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H0008 Dec 541/93 M Print K7601

AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Industrial Relations Act 1988 s.113 application for variation

Australian Hotels Association (C No. 22069 of 1990)

THE HOTELS, RESORTS AND HOSPITALITY INDUSTRY AWARD 1992(1) (ODN C No. 02782 of 1986)

Hotel workers Liquor and accommodation industry

COMMISSIONER GAY SYDNEY, 6 MAY 1993

Wage rates - penalty rates - employer sought to substantially alter basis for paying ordinary time worked other than Monday to Friday - sought review of weekend penalties, public holiday loadings, and rates applicable between 7 p.m. and 7 a.m. weekdays - Commission found arguable case for review of non-day weekday week - penalty rates should be examined in the context of each award - in absence of evidence public holiday loadings not altered - approach to averaging weekday after hours penalties rejected - loading increased for work from midnight to 7 a.m. - weekend penalty averaged and expressed as flat amount - loading reduced by 25% for Saturday work.

DECISION

On 16 November 1990 the Australian Hotels Association (the AHA) made an application under section 113 of the Industrial Relations Act 1988 (the Act) to vary what is now The Hotels, Resorts and Hospitality Industry Award 1992 (the award) in relation to enterprise agreements and a range of work periods which currently attract a pay loading.

The application seeks to substitute for the existing percentage weekend and public holiday loadings paid for ordinary time worked during such periods flat amounts of money to be paid hourly. Thus a flat hourly amount of $4.50 for all employees regardless of classification level would replace the 50% loading applying currently for ordinary hours worked on a Saturday with $6.80 per hour replacing the 75% Sunday loading for non-liquor service employees and 100% loading for liquor service employees. Ordinary time hours worked on a public holiday would receive payment at an hourly rate of $13.50 for permanent employees in lieu of the current 150% loading, and $11.30 per hour for casuals in lieu of the 125% loading.

The application seeks also to alter the terms of payment and quantum of the additional amount of $1.03 per hour provided by the award currently for ordinary time worked from Monday to Friday after 7 p.m. and before 7 a.m. termed the 'after hours' penalty. It does this by prescribing, inter alia, that the threshold for payment of the allowance be extended by five hours so that payment of $2.00 per hour would commence for ordinary time worked after midnight. Award base rates would therefore apply, Monday to Friday, not until 7 p.m. as at present but until midnight.

(1)Print K3966 [H008]

2

DECISION

All these changes only effect ordinary time worked at such times i.e. on Saturday, Sunday, public holidays and between the current hours of 7 p.m. to 7 a.m. Monday to Friday. Whilst in this decision there is frequent reference to periods for which there currently exist pay loadings or 'penalty' payments it should be borne in mind that the work under consideration is in each case ordinary time work, not overtime.

Other than the percentage payment for public holidays and weekends set out above, the $1.03 per hour payment for Monday to Friday 'after hours' work is the totality of penalty payments in the award. No shift premia for various shifts worked Monday to Friday are paid.

Both parties referred to Acting Chief Judge Drake-Brockman's decision in the Saturday and Sunday Rates of Pay Case,(2) where in a review of what penalty rates are and are not his Honour observed:

"A similar diversity of usage is to be found in the awards of this Court. Some awards do not use the term 'penalty rates' at all, although containing provision for rates similar in amount to those which in other awards are referred to as penalty rates and required to be paid in similar circumstances. Awards and judgements which use the phrase do so in widely different meanings."

In describing Saturday and Sunday rates as "shift rates" not penalty rates when the work is in ordinary time, the judgement continues:

"We have power to deal with this claim insofar as it relates to shift workers. So far as they are concerned the rate paid for Saturday work performed within standard hours is not, on the principles above stated a 'penalty rate' but it is a 'shift rate'."(3)

and re Sunday work

"We have power . . . it is not as regards work not done in overtime, a 'penalty rate'."(4)

The debate as to nomenclature takes on a livelier form later in this decision in terms of the AHA submission that any punitive element effecting the employer for regularly requiring work at such times must be excised from the award.

Various other changes are contained in the variation sought such as to constitute a most significant series of alterations to the award.

The Application

The AHA application constitutes an overall approach whereby currently loaded ordinary time hours are revalued in a way which is said to be cost neutral from an industry-wide perspective and thereby countenanced, if not indeed encouraged, by the Structural Efficiency Principle (SEP). The AHA do not contend that the application results in a cost neutral outcome for all

(2)58 CAR 610 at 615 (3)ibid., p.619 (4)ibid., p.620

DECISION

employees in the event of its introduction. While the AHA submit that for many employees the application would result initially in a positive pay outcome, it is conceded that there will be losses for some employees at the time of introduction.

The number of employees in this category and the extent of their loss provided fertile ground for competing contention during this case. For current purposes, it is sufficient to register the AHA's acknowledgement of loss to some employees and record that this element of the AHA's overall formula for change was put as fitting squarely within the orbit of legitimate structural change envisaged by the April 1991 National Wage Bench in its observation that:

"Implementation of the structural efficiency principle will involve what might be perceived as both losses and gains for employers and employees. The end, however, is that all will gain through the increased viability and efficiency of Australian industry."(5)

The cost neutrality on an overall industry basis said to support the application results from the AHA's analysis of a survey, conducted by it in the early stage of the case, which requires, as the quid pro quo for the elimination of the existing schema, that base rates in the award be increased by 1.59%. The 1.59% base rate increase derives from that quantum of earnings currently generated industry-wide from the weekend, public holidays and Monday to Friday after hours penalty, when the replacement fixed loadings are taken into consideration. Various other adjustments are made to the AHA calculations to arrive at the figure of 1.59%.

It should also be said in this summary of the key features of the application that the fixed hourly amounts provided for in the application (supplemented by the base rate increase) are, in the variation sought by the AHA, not capable of variation for two years. That they will decline in real terms, over time, is an essential part of the thinking of the AHA. That the hourly amounts could in, say, two years be adjusted by CPI or some other amount necessary to restore the pay position which currently exists would be to, in the AHA view, destroy the entire rationale for the exercise. The AHA purpose is to lessen the value of the weekend loadings so that their cost is 'closer' to the Monday to Friday award base rates.

Mr Lewis, appearing for the AHA, put it in this way:

"The AHA's application isn't directed at the abolition of penalty rates. It is taking a new approach which over time will bring weekend labour costs nearer to the Monday to Friday labour costs and we say accordingly that would help to overcome the problem the industry now finds itself in with having to restrict services at weekends."(6) The AHA described this application as the means of initially breaking the award's nexus with percentage penalties, following which further 'adjustments' might be made to speed the diminution of the weekend loadings relative to Monday to Friday rates. The overall philosophy underpinning the application, together with the intentions of the AHA, are perhaps best put in the following submission of Mr Lewis:

(5)Print J7400 p.45 (6)transcript p.735

4

DECISION

"It's the intention of the application to convert compensation for work on weekends and public holidays from percentage based compensation to a flat rate compensation and to allow the relativity of penalty rates for weekends and holidays their relativity to week day rates to diminish over time so there would finally be a more even operating cost over the seven days of the week.

This proposal for two year period allows that process to commence to operate and gives the Commission at the end of that time the opportunity to review it on application by either party. And I've made the point before and I repeat in short by saying that the AHA does not see that exercise as merely an updating to take account of wage movements because we see that would defeat the fundamental objective of the change that it proposes and that in in future application the AHA would strongly oppose that kind of approach being taken.

It is possible in the light of the experience with the new arrangements that there might be a further application after that time from the AHA to seek to make some further adjustment to the flat money amounts to accelerate the process of getting them closer to weekday operating cost by making an adjustment of the kind proposed here. In other words, some offsetting adjustment to wages generally might be made in return for some further adjustment in the flat penalty rates.

The Commissioner: Reduction in those rates?

Mr Lewis: Yes, reduction in the rates. Now, I don't say that necessarily will happen. I say that that is a possibility and very much in the mind of the AHA . . ."(7)

In summary then the application constitutes, for the AHA, the commencement of a staged process providing for:

(a) variation to the Monday to Friday after hours payment;

(b) the removal of percentage weekend and public holiday loadings in favour of fixed hourly amounts, made cost neutral industry-wide via a base rate adjustment;

(c) the freezing for two years of the hourly amounts to allow their quantum to diminish relative to Monday to Friday base pay; and

(d) another phase, external to the present application, where by time or perhaps by additional application of the AHA, the quantum of the hourly amounts may be further reduced. Separate from the detailed workings of the AHA's flat hourly rate approach is an Enterprise Agreement provision sought by the AHA. Termed a facilitative clause, this provision allows for agreements to be made between employers and an employee or group of employees, which would override the new regime sought by the application. Such agreements would not require the

(7)transcript p.990

DECISION

involvement or agreement of the Australian Liquor, Hospitality and Miscellaneous Workers Union (the union) or variation of the award. Rather the agreement would be recorded and held locally and not preclude the involvement of the union in the event that an employee or group of employees requested the union's participation. The union would not be a party to such agreement.

During the course of conciliation the AHA conducted a survey of its member hoteliers, respondent to the award in those areas where the award applies i.e. South East Queensland, New South Wales, Victoria and Tasmania. This survey, which is central to the detailed workings of the variation is Appendix A of Attachment 1. The first twelve pages of Attachment 1 are the detailed AHA analysis of the survey material. Much of what follows turns on an understanding of the calculations contained within Attachment 1.

Background

Before proceeding further it is helpful to record the context in which the AHA application is made. This award was varied for the first pay movement available under the August 1989 National Wage decision(8) by Munro J in a decision dated 27/11/89.(9) The AHA in opposing the increase sought, argued that no agreement had been reached as to the classification structure of the award or to the following additional matters which in the AHA's submission were required to be addressed to provide flexibility and efficiency in the industry:

. flexibility in hours of work . flexibility in part time employment provisions . a new approach to weekend penalties . a review of 'after hours' penalties.

The relevance of these issues to real gain under the SEP was highlighted by the AHA submission that:

. the classification groupings within the award already had generally a single pay rate,

. there already existed interchange between classifications,

which meant that broadbanding of classifications was "devoid of benefit to the employers". In varying the award Munro J concluded the parties had on balance co-operated positively in a fundamental review of the award however adding the following:

"In expressing that satisfaction I stress that I am by no means satisfied that the parties have approached the limits of the co-operation that should be expected nor has the extent of the review thus far approached the limits which might reasonably be expected as the final outcome of a fundamental review".(10)

The issues outstanding were subsequently referred to Commissioner Smith, together with the union's application for the second increase available under the SEP. A range of issues had been agreed and others were determined by the Commission. Additionally however there were substantial issues reserved for later attention which situation was recorded by the following observation of Smith C:

(8)Print H9100 (9)Print J0424 (10)ibid., p.12

6

DECISION

"There are also four matters which it was submitted were part of the structural efficiency negotiations but were not sought to be arbitrated at this stage. Those matters relate to paid education leave, sexual harassment, travelling facilities and penalty rates. Both parties acknowledged that negotiations on these items must, at some stage, be brought to an end and, if necessary, arbitrated."(11)

These proceedings represent the arbitration of the 'penalty rates' component of those reserved structural efficiency matters. It is also germane to recall the further comments of the Commissioner:

"Directly on the issue of penalty rates, I remain concerned that there may be difficulties in addressing this issue in an award which provides minimum terms and conditions for such a wide range of enterprises over vastly different geographical locations.

The question can be asked; are the needs of a small hotel in a non-tourist country region the same as the needs of a major tourist oriented hotel complex. Similarly, are there particular periods of the year where different systems of work are more appropriate compared with other times."(12) Conferences

Prior to proceeding to arbitration, a series of conferences were chaired by the Commission. These occurred on 17 January, 27 February, 26 March, 1991 following which inspections were undertaken in Melbourne and Geelong on 11 April and in Ballarat and Bendigo on 12 April and in Queensland on 16, 17 and 18 April 1991.

Following further conferences on 28 May and 14 June 1991 a statement was issued by the Commission foreshadowing a likely end of conciliation. On 5 July 1991 I indicated that the conciliation phase was at an effective end and called the matter on for arbitration on 20 August 1991.

Progress of the Case

The application has been amended several times. The final amendments which arise by virtue of the last minimum rates adjustment process being concluded by the Commission,(13) were received in the Commission in early December 1992. Attachment 2 is the AHA communication of 2/12/92 updating the calculations contained in Attachment 1.

On 6 September 1991 the applicant sought that hearing dates scheduled from 16 September be vacated and that the matter be adjourned generally "until after the National Wage Case decision".

On 13 November 1991 the applicant sought to have the matter come back on for hearing. On 17 December 1991 hearings recommenced. On 16 March 1992 the Commission received a copy of an amended application from the AHA. A further amendment relative to varying effects of sick leave was received on 22 June 1992.

(11)Print J3179 p.2 (12)Print J3179 p.13 (13)Print K5233

DECISION

A statement was issued by the Commission on 6 August 1992 relative to industrial action in Victoria on 10 August 1992. This statement is Attachment 3.

The union reply commenced on 13 July 1992 and proceedings adjourned on 25/9/92 having extended over 2182 pages of transcript with additionally many thousands of pages of exhibits.

The Application

The application proposes an increase to clause 17 - Wage Rates of 1.59% and:

"2. By deleting clause 20 and inserting the following:

20 - OVERTIME AND PENALTY RATES

(a) An employer may require any permanent employee to work reasonable overtime at overtime rates and such employee shall work overtime in accordance with such requirements. To ensure that permanent employees are not deprived of the opportunity to work reasonable overtime, an employer shall so far as is practicable offer such employee the opportunity to work any overtime that may be required to meet fluctuations in his/her trade or other special circumstances, in preference to engaging casuals to supplement his/her normal labour force.

(b) All time worked in excess of the hours and/or outside the spread of hours or outside the rostered hours prescribed in clause 12 of the award shall be overtime and shall be paid for at the following rates:

(i) Monday to Friday inclusive time and half for the first two hours and double time for all work thereafter.

(ii) Between midnight Friday and midnight Sunday double time for all time worked.

(iii) All work performed on an employee's rostered day off shall be paid for at the rate of double time with a minimum payment of four hours at that rate provided that such minimum does not apply to work which is part of the normal roster which began the day before the rostered day off.

The four hours minimum shall not apply when overtime is worked and is continuous from the previous day's duty.

(iv) Overtime on any day shall stand alone.

(v) If an employee is so long on overtime duty following his/her normal finishing time that he/she has not had ten hours interval before his/her next regular starting time such employee shall be allowed at least ten consecutive hours interval without deduction of pay or shall be paid at overtime rates for all time of duty until such employee has had at least ten hours interval.

8

DECISION

(c) Notwithstanding the rate prescribed in subclause (b) hereof at the instigation of the employee there may be an agreement in writing between the employee and employer to take time off with pay equivalent to the amount for which payment would otherwise have been made. Such accumulated time must be taken within four weeks from the time of accrual.

Weekend and Penalty Rates

(d) (i) All ordinary time worked between midnight Friday and midnight Saturday will incur an additional payment at the rate of $4.50 per hour.

(ii) All ordinary time worked between midnight Saturday and midnight Sunday will incur an additional payment at the rate of $6.80 per hour.

(iii) All ordinary time worked on public holidays will incur an additional payment at the rate of: (1) $13.50 per hour for permanent employees, with a minimum of four hours pay except where the ordinary hours of work commence or finish on a holiday, the major and substantial part of which falls on the next or previous calendar day.

Alternatively, permanent employees who worked on a prescribed holiday may by agreement, perform such work at ordinary rates plus $4.50 per hour in that week provided that equivalent paid time is added to the employee's annual leave or one day in lieu of such public holiday shall be allowed to the employee during the week in which such holiday falls. Provided that such holiday may be allowed to the employee within 28 days of such holiday falling due.

(2) $11.30 per hour for casual employees.

(iv) Subject to paragraph 24(c)(iii), for casual and part-time employees, the hourly rates prescribed in this subclause will be paid in addition to the rates prescribed in clauses 23 and 24 respectively.

(v) The hourly rates prescribed in this subclause shall remain fixed and will only be reviewed on specific application after a period of two years from (date of variation).

Enterprise agreements

(e) (i) Employers and employees covered by this award may reach agreement to vary the provisions of subclauses (d) and (f) hereof (and as a consequence clause 17 hereof) to meet the requirements of the employer's business and the aspirations of the employees concerned.

DECISION

Such agreements shall be made in accordance with the procedures contained in paragraph (ii) hereof.

(ii) (1) The proposed variation shall be by agreement between an employer and an employee or group of employees. In the case of a group of employees the following shall apply:

- the majority of the group must consent; - any new employee in the group will be bound by the agreement.

(2) The agreement shall be committed to writing and a copy kept with the time and wages records.

(3) The agreement shall be the subject of negotiation between the parties directly concerned with its effect. Nothing in this subclause shall prevent the employees from seeking advice from or representation by the union during such negotiations.

(4) Where the agreement represents the genuine consent of the employer and the employees directly effected by it and complies with the provisions of this subclause, the union will not withhold its consent or otherwise oppose the operation of the terms of that agreement.

(5) The agreement shall have a fixed duration and shall continue to apply after its expiry. It may be terminated at any time by agreement between the parties. After its expiry it may be terminated by either the employer or the employee or in the case of a group of employees the majority of the group, giving three months written notice to the other party.

Other penalty

(f) A permanent employee who is required to work any of his/her ordinary hours between the hours of midnight and 7.00 a.m. on Monday to Friday inclusive shall be paid $2.00 per hour, or any part of an hour, for such time worked outside the said hours. This payment shall not apply to shifts which attract public holiday or overtime rates.

Broken periods of work

(g) Permanent employees who have a broken work day shall receive an additional allowance for a spread of hours as prescribed in clause 12 of this award as follows:

(i) Two hours over the hours worked in a day and up to three hours - $1.30.

(ii) Three hours over the hours worked - $2.10.

3. By deleting clause 23 and inserting the following:

10

DECISION

23 - CASUAL WORK

(a) "Casual employee" in this industry shall mean and be deemed to be any employee engaged as such to work for a lesser period than a working week of 38 hours on the class of employment for which the casual is employed.

(b) A casual employee shall be paid per hour at the rate of 1/38 of the weekly rate prescribed for the class of work performed plus 25 per cent. Provided that additional penalty payments shall be in accordance with subclauses 20 (d), (e) and (f). Provided further that the penalty prescribed in subclause 20(f) shall be subject to a maximum of three hours per shift.

(c) Casual work may, by mutual consent, be paid for weekly or fortnightly by agreement between the employers and employees or at the termination of each engagement.

(d) "Engagement" for the purposes of this clause shall be deemed to mean the period or periods for which the employer notifies the employee that he/she is so required to attend on any one day. Provided that each period of engagement shall stand alone and shall be treated as an engagement of not less than two hours and paid for as such.

(e) Casual employees who have been regularly employed as such in an establishment shall not be re-employed as permanent employees in that same establishment for a lesser period than one month.

4. By deleting subclause 24(c) and inserting the following:

(c) (i) A part-time employee shall be paid per hour at the rate of 1/38 of the weekly rate prescribed for the class of work performed, plus 10 per cent.

(ii) The additional 10 per cent shall be regarded also as ordinary wages for the payment of annual leave, sick leave, and when work is not performed on a holiday.

(iii) The said additional 10 per cent shall not apply in addition to the rates prescribed for work on Saturday, Sunday, holidays, overtime, or where double-time is prescribed in the award."

The Applicant's Case

Mr Lewis supported the application with a very substantial body of material additional to the AHA witness evidence. While I propose to examine much of the material tendered and evidence led, this is a convenient place to indicate that I have considered at some length all that has been put by both parties. Non-re-iteration here of a particular argument cannot be taken as an indication of its irrelevance or that it has not been considered.

The AHA case also comprised a substantial body of reports and calculations as to the effect of weekend penalty rates and allowances for evening and night work performed Monday to Friday. These are set out in the list of exhibits found at Attachment 4.

DECISION

Much factual information and opinion was also tendered from several consultants to, or observers of, the industry. This considerable amount of evidence was supplemented by a range of industrial agreements and decisions from the Commission and various State tribunals.

It is perhaps unnecessary to add that every aspect of the variation sought by the employers was contested by the union. No submissions were put by interveners.

The Survey

The survey (Attachment 1) was conducted by the AHA during the early phase of conciliation. Some input from the union was sought by the AHA. A part of that input was accepted by the AHA. Much argument was to ensue as to the validity of the survey and the subsequent use to which its findings were put. As most of this argument stemmed from the evidence of the union's expert witness Mr Strahan, it is convenient to consider that evidence in examining the union case in reply. With this caveat as to the survey in mind, set out briefly below is some of the industrial demography of the industry said to be revealed by the survey.

The survey was circulated to all AHA members "covered by the Federal Hotels Award" in February 1991 and sought information as to the pay week commencing on or after 11 February 1991.

The following information is referable to that pay week.

. of the 2958 questionnaires issued, 508 or 17% were returned

. the responses covered over 13,000 employees

HOTEL EMPLOYMENT . 70.8% of all employees are casuals . 25.6% of all employees are full time . 3.6% of all employees are part time

DISTRIBUTION OF HOURS . casual employees worked 54.1% of total hours . full time employees worked 42.8% of total hours . part time employees worked 3.1% of total hours

AVERAGE HOURS . average hours of casual employees = 17.4 hours per week . average hours of part-time employees = 20.0 hours per week

TIMES WORKED . Full-time - . 23.9% Monday to Friday roster . 26.95% four week days plus Saturday . 12.0% four week days plus Sunday . 37.2% three week days, Saturday Sunday

12

DECISION

. 74.95% Monday to Friday . 13.9% Saturday . 11.1% Sunday

. Casual hours -

. 70.91% Monday to Friday . 18.3% Saturday . 10.8% Sunday

The main thrust of the AHA's analysis of the survey was to provide for the construction of an industry average person i.e. to apportion to a notional person the various work times loaded and unloaded that according to the survey, actually exist. By weighting the classification structure according to the survey results it is possible to construct a 'Hotel Award Wage'. This weighted award wage can, the AHA approach suggests, be then applied to the equivalent breakdown by job classification to produce an average award wage payable. It is this average award wage payable that is then used throughout the very detailed workings of the applicant in their calculation of the effects of the application upon earnings. I do not propose to here examine these complex calculations, containing as they do a series of adjustments for on costs, casual loading, sick leave and other unworked time and the like. The calculations can be found commencing at page 10 of Attachment 1.

The Base Rate Adjustment The AHA approach as to the base rate adjustment can be summarised as follows.

The AHA position calculates the adjustment required to achieve industry cost neutrality by constructing the average award wage and plotting its application across the total hours worked by all types of employees having apportioned to those total hours the varying pay loadings (other than Monday to Friday after hours penalty).

Therefore a notional industry person comprising of the work performed in the industry at the times it is performed, in the proportions it is performed, can be represented as follows:

NO PREMIUM - Monday to Friday 71.71% 50% LOADING - Saturday 15.83% 100% LOADING - Sunday (permanent liquor service employees) 1.50% 75% LOADING - Sunday (non permanent liquor service employees) 8.89% 150% LOADING - Permanent on public holiday 0.90% 125% LOADING - Casual on public holiday 1.17%

The cost neutrality adjustment then required is arrived at using the average award wage referred to earlier ($342.80) to calculate the amount paid currently across these periods compared with that generated by the proposed

DECISION

hourly amounts. The shortfall, when further adjusted for the Monday to Friday after hours amounts (and those other components mentioned earlier), is the amount by which the AHA seek to increase all base rates in this award i.e. 1.59%.

It is important to highlight the interdependence of the various changes sought to be made. For example the wage adjustment factor and weekend hourly payments rely in part on the calculated effect of removing the $1.03 per hour Monday to Friday after hours payment and the substitution of $2.00 per hour from midnight to 7 a.m. In the event that this approach was not accepted or sought to be substantially changed by the Commission the AHA's overall adjustment formula, relying as it does on each of its parts, is compromised.

In summarising the case of the AHA and then setting out that of the union in reply I propose by reason of the volume of material put to briefly outline the arguments raised.

The Hotel Industry and the Structural Efficiency Principle

The place within the Australian economy occupied by the hospitality sector generally and by the hotel/resort industry particularly was quite properly stressed by the AHA.

The AHA case is developed as a structural efficiency application which, as outlined earlier, is described as entirely consistent with the injunction of the August 1989 National Wage Bench as to penalty rates. Reminding the parties that in the earlier National Wage review decision of that year "no limitation (was) imposed on the agenda available for structural efficiency exercises," the Bench set out that it was "concerned that conditions of employment have not been included in negotiations as a matter of course."(14)

Referring to the earlier indication of the need for structural efficiency exercises to ensure that "working parties and arrangements enhance flexibility and the efficiency of the industry," the August National Wage Bench set out a more detailed indication of issues calling potentially for attention by saying:

"In relation to the last measure in particular we are of the view that many awards have scope for a less prescriptive approach and, without limiting the opportunities for innovation, the following are some of the measures which are appropriate for consideration: . averaging penalty rates and expressing them as flat amounts."(15)

The AHA argue that this is what they have done in a cost neutral way from an industry perspective, in satisfaction of the no negative cost cutting requirement developed further in the April 1991 National Wage Case decision.(16)

In support of the change in approach to money amounts from the percentage approach at weekends, the AHA put that the current payments inhibit the provision of services, limit employment, are a negative factor for tourists, particularly international tourists, and in a general way stultify and wrongly penalise the hotel industry.

(14)Print H9100 p.9 (15)Print H9100 p.10 (16)Print J7400; 1991/4 CAR 204

14

DECISION

In support of the proposed variation that on Mondays to Friday there be only base pay until midnight, rather than the $1.03 per hour currently payable, the AHA submitted that 7 p.m. as a trigger for additional pay was anachronistic. Changed licensing laws were evidence, in the AHA view, that any legacy of the 'six o'clock swill' should be removed. In the AHA view midnight was a reasonable time from which a social disability existed. What might be termed the traditional arguments for use in shift cases were pressed, such as the benefits flowing from being with family and school children in the day time, extending to the added amenity said to attach to the use of sporting and recreational facilities at non-crowded times.

An argument particularly stressed was that in this highly casualised industry, employees, fully aware of the non-standard hours, public holiday and service-oriented nature of employment, offered only for work which suited them and could not then validly claim for rates to be loaded to meet a non-existent 'disability'. Societal changes were said to play a role in an attitudinal development which saw evening and weekend work quite dissimilarly than employees whose attitudes may have been reflected in the early cases in this and other awards where the early loadings were developed. It was further put that a two year period of operation allowed for an appropriate period of review.

The AHA submitted that in fixing additional payment for hours outside 'normal' Monday to Friday day hours, arbitrators (and those dealing with consent applications) had always had in explanation and justification of their actions a duality of purpose. This was recognition of the element of deterrence directed at the employer and the element of proper compensation directed at the employee.

To make out these submissions a range of evidence was relied upon. The summary which follows can be no more than an indication of what was put.

The AHA Witnesses

The key AHA witnesses giving evidence directly upon hotel operations and the bad effects of penalty rates were:

Mr T.K. Davies, the Director of Human Resources at the Hotel Conrad and Jupiters Casino at the Gold Coast in Queensland.

Mr D.H. Edmonds, the Director of Personnel and Training at the Sydney Hilton and Area Director for Human Resources for Hilton Australia.

Mr J. Franks, Licensee and owner of the Woolloomooloo Bay Hotel Sydney.

It is worthwhile identifying for current purposes the parts of the industry represented by these witnesses. Later in this decision I will further deal with the matter of the breadth of coverage of this award relative to discernible sectors of the industry.

Mr Davies described his establishment as an international hotel casino and entertainment complex which was itself a tourist attraction. Mr Edmonds' establishment can be described as part of the more traditional international hotel operation. Mr Franks described his hotel as a 'pub' - where the accommodation aspect was not significant. While Mr Franks' view was that no two 'pubs' were the same he recognised that his hotel had some special characteristics.

DECISION

The Resort Hotel Casino

Mr Davies' evidence was that the Hotel Conrad and Jupiters Casino was disadvantaged by the cost impact of weekend and Monday to Friday after hours penalties by:

. guests being limited in the choice of restaurants and facilities available to them at such times,

. guests being effected and service standards falling, owing to cost premiums forcing staff being prematurely let go at the edge of and during peak cost times,

. the need for services regarded as essential to be cross-subsidised from other departments by virtue of their cost such as laundry services and the provision of guest valets,

. surcharges being applied which caused resentment among customers,

. guest services being limited, or non-existent, at certain times because of the effect of penalties; i.e. in Mr Davies' view a full range of services should be available around the clock, (many are at Jupiters) such as food, health club, travel arrangements, organising tours, disposing of foreign currency and shopping. Mr Davies' evidence was that a much fuller range of services would be available in many hotels if costs were different and that there would be greater, not the same, turnover.

In relation to the after hours penalty paid Monday to Friday Mr Davies said:

"In respect of the AHA application for the after 7.00 p.m. penalty to be replaced by one commencing at midnight, it has been a long time within our industry since the days where it was considered an impost to work of an evening. Any person contemplating a career in our industry understands that evening work is an important feature of our industry, and indeed, many would consider it a penalty to work during the day. The current award structure places too much emphasis on weekends, is unfair to the average employee and is based on social conditions of 50 years ago."(17)

The International Hotel

The thrust of Mr Edmonds' evidence stressed the dynamic potential for change, requiring enormous flexibility on the part of a property to remain competitive. Benefits for employees seen to attach to the application were:

. a levelling out of weekly pays thereby eliminating fluctuations;

. simplification of pays which would serve to resolve the current low level of understanding of pay makeup;

(17)transcript p.341

16

DECISION

. improved commitment to the industry resulting in less turnover of staff (a sub theme as to itinerancy of workers and its effect on the industry exists in the reports and in the decision(18) of Lear C in the Hotels, Motels, Wine Saloons, Catering, Accommodation, Clubs and Casino Employees (Northern Territory) Consolidated Award 1986. Mr Edmonds' evidence was that the higher rates of pay accomplished through loading rates were simply not necessary where hospitality workers worked weekends by choice, for second incomes or as students.

Having questioned the existence of a "disability" for which weekend loadings were paid, Mr Hinkley for the union asked Mr Edmonds:

". . . what is it you mean by that expression? . . .My understanding is that there is - historically I have had the word disability put to me by union officials and others, about the alleged disadvantages to working on a weekend. I've put it in inverted commas because in the industry I don't know that that is the perception.

Yes, well how do you characterise your understanding of what this disability in your view is said to consist of? ...In other industries, in Australia, I believe that where businesses operate Monday to Friday it is a disadvantage for people who have organised their personal lifestyle around that, it may be a disadvantage in some cases for them to have to work on a weekend. In our industry characterised by people who are only available to work weekend, or who are only interested in working in restaurants in the evenings that that is not a disability, that is what they desire to do."(19)

Additionally Mr Edmonds' evidence was that:

. greater employment opportunities would follow from the expansion of the range of weekend services and improvements in the standard of service offered,

. a fairer result is achieved with a uniform penalty applying across all classifications,

. more productive use of capital facilities would result,

. opportunities for additional revenue to be generated on weekends would flow from the altered viability of current and potential services. In this important regard Mr Edmonds said:

"We believe that we would be able to provide more and better services, particularly on Sunday by opening or expanding the hours of operation of food and beverage outlets which now remain closed."(20)

Examples of the sorts of services which might be offered were given.

It was clear from Mr Edmonds' evidence that no research had been done by the Hilton as to Hilton employees preference for certain hours and their personal circumstances.

(18)Print K1477 (19)transcript p.436 (20)transcript p.419

DECISION

The matter of cross-subsidisation of departments in penalty times from lower-cost periods was put by Mr Edmonds as a negative effect of the current levels as was detailed profit and loss information as to trading in certain Hilton departments in penalty times. I do not propose to canvass this material felt, by the Hilton to be commercially sensitive, in any detail. The union were in possession of this material. However, I do indicate that I accept the material forwarded to the Commission some time after Mr Edmonds gave evidence, as indicating that in applying the standard profit and loss analysis, an otherwise profitable cost centre went into loss. I will refer to this issue again later.

Finally Mr Edmonds, a very experienced hotel operator, having commented on the boom in hotel construction, particularly in New South Wales, gave evidence concerning his awareness of the varying commercial stances found within the hotel industry.

". . .because particularly of the type of arrangements that Hilton International has with owners, that there are entirely different reasons sometimes for opening hotels and that the interests are completely separate from people who are managing hotels."(21)

And later:

"The people who are opening hotels do it for many, many different reasons, not necessarily to operate a commercial hotel profitably. . . .I am aware however that there are many developers who operate hotels for the prestige value and are not interested in profits in the hotel in the short term and take a long term view because of the capital appreciation that comes from holding real estate in prime locations."(22)

The City Pub

Mr J. Franks the owner and licensee of the Woolloomooloo Bay Hotel gave detailed evidence of the retarding effects of penalty rates in his view upon the style, methods and standards of service offered in his hotel. Having run and commercially revitalised a series of small, not always successful hotels, Mr Franks' evidence was that the vast change that had effected his hotel (with its colourful past) was illustrative of that effecting his hotels' end of the industry generally.

The following features characterised the hotel he bought some dozen years ago; tiles on the floor; no decoration; big inefficient bars - poor for customer and staff alike; poor or no kitchen facilities; 'steak sandwich/ hamburger' menu; no entertainment; little or no wine served; no coffee served; few women patrons; fighting and other "disgusting" behaviour.

The changes to all these things reflect only a part of the change referred to by Mr Franks. Carefully selected and trained staff - maintaining the highest standards, work in an environment where live entertainment, an extensive menu, quality facilities for women, poker machines, Pub Tab, the first licensed footpath, an emphasis on non-alcoholic beverages such as freshly squeezed juices and espresso coffee and a courtesy shuttle bus for patrons rounds off the comparative picture.

(21)transcript p.457 (22)transcript p.458

18

DECISION

Mr Franks' evidence was that:

"Many decisions made in respect of planning, staffing and facilities provided by my hotel are influenced by penalty rates paid to employees. Compromises are made in hotels and pubs because of penalty rates."(23)

A range of limitations on services being offered and operational curtailments were cited by Mr Franks. Examples of these are:

. Table service is not commercially viable on Saturdays and Sundays. As customers do not appreciate abrupt changes in service standards, table service is not offered during weekdays.

. Pub Tab operates at a net loss on public holidays.

. A surcharge is necessary on drinks on Sundays, thus the price of a can of beer is increased from $2.50 to $3.50.

. With the exception of Good Friday, no surcharge is made on public holidays "so on those days I operate negatively".(24) Mr Franks' evidence was that decisions as to hotel operations turned on the issue of penalty rates, as is clear from the following passage.

"More money is spent by the public on weekends than is spent on weekdays, yet this is the time when our labour costs are highest. As a consequence I make the decisions about my operations based on the wage structure. I do not open at certain times on public holidays due to penalty rates.

Mr Lewis: Can you explain what you mean by that? . . .Let's use Easter Monday as the example, coming up. My hotel would normally open at 10 o'clock on a Monday. It will open at midday. My hotel would stay open till 11 o'clock at night. It will close as soon as the clientele drops off, the public bar would probably close at 8 o'clock and more than likely the saloon lounge area would close at nine, ten. The games bar which would normally be staffed from four to eleven will not be staffed at all. The bottle shop which would normally stay open till ten will shut at eight. So right through the building there are decisions based purely on the wage structure for that day."(25)

Further Mr Franks gave evidence that despite his hotel's very substantial success he had deferred developing a roof garden and verandah by virtue of the following analysis:

"But when I analysed it the risk involved was big but then I looked at it and thought, well it's only going to work at weekends so therefore there's risk involved and it's only going to work at weekends and at weekends I'll be paying penalty rates and frankly because of the penalty rate factor I was frightened to do it."(26)

In a range of other ways Mr Franks' management style had been innovative and at times bold.

(23)transcript p.623 (24)transcript p.624 (25)transcript p.624 (26)transcript p.626

DECISION

Evidence was also given by officials of organisations associated with the industry.

The Australian Tourism Industry Association (ATIA)

Mr O'Clery the Chief Executive of the Australian Tourism Industry Association, gave evidence that described "the present labour penalty system" as anachronistic and supported the application as a means of achieving a price and quality competitive tourism product comparable to Australia's tourism opposition internationally. This achievement was seen to be at odds with the '9 to 5 mentality' which Mr O'Clery felt resulted in loaded rates being paid for work outside such times.

The vitally important role for Australia played by the tourism industry was highlighted by Mr O'Clery indicating that:

. it generates 450,000 jobs in Australia (1 in 17)

. overseas visitors generated $6.7 billion in foreign earnings in 1990 (more than coal and twice that earned by wool).

The hotel/resort industry is a very important part of the broader tourism industry. Job creation was stressed by Mr O'Clery.

Mr O'Clery was concerned as to the possibility for the industry to have performed even better than it had in the growth period of the 1980's and in the future "if we get the degree of flexibility which we believe will provide internationally competitive product."(27)

Speaking of the somewhat contentious forward tourist estimates, Mr O'Clery gave evidence as to the enormous growth in tourist infrastructure including the accommodation sector. His evidence was that the hotel/resort product had to be delivered and had to fulfill the qualitative expectations of the customer - if growth was to be sustained. The following evidence is a convenient summary of the evidence put forward, in the larger residential sector, as justifying the AHA approach.

Mr O'Clery: ". . .20 years ago the Australian tourism market was almost wholly domestic, people in transit between major cities, a highly seasonal holiday market with tremendous peaks and troughs and a commercial market. Not only has the number of tourists increased dramatically but these requirements and tastes have changed over the period - over that period of time. These changes have been catered for by very large capital investment and accommodation resorts and other leisure activities. This has generated a dramatic increase in employment and led to the development of excellent and educational facilities. While these dramatic changes have occurred they have not been matched by changes and labour conditions. These have hardly changed and still seem to be driven by a 9 to 5 Monday to Friday mentality with penalties being attracted for work outside such times. The change to customer orientation as part of the world theatre requires us to keep up our competitiveness in price, quality and service and we can't do that if we have to curtail services at times which are important to our customers as a result of distortion and low labour costs."(28)

(27)transcript p.316 (28)transcript p.304-305

20

DECISION

When asked to give examples of the services so curtailed Mr O'Clery replied:

"Well where you find at weekends that hotel restaurants are shut or other services are not available because its out of those sort of core hours as far as the international visitor you've got to close most of our domestic market also as an international market in a sense that we have to compete for them and they're well accustomed to what they get in off-shore locations. For most of them have, when they are travelling and particularly travelling on holidays, the days of the week and sometimes even the hours of the day are not particularly travelling on holidays, the days of the week and sometimes even the hours of the day are not particularly important to them they just expect a particular level of service. And if we're not delivering that sort of level of service well then our industry is not performing to its maximum."(29)

and further

". . .essentially the tourist expects as with any world class facility that he can eat when he wants to eat, that he's not going to be suddenly discover that he can't use the restaurant in the hotel on a Sunday, that he's got to go and find somewhere else. It's just pretty alien to the sort of way in which the tourism industry has now grown world-wide."(30)

The views of Mr O'Clery are found overtly and attitudinally in the reports tendered by the AHA. A range of contentions can be identified when one analyses the rationale supporting the changes sought by the AHA. In part the attitude is internationalist - the idea that there must be greater parity in such things as work rules and pay rates for the Australian hotel industry to progress to 'true' competitiveness. In this regard room costs and labour costs were the subject of surveys tendered to show different cost structures within the Asian, Pacific and other regions all part of Mr O'Clery's 'world theatre' justifying a reassessment of loadings traditionally paid for weekend, public holiday, afternoon and night work in this country.

While the 'global village' argument can be eloquently pressed and is no doubt enormously well received within its own electorate, it is in my view necessary to look to other substantial grounds in support, under different heads, to make out change of the magnitude envisaged here.

The Chartered Accounting Firm

The evidence of Mr Barbuto, the National Director, Tourism and Hospitality Industry Services for an international chartered accounting firm, Pannell Kerr Forster, was not subject to full cross examination by the union.

Mr Barbuto presented detailed analytic material of the sort which the union submitted was not tendered to support the views expressed by other witnesses. This material, exhibits W8 and W9, provided a detailed 'statistical review incorporating operational and financial data on hotels. The AHA sought that I draw conclusions from this material relative to:

(29)ibid.,p.305 (30)loc cit

DECISION

. Australia having the highest average room costs in the Asia Pacific region.

. Australia having a high level of payroll and related costs relative to other regions.

Mr Barbuto's view was in the light of this material and other information available to him that 'more business should be able to be done'. The following evidence is of interest:

Mr Warren: ". . .When you say there it should enable more business to be done, could you expand on that comment, please? . . .My belief is that if the labour costs in those departments that we have identified where the ratios are higher and the figures become equalised then the opportunity then exists for outlets to either price more competitively or to operate in periods other than when they may have not operated due to the unprofitable nature of opening and therefore the opportunity may exist for more business to be done because it can be done at a more profitable level."(31)

Cross country comparisons that were to be reviewed by Mr Barbuto (in a comparative analysis document involving a uniform system of accounting) prior to his final cross-examination were not produced owing to Mr Barbutos' non-availability. There was no supplementary witness called to give evidence as to Mr Barbuto's material. Australian hotel costs and profitability and the basis upon which these can be validly measured with regional competitors was thus unavailable.

As a consequence of the union being unable to examine the document designed to support several of his important conclusions, and to cross-examine him generally, I have not relied upon Mr Barbuto's evidence.

The Reports

The wide range of reports tendered by the AHA are informative and to that extent useful. As will be clear in the later summary of the union's reply they suffer in varying degrees from:

(a) a narrow research base, (b) inadequate representation and weighting if any, of opposing views as part of the reaching of conclusions on a reasoned basis, (c) a potential lack of objectivity.

In a number of cases it is not easy to show that they are at arms length from the cause of the AHA. They are however of interest. They contend that pay loadings at the times under review in this case are no longer justified; that they serve as a disincentive to employment, act as a retarding agent upon further development and wrongly penalise employers from trying to ply the trade of hotelier. They postulate societal change which is said to require a different 'modern' outcome to the valuation of weekend, late or public holiday working times. They venture to suggest that different working times are not regarded as important and even that penalty rates do not play a large role in the minds of employees.

In any event they have all been considered.

(31)transcript p.330

22

DECISION

The Authorities

Mr Lewis sought to rely in support of his case upon a series of decisions, particularly from cases heard in the State Commissions. These cases were supportive, it was submitted, of a series of contentions:

(a) That penalty rate reviews were considered consistent with the requirements of the current wage fixing principles and particularly the April 1991 National Wage Case decision, when it enjoins against negative cost cutting.

(b) That review of penalty rates in an industry award turns on a review of the state of, and conditions within, that industry.

(c) That in part as a consequence of (b) penalty rates be not assessed on a base broader than the industry under review.

(d) That rates set in the past, often in relation to broad standards, could be reviewed and then adjusted.

Test Case

While I will return to the matter of test case principles later in considering the union case in reply, it is necessary to record at this point the AHA submission relative to the above cases and the so-called 'test case' approach. As to this being a test case Mr McKendry for the AHA at the outset of the case in opposing the intervention of the ACTU put the following position:

"We do not perceive this matter as being a test case. We see it as being unique to the Hotels, Resorts and Hospitality Award. The issue of a test case, sir, is to our way of thinking, a significant one. We reject the suggestion that it is. The hospitality industry is unique; the claim is unique to that industry."(32)

This view was supported at the end of the case by Mr Lewis' submission:

"It has certainly been our position that this is not a test case, this is very much a case which is directed towards what should happen in the hotel industry, and that follows one of the agenda items proposed by the 1989 National Wage Case decision as to the sorts of things that are proper for parties to look at."(33)

The view of the union was that this was not a test case. Of course the parties declaration on this issue does not make it so. The tests are (a) the basis upon which a particular conclusion is said to apply in this award and then subsequently is applied by the Commission and (b) the extent to which the parties and interveners present material persuasive to the outcome which has a locus outside the industry under review.

In this matter Ms Acton, then appearing for the ACTU, highlighted that this case was a continuation of structural efficiency matters previously heard and involving the ACTU earlier. The ACTU put as a ground for intervention:

(32)transcript p.244 (33)transcript p.2159

DECISION

". . .we have read much in the newspapers about what might, almost be called a test case nature of the matter which is before you and, in light of that the trade union movement as a whole has a general interest in how the issue of penalty rates and other aspects of the application are dealt with in this case . . ."(34)

While leave was granted it should be noted that the ACTU made no further appearance or submission notwithstanding Ms Acton's establishing that the ACTU would have the opportunity of putting relevant submissions after the case for the union was put.(35)

As a matter of convenience I will deal only with those of the cases put forward by the AHA and the union which are relevant to the decision I have reached. As with the other material tendered all the cases have been considered.

The Reply of the Union

The reply of the union was multi-faceted. It is proposed to deal with it in some detail. The union submitted that:

(a) the 1989 National Wage Case decision effectively ruled out applications such as this because it had the effect of reducing earnings for ordinary time work;

(b) the onus resting on parties to SEP exercises to show precisely that efficiency or productivity impediment which was;

(i) sought to be remedied, and

(ii) remedied by virtue of particular features of the application had not been discharged. (c) the industry was now, and had been over many years, successful notwithstanding the existence of whatever it was in loaded rates said now to retard the industry;

(d) there was an inequity in reducing pay entitlements;

(e) Monday to Friday work after 7 p.m. and before 7 a.m. did bring with it a disability currently met by the after hours supplement of $1.03 per hour;

(f) the enterprise agreement clause would not achieve the results sought by the AHA; provided for contracting out; denied the proper rights of the union;

(g) deterrence had never been a feature in the formulation of hotel penalties;

(34)transcript p.243 (35)transcript p.252

24

DECISION

(h) equity and the wage principles were offended by taking that part of the industry's payroll attributable to working on Saturday, Sunday and public holidays and distributing it per medium of a base rate increase to Monday to Friday workers;

(i) equity and the wage principles were offended by the particular method by which the 'redistribution' in (h) above was to be effected. As the minimum rates process has been completed (subject to a potential review foreshadowed by the union) supplementary payments are set, in the view of the AHA, in proper relationships consistent with National Wage decisions. It followed, in the AHA view, that the base rate adjustment called for by its approach in this case was necessarily consigned to the special allowance clause where it would be permanently fixed, not subject to adjustment along with award movements in the future;

(j) the survey of hoteliers was flawed in its conception and calculation and thus the use to which it was subsequently put was tainted.

Additionally the union took a point as to each argument raised by the AHA. It should be said that notwithstanding the highly contested nature of the proceedings, that the case was conducted in a most proper way.

As to the first of these points very substantial issue was joined. Mr Hinkley's argument was that the 1989 National Wage Bench sought to be particular in clarifying the important issue of what effects of agreements would constitute negative cost cutting and be thereby prescribed.

As to onus generally there can be no doubt that the applicant must discharge that obligation which properly inheres in the task of one who seeks to change settled matters.

The Union Witnesses

Critical that the employer had not consulted in the formulation of the proposal or in its refinement after its formulation, Mr Hinkley led witnesses from establishments in each State where the award has application and from a broad range of classifications. Much of this material was relevant to the difficulties attaching to work across different classifications and when performed at weekends, public holidays and between 7 p.m. and 7 a.m. on weekdays. Witnesses were asked to outline the social and personal disadvantages incurred in their social and family lives by virtue of working the so-called unsociable hours i.e. weekends, holidays and week day evening and night work.

As an example of a witness' view concerning the generality of the AHA's formulaic approach the evidence of Ms Hudson, an organiser of the Tasmanian branch, is representative of the view expressed by individual witnesses. "AHAs compensatory mechanism simply does not take account of the reality that certain persons who work overwhelmingly during - that certain persons work overwhelmingly during penalty rate periods. Members are very conscious of this and are very aware of the effect on their individual pay packets that this proposal will have. They are also aware that some

DECISION

of them may for the moment receive some increase in wages. But they know that in a very short time their wages will be eroded. I have been directly involved in negotiations for the Tasmanian Branch with the Federal Hotels in Tasmania with a view to the establishment of an enterprise agreement. I am very aware from the detail of these negotiations of the need to directly and specifically identify the effect of award changes in relation to individual employees and especially their pay packets. It is simply not possible to lump together varying types of hotels both big and small (and indeed medium hotels and various classifications of employees) in making award changes that effect the application of penalty rates. Changes such as these need to take account of differences especially differences in employees types of work, hours of work and take-home pay."(36)

The evidence of the union witnesses went particularly to the reliance placed upon the current level of penalty earnings as a foreseeable proportion of, and supplement to, their award base rates. In this respect I am mindful of the general observation of Munro J as to hotel earnings in his decision as to the March 1987 National Wage Case.(37) In relation to a survey of earnings his Honour said:

"Those figures and some statistical material on distribution of earnings were not challenged and I find that representative liquor industry award classifications fall within the lower end of the earning scale."(38)

I am mindful also of the AHA contention put in a number of earlier cases that there is little incidence of over award payments in many areas of the industry. Evidence was also given by the employee witnesses as to their perception of the foreshadowed application of earnings currently attributable to penalty periods to the award base rates (the 1.59% adjustment). The general view was that such a redistribution was inequitable and likely to cause division between Monday to Friday workers and those who work at times which currently attract loaded rates.

I have paid close regard to all the witness evidence. There is no purpose served by summarising it here.

In relation to the National Wage encouragement of the averaging of penalty rates and their expression as flat amounts, the union argued that the only purpose for validly averaging penalty rates would be to enhance the flexibility and efficiency of the industry. The union stressed that the National Wage Bench does not say (as it might):

. "ensure employment costs encourage additional employment,

. ensure that employment costs are adjusted so as to be an aide to international competitiveness, or to increased profitability,

. remove penalty rates,

(36)transcript p.1241 (37)Print G6800 (38)Print H5891 p.9

26

DECISION

. average penalty rates and distribute them throughout the wages of various classifications, either as a fixed money amount or a percentage,

. take a portion of the industry's aggregate earnings attributable to penalty periods and place it in an area of the award where it cannot be adjusted so as to ensure its value is maintained but rather to have the effect of it wasting."

and finally

. "it does not say, as this application has no hesitation in saying it is designed to do. . .'average penalty rates and express them as flat amounts which will not be adjusted into the future'."(39)

The union case particularly relied upon the distribution of earnings referable to penalty rates by the AHA's averaging process and having the result, the aggregate penalty, absorbed into wages and then into special allowances in the way described above. The union builds on their critique of this approach by arguing that the National Wage requirement that: "Minimum classification rates and supplementary payments for other classifications throughout awards should be set in individual cases in relation to these rates on the basis of relative skill, responsibility and the conditions under which the particular work is normally performed."(40)

is incompatible with the application's end result. The invalid result is said by the union to be the augmenting of supplementary payments by the 1.59% derived from the aggregate industry penalty calculated from the survey figures, not the setting of supplementary payments according to the criteria quoted above. (It should be acknowledged that this argument was put prior to the final minimum rate adjustment).

The union put forward an alternate view of what the National Wage Bench intended. The union felt that the indications were, from the form of the decision, that averaging in such a context should be done on a classification by classification basis or perhaps by groups of like classifications. A further indication, the union argues, is given by the 1989 National Wage Bench saying that not only should changes of this kind be not approached in a negative, cost cutting manner but that to the extent possible they be introduced by agreement.

In the ultimate the union declares that it is not their responsibility to identify with precision what is the 'correct' averaging approach of penalty rates anticipated by the National Wage Bench. The argument is put in this way:

"It is not really appropriate for us to attempt to finally say what in any particular circumstance would be the correct process for averaging penalty rates. The first reason for that is that you really do need a set of facts with which you can finally come to grips and despite all the Commission has heard, in our submission it has not really got a set of facts with which it can finally come to grips. The Commission just does not have enough information about the differences between groups of

(39)transcript p.1604 (40)Print H9100 p.12

DECISION

employees, sectors within the industry and the pattern of employment of employees to be able to come to grips with what would be an equitable and a just method of averaging penalty rates."(41)

From this the argument is that it amounts to the Commission 'taking flight' to embrace the AHA's 'broad averaging perspective' put in lieu of the approach the union submit would be legitimate.

The union stressed that for any part of the application to succeed it must be premised on productivity and efficiency improvements. A range of further arguments were put by the union. It was put that it was not a valid SEP argument to say that by reducing money amounts paid to employees that more employees may be able to be employed because of the labour cost savings achieved thereby.

The union's criticism of the conclusions drawn by the employer witnesses stemmed particularly from there not existing a research base to justify the positions held by each. Thus Mr O'Clery of the ATIA was said to have merely repeated the policy positions of the Association's members without having done any independent research.

An example of this stressed by Mr Hinkley was the Australian Tourism Industry Association's major submission to the Industries Assistance Commission Inquiry into travel and tourism. The position of the ATIA submission relevant for these proceedings was prepared substantially by Access Economics. This material is Attachment II of Appendix D to Exhibit W15 in these proceedings and as an example of employer tourism research is appended to this decision as Attachment 5. Of this overview paper the union submits:

"The argumentative base for what has been said is not apparent either in the IAC submission or in the AHA material and of course, that is important because we will be saying to you that there is nothing more than eloquently expressed statements of policy positions but not premised upon analytical argument. And that is relevant to what we say about the onus to satisfy the Commission about various issues."(42)

Ironically the ATIA material stressing a sectoral approach and proposing that "the issues must be handled on a sector/geographic region or project basis", (Attachment 5) is consistent with the queries put forward by Smith C and comments made by Munro J in earlier proceedings involving this award. Further comment as to sectoral elements is made later.

Mr Hinkley put that the benefits of the application as described by the AHA had simply not been addressed in relation to the various sectors of the industry that had been identified during the progression of the case.

Profitability

The union at several stages during proceedings sought to overcome AHA objections to the matter of profitability being probed. AHA objections to the relevance of profitability were overruled by the Commission - particularly where the actual deleterious effects on a particular division or outlet was

(41)transcript p.1615 (42)transcript p.1641

28

DECISION

potentially to be found in the empirical material of the bookkeeper. This important issue arises under several heads. Issues such as cross subsidisation, market development over time, the intrusion of broader commercial considerations and the operational decisions to close early or to not open at all, at certain non-peak times, were canvassed to varying depths.

Clearly some are unreservedly relevant and will be dealt with later while others, such as the longer term investment motives of freehold owners/operators are not only more difficult to establish but have the effect potentially of broadening the debate so much as to be unhelpful. This is particularly so where a point turns on the relative level of returns for hotel operations in Australia compared with regional or other international tourist destinations with whom our hotel industry might be compared.

In a more general sense the union's submission relative to efficiency and productivity as they may bear upon profitability and the extent to which penalty rates may effect it (a robustly moot point in this case) is summarised by Mr Hinkley's following submission:

"In terms of any efficiency or productivity that is relevant to financial profitability, short of simply saying less money is being paid, there has been no attempt to analyse for the Commission what effect on profitability even if it is relevant to efficiency and productivity, what effect on profitability any of the application, if it were successful would have."(43)

Rather, the thrust of the AHA argument is partly to approach this issue in a more muted way. This is done by the 'international competitiveness' argument stressing the Australian labour costs ought be lessened in the interests of ensuring greater parity with overseas cost structures - the outcome being presumably enhanced capital investment prospects and of course improved profitability. It was not contended that pay rates in this award should be at the same level of other countries with whom Australia competes for the tourist market.

As to the effect on growth and return, the union argue that it is not enough to say that if penalty rates are got rid of (or lessened) then the prospect of the potential for the future is enhanced. The union argued that there should have been an exercise done contrasting potential past growth with actual past growth - all in the context of the effect of penalty rates on these subjects. It can be readily observed that such matters go to areas of inexact science. The employer evidence was subject to rigorous cross-examination and analysis by the union. I will not set out below all the arguments put as to the reasons why the employer evidence was said to be unreliable. A brief summary is sufficient.

The Union Analysis of the Employer Evidence

Mr Davies of the Hotel Conrad and Jupiters Casino, was said to have been unable to explain the link between more even operating costs at weekends, as to week days, and an increase in efficiency, productivity, quality of service or

(43)transcript p.1642

DECISION

stability in the work-force. Key elements of Mr Davies' evidence were that poor service standards, surcharges and non-availability of services were allegedly legacies of penalty rates. The poor support of these views by the 'guest comment' sheets, which were relied upon by Mr Davies to sustain them, was said to reduce this evidence. Further the assertion of Mr Davies as to increased patronage of venues following from a penalty reduction, was not, in the AHA submission, sustained. Mr Davies evidentiary value was criticised for his not consulting with the relevant managers as to the issues set out above, knowing as Mr Davies did, that they were not to give evidence. As a consequence his evidence was termed 'impressionistic'.

As to Mr Edmonds of the Hilton chain, it was said that his evidence of the potential for growth was not sustained by research and that they key issue was whether a market existed in some of the potential growth areas currently forsaken as a result of the effects of penalties.

The loss analysis produced for the Sunday operation of a division of the Sydney Hilton was dealt with by the union arguing that not at all times do commercial operations make a profit against costs. It was further put that all operations have highs and lows stemming from peaks in demand and costs which vary either as a result of penalty rates or fluctuating commercial returns. The conclusion contended for by the union was that at the Hilton there would be greater profit as a consequence of a reduction in penalty rates not an increase in productivity or efficiency.

"It is merely the observation that there would be more money made or less money lost."(44)

The likelihood that the Hilton might seek to utilise an ability to arrive at an 'in-house' agreement were the application successful was portrayed as an indication that the Hilton chain were, at best, ambivalent about the application.

Mr Franks' evidence as to foregone expansion opportunities at the Woolloomooloo Bay Hotel is said to reduce to a desire that the commercial risk of expansion be subsidised by a reduction in wages. Mr Franks' view as to penalty rates is said by the union to partly result from his dislike for paying current penalties to 'second rate workers' who are not committed to the industry.

Mr Franks gave a number of examples of areas where he felt his hotels' operations were impacted upon negatively by penalty rates. The issue of waiter/table service in his dining operation has already been discussed. The union argued against this part of Mr Franks' evidence being taken as illustrative of the negative effects upon efficiency and productivity of penalty rates. The somewhat artful argument was that increased costs associated with altered service, as in the case above, is an example of a change in operation at the instigation of the proprietor which goes to a reorientation of the business in relation to the commercial niche within which it operates.

(44)transcript p.1701

30

DECISION

The Argument as to Change

The union submitted that the part of the applicant's case relying upon fundamental change having occurred as justification for a SEP review of penalty rates was wrongly based. This was so because the functions of hotels were said not to have changed despite licensing changes.

Mr Hinkley put the argument this way:

"There is no evidence that there is a change in the nature of the industry; that circumstances have changed. And apart from liquor service employees obviously being able to be employed for longer periods of time because of the fluctuating liquor licensing hours, there is no evidence to suggest, apart from expansion, that things have changed."(45)

As to the range of innovations such as Pub Tab, Sky Channel and poker machines, it is said:

". . .there is no attempt to draw any relationship between the change of the service made available in relation to those matters and penalty rates for the purposes of identifying any changed circumstances."(46)

and further,

". . .it is important, in our submission, that it be recognised that if you are going to rely upon changed circumstances in relation to a dealing with penalty rates you have to identify circumstances that have changed in relation to employees, how they see things, because it is the compensation to them that the penalty rate is meant to service . . ."(47)

The union highlighted the considerable flexibility it said was available to employees now by noting that:

. no cap was placed on the number of casuals capable of being engaged, . there was a small group of part-time employees in the industry, . employees currently did and could be required to so do, perform work flexibly.

It was said that the industry had generally done no research into demand and that as a consequence it was not possible to portray unfulfilled potential demand as an indication of the bad effects of penalties. The union relied heavily on the lack of such research and its link to the potential for increased efficiency and productivity. The following cross-examination of the Hilton's Mr Edmonds is illustrative of this point from the union's view, while from the AHA view would be seen as entirely supportive of the application.

Mr Hinkley: "You're speaking of a belief that you'd be able to provide more and better services, particularly on Sunday, by having or expanding the hours of operation, etcetera. Again in that context there's been no consumer analysis for that service that's presently being conducted that you know of? . . . No formal analysis no.

(45)transcript p.1722 (46)transcript p.1724 (47)transcript p.1727

DECISION

Have you ever closed your doors despite the demand for services in those times? . . . There are many opportunities that we decline because it would not be profitable to do it."(48)

The AHA case was criticised for being the subject of either no, or very little, liaison between employer and employees. While it may be that this has little relevance to the application satisfying the principle, the relevance of this point to the separate enterprise agreement clause claimed was the subject of comment.

The union put that the preparedness of employees to work at the times required by the employers was not evidence of an overall 'wish' to work at such times and could not be said to reduce the need for a proper evaluation of any additional payments justified. The matter of equity was addressed by the union in relation to the single money amounts payable on Saturday and Sunday in lieu of the differing outcomes resulting from the current percentage approach. The issues of attraction and retention were raised with Mr Hinkley submitting that the 'one penalty for all' argument might well "look good as a philosophical principle of fairness"(49) but that it would not hold particularly when skills and market shortages come into play. This factor was also found in the reports. The employer assertion that the same disability required the same payment was responded to in this way:

"You do not stand back as an employer and say, 'Look we have this sense of justice in our Platonic soul and we can tell you that fairness requires that employees should get the same amount of money.' As between employees that sense of fairness is tested by what employees think."(50)

The union stressed that none of the employer witnesses spoke of employees holding percentage penalties to be unfair and tellingly that proposition was not put to the range of employee witnesses by the applicants.

Additionally equity considerations were said to attach to the applicant's approach where, by the use of the industry model, the payments currently made for Saturdays and Sundays which were in excess of the flat amounts sought, were to be redistributed to all employees via the 1.59% base rate adjustment. There was substantial evidence about how this element of the application was regarded; that it was wrong and unfair.

The union contested the 'no reduction in pay' argument of the applicant putting that for all the loss was inevitable over time and for some, the loss was immediate. The frozen nature of any amount of the 1.59% which is proposed to be placed into the non adjustable Special Allowance clause was stressed as was its necessary erosion over time.

The Union Response to Reports and Inquiries

I do not propose to summarise all the submissions put by the union as to the reports relied upon by the applicant. Where they have had a particular relevance in my reasoning I have cited them in that context.

(48)transcript p.473-474 (49)transcript p.1783 (50)transcript p.1784

32

DECISION

The respondent dealt harshly as to the objectivity of some of the reports cited.

The Dawkins Report

In relation to the Dawkins Report it was said that in examining non standard hours generally across a number of sectors Dawkins' analysis relevantly for this case was based on discussions with one hotelier at a seaside location in a State not covered by the award the subject of this application. To the extent that the Dawkins Report relies upon the Peat, Marwick and Mitchell and Co.(1975) study in observing "that penalty rates are not an important part of the wage package and our attitudinal evidence referred to above tends to confirm this" (Dawkins, W31, Penalty Rates and the Organisation of Working Time. 1985 National Institute of Labour Studies. Flinders University, page xiii and xiv) the respondent replies that this is against the viva voce evidence in this case and in any event sourced externally from the hotel industry.

This alleged view of employees as to penalties echoes through the other reports (see Attachment 5 where Dawkins is given as the source of this view. In fact Dawkins quotes the Peat Marwick and Mitchell study.) The source of employee views from the 1975 report is four discussion groups held with employees from motels, restaurants and hotels. The summary of these 'discussions' was given by Dawkins as:

"Wages were felt to be adequate and penalty rates unimportant and in most instances further significant increases in these areas were seen as a threat to job security. Shift work was preferred for reasons other than provision of penalty rates."(51)

The respondent reply to Dawkins' view that penalty rates and other structures are detrimental is to stress that Dawkins is operating in the pre-structural efficiency environment whereby the key priorities of the employers have been addressed.

It is also worthy of note that at the sole hotel reviewed by Dawkins, casuals received a loading under the State award of double the rate provided for in The Hotels, Resorts and Hospitality Industry Award 1992. The transferral of conclusions where such different costs have application might well be to risk error.

The Queensland 'Tripartite Committee'

The March 1990 Report of the Committee of Review of Industrial Relations and Training in the Queensland Tourism and Hospitality Industry, (exhibit W33) arose from that tripartite committee. The respondent highlighted that the Committee, in favourably commenting on base rates absorbing penalties, (as in the Offshore Islands Award Queensland) looked to 'genuine agreement' and consideration of:

. permanency . equitable rosters . frequency of normal hours work versus work outside normal hours.

It was also noted that this Review Committee had a non-partisan makeup.

(51)Dawkins p.153

DECISION

The Ernst and Young Report

The Ernst and Young Report to the Australian Tourism Industry Association on Investment in the Tourism Industry (November 1991) (exhibit W34) spoke, in the respondent's submission, of the reduction in risk and the minimisation of the otherwise inherent risks, of tourism projects, through deregulation of the labour market. This was characterised as being the free-market approach which was warned against by the AIC Report and the Monash Report.(52) As to investment in the industry penalty rates were not cited as a negative influence.

The Tourism Task Force Report

The Statistical Study of the Labour Competitiveness of Australian Four and Five Star Hotels of February 1992 was prepared by the Tourism Task Force and Horvath Services (exhibit W41) and suffered in the view of the union by not providing sufficient comparative data to allow for conclusions to be drawn.

The Industries Assistance Commission (IAC) Report

It is relevant to note the IAC Report of 1989 Travel and Tourism in its findings on shift penalties:

"Participants raised concern about penalties payable for work outside standard hours, which is prevalent in tourism - related industries. On the evidence available to the Commission, it appears that roughly equivalent supplements would be required to attract staff at unpopular times, even in the absence of legal obligation to pay penalty rates." (emphasis added) (IAC Exhibit W30 p.16)

This statement reflects similar views found in Dawkins. In a general sense the union critique of the reports tendered by the applicant relied upon four grounds:

1. The reports are themselves unreliable.

2. The parties reporting have, on occasion, an interest albeit indirect, in the outcome of the proceedings.

3. The attitudinal, subjective types of assertions are at odds with the witness evidence before the Commission.

4. The reports are generally pre structural efficiency principle.

The Authorities

I propose to cite the authorities brought forward by both parties as they may be relevant.

There exists of course a series of important judgements which set out the reasoning applied in the cases over many years in relation to the appropriateness of loadings, shift premia and penalty payments in varying industrial circumstances. Reference to any arbitral index will identify the most significant.

(52)transcript p.1845

34

DECISION

There was a close analysis of the uses that might be put, in this SEP context, of the various cases. The debate was entered into by the union even though the union argued that the application in its totality offended against the April 1991 National Wage Case decision.

In summary form it is noted that several of the agreements relied upon by the AHA were said to be of little value to the Commission as:

. they were agreements;

. they contained several non-normative components (such as 50% casual loadings, or 50% penalty after 10 p.m.);

. they were closed shop arrangements, that is to say that the securing of closed shop status may well have been a vital consideration for the unions involved.

The Union View as to the Survey

As to the applicant's survey, the union relied upon Mr Strahan, a director of Australian Community Research and of Australian Productive Culture which were described as commercial enterprises allowing for the independent undertaking of social and economic research by the construction, processing and analysis of surveys. Mr Strahan's evidence was that the AHA survey was not a validly composed or conducted survey and further that the use to which the material resulting had been put was so flawed as to be valueless.

The survey provided fertile ground for debate as to valid statistical method and interpretative application. The position of the respondent is perhaps summarised by Mr Strahan's following evidence:

"AHA survey and subsequent analysis of data collected are geared to providing a measure of the average penalty payments made to an average worker. This averaging of penalty hours worked and award wage rates is, at best, highly misleading and, at worst, meaningless. The approach is flawed because although an average can be calculated arithmetically, it does not necessarily represent or typify the majority of workers."(53)

It is necessary to see the above comments and those which follow against the background of the survey response rate. Of this Mr Strahan said:

"I guess the AHA made their sample the full population of their members. And 17% response rate is not a good response rate. It is a very low, very low response rate. One would hope to get 50 or 60 per cent or more. But if you get a response rate around 20 per cent or below, then that is very low, and if you combine that with a potential bias in the respondency you get, then that exacerbates the problem."(54)

The survey attempted no sectoral cross-examination of data. Additional to the statistical material set out earlier Mr Strahan isolated five different penalty levels.

1. Full-time employees working three week days and Saturday and Sunday constitute 17% of the hours worked and receive a penalty of over 30%.

(53)transcript p.1511 (54)transcript p.1508

DECISION

2. Full time employees working four days Monday to Friday and either Saturday or Sunday perform 16% of the hours worked and receive a penalty of approximately 12.5%.

3. Full time employees working Monday to Friday solely constitute 11% of total hours and receive zero penalties.

4. Part time employees work 3% of hours and earn 18% penalties.

5. Casuals work some 54% of hours and earn 17% of penalties.(55)

The union submission was that for these penalties to be aggregated:

". . . into one 'average' penalty payment of 18.895% is totally artificial and ignores the true structure of working hours in the industry and decisions which both employers and employees have made about working hours."(56)

In summary the applicant's approach was said to:

. fail to represent the situation of any worker;

. demonstrate that the penalty paid to many casual workers and all full time workers working both Saturday and Sunday is "significantly under rated";

. rely upon an average award wage of $331.09 arrived at by aggregating pay rates across 22 diverse job categories from maitre d' to bus person where pay rates varied from $410.90 to $247.10 (plus 2.5%).

The average award wage (weighted) was said to be able to significantly vary yet still satisfy the Bureau of Tourism test. The conclusions to be drawn in the light of all this is, in the union's view, that:

"The manner in which the data were collected totally undermine their representativeness" and "the averaging of these data across employment types and occupational categories in meaningless and misleading".(57)

Finally Mr Hinkley sought to focus narrowly the issues for determination, warning that the Commission was limited to the confines of the application and that to rely upon the more recent cases and apply in this award what has been applied elsewhere is wrong and would constitute the application of test case principles.

Commission Consideration

It is difficult, having regard for all that has been put, to sufficiently stress the central role for the tourism industry in assisting Australia's economic well being and particularly the benefits which attend the industry performing optimally. The areas of employment regulated by the award are a substantial part of the tourism industry overall.

(55)transcript p.1514 (56)loc cit (57)transcript p.1521

36

DECISION

It is clear that the matter of the proper level of recognition for non day work Monday to Friday and for work upon weekends and public holidays has vigorously exercised the minds of industry employers for some years. In this respect it is instructive to acknowledge the view expressed by the IAC report Travel and Tourism of September 1989 when it said:

"The development of tourism is important. But it cannot be paramount. To preach tourism at all costs, would imply preferential treatment that would be inconsistent with the interests of other industries and of the community at large. Put simply, tourism has to be considered within a wide economic and social context." (IAC Report, exhibit W30 p.3-4)

Part of that social context must be fair working arrangements which recognise real disabilities and properly reward work at times which cause social and domestic inconvenience. The determination of the issues which thereby arise require value judgements to be made which stem from contemporary society. Either some elements of awards are inviolable and their provisions immutable, or capable of searching enquiry as potentially the 'more fundamental institutionalised elements that may operate to reduce the scope for increased productivity and efficiency' as identified by the August 1989 National Wage Case decision.

The issue in this case is no less than the overturning of the basis upon which all ordinary time work, other than Monday to Friday day work, is remunerated. The impact of this, by design of the employers, is intended to be substantial, particularly as time passes. Fixed money amounts are to replace percentage multipliers for weekend and public holiday work, while there is to be no loading for Monday to Friday work until after midnight.

On these and other issues considered in the following, there is a great gulf between the parties. It is necessary to add however that this case is but one aspect of a substantial number of issues dealt with successfully by the parties in the structural reform of the award. The great majority of issues dealt with have been by agreement such as the classification structure and the substantial amount of work which has been successfully accomplished as to training and career paths.

My assessment of the key element of the application has taken the following form. Is there a justification for dealing with weekend/public holiday rates and late work Monday to Friday? This threshold question is put in the broadest sense, requiring application of the traditional test of equity, good conscience and substantial merit. Should the answer be in the affirmative any variation which may follow must be consistent with the Structural Efficiency Principle. It would then be necessary to consider whether the particular regime advocated by the AHA is such a dealing. If the answer is 'yes' it is well enough. If the answer be 'no' then it is incumbent upon the Commission, in the face of that merit which led to the conclusion that there was a proper justification for dealing with these payments, to do so in a way compatible with the current wage fixing principles. Fortunately there is more than sufficient material, evidence and analysis from both parties to allow me to reach a view on these and other issues thrown up by the application.

In pressing its desire to 'lessen the impact' of penalty rates, or to diminish them over time, the AHA relies on a two pronged argument. It is that there is in the status quo an unjustified level of costs which impede the actual operation of the normal affairs of the industry. The second, closely

DECISION

integrated with the first, is that the above costs are not justifiable having regard for the basis upon which employers require the work to be performed, the knowledge of the industry's requirements possessed by potential employees, the change that has altered the industry fundamentally over recent decades (which is not restricted to the licensing metamorphosis) and accompanying attitudinal change within the industry reflecting that of society at large. Additionally there are a range of supplementary arguments brought forward to buttress the major contentions set out above, not the least of which were alleged public interest considerations. Issue was joined by the parties on all these various grounds.

Weekend rates

(a) Justification for dealing

As to the first question - whether there is, in the evidence, a justification for dealing with penalty rates - my view is that the AHA have made out a case that there is a consequence of the current arrangements which impacts on the performance of the work, the way it is offered and the very extent to which it is offered. Without repeating the detailed evidence already summarised I accept that the current level of weekend costs, has the effect broadly described above to provide the prima facie justification to further consider the application according to the process set out above. This finding does not extend to the Monday to Friday after hours penalty or to public holiday rates which will be further dealt with later.

I have come to this position only after having carefully considered Mr Hinkley's cross examination of the applicant's witnesses. It is true that formal, analytical exercises had not been carried out by the establishments severally, or by the industry in a more general sense, to prove of penalty rates:

(i) the deleterious effect upon hotel operations (and potential operations),

(ii) the claimed negative impact on clients (both domestic and international) of such things as surcharges and limited operations,

(iii) the potential for growth, both via internationally improved competitiveness and markets that might be expanded and/or developed.

(b) The evidence Whether these issues are capable of being determined in a quasi-scientific way is problematic. It may be that more arms length research and demographic exercises would have strengthened the AHA case. However, the degree of controversy created by every aspect of the AHA survey does not inspire confidence that some of these issues can be established empirically to the satisfaction of intractable opponents. Munro J commented upon the difficulties of a forensic approach in this industry in the November 1988 restructuring and efficiency principle review:

38

DECISION

"Assessment of the cost benefit impact of award variations in securing a higher level of efficiency in this industry would be most difficult under any circumstances."(58)

While the union has stressed the need for valuing the specific efficiencies to be gained by the AHA's application, the major thrust of the AHA has been to detail the currently detrimental effects of penalties.

I have accepted the evidence of the witnesses at face value, as credible and for its practical value. Thus where the reasoned views and conclusions reached by the AHA witnesses Messrs Franks, Edmonds and Davies had the support of logic and their experience I have not discounted it by virtue of there being no external research base.

Generally I have accepted, for example, the evidence of Mr Franks that the current level of penalty payments effects his operation in almost every way at weekends; that staffing costs reduce his operations to either an unprofitable level or impinge substantially upon the service standard he offers and the way his operation is structured.

I have accepted for example, via the normal commercial cost accounting formulae used in-house by the Hilton, and provided confidentially, that an otherwise profitable restaurant became, solely through wage costs, non viable on the Sunday reviewed.

I have accepted that there are services not offered on weekends and that a rationalisation of restaurants and other services occurs on weekends for reasons not attributable to factors other than those here under review. Similarly it is clear that service standards and levels of employment are effected in those areas that are operated in an attempt to mitigate the costs of staff employed at loaded rates.

Having thus concluded that there is a justification for dealing with weekend rates I turn now to consider whether the regime of the AHA is one which satisfies the Act generally, the Structural Efficiency Principle particularly and is justified on the merits.

In answering this question it is important to focus on the interdependence of the component features of the AHA case. The application proposes a formulaic approach which allows for the effect of flat hourly penalties and the changed Monday to Friday after hours penalty as valued by the AHA to equal, on an industry-wide basis, the current cost of penalties. This is achieved by the use of the adjustment factor to base rates of 1.59%.

(c) The Survey

The base rate adjustment required is arrived at by reference to the notional industry person constructed proportionally to hours worked industry-wide. Thus the relevance of criticisms of the AHA survey can be appreciated. The basis of these calculations is set out on pages 10 to 12 of Attachment 1.

While the probity of the AHA survey was questioned on a range of grounds by the respondent, Mr Lewis described the survey as "an earnest and honest attempt to survey from its membership and within its own resources the vast

(58)Print H5871 p.12

DECISION

majority of employees in the industry".(59) Genuineness is nevertheless no substitute for a broadly based representative survey. Mr Strahan's concern as to the respondency rate of 17% is in my view valid, particularly when coupled with those other deficiencies set out in the summary of evidence. This is so notwithstanding the helpful and expert evidence of Ms Lambert. I have not the slightest doubt that Ms Lamberts' approach was as intellectually rigorous as the AHA resources devoted to the exercise allowed.

For the part of the arbitrator there must be far more certainty than exists in the survey results and their extrapolation, when they occupy a pivotal arithmetic place as in this case. My concerns with the survey are also that it aggregates in the notional industry person, like and non-like characteristics. While this may be unexceptional in statistical modelling, it does not allow for the fashioning of images of real employees.

(d) Equity

Averaging on an industry wide front on this basis cannot provide the information about actual wage outcomes which would result in the event it was applied. A base rate adjustment may result theoretically in cost-neutrality but without considerable information about actual work patterns and rostering equity the outcome may well produce a result other than that computed. It constitutes a risk for someone else that I am not prepared to take. As noted earlier these are concerns stressed by the Queensland Tripartite Committee of Review as to the vital need for rostering equity.(Exhibit W33 p.46 at point 10)

The need to understand the precise affect of a loaded base rate in a shift environment was the subject of approval in relation to the single site Olympic Park Agreement 1991 by a Full Bench (Maddern P, Polites DP and Smith C). In applying special case status to that application the Bench indicated that the agreement, inter alia:

". . . eliminates penalty rates by building them into the hourly rate - the parties have also provided for rostering on an equitable basis so that staff work "all venues, all hours and, within reason, all days of the week."(60)

Such equity considerations are in my view pivotal.

A key element in the calculation of cost-neutrality is the claimed removal of the Monday to Friday after hours penalty as follows. Currently hours worked within the 12 hour span 7 a.m. to 7 p.m. on week days attracts base rates only. The current $1.03 per hour paid from 7 p.m. to 7 a.m. (maximum for casuals $3.13) is to be replaced in the AHA view by an hourly payment from midnight, to include casuals, of $2.00. Elimination of the 7 p.m. to midnight payment is clearly a substantial component of the overall. Its redistribution plays a significant part in the AHA's equation. Much of the work in the

(59)transcript p.2142 (60)Print K2500 p.2 - See also a decision of DP McMahon of the Industrial Commission of New South Wales 3/1/90 in re Bread Industry (State) Award, Matter No. 942 of 1989, "Until the Commission is informed in detail of shift systems to be worked by major bakeries and also other bakeries, consideration cannot be given to determining appropriate penalty rates in accordance with the principle enunciated in the 1972 Shift Workers Case."

40

DECISION

industry is undertaken during this period. For reasons which I will set out I do not accept that this proposed change is fair. By coming to this position the utility of the formula is so eroded when coupled with the more technical difficulties which in my view afflict it, that it cannot be applied with confidence.

Current Weekend Penalties and the Structural Efficiency Principle

The position obtaining then, is to apply the precepts of the SEP and of the Act to the current level of weekend penalties which I have determined to be set at a level inimical to both reasonable productivity and efficiency. The result is to determine a proper compensation for social disability incurred having regard for the above.

A range of considerations are involved.

(a) The Argument of Specificity

Mr Hinkley argued that this case involved such a clearly delineated issue that for the Commission to 'go outside' the precise confines of the claim and award some other relief was not fairly open. I am unable to accept that argument. The applicant's case, while directed to the adjustments sought, was justified by a wide range of material, some obviously relevant to the industry, some to other entirely unrelated industries and some to the varying approaches in hospitality and service industries said to have similarities operationally or in logic to the condition of the respondents to this award. As has been noted all these issues were taken up in very full argument.

(b) The Test Case Argument

This ground against other relief was linked to that above. Detailed submissions were put by the AHA as to cases in the Commission and in the State Commissions which it said were relevant and supportive of its specific remedy; to a recognition of important elements contributing to the need for review of penalty rates and the particular results were noted. Again, issue was joined in all these regards.

At pains to declare this not to be a test case, the union developed an argument that said for the Commission, in the circumstances of this case, to determine a standard from the cases and apply it to this award would be wrong. This was said to be so because the parties had not had the opportunity to address on such a standard and that such an approach introduced test case principles.

Mr Hinkley put his test case axiom in this way:

"This is a case that is confined to this industry and it is confined to the evidence in this case and if it comes down to saying that what applies in another industry should apply in this industry because it applies in another industry and no more, then that is a test case approach."(61)

However in this case I reach no such conclusion. In determining to vary the award I have done so solely on the basis of the material put, and evidence

(61)transcript p.1858

DECISION

"It is for a particular tribunal, in your case, sir, to review the position and decide the best method. And on this it says the previous history of the award will be a significant although not a decisive consideration."(63) (emphasis added)

In a similar way and importantly much earlier in the case Mr Warren for the AHA put:

"This is not an inability to pay argument in accordance with the provisions of the Act, its not an argument to say that we can no longer afford to pay penalty rates - as the evidence is that we wish to provide better service, we have a need to have people employed at this time, people choose to work in an industry that works at this time and it's a question for the Commission whether the current penalty rates are appropriate or whether some other assessment of the position is more appropriate."(64) (emphasis added)

Central to the analysis of the need for review of weekend rates is the SEP. The parties argued in considerable detail the issue of negative cost cutting and the varying form its prohibition should take in a case of this nature. I do not propose to repeat these arguments other than to note that in progressively encouraging the parties to take the step necessary to deal with "the more fundamental, institutionalised elements that operate to reduce the potential for increased productivity and efficiency".(65) National Wage Benches have referred specifically to penalty rates and this method of expression in the context generally of perceived losses. I will deal further with negative cost cutting later.

(c) Industry Change

Aspects argued by the AHA which I consider relevant to appropriate weekend penalties include:

. The nature of the industry, particularly as to changes of a significant and widespread kind which might be said to have altered key features of the industry since the current standards were set.

. The basis of original determination of weekend penalties.

These issues raise a number of considerations.

It is claimed by the union that, while some technological features were obviously not present in 1949 when Morrison CC made the first award in its current form, there were present the key features still observable. Mr Hinkley put:

(62)1972 AR 633 (63)transcript p.1789 (64)transcript p.462 (65)Print H4000 p.5

42

DECISION

"There is no evidence that there is a change in the nature of the industry; that circumstances have changed. And apart from liquor service employees obviously being able to be employed for longer periods of time because of the fluctuating liquor licensing hours, there is no evidence to suggest, apart from expansion, that things have changed."(66)

In response to the wide range of features of today's hotel industry such as Pub Tab, Sky channel, licensed footpaths, live music and poker machines to name but a few, it is said that:

". . . there is no attempt to draw any relationship between the change of the service made available in relation to those matters and penalty rates for the purposes of identifying any changed circumstances."(67)

While it is interesting to comment on these changes it is not sufficient to point to the tiny number of hotels in the 1950's or 1960's that may have boasted cabaret rooms, or nightclubs or cocktail bars to sustain the argument that there has been no change. It is indisputably the case, in my view, that the industry surveyed by Morrison CC in 1949 is so vastly different from the industry today as to be almost unrecognisable. I accept Mr Franks' description of the pub of yesteryear and his summary of change.

The importance of noting such features as the almost universal 6 p.m. closing, meagre provision of dining facilities and zero trading on Sundays is to give the context to the Commissioner's awarding of the ruling rate generally:

"Bar staff in the front of the house have been awarded time and a half for Saturday and double time for Sunday work. This is now the ruling rate in industry generally, which for the purpose of uniformity I must adopt."(68)

In applying the standard having general application at that time to an industry then substantially similar to other industry, there existed within the weekend rates, in addition to the element of compensation for working at such times, a punitive factor having the purpose of deterring the employer.

It is I believe now accepted, and certainly my approach, to not attempt to prescribe or justify the different methods of remunerating shift work by reference to a standard. While it may be that in relation to some calling a standard could be discerned, I make no such declaration. Instead the need of each industry or award must be examined on its particular merits.

Against this background it is said that Saturday and Sunday work is now so normative and reasonably required by an employer, through the demands of a changed society, as to justify a different penalty. To this proposition is added the view that because the hotel industry is now genuinely a seven day 24 hour industry, workers in the industry know and accept this. I do not propose to deal with these observations at length.

(d) The Argument for No Disability

It is an entirely unsound basis for proceeding, to assert that because employees offer for work at weekends in the knowledge of the extended hours of

(66)transcript p.462 (67)transcript p.1724 (68)1949 CAR 409 at 420

DECISION

the industry or because for some, such hours might suit their personal and economic circumstances, it also follows that work performed at unsociable hours should carry a lesser loading. Consideration of the range of reasons for a person offering for work at such times cannot go to amelioration of the disabilities attaching to the work at certain times. It is akin to arguing for an aviator or musician that their rate should be the lesser by virtue of their special love of their work.

The rate received should comprehend all the features of the work, including social disability, relevant to the time the work is performed, free from the subjective considerations above. The evidence of the union witnesses in this case supports the view that workers value weekends highly both in seeking to retain the status quo and as a measure of the social detriment they suffer. Theories to the contrary were not put directly to the union witnesses for testing and no evidence was led to support either the 'no disability perceived' argument or the 'preparedness to work for less' argument.

While there may be some for whom shift work/late night work is a personal boon offering few drawbacks and the frequently recounted 'benefits', for many others it presents formidable social, familial and health problems. These have been the subject of serious study since at least the 1970's. Additionally, for many workers economic need provides the impetus for working at the 'difficult and inconvenient hours'. The fact that current economic circumstances may produce those prepared to work for lesser amounts is of no assistance in determining a proper rate. Arguments for change and for the status quo must find their just cause in the real workings of the industry.

(e) Shift Premia

I am conscious that workers in this industry do not receive shift premia. It has been said that the work in the hotel industry outside of day work is not shift work. I will not survey the development of award prescription in the industry which leads to this being said to be so. Brack C, in reviewing this question, perhaps at a junction point in the industry's modernisation, found that out of hours work was not performed in shifts, in the classic sense, but rather was work abutting day work which took hotel employees into the "difficult and inconvenient hours".(69)

The result of this is of interest. Where what is frequently termed afternoon shift has workers concluding their shift at, say, midnight or 10 p.m. there is generally in industry a premium of from 10% to 15% for all those hours. In the hotel industry an employee working, say, until 10 p.m. would receive ordinary time for the shift plus $3.09 being the three hours at the post 7 p.m. allowance of $1.03 per hour.

This result also occurs for 'back of the clock' hours until 7 a.m. which in awards generally would receive a night shift premium of approximately 20%. Permanent night shift work is more highly valued. Hotels require work of all these kinds.

From the information as to rosters and work patterns presented in this case, I am concerned about the proper identification and reimbursement of week day shift hours. Of course it may be that the findings of Brack C relative to

(69)216 CAR 794 at 799

44

DECISION

the industry of the 1970's would be found to continue to apply to the industry after the substantial changes so vividly described by the AHA.

Mr Hinkley focused on the regularity of shift requirements on weekends as requiring attention, referring to such a requirement as a 'special detriment'. The union put:

". . . it may well be that now in an appropriate case it could be said that we have moved into real shift situations in this industry. That where you get, as this Commission has seen, the regular rostering of proper weekend off and weekend on etcetera that you have either rotations or continuous shift work on weekends even for an individual employees."(70)

The information before me supports the view that there is, and I emphasise, in a technical sense, an arguable case as to the existence of shift work in the industry such as to warrant a review of the recognition of non-day work performed Monday to Friday. That is a matter for inquiry should such a case be put. It is relevant in this case because the current week day allowance is sought to be changed.

(f) Industry Sectors

Sectoral concerns are a live issue also because the union asserts the applicant has failed to identify sufficiently the efficiency and productivity shortcomings which, as a factor of penalty rates are in this application to be remedied. Perhaps the closest to recognising non-industry-wide issues is the ground put forward by the AHA in support of its own type of enterprise bargaining.

Mr Lewis in recognising the wide range of establishments submitted:

"What is proposed here is that there ought to be a system which recognises that different hotels, different employees in different sectors of the industry may have different needs and a different view about weekend or evening penalties."(71)

These issues are relevant in a general sense to the enquiry as to whether current week day penalties are properly set. Sectoral concerns are stressed but not specified by some of the reports tendered by the AHA. Yet the AHA rely on this ground to support its enterprise bargaining clause. At the same time the union raise, only in an oblique way, the matter of shift work being recognised more fully than at present.

General Considerations as to Shift Work

With the expansion of trading hours and the scope of hotel operations involving more workers in periods of duty extending well beyond day work, it can be seen that the tests for reasonableness of the employers requiring work to be done and the regularity of its being required, are material considerations in the appropriateness of loadings to be paid. Clearly it is not unreasonable for the comparatively new and widespread demand for services at such times to be satisfied, so that in my view the public interest is met by there existing no dissuasion as to such work.

(70)transcript p.1882 and p.2009 (71)transcript p.1012

DECISION

The AHA have contended that societal change has removed much of the basis for weekend extra reimbursement. I will not repeat these arguments. They are either well known or readily imagined. As part of my reasons for coming to the position I have as to Saturday and Sunday rates and as to week day work between 7 p.m. and 7 a.m., I set out the following observations.

While trading patterns, hotel and shop hours legislation and social habits have altered markedly over the last decade or so, the norm remains for evenings, weekends and public holidays to be the times when friends, families and social groupings, however constructed, are able to be together to enjoy social and recreational activities. Social dynamics are such as to mean that as religious observance on Sundays undergoes change so do some other forms of activity by way of supplementation. Shift work and work extending well outside the day time hours which thereby intrude regularly and substantially into such social, recreational or family/friend times and the many aspects of life akin to them, causes, in the long standing view of the Commission, an equivalently substantial deterioration in the amenity of life. It is this that is to be recognised.

While there are said to be standards the resultant provisions vary from industry to industry and award to award.

In reviewing the application of the SEP and the issue of negative cost cutting, I have in closely considering the submissions, formed the view that it was not the intention of the National Wage Bench to prevent a review of current penalty rates. In emphasising the importance of the parties to awards "ensuring that working patterns and arrangements enhance flexibility and the efficiency of the industry"(72) the 1989 decision gave as its first example the averaging of penalty rates and expression of them as flat amounts. This was put forward by the 1989 Bench not prescriptively, but in the contrary, "without limiting the opportunities for innovation".(73)

It is with this view particularly in mind that I believe it is appropriate to examine penalty rates (and other loadings for out of hours work) in the context of each particular award, having regard for the industry and the development of its award provisions. Thus events in one award can be of little determinative effect elsewhere.

The Cases

The series of cases dealt with at length by the parties are of relevance, in the AHA view, as they evidence a preparedness by tribunals to consider, not as test cases, but on an industry by industry approach, that level of loading which is appropriate to particular circumstances and more latterly, in the context of the SEP. It is said that cases involving labour intensive service industries have, in the above context as to the SEP, been the subject of variation.

Noteworthy amongst these is the decision of 4/1/92 of a Full Bench in the Queensland Commission as to, inter alia, weekend and week day loadings in the Hotels and Liquor Industry Award - State (excluding South East Queensland). In determining time and a quarter and time and a half for ordinary hours worked on Saturday and Sunday respectively the Bench observed:

(72)August 1988 NWC decision Print H4000 p.6 (73)Print H9100 p.10

46

DECISION

"We have approached the issues of penalty rates on the basis of what is appropriate to this industry and the employees given that it is a 7 day a week, 365 day a year operation. Additionally licensing laws are such that extended trading hours beyond those contemplated in the existing Hotels Award are in operation with further changes likely. Social attitudes towards dining and expectations of service have also changed. Although direct evidence by employees was not presented, the Commission is aware that employees attitudes to work are also undergoing change.

Contrasted with the era from which the existing award provisions emerged, working at night or on weekends is not generally considered to be working unsociable hours in this industry. Some employees, too, may prefer to work on weekends and have time off during the week.

Some might argue that the penalty rates attaching to night work or weekend work are the main contributing factors to employees work preferences. But we cannot ignore other societal changes referred to above. If this industry is to have a productive future, then the issue of penalty rates requires close attention."(74)

In arriving at its decision that Full Bench had particular regard for the frequency and social necessity of work being performed on Sundays and concurred with the view expressed by an earlier Full Bench of the Queensland Commission (Miscellaneous Workers' Award - State Government,(75) Bougure, Swan C, with Dempsey C concurring separately, that the proper rate for Sunday work must be assessed without according the deterrent element substantial weight.

Additionally a number of decisions of the New South Wales Commission in Court Session were cited. In the Shop Employees (State) Award Case(76) of 27/9/91 Fisher P, Glynn and Sweeney JJ determined the rate of time and one half as continuing to be appropriate for ordinary time worked on Sundays. Previously little Sunday work in this award was performed in ordinary time as distinct from overtime. The various retail cases reviewed in these proceedings occasionally arose in an environment of changes in the law as to shop trading. Not all are cited.

The above case turned not on the setting of a rate for newly legislated hours, but rather, followed the agreement of the parties which had the effect of allowing for employees of shops, able to lawfully trade on Sundays, to work on five of all seven days of the week in ordinary time. The Bench resolved the issue of the rate of pay for ordinary hours of work performed on a Sunday where the rate claimed was double time. Citing an encouragement to trading and increased employment opportunities the Full Bench observed:

"We think that a conclusion that the rate in ordinary time for work done pursuant to lawful trading on Sunday should be, as it has been since 1937, compensated at a rate of time and a half is irresistible.

(74)Queensland Government Industrial Gazette, 4/1/92 p.30 (75)137 QGIG 299-303 (76)Nos 1073, 1175, 1226 of 1989

DECISION

We consider the proposals by the employers to pay time and one half for ordinary time on Sundays, as the award presently provides, adequately compensates for the social disabilities involved in working at inconvenient times."(77) As to social change manifest in public demand for extended trading, the Bench referred in relation to Saturday rates to the observations of the New South Wales Commission in Court Session (Fisher P, Watson and Sweeney JJ) in the Shop Employees (State) Award Case of 16 August 1985, where it was said:

"We believe that there is a definite public interest in the added amenity of Saturday afternoon shopping and a direct industrial interest in the further employment opportunities that extended trading on Saturday afternoon implies. We are reluctant to impose a further cost burden such would inevitably tend to discourage Saturday afternoon shopping, discourage its spread and limit employment opportunities."(78) Further, the decision of the New South Wales Industrial Commission in Court Session (Fisher P, Bauer J and Connor C) in the 1989 Hairdressers Case was cited as follows:

"There is a well established line of authority in New South Wales in relation to special and confection shops which generally speaking are small businesses, that fixed proper compensation for any social disability in working in ordinary time on Saturdays at time and one quarter. The rates there have been time and one quarter since the early seventies. Time and one half and especially double time have no place as penalties in ordinary time in retailing and related service areas."(79)

Reference was also made to the reform in New South Wales of the TAFE working arrangements, where the correct fixation for afternoon work was considered by the New South Wales Commission in Court Session (Fisher P, Bauer and Hungerford JJ) for both week day and Saturday work. The complex issues not here summarised involved previously applying credited hours for work performed after 6 p.m.

The Commission awarded a 25% loading for hours Monday to Friday worked after 5.30 p.m. for the "social disability of working inconvenient hours". For Saturday work the rate of 25% was awarded, again for the social inconvenience of work at such times; the Commission observing,"The Commission considers for work in ordinary time rates should not be loaded to overtime penalty levels."(80)

The August 1991 decision of the New South Wales Commission in Court Session (Fisher P, Cahill, Cullen JJ and Buckley CC) in the State fruit growing awards, determining time and a quarter and time and a half for ordinary time

(77)ibid., p.6 (78)No. 1682 of 1984 (79)Nos 1232 and 1236 of 1987 (80)Application by New South Wales Teachers' Federation and Anor re Crown Employees (Teachers' Education Teaching Service) AW and other awards Nos 566 and 1619 of 1989 and 515 of 1990 - AILR 358 Vol 33 No 22

48

DECISION

worked on Saturdays and Sundays respectively was said to be in recognition of the need for such work to be performed in ordinary time over seven days of the week.(81)

The decision of Maidment J of the New South Wales Commission in the Employees Retail Shops (State) Award of 26 March 1992 was said by the AHA to provide a line of reasoning as to structural efficiency exercises particularly in the context of changes to award provisions. His Honour says at page 11 of his decision:

". . . as to structural efficiency, there is no assumption that there must be a return to the employees of benefits commensurate with the value of changes to the employer.

I am, at the same time, conscious of Mr Murphy's submission that a negative cost cutting exercise is not an appropriate approach to the matter.

The rationale of the various decisions regarding structural efficiency reflects a consciousness of the need for the community to discard work practices and award conditions which are inefficient or add on undue expense. The fact that a practice or condition has existed for a considerable time does not render it immune from scrutiny. The processes involved in the application of the structural efficiency principle provide an opportunity, which should be taken, of assessing the relevance and appropriateness of work practices and award conditions to economic realities."(82)

Substantial attention was also given to the majority decision of the Victorian Industrial Relations Commission in Court Session (Boulton J, Marsh DP and Eggington C) in the Retail Workers Case of 18 June 1992.(83) In dealing with a number of the cases also raised in these proceedings, the above decision also dealt with the effect of the no negative cost cutting stipulation upon a downward review of penalty rates.

The Bench indicated that they had paid particular regard for a number of significant developments, including:

. trading over the days in question being now widespread;

. shopping being now regarded as a leisure activity with the demand resulting for trading to occur at times convenient to the general public;

. the likelihood of additional employment opportunities resulting from "a higher level of service during weekend trading".(84)

In determining a rate of time and a quarter for Saturday work the Bench considered that, with a nil reduction provision for permanent employees, their determination was not negative cost cutting, saying:

(81)Nos 390,391 and 616 of 1988, 1001, 1023 and 1024/89, 737 of 1990 (82)No. 822 of 1990, 1045/91 (83)Decision D92/0256 (84)ibid., p.23

DECISION

"We do not consider that retail employees will be subject to a loss of existing income as a result of the approach we have adopted in moving over a period of time to a more appropriate level of compensation for Saturday work. We are also mindful of the increased employment opportunities associated with this movement."(85)

Enterprise Agreements

The claim proposes a schema whereby local agreements reached in relation to weekend and public holiday penalties are to:

. override the provisions of the award as to weekend and public holiday penalties;

. be arrived at locally with either an individual or group of employees;

. be recorded in writing and kept with the time and wages records;

. be reached with employees able to seek advice or representation by the union during such negotiations;

. be reached between the employer and employee with the union being unable to be or become a party to the agreement;

. be reached with "the genuine consent of the employer and the employees directly effected by it" and not thereafter be subject to the union withholding its consent or otherwise opposing the operation of the terms of that agreement.

The AHA said the clause was workable and effective; the union that is was wrong in principle and designed to deny the union its rights. Mr Hinkley put that it was ridiculous to believe that employees would have a fair chance of representation were they to be, in the AHA model, required to represent themselves. The union argued in this respect that in the evidence there were episodes recited where employees had suffered under entirely non-consultative approaches.(86) Mr Lewis described the clause as a facilitative provision - not an enterprise based agreement as envisaged by the April 1991 National Wage Case decision. I believe there is some confusion as to the role intended for the various clauses referred to.

The National Wage Bench has made it clear that opportunities should not exist which allow for contracting out of parties' obligations. I respectfully concur with these views. The April decision distinguishes between facilitative provisions and award modernisation clauses. The facilitative clause is described by the National Wage Bench as:

". . . designed to provide, against the background of the standard or basic award clause, scope for flexibility to meet the particular working or competence requirements within an establishment."(87)

The Bench then give an example of such a clause where an alternative course of action, an option, is set out in detail within an award to provide the flexibility so highly valued.

(85)ibid., p.25 (86)transcript p.2015 (87)Print J7400 p.44

50

DECISION

By way of contrast the Bench speak with approval also of award modernisation and enterprise flexibility clauses, which tend to have similar purposes and be of similar construction. As the April National Wage Bench comments:

"These clauses usually contain subclauses prescribing mechanisms for enterprise based negotiations. These prescriptions generally include:

. the establishment of a consultative process at the enterprise/ workplace level to focus the attention of management and employees on measures needed to improve efficiency; and

. a formal mechanism and criteria for enterprise agreements which require a change to an award provision. The requirements for these agreements often include:

- the genuine agreement of the majority of employees,

- no loss of income,

- no reduction in national standards,

- union involvement and agreement (agreement not to be unreasonably withheld),

- Commission approval of the agreement."(88)

and further, the Bench observes:

". . . there seems to be a view that an award modernisation clause may be used to negotiate a variation to a standard or basic award provision without the need to seek a formal award variation. This would be tantamount to providing a built-in contracting-out provision in an award, which should not occur. While an award system is provided for under the statutory framework, the parties to a particular award should not, in our view, be entitled to divest themselves of their obligations under it. If another or both should wish to change those obligations, they should seek to do so in accordance with the processes provided by the Act. Clearly, the relevant union or unions have a role in that process."(89)

The award does not currently contain a clause as required by the April 1991 National Wage Case decision calling for the creation of local consultative groups within hotels, consistent with the size and needs of the particular establishment, to further the structural efficiency process.

The clause I propose to insert is intended to provide for enterprise arrangements to be entered into which reflect the genuinely agreed views of the workers and the employer at an establishment.

A key concern of the employers appears to be that in many hotels there is little union presence - a situation not sought to be disturbed by the employers in their drafting of the application.

(88)Print J7400 p.43-44 (89)Print J7400 p.43-44

DECISION

Agreements entered into which purport to override the award must be properly made to provide the validity, the enforcability employers and employees require. This is achieved, in the clause to have application, consistent with the April 1991 National Wage Case decision, by providing for a variation to be made which operates as a schedule to the award.

The balance between the rights of the union to be involved and yet not oppose unreasonably the reaching of an agreement was considered in the decision of a Full Bench (Moore VP, Hancock SDP and Palmer C)(90)in the Retail and Wholesale Employees (Australian Capital Territory) Award 1983 in a s.45 appeal against an order of Lawson C.(91) I have modified the clause resulting from that case largely in the light of the employers proposed clause.

The effect is a general SEP oriented Enterprise Arrangements clause while providing a proper role for the union as commented upon by the above Full Bench in these terms:

"Given that registered organisations, rather than employees, are ordinarily the award respondents (as is the case with this Award), we do not think they lawfully can or should be excluded from proceeding leading to variations of an award . . ."(92)

The clause to apply is set out below.

"Enterprise Arrangements

To ensure that the award provides for:

. flexible working arrangements, . enhanced skills, job satisfaction and training, . optimum workplace efficiency and productivity,

the parties will, consistent with the Structural Efficiency Principle, establish at each enterprise a consultative mechanism and procedures appropriate to the size, structure and needs of the enterprise. Any measure raised, award or non-award, which has an effect consistent with the above objectives shall be processed through that consultative mechanism and procedures set out below.

(a) Enterprise arrangements may involve a variation in the application of award provisions in order to meet the requirements of individual enterprises and their employees. Arrangements may be negotiated and consequential award variations processed in accordance with the provisions set out herein provided that:

(i) a majority of employees effected genuinely agree,

(ii) such arrangement is consistent with the current National Wage Case principles.

(b) The procedures for processing enterprise arrangements where no award variation is necessary will be as determined by the consultative body

(90)Print K5074 (91) Print K3234 (92)Print K5074 p.5-6

52

DECISION

jointly established. Should difficulties emerge in processing, finalising or applying an agreement the matter may be referred to the Commission.

(c) The procedures for processing enterprise arrangements where a variation to the award is necessary will be as follows:

(i) All employees will be provided a reasonable opportunity to peruse the current prescriptions (e.g. award, industrial agreement or enterprise arrangement) that apply at the place of work.

(ii) The authorised representative of employees at an enterprise may include an organiser or official of the union if requested to be involved by an employee/s at the establishment.

(iii) Where agreement is genuinely reached between the employer and the employees, or their authorised representative, as to an arrangement to apply at an enterprise such arrangement may be committed to writing.

(iv) Before any arrangement as in (iii) is signed and processed further in accordance with this clause, the proposed arrangement shall be forwarded in writing by the employer to the employer association, if any, of which the employer is a member and to the Federal Secretary of the union.

(v) The employer association or union may, within fourteen days thereof, notify the employer in writing of any objection to the proposed arrangements including a full outline of the reasons for such objection. Should such an objection be raised the parties are to confer in an effort to resolve the issue.

(vi) The union and/or employer association shall not unreasonably withhold consent to the arrangements agreed upon.

(vii) Where an arrangement is objected to in accordance with subclause (v) hereof and the objection is not resolved, an employer may make application to the Australian Industrial Relations Commission to vary the award to give effect to the arrangement at the enterprise.

(viii) If no party objects to the arrangement, then a consent application shall be made to the Australian Industrial Relations Commission to have the arrangement approved and the award varied in the manner specified in paragraph (ix) hereof. Such applications are to be processed in accordance with the appropriate National Wage Case principles.

(ix) Where an arrangement is approved by the Australian Industrial Relations Commission and the arrangement is contrary to any provisions of the award then the name of the enterprise to which the arrangement applies, the date of the operation of the arrangement, the award provision from which the said enterprise is exempt and the alternative provisions which are to apply in lieu of such award provisions shall be set out in a schedule to the award.

DECISION

(x) Such arrangement when approved shall be displayed on a notice board at each enterprise effected.

(xi) No existing employee shall suffer a reduction in entitlement to earnings, award or overaward, for working ordinary hours of work as the result of any award changes made as part of the implementation of the arrangement.

(xii) The disputes procedures will apply if agreement cannot be reached in the implementation process on a particular issue."

The Commission will call this element of the decision back on in six months to hear a report of the parties as to the workings of this clause.

Penalty Rates - General

In his decision of 25/11/1988(93) resolving a wide range of disputed matters as to conditions of employment to apply in the award, Mr Justice Munro applied the then Restructuring and Efficiency Principle. In adverting to the persuasive argument of the AHA as to the "almost exponential" change that had effected the industry over recent years his Honour referred to the changes to services, demand and licensing which were also stressed in this case. Since that time however, many important issues as to modernising conditions of employment, the classification structure, training and work performance have been applied, either through consent or arbitration. In emphasising the importance of one that remains, sight can be lost of all that has been achieved.

It is clear that the issue of penalties must be dealt with and regrettable that sectoral concerns, stressed by the Commission, by the parties earlier and in the reports, have not been the subject of successful negotiation.

The rates fixed by this decision will operate in a variety of different circumstances all of which have not been the subject of evidence. However the concepts involved and the rates fixed, concern aspects of work which I consider are not relevantly distinguishable.

Therefore the Commission will resolve the issues in the broad.

Public Holiday Rates

To the extent that the AHA application seeks to alter public holiday rates, I have to determine whether there is a ground, in all that has been put, to justify dealing with such rates.

Very little was put as to public holidays and particularly relative to the long standing level of recognition of such days in the community generally, as reflected in agreements and determinations of the Commission and the State tribunals. To rely on the generality of the application to establish the justification for dealing with public holidays is unsound and does not discharge the onus considerations properly raised by the respondent. This view is supported by my decision in relation to the other heads of claim of the AHA.

(93)Print H5871 p.11

54

DECISION

I am unable to reach the conclusion necessary to take the further steps sought by the applicant. I find that the existing clause as to public holiday payment should continue unaltered.

Week Day After Hours Penalty

The AHA claim for change to the current arrangement has been closely considered. The application eliminates the $1.03 per hour payable from 7 p.m. to 7 a.m. substituting an amount of $2.00 per hour for hours worked after midnight and before 7 a.m. All that amount paid currently to the employees actually working these hours is taken up by the AHA formula and applied to the base rates of those who work at such times and those who do not.

I am unable to agree with the AHA approach either put explicitly or existing implicitly that the organic approach to reform constituted by the AHA formula should somehow take up the $1.03 per hour for the hours from 7 p.m. until midnight when the $2.00 would become payable.

I have already indicated that from a 'technical' stand point, on the evidence adduced in this proceeding, there exists in my view, an arguable case for the existence of shift work in various sectors of the hotel industry such as might justify a review as to shift premia.

It will be appreciated that my view that such a situation can be postulated does not entail: (a) that such a prima facie position could be made out in the face of further enquiry or argument in opposition, and (b) that any particular finding as to premia might come from a case resulting.

That such an arguable case exists is to embrace a fundamental element of the AHA case, that vast change has altered the industry and that findings based on the 'traditional' industry are outmoded and therefore inappropriate. Thus it may be that the finding of Brack C(94) could properly be revisited as to parts, if not the totality of the industry.

Having considered all the evidence I do not accept that the $1.03 per hour currently paid after 7 p.m. on week days constitutes an inhibiting burden such as to invoke the application of the SEP. On the contrary and having regard for the considerable material put, I find the payment to be both justified and modest. To reward the social inconvenience of working a shift, say, from 4 p.m. to 11 p.m. by the payment of an allowance totalling $4.12 is not such as to warrant intervention by the Commission.

Other than as an exercise in irony I do not accept that there is anything upon which one could rely in finding that employees do not regard this payment as "an important part of the wage package". This is a central contention of the overview paper for the Australian Tourism Research Institute (Attachment 5) relied upon as part of the attitudinal change of employees said to mirror the industry changes referred to earlier. I accept the inference contended for by the union in its noting that this 'attitude' was not put to the many employee witnesses.

(94)216 CAR 794

DECISION

I am of the view that the allowance currently paid is inadequate recompense for work after midnight and before 7 a.m. I reach this view, not on the basis of the quantum that might result from application of the relevant provisions found in the vast majority of awards and agreements which deal with night work, but rather having regard for the evidence in this case as to:

. the substantial social and other inconvenience that attaches to such night work,

. the nature of the work itself,

. the regularity with which employees are called upon to so work.

I propose to vary the allowance to an amount which more adequately meets the level of inconvenience. The amount set does not comprehend a component designed to deter such work being required and yet is not set so high as to have that practical effect through inadvertence. Work performed in ordinary hours after midnight and before 7 a.m. on Monday to Friday shall attract an allowance of $1.50 per hour or any part of an hour. The current limitation to three hours payment for casuals will continue to apply within the separate periods for which each allowance is payable i.e.

7 p.m. - midnight - $1.03 per hour midnight - 7 a.m. - $1.50 per hour

Thus a casual working from:

. 9 p.m. to midnight would receive 3 hours @ $1.03 . 8 p.m. to midnight would receive 3 hours @ $1.03 . 9 p.m. to 1 a.m. would receive 3 hours @ $1.03 and 1 hour @ $1.50 . 11 p.m. to 3 a.m. would receive 1 hour @ $1.03 and 3 hours @ $1.50 . 8 p.m. to 4 a.m. would receive 3 hours @ $1.03 and 3 hours @ $1.50

Weekends

I turn now to the matter of Saturday and Sunday rates. Earlier in this decision I have determined that there is a cause for dealing with weekend rates in the hotel industry arising from structural efficiency considerations. I reach this conclusion by considering the effect on the operation of hotels of the sorts brought forward in the evidence. I will not recite them here. In the aggregate they have effects which trigger the principle by constituting an important impediment to work being performed and to the efficiency and overall well being of the industry.

It is my view that if penalty rates could, by a structural efficiency consideration, be averaged and expressed as flat amounts for some productive result, as urged by the National Wage Bench, then equally it is a valid exercise of jurisdiction under the principle to address their operation in the circumstances described here.

The validity of the calculations relative to a notional 'industry person' has been the subject of vigorous submissions as outlined earlier. The base rate adjustment assumed acceptance of the changes, not only to weekend penalties, but also to public holiday rates and week day after hours rates. These latter two have not been accepted by the Commission and to that extent the utility of the AHA approach is substantially eroded.

56

DECISION

The AHA approach calls for earnings, currently generated by weekend work, to be dealt with in two ways. For Saturday work, $4.50 per hour would be paid and for Sunday, $6.80 per hour. These money amounts would not increase consistent with wage movements. They would atrophy. The remaining amount currently paid over and above these flat amounts goes via the formula to the base rate adjustment. It does not however go to the base rate so as to be part of future adjustments but rather is intended by the AHA to be placed in the 'additional allowance' column where it would not increase with wage movements in the future. Rather these amounts also would atrophy.

This approach in my view institutes far more than a dealing anticipated by the National Wage Bench. It envisages the current amount of pay generated by weekend work will decline over time, irrespective of base pay movements and without any floor by way of minimum level of decay for these amounts. While the application calls for the weekend fixed hourly payments to remain unaltered for two years, the AHA acknowledge the review opportunity after that period is not for the purpose of amending these amounts by some updating factor. The opposite is the case. The two year review hearing, for the AHA, is likely to see a further application, in an as yet undecided form, which would have the effect of accelerating the diminution of the fixed weekend money payments.

Even if the single money amount approach commended itself, which adopting the reasoning of the Bench in the Shift Workers Case cited below, it does not, the open ended consignment of weekend earnings in the way sought is not a just substitute for assessing the amount which in all the circumstances is proper to be received. It is fundamental that a rate be determined, and it is not an appropriate arbitral judgement to decide a payment currently received requires adjustment and then institute the means whereby that payment will decline, relative to an increase in overall earnings, without setting out the level at which the payment should stabilise. I find this approach to be not in concordance with the SEP.

As to the recognition of the appropriate weekend rates via a flat rate or percentage method, the view expressed in the New South Wales Shift Workers Case is of interest:

". . . while the method to be adopted should be left to the parties or the tribunal dealing with each award to decide, the previous history of the award will be a significant although not decisive consideration."(95)

The rate to apply in the hotel industry for weekend work should have no element designed to deter an employer from requiring work be performed on Saturdays and Sundays and no punitive element designed to punish when such work is actually required to be performed. In determining the appropriate loadings, I have relied not on any existing or emerging 'standards', but the argument put by the parties. To the extent that my conclusions have an element of consonance

(95)1972 AR 633

DECISION

with the cases cited, I have thereby been fortified in fixing rates which in my assessment will provide fair recognition of social disability and a proper aid to a more efficient and productive hotel industry. The positive effect on employment in the industry is also a relevant consideration.

The Saturday rate for ordinary time worked in this industry should be loaded over the Monday to Friday rate but not punitively so, yet loaded at substantially less than the Sunday ordinary time rate. The Sunday ordinary time rate should be less than the overtime rate and yet appreciably more than the Saturday rate. The rate for ordinary time worked upon a Saturday, for all permanent employees, is to be the ordinary rate plus 25% and for ordinary time worked upon a Sunday, for all permanent employees, is the ordinary rate plus 75%. The distinction in Sunday rates between liquor service/'front of the house' and 'back of the house' staff has no further justification and will therefore cease to apply.

There will be a savings clause operating in respect of permanent employees engaged at today's date. This will ensure that nothing in this decision will have the effect of reducing for such employees, pay at the level received for Saturday and Sunday ordinary time work prior to today's date until such amount is exceeded by the ordinary time rate of pay for Saturday and Sunday work as determined by this decision for permanent employees engaged from today's date.

I have very closely considered the position as to a savings clause for casuals. However the practical difficulties which intrude make such a clause not feasible. There also exists a real difficulty given the sessional nature of their employment should a rate for 'current serving' casuals be set at a rate higher than casuals engaged from the date of effect I have determined.

Where the award currently provides for casuals to be paid for Saturday at the award base rate plus 75%, from the date set below the rate will be the award base rate plus 50% and where double time was paid for casual work on a Sunday, the rate will be the award base rate plus 75%.

This decision will take effect for the altered Monday to Friday post midnight rate of $1.50 and, for permanent employees engaged after today's date, as to Saturday and Sunday rates, from the first pay period to commence on or after 3 June 1993.

The revised rates for casuals engaged in Saturday and Sunday work will take effect from the first pay period to commence on or after 1 July 1993.

The applicant is to provide a draft order.

58

DECISION

Appearances:

K.G. Lewis, R.S. Warren of counsel, with C.R. Walker, P. McKendry, J. Lambert and I. Forbes for the Australian Hotels Association.

R.W. Hinkley with K. Parkinson of counsel, with M. Boland for the Federated Liquor and Allied Industries Employees Union of Australia (now the Australian Liquor, Hospitality and Miscellaneous Workers Union).

G.E. Farrar for The Motor Inn, Motel and Accommodation Association (intervening).

J. Acton for the Australian Council of Trade Unions (intervening).

Dates and places of hearing:

1990. Sydney: December 11.

1991. Melbourne, Geelong, Ballarat, Bendigo: (inspections); April 11, 12. Queensland: (inspections); April 16 to 18. Melbourne: July 5. Sydney: August 20 to 22. Melbourne: September 13. Melbourne: December 17.

1992. Sydney: April 13 to 15, 27, 29; May 18 to 20. Melbourne: May 26. Hobart: July 13 to 15. Sydney: July 21. Brisbane: July 28, 29. Melbourne: August 6; September 15 to 18, 21 to 23, 25.

DECISION

ATTACHMENT 1

Exhibit W39 29/4/92 C No. 22069/90

AUSTRALIAN HOTELS ASSOCIATION

SURVEY OF HOTELKEEPERS

1991

An examination of Hours of Work and Penalties Paid in the Australian Hotel Industry

November 1991

60

DECISION

ATTACHMENT 1 C NO. 22069/90

1. INTRODUCTION

In November 1990, the Australian Hotels Association applied to the Australian Industrial Relations Commission to vary the Penalty Rates Structure contained in the Federal Hotels, Resorts and Hospitality Industry Award 1990 (Federal Hotels Award). This application necessitated the gathering of information on average penalties and average award wages paid under the award.

To satisfy this demand for detailed and reliable information, the Association undertook a survey of all of its members covered by the Federal Hotels Award.

The questionnaire was delivered to member in February 1991 and related to a pay week commencing on or after 11 February. (A copy of the survey document is found at Appendix A). The responses to this survey were received over March and April 1991 and were all checked and entered into a computer spreadsheet system. Where possible any discrepancies which became evident on the survey responses were followed up and clarified by telephone.

1.1 Returns received

Table 1 indicates the number of returns received. As can be seen over 500 returns were received of which 97% were capable of being used in the survey. Table 2 shows the survey returns received according to the size of the hotel in terms of its number of employees.

Table 1

Returns Received by State

NSW 260 51.2% TAS 57 11.2% QLD 70 13.8% VIC 121 23.8%

TOTAL 508 100.0

Table 2

Returns Received by Size of Hotel

No. of employees No. % 0-5 125 24.6 6-10 112 22.0 11-20 118 23.2 21-50 100 19.7 51-100 32 6.3 101-200 13 2.6 201-300 2 0.4 Over 300 6 1.2

TOTAL 508 100.0

The responses received covered over 13,000 employees. However, even though the number of large residential establishments responding to the survey were not disproportionate in total number, they represented over 40% of the total number

DECISION

ATTACHMENT 1 C No. 22069/90

of employees. This compares to figures released by the Bureau of Tourism Research Labour Force Survey1 which indicated that hotels with over 60 rooms employ only 27% of the total number of employees in the hotel industry. Therefore, the statistics represented in this report have been weighted so as to be in conformity with acknowledged industry criteria.

1Bureau of Tourism Research, Hospitality Industry Labour Force Survey, conducted during 1988 on behalf of Department of Arts, Sport, the Enviroment, Tourism and Territories. The National Tourism Industry Training Committee and the Department of Employment, Education and Training, Commonwealth of Australia, 1990.

62

DECISION

ATTACHMENT 1 C No. 22069/90

2. HOTEL INDUSTRY EMPLOYMENT

Figures 1 and 2 indicate the breakdown of employment in terms of the total number of employees and total hours worked in hotels. The survey showed that 70.8% of all employees are casual, 25.6% permanent full-time and 3.6% permanent part-time. However, when this is examined in terms of hours worked by these employees (see Figure 2) a far more even picture emerges of the contribution made by permanents and casuals. In this regard, casual employees worked 54.1% of the total hours, compared with 42.8% for full-timers and 3.1% for part-time permanent employees.

Figure 1

(Note: Graph is contained in the pamphlet version of decision and may be inspected on file C No. 22069 of 1990)

Figure 2

(Note: Graph is contained in the pamphlet version of decision and may be inspected on file C No. 22069 of 1990)

2.1 Average hours worked other than by full-time employees

Average hours worked by casual employees 17.4 hours per week Average hours worked by part-time employees 20.0 hours per week

DECISION

ATTACHMENT 1 C No. 22069/90 3. HOURS WORKED - WHEN

3.1 Permanent Full-time

Figure 3 illustrates the breakdown of how full-time employees work their weekly rosters. As shown, 23.9% of all full-time employees work a Monday to Friday roster, almost 27% work four weekdays plus Saturday, 12% four weekdays plus Sunday, with the largest proportion, 37.2%, working three weekdays plus weekends.

Figure 3

(Note: Graph is contained in the pamphlet version of decision and may be inspected on file C No. 22069 of 1990)

3.2 Permanent Part-time

Figure 4 shows the breakdown of hours worked by part-time employees according to the days they were worked. As can be seen, almost three-quarters of the total hours worked by part-timers are worked Monday to Friday, as compared with 13.9% on a Saturday and 11.1% on a Sunday.

Figure 4

(Note: Graph is contained in the pamphlet version of decision and may be inspected on file C No. 22069 of 1990)

3.3 Casual Hours

As shown in Section 2, casual employment even in terms of hours covers the majority of the work done in the hotel industry. Figure 5 shows the breakdown of those hours in accordance with the days on which they were worked. Almost 71% of all hours are worked on Monday to Friday, with 18.3% on a Saturday and 10.8% on a Sunday.

64

DECISION

ATTACHMENT 1 C No. 22069/90

Figure 5

(Note: Graph is contained in the pamphlet version of decision and may be inspected on file C No. 22069 of 1990)

3.4 Total Hours

Figure 6 illustrates the breakdown of total hours worked by all types of employees in the hotel industry. The breakdown aligns with times worked that are subject to different rates of penalty payment (other than after hours penalty which is covered in Section 5):

Monday to Friday No penalties Saturday 50% additional Sunday (permanent Liquor Service Employees) 100% additional Sunday (other) 75% additional Public Holidays (permanent employees) 150% additional Public Holidays (casual employees) 125% additional

Liquor Service Employees are defined in the award as:

". . Those persons employed in the capacity of the selling or dispensing of liquor in bars and/or bottle departments or shops and cellar employees. Additionally, in the Southern Eastern Division of Queensland such Liquor Service Employees shall include all employees who are engaged in serving drinks or food (but not so as to include employees preparing food in separate kitchen) in areas of hotels which are primarily used for the consumption of alcoholic liquor such as bars, lounges and beer gardens. Drink waiters and drink waitresses, wherever employed in the South Eastern Division of Queensland, are included."

Basically, this definition covers duties such as bar attendant, cellar work and bottleshop.

Figure 6

(Note: Graph is contained in the pamphlet version of decision and may be inspected on file C No. 22069/90)

DECISION

ATTACHMENT 1 C No. 22069/90

4 AVERAGE PENALTY PAID

From the breakdown of when hours are worked as presented in Section 3.4, the average penalty paid to all hotel employees can be calculated on the following basis:

Monday to Friday - 71.71x0 0.0 Saturday - 15.83x50% 791.5 Sunday (perm Liq Service Emp) - 1.5x100% 150.0 Sunday (other) - 8.89 x 75% 666.75 Public Holidays (permanent emp) - 0.90 x 150% 135.0 Public Holidays (casual emp) - 1.17x125% 146.25

1889.5

Therefore, the average penalty paid in the hotel industry (not including after hours penalties) is 18.895%.

5. AFTER HOURS PENALTY

5.1 Permanent Employees

The Survey indicated that 17.6% of all hours worked by permanent employees were done so between the hours of 7 p.m. and 7 a.m. Monday to Friday.

Of those hours worked between 7 p.m. and 7 a.m.:

. 53.4% were worked between 7 p.m. and 10 p.m.

. 22.5% were worked between 10 p.m. and midnight

. 24.1% were worked between midnight and 7 a.m.

5.2 Casual Employees

The Survey indicated that 25.6% of all hours worked by casual employees were done so between the hours of 7 p.m. and 7 a.m. Monday to Friday.

Of those hours worked between 7 p.m. and 7 a.m.:

. 65.4% were worked between 7 p.m. and 10 p.m.

. 22.0% were worked between 10 p.m. and midnight

. 12.6% were worked between midnight and 7 a.m.

Significantly, the Federal Hotels Award provisions restrict the total payment of after hours penalty to casuals to $3.13, compared with a payment per hour of $1.03, i.e. approximately a 3 hour maximum. The survey indicated that of all hours worked between 7 p.m. and 7 a.m. by casuals, 75.2% received a penalty payment.

66

DECISION

ATTACHMENT 1 C No. 22069/90

5.3 Total Employee Hours

Figure 7 illustrates the breakdown of total hours worked between 7 p.m. and 7 a.m. Monday to Friday by both permanent and casual employees.

Figure 7

(Note: Graph is contained in the pamphlet version of decision and may be inspected on file C No. 22069 of 1990)

6. HOTEL EMPLOYMENT BY JOB CLASSIFICATION

The survey provided a breakdown of hotel industry employment according to key job classifications.2 Responses relating to part-time and casual employees were provided in hours, and have been converted to full-time equivalent figures for the purposes of providing the following picture of the range of classifications in the industry:

Table 3

Hotel Industry Employment by Classification

Supervisory Chef 1.3% Advanced Senior Chef 1.0 Other Chef (Qualified) 4.2 Cook (unqualified) 3.7 Apprentice Chef/Cook 4.7 Kitchen/Pantry Person 4.6 Other Kitchen 2.8 Housekeeping Supervisor 1.0 Room Attendant/Porter 5.7 Other Housekeeping/Cleaning/Car Att 9.3 Maitre d'/Waiting Supervisor 1.4 Waiter/Waitress 10.4 Head Bar Attendant/Bottle Shop Supervisor 4.5 Bar/Bottle Shop Attendant 30.7 Useful/Busboy 2.1 Cocktail Waiter/Waitress 1.7 Cellar Person 1.0 Front Office Supervisor 0.7 Receptionist/Reservations Clerk 2.8 Cashier (Front Office) 0.7 Other Front Office 1.4 Other 4.2

2The percentage of usable surveys for this question was 89% (508 received and 452 were usable).

DECISION

ATTACHMENT 1 (C NO. 22069/90)

Figure 8 illustrates the grouping of the above figures into major categories:

Figure 8

(Note: Graph is contained in the pamphlet version of decision and may be inspected on file C No. 22069 of 1990)

A comparison between the above breakdown and figures presented in the BTR Labour Force Survey 1988 (when also converted to full time equivalent positions) is shown in Table 4. As can be seen, the figures indicate that the only variance of significance is in the categories of "Housekeeping" and "other". This may be partly explained by the likelihood that the BTR survey included cleaners into the other category, whereas this function was incorporated into the housekeeping category in the 1991 survey.

Table 4

Category 1991 Survey 1988 BTR

Kitchen 22.4% 20.4% Housekeeping 15.9 12.1 Waiting 11.8 13.3 Bar 40.1 38.2 Front Office 5.6 6.7 Other 4.2 9.4

68

DECISION

ATTACHMENT 1 (C No. 22069/90)

7. AVERAGE AWARD WAGE PAID

Using the breakdown of hotel industry employment by State from the Labour Force Survey as a guide. Table 5 represents the weighted (average) award wage attributable to each job classification.

Table 5

Hotel Award Wage (weighted)

Supervisory Chef $440.00 Advanced Senior Chef $424.40 Other Chef (Qualified) $402.30 Cook (unqualified) $339.80 Apprentice Chef/Cook $260.90 Kitchen/Pantry Person $325.30 Other Kitchen $325.30 Housekeeping Supervisor $419.70 Room Attendant/Porter $338.20 Other Housekeep/Cleaning/Car Att $325.30 Maitre d'/Waiting Supervisor $420.00 Waiter/Waitress $338.70 Head Bar Attendant/Bottle Shop Sup $357.90 Bar/Bottle Shop Attendant $340.60 Useful/Busboy $324.40 Cocktail Waiter/Waitress $375.30 Cellar Person $375.30 Front Office Supervisor $421.90 Receptionist/Reservations Clerk $342.00 Cashier (Front Office) $355.60 Other (Front Office) $342.00 Other $343.40 By applying the weighted award wage to the breakdown of employment of job classification, the average award wage payable is calculated as being:

Average Award Wage Payable $342.80

As the survey made no distinction according to age, in calculating the average it was necessary to assume that all employees are paid the adult rate of pay (except apprentices). Obviously, as juniors are employed in this industry, this assumption has the effect of artificially raising the average above its real level.

8. EFFECT OF AHA APPLICATION TO VARY PENALTY RATE STRUCTURE

8.1 Weekend and Public Holiday Penalties

The AHA fixed rate penalty option worked the setting of penalties as flat dollar amounts on the following basis:

DECISION

ATTACHMENT 1 (C No. 22069/90)

. $4.50 per hour for work on Saturday

. $6.80 per hour for work on Sunday

. $13.50 per hour for work on a public holiday for a permanent employee and $11.30 per hour for casual work

Using the breakdown of hours involved in Section 3.4. the average hotel employee earning an award wage of $342.80 (for a 38 hour week or casual equivalent) would receive the following penalty payments under the current structure:

Under Current Penalty Rate Structure

Total 38 Hour Hours Week Additional Penalty (%) (Hours) Penalty Rate/Hr Paid Monday to Friday 71.71 27.25 0 0 0 Saturday 15.83 6.01 150% $4.51 $27.11 Sunday (Non Perm LS) 8.89 3.38 175% $6.77 $22.88 Sunday (Perm LS) 1.50 0.57 200% $9.02 $5.14 Perm Public Hol 0.90 0.34 250% $13.53 $4.60 Casual Public Hol 1.17 0.45 225% $11.28 $5.08 Total 100.00 38.00 $64.81 Under the AHA proposed structure the $64.81 (or 18.91% of $342.80) would be marginally reduced by $1.22 to $63.59 (or 18.55%)

Under the Proposed Penalty Rate Structure

Total 38 Hours Hours Week Penalty (%) (Hours) Penalty Paid Monday to Friday 71.71 27.25 0 0 Saturday 15.83 6.01 $4.50/hr $27.05 Sunday (Non Perm LS) 8.89 3.38 $6.80/hr $22.98 Sunday (Perm LS) 1.50 0.57 $6.80/hr $3.88 Perm Public Hol 0.90 0.34 $13.50/hr $4.59 Casual Public Hol 1.17 0.45 $11.30/hr $5.09 Total 100.00 38.00 $63.59 Therefore, to compensate the average hotel employee for a change in the penalty rate structure to the proposed amount would involve an adjustment to the total wage of 0.36%.

70

DECISION

ATTACHMENT 1 (C No. 22069/90)

8.2 After Hours Penalty

The AHA proposal for the after hours penalty is to replace the existing 7 p.m. to 7 a.m. structure with the following:

Permanents - $2.00 per hour for all hours worked between midnight and 7 a.m.

Casuals - $2.00 per hour for hours worked between midnight and 7 a.m. up until a maximum of 3 hours worked.

In order to calculate the effect of this proposal on the average employee earning $342.80 the following assumption needs to be made:

that 75% of casual hours after 12 midnight would be paid.

If the proposal resulted in an adjustment to the payment between midnight and 7 a.m. to directly compensate for the elimination of the pre-midnight payment, then the post-midnight payment would need to be $5.88.

As it is proposed to only pay $2.00 for post-midnight hours, this will result in a loss of $3.88 for these hours, However, as the hours between midnight and 7 a.m. Monday to Friday only account of 3.36% of total hours worked then this results in an average loss per hour of only 12.7 cents.

Therefore, to compensate the average employee earning $342.80 for a change in the after hours penalty would involve a payment of $4.83 per week (12.7x38), which is 1.41% of the total wage.

8.3 Total Adjustment Needed

The survey indicates that the average employee earning $342.80 per week in award wages requires the following compensation for his/her total award wage and penalty entitlement to remain unchanged.

Weekend and Public Holiday Adjustment 0.36% After Hours adjustment 1.41%

Preliminary Adjustment Figure 1.77%

9. ADJUSTMENT FOR ON COSTS AND LOADING

For any adjustment to the total wage to be truly neutral, the affect of labour on costs and the casual loading of 25% need to be taken into account.

9.1 Permanents

Labour on costs broadly fall into two categories:

. Those that are incurred by the employer regardless of the type of employee, e.g. workers compensation, pay-roll tax, superannuation (although with some limited exception for low earning casuals), long service leave (depending on State Legislation) etc.

DECISION

ATTACHMENT 1 (C No. 22069/90)

. Those on costs that are only payable to permanent employees as opposed to casuals, e.g. sick leave, annual leave including loading and public holidays not worked.

It is the second category which we are concerned with in terms of any adjustment for on costs. Given the fact that the survey indicated that around 45% of all permanents work on public holidays, this gives the following picture of the percentage of annual hours paid for but not worked:

Public holidays - 41.8 hours per year 2.21% Sick Leave - 76 hours per year 3.85% Annual Leave - 152 hours per year 7.69% Total 13.66%

Therefore, 13.66% of a permanent employee's wages are paid for time not worked during the year. In addition, the permanent employee is paid an annual leave loading of 17.5% for four weeks which equates to an additional 1.35%.

Without adjusting for such on-costs, by adjusting the total wage by a full 1.77%, permanent employees are being compensated for time they are not actually earning penalties. Therefore, the following adjustment needs to be made.

For time not working during the year,

1.77% - (13.66% x 1.77%)=1.53%

For additional payments made,

1.53% x 100 = 1.51% 101.35

9.2 Casual

As the 25% loading is not taken into account in the calculation of average penalties, the effect of this loading, like the on costs for permanents, would mean that the casual would be over compensated for the change in penalties if the 1.77% adjustment was applied in full. Therefore, the 1.77% needs to be discounted as follows:

1.77% x 100 = 1.42% 125

9.3 Total Adjustment needed

Thereby, taking into account the on costs and the casual loading, we can calculate the total adjustment necessary in order to achieve a truly neutral cost effect across the industry. To do this we apply the percentages outlined in section 2 which broke down the total hours worked in the industry.

Permanent 45.9 x 1.51% = 0.693 Casual 54.1 x 1.42% = 0.768 1.461

Total Adjustment - 1.46%

72

DECISION

APPENDIX A

ATTACHMENT 1 (C No. 22069/90)

HOTELS RESORTS AND HOSPITALITY INDUSTRY AWARD

AUSTRALIAN HOTELS ASSOCIATION

February 1991

SURVEY OF HOTELKEEPERS

Please read all questions carefully and answer as accurately as possible. All answers will be kept in strict confidence.

General

1.1 Name of Hotel .............................. Date Completed..............

Phone No. and Contact name............................................... (for checking of figures if necessary)

Except where otherwise specified, please provide information for the remainder of the questions as it applied for the first pay week commencing on or after 11 February 1991 for your Award employees.

2.1 Total number of full-time permanent award employees ..............

2.2 Total number of part-time permanent employees ..............

2.3 Total number of casual employees ..............

(a) Who worked in that week ..............

(b) Who are listed as available for employment [including (a)] ..............

Weekend work

3.1 How many full time employees worked their ordinary hours on the following days:

(a) Monday to Friday only ..............

(b) Four weekdays plus Saturday ..............

(c) Four weekdays plus Sunday (i) Liquor Service Employees ..............

(ii) Non-Liquor Service employees ..............

(d) Three weekdays plus weekend (i) Liquor Service Employees ..............

(ii) Non-Liquor service employees ..............

DECISION

ATTACHMENT 1 (C No. 22069/90)

[Please note that (a)+(b)+(c)+(d) must equal the number supplied for Question 2.1]

3.2 What are the total hours worked by your part-time employees on the following days:

(a) Monday to Friday .............. (b) Saturday .............. (c) Sunday ..............

3.3 What are the total hours worked by your casual employees on the following days:

(a) Monday to Friday ............. (b) Saturday ............. (c) Sunday .............

After Hours Penalty

Permanents (Full-time and Part-time)

4.1 Not including overtime, how many hours were worked on Monday to Friday by permanents between 7.00 p.m. and 7.00 a.m.? ............. 4.2 Of these hours indicated in 4.1. how many were worked:

(a) Between 7.00 p.m. and 10.00 p.m. (in hours) ............. (b) Between 10.00 p.m. and 12 midnight (in hours) ............. (c) Between midnight and 7 a.m. (in hours) .............

[Please note that (a)+(b)+(c) must equal the number supplied for Question 4.1]

Casuals

4.3 How many hours were worked on Monday to Friday by casuals between 7.00 p.m. and 7.00 a.m.? ............. 4.4 Of these hours indicated in 4.3 how many were worked:

(a) Between 7.00 p.m. and 10.00 p.m. (in hours) ............. (b) Between 10.00 p.m. and 12 midnight (in hours) ............. (c) Between midnight and 7 a.m. (in hours) .............

[Please note that (a)+(b)+(c) must equal the number supplied for Question 4.3]

4.5 Given the fact that there is a maximum payment made to casuals for work between 7.00 p.m. and 7.00 a.m. Monday to Friday, how many of the hours indicated in answer 4.3. incurred an additional after hours penalty payment? .............

74

DECISION

ATTACHMENT 1 (C No. 22069/90)

Public Holidays

5.1 The public holidays prescribed by the Award are as follows:

New South Wales Victoria Tasmania Queensland

New Year's Day New Year's Day New Year's Day New Year's Day Australia Day Australia Day Australia Day Australia Day Good Friday Good Friday Good Friday Good Friday Easter Monday Easter Monday Easter Monday Easter Monday Anzac Day Anzac Day Anzac Day Anzac Day Sovereign's B'day Sovereign's B'day Sovereign's B'day Sovereign's B'day Six-Hours Day Labour Day Labour Day Labour Day Union Picnic Day Union Picnic Day Union Picnic Day Exhibition Day Christmas Day Christmas Day Christmas Day Christmas Day Boxing Day Boxing Day Boxing Day Boxing Day

or such other days as is generally observed in the locality as a substitute for any of the said days respectively.

In the last 12 months (i.e. 1 February 1990 to 31 January 1991), on average how many employees would have worked on each public holiday?

(a) Permanent Full-time (as part of their ordinary hours)? .............

(b) Permanent Part-time? (i) Employees .............

(ii) Total hours for all employees who worked? .............

(b) Casuals? (i) Employees .............

(ii) Total hours for all casuals worked? .............

Breakdown of Employment - Award Employees by Job Classification

6.1 In the same pay week used for Qns 1 to 4, how was your workforce divided in terms of the following: Full-time Part-time Casual No. of Employees Number of Hours

Supervisory Chef ------ ------ ------ Advanced Senior Chef ------ ------ ------ Other Chef (qualified) ------ ------ ------ Cook (unqualified) ------ ------ ------ Apprentice Chef/Cook ------ ------ ------ Kitchenhand/Pantry Person ------ ------ ------ Other Kitchen Staff ------ ------ ------ House Keeping Supervisors ------ ------ ------ Room Attendant/Porter ------ ------ ------

DECISION

All other Housekeeping Staff/Cleaners/ Car Parking Attendant ------ ------ ------ Maitre'd/Waiting Supervisor ------ ------ ------ Waiter/Waitress ------ ------ ------ Head Bar Attendant/Bottle Shop Supervisor ------ ------ ------ Bar/Bottle Shop Attendant/Bar or Bistro cashier/Asst Cellarperson ------ ------ ------ Cocktail Waiter/Waitress ------ ------ ------ Cellar Person ------ ------ ------ Front of House Supervisor ------ ------ ------ Receptionist/Reserv Clerk ------ ------ ------ Cashier (Front Office) ------ ------ ------ All Other Front of House ------ ------ ------ Other - please specify ------ ------ ------

TOTAL ------ ------ ------

Thank you. To best assist the AHA in its penalty rates application before the Industrial Relations Commission, it is essential that this completed survey is now returned to your AHA State Branch as soon as possible.

76

DECISION

ATTACHMENT 2 (C No. 22069/90)

(Note: Letter from Australian Hotels Association to Commissioner Gay, dated 2 December 1992 is contained in pamphlet version of decision and may be inspected on file C No. 22069 of 1990)

DECISION

ATTACHMENT 2 (C No. 22069/90)

7. AVERAGE AWARD WAGE PAID

Using the breakdown of hotel industry employment by~State from the Labour Force Survey as a guide, Table 5 represents the weighted average award wage attributable to each job classification

Table 5

Hotel Award Wage (weighted) Supervisory Chef - $458.90 Advanced Senior Chef $438.10 Other Chef (Qualified) $417.20 Cook (unqualified) $342.10 Apprentice Chef/Cook $271.20 Kitchen/Pantry Person $325.40 Other Kitchen $325.40 Housekeeping Supervisor $438.10 Room Attendant/Porter $342.10 Other Housekeep/Cleaning/Car Att $325.40 Maitre d'/Waiting Supervisor $438.10 Waiter/Waitress $342.10 Head Bar Attendant/Bottle Shop Sup $364.60 Bar/Bottle Shop Attendant $342.10 Useful/Busboy $325.40 Cocktail Waiter/Waitress $385.50 Cellar Person $385.50 Front Office Supervisor $438.10 Receptionist/Reservations Clerk $342.10 Cashier (Front Office) $364.60 Other Front Office $342.10 Other $343.40

By applying the weighted award wage to the breakdown of employment of job classification, the average award wage payable is calculated as being:

Average Award Wage payable $346.30

As the survey made no distinction according to age, in calculating the average it Was necessary to assume that all employees are paid the adult rate of pay (except apprentices) Obviously, as juniors are employed in this industry, this assumption has the effect of artificially raising the average above its real level.

78

DECISION

8. EFFECT OF AHA APPLICATION TO VARY PENALTY RATE STRUCTURE

8.1 Weekend and Public Holiday Penalties

The AHA fixed rate penalty option worked the setting of penalties as flat dollar amounts on the following basis:

$4.50 per hour for work on Saturday.

$6.80 per hour for work on Sunday.

$13.50 per hour for work on a public holiday for a permanent employee and $11.30 per hour for casual work.

Using the breakdown of hours involved in Section 3.4, the average hotel employee earning an award wage of $346.30 (for a 38 hour week or casual equivalent) would receive the following penalty payments under the current structure:

Under Current Penalty Rate Structure

Total 38 Hour Hours Week Additional Penalty (%) (Hours) Penalty Rate/Hr Paid

Monday to Friday 71.71 27.25 0 0 0 Saturday 15.83 6.01 150% $4.55 $27.35 Sunday(Non Perm LS) 8.89 3.38 175% $6.83 $23.09 Sunday(Perm LS) 1.50 0.57 200% $9.11 $5.19 Perm Public Hol .90 0.34 250% $13.67 $4.65 Casual Public Hol 1.17 0.45 225% $11.39 $5.13

Total 100.00 38.00 $65.41

Under the AHA proposed structure, the $65.41 (or 18.89% of $346.30) would be marginally reduced by $1.82 to $63.59 (or 18.36%):

Under Proposed Penalty Rate Structure -

Total 38 Hour Hours Week Penalty (Hours) Penalty Paid

Monday to Friday 71.71 27.25 0 0 Saturday - 15.83 6.01 $4.50/hr $27.05 Sunday (Non Perm LS) 8.89 3.38 $6.80/hr $22.98 Sunday(Perm LS) 1.50 0.57 $6.80/hr $3.88 Perm Public Hol 0.90 0.34 $13.50/hr $4.59 Casual Public Hol 1.17 0.45 $11.30/hr $5.09

Total 100.00 38.00 $63.59

Therefore, to compensate the average hotel employee for a change in the penalty rate structure to the proposed amount would involve an adjustment to the total wage of 0.53%

DECISION

ATTACHMENT 2 (C No. 22069/90)

8.2 After Hours Penalty

The AHA proposal for the after hours penalty is to replace the existing 7 p.m. to 7 a.m. structure with the following:

Permanents $2.00 per hour for all hours worked between midnight and 7 a.m. Casuals $2.00 per hour for hours worked between midnight and 7 a.m. up until a maximum of 3 hours worked.

In order to calculate the effect of this proposal on the average employee earning $346.30, the following assumption needs to be made:

that 75% of casual hours after 12 midnight would be paid.

If the proposal resulted in an adjustment to the payment between midnight and 7 a.m. to directly compensate for the elimination of the pre-midnight payment, then the post-midnight payment would need to be $5.88.

As it is proposed to only pay $2.00 for post-midnight hours, this will result in a loss of $3.88 for these hours. However, as the hours between midnight and 7 a.m. Monday to Friday only account for 3.25% of total hours worked, then this results in an average loss per hour of only 12.7 cents.

Therefore, to compensate the average employee earning $346.30 for a change in the after hours penalty would involve a payment of $4.83 per week (12.7 x 38), which is 1.39% of the total wage.

8.3 Total Adjustment Needed

The survey indicates that the average employee earning $346.30 per week in award wages requires the following compensation for his/her total award wage and penalty entitlement to remain unchanged:

Weekend and Public Holiday Adjustment 0.53% After Hours Adjustment 1.39% Preliminary Adjustment Figure 1.92%

9. ADJUSTMENT FOR ON COSTS AND LOADING

For any adjustment to the total wage to be truly neutral, the affect of labour on costs and the casual loading of 25% need to be taken into account.

9.1 Permanents

Labour on costs broadly fall-into two categories:

. Those that are incurred by the employer regardless of the type of employee, e.g. workers compensation, pay-roll tax, superannuation (although with some limited exception for low earning casuals), long service leave (depending on State Legislation) etc.

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DECISION

ATTACHMENT 2 (C No. 22069/90)

. Those on costs that are only payable to permanent employees as opposed to casuals, e.g. sick leave, annual leave including loading and public holidays not worked.

It is the second category which we are concerned with in terms of any adjustment for on costs. Given the fact that the survey indicated that around 45% of all permanents work on public holidays, this gives the following picture of the percentage of annual hours paid for but not worked:

Public holidays 41.8 hours per year 2.21% Sick Leave 76 hours per year 3.85% Annual Leave 152 hours per year 7.69% Total 13.66%

Therefore, 13.66% of a permanent employee's wages are paid for time not worked during the year. In addition, the permanent employee is paid an annual leave loading of 17.5% for four weeks which equates to an additional 1.35%

Without adjusting for such on-costs, by adjusting the total wage by a full 1.92%, permanent employees are being compensated for time they are not actually earning penalties. Therefore, the following adjustment needs to be made:

For time not working during the year,

1.92%-(13.66%x 1.92%)=1.66%

For additional payments made,

1.66% x 100=1.64% 101.35

9.2 Casual

As the loading is not taken into account in the calculation of average penalties, the effect of this loading, like the on costs for permanents, would mean that the casual would be over compensated for the change in penalties if the 1.92% adjustment was applied in full. Therefore, the 1.92% needs to be discounted as follows:

1.92x 100=1.54% 125

9.3 Total Adjustment needed

Thereby, taking into account the on costs and the casual loading, we can calculate the total adjustment necessary in order to achieve a truly neutral cost effect across the industry. To do this we apply the percentages outlined in section 2 which broke down the total hours worked in the industry.

Permanent 45.9 x 1.64%= 0.752 Casual 54.1 x 1.54%= 0.833 1.585

Total Adjustment 1.59%

DECISION

ATTACHMENT 3 (C No. 22069/90) H008 Dec 824/92 M Print K4087

AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Industrial Relations Act 1988 s.113 application for variation

Australian Hotels Association (C No. 22069 of 1990)

THE HOTELS, RESORTS AND HOSPITALITY INDUSTRY AWARD 1988(1) (ODN C No. 00389 of 1975)

Hotel workers Liquor and accommodation industry

COMMISSIONER GAY MELBOURNE, 6 AUGUST 1992

Hours of work - overtime rates - penalty rates - award clause providing opportunity for a paid meeting of three hours has not been availed of in 1992 - proposed industrial action will have no affect on decision to be made.

STATEMENT

The following statement was given in transcript at Melbourne on 6 August 1992.

I have been told by the Australian Hotels Association (the AHA) of a 24 hour stoppage scheduled to occur in Victoria on Monday, 10 August 1992. That this is to occur has been confirmed by the Australian Liquor, Hospitality and Miscellaneous Workers Union (the union) advising that a rally and stoppage has been called by shop stewards. Mr Hinkley for the union has today highlighted that this activity relates to other proceedings.

I am concerned however that stoppages of work may occur in establishments where work is covered by this award and perhaps in places where work is regulated by other awards of this Commission.

It is noted that the award clause providing the opportunity for a paid meeting of three hours has not been availed of in 1992.

In relation to the activity proposed for 10 August I make the following comment. If it is intended that industrial action will have some affect upon the Commission in its determination of this application such action is wrong and misplaced. This matter will be determined solely on the basis of the merit of material put before the Commission by the applicant and the union.

Mr Hinkley has made it clear that this is the understanding of the union and further that it is not the union's intention that such industrial action influence my decision. Industrial action is therefore futile, damaging to employees and employers alike and I urge that it not occur.

I request that the union arrange for this statement to be brought to the notice of appropriate State officials.

(1)Print F3002 [H008]; [title change Print H6050 [H008 V025]]

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DECISION

ATTACHMENT 4 (C No. 22069/90)

LIST OF EXHIBITS ______________________________________________________________________________ EXHIBIT DATE TENDERED BY DESCRIPTION TRANSCRIPT NO. TENDERED PAGE REFERENCE

H1 5/7/91 K. Parkinson Penalty rate application history 245 H2 " " Proposed procedural directions and 247 and timetable W1 20/8/91 R.S. Warren Third minimum rates adjustment 284 application W2 " " Amended application by the AHA - 286 draft order W3 " " 'Without Prejudice' AHA document re 289 clause 17 wage rates W4 " " Statement - P C O'Clery 301 W5 " " British Airways facts & issues card 302 W6 " " ATIA's strategy for the 1990s 307 W7 21/8/91 " Statement - David Barbuto 321 W8 " " Booklet - Trends in the Hotel Industry 322 - International Edition 1990 W9 " " Booklet - Trends in the Hotel Industry 322 - USA Edition 1990 W10 " " Tourism News 322 W11 " " Payroll expense charts 323 W12 " " Australian Bureau of Statistics re 327 accommodation W13 " " Statement - T K Davies 335 W14 " " Statement - D H Edmonds 405 H3 22/8/92 R.W. Hinkley Evidence D H Edmonds 22/5/90 440 H4 " " Extract - The Weekend Australian - 457 17-18/8/91 re building boom for Sydney hotels H5 not allocated H6 13/9/91 R.W. Hinkley Ltr from Ryan Carlisle Thomas 2/9/91 to 482 Ausgroup Consulting re matters arising out of proceedings 22/8/91 H7 " " Ltr from Ausgroup Consulting 6/9/91 482 to AIRC requesting that Brisbane hearing dates be vacated H8 " " Ltr from Ryan Carlisle Thomas 6/9/91 482 to AIRC acknowledging Ausgroup letter H9 " " Ltr from Ryan Carlisle Thomas 9/9/91 to AIRC advising that FLAIEU wishes to be heard prior to any procedural orders are made H10 " " Ltr from Ryan Carlisle Thomas 10/9/91 482 to AIRC requesting a hearing re application for adjournment H11 " " Ltr from Ryan Carlisle Thomas 10/9/91 482 to Ausgroup Consulting re adjournment H12 17/9/91 " Ltr from Ryan Carlisle Thomas 30/9/91 500 to Ausgroup Consulting re request for further material and information

DECISION

ATTACHMENT 4 (C No. 22069/90) ______________________________________________________________________________ EXHIBIT DATE TENDERED BY DESCRIPTION TRANSCRIPT NO. TENDERED PAGE REFERENCE

H13 17/9/91 R.W. Hinkley Ltr from Ausgroup Consulting 1/10/91 to 500 Ryan Carlisle Thomas re request for further information H14 " " Ltr from Ausgroup Consulting 18/10/91 501 to Ryan Carlisle Thomas re refusal to provide further material and information to the union W15 13/4/92 K. Lewis Australian Tourism Industry 539 Association (ATIA) Ltr 20/8/91 re penalty rates and attachments "A" to "K" W16 " " Revised Draft Order 541 W17 " " Newspaper clipping "The Weekend 551 Australian" November 23-24 1991 W18 " " Newspaper Clipping "The Weekend 552 Australian November 30 December 1 1991 re substitue service application to vary award W19 " " Ltr to Commission (AIRC) 8/4/92 from 555 Conrad/Jupiters re additional information requested during evidence of Mr T Davies W20 14/4/92 " Ltr to Commission (AIRC) from Sydney 604 Hilton 9/4/92 re additional information requested during evidence of D Edmonds W21 " " Statement of J Franks 608 W22 15/4/92 " Qld Gazette, Cafe, Restaurant and 679 Catering S.E. Division W23 " " LTU, AHA South Australia Tourism/Resort 685 Complex (Remote Areas) Agreement W24 " " Qld Off-shore Island Resorts 688 W25 " " Qld Sanctuary Cove Employees Award 689 W26 " " Australian Tourism Data Card 693 W27 " " BTR, Statistical Bulletin 696 W28 " " Tourism Training Aust, becoming a member 698 W29 " " " " " overview of 698 industry structure and employment W30 " " IAC Travel and Tourism 704 W31 " " Dawkins Report April 1985 718 W32 27/4/93 " Qld Tourist Corporation penalty 732 rates and youth wage 739 W33 " " Qld report of CTEE review W34 " " Report to Australian Tourism Industry 744 Association re investment W35 " " ABS Bulletin Tourist Association 750 September 1991 W36 " " Wage Rates 750 W37 29/4/92 " Statement - J Lambert 757

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DECISION

ATTACHMENT 4 (C NO. 22069/90) EXHIBIT DATE TENDERED BY DESCRIPTION TRANSCRIPT NO. TENDERED PAGE REFERENCE

W38 " " BTR Hospitality Industry 757 Labour Force Survey 1988 W39 " " AHA Survey of Hotelkeepers 1991 757 W40 " " AHA Industrial Bulletins 808 H15 18/5/92 R.W. Hinkley FLAIEU application to vary the award 812 H16 " " PENRES XLS Hotel Survey 815 W41 18/5/92 K. Lewis The Tourism Task Force Statistical 827 Study of the labour competitiveness of Australian 4 and 5 star hotels W42 " " NSW Tourism Commission industrial 839 relations and award restructuring initiatives in the Australian Tourism Industry W43 " " Movement of penalty rates 848 W44 19/5/92 " Australian Tourism Industry 913 Association documents W45 26/5/92 " Annual earnings - average employee 1034 W46 " " Table - minimum rates adjustment 1040 W47 13/7/92 " Recalculation of formula less sick 1071 leave W48 " " Decision of the IRCV Full Session 1072 H17 13/7/92 R.W. Hinkley Statement M W Saunders 1079 H18 " " Discussion paper - kitchen 1082 classifications H19 " " Wage slip - M W Saunders 1087 H20 " " Income analysis - M W Saunders 1087 H21 " " Witness statement - M G Flynn 1103 H22 " " Pay slip 7/6/92 - M G Flynn 1112 H23 " " Income analysis - M G Flynn 1112 H24 " " Witness statement - M Krooshaf 1116 H25 " " Pay slip - M Krooshof 1125 H26 " " Income analysis - M Krooshof 1125 H27 " " Witness statement - J Alty 1137 H28 " " Pay slip/income analysis J Alty 1142 H29 14/7/92 " Witness statement - N Bradford 1161 H30 " " Pay slip - N Bradford 1168 H31 " " Income analysis - N Bradford 1169 H32 " " Witness statement - B Griffiths 1176 H33 " " Pay slip - B Griffiths 1180 H34 " " Income analysis - B Griffiths 1180 H35 " " Witness statement - A Tilla 1193 H36 " " Weekly roster 1194 H37 " " Income analysis - A Tilla 1197 H38 " " Witness statement - A Mooney 1211 H39 " " Witness statement - J Clough 1222 H40 " " Income analysis - J Clough 1225 H41 15/7/92 " Diary entry of hours worked by 1235 M Saunders H42 " " Witness statement - H Hudson 1235

DECISION

ATTACHMENT 4 C No. 22069/90 ______________________________________________________________________________ EXHIBIT DATE TENDERED BY DESCRIPTION TRANSCRIPT NO. TENDERED PAGE REFERENCE

H43 15/7/92 " Time sheet J Alty 1254 H44 " " Witness statement - T Fahey 1256 H45 " " Time sheet T Fahey 1259 H46 " " Income analysis T Fahey 1263 W49 21/7/92 K. Lewis Extract from the Age 17/7/92 1270 H47 " R.W. Hinkley Newspaper extracts re stop work meeting 1275 H48 " " FLAIEU notice re stop work meeting 1275 4 August H49 21/7/92 R.W. Hinkley FLAIEU notice "attack on penalty rates" 1276 H50 " " Ltr to Mr Hinkley 17/7/92 - identifying 1276 hotel employees who are members of Tasmanian Branch H51 " " Witness statement - A Murray 1278 H52 " " Income analysis - A Murray 1288 H53 " " Pay slip 13 July - A Murray 1288 H54 " " Witness statement - Z Whallin 1299 H55 " " Income analysis/pay slip - Z Whallin 1308 8/6/92 H56 " " Income analysis/pay slip - Z Whallin 1308 22/6/92 H57 " " Witness statement - G D'Warte 1316 H58 " " Witness statement - P J Van Nierop 1335 H59 " " Pay slip - P J Van Nierop 1341 H60 " " Income analysis - P J Van Nierop 1341 H61 28/7/92 " Witness statement - A J Bradshaw 1353 H62 " " Union newsletter on penalty rates 1360 H63 " " Conrad Hotel letter 11/3/92 re union 1362 literature H64 " " Pay slips/income analysis - A Bradshaw 1366 H65 " " Hotel Award/Penalty Rate issue 1368 "Petition" H66 " " Witness statement - R Dowsett 1387 H67 " " Income analysis/pay slip - R Dowsett 1398 H68 " " Witness statement - L Chew 1409 H69 " " Pay slip - income analysis 3/5/92 1418 L Chew H70 " " Pay slip - income analysis 5/7/92 1418 L Chew H71 29/7/92 " Witness statement - K Seferi 1430 H72 " " Pay slips/income analysis - K Seferi 1439 H73 6/8/92 " Witness statement - R Blumhoff 1495 H74 " " Income analysis - R Blumhoff 1501 H75 " " " " " 1501 H76 " " Witness statement - E Lay 1508 H77 " " Pay slip - E Lay 1515 W50 " K. Lewis Meeting 10/8/92 Trades Hall 1488 W51 " " "Employers Hands Off Our Penalty 1488 Rates"

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DECISION

ATTACHMENT 5 (C No. 22069/90)

LABOUR MARKET REGULATION

A Brief Overview Paper for the Australian Tourism Research Institute

There is a need to rethink the regulatory framework in which the tourism and hospitality industry operates today. The regulations of the past which institutionalised specified standard working hours, penalty rates, the approach to training and other work "practices" is not applicable to a 24 hour, 7 day a week internationally competitive industry.

The Australian Tourism Industry Association in a paper entitled "Tourism 2000. A National Tourism Strategy for Australia" identified a number of areas of immediate concern:

. wage relativities . penalty rates . restrictions on trading hours . performance incentives . benefits . industrial relations climate

Many of these issues are interrelated and have a direct impact on other matters raised in this submission, particularly training, the creation of career paths for employees and establishment of long-term employment and growth for individual employees.

WAGE RELATIVITIES

The tourism industry offers wide ranging positions from the junior, unskilled employees through to senior managerial levels.

There is concern that present awards set junior remuneration too high and that, while increasing skills are essential in the industry, there is not enough incentive to employees to seek relevant skills which can increase their personal productivity, and rewards, and performance of the industry.

There is a need for greater attention to career path planning with an appropriate relationship between relevant and accredited skills acquired and remuneration.

There needs to be a widening of pay relativities at their lower points of entry with good prospects for upward mobility. Compressing the bottom of the scale acts against the long term interests of a professional, rewarding industry with sustained international competitiveness.

The introduction of a "trainee wage" structure should be further pursued.

PENALTY RATES

The Australian tourism industry today is increasingly a 24 hour-7 day a week business.

DECISION

ATTACHMENT 5 (C NO. 22069/90)

The historical reasons for penalty rates have now almost wholly gone and the industry believes it is time to move to a more flexible system in which a maximum number of hours in any 7 day period is set, and additional benefits only accrue in excess of this period.

Penalty rates are not paid in recognition of higher productivity and the notion that all sectors of the community wish to work "standard hours" is today an anachronism for many employees. Indeed there appears to be a significant sector of the community for which "non-standard" hours are seen as adding to their personal lifestyles.

The removal of penalty rates in all situations however is viewed with some concern by certain specific sectors and some geographic regions.

Reviews of the effect of penalty rates on various parts of the tourism industry have arrived at different conclusions in respect of the impact on the hospitality sector. It is suspected that this is, in part, due to the very diverse nature of the industry and the degree to which very similar properties may be providing for very different customer requirements.

The the report "Penalty Rates and Organisation of Working Time" bv Peter Dawkins. April 1985 provides a comprehensive review of the effect of penalty rates and the problems confronting those seeking to negotiate change.

In discussion with operators within the industry several messages emerge:

. there is no universal approach acceptable to all; the issues must be handled on a Sector/geographic region or project basis;

. awards should be flexible and allow time off in lieu of payments.

The ATIA strategy paper consequently argued that tourism related awards needed to be examined on a sectoral/regional basis to see where modifications could be made which would assist in promoting industry performance. Employer and union organisations, with relevant arbital authorities, need to be encouraged to pursue this.

TRADING HOURS

Apart from any impacts of penalty rates on the hospitality sector, the industry is affected by regulations of state governments which proscribe the opening hours for certain businesses, particularly retail activities - a range of which are important parts of the tourism experience.

The 1988 Bradbury Report into tourism shopping reviewed this area of tourism activity and recommended some changes.

While the focus by some governments is now being directed towards deregulation of the retail sector generally, in those states which do not propose changes, the industry would advocate that the needs of the growing tourism retail market be met through specific tourism zones in which restrictions would be removed.

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DECISION

ATTACHMENT 5 (C No. 22069/90)

If the Australian industry fails to provide shopping facilities of international standard available during hours suited to tourism demand, it will fail in terms of maximising the benefits of tourism to the economy as well as fail in providing the fully rounded and internationally competitive holiday experience.

PERFORMANCE INCENTIVES

The industry with its high growth and employment performance has an excellent opportunity to increase employee participation and productivity through bonus arrangements that reward excellence. RECENT LABOUR MARKET DEVELOPMENTS

Recent developments in Queensland in respect of Sanctuary Cove and the Whitsunday Passage, as well as action in New South Wales by the Restaurants Association, indicate an increasing degree of co-operation and understanding between employers, employees and unions in pursuit of improved national performance.

The need for awareness of wider issues and the need to promote discussion appears to accord with statements made to the 1988 Australian Tourism Convention in Perth by Errol Hodder, General Secretary, Australian Workers Union, Senator Graham Richardson, Minister responsible for tourism and Sir Frank Moore, Chairman of the Association. Their remarks were not confined to penalty rates but also covered a wider spectrum of employer/employee relationships including trading hours and training.

The present process of consultation and development of new award structures must continue. Experience and the problems outlined above, indicate that a "piecemeal" approach to the problem may be easier, more flexible and responsive to local market issues than action on either a state or nationwide basis.

There are however those who do not see the tourism industry in the same positive light and who tend to describe recent developments as:

. not producing "real jobs" . inability to last as only "flavour of the month" . promoting "servility" . promoting "transient" employment or . "casualisation"

Recent research suggests that plausible growth forecasts indicate a large increase over the next decade. It was perhaps a convenient way to explain the surge in visitor numbers some time ago, but that "surge" has now been evident for almost four years.

The youth of Australia has adopted the industry and has shown an ability to provide a caring service with friendliness. The very notion of "servility" is a fast fading, lingering hangover of times past well beyond the minds of present youth.

DECISION

ATTACHMENT 5 (C No. 22069/90)

In terms of the "transient" nature of some jobs and "casualisation", discussions with operators indicate that the level of short-term work is high due to many factors, which include penalty rates, seasonality within parts of the industry, employers entering the market filling positions from experienced staff in other facilities and the ability for persons with some skills to move through the country almost certainly assured that they can get a job wherever they go. Additional, perhaps contributing, factors such as the level of accommodation provided or remoteness of location are issues which employers need to monitor and address, as appropriate.

It might be expected that, after implementing changes to awards and training requirements and increasing marketing efforts to reduce "seasonality" and its consequential short-term employment characteristics, the current very high incidence of short term employment would decrease.

A high degree of mobility is important, but too high a level does not aid efforts to promote on-the-job training by employers, a stable work environment or a consistent level of customer service. This is not to say that a high degree of casual work is necessarily undesirable, or against the longer term interests of either employees or employers. The critical issue is that both have the greatest possible choice.

The Report "Penalty Rates and the Organisation of Working Time" (mentioned above) suggested that penalty rates are not regarded by employees as an important part of the wage package. If this is indeed so, then those who have delayed the process of change have disadvantaged the Australian community.

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