Industrial Relations Commission of New South Wales CITATION: Notification under s130 by Pirelli Power Cables and Systems Australia Pty Ltd of a dispute with National Union of Workers, NSW Branch & ors [2005] NSWIRComm 473 Applicant: Pirelli Power Cables & Systems Australia Pty Ltd Respondent: PARTIES: National Union of Workers, NSW Branch Electrical Trades Union Australian Manufacturing Workers' Union FILE NUMBER(S): IRC3446 of 2005 CORAM: Kavanagh J CATCHWORDS: s130 dispute - Industrial Relations Act 1996 Workplace reform significant – further reform proposed through introduction of KP1s – successfully performed in trial – increase in wages not linked to KP1s as a bonus payment LEGISLATION CITED: Industrial Relations Act 1996 s130 HEARING DATES: 07/22/2005; 07/25/2005; 07/26/2005; 11/29/2005 EXTEMPORE JUDGMENT DATE: 12/13/2005 Applicant: Mr R. Cook Solicitor Clayton Utz, Canberra LEGAL REPRESENTATIVES: Respondent: Mr A.P. Joseph of counsel Mr S. Mueller National Union of Workers, NSW JUDGMENT: - 3 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: Kavanagh J Tuesday 13 December 2005 Matter No IRC 3446 of 2005 NOTIFICATION UNDER S130 BY PIRELLI POWER CABLES AND SYSTEMS AUSTRALIA PTY LTD OF A DISPUTE WITH NATIONAL UNION OF WORKERS, NSW BRANCH AND OTHERS RE INDUSTRIAL ACTION EX TEMPORE DECISION [2005] NSWIRComm 473 1 This matter came before me for arbitration after conciliation failed. The parties agreed to abide by the arbitrator's decision. However, as the arbitrator, I also referred the matter to the President for a special reference given we are dealing with a wage increase under section 10 of the State Wage Case 2000 Principles. That reference has been made to me. 2 Following my decision of 26 July 2005, in accordance with Order 2, the members of the National Union of Workers, Electrical Trades' Union and the Amalgamated Metalworkers' Union worked to agreed KPIs for a three month trial period beginning 1 August 2005. After the trial was completed, the KPIs were adjusted and the KPIs were then settled between the parties as achievable for the purposes of productivity increase. 3 The remaining issue to be determined is whether the further one percent which has been both offered and granted be paid as an incentive payment or as an increase in the wage component. 4 The respondent submitted the further one percent should be paid quarterly on achievement of the KPIs and accepts such quarterly payment will be treated as a wages component. The unions submit the one percent be paid as a straight wage increase. 5 Also for consideration is the date from which the payment is to be paid. 6 The company once again reiterates that without attaching the one percent payment to the achievement of the KPIs there will be no incentive for the employees to achieve KPIs. It is the company's view the one percent payment be an incentive payment paid on achievement of the KPIs and it should be paid quarterly. 7 Much of the first decision of 26 July 2005 dealt with the company's initial offer of a 2.75 percent wage increase and further 1.25 percent increase as a bonus on achievement of the KPIs. 8 The Commission initially held the company could afford a 4 percent increase and that the first three percent be paid as a wage increase, having been satisfied that the company could afford same (see paragraph 79 of prior judgment). 9 I am persuaded the employees have adapted, if not easily, to the concept of change and have accepted productivity measures had to be taken at this worksite. Evidence revealed there had already been very significant workplace reform before the introduction of KPIs, and while those reforms were not easily introduced, they are now in place and have achieved productivity increases. The KPIs are now also in place and accepted as part of the push for further productivity gains for the company. There is a complete reversal of past difficulties. 10 As the differences between the parties were aired it became clear the claim for a wage increase by the union members was merged with the productivity demands of the employer. Other sites run by this company have allowed employees a straight four percent pay increase. 11 Given the evidence of significant productivity changes which have already occurred on the worksite and the acceptance and now the introduction of achievable KPIs, I do not believe there is a reason to link productivity to the further one percent wage increase. Perhaps originally the employees were not willing but they have now accepted productivity as an acceptable measure of workplace efficiency. Accordingly, I reject the applicant's application to link the productivity gains to the wage increase in this particular circumstance. I believe this payment should be made in the context of rewarding the employees for the gains already made and in the context where the employees have committed to further efficiencies for further productivity gains. 12 I have spoken of the difficulties faced by this employer. If productivity falters and the gains are not achieved and maintained, employees know the company's only option will be redundancies. 13 Given the industrial history at the worksite, leave is given for either party to apply at short notice for a re-listing if there is any issue arising related to the further implementation of the KPIs or the wage increase as ordered. 14 I order: 1. The company is to pay a further one percent increase to the employees as a component of the employees' wages from 1 August 2005. It is to be paid weekly from the first pay period on or after 1 August 2005. 2. The full 4% increase in wages for the second year of the agreement will be paid from 6 July 2006. It is agreed an enterprise agreement be entered into for a two year period. 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.