Transport Workers' Union of New South Wales v. Paperlinx Australia Pty Ltd [2013] NSWIRComm 1032

Industrial Relations Commission New South Wales Medium Neutral Citation: Transport Workers' Union of New South Wales v. Paperlinx Australia Pty Ltd [2013] NSWIRComm 1032 Hearing dates: 13, 14 November 2013 Decision date: 14 November 2013 Jurisdiction: Industrial Relations Commission Before: Newall C Decision: Application for contract determination dismissed Catchwords: Contract determination - application by union - issue in dispute confined to rates of remuneration - agreement reached with all but one contractor - rates sought above those in General Determination - rates above General Determination within jurisdiction and on occasion justified - necessity for economic evidence - effect of s.146(2) of Industrial Relations Act - lack of economic evidence - application dismissed Legislation Cited: Industrial Relations Act 1996 ss. 146(2), 162(2)(a), 222, 313(3), 315 Cases Cited: Re Journeymen Farriers Union (1910) AR (NSW) 264 Category: Principal judgment Parties: Transport Workers' Union of New South Wales - Applicant Paperlinx Australia Pty Ltd - Respondent Representation: Mr T Warnes - applicant Mr M Baroni, solicitor - respondent File Number(s): IRC 624 of 2013

EXTEMPORE DECISION 1I am taking the step of giving a decision on the record on the same day that the submissions, at least, were concluded because I take very seriously the Commission's statutory obligation, under s162(2)(a) of the Act, to act as quickly as practicable. In my view, an essential function of an Industrial Tribunal is that it hands down its decisions, and allows the parties to know what those decisions are, as quickly as humanly possible, that obligation weighing more on the Commission than perhaps on any other kind of court . 2I appreciate it has not always been the usual course but it is a course that where practical, I propose to adopt in matters. I can say to the parties that were I to have reserved the decision, gone away and spent the time to set out the decision in writing, the parties may not have had their answer before the end of the law term, which is a situation I was most anxious to avoid. Whatever answer I give and whether anyone likes it or not, at least you have it quickly and you know what the results of the argument before the Commission have been. 3This is an application for a contract determination brought by the Transport Workers' Union New South Wales against Paperlinx Pty Limited. No issue has been taken that the applicant Union cannot make the application nor that any other jurisdictional bar exists to the application sought; indeed that standing was very properly conceded by solicitors for the respondent company. 4The application is, in the end, given that clause 3 to schedule B to the application was not pressed, an application for an increase in the hourly rates of remuneration paid to contract owner-drivers in the yard, of whom there are eight. An immediate increase is sought together with a structure for a further tranche of increases of 3% each year, going forward through the life of the contract determination. 5The application is based on percentage increases to hourly rates and that is because, and I make no criticism of the Union for doing it in this way, those are rates reflective of the company's choice to pay an hourly rate as provided for by clause 17 of the General Contract Determination. Those rates are of course exclusive of what is usually called the fuel levy. The application seeks to cover all of those eight contractors in the yard and I will return to that in due course. 6The company opposes the claim made. The increases in the rates of pay immediately sought are of a scale in the order up to 9.25% and it is after that, that the three increases of 3% are proposed. 7There was a conference before the Commission pursuant to s 315 of the Act as required and the matters have now been inquired into and arbitrated. The evidence has been brought and tested. Addressing that evidence, I may say that I found all of the witnesses to be credible. I found that all of the witnesses who came before the Commission were doing their level best to give the Commission candid and honest answers and to assist the Commission, and not otherwise. 8The upshot of all that evidence is this. The company negotiated with the Transport Workers' Union representatives, in particular, Mr Hirst and two delegates who have been present in these proceedings, about a new agreement. All went well enough with those discussions up to the point where the matter of rates was introduced into the negotiations. The Company as I apprehend the evidence at first declined to enter into discussions on rates at all. There was some later to-ing and fro-ing, including immediately prior to proceedings involving the parties before his Honour Justice Staff. But at first there was no inclination to enter into discussions on rates let alone grant an increase. 9That approach on behalf of the respondent was bound, it must be said, to provoke some sort of dissatisfaction in circumstances where rates had not been increased since 2010, and it did provoke that dissatisfaction. In the end it has brought the matter here. Indeed, Mr Warnes of the Union put it quite candidly when he said that the purpose of the application before the Commission was precisely to resolve the outstanding dispute between the parties, that is, about rates. I will return to that point later. 10The case was put without contest on the evidence that the owner-drivers had not had any increase in the hourly rate paid to them by the company since 2010. Since that time, it was said, their costs had gone up although there was no great specificity about exactly by how much, nor on what basis the costs had gone up. It was said, and it is correct, that the General Determination, to use that shorthand term to refer to it, had increased rates in that period since 2010. 11It was also put that employees of the respondent company, members of the National Union of Workers, had received in that time between 2010 and now, a total of 10.5% in wage increases and were to receive further increases in the present round of increases. That was put in the context of, as I say, the owner-drivers receiving no increase in their rates over that time. 12It was also put that there had been an historic and continuing reluctance on the part of the company to make any increase at all, a point which was not in fact put in contest by the company on the evidence. It was put that there was an erosion of take home pay by this failure to increase rates, as it was put. It was put indeed that this erosion of take home pay was potentially a safety issue, a point to which I will also return. 13It was also put in the application that the company had on occasions paid below the general determination rate. I return to that point as well in due course. 14Essentially, however, the claim for a contract determination ran on the basis of the propositions I have just summarised. 15It quickly emerged on the evidence that of the eight owner drivers in the yard, all save one, Mr Kaye-Smith, had, subsequently to the present application being made, either entered into or agreed to enter into, new individual contracts. These are not collective but individual contracts, but nevertheless identical in terms. Save as to rates, these contracts incorporated as I understood the evidence, all the matters that had been discussed between the Transport Workers' Union and the company. In noting this I refer again to Mr Hirst's evidence where he said that "matters had gone well enough until the point where rates had come into it." 16The contracts that have been entered into and that will be offered to the two remaining owner drivers - who have not yet entered into them because their contracts that are presently on foot have not expired - do not contain provisions for increases in rates. However, I have been told and I accept that new increased rates will be set out in letters from the company to its individual contractors. 17The company has entered into an agreement with those contractors to pay two increases of 1.5% to the hourly rate, the all up hourly rate as I describe it, all up at least save for the fuel levy. The first increase is to take effect on 1st November 2013 and the second in July 2014. On the evidence, exhibits 4 and 5 in particular, I see that the first increase has been given effect on and from 1st November including, I observe, to Mr Kaye-Smith. 18On Mr Hirst's evidence and Mr Warnes' submission it seems clear enough the other terms of the agreements reached with seven out of the eight contractors are satisfactory in the TWU's eyes save only as to rates. I base that on the proposition that there remains one only matter in dispute between the parties, as I was told by Mr Warnes. 19On the respondent's evidence all, save Mr Kaye-Smith, have agreed to the new contract and to the rates, and no evidence is brought is against that. And that means that, that so far as the application does represent settlement of a dispute between the parties, as Mr Warnes has put it, while the application is brought by the TWU about and for the whole yard and would cover the whole yard, the only person who is actually in dispute with the company now, that is, who has not agreed to the new agreement and the rates of increase that the company has offered, is Mr Kaye-Smith. I will return to the effect of that. 20But let me address Mr Kaye-Smith's situation if I may. He is still in dispute with the company, to use my term, and he has two bases for that on the evidence that I heard. First, as it emerged on the evidence, he would like a rate increase further to that increase the company has offered. And that is the nature of the application before the Commission, to provide for a greater increase than the company has offered. The other owner drivers do not support or press that application; Mr Kaye-Smith continues to do so. 21The second issue is that there appears to be a dispute about the proper rate applicable to the truck that Mr Kaye-Smith owns. Now this is not a part of the application the Union has made and I say immediately, I have no power to do anything about that in the context of this application. But Mr Kaye-Smith whom I must say struck me as a reasonable and sensible man, has been associated with this company for many years and continues to be a contractor with the company carrying out his contract without difficulty despite his concerns about these matters. 22Now I make an observation which is no more than this, but in my view the company should sit down with Mr Kaye-Smith and sort out this second matter, the situation about the appropriate rate to be paid for the use of his truck. I do not mean the company should simply do as Mr Kaye-Smith asks, that may not be the proper answer on the facts and I do not know all of the facts. But I think he deserves a hearing and a considered response and a decision from the company on his circumstances. I cannot and do not make any order about that but what I have said is on the record. 23I return to the application for determination that is before the Commission. As I have said, as it emerges on the uncontested evidence the application while brought for the whole yard, really represents a dispute involving Mr Kaye-Smith and the principal contractor alone. Nobody else of the owner drivers is actually in contest, in dispute with the company in any real and practical term; rather, they are in agreement. No suggestion was made to me that the agreement formed with the other seven contractors was anything other than a freely made agreement; Mr Wood and Mr Winter's evidence about that was not challenged in any way. 24I will say now rather than wait until the end of this decision that I am not disposed to make a contract determination on that basis. Where a company has reached agreement with all but one of its contractors on rates which include an admittedly modest increase now and another next year, it would not in my view be a proper use of the Commission's discretion to make a contract determination changing that agreed arrangement, agreed with everyone else except one contractor across the board, on the basis of the one person in aid of whom it is in practical terms brought. And that of itself in my view is a sufficient and proper reason not to exercise the discretion to make a contract determination in this matter. But it is the more so, given the next matter to which I am about to turn. 25And that is this; even if it were not so, and even if the application were brought on the basis of the whole of the yard being in dispute with Paperlinx, I would not be disposed to make a contract determination on the case that has been put before me. That is because there is simply insufficient evidence brought to justify the grant of an increase in remuneration either at the levels sought or at any level. 26Of course the company brought evidence of the company's financial situation which evidence was entirely uncontested. The financial situation of the company is poor, I accept that. But it is not just that, indeed the simple statement that a company may be struggling at large is not a reason to refuse proper rates of pay to workers and contractors, not at all. I accept for the purpose of these proceedings Mr Hirst's evidence that the company is paying less than Toll and the other majors. He would be in a position to know that, his evidence to that effect was not put in contest and I accepted his evidence. I can however see a simple reason for that; this company is not, with respect, Toll, it is not a major carrying company on that scale, with the benefits of that business flow and those economies of scale that a major company enjoys. 27The point, however, is essentially this, if the Commission is being asked to impose rate increases on a principal contractor or anybody else, there must be evidence permitting that to be done. First, that evidence has to give a basis for the application with a greater depth and precision than estimates and assertions. Second, in a case such as this, the evidence must deal with the company's unchallenged assertions, not only that it cannot afford increases but that the company would be damaged by them. 28Extensive financial evidence was put before the Commission by the respondent on this point. In particular I have read with care what was said by Mr Winters at paragraph 13 of his affidavit and the material advanced by Mr Winters at annexures A and B to his affidavit. That material was not touched on and the evidence of Mr Winters and Mr Wood to the same effect about the company's inability to afford increases was not challenged. The Commission simply cannot ignore it. 29The Commission cannot ignore it because this Commission has always had an obligation to have regard to the economic affects of its decisions. That was made clear as early as in Re Journeymen Farriers Union (1910) AR (NSW) 264. It has been said in many State Wage Cases and it has been said in many other places. That position is now even more so given the terms of s 146(2)(b) of the Act. That does not mean that increases in rates cannot be granted and will not be granted, far from it, but it does mean that an application for increases in rates particularly when it is for increases in rates over a guaranteed minimum provided by this Commission, must address in substance the economic reasons for and affects of those rates even just so far as they affect the principal contractor's concerns. Where you have the operations manager of a principal contractor giving evidence to this Commission in terms that an increase of 3% would have a significant detrimental affect on business and allies that to evidence of a string of redundancies, none of which was challenged, that evidence was not even called into question, it must become a part of the Commission's discretionary decision making process. 30Now of course it will be said, employers will always say they cannot afford to pay, they have been saying it since the pyramids were built and they will always say it; and I accept that that is anecdotally true, it is what employers always say. And saying it does not defeat a wage or a contract determination claim. But I am bound to have regard to the evidence before me and in my view to overcome that evidence, given the obligations to consider economic affects that I have under the statute, there must be some sort of case to defeat that mounted to that effect and in this case there was not. 31The company must of course observe the general determination. That is not to say that in all cases without exception the general determination rates and conditions are enough, and that no contract determination will be considered that is in excess of the general determination. That is not the approach this Commission has adopted. Indeed it is evident that notwithstanding that all of the agreements that I could find that do contain provisions above the general determination rates were by consent, the Commission clearly will embrace and entertain such applications. But in this case the Commission was not persuaded on the evidence, notwithstanding the concessions that Mr Warnes obtained from Mr Wood in cross-examination. That means too that the safety argument put on behalf of the application falls away because I am not able to accept that there can be that safety concern in the terms in which it was put, if the sums created by the aggregation of the amounts under the general determination are being met. 32Indeed let me address in more detail the issue of the general determination rates. The Commission may have had a different view of this matter, very probably because the evidence of general agreement that is now in place would likely be different, had the company not granted the 1.5% upon 1.5%, had there been a blanket refusal to grant any increase at all. However, that has been done, and wisely, as on the evidence in the case of at least two contractors, on the company's own evidence, it was clear the company was going close to paying no more than the general determination. 33Now that of course is legal and permissible. It could be done, as submitted by Mr Baroni, starting tomorrow morning. However, it ought not be thought that paying the legal minimum in every case is all that is appropriate. There may be circumstances where a contract determination will be made in excess of the legal minimum, at least as to rates of payment, although in this case as I say there was simply insufficient evidence to justify such a determination; that is, insufficient evidence to justify setting this yard aside from all the other yards of its scope and size that are covered by the general determination rates. 34However I am now satisfied that, certainly with the 1.5% increase that has flowed, that the company is paying above the general determination rates. I note and I understand the criticisms made of Mr Wood's evidence and I have balanced the numbers and facts given in Mr Wood's evidence against those criticisms of the structure, but two things should be said about that. 35Firstly, as it was submitted, it was certainly the best evidence there is in this case there being not any other evidence beyond mere assumptions. Perhaps surprisingly in circumstances where it was sought to put Mr Wood's evidence in contest and say something controverting it, there simply was not any other evidence that would allow any other view to be formed than that which flows from the evidence that Mr Wood put forward. Indeed, I did some work on Mr Wood's evidence overnight, recalculating some of it and even with the deficiencies in it to which the applicant union has pointed, it seems to me overall that the general conclusions he has drawn are essentially correct. Certainly I am not in any position to form any contrary view on the evidence that was put before me. 36That brings me to a further point. It was the company's own evidence that there is simply no mechanism in place to check that the general determination is being observed in a given week or month. In circumstances where, again as on the company's own evidence was the case, certainly before the last increase, some contractors at least were running very close to being paid no more, or little more than the general determination, that is an unwise approach. It is not reasonable to expect the contract drivers themselves to do all these calculations, although some may. 37The company has the legal obligation to pay the rates prescribed by the general determination. It has the right to pay a rate in the way this company is paying - that is, all up - but it does not excuse it from observing the terms of the general determination. In my view the obligation to pay the general determination terms carries with it necessarily the obligation to take steps to ensure that those obligations are being fulfilled. The Commission has got express powers under s 313(3) to make a contract determination as to the kinds of records to be kept by a principal carrier. Arguably that power extends to an order that the records be kept in such a way as to allow satisfaction on the part of all parties that the general determination is being met. 38No applications have been made to this Commission for an order of that kind and I do not propose to make or contemplate such an order on my own initiative, even less so without the necessary step of putting everyone on notice that that was something that was in the Commission's mind. I do not say that it is necessary that such an order be made at this time. I do not say that an order would necessarily be made were it sought. But in my view it would be wisdom to have some checking system, I do not dictate to the company at all what it might be, indeed these are no more than observations which would allow checks to be carried out on an overall basis or from time to time. 39If not, and there were ever a claim which was put that there was a failure to observe the general terms - though at the moment I have found that that claim falls away and cannot be sustained - the company could not say that it was not on notice, given what I have just said, that it has a responsibility to satisfy itself that it is fulfilling its legal observations. 40To return to the effect of the provisions of the general determination on the application that has been made here, to say that increases in the general determination have occurred in the last three years, which is of course factually entirely correct and that they should be equitably flowed on, does not take the applicant home. I cannot accept that proposition in circumstances where inferentially it is the case that before the past three years' increases in the general determination, the rates paid to the contractors which have not increased in that time, were more substantially in excess of the general determination terms than they now are. 41That would mean that there has been, as was submitted by Mr Warnes, some erosion of take home pay. That happens in times of economic difficulty. It is a matter of regret that it happens but it happens. Ultimately there are mechanisms which allow that to be redressed, although to the contractors looking down the back end of three years of no increase, I understand that those mechanisms may appear to be a long way away and to give little comfort. 42But it is no part of the jurisprudence of this Commission that differences - in effect a cushion - between the rates in the general determination and what is being paid must be maintained. Indeed arguments of that kind have been rejected substantially in State wage cases and in award claims before the Commission and I do not propose to step outside the jurisprudence of the Commission in that regard. 43I now turn to the application for the inclusion in the contract determination a flat 3% increase in each of the next three years. I have already said that I cannot justify on the evidence imposing the increases sought for the present time of 2.5% or increases at all. Still less can I justify granting this part of the application on the evidence. It is not the way that the general determination is varied - that is by a flat increase in rate - and to project 3% increases into the future would not in my view, indeed not just in this case but in almost any case, be a proper use of the Commission's discretion. That is the more so having regard to s 146(2) of the Act. And it is the more so absent a telling case based on economic data which is always extremely difficult to do, prognosticating three years into the future. 44It was put to me as a discretionary argument, rather than a jurisdictional one, that it was not a proper course to, when discussion under Part 7 of the Act broke down, turn to make an application under Part 6 as the TWU has done here. I am not required to rule on that and what I am about to say therefore is by no means ratio decidendi in this case. 45In my view the power to make a contract determination pursuant to s.313 of the Act and the discretions available to the Commission in using those powers under s 313 are untrammelled by the introduction of s 222 and its following sections. Nothing was said in the second reading speech to that effect and the Parliament has made no provision to that effect in the statue itself. I do not need to decide the matter today, but I would need considerable persuasion that it is in fact so that if a collective agreement broke down there is a bar, even if only in a discretionary sense, to a union or another party making an application to the Commission for a contract determination. 46I understand perfectly well why this application was made. I understand the dissatisfaction that arises where no increase in three years is seen, whilst the general determination does increase and while costs increase, even though there cannot be any assumption of an automatic flow. I understand the frustration that has arisen and I note that while the application was made there was no breath of suggestion that industrial action would arise; the contractors continued to carry out their contracted work without any hindrance. All that is as it should be, but do not think it passes unnoticed. 47I understand too, I should add, why that frustration is increased when it is known that employees of the same company have had increases which have not flowed to the contractors. I have some knowledge of the pressures and difficulties of being an owner-driver. However, as I have said, on the application that is brought before the Commission and on the evidence that is before the Commission, I must decline to make the contract determination. Accordingly the order I make in the proceedings is that the application brought in matter 624/2013 is dismissed.