Notification under section 130 of a dispute by Transport Workers' Union with TNT Australia re: threat of termination [2012] NSWIRComm 128

The freecall system 8Mr Boland described how the freecall system works and its advantages: Every morning, the TNT Same Day radio room begins transmitting at 6 a.m. and concludes at 7 p.m. Each courier is expected to be available for a minimum of 10 hours each day, however TNT Same Day provides a 24 hour service and accordingly some drivers will work outside of the radio room transmission hours. Each driver commences their shift daily from a location that they consider to be close to their first job. At 6 a.m. the radio room begins to put jobs out to the fleet and each available car may bid for that job. The job is then allocated to the most suitable car based on direction of travel, location and number of jobs already held. As a consequence of each job being put out over the radio, the fleet obtains an understanding of what jobs are available, who is taking the jobs, where the work is and what jobs are left over 'on cover.' This allows the drivers to make decisions on where they go, how quickly they travel and how much work they take on at any given time. This system also allows a significant degree of transparency as each driver is aware of how much work everyone else has at any given point in time. This also allows the whole fleet the ability to ascertain whether anyone is being given preference of work or being discriminated against in the allocation of work. ... The present radio procedure allows for an incentive based system of pay. Drivers who want to work hard are paid the most and drivers who choose to not work as hard are paid less. For example, I consider myself one of the harder working drivers and I earn approximately $400-500 (gross) a day (approx $2,500 per week (gross)). Conversely, a driver who does not work as hard would earn approximately $250-300 (gross) a day (approx $1,200 per week (gross)). ... Presently, TNT's primary method of communication is via two way radio. This method of communication allows for a safe, legal and quick method of informing drivers of what jobs they have. Furthermore, this method of communication allows every driver to communicate with each other in real time, providing traffic updates and advising on other hazards that may be out on the road. 9Mr Holloway, in his statement also referred to the freecall system. Mr Holloway is a driver who is regularly on an hourly hire. His ability to pick up extra work is subject to customer requirements and service criteria. He is a lower earning driver and earns approximately $300 (gross) a day and $1,500 per week (gross). Mr Holloway said: As it presently stands, the Freecall radio procedure enables me to call on work and put work together in real time. This additional work is work that I can use to supplement my income. With the Freecall system, you are only limited by your own self and your capacity as a courier. In addition to this, the Freecall system works as a collective with each driver working in conjunction with each other and the operators back at the depot. The collective system allows for each driver to contribute to the running of the business and ensures that the drivers and the operators provide the best level of service to the customers. The collective nature of the Freecall radio procedure equips the TNT Same Day fleet with the best level of knowledge and understanding to ensure an efficient business operation. Furthermore, by knowing where each driver is at any given point in time, the Freecall radio procedure is incredibly transparent and by its very nature, prevents drivers from touting or sniping jobs of others. 10Mr Soussa in his statement also referred to the freecall system and he described its disadvantages: The current freecall system has a three step calling process. The calling process involves a "first call", "second call", and "cover call". On the first call drivers who bid on jobs must be able to pick up the job within 10mins, must have no more than three jobs onboard and must be travelling in a straight line if holding outstanding work. Drivers who bid on the second call, must be able to pick up the job within twenty minutes, can have any reasonable number of jobs onboard and can proceed in a shallow arc toward the destination. The final call is called the cover call. All drivers may bid on such jobs and may offer a time to pick up. As well as the above procedure, within each call described above, there are three criteria which drivers must satisfy in order to bid on and be allocated jobs by the Radio Operator. The order of precedence is as follows: Proceeding car (a car proceeding in the direction of the job to be despatched, holding no more than three jobs), Vacant car (a car not holding any work but that had previously declared itself vacant to the operator), Dropping car (a car which is not proceeding but will allow pickup within the call time). This process must be followed for each of the jobs despatched throughout the day (approx 700+ jobs per day). This is a highly inefficient process because for each call the operator may take a large number of driver submissions. The operator then needs to perform accurate assessments on each driver/vehicle biding for work to determine who best meets the criteria. This process takes time, sometime more than 10 minutes for a job. In addition, there are currently many job allocations disputed by drivers who feel that the measurement should have gone their way or that other cars calling are not in-fact in the location they claim to be. A review process is in place where the supervisor may review the job and determine whether the allocation was made correctly or not. Where the allocation is not made correctly, the supervisor may provide feedback, further train or counsel the allocator or driver in breach. Under the freecall system, couriers may also choose not to call on work as offered above if they do not wish to do so or if the work is unpopular. This causes conflict between the despatcher and drivers, and/or results in a degradation of service to customers as a result of job outsourcing (ie offloads).

Direct allocation system 11The proposed direct allocation system does not involve the use of a radio. The system allocates each job to an individual driver on a unilateral basis. Mr Soussa described the proposed system and its advantages thus: The proposed allocation system with GPS functionality is a faster and more efficient allocation process than freecall despatch. The allocation system consists of a map showing active vehicles in their current GPS location, a corresponding screen showing what jobs each vehicle is holding and their job status. The allocator, following a series of logical time related steps, determines from this information, which vehicle is closest and most suitable to the job to be allocated through those means. ... GPS / Allocation allows more opportunity for drivers to gain jobs. Under a freecall (analogue or digital) system the driver must be in his/her vehicle and not in a" radio blackspot" to be able to hear the job being called and to then bid for the job. Whereas under the GPS/Push to talk allocation model jobs will be allocated to the vehicle best able to service the job via the driver's scanner and it won't matter whether the driver is in the vehicle or not or in a "radio blackspot. This will result in less jobs having to be "outsourced" to other courier companies/outside hire. 12Mr Soussa said that in order to compete it was necessary for TNT to move to a direct allocation system and that TNT nationally had moved to that system: Phasing out of the freecall method commenced in the Taxi Industry around 1992 and then broadened to the courier industry. The industry has abandoned freecall despatch as it is no longer relevant given technological advancement. To our knowledge, TNT is the only significant courier company in Australia using the Freecall method of despatch. The Business to Consumer (B2C) courier market has seen recent significant growth. Consumers now expect more information about delivery status. Competitors are providing calculations from current GPS location to drop time. Mobile phone applications adopted by major courier companies allow users to track their consignment whilst enroute. Major courier companies are teaming up with online retailers and offering a lightning fast "have it now" option where consumers can have the order processed and delivered within 3 hours in the metro area or delivery cost is free. This requires lightning fast allocation processes and enroute tracking. TNT's current freecall system and the absence of GPS does not allow TNT to provide these customer services. This in turn limits TNT's ability to grow its share of the B2C market. TNT's Sameday prices today are generally lower than 10 years ago because technology has allowed a lowering of the traditional barriers to entry and competition is fierce. Many new entrants and existing companies use readily available PDA technology to offer customers online tracking services/GPS. Accordingly, every cost saving initiative and efficiency gain must be realised to remain economically viable and relevant. ... Due to its speed and efficiency GPS / allocation has been adopted as "industry best practice" and is being utilised by all of TNT's major competitors... The introduction of a GPS/Allocation system would allow TNT to compete with more innovative competitors. By adopting a similar technology base to that which our competitors use, it would allow TNT to offer comparable services to those offered by them currently and thereby expand its point to point business. This will be of benefit to both TNT and the drivers. The local point to point segment of TNT's Sameday business has seen decline for some years as TNT has lagged the market on despatch technology. In contrast, the growth segments have been in Taxi Truck & Dedicated fleet products which run GPS and allocation under a different contract within the Sameday business. ... TNT has invested significant resources into the development of GPS / Push to Talk technology. This technology has already been successfully rolled out to a large number of its network fleets across Australia. Currently there are 982 vehicles operating under this technology. The rollout of this technology into the Sydney Sameday fleet is consistent with this broader TNT IT platform. 13Mr Soussa referred to a table that set out TNT Sameday's major Sydney competitors in order of estimated size along with their known method of job despatch. On its face, the table indicated that TNT was not competitive. However, there is some doubt the table compares like with like given the nature of TNT's Sameday business. Accordingly I do not accept the table as being reliable. 14Mr Soussa referred to changes in technology: TNT Sameday currently operates a two-way radio analogue network on 25kHz.when offering work to Sameday drivers using the freecall system. We have been informed by ACMA that two-way radio analogue network frequency is being narrowed from 25kHz to 12.5kHz on 31st December 2012.... TNT Sameday's current radio equipment is more than 20 years old and cannot be converted to new analogue frequency or to the digital spectrum. Due to the above change, TNT needs to move to an alternative method of allocating work to Sameday drivers in Sydney. ... Allocation with GPS is the most cost effective despatch solution. Digital 2-way radio is significantly more expensive to purchase and maintain... digital radio costs at least twice that of the GPS/Push to talk option.... In addition, the digital radio alternative would deliver no efficiency benefits. It is a replacement of current outdated technology with no change. Freecall operates on Voice traffic, which is considered less efficient. Freecall does not reduce this voice traffic in any way. TNT has invested significant resources into the development of GPS / Push to Talk technology. This technology has already been successfully rolled out to a large number of its network fleets across Australia. Currently there are 982 vehicles operating under this technology. The rollout of this technology into the Sydney Sameday fleet is consistent with this broader TNT IT platform. Digital 2-way radio is not used anywhere else within TNT. The company already has a "GPS/push to talk" platform and therefore does not extend Operational and IT support to digital radio equipment and applications. TNT Sameday is therefore not able to spread maintenance and support costs across the broader business further adding to its cost burden.

Criticism of the direct allocation system 15In his statement Mr Boland was critical of the proposed direct allocation system. He said: the system prevents drivers from bidding on jobs and allocates each job to an individual driver on a unilateral basis with no input from the wider fleet; the system does not allow for the use of a radio. This will create a situation whereby no driver will know where any other driver in the fleet is. Also, the driver will not know where any of the work is; the high level of transparency that exists in the present model of radio allocations will disappear. This has significant potential to bring about a culture of favouritism towards the operator to get the best work possible; with the inability to hear when and where the work is, drivers will not know where to position themselves for the next best available job; harder working drivers will suffer a loss of earnings of approximately $500 a week (gross); the consequence of shifting the decision making process from 92 people to two people will result in a significant loss in on-time delivery rates and will jeopardise TNT's ability to remain as the market leader in same day deliver services; the proposed system uses a 'Personal Data Unit' ('PDU') as the primary method of communication. The TNT proposal dictates that jobs would be allocated to each driver by way of text message on the PDU; currently, NSW road rules prohibit 'texting' (sending and receiving text messages) whilst a vehicle is moving or stationary (but not parked). To use the text message functionality on a mobile device, the vehicle must be parked; TNT has advised the drivers that they are expected to pull over, park and read the text message on the PDU. However, in practice this is nearly impossible as often jobs are allocated to us while we're on the highway or other road that prevents us from pulling over and parking our vehicles. The practical reality is that drivers will use the PDU whilst driving, opening themselves up to liability and risking the safety of themselves and the travelling public; TNT has included a backup 'push to talk' ('PTT') method of communicating directly with the depot if there are any problems. A PTT system records a short voice message by one user and delivers it to the other user's PDU for receipt. This system works well when there are only two people on the same channel but causes significant problems when more than one message is transmitted at the same time. When this occurs each message 'banks up' and waits until the recipient of the message has finished listening to the first message before immediately playing the second message. This results in a situation whereby the ability to have a real time conversation between the operator and the drivers is lost as the operator may have to work through a number of messages before responding to each driver in turn; the system proposed by TNT has already caused significant unrest in the yard. Drivers are concerned that by not knowing what work is available at any given point in time, driver's earnings will be reduced and the ability of carriers to work to their full potential will be diminished; as a consequence of the switch to the allocations radio procedure, the turnover of drivers in the yard will increase dramatically. 16Mr Holloway was also critical of the direct allocation system: Under the system proposed by TNT, when and where I go will be dictated solely by the operator at the TNT Botany yard. The operator will lack the collective knowledge of the whole fleet and will make assumptions based only on his or her experience and the map data at the yard. This has the potential to result in missed or rerouted jobs as the dialogue that exists under the Freecall system will be lost. Furthermore, my knowledge of the traffic situation out on the roads will be lost. As a consequence of this collective knowledge being lost, more pressure will be placed on both the drivers and the operators as the day-to-day issues that arise in normal operations will not be able to be solved by way of a simple radio call as they are presently. As I am regularly engaged on hourly hire, I am concerned that I will not get allocated any additional jobs while on my ordinary run as the operator will simply quarantine me and keep me out of the loop on any additional work until I finish the hourly hire. If I am quarantined and can only pick up work after my hourly hire has finished, I am set to lose approximately $50 (gross) per day or $250 (gross) per week. I am also concerned that the level of transparency within the yard will diminish. Without knowing who has what work on at any given time there is significant risk that favouritism and corruption may become a feature in allocating work. I have heard that favouritism and corruption are not uncommon practices in other courier yards that use the allocations system of work. Indeed, favouritism or bullying has at times occurred in the TNT Same Day yard in the past. However, the transparent nature of our radio system and allocations procedure prevents this from occurring on an ongoing basis. I am concerned that if we move to an allocations radio procedure a system of favouritism and/or bullying will set in and there will be no mechanism for us to know it is occurring or prevent it from continuing.

Consideration 17The first thing to be said is that until the Ansett Agreement terminates the parties remain bound by it and regardless of any Recommendation the Commission might make, any change in the radio procedure under the Ansett Agreement would need to be by agreement, such agreement needing to be incorporated into a contract agreement or determination. 18In his submissions for the TWU, Mr A Hatcher SC referred to the decision of Hungerford J in Re John Lysaght (Australia) Limited - Port Kembla - Slit Recoil Line - Rates of Pay Award (unreported, Matter No IRC 2374 of 1994, Industrial Relations Commission of New South Wales, 21 March 1995) where his Honour said: A question of manning is, it seems to me, concerned necessarily with the management of an employer's business. The long-settled approach to such matters by the Commission is for it not to intervene by assuming the role of employer but rather to assess whether what the employer proposes would impose unfair or unreasonable demands on employees, including unsafe work practices. 19After referring to the High Court's decision in Re Cram; Ex parte NSW Colliery Proprietors' Association Ltd [1987] HCA 28; (1987) 163 CLR 117 at 135-137, Hungerford J said: These considerations indicate the objection voiced by O'Connor J in Clancy to the regulation and control of business enterprises by industrial tribunals is not a matter that goes to the jurisdiction of the tribunals. Rather it is an argument why an industrial tribunal should exercise caution before it makes an award in settlement of a dispute where that award amounts to a substantial interference with the autonomy of management to decide how the business enterprise shall be efficiently conducted. 20Mr Hatcher observed, however, that here the Commission was not concerned with the employer/employee relationship but one of principal contractor and contractor. He referred to the Ansett Agreement, which provides in cl 3 that the contract carrier is an independent contract carrier that provides services to the principal contractor and that nothing in the contract is intended to create an employment, agency, joint venture or partnership relationship between the principal contractor and the contract carrier. 21A statement by the parties as to the nature of their relationship is not determinative of it. The relationship is to be determined objectively. However, Mr Hatcher submitted that the direct allocation system proposed by TNT would mean that TNT would be exercising a far greater degree of control over the contract carriers than that which existed under the freecall system and TNT ran the risk of changing the nature of the relationship between it and the carriers to one of employer and employee. Mr Hatcher referred to the decision Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 where the High Court held that bicycle couriers were employees and not contractors. Mr Hatcher drew parallels between the bicycle couriers and the contract carriers having regard to the indicia identified by the majority at [47]-[57] of the decision. For example, at [49] and [57] the majority stated: Secondly, the evidence shows that the couriers had little control over the manner of performing their work. They were required to be at work by 9.00 am and were assigned in a work roster according to the order in which they signed on. If they signed on after this time, they would not necessarily work on their normal "channel". Couriers were not able to refuse work. It was stated in Document 590 that "ANY DRIVER WHO DOES SO WILL NO LONGER WORK FOR THIS FIRM." The evidence does not disclose whether the couriers were able to delegate any of their tasks or whether they could have worked for another courier operator in addition to Vabu during the day. It may be thought unlikely that the couriers would have been permitted by Vabu to engage in either activity. ... Finally, and as a corollary to the second point mentioned above, this is not a case where there was only the right to exercise control in incidental or collateral matters. Rather, there was considerable scope for the actual exercise of control. Vabu's whole business consisted of the delivery of documents and parcels by means of couriers. Vabu retained control of the allocation and direction of the various deliveries. The couriers had little latitude. Their work was allocated by Vabu's fleet controller. They were to deliver goods in the manner in which Vabu directed. In this way, Vabu's business involved the marshalling and direction of the labour of the couriers, whose efforts comprised the very essence of the public manifestation of Vabu's business. It was not the case that the couriers supplemented or performed part of the work undertaken by Vabu or aided from time to time; rather, as the two documents relating to work practices suggest, to its customers they were Vabu and effectively performed all of Vabu's operations in the outside world. It would be unrealistic to describe the couriers other than as employees. 22There is substance in this aspect of the TWU's submission. It does appear that the carriers will be subject to a much closer degree of control by TNT under the proposed direct allocation system and a serious question arises as to whether under such a system the carriers would be running their own enterprise as independent contractors. 23The Commission in these proceedings does not have sufficient material before it to arrive at a definitive conclusion about whether the adoption of the direct allocation system as proposed by TNT would have the effect of creating an employer/employee relationship between TNT and the carriers. Accordingly, it could not recommend in the TWU's favour on that basis. However, it seems to me that if TNT were to proceed to implement the system it would be prudent to first obtain advice about the implications of doing so. 24In relation to the merits of the parties' respective positions, TNT has made a business decision to introduce the direct allocation system. It has done so on its assessment of changes in technology, the need for faster and more efficient allocation of jobs, the need to be competitive in a highly competitive market and because it has already adopted the new system in all other states other than New South Wales. 25The business is TNT's business and subject to the constraint it is presently under, it is entitled to move to a direct allocation system whether a decision to do so is good or bad; whether it results in being more competitive or less competitive; whether it is more efficient or less efficient. 26Whilst Hungerford J's comments in John Lysaght related to employers and employees, they are apposite here: it is not for the Commission to intervene by assuming the role of the business decision maker, but rather to assess whether what the decision maker proposes would impose unfair or unreasonable demands on contractors, including unsafe work practices. 27The Commission was advised the change to the new system was not designed to reduce the number of drivers, but rather there will be the same pool of work available to the Sameday contractors, and that it was TNT's intention to expand the customer base to expand its business. The Commission was also advised that it was not intended to reduce drivers' remuneration and there would remain the ability for drivers who wish to work hard to be remunerated accordingly. 28Mr Boland raised the question of safety. He said the practical reality was that drivers will use the PDU whilst driving, opening themselves up to liability and risking the safety of themselves and the travelling public. TNT has advised the drivers that they are expected to pull over, park and read the text message on the PDU. TNT's advice to drivers is consistent with the road rules. What TNT has directed cannot be regarded as unsafe and it cannot be rendered an unsafe system because individual drivers disobey the direction and the road rules. If they do, the responsibility falls on them. 29Mr Holloway raised the potential for favouritism or bullying under the direct allocation system. Both are completely unacceptable. But the Commission cannot recommend that TNT cannot introduce a new allocation system on the grounds that favouritism and bullying might occur. If the new system is implemented, TNT will have a serious responsibility to ensure there is no such conduct and it should be made clear from the outset that such conduct would not be tolerated. 30The Commission can well understand the carriers' concern about moving away from the freecall system. In their eyes it is a system that works well and has delivered benefits to both the carriers and TNT. The carriers want to retain their status as persons who carry on their own independent businesses. Much of that independence is derived from the freecall system. 31I propose to recommend that the parties cooperate and consult further on the introduction of the direct allocation system. However, that is subject to the parties satisfying themselves that to do so will not change the nature of the relationship to employer and employee. Except for that very significant caveat, the carriers need to come to terms with the "autonomy of management to decide how the business enterprise shall be efficiently conducted", subject always to the Commission's right to intervene where unfair or unreasonable demands or unsafe work practices are sought to be imposed on employees or contract carriers. In this case the Commission has been unable to conclude TNT is seeking to impose unfair or unreasonable demands or unsafe work practices.

Recommendation 32The Commission recommends that the parties cooperate and consult further on the introduction of the direct allocation system. That further consultation should address at least the following matters: (1)some mechanism to protect the income of carriers for a fixed period of say six months if as a direct consequence of the introduction of the direct allocation system and not individual work effort, incomes are adversely affected; (2)objections or concerns the drivers have in relation to the procedure set out in annexure G to Mr Soussa's statement in the proceedings; (3)clear rules to ensure no bullying or favouritism occurs in the allocation of jobs; and (4)whether it is possible to retain aspects of the freecall system to enable drivers to see that the work is being shared equitably.

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. Decision last updated: 16 November 2012