Storeworkers - IGA Distribution Pty Limited New South Wales Distribution Centres Award 2002 [2002] NSWIRComm 156

APPLICANT/RESPONDENT: Mr J Shaw QC with Mr A Searle of counsel INSTRUCTED BY: Mr A Joseph National Union of Workers, New South Wales Branch

LEGAL REPRESENTATIVES: RESPONDENT/CROSS-APPLICANT: Mr G Hatcher of counsel INSTRUCTED BY: Mr M Davis Middletons Moore & Bevins

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES FULL BENCH

CORAM: Walton J, Vice-President HARRISON DP PATTERSON C

Matter No IRC 3866 of 2000 STOREWORKERS - DAVIDS DISTRIBUTION PTY LTD NEW SOUTH WALES DISTRIBUTION CENTRES AWARD 2000 Application by the National Union of Workers, New South Wales Branch for a new award

Matter No IRC 4312 of 2000 STOREWORKERS - DAVIDS DISTRIBUTION PTY LIMITED NEW SOUTH WALES DISTRIBUTION CENTRES AWARD 2000. Application by Davids Distribution for a new award.

DECISION OF THE COMMISSION [2002] NSWIRComm 156 Introduction

1 These matters are cross applications seeking an award to regulate employment of storeworkers engaged at distribution centres located at 4 Newington Road, Silverwater and 37 Bessemer Street, Blacktown ("the distribution centres").

2 The terms and conditions of employment of those storeworkers have their origin in an award entitled Storeworkers Davids Distribution Pty Limited NSW Distribution Centres Award 1998 ("the 1998 Award") which was made by Schmidt J in arbitration proceedings on 6 November: Re Storeworkers - Davids Distribution Pty Limited NSW Distribution Centres Award 1998 (No 1) (1998) 85 IR 179 (the "1998 decision"). A supplementary judgment was issued by her Honour on 7 December 1998: Re Storeworkers - Davids Distribution Pty Limited NSW Distribution Centres Award 1998 (No 2) (1998) 85 IR 198. That award had a nominal term of 18 months, which expired on 6 June 2000.

3 During the course of these proceedings the award was subject to a review pursuant to s19 of the Industrial Relations Act 1996 ("the Act"). The review was undertaken by Harrison DP and resulted in some variations to the 1998 award. The reviewed award was entitled Storeworkers - IGA Distribution Pty Limited NSW Distribution Centres Reviewed Award 2001 (2001) 327 IG 560 ("the reviewed award").

4 On 7 August 2000, the National Union of Workers, New South Wales Branch ("the NUW") made application to establish a new award to regulate employment at the distribution centres. A cross application was filed by Davids Distribution Pty Ltd ("Davids"), as it then was, on 30 August 2000. That application also sought the making of a new award.

5 Both applications were amended during the proceedings (and shall be referred to as "the amended applications"). In each case, the applicants sought substantial variations to the reviewed award which, together with the 1998 award shall compendiously be referred to as the "1998 award".

6 During the course of proceedings in this matter the applicant, Davids Distribution Pty Ltd, underwent a commercial transition and became known as IGA Distribution Pty Limited, a wholly owned subsidiary of Metcash Pty Limited. We shall refer to the cross applicant as "IGA", although where reference is made to the history of the award, we shall refer to the cross-applicant as "Davids". 7 The matters were firstly before Walton J, Vice-President. Those proceedings established that there would be no agreement between the parties (at least as to the substantive issues of wages, hours of work, and application of 'engineered standards') and that the claims in relation to the issues of wages and hours of work went beyond the parameters of the relevant wage fixation principles. Accordingly, the matters were referred by Walton J to the President to be processed as a 'special case' pursuant to the wage fixing principles then applicable: State Wage Case 2000 (2000) 97 IR 93 at 120.

8 Upon listing the matters before this Full Bench, the Bench then referred to Harrison DP in order to undertake conciliation and for the purpose, if required, of taking certain aspects of the evidence. His Honour also undertook an inspection of the Silverwater facility, although the Full Bench inspected the Blacktown facility.

9 The delegation for the purpose of taking evidence was opposed. In determining to refer the matter to Harrison DP, the Full Bench stated: We have determined that part of the evidence in these proceedings shall be taken, at least in part, by one member of the Full Bench, Deputy President Harrison .

The particular aspects of the evidence which shall be taken before him shall be decided after further hearing from the parties as to the nature of the evidence proposed to be called.

We do not propose to give detailed reasons as to the matters raised by Mr Hatcher of counsel for Davids Distribution Pty Limited this morning as to the operation of s156(5)(a) of the Act. In our view, there is ample power and authority for the taking of the evidence by a single member of the Full Bench, having regard to provisions 162 and 163 of the Act.

Finally, we note that we intend to ensure that no party is denied natural justice in the conduct of these proceedings. That will ultimately involve the Full Bench dealing with any submissions raising concerns as to that matter or similar matters in its final deliberations in relation to this matter.

10 We observe that no party availed itself of the opportunity to raise further submissions in accordance with the final paragraph of that decision, although submissions were put as to the weight that could be attached to certain evidence, for example, the evidence of Mr Belan.

11 A comparison of the NUW and IGA amended applications is contained in a document provided jointly by the parties (exhibit 6).

Non-Contentious Issues 12 The applications did not seek an alteration to clauses in the 1998 award concerning annual leave, long service leave, jury service, disputes procedure, right of entry for union officials, the eligibility criteria for payment of first aid allowances, methods of payment of wages, crib time arrangements, fares and travelling entitlements and attendance at repatriation centres. Results of Conciliation

13 A number of formal conciliation conferences took place before Harrison DP. The method of conciliation was to carefully examine each element of the amended applications to determine those aspects upon which negotiation and agreement was available. In addition to the formal conciliation conferences, there was some direct discussion between the parties and an exchange of draft positions.

14 After this exhaustive conciliation process, agreement was, in fact, only reached as to a relatively small component of the respective applications, including the form of various provisions; although that process did serve to crystallise the precise issues existing between the parties. The parties' final positions were set out in the form of a draft award (exhibit 61) which detailed the provisions which were agreed and the alternative provisions where a dispute remained. Issues In Contention

15 Broadly speaking, the NUW sought a return to conditions of employment enjoyed pursuant to an enterprise agreement, the nominal term of which expired in 1997 but which continued until its termination on 4 December 1998 ("the 1997 Agreement") (which was the subject of some considerable attention in the proceedings before Schmidt J concerning the 1998 award); and a wage increase of 5 per cent over the rates of pay in the 1998 award.

16 The NUW contended that the Commission should not treat the 1998 award as constituting fair and reasonable conditions of employment because of certain features of the proceedings giving rise to the 1998 award and the decision itself.

17 IGA sought to retain the gains made by the employer under the 1998 award and to obtain further improvements by way of a greater degree of flexibility and control over employee behaviour. In its final submissions, IGA opposed any improvement in wages. However, in doing so, IGA amended its application by withdrawing that part of its application which sought a two year award with a three percent increase in wages on two occasions. In the result, by the close of these proceedings IGA opposed entirely the NUW wage claim (which, in fact, was unknown to Mr J W Shaw QC, who appeared for the NUW, at the time of the making of his final submissions). That position emerged in the following circumstances. 18 Mr Hatcher submitted that IGA had made application for a three percent increase based on the number of alterations to conditions of employment sought by IGA, which he put was the foundation of a special case. Mr Hatcher contended that during the course of the conciliation process IGA abandoned all of those claims resulting in withdrawal of any basis for a special case or consequential wage increase. In the result, Mr Hatcher submitted that the Commission should make an award replicating the 1998 award with respect to wages.

19 Mr Shaw submitted that such an approach was untenable, unfair and oppressive in all aspects, not the least of which, having regard to CPI movement over the relevant period (6 December 1999, the date of the second and last wage increase determined by Schmidt J in the 1998 Award to the date of hearing) results in a reduction of real wages. Mr Shaw submitted that this position is inconsistent with the improved financial circumstances of the respondent (which he conceded was substantially better than that which faced her Honour in 1998) and increases in productivity arising from both an increase in through put and reduction in the number of employees.

20 Mr Shaw described the change in position by IGA as a tactical ploy to damage the union's special case argument. 21 Mr Hatcher did not specify or go to those claims made by IGA which he contended were the basis of the three percent wage increase originally proposed by IGA.

22 Exhibit 61 revealed that there were a number of other core issues which remained for arbitration - namely, the issues concerning hours of work and engineered standards. The contest between the parties as to these key issues may be summarised as follows :

1. Hours of work The NUW sought a 36 hour week with a limitation to spread of hours to 10 per day. IGA sought to retain the 38 hour week in the 1998 award and to extend the spread of hours to 5.00 am to 6.00 pm at Blacktown and 5.00 am to 6.00 pm at Silverwater (with consequential alteration to meal times). The NUW sought a meal allowance which would be paid in cash. It also sought a provision that any alteration in meal times would be subject to the consultative committee process. 2. Engineered standards The NUW sought the removal of reference to 'Engineered Standards' in the classification structure and consequently the use of 'performance against engineered standards' as a merit criteria for advancement. This was opposed by IGA. 3. Counselling Procedure The NUW sought the removal of the reference to performance standards, i.e. engineered standards, from the counselling procedures prescribed by the 1998 Award. 23 There were a range of other claims pursued by the parties in the arbitral proceedings. These were as follows :- 1. Limitations on use of casual, part time, and seasonal workers The NUW sought to restrict the use of casual, part time and seasonal workers. The NUW also sought a commitment to maximising full time permanent employment. It sought the deletion of clauses from the 1998 award concerning fixed term employees, the probationary periods and the exclusion of former casuals. These claims were opposed. 2. Rosters - Consultative arrangements The 1998 Award provides that: The company may alter the starting and/or finishing times within the spread of hours for a rostered shift without payment of overtime upon the giving of seven days notice. The NUW sought a new roster provision providing rights to employees to remain on existing rosters with capacity for additional rosters to be established in accordance with the consultative committee process. The NUW sought the following new provision: The company shall consult with the employees and, if requested, the union in relation to any change in roster. The Company will not unnecessarily impose a change of roster on employees where it would cause personal hardship.

IGA oppose this proposition, contending that it is unnecessary. 3. Hours of day work - Definition of early morning shift IGA sought to change the definition of early morning shift from any shift commencing from 4.00 am to 6.00 am (as provided in the 1998 Award) to any shift commencing between 4.00 am to 5.00 am; altering the spread of hours for day work from 6.00 am to 6.00pm to 5.00 am to 6.00 pm. 4. Working on a rostered day off (RDO) IGA sought the insertion of a new provision which allowed payment of a 25 percent loading in lieu of overtime rates when work was performed on rostered day off; and, in the case of shift workers, the 25 per cent loading or shift allowance, whichever is the greater, in lieu of overtime rates where an employee, by mutual agreement, works on an RDO. IGA's proposal was that work in excess of normal rostered hours would be paid at overtime rates. 5. Saturday work The parties were not able to agree on the method of payment for part time or seasonal employees rostered for Saturday work. There was no dispute that a 60 per cent loading should be paid. The NUW sought that the Saturday loading to be calculated into the all purpose rate for part time and seasonal workers in the same manner as full time employees, and that the Saturday loading be paid in addition to casual and shift loadings. IGA sought retention of the current award provision which distinguished between full time employees and casual/part time employees. The current award provides for payment of the 60 per cent Saturday loading in addition to casual loading, but not the shift allowance. 6. Saturday rates for shift workers IGA sought the retention of current arrangements which provided a 60 per cent loading in lieu of shift allowances; and for the 60 per cent loading to be paid in addition to shift allowances. The NUW sought that those provisions be deleted. 7. Sunday overtime The NUW sought an addition to cl 21(iv) of the 1998 award to provide that overtime worked on a Sunday would be paid at the rate of double time and one half (in substitution for the present provision found in cl 13(ii) Overtime which provides for payment at double time). 8. Weekend work meal breaks IGA proposed that, where an employee worked 9 hours overtime on a Saturday, Sunday or Public Holiday between the span of hours for day shift, the ordinary week day lunch break would be observed without penalty. The NUW sought the retention of the current criteria. 9. Holidays IGA sought the deletion of the picnic day entitlement. The NUW sought the deletion of the provisions of Clause 19 of the 1998 Award (which reduced the former payment for work on a public holiday, where that work was part of an employee's normal roster, from triple time to double time and a half payment). 10. Sick leave (i) Notification The NUW sought the retention of the current provision that notification of absence due to illness be given within 24 hours of the commencement of the absence. IGA sought a provision requiring notification prior to commencement of the rostered shift. (ii) Standard of proof IGA seek a provision that any absence prior to a public holiday and sick leave in excess of two single days be supported by a certificate issued by a duly qualified medical practitioner, in place of the current requirement that proof satisfactory to the company or, in the event of a dispute, satisfactory to the Commission, be the relevant standard. 11. Deduction of union dues The NUW sought a provision requiring the employer to deduct union dues from wages where requested (and authorised) by the employee to do so. This was opposed by IGA.

12. No extra claims The NUW sought that the no extra claims provision in the 1998 award should apply to all parties, not just the union. It also sought the introduction of a provision which permitted the parties to commence negotiations for a new award, two months prior to expiry of the award. 13. Area, Incidence and Duration IGA sought retention of the current provisions in the 1998 award. The NUW sought coverage of all storeworkers, other than staff at the specified locations, and the addition of a provision that the award shall apply to any "successor, assignee, or transmittee" of all or any of the work covered by this award. The NUW also sought the addition of a provision that, to the extent of any inconsistency, the award will prevail over the Storemen and Packers, General (State) Award (2000) 317 IG(NSW) 1097. The provisions were opposed. 14. Arrangement of the award IGA sought that rates of pay and conditions of employment in the 1998 award specific to the Silverwater warehouse be removed from the wage schedule and located in an appendix to the award. This was opposed by the NUW. Evidence 24 The evidence in these matters comprised some 63 exhibits, supported by oral evidence from: NUW Witnesses: · Mr W J Allison - employed by IGA as a storeworker and currently the union delegate · Mr K R Stewart - employed by IGA as a storeworker for some 23 years · Mr M Christmas - employed by IGA as a storeworker; previously occupied the role of union delegate · Mr F Belan - NSW State Secretary of the NUW; Mr Belan was not available for cross examination, his evidence provided by affidavit without objection IGA Witnesses: · Mr A McKenzie - Chief Executive Officer of Australia Asia Pacific Wholesalers and a Director and National Spokesperson for the National Association of Retail Grocers of Australia (NARGA). Mr McKenzie was not required for cross examination. His evidence was provided by statement. · Mr B Douglas - General Manager, IGA Distribution Pty Ltd · Mr G Gearing - Operations Manager, Perishable - responsible for operation of the Perishable Distribution Centre at 4 Newington Road, Silverwater. · Mr G Johnson - Group Employee Relations Manager, Metcash Trading Pty Ltd. · Mr P McNally - Training Manager Australia and New Zealand for EXE Technology (Engineered Standards); formerly State Human Resources Manager for Retail Distribution Division, Davids Distribution Pty Ltd, 37 Bessemer Street, Blacktown. · Mr M O'Neill - Group Occupational Health and Safety Manager, Metcash Pty Ltd · Mr R Kinnane - Training Supervisor, IGA Distribution Pty Ltd. · Mr D Bru - Afternoon Shift Supervisor, IGA Distribution Pty Ltd, Blacktown · Mr G O'Shea - Blacktown Warehouse Operations Manager, IGA Distribution Pty Ltd.

25 The evidence was presented in a thorough and detailed manner. We do not consider it necessary or helpful to undertake an exhaustive analysis or recital of the evidence. We will refer, as appropriate, to those particular components of evidence which is of assistance in determination of specific issues.

The Significance of 1998 Decision and Award Privative Provisions and Relevant Principles

26 Mr G Hatcher of counsel, who appeared for IGA, submitted that the starting point for consideration of the applications must be that the wages and conditions of employment determined by Schmidt J in 1998 were fair and reasonable and not open for reconsideration in this matter.

27 He submitted that, as there was no appeal from her Honour's decision, the Commission should treat the decision as an appropriate determination of fair and reasonable conditions of employment for the subject employees.

28 Mr Hatcher relied upon the provisions of s179 of the Act to submit that finality was accorded to the Commission's decision in 1998. In order to vary the award conditions established by that decision, it must be demonstrated, on the evidence, that the terms and conditions of employment provided by the 1998 award no longer provided fair and reasonable conditions of employment. He contended that the Commission is precluded, as a matter of law and principle, from considering whether the provisions of the 1998 award did, in fact, provide fair and reasonable conditions of employment, even if it were to be demonstrated that any aspect of the 1998 decision was attended by an error of law. Indeed, Mr Hatcher went so far as to submit that the Commission was precluded by the operation of s179 from considering the basis upon which the 1998 award was made for the purposes of assessing what factors were, or were not, taken into account in order to make an assessment of the veracity of the claims in the amended applications. 29 In addition to the provisions of s179 of the Act, Mr Hatcher relied upon a judgment of a Full Bench of the Commission in Court Session in Nutshack Merchant Franchise Pty Limited v Smith (1999) 90 IR 355 at 360 and Re Pastoral Industry (State) Award (2001) 104 IR 168 at 193.

30 Mr Shaw submitted that there were some unusual features of the arbitral proceedings before Schmidt J in 1998 which bear upon the weight which should now be given to that decision in the present context. He submitted that the "unsatisfactory features" of those proceedings, of which his client accepted partial responsibility, resulted in errors in the 1998 decision or such unsatisfactory features arising from the proceedings as would remove any presumption that the award made in consequence of the decision was fair and reasonable. Mr Shaw submitted that, in proceedings brought to establish a new award, or to vary an award, the award history was always relevant but that it did not ultimately restrain the Commission which was bound to make a decision in conformity with s10 of the Act.

31 It was also submitted, for the NUW, that IGA's reliance upon s179 of the Act was misconceived because, whilst that provision protected the legal efficacy of an earlier decision and consequent award during its current operation, it did not now prevent the Commission from determining fair and reasonable conditions of employment upon an application to establish a new award. Mr Shaw submitted that there was no authority for the proposition that s179 inhibited or precluded the making of a new award prescribing fair and reasonable conditions of employment pursuant to s10 of the Act. Section 179 does not preclude a party re-agitating issues concerning the terms and conditions of employment of an award which were argued and determined at some earlier time.

32 As to the decision of the Full Bench in Re Pastoral Industry (State) Award, it was submitted for the NUW, that the Commission had concluded that there was a rebuttable presumption that an award made earlier in time provided for fair and reasonable conditions of employment. That presumption, according to Mr Shaw, may be rebutted by evidence called in a later case after the expiry of the earlier award.

(1) Subject to the exercise of a right of appeal to a Full Bench of the Commission conferred by this or any other Act or law, a decision or purported decision of the Commission (however constituted): (a) is final, and (b) may not be appealed against, reviewed, quashed or called in question by any court or tribunal (whether on an issue of fact, law, jurisdiction or otherwise).

(2) A judgment or order that, but for this section, might be given or made in order to grant a relief or remedy (whether by order in the nature of prohibition, certiorari or mandamus, by injunction or declaration or otherwise) may not be given or made in relation to a decision or purported decision of the Commission, however constituted.

(3) To avoid doubt, this section extends to any decision or purported decision of the Commission, including an award or order of the Commission.

34 We do not accept that s 179 of the Act precludes us from examining the decision of Schmidt J for the purposes of considering whether or not the provisions of the 1998 award meet the requirements of s 10 of the Act. The history of an award is clearly a relevant consideration in making such a determination. It will be necessary, in considering that award history, to evaluate the basis upon which a particular condition was awarded so as to determine, inter alia, the factors comprehended in the establishment of that provision. Such examination is usually undertaken to avoid a double-counting of factors already comprehended, but also extends to a consideration of the basis upon which an earlier provision may have been awarded so as to consider whether the conclusions reached in an earlier decision remain applicable, having regard to the evidence and submissions in the current proceedings.

35 Nothing in s 179, precludes, in our view, the Commission examining, in that context, and for the purposes of making the determination required under s 10 of the Act, the reasons given for the making of the 1998 award. In doing so, the Commission will, subject to the correct application of principle which we will now discuss (and existence of relevant evidence) reach its own conclusion as to the appropriate terms of the award in accordance with the provisions of s10 of the Act. This is particularly so where the earlier decision of a single member is considered by a Full Bench in arbitral proceedings such as these. We respectfully adopt, as the correct approach, that which was stated by the Commission in Court Session in Abigroup Contractors Pty Limited v Inspector Kathleen Maltby [2002] NSWIRComm 18 at [7] as follows: We do not so view Kavanagh J's decision at first instance which, on one approach, is directed to whether the orders made by Wright J per se may be impeached. However, the appellant went so far as to submit that s179 of the Industrial Relations Act operated in such a way as to preclude a member of the Commission (even in arbitral proceedings) from questioning (that is, arriving at a different view) a decision of another member, and even where different parties were involved in later proceedings. This is said to extend to proceeding where a Full Bench is considering an earlier judgment of a single member or by another Full Bench. We have real doubts the section operates in such a manner. 36 The Full Bench of the Commission in Court Session in Nutshack does not assist IGA in this respect. That matter concerned whether an appellant should be heard upon an appeal where a stay of the decision at first instance had not been sought and an order of the Court at first instance had not been complied with by the respondent. The observations of the Court as to s 179 in that matter addressed the question of whether the decision and orders at first instance would continue to operate unless the subject of a successful appeal or stayed by order of the Court.

37 Nor do we consider that the decision of the Full Bench of the Commission in Re Pastoral Industry (State) Award assists IGA with respect to its contentions as to the operation of s 179 of the Act. However, that decision is applicable as to the principles to be applied in considering applications for a new award which would have the effect of supplanting, in part or in whole, an earlier award operating in the same area of employment. We note in this respect that both parties accepted the decision in Re Pastoral Industry (State) Award was relevant to these proceedings but differed as to its effect.

Special Case - The relevant principles 38 We turn to the principles applicable in determining special case applications. The starting point for this analysis is the question of onus, noting that a number of aspects of the applications before us are being pressed under the special case principle of the State Wage Case 2001 (2001) 104 IR 438 at 480. 39 In a special case, an applicant must meet the ordinary onus to make out its case on the evidence: Re Pastoral Industry (State) Award at 73, although economic and public interest considerations may arise.

40 As to the requirements of s 10 and the significance of existing award conditions, the Full Bench in Re Pastoral Industry (State) Award stated, correctly in our view (at [76] and [77]): All of this means that in considering the substantial changes here sought from the current award arrangements, the Commission must be satisfied that in granting the application, it would be making an award which meets the statutory obligation in s 10 to make an award 'fixing fair and reasonable conditions of employment' (and which conforms with the objects of the Act).

Existing award conditions are, of course, not immutable. Subject to compliance with the requirements of the Act and applicable principles, they can be varied upon the basis of the consent of the parties, or in the case of contested proceedings, if a case is made out on the evidence, upon the basis that the award conditions in question no longer provide fair and reasonable conditions of employment. In a contested case, the onus falls on the applicant to make out a case for an alteration to an award, which otherwise will remain undisturbed.

41 We also adopt the following observations of the Full Bench in that matter (at [114]): In our view, the fact that an award contains current conditions of employment, properly leads to the inference that, either as the result of the Commission having accepted an agreement which the award parties have reached in the past, or as the result of an arbitration, those conditions were awarded in conformity with the obligations imposed upon the Commission by s10 of the Act and its predecessors. It follows that some positive demonstration of why such a condition sought to be removed no longer provides fair or reasonable conditions of employment must be provided on the evidence, before the Commission will act to remove them, particularly over the objection of another award party or parties. In a contested case the mere fact that such provisions have been removed from a counterpart Federal award as the result of the requirements of s89A of the WR Act and Schedule 5 to the WROLA Act, does not offer a sufficient basis for such a removal.

42 Thus, in proceedings brought to establish a new award or vary an existing award, it shall be presumed, for the purposes of s 10 of the Act, that the existing award sets fair and reasonable conditions of employment for employees. However, that presumption is rebuttable by the applicant upon the establishment, by evidence, that the award does not provide fair and reasonable conditions of employment.

43 This conclusion may be illustrated by reference to consent awards. The parties to such an award may have, in reaching their agreement, overlooked or not properly assessed certain factors as to a term of an award. That omission may be considered in a later adjudication as to that term. So much was expressly contemplated in that aspect of the equal remuneration principles established by a Full Bench of this Commission in Re Equal Remuneration Principle (2000) 97 IR 177 at [158] which dealt with the issue of undervaluation. Further, an earlier decision of the Commission may have been reached in circumstances where there was very little argument advanced before the Commission in order to assist it in reaching a particular conclusion. This matter represents no exception, in that respect, where, for largely unexplained and possibly irrational reasons, the union chose substantially not to participate in the proceedings before Schmidt J.

44 It may be also demonstrated that the conditions are no longer fair and reasonable having regard to changed circumstances, including changes in the respective positions or conduct of the parties, developments in a business, industry or the economy generally and changes in the factors which had underpinned the particular condition or conditions in question at the time of the making of an award.

45 We also adopt, with respect, the statement of applicable principles as to special case proceedings stated by the Full Bench in the Re Operational Ambulance Officers (State) Award [2001] NSWIRComm331 at 168 as follows: A number of principles may be distilled from these authorities bearing upon the contention advanced by the HAC. In order to make out a special case the applicant is required to make out that the variation is necessary to establish fair and reasonable conditions of employment and that the matter has special attributes. In doing so, the applicant is not required to meet a higher onus or standard of proof. The evidentiary requirements of a special case are no more strict than would apply in an ordinary matter, although the applicant to a special case will need to establish an adequate evidentiary foundation for those factors which are relied upon as showing the special case attributes of the case. Whilst respect will be afforded earlier decisions of the Commission or its predecessors, the conditions of employment earlier established need to be ultimately tested against the requirements of s 10 of the Act and that which we have discussed as being applicable to making out a special case. Where, as here, the former decision involved a test case, particular care should be taken to ensure that the factors relied upon by an applicant in support of its claim do not replicate factors which were taken into account by the Commission or its predecessors in establishing the general standard emerging from such case. In any event, the basis for and circumstances under which the conditions in the award were established will be significant considerations in the Commission's deliberations in order to assess whether the factors relied upon by the applicant in support of a special case have already been accommodated by the earlier made award (in which case the present prescription may adequately compensate for those factors). (See also Re Public Holspital Nurses (State) Award [2002] NSWIRComm 100).

46 We propose to deal here with an issue of statutory construction raised by IGA before further examining the 1998 decision and award. The NUW sought to rely upon the terms of the 1997 enterprise agreement in these proceedings. It was submitted that the terms of this instrument represented the appropriate standard for hours of work for this group of employees. That agreement prescribed a 36 hours of work per week which was inappropriately removed by the 1998 award.

47 Mr Hatcher submitted that s 47 of the Act proscribed any consideration by the Commission of the 1997 agreement. We do not agree with this submission although we nonetheless recognise that there is considerable difficulty, as a matter of merit, in the union relying upon an agreement made in 1997 to sustain the present application for hours of work.

When making awards or exercising its other arbitral functions under this Act, the Commission is not to regard conditions of employment set by enterprise agreements as standard conditions of employment for other employees.

49 In contrast with s 131 of the Industrial Relations Act 1991 ("the 1991 Act"), the provisions of s 47 plainly do not wholly preclude a consideration by the Commission, when making awards or exercising its other arbitral functions, enterprise agreements. Rather, s 47 limits the circumstances under which the Commission may have regard to such instruments. Hence, the Commission may not have regard to the conditions of employment set by enterprise agreements as standard conditions of employment for other employees. We consider that Mr Shaw was correct in submitting that this limitation is confined to circumstances where enterprise agreements are relied upon to establish a general standard which could then be utilised as a basis for establishing a condition in an industry or enterprise award. This conclusion is plainly available as a matter of statutory construction and is also supported by reference to the parliamentary debates to which we were taken by the NUW.

50 We do not consider that the provisions of s 47 prevent us from considering and taking into account, in the context of an application for a new award, the terms and conditions of an enterprise agreement which had, in the present case, hitherto regulated the terms and conditions of employment of the employer and its employees, the subject of that application. Nor do we consider that such an approach is contrary to relevant principles: see Storeworkers - Campbell's Cash and Carry Pty Ltd (NSW), NUW (NSW Branch) Award 2000 (2001) 104 IR 367 and Campbell's Cash and Carry Pty Ltd v National Union of Workers, New South Wales Branch (No 2) (2001) 106 IR 429.

The 1998 Decision 51 The 1998 award emerged from a failure by the NUW and IGA to renegotiate the 1997 enterprise agreement.

52 The early stage of the proceedings were accompanied by considerable industrial disruption and proceedings both before the Commission (at first instance and on appeal), the Supreme Court of New South Wales, the Australian Industrial Relations Commission and the Federal Court of Australia.

53 The proceedings commenced before Schmidt J in August 1998 upon an application by Davids for an award. As her Honour noted in her decision, the union filed no counter application and, after unsuccessful adjournment applications, the union withdrew from the proceedings so that the hearings continued in the absence of any representative of the NUW at the outset of the proceedings. At a later stage, the union was represented in the proceeding although then only as to the application by Davids which was resisted by the NUW.

54 Her Honour commenced her decision by a statement of what she described it as the then "current industrial regulation" as follows (at 182): The Storeman and Packers General (State) Award (284 IG 1665) and its predecessors included, over many years, an exemption in clause 38 Exemptions in favour of members of the Retail Traders' Association of New South Wales covered by the terms of various agreements, including relevantly for present purposes, the Storeman and Packers - Davids Holdings Pty Ltd (Blacktown) Agreement and the Storeman and Packers Davids Distribution Division Agreement.

Apparently unknown to Davids when it opened its case, that exemption no longer exists under the current, (as yet unpublished), consolidated award, the Storeman and Packers General (State) Award , which now applies to the Union's members employed by Davids. At present however, by operation of the provisions of s41 of the 1996 Act, the parties' 1997 enterprise agreement prevails over the provisions of that award. That situation will come to an end on 4 December when the enterprise agreement terminates as a result of the notice given by Davids to the Industrial Registrar in accordance with the provisions of s44 of the 1996 Act.

55 Her Honour then turned to the operation of the wage fixing principles to consider whether the first award principles should apply and found (at 182): Given the current application of the provisions of the Storeman and Packers General (State) Award to the work in question, a matter first revealed by Mr Joseph , when opening the Union's case, it became apparent that the first award principle could not apply to the application, but that the special case principle did: State Wage Case June 1998 (at 447) ...

56 Her Honour then turned to the respective positions of the parties in the proceedings and noted that Davids had submitted that the flexibilities it sought in the award would warrant compensation to the employees affected by the award by the granting of an 8.5% wage increase. The union, for its part, submitted that the employment of storeworkers at Davids had been by way of a separate industrial instrument for some 25 years when the Storemen and Packers General (State) Award ceased to have any practical application at the operations of Davids. Her Honour then summarised the disputed matters between the parties as follows (at 185): The issues pursued by Davids, which were opposed by the Union, included both positive changes proposed and provisions omitted from the existing agreement. In short summary those matters included a 38 ordinary hour week, with consequential changes in relation to matters such as rostered hours and spread of hours, (the Union taking the view that the provision made in the enterprise agreement for a 36 hour week should continue in the new award); increase in rates of pay by 8.5%; elimination of restrictions upon the employment of casual, part time and seasonal workers; changes in various aspects of the classification structure; detailed reference in various parts of the award to performance measured in accordance with Davids' Dallas computer system and the abolition of the consultative committee

In addition to arguing for the continuation of various provisions of the existing agreement, the Union advanced a number of provisions which it had not sought by way of counter award application. These provisions included a 10% increase in wages and allowances over a 2 year period, (later amended to 5% over 12 months); provision for deduction of Union dues and a provision for paid leave for Union delegates. It was the case for Davids that the Commission would not entertain these claims as a matter of discretion in the proceedings, the Union having filed no counter application and having called no evidence in support of the claims. Submissions were also made as to the Commission's jurisdiction to award some provisions sought.

57 After considering s 10 of the Act, her Honour determined that an enterprise award should be made rather than allowing the Storemen and Packers General (State) Award apply to the workplace. The Commission also rejected the claims sought by the union, inter alia, because it had filed no counter-claim.

58 As to the hours claim, her Honour determined that the award would provide a 38 hour week. She rejected submissions by the NUW that the then 36 hour week, as provided by the enterprise agreement, should continue. In particular, she rejected the NUW submission that s22 of the Act did not constrain the Commission from awarding a 36 hour week. Her findings, in this respect, were as follows (at 187 - 188): As I earlier noted this case requires that consideration be given to both the past and current industrial regulation of the work in question, particularly given that Davids is at present not exempted from the Storeman and Packers General (State) Award and that the parties' enterprise agreement, which provides for a 36 hour week, is about to expire. Those circumstances are quite different to those which I dealt with in Re Storepersons - Woolworths Moorebank Warehouse Award 1995 (unreported, NSW Industrial Relations Commission, 23 June 1995) and those dealt with by Maidment J in Re Coles Supermarkets (Australia) Pty Ltd Flemington Fresh Produce Distribution Centre Award 1997 (unreported, NSW Industrial Relations Commission, 9 September 1997). In both those cases the parties were agreed as to the continuation of a 36 hour week which had existed for considerable periods under earlier agreements. In these proceedings Davids seeks an award making provision for a 38 hour week, a provision also contained in the otherwise applicable award, the Storeman and Packers General (State) Award and does not consent to the continuation of the previously agreed 36 hour week provision.

This aspect of the application is of course inextricably intertwined with the rates of pay which the Company proposes be fixed by the new award. The Company has costed the savings it understands will flow from employees working 2 additional ordinary hours per week, at some 2.33%, (submitted by the Union to be properly calculated at some 2.8%). That costing was advanced to support part of the 8.5% wage increase proposed by Davids. While the Union criticised Davids' costings, it did not require the author of the costing document for cross-examination or seek itself to cost the changes proposed in any detail. The Union's simple position as to hours was that the employees preferred to maintain their current working hours, rather than to accept the increased rates of pay proposed by Davids.

That being the case, it is difficult to comprehend the Union's continued adherence to its position of refusing to file any counter claim to the award sought by the Company in these proceedings. On its face, if made, such an application would have required consideration by a Full Bench, having in mind the provisions of s22(5) of the 1996 Act, particularly given that the applicable award, the Storeman and Packers General (State) Award provides for a 38 hour week. Such an application not having been made by the Union, it necessarily follows that there is no basis upon which the Union's submissions in relation to a 36 hour week could properly be acceded to in these proceedings.

59 Her Honour then proceeded to deal with questions associated with rosters, shift work, categories of employment and classification structures. We will not attend to those matters at this point. The next aspect of the decision which relevantly bears upon the core issues in this matter appears under the heading "promotional criteria".

60 Before turning to her Honour's reasoning in this respect, it is appropriate to set out the terms of clause 31 of the 1998 award made by her Honour. Those terms were as follows: 31. Counselling Procedure

(i) Where an employee does not meet the Performance Standards set by the Company as outlined in clause 8, Classification Structure, the employee shall be entitled to counselling and two separate warnings.

(ii) Such warnings shall be given formally and shall be in writing.

(iii) The Union delegate or co-delegate or alternate on the shift in question shall be present at the time of warning.

(iv) If, following the aforesaid warnings, the employee continues to be in breach of the Performance Standards set by the Company, the employment may be terminated forthwith.

(v) In the case of misconduct justifying instant dismissal, an employee may be instantly dismissed.

61 As we have earlier noted, the NUW sought the deletion of this provision in these proceedings. The reference to "performance standards" in the clause is a reference to the computerised method of monitoring individual work performance operated by IGA (and its predecessor, Davids) entitled "Engineered Standards".

62 Her Honour's reasoning with respect to this provision is set out below (at 191 - 192): Mr Small's evidence was that promotion is at present assessed in part against employees' performance under the Dallas system, in which employees are trained. An incentive system also operates for employees in respect of their achievement of those standards. The evidence was that prior to the recent industrial action by employees, the workforce on the whole was operating at some 95% - 98% of these standards after the introduction of the incentive scheme, with increasing numbers of employees achieving the incentives available under the scheme. When work resumed after the industrial action had ceased, performance was significantly down across the workplace, (to something in the order of 84.42% of the standards set), but was gradually building up again.

Mr Small also gave evidence about how individuals who were not operating to standard were dealt with by way of extensive counselling and training having regard to their own circumstances, such as their age and physical abilities and the position in which they were employed.

Mr Small estimated that up to 10% of the employees at any one time might be receiving such assistance. Ultimately, if their work was not satisfactory they would be dismissed. In his experience, those dismissed would have had other problems such as punctuality, time wasting, or disappearing, all of which would contribute to a failure to meet required standards. Mr Small's evidence was that to date only 2 or 3 employees had been dismissed for failing to meet required standards.

There was also evidence that Davids remains in ongoing discussion with the WorkCover Authority about the operation of these engineered standards. That accords with the recommendations made by the Full Commission in its Report into "Engineered Standards" in the Warehouse and Distribution Industry (unreported, NSW Industrial Relations Commission, Glynn J, Cullen J and Murphy CC, 26 March 1996). Relevantly, the Commission there accepted that employers such as Davids had the right to operate systems such as the Dallas system, but noted that such rights were qualified by the need to ensure that the system operated fairly, equitably and safely. The Commission also noted that systems such as these require continuous review to ensure that they so operate. The Commission envisaged input from the WorkCover Authority in such reviews, as well as from two inhouse committees which are, on the evidence, operating successfully at Davids - the 'slotting' committee and the occupational health and safety committee. This approach is of course also consistent with the Company's continuing obligations under the Occupational Health and Safety Act 1983 (NSW) .

The attitude of the Union in these proceedings was that the award should not contain any references to engineered standards. Mr Small's evidence in cross examination was that promotion was dependent upon individual performance, which was measured not only against the engineered standards, but other criteria as well, for instance absenteeism, punctuality, time wasting and accuracy. In the checker's area for example, Mr Small's evidence was that accuracy was preferred over speed and that employees were selected for employment in that area on that basis.

While it was submitted by Mr Joseph that in all of those circumstances in the award it would be wrong to tie promotion so closely to a time related disciplinary system and that it would 'radically alter the status quo', there was no evidentiary foundation for the submission. It was not put to Mr Small in cross examination that there was any difficulty in the current operation of the Dallas system, that it had led to any recent or particular disputation at Blacktown or that it had led to the unfair dismissal of any employee. The Union's position cannot therefore properly be accepted.

I do accept however that a case was made out for some reference in the award to other criteria which Davids uses to measure performance. I take the view that if there is to be a provision dealing with performance in the award, it must be a balanced one, which reflects the actual practice of performance being measured by the various other criteria specified by Mr Small, in addition to the standards set under the Dallas system. The award provision will therefore include reference to these other criteria.

I finally note that the reference to such criteria should be on a consistent basis throughout the award - "the performance standards set by the company" is seemingly an appropriate term.

63 The final aspect of the decision to which we will turn is in relation to wage increases. Her Honour noted that Davids had then proposed a wage increase of 8.5% introduced in two steps - 5.5% from the making of the award and 3% 12 months thereafter. It was noted that Davids sought to justify those increases on the basis of "the costings advanced in respect of the other changes in conditions which were proposed to be introduced in the new award". Those costings related to increased hours, changes proposed in relation to higher duties, an increased span of hours, changes to public holiday provisions, changes to restrictions on employment of staff, payment of meal allowances by EFT, increased overtime for payment of meal money and commitment to productivity improvements.

64 Her Honour noted that the union's claim was for 5% per annum. It was again noted in this respect by her Honour that the union had filed no counter-claim or brought any evidence of its own in those proceedings. Her Honour rejected the union's claim and then gave the following decision as to the wage component of the case (at 179): Having regard to the conclusions which I have reached on the matters proposed by Davids, in the context of the costings advanced I have concluded that the rates fixed by the new award should provide for wage increases of 7.5%. Given the state of the evidence in relation to costing, I could not be satisfied that all of Davids' costings were accurate, particularly in connection with the introduction of a 38 hour week. Nor do the costings appear to have taken account of all of the changes proposed and granted. In reaching my conclusion, I have taken into account the costing of various proposals which I have rejected and have sought to arrive at a balanced conclusion in the light of all of these factors. The first increase of 4.5% will operate from the beginning of the first pay period to commence on or after the date of commencement of the award and the second increase of 3% from a date 12 months thereafter.

Contentions as to the 1998 Decision 65 Mr Shaw submitted that there were a number of unusual circumstances applying to the 1998 proceedings and decision which should bear upon the weight given to "the arbitrated outcome of that decision". The factors he referred to were as follows: 1. The proceedings were infected by the surrounding circumstances. There had been a failure to renegotiate the enterprise agreement. There was substantial industrial disputation and efforts by the NUW to avail themselves of a protected bargaining period involving extensive litigation in the New South Wales Supreme Court, Australian Industrial Relations Commission and the Federal Court. There were attempts to prevent the Commission further considering the matter as a matter of jurisdiction. No counter-claim or application was filed by the union. There was a failure to comply with directions of the Commission and adjournments refused. The proceedings continued in the absence of a representative of the NUW, either through its non-appearance or a failure to play an active role. There were other procedural peculiarities attending the proceeding, including the union presenting a counter-draft award during the course of cross-examination of an employer witness and later amending that claim but not, in fact, proceeding by application. 2. Those procedural irregularities, it was submitted, gave rise to an extraordinary result in the arbitration. For example, the Commission, he submitted, without precedent, increased the ordinary hours of work from 36 to 38 hours. 3. Another example of the extraordinary features of the decision was that there was also a reduction in the hourly rate of pay of the employees at Davids brought about by the decision. The increase in rates of pay granted by the Commission in the 1998 award did not sufficiently compensate for the loss incurred by the change of a devisor arising from the increase in ordinary hours. 4. In any event, the wage increase awarded by the 1998 decision was less than that sought by the employer in the proceedings. 5. The decision introduced, for the first time in New South Wales, "engineered standards" as an award condition of employment. That decision was contrary to the view expressed by a Full Bench of the former Industrial Relations Commission in its Report into Engineered Standards in the Warehouse Operations and Distribution Industry ( Glynn , Cullen JJ and Murphy C, 26 March 1996) ("engineered standards inquiry"). 66 The NUW also submitted that the 1998 decision proceeded upon an error of law as to the operation of s 22 of the Act. Her Honour had rejected a submission by the NUW that the then employees of Davids worked 36 hours per week under the enterprise agreement and therefore s 22 of the Act did not constrain the Commission from awarding 36 hours per week. Her Honour distinguished that situation from other cases where the Commission had found that it was not precluded from awarding 36 hours per week where there was agreement between the parties and the pre-existing conditions of employment provided for 36 ordinary hours.

67 It was submitted by Mr Shaw that there was no basis in law for the conclusion then reached by the Commission. At the time that the Commission gave judgment in the matter the previous enterprise agreement continued to operate and thereby provided for 36 ordinary hours per week for the employees of Davids. In any event, it was submitted, the hours of work were increased from the "existing practical reality", which had operated at this workplace over a considerable period of time. It was a startling outcome, it was contended, that the matter would be decided on an entirely artificial and technical basis (wrong in any event) that s 22 inhibited the reduction of hours because of the impending cessation of the enterprise agreement providing for same.

68 In addition to referring to the privative provisions of the Act, Mr Hatcher responded to this aspect of the NUW's case by submitting that there was no error of law in the 1998 decision. There was no error, he submitted, as the Storemen and Packers General (State) Award applied at the time of the decision. It was submitted that the enterprise agreement and the Storemen and Packers General (State) Award created co-existing obligations and entitlements: Re Journalists Sydney County Council Award (1959) 55 AR 555. Thus, it was submitted, the Storemen and Packers General (State) Award applied at the time of the making of her Honour's decision. It was that consideration and not the existence of the enterprise agreement that her Honour was required to take into account.

69 Mr Hatcher conceded that the practical situation was that there was an agreement in place (including a provision for 36 ordinary hours of work per week) but stressed that her Honour was nevertheless required to have regard to the prescription for ordinary hours of work in the Storemen and Packers General (State) Award as the then applicant had sought to vary the award prescription for hours of work. Mr Hatcher also contended that the special case principle did not permit the Commission to reduce hours below 38 hours contrary to the hours of work principle found in the wage fixing guidelines. Conclusions regarding the 1998 Decision 70 We do not consider it necessary to pronounce upon whether or not the 1998 decision was attended by errors of law or principle. The conclusions that we have reached as to the issues in dispute in this matter, particularly in relation to hours of work and wages, would not, in our view, be affected by a pronouncement upon that issue.

71 However, a consideration of the 1998 decision, in the light of the experience since that decision, and the evidence before us is significant in a number of respects:

1. As Mr Shaw properly conceded, the NUW had actually occasioned some of the unusual procedural aspects of the 1998 proceedings and can hardly now be heard to complain about those matters (particularly when no appeal was brought from the 1998 decision). However, and putting aside those matters laying at the feet of the NUW, there were background circumstances surrounding the 1998 decision which were highly unusual. 2. There can be no doubt that some of the considerations which were taken into account in reaching the 1998 decision are either no longer applicable or significantly changed. For example, the 1998 decision as to engineered standards occurred at the zenith of industrial disputation as to that matter, at an early stage of the consideration and implementation of the recommendations of the engineered standards inquiry and in circumstances where the Commission was given assurances that a variety of factors would be taken into account by the employer, in addition to performance against standard, when it disciplined employees pursuant to cl31 of the 1998 award. 3. Further, in light of the evidence before us and considered in the present context, real issues arise as to whether the employees of David's were fully compensated for the increase in hours worked and other award changes (including provisions concerning engineered standards) in the 1998 award.

72 We consider that these factors constitute, of themselves, a sufficient basis for concluding that this matter constitutes a special case. That conclusion is buttressed by the other conclusions we have reached in this decision as to particular claims advanced by the parties (and, in particular, the core claims advanced by the NUW). We shall now deal with the disputed aspects of the amended applications.

NUW Application Engineered Standards - Classification, Promotion, Counselling and Discipline

73 Mr Shaw submitted that engineered standards had been utilised in the warehouse industry for a number of years prior to provisions regarding such standards being included in the 1998 Award. Mr Shaw put that, since inclusion in the 1998 Award, engineered standards have been applied in a manner which is unjust and unfair, adding that the operation of the standards has not been adequately explained to workers and, on the evidence, some management personnel appear to be unsure how the standards are to be applied. It was submitted that the discretion of supervisors to initiate counselling or disciplinary procedures with respect to employees who failed to meet standards had been misapplied.

74 In support of these submissions, Mr Shaw noted that the supervisors of IGA determined which workers performed work that is "on standard", and which workers performed work that was "off standard". This created an inequitable mix of work compounded by the fact that the supervisors' discretion to allow "delay time" could vary between employees undertaking the same task.

75 It was submitted that the use of engineered standards for disciplinary and conduct issues was further flawed as the standards do not take account of the effects of age on the ability of workers to meet the standard. It was acknowledged that some evidence brought by IGA showed that age considerations are taken into account when counselling workers for failure to meet standard. However, it was submitted that this evidence demonstrated the unsatisfactory and variable nature of the consideration of age in each such case.

76 The NUW also submitted that, having regard to the Anti Discrimination Act 1997 and s169 of the Act, the use of engineered standards is indirectly discriminatory and should not be allowed.

77 Since the introduction of engineered standards into the 1998 Award, it was contended, counselling of employees for "poor work performance" (meaning a failure to meet engineered standards) had increased, as had the termination of employees of IGA on work performance grounds.

78 Further, it was argued that the introduction of engineered standards into the 1998 Award had a negative impact on the occupational health and safety of the workforce. This effect was demonstrated by the fact that the amount of "cartons picked" has increased significantly since the existence of the system of "pick rates", the former measure of performance replaced by engineered standards. It was submitted that the increased workload had also been accompanied by a significant reduction in staffing levels at IGA over the life of the 1998 award.

79 Mr Shaw referred us to the Ingleburn Distribution Centre Enterprise Agreement 2000 (Exhibit 39) ("the Ingleburn Agreement") which, he submitted, was an example of the amelioration of the rigour of engineered standards by sensible arrangement between the parties.

80 The Ingleburn Agreement was made between the NUW and Franklins Limited. The relevant provisions of the Ingleburn Agreement are found at cl38 and cl39, which are in the following terms: 38. DEFINITION OF WORK PERFORMANCE AND EFFICIENCY

Clauses 38 and 39 shall be read to be related in their application to each other and refer to the introduction, application, implementation and absorption of engineered standards.

a) The employer shall in co-operation with and in conjunction with the employees and the union actively pursue a new method by which the performance and the efficiency of work is measured in the warehouse operated by the employer.

b) The measure of efficiency and performance of work (herein after called work standards) shall became (sic) the benchmark by which the warehouse operated by the employer shall be deemed and be seen to be deemed to be operating at an accepted level of productivity.

c) Each definable work task within the warehouse operated by the employer shall be subject to a work standards evaluation.

d) Work standards shall be geared to improving the efficiency and productivity in the warehouse operated by the employer by eliminating unnecessary time wastage in the performance of work and by the adoption of established industrial engineered methodology as applied in warehousing and distribution.

e) No measurement of efficiency and performance of work shall be developed and implemented without regard to the obligation each of the parties have in respect to the Occupational Health and Safety requirements and the National Standard for Manual Handling and the National Code of Practice for Manual Handling.

f) No employee shall be treated unfairly in his/her employment nor shall an employee be dismissed, for mere fact of not achieving the work standards allocated to the work task performed by the employee.

The parties commit to improve the work relationship between all employees; to enhance the work conditions of all employees and improve the methods and manner by which work is performed.

a) The parties shall co-operate in the introduction and implementation of the new warehouse management system.

b) The parties shall engage in the process of training and education, to be provided by the employer, and to assist employees to fully understand the requirements of work standards.

c) The parties shall co-operate in the gathering of all relevant data and information to assist in the development of work standards.

d) The parties shall co-operatively work to implement work standards and shall provide all reasonable assistance to an employee experiencing difficulty with work standards.

e) No party or employee shall be unreasonable in refusing to participate in the education, training development and implementation of work standards and the new warehouse management system.

f) The employer shall establish machinery to monitor and regulate the implementation of the work standards to ensure health and safety considerations are observed and followed.

81 Mr Shaw made a number of additional oral submissions as follows: 1. The system of engineered standards involves constant surveillance and is an extremely intrusive method of work, characteristic of supervision on a Taylorist model. 2. The system had a real and tangible potential for unfairness. This arose, in part, because of the lack of the knowledge of the workforce as to how the system operated. There is excessive disciplinary pressure put on the workforce through a system of counselling. There is a high degree of subjectivity by supervisors in this process. 3. The recommendations of the Full Bench in engineered standards inquiry did not prohibit the use of that system. However, the Full Bench did not conclude that engineered standards should be translated into an award condition of employment. Nor did the Full Bench conclude that engineered standards ought to be regarded as relevant for disciplinary processes. 4. As to the decision of Sams DP in Mumby , it was submitted that his Honour considered that he was bound by a most unusual award provision. His decision proceeded upon the basis as to the appropriate method of applying that provision. The ultimate findings by the Deputy President turned upon the facts of that case. 5. The whole tenor of the report of the Inquiry was one of healthy scepticism about the appropriateness of the system.

82 Mr Hatcher acknowledged that the issue of introduction and utilisation of engineered standards had a lengthy history. Mr Hatcher noted that the parties had sought an inquiry into the system of engineered standards. The inquiry was undertaken by a Full Bench of the former Industrial Relations Commission. On 26 March 1996, the Commission reported to the Minister, after having conducted a detailed and extensive inquiry.

83 IGA's written submission in relation to the engineered standards inquiry (containing, as it does, references to the Report of the inquiry) was as follows:

It is important to appreciate that the question of the application of Engineered Standards at the Distribution Centres operated by IGA is hardly recent. As observed above, the NUW, in conjunction with IGA, sought an Inquiry into the system of Engineered Standards as long ago as 1994 (Ex 46 p. 13). In that Inquiry, conducted by a Full Bench of this Commission, the Commission noted the history: For a period of some time in the 1980's the concept of a 'fair day's work for a fair day's pay' was predominant. However concerns over productivity levels and the need for the industry to become more competitive led to increased pressure on management to introduce minimum or mandatory pick rates, involving some measure of individual performance. This later expanded to embrace the concept of engineered standards due to the imperfections of the minimum pick rate system which generally was seen as being deficient by both management and the NUW." (Ex 46 p9)

Further, the Commission observed: Given the relationship between management, the NUW and employees which led to the Inquiry, the Commission is required to give consideration to the means for restoring the relationships between management and employees, the enhancement of joint commitment by the parties to corporate objectives and how the differences between the parties can be harmoniously resolved in the introduction and implementation of such systems.

However, it is the labour monitoring and labour-pacing aspects of engineered standards systems, which set each employee a time for the completion of tasks (such as the order selection or picking of order assignments), which in large part raises the occupational, health and safety (OH&S) issues and the industrial relations questions and is thus the main focus of the Inquiry's deliberations. It is the manner in which computerisation of the stock inventory auditing system, the Optimum store layout by the location of cartons for efficient picking sequence and the computer knowledge of the weight and size of completed pallets of picked orders impact upon employees which raised the industrial relations concerns. Driving the pallet jack is an integral part of the assignment of an order selector in picking an order. Whilst the assignments of the fork lift operators usually do not have a manual handling component, the order selectors are affected by the operations of fork lifts on the warehouse floor.

84 Further, it was submitted that the recommendations made by the Full Bench were as follows:

1. employers had the right to measure the work performance of their employees; 2. in that endeavour, the employers had the right to set estimated targets; 3. the use of that aspect of engineered standards system which measured individual performance was a part of such process; 4. such rights were qualified by the necessity to ensure that such estimates are fair, equitable and safe to the individual and take into account human variability as far as practicable;

85 Mr Hatcher also relied upon the judgment of Schmidt J in making the 1998 Award introducing engineered standards for promotional and disciplinary purposes. He submitted that there was no evidence before Schmidt J that the engineered standards had led to the unfair termination of any employee.

86 IGA also relied on the decision of Sams DP concerning unfair dismissals applications brought by the NUW against Davids with respect to Mr Phillip Mumby and Mr Victor Zammit: National Union of Workers, New South Wales Branch (on behalf of Phillip Charles Mumby and Victor Zammit) v Davids Distribution Pty Ltd (unreported, Matter Nos. IRC2056 and 2060 of 1999, 9 February 2000). Noting that there was no appeal from those decisions, Mr Hatcher argued strenuously that the approach adopted by his Honour is those cases should be followed undisturbed.

87 It was submitted that a history of union obstinacy and opposition to any form of monitoring of individual performance had led to the insertion of engineered standards into the award. Mr Hatcher conceded that the award provision was unusual, although necessary in the circumstances in order that the employees, who were subject to the award, clearly understood what was expected of them. It was contended that any removal of the reference to engineered standards in the award was likely to be characterised by the workforce as "carte blanche" from the Commission to employees to ignore standards.

88 In reply to the NUW, IGA submitted as follows: 1. There was a paucity of evidence from the NUW to demonstrate that the engineered standards had been applied unfairly. 2. The evidence disclosed that the counselling provided by the respondent provided a proper opportunity for explanation to be given by employees not meeting the standards. That evidence also disclosed that where the explanations were reasonable they are taken into account. 3. The evidence also disclosed that there are benefits which flowed to employees and the company from the use of engineered standards. For example, supervisors and managers did not generally take action where employees are seen talking or standing around the warehouse so long as they are achieving the standard. Further, if IGA were not able to use engineered standards as a monitoring tool, supervisors would again be required to be stricter in monitoring time wastage. 4. It was simply not correct to say that if an employee did not perform to standard they were counselled and then dismissed. The immediate achievement of the 100% standard was not required and training was provided to assist employees in reaching the standard. If an employee failed to achieve an acceptable standard they are given an assembly technique review ("ATR") by their supervisor. That review is a method by which a supervisor attempts to assist the employee in achieving an acceptable standard whilst following the preferred methods, particularly in relation to the safety of the company. The ATR is a form of training. IGA took into account individual circumstances in judging work performance when assessed against engineered standards. 5. It is also incorrect to say that employees were not counselled for failing to meet standards prior to the 1998 award. Employees did receive counselling prior to that award, however, industrial pressures and constant threat of industrial action had inhibited the use of that counselling option to some extent. 6. Whilst engineered standards were one factor taken into account in considering the promotion of employees, they are not the only element, and factors such as absenteeism, attitude, quality of the work, knowledge of systems, skills and length of service are considered in assessing the promotion of a particular employee. 7. As to the question of delays, the evidence revealed that the engineered standards themselves contained allowances for a number of factors. If delays other than those accounted for in the engineered standards occur, employees may seek a delay allowance from their supervisor. Such delays inevitably occurred during the normal course of warehouse operations and delay allowances are equally recorded and adjusted within the system to ensure individual performance of employees is not adversely affected. 8. Employees are not penalised for age. IGA takes into account individual differences in assessing whether an employee does not reach 100% of standard. It was also argued that some older employees perform better than younger employees. Age was considered when counselling or terminating employees as well as goal setting and reward. 9. As to the allegation that engineered standards had caused employees to use unsafe methods due to the pressures of meeting time constraints, it was submitted that the case led by the NUW exhibited the "unsubstantiated and scare mongering nature of the evidence sought to be led by the NUW in relation to engineered standards". Issues raised in safety committee meetings had already been taken into account by IGA. There was no real risk to safety. The focus was on employees working "smarter not harder". Further, the ATR's are designed to improve safe methods of work. The preferred method used by engineered standards was a safe method. There was a significant emphasis on safety at the workplace. There had, in fact, been a decrease in the number of workers compensation injuries. The WorkCover Infringement Notices issued against IGA should be seen in context as those notices were issued without the WorkCover Authority of New South Wales inspecting the area in question and talking adequately to company officers. 10. It was further submitted that the failure of an employee to reach the engineered standard did not give the opportunity to immediately warn and dismiss an employee. However, a failure to reach the standard did entitle IGA to have regard to it for disciplinary purposes. Further, in the disciplinary process, supervisors were expected to use experience and discretion. There was no firm policy as to how a failure to meet engineered standards might be taken into account in a disciplinary process. The approach may vary upon the supervisor's assessment of an employee's capacity to comply with the standard.

89 Mr Hatcher referred to two forms of audit of the engineered standards. He described the evidence in this respect as follows: HATCHER: That's the very distinction I was trying to make. There are two forms of audit. There is the professional audit where the NUW, Labor Council, Workcover, who have provided an engineer skilled in this art [or] science - depending on one's approach - and they look into the [elements] of the system. They go through how the standard was calculated, the allowances [they] used, the measure of travel, time and so forth. This audit is a much more rudimentary audit. It [seeks] to replicate the [work] and see whether the order that is complained of by the employees was fairly attainable or whether there is some defect in the time that's been thrown up by the standard. The evidence in relation to the former is no audit has been conducted by the NUW. No audit has been conducted by the Labor council. No audit has been conducted by Workcover.

My client remains, as it has since 1992, open to any such audit and welcoming to any such audit. It does conduct its own audit from time to time. His Honour's conclusions in relation to that audit is to be found at paragraph 5 on page 82. "There was some attempt to attack ... on Mr Thomas's credibility." That's a finding in terms of the success of the system. Here you have an employee that his Honour has characterised as mid-range in his performance, performing from 91 to 104 percent.

Consideration 90 The gravamen of Mr Hatcher's argument for retention of the provisions of the 1998 award concerns performance standards is that, without the award prescription, the standards would be ignored by employees and disciplinary processes would prove unworkable. This amounts to a melancholy submission that management are unable to manage performance and discipline without the direct force of the award, and have no capacity to gain the co-operation of the employees by any other means such as is illustrated, for example, by the Ingleburn Agreement.

91 The evidence brought by both parties in respect to engineered standards reveals that the experiment of award prescription has not produced a co-operative application of engineered standards and suggests the conclusion that management have relied upon award rights for enforcement in preference to appropriate communication, consultation, leadership and an evaluation of the standards as contemplated by the recommendations of the Full Bench in the engineered standards inquiry.

92 We are of the view that no single criteria for promotion or disciplinary counselling should be elevated to specific award prescription. This, we would note, was reflected, in part, in the views expressed by Schmidt J in the 1998 decision in dealing with promotion criterion (at 191) and counselling procedures (at 195), wherein her Honour concluded that reference throughout the award should be consistent and that "'the performance standards set by the company' is seemingly an appropriate term". However, the evidence in these proceedings demonstrated that the clause has not operated in this manner. The provision has operated primarily as a means of requiring performance to the 'engineered standards' per se. This is amply demonstrated by the evidence in this case of the practices of IGA and its supervisors. 93 Mr Shaw submitted that the relationship between the award recognition of engineered standards and warnings is diminished by the information available from exhibits 22, 23 and 24 - records of warnings issued, which revealed that, in 1996 and 1997, there were no warnings issued for poor work performance. In 1998 there were three warning subsequent to the making of the 1998 award. Six of the 37 warnings issued in 1998 were related to engineered standards and in 1999, 26 such warnings were issued. 94 It is noted that the information contained in exhibits 22, 23 and 24 is correspondence from Davids/IGA to the NUW advising of warnings given under an arrangement then existing between the parties. This arrangement is no longer in place, Davids/IGA withdrew from it on the basis that not all employees were members of the union and that the employer had no means of distinguishing between a member and non-member. IGA indicated that it would not wish to provide information to the union concerning non-members. 95 There can be no better illustration of the conclusion reached in paragraph 92 above than the decision in Mumby. Both parties relied upon the decision of Sams DP in Mumby and Zammitt to support their opposing positions. Mr Shaw contended that Sams DP in Mumby was improperly constrained by the award. He submitted that, notwithstanding a long period of service as an employee and union delegate, the decision of the Commission in dismissing an unfair dismissal application, appeared to rest upon the requirement of, what was described in the decision as, an unusual award provision (namely, cl 31, see at 7) and the failure of the applicant to meet the requisite engineered standards set by IGA. 96 Mr Hatcher submitted that the matter was fundamentally decided upon the basis that, although the applicant could, in fact, meet the engineered standards (notwithstanding submissions put on his behalf as to his age and medical condition), he had "persisted with an obdurate and inflexible opposition to" those standards; putting that the decision by the Deputy President was an appropriate exercise of discretion pursuant to Part 6 of the Act based on the facts of the case. What is more significant is that the decision was based, at least in part, upon the operation of the award provision and the failure of the applicant to meet the standard set by the employee.

97 As a matter of broad observation, an employer has the right, and indeed the obligation, to set appropriate performance standards and communicate them to all employees so that each employee might be aware of what is expected of them and what achievements are required for promotion. (We observe, in this respect, that the NUW did not seek, in the light of the report of the Full Bench in the engineered standards inquiry, the abolition or prohibition of the engineered standards in these proceedings). The right of setting such standards carries with it, however, a significant obligation that the standards be safe, fair and reasonable and the measurement of performance against these standards be objective and transparent. The rigidity of an award prescription militates against dealing with each set of circumstances upon their own merits and, in some respects, as the experience of IGA would indicate, a comprehensive evaluation of the current systems of engineered standards against those criteria.

98 In our view, the qualified endorsement by the engineered standards inquiry of the measurement of performance by engineered standards was entirely in accord with this statement of principle. The Full Bench eschewed the resolution of issues concerning engineered standards as an industrial dispute because that measurement system raised fundamental safety, health and welfare concerns (at 308). The Full Bench encouraged the introduction of any such system by conciliation and consultation (at 4).

99 In its report, the Full Bench was not unmindful of the history of disputation resulting from the introduction of systems of engineered standard. This was one important reason why the Full Bench proposed a comprehensive audit of the systems (both to those already in operation and newly proposed arrangements). The Full Bench stated (at 4 - 5): It is quite evident that there is no unity between employers and employees in the bid to create greater efficiency and productivity. These benefits, as in any enterprise arrangement negotiations, need positive input from both parties in order to develop a relationship which results in benefits to both. It is for this reason that the Commission is recommending a new start to commence with consultative processes and an audit of each system as applied in each warehouse. This audit of the computerised operation of warehouses involves a fundamental examination of every aspect of the work, particularly the requirement of an intense labour input in giving effect to such system. Until detailed attention has been given to the relief of the arduousness of the manual effort of employees then it should be forefront in the minds of the parties that the safety, health and welfare of the employees and the provision of a safe working environment are a necessary precursor of the adoption of a new system. The social and economic costs in the longer term resulting from the insistence of continued high levels of manual activity cannot be quantified in any particular way. In the long run such costs may significantly outweigh the immediate benefits likely to arise from greater throughput per shift of warehouses by the imposition and operation of such electronic systems.

100 The recommended audit would have allowed a comprehensive evaluation of the controversial elements of the engineered standards system, including methodology (such as the 'preferred method' and 'allowances'), health and safety and systems of monitoring and enforcement (such as, 'ATR's' and 'supervision').

101 The Full Bench stated (at 309 - 311): The most important immediate issue which needs to be addressed is the safety, health and welfare of the employees in relation in particular to their methods of work in the environment in which they are currently operating. The recommendations are wide ranging and direct attention to a re-examination of the work places which confront employees who are required to perform manual work under established time guidelines. This requires a re-examination both of physiological and psychological needs of the employees and in particular, their relationship to each other and their supervisors. The Commission noted the evidence relating, for example, to the personal benefits which employees contend they derived from teamwork, compared with the individual isolation imposed by the engineered standards systems. Some expressed their concern at the impact of the fast-working employees which interfered and impeded them in their efforts to reach the standard. Attention is therefore directed to the concept of uniform output of all employees rather than encouraging, such as by incentives, a wide disparity in the output of individual employees.

We consider that the system of monitoring by ATR's, if necessary, should be conducted in the presence of a suitably qualified safety person to ensure that safety standards are being observed as a primary function of the work. Furthermore, any issue arising as to the time allocated for particular loads, initially, should be referred to representatives appointed from the Safety Committee to ensure that safety matters are promptly dealt with. As indicated earlier in this Report, the application of safe methods of handling should be re-assessed by the parties, e.g. the preferred methods which are theoretically expected to be performed are not always in fact being performed.

Those audits will need to deal with the various issues likely to arise from such matters as the need to calculate allowances and the safety problems involved in the use of hooks, opening cartons, walking on pallets, creating a stable load, the use of a roving fork lift to rotate pallets, assistance in dealing with heavy orders or the breaking up of such orders.

We stress that the "mystique" of the so-called "black box" should be put aside and that the expected times be explainable and understandable to both supervisors and employees so that realistic and acceptable goals are set for the orders to be completed.

Although the consultants were invited to respond to requests for details concerning the concept of a "normal" person they did not respond. It is regrettable that the interrogatories were only partially successful in evincing answers to them. Accordingly, it is not possible for the Commission to be as definitive as it would like in relation to recommendations as to procedures which might be considered to be advisable to prevent adverse effects on the safety health and welfare of employees in these warehouses and in fact other warehouses introducing similar systems.

102 It was also clear that the Full Bench proposed such an audit so as to properly assess and consider its concerns as to various aspects of the system and its implementation. For example, we refer to the following observation of the Full Bench as to possible occupational health and safety problems (at 232): It is a common aim in modern industry in the achievement of increased productivity and efficiency to reduce the burden of manual work both as to weight and volume. The usual concept of increased productivity is conceived as the replacement of manual labour. This is not the case in picking orders. If the achievement of increased productivity is dependent, in part, on added manual burdens to the individual order assembler, then preventive measures to avert industrial injury or ill-health need to be closely examined.

These particular systems are of recent introduction in New South Wales warehouses, and as a result, their effects on health have yet to be determined. This is primarily because of the relatively long period before the onset of physical reactions to the increased burden of manual work and the resultant manifestation of chronic symptoms. Workers' compensation statistics cannot assist at this stage because of the new workforce which has been employed in this industry and the time taken for chronic symptoms to develop. The cost of chronic ill health, in particular back injuries, could impose greater social costs than the short term benefits of greater manual output per employee. Accordingly, the monitoring of the new system of work needs to be cautious and circumspect in order to limit the possibilities of such industrial ill health developing.

103 The audit so contemplated by the Full Bench entailed a comprehensive review of the system as distinguished, as Mr Hatcher described it, from an audit of the ordinary workings of the system in particular cases (thereby simply checking the operation of the system, as designed, by replicating a particular order to determine whether the order that is complained of by the employee was fairly attainable or held an inherent defect).

104 A comprehensive audit of the kind envisaged by the Full Bench (as opposed to an internal audit) has never been undertaken at the distribution centres. Mr Hatcher noted that his client remained open to and would welcome any such audit. Mr Hatcher referred to the NUW and WorkCover's failure to take such a step. However, the Full Bench expressly required "joint audits" (and not one undertaken for IGA by a consultant selected by it).

105 It is difficult to see how the award provision could properly operate in the absence of such an audit process, particularly, as we have earlier noted, where the clause was essentially directed to the implementation of 'engineered standards'. Further, the evidence before us reveals that the issues concerning engineered standards, which was discussed in the report of the engineered standards inquiry, remain largely unabated.

106 Little purpose is served by IGA regenerating, as submissions in these proceedings, contentions put to the engineered standards inquiry which were then treated with some reservation, absent some independent testing of those propositions in the intervening period by an audit (or the production of conclusive evidence in these proceedings which, we note, was not forthcoming). For example, it was contended that hardship did not arise for employees from the engineered standards system as employees were required to adopt "smarter methods". The inference was that, even though the frequency of 'picking' had increased, the burden was no greater because of the methods employed. 107 Mr Hatcher's contentions, in this respect, were as follows : Productivity increases flow from the use of standards. They may, in part, be composed of increased worker input, that may be more productive worker input without increased effort, and there was a substantial amount of evidence directed to this where divisions in work flow were identified and removed congestion in the aisle ways apparently.

When one goes about setting a Standard, new routes are organised to avoid the congestion, trucks waiting for their loads is overcome because work is flowing at a more predictable rate, expenses, having supervisors trying to ensure that people aren't huddled in a group talking, are saved. There are many productivity gauges attached to the Engineered Standard, if employees are putting in greater effort then that will be part of it as well. But there is no evidence in these proceedings as to the effort of individual workers or improved productivity of individual workers, just none.

108 We note what the Full Bench said about a similar contention advanced before the engineered standards inquiry : It was repeatedly asserted by the employers that the burden had not changed but that employees were merely working "smarter". The so-called "smarter" methods were that the ticketing procedure and layout made the identification of items better and generally in less diverse locations. Frank Pecoraro, the Director of Dallas Systems Corporation stated that "smarter" usually meant "quicker". (transcript 316) Gary Conlon, a storeman for Davids Distribution indicated that for him "smarter" also meant working "quicker". He provided the example of picking up two or more boxes at a time rather than just one. (transcript 2289) To the contrary, the overwhelming evidence was that many employees were using the same handling methods and picking more orders. They were working harder. The actual handling methods have not changed. 109 Mr Shaw relied upon evidence found in exhibit 38 which, he submitted, revealed an improvement in throughput and a decrease in employment at the Blacktown warehouse (from 293 at December 1998 to 196 at December 2000). Mr Shaw acknowledged some criticism of methodology and analytical techniques applied in the construction of exhibit 38. However, and more significantly, no alternative analysis of productivity was offered by IGA. Further, the evidence of employees of IGA clearly demonstrated that the workload had increased. 110 We must conclude that the system produces higher work rates which are not wholly offset through work design so that there is a net significant increase in the intensity of manual handling tasks. Neither party produced evidence to allow a precise quantification of this charge.

111 We also note that there remains concerns as to whether the system of engineered standards undermines safe lifting standards. In this respect, ATR's also continue to present issues. We doubt that the recommendation of the Full Bench in this respect has been properly implemented. 112 For these reasons, we consider that it would be inappropriate to continue to make provisions in the award for "engineered standards" whether in the context of counselling procedures, performance standards or promotional criteria. We will discuss further the variations to the award which are appropriate to be made below. However, before doing so we would hope that we are not suggesting that employees will thereby be entitled to reject the use of engineered standards per se. Their union did not seek this outcome, and it would not be warranted in the light of the findings of the engineered standards inquiry. However, we consider that the systems require urgent review by an appropriate joint audit and that until such a step is completed, great care would need to be exercised in taking disciplinary action based only on a failure to meet standard. 113 IGA sought the retention of the current provision which provided that an employee not meeting the performance standards set by the company in cl 8, Classification structure, shall be entitled to counselling and two separate warnings. 114 The NUW sought alteration of this provision to provide that where an employee's attendance and punctuality of attendance is not to the satisfaction of the company, the employee shall be entitled to two separate warnings.

115 The NUW opposed the form of the IGA provision and existing clauses 8 and 31 insofar as those clauses made reference to performance standards per se. The NUW sought to substitute reference to attendance and punctuality of attendance for performance standards in those clauses. 116 An issue also arose as to the nature of warnings given to employees. The award requires that the warnings shall be given formally in writing. 117 The NUW sought inclusion of a provision that, if requested by a member of the union, delegate or co-delegate, a copy of the warning report shall be given to the Secretary of the NUW. 118 IGA opposed this provision, submitting that it could result in a delegate or co-delegate having the authority to request and obtain information concerning a person who is not a member of the union and who does not wish the union to become involved in such issues. 119 The traditional purpose of providing a copy of a warning to the union and/or delegate is firstly, communication, in order that the union and/or delegate cannot at a later date deny the event; and, perhaps more importantly, so that the union may assist the member with necessary behavioural modification to avoid further transgression. The primary purpose of a warning is to effect a change in behaviour. However, this is essentially a co-operative arrangement which is not, on the material before us, appropriate to award prescription.

120 We have decided that clauses 8 and 31 of the reviewed award should be varied in accordance with the NUW claim in exhibit 61, except that clause 31 shall not be varied so as to require any written warning to be forwarded to the Secretary of the NUW upon request.

Hours of Work 121 The NUW brought extensive evidence of agreement to 36 hour week arrangements between itself and the respondent in a wide range of establishments throughout New South Wales and other States. As earlier mentioned, it is not contested that an enterprise agreement between the parties applicable to the Blacktown and Silverwater sites which preceded the 1998 Award made by Schmidt J provided a 36 hour week and that employees engaged at adjacent operations conducted by Australian Liquor Marketers (ALM), also a wholly owned subsidiary of Metcash Pty Ltd, which shares common drive way and loading dock facilities, enjoy a 36 hour week, by agreement.

Consideration 122 In our view, a 36 hour week is not generally available in arbitrated proceedings and, to the extent that it might be so in special and exceptional circumstances, we are not convinced that hours should be reduced as sought by the NUW.

123 The case for the NUW did demonstrate that there had been a real deprivation of an entitlement in 1998. The 1997 enterprise agreement was clearly relevant in this respect. Those circumstances, of themselves, do not constitute, however, a sufficient basis to now reduce the hours of work under the existing award. Nor do examples of other workplaces experiencing a 36 hour arrangement. We do consider that the circumstances of the removal of this condition requires rectification in the context of the setting of wages to which we will now turn.

Wages 124 Mr Shaw predicated his submissions on the basis that both parties to the proceedings were seeking an increase in rates of pay by an amount in excess of the State Wage Case 2001 (2001) 104 IR 438. As earlier mentioned, the NUW claim was for a 5 per cent increase for one year. Mr Shaw put that the employer's application was for 3 per cent increase plus a further 3 per cent 12 months thereafter. It was Mr Shaw's submission that the State Wage Case 2000 (2000) 97 IR 93 provided for a flat $15 per week increase, whilst the State Wage Case 2001, if applied to the current award, would result in increase of approximately 2.5 per cent.

125 Mr Shaw submitted that the evidence brought in these proceedings supports a finding by the Commission that a special case had been established which justified a wage increase over and above that provided by the 2001 State Wage Case. He referred to examples of the consideration of special cases, such as, Kellogg (Australia) Pty Ltd v Federated Millers and Mill Employees Association of Australasia, NSW Branch (1991) 39 IR 1 and AMWU and Others v Alcoa of Australia Ltd and Others (1996) 63 IR 138, putting that neither casts much light on the precise principles that would constitute a special case, other than it having to be something unusual and out of the ordinary. Mr Shaw referred to authorities where the concept of unusual, special and isolated circumstances had been considered: Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576; Springfield Nominees v Bridgelands Securities (1992) 38 FCR 217; Re Australian Federation of Principals Employed in Catholic Schools (1993) 49 IR 1; Re Ambulance Employees (State) Award (1988) 25 IR 38; Corrections Health Service Nurses' (State) Award (No 2) [2001] NSWIRComm 58.

126 Mr Shaw submitted that in applying the above authorities to the facts in these proceedings, the following factors warrant a finding that the present matter constitutes a special case: (i) the reduction of the hourly rate of pay in the 1998 award; (ii) the increase in workload given by the introduction of engineered standards in the award; (iii) the increase in workload occasioned by the significant reduction in staffing levels at IGA; and (iv) the consequent massive increase in productivity as documented by exhibit 38.

127 Mr Shaw emphasised that the NUW does not argue for a wage increase based on productivity considerations alone. That consideration is, however, a relevant consideration in determining the amount of wage increase. It was contended that it is equitable that productivity gains be shared between the employer and employees.

128 Mr Hatcher commenced his written submissions acknowledging the NUW's position that both parties are asking the Commission to increase rates of pay in excess of the two most recent State Wage Cases. Mr Hatcher subsequently corrected this position, asserting that concessions made by IGA in conciliation removed any basis upon which the Commission could award increase in wages and allowances under the wage fixation principles. IGA thereby adopted a position of total opposition to a wage increase.

129 It was further submitted that the NUW case failed to acknowledge the wage increase awarded by Schmidt J, pursuant to the special case principle, in making the 1998 Award.

130 Mr Hatcher acknowledged the necessity for a special case to be made out, which he put required a demonstration of circumstances which would take the case out of the ordinary. Mr Hatcher referred to Re Crown Employees (State) Award (No 2) (1993) 52 IR 243 wherein the Full Bench (Fisher P, Cahill VP, Bauer, Hungerford JJ, Sheils CC) discussed the application of the special case principles at p 376, noting that it was available for application either alone or in conjunction with other principles; and that in some cases increases are allowed, and in some cases not. The Full Bench noted, it was contended, that: 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.

131 Mr Hatcher reiterated his submission that there is no basis for a special case increase in the present circumstances having regard to the decision by IGA not to press for productivity improvements in the course of conciliation or in arbitration. This development, it was submitted, removed the basis for increase due to enhanced flexibility. He presented an analysis of wage increases afforded IGA employees since May 1991 when compared to State Wage Case increases. It was contended that the application of State Wage Case Decisions to the wage rates applying in 1991 for the period leading to the State Wage Case 2001 would result in a wage increase of $100.90 per week over that period against the cumulative increase of $153.60 per week enjoyed by the employees at Blacktown Distribution Centre from 25 September 1990 to 6 December 1999. Consideration 132 As earlier noted, the proper application of the special case principle has been recently discussed in Re Operational Ambulance Officers (State) Award (see at [165] - [168] and Re Public Hospital Nurses (State) Award at [13].

133 The primary submission by Mr Hatcher is that IGA had conceded so much in conciliation that there was no warrant for any wage increase (as initially proposed by the IGA). We do not consider that this contention has been made out. 134 This is not to say that the results of conciliation are ignored. We approach consideration of appropriate wage increase having regard to those matters not in dispute between the parties (set out in exhibit 61) and those matters which we are required to determine in these proceedings; the sum total of which are the conditions of employment, rights and obligations of the parties surrounding and supporting the applicable rate of pay.

135 We consider the evidence of productivity improvements measured in terms of increased volume of production with significantly less employees, to be a compelling basis for finding that a special case exists in this matter. We consider that the evidence also demonstrates that employees contributed significantly to the improvement in production.

136 We also consider that, in the light of the evidence now available, the 1998 decision did not fully adjust for the loss of the 36 hour provision.

137 We conclude that a special case has been made out and that wage increases should form part of a two year award.

138 We evaluate the first wage increase at five per cent of the existing rates of pay with an equivalent movement in allowances payable from 1 February 2002. A second increase of four per cent will be payable from 1 February 2003. The award will expire on 31 January 2003.

Limitations on use of casual, fixed term and seasonal employees 139 Mr Shaw argued that restriction on casual employment is not a novel proposal and existed elsewhere in the warehousing industry. In support of this contention he relied upon a number of industrial agreements and the evidence of Mr Frank Belan that the company functioned with a limitation of 15 per cent of casuals, compared to full time permanent employees, for 16 years prior to the introduction of the 1998 Award.

140 Mr Shaw contended that as a matter of industrial principle there should be an emphasis on industrial instruments on permanent employment, noting that the NUW recognises the need from time to time to have recourse to casual employment so long as it is not used to undermine permanent and full time employment. It was submitted that the proposal put by the NUW does not exclude or unduly restrict the use of casual employment and seeks to ensure an appropriate balance between permanent and casual engagement.

141 In opposing this aspect of the NUW application, Mr Hatcher relied on the decision of Schmidt J in making the 1998 Award, wherein her Honour said: Categories of employment

The enterprise agreement contains agreed restrictions upon the employment of casual, seasonal and part-time staff. Those restrictions are no longer agreed and on Mr Small's evidence pose an inappropriate impediment to both the efficient operation of Davids' warehouses and to the employment of greater numbers of storeworkers. I have concluded that Davids made out a case for the removal of such restrictions. As the Test Case Bench observed in the State Part-Time Work Case (1998) 78 IR 172 at 198 : "The evidence indicated that part-time work has in the past been resisted by some industrial parties, a view being taken that permanent full-time work was to be preferred and permanent part-time work was to be discouraged. That approach has largely, but not completely, disappeared, with the result that part-time working arrangements are today a commonplace feature of workplaces in New South Wales, albeit with many and varied restrictions imposed by industrial instruments upon access to part-time work and the conditions under which it may be worked. Those restrictions resulted largely from the agreement of particular industrial parties, although in some cases from decisions, (generally not recent ones), of the Commission's predecessors."

Here Mr Small's evidence demonstrated that Davids has increased its full-time work force over recent years and that it intends to continue to do so in the future. Davids utilises its casual workforce, not only to "top up" staff during busy times, but also as a valuable recruitment tool. There is limited part-time employment at present - generally to accommodate the needs of particular employees. There is also some seasonal employment.

Davids has entered an agreement whereby it will be able to offer training to both its casual and permanent workforce through the Vocational Educational and Accreditation Board scheme at TAFE. The training will initially be provided by an agency and once accredited by Davids itself. The end aim is that employees will obtain new skills and a valuable formal qualification, of use not only to the Company in the work it requires to be performed, but also to the employees in the future, if seeking employment elsewhere Mr Small's evidence was that the continuation of the current limitations on employment of staff would effectively preclude that scheme operating, it requiring the employment of additional casuals.

As has been observed by State Wage Benches in both the State Wage Case June 1998 and State Wag e Case August 1997 (1997) 73 IR 200, unemployment remains unacceptably high in NSW (State Wage Case June 1998 at 437): "We accept on the material before, us that in New South Wales there is no room for complacency about the state of the economy, particularly given the continuation of unacceptably high levels of unemployment, which are expected to continue in the foreseeable future."

While I can appreciate concerns which current permanent employees may have for their own job security, (although there was no evidence either of the existence of such concerns or their basis), in my view it would be quite wrong for the Commission to exercise its discretion to artificially limit any employment opportunities. The Union's opposition to this aspect of the proposed award cannot be accepted.I take the view that it would not be appropriate to follow the approach adopted by Maidment J in Re Coles Supermarkets Australia Pty Ltd Flemington Fresh Produce Distribution Centre Award 1997 where various previously agreed limitations on employment were continued. I also note that the approach adopted in National Union of Workers, NSW Branch v Franklins (unreported, NSW Industrial Relation Commission, Schmidt J, 30 September 1994) is not available here - there the parties being agreed on limitations on employment of certain categories of employees, the question to be determined being the level of such limitations.

I have concluded that Davids made out a case for the removal of such restrictions (on employment upon the employment of casual, seasonal and part-time staff contained in the enterprise agreement). As the Test Case Bench observed in the State Part-Time Work Case (1998) 78 IR at p 198: The evidence indicated that. part-time work has in the past been resisted by some industrial parties, a view being taken that permanent full-time work was to be preferred and permanent part-time work was to be discouraged. That approach has largely, but not completely, disappeared, with the result that part-time working arrangements are today a commonplace feature of workplaces in New South Wales, albeit with many and varied restrictions imposed by industrial instruments upon access to part-time work and the conditions under which it may be worked. Those restrictions resulted largely from the agreement of particular industrial parties, although in some cases from decisions, (generally not recent ones), of the Commission's predecessors.

142 Mr Hatcher put that the only evidence presented by the NUW was that of Mr Belan who was not available for cross examination. He noted that there is no limit to the use of casual employees in the Australian Independent Wholesalers Agreement which was also referred to by Mr Belan.

143 Mr Hatcher submitted that the evidence of Mr Johnson was that the removal of the former limitations as to the engagement of casual and part-time employees had provided IGA with flexibility to cope with short term demands, as well as allowing the engagement of casuals to boost permanent numbers. Mr Johnson had expressed, it was contended, a preference for full time or permanent part-time employees, there nevertheless remained a need for the flexibility of casual employment.

144 It was further submitted that Mr Johnson had refuted the assertion made by Mr Belan that the introduction of casual employees was a concession made by the NUW in the process of introducing the 36 hour week. That evidence, it was contended, showed that the use of casuals was negotiated as a trade off when three percent superannuation was introduced by agreement in 1987. Mr Johnson supported this evidence by reference to transcript of proceedings before Cahill J, then Vice President, on 15 June 1987 in IRC 1601 of 1986, which recorded the introduction of casual employees and the limitation thereto at that time; and an agreed position statement tendered within those proceedings on 15 April 1987. That document referred to a limitation of casual employment in the following terms: Storemen & Packers Union

Casuals accepted in principle but overtime guarantee of six hours per storeman in weeks in which casuals are utilised.

• Company proposed limitations on employment of casuals:

• Maximum of 15% of permanent "storemen" may be employed as casuals. An increase beyond 15% to take account of increased business at Christmas and peak holidays would be subject to further negotiation; - Minimum four hours per day;

• Casuals restricted to "storemen" classifications only, not on fork or any higher grade work;

• Casuals not to work on Saturday, Sunday or on shift work unless separately negotiated;

• Preference of employment as a permanent would be offered to a casual employee -subject to a vacancy occurring and the employee meeting all the requirements of the company.

145 We also note the correspondence from a Mr Miller, then Industrial Relations Manager of Davids, setting out a schedule of offsets agreed in negotiations between union and company representatives for introduction of a nine day fortnight. This correspondence revealed that the question of casual employment would be pursued during general agreement negotiations.

146 Mr Hatcher further relied on the evidence of Mr O'Shea as to the need for casual employment to meet the fluctuations in demand that can occur across a shift or within a day. Casual employees were required to meet IGA's daily labour needs. The evidence of Mr O'Shea was that IGA did not intend to casualise their workforce, although it needed to retain the capacity to engage casual employees as required.

147 Mr Hatcher also submitted that Mr Gearing's evidence provided a number of examples of the engagement of casual employees. It was noted that, on the day of inspection by this Commission of the Silverwater Distribution Centre, all casual employees who had been engaged on that day had been discharged early, prior to the commencement of inspection, due to lack of work. Consideration 148 The evidence in these proceedings supports the conclusion that the introduction of casual employees in the IGA workforce arose from negotiation between the parties. The limits on the use of casuals also arose from the settlement of those negotiations. Those negotiations may have occurred with respect to the introduction of a nine day fortnight or superannuation. That issue is largely immaterial. The fact of the matter is that the arrangements as to casuals arose from a genuine arrangement reached between the parties.

149 The NUW's position in these proceedings is strikingly similar to that of Davids in the proceedings before Cahill J in 1986. Indeed, the circumstances are reversed to such an extent that IGA now opposes a provision earlier proposed by it.

150 It is apparent from the reasoning advanced by Schmidt J that she was persuaded on the evidence before her at the time that removal of restriction on casual employees would aid the creation of employment opportunities.

151 The evidence advanced in these proceedings (earlier discussed) is that a reduction of employment has been the actual result.

152 We note that contemporary approaches to the agreed regulation of casual employment, for example, as expressed in Re Metal, Engineering and Associated Industries Award (2001) 110 IR 247 tend towards a limitation of the engagement of casual employment by increasing the casual loading or the imposition of a limitation on the period of casual engagement (with a conversion to full time employment at some point).

153 We are of the view that the NUW has made out a case for the re-introduction of restrictions on casual, part time and seasonal employees. We so determine. The relevant provisions proposed by the NUW in exhibit 61 are adopted. Clause 13 Overtime - Clause 21 Sunday Work 154 IGA sought the retention of the current provisions which provide for double time payment for Sunday work. The NUW sought payment for work on a Sunday at double time and one half. The NUW proposed that this be achieved by deletion of reference to Sunday Working from cl 13, Overtime and the insertion of a prescription for a double time and one half penalty in cl 21, Sunday work. 155 No case has been made out by the NUW for a departure from the existing award provisions. 156 IGA sought the insertion of a new provision in cl 13, Overtime to provide:

Except where indicated to the contrary these overtime rates do not apply to work performed by agreement under cl 6(iii) and 7(iv) of Part A and clauses 3(iii) and 4(iv) of Part C. 157 This provision was necessary to support the IGA application that work on RDO's attract a penalty of 25 percent in lieu of overtime rates. 158 We have decided against the application by IGA with respect to RDO's and accordingly the enabling provision sought by IGA in cl 13, Overtime is redundant. It is also rejected. Payroll Deduction of Union Dues 159 Mr Shaw argued that this proposal was consistent with the objects of the Act, in particular items 3(c) and (d). As a matter of freedom of association, if a person has decided to join the union, then there should be no difficulty with the employer deducting and remitting to the union membership dues where authorised by the person concerned. He submitted that payroll deduction of union dues is not unusual and is a practice with which the Metcash Group is familiar and participates in by agreement at other locations, either as a component of an applicable industrial instrument or by direct arrangement, as is the case of ALM at Silverwater.

160 Mr Shaw submitted that there was no substantial argument against this proposal put forward by IGA in these proceedings; there is no evidence that such a proposal would create any hardship for the employer and that it would be fair and equitable to include such a provision in the award.

161 Mr Shaw offered the example of the provision sought being determined in an arbitrated award at cl37 of the Storeworkers - Campbells Cash and Carry (NSW) NUW (NSW Branch) Award 2000.

162 Mr Hatcher acknowledged that union dues are deducted from payroll on authorisation at ALM, submitting that this is the only location in New South Wales where Metcash does deduct union dues for any member of the NUW. It was put that the practice of refusing to deduct union dues for the NUW was adopted as a result of unreasonable conduct by the NUW. Mr Hatcher relied on the evidence of Mr Johnson to submit that there is an administrative expense in deduction of union dues upon the company. This evidence also acknowledged the prior co-operative arrangement for deduction of union dues between these parties. Mr Johnson deposed that subsequent to the unreasonable conduct of the union there was no basis upon which Metcash would choose to encourage any activity of the NUW. Mr Hatcher submitted that the NUW had brought no evidence to support or justify the provision sought. Consideration 163 Whilst no issue was raised as to our jurisdiction in this matter, we consider that a claim for an award provision requiring the employer, where authorised by an employee, to deduct union dues and forward them to that employee's union is within the Commission's award making power: Campbell's Cash and Carry v National Union of Workers, New South Wales Branch No 2.

164 The contention by IGA that payroll deduction is an activity which simply supports the union is to some extent misconceived. The request for payroll deduction is made by an employee. The award provision simply provides a right to make that request and have it met. In any event, we consider that if an award for payroll deductions had the effect of facilitating the performance of the NUW as an industrial organisation then it would be a provision entirely consistent with the objects of the Act (see s3(d)).

165 The previous industrial history is, we think, to be lamented by all parties. It is legitimate to see payroll deduction of union dues as a co-operative arrangement or one fostering co-operation. There is, in our view, a significant need for a greater level of co-operation between the parties and every beachhead or foothold which may engender that result should be seized upon with optimism.

166 We consider that the evidence in support of the introduction of this provision is to be found in the conduct, demeanour and behaviour of the parties over the period of these proceedings, particularly when contrasted to that displayed after the 1998 decision. The NUW has behaved in a responsible and proper manner. The conditions for the removal of the provision have substantially evaporated. The cost of the provision is minimal and it is a benefit sought by a substantial number of the employees of IGA

Saturday Loadings 168 The argument advanced by Mr Shaw is found in his written submission on supplementary matters in the following terms: Saturday loadings,

The NUW proposes that if a person works a Saturday afternoon shift or a Saturday night shift they receive both the shift loading and also the loading applicable to work on a Saturday.

This is put forward by the union on this basis: if a person works an afternoon shift or a night shift they are at present entitled to receive a shift loading (see 1998 Award. cl 7(iii) at p985). And if work a person works on a Saturday they receive a Saturday loading (see 1998 Award, clause 7(vi) at page 986). At present, clause 7(vi) is in substitution for and is not cumulative upon the shift allowance prescribed by clause 7(iii).

It is submitted that this situation is not logical. Each of the loadings provided for are compensatory for not just the number of hours worked but also where in the week those hours of work are required. They are, at least, in part, compensatory for loss of society.

Therefore, if a person works on Saturday and is working a shift as defined in the award by the award they should receive the Saturday loading as provided for in cl 7(vi) in addition to the shift allowance prescribed by subclause (iii).

169 Mr Shaw referred to examples of the application of these principles in industrial instruments found in the ALM NSW/NUW Agreement 2000 and the ALM Canberra Agreement.

170 Mr Hatcher did not address this matter in submissions. Consideration 171 There was no opposition to the application, as pressed. We see no reason in law or principle to refuse the claim. The application by the NUW, in this respect, is granted. Consultation on Roster Changes

172 The application by the NUW is rejected. Consultation with employees concerning roster changes is laudable but we consider that the variation to the award is, in all circumstances, unnecessary.

No Extra Claims 173 The NUW gave an undertaking that they would bring no extra claims during the course of any award made in this matter and sought that this requirement apply equally to the employer. The NUW also sought a provision permitting the parties to commence negotiations for a new award two months prior to the nominal expiry date of this award. 174 This was resisted by IGA. No basis was established for a departure from the form of the 'no extra claims clause' typically found in awards. The claims are rejected. Settlement of Disputes 175 IGA sought the retention of the current award provision which removed the "status quo" requirement in respect to warnings issued or action taken by the company in accordance with the counselling procedure. The NUW sought the deletion of this provision, the effect of which is to retain the "status quo" obligation upon the parties. 176 177 The "status quo" obligation was expressed in cl 30, Settlement of disputes of the reviewed award, in the following terms: During the discussion the status quo shall remain and work shall proceed normally. "Status quo" shall mean the situation existing immediately prior to the dispute or the matter giving rise to the dispute.

178 The parties did not favour us with submissions on this issue. There is no evidence that the current award provision has resulted in difficulty, unfairness or disadvantage to either party. It is retained. 179 Area, Incidence and Duration 180 The NUW sought that the award apply to "All storeworkers covered by clause 7 Classification Structure, other than salaried or staff employees". 181 The IGA sought the retention of the current award provision. Clause 37(i) and (ii) of the reviewed award provides:

(i) The award regulates, in whole and exclusively, the conditions of employment of all storeworkers, other than salaried or staff employees, employed by IGA Distribution Pty Ltd at its warehouses situated at 37 Bessemerr Street Blacktown and 4 Newington Road Silverwater in the State of New South Wales. 182 (ii) This award is in full settlement of all rights between the parties and all pre-existing rights subsumed within it.

183 There has been no evidence that the current description of award coverage has created disputation, hardship or unfairness. 184 The NUW is concerned that contractors or employees of labour hire companies may be used at these locations to avoid the award. Whilst these may be legitimate matters to consider in the context of an award application they can not be considered in a vacuum. In the absence of adequate evidence underpinning the claim, it must fail. 185 The NUW also sought the insertion of a new provision as follows:

This award shall apply to any successor, assignee, or transmittee of all or any of the work covered by this award.

186 The provision was opposed by IGA. 187 We are of the view that the clause is an unnecessary and potentially complicating restatement of provisions found in Part 8 of Chapter 2, Protection of Entitlements on Transfer of Business of the Act. No basis has been established for the clause. It is rejected. 188 The NUW also sought the insertion of a new provision as follows:

To the extent of any inconsistencies between the Award, Previous Agreements, and the Storeman and Packers General (State) Award, this award shall prevail.

whilst offering retention of the current 1998 award provision in the following terms:

The award is in full settlement of all rights between the parties and all pre-existing disputes are subsumed within it. 189 Both provisions have merit and conform with the general tenure of our approach in this decision. They are to be included in the award.

IGA Application Spread of Hours - Early morning shift 190 IGA sought an extension of the spread of hours for day work at Blacktown and Silverwater Distribution Centres so as to provide that day work may commence from 5.00 am and finish by 6.00 pm, (the current prescription is a spread of ordinary hours of 6.00 am to 6.00 pm). The purpose of the variation is to alter the definition of early morning shift from any shift commencing between 5.00 am and 6.00 am to any shift commencing between 4.00 am and 5.00 am. 191 The evidence of Mr Allison was that some six employees work an early morning shift at the Blacktown warehouse from 4.00 am to 12.25 pm, for which they are paid a shift allowance of 12½ per cent. 192 The evidence of Mr Stewart was that an early morning shift (commencing at 4.00 am) was introduced at the Silverwater warehouse by arrangement between the employees concerned and management. There is conjecture in the evidence of Mr Stewart and Mr Gearing as to whether employees approached management or management approached employees. It is clear that there was a strong component of mutuality in the arrangement. 193 The evidence of Mr Gearing is that he was approached by a number of employees at the Silverwater warehouse who desired to start at 4.00 am and forgo the 12½ per cent early morning shift loading. A "voluntary roster" was put in place for a time until the issue of payment was challenged by the union. Mr Gearing acknowledged that it was a mistake by the company not to make payment of the 12½ per cent loading as prescribed by the 1998 award. His evidence is that all employees involved were subsequently paid the early morning shift allowance. 194 The practice ceased as IGA regarded the award requirement for payment of early morning shift commencing from 4.00 am to be uneconomical.

195 Mr Hatcher submitted that an increase in the span of hours to alter the commencement to 5.00 am would give IGA the option to allow some assembly to commence before 6.00 am, providing an extra hour to pick and load orders be delivered in the afternoon or to overcome any delays from the previous afternoon shift.

196 There was agreement between the parties concerning the basis of the application. 197 Mr Hatcher contended that the application, if granted, would allow the company to economically engage employees on the early morning shift who sought that arrangement but were prevented by the award requirement to payment of 12½ percent shift loading. 198 Mr Shaw submitted that there was no foundation for the contention that employees had a desire to work the early morning shift without shift penalty. 199 Mr Shaw relied upon the evidence of Mr Stewart that only 3 of the 12 employees working the "voluntary roster" remained in the company's employment and, so far as he was aware, as union delegate, no employee was prepared to forgo the 12½ per cent early morning shift loading. 200 Mr Hatcher submitted that this view was unsubstantiated hearsay and should not be given any weight at all. Consideration 201 There is not an adequate basis demonstrated for the alteration of present arrangements in the award. We do not consider that IGA has demonstrated that employees desire to commence at 4.00 am without any additional cost. There is plainly substantial opposition to it. The grounds in support of it really relied upon the possible mutual convenience which may derive from the change in the system (which failed when employees did not generally support the scheme). There has been an insufficient case made out on economic or industrial grounds to alter the existing provision. Working on Rostered Days Off ("RDO'S")

202 IGA sought to insert a provision that allowed, by agreement, an employee to forego an RDO and work on that day. IGA's proposal was that, where agreement is reached, and the employee works on an RDO as an alternative to a day off, payment shall be at the ordinary rate plus an additional 25 percent for the hours so worked.

203 Mr Hatcher relied on the evidence of Mr O'Shea that such an arrangement would of mutual benefit to IGA and the employee concerned. Mr Hatcher submitted that the present arrangement is that casual employees are used to fill the necessary gaps on RDO's, and that the 25 percent loading would make full time employees sufficiently price competitive in relation to casuals to be offered work on RDO's and subsequently able to earn additional remuneration if they so desire.

204 The evidence of Mr Gearing was that, having permanent employees available for this work compared to casual employees, would have significant operational benefits for IGA as the permanent employees are considered more productive.

205 Mr Hatcher further relied on the evidence of Mr Gearing that employees are generally content with IGA's proposal because it was on a voluntary basis.

206 This proposition is contrary to the evidence of Mr Stewart who expressed his personal opposition to the proposal and, on his knowledge as a union representative, the opposition of employees at large.

207 Mr Shaw categorised the proposal as a pay cut of significant proportion as the 1998 award provided an overtime payment of time and a half for the first two hours and double time thereafter where an employee is required to work on an RDO. Mr Shaw submitted that the contention by IGA that employees were generally in favour of such an arrangement defied common sense and was not supported by any evidence. Nor had there been shown on the evidence any genuine need or justification for the proposal. Consideration 208 The basis for this claim is that IGA wishes to engage its existing permanent workforce on RDO's at a lower rate of pay. There is no justification advanced for this change. IGA's 'preference' to use permanent employees who are considered more productive due to job knowledge and experience at a lower rate of pay merely has the effect of providing (without further justification) an experienced employee at a discount rate. We are of the view that no case has been made out for alteration to the existing award. The desire for a lower cost regime per se does not constitute a sufficient basis to vary the existing principle. IGA's application is refused.

209 210 Deletion of Union Picnic Day 211 IGA sought the deletion of the second Friday in February as a holiday prescribed by the 1998 Award. This day has traditionally been the Union Picnic Day and, whilst, in the past, the entire retail industry would close down, the day is now not a "closed day". 212 The current award provision (which is sought to be retained by the union) allows mutual agreement between the company and the "employee concerned" to work on the nominated holiday and be paid one extra day's pay or have one day added to their annual leave or to take one day off in lieu. 213 The IGA application is to abolish the day as a holiday, thus reducing the number of public holidays provided by the award. The principal argument advanced by IGA is that as the day is no longer observed as a picnic day in the traditional sense, there is no longer a basis for it to be a prescribed holiday.

214 Mr Hatcher relied on the evidence of Mr Belan who recounted, in part, the history of Union Picnic Day and its transition from a closed day to present arrangements to support his contention that the day no longer held the status of a general closed day as other public holidays and accordingly ought to be deleted.

215 This proposition is opposed by the NUW upon the basis that the condition was a long established award condition, it had arisen in a particular context and no basis for change had been demonstrated.

216 Consideration 217 The argument advanced by IGA in respect to this item is plainly unsupportable. It relies on co-operative arrangements to alter a general closed day to one of partial operation, brought about to meet the needs of the industry and this employer, as an argument to then entirely remove the entitlement.

219 Further to the substantive issue of the retention or deletion of the second Friday in February as a public holiday, there are additional differences between the parties expressed in exhibit 61 in relation to this matter. 220 At subclause 18(i) the NUW sought to retain that the prescribed public holidays would apply to "all weekly employees"; whereas the IGA application expressed the entitlement to be allowed to "all full time and part time employees".

221 There is merit in the IGA application in describing entitlement in the terms proposed and it is adopted.

222 At subclause 18(ii), the NUW seek removal to reference to cl19, Rostered work on public holidays. This is opposed by IGA. 223 Clause 19 of the reviewed award provides that where an employee, as part of his normal roster, is required to work on a nominated public holiday, a loading of 150 percent is paid in addition to the day's pay for the public holiday, effectively providing payment at double time and a half for the nominated public holiday. Sub clause 19(ii) nominates the holidays subject to this arrangement as Australia Day, Anzac Day, the Queen's Birthday, Labour Day and New Year's Day (or the days in substitution thereof). Clause 19 further provides that an employee may elect to accrue one and a half days in additional annual leave (in lieu of the 150 percent loading). The effect of removal of reference to cl19 from sub clause 18(ii) is to increase the payment for work on the nominated public holidays from 150 per cent to double time, effectively increasing payment from double time and a half to triple time.

224 No proper basis has been advanced in support of the change sought. The existing award provision is retained. 225 At sub clause 18(iii) the existing award provides that where an employee is rostered so as not to work ordinary hours on the same days each week and a public holiday falls on a rostered leisure day, the employee shall be entitled to one substituted day. The NUW application sought to remove the qualification that the employee does not work ordinary hours on the same days each week, the effect being to provide a substituted day for all employees where a public holiday falls on a rostered leisure day. If this were accepted, employees rostered to work Monday to Friday would be entitled to a substitute day where, for example, Anzac Day fell on a Saturday. 226 There is no adequate justification advanced for the NUW application. The existing award arrangement is retained. Sick Leave

227 IGA's application sought several changes to the sick leave clause of the 1998 award.

228 The first aspect of the claim was to change the time of notification of absences due to sickness from the present requirement that employees notify "within 24 hours of the commencement of the absence" to a requirement that employees notify an absence "prior to the rostered commencement time".

229 The second change sought by IGA was an alteration to the proof of illness provisions of the award. IGA sought that, where proof of illness was required, an employee shall not be entitled to payment for that day, unless the absence is supported by a certificate from a duly qualified medical practitioner stating that, in the medical practitioner's opinion, the employee was unable to attend for duty on account of personal injury or illness.

230 The present award prescription is found at cl 24(c) in the following terms:

He/she shall prove to the satisfaction of the Company, or in the event of a dispute, the Industrial Relations Commission of New South Wales, that he/she is or was unable on account of such illness, to attend for duty on the day or days for which payment under this clause is claimed.

231 It should be noted that there is no change proposed to the present arrangement that the first two separate single day absences on account of personal injury or illness do not require production of proof.

232 Mr Hatcher relied upon the evidence of Mr O'Shea and Mr Gearing which details the obvious difficulties arising where employees do not present for work as rostered. They pointed out that there was no certainty as to whether they are going to be a few minutes late or unable to attend at all due to illness or injury. The dilemma is faced by all employees on the shift who then may be required to work shorthanded or make interim arrangements pending the arrival of a replacement employee by way of overtime arrangements or the engagement of a casual.

233 Mr Shaw acknowledged these difficulties. However, he relied upon the evidence of Mr Stewart that information of absence prior to the commencement of the absence is not always practicable, having regard to shift starting times and the various circumstances under which employees suffer illness or injury (where treatment or disability may physically prevent the communication of required information).

234 Mr Hatcher refuted the assertions put by Mr Stewart as to practicability, submitting that shift workers work regular hours and that, unless a shift worker is unconscious, it is difficult to fathom how, once the shift worker felt themselves ill enough to justify not attending work, the worker could not simply telephone IGA's 24 hour voice mail facility to so advise. Consideration 235 We do not believe that a case has been made out for granting of the full extent of the claim sought by IGA. However, it is not unreasonable, in our view, that the award be altered to require that an employee notify absence prior to the commencement of a shift, whenever practicable, and in any event no later than 24 hours from the time of the commencement of the shift. We note, in this respect, that there was no evidence that sick leave entitlements are abused or that absenteeism is excessive.

236 We would observe that, as a matter of industrial reality, employees could be expected to overcome obstacles to providing information by effort and ingenuity in direct proportion to the increase in a co-operative workplace environment. Award Structure - Establishment of Silverwater Appendix 237 Mr Shaw reiterated NUW's opposition to this proposal, submitting that there had been no evidence brought by IGA to support the change.

238 Mr Hatcher argued that there was an administrative advantage in being able to locate all of the considerations relevant to Silverwater at a single location within the award.

239 Consideration 240 We consider that this proposal is logical and will assist in the application of the award. We grant IGA's application in this regard. Date of Operation 241 The new award we will make in this matter shall operate from the first pay period to commence on or after 1 February 2002.

Orders 242 We make a new award entitled the Storeworkers - IGA Distribution Pty Limited NSW Distribution Centres Award 2002 in terms of the reviewed award, as varied by the consent arrangements between the parties (as specified in exhibit 61) and the terms of this decision. That award shall operate from the first pay period to commence on or after 1 February 2002 and shall remain in force for a period of two years.

243 The NUW shall serve upon IGA within 7 days a draft award reflecting the matters agreed between the parties and our decision as to arbitrated matters. The parties shall thereafter confer in order to settle the form of the draft award. The NUW shall file in the Commission and serve within 21 days a draft award which shall be accompanied by a short submission as to whether the draft is agreed and, if not agreed, the clauses of the draft award which are disputed. That submission shall also include the reasons for the NUW's proposed draft where it is not disputed. If there is any disputed matter as to the form of the award arising from the decision, the IGA shall file and serve 7 days thereafter the form of each disputed clause which it would propose be included in the draft award and a short submission in support of the form proposed by it. Upon the receipt of the aforementioned documents we shall determine the final form of the award either in chambers or if required, after further hearing the parties as to the disputed matters of form. ____________________

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