Racecourse Totalisators (State) Award [2005] NSWIRComm 275

Racecourse Totalisators (State) Award [2005] NSWIRComm 275 - NSWIRComm 2005 case summary — Zoe

[14]

3 Presumably acting upon that observation, the New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union ('the Union') filed an application on 18 January 2005, pursuant to s 17 of the Act, for the safety net adjustments available from the State Wage Case 2004. 4 The application came before the Commission on 14 February 2005, at which time Mr N Stevens appearing for the respondent, Tab Limited, opposed the application on the grounds that the proviso requiring at least 12 months between the last State Wage Case adjustment had not been met. Nevertheless, the respondent submitted that it may be prepared to consent to the application if the Union would agree to certain productivity or flexibility improvements in the Award (for convenience I shall refer to these as 'offsets'). Not surprisingly, and despite the Commission's attempts at conciliating a resolution of the matter, the Union maintained that employees employed under the Award should not be required to agree to any offsets in order to obtain the safety net adjustments available in State Wage Cases. 5 Both parties agreed that the application could only be determined in accordance with the instruction of the Full Bench in the State Wage Case 2002 114 IR 81 which required that any application of this type be dealt with as a Special Case. At par 72 the Full Bench said: In our view, no proper basis has been established for the retention of principles 8 (g) and (h) (dealing with 'lagging' awards). Upon the material before us, it would appear that the principles have essentially served their purpose. Any residual issue (such as may exist) should be dealt with in special case proceedings. 6 This requirement was reaffirmed in the State Wage Case 2003. The Special Case Principle is expressed as follows: Except for the flow on of test case provisions, any claim for increases in wages and salaries, or changes in conditions in awards, other than those allowed elsewhere in the principles, will be processed as a special case before a Full Bench of the Commission, unless otherwise allocated by the President. This principle does not apply to applications for awards consented to by the parties, which will be dealt with in the terms of the Act, or to enterprise arrangements, which will be dealt with in accordance with the Enterprise Arrangements principle. 7 This requirement remained unaltered in the State Wage Case 2004 and is relevantly applicable to the application now before the Commission. That being so, the matter was referred to his Honour the President. On 23 February 2003, his Honour determined that: Having considered the reference to the President of the Commission by Deputy President Sams in this matter dated 21 February 2005, and the memorandum of his Honour of the same date, I determine that these proceedings, including any Special Case aspect of them, are to be dealt with by his Honour. BACKGROUND

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25 In preparing the budget, labour costs were taken into account and no allowance was made for the 2004 State Wage Case because 12 months must elapse from the 2003 increase awarded in October 2004. She said that any further increase at this time would 'blow-out' the budget. 26 Ms McLoughlin highlighted the lack of growth and expected decline in profitability of oncourse operations since 2001/02. This decline was expected to continue due to a significant fall in punter attendances at oncourse race meetings. Profits would also be affected by a decline in high value customers. Ms McLoughlin agreed that the dividend for a bet was the same whether it was placed oncourse or offcourse. 27 Ms McLoughlin provided a graph which was said to depict declining profits in oncourse operations since 2001/02. The graph does not however, deal with profit, but rather with turnover. Ms McLoughlin also tendered a newspaper article which referred to a drop in Sydney racing TAB sales from $692.6m in 1993 to $576.4m in 2004. Again, these figures do not reflect profit, but sales. 28 In cross examination, Ms McLoughlin said the respondent was required to provide a service to the race clubs in terms of totalisator facilities. The number of windows which are opened on race days are negotiated with the race clubs. Oncourse facilities would never be completely shut down. 29 Ms McLoughlin was shown the TabCorp financial report for the 6 months ended 31 December 2004 and in particular par 2 on p 7: Wagering The Wagering division achieved profit before interest, taxation and amortisation of goodwill of $103.2 million, which was 159.9% above the previous corresponding half year. Its total operating revenue increased by 194.5% to $688.6 million. The increases included the impact of the wagering business of Tab Limited acquired in July 2004. 30 Ms McLoughlin explained that the large growth of almost 200 per cent reflected the acquisition of Tab Ltd in 2004. She added that it would not be appropriate to disclose to shareholders negative returns of one business unit in the Division. 31 In order to address the respondent's declining profits, Ms McLoughlin said that she had investigated ways of offsetting cost increases. The two largest controllable costs are casual wages and security. She concluded that reducing security guards manning cash in transit or at racecourses would not be in the public interest. 32 Over the last three years, the respondent has been developing new technology which includes automated totalisator machines. This will reduce the number of casual employees directly and avoid training costs. The new technology has reached a trial stage with the race clubs expressing great interest in purchasing the new equipment. Ms McLoughlin agreed that the new technology was an impersonal means of placing bets which may not be popular with the public. However, cost savings would be available if the new technology is rolled out before it might otherwise have been. This may initially reduce casual staff levels by 2 per cent. 33 In a reply affidavit, Ms Fraser disputed that the Union had failed to address the 'lagging' nature of the Award. The Union had sought both the 2000 and 2001 State Wage Case adjustments in 2001 and raised the matter in s19 Award Review proceedings in 2003. She noted the respondent had not sought to address the 'lagging' nature of the Award. 34 As to the proposed offsets, Ms Fraser said the Union had never arrived at a 'consent position' to be put to its members. Rather, the Union had agreed to put the respondent's proposals to members. 35 Ms Fraser undertook a study of the effect of the 'lagging' Award on actual rates of pay, the cost savings for the respondent and the effect of any retrospectivity granted in this case. She used the 2A casual totalisator rate for her research. She concluded as follows:

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45 Mr Stevens addressed the requirements of the Union to establish a Special Case. Two important considerations were the cost of the claim and the public interest. From the evidence of Ms McLoughlin it was apparent that there will be additional costs for the respondent which have not been budgeted for. 46 In referring to the Union's calculations of costs and savings, Mr Stevens said there was no evidence that the Union's reliance on a particular scenario was the usual or average case. In any event, such savings are not the test to be applied in this case. 47 In considering the public interest, Mr Stevens submitted the Commission should rely on Ms McLoughlin's evidence that the increase will impact on jobs. By looking for cost savings, the need to reduce the labour impact would be neutral. Other public interest factors were the lack of growth of the on course operation, expected decline in profitability and service to the public through the introduction of new technology. Mr Stevens detailed each of these factors by reference to Ms McLoughlin's evidence. 48 While opposing the application, Mr Stevens put that if the Commission was against the respondent, an operative date some time later than the 18 January 2005 would be less of a cost burden for the respondent. 49 At the conclusion of his submissions, the Commission asked Mr Stevens if the Commission should do or say anything about the respondent's proposed cost offsets. He said that while it was not the appropriate forum to do so, the Commission might consider at least three of the four cost savings, identified by the respondent in the evidence. 50 In reply, Ms Wilson agreed that Ms Fraser's calculations were based on a particular scenario. However, on any basis the respondent must have made considerable savings by not passing on a wage increase. 51 As to the public interest tests, Ms Wilson said that Ms McLoughlin had not said the respondent would experience no growth, just less growth. As to job losses, these would occur anyway, as would any reduction in hours for casual employees. She said the real public interest is ensuring low paid workers receive the safety net adjustment. 52 As to staggering the operative dates, Ms Wilson put that the respondent had been on notice for some time that the "lagging" issue would be addressed. Finally, Ms Wilson said that the respondent should look to other cost savings, such as reducing its profit margin. CONSIDERATION

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53 As properly conceded by both parties, this application must be processed as a Special Case in accordance with Principle 10 of the State Wage Case 2004 Wage Fixing Principles. The matters to be considered when dealing with the obligations on the parties under the Special Case Principle are well known and were recently referred to in Re Nursing Homes &c, Nurses' (State) Award (No 4) 138 IR 409 where the Full Bench said: 18 The special case and work value principles have been recently considered in a number of decisions of the Commission, including, in particular Re Social and Community Services Employees (State) Award (2001) 113 IR 119 at 128 - 130 ; Re Operational Ambulance Officers (State) Award (2001) 113 IR 384 at 418 - 420 ; Re Public Hospital Nurses (State) Award (2002) 115 IR 183 at 186 - 190 ; Re Health Employees Pharmacists (State) Award and other Awards (2003) 132 IR 244 at [23] - [27]; Re Public Hospital Nurses (State) Award (No 4) (2003) 131 IR 17 at [16] - [22]; and Re Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award (2004) 133 IR 254 at [30] - [32] and [86] - [96]. It is unnecessary, in light of those recent decisions, to reconsider the principles except to emphasise that: 1 In order to satisfy the requirement for a special case, the applicant must demonstrate that the case has "special attributes" or is "out of the ordinary" so as to take it outside the restrictions which may otherwise apply under the wage fixing principles: Re Operational Ambulance Officers at [166]. 2 An applicant to a special case needs to establish an "adequate evidentiary foundation" to establish the special factors that warrant an award variation in order to set fair and reasonable conditions of employment: Re Operational Ambulance Officers at [168]. 54 I repeat, the onus rests with the applicant to convince the Commission of the merits of the claim based on an adequate evidentiary foundation. In granting any Special Case claim, the Commission is required to consider the cost of the claim, potential for flow on and the public interest. For this application to meet the tests of what constitutes a Special Case, the Union must establish that the case is one which is "exceptional", "unusual" or "out of the ordinary". 55 In this later respect, I am well persuaded that the Union's onus has been appropriately discharged. Firstly, the fact that this is the only case which has specifically addressed the notion of a 'lagging' award outside State Wage Case proceedings must, I think go in large measure to justifying this as an 'exceptional', 'out of the ordinary' case. Secondly, the extent of the 'lagging' is also, in my view, somewhat exceptional and would ground a conclusion that this case has unusual characteristics. The 'lagging' Award

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60 For the reasons I shall shortly outline, I have concluded that granting this application will be consistent with the Act's objective of awards being made which set 'fair and reasonable conditions for employees'; see Pastoral Industry (State) Award. I further conclude that the grant of the application would be in the public interest. 61 Firstly, the evidence is that this is an actual rates Award. In other words, the rates of pay prescribed in the Award are the actual rates of pay paid to the employees. No over award payments are made. It must be observed that safety net adjustments are designed, inter alia, to provide a mechanism for ensuring that rates of pay for employees on actual rates awards do not fall significantly behind employees who receive over award payments or who are covered by enterprise arrangements or agreements. 62 Secondly, employees employed under the Award are overwhelmingly women. The work is casual employment with the employees being engaged on race days only. Ms McLoughlin's evidence was that she works 4.5 to 6.5 hours a week and supplements her income by other casual and part time engagements. 63 Thirdly, the current hourly rate for a racecourse totalisator operator 2A is $20.22. It could hardly be said that the rates under this Award are high or excessive. Safety net adjustments were introduced to assist the needs of the low paid. In my opinion, employees under this Award may properly be regarded as low paid employees and, in the ordinary course, would be entitled to receive the benefits of safety net adjustments provided for in State Wage Cases in a timely fashion. 64 Fourthly, this application was filed on 18 January 2005. The Union seeks this date as the date from which the 2004 State Wage Case adjustments should apply. Even accepting this operative date, the Award will remain around 6 months behind the State Wage Case 2004. While I accept there will be some administrative burden on the employer in calculating any back pay entitlements, I do not accept this burden to be exceptionally onerous or unworkable. This burden must be weighed against the rectification required to be made for the employees concerned. 65 Fifthly, Mr Stevens emphasised the cost of the claim and its possible impact on the respondent's operations, including the maintenance of existing staffing levels. It is trite, of course, to observe that any wage increase is a cost to the employer. However, in view of the quantum of increase proposed, and my assessment of its financial impact, I conclude that the cost imposition on the respondent will be minimal. I note that the Union argued that the respondent has had the benefit of savings from delaying past safety net increases. While there is some logic in this submission, I am not convinced that the savings are as great as the Union has calculated. In any event, I agree with Mr Stevens that this is not the test of whether this application should be granted. 66 Sixthly, Mr Stevens correctly in my opinion, did not advance his client's case on an incapacity to pay basis. That being said, the central thrust of the respondent's case focused on the cost impact of the claim and its consequences for staffing levels. I should say, I find this evidence to be unpersuasive for the following reasons. 67 The Commission was provided with information concerning reduced turnover arising from falling attendances at race meetings. This was not disputed. However, the evidence was less than clear as to the effect of the reduced turnover on operating costs and the profit and loss of the oncourse operations. 68 The Commission accepts Ms McLoughlin's evidence that the oncourse operations of TabCorp Holdings Ltd is required to set and meet its own budgets and operating expenses. However it is pellucidly clear from TabCorp Holdings Ltd half year report to 31 December 2004 that the oncourse operations are not an autonomous business unit within the corporate entity. Rather, its results are included in the Wagering Division which, for the period just referred to, recorded a profit before taxation and amortisation of goodwill of $103.2m - 159.9% above the corresponding previous period. Total operating revenue increased by 194.5% to $668.6m. While this was attributed, in large measure, to the acquisition of the wagering business of TabCorp Ltd in July 2004, it still is a profit of the relevant Division. 69 Moreover, the respondent's Managing Director, in describing the overall results, said "We currently expect the group will again deliver solid growth earnings per share in the 2005 financial year". 70 I do not regard the proposed fast tracking of new technology and its effect on staffing levels as being an impediment to the grant of the claim. Obviously, the new technology will be introduced at some stage. This is a fact of modern industrial life. However, in my view, this argument should not be used as a grounds to justify the refusal of an otherwise meritorious claim. 71 Mr Stevens did not argue that, if the Commission granted this application it should do so with all, or some of the cost offsets, accepted by, or endorsed by the Commission. As mentioned earlier I queried Mr Stevens about this at the conclusion of his submissions. Upon reflection, I do not believe I have sufficient material before me to make variations to the Award or otherwise recommend or order that the proposed offsets be given effect. 72 Notwithstanding this conclusion it seems to me that at least two of these proposals would have little, or no impact on the employees under the Award; for example, the Union's agreement to an enterprise agreement and EFT for employees' wages, rather than cash payments. 73 Finally, I would direct the parties' attention to a General Ruling made by the Queensland Industrial Relations Commission on 27 June 2005 pursuant to ss287 and 288 of the Industrial Relations Act 1999 (Qld) (Queensland Government Industrial Gazette, 8 July 2005 at 412). The effect of this General Ruling was to provide a mechanism for adjusting all Queensland State awards for outstanding State Wage Case increases from 1 January 1987 to 1 January 2005. I would emphasise, of course, that this process was adopted under a different legislative framework and no doubt in different circumstances. Obviously, I have not relied on it when arriving at my determination of this matter. Indeed, it would be wrong for me to do so, absent of any submissions from the parties on the relevance, or otherwise, of this decision. I raise it merely as a matter of some passing interest for the parties. 74 For the reasons I have earlier expressed, I would grant the Union's application to apply the State Wage Case 2004 increases to the Award effective from the first full pay period to commence on or after 18 January 2005. The parties are directed to confer as to an agreed schedule to be filed with the Commission within 14 days. Liberty to apply is available in the event of any disagreement. 75 As to the Union's application IRC3413 of 2005 filed on 30 June 2005 seeking the State Wage Case 2005 adjustments, that matter is listed for mention on Thursday 18 August 2005 at 10:30am.

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