Industrial Relations Commission of New South Wales CITATION: Boral Resources (NSW) Pty Ltd and Transport Workers' Union of New South Wales [2009] NSWIRComm 112 APPLICANT Boral Resources (NSW) Pty Ltd PARTIES: RESPONDENT Transport Workers' Union of New South Wales FILE NUMBER(S): IRC 686 of 2009 CORAM: Sams DP INDUSTRIAL DISPUTE - production and distribution of premixed concrete - truck drivers - s 142A referral agreement - expired agreement - enterprise bargaining negotiations - impasse over wages and staggered start times - evidence as to peaks and troughs of demand - idle time - loss of overtime - impact on work/family responsibilities - health and safety - Australian Fair Pay Commission decision. CATCHWORDS: RECOMMENDATION - evidence as to net effect inconclusive - desirable to have flexible utilisation of workforce - parties should work cooperatively - individual difficulties to be considered - two different wage increases undesirable - Australian Fair Pay Commission decision no authority - recommendation to accept Company's proposal - review impact after six months. LEGISLATION CITED: Fair Work Act 2009 (Cth) Industrial Relations Act 1996 Australian Fair Pay Commission Wage Setting Decision 2/2009 CASES CITED: State Wage Case 2006 (No 6) (2006) 153 IR 268 AWARD: Boral Concrete Sydney Metropolitan Drivers Collective Agreement 2008 HEARING DATES: 8 July 2009 DATE OF JUDGMENT: 13 July 2009 APPLICANT Mr N Chadwick Chadwick Workplace Law LEGAL REPRESENTATIVES: RESPONDENT Mr O Fagir Transport Workers' Union of New South Wales JUDGMENT: - 14 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 13 July, 2009 Matter No IRC 686 of 2009 Notification under section 130 by Boral Resources (NSW) Pty Ltd of a dispute with Transport Workers' Union of New South Wales re terms of a new workplace agreement STATEMENT AND RECOMMENDATION [2009] NSWIRComm 112 1 This matter concerns a dispute between Boral Resources (NSW) Pty Ltd ('the Company') and the Transport Workers' Union of New South Wales ('the Union') following a deadlock in their negotiations over the terms of a new enterprise agreement. The proposed agreement, to be known as the Boral Concrete Sydney Metropolitan Drivers Collective Agreement 2008, is expected to cover around 118 employee drivers (72% of the Company's driver workforce) at Boral's 15 premix concrete production and distribution yards in metropolitan Sydney. The previous agreement expired on 23 February 2009. 2 The dispute was lodged on 8 May 2009, pursuant to a s 142A referral agreement under the Industrial Relations Act 1996 ('the Act'); noting that the proposed agreement is intended to be lodged for approval under the Fair Work Act 2009 (Cth). 3 The parties have been involved in negotiations for a new agreement for some considerable time, but have reached a deadlock as to wage increases and a proposal by the Company to introduce flexible start times. The Commission has chaired a number of conferences with the parties, but has been unable to resolve the impasse. A suggested way forward was proposed by Mr N Chadwick for the Company: that is, that the Commission issue a recommendation, the effect of which would be to endorse the Company's proposal as reasonable. The Union does not oppose the Commission hearing the matter, but strenuously opposes the recommendation sought by the Company. Annexed to this recommendation is the Company's proposal as it would be reflected in the new agreement (Annexure 1). The essence of the proposal is: § At the start of the agreement each driver would have the option of electing to operate under either a variable starting time system or the current default starting time system. § Drivers who elect to operate under variable starts will receive a 5% increase on the 1st of July 2009, and a 3% increase on the 1st of July 2010. They will also receive an additional week's leave credited on the 1st of September 2009. § Drivers who elect to stay with the current default starting time system will receive a 2.5% increase on the 1st of July 2009 and a 2.5% increase on the 1st of July 2010. § All new employees will be employed under the variable starting time conditions. § Effective from the 31st of January 2011 (approx 18 months after the start of the agreement) all drivers who have elected to operate under the current default starting time system will move to variable starting times. The expired agreement relevantly provides as follows: Normal hours of work are 7:00am to 3:30pm. By agreement between the company and individual driver, these times may be altered to start between 6:00am and 7:00am. 4 The evidence of Mr Geoff McDonnell, Operations Manager, was that the current hours clause works as follows: Orders are taken and dispatched from a central location. The current practice to meet customer demands is for central allocations to set loading times for the next day based on customer demand and communicate these requirements to drivers before the end of work. The drivers start time is the loading time minus 15 minutes for vehicle checks. Under the expired Agreement drivers are paid their ordinary time rate for hours worked between 7:00am and 3:30pm and any time worked outside these hours is paid at overtime rates. The default starting time is 7:00am and employees who are rostered to arrive at work before this time are paid at overtime rates ("Default starting time" is the time a driver should start if no roster is provided). An example of the application of this condition is if a driver is rostered to start at 6:00am and rostered off at 2:30pm, he/she will be paid time and one half for the hour worked between 6:00am and 7:00am and then ordinary time for the hours worked between 7:00am and 2:30pm. If a driver commences work at the default starting time of 7:00am, his/her vehicle may not be loaded until at the earliest, 8:30am. The driver's working time between 7:00am and 8:30am is spent mostly sitting in the lunch room waiting to load. He described the Company's proposal as follows: The current practice of notifying drivers of their starting time via central allocations will be maintained. Under the proposed agreement the span of ordinary hours will be between 6:00am and 5:30pm and any time worked outside of these hours (or in excess of 8 hours), will be paid at overtime rates. These conditions would be transitioned into operation over an 18 month period and drivers will have the option of working under a fixed start time arrangement or variable start time arrangement. Ordinary hours for a driver will commence from the drivers start time each day. In practice the default staring time will continue to be 7:00am but a portion of the fleet would receive staggered starts based on demand. If a driver is rostered to start at 6:00am they will be paid ordinary time rates until 2:30pm. Time worked beyond 2:30pm will be paid at overtime rates. Subsequently if demand requires a vehicle not to receive its first load until 8:45am, the operator will be rostered on at 8:30am and paid ordinary hours until 5:00pm. Any time worked beyond 5:00pm will be paid at overtime rates. The impact on driver overtime will be on rosters that start before 7:00am and finish before 2:30pm and rosters that commence after 7:00am and finish before the completion of 8 hours. These drivers will not receive the overtime that would have been paid under expired Agreement. 5 Mr McDonnell described the demand profile of the business. About 80% of customer orders are placed within two days of supply and are determined by the demands of a particular project. Differences will occur between days (varying between 120 and 850 loads) and during the day. Historically, work starts slowly from 6:00am, peaks between 10:00am and 11:00am and tapers off in the afternoon. To meet these fluctuations, variable start times are necessary. He estimated 20% of the fleet could start before 7:00am and 20% after 7:00am, while the remaining 60% would start at 7:00am. This arrangement would better manage both morning and afternoon workloads. 6 Mr McDonnell deposed that staggered start times are a feature of the industry and he identified relevant clauses from Boral's competitors' industrial agreements. In addition, Boral's hourly rates are the highest in the industry. 7 Mr McDonnell submitted that flexible starting times were fair and reasonable because: Boral Concrete cannot continue to sustain a fixed starting time system. Flexible starting times are required and we believe such an arrangement to be fair and reasonable for the following reasons: a. Customer demand creates variation in supply and staggered start times are required to meet this variation; b. Staggered start times will allow the business to better manage driving hours and reasonable working hours while still meeting customer demand; c. Terms and conditions applied by our competitors (flexible starting times and hourly rates) allow them to meet the market more effectively at lower costs (compared to Boral Concrete); d. Four years ago Boral Concrete moved from a predominantly LOD owned fleet to operate the largest company agitator fleet in the Sydney Metropolitan area. This shift has highlighted a short fall in flexibility which hinders our competitive position. This can be resolved with the introduction of staggered start times; e. For Boral Concrete's drivers, staggered start times are a change in operational practice but the inclusion of an 18 month transitional period effectively provides drivers with 18 months notice of the change; f. It is estimated that on average drivers will be required to participate in one early and one late start per week under staggered starts. This would result in a reduction in overtime of about 1 hour per week per employee. Given the current economic climate our proposal of a 5% increase along with crediting 1 week additional leave for employees (who elect to operate under a variable start time system) followed by a 3% wage increase payable in July 2010, is reasonable. It will assist in compensating drivers for the reduction in overtime. Boral Concrete drivers will be paid the highest hourly rate in the Sydney Metropolitan Concrete market. 8 In oral evidence, Mr McDonnell said that under the existing arrangements a driver who starts at 7:00am and is rostered off at 12:00pm, due to low customer demand, is still paid eight hours at ordinary rates. In the month of May, the 118 drivers were paid over 2000 hours which had not been worked. 9 In cross-examination, Mr McDonnell said he could not give a guarantee that drivers would only lose one hour per week in overtime. It was simply impossible to predict. Mr McDonnell said he did not know if competitor companies actually worked under staggered starts; he had relied purely on what their agreements provide for. 10 Mr Greg Masters has worked for the Company as a driver for 20 years and has been a Union delegate for 15 years. Mr Masters has spoken personally to around 90 drivers about the dispute. He said the vast majority of drivers had expressed opposition to the proposal based on the following: First, staggered starts would have a negative impact on our working and personal lives. The effect of not knowing what time we start work on any given day until the afternoon before is obvious. The drivers who I have spoken to who have young families are particularly concerned about this. Second, staggered starts will lead to a reduction in overtime and therefore a reduction in income for drivers. A lot of people, particularly in the busy city plants, rely on money they make by working overtime. I have spoken to a number of drivers who have estimated they will lose around $200 per week. Third, I am very concerned that staggered starts could make our work days longer. A 9a.m. start compared to a 7a.m. start means drivers will spend more time getting to work in the mornings as they contend with peak hour traffic. Those drivers who start late will also be likely to finish late not only because they are scheduled to, but also because they (sic) more likely to be responsible for finishing a greater amount of backed-up work at the end of the day. Drivers who finish away from their home plant may spend an hour or two driving home and be rostered to start the early shift the next morning. 11 Mr Masters responded to the Company's evidence by saying that waiting time can occur at any time of the day and it is generally utilised to do general maintenance on the truck, such as washing it down. He said it would be a 'bad idea' to have different pay scales in the yard, as it would lead to animosity and tension. The Union had proposed the introduction of an afternoon shift if customer demand justified it. 12 In cross-examination, Mr Masters agreed that customer demand fluctuates on a daily basis. Mr Masters said that the current starting time is 7:00am, or by agreement, before 7:00am. He agreed that in the majority of plants where only one truck can be loaded at a time, a driver mightn't be able to load until 8:00am. In these circumstances, Mr Masters agreed the driver would usually be waiting in the lunch room, having a coffee or reading the paper. SUBMISSIONS For the Company 13 Mr Chadwick corrected the tendered documentation to demonstrate that the hours of work proposed may be 9:00am to 5:30pm with a 30 minute unpaid lunch break. 14 Mr Chadwick submitted that subject to the agreement being voted upon and accepted by the drivers and approved by Fair Work Australia (FWA), the first pay increase would be the first pay period on, or after, approval by FWA. 15 Mr Chadwick emphasised that the proposed system is not initially mandatory, as there is an 18 month transitional period. Flexible start times are consistently applied by Boral's competitors and Boral's hourly rates are the highest. Currently, drivers who are loaded after 7:00am are not productive. It is incumbent on all parties to facilitate workplace efficiency, particularly in these difficult economic times. Mr Chadwick said that drivers have been enjoying the benefit of overtime through the operation of the Agreement's clause which produces a flawed result. 16 Mr Chadwick referred the Commission to the decision of 7 July 2009, by the Australian Fair Pay Commission 2/2009 (AFPC), in not granting any increase in the federal minimum wage. This means the underpinning federal award will receive no adjustment, while Boral's drivers are being offered wage increases of 5% and 3% and a week's extra annual leave. For the Union 17 Mr O Fagir submitted that on any basis, the Company's proposal will see drivers lose take home pay. It is no wonder, in the context of enterprise bargaining, that the drivers have said 'no thank you'. Mr Fagir said it should not be the drivers who assist the Company's business difficulties. 18 Mr Fagir submitted that the proposal will add at least three hours to the end of a shift, which will cause disruption to a driver's personal and family circumstances. Mr Fagir said there may also be a negative effect on fatigue and workplace safety. 19 Mr Fagir argued that the Company had not made out a case of competitive disadvantage and there was no evidence of any pressing necessity for the change. As for the transitional period, he said that it didn't matter if you were 'kicked in the teeth now or in 18 months time'. In addition, there would be negative industrial implications by having two drivers working side by side, being paid different hourly rates. 20 Mr Fagir rejected Mr Chadwick's reliance on the AFPC decision as being irrelevant to wage fixing in New South Wales under the State Act. In reply 21 Mr Chadwick said it was wrong to suggest that the drivers and the Union should have no role in fixing problems which result in lower productivity. Mr Chadwick said that for 80% of drivers there will be little or no effect on their work/family balance as a result of the change. This is because only 20% of drivers would ordinarily be required before 7:00am. 22 In response to questions from the Bench, the Company gave assurances that any genuine family difficulty would be sympathetically considered. The Company also said that as the roster is cyclical, drivers will know where they fit in the roster and the likely pattern of start times. STATEMENT 23 There is no doubt that the Company's proposal is designed to remedy a long standing practice which does not enable it to manage its workforce efficiently and effectively to meet the needs of the industry. This is not the fault of the drivers - as Mr Chadwick readily conceded - it is a problem with the actual terms of the industrial instrument. Equally, there can be little doubt that the proposal will reduce the Company's costs and thereby ensure a capacity to increase its customer base and improve its market competitiveness. These are laudable objectives and ultimately may prove vital to maintaining the Company's competitiveness; particularly in the current poor economic climate. The question arises, of course, as to whether the proposal is reasonable, as far as the drivers are concerned. I note that there is probably little the Company can do if the proposal is rejected, considering the context of enterprise bargaining from which it has emerged. I remain very concerned at that prospect, particularly as the existing Agreement expired in February 2009. 24 The evidence of Mr McDonnell as to the vagaries of customer demand and the problems which it creates, including 'idle' time, is overwhelming and incontrovertible. Mr Master's evidence supported Mr McDonnell's in that respect. Further, it seems unarguable that Boral's competitors have a capacity (whether it is utilised or not) to have far greater flexibility with starting times than Boral does currently. That is not a decisive argument, of itself, but does demonstrate that the proposal is not so outrageous or controversial as to be outside the bounds of reasonable industry expectations. 25 That said, it must be acknowledged that there is an obligation on all parties, the Company, the Union and the drivers, to work together to improve efficiency and increase competitiveness - even more so in the current unhealthy, recessed economy. This does not mean however, that there should be a wholesale butchery of workers' hard won conditions of employment. Before leaving these more general observations, I would wish to comment on Mr Chadwick's reliance on the recent AFPC decision not to award any increase in the federal minimum wage. Firstly, the AFPC's decision can be no authority for decisions made by this Commission, in circumstances where both tribunals operate under an entirely different and distinct statutory framework: See State Wage Case 2006 (No 6) (2006) 153 IR 268. Under the New South Wales Act, the Commission is required to set wages and conditions for employees which are fair and reasonable having regard to the public interest. Secondly, there can be no suggestion that drivers in this industry would be bound by the wages contained in a minimum rates award. Consequently, a decision effecting such awards is of little relevance where wages and conditions are brought about by direct collective enterprise bargaining negotiations. 26 I would wish to address the Union's case in the following way. Firstly, in my judgment, it is obvious that the primary objection of the Union to the Company's proposal is that there will be a reduction in overtime and, thereby a loss of actual take home earnings. While this is a perfectly understandable objection, it is not a sustainable proposition to maintain that an employee's take home pay should be dependent on regular overtime. This must be particularly so in an industry where the vagaries of demand and the 'peaks and troughs' of the industry are a common characteristic. Indeed, the working of excessive overtime should be generally discouraged. It is a practice which has the potential to compromise safety and have undesirable consequences for appropriate work/family balance. 27 In any event, this is not a case where a company is seeking to unilaterally alter an existing condition of employment. Rather, it must be seen in the context of : a) the re-negotiation of the parties' collective agreement; b) wage increases in the order of 5% and 3% and one weeks additional leave as an offset for the change; and c) an 18 month transitional period. 28 The evidence of Mr McDonnell was that it was likely that employees would lose only about one hour overtime per week with a commensurate increase of 5% and 3% in hourly rates and a one off week's additional extra leave. Mr Masters put the estimated loss for some drivers at $200 per week. Mr McDonnell disputed this. I am unclear if the Union's estimates include the offsetting wage increases and week's annual leave. In the absence of any other evidence, I should say that the net effect of the Company's proposal, in strict dollar terms, is inconclusive and speculative, at best. It may be close to cost neutral. The fact is, we simply don't know. I would treat this evidence with some caution. 29 The Union's other main argument concerned the disruption to a driver's family responsibilities by only knowing the day before what hours will be worked the next day. It needs to be said that there is an inherent inconsistency in the Union's case when, on the one hand, it complains about a loss of overtime and on the other, argues the proposal will add more hours to the working day, thereby disrupting personal and family life. Nevertheless, this is an important and relevant consideration which should not be overlooked. I note that the existing arrangements allow for drivers to commence work before 7:00am, by agreement. Moreover, there may be some drivers who might actually welcome a later start time. Even so, it seems to me that assurances given by the Company that a driver's individual circumstances will be taken into account and the fact that 60% of the work would appear to be unaffected during the peak period, will give the necessary scope for employees with genuine family responsibilities to be taken into account. 30 Finally, I agree with Mr Masters and Mr Fagir that having two different pay rates at the yard, (albeit for 18 months), is not the most desirable industrial outcome. However, it must be seen as a genuine concession by the Company to allow a long transitional period before the change becomes automatic. I would think that it would be preferable and in all parties' interests to work under one system with one pay increase. That said, I am confident that the proposal, when tested after a relatively short readjustment phase, might not have the draconian outcomes which the Union has suggested. RECOMMENDATION 31 It is for these reasons, that I propose to recommend that the Company's proposal be accepted, but be subject to a review by the Commission after a period of six months in order to establish the extent of the take up of staggered start times and what effect it may have had in terms of better workforce utilisation and whether any drivers have experienced serious financial detriment as a result. I would further recommend that this statement and recommendation be put to a meeting/s of drivers as soon as can be arranged. Peter J Sams, AM Deputy President Annexure 1 6. Hours of Work 6.1 The ordinary hours of work shall be 38 hours per week provided that no more than eight (8) ordinary hours may be worked on any one day Monday to Friday. 6.2 Hours in excess of an average of thirty-eight (38) hours per week will be paid at overtime rates in accordance with clause 9. 6.3 Within one (1) month of this agreement being approved by Fair Work Australia, drivers must make an election, in writing, in relation to the way they will be rostered daily to perform their work. The written election shall be submitted by each driver in accordance with Schedule (D) to this Agreement. 6.4 Drivers shall have the option of working their ordinary hours by either: (a) a default starting time system under which ordinary hours of work are 7:00am to 3:30pm, Monday to Friday. (b) a variable starting time system, under which ordinary hours may be worked between the hours of 6:00am and 5:30pm on any one day Monday to Friday. Ordinary hours will commence from the drivers start time each day. 6.5 A driver who elects to work their ordinary hours pursuant to 6.4(a) above, shall be paid their wags in accordance with Table 1 in Schedule 1 to this Agreement. 6.6 A driver who elects to work their ordinary hours pursuant to 6.4(b) above, shall be paid their wages in accordance with Table 2 in Schedule 1 to this Agreement and shall be entitled to receive an additional one (1) week of annual leave as a one off allocation, which will be credited to their annual leave entitlement on 1st of September 2009. 6.7 Drivers who elect to work their ordinary hours pursuant to 6.4(b) above shall have their individual starting times for the next working day provided to them prior to the end of work on the previous day. The starting time will be the time provided minus 15 minutes to allow for pre-start checks to be performed. 6.8 At any time during the nominal term of this Agreement, a driver who has elected to work their ordinary hours in accordance with 6.4(a) above, may change this option to 6.4(b) in which case that employee shall be entitled to receive the wages outlined in Table 2 of Schedule 1 to this Agreement from the agreed change date. To avoid any doubt only employees who have elected to operate under 6.4(b) by the 30th of June 2009 will be entitled to receive the additional weeks leave outlined in clause 6.6. 6.9 Any new employees who are employed by Boral during the nominal term of this Agreement shall be employed to work their ordinary hours in accordance with the variable daily starting time system. Such employees shall be entitled to receive the wages outlined in Table 2 of Schedule 1 to this Agreement. 6.10 On the 31st of January 2011, the option of drivers working their ordinary hours in accordance with 6.4(a) shall cease and all driers employed under this Agreement shall work their ordinary hours in accordance with a variable daily starting time system. 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.