consent Award and to the extent that it is different to any predecessor award? A. Certainly. I have been involved in the negotiating process for the past decade and it has remained pretty much unchanged. That is, approximately three months before the expiry date of the existing whatever period or term that is, consent award, we enter into a negotiation phase. That negotiation phase always starts on a set date where certainly we meet with the delegates and NUW officials. We do a presentation to the delegates and NUW officials about what is happening in the business, what changes we need to make in this round of negotiations, what sort of expectations and role and goal getting would be. Timetabling for various meetings. We then enter the process - sometimes the process can go for days, weeks, sometimes months. It culminates in a final document that goes to the rank and file and at a time the officials of the NUW come and address the rank and file for full acceptance of the Consent Award and in the past two you asked about, that was the process that was followed. Q. In relation to the current award, is it your understanding that the proposed award was accepted by the union and then recommended to its members at Kellogg? A. Yes, that is correct. We always give the delegates a few days to go out to the Granville office and walk the NUW officials through the changes in the award and then it is put to the membership.

44 The process as outlined by Mr Morgan was not challenged in any way by the NUW.

45 On behalf of the NUW, Mr Herbert's evidence in relation to negotiations for the 2001 Consent Award centred around the issue of the rate of pay for casuals as provided in Clause 13, Casuals of the Award. Without detailing that evidence, that I do not consider particularly relevant to the matters before me, Mr Herbert deposed: The new arrangements were put to a mass meeting of members on 12 November 2001 (including new casual rates) and the award proposal was endorsed by the members at that meeting. The award itself was subsequently ratified by her Honour Justice Kavanagh on 21 November 2001 as part of a dispute (IRC No. 7538 of 2001). and: The Union did not ask for a variation of the Area, Incidence and Duration Clause (sic) as we believed in good faith that we were negotiating for all of those employees at the site who were currently having the award provisions applied to their employment.

46 The above reference in Mr Herbert's affidavit that Kavanagh J ratified the 2001 Consent Award as part of dispute proceedings requires clarification. In writing this judgment I had cause to review the transcript of proceedings before her Honour on 21 November 2001 in relation to the Consent Award. There were two matters before her Honour on that day involving the NUW and Kellogg. One was Matter No. IRC 2063/01. That matter was the dispute Mr Herbert was referring to. It was a dispute filed by Kellogg in March 2001 involving the issue of crewing levels at the Botany site. The second matter was Matter No. IRC 7538/01. That matter was the application for approval of the 2001 Consent Award.

47 In relation to the dispute issue (Matter No. IRC 2063/01) her Honour was advised the issue had been resolved by negotiations. In relation to the negotiations for the new Consent Award Mr Herbert had this to say when asked by her Honour: I have nothing further to add. Last time we were before you we still had one outstanding issue concerning the agreement but happily that has now been finalised. That was the rates of pay for casuals outlined on p9 of the document. So the Union consents to the Award.

48 In approving the 2001 Consent Award her Honour said: This is an application for the approval by the Commission of an award entitled the Kellogg (Aust) Pty Ltd Botany (NUW) Consent Award 2001. The Award is intended to displace before its final operative date the Kellogg (Aust) Pty Ltd Botany (NUW) Consent Award 1999. That Award was to have a life until 24 November 2001. The new Award addresses a considerable number of issues that arose following notification of the dispute before this Commission way back in March this year. The original dispute referred to reductions in crewing levels but an analysis of the work situation arising out of that dispute revealed significant other problems. That dispute has rather persistently come before me as the parties very sensibly worked through all of the detailed problems that the initial dispute revealed. I am now satisfied that all of those matters that have been touched upon before me that were genuinely in dispute have been addressed in this new Award. It is notable that the employer has listened to some of the concerns of the workforce on the floor and devised a new level of pay rates that recognises the difficulties their crewing changes caused. The Union has now accepted the employers' right to implement some crewing changes. Although it has taken a considerable number of months, a sensible resolution is before me. Accordingly, I approve the said Award to have effect from today's date. I rescind the Kellogg (Aust) Pty Ltd Botany (NUW) Consent Award 1999. I further note File No. IRC 2063/01, which file originally notified this dispute in March, is now finalised.

49 In addition to the above, it is clear from a reading of the transcript of the proceedings before her Honour that the parties had had considerable discussions and negotiations in the period before the approval of the 2001 Consent Award - particularly on the issue of crewing levels and casual rates of pay.

50 All in all, it is clear in my view that the NUW and its workplace delegates were directly and closely involved in all aspects of the 2001 Consent Award.

51 Notwithstanding all of the above, according to Mr Herbert, in negotiating the Consent Award, the NUW was negotiating to: cover all persons working in production and distribution at the Botany site, irrespective of whether they are direct employees of Kellogg or casual workers provided by labour hire agencies or contractors. Certainly, the custom and practice of the site and the way the negotiations occurred, left me with the view that all of our members (including in distribution) were covered.

52 It is unsustainable, in my view, for the Union to assert that position, particularly given that the relevant Consent Award history at the Botany site, particularly but not exclusively with the NUW, has only ever been expressed and, in my view, ever intended to apply to Kellogg employees. Further, given the ramifications of such an assertion, it is an issue that would hardly be expected to be dealt with by some passing words or inferences to be drawn by either party to the Award. It is an issue that would have required to be precisely put and, that having been done, it would have been expected that some agitation would have ensued given the history of Consent Award coverage at the Botany site.

53 I am satisfied that the terms and conditions of the Kellogg Pty Ltd Botany (NUW) Consent Award 2001 does not apply to persons employed in the distribution area of Kellogg's operations at Botany. Further, given the circumstances and background leading to the approval of that Award, I am satisfied it was never intended to apply to those employees.

54 I believe the NUW recognises that the Consent Award, as currently expressed, does not apply to those persons employed in the distribution area at Kellogg's Botany site. To say otherwise would be to suggest that all that had gone before had occurred without their knowledge and participation. That is simply not the case. If it was as clear as the NUW, at first blush, might suggest, then there would be no need to seek the variation that they do. 55 Further, the real nub of the issue between the parties is not, in my view, the application of the Consent Award to those employees in the distribution area. The real issue was, and is, the rate of pay being paid to those employees of Adecco in the distribution area referenced as it is to the casual rate in the Consent Award.

56 During the life of the 1999 Consent Award and during the currency of the 2001 Consent Award, those persons in the distribution section of the Company's operations at Botany were and are employees of Adecco. MJS/Adecco agreed to pay the Consent Award rates of pay applying to those employees, specifically the rates applying in Clause 13, Casuals of that Award. If that 'arrangement' had not been disturbed by any new incoming third party contractor, then in my view this dispute would never have commenced. It is the application of the Consent Award rates to employees in the distribution area that is the real nub of the issue between the parties.

57 Notwithstanding the above expressed view, the NUW's application to have the Consent Award varied and extend its scope and operation to the distribution area at Kellogg's Botany site must be considered.

58 To start with there are significant problems in the NUW's contention that, if its application is successful, the current Consent Award as between Kellogg, the NUW and its members employed by Kellogg would apply to persons not employed by Kellogg but engaged by them through external third party contractors.

59 There are conditions in the Consent Award that Kellogg has agreed to for its employees that are, on any view, in excess of those conditions contained in the relevant parent award, the Storemen and Packers General (State) Award. As well, there are conditions in the Consent Award that could sensibly never be meant to apply to any employee other than a Kellogg employee. For example: · Clause 2 - Introduction - a partnership to a quality future

60 Kellogg contends, not surprisingly, that agreement to these and other conditions are and always were meant as a direct benefit to its own employees and not to any person who is employed by another company who provides labour to Kellogg via properly regularised contractual and outsourcing arrangements. On any view that must be right. Quite apart from any considerations arising under s12 and s17 of the Act, the application by the NUW to have the whole of the Consent Award apply to those employees of another employer who work at Kellogg's site pursuant to proper outsourcing arrangements is industrially unsustainable.

61 In the first instance, regard must be had to s17(3) and s12 of the Act.

62 s17(3) of the Act states: s17(3) [Circumstances for variation or rescission ] An award may be varied or rescinded in any of the following circumstances only: (a) at any time with the mutual consent of all the parties to the making of the original award, (b) at any time to give effect to a decision of the Full Bench of the Commission under section 50 or 51 (National and State decisions), (c) during its nominal term if the Commission considers that it is not contrary to the public interest to do so and that there is a substantial reason to do so, (d) after its nominal term if the Commission considers that it is not contrary to the public interest to do so.

63 The Consent Award is currently in its nominal term. S17(3)(c) has a requirement that the Commission may vary an Award during its nominal term on the basis of two established grounds:

· that it is not contrary to the public interest: and

64 Public interest is best understood by reference to the decision of the High Court in O'Sullivan v Farrer (1989) 168 CLR 210 at 216 where the Court stated: Indeed, the expression 'in the public interest,' when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only 'insofar as the subject matter and the scope and purpose of the statutory enactments may enable …given reasons to be [pronounced] definitely extraneous to any objects the legislature could have had in view:' Water Conservation and Irrigation Commission (New South Wales) v Browning (1947) 74 CLR at 505.

65 Nothing was advanced specifically before me by the NUW as to whether the application in the terms as sought was not contrary to the public interest. Given the factual circumstances of this matter it could be said that the variation sought by the NUW is, at first glance, public interest neutral. Having said that, if the application to vary is to be successful, it is necessary that not only must there be a finding it is not contrary to the public interest but that there is a substantial reason to do so. If anything, it is my view that there is a very substantial reason not to do so in the matter before me. In considering what may or may not be a substantial reason as required in s17(3)(c), I take account of s12(1) of the Act, which states: An Award is binding on all employees and employers to which it relates, whether or not they were a party to the making of the Award.

66 On any view, if I was to accede to the NUW's application to vary the Consent Award in the terms as sought, it would open up the Consent Award to other employees (and their representatives) and employers not currently parties to the Consent Award. It is difficult to comprehend that the NUW would want that. Kellogg certainly does not. The Consent Award history of the Kellogg operations at Botany is one that has seen the reduction of eight participating unions to one - that being the NUW. That factor in itself must tend to industrial harmony at the site with one negotiating body, no demarcation disputes and the clear lessening for potential industrial disputation on that and other issues. To make the orders as requested by the NUW would change the very nature of the Consent Award, as well as the parties to that Award, in the most fundamental way. It would visit upon both the NUW and Kellogg other parties to a wholly different industrial instrument that, potentially at least, would bear all the hallmarks of threshold and ongoing disputation to a degree not currently experienced by the two parties to the Consent Award.

67 As well, the NUW's application flies in the face of the history of award coverage of the Kellogg's Botany site up to the present. That is, an Award history that was moved from a multi-union to a one union site. That the parties saw this as extremely significant is reflected in the paragraph that appears in the 1996 Consent Award in Clause 2, Introduction - A Partnership in a Quality Future, as follows: For the first time in the history of Botany, manufacturing employees (comprising production, distribution and materials handling personnel) at Botany are covered by a single Union. This relationship has many advantages, including the opportunity for both parties to design a document which builds a partnership for the future.

68 As well, at the Botany site there is a significant history, as between the NUW and Kellogg, of Awards being negotiated to a consent outcome. Those Consent Awards, over that time, contain a commitment by both parties to technological change, structural efficiency and consequential restructuring and retraining and, as a last resort, redundancy.

69 The application of the NUW would, if granted, and, on any commonsense consideration of the consequences, disturb much of the above. If anything, that seems to me a substantial reason for not varying the Award during its nominal term. Indeed, having regard to s12 of the Act, it would invite not a continuation of the current Consent Award but an industrial instrument clearly fundamentally different in nature, scope and operation from the Award currently before me.

70 In all the circumstances, I am not persuaded that the NUW has met the test as provided by s17(3)(c) of the Act in support of its application to vary the 2001 Consent Award during its nominal term. I decline to make the orders sought by the NUW that would have the effect of varying the Consent Award in the terms expressed in its application.

71 Where the NUW and Kellogg part company is not only the application of the Consent Award to those persons who are not its employees. The NUW also says that Kellogg was party to an agreement with MJS/Adecco that required the latter to pay the Adecco employees in the distribution area the rates of pay as set out in Clause 13, Casuals of the Consent Award. That is a matter strongly disputed by Kellogg. Again, the factual circumstances require elaboration.

72 Initially, PGA Logistics had the distribution services contract and this was subsequently taken over by MJS Logistics. 73 In taking over the distribution services of Kellogg, MJS used the labour hire company Adecco to provide the employees to work in the distribution centre (the MJS/Adecco employees).

74 During the life of the 1999 and the 2001 Consent Awards, Kellogg was also using the services of Adecco to provide casual employees to supplement its permanent workforce within the core business operations of the Company (the Kellogg/Adecco employees). Those latter persons so engaged were engaged pursuant to the provisions of Clause 13, Casuals of the Consent Award.

75 Clause 13(h) of the 2001 Consent Award states: Casuals may be utilised to perform the following functions prior to the offering of overtime to permanent employees:

iv. Material received, fork lift driving, hand stacking

ix. Cleaning machinery / equipment (as provided for at Annexure A)

xi. Quality Control Belt Inspections xii. Hand packing

76 It is not in dispute that the Kellogg/Adecco employees were paid in accordance with Clause 13 of the Consent Award and still are. That much is particularly clear from para [6] of the affidavit evidence of Mr Clyde Morgan, the Human Resources Director of Kellogg (sworn 16 March 2003) in the following terms: The commercial arrangement that Kellogg reached with Adecco included that Adecco would pay the casual employees that it provided to Kellogg to perform work under the Agreement the hourly rates set out in Clause 14 of the 1999 Award, this arrangement was a pre-condition to obtaining the agreement of the NUW to labour hire employees being utilised on the Botany site. However, there was never any agreement or understanding between Kellogg and Adecco that the 1999 Award was in any way legally binding on Adecco in respect of their employees. It was well understood that the Kellogg Award applied to Kellogg and its employees only.

77 Reference to Clause 14 is the clause applying to casuals in the 1999 Consent Award which is in similar terms to Clause 13 in the 2001 Consent Award.

78 The only exception to Mr Morgan's evidence above is that, over the protracted history of these dispute proceedings, the Company has changed its preferred labour hire provider for its casual workforce from Adecco to Integrated.

79 It is also clear that in the distribution area at Botany, Adecco paid its employees the Consent Award casual rates. What is in dispute is how that arrangement came to be. Mr Michael Stanbury, the Managing Director of MJS Logistics Consultancy Pty Ltd provided an affidavit in these proceedings and also gave oral evidence. In his affidavit (exhibit 2) Mr Stanbury stated: When MJS accepted the contract as referred to above with Kellogg in 1999, I was advised by Kellogg that employees working in my area were to be paid in accordance with the site Consent Award. Our staff, engaged for stores work (approximately nine employees) were sourced through the labour agency Adecco. and: The advice I received from Kellogg, about casual employees in the distribution area being paid in accordance with the site Award, was, and remains, the basis of my costings and invoices issued to Kellogg for my services

and further: When MJS was negotiating the contract to provide our services with Kellogg, I obtained the relevant Award usage rates from Kellogg, provided these to Adecco and Adecco quoted MJS the cost of providing employees to MJS to perform the contract. Every time there has been a wage increase since 1999 either I, or Kellogg, have advised Adecco of this fact and Adecco have advised me of the changed hourly rates for our employees.

80 Attached to Mr Stanbury's affidavit were relevant copies of documentation reflecting an arrangement as between Adecco and MJS to pay the rates as applying to casual employees in the Consent Award to Adecco employees in the distribution area. What is not before me in any documentary form is any evidence that Kellogg was a party to that agreement as between MJS and Adecco. Kellogg disputes any such agreement as between it and MJS or Adecco.

81 According to Kellogg, any arrangement between MJS and Adecco as to the rates to be paid was not part of any agreement that the Company had with MJS to operate the distribution services. As Mr Morgan on behalf on Kellogg stated: I deny that I or any other Kellogg manager advised Mr Stanbury that employees utilised by him were to be paid in accordance with the site Consent Award. When MJS accepted a contract to provide certain services to Kellogg, I told Mr Stanbury that he would need to speak to the NUW and negotiate an appropriate enterprise agreement to cover the work performed by MJS. I met with Mr Stanbury on several occasions and on each occasion encouraged him to put appropriate industrial arrangements in place with the NUW.

82 As is clear, the evidence of Mr Stanbury before me was to the contrary.

83 I would have to say at this point that, on this issue, I prefer the evidence of Mr Morgan. I say that because it is abundantly clear to me that, given the protracted and stormy history as between Kellogg and the NUW as to the outsourcing of its distribution services, the Company would do all that was necessary to maintain the distinction between its core operations and its distribution services. That industrial history has gone on during the life of the 1996 Consent Award culminating in the decision of Hungerford J in 1998 and the subsequent Consent Awards of 1999 and 2001. It would be utterly surprising if Mr Morgan, on behalf of Kellogg, would do anything other than continue to insist on that clear distinction between Kellogg's core operations and its employees when discussing the distribution services and the employees of the third party contractor or its labour hire company.

84 I am satisfied that, in maintaining that distinction, Kellogg was at pains to retain the ambit of the Consent Award to its own employees. Further, apart from the evidence of Mr Stanbury as to conversations he had with Mr Morgan as to the direct application of the Consent Award rates to the distribution area employees, there is nothing in the agreement between MJS and Kellogg that refers to that in any way. Given that this was such a significant issue, it is surprising that Mr Stanbury, on behalf of MJS, could produce no documentary evidence, directly or otherwise, that refers to such an important contractual condition as between MJS and Kellogg.

85 More significantly, there is evidence before me that steps were taken, which Mr Stanbury would have been a part of, to secure an enterprise agreement as between the NUW and MJS/Adecco concerning the Botany distribution services. There are two copies of what can only be considered a draft of that proposed enterprise agreement before me and they were produced by Mr Morgan. The latter of the two drafts is titled 'Adecco National Union of Workers (Kellogg Australia Pty Ltd and MJS Group) Enterprise Agreement 2000 (at 26/9/01). In cross examination Mr Stanbury conceded discussions had taken place about such documents but at no time did he refer to them in his original affidavit material.

86 For reasons that are not entirely clear, those negotiations and draft agreements were never pursued to conclusion as between the NUW and MJS/Adecco. The only explanation proffered by the NUW was that it made the strategic decision that, rather than pursue an enterprise agreement with MJS/Adecco for those employees in the distribution area at Botany, they would pursue their objective against Kellogg as the 'host employer.'

87 As I have earlier stated, the NUW's alternative proposition in the proceedings before me was that if the Consent Award did not apply to those employees in the distribution area at Botany then, as a matter of fact and on the basis of all that is industrially fair and reasonable in the circumstances, it should. The NUW primarily based this claim on the close inter-relationship as between those workers in the distribution section at Botany and the Kellogg employees in the rest of the plant as well as the commonality and perceived overlap as to the nature of the work undertaken between those two discreet areas of the Company's operations at Botany.

88 I have already determined that the Consent Award was never intended to apply to the employees of the labour hire provider in the distribution area at Botany and, for the reasons expressed, I am not prepared to vary the 2001 Consent Award that would make such provision. Nevertheless, there is no doubt that two specific decisions taken by the Company give added weight to an argument in support of the application of the Consent Award rates to employees in the distribution area at Botany. The first was the decision made by the Company to return a component of its distribution function to the Botany site. This had previously been undertaken from its Minto site. By returning a component of the distribution function to the Botany site, Kellogg did so by locating that function within the overall geographic layout of its plant at Botany.

89 The overall geographic layout of the Company's operations at Botany, as understood by me following my inspection of that site, identifies four component parts to it:

· the receival area for the raw goods required in the manufacture of the company's products;

· the packaging/unitisation and bar-coding of the finished product (the unitisation process); and

90 It is in relation to the unitisation process and the distribution area within the actual plant that the blurring arises, so to speak, of the distinction between what Kellogg says is part of its core operations and what it says is extrinsic or external to those core operations and that includes distribution.

91 In other words, there comes a point within the Company's plant at Botany where the finished product in its unitised form is placed onto a pallet conveyer system. The palletised and finished product then moves in lines by a conveyer system some 50 metres or so to a point where it is loaded into trucks for further and more extensive distribution beyond the factory door or placed into adjacent containers for export distribution.

92 It is when the unitised and finished product is first placed on pallets at the beginning of the conveyer system that is considered by the Company to be the beginning of the distribution function of the Kellogg's operations. The argument in support of that, according to Mr Morgan on behalf of the Company, is that, at that point, there is no further 'value adding' on the part of the Company to the finished product. In other words, at that point it is ready for distribution.

93 On inspection, the operation I have described above is, on first impressions, one of a continuous process. There is no barrier or obvious demarcation point between the unitisation process and the distribution process of the overall operations readily apparent to the untrained or otherwise unknowing observer. It is simply a point denoted by the Company within that part of the plant. The employees of Kellogg in the unitisation area and the distribution area employees clearly relate to each other within that site and work, figuratively speaking, side by side within that area.

94 The second decision of Kellogg that is relevant to the issues before me has been the use by Kellogg of the labour hire provider Adecco to provide its casual labour force pursuant to Clause 13, Casuals of the Consent Award. MJS was, and still is, using Adecco to provide its labour force in the distribution area. At the time of hearing this matter the Company had changed its preferred labour hire provider for casual labour from Adecco to Integrated.

95 What had been happening at the Botany site is that a number of the employees being supplied by Adecco to MJS to work in the distribution section of the Company's operations were also being supplied by Adecco to Kellogg to undertake work as a casual employee in accordance with Clause 13, Casuals of the Consent Award.

96 It must be said that Kellogg was not entirely unhappy with that arrangement because, to paraphrase Mr Morgan's evidence, when that occurred, Kellogg got a worker who was familiar with the plant layout and its operations. On any view, those employees being used interchangeably in that way only adds weight to the applicability of the casual rate in the Consent Award to be paid to employees in the distribution area. It is a point that cannot be lightly dismissed.

97 As well, some of the work being undertaken by those Adecco employees in the distribution area, compared with that as denoted for casuals in Clause 13 of the Consent Award (within the operations of Kellogg), is not so different in kind as able to be significantly differentiated. For example, in both the distribution area and the remainder of the Company plant, employees are engaged in forklift driving. As well, some degree of manual stacking would be undertaken within both areas. It would not be overstating it, I believe, to say that the type of work undertaken in the distribution area and that undertaken by casual employees in the remainder of the plant under the Consent Award would be of a common skill level. Given the inter-changeability of workers and work between the two sectors of the Company's operations, the application at the very least of the Consent Award rates of pay to those employees in the distribution area warrants favourable consideration.

98 Overall, the NUW's claim that the work being performed by those workers in the distribution area at Botany and those casual employees engaged by the Company to perform those tasks identified in Clause 13 of the Consent Award is the same, or of a similar nature, is I believe, generally correct. The fact that the Company has utilised the services of such workers interchangeably would tend to support that conclusion.

99 Given the commonality of work being performed, I believe that it is only fair and reasonable that the employees in the distribution section of the Company's operations at Botany should be paid the same rates as those persons engaged by Kellogg as casual workers pursuant to Clause 13 of the Consent Award.

100 Having come to the conclusions that I have, it is necessary to consider how the issues between the parties may best be resolved. I am firmly of the view that it must be resolved - otherwise it will continue to be a source of ongoing friction and disputation in the Company's workplace at Botany.

101 Those persons currently working in the distribution area are Adecco employees. That arrangement is continuing until the matters before me are finally determined. It is the Company's contention that if those persons are being paid the Consent Award casual rates subject to a verbal agreement or undertaking between MJS/Adecco and the NUW, then it is a matter for the NUW to negotiate an appropriate industrial agreement with MJS/Adecco (or Linfox) and formally secure those rates and any other relevant attendant conditions. I believe that is right.

102 There is a history of industrial agreements as between unions and third party providers to cover employees such as those currently employed in the distribution section of Kellogg's Botany site. That much is clear on the evidence before me of Mr Freeman on behalf of Linfox and Mr Herbert on behalf of the NUW.

103 S136(1)(d) of the Act provides that, in arbitration proceedings, the Commission may 'make any other kind of order it is authorised to make.'

104 The current intervenor Linfox has sensibly and rightly acknowledged that the relevant industrial instrument as a starting point for industrial agreement in the distribution area at the Botany site is the Storeman and Packers General (State) Award. As part of the Commission's powers under s136 of the Act, relevant to the matters before me, I propose to make a specific Award for the distribution area of the Company's operations at Botany. Before I do, I would wish to give the parties the opportunity to be heard as to those matters that should be included in such an Award.

105 It would be my view that the starting point for such an Award would be to provide the rates of pay to those employees as currently applying in Clause 13, Casuals of the Consent Award.

106 The parties to the Award would be the NUW and the current intervenor Linfox. It seems to me that Kellogg should also give consideration to being a party to the Award given its clear involvement in this matter and the need for it to ensure industrial harmony at its Botany site.

107 Whether any other conditions should be included in that Award, in addition to those required by statutory provision, is a matter the parties may also wish to address me on.

108 One of the consequential matters I have been asked to consider in these proceedings is whether Clause 35, Grievance/Dispute Procedure, of the Consent Award applies 'to disputes about the terms and conditions of employment of employees who are not covered by the Award.'

109 This issue arises because of the initial s130 dispute proceedings that became the catalyst for the matters before me. In that matter, the issue of what was or was not the status quo became critical when one has regard to the meaning and application attached to those words in Clause 35 of the Consent Award as follows: During a dispute the status quo (i.e. the situation which existed immediately prior to the matter giving rise to the dispute) shall remain. Work will proceed without stoppage or the imposition of any ban, limitation or restriction while the matters in dispute are being dealt with accordance with the following steps.

110 When the dispute in these proceedings was filed by Kellogg in April last year, the NUW and Kellogg both had differing views as to the meaning and application of the words 'status quo' in Clause 35 of the Consent Award. As I expressed in my earlier decision of 18 November 2002 concerning the application by the NUW for interim orders in Matter No. IRC 2253/02 [NSWIR Comm 315] at para [35]: To the extent that the expression was used by Kellogg, it was used in the context of the original reasons for notification of the dispute: that is, the threatened industrial action by the union. In other words, the intention as I understand it is that the company is saying in effect, 'We will leave things as they are until this matter, the threatened industrial action, is resolved between us.' But they say at the same time that the Consent Award has no relevance to the alleged cause of the dispute because of their view of matters following Hungerford J 's decision. and at para [37]: As understood by the union, the application of the phrase 'status quo' has a different meaning altogether. To the extent it is relied upon by the union, it pre-supposes that the Grievance/Dispute provisions of the Consent Award apply to the employment and industrial conditions of the persons engaged in the distribution area of the Kellogg operations at the Botany site.

111 Given that the dispute was about the NUW's threatened industrial action in the circumstances outlined in para[s] [3]-[6] above, it is clear that the original dispute was not one affecting Kellogg employees employed in the 'processing, packaging and materials handling departments.' The issue in dispute then, and still, goes directly to those persons employed in the distribution area of Kellogg's Botany site. Those persons are not Kellogg employees. I have determined that they are not covered by the current Consent Award and, for the reasons I have given, were never intended to be. Further, I have declined to make the variations sought by the NUW that would have the effect of extending the Consent Award to those employees. Accordingly, the dispute provisions of Clause 35 of the Consent Award do not apply to them.

112 The future application of the dispute provisions of the Consent Award to employees in the distribution area is not an issue I need to determine given the course I propose to adopt for employees in that area.

113 Having regard to the orders sought and the questions raised by the parties before me, I propose only at this stage to answer the questions raised by Kellogg in the following terms: Question: Do the rates of pay and terms and conditions of employment contained in the Award apply to the employment of employees of a third party who provides labour and/or other distribution services to Kellogg pursuant to a contract for services either directly with Kellogg or with a contractor to Kellogg? Answer: No. Those persons engaged as casuals pursuant to Clause 13, Casuals of the 2001 Consent Award are engaged pursuant to the provisions of that clause alone. Question: Does Clause 35 of the Award apply to disputes about the terms and conditions of employment of employees who are not covered by this Award? Answer: No.

114 To the extent that the orders sought by Kellogg remain before me, I propose to deal with them following further submissions from the parties as to the course I propose to adopt.

115 The question of costs is reserved until the matter is finally concluded following further submissions from the parties on the issues I have identified.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.