TWU v P & O TRANS AUSTRALIA PTY LTD

SOLICITORS Freehills SYDNEY

JUDGMENT: - 9 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

NOTIFICATION UNDER SECTION 332 BY THE TRANSPORT WORKERS' UNION OF AUSTRALIA, NEW SOUTH WALES BRANCH OF A DISPUTE WITH P & O TRANS AUSTRALIA RE DECLINE IN LEVELS OF ENGAGEMENT DECISION

1 This matter arises from a notification of a dispute pursuant to s.332 Industrial Relations Act 1996 ("Act"). The Transport Workers' Union of Australia, New South Wales Branch, the notifier, represents 14 lorry owner-drivers who have contracted for varying periods of time, some for many years, to cart containers on behalf of the respondent, P & O Trans Australia. It is accepted for the purposes of the proceedings that they are contract carriers within the meaning of the Act.

2 The fundamental issue relates to the TWU's application in the proceedings for an interim contract determination in the following terms: That the Commission issue an Interim Determination, under section 332(5) ordering that P & O Trans Australia utilise the permanent subcontractor fleet of P & O to the levels of engagement that were occurring prior to P & O's purchase of Smith Brothers on 5 October 2001.

P & O opposes the making of any interim determination.

3 These proceedings were conducted urgently, upon the basis that assertions from the bar table which were not disputed were to be accepted as establishing the facts on a prima facie basis. The matter arises this way. On 8 October 2001 P & O held a meeting with the LOD's to announce that P & O had acquired the transport and logistics business known as Smith Brothers, which employs approximately 40 employee drivers. A Director of P & O, in making the announcement, indicated that the acquisition and eventual merger of the businesses would not impact upon the work of the LOD's. It was emphasised that P & O wished to retain the LOD fleet on an ongoing basis.

4 Over the remaining months of 2001 there was a noticeable but not substantial reduction in work for the LOD's. That reduction appeared to be referable to a number of factors including a post-Olympics slump, a downturn in trade, influenced to some degree by the events in New York of September 11, 2001 and also by general economic conditions, and the actual merger of the P & O and Smith Brothers operations. The material advanced by P & O showing the monthly revenue fluctuations from both the P & O and Smith Brothers sources of work, shows that over the period since October 2001 the revenue of the P & O work reduced by 26 percent and that for Smith Brothers by 20 percent. Nevertheless the position seems to be that the employee drivers originating from the Smith Brothers fleet have maintained their levels of work of the order of 10 to 12 hours a day whereas the LOD's have altered from 10 hours per day five days per week to a position where they are required to be available to P & O only one week in two and then are not guaranteed any work for that week, although they would be paid a safety net payment which equates with $500.00 per week.

5 It is difficult to see how a 20 percent reduction in revenue on the Smith Brothers side resulted in a maintenance of work levels for employee drivers and a 26 percent reduction in revenue on the LOD's side can result in more than halving of the work for LOD's, unless there has been transferred to the employees work which was formerly done by the LOD's. This I accept has occurred and represents the "synergies" P & O has submitted have been the result of the merger.

6 The safety net proposal is one which emanated from P & O after a request for consideration by the LOD's. That request was made prior to Monday 4 February 2002 and a response was promised by P & O by Friday 8 February. On 1 February 2002 the TWU notified the dispute. It was listed on Monday 4 February 2002 and then stood over until 11 February 2002 to await the outcome of P & O's foreshadowed proposal. That proposal was, and is, that the LOD fleet should be paid a minimum guarantee of $500 per week, payable fortnightly, on the basis that half the fleet would make itself available each second week and be free in the alternate week to pursue other work if they so choose. The expectation for the immediate future is that there would be little work for those members of the fleet presenting according to the roster. The LOD's would be entitled to decline to make themselves available for two (consecutive) rostered weeks without impairing their presence on the roster. Unavailability for three consecutive rostered weeks would remove them from the roster. In this way P & O submits it has catered so far as it can for the interests of the LOD's in terms of the availability of work from P & O and giving the fleet a reasonable opportunity to pursue other casual work or indeed, other permanent work. In addition, P & O has indicated that individual drivers would be free to offer themselves for work as casual employee-drivers in the combined operation.

7 The position adopted by the LOD's is that they would be incapable of surviving on the safety net provided, the $500 minimum contrasting with average earning levels for 2001 in the range of $2000 to $3000 per week.

8 Section 332 of the Act is in the following terms: (1) If subsection (2) or (3) applies or the Commission has reasonable cause to believe that it applies, the Commission may summon a person to a compulsory conference: (a) to confer, or

in an endeavour to bring the interested parties to a settlement which will determine the matter in relation to which the subsection applies.

(2) This subsection applies if an association registered under this chapter or a bailor or a principal contractor becomes aware of an industrial dispute that might lead, or has led: (a) to owners of public vehicles being in breach of contracts of bailment of those vehicles or refusing to enter into contracts of bailment of those vehicles, or

(b) to principal contractors under contracts of carriage being in breach of those contracts or persons refusing to enter into contracts of carriage as principal contractors, or

(c) to bailees of public vehicles or carriers under contracts of carriage being in breach of those contracts, or

(d) to persons refusing to enter into contracts as bailees of public vehicles or as carriers under contracts of carriage.

(3) This subsection applies if an industrial dispute arising from the reorganisation of the business of a principal contractor affects, or is likely to affect, the number of carriers used by the principal contractor or their remuneration.

(4) At a compulsory conference, the Commission is to investigate the merits of the matter concerned, irrespective of whether or not industrial action is taking place.

(5) If the Commission considers that: (a) the public interest is, or could be, affected by a question, dispute or difficulty referred to in subsection (2) or (3), and

(b) all reasonable steps have been taken to resolve the industrial dispute by conciliation.

It may make a contract determination expressed to be an interim determination made under this subsection.

(6) An interim determination made under subsection (5): (a) is, as far as practicable, to restore or maintain the conditions existing between the parties immediately before the occurrence of the events giving rise to the industrial dispute, and

(b) is to remain in force for such period, not exceeding one month after its making, as is specified in it.

9 It will be seen that three subsections are of particular interest in respect of the matter now in issue. Subs. (3) gives operation to subs. (1) in the context of this dispute. It is clear that the restructure of the P & O business is the result of the acquisition of Smith Brothers and has impacted upon both the availability of work and remuneration.

10 More particularly for present purposes, subs. (4) provides conditions which must be satisfied before any interim contract determinations may be made in the proceedings. The parties agreed that all reasonable attempts have been made at conciliation but have been unsuccessful. They are not ad idem about the question of the public interest being involved. Equally, there is an issue concerning the utility or feasibility of any interim contract determination in or approaching that sought by the TWU, given the limited nature of its operation for only four weeks.

11 I have been persuaded by other submissions made by the TWU that there would be utility in the making of an interim order to provide the LOD's with an opportunity to reassess their positions without the impact of a severe reduction in earnings being faced immediately. I take that view for a number of reasons. Firstly, I accept the presently undisputed fact that P & O provided assurances to the LOD's as recently as October that they would not be affected detrimentally by the merger. Secondly, I consider that in those circumstances the transfer of any work from the LOD's fleet to Smith Brothers without warning and with an impact on the LOD's fleet contrary to the October promise is prima facie unfair. I would not go so far at this stage to suggest that such a transfer is not to be ultimately appropriate. Circumstances in which that should occur are not at issue. For it to occur suddenly, however, and for any detriment involved in the merger to be visited upon one group seems to me to justify an approach which would ensure that, so far as the section might permit, these impacts are minimised.

12 I have already, in the proceedings, expressed my concern that the formal order postulated by the TWU might have an effect which is incalculable. If there is not sufficient work originating from the sources traditionally those of P & O, then it would be impossible to provide work to the October levels without impinging, it would seem, on the work traditionally that of Smith Brothers. Such a result would be equally unfair. My conclusion would be that, if the public interest is involved, P & O should be ordered by contract determination to provide to the LOD's for a period of one month that work which originates from traditional P & O client sources. I understand that this may produce difficulties in allocations but I have been informed that it is not impossible to separate the work in this way.

13 Before such contract determination may be made, as I have said, the public interest must be found. Where is it in this case? The TWU argues that the reduction in income will prevent LOD's from maintaining their vehicles in the same way as would occur when they are fully employed; that this may lead to an endangering of members of the public; that their impecuniosity might cause them to work hours in excess of the maximum permitted under the Roads and Traffic Act, also having a like result; that they may double bank their loads to excess weights again endangering the public; that they might be forced to offer for work at lower rates than standard thereby impacting on the container industry operations generally.

14 Each of these considerations, while potentially real, do not seem to me to amount to matters which raise the public interest. In particular, I do not consider the prospect of an LOD choosing to operate contrary to law is appropriate to be erected as a reason why something should be done to interfere with the contractor relationship here. The public interest in such breaches would be served by appropriate prosecutions should such occur. I do not consider the Commission should lend itself, by its orders, to such concepts.

15 In the course of argument, the question did arise whether the public interest might exist in trying to ensure the approach of parties to an industrial question of the kind involved here is even-handed and balanced. In other words, that parties, so far as reasonably possible, not have unequal bargaining positions.

16 P & O has argued that the public interest is not to be found in what is really a localised contractor relationship without wider impact. Reference was made to the judgment of Boulton J in the Australian Industrial Relations Commission, in what was recognised as a different context, but where His Honour, in considering whether the public interest was affected in the particular case said: It was submitted by the CFMEU, among other things, that the termination of the Agreement is against the public interest because it will lead to an immediate loss of take-home pay for the workers at the Mine. Clearly it is not in the interest of workers at the Mine that the Agreement be terminated, at least to the extent that they will lose pay as a result of the award and overaward arrangements which the Company intends to apply upon termination. It was also argued that the termination of the Agreement will advantage the Company in negotiations for a new collective agreement and in the introduction of changes in working conditions and arrangements at the Mine. Although these are matters of concern, they are not sufficient, on their own, to support a conclusion that the termination of the Agreement would be contrary to the 'public' interest. In the context of a system built upon the determination of wages and conditions of employment by agreement between employers and employees at the workplace or enterprise level and with awards providing a safety net of minimum standards, it would be difficult to conclude that the mere existence of such advantages to one party or the other is contrary to the public interest. There are part and parcel of the current bargaining arrangements, as is the possibility of parties taking industrial action, protected or otherwise, in order to advance or protect their interests in relation to the negotiation of wages and conditions of employment.

17 There seems to me to be a major difference between the system described by Boulton J., one concerning levels of wages and conditions, and that here, where the statute contemplates the need, in an appropriate case, for a remedy, however temporary. In the present case it is clear enough to me that the LOD's have been presented with what is effectively a fait accomplit and whilst I accept P & O's attempts to establish a safety net have been genuinely made, the safety net does seem to me to involve serious difficulties for the LOD's. P & O has submitted that there are "synergies" to be taken advantage of in the merger. That is undoubtedly its right, and perhaps its obligation in these commercially-oriented times. However, the LOD's are not just economic units, to be utilised as the financial mood dictates. They include family men, with all the usual financial commitments, and also those related to the possession and operation of a truck. They have worked for as long as twelve years for P & O. One young man paid, it is claimed, $100,000.00 in September last for a truck in work with P & O, to be faced with this restructure almost immediately. It may be no answer to a disaster of that kind to make an interim determination for only one month, but it is the very least that can be done within the constraints of the legislation.

18 I mention that the General Carriers Contract Determination provides, in cl. 15, No Guarantees: An engagement by a Principal Contractor of a Contract Carrier to undertake work under a contract of carriage or contracts of carriage does not commit the Principal Contractor to enter into further contracts of carriage with the Contract Carrier or guarantee any minimum remuneration.

19 I do not consider that the proposed interim determination is inconsistent with the intent of that clause. Obviously, a principal contractor must be free to allocate work in an appropriate way, having regard to the usual exigencies of the business. However, the clause is not a licence to treat LOD's unfairly. If there could be found such an inconsistency, I consider that, in the circumstances of this case, it would be justified.

20 This result is not inconsistent with the approach taken by the Commission in TWU v Conaust (1992) 46 IR 18, where that work which was available to Conaust was to continue to be allocated to Conaust's LOD's.

21 I make an interim contract determination in the following terms: P & O Trans Aust shall allocate to the eleven contract carriers presently the subject of its safety net proposal such work as would have been done by them but for the acquisition of and merger with Smith Brothers. The allocation will exclude that work done by the three remaining LOD's, who have either specialised equipment or, in one case, a particular client relationship. This interim determination shall take effect from Monday, 25 February, 2002 and shall remain in force for one month.

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