Title STANDING COMMITTEE ON EMPLOYMENT, WORKPLACE RELATIONS AND EDUCATION
08/06/2007
Workplace Relations (Restoring Family Work Balance) Amendment Bill 2007 Workplace Relations Amendment (A Stronger Safety Net) Bill 2007
Database Senate Committees
Date 08-06-2007
Source Senate
Committee Name STANDING COMMITTEE ON EMPLOYMENT, WORKPLACE RELATIONS AND EDUCATION
Place Canberra
Page 38
Status Final
Questioner CHAIR
Senator MARSHALL
Senator GEORGE CAMPBELL
Senator FIELDING
Senator SIEWERT
Senator BIRMINGHAM
Senator BARNETT
Reference Workplace Relations (Restoring Family Work Balance) Amendment Bill 2007 Workplace Relations Amendment (A Stronger Safety Net) Bill 2007
Responder Mr de Bruyn
Mr Smith
System Id committees/commbill/10328/0003


STANDING COMMITTEE ON EMPLOYMENT, WORKPLACE RELATIONS AND EDUCATION - 08/06/2007 - Workplace Relations (Restoring Family Work Balance) Amendment Bill 2007 Workplace Relations Amendment (A Stronger Safety Net) Bill 2007

CHAIR —Welcome. The committee prefers to take evidence in public. It will consider any request for all or part of evidence to be given in camera. Thank you for your submission. Are there any changes or additions?

Mr de Bruyn —There were a couple of changes which we notified the committee of and which was to be circulated to senators. There is nothing further beyond that.

CHAIR —That is correct. I invite you to make a brief opening statement before we go to questions.

Mr de Bruyn —Thank you, Chair and Senators, for giving us the opportunity to make a submission this morning. The Shop Distributive and Allied Employees Association is a union with 220,000 members as at 31 December 2006, and we submit strongly that the proposed fairness test in the Workplace Relations Amendment (A Stronger Safety Net) Bill 2007 is inadequate for the following reasons. Firstly, the bill continues to permit Australian workplace agreements to be concluded between the employer and individual workers. The fundamental problem with an AWA which overrides any other industrial instrument and can be put to a worker at any time is that it involves an unequal bargaining relationship between the employer and the worker. The employer holds all the cards. He determines whether the worker has a job and the starting times and finishing times of each work engagement, the nature of the work to be performed and how it is to be performed, and the timing of meal breaks and tea breaks and so on. To imagine that a worker can rise to the occasion and bargain with the employer on an equal basis in these circumstances is utterly fanciful. This is particularly so for vulnerable workers such as juniors and casuals. Even if the worker is so unique in his or her job that the employer cannot afford to lose him or her, the worker is unlikely to have the skills, the experience and the knowledge to be able to deal successfully with the employer on the employment conditions and the rates of pay. The continued existence of the AWA as an instrument will guarantee that workers will continue to lose out, no matter what protections may be legislated by the parliament.

Secondly, the bill ignores all those Australian workplace agreements and collective agreements which came into force between 27 March 2006 and 7 May 2007 and which take away conditions of employment without compensation or without sufficient compensation. We know from evidence given by the Employment Advocate before a Senate committee last year that most AWAs filed after Work Choices commenced removed various entitlements from workers. If it is now felt that workers need protection, the legislation should be backdated to cover all agreements filed since the Work Choices legislation commenced.

Thirdly, as we have stated in our written submission, in the retail industry in Queensland, New South Wales, South Australia, Western Australia and Tasmania, if all protected conditions are excluded or modified in a proposed agreement, the fairness test does not apply. This means the fairness test can be avoided in these five states, where over 73 per cent of employees in the retail industry are employed. This covers over one million retail workers. The same would apply for other industries which are presently covered by notional agreements protecting state awards.

Fourthly, in the retail industry in the ACT and the Northern Territory, the fairness test would not apply because the retail industry is not usually regulated by an award as it is defined in the legislation. This means the fairness test can be avoided for another 33,000 retail workers.

Fifthly, the proposed fairness test ignores a range of important conditions. They are not included in the fairness test. There are many examples one can give, but just to throw up two—the first is rostering entitlements, which are extremely important for retail workers; and the second one is the right to refuse to work on Sundays. In fact, the fairness test is limited to protected award conditions.

Sixthly, the fairness test is applied by inexperienced public servants operating in secret, not by an experienced independent umpire—namely, the Australian Industrial Relations Commission—operating in open court and publishing its reasons for a decision that are subject to appeal.

Seventhly and finally, the use of non-monetary compensation means that employees can still be worse off financially under the application of the fairness test.

 For all of these reasons, we believe that the safety net bill does not achieve what its supporters claim. The Work Choices legislation in its entirety should be repealed, and a fair and balanced national industrial relations system should be put in its place. Thank you.

CHAIR —Thank you. I will pass to Senator Marshall.

Senator MARSHALL —Thank you, Mr de Bruyn. I think you have quite clearly identified the fundamental flaw in the Work Choices legislation, and that is the assumption under Work Choices that employees and employers come to the bargaining table with equal power and equal bargaining strength, and of course that is not the case.

I would like to understand more about your experience of how AWAs are actually dealt with because I am concerned about the secrecy of the application of the fairness test and how precedents will be set, if they are set—how people will be able to rely on one agreement passing and then be able to rely on that agreement to take it elsewhere. I would like you to talk about that in the context of your understanding of how agreements are actually offered. Are they offered to individuals as individual agreements tailored to an individual or are they offered as a common AWA across an employment group, on a take it or leave it basis; and, if an element has passed the fairness test in one agreement and it is applied consistently across every employee, does that necessarily give a fair outcome for every individual employee?

Mr de Bruyn —Our experience is that AWAs within a business are offered on a take it or leave it basis. The employer draws up what he believes to be an appropriate AWA for the business. That is usually done with expert advice and assistance, which might be from a lawyer or from an employer organisation. That AWA is then offered as the template for all of the people in the business who are ordinary employees, and it is offered to them on a take it or leave it basis.

This time last year there was a controversy raging over the Spotlight AWA, which became well known around the country. The Spotlight AWA takes away all the protected conditions. It is a very basic AWA and it will be recalled that the publicity mentioned there was a 2c per hour increase in the rate of pay. The origin of the 2c increase in the hourly rate of pay was not because the employer wanted to offer a derisory increase in the hourly rate to compensate for all the loss of conditions, it was because they used the Victorian adult shop assistants rate of pay, which was 80c per week higher than in New South Wales, and 80c per week translates into 2c per hour. So the employer was not intending that to be compensation, the employer was intending simply to offer the standard rate; and, of course, all the protected award conditions were taken away.

The Spotlight AWA can continue to be used by the company in the future under the legislation as it stands because, as we have found, in the way the legislation is drafted, the fairness test will not apply to a retail company such as Spotlight. What Spotlight does is to offer that AWA to all new employees on a take it or leave it basis. It therefore creates extraordinary anomalies. For example in Victoria it means that, if you are an existing employee whose terms are covered by the Victorian federal shops award, you get double time for work on Sundays but if you are a new employee covered by the AWA, you get ordinary time for Sundays. So one person gets twice the hourly rate compared with another even though the same work is being done and that situation can continue despite this proposed fairness test. So the experience we have is that there is a template AWA. It is offered to everybody on a take it or leave it basis. In the case of Spotlight it is offered to all new employees. If they refuse to sign, they do not get the job. If they do sign, they do get the job, and that is how the company is using natural turnover to introduce substandard conditions of employment into its business.

The retail industry turnover is very high. Spotlight is a company which typically would have turnover of perhaps 30 per cent per annum. Sometimes in retail businesses it is even higher and so it does not take long before that becomes the new standard that operates in the business. Spotlight also gives the same AWA to existing employees where they seek to have a change in their terms of employment. We had one example of a lady who was a casual worker in Spotlight. She was asking the company to become part time and therefore gain the advantages of permanency. The company said, ‘We’ll agree to that provided you sign the AWA.’ She came to the union for advice. We analysed it for her and she was going to be worse off, so she declined to make the change.

Senator MARSHALL —There has been some discussion this morning about the protections contained in the fairness test when the so-called protected award conditions are to be removed. The words ‘fair compensation’ are used but there are also words such as, ‘exceptional circumstances’ ‘public interest’ and ‘significant value’. I have not yet seen any definitions of any of those words spelt out in the bill. I am just wondering whether you have concerns about how these things may be dealt with in a subjective way by the Workplace Authority director.

Mr de Bruyn —We have very great concerns about how non-monetary compensation might be dealt with. Those concerns are particularly felt by us because of the comments that were made by the Prime Minister on 4 May when he first announced that the government was going to introduce this test. He said in the interview:

In some cases extremely flexible working arrangements can be given in return for the non payment of penalty rates ...

That opens up enormous scope for people to lose financially in their employment in return for some flexibility in their working arrangements, which may cost the employer nothing, which the employer might very well be able to provide without any change to other conditions of employment but is simply using it as a means, a device, to avoid the payment of penalty rates. In that particular interview the Prime Minister went on to say:

It can be the case that a particularly beneficial arrangement is made by a parent in relation to leave to do things concerning their children in return for an understanding that if that parent is required to work at irregular hours then penalty rates are not to be paid. Now these are all assessments that will be made.

Clearly, the Prime Minister, representing the government, envisages that this legislation will enable an employer to provide flexibilities the nature of which may be quite ordinary in their terms but which avoid the payment of penalty rates, which frequently are a significant component of a person’s income. In the Spotlight example I gave before, Sunday work in Victoria in the retail industry under the award is paid double time for ordinary time work, not overtime. It may very well be that an employer says to a worker, ‘I will give you this flexibility,’ and as a result the hourly rate is cut in half. If that happened, that would be an absolute disgrace.

Senator MARSHALL —But you think that could be allowed under this fairness test proposal?

Mr de Bruyn —The Prime Minister, in announcing it, made it clear that those sorts of things can be done.

Senator MARSHALL —It has been put to the committee by both the department and ACCI this morning that we have to appreciate that these agreements come to the table based on genuine agreement between employee and employer—it is what they want, what they have agreed to. Is it your practical experience with the operation so far that that will be the case?

Mr de Bruyn —No. AWAs are invariably offered on a take it or leave it basis. There is no genuine negotiation and, as I said in my opening comments, in the vast majority of cases of ordinary workers they are not in a position to negotiate on an equal basis with their employer. Therefore, the idea that you have an equal negotiation and the employee gets benefits in return for making certain concessions simply does not happen in the real world. Let me give you another example. A supermarket in Western Australia was being sold and the new owner came into the store in the week before he was to take over. He held a meeting with all the employees, who were covered by an industrial agreement negotiated by the union which still had at least two years to run. We thought and the employees thought that despite the transmission of business these people would be secure. The new employer came to those employees and said, ‘I’m taking over this business next week. I’m happy to employ you provided you sign this AWA,’ and out came a standard template AWA to be signed by all employees in the store, irrespective of their circumstances. He said, ‘If you sign the AWA, you’ll get employment with me when I take over next week. If you don’t sign the AWA, I won’t employ you.’

We did not believe that, under the Work Choices legislation, what he was doing was legal, but nevertheless we got legal advice. The legal advice that came back from a senior QC was that under the Work Choices legislation an AWA can be offered at any time and if it is signed by the employee it becomes immediately effective, overrides any other industrial instrument and can be offered as a condition of employment. So the advice was yes, he can do what he was suggesting. So our advice to the employees was, ‘If you want to retain your employment when the change of ownership occurs, you had better sign the AWA even though it is not a palatable thing.’ In the event, two employees refused to sign and lost their jobs. All the remainder signed the AWA and they were all worse off because the AWA took away all their so-called protected conditions, penalty rates and so on without any increase in the rate of pay. So that is how it works in the real world.

Senator GEORGE CAMPBELL —Mr de Bruyn, the example that you gave to the committee about what has been occurring at Spotlight—and I presume that you have looked at this legislation in detail, so if you are unable to answer the question, don’t—wouldn’t Spotlight, now, in their agreements, be forced to reintroduce those protected award conditions in any new agreements they seek to register?

Mr de Bruyn —No, because the way the legislation is drafted, we believe that Spotlight would not be covered by the fairness test. If you look at the legislation, Spotlight was traditionally covered by state awards around Australia; there was a federal award in Victoria and a federal award in the ACT and the Northern Territory. In all of the company’s operations other than Victoria, we do not believe that the fairness test will apply because the legislation prescribes that if you are bound—

Senator GEORGE CAMPBELL —Which clause are you looking at, Mr de Bruyn?

Mr de Bruyn —I am looking at paragraph 52AAA of schedule 8. Paragraph 42 of the bill. It states that the criteria for whether a fairness test is activated in this instance are threefold: firstly, the workplace agreement was lodged; secondly, immediately before the workplace agreement was lodged, the employer and the employees were bound by a NAPSA, a notional agreement protecting state awards; and thirdly, the workplace agreement contains protected notional conditions because the agreement did not expressly exclude or modify all of the protected notional conditions. The Spotlight AWA expressly excludes all the protected notional conditions; therefore, this does not pick it up.

Senator GEORGE CAMPBELL —So even when you come to renew agreements they will still, in effect, be able to avoid the responsibility.

Mr de Bruyn —Yes. As we read the bill that is before the Senate, Spotlight can continue to offer its substandard AWAs to all new employees and will not face the new fairness test.

Senator GEORGE CAMPBELL —On the question of non-monetary reward, I understand that in your industry, particularly in the clothing sector, it is quite common for employees to get access to this kind of clothing. Has there been any attempt by employers so far to include that as part of the remuneration package, or do you see the potential for that in the future?

Mr de Bruyn —I am not aware of any examples where a discount on the merchandise that is sold by the retailer has been put into part of the remuneration. To date that has usually been offered as a benefit to employees over and above the normal remuneration. But there is obviously a serious question arising under this bill: if non-monetary compensation is to be permitted, will discounts on merchandise, vouchers or whatever be able to be offered by the employer in return for doing away with penalty rates and other protected conditions?

Senator FIELDING —I notice that on page 3 of your submission you talk about a review that was recently undertaken of 100 agreements in the retail and fast food industries. Could you give us some background on those and what led you to do that?

Mr de Bruyn —That was done by our Victorian branch and I must confess that I am not familiar with that research.

Mr Smith —In New South Wales we undertook a similar sort of exercise as part of a recent child employment principles case. We handed up 26 agreements that were done in a template form and which stripped out all protected award conditions. I think just about every agreement contained only the award base rate of pay for those conditions, but they excluded all protected award conditions. They are the sorts of agreements that would continue to operate in the retail industry despite the fairness test. Because of the way that the bill is currently drafted, the fairness test would not apply to those sorts of agreements.

Senator FIELDING —The concern that I have—I think it is a bit further on in your submission—is that some agreements that have been entered into before the fairness test kicks in—and let us face it, AWAs can run for one, three or five years and some will still be on those conditions for a number of years—would definitely breach the fairness test. Do you think that is the case?

Mr Smith —Whilst the fairness test would not to apply to those agreements even if they were entered into after this bill is passed, if you were theoretically to apply the test I do not think they would pass the fairness test on monetary value.

Senator FIELDING —The area that I have most concern with is that if you vary the length of those agreements the fairness test would not be evoked to have a look at those agreements, so they could be extended in perpetuity, basically.

Mr de Bruyn —This is where there was an amendment made to our submission. The maximum period for an agreement to apply is five years from their commencement. It is possible for existing agreements to avoid the fairness test for a five-year period commencing from the date of the lodgement of the agreement. Therefore, because there are so many AWAs that have already been lodged, even if they are not for a five-year term they can be varied to extend their term to make them a total of five years in duration from their original inception. And if nothing else is amended in the agreement, then the fairness test is avoided for that whole five-year period.

Senator FIELDING —On a separate point, we heard this morning from the department that some of the talk is that the fairness test is similar or the same—it seems to be a bit tricky about that works with the no disadvantage test. On collective agreements and the understanding of how it applies to individuals and groups, are you able to work through that? I know in your submission you talk about when the disadvantage is as a whole or when it is an individual that could be worse off.

Mr de Bruyn —We believe that under the fairness test the likely interpretation will be that one will look at what applies on average across the group, rather than looking at each individual person. That makes it quite different to the old no disadvantage test, which obviously looked at the agreement in comparison with the award in its entirety, but then it went on to look at the individual circumstances of each employee, and the fairness test had to be applied and passed for each individual person rather than just for the average. Therefore, it is possible under the fairness test for a minority of employees to be worse off but the collective agreement will still then pass.

Senator FIELDING —That is certainly a concern. I have a final point, which I raised previously. You may need to take this on notice and respond at another stage. It is in relation to the article in the Weekend Australian on 2 June 2007 on the case of an employee of Global Television Services who was sacked for operational reasons. The operational reasons were that the company decided to restructure—it was not in any financial difficulty—and the Australian Industrial Relations Commission has ruled that this is legal under Work Choices. Obviously you will need to look at this a bit further, but if that report in the Australian is correct would it be a concern to your workers?

Mr de Bruyn —One of the worst things about the Work Choices legislation is that it has taken away the right to contest an unfair dismissal from the vast majority of workers in this country. Any employee who works in a business of less than 100 employees no longer has any right to contest an unfair dismissal. If you work in a business where there are more than 100 employees then once you have got the required period of service up you can contest an unfair dismissal, but you cannot if the restructuring of the business was at least part of the reason for the dismissal. So if the employer can argue that a restructuring of the business was at least part of the reason for your dismissal then the commission has no jurisdiction to hear it and therefore you have no rights under the unfair dismissal provisions of the Work Choices legislation.

This is one of the worst things about the Work Choices legislation, which employees find to be objectionable because the security in their employment which they previously had has been largely or completely taken away. Security from being arbitrarily dismissed from the job that is giving you your livelihood is fundamental to employees, fundamental to ordinary working people.

Senator FIELDING —Just to clarify this point: the issue I was raising there was to do with the ‘operational reasons’ and that it quite clearly seems that restructuring is an operational reason—

Mr de Bruyn —Yes.

Senator FIELDING —which I do not think was the intended purpose of it at all, to start with.

Senator SIEWERT —Following on from that question about operational reasons, have you seen other examples? That one has been quoted in the media and there have been others. Have you heard of a lot of cases where that has been used to justify people being dismissed? Also, for me, that is linked to the issue about exemptions. If there are massive holes in the operational reasons clause, are you concerned about what holes there will be in what can be allowed under the exemptions rules?

Mr de Bruyn —We are concerned about how widely ‘operational reasons’ is being interpreted. There was the case of the Priceline employee who was involved at a senior level in the design of stores and the use of space in stores. He was dismissed by the company, and a few weeks later the same job was being advertised at a lower rate. He took a case to the commission to get reinstatement, and the company was able to show that he was dismissed for operational reasons. The fact that the same work was being readvertised at a lower rate did not give the commission jurisdiction because the jurisdiction was not there in the first place. I do not know of many cases because in the retail industry we enjoy good relations with virtually all the employers with whom we deal and where there are dismissals for whatever reason we can usually sort them out without needing to go to the commission, and so the jurisdictional issue does not arise.

You really do wonder what is happening in the world where people are not unionised, where they do not have a trade union to go to, because normally what happens there does not appear above the horizon—there is no public visibility. We are very concerned at the decisions which the commission is making about how widely they are interpreting ‘operational reasons’. It means that, where the employer has over 100 employees, ‘operational reasons’ can easily be found to justify dismissals. Therefore, any security that people in the larger companies might feel they still have under Work Choices is very much jeopardised.

Senator SIEWERT —You raised the case of the supermarket in WA. In the media around that time was the case of some young people who had basically missed out on a number of weeks pay because they were being required to pay for their uniforms. Is it possible, under your interpretation and looking at the bill, that that could be included as part of non-monetary compensation?

Mr de Bruyn —The provision of a uniform?

Senator SIEWERT —Yes.

Mr de Bruyn —I would answer it this way. There is nothing in the bill that I have seen which would prevent it, so presumably it becomes a matter of interpretation. I go back to the words of the Prime Minister when he first announced that this fairness test was going to be legislated. He seemed to provide a wide opportunity for non-monetary compensation to be able to be offered by the employer to compensate for taking away protected conditions.

It ultimately will depend upon how it is interpreted, and we know that the person who is going to do the interpreting—the Employment Advocate—is not likely to be sympathetic to the views we represent. You have to remember that the Employment Advocate from the outset of the Work Choices legislation has been running seminars all around the country for employers to advise them how they can use the Work Choices legislation for their business. If the Office of the Employment Advocate is using all of the resources that are at its disposal to advise employers how to take advantage of the Work Choices legislation, you would expect that the disposition of the Employment Advocate would be to allow these sorts of things—these non-monetary compensations—to be used to take away penalty rates and other conditions.

Senator SIEWERT —I did some very quick calculations. I do not know whether you were here when I asked the department about how many staff they were going to have and how many AWAs they were going to be dealing with.

Mr de Bruyn —I was not here.

Senator SIEWERT —They said there were going to be about 400,000 and they were going to have up to 800 staff. My quick calculation suggests that that is 500 per staff member per year. Do you believe that that is going to be adequate time for an assessment of individual AWAs?

Mr de Bruyn —No. If you take an agreement and you compare it with, say, the award that would otherwise apply, that is a very significant task to undertake. Even just the straight comparison may not under the fairness test lead you to be able to make a decision. There may be things about the employer’s business that you need to find out about before you can come to a conclusion under this so-called fairness test. So to do an analysis of just one agreement is likely to take a substantial period of time. Therefore, there is an enormous task ahead for the Employment Advocate and his office, under his new title, to check not only the agreements that have been filed since 7 May but to continue to examine each agreement that comes in from now on into the future. It would take an army of public servants, with all the best of intentions, to be able to do this job.

Senator BIRMINGHAM —Mr de Bruyn, is it fair to say that you and the SDA have a fundamental objection to AWAs and individual agreements?

Mr de Bruyn —Yes.

Senator BIRMINGHAM —Also, you believe that unfair dismissal laws should be reintroduced to cover all workplaces?

Mr de Bruyn —Yes.

Senator BIRMINGHAM —So, no matter who was sitting at this table or who were the government of the day, you would actively lobby them to abolish AWAs and individual agreements and reintroduce unfair dismissal laws for all workplaces?

Mr de Bruyn —Of course.

Senator BIRMINGHAM —Including of course people such as your state secretary in South Australia, Mr Don Farrell, whom I expect will be joining us in the Senate from 1 July next year?

Mr de Bruyn —I understand that whether he is going to join you was the subject of a meeting yesterday, but I have not heard the result.

Senator BIRMINGHAM —I believe he secured—not so surprisingly—the No. 1 spot on the ticket.

Mr de Bruyn —Well, I am very pleased to hear it.

Senator BIRMINGHAM —And you would expect him to uphold the SDA policy when he gets here?

Mr de Bruyn —I certainly hope so.

Senator BIRMINGHAM —Mr de Bruyn, can you tell me this. In collective agreements negotiated by the SDA, have you ever traded away penalty rates?

Mr de Bruyn —Yes.

Senator BIRMINGHAM —And could you give us a guarantee that workers under those collective agreements are no worse off than they would have been under the award conditions?

Mr de Bruyn —Yes.

Senator BIRMINGHAM —You are absolutely certain?

Mr de Bruyn —Well, the no disadvantage test was applied to them. The old no disadvantage test is where you had to submit any agreement to the commission and the commission made a comparison between the agreement and the award that would otherwise apply. The agreements passed the no disadvantage test.

Senator BIRMINGHAM —So no worker under a collective agreement negotiated by the SDA where penalty rates have been traded away is worse off than they would have been under the award conditions?

Mr de Bruyn —That is what I believe, because that is what we submitted to the commission in the no disadvantage test. The no disadvantage test would not have been passed if it were otherwise.

Senator BIRMINGHAM —We have all sorts of hypotheticals that are thrown up around these hearings. We hear about young employees who work casually on weekends, and the argument is put that, under an AWA that might be negotiated, they could be worse off if weekday rates were raised but that there could be a levelling out between weekday rates and penalty rates over weekends and so on, so in net terms employees benefited but there might be isolated examples where employees did not benefit. You are saying that, under the collective agreements negotiated by the SDA, such young employees who only work weekends would not be worse off than under the award rates.

Mr de Bruyn —Because when we negotiated these things they were always accompanied by complex savings provisions which protected people from being worse off. It was because of those savings provisions that the commission, in looking at the agreement, recognised that nobody was worse off and therefore the no disadvantage test was passed.

Senator BIRMINGHAM —It is true that the previous no disadvantage test allowed for the trading away of annual leave, sick leave and such conditions, isn’t it?

Mr de Bruyn —No. I am not aware of the trading away of annual leave under the old arrangements.

Senator BIRMINGHAM —It allowed for some trading away, whereas the proposed fairness test—

Mr de Bruyn —I am not aware of that.

Senator BIRMINGHAM —That is certainly counter to some of the evidence we have had earlier today.

Mr de Bruyn —I was not here for the earlier evidence, but I can assure you that that issue has never been something that we have engaged in as a union. I must admit I was not aware that it was possible to trade away annual leave. We have certainly never done it. In fact, we would be opposed to trading that away, because people need their four-week break every year from their employment to recharge their batteries.

Senator BIRMINGHAM —Indeed. In fact, this new fairness test makes that harder and in fact is a greater protection than the previous no disadvantage test was.

Mr de Bruyn —I am not aware of sick leave and annual leave being traded away under the previous arrangements before Work Choices came in. We certainly did not trade sick leave or annual leave. We were typically trying to increase the availability of sick leave to employees.

Senator BIRMINGHAM —I will turn to non-monetary compensation and particularly, shall we say, family-friendly negotiations. You seem to have been highly critical in your evidence of the ability of employees to negotiate different working hours or different arrangements with employers that might suit their personal family arrangements. Why is that the case?

Mr de Bruyn —Because typically employers have a standard AWA which has been drawn up for their business by an outside expert, either from an employer association or by a lawyer, and they use it with all of their employees. There is no negotiation. It is put on a ‘take it or leave it’ basis. Take, for example, the Darrell Lea AWA which got publicity recently. The company decided that it wanted to take away the penalty rates and other entitlements like tea breaks and so on from casual employees who typically work in the company on weekends. It had a standard AWA drawn up, it was issued to all of the casuals within the company, and they were asked to sign it. There was never any individual negotiation with any of the casuals. While they had the right to say no as existing employees, most casuals in the company felt that, with the employer putting it to them and their not being in the union and therefore not getting union advice, they were required to sign. There was no individual negotiation, no taking into account individual circumstances, no looking at family-friendly provisions and, once the casuals signed the AWA which took away their entitlements without compensation, they were simply filed with the Employment Advocate and the people were worse off.

Senator BIRMINGHAM —But, under the union policy, you would trade away the opportunity for any employee to make those negotiations with an employer.

Mr de Bruyn —No. Under the old system of awards and under the agreements that we negotiate, it is perfectly possible for any employee to sit down with the employer to negotiate anything which sits above that agreement or above that award. From time to time, that happens. We encourage it, and if the employee and the employer sitting down together can work out something which sits above the award and which satisfies the desire of the employee for, say, some family flexibility then we—

Senator BIRMINGHAM —But it is a one-way street, isn’t it? The employee in that instance is attempting to get something. Their chances of obtaining those family-friendly arrangements are much diminished by the fact that there are very few things that you would allow them to trade with an employer.

Mr de Bruyn —The employee might very well be asking the employer to agree to a family-friendly position which imposes no real cost or disadvantage to the employer. Let me give you an example in the retail industry. Let us say that there is an employee who is a mother and has the responsibility of, for example, taking children to school or picking them up in the afternoon and wants to change her hours of work in order to better fit in with those family responsibilities. It is no skin off the retailer’s nose to adjust the working hours of that employee so that she can attend to her responsibilities and invite other employees to change their hours so that there is continued provision of labour at all the required times with nobody being worse off. That is of no disadvantage to the employer.

Senator BIRMINGHAM —Unless she would actually rather work at a time when penalty rates were paid and negotiate with the employer to secure those hours and perhaps negotiate away some of those penalty rates in return for the valuable opportunity of spending more time with her children.

Mr de Bruyn —But, if the employer suffers no disadvantage arising from the change in the hours, why should the employee give up part of their income to pay for it?

Senator BARNETT —I will continue on that line. I want to clarify your comment earlier. You were not aware that you could trade away up to two weeks annual leave?

Mr de Bruyn —Are you talking about under Work Choices or before Work Choices?

Senator BARNETT —Either.

Mr de Bruyn —I certainly was not aware that you could trade away annual leave before Work Choices came in. I am aware that there was the possibility of cashing out annual leave under Work Choices since 27 March last year because that has had a lot of publicity.

Senator BARNETT —I want to get it clear that your union has never traded annual leave, I think you said, in negotiations and agreements that you have had with employers?

Mr de Bruyn —Not in reducing entitlements to annual leave, no. I take it that what you are talking about is an agreement whereby you reduce the entitlement to annual leave from, say, four weeks to two weeks and in return you might get, say, a higher hourly rate?

Senator BARNETT —Yes. That is what I am asking.

Mr de Bruyn —The answer is no.

Senator BARNETT —Have you ever traded away annual leave loading?

Mr de Bruyn —Yes. There have been examples of that—for example, in the Bunnings agreement. Before Bunnings started building their big stores, they came to us to negotiate an agreement. They were insistent that they did not want the annual leave loading to be part of the entitlements, and they said that they would compensate for that in higher rates of pay. We were reluctant about that, but we did the agreement, and the first agreement came into being. That occurred for a while, but the employees over time continued to insist to us that they wanted the annual leave loading to be restored, and no amount of us explaining to them that it was part of their higher hourly rate of pay would work. So, in the end, it became part of the negotiation of the next agreement to restore the 17½ per cent leave loading, because the employees were insistent upon it and they would not accept that it was part of a higher hourly rate of pay.

Senator BARNETT —I am interested that you differentiate between trading away annual leave and annual leave loading and that you have used the Bunnings example. You indicated that you were not aware that you could trade away annual leave prior to Work Choices. It is my firm understanding that you could trade away all of your annual leave and sick leave prior to Work Choices. Work Choices has required a minimum of, I think, 15 days a year or two weeks leave for the first time in law.

Mr de Bruyn —In all of my experience of negotiating enterprise agreements up to the time that Work Choices came in, I am not aware that the question of trading away all or part of four weeks annual leave or all or part of sick leave entitlements in return for some other benefit has ever come up. It has never been put to us by an employer.

Senator BARNETT —But you were advising the committee that you were not aware that that was the law.

Mr de Bruyn —No, I was not aware that it could be done. It has never crossed my mind that anybody would even propose it.

Senator BARNETT —Let us move on. Is your union in the habit of trading away penalty rates, annual leave loadings, monetary allowances and overtime, shiftwork loadings and penalty rates when you are negotiating agreements?

Mr de Bruyn —There have been some occasions when we have traded away some penalty rates in return for other benefits—which typically was a higher rate of pay.

Senator BARNETT —So there have been some examples—you admit to that?

Mr de Bruyn —Yes, and it is done in such a way that everybody is no worse off or, preferably, better off by virtue of the higher hourly rate of pay and, secondly, by virtue of the savings provisions that are put in place.

Senator BARNETT —I understand you have a five-year collective agreement with Figgins Holdings Pty Ltd. Are you aware of that agreement?

Mr de Bruyn —I cannot be certain. Figgins, I think, is a chain of shoe stores. I am not aware if we have a current agreement with them, but we may have. There are a number of companies which are a chain of shoe stores. If Figgins is the one I am thinking of, in fact we failed to renew our agreement recently, so we terminated the old agreement hoping that the people would then fall back under the pre-existing award.

Senator BARNETT —I am not sure how recently this happened, but the advice I have is that there was a five-year collective agreement with your union, that overtime and Sunday penalty rates were reduced, that the spread of ordinary time hours was increased, that annual leave loading was removed and absorbed into pay, that rest breaks could be consolidated, that there were more flexible rostering arrangements and that shift loading was removed. That is an example where there has been a whole lot of trading away of these conditions.

Mr de Bruyn —I am not familiar with that agreement. Certainly I was not involved in the negotiation of it.

Senator BARNETT —All right. It is your union that I am referring to.

Senator GEORGE CAMPBELL —Have you got the agreement? Could you table it?

Senator BARNETT —I will be more than happy to follow up on that as soon as possible.

Senator MARSHALL —So you do not have it?

Senator BARNETT —Not with me, no, but we can follow up on that.

Mr de Bruyn —We will provide a copy of the agreement, if it exists, to the members of the committee.

Senator BARNETT —Thank you very much. That would be most helpful. How do you go about getting support for an agreement like that? Do you have a vote with your members? What if some of them, for example, do not support such an agreement?

Mr de Bruyn —Under the legislation, for most of the time that that agreement-making has been done by the union it has been a legal requirement that you conduct a vote amongst all the employees; and only if the majority support the agreement can it go forward for certification.

Senator BARNETT —And what about the minority?

Mr de Bruyn —You conduct the vote and if there is a majority who vote in favour then the agreement goes forward to the commission, under the old arrangements for the application of the no disadvantage test, and if the no disadvantage test is passed, the agreement is certified. If the no disadvantage test is not passed, the agreement is not certified.

Senator BARNETT —For all those employees?

Mr de Bruyn —For all those employees. As I have explained before and as we say in our submission, the no disadvantage test is applied in respect of individual employees to make sure that they are all better off. The commission satisfies itself in an open court that that is the case.

Senator BARNETT —So that applies even if 51 per cent vote for it and 49 per cent vote against it?

Mr de Bruyn —Yes. That is the way this parliament operates, too. A majority is a majority; if you have the numbers, you get there.

Senator BARNETT —There has been some public discussion about your views on common-law contracts, with respect to certain employers and there being honest mistakes and so on. I am interested in whether you think employees are more secure in their entitlements, terms and conditions, and job security under a common-law contract compared to under the legislative arrangements that we have here for AWAs.

Mr de Bruyn —I think that under the Work Choices legislation employees are extremely insecure. In the case of a common-law contract, the question is: does that operate alongside the Work Choices legislation or does it operate under what applied before Work Choices? Before Work Choices the award was the minimum and a common-law contract could not undermine that minimum. A common-law contract could only sit on top of the award; it could not go, in any way, below an award because it was not an instrument to override an award.

Senator BARNETT —I am not sure if you have had a chance to look at the AMMA submission to our inquiry.

Mr de Bruyn —No.

Senator BARNETT —In any event, if you have not, they say that common-law contracts of employment, as opposed to AWAs, create a ‘legal minefield’. They say that in their submission at page 10. What would you say to that proposition?

Mr de Bruyn —Under the old arrangements before Work Choices, a common-law contract could only operate on top of an existing award or agreement that was legally enforceable. It could not change the terms of an award or an agreement, because it did not carry the power to do so. As for common-law contracts under Work Choices, it just creates greater complexity. But the instruments that under the Work Choices legislation have legal effect are AWAs if they apply because they override any other industrial instrument. Otherwise, the legally applicable instruments are certified agreements or federal awards.

CHAIR —Thank you for your appearance here today.

[11.52 am]