Industrial Relations Commission of New South Wales CITATION: Residual Business Management Corporation Employees Award 2003 [2005] NSWIRComm 165 NSW Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union and others PARTIES: Residual Business Management Corporation FILE NUMBER(S): IRC 6483 of 2003 CORAM: Harrison DP Application for new award - Electricity generation industry - restructure - work value - redundancy - salary maintenance - redeployment - secondment to work in the industry - Special Case Principle. CATCHWORDS: Held - Special Case Principle met - circumstances unique - commitment to salary maintenance and to no disadvantage - upheld as issues of industrial integrity - value of work on secondment supports increase - Award made. Industrial Relations Act 1996 LEGISLATION CITED: Pacific Power (Dissolution) Act 2003 No 17 Electricity Supply Act 1995 Re Crown Employees (State) Award (No 2) 52 IR 243 Re Transport Industry (State) Award 95 IR 126 Re Operational Ambulance Officers (State) Award (2002) 113 IR 384 CASES CITED: Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award 2004 [2004] NSWIRComm 340 Federated Municipal and Shire Council Employees Union of Australia, NSW Division and Pacific Power Re Salary Advancement for Officers Vales Point Power Station [1998] NSWIRComm 656 HEARING DATES: 11/25/2004; 11/26/2004; 02/07/2005; 02/08/2005; 02/21/2005; 03/14/2005; 03/15/2005; 03/17/2005 DATE OF JUDGMENT: 05/31/2005 EXTEMPORE JUDGMENT DATE: 03/17/2005 APPLICANT Mr M Barnes Solicitor White Barnes Solicitors LEGAL REPRESENTATIVES: RESPONDENT Counsel Mr J Fernon Solicitor Ms E Raper Baker & McKenzie Solicitors JUDGMENT: - 41 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP Tuesday, 31 May 2005 Matter No IRC 6483 of 2003 RESIDUAL BUSINESS MANAGEMENT CORPORATION EMPLOYEES AWARD 2003 Application by New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union for a new award. REASONS FOR DECISION [2005] NSWIRComm 165 1 This is an application by the New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union ('USU') for a new award to be titled the Residual Business Management Corporation Employees Award 2003 ('the Award'). The Award is to replace and rescind the Pacific Power Consent Award 2002 (" the 2002 Award") 339 IG 784. 2 The award sought is to apply to all employees of Residual Business Management Corporation ('RBMC') from the first pay period to commence on or after 15 November 2003, irrespective of whether any employee or employees has or have ceased employment with RBMC. 3 The Grounds and Reasons advanced in support of the Award are detailed in Schedule B of the application in the following terms: "1. The nominal term for the Pacific Power Consent Award 2002 expires on 15 November 2003. 2. To make provisions for the appropriate award coverage for employees and new employer entity Residual Business Management Corporation (RBMC). 3. To provide an appropriate means of regulating rates of pay and conditions for employees with RBMC. 4. To provide for appropriate conditions of employment for employees with RBMC. 5. Such further grounds as the Commission may deem appropriate. " 4 These grounds were supported by a Statement of Contentions filed on 6 July 2004 (exhibit 35). A reply was filed by Baker and McKenzie Solicitors on behalf of RBMC on 2 September 2004 (exhibit 57). 5 RBMC oppose the application on the basis that employees are not required to undertake any productive work and are entitled to substantive over-award benefits in the form of extensive outplacement services, financial and psychological counselling and training. RBMC's reply acknowledged that its employees are engaged pursuant to the 2002 Award, a comprehensive award made in this Commission, which commenced operation on 15 November 2002. The reply further acknowledges that the award rates of pay were last adjusted by an increase of one percent (1%) operative from 26 November 2001. 6 The reply by RBMC asserts that there are no grounds for the application of the Special Case Principle of the NSW State Wage Principles (2004) 132 IR 190 at 214, putting that the Applicant cannot demonstrate that the case has "special attributes" or is out of the ordinary, and that this is not a case where structural efficiencies would justify wage increases beyond those normally allowable under the State Wage Principles. 7 RBMC further asserts that a new award is not necessary to establish fair and reasonable conditions of employment; that there are no improvements in productivity, efficiency and/or quality of work that would readily justify a special case and that there are no public interest reasons for a Special case or grounds to justify a joint award pursuant to Principle 13 of the State Wage Fixing Principles (2004) 132 IR at 217. 8 RBMC argue that its employees subject to this application are entitled to no more than the State Wage Case 2004 (2004) 132 IR 190 (SWC 2004) adjustment. 9 The USU filed a reply to RBMC on 17 November 2004 (exhibit 58). These contentions state that the vast majority of RBMC employees were mandatorily transferred from Pacific Power. The USU note that the employees remaining have preferred long term careers and have relied upon the representations of the NSW Government and the employer that there would be no mandatory or forced redundancies. The USU contends that any non-award benefits referred to by RBMC arise directly from the decision making process of the respondent and have no relevance to the current application. 10 The USU notes that negotiations between the parties evoked no offer from RBMC that the award be increased by the SWC 2004 adjustment or any other amount. 11 The USU asserts that acceptance by RBMC of entitlement to an award movement in accord with the SWC 2004 decision is an admission of liability and invites RBMC to make the same admission in respect to the State Wage Case 2002 (2002) 114 IR 81 (SWC 2002) and State Wage Case 2003 (2003) 121 IR 446 (SWC 2003) decisions. And to prepare a schedule demonstrating the effect of the SWC 2002, SWC 2003 and SWC 2004 adjustments, specifically addressing the issue of lagging. 12 In reply to the "Special Case" arguments, the USU's contentions state: 18. The Respondent has served Notices of termination of service, based on redundancy on the vast majority of the Respondent's employees. These notices were at best temporarily withdrawn. 19. These termination notices and the implementation is directly contrary to repeated representations by the Respondent and its owner, the State of New South Wales. Such representations were relied upon by the effected employees. 20. Such representations include: (a) Memo from Minister of Energy, Michael Egan, 24/10/95 (b) Letter to H Chawla from Carl Scully, 1/12/95 (c) Letter from A Valente from Carl Scully, 12/12/95 (d) Letter to T Morrissey from the Premier, 9/5/96 (e) Email from Professor Hilmer to Michael Egan, 1998 (f) Letter to MEU from Bob Carr, 1/3/99 (g) Market Implementation Group (MIA) Presentation to Staff, 22-24 June 2002 (h) Chris Raper letter to Labor Council, 15 July 2002 - (i) Hansard, August 2002 (j) Labor Council letter to MIG, 23/9/02. (k) MEU letter to John Della Bosca, 18/8/02 (1) Letter from MEU to Bob Carr, 6/3/02 (m)Letter to MEU from Michael Egan, 8/5/03 (n) Hansard Orkopolous, second reading, 20/6/03 (Pacific Power Dissolution Bill) 21. These representations were part and parcel of the disaggregation process involving Pacific Power. 22. Employees of the Respondent are not all performing duties to the extent of their capacity as a consequence of deliberate decision making processes of the Respondent. Those working on "secondment" are making a real and substantial contribution to a more efficient generation industry. Those not on secondment are complying with the Respondent's directions. 23. The MOU has limited practical effect in terms of redeployment into the wider public sector and/or generators. The State Government process has been flawed. The employees and their unions have co-operated with such processes and endeavoured to highlight inadequacies in the employer/State Government approach. 24. Salary maintenance under the MOU has failed to maintain the purchasing power of the employees earnings. The same failure applies to the employees' superannuation claims. 13 The matter was subject to unsuccessful conciliation proceedings throughout late 2003 and 2004 and was subsequently referred to his Honour, Wright J., President in May 2004 for consideration as a special case. 14 The President concluded that the proceedings, including any special case aspect, were to be determined by the Commission as presently constituted. 15 The matter was subject to further proceedings on 24 May 2004 resulting in directions being issued to bring the matter to hearing on 6 and 7 July 2004, which dates were subsequently vacated and hearing rescheduled to 2 and 3 September 2004. 16 At the request of the applicant, hearing proceedings listed 2 and 3 September 2004 were vacated and rescheduled to 25 and 26 November 2004. 17 On 25 November 2004 Mr M Barnes of White Barnes Solicitors appeared on behalf of the USU. Mr J Fernon, of Counsel, appeared on behalf of RBMC instructed by Ms E Raper of Baker & McKenzie Solicitors. 18 On commencement of proceedings on 25 November 2004 the parties sought a return to conciliation pursuant to s 87(2) of the Industrial Relations Act 1996 ('the Act'). Attempts to resolve the matter in conciliation, which took place on 25 November and 26 November 2004, were also unsuccessful. 19 Arbitration continued throughout February and March 2005. An ex tempore decision was issued in transcript on 17 March 2005 and orders published on 21 March 2005. The ex tempore decision referred to the later publication of a decision dealing with all aspects in fulsome detail. That decision is now published. BACKGROUND TO THE APPLICATION 20 The electricity industry in New South Wales has been subject to substantial restructure over the past decade. The sequence of events relevant to these proceedings are usefully set out in the evidence of Mr John Creeley, called to give evidence by Mr Fernon. Mr Creeley is engaged in the position of Commercial Manager by a company known as Pacific Power Subsidiary No 1. Pty Ltd, a wholly owned subsidiary of RBMC, which provides administrative services to RBMC. 21 It is Mr Creeley's evidence that Pacific Power Subsidiary No 1 has no employees and that he and others engaged by that entity are so engaged under contract. Mr Creeley deposed that he provided finance and accounting, information technology support, and payroll approval services to RBMC. 22 The background to restructure is set out at paras 6 to 18 of Mr Creeley's affidavit (exhibit 56) in the following terms: Background concerning the restructure of Pacific Power since 1 July 2000 6. By way of background, electricity generation and its sale in New South Wales has been regulated by the State Electricity Commission of New South Wales since 1950. As a consequence, the State Government owned instrumentality was exclusively involved in the building, operation and ownership of all power stations throughout New South Wales. Pacific Power also operated the electricity distribution network and various coalmines which provided coal for the generation of power. 7. In 1995 Professor Fred Hilmer, a then Management Consultant was engaged by the Federal Government to provide a report concerning the State Government Regulation of the power industry throughout Australia. As a consequence of this report, the New South Wales State Government made the decision to restructure Pacific Power, through the transfer many of its assets to other State Owned Corporations to comply with federal competition requirements. Annexed hereto and marked with the letter "JC-1" is a true copy of this Report. [Not reproduced] 8. Since 1995, Pacific Power has been progressively restructured until 1 July 2003 at which time the government-owned instrumentality of Pacific Power, was succeeded by Residual Business Management Corporation. 9. In 1995, the transmission assets of Pacific Power, namely the power lines and substations were transferred to Transgrid a State-Owned Corporation which primarily distributed electricity between the power station and the on-seller (eg: EnergyAustralia). In 1996, Delta Electricity and Macquarie Generation were formed, again these are State-Owned Corporations, to participate in the new competitive market for electricity. 10 At 1 July 2000, Pacific Power's business consisted of: (a) power generation assets (including coal, wind, gas and hydro generation plants); (b) power station operations & maintenance (Pacific Western); (c) an energy consulting business (Pacific Power International); (d) coal mining (Powercoal); and (e) research & development (Pacific Solar) 11. On 2 August 2000, the following businesses within Pacific Power were transferred to Eraring Energy – again a State-Owned Corporation: (a) power generation; (b) the power station operations maintenance. 12. Consequently the then Pacific Power remained solely as an energy consulting and a much larger coal mining business for two years. The coal mining business was sold on 6 August 2002. The energy consulting business was sold on 7 February 2003. All records associated with these businesses were transferred to the new owners with the exception of the Engineering Procurement & Construction ("EPC") Projects. 13. The EPC projects are the only remaining projects of PPSub1 (formerly Pacific Power International) and relate to the construction of power stations at Callide and Tarong North in Queensland. 14. From February 2003, Pacific Power has progressively downsized its operations. The effect of this restructure on the size and function of Pacific Power's workforce has been dramatic. In July 2000, the Pacific Power workforce would have been approximately 960. Immediately prior to the transfer of the energy consulting business in February 2003, the then workforce was approximately 335. 15. As at the date of this statement, there are 48 staff of RBMC of which approximately 44 are surplus to business requirements and are seeking to be redeployed in the public sector. A further 4 staff are engaged to assist the completion of EPC Projects. The EPC projects are both past Practical Completion and into the "Defects Phase". Practical Completion means that the power stations are now being operated by their owners and construction has effectively been completed. However, PPSub1 continues to have responsibility for a defined period in rectifying any defects that become apparent. Final completion of the Callide project is expected in September 2004 with the Tarong North project expected to conclude in August 2005. I am aware of no other active projects which are planned or contemplated. 16. RBMC was a special purpose corporation created by virtue of the Pacific Power (Dissolution) Act 2003 No. 17. This Act was passed and commenced effective 1 July 2003. I am aware of the facts and circumstances with respect to the establishment of RBMC. RBMC was established to manage the remaining assets, rights and liabilities of Pacific Power. The Divestiture of PPI to Connell Wagner 17. Pacific Power International ("PPI") was established by Pacific Power in December 1987 (originally called Elcom Services) as a new entity to provide consulting at both domestic and international level to assist the owners of power stations in their dealings with their contractors and to provide consulting services to power stations. 18. In February 2003, the business of PPI was sold to Connell Wagner. All assets and contracts of PPI were transferred to Connell Wagner apart from the two outstanding EPC contracts which I have described above, the Callide and the Tarong North contracts. PPSub1 continues to manage these projects. As part of this divestiture, approximately 122 joined Connell Wagner. There are approximately 10 to 12 Connell Wagner contractors (who were formerly with Pacific Power) who are assisting in the completion of those contracts). 23 The work of Pacific Power, and particularly the role of staff, is succinctly put in the Chief Executive's Report by the Acting Chief Executive, Mr Rob Lang, in the 2001 Pacific Power Annual Report. This appears in the evidence of Mr Geoffrey Brands in the following terms: The last 12 months have seen the organisation complete the final phase of its role in the establishment of the competitive electricity market, in which the various transmission and generation components of Pacific Power have been separated as independent operating organisations over the past six years. This process commenced in early 1995 and concluded on 2 August 2000, when the New South Wales Government established Eraring Energy as a new, state-owned generation corporation, acquiring Pacific Power's remaining generation assets including the 2,640 MW Eraring Power Station, 375 MW of hydro facilities and wind farms at Crookwell and Blayney. Pacific Power is now substantially an energy services business with an international reputation for its technical expertise in power engineering, and a proud record of achievement over the past year. Pacific Power International (PPI) completed the construction of the Blayney Wind Farm during the reporting period, adding 10MW of renewable energy to the market for its client, Eraring Energy. It also progressed to near completion, another green energy project, upgrading Burrinjuck Hydro Power Station from 10MW to 29 MW. This sector is likely to grow rapidly as the Federal Government's recent regulatory initiatives on renewables start to take effect. Similarly, the first unit of the 849 MW Callide B Power Station in North Queensland was nearing completion by the end of the reporting period, with the second unit scheduled for completion by the end of the current calendar year. PPI has the lead role in this development project, as we do for the construction of a 450 MW advanced coal-fired power station at Tarong North, also in Queensland. Construction at Tarong North commenced in earnest during the reporting period, with the project scheduled for completion in 2003. PPI's strong position in the Vietnamese market was reaffirmed in winning a major new contract to act as Owner's Engineer on the Uong Bi coal-fired Power Station, which will follow on from the successful work being undertaken by PPI on the Pha Lai project. All of this new activity was carried on at the same time as the organisation readied itself for the next phase of reform, with the New South Wales Government indicating its intentions to establish Powercoal and Pacific Power International as separate corporate identities and to wind down, and eventually cease the operation of Pacific Power. This process should be completed over the next 12 months, with this report likely to be the last of its kind for Pacific Power as an entity. Pacific Power has built an outstanding reputation over the past five decades, reflecting the history of achievement of the organisation through the skills and dedication of its people. Our last tasks are to rigorously prepare the remaining wholly owned subsidiaries for a successful future. I am pleased to report that this process is well advanced and on track. The people of Pacific Power have made this organisation great. I would like to take the opportunity to wish each of you a happy and prosperous future and to thank you for the part you have played in the development of this organisation, and indeed the development of New South Wales. [Emphasis added] 24 On 1 July 2003 the Pacific Power (Dissolution) Act 2003 No. 17 commenced which created RBMC with the purpose of employing the remaining employees and finalising all business of Pacific Power that had remained the responsibility of the New South Wales Government. 25 Mr Fernon brought evidence from Mr Sam La Spina who has been engaged by RBMC in the position of Human Resources Manager from 15 September 2003. 26 Mr La Spina's affidavit (exhibit 59) contains an outline of events from formation of RBMC, describing the relevant events at paras 6, 7 and 8 of ex 59 in the following terms: 6. As a result of the dissolution of Pacific Power, a total of 335 Pacific Power employees remained displaced as at 11 February 2002. Of these 335 employees, 122 accepted the Pacific Power voluntary redundancy package and secured permanent positions with Connell Wagner. Connell Wagner was the purchaser of one of the subsidiaries of Pacific Power, Pacific Power International ("PPI"). 90 employees accepted the Pacific Power voluntary redundancy package and exited the organisation on 11 February 2002. 7. When RBMC was initially formed in 1 July 2003, there were approximately 122 employees who became employed by RBMC. These employees were those employees remaining after the divestiture of Pacific Power International ("PPI") who had not taken positions with the purchaser of PPI, Connell Wagner. As at the date of making this affidavit, 44 employees remained in the redeployment pool and elected the Pacific Power voluntary redundancy package at a later date. 23 employees have been successfully placed into permanent positions within State-Owned Corporations or Government agencies. RBMC continues to employ approximately 55 employees. These employees are situated in premises in: (a) Hunter Street, Newcastle (the "Newcastle Site"); (b) at Kent Street, Sydney (the "Sydney CBD Site"); and (c) at Wallerawang, near Lithgow ("the Wallerawang Site"). I am based at the Sydney CBD Site. 8. I have annexed a true copy of a schedule, prepared by me, which sets out the numbers of employees who have been employed by RBMC since its inception. This table includes a summary of the numbers of employees to the current date. There are currently 48 employees employed by RBMC covered by the PPEC Award: (a) 17 employees in the re-deployment pool; namely those employees actively seeking work with the assistance of RBMC. See paragraph 16 and following below; (b) 25 employees on secondment to other State-Owned Corporations or Government Agencies; (c) 2 employees in 8 week career transition, which means the employees have elected voluntary redundancy and in the process of exiting RBMC; and (d) 4 employees are retained to complete two outstanding energy contracts which were entered into by Pacific Power. This schedule is annexed and marked with the letter "SLS3". 27 Mr La Spina deposed that he had visited the Newcastle site on approximately four occasions and the Wallerawang site on two occasions 28 Mr La Spina described the functions of RBMC and his role with the organisation in the following terms (p 9 TR 14/3/05): Q: Just for an overall position what is the role of RBMC? A: RBMC is a wind-up organisation as part of the vestiture of Pacific Power. Residual Business Management Corporation was set up as the entity to resolve all outstanding contractual obligations and employees. My role within the redeployment pool is to manage the redeployment pool and the displaced employees for one of two things - to train and coach for redeployment purposes or to train and coach for the purposes of exiting through redundancy. 29 Mr La Spina deposed that this process had been very successful, describing the process in the following terms (p 10 TR 14/3/05): Q: Just by way elaboration you say that these employees report to work and then their main duty is to find work. I just ask you to elaborate what's involved in that exercise? A: Their day essentially is coming in, switching on the computer, checking the websites for various jobs, they're required to essentially job search and initially make contact with potential employers. We have coaches available that will assist any of the employees if they have found a particular job or they've been matched to a job to assist them with their resume writing and application writing but other than that - that is essentially all they do is come into the office and sit there. 30 Mr La Spina deposed that job searching was available through a number of avenues, including access to the Redeployment Relocations Services Unit of the Premier's Department, formerly known as the Workforce Management Centre; a Vacancy Notification Scheme within state-owned corporations and internet search. 31 Mr La Spina deposed that the Vacancy Notification Scheme required an enquiry by a state-owned corporation to RBMC on exhaustion of the recruitment processes. The enquiry is forwarded by email to all RBMC personnel who self-refer to the state-owned corporation. 32 Mr La Spina deposed that the process of placement had been very successful, putting that the secondment process was the more effective method with the twin advantages of finding alternative employment and maintenance of skills of the individuals. This evidence of Mr La Spina is in the following terms (p33 TR 14/3/05): Q: Could I suggest to you therefore that if you eliminated over 85 percent or nearly 90 per cent of your workforce in 20 months that the organisation has been quite productive in cutting its recurring overheads? A: That is the point of the organisation. That is a point of its existence - is to - it's a wind down operation. Effectively the purpose of that is to wind down the business and it is a program that was initiated as part of the secondment to stimulate individuals to obtain gainful employment elsewhere. Q: And do you regard the process, do you not sir - that in the space of 20 months having the workforce reduced from 122 to 14 as being a successful process? A: I believe its been quite successful. 33 Mr La Spina acknowledged that the unions had been supportive of the secondment scheme. 34 Mr La Spina maintained the view (earlier expressed at p23 TR 14/3/05) that employees on secondment do not provide a service to RBMC, and that whilst working on secondment in a state-owned corporation, the State of New South Wales received an indirect benefit of the work undertaken as the main thrust of the secondment, in his evidence, is the maintenance of skills. 35 Mr La Spina did not include time spent by RBMC employees participating in cross departmental interview panels as time on secondment as he deposed that this was a voluntary activity, arranged directly between the Government agency requiring a neutral member for an interview panel, and the individual/s concerned, and he did not have accurate records of who had been involved or to what extent. 36 It is Mr La Spina's evidence (pp 24 and 25 TR 14/3/05) that where an employee of RBMC obtained secondment to a state-owned corporation the individual was paid their existing rate of pay by RBMC; the existing rate of pay being that prescribed by the 2002 Award for the applicable salary point. Mr La Spina deposed that where the work undertaken by the RBMC employee was of higher value, the individual would need to demonstrate that they could perform the inherent requirements of the position and agreement reached for the state-owned corporation to pay the additional monies. It is Mr La Spina's evidence that where a state-owned corporation did not want to pay any additional amount, RBMC was unable to do anything about it. 37 It was Mr La Spina's evidence (p 29 TR 14/3/05) that he was in continual contact with state-owned corporations in seeking secondment opportunities. 38 In re-examination Mr La Spina deposed that he was not aware of any problems concerning payment of higher wages to employees on secondment. 39 Mr La Spina's evidence is that he had formed the view that RBMC employees on secondment were adequately remunerated for that work. 40 Mr La Spina confirmed (p 26 TR 14/3/05) an active stream of email communication from Mr Gill detailing difficulties with the process. Mr La Spina acknowledged that all state-owned corporations had not complied with the processes and that it had taken considerable effort on his part and that of the Unions, working through the New South Wales Treasury, to "get them into line". Memorandum of Understanding (MoU) 41 The evidence of Mr La Spina is that he was not involved with the making of the MoU, which he put was negotiated in late 2002 and early 2003. Mr La Spina's evidence is that he is aware of the terms of the MoU (Attachment SLS4 to exhibit 59). 42 The MoU is a comprehensive document negotiated between Pacific Power and the Labor Council of New South Wales. The preamble sets out the purpose and scope of the document in the following terms: 20 December 2002 MEMORANDUM OF UNDERSTANDING: EMPLOYEE ARRANGEMENTS FOR THE SALE OF PACIFIC POWER INTERNATIONAL (PPI) AND THE CLOSURE OF PACIFIC POWER Preamble This Memorandum of Understanding (MoU) constitutes the entitlements and benefits available to employees of Pacific Power arising out of the sale of Pacific Power International (PPI) and the closure of Pacific Power. The MoU shall have application from 20 December 2002 until 12 months after an individual employee is declared surplus (in accordance with the section on salary maintenance in Section 3 of this MoU). During this period, this MoU applies to employees of Pacific Power and any remaining public sector entity after the closure of Pacific Power, which retains the business or part thereof of Pacific Power and continues to employ persons previously employed by Pacific Power ("the Remaining Public Sector Entity"). To the extent that the MoU and its attachments conflict with or provide an enhanced employee benefit compared to any benefit existing at the time of commencement of the MoU, this MoU and its attachments shall apply to the exclusion of the pre-existing benefit. The MoU and its attachments shall not establish a precedent within the New South Wales public sector and constitutes the entirety of the benefits available to employees of Pacific Power and PPI arising out of the sale/closure. 43 The MoU proceeds to detail exit arrangements for Pacific Power and PPI, and Government sale requirements regarding the employment of staff. New South Wales Government policy on managing displaced employees is outlined in the following terms: The process of redeployment for staff who do not elect to take VR will be conducted in accordance with the provisions of the NSW Government Policy on Managing Displaced Employees (MDE). This policy states that displaced employees whose positions are excess to requirements are considered before vacancies are advertised. Redeploying staff are assessed against the criteria of whether the officer: Meets the essential requirements for the job; and/or Can perform adequately or is likely to perform adequately in the job in a reasonable period of time given access to appropriate training. These criteria provide displaced staff with opportunity for placement into new jobs without an open competition process. Employees covered by this agreement who are redeployed will do so at their existing salary or up to 5% or 1 grade above their existing salary unless the employee elects to seek a position at a lower salary. 44 The MoU also details redeployment arrangements including detailed provisions for voluntary redundancy (VR), a vacancy notification scheme, and salary maintenance. It is appropriate to quote the terms of the salary maintenance provisions of the MoU at this point: Staff covered by this MoU who are seeking redeployment, and whose positions are declared surplus under the terms of this MoU, will be guaranteed salary maintenance for 12 months from the date of being declared surplus. Employees in PPI will be declared surplus on the date of sale of the PPI Business. Unless Pacific Power notifies employees otherwise, the date of being declared surplus for the remainder of employees under this MoU will be the 31 December 2002 (the general surplus date). Individual employees and Pacific Power may negotiate that an individual is declared surplus at an earlier date if the employee and Pacific Power management both agree. Salary maintenance will only be continued after 12 months if employees are able to demonstrate a commitment to seeking opportunities for alternative employment using the criteria set out in Attachment 6 of this MoU. This replicates the arrangement in the November 2000 Agreement on Management of Employees During the Reorganisation of Pacific Power. 45 The MoU also details arrangements for employment conditions following redeployment, mobility of staff entitlements following redeployment, superannuation, and relocation arrangements. 46 Item 4 of the MoU details career transition, including the sale of computer equipment, the provision of outplacement services, skills training and career management, encouraging excess and potentially displaced staff to register with the Workforce Management Centre for redeployment, voluntary employee assistance and health assessment programs, and communication strategies. 47 Section 5 of the MoU, titled Additional Measures, details arrangements under the headings: · Employees who are required by Pacific Power to continue working for Pacific Power past the general surplus date. · Dispute Resolution Process, which states: A Dispute Resolution Committee will be established consisting of one representative from each of Pacific Power or the Remaining Public Sector Entity, the Labor Council and an Independent Appointee. This Committee will seek to resolve any grievance regarding the application of this MoU for redeployment and VR. · Process Committee, which states: A Process Committee will be established to review the administration of Career Transition. The Process Committee is of a consultative nature and is intended to periodically review the application of principles in this MoU. The Committee will be comprised of no more than 3 representatives including one from each of Pacific Power Management (or the Remaining Public Sector Entity), Labor Council and Treasury. 48 There are six attachments to the MoU dealing with: (i) VR termination payments (ii) Process for VR (iii) Use of funds for job assistance scheme (iv) Vacancy Notification Scheme (v) Career transition support (vi) Salary maintenance policy (vii) Frequently asked questions on VR (issued to staff in October 2002) (viii) Frequently asked questions on redeployment (issued to staff in October 2002) 49 It is appropriate to repeat attachment 6, Salary Maintenance Policy: • Salary maintenance will be continued on the proviso that employees are able to demonstrate commitment to seeking external opportunities for alternative employment and any internal vacancies (including redeployment opportunities), using the criteria set out below. • The review will commence within the initial 12 months salary maintenance period, and will be ongoing. Throughout the review process employees will be provided with assistance and access to counselling in relation to their performance. • At any time after the end of the guaranteed minimum 12 months salary maintenance period, where an employee's performance against the criteria is not satisfactory, the employee will be given a month in which to meet the performance criteria. If, by the end of that month the employee meets the performance criteria, salary will be maintained. Should the employee's performance fail to meet the criteria either by the end of that month, or at any subsequent review time, salary will be adjusted to reflect the appropriate rate of pay determined through job evaluation, for the work being done. In the event that problems and difficulties arise from the application of this policy, the Dispute Resolution Committee will be used to resolve the matters. An employee's continued access to salary maintenance beyond the guaranteed 12-month period shall be determined by the ongoing achievement of a satisfactory overall evaluation of performance against the following review criteria: • Acceptance of appropriate special projects and performing other suitable work as directed while awaiting redeployment and/or alternative external employment. • Seeking a mix of opportunities, including acceptance of any training and development opportunities offered. • Acceptance of the first or second suitable offer for a redeployed position. • Demonstration of concerted efforts to locate alternative employment external to Pacific Power, as evidenced by the employee: - taking advantage of the range of individually tailored employment service offered by Pacific Power or the Remaining Public Sector Entity; or - actively pursuing employment through self-initiated job search activities, such as responding to press advertisements and/or cold canvassing potential employers, and/or by pursuing alternative employment services. § Continued maintenance of a satisfactory punctuality, safety and work output record. and the final question of attachment 8: What arrangements will be in place for staff seeking redeployment in the public sector following the sale of PPI and the closure of Pacific Power? Issues relating to the ongoing structure and corporate identity of Pacific Power following the sale of PPI and the closure of Pacific Power are currently receiving consideration by the Sales Advisory Team. At this stage no firm decision has been taken so it is premature to answer these questions. Staff will be fully informed at the earliest possible time. All appropriate infrastructure and equipment will be available for staff actively seeking redeployment. All staff actively seeking redeployment will be allocated a case manager and be required to participate in activities and training designed to maximise placement opportunities. 50 The MoU is an unsigned document which the parties have applied as a guide to conduct, rights and obligations since its creation. 51 The evidence of Mr La Spina is that at 7 March 2005 a total of 335 employees remained displaced. This is detailed in Attachment SLS1 to Exhibit 60 in the following terms: 1. A total of 335 Pacific Power employees remain displaced 2. Of these 335 employees, 122 accepted the Pacific Power VR and secured permanent position with Connell Wagner 3. 90 employees accepted the Pacific Power VR and exited on 11 February 2003 4. 64 employees who remained in the redeployment pool, elected the Pacific Power VR at a later date 5. 2 retired through ill health 6. 4 employees have remained to complete Engineering Procurement Construction (EPC) Contracts. All have accepted Pacific Power VR. EPC estimated completion date end 2005. 7. 38 employees have been successfully placed into Government Agencies or State Owned Corporations (SOC). 4 employees at RFS start date 1/4/05. 8. 4 employees are seconded to Government Agencies or State Owned Corporations (SOC's). 9. 10 employees remain in the redeployment pool. 52 Attachment SLS6 to Exhibit 61, an affidavit sworn by Mr La Spina on 18 February 2005, states that there were 17 people in the Redeployment Pool with varying experience in secondment. Seven people had been on secondment in excess of 50 percent of the time. 53 Where an employee is placed in a secondment position, the "host" employer is not required to pay the employee's salary, however, will be liable for any payment in excess thereof. 54 Mr La Spina was unable to offer any explanation as to why some people had not had any secondment, putting that it was really a matter for them to put themselves forward. 55 At the conclusion of Mr La Spina's evidence two enquiries were made from the Bench. Transcript of those questions and answers is provided herewith (p38 TR 14/3/05): HIS HONOUR: Q. Mr La Spina can I take you to SLS4 of your first statement which is in fact the memorandum of understanding and at page 4 it says there's a provision for salary maintenance. It provides that salary maintenance would last for only 12 months and the second paragraph says, "Salary maintenance will only be continued after 12 months if employees are able to demonstrate a commitment to seeking opportunities for alternative employment using the criteria". To you or has anyone to your knowledge formally extended the salary maintenance beyond 12 months or formally advised any individual that they'd failed to meet that criteria and their salary maintenance was being curtailed? A. No. We have - as part of the MOU there was a 12 month guarantee of salary maintenance. There was a letter from John Pierce the Assistant Secretary to the Treasurer I believe where that was clarified where the salary maintenance would continue until March '05 on the proviso that individuals would meet the criteria set out in - I think it's attachment 6 or 7 of the MOU. As part of my tenure at RBMC I have met with all the individuals and had a discussion of what their future prospects would be in terms of work or getting into a position of where they would accept work outside of the public sector. Q. Thank you. We'll take you now to the last document attached to your last statement which is SLS6 which gives me the time and days and percentage of people in the pool and on secondment. It would seem that there were six people that never had any secondment at all? A. That's correct. Q. How is it then for example that Mr Azzam has had no secondment? A. It's been really a situation where an individual can either identify a position and make me aware of it or alternatively I go and solicit secondment work for individuals. There's been limited opportunities and it's really being based on past experiences and their knowledge of managers to try and stimulate some work and in some instances individuals have just not put up their hand for secondment. I'm not suggesting Mr Azzam has. But in some situations that has been the case. Q. So you're not aware of any particular circumstances where these would be managed by exception? A. No. AWARD PRESCRIPTION 56 Employees of RBMC are employed under the 2002 Award and are paid a salary pursuant to the 40 point salary scale prescribed by the award. 57 The 40 point salary scale was initially created in the Electricity Commission of New South Wales Employees Consent Award (1992) 269 IG 896 and remains the salary structure for TransGrid, Macquarie Generation, Delta Electricity and Eraring Energy. 58 The 2002 Award prescribes classifications of Administrative Officer, Engineering Officer, Professional Officer Operator and Power Worker. Employees are appointed to positions in a classification and the position valued in terms of salary points from the 40 point scale. Trades and non-trades classifications are placed in the 40 point scale on the basis of a skills development program, whilst other classifications are appointed to positions which are valued in terms of the 40 point scale by the Cullen Egan Dell job evaluation system (which is now known as Mercers). Clause 9, Classification Advisory Committee, of the 2002 Award details a consultative process for review of job evaluations. The committee prescribed by cl 9 recommends appropriate salary points for a position which can include consideration of alteration of salary points on the grounds of altered circumstances, errors, anomalies or creation of a new position. This process is consultative and predominantly internal, with rare appeals to this Commission. 59 The current application seeks to increase RBMC employees' rates of pay by increasing the 40 point salary scale in line with movement in the 40 point salary scale with TransGrid, Macquarie Generation, Delta Electricity and Eraring Energy. 60 The 2002 Award was made by consent of the parties in proceedings which took place on 15 November 2002 and 2 December 2002 before the Commission as presently constituted. 61 Clause 2 of the 2002 Award, Intent, Commitment, Scope and Duration, specifies that the award will be effective from the first pay period to commence on or after 15 November 2002 for a period of one year. Wages as described by the 40 point salary scale found in cl 5 are operative from 26 November 2001. There is no further increase in rates during the course of the award. 62 Clause 2.5, Leave Reserved of the 2002 Award provides: Leave is reserved for the parties during the term of this award to apply to the Industrial Relations Commission of NSW seeking a further variation to Clause 5, Salaries and subclause 6.1 Location Allowances. 63 The making of the 2002 Award was a difficult process involving a range of disputation between the parties, dealt with by compulsory conference proceedings and recommendations of the Commission detailed in part in the evidence of Mr La Spina (exhibit 59 Att. 6) THE UNION'S EVIDENCE 64 Mr Barnes brought evidence from Mr Geoffrey Brands, Mr Colin Brann, Mr Harinderpal Chawla, Mr Stephen Fisher, Mr Roman Migocki, Mr Nicholas Sollazzo, Mr Ian Turnbull, Mr Howard Bates, Mr Eric Legge and Mr Mark Gill all of whom are or were employed by RBMC. All employees of RBMC brought to give evidence have in excess of 10 years service with the EC and its successors. 65 Further evidence was brought from Mr Gordon Brock, Senior Industrial Officer for the Association of Professional Engineers, Scientists and Managers Australia ('APESMA'). Mr Geoffrey Brands 66 Mr Brands commenced employment with the Electricity Commission of New South Wales ("the EC") as a Fitting and Machining apprentice in December 1987 and upon completion of his apprenticeship in 1991 attained a position at Bayswater Power Station. In February 1993 Mr Brands was appointed as an Engineering Officer/Non Destructive Testing Technician at the EC facility at the Advanced Technology Centre, Callaghan Campus of the University of Newcastle. 67 Mr Brand's evidence is that when the EC became Pacific Power in 1994 a memo (attachment 1 to Exhibit 22) was sent to all staff from the Hon. Michael Egan, Treasurer and Minister for Energy, as he then was, stating that there would be no forced redundancies, forced transfers or reduction of entitlements. This communication, dated 24 October 1995, states: MINISTER FOR ENERGY NEW SOUTH WALES, AUSTRALIA TO: PACIFIC POWER EMPLOYEES FROM: MICHAEL EGAN, TREASURER & MINISTER FOR ENERGY DATE: 24 OCTOBER 1995 SUBJECT: PACIFIC POWER RESTRUCTURE After extensive public discussion of the report by the Generation Reform Working Group, led by the Chairman of Pacific Power Professor Fred Hilmer, cabinet has adopted a plan to restructure Pacific Power's generating capacity into two state owned corporations, and again ruled out privatisation. One corporation is to contain Liddell and Bayswater power stations, while the other will have Mount Piper, Wallerawang, Vales Point, Munmorah and Eraring. The plan calls for the second corporation to be structured as a holding company with two subsidiaries one of which contains Eraring. This will leave open the option of linking Eraring with a publicly owned generator in another State which would facilitate the operation of the national electricity market. The plan will be put to a Government party meeting in the near future and will include legislation that will prevent privatisation without the approval of both Houses of Parliament. Pacific Power's coal mining, services and other non-coal fired generating business activities will initially stay as they are. Over the next few months the Government will be considering proposals for restructuring these activities into commercially viable businesses that maximise the value of the State's investment, particularly in Research and Development and environmental protection, and promote competition in the supply of goods and services to the power stations. Through your collective efforts over a number of years, Pacific Power has recorded substantial performance improvements. These gains were made possible by a shared commitment to better outcomes for your customers and the community. [Emphasis added] The restructuring of Pacific Power allows us to build on these past achievements within a competitive, customer driven national energy market and to balance the interests of all stakeholders. The two generation businesses will have every opportunity to succeed within the national market by offering a competitive product, bringing increases in income and employment to New South Wales. The Board of Pacific Power will be responsible for the development of detailed recommendations on the restructuring and, subject to Government approval, their implementation. The generation corporations will be established for the commencement of the interim State electricity market, scheduled for March 1996. In discussions with Pacific Power unions I have guaranteed that the restructuring will take place with no forced redundancies, no forced transfers and no reduction of entitlements. Implementation will be co-ordinated with a high level consultative committee established with the unions. I am aware that the question of the appropriate structure of New South Wales generation has meant that you have been working under a cloud of considerable uncertainty. This decision, and those which are to follow, give a clear direction for the future and allow both management and employees to plan for the challenges and opportunities which the reforms present. [Emphasis added] 68 Mr Brands was appointed as Engineering Officer/Condition Monitoring Technician in September 1997 with Pacific Power at the Advanced Technology Centre where he remained until the sale of PPI when he was transferred as a displaced employee to RBMC. 69 Mr Brands evidence is that in late 2002 the Hon. Michael Egan requested state owned corporations to participate in a Voluntary Notification Scheme (VNS). Mr Brands stated that apart from four weeks secondment at Vales Point Power Station in August/September 2003 he has been unable to gain employment having unsuccessfully applied for four positions through the VNS and one external position in which he was also unsuccessful. 70 Mr Brands provides extensive evidence of requests for re-deployment, training and secondment, all of which were unsuccessful. 71 Mr Brands deposed that his salary has not altered since November 2002 despite increases in the cost of living which have eroded purchase power with a negative effective on his standard of living. Mr Brands further deposed that the value of superannuation has been adversely affected as his contributions and employer contributions have not increased. Mr Brands' evidence is that the value of his superannuation was some $40,000 less than an employee on the same salary point employed by Eraring Energy. 72 Mr La Spina acknowledged the difficulty in placement of Mr Brands, deposing that Mr Brands has received financial assistance to undertake a Bachelor of Engineering Mechatronics at the University of Newcastle. Mr Colin Brann 73 Mr Brann commenced employment within the electricity industry as an apprentice Electrical Fitter/Mechanic in 1970 and after working as Testing Officer/Testing Group Sydney City Council attained employment with the EC in 1978 as Technical Officer/Transmission Supply Group (Sydney). 74 Mr Brann deposed that he was employed within the EC in different capacities until 2001 when he became Specialist Design Engineer/Engineering/Electrical and Control Systems/Electrical Group (Sydney) Pacific Power International, remaining until February 2003 when he elected to stay with the public sector and was placed with RBMC. 75 Mr Brann deposed that he has participated in all redeployment processes established and involved himself within the VNS having applied for nine positions within different electricity organisations. 76 Mr Brann deposed that he had been seconded to EnergyAustralia as Project Manager (Homebush Enserve) from November 2003 on his RBMC rate of pay, which he deposed was to the order of 10 percent less than the EnergyAustralia rate paid to employees undertaking the same work. Since the secondment Mr Brann has gained permanent employment within EnergyAustralia as a Project Engineer. 77 Mr Brann's evidence is that since November 2002, at which time a 1% pay rise was awarded, he has not received a pay increase and on comparison with the equivalent salary level within his current organisation he was at a significant loss. 78 Mr Brann deposed that without a rise in RBMC pay scales similar to those implemented within the other electricity corporations, potential superannuation benefits are greatly reduced. 79 Mr La Spina deposed that comparison of RBMC and EnergyAustralia pay scales is difficult, adding that it was open to Mr Brann to contest his salary during the period of secondment. Mr Harinderpal Singh Chawla 80 Mr Chawla began his career with the electricity industry in India in the early 1970's as an electrical engineer and after emigrating to Australia attained employment with ACT Electricity Authority Canberra in 1985. 81 Mr Chawla's evidence is that he commenced with the EC in 1986 as Professional Electrical Engineer/Transmission/Plant Branch and remained with the organisation until the sale of PPI, at which time Mr Chawla was transferred to RBMC. 82 Mr Chawla has been successful in attaining permanent employment within EnergyAustralia following a secondment period of approximately four months, deposing that his current salary is substantially higher than what was received while on RBMC secondment rate of pay. 83 Mr Chawla's evidence is that he was paid at salary point 34 by RBMC and was assessed by EnergyAustralia at salary point 55 of the scale applicable within EnergyAustralia. 84 The EnergyAustralia Award 2003 ("the EnergyAustralia Award) 342 IG 402 provides a salary scale of different dimension to the electricity generators. Mr La Spina deposed that it is no possible to align the two scales to establish equivalents, and accordingly no valid comparison can be made. Mr Chawla deposed that alignment can be achieved by use of job evaluation processes relevant to each scale. 85 Both organisations use job evaluation methods to establish pay points for a particular task or set of tasks. Subject to the imperfections of structure and application of any job evaluation system, it is possible to arrive at an equivalent salary for the same job in each of the pay scales. 86 Mr Chawla deposed that the lack of salary progression experienced within RBMC has impacted on superannuation entitlements as these are dependent on final salary. Mr Chawla's evidence is that he has not received a pay increase since November 2001 which has resulted in a significant loss to him. Mr Chawla's evidence is that the position at EnergyAustralia is valued from $145 pw to $242 pw more than he was paid by RBMC and the same salary point under the Eraring Energy Employees Consent Award 2004 (the Eraring Energy Award) 345 IG 940 would be paid an additional $204 per week. Mr Stephen Fisher 87 Mr Fisher has been involved with the electricity industry since July 1980 when he commenced employment with the EC as a carpenter. 88 From 1984 to 1990 Mr Fisher worked as a leading hand carpenter, civil inspector and building foreman for various periods. 89 In 1990 the Homebush Regional Centre was closed and Mr Fisher, having elected redeployment over redundancy, was employed as a civil inspector overseeing a stores refurbishment project, eventually returning to carpentry and general maintenance duties on completion of the project on a salary six points below that of a civil inspector. 90 Mr Fisher rejected further offers of redundancy and in subsequent consultation with immediate management, committed to a career in material supply. Mr Fisher was appointed to the position of Purchasing Officer in the Pacific Power Hyde Park offices and, at the request of management, undertook the Purchasing and Supply Certificate Course of two years duration conducted by TAFE. 91 On completion of this course Mr Fisher was assigned the additional duties of liaison with site staff on technical issues and undertook technical evaluations. 92 On disaggregation of Pacific Power Mr Fisher became part of the Engineering Services Group, then in 1998 became a commodities buyer in PPI. 93 It is Mr Fisher's evidence that he has participated in the VNS and WMC matching process with minimal success. Mr Fisher deposed that he is prepared to work wherever his skills and qualifications will be utilised. Mr Fisher's evidence is that he genuinely believed he would be redeployed in a manner similar to his previous experiences. 94 Mr Fisher's evidence is that he is paid at salary point 20 ($896.40 per week) which has not moved for three years resulting in an adverse effect on superannuation benefits. Mr Fisher put that the equivalent rate of pay on salary point 20 at Eraring Energy is $1023.26 pw; TransGrid $1079.30; Delta Electricity $1006.20 and Macquarie Generation $1013.90, noting that a multiplier effect magnified the disadvantage to him. Mr Roman Migocki 95 Mr Migocki commenced employment with the EC in 1979 as Technical Officer Grade 1. Mr Migocki's career advanced to Senior Technical Officer by 1987 and in 1990 he was appointed Senior Technical Officer Grade 2. Mr Migocki was appointed to the position of Engineering Officer (Branch Planner) in 1993. Mr Migocki's evidence, not challenged, is that for diligence and dedication to duties and as recognition for extra efforts during preparation of major bids he was elevated to salary point 30, the top of the salary range for his position. In 1998 Mr Migocki was appointed Information Technology Support Officer for PPI. 96 Mr Migocki's evidence is that in 2002 when PPI was being reorganised he joined PPI's Services Group as Information Technology Contracts Administrator, where he remained until the demise of Pacific Power in June 2003. 97 It is Mr Migocki's evidence (unchallenged) that he worked a lot of unpaid overtime in the hectic period of winding up Pacific Power. Mr Migocki subsequently referred to this period as having actively supported a Government initiative unknowingly to his own disadvantage. 98 Mr Migocki is 57 years of age and has contributed to the State Superannuation Scheme (SSS) throughout his employment. It is Mr Migocki's evidence that he rejected a "better paid" position in private industry in 1988 on the basis of security of employment in the public sector and his commitment to the SSS. Mr Migocki deposed that, considering his age and commitment to superannuation, his only option on the demise of Pacific Power was re-deployment in the public sector. 99 Mr Migocki deposed that for these reasons he did not apply for a position with Connell Wagner. Mr Migocki deposed that he declined to take the redundancy package offered as he felt he should continue to contribute rather than take redundancy and go into retirement. 100 Mr Migocki's position was declared redundant on 30 May 2003. 101 Mr Migocki experienced a period of secondment with Eraring Energy from 24 May 2004. 102 Mr Migocki's evidence is that he actively sought placement in another position but was wrongly matched (both in qualifications and experience) twice by the Workplace Management Centre; and on another occasion was sent to an interview for a position which required excellent knowledge of specific procedures. Mr Migocki used his information technology skills to assist other employees within RBMC. Mr Migocki notes in his evidence that his salary was frozen at the December 2002 level, despite undertakings from Treasury that employees would not be disadvantaged. 103 Mr Migocki undertook two short training courses and made several unsuccessful applications for employment until being appointed Information Technology Business Support Officer at salary point 27 with Eraring Energy, commencing on 15 November 2004. The work required of him in this position is described as very similar to that undertaken for Pacific Power at the time of being declared surplus. 104 Mr Migocki deposed that despite a reduction from salary point 30 to salary point 27 he is paid approximately $20.00 per week more under the Eraring Energy Award than he was at salary point 30 under the 2002 Award. Mr Nicholas Sollazo 105 Mr Sollazzo commenced employment with the EC in February 1971 remaining with the EC until the sale of PPI at which time he was transferred as a displaced employee to RBMC located in Newcastle. 106 Mr Sollazzo's evidence is that he received the guarantees of no forced redundancy and no disadvantage from the NSW Treasurer in the same terms as other employees. 107 Mr Sollazzo takes issue with the assertion by management that the reform process was concluded in 2000/2001 with the establishment of Eraring Energy. 108 It is Mr Sollazzo's evidence that up to and during the time of sale of PPI he was committed to and actively employed in the role of Consultant/Machine Condition Monitoring servicing the power stations and paid at salary point 30, which is now $178.26 pw (or 14%) below the equivalent salary point 30 at Eraring Power Station. 109 Mr Sollazzo deposed that he was prevented by management from taking up available positions at power stations. At para 10 of exhibit 30 he states: 10. During my employment period at Pacific Power's/Advance Technology Centre there have been various voluntary redundancy packages and 'mix and match' positions at various Power Stations. But because my position was regarded as essential to the business at the Advance Technology Centre I was not allowed to participate in these opportunities. 110 Mr Sollazzo deposed that he did not seek employment with Connell Wagner on the sale of PPI as the negative effect on his superannuation made that course non-viable for him. 111 Mr Sollazzo's evidence is that, given his specialist skills, it has been difficult for him to find a position outside power generation. 112 Mr Sollazzo has had two periods of secondment with Delta Electricity, in which he was able to apply his skills and experience to substantial tasks of material benefit to Delta. Mr Sollazzo deposed that he was ready and willing to take up a position with any of the Electricity Generators and would retrain if needed, and that he was increasing his information technology skills on his own initiation. 113 Mr Sollazzo deposed that he has not received a wage increase since November 2002 which has reduced his purchasing power and greatly affected superannuation pension entitlements, which he details in Exhibit 32A as a reduction in retirement benefits of $95.41 per fortnight on early retirement and up to $426.51 per fortnight on retirement at age 60. 114 Mr La Spina disputed an assertion by Mr Sollazzo that he had been paid less than equivalent employees of Delta Electricity when working on secondment. Mr Ian Turnbull 115 Mr Turnbull began his career within the electricity industry as a Boilermaker in 1977 with the EC at Munmorah Power Station where he remained until 1982 when transferred to Bayswater Power Station in the capacity of Power Station Construction Welding Inspector. 116 Mr Turnbull deposed that he was transferred back to Munmorah Power Station after the EC's Power Projects Division was disbanded in 1989. 117 It is Mr Turnbull's evidence that on appointment he suffered a reduction of one salary point on the basis that he would never have to move from his permanent location again. 118 The evidence of Mr Turnbull is that following appointment to Munmorah he was required to undertake work at Vales Point and Eraring Power Stations and in June 1999, when the EC became PPI, first at the Lake Macquarie Centre and than at Morisset. Mr Turnbull undertook work at Eraring and Bayswater Power Stations in NSW and assignments for PPI at Rockhampton, Mt Isa, Burringjuck and a one year assignment at the Phai Lai Power Plant in Vietnam. 119 The evidence of Mr Turnbull at pts 6 and 7 of exhibit 33 is: 6. After completing my assignment at the Phai Lai Power Plant project in Vietnam, I was transferred (without consultation) from Pacific Power international to Pacific Power, which contained the employees not utilised for the consultancy work that was undertaken by Pacific Power International. 7. In 2002, I was relocated to the Advance Technology Centre (ATC) due to the imminent closure of Pacific Power. Pacific Power Management informed me that even though we were being located at the ACT, we would not be eligible to be considered for a placement with Connell Wagner as part of the PPI sale process. 120 At the time of giving evidence Mr Turnbull was 55 years of age and had been engaged in the power industry for some 27 years. It is appropriate to reprint items 13, 14 and 15 from the testimony of Mr Turnbull (exhibit 33) which succinctly describe his circumstances: 13. Since being placed in the RBMC, I have undertaken training in project Management and have actively participated in all processes such as the Workforce Management Centre, career coaching and the Voluntary Notification Scheme (VNS). To this date I have been frustrated at the lack of permanent opportunities available to me under this system. With my training and experience being specialised in the Power Generation Sector, the opportunities available to me in other Government Departments are almost non-existent, other than the Power Stations. 14. I feel that I have been greatly disadvantaged over the last 3 years, as I have not had a salary adjustment since 2002. The difference in salary between my salary of $1,260.50/wk/gross, Salary Point 30, and the equivalent salary point in the other Generators are as follows; Eraring Energy $1,438.76/wk/gross, Salary Point 30; Delta Electricity $1,414.18/wk/gross, Salary Point 30; Macquarie Generation $1,442.90/wk/gross, Salary Point 30. 15. This does not take into account the lack of opportunity to increase my income through overtime and the possible allowances. This has reduced the purchasing power of my pay and has led to frustration and anxiety due to the stagnation in RBMC of my salary and the overall effect it will have to my projected superannuation entitlements in the State Superannuation Scheme, which, when extrapolated over the years, is significant. In addition I cannot transfer my sick leave accruals to another State Owned Corporation unless it agrees to take them on. 121 Mr Turnbull deposed that Pacific Power management informed him that despite being located at the Advanced Technology Centre at the University of Newcastle Campus he would be ineligible to be considered for placement with Connell Wagner as part of the sale process of PPI. 122 Mr Turnbull's position was subject to a job evaluation process which took some three years to resolve, coming to conclusion in September 2004 at salary point 31. 123 Mr Turnbull's evidence is that since being placed with RBMC he has always been ready and willing to work, having undertaken two three month secondment periods with Eraring Power Station, engaging in training and actively participating in career coaching and the VNS. 124 Mr Turnbull secured a permanent full time position at Eraring Energy in the position of Senior Maintenance Support Officer at salary point 26-30 from 14 January 2005, commencing at salary point 28. 125 Mr La Spina disputed the assertion that Mr Turnbull was paid less than the value of work performed whilst on secondment, deposing that Mr Turnbull is currently on salary point 30 under the Pacific Power Award which is equivalent to salary point 26 under the Eraring Energy Award. Mr La Spina added that Mr Turnbull would be classified as a Senior Plant Owner or Project Specialist under the Delta Electricity Employees Award ("the Delta Award") 343 IG 331 at salary point 26-30 in both classifications. Mr Howard Bates 126 Mr Bates commenced employment with the EC as a Technical Officer on 19 January 1981. Mr Bates remained in continuous employment with the EC and its successors. In 1995 Mr Bates was appointed to the position of Financial Business Manager within the Electrical Rotating Plant branch. In 1996 a further restructure of Power Plant Engineering saw the Engineering and Commercial Services portion of Pacific Power separated from Generation, providing a central service funded by all the Generators. Mr Bates' evidence is that the 360 personnel in Engineering and Commercial Services were spread across 17 departments within Pacific Power, operating on a separate budget and regarded as "non core" to Pacific Power operations. Mr Bates' evidence is that the remaining staff formed PPI, which was considered the core business. 127 The evidence of Mr Bates is that in association with a senior engineer he was responsible for the administration of the Engineering and Commercial Services budget, which was approximately $30 million in the 1996/1997 financial year. 128 Mr Bates was subject to further restructure in 1999 when approximately 91 remaining Engineering and Commercial Services staff, the majority Sydney-based, were retitled the Transitional Services Group and available work further reduced. Mr Bates' evidence is that 33 personnel were located at 418 Elizabeth Street, Surry Hills, the remaining 58 remained at the Hyde Park Square head office and continued to work as contractors to PPI. Mr Bates was appointed to the role of Administration and Finance Manager of the Surry Hills group, responsible for an annual budget of $16.3 million for the 1999/2000 financial year. 129 Mr Bates' evidence is that on sale of the Transport Division site at St Peters to the Federal Airports Corporation a further 24 staff were relocated to the Surry Hills location. 130 Mr Bates deposed that he was increasingly called upon to mentor individuals and assist them with the stress and challenges of relocation as supernumerary staff, and on occasion he recommended psychological assistance be obtained. 131 Mr Bates remained at Surry Hills until October 2002 when that location was closed. He was then transferred, together with remaining Transitional Services personnel, to Hyde Park Square and he took up a PPI Corporate Business Services role. Mr Bates continued in this role until the sale of PPI to Connell Wagner in February 2003 when he and other Transitional Services Group personnel became part of RBMC. 132 Mr Bates described his role within RBMC at paras 27, 28 and 29 of his affidavit (exhibit 41) in the following terms: Transitional Services becomes RBMC on 11th February 2003. [Date of PPI sale] 27. Since the PPI sale to CW, the dissolution of Pacific Power, and the formation of RBMC with the incorporating the MOU in our Pacific Power consent award provisions, I have been working closely with variously appointed HR Managers in discussions/negotiations on "award" interpretation and how the result of the sale directly affected remaining RBMC staff conditions. 28. My function still involves ongoing discussions with RBMC staff, Mr La Spina (our current HR manager) and Interim in encouraging them to take up offered job secondment opportunities on a trial basis within various State Owned Corporations (SOC's) and other State Government authorities. I also assist the HR Manager in looking after the ongoing maintenance of all services and maintenance of amenities at our current location, level 19 of Town Hall House. 29. Since March 2004, opportunities for RBMC staff to work as independents on State Government authority interview panels have presented. I and about 6 other RBMC colleagues have sat on numerous Interview Committees at City Rail since February 2003, to the satisfaction of the client organisation, something which is ongoing. 133 Mr Bates commenced a period of secondment with the NSW Rural Fire Service (NSWRFS) on 8 November 2004. The terms of secondment are set out in correspondence (exhibit 42), which states in part: Your remuneration will remain at the current level during the period of your secondment and will continue to be met by RBMC It is possible that a permanent position may follow this present arrangement subject to circumstances existing at the end of your initial assessment of two months i.e. by 7 January 2005 and subject to a satisfactory performance assessment of you by the NSWRFS. If not, you will return to your host agency at the expiration of the initial secondment period. Should your secondment continue past this point your remuneration will continue to be met by the RBMC until 31 March 2005 after which time you will move to the payroll of the NSWRFS. This secondment can then be made permanent by arrangement with the NSW Treasury from the beginning of the new financial year i.e. 1 July 2005. 134 At the time of giving evidence on 7 February 2005 Mr Bates anticipated permanent appointment to the NSWRFS within days. Mr Eric Legge 135 Mr Eric Legge commenced employment with the EC in 1971 where he remained in various capacities until the sale of Pacific Power to Connell Wagner. 136 Mr Legge deposed that he declined an offer of employment with Connell Wagner as at his age of 49 years it was impractical for him to relocate from the Lithgow district where he had resided for many years. Mr Legge was further motivated by superannuation considerations, putting that a move out of the public sector would be a significant disadvantage to him. 137 Mr Legge actively pursued alternate employment and secondment, seeking secondment to TAFE in March 2003 in a vacancy within TAFE he discovered though his professional contacts. This secondment did not take place as the incumbent PPI Human Resources personnel considered that it would be too difficult to achieve. 138 Mr Legge is complimentary toward Mr La Spina who was eventually able to resolve the issues, resulting in Mr Legge being seconded to TAFE from March 2004. 139 Mr Legge described the duties he undertook for TAFE to include a tutoring role at Orange TAFE, writing training guides for the mining industry and attending Wallerawang Power Station two days per week pursuant to a contract between TAFE and Delta Electricity for provision of operator training. 140 Mr Legge's attendance at Wallerawang Power Station for Lithgow TAFE developed from two days per week to five days per week from July/August 2004 and continuing at the time of giving evidence on 8 February 2005. 141 Mr Legge deposed that he was to take up an appointment with Delta Electricity as a Professional Engineer with Plant Performance, Delta Western, on three months probation from 9 February 2005. This position would be at salary point 34, an increase in remuneration of approximately $30 to $40 per week compared to Mr Legge's current rate of pay at salary point 37 under the 2002 award. Mr Colin Brown 142 The evidence of Mr Colin Brown is that he had been employed in the electricity industry for the past 34 years. Mr Brown joined the EC in 1978 and remained in continuous employment with that organisation and its successors, including RBMC. During this period Mr Brown acquired and utilised a range of skills, obtaining professional qualifications through approximately 10 years of part time studies in addition to three years as an apprentice Electrical Fitter/Machinist, which led him to appointment in 2001 to the position of Specialist Design Engineer/Engineering and Control Systems/Electrical Group (Sydney) at PPI. 143 Mr Brown's evidence is that in February 2003 he elected to remain in the public sector after several discussions with Connell Wagner concerning the position available to him and was placed in RBMC. Mr Brown deposed that the lack of career prospects within Connell Wagner and a reduction in superannuation influenced his decision. Mr Brown actively participated in the redeployment and secondment schemes which he described as an isolating and frustrating experience involving considerable stress. 144 Mr Brown's evidence, which is not challenged, is that he followed his employer's written instructions to the letter. 145 Mr Brown obtained a secondment to EnergyAustralia on 3 November 2003 where he has remained, winning a permanent appointment on merit through an open interview process from 23 August 2004. The evidence is that from secondment in November 2003 to appointment in August 2004 Mr Brown was paid in accordance with the 2002 Award, which had not moved since November 2002, and did not participate in general or productivity based wage increases enjoyed by employees of EnergyAustralia in the same position and undertaking the same duties as himself. During this period Mr Brown was paid approximately 10 per cent less than the rate determined for the work he was undertaking. 146 This, in my view, amounts to a significant injustice to Mr Brown which is compounded by the fact that his superannuation entitlements are adversely affected as they are linked to salary paid. 147 Mr Brown deposed that he had suffered the loss of eighteen months accumulated sick leave on joining EnergyAustralia. This indicates that the transition was not without loss to Mr Brown, whilst the extent of untaken sick leave reflects his good health and length of service. Mr Mark Gill 148 Mr Gill commenced employment with the EC at Liddell Power Station in 1979 in the position of Boilermaker having successfully completed his trade apprenticeship at the Newcastle State Dockyard and having worked briefly in the shipbuilding and power station construction industries as a tradesman. On taking up the position at Liddell Power Station Mr Gill relocated his young family to Muswellbrook. 149 Mr Gill undertook further study, travelling from Muswellbrook to Newcastle one night per week to obtain qualifications as a welding supervisor which led to appointment to the EC's Field Construction Group involving work on Vales Point and Eraring Power Stations, refurbishment of Liddell Power Station, construction of Bayswater Power Station and then to Lithgow for the construction of Mt Piper Power Station. 150 The Field Construction Group was disbanded in 1989 and Mr Gill moved his family from Bathurst to Swansea on appointment to Eraring Power Station. Similiar to Mr Turnbull, Mr Gill's salary was reduced by one salary point on the basis that he was now at a permanent location. 151 Mr Gill declined offers of voluntary redundancy during this period, believing that his skills and knowledge were unique to the Energy industry. On the basis of these skills Mr Gill was assigned to the rehabilitation of Munmorah Power Station in 1990 whilst remaining "officially" based at Eraring Power Station. 152 Mr Gill's evidence in his statement (exhibit 49) recites the events of disaggregation of the electricity industry in NSW from the EC to Pacific Power, to the present day, including the guarantees of no forced retrenchment and no disadvantage referred to earlier. 153 Mr Gill also provided a supplementary statement (exhibit 51) in which he gives detail of the undertakings. Attachment 1 to exhibit 51 is correspondence from the Hon Carl Scully MP, Minister for Small Business and Regional Development, Minister for Ports, Assistant Minister for State Development and Assistant Minister for Energy. This correspondence, dated 1 December 1995 and addressed in this case to Mr Chawla, states: Dear Sir/Madam I refer to your letter to the Minister for Energy, Michael Egan, concerning the restructuring of Pacific Power as recommended by the Hilmer Generation Reform Working Group. Following extensive public discussions and consultation with industry and unions, the Government has taken the decision to restructure Pacific Power into two state owned corporations. One corporation is to be made up of Liddell and Bayswater power stations, while the other corporation will act as a holding company for two subsidiaries; one containing Eraring power station, the other Mount Piper, Wallerawang, Vales Point and Munmorah power stations. The two generation businesses will be commercially viable, yet neither they nor interstate competitors will be of sufficient size to abuse market power and produce distorted pricing outcomes. In taking this decision the Government has again ruled out any prospect of future privatisation of generation in NSW and it is intended that legislation be introduced to prevent such action without the approval of both Houses of the NSW Parliament. Moreover, the Minister for Energy has assured relevant energy unions in discussions that no forced redundancies or forced transfers will occur as a result of the restructuring, nor will there be any reduction in employee entitlements. The restructuring will provide the opportunity to build upon the past achievements of Pacific Power and its employees in preparation for the interim state market and, ultimately, the national competitive electricity market. This, in turn, will provide lower electricity prices, expanded economic output and higher employment in New South Wales. 154 Attachment 6 to exhibit 51 is hard copy of overhead projection slides used in a presentation by the Market Information Group (MIG) (comprising Don Anderson, Chairman of the Pacific Power Sales Advisory Team, Mark Duffey, Nick Haralambopoulous and Nora Mulquincy) held from 20 to 24 June 2002. The presentation was given to all Pacific Power employees to provide information on: Employee Buy Out (EBO), transfer of PPI to the private sector, wind up of Pacific Power, and to establish a negotiating committee with appropriate and adequate staff representation to address all employee related issues. The EBO was a proposal for employees and/or their superannuation funds to acquire PPI which did not eventuate. 155 The present proceedings deal with the effect of the other options, ie transfer of PPI to the private sector and wind up of Pacific Power. 156 Mr Gill's evidence is that exhibit 51 was given to participants at the conclusion of each presentation. 157 The presentation referred to above included a title "Basic Principles", which states: § No forced transfer to the private sector § No forced redundancies § Opportunity for EBO § Opportunity for staff to negotiate transfer package § Protection of entitlements (including protection of existing superannuation benefits) § Opportunity for VR or redeployment 158 The "Options for Employees" were listed as: § Employee Buy Out of PPI § Transfer to new purchaser - for those offered positions § Voluntary Redundancy § Redeployment to other Public Sector Agencies 159 Exhibit 52 contains further correspondence and copies of Hansard which need not be examined closely. 160 Mr Gill's evidence is that the negotiations which concluded the 2002 Award left salaries and location allowances as leave reserved matters due to the unwillingness of PPI to negotiate a three year award sought by the Labor Council and unions to ensure employee entitlements post-sale. 161 Mr Gill produced correspondence directed to all staff from Mr R Lang, Acting Chief Executive Officer of Pacific Power dated 6 June 2002. This correspondence states in part: Status of Discussions regarding the Consent Award As previously advised, at the Consent Award meeting of 12 March 2002, Pacific Power put forward its position in respect of each item of the Labor Council and combined Unions' log of claims. These terms were unfortunately rejected at mass meetings. Since 12 March 2002, various events have taken place, which have affected Pacific Power and the terms of any new award being discussed: - The Treasurer of NSW Media Release on 6 March 2002 "Sale of Pacific Power International" announcing the NSW Governments intention to offer Pacific Power International for sale. - The Voluntary Redundancy Trigger announcement to start from 18 March 2002 - Timetable being set by the Government to progress the sale of Pacific Power International - The announcement by the NSW Treasurer of the NSW Government's intention to close Pacific Power by the end of 2002 Another Consent Award meeting was convened between representatives of the Labor Council, affiliated Unions and representatives of Pacific Power on Wednesday, 29 May 2002 in an attempt to advance this matter. Continuity of Employment Conditions At the meeting on Wednesday, 29 May 2002 the Unions raised various concerns regarding protecting employee entitlements post sale indicating that they were seeking a 3-year term to the new award and inclusion of certain employment policies into the award. The Unions' view was that a 3-year award would secure all existing entitlements post sale. Given the NSW Government's advice that Pacific Power will not be operating by the end of the year, Pacific Power is now unable to negotiate a multi-year award. It should also be noted that under the terms of sale currently being proposed by the NSW Government, there is no guarantee that our current award/industrial instrument is able to "transfer" in this form to a new owner. Pacific Power has referred the continuity of conditions to the NSW Government and is advised that employment conditions beyond the closure of Pacific Power are subject to the outcome of the NSW Government's negotiations regarding an appropriate transfer package. The MIG will be talking to staff about transfer conditions in coming weeks. It should be noted that the governments' position on employment conditions is referred to in the PPI Call for Submissions document dated 17 August, 2001, Clause 21. Employment Conditions: "A fundamental issue for the Government is to ensure that staff will not have their existing employment conditions eroded". NSW Treasury Market Implementation Group 162 Mr Gill gave evidence of a meeting he attended between a number of unions, led by the NSW Labor Council and Mr Michael Coutts-Trotter, Chief of Staff of the Treasury, in which he put that the issue of a wage increase for employees of RBMC, pursuant to leave reserved provisions of the 2002 Award covering salaries and location allowance, was raised and to which Mr Coutts-Trotter responded to the effect that: "If the unions want to pursue a pay rise they will have to do it through the Industrial Relations Commission". 163 Exhibit 52 was filed and served on 23 November 2004. The evidence of Mr Gill was questioned but is not refuted. 164 Mr Gill's evidence is that he has suffered a reduction in earnings and loss of entitlement as a result of his placement in RBMC and freezing of the award rates. 165 Mr Gill is appointed at salary point 32 which he put is $190.83 pw (or 14%) less than the rate prescribed by salary point 32 of the Eraring Energy Award. 166 At the time of swearing his statement of evidence (exhibit 49, 5 July 2004) Mr Gill was on secondment to Delta Electricity at Vales Point Power Station. This secondment commenced in May 2004 and continued to August 2004. During this period of secondment at Vales Point Mr Gill was paid $165.10 pw less than employees of Delta Electricity on salary point 32 of the Delta Award. 167 Mr Gill has had other brief periods of secondment, including recommissioning of the Burrungjuck Power Station in December 2003, and at the time of giving evidence, 21 February 2005, was on secondment to Delta Electricity at Munmorah Power Station. Mr Gill was uncertain whether this secondment would continue, expressing some apprehension that senior management of Delta would exercise an option to conclude the arrangement to avoid the risk of being "stuck" with him by Ministerial appointment or other processes on the closure of RBMC. 168 Mr Gill associated this view with a refusal by the host employers to pay the difference between his RBMC rate of pay for salary point 32 and the host award rate on previous secondments. 169 Mr Gill deposed that he raised the matter with Mr La Spina and tested the process of negotiation allegedly in place, which led him to the conclusion that the practical effect was that there was no effective process to achieve wage parity with employees of the host organisation. 170 Mr Gill deposed that he took the view that he was better to be in a host organisation demonstrating his skills: "with a view to obtaining longer term employment rather than arguing about the dollars which may pay you out of that process" (p 35 TR 21/2/05). 171 There was some acceptance as to whether the work required of Mr Gill on secondment was valued at salary point 32. The evidence is that Mr Gill is simply requested to "help" whilst on secondment and is not given a statement of duties or position description. There is no dispute that the work undertaken is genuinely required to be done, is of real benefit to the host organisation, and is consistent with the skills and experience of Mr Gill. These circumstances would point to salary point 32 as the appropriate level. 172 Mr Gill has been an active member of the USU (formerly the Federated Municipal and Shire Council Employees Union of Australia, NSW Division) from the 1980's, filling the role of delegate and job representative and participating in a range of negotiations with management and proceedings in this Commission. Mr Gill was seconded to the Australian Service Union, NSW Branch and undertook duties as a union official for a period of three months. Mr Gordon Brock 173 Mr Gordon Brock's evidence is that he has been employed by APESMA since October 1999 in the capacity of Industrial Officer, promoted to Senior Industrial Officer in 2000. Mr Brock has been engaged in providing services to members working in the New South Wales electricity distribution, transmission and generation industry. 174 The evidence of Mr Brock is that he is very familiar with the system of award regulation in place within the industry and in particular at RBMC. 175 Mr Brock's evidence described the job evaluation process applied to determine salary points drawn from the 40 point salary scale for a particular position. 176 Mr Brock's evidence is that the process within each segment of the electricity generation and distribution organisations are similar. Mr Brock deposed that he is familiar with the application of the Mercer job evaluation system. 177 Mr Brock gave evidence of his involvement in representing and assisting members of APESMA employed within RBMC. Mr Brock described his involvement with RBMC from the year 2000 and in particular from October 2004 when a dispute arose over the closure of RBMC. 178 It is Mr Brock's evidence that at October 2004 18 of the 44 employees of RBMC were members of APESMA, a large proportion of which, he deposed, were involved in work on behalf of PPI at Tarong and Callide Power Stations in Queensland and Callie Power Station in Western Australia. 179 Mr Brock's evidence is that the professional personnel employed by RBMC making up the membership of APESMA continued to be involved in productive work, either within the Contracts Group of RBMC or on secondment. Mr Brock deposed that his membership engaged in the Contracts Group continued to be paid in accordance with the 2002 Award and consequently had not received a pay increase since the one percent agreed in 2002, paid from 2001. 180 Mr Brock further deposed that his efforts to obtain a rate of pay commensurate with the work performed on behalf of members engaged on secondment had been a difficult and largely unsuccessful experience. 181 Mr Brock agreed with Mr Fernon that a mechanism for negotiated salary adjustment existed, deposing that it was not an efficient or effective mechanism. 182 Mr La Spina deposed that some employees continued to be gainfully employed until 31 July 2003 (exhibit 59 para 23). 183 Mr La Spina gave evidence of two employees on secondment to Sydney Water who had been paid at a higher rate. Mr La Spina deposed that the work of an employee on secondment may evolve over time to warrant an increase in remuneration and in these circumstances the employee concerned is able to raise the matter with RBMC who would then liaise with the host employer. Financial Effect of Restructure 184 Mr Barnes relied upon a series of reports by the NSW Treasury to demonstrate the value of reform of the Energy industry in New South Wales from 1995 to the Government of New South Wales and through it to the citizens of the State. 185 Exhibit 14 is a NSW Treasury research and information paper titled "Performance of NSW Government Business - Microeconomic Reform 1995-1996" published in February, 1997. 186 The forward to this report by the Hon. Michael Egan (then Treasurer and Minister for Energy) states in part: The Government has restructured the electricity industry with the aim of providing cheaper power, better services and a cleaner environment. … … The performance of NSW Government businesses continues to be characterised by rising productivity, falling prices, better returns to taxpayers and a reduction in total debt. While much has been achieved, the task is not finished. The citizens of NSW can look forward to improved services and better value from their government businesses. 187 At page 53 of the report specific financial information is provided in respect to the power industry in the following terms: Pacific Power has achieved impressive rates of return while delivering price reductions to its customers. The Pacific Power entity achieved an operating profit result of $521.8 million in 1995-96, and will make a 127.8 million income tax equivalent payment and a $315.7 million dividend payment to the NSW Government. Return on assets and return on equity during 1995-96 were 11.3 per cent and 18 per cent respectively. These achievements occurred while Pacific Power funded all capital expenditure internally and reduced its nominal debt from $2.3 billion in 1994-95 to $0.5 billion in 1995-96 ($1.8 billion of debt was transferred to the new generating entities). 188 Exhibit 15 is the Treasury Report on the performance of NSW Government Businesses 1996-97, published in February 1998, which reports on the impact of the Electricity Supply Act 1995 and the restructure of the market for electricity. Pacific Power, TransGrid, Macquarie Generation and Delta Electricity are separately reported for the first time. 189 Exhibits 16, 17, 18, 19, 20 and 21 are progressive reports for the period 1997-98, 1998-99, 1999-2000, 2000-01, 2001-02, and 2002-03. 190 The Treasury report for 2002-03 (exhibit 21) reports the aggregate performance of major NSW Government businesses in the following terms: 1. AGGREGATE PERFORMANCE OF MAJOR NSW GOVERNMENT BUSINESSES NSW Government businesses in the electricity, transport and water sectors account for around 86% of all NSW Government business employment. In 2002-03, the electricity and water sectors contributed approximately 82% of Financial Distributions (dividends and tax equivalent payments) from all NSW Government businesses. Accordingly, labour productivity improvements in these areas have had a significant impact on the overall performance of NSW Government businesses. The sectors comprise the following Government businesses: Electricity: Generation: Delta Electricity, Eraring Energy and Macquarie Generation; Distribution/Retail: Australian Inland, Country Energy, EnergyAustralia and Integral Energy; and Transmission: Transgrid. Transport State Rail Authority, State Transit Authority and Rail Infrastructure Corporation. Water Hunter Water Corporation, Sydney Water Corporation, Sydney Catchment Authority and State Water. 1.1 Productivity and Tax Equivalent/Dividend Payments Reforms in the electricity, water and transport sectors have resulted in considerable labour productivity improvements. Table 1 overleaf shows that the major Government businesses have achieved a weighted labour productivity improvement of 46% between 1994-95 and 2002-03. In recent years, the returns on reform have diminished as the scope for further reform has reduced. The most notable areas of productivity improvement since 1994-95 are: • Electricity Generators by 245 %; • Electricity Distributors by 80 %; • Sydney Water by 90 %; and • Hunter Water by 56 %. These gains are particularly impressive given that each of the above sectors continues to service an increasing number of customers. [Emphasis added] 191 In the applicant's written submissions (exhibit 65) Mr Barnes noted the number of employees engaged in electricity generation has diminished from 5,596 in June 1995 to 1,725 in June 2003 ( ex 65 pp 10-14). 192 It is appropriate to note at this point that the achievements of a decade of reform detailed above have been achieved in consultation with the Trade Union movement and as a matter of record in this Commission. Reform has been attended by differences between the parties, at times substantial, resolved by application of the disputes procedures mandated by s 14 of the Industrial Relations Act 1996. 193 The resolution of issues, at times vigorously pursued, has been attended by negligible industrial action, and characterised by patient and responsible behaviour on behalf of all parties. 194 The pursuit of efficiency and productivity has proceeded smoothly within the framework of the Act and the awards made pursuant to that legislation. 195 The effect of undertakings by Government of no forced redundancy, which underpinned the behaviour of the parties and supported the level of cooperation and positive debate in formal and informal proceedings contributing to the results reported above, cannot and should not be underestimated or diminished in value. 196 Mr Barnes tendered copies of awards of this Commission applicable to Eraring Energy, TransGrid, Delta Electricity and Pacific Power (exhibits 9,10,11, 12 and 13) to support an analysis of rates of pay and movement in the 40 point salary scale over the relevant period. 197 Mr Barnes further supported this information by tender of Australian Bureau of Statistics (ABS) report 6401.0 (exhibit 5) detailing movements in the Consumer Price Index. 198 Mr Barnes tabulated the award wage movements in the respective elements of the former Electricity Commission of NSW at page 9 of exhibit 4: Approximate Percentage Increases for SOC's Compared to Pacific Power (RBMC) Year Pacific Macgen Delta Eraring Transgrid Power 1995 1996 5.00% 6.00% 4.00% 5.00%* 4.00% 1997 5.00% 5.00% 5.00% 5.00%* 6.00% 1998 5.00% 2.50% 5.20% 5.00%* 4.50% 1999 4.00% 4.00% 1.50% 4.00%* 8.00% 2000 4.00% 4.00% 4.00% 4.00% 4.50% 2001 4.00% 4.00% 5.00% 4.00% 6.50% 2002 0.00% 4.50% 4.00% 4.00% 5.00% 2003 0.00% 4.50% 4.75% 5.00% 5.00% 2004 0.00% 4.50% 4.25% 4.50% 4.50% 2005 4.50% Simple Total 27.00% 39.00% 37.70% 45.00% 48.00% Percentage Interest Table 7: Percentage Increase for Pacific Power to SOC's In 1995 all State Owned Corporations had equal pay rates. *Eraring Power Station was still part of Pacific Power 199 This tabulation, supported by the aforementioned exhibits, was not challenged. 200 Mr Barnes relied upon movements in the Consumer Price Index (CPI) and State Wage Case movements to support his argument. The relevant CPI movements are summarised in the following terms (exhibit 65 p 22): The percentage change for the year ending 30 June 2001 was 6%. For the year ending September 2002 the All Groups CPI figure was 2.5%. For the year ending September 2003 the All Groups CPI figure was 3.2%. For the year ending September 2004 the All Groups CPI figure was 2.3%. For the year ending December 2004 the All Groups CPI figure was 2.6%. 201 Having regard to the lack of wage movement from November 2001 the CPI has moved 10.6% from that date. 202 State Wage Case movements over the respective period have been: 31 May 2002 $18.00 pw 27 May 2003 $17.00 pw 2nd tier $15.00 pw 27 May 2004 $19.00 pw Application of the 2003 and 2004 SWC increases to salary point 1 of the 40 point salary scale results in an increase of 11.86 percent. SPECIAL CASE PRINCIPLE 203 The special case principle is found at Item 10 of the Principles determined in the SWC 2004. The relevant principle states: "10. Special Case Except for the flow on of test case provisions, any claim for increases in wages and salaries, or changes in conditions in awards, other than those allowed elsewhere in the principles, will be processed as a special case before a Full Bench of the Commission, unless otherwise allocated by the President. This principle does not apply to applications for awards consented to by the parties, which will be dealt with in the terms of the Act, or to enterprise arrangements, which will be dealt with in accordance with the Enterprise Arrangements principle." The Special Case Test 204 Application of the special case principle and criteria to determining a special case has been subject to consideration in the Re Crown Employees (State) Award (No 2) 52 IR 243 at 377 in which the Full Bench made the following statements when considering the applicable special case principle prescribed in the State Wage Case 1992 (1992) 41 IR 239 at 317 in the same terms as the present principle other than the discretion afforded to the President to allocate the matter other than to a Full Bench. This discretion was introduced in the State Wage Case 1993 (1993) 52 IR 152. 205 In Re Crown Employees (State) Award (No 2) the Full Bench said: "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 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 matter relied on to take the case "out of the ordinary" and thus make it "special", to decide whether the claim, in part or in whole, should succeed. Some of the cases brought under the special case provision have relied, it is true, on the Work Value Changes principle, a principle which is not relied on here. But other cases, some of which have earlier been identified, have substantially been brought on the basis that developments in workplace reform of a structural efficiency kind, in which employees have participated or to which they have contributed, have been such as to justify wage increases beyond those normally allowable under the principles. On a number of occasions such applications have been approved by the Commission. In some of them the amounts of wage increase have been agreed by the parties but in others they have not, and the Commission has made an arbitrated decision in the matter. In our view the present application can fit comfortably into the class of case which we have just referred, certainly so far as it seeks wage increases by way of award prescription. This appears clear from the following extracts from the PSA's Ex 7, which we again set out: "1. The PSA's proposal is that the Commission hear the proceedings in two phases: (a) initially the case will be based upon productivity, performance and efficiency improvement across the New South Wales Public Sector (within the ambit of the application) inclusive of the improvements brought about by: (i) overall changes in the nature of the Public Sector; (ii) in particular, changes in Governmental policies (and implementation of the same) affecting the Public Sector including what may be described as corporatisation, commercialisation and managerialism; (iii) reductions in staff without a reduction in service or function in the Public Sector. ……… 2. The general case is essentially a Special Case of general dimensions which look in the broad at changes in productivity across the sector and not at specific classification based changes in the nature of the work along traditional work value lines under the Work Value Principle." We therefore find that the applicants are entitled to bring their case under the special cases provisions of the principles. [Emphasis added] That, of course, is not the end of the matter. The Full Commission must decide whether, on the whole of the material before it, and bearing well in mind the respondent's opposition, the claim should in whole or in part succeed, and, if so, what increase should be awarded and what conditions, if any, should be prescribed. But we repeat our view that, in accordance with the principles, it is entirely appropriate for this claim to be heard and for the Commission to grant the claim in whole or in part if considered justified on the merits." 206 Application of the special case principle was further considered by a Full Bench of the Commission in Re Transport Industry (State) Award 95 IR 126. In that matter the bench accepted submissions from the Minister for Industrial Relations in the following terms: "Mr M Taylor of counsel appeared for the Minister for Industrial Relations, who intervened pursuant to s 167 of the Industrial Relations Act 1996 (the Act) to support the agreement although making no submission on the level of increases nor the value of the proposed award variations to offset the increases. It was submitted that the public interest includes the interests of the employees; that the special case principle does not require compliance with the other principles - it is the merit of the special case which must be considered; and that the Commission is not prevented by the Act from paying regard to the evidence of the fact of enterprise agreements having been reached in the industry." 207 Mr Barnes submitted that the special case tests had been met. Mr Barnes put that the work value principle did not feature in appropriate consideration in this matter, asserting that, of the other wage fixing principles, the structural efficiency principle held more relevance. 208 Mr Barnes submitted that the Commission is obliged to consider the date on which the last increase took effect and the change in money value of wages since that time and forecast during the life of the award sought. 209 Mr Barnes further submitted that it is appropriate in the context of a special case and structural efficiency for the Commission to have regard to the commitment and cooperation of the employees and their agents in achieving the reform of the electricity industry and correspondent efficiencies which have had state-wide implications. 210 Mr Barnes submitted that the respondent had not advanced any case that a decision in favour of the applicant would have an adverse effect on the economy of New South Wales, nor any proposition regarding capacity to pay. 211 Mr Barnes relied upon the decision of a Full Bench of this Commission in Re Operational Ambulance Officers (State) Award (2002) 113 IR 384 in which a special case was found and the Commission determined that the applicant was not required to meet any special or higher onus. The Full Bench expressed the principles to be considered in the following terms (113 IR at pp 420 and 421): 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). 212 Mr Fernon submitted that a special case had not been made out, putting a secondary submission that, should it be found that the special case test had been met, his instructions were that wage movement should be in accordance with the State Wage Case adjustments in the previous two years, ie May 2003 and May 2004. 213 Mr Fernon further submitted that an operative date no earlier than November 2004 be allowed based on the amendment to the claim made in the applicant's reply to contentions (exhibit 58 filed on 17 November 2004). 214 Mr Fernon also relied on Re Crown Employees (State) Award No 2 and Operational Ambulance Officers Award cases to develop his argument against the finding of a special case. 215 Mr Fernon submitted that analysis of these judgments leads to the conclusion that in order to satisfy the special case test the onus is on the applicant to demonstrate that the wages and conditions of employment are not fair and reasonable so as to warrant the intervention of the Commission. 216 Mr Fernon submitted that the 2002 Award prescribed fair and reasonable conditions and accordingly this application fails to meet the criteria of a special case. Mr Fernon supported this argument by reference to the nature and functions of RBMC, which he put could not be regarded as a viable commercial business. 217 Mr Fernon submitted that this was demonstrated by the reduction in the number of employees to 10 in the redeployment pool at the time of submissions on 17 March 2005, and four employees in an engineering procurement centre involved in consulting work at two Queensland power stations. Mr Fernon put that contract work would cease toward the end of 2005 and RBMC ultimately dissolved. 218 Mr Fernon put that a proper comprehension of the MoU is a crucial aspect of this case. Mr Fernon noted that the MoU, whilst negotiated with the Labor Council and unions, is an unsigned document. Mr Fernon submitted that the MoU provided salary maintenance for 12 months from the date of being declared surplus, only if: …. employees are able to demonstrate a commitment to seeking opportunities for alternative employment . [Emphasis added] 219 Mr Fernon noted arrangements for cessation of salary maintenance or a reduction in salary on notice where employees failed to meet the criteria for seeking alternative employment. 220 Mr Fernon relied on the MoU and the detailed provisions thereof to emphasise that all of the employees concerned are surplus to requirements and thus not working to a specific duty statement, the daily focus of the individuals being to find alternative employment. 221 Mr Fernon referred to the decision of a Full Bench of this Commission in Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award 2004 [2004] NSWIRComm 340 which dealt with the issue of cost in considering the special case test. The passage referred to by Mr Fernon (para 139) reads: 139 Under the special case principle, although the issue of the cost of a claim will clearly be a relevant one, it will not be decisive in itself: Pastoral Industry (State) Award (2001) 104 IR 168 at 184 ; Re Health and Community Employees Psychologists (State) Award (2001) 109 IR 458 at 479. Issues of cost should not lead to employees being remunerated on a basis which would in effect involve them subsidising the cost of the service provided to the employer or the public. The Federation cited Schmidt J in Re Teachers (Non-Government) Pre-Schools Award (at [406]): I also have taken the view that the fixing of fair and reasonable conditions of employment should not result in the employees the subject of that consideration being put out of work. The converse is also true. The employees' rates of pay should not be fixed as such a level that they are required to support what, in reality, would be an unviable business, if fair rates had to be paid for the work in question. Nor should rates be fixed on a basis, which, in reality, had the effect that teachers were required to subsidise the fees which parents should fairly be paying for the services which they are availing themselves of for their children. 222 Mr Fernon sought to take the converse of the remarks of Schmidt J referred to by the Full Bench, whilst conceding that capacity to pay was no part of the respondent's arrangement he submitted that RBMC is not a viable business and that an employee's rate of pay should not be fixed at such a level that they are required to support what in reality would be an unviable business if their rates had to be paid for the work in question. 223 Mr Fernon acknowledged that undertakings had been made in respect to salary and conditions and that individuals had acted on the basis thereof. Mr Fernon submitted that the concerns expressed in respect to superannuation overlooked the fact that in Government, Connell Wagner, or elsewhere, superannuation contributions end up in managed funds. 224 Mr Fernon submitted that the representations made in respect to salary and conditions, while of some relevance in other circumstances, were not factors which could contribute to or establish the grounds for satisfaction of the special case test. 225 Mr Fernon submitted that the legislative path to RBMC and the changes in productivity within the power generation industry are also not factors to be considered in application of the special case test. 226 Mr Fernon submitted that there is no logical or valid link between displaced employees and the residual productivity of the organisation post their departure and reorganisation of the work of the remaining employees. 227 Mr Fernon submitted that having regard to the requirements of the employees, who have no accountability for the delivery of outcomes of value to the organisation, the notion of work value does not arise nor do issues of structural efficiency. 228 Mr Fernon put an alternative submission that any increase in rates of pay be confined to State Wage Case movements and that any award made should apply to present employees only from no earlier than November 2004. 229 Mr Fernon referred to a decision of the Commission as presently constituted in Federated Municipal and Shire Council Employees Union of Australia, NSW Division and Pacific Power Re Salary Advancement for Officers Vales Point Power Station [1998] NSWIRComm 656 (15 December 1998) to support the latter point. In this matter it was held that an industrial dispute (concerning rates of pay) was extinguished on the conclusion of employment by voluntary redundancy. 230 It is not contested that RBMC is an entity specifically formed as a vehicle for conclusion of an important phase in the reorganisation of the New South Wales electricity industry. 231 This in itself is out of the ordinary. The fact that RBMC does not produce or create any saleable item or service is further, to remain with the language of the Special Case Principle and Re Crown Employees (State) Award No 2, "out of the ordinary"; and in my opinion so far out of the ordinary to make it a special case. 232 An argument advanced by RBMC that the Wage Fixing Principles are directed at ongoing, viable businesses, further supports a finding of a Special Case. If it were to be held that the Principles do not apply to RBMC as it is a "wind up" organisation, that would in my opinion be inconsistent with the Principles as it is not possible to read anywhere in the State Wage Case determinations an exclusion or exception for a particular type or class of employer. However, by separating RBMC from the usual and ordinary, it must become unusual, out of the ordinary, and consequently a special case. 233 It is appropriate in my view to follow Re Crown Employees (State) Award No 2 further. This is a case in which the applicant sought an increase in award wages on many grounds, including the participation in and contribution to structural reform by the employees concerned; an argument which fits within the finding in Re Crown Employees (State) Award No 2 set out earlier. 234 The circumstances of the employees subject to these proceedings may also be described in the extract quoted previously from Re Crown Employees (State) Award No 2 to which emphasis has been added. A substitution of NSW Power Industry for the NSW Public Sector in the reference in my opinion accurately and succinctly describes the present matter. 235 I note the submission of Mr Fernon that there is onus on the applicant to demonstrate that the current rates of pay are not fair and reasonable in order to satisfy the special case tests. 236 The 2002 Award applied from the first pay period to commence on or after 15 November 2002. It was made by consent of the parties in November 2002 and must be taken to have been considered by them and the Commission as prescribing fair and reasonable conditions of employment at that time. The existence of a leave reserved position in respect to wages must equally be taken as a recognition by all parties that the question of wages required further consideration in 2003 in order to ensure that the criteria of "fair and reasonable", to use the language of s 10 of the Act, continued to be met. 237 There are further issues of industrial justice, behaviour and conduct of the parties and the unique circumstances of industry restructure which contribute to a conclusion that the present matter is appropriately considered as a special case pursuant to the Wage Fixing Principles. MERIT 238 The central argument advanced by RBMC is that the employees were not required to undertake any production duties and accordingly, on a work value basis, there is no justification for an increase in award wages. 239 The nil work value argument ignores the work done on secondment at lower than the applicable award rate, and devalues the efforts of the individuals concerned in redeployment programs. 240 There is an unsettling tone to the argument of the respondent which directs blame and consequent economic sanction upon the persons remaining in RBMC for not taking up employment with Connell Wagner or voluntary redundancy. This is grossly unfair, particularly given the evidence that the redeployment process recognised as the most productive form of redeployment was one of self-referral. This unfairness is further exacerbated by the failure of the respondent to initiate a personal placement plant for the remaining employees rather than leave them to their own devices, ad hoc counselling and peer support. 241 The evidence of the witnesses detailed above, who have minimum service of 18 years and maximum service of 35 years in the industry, reveals a substantial contribution and commitment to the industry. The eleven persons giving evidence in this matter have a combined service history approaching 300 years. All employees of RBMC have service in excess of 10 years. 242 The circumstances and structure of RBMC led to a vulnerable group of employees who, through no fault of their own, found themselves surplus to an industry to which they had made significant contributions. 243 I accept the evidence of the applicant's witnesses that employees were substantially underpaid on secondment and that the capacity to be paid at the appropriate rate was negligible. 244 The evidence of Mr La Spina could only identify two employees, engaged by Sydney Water, who were subject to job evaluation in the position of secondment and paid additional wages by that organisation. In other cases the host employer had the benefit of the expertise of the secondee at no cost. The fact that RBMC chose not to charge for those services is a policy decision available to it, not the employees. Guarantees Of Salary Maintenance And No Disadvantage 245 In the ex tempore decision of 17 March 2005 I said: The application is to be examined in the light of the undertakings made by the NSW Government to the Unions in the reorganisation of the electricity generation industry. I refer to a statement made by the then Treasurer and Minister for Energy Mr Egan to all employees on 24 October 1995 which says in part: "In discussions with Pacific Power Unions I have guaranteed that the restructuring will take place with no forced redundancies, no forced transfers and no reduction of entitlements. Implementation will be co-ordinated with a high level consultative committee established with the Unions". This commitment has been reiterated in various forms by Government, the marketing implementation group and various managements and has under-pinned a decade of reform in the power industry which on analysis of treasury reports by Mr Barnes in these proceedings resulted in dividend's to Government in excess of $6 billion and earnings before interest and tax in excess of $10 billion. 246 This information falls from the evidence and is conveniently tabulated by Mr Barnes in his written submissions (exhibit 65 p 17). 247 The significance of reform in the New South Wales electricity industry and in power generation is not to be underestimated, nor is the contribution of employees and the registered industrial organisations which have participated in that process in a cooperative and responsible manner. 248 Mr Barnes referred also to the second reading speech on the Pacific Power (Dissolution) Bill on 26 June 2003 where the Hon M Egan, Treasurer is reported (Hansard pp 2264 and 2265) (exhibit 51 annex. D1): The purpose of this bill is to dissolve Pacific Power. Its closure represents the culmination of an extensive and successful reform program undertaken by the Government over the past decade that has delivered significant benefits to New South Wales. … … The Government estimates that between 1995, about the time when electricity reforms commenced, and December 2002 New South Wales electricity customers have saved more than $1.745 billion in real terms on their electricity bills. … … Throughout the restructure of Pacific Power, the Government has worked constructively with employees and their unions. Without doubt, this contributed to the success of the reforms. 249 The undertakings were real, reiterated many times at many levels, and resulted in substantial benefit to the NSW Government and through it, the citizens of the State. 250 The essence of equity, fairness and industrial stability is that undertakings made by any party are to be met in substance and form. 251 It would, in my opinion, be unconscionable to ignore these undertakings. To do so would be inconsistent with the objects of the Act, found in s 3 in the following terms: SECTION 3 OBJECTS The objects of this Act are as follows: (a) to provide a framework for the conduct of industrial relations that is fair and just, (b) to promote efficiency and productivity in the economy of the State, (c) to promote participation in industrial relations by employees and employers at an enterprise or workplace level, (d) to encourage participation in industrial relations by representative bodies of employees and employers and to encourage the responsible management and democratic control of those bodies, (e) to facilitate appropriate regulation of employment through awards. enterprise agreements and other industrial instruments, (f) to prevent and eliminate discrimination in the workplace and in particular to ensure equal remuneration for men and women doing work of equal or comparable value, (g) to provide for the resolution of industrial disputes by conciliation and, if necessary, by arbitration in a prompt and fair manner and with a minimum of legal technicality, (h) to encourage and facilitate co-operative workplace reform and equitable, innovative and productive workplace relations. 252 On consideration of the facts in this matter all of the Objects apply. To discard the undertakings would be to abandon the integrity demonstrated by the parties in their industrial relations throughout the reform process; it would be unjust and unfair (objective (a)); would fail to promote efficiency and productivity in the economy of the state; and would deny the participation of employers and employees at the enterprise level. 253 The undertakings were made to unions acting on behalf of members. To discard the undertakings would discourage participation of representative bodies and would discourage responsible management and democratic control of those organisations. 254 If an arrangement openly and honestly made with a representative body is abandoned, the effectiveness of that body as a representative is diminished and the confidence of members undermined with potential for anarchy. 255 The evidence in this matter is one of cooperative workplace reform and equitable, innovative and productive workplace relations. If the undertakings were discarded such outcomes would be discouraged and accordingly achievement of mutual benefit made more difficult. 256 The negotiations between the parties do not end with the undertakings referred to. It is appropriate to consider the MoU. Memorandum of Understanding 257 This is a comprehensive document which detailed the method and means of giving effect to the undertakings of no forced redundancy and no disadvantage. 258 The technique of a memorandum of understanding has served the parties well in the pursuit of mutual advantage. 259 The MoU prescribes means of salary maintenance and salary adjustment downwards in the circumstances of an individual that so warranted. This mechanism, described by Mr La Spina in his evidence, was not used; leading to the conclusion that all employees met the requirements of actively seeking alternative employment and in that context pursued and achieved results sought by their employer. 260 The existence of this mechanism and the underpayment of employees on secondment are two further elements which support an increase in the 40 point salary scale. 261 The evidence of Mr Brown in particular reveals that he was paid approximately ten percent less than the rate determined for the work he was undertaking on secondment for EnergyAustralia. Messrs Migocki, Turnbull, Chawla and Fisher all found themselves in these circumstances. Mr Bates, from his evidence, undertook real and substantial duties within RBMC which would justify a consideration of an increase in the rate of pay, both on special case and work value principles. Mr Turnbull was not eligible for employment by Connell Wagner. Mr Legge was held back from a secondment with TAFE for 12 months because human resources personnel at the time found it "too hard" and Mr Sollazzo was restrained from taking up positions with electricity generators because his expertise was required by the respondent. 262 The arguments advanced by the respondent seek to direct attention from those employees carrying out project work now in Queensland and previously in other states as well. It is not appropriate, fair or reasonable to do so. 263 These circumstances represent an injustice which is further compounded by the multiplier effect on superannuation. OPERATIVE DATE 264 The application in this matter was filed on 12 November 2003 which, by operation of s 15(3) of the Act, becomes the earliest available date. 265 The proceedings have taken a considerable period of time. Much of that time has been occupied in conciliation attempts which have been punctuated by periods in which the applicant has directed its resources towards cooperation with the respondent in meeting objectives of the respondent in obtaining alternative employment for employees concerned. This is supported by the evidence of Messrs Gill and La Spina who both described mutual efforts to ensure the VNS worked effectively. In the circumstances it is not appropriate that any party suffer or advantage from the delay. 266 Mr Barnes relied upon the leave reserved clause put into the 2002 Award by consent of the parties to support a submission that there were genuine grounds for the expectation of a salary increase during 2003 and a concession by the respondent that the level of salaries as determined by the 40 point salary scale was not frozen or quarantined from review after that date. 267 Further, having regard to the fact that the last effective increase in rates of pay for the employees covered by this application was in 2001, it is appropriate in my view that an award be made to follow on from the nominal expiry date of the 2002 Award, 15 November 2003. I prefer this course to the operative dates of the 2003 and 2004 SWC increases of May 2003 and May 2004 respectively on the basis that the leave reserved clause of the 2002 Award contemplated that wages be advanced during the life of the Award. In all the circumstances of this matter a date at the end of the award achieves appropriate fairness and equity. QUANTUM 268 It is appropriate in my view to consider the quantum of increase against wage movements within the power generation sector and, in particular, Eraring Energy. 269 The relevant wage rates per week for salary point 1 taken from exhibit 4 are: Date RBMC Eraring Energy $ $ September 2001 303.42 November 2001 303.40 March 2002 315.50 March 2003 331.30 January 2004 346.21 March 2005 361.79 270 The proposition advanced by the respondent in the alternative, that the 2003 and 2004 SWC decisions be applied, results in an increase in salary point 1 of $17 per week from $303.40 to $320.40 pw or 5.6 percent from May 2003; and a further increase of $19 per week to $339.40 pw effective May 2004, resulting in an overall increase of $36 per week or 11.86 percent. 271 The Eraring Energy Award moved from March 2002 and March 2003. It is appropriate in my view, having regard to the timing of award movements, to bring the 2002 Award to equate with the 2003 Eraring Award rate. Accordingly, I delivered an increase of 9.2 percent, moving salary point 1 for RBMC employees to $331.40 pw from 15 November 2003, recognising that they had not had an effective wage increase since September 2001 compared to Eraring employees who had enjoyed increases from November 2001 and March 2002 prior to March 2003. 272 It is appropriate in my view to maintain the nexus with Eraring Energy to November 2003 as the history of RBMC is more closely aligned to Eraring Energy and Eraring Power Station. 273 I note the submissions of Mr Barnes referring to Re Crown Employees (State) Award No 2 for authority that members of the Commission are entitled to have regard for their own knowledge of movements in wage rates. 274 From 2003 the sectors of the former Pacific Power engaged in productivity bargaining more independently and on an ever diverging basis, having regard to the particular circumstances of each business. 275 It is appropriate that RBMC employees receive an increase of four percent from 15 November 2004 which will set rates to apply for the ensuing 12 months, thus meeting the principles of wage justice and equity through the closure of the organisation. 276 The evidence presented by the applicant here demonstrates all sectors of the electricity industry produced increases in excess of 4 percent. 277 The experience of wage negotiations during 2004 was that four percent represented the benchmark figure for general productivity bargaining, with increases below or above that amount depending upon a range of factors relevant to the negotiations. 278 Employees of RBMC continued on secondment to varying extents in all sectors of the energy industry. It is not possible to correct an under-valuation of the services provided in a precise manner, however, having regard to the undertakings referred to and the outcomes in the Energy sector in which the employees of RBMC were deployed I determine an increase of four percent to be appropriate and necessary to discharge the obligations of s10 of the Act to set fair and reasonable rates of pay. 279 Orders in accordance with the ex tempore decision of 17 March 2005 were issued on 21 March 2005. oo0oo DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.