Storeworkers - Campbells Cash & Carry Pty Limited (NSW), NUW (NSW Branch) Award 2000 [2000] NSWIRComm 244

Solicitor: Mr M Davis Middletons Moore & Bevins

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: MAIDMENT J

Matter No. IRC1384 of 2000 Storeworkers - Campbells Cash & Carry Pty Limited (NSW), NUW (NSW Branch) Award 2000.

Application by the National Union of Workers, New South Wales Branch for an award. JUDGMENT

1 Campbells Cash and Carry Pty Ltd ("Campbells") operates wholesale supermarket outlets throughout Australia, those in NSW having being regulated for more than 20 years by a series of agreements with the National Union of Workers, New South Wales Branch ("the NUW") and its predecessor Federated Storemen and Packers Union, NSW Branch.

2 The current agreement commenced on 1 December 1997 and nominally remained in force until 1 December 1999, however, as it is an approved enterprise agreement under the provisions of the Industrial Relations Act 1996, it remains in force pursuant to s.42 of that Act.

3 As the parties failed to negotiate a replacement agreement the NUW has made an application for an award to cover the Campbells' operations which reflects the terms of the 1997 Agreement with some improvements in wages and conditions.

4 The major changes sought by the NUW are the addition of test case provisions such as personal carers leave, the inclusion of redundancy provisions, an increase in sick leave entitlements, an increase in casual loadings on Saturdays, Sundays and public holidays, 10 days paid leave per annum for delegates attending trade union training courses and the introduction of an early morning shift with a 12.5% loading.

5 Campbells has responded by making its own application, in these proceedings, for a replacement award based upon the Storemen and Packers General (State) Award ("the General Award") which would, in the absence of the 1997 Agreement, apply to its operations. Additionally Campbells has filed a notice of intention to terminate the agreement on and from the date of commencement of any award which might result from these proceedings.

6 Campbells contends that its notice of intention to terminate the agreement is reactive to the NUW award application and that it would have been otherwise content had the agreement continued in force. It now, however, presses that an award be made, but in the terms contained in its counter application. 7 The significant departures from the General Award which are sought by Campbells include provision for an early morning shift with a loading of 25% for work between 4 and 6am, and a day work span from 4am to 10pm instead of 6am to 8pm, that before 6am by mutual agreement. Night fill provisions are sought and departure from the award provisions as to payment of wages, meal hours, holidays and Sunday rates of pay are sought. Rostered day off availability is sought to be abolished.

8 Evidence was given in the NUW case by its Branch Secretary, Frank Belan and by three delegates employed by Campbells being John Eric Cousins from the Wickham site, Norman Coonerty from Fairy Meadow and Robert Fellows from Northmead.

9 Geoffrey Noel Gavan, National Human Resources Manager, John Walter Scott General Manager of M C Australia Pty Ltd, a wholly owned subsidiary of Campbells, and George Stanley Sleet, the Northmead Manager, gave evidence in the Campbells case.

10 No issue of credibility of witnesses arose nor did any significant issue of fact.

11 The parties are agreed as to the scope of any enterprise award, it would extend beyond that covered by the 1997 Agreement, I do not consider it necessary to detail the difference nor to deal with different arrangements at some sites such as metropolitan as opposed to country.

12 The Commission inspected the Campbells and associated premises at Northmead and Liverpool.

13 Mr A Joseph contends on behalf of the NUW that an enterprise award based upon the existing agreement would be appropriate as the 1997 Agreement has been crafted to provide conditions suitable to the enterprise. The NUW seeks increases of 10% during the life of the award.

14 Mr G Hatcher , counsel for Campbells, argues that, upon cancellation of the agreement, the General Award would ordinarily apply to the Campbells operations and that it would be contrary to established principles for the Commission to impose, by way of an award, the provisions of an agreement upon Campbells. He contends that the General Award must be taken as providing fair and reasonable conditions for employees in the industry and that the making of an enterprise award reflecting its terms would accord with the Commission's obligations under s.10 of the Act.

15 Campbells proposes that, in exchange for some altered conditions, wages $15pw higher than those in the 1997 Agreement should be provided by the new award plus a further 2% on 15 July 2001. Mr Hatcher , when asked, submitted that the special case which would support the Campbells application was constituted by: The departure from the conditions set in the Storemen and Packers General Award that will enable this business to hopefully continue by allowing it to meet the needs of its customers.

16 The Principles of Wage Fixation, as adopted by the State Wage Case 2000, include the following: 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.

17 Although each party accepts that both the NUW application and that of Campbells depend upon the establishment of a special case the matter is allocated to the Commission as presently constituted by a single member for the purpose of determination.

18 I accept that this is a special case to the extent that, although the General Award would ordinarily apply upon the 1997 Agreement ceasing to cover the enterprise, the situation is out of the ordinary as a consequence of the long history of regulation by agreement.

19 Therefore, on a special case basis, it seems to me that it is open to the Commission, if it considers it appropriate, to make an enterprise award which wholly or partly reflects conditions found in the 1997 Agreement and not in the General Award. It could also, on a special case basis, approach the matter as though the first award or existing award principles apply, with or without modification, even though this is not, at least in the technical sense, a first award or existing award situation. The question would seem to me to be whether or not such a course is justified.

20 I am conscious of the learning which is to the effect that tribunals will not ordinarily impose by award the terms of agreements between parties. I also accept that, in the technical sense at least, this is not a first award or existing award situation as the General Award (or its predecessor) has had some applicability to the Campbells operations. To ignore the terms of the agreement would, however, be unrealistic and unfair to the employees.

21 An example of unreality and unfairness which would arise should the Campbells application be granted is the difference between the 1997 Agreement and the General Award as to annual leave loading, the award provides a loading of 17.5% the Agreement 25%. The evidence of Mr Fellows is that he has 450 hours of accumulated annual leave which, under the Campbells proposal, would be devalued by the difference between the 25% Agreement loading and the 17.5% under the General Award.

22 Mr Hatcher submitted that such situations could be avoided by the inclusion of savings provisions, that, however, is not a course which I find attractive.

23 The evidence discloses that the NUW negotiators of the 1997 Agreement were sympathetic to the circumstances of Campbells which was then in significant financial difficulties. It had been led to believe that Campbells was in danger of closing. It was agreed that the ordinary working hours be increased from 36 to 38 hours per week with additional flexibilities in the span of ordinary working hours. The agreement was for 2 years with increases of 7.5% during that period.

24 It is plain from the evidence that, by and large, the 1997 Agreement has provided satisfactory regulation of the relationships between Campbells and its employees. It is further evident, particularly from the evidence of Mr Gavan, that no earnest consideration has been given by Campbells to the effect a reversion to the General Award would have upon either the company or its employees. Resultant benefits and/or detriments have not been identified. The proposition that, upon termination of the 1997 Agreement the provisions of the General Award (with some improvements in favour of Campbells) should apply, seems to be based upon a perceived windfall legal result unrelated to the needs of Campbells. On the other hand the NUW has pointed to detriments to the employees which would result without good reason. Consideration of the content of the 1997 Agreement does not disclose any provision which ought not be contained in an award which is the result of a special case of this peculiar nature even though some of the provisions exceed Commission standards, eg. annual leave loadings. The inclusion of provisions by way as a special case (whether by application of first award or existing award principles or otherwise) does not create a precedent for the awarding of such provisions elsewhere.

25 I reach the view that any award should be based upon the terms of the 1997 Agreement. Consideration then needs to be given to the changes, if any, to the Agreement provisions. In particular the NUW claim for higher rates of pay requires consideration.

26 As I understand the Principles of Wage Fixation arbitrated increases in wages are not to exceed those available pursuant to State Wage Case decisions unless a special case for higher increases has been made out.

27 Campbells contends that higher wages are not available unless additional flexibilities, for which it contends, are introduced.

28 The 1997 Agreement provided for a wage increase of 5.5% in December 1997 and a further 2% on 1 February 1999. The parties anticipated a replacement agreement would result from negotiations scheduled to commence in late 1999. As no agreement was negotiated the wages have remained unaltered since February 1999, the State Wage Case adjustments not having been of sufficient proportion to have enabled an increase in the agreed rates.

29 The State Wage Case 2000 authorised a wage increase of $15 per week to be generally available 12 months after the insertion into the relevant award of the State Wage Case 1999 decision. That $15 increase was only to be available to awards which do not contain wage increases awarded since 29 May 1991, other than safety net, State Wage Case and minimum rates adjustments. Absorption of such increases since 29 May 1991 and of over award payments is provided for in the wage principles. The increases received under the 1997 Agreement, and its predecessors prior to the State Wage Case 2000, disqualify, under the absorption requirements, the employees from receiving a further increase by way of award prescription except either by way of consent, work value changes or by way of special case.

30 As this is not a work value change case and consent is not forthcoming a special case needs to be made out if wage increases are to be granted.

31 The union witnesses identified CPI movements, the GST and higher interest rates as supporting a wage increase. The affidavit of Mr Belan contains the following: 22. The wage increase of 10% over 18 months is reasonable in the current economic climate. The economy is growing, interest rates have risen by approximately 2% over the past 12 months and inflation has increased by approximately 3% in the past 12 months (Annexed and marked "FB8" is an extract form the Australian Bureau of Statistics Consumer Price Index Booklet (6401.0).) and is expected to rise by "a further 5 ¾ % in year average terms in 2000-2001 and 5 ¼ % through the year to the June quarter 2001." Extract from Budget Statement 2 - Economic Outlook. 23. Considering that our members at Campbells have only received a 7 ½ % wage increase over the previous 3 ½ years, together with an increase in their working hours by 2 hours per week. I believe that a wage increase of 10% is not excessive, especially when you take into account the current economic climate. In fact, their disposable income per week has decreased rather than remain constant or increase. For example, a Grade 2 Storeworker/Forklift Driver, currently receives a weekly income of $529.20 gross. He/she received their last pay increase of 2% on 1 February 1999. Therefore they have not received a pay increase for the last 17 months, even though the inflation has increased by 3% since March 1999 to March 2000- (Refer to "FB8".)

32 The transcript records the substantive NUW submissions in support of wage increases as follows: Your Honour, on the question of wages, it is fair to say from the union's submission that the union's case is more forcefully predicated on protection of those conditions which exist in the current award rather than wishing to see those conditions traded off for a wage increase. I think that is a fair way of putting the union's position. Obviously it would be with respect recognisable in the union's submissions that if certain conditions which we have made submissions in relation to were not to be continued, that the union would obviously have a view as to a wage increase or some wage increase attaching to them but there is a strong preference I would say from this side of the Bar table for the maintenance of those conditions and the agreement to those conditions which the unions seeks.

33 Mr Joseph went on to put submissions as to CPI movements, the GST and as to wage and salary statistics. He compared wage increases between the 1997 Agreement and the General Award.

34 As I understand the authorities the NUW wage claim, if it is to succeed as a special case requires demonstration of circumstances which would take the case "out of the ordinary". Such a case must demonstrate circumstances which warrant increases above and beyond those made available pursuant to State Wage Case decisions. In Re Crown Employees (State) Award (No 2) [1993] 52 IR 243 the Commission, Fisher P, Cahill VP, Bauer J, Hungerford J and Sheils CC , said at 376: We do not accept the proposition advanced by the respondents that the provision may only by utilised in tandem with some other specific provision of the principles. Such a narrow construction would impose undesirably inflexible restrictions on the Commission. It would also be in conflict with the origins and development of the provision within successive series of principles, a matter to which we have earlier referred. In our view, the special cases section of the principles provides a mechanism whereby a claim for enhanced wages or conditions beyond those normally allowed under the principles may be brought before the Commission. The hearing of such a claim is to be conducted by the Full Commission (formerly the Commission in Court Session) thus emphasising the special nature of the case. It will be a matter for the Full Commission, after hearing the evidence and submissions, particularly relating to the matters relied on to take the case "out of the ordinary" and thus to make it "special", to decide whether the claim, in part or in whole, should succeed. Some of the cases brought under the special cases provision have relied, it is true, on the Work Value Changes principle, a principle which is not relied on here. But other cases, some of which have earlier been identified, have substantially been brought on the basis that developments in workplace reform of a structural efficiency kind, in which employees have participated or to which they have contributed, have been such as to justify wage increases beyond those normally allowable under the principles. On a number on (sic) occasions such applications have been approved by the Commission. In some of them the amounts of wage increase have been agreed by the parties but in others they have not, and the Commission has made an arbitrated decision in the matter.

35 The case based upon CPI movements, the GST and increased interest rates cannot succeed as a special case. Every employee under every award and agreement is the subject of those economic influences. By their very nature they are the influences which are the subject of consideration in National Wage Cases and, in their turn, State Wage Cases. Similarly that based upon movements in the General Award cannot succeed as the only increases in the award rates have been State Wage increases which would have been granted to the employees under the 1997 Agreement but for the constraints of absorption.

36 The increases advanced by Campbells are underpinned by proposed changes in conditions of employment which would advantage the company and disadvantage, at least potentially, employees. It is clear from the submissions of Mr Joseph earlier quoted that the NUW is not prepared to trade such changes in order to gain wage increases. The evidence relied upon in support of the proposed changes in conditions is primarily to the effect that existing and, more especially, changing customer demands require flexibilities in working hours and that Campbells seeks to avoid the imposition of certain existing penalty rates. The NUW opposes the changes on the basis that existing flexibilities are appropriate and that penalty rates should not be reduced.

37 The evidence does not compel me to the view that the changes sought by Campbells should be granted. It goes no further than an argument for a reduction in operational costs which, it is said, would reduce the likelihood of competitors entering the field. There is nothing special or out of the ordinary in an employer seeking to reduce operational costs. True it is that wage increases are proffered as compensation for the proposed changes in conditions, however, the Commission is not able to assess the overall effect of the proposals.

38 In regard to the competing contentions as to the granting of conditions different to those now applying I note the observations of Schmidt J in Re Storeworkers - Davids Distribution Pty Ltd NSW Distribution Centres Award 1998 , [1998] 85 IR 179 at 186. Her Honour was faced with a not dissimilar situation to the present although in that case the employer was seeking an award which largely reflected the provisions of an enterprise agreement which had covered the distribution centres. In considering the opposing arguments her Honour, as to matters such as rosters and spread of hours, approached the matter by way of considering whether or not, bearing in mind the evidence, departure from the enterprise agreement provisions was appropriate. In performing that task her Honour gave due weight to reliance, when it arose, by one or other of the parties upon specific provisions of the General Award.

39 I should note that, having decided that any award emanating from these proceedings should essentially reflect the provisions of the 1997 Agreement, I approach the task of determining whether or not departure from its terms is warranted. As to the "improvements" in conditions sought by either party it seems to me that a special case for departure from the existing conditions would need to be demonstrated.

40 Neither party has made out a special case for departure from the existing conditions of employment. They each have put a conventional case, that of the NUW on the basis that improvements are desirable, that of Campbells on the basis that it could meet its customers' demands more economically if the changes sought by it were granted.

41 Campbells does not oppose the awarding of standard redundancy provisions, however, those sought by the NUW go beyond standard provisions and reflect those hammered out during a dispute with Campbells which resulted in proceedings before Schmidt J in 1997. The agreement then reached, which is more favourable to employees than the Commission's standards, was not registered and remained in force until May 1999. The fact of its existence from 1997 to 1999 does not persuade me to incorporate it in an award thus enshrining higher than standard benefits, rather, it seems to me that should Campbells consider redundancies at some future time it should inform the NUW, and if appropriate the Commission, in order that any issues might then be addressed.

42 I reach the view that it might be preferable to allow the agreement to continue to regulate the situation in the hope that the parties can negotiate a replacement, however, should the NUW upon consideration of this decision so desire, an award will be made in terms reflective of the terms of the 1997 Agreement with any departures agreed between the parties which do not offend against principle and test case provisions.

43 Either way the employees will be entitled, along with the rest of the award regulated community, to participate in wage movements provided by State Wage Case decisions. Along with the rest of that community they will not be entitled to greater wage movements unless by agreement, work value change or special case.

44 The outcome is that the applications are presently rejected.

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