AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
Workplace Relations Act 1996
s.170MW applications for termination of bargaining period
s.170MX matters
CPSU, the Community and Public Sector Union
and
Australian Protective Service (APS)
(C Nos 33042 and 33383 of 2000)
Various employees |
Commonwealth employment |
JUSTICE MUNRO |
|
SENIOR DEPUTY PRESIDENT CARTWRIGHT |
|
COMMISSIONER DEEGAN |
MELBOURNE, 29 OCTOBER 2001 |
Section 170MX arbitration; principles guiding exercise of discretion; case-by-case approach; discretion to make award not limited by matters already agreed between negotiating parties; weight to be given to considerations related to competitive position of employer negotiating party; conduct of negotiating parties as a factor in exercising discretion; application of any section 170MX award to employing covered by various certified agreements and Australia Workplace Agreements; public interest considerations relating to protective security functions required by Commonwealth; qualifications necessary in competition policy in application to agencies performing law enforcement and security function; award made.
CONTENTS
1. The matter and proceedings before the Commission: 33
2. Principles applicable to section 170MX arbitrations: 4
3. The CPSU case in outline: 8
4. The APS case in outline: 11
5. Outline of submissions put by the Minister:15
6. Matters for determination: 18
7. Matters to be determined about award content: 19
8. The functional and operational character of the APS: 24
9. Conclusions: specific issues and considerations listed in section 170MX: 33
9.1 The approach to arbitration under section 170MX: 33
9.2 Matters in issue during the bargaining period: 33
9.3 Interests of the negotiating parties and the public interest: 36
9.4 How productivity in the APS might be improved? 40
9.5 Unreasonable conduct of a negotiating party during the bargaining period: 42
9.6 Principles formulated by Full Benches for purposes of section 170MX: 42
10. Consideration and determination of unresolved issues about content of proposed award:
10.1 Decision to make an award under section 170MX: 43
10.2 The issues about nomenclature: 43
10.3 The issues about application and operation of the award: 43
10.4 Station flexibility, facilitation, and implementation of Continuous Improvement Program: 54
10.5 Hours of work and rostered days off: 59
10.8 Payment for annual leave penalties: 72
10.10 Rate for public holiday falling on day rostered off duty: 74
10.11 Relocation assistance: 76
10.12 Remote locality leave fares: 77
10.14 Date of effect and term: 84
DECISION
1. THE MATTER AND PROCEEDINGS BEFORE THE COMMISSION:
[1] This matter arises from a reference to the Full Bench under section 170MX of the Workplace Relations Act 1996 (the Act) following the termination of bargaining periods between the CPSU, the Community and Public Sector Union (the CPSU) and the Australian Protective Service (the APS). The relevant bargaining periods were initiated on 16 July 1998 in matter C No. 35507 of 1998, and on 18 June 1999 in matter C No. 90235 of 1999. They were terminated by Deegan C on 17 November 20001, exercising the power in subsection 170MW(1) in relation to a contested application made by the CPSU based on the circumstance in subsection 170MW(7). Deegan C's decision was the culmination of protracted proceedings before her which included extensive conciliation aimed at securing agreement. Deegan C's decision noted that it was not disputed that the employment conditions of APS employees were, prior to the commencement of section 170MW, customarily determined by an award that was a paid rates award2.
[2] The President constituted a Full Bench under subsection 170MX(4) on 19 December 2000. Munro J presided over a directions hearing on 2 February 2001. After discussion with the parties, Munro J recorded that subsection 170MX(3) had been satisfied, stating that the Commission considered it appropriate to exercise arbitration powers under section 170MY to deal with matters that were at issue during the bargaining periods and had not been settled. Munro J issued directions for the conduct of the hearing of that arbitration. However, with the agreement of the parties, he also convened and presided over conciliation conferences between the APS and the CPSU on 8 March, 2 and 21 April 2001. Those conferences did not resolve all outstanding matters that had been in issue between the parties during the bargaining periods. However, the parties did consolidate and develop parts of a common draft for an award comprising provisions agreed during the bargaining period; or, agreed in a conciliation proceeding before Deegan C; or, resolved through further discussions.
[3] Consequently, when the substantive hearings were commenced before us, the parties jointly presented some elements of a proposed draft section 170MX award. That document identified agreed provisions, and provisions proposed by either the APS or the CPSU, but not agreed. Associated with the submission of that draft document, the parties submitted an agreed list itemising the issues that were left unresolved for the Commission's determination. That list includes some provisions in relation to which objection is taken on the ground that it pertains to a matter that was not at issue during the bargaining periods.
[4] Pursuant to directions issued on 27 March 2001, the parties lodged in advance of the hearings written contentions, witness statements and copies of documentary material to be relied upon. Hearings commenced on 26 April 2001 and were conducted over eight hearing days. We issued a further direction on 8 June 2001, some weeks before the parties completed the presentation of their evidential cases. We intended by that direction to assist the parties: "to bring into better focus the basis upon which they each expect the Full Bench to determine the matters that are in issue". The terms of that direction made reference to the considerations specified in subsection 170MX(5), posed several questions about points to be determined and the merits of the cases presented, and sought responses on particular points that the Full Bench considered might be relevant to either improving the productivity of APS operations or to the determination of the matter before it. We will refer to some of the detail of that direction at later points in this decision.
[5] In the hearings before us, Ms S. Mountford appeared for the CPSU; Mr A. O'Brien appeared for the APS, and for the Minister for Employment, Workplace Relations and Small Business, (the Minister), intervening. Among others who appeared to support those advocates were Mr A. Rich (CPSU); Mr M. Studdert and Mr J. Ashurst, (APS); and Mr S. Kibble, (the Minister).
[6] On the last of the days allocated for hearings, 10 August 2001, the advocates spoke to written submissions. Several questions were raised by members of the Bench about submissions or material advanced in the course of that presentation. At the conclusion of that day's hearing, the Full Bench directed that further evidential material be submitted and allowed for written submissions to be lodged in respect of that material by 24 August 2001.
2. PRINCIPLES APPLICABLE TO SECTION 170MX ARBITRATIONS:
[7] The bargaining periods between the CPSU and the APS were terminated by Deegan C on application made by the CPSU under subsection 170MW(7). That subsection reads:
"(7) A circumstance for the purposes of subsection (1) is that:
(a) immediately before the commencement of this section, the wages and conditions of the kind of employees whose employment will be subject to the agreement were determined by a paid rates award, or would have been so determined if a certified agreement, an enterprise flexibility agreement (within the meaning of this Act as then in force) or a State employment agreement had not prevailed over the award; and
(b) so far as the wages and conditions of the kind of employees whose employment will be subject to the agreement were, before the commencement of this section, customarily determined by an award or a State award, they were determined by a paid rates award; and (c) there is no reasonable prospect of the negotiating parties reaching an agreement under Division 2 or 3 during the bargaining period."
[8] Following the termination of the bargaining periods, the need for conciliation of the kind required by subsection 170MX(2) was investigated by Munro J on delegation from the Full Bench. Extensive conciliation proceedings were undertaken by Deegan C prior to the termination of the bargaining periods. Munro J, as noted above, also conducted conciliation proceedings in association with this proceeding but prior to the substantive hearing of the questions to be dealt with under section 170MX. That section reads:
"170MX What happens if Commission terminates a bargaining period under subsection 170MW(3) or (7)
(1) This section applies if a bargaining period is terminated on the ground set out in subsection 170MW(3) or (7).
(2) As soon as practicable, the Commission must begin to exercise the conciliation powers mentioned in section 170MY:
(a) to facilitate the making of an agreement under Division 2 or 3; or
(b) otherwise to settle any matter or issue that could be covered by such an agreement.
This subsection applies even if the Commission has already attempted conciliation during the bargaining period.
(3) If, after exercising conciliation powers as required by subsection (2), the Commission is satisfied that:
(a) the negotiating parties have not settled the matters that were at issue during the bargaining period (whether or not by making an agreement); and
(b) it is not likely that further conciliation will result in the matters being settled within a reasonable time; the Commission must, if it considers it appropriate, exercise the arbitration powers mentioned in section 170MY to make an award that deals with the matters.
(4) Despite any other provision of this Act, those arbitration powers may only be exercised by a Full Bench.
(5) In exercising those arbitration powers, the Full Bench must have regard to the following:
(a) the matters that were at issue during the bargaining period;
(b) the merits of the case;
(c) the interests of the negotiating parties and the public interest;
(d) how productivity might be improved in the business or part of the business concerned;
(e) the extent to which the conduct of the negotiating parties during the bargaining period was reasonable;
(f) any relevant principles formulated by a Full Bench for the purposes of this subsection.
(6) Subsection (5) does not, by implication, limit the matters to which the Full Bench may have regard."
[9] We have noted, and the parties have accepted it as common ground, that the condition set by subsection 170MX(3) as to the arbitration of the matters not resolved during the bargaining period has been satisfied.
[10] The approach that we should take to the arbitration before us was debated at length in submissions. The main points of those submissions are summarised in sections 4 and 5 of this decision. The points made turned on the construction that the APS sought to place on the Act, or on emphases that the parties gave selectively to one or other of several Full Bench decisions in other arbitrations under section 170MX and its predecessor. We note that there has also been some academic debate about how the power in section 170MX should be exercised3.
[11] With respect to those submissions and that debate, we do not consider it is appropriate to attempt to extract binding principles from cases that constitute only an array of single instances. The arbitration required in this instance arises from the discretionary power in section 170MW. Some conditions for the exercise of that power are prescribed through the definition of the circumstances under subsections 170MW(3) and (7). Power in a Full Bench to make an award upon termination of a bargaining period was kept alive to deal with the particular circumstances specified in the Act in general terms under those two heads. The second and least exacting set of circumstances arises where the relevant negotiating parties were formerly subject to arrangements that equated to a paid rates award but have failed to reach agreement under the enterprise bargaining regime, and have no reasonable prospect of doing so.
[12] Arbitration to deal with such a circumstance, as was the case with arbitration of paid rates awards directly, is a function demanding the balanced assessment of a wide range of considerations peculiar to the circumstances of the particular case. The Act identifies several mandatory considerations to which regard must be paid under subsection 170MX(5). Those considerations apart, there is no rule of thumb to direct a Full Bench in its task. In that respect, we agree with and adopt the observation of the Full Bench in AEU v State of South Australia4 (the SA Teachers Case) when it said:
"[21] Each s.170MX arbitration decision turns on its own circumstances. In our view, little assistance is provided by other decisions. The case before us has, of course, its own circumstances which are derived from the evidence and the submissions. In the Tasmanian Teachers Case the Full Bench, at p. 13, adopted the approach taken by Riordan SDP in a case under s.170PP of the Industrial Relations Act 1988 (the predecessor to s.170MX) in which his Honour said:
`I must add that I have not seen my function as being required to `make a bargain for the parties' as was proposed by the HSUA. What I have done is to decide to make an award which is consistent with the requirements of the Act, in particular the statutory direction to the Commission to act with equity, good conscience and the substantial merits of the case."
[13] It follows that in determining this matter, we are obliged to have regard to each of the considerations itemised in subsection 170MX(5). Each of those considerations is to be treated as a matter of significance in the decision-making process. As a duty collateral to that requirement, but corresponding to the consideration required under paragraph 170MX(5)(b), we are also obliged to have regard to all matters affecting the cases presented and to act thereon according to equity, good conscience and the substantial merits of the case.
[14] Naturally, the parties in presenting their cases have been guided by aspects of determinations made by other Full Benches under section 170MX. We do not discount the value of such guidance although any such value must be measured against its force and relevance to the circumstances of this case. In that context, we note also that this is the first instance in which a section 170MX arbitration has dealt with matters in issue between an employing agency and a negotiating party for employees subject to an Australian Government employment paid rates award.
[15] Several points were made to us in submissions about that aspect of this matter. The APS urged the Full Bench to exercise caution in making an award. It suggested that too generous an award might encourage other negotiating parties in the Commonwealth government sector to forsake enterprise bargaining and pursue a section 170MX arbitration process. That submission was founded in part upon a proposition put by the APS and developed by the Commonwealth about the character of a section 170MX award. The proposition was founded upon a generalising construction of several provisions of the Act to justify the paramountcy of encouraging agreements between employer and employees and leaving scope for future bargaining. In substance, the proposition was that the function of a section 170MX award is to create a stable foundation for such future bargaining.
[16] It may often be that the effect of an award made under section 170MX is that it will provide a stable basis for future bargaining. However, there is in our view no provision in the Act that can properly be construed as requiring that the relatively clear and comprehensive direction in subsection 170MX(5) should be read down. The exercise of arbitral discretion under section 170MX is not subjugated to making an award of any particular character. Characteristics of the kind that the Commonwealth would have read in would restrict the exercise of discretion under subsection 170MX(5). In our view it is neither necessary nor appropriate to add a gloss or purposive overlay to the matters and considerations to which a Full Bench must have regard under subsection 170MX(5). The Commission is required to exercise the discretion in a manner that accords significance in the decision making process to each of the matters and considerations listed. Having regard to the nature and width of that discretion, the best approach to the exercise of the power is to have regard to those matters and considerations on a case-by-case basis that takes account of all the circumstances.
[17] The CPSU presented its case through three main sets of submissions, opening, closing, and reply submissions. Each incorporated evidential material. Direct evidence was led from three witnesses, two of whom were cross-examined:
· Vincent J. McDevitt |
Protective Service Officer Brisbane Airport Secretary of the CPSU APS Section |
Exhibit CPSU 6, Transcript at PN1222. |
· Janet Watson |
Senior Protective Service Officer Parliament House Canberra President of CPSU APS Section |
Exhibit CPSU 6, Transcript at PN1673. |
· Dr David Gowland |
Academic Program Leader School of Accounting & Law RMIT Melbourne |
Exhibit APS1, Tab 29 |
[18] Dr Gowland was not available for cross-examination. The CPSU relied upon his statement as evidential material, subject to whatever qualifications might be made about the weight that should be given to the statistical material and opinions set out.
[19] The CPSU's case commenced with a detailed explanation of the background of the employment sought to be covered by the proposed award. That explanation identified APS employment as employment under the Public Service Act 1999 (the Public Service Act) within which Protective Service Officers (PSOs) are appointees to a service established under the Australian Protective Service Act 1988 (the APS Act). The APS is a division of the Commonwealth Attorney General's (AG) Department. PSOs are a uniformed service, authorised to exercise powers of arrest, armed, and subject to the command and direction of the Director appointed under the same Act, albeit also employed under the Public Service Act. The CPSU submissions and the APS responses both elaborated upon detailed aspects of the statutory basis, functions, organisational structure, industrial regulation, staffing, strategic plans, budgeting and competitive policy of or affecting the APS.
[20] In relation to those propositions and its case generally, the CPSU emphasised the nature of the work and its inherent stresses on the APS, and PSOs in particular. The PSOs work shift-work, often over 12 hours in 24 hour cycles. Surge capacity to meet the need for urgent deployments is based on using a leave backfill rostering arrangement which is also designed to reduce the need for overtime when covering absences of staff on leave. The relatively intensive use of available staff hours allows for deployments to cope with emergencies whilst continuing to maintain a capacity to meet base client service needs and standards. The CPSU submitted that in the circumstances, its concession of a provision that will allow PSOs to elect to move to a 40 hour week working arrangement by choosing to forgo an existing RDO entitlement should be seen as a significant productivity offset.
[21] The CPSU generally marshalled the presentation of its case about the considerations to which regard must be paid under subsection 170MX(5). However, one broad issue emerged, sometimes obscurely, from several points of that presentation. That issue was thematic to many of the differences debated in the hearing before us. For present purposes, it is sufficient to note one formulation of what became a broad and variously stated issue:
"The CPSU contends that whilst government policy recognises the wider public interest issues in sensitive sites by requiring these sites to be guarded by officers, who have the power to use coercive force and the ability to return gun fire as a last resort, it does not recognise the public interest issues when determining who should carry the cost of APS services in non contestable organisations."5
[22] In its opening submissions and the supporting evidence, the CPSU made reference to matters and points that it asserted were "productivities and efficiencies" implemented in the APS since 1996. In that respect, the CPSU relied upon lists of matters compiled from various sources including the AG's Annual Reports, APS financial statements, and comments provided by CPSU members familiar with the operations of particular APS stations. We shall deal with considerations going to particular and general productivity improvements in a later section of this decision.
[23] The CPSU evidence, and parts of its cross-examination, criticised the APS's conduct as a negotiating party. That evidence and related submissions alluded to particular actions said to be a foundation for a proposition that negotiations had been unnecessarily prolonged and unproductive because of such conduct. The CPSU sought a finding that the APS had promoted and caused unnecessary delay. A finding to that effect was the foundation upon which the CPSU sought to justify the award being made with substantial retrospective effect for pay increases.
[24] The CPSU sought that the application of the proposed award should be as wide as practicable. It sought to have the proposed award apply to work within the APS in a way that would allow employees covered by an extant Australian Workplace Agreement (the AWA) to elect to remain covered by their AWA, or to be subject to the proposed award. Some 200 employees were said to be engaged under terms established by AWAs. In the CPSU's submission, the proposed award should apply to an employee covered by an expired AWA and also to employment covered by three certified station agreements upon their expiry. In that context, the CPSU pointed to a condition in each station agreement to the effect that if a global agreement was negotiated during the life of the station certified agreement the employees may vote to have the same overall package as provided by the global agreement applied to them6.
[25] The CPSU's case seeks among other provisions, an award of a 21% increase to existing salary rates for PSOs. It sought also an inclusion of a new salary point for PSOs undertaking what are designated as Advanced First Response (AFR) competencies and functions at certain airports. The claim for pay increases at the proposed level was fundamental to the CPSU's case. The level of increase claimed was supported in part by what the CPSU contended were concessions about provisions and arrangements sought by the APS in the negotiations. However, the CPSU also advanced claims that other provisions of the award retain, or at least do not reduce for existing employees, some existing entitlements. We will come to the specifics of those claims or concessions when dealing with the content of the proposed award.
[26] The CPSU's general case on the merits for the salary increases claimed rested upon the following main points:
· the last pay rise for PSOs was in 1996; since then general wage movements had been agreed for employees in the Australian Federal Police (the AFP) (13.5% plus sign on bonus), Customs (12%), the AG's Department (14%); and Protective Service Officers in the Victoria Police (9%), and in the workforce generally (AWOTE 20.4%);
· productivity improvements in the APS over recent years; together with "productivities" that may be expected to arise from the implementation of a section 170MX award;
· increases in the Consumer Price Index for the past four years of about 4.9% or forecast over the next three year period corresponding with the proposed term of the award; and,
· the employer's capacity to pay, reflected in the productivity dividend of 50% of profit paid back to Consolidated Revenue.
[27] The CPSU propounded the desirability of the Full Bench adopting a balanced approach to issues raised by the APS about funding. The CPSU relied particularly upon another section 170MX arbitration where the setting of fair wages was treated as itself a consideration to be balanced against the funding difficulty proposed by the relevant employer7. In the CPSU's submission, the financial and budgetary arrangements and policies affecting the APS should not be treated as justification for the Commonwealth Government refusing directly or indirectly to find the funds necessary to properly fund, and pay fair wages and conditions to employees of the agency charged with providing Australia with its counter-terrorist first response at numerous locations.
[28] The APS case was presented through the same combination of written submissions, opening, closing submissions and summation, and some supplementary documents lodged under cover of a letter dated 24 August 2001. The CPSU objected to parts of that last bundle of material. It contended that some of the assertions were not responsive to the direction made by the Full Bench when reserving decision. We have taken that objection into account. We do not consider it is necessary to re-open the hearing to allow for correction of or deletions from the material.
[29] The APS case was developed around the witness evidence and opinions of five witnesses, all of whom were cross-examined:
· Jason Lou-Brown |
Assistant Secretary Defence Security Branch Department of Defence |
Exhibit APS 10, Transcript at PN2518. |
· Kim C. Ellis |
General Manager Bankstown Airport |
Exhibit APS 11, Transcript at PN2079. |
· Martin Studdert |
Director, APS |
Exhibit APS 17 (Tab 7 of Exhibit 1), Transcript at PN2976. |
· Lawrence A. Gardiner |
Commander Operations, APS |
Exhibit APS 14, Transcript at PN3308. |
· Rene Ter Bogt |
Manager, Business Support, APS |
Exhibit APS 18 (Tab 10 of Exhibit APS 1), Transcript at PN4204. |
[30] The primary contention of the APS was that the Commission should exercise its discretion by refusing to make an order under section 170MX at this time. In the alternative, the APS proposed an order with a particular content. The APS contended that the function of a section 170MX award is effectively to provide a "floor" as a stable basis for future bargaining. It should not be treated as a determination of a "ceiling" or optimum outcome. Rather, any determination made must be an arbitrated outcome to create a stable foundation for future bargaining. The APS submitted that the Act should be construed as intended to cause such awards to be conceived as being of a special nature. Section 170MX awards should have many of the operational characteristics of agreements but remain enforceable as awards and provide a stable environment for direct bargaining between the parties.
[31] The APS position and case was presented as founded upon two key planks: operational imperatives and the funding arrangements for the APS restricting the affordability of any pay increases that might be agreed or awarded.
[32] In relation to the funding arrangements, Mr Studdert's evidence in particular was directed to establishing the character of the APS as a "non-budget", full cost recovery agency within the governmental system. Direct labour cost is about 80% of APS operating costs. Funding supplementation from the Commonwealth to meet costs of changes to terms and conditions through agreement-making is not available. The full cost recovered status of the APS was the predicate for the proposition that the APS cannot increase its prices to its clients. It is already more expensive than what Mr Studdert described as private sector competitors. The APS contended that it must fund internally any increase to labour costs.
[33] The APS is a diverse organisation spread across 21 stations, each of which the APS considered to be a distinct geographical, operational and organisational unit. In the APS submissions, various conditions of employment had differing impact on stations. The operational imperatives of the APS demand that any conditions set by the award should be framed to take account of the roles and functions performed, the disabilities associated with the conditions under which work is performed at the stations, and the differing work cultures and needs of the APS at the stations.
[34] The APS contended that the provisions it proposed for the award were designed to reflect an appropriate balance. Proposed improvements to rates of pay and other terms and conditions of employment had been balanced with measures to improve efficiency and productivity. The APS denied that it had adopted a simple mathematical or formulaic approach to costing the package. A degree of industrial judgment was necessarily involved. The APS sought to balance what it can reasonably afford by having regard to proposed productivity improvement measures. Other provisions of the proposed award retain, or at least do not reduce for existing employees some existing entitlements. The salary increases proposed were intended to position the APS as a viable alternative to relevant comparable organisations in the employment market. The salary increase proposed, 12.5%, had been balanced by several productivity enhancing measures. In its opening submission the APS identified a component of around 8.7% of any such increase as "funded" by direct offset of changes to existing terms and conditions; a further 3.8% was not specifically linked to any particular productivity improvements8. That submission was founded upon the evidence of Mr Studdert. Mr Studdert in cross-examination deferred to the opinion of Mr Ter Bogt9. Mr Ter Bogt in his evidence presented a calculation which he interpreted to mean that the revised APS package should come in 4.8% short of cost neutral over the three years of the award based on an assumed current year cost of $420,000 for each 1% increase10. In its closing submission, the APS submitted that 7.7% of the proposed 12.5% salary increase could be directly funded from the changes to conditions of employment proposed by the APS11, asserting that the maximum increase it could afford beyond any amount directly funded by such changes would be 4.8%.
[35] In the APS submission, productivity could be improved by removing existing arrangements that operate unreasonably to reduce the potential for increased productivity and efficiency. In particular, it asserted the reintroduction of a 40 hour standard working week, and concurrent elimination of RDO accruals, would support 5.2% of the proposed salary increase. A marginal reduction in overtime rates for extra duty from Monday to Saturday; and, tighter restrictions on the eligibility for emergency duty provisions would be further appropriate productivity enhancements to offset the proposed salary increase.
[36] The APS contended that the determination of an award in the terms it proposed would be most compatible with both the public interest and the interests of the negotiating parties. Wage increases above the level proposed by the APS would seriously affect its ability to retain its current contracts or to win new contracts. The resultant weakening of the APS's competitive position would have a detrimental effect on the ongoing employment of APS staff. The strategic importance of the APS role in providing protective security services to the Commonwealth reinforces that public interest consideration.
[37] The APS generally contested points relied upon by the CPSU to establish the merits of its claim. We shall not repeat the detail of each of several exchanges between the parties about various considerations claimed to justify outcomes proposed by the protagonists. Where it is necessary to refer to such detail, we shall do so in an analysis of the merits.
[38] However, as one exception to that approach, we note at this point that the APS challenged the legitimacy of the CPSU's reliance on wage movements in comparable services. The APS advanced several grounds for rejecting generally the CPSU's wage comparisons argument. Those grounds include the inappropriateness of resurrecting comparative wage justice (CWJ) grounds for pay increases; the incompatibility of any concept analogous to CWJ with the proper role of section 170MX arbitration; the inconsistency of any use of CWJ grounds for setting section 170MX award rates after the Commission has moved to require extant paid rates awards to be converted in form to minimum rates awards structured to disclose a properly fixed minimum rates component12; the dissimilar character of the agencies that the CPSU selected for comparison, each of which is budget funded and none of which should be accepted as a legitimate wage comparator.
[39] The APS contended that the Commission should eschew any approach based on the use of CWJ reasoning; rather the terms proposed by the APS should be adopted as a fair result, able to be supported by taking a side-ways glance at other relevant wage outcomes. For that purpose the APS made reference to what it submitted are useful indicative wage comparisons in the protective security industry, and the Australian Public Service generally. A selection of 18 private sector protective security industry awards and agreements was drawn upon to produce a comparison of some details of hours, penalty rates, and salaries13.
[40] The APS stressed that the Commission should be cautious about accepting the relevance of pay outcomes in the Australian Public Service. However, it provided the basis for what it contended would be the most instructive and appropriate indicative sideways glance at all wage outcomes in that sector. That perspective should be derived from the statistics it provided for the 23 agencies with certified agreements that make up the lowest quartile, covering 10,100 employees. Over the four years and two months from end October 1996 to 31 December 2000, this group received an average 6.2% increase through bargaining. As an alternative, the APS submitted similar instruction should be derived from the 25% of Australian Public Service receiving the lowest pay outcomes (around 30,000 employees) over that period. That group, it appears, received an average increase of 6.65% or 1.6% annualised increase. The APS submitted no significance should be placed on agreement making outcomes in the Australian Public Service above the average pay increase for the lowest quartile: 8.1% or 2.6% annual wage increase14.
[41] The APS submission also rejected as deceptive and misleading a CPSU contention that a total of seven years and two months would elapse between the date of the last salary increase for PSOs in October 1996 to a proposed expiry date of the section 170MX award in December 2003. The APS submitted that the period should be taken as four years six months to April 2001. That period represented the period over which the relevant employees had failed to secure an increase because they had failed to successfully participate in productivity bargaining. They were an exception to the rule. Over the same period, other employees in the Australian Public Service had had two or three rounds of bargaining and increases associated with productivity trade-offs, resulting in Averaged Annualised Wage Increases (AAWI) overall of 3.9%.
[42] A substantial part of the submissions and case was directed to supporting particular proposals for the draft award proposed by the APS, or to opposing the CPSU counter-proposal. We shall refer where necessary to those submissions when dealing with the particular proposals.
5. OUTLINE OF SUBMISSIONS PUT BY THE MINISTER:
[43] Three written submissions on behalf of the Minister were prepared and presented by the Workplace Relations Implementation Group of the Department of Employment, Workplace Relations and Small Business. The reason for the Commonwealth's intervention was stated as being that this case is considered to have significant implications for the operation of Part VIB of the Act. This is the first occasion that the Commission is being asked to make a section170MX award in the Australian Public Service involving an agency subject to the Public Service Act. In particular, the Commonwealth intervened to make submissions about the interaction between awards made under subsection 170MX(3) and certified agreements and AWAs made under the Act. The Commonwealth submitted that any APS employment covered by certified agreements reached to date, and areas where there is a high incidence of AWAs in place should be quarantined from any arbitrated award.
[44] That submission expounded a construction of the Act to support a proposition, also put by the APS, that the access to arbitration under section 170MX is to provide for an arbitrated outcome to create a stable foundation for future bargaining. On that predicate, a section 170MX award should be conceived as an instrument that has many of the operational characteristics of an agreement but remains enforceable as an award and provides a stable environment for direct bargaining. To that end, the Commonwealth made reference to parts of the Third Reading Speech for the Workplace Relations and Other Legislation Amendment Act 1996 (the WROLA Act), and to what it described as the key features of section 170MX as provided for in the Act15.
[45] The Commonwealth supported also the APS proposal that the section 170MX award shall not apply to any employee who is covered by an AWA or any of the (three relevant) certified agreements. The Commonwealth contended that, notwithstanding subsections 170LY(2) and 170VQ(2), the Act does not prescribe the relationship between section 170MX awards and agreements in situations where agreements still in operation were certified or made prior to the determination of the section 170MX award. That proposition was argued on the basis that a section 170MX award should not be used to override the provisions in the Act for the variation, termination or continuation after the nominal expiry date of certified agreements and AWAs.
[46] On the Commonwealth's submission, 35% of APS employees are covered by three station section 170LK certified agreements (50 employees), or by approximately 200 AWAs, of which 70 were second round agreements. Having regard to the primacy given by the Act to bargaining between the parties to determine terms and conditions of employment, the making of an award in this matter should not displace agreements that are in operation. If the section 170MX award were made to apply generally, it would restrain the replacement of current agreements with new agreements. That would result from the operation of subsections 170LY(2) and 170VQ(2). Those provisions preclude the making of new agreements with legal force while a section 170MX award is in operation. Some employees demonstrated by their entry into the relevant agreements that they are willing and able to reach agreement. The section 170MX award could prevent them from making further agreements for so long as it is in force. It would detrimentally affect those employees, and would impede agreement making following the expiry of the section 170MX award. In the Commonwealth's submission, the rationale of the Full Bench decision in CPSU v State of Victoria16 supports the view that there should be no presumption that subsection 170LY(2) requires that a section 170MX award should be applicable to employees subject to certified agreements. The mere need to move small numbers of staff on a short term basis between stations subject to a section 170MX award should not be regarded as a sufficient basis to justify the abolition of three section 170LK agreements covering 50 employees.
[47] The Commonwealth noted that a closing submission by the CPSU called upon the Commission to determine under subsection 170VM(3) that it is in the public interest to terminate the AWAs of officers who had petitioned for their termination. The Commonwealth did not oppose the termination of the AWAs. However, it submitted that the AWAs should be terminated in accordance with the Act. It accepted that it would be open to the Commission to treat the relevant employees' petition as an application under the Act, but submitted we should not do so if we considered that separate hearings should be held to allow relevant parties to make submissions in relation to public interest considerations.
[48] The Commonwealth also put submissions contending that it is not open to the Commission to include in a section 170MX award provisions that have the effect of varying the award within its operative life. The Commonwealth accepted that it may be open to include a "genuine facilitative provision" in a section 170MX award. However, it submitted that a facilitative mechanism might properly provide only for an alternative mechanism for delivering a defined entitlement. A facilitative provision cannot allow for a wholesale change to be made to the entitlement itself by agreement. Although a facilitative provision might be made about how award provisions are to apply, such a provision cannot open the possibility of changing the award itself. The facilitative provisions for station agreements proposed by the CPSU were not genuine facilitative provisions in the Commonwealth's submission. The subclauses proposed by the CPSU allow for changes to specific entitlements, or lack sufficient specificity to prevent the possibility of changing the award provision itself. An enterprise flexibility clause cannot be dressed up as a facilitative provision17.
[49] Moreover, in a section 170MX award it is not open to include a provision such as an enterprise flexibility clause or any other arrangement that would require a variation to the section 170MX award. Subsection 170MZ(6) prevents the variation of a section 170MX award unless for the prescribed purpose of removing ambiguity or uncertainty. A section 170MX award should be conceived as designed to be final: during its operation it prevails against the operation of certified agreements or AWAs, and may be revoked only on the prescribed grounds18.
[50] In response to questions put by the Commission, the Commonwealth acknowledged that there may be no direct impediment to a section 170MX award allowing for a Board of Reference provided it did not deal with matters at large. It would be contrary to the intention of the Act to provide a Board of Reference scheme that allowed for the parties to seek further changes to terms and conditions while the award remains in place. A Board of Reference clause might be drafted in such a way that it does not amount to a technical variation of the award, but any process that allows for changes to the level of entitlements set by the award would be a de facto variation, and therefore invalid. Enabling a Board of Reference to grant further wage increases would also be a disincentive to future bargaining; any provision for such a power would be inconsistent.
[51] Finally in this context, the Commonwealth indicated that it would support flexibility in a section 170MX award provision subject to the flexibility being:
· within the arbitrated level of entitlements determined by the Full Bench; and
· implemented in a way that would not amount to a variation of the award.
[52] A properly drafted facilitative provision would provide such flexibility. It might provide an alternative means of delivering a defined level of entitlement, and set out a process for how a decision could be made to adopt one of the alternative means. The Commonwealth did not oppose inclusion of provisions along the lines of those in the Metal, Engineering and Associated Industries Award 1998 (the Metal Award).
[53] From that broad review of the cases presented, it is manifest that there are several sets of issues to be determined. The first set relate broadly to the construction of the Act and to a proposition that the character of section 170MX award should be conceived as ancillary or foundational to future bargaining. We have expressed our view about that proposition in paragraphs 12 to 16 above.
[54] Related to that broad issue is another set of issues raised in respect of the factual considerations relevant to one or other of the matters to which regard must be paid under subsection 170MX(5). Most important of those is what we have referred to as a thematic issue between the parties. The APS founded much of its case on the proposition that it is bound by full cost recovery policies and "affordability" principles. As a Division of the AG's Department, the APS would appear to have no alternative but to subordinate itself to those policies. The "affordability" of any wage outcome by agreement, or from this proceeding has understandably been developed by the APS as a paramount consideration or principle constraining it in its conduct of negotiations and its case in this matter.
[55] In broad terms, the issue for the Commission is the extent to which the relevant policies and the associated principle expounded by the APS should dictate the outcome of this proceeding, or be given determinative weight in resolving subsidiary issues. Those subsidiary issues comprise a further set of issues. It is made up from the competing detailed options respectively advanced by the parties and intervener about the making of a section 170MX award with a particular content.
[56] Aspects of the broad thematic issue emerged directly as considerations integral to each party's positions about several of the matters to which regard must be paid under subsection 170MX(5). Such considerations were linked to the identification of the public interest and those of the negotiating parties, the reasonableness of the conduct of the negotiating parties and to the merits of the case. Our determination about the thematic issue is likely to be pivotal in our assessment of those matters. Accordingly, we will address issues about the specific content of any section 170MX award as subsidiary to our determination about the thematic issue.
7. MATTERS TO BE DETERMINED ABOUT AWARD CONTENT:
[57] As we have noted, by the close of submissions the parties were provisionally agreed about a substantial part of the content of a proposed section 170MX award. Among other provisions agreed between the parties as appropriate for inclusion in the proposed award are provisions that will:
· transpose to the proposed award, and in some respects displace from the Australian Public Service Award 1998 (the Public Service Award), the current regulatory framework for terms and conditions of employment, including a salary classification system and indicative definitions;
· allow the implementation of a Performance Management System (PMS) assessment process. When fully developed, PMS will rate performance against guidelines and assessment criteria for purposes that include salary advancement and management of poor performance;
· carry-over from the 1995 certified agreement, the Continuous Improvement Agreement 1999 (the CIP Agreement), processes known as the Review of Continuous Improvement in respect of hours of duty, penalty payments, annualised or composite salary, attendance, implementation of the PMS, and simplification of the pay system and its components;
· reduce the retention period applicable to employees under redundancy/retrenchment procedures to a uniform seven months in all circumstances;
· revise conditions that determine entitlement to emergency duty attracting penalty payment at double time rates. Emergency duty entitlement will not arise if the employee: gives prior notice of availability to be recalled; accepts the duty at overtime rates; or, is already covered by a restricted duty payment;
· modify overtime rates Monday to Friday by substituting a standard 170% loading. That loading will operate in lieu of the existing loading for shift workers which is 150% for first three hours and 200% thereafter;
· allow for salary packaging arrangements that may confer a benefit on employees without extra cost to the APS.
[58] A substantial number of matters, some of them minor, were not resolved between the negotiating parties during or after the bargaining periods. The most important issue about the content of the proposed award concerns the level of salary increase to be awarded. The parties are broadly agreed on a three level classification structure for PSOs associated with vestibule trainee classifications. The parties also resolved a disagreement about the proposed introduction of a fourth classification level for low risk work within a classification description designated as Security Assistant. The parties are not agreed about the salary rates for the salary points within the agreed structure.
[59] The classification structure currently applicable to positions designated as PSOs was comprehended within the broadbanded Australian Public Service classifications known as Administrative Service Officers (ASO's). The three PSO classifications were equated with Levels 2, 3 and 4 of the ASO generic structure, incorporating 17 pay points respectively. That structure was last subject to a general review of salary rates in 1995. The last adjustment took effect from October 1996 pursuant to the public service wide CIP Agreement the term of which expired on 31 December 199619.
[60] The table below shows the existing PSO classifications and the effect of first and last of the adjustments proposed by the APS and CPSU respectively:
Designation |
Current ASO aligned rate |
APS Proposal 40 hour week |
CPSU Proposal 38 hour week | ||
A |
B |
A |
B | ||
$ |
$ |
$ |
$ |
$ | |
PSO1 |
27,091 |
29,394 |
30,578 |
30,884 |
33,083 |
(ASO2) |
27,837 |
30,203 |
31,420 |
31,734 |
33,994 |
28,568 |
30,496 |
32,245 |
32,568 |
34,886 | |
29,310 |
31,801 |
33,083 |
33,413 |
35,742 | |
30,042 |
32,596 |
33,909 |
34,248 |
36,686 | |
AFR New Pay Point |
33,390 |
34,736 |
35,448 |
37,972 | |
PSO2 |
30,857 |
33,480 |
34,829 |
35,177 |
37,682 |
(ASO3) |
31,659 |
34,350 |
35,734 |
36,091 |
38,661 |
32,463 |
35,222 |
36,642 |
37,008 |
39,643 | |
33,304 |
36,135 |
37,591 |
37,967 |
40,670 | |
AFR New Pay Point |
37,047 |
38,540 |
39,167 |
41,955 | |
SPOS |
34,391 |
37,314 |
38,818 |
39,206 |
41,997 |
(ASO4) |
35,485 |
38,501 |
40,053 |
40,453 |
43,333 |
36,408 |
39,503 |
41,095 |
41,505 |
44,460 | |
37,341 |
40,515 |
42,148 |
42,569 |
45,600 | |
AFR New Pay Point |
41,527 |
43,200 |
43,769 |
49,698 | |
Note: Column A denotes rate from date of operation of award. Column B is rate proposed from second year after award commences. New Pay Points for Advanced First Response PSOs are set in Bold.
[61] The respective positions are set out in a manner that omits details of some issues in dispute about rates claimed. We do not set out the rates claimed for one year after commencement of the proposed award. Nor have we made reference to the Trainee Security Assistant and Trainee PSO salary points. As we understand each party's position, the only issue about those trainee classifications is the increase to be applied to the rates. We have also truncated the presentation of what we understand to be an agreement about Advanced First Response PSOs. They shall be classified in a way that effectively advances their commencing rate one salary point, and also creates a new salary point applicable only to them. The figure in bold in each classification is applicable only to AFR PSOs. Their commencing rate in the classification in each instance is to be the second salary point.
[62] The APS proposes a total 12.5% (12.88% compound) increase to all salary points based upon an integrated package of measures that it proposes should comprise the section 170MX award with no retrospectivity:
· 1% one year later;
· 3% two years later.
[63] The CPSU seeks generally a total 21%:
· 4% two years after commencement.
In addition, the CPSU seeks an extra 6% applicable to the salaries of employees who elect to forego rostered days off (RDOs) from date of election.
[64] Another significant issue between the parties concerned provisions about standard hours for ordinary time work and any associated entitlement to RDOs. The APS seeks and the CPSU opposes reintroduction of a 40 hours standard working week. In conjunction with that change, the APS seeks the abolition of an entitlement to RDOs. The APS puts a value of 5.2% on that change as a trade-off for the increase to salary it proposes. The CPSU opposes a abolition of the entitlement, but would allow individual employees to substitute a 6% pay rise for entitlement to RDOs.
[65] Several lower order conditions of employment changes gave rise to another set of issues:
· Overtime rates: the APS seeks a flat rate of 170% Monday to Saturday. The CPSU agrees to the rate being 170% Monday to Friday, but would retain 200% for Saturday duty.
· Shift penalties: the APS seeks 10% averaged penalties (or 12.5% for 9F officers) to apply to 12 hour shifts. The CPSU rejects any removal of an existing entitlement for those engaged on 12 hour shifts to 15% (or 22.5% for 9F officers).
· Relocation assistance: the APS proposes, and the CPSU opposes, a provision removing entitlement to relocation assistance except where allowed at discretion of Director.
· Remote locality leave fares: the APS seeks abolition of remote locality leave fares. The CPSU approves removal but would make that change subject to retention of the condition for existing staff.
[66] Leave entitlements gave rise to another set of issues:
· In relation to annual leave, the APS seeks half-pay penalties for annual leave to be paid out once yearly on first pay day following 1 January. The CPSU seeks to retain an entitlement to have the penalty paid on utilisation of annual leave.
· Miscellaneous leave: the CPSU seeks a wider discretion to allow leave for short term absences.
· Public holidays: the APS proposes and the CPSU opposes abolition of the entitlement to payment for public holiday for an employee rostered off on such day.
[67] Several miscellaneous issues may be grouped as a final set of issues about award content:
· Reference to the CPSU in the award title, and in the definition of "employee representative".
· The CPSU seeks retrospective operation of award from 25 May 2000; the APS proposes prospective operation.
· The APS seeks an exclusion from the award for current and successor certified agreements and Australian Workplace Agreements (AWAs), (unless the termination powers under subsection 170MH(1) or subsection 170VM(3) are exercised), and prospective new areas of work. The CPSU seeks that the award subsume current certified agreements, and opposes any exclusion from award of potential new areas of work.
· The CPSU seeks, and the APS opposes, an outlined implementation process for facilitative agreements about various conditions to operate in particular APS "stations".
· The CPSU seeks to retain, or to preclude from a displacement sought by the APS, existing award conditions associated with continuous duty and make up time.
8. THE FUNCTIONAL AND OPERATIONAL CHARACTER OF THE APS:
[68] The APS is a uniformed Service established by the Australian Protective Service Act 1987. It is also a Division of the Commonwealth AG's Department. The operations of the Service are under the control of the Director, who reports directly to the Secretary of the AG's Department.
[69] The officers of the APS are designated special officers of the Department, employed under the Public Service Act, but are accorded a statutory designation, Protective Service Officers (PSOs) and swear or affirm a distinctive oath of service. About 90 of the current 650 or so PSOs were transferred from the AFP on the inception of the APS in 1988. They are entitled to conditions carried over from their former employment and are known as 9F Officers, a reference to Division 9F of the Public Service Act. Section 6 of the APS Act states that the function of the Service is to provide such protective and custodial services for or on behalf of the Commonwealth as the Minister directs. Among other functions specified are the protection of Commonwealth and foreign country owned property, protection of holders of Commonwealth office, protection of "internationally protected persons", and the keeping of persons in custody under the Migration Act 1958. The powers and duties of PSOs include arrest without warrant for specified offences, powers of search of an arrested person, and a duty to deliver a person arrested into custody of a police officer. Generally, PSOs bear side arms and are required to be proficient in the use of firearms.
[70] Under the Air Navigation Regulations 194720, PSOs are generally accorded the work and responsibilities of security force personnel. Security force personnel for the purposes of aviation security are not necessarily confined to PSOs. In practice, perhaps because of the nature of the qualifications and competencies required, there has been only very limited resort to service providers who are not PSOs. Duties vary between airports but for the principal airports, Category 1 or Category 2 airports, at which PSOs are engaged the duties include: the removal of persons or vehicles from an area of an airport; provision of continuous patrolling during operational hours of the airport at a frequency agreed by the airport operator and the Secretary of the AG's Department; rapid response to a security emergency; the making available of dogs trained to detect explosives and a provision of a handler for each dog.
[71] The qualifications and character requirements for security force personnel at Category 1 or Category 2 airports are specified by Regulations 71 and 72. The qualifications specify that the personnel must be:
· trained to an approved level of competency approved by the Secretary of the Department in the techniques of first response to acts of terrorism; a proficient level in the use of firearms; an approved level of competence in general airport procedures in relation to the movement of persons and cargo within an airport; and
· capable of responding promptly and effectively to a breach or impending breach of aviation security.
[72] The reference to first response in relation to terrorism is defined to mean initial action:
"(a) to evacuate endangered or potentially endangered persons; and
(b) if the act has occurred or is occurring - to contain it; or
(c) if the act is threatened or prospective - to deter or prevent it; and
(d) to cordon the location of that act; and
(e) to pass relevant information to emergency services that respond to the act and to other relevant government agencies."21
[73] The broad purpose and functions of the APS are comprehensively stated in the APS Strategic Plan 2000-2003:
"The APS provides high level protective security services to sensitive Defence establishments (including specified joint defence facilities), the Official Residences of the Prime Minister of Australia and the Governor-General, Parliament House, Canberra, to Diplomatic Missions and Protected Persons Australia wide, High Office Holders (Minister, Senators, Members of Parliament), and the Australian Nuclear Science and Technology Organisation's Lucas Heights facility.
The APS also provides: Counter-Terrorist First Response (CTFR) at major Australian airports; Escorts of valuable and sensitive property items; Protective Security Risk Review consultancy services; Specialist Security Advice; Alarm Monitoring; Firearms, Baton, Tactical Communication and other specialised security training; Bomb appraisal and detection; Explosive Detector Canine (EDC) services; Protection of visiting dignitaries' establishments."
[74] In relation to the services listed in the second paragraph of that statement, we note that apart from the first and last mentioned, those services have been identified as fully contestable services. In other words, they are services provided to Commonwealth agencies in competition with the private sector. Those services account for only 1% of the APS's revenue22.
[75] The budgetary status and financial accountability of the APS is complex. The APS is a Division of the AG's Department but it is generally treated as a "non-budget funded agency" with no direct budget allocation. However, a budget allocation was made in 1999-2000 to cover the cost of restructuring and redundancies related to the loss of the custodial role at Immigration Detention Centres. The APS has been required to comply with a policy direction demanding full cost recovery and its operation along commercial lines. Since at least 1988 it has been required to operate in a way consistent with that status. The current regime is set out in a Memorandum of Understanding between the APS and the Department of Finance (the DoF MOU).
[76] Under the DoF MOU and policy directives, the APS is required to achieve an 8% return on equity capital and to pay a dividend of 50% of its operating profit into consolidated revenue. The annual turnover of the APS is approximately $55M. 50% of that turnover is generated from Commonwealth clients, 35% from airport clients and the remaining 15% from other clients. The APS is also required to comply with what are known as the Commonwealth's "competitive neutrality" principles. Those principles are a by-product of the Government's Competition Policy intended to promote efficient competition between public and private businesses. In compliance with that policy, the APS charges GST to all relevant clients. The status of the APS as an "off-budget" organisation was confirmed by Cabinet in its 1997 Review of the APS.
[77] The Full Bench questioned Mr Studdert about what rationale might exist for not simply putting out to private tender all or most APS functions, breaking any nexus with the Australian Public Service. Mr Studdert responded:
"... the rationale or philosophy behind that ... is that there are core functions that are of such a sensitive nature that they require the full accountability and the characteristics that a public service Commonwealth uniform force has and that those functions continue for a number of reasons, mostly to do with either sensitivity or international obligations or the function is a joint one and the parties require it."23
[78] We consider that the force of that rationale is readily demonstrated. A report of the Commonwealth Competitive Neutrality Complaints Office (CCNCO) included observations about the likely basis for the Commonwealth Government preference for having a government agency undertake such functions. The retention of direct government control may be influenced by national security considerations. Another influencing factor was said to be the desirability of such accountability in situations where, in public places or in defence of public assets, powers of arrest, use of coercive force, and the expectation that gunfire would be returned as a last resort24, may be activities required of the agency. Those factors mask not only important political considerations, but also concomitant service personnel capability and training standards which we need not expand upon.
[79] We note, and emphasise, that the exercise by PSOs of the statutory powers accorded to them is not vestigial. The advanced first response capacity, or Counter-Terrorist First Response (CTFR), as it was referred to in evidence, is adequately explained by the extract we have set out in paragraph 71. There is a significant level of utilisation of the statutory powers. In calendar 2000, APS officers made 42 arrests and dealt with 5,029 "reportable incidents"25. The demand for heightened and effective security at Australian airports triggered by the World Trade Centre catastrophe underlines the significance of, and high public interest in, the capabilities intrinsic to those functions and statistics.
[80] A broad but perhaps not exact outline of the staffing resources and distribution of the APS appear from the approximate figures set out in the Table below:
APS Operational Staffing and Classification - 26 June 200126
APS Station |
PSO1 |
PSO2 |
SPSO |
Total |
Shift Length Hours |
ACT DPPG |
19 |
- |
4 |
23 |
8 |
ACT OE'S |
23 |
8 |
- |
31 |
8 |
Adelaide Airport |
10 |
3 |
- |
13 |
8, 9 and 10 FT; 4 PT |
Brisbane Airport |
30 |
3 |
- |
33 |
8 and 12 |
Cairns Airport |
13 |
- |
4 |
17 |
10 and 12 |
National Central Monitoring Station +s.170LK CA |
5 |
- |
4 |
9 |
8 |
Coolangatta Airport |
4 |
3 |
- |
7 |
8 |
Darwin - Shoal Bay |
7 |
3 |
- |
10 |
12 |
Defence Russell Hill |
37 |
- |
3 |
40 |
8 |
Exmouth |
9 |
4 |
- |
13 |
12 |
Geraldton +s.170LK CA |
9 |
- |
- |
9 |
12 |
Lucas Heights |
16 |
- |
3 |
19 |
8 |
Melbourne Airport |
36 |
4 |
- |
40 |
12 |
Sydney DPPG +s.170LK CA |
10* |
15* |
5* |
30 |
8 |
NSW OE'S |
26 |
4 |
- |
30 |
- |
Parliament House |
51 |
8 |
4 |
63 |
12 and 8 |
Perth Airport |
22 |
4 |
- |
26 |
12 |
Pine Gap |
33 |
5 |
- |
38 |
12 |
Sydney Airport |
80 |
6 |
4 |
90 |
9 and 10 |
Vic DPPG |
25 |
4 |
- |
29 |
12 |
ALL STATIONS |
465 |
74 |
31 |
570 |
+ Assuming those in training are successful, 31 will be deployed to the ACT Stations on 13 August 2001.
* The Sydney DPU certified agreement does not retain the PSO classification and designation. The figures shown allocate DPO1 and SDPO positions to PSO1 and PSO2 respectively; the five positions allocated to SPSO are 1 DPO and 4 DPS positions.
[81] Almost all of the 570 PSO station staff in that total are full-time ongoing; there seem also to be about 10 full-time equivalent positions for part-time staff, and there are in addition 31 trainees. It appears from Commander Gardner's evidence that the operational staffing level is approximately 47 officers understrength or "short across the board". It also appears that at all save two or three of the stations, duty is rostered on a continuous 24 hour seven day week basis.
[82] A relatively sharp contraction over recent years in the numbers of operational staff was disclosed in the submissions and evidence. Again, exact comparative data proved to be elusive, but the following table provides a reasonable approximation:
Staff Category |
1997-1998 |
1998-1999 |
1999-2000 |
2000-2001 |
SES |
4 |
4 |
3 |
- |
Senior Officers |
36 |
17 |
30 |
- |
PSOs |
715 |
692 (652) |
684 (602) |
580 (1) |
TOTAL |
755 |
731 |
718 |
645 (2) |
Source: CPSU figures extracted from staffing statistics at 30 June; Exhibit CPSU 1, paragraph 54; (1) the figure for 2000-2001 is extracted from Exhibit APS 1, Tab 10, Attachment O; (2) the figure for total staff is from Agency Budget Statement, AG's Department, Exhibit CPSU 18 at page 64 projected to fall to 631 for 2001-2002. In a revised Attachment 0-1 Graph 2, the APS supplied material after the close of hearing which indicated that the operational PSO complement increased from 580 to 610 between 30 June and August 2001. The figures in brackets for 1999 and 2000 are revised averages for the reporting period at 1 July in those years.
[83] Mr Ter Bogt's evidence put the decline in APS staffing levels in perspective with a loss since 1999 of approximately 454,000 service hours due to clients' market testing. He endorsed Dr Gowland's evidence to the effect that labour costs account for 84% of the APS's operating costs, and that consequently any increase in wages will need to be passed on to clients as a price increase, or be offset by a reduction in resources. However, Mr Ter Bogt disputed Dr Gowland's calculation of a productivity increase per officer since 1997.
[84] Mr Ter Bogt contended that Dr Gowland's use of 1996-1997 as a base for productivity measurement was unsound. In that year, the APS had written off $5m as a bad debt. It appears that in 1996-1997 the APS lost the "contract" let by the Department of Immigration and Multicultural Affairs (DIMA) for custodial detention of illegal immigrants. The amount of $5m, due and payable for work already performed, was written off at Ministerial direction. The APS had earlier failed to meet a demand placed on it to produce a 15% reduction in costs; subsequently, it did not tender for the new contract let by DIMA. As we have noted, the 1999-2000 budget included an $11m allocation to the APS to cover restructuring costs related to the loss of the DIMA work.
[85] The CPSU disputed the accuracy of Mr Studdert's characterisation of the APS as a full cost recovery agency. In her cross-examination of Mr Ter Bogt, Ms Mountford delved into the financial and organisational relationship between the APS and the Protective Service Co-ordination Centre (PSCC). The latter is also a Division of the AG's Department. It co-ordinates the provision of protective services. It is allocated a direct budget appropriation to provide security to the different communities under its responsibility, including the diplomatic services. In the Agency Budget Statement for the AG's Department for 2001-2002, the appropriation of the PSCC was $18m, with a further contingency fund of $5m for diplomatic and consular guarding, and a facility for $3.5m to be drawn on an overdraft basis. The APS merely provides protective guarding and security services at the behest of the PSCC, client agencies, or for contracts tendered to clients external to the Commonwealth involving aviation security. The APS effectively charges the PSCC for services it provides to that agency, does likewise for services provides to other agencies, and is authorised by the Act to charge for non-governmental clients.
[86] The PSCC tasks the APS on a contract basis for regular services. It may also engage the APS for contingency guarding services to meet specific or sudden exigencies. Other departmental clients of the APS may also have allowance for guarding within their general budget allocations and engage the APS on a similar basis. The full cost recovery status of the APS is almost entirely a function of revenue and expenditure transactions between the APS and Commonwealth budgeted agencies. It would appear that such transactions and their effects are essentially a matter for the Commonwealth's internal fiscal policy and machinery of government arrangements. The provision of services by the APS to clients external to the Commonwealth or an authority of the Commonwealth is different in character. The APS Act in section 25A enables the APS to "charge an amount reasonably related to the cost of ... relevant services" provided at the request of a person other than such a Commonwealth entity.
[87] The CPSU submission made reference to the report by the CCNCO about a complaint lodged by the Board of Airlines Representatives of Australia (BARA). The complaint disputed extra charges levied by the APS on CTFR services at airports. According to the APS, charges had been increased by about 5% to comply with the competitive neutrality policy by which the APS is bound. BARA contended that the supply of CTFR services did not qualify as a business for purposes of competitive neutrality policy. It submitted that no actual or potential competition to the APS existed for those services in airports. The December 1998 CCNCO Report found that fully contestable services provided by the APS then accounted for only 1% of the APS revenue. It also pointed out that the relevant Air Navigation legislation operated to limit potential CTFR providers to the APS, or to the police services.
[88] We do not consider it necessary for us to explore or to expound more fully here upon the detail of the cost recovery and pricing policy of the APS. However, we note that the Commonwealth's competitive neutrality policy appears to operate to require that, at least, the charge out price for APS's CTFR service will include a component for State taxes and duties of the kind imposed upon a private business. We note moreover that the same charge out price also includes components for all labour costs including superannuation costs and conditions peculiar to Australian public service employment. The effective rate of employer contribution to public service superannuation schemes applicable to APS staff is markedly higher than that required under the SGEA legislation; and presumably than most private sector protective security service providers.
[89] Mr Studdert's evidence presented an explanation of the APS's use of its labour resource and the closely associated services pricing policy27. In essence, all APS clients contract with the APS for regular work, comprised of a specified number of hours of guarding services for the contract period. That specification is based upon the daily duration and personnel strength of the watch serviced. The methodology for pricing and staff resourcing for the contracted service uses a divisor of 1,638 net effective annual working hours per PSO to arrive at a staffing requirement for the station. In addition, a client may require extraneous work on a contingent and unpredictable basis. That need is serviced predominantly by existing staff employed on overtime. The price to clients for extraneous work (approximately $63 per hour) is much higher than for regular work (approximately $50 per hour).
[90] The criticality of standard hours worked, overtime and rostering arrangements to APS staff resourcing and cost effectiveness is manifest but understated in that explanation. The importance of standard working hours and RDOs is well illustrated by the APS formula for deriving the net effective annual working hours per employee:
"1638 hours is the average net effective annual working hours per person. It derives from: 52.14 weeks x 40 hours per week = 2088 hours gross per year. Minus absences: 200 hour rec leave + 80 hours sick leave + 28 hours other leave (bereavement, carers etc) + 88 hours rostered days off + 54 hours LSL, training time, unpaid sick leave. Equals 2088 hours - 450 = 1638 hour average per year."28
The factors for sick leave, other leave and long service leave in that calculation are apparently not empirically based. Rather, they are estimates of liability based on assumed maximum usage of entitlements. The 88 hours for RDOs reflects the conversion of the 40 hour working week to the 38 hour standard, resulting in 11 RDOs per year. Mr Ter Bogt's evidence used a different figure for net effective working hours: 1,690 per annum. However, that calculation omits the allowance for long service leave, training, and unpaid sick leave incorporated in Mr Studdert's calculation29.
[91] The APS formula for net working hours includes no overtime component, or factors for weekend work, shift or roster arrangements. The APS reliance on overtime to service extraneous work points to the likelihood of a high but variable usage of overtime work. Surprisingly, the APS seemed unable to readily extract reliable and consistent data on overtime use, or at least do so in a format that aided comparative analysis to assess the effect of changes in rostering arrangements, extraneous work, and establishment levels over time. None the less, from data that was made available over the course of the proceedings, two points are abundantly clear. A significant proportion of APS regular and extraneous work is performed at overtime rates. A high proportion of a PSO's take home pay is generated from overtime or penalty rate earnings.
[92] The CPSU converted the overtime figures from one sample for PSOs generally to an average of 58 extra eight hour shifts, or 39 extra 12 hour shifts per year30. That estimate is broadly consistent with a later set of figures derived by a survey of 467 payroll records. For 2000-2001 the average overtime hours for PSO classifications in the sample was 404 hours, constituting 25% of the total earnings. For the same sample and period, earnings from penalties added a further 18.5% of total earnings; thus overall overtime and penalties added $21,650 or 71% to the average salary across all PSO grades of $30,36331. Those figures are not readily transposed to individual employees. However, on the assumption made by the APS in calculating net effective annual working hours per employee, for each of the approximately 41 weeks on a 40 hour ordinary time basis, an average PSO works at least a 51 hour week. The statistics for penalty rates translate less readily to average working time effects. However, the proportion of average income attributable to penalties connotes an inevitably high use of Saturday, Sunday and public holiday work concomitant with seven day continuous rosters applied to a service team whose overall establishment has been kept to minimum operational levels.
[93] There are various factors that conduce to that result. They include a significant flexibility in the labour resource available to management, effectively creating surge capacity in a service conditioned to react in a disciplined way to meet priority needs. That flexibility in adjusting to demands for extraneous work has the advantage of cost effectiveness through minimisation of add-on costs, such as superannuation, associated with a larger permanent workforce. Another factor contributing to high overtime usage may be a propensity for employees to arrange absences from duty or to take RDOs in a manner likely to maximise overtime required. Any such factor is magnified by the superimposition of 12 or eight hour continuous shift and rostering arrangements over seven days on a Monday to Friday standard 38 hour ordinary time working week model.
[94] Whatever influences may be at work to sustain the high dependence of the APS on overtime and penalty shift rostering, one fact is plain. An overtime culture is at present a significant dynamic in staffing resource response to the operational imperatives of the APS. That culture should not be depicted as though it is a creature of the employees alone acting out of self-interest. It is a method of working and of resourcing work which suits the APS management, even when, as now and for some years, severe cost restraint pressures have to be absorbed. One operational imperative is well served by that conditioned resort to overtime and penalty rate weekend work. It is surge capacity, the need for the APS to cope with exigencies. There is a consistent need for a competent well resourced and trained guarding and security service in sensitive political and social situations but the level of demand is difficult to predict. Some demand peaks can be met cost effectively and expediently by using the PSO force on an overtime or extra duty basis. Employees do work long hours. But they get higher earnings for doing so. We have no reason to doubt that the public interest is well served by the availability of a well trained service of that kind, relatively mobile or deployable at sudden notice on that basis.
9. CONCLUSIONS: SPECIFIC ISSUES AND CONSIDERATIONS LISTED IN SECTION 170MX:
9.1 The approach to arbitration under section 170MX:
[95] At paragraphs 12-16, we have stated sufficiently our view about the correct approach to an arbitration under section 170MX. The parties organised their closing submissions in a manner that marshalled their contentions and material around the main headings of the considerations listed in subsection 170MX(5) to which the Commission must have regard. It is convenient to deal now with several of those considerations.
9.2 Matters in issue during the bargaining period:
[96] The parties both submitted that agreed content of the proposed section 170MX award and most of the proposed provisions in dispute were matters in issue during the bargaining periods or sufficiently related to such matters. A rare unanimity between the APS and the CPSU was displayed when both put that the Commission should not arbitrate on matters agreed between the parties. However that submission could not be taken to intend that the arbitration powers should not be used to make an award that includes agreed provisions. Rather, the joint position is that the Commission should make an award that does not depart from agreed provisions, but arbitrates between the parties only in relation to the unresolved matters presented as alternative provisions for the proposed award.
[97] The parties are also allied in a contention that the Full Bench should not venture upon a use of arbitration powers to reconstruct existing shift work and penalty provisions to align them more closely with manufacturing or service industry models. The direction and statement we issued on 8 June 2001 canvassed an option of that kind. We will discuss aspects of the joint responses to that direction in our analysis of ways in which the productivity of the APS might be improved. For present purposes, it is sufficient to note the position put jointly by the parties. We attach weight to that position and to the reasons given for it.
[98] However that weight is in respect of a consideration that goes to merits, not to jurisdiction. There is substantial agreement between the parties about particular provisions in the proposed awards. There is also a common front by the negotiating parties against the Commission exercising the arbitration power to include in any such award provisions that stray beyond points they have agreed. The Commission has discretion to make an award that deals with the matters that were at issue during the bargaining period. We are not persuaded by anything put to us that we are to be constrained by any partial agreement between the negotiating parties. They have failed to settle the matters in issue in the bargaining period. We consider we have jurisdiction to deal with any such matter, or with all of them, in exercising the arbitration powers mentioned in section 170MY.
[99] Over the course of the hearing, the parties resolved several questions raised in exchanges between them about whether particular proposed provisions were matters in issue during the bargaining period. The only exception was a debate about a CPSU contention that "the exclusion of rapid response work, marine and overseas duties were not matters at issue during the bargaining period" (sic). The APS agreed with that submission, adding that it followed that the Commission does not have power to arbitrate. However, the APS also pressed for the inclusion at clause 11.4 of its proposed award a provision to the following effect:
"This award will not operate with respect to the employment of an employee assigned to potential new areas of work including the following:
· Duty overseas; or
· Maritime duty; or
· Duty as an officer in a rapid response force."
The CPSU's contention was that the three types of work are existing functions of PSOs and within existing classifications nominal duties32. On that submission, the specified duty should not now be excluded from classification and award coverage. However, in apparent contradiction of one element of its argument about what matters were in issue in the bargaining period, the CPSU sought to include in proposed clause 7.3.2(d) a facilitative provision for employment arrangements for employees required to perform work in new locations, in new ways or for new clients.
[100] We do not consider that the issue about exclusion is truly dependent upon the character or scope of matters in issue during the bargaining period. The parties are agreed that no reference was made during the bargaining period to the relevant work, or to any differentiation in respect of it. It appears that duties of the kind specified may at least notionally be subject to allowance entitlements applicable to Australian Public Service Officers engaged on Customs duties, or in the Department of Foreign Affairs. The three certified agreements also refer to apparently extant AG's Department determinations. Questions about the existing entitlements to seagoing or overseas duty allowances, or a differentiation between types of CTFR duty were inconclusively canvassed in the hearing. Although there are relevant precedents for such allowances in the Human Resource Manual for the Australian Public Service, the extent to which there is any binding duty on the Director to accord them was not clearly established.
[101] In the circumstances, on a balance of considerations on the merits, we do not consider it is appropriate for the award to effectively excise duty of that kind from the operative effect of other provisions of the award. Our conclusion on that point may be reinforced by the possibility that there is substance in a jurisdictional point to the effect that a differential classification or allowance system for PSOs undertaking such duty was not a matter in issue during the bargaining period. The effect of the APS proposed exclusion would effectively bring about such a differentiation. We do not need to determine that point of jurisdiction, but we are not persuaded that the grounds advanced by the APS are sufficient reason for us to effectively avoid it by excluding potential work of PSO's from the application of the award.
[102] The development of any differential conditions or allowances for such duty beyond those already provided may need to be dealt with by modification of the award or determination by which any such entitlements are provided. Perhaps the facilitative or continuous improvement review provisions of the proposed award might productively have been applied for that purpose. We shall return to that possibility when dealing with that subject.
9.3 Interests of the negotiating parties and the public interest:
[103] In its closing submissions, the APS linked the notion of the negotiating parties' interests with the making of an award in the terms it proposed:
"If the Commission were to make a section 170MX award in the terms proposed by the CPSU, or indeed in other terms which resulted in a significantly higher quantum for the given package of measures, then the capacity of the APS to compete would be severely diminished. The cost pressures described in evidence ... as well as the organisational pressures outlined in ... evidence ... clearly demonstrate the competitive pressures under which APS operates. ... the CPSU award proposal would potentially price APS out of the markets in which a large proportion of its employees are employed, and so such an award would foreseeably jeopardise the future employment security of APS employees in those positions."33
[104] Those propositions about the centrality of the competitive pressures on the APS were not directly linked with public interest considerations. However, the APS submissions about the scheme and objects of the Act and the role of a section 170MX award indirectly link those public interest considerations with satisfaction of the competitive pressures by which the APS is bound.
[105] The CPSU in its submissions did not dispute the necessity for the APS to reduce add-on costs and remain competitive, contending that efficiencies from rostering practices, emergency duty conditions and reductions in overhead staff could ensure that the price of operational staff need not be affected by salary increases. As we have already noted, the CPSU also contended that the high national interest in the security protection work carried out by the APS should itself be a consideration and dynamic in the assessment and judgment of other considerations and issues.
[106] In the circumstances, it is convenient at this point to address what we described at paragraphs 54-56 above as a thematic issue about the extent to which the affordability of any wage outcome should be accorded weight as a dominant consideration or principle. That issue or consideration is also relevant in assessing the conduct of the parties during the bargaining period. Effectively the APS "affordability" objective and the reasons for it became the APS defence to complaints by the CPSU that the conduct of the APS during the bargaining period was unreasonable. In particular, the CPSU alleged that the APS had at least initially pressed a demand for a 20% reduction in pay instead of responding in a reasonable way to claims for a negotiated agreement about a pay increase. Among other complaints were allegations of unduly dilatory responses to proposals; offensive or excessive reaction to legitimate bargaining conduct; unilateral withdrawal of conditions of employment; and directions resulting in departures from custom or practice, causing significant income losses to officers34. With minor exceptions, all of the conduct complained of may be associated with a zealous attempt by the APS to bring about the changes in employment conditions that it was pursuing to achieve cost reductions, or to resist changes that the CPSU sought to achieve. That conduct was aligned with the policy vision of affordability the APS was promoting, and in our view was motivated by that policy.
[107] Our analysis of the thematic affordability issue in this context is the foundation upon which we will make abbreviated reference to it in the sections of our decision dealing with the merits of the case, the conduct of negotiating parties, and how productivity might be improved in the business.
[108] The circumstantial foundation for our analysis of the issue is set out in the preceding section of this decision. We have broadly summarised there the contentions made about the character of the APS as a full cost recovery off-budget agency required to return a profit on capital investment and to conform with competitive neutrality policies35. We did not attempt in that summary to narrate all aspects of the fiscal management of the APS. Nor did we seek to unravel or highlight some apparent vagaries in budgetary practice from time in creating a ledger entry about the performance of the APS within the fiscal paradigm. The APS witnesses were confronted in cross-examination with questions about the compatibility of those entries with ostensible full cost recovery dictates. We also made only selected reference to aspects of the overtime culture which pervades the resourcing of and remuneration for APS services36.
[109] No reasonably objective analysis could criticise a vigorous pursuit over the past decade or so of a more cost-effective APS. In that respect, cost-effectiveness may need to be, and to some extent has already been assessed within a perspective wider than one confined to the APS in isolation from the clients it serves. That perspective includes a minimisation of resort by clients to guarding at all, or to guarding by personnel with the powers, functional capability and priorities which the relevant statutes make intrinsic to the operation of the APS.
[110] Nor in our view can it be reasonably disputed that there has been substantial progress in achieving a significant improvement in the cost effectiveness of the service delivery for which the APS has been responsible. A stark reduction in the overall service hours supplied by the APS may be part of that achievement. Static guarding for some agencies has withered away. Cost pressures have caused a loss of work to the APS. Sometimes, but not necessarily, that loss has been accompanied by a shift to guarding protective security services provided by suppliers in private enterprise. Conversely, the APS has in a number of respects brought into operation measures intended to improve the quality and effectiveness of the services it provides. The emphasis now given to the training of PSOs in relevant competencies, to their physical fitness and to work performance indicators exemplify such measures. The introduction and enforcement of dropline roster arrangements in November 2000 to a number of stations is another facet of the same emphasis on cost effective use of the available staff resource.
[111] That emphasis on achieving a quality service delivered with maximum cost effectiveness is highly commendable. It has also achieved highly commendable results. We do not doubt that there is still room for improvement in the APS. However, from the reports and material we have seen in this case, and from our knowledge of the background, we are satisfied that the APS has made great advances toward a high level of proficiency in a demanding and nationally important public service.
[112] Optimisation of cost effectiveness must be given a high priority. However, that priority does not supplant considerations of industrial equity and good conscience. Nor should the statutory functions of the agency or the character of the market within which it operates be distorted or misconceived as subservient to financial policy. There are well defined limits to the "market" within which the APS operates. There is much about the debate between the parties in this matter to suggest that the constraints and effects of those limits have not been fully appreciated by APS management, or by the CPSU acting for its members.
[113] The "product" that the APS markets is designed by the APS Act. That Act establishes the Service, stipulates employment within a Department of State, and vests statutory powers and protections in the Service's officeholders. The Service established now includes a number of PSOs transferred from the AFP. The character of the APS as an agency has evolved along lines that merge a selection of functions normally associated with either police or armed services. The services delivered by the APS however include a high volume of what are called static guarding practices, although "static" guarding now seems to involve considerable mobility and a high level of visibility. However, to conceive the market for which APS competes as that of static guarding or protective security oversimplifies the APS function as an established service. The competitive faculty that the APS can reasonably be expected to exercise can easily be distorted by any such misconception.
[114] The APS in this matter argued that its competitive disadvantage should be reduced, inter alia by cutting back on the level of penalty payments for shift work, weekends and public holidays. The gist of that argument was that earnings of APS staff from base salary and overtime are about equal to the earnings of their private sector counterparts, with higher earnings attributable to penalty rates paid over and above overtime earnings37. We discuss those arguments under headings specific to those conditions of employment. But APS did not, and in these proceedings, cannot address the competitive cost penalties it faces in several other areas. Two notable differences from private sector arrangements are in superannuation and "retention". APS is making employer contributions at 17% of base salary, compared to 9% that will be required under the Superannuation Guarantee Levy at 30 June 2002. Another difference is that the public service is limited in how it may adjust the size of its workforce from time to time. Payments for a considerable "retention period" are applicable to the APS and other departmental agencies under the CIP Agreement. The duration and conditions associated with the retention period are less rigid than in the past. None the less, the obligation to retain staff is a cumbersome substitute for involuntary retrenchment option more readily available to most private sector employers.
[115] We do not consider it to be a fault of the APS that it is not competitive for services able to be competently and more cheaply delivered through private sector organisational structures that are different in several material respects from that of the APS. The APS has already lost a high proportion of work that most readily fits within a description of static guarding. We accept, and we would urge that all reasonable steps to minimise APS costs and pricing structure and to improve its product should continue to be taken by the APS. But we do not consider that it follows that APS attempts to service a market for which it is not statutorily designed are sound or consistent with the improvement of productivity. Many static guarding needs can be adequately serviced through an employment structure for employees not required to have, or who do not ever need to use powers of arrest. Most of the staff who will provide such guarding services will not be trained or likely to be required to act in a manner consistent with APS's first response competencies, whether within or beyond the existing use of such competencies in aviation security. To put the same proposition another way, we do not see why the APS should contort its statutory purpose and profile to meet a demand that might arise if for instance the Department of Defence decides it no longer wants its perimeters and properties serviced at the level the APS is established to supply.
[116] We have outlined the organisational, resourcing and remuneration structure of the APS. That structure is manifestly suited to the specialised, readily disciplined, and not always predictable levels of service it delivers. The structure is not readily adaptable to compete for work suited to a less specialised, less comprehensively trained, and more flexibility recruited and available employment structure.
[117] In the circumstances, it follows in our view that it can be counterproductive and unfair to attempt to elevate the pursuit of cost restraint objectives to a level of priority that denies room for any improvement in employment conditions not offset by savings from other alterations to such conditions. We acknowledge that the APS management may have had little room in which to manoeuvre to adopt a more liberal negotiation position than it did; or at least that the APS management may have believed that it had no room to do so. The APS is effectively bound by the policies imposed on it by the Department of Finance, and the departmental structure of which it is part. We do not accept that such policies are or should be a barrier to the Commission determining an outcome that we may consider to be justified on the merits of the case.
[118] Our view in that respect forms part of the perspective in which we have considered the interests of the negotiating parties and the public interest in the matters that are unresolved between the parties. The aspects of both of those sets of interests which we have taken into account are broadly embraced within the analysis and considerations to which we have referred in this and subsections 9.1 and 9.2 above.
9.4 How productivity in the APS might be improved?
[119] In the preceding subsections we have touched briefly upon several aspects of a concern with improvements to productivity that permeated the hearing before us and no doubt the negotiations which preceded it. The parties each adopted relatively idiosyncratic approaches to the definition and identification of productivity improvements.
[120] The CPSU cited a multitude of changes and activities since 1997 at station level as instances of "productivities" that should be taken into account. Much more convincingly, it relied also on the effects that will be associated with the proposed and agreed alterations to existing conditions of employment. We have summarised those changes at paragraph 57. We note that other effects will flow from our determination of the unresolved matters.
[121] The APS disputed the relevance of the instances relied upon by the CPSU as productivity improvements since 1997. In the APS submission, to be relevant, any improvement would need to be prospective, and the CPSU had failed to substantiate any of the past productivity improvements it had claimed. The introduction of dropline rosters and reforms to rostering arrangements in November 2000 were merely a removal of inefficient practices that were not required or funded by clients38. On the other hand the APS developed in detail a valuation of the particular provisions for and changes to conditions of employment that it sought. The largest contribution to productivity improvement it proposed was about a 5.2% saving to wages cost through the cessation of RDOs and the reinstatement of a 40 hour standard working week.
[122] In the statement we made as part of our direction issued on 8 June 2001, we sought to explore the scope for productivity improvement through modifications to the current conditions of employment. Several conditions of employment were referred to. In particular, we canvassed the possible adoption of a seven day continuous shift work pattern with loadings and penalties based on a manufacturing industry model.
[123] The CPSU seemed attracted to some features of the model that might result in an increased penalty, but only in isolation from the model itself39. The APS responded that it had developed its shift work arrangements over a long period of time to cater for its own circumstances40. The shift work area of the draft award had been substantially agreed between the parties and should not be changed. The APS management needed to retain flexibility in the construction and amendment of shift rosters in its discretion.
[124] Although not all of the submissions and initiatives to which we have referred are conducive to particular conclusions, we are satisfied that in this case the parties and the Commission have explored to a significant degree how productivity in the APS might be improved. We have already expressed our view that the APS has made substantial progress in achieving a more cost-effective and higher quality service. Significant contributions to that outcome have been made by adoption of various measures including training and rostering reviews. We consider that there should be room for substantial further exploration, provided that the APS and the representatives of its employees could arrive at an adequately consensual basis for doing so, and for implementing any agreed outcomes. Certainly it is desirable that the award should make provision for a process that conduces to such outcomes. We shall address that aspect and other impacts of the proposed award on productivity when considering provisions in the award for facilitative clauses and implementation of outcomes of consultation.
9.5 Unreasonable conduct of a negotiating party during the bargaining period:
[125] We have referred to the complaints made by the CPSU about the conduct of the APS during the bargaining periods and in particular about the manner in which the APS conducted its negotiations. That complaint was the foundation for the contention that the APS deliberately obstructed the process for achieving agreement and caused unreasonable delay. The APS in response recriminated against the CPSU's tactics and alleged failures to adequately consider the merits of the proposals that were put to it.
[126] The CPSU initiated a bargaining period with the APS by notice lodged under section 170MI on 16 July 1998; the APS lodged a notice to initiate a bargaining period with the CPSU on 18 June 1999. The respective bargaining periods were terminated by Deegan C with effect from 17 November 2000. Some aspects of the positions adopted by each of the negotiating parties during the bargaining period might reasonably be criticised. A regrettable amount of time was directed in the bargaining period and negotiations to initiatives and tactical encounters that some might consider to have been counterproductive to either industrial agreement or constructive maintenance of team work in achieving APS objectives. However, we do not accept that the conduct of either party during the bargaining period should be given much weight in our determination of this matter. The considerations to which we have referred in paragraphs 86 - 89 and 116 - 118 constitute the main premises upon which we reach that conclusion. We do not consider that we are likely to be assisted by findings about the more detailed issues canvassed during proceedings. Where we need to have regard to the conduct and nature of the tactics used during the bargaining periods for particular merits issues, we will make reference to any such aspect of the conduct that we consider should be taken into account.
9.6 Principles formulated by Full Benches for purposes of section 170MX:
[127] We are not aware of any principles formulated by a Full Bench for the purposes of section 170MX arbitrations. In paragraphs 12 - 16, we stated how we will apply section 170MX, and exercise the arbitration power in this case.
10. CONSIDERATION AND DETERMINATION OF UNRESOLVED ISSUES ABOUT CONTENT OF PROPOSED AWARD:
10.1 Decision to make an award under section 170MX:
[128] We are satisfied that it is appropriate and necessary to make an award to deal with the matters that were in dispute during the relevant bargaining period. Our satisfaction in that respect is founded upon the merits of the cases generally and particularly upon the positions put by both negotiating parties. In determining the content of the award, we shall generally adopt the provisions agreed between the negotiating parties although we do not consider that we are constrained from making such departures as we may see fit. However, we shall adopt the agreed provisions unless we consider it necessary and proper to the circumstances of the case to do otherwise. Accordingly, in the following sections of this decision we consider and determine the issues about provisions that the parties were not able to resolve.
10.2 The issues about nomenclature:
[129] The negotiating parties remained at issue about whether:
· the award title should make reference to the CPSU; and,
· whether the definition of employee representative should use a generic reference to organisation, or refer specifically to the CPSU.
[130] We resolve the issue about title by determining that the guidelines for making federal awards simpler shall be applied41. The title of the award shall be "The Commonwealth Employment (Protective Service Officers) Section 170MX Award 2001".
[131] The definition of employee representative shall read:
"8.10 EMPLOYEE REPRESENTATIVE means a representative of the CPSU or of an organisation of employees entitled to represent the industrial interests of an employee covered by this award; or an individual nominated by an employee."
10.3 The issues about application and operation of the award:
[132] The parties were at issue as to the operation of the proposed award in respect of:
· employment covered by current and prospective certified agreements and AWAs to which the APS and particular PSOs are party; and,
· employment on duty overseas, maritime duty or duty as an officer in a rapid response force.
For the purpose of the first of those exclusions from the operation of the proposed award, the APS nominated all AWAs approved prior to the commencement of the award. It also specified agreements applying to employment in relation to the Sydney Diplomatic Protection Unit, (the SDPU Agreement)42, the Australian Defence Satellite Communications Station, (the Geraldton Agreement)43, and the National Central Monitoring Station, (the NCMS Agreement)44. It proposed that employees covered by any of those agreements, including the AWAs, will continue to be covered by them, or successor agreements after their nominal expiry date, unless terminated under subsection 170MH(1) or subsection 170VM(3), at which time the relevant employee "will become covered by this award".
[133] The provision sought by the CPSU would have the award apply to all employees in listed PSO classifications but would exclude the operation of it in respect of any employee covered by an AWA approved prior to the commencement of the award: such employees will continue to be covered by an AWA after its nominal expiry date unless terminated under subsection 170MV(3), at which time the employee will become covered by the award. That provision does little more than paraphrase what would be the effect of subsections 170VQ(1) and section 170VM. However, the CPSU sought to supplement that effect by presenting "petitions" from 42 individual employees at Sydney Airport for their respective AWAs to be terminated45. The CPSU submitted that each of the individually signed requests to the Director that made up the petitions should be accepted as a separate application for the termination of the respective AWA. It submitted that the Commission should determine each such application under subsection 170VM(3), acting on the basis that the making of a section 170MX award causes it to be in the public interest to terminate the AWA to which each petitioner is a party.
[134] In relation to the exclusion of specified duties, the APS contended that such exclusions were necessary to allow it a free hand to tender for and negotiate agreements with staff about potential new areas of work involving a new class of employees whose functions were not yet established or even predictable. The CPSU countered that existing conditions of employment comprehend the purported new areas of work. It opposed the exclusion of the listed employment activities from the application of the award. It contended that Clause 12 of the draft award, Relationship with Other Awards and Certified Agreements as agreed, does not preclude an award being made if the parties agree that overseas allowances or classifications are required.
[135] We have already summarised the main arguments put by the Minister and by the APS for the exclusion of employment under the relevant agreements from operation of the award46.
[136] The CPSU contended that the APS could not refute the fact that the three section 170LK agreements had been made in circumstances where the APS had held out that those bound by them could elect to achieve a global wage outcome or equivalent. In the CPSU's submission that circumstance should be seen as sufficient to remove the three agreements from the reach of the observation made by a Full Bench in CPSU v State of Victoria to the effect that the Bench in general circumstances would be reluctant to act to make a section 170MX award applicable to employees who are the subject of certified agreements47.
[137] In the CPSU submission, it was desirable that there should be service wide conditions of employment in the APS, and that the productivity improvements achievable through the proposed award should as far as practicable be uniformly available. It further submitted that the exclusion of employment covered by the section 170LK agreements would result in those temporarily assigned to the three stations being subject to the conditions of the station; a relevant factor when taken in conjunction with the significant level of mobility in the APS. The duration of a section 170MX award should not be a significant barrier to agreement making if the conduct and capacity of the parties to reach agreement is adequate. If a majority of employees bound by a section 170MX award agree with the employer to do so, the award can be revoked and replaced by agreement during its term48.
[138] In relation to the continuing operation of AWAs, the CPSU by the conclusion of the hearing had resiled from its initial defiance of the Act and total opposition to the APS position. It noted that the Commonwealth's supplementary submission did not oppose the termination of 42 expired AWAs. However the CPSU submitted that insistence on strict adherence to the subsection 170VM(3) process in the circumstances should be seen as petty and productive of further antipathy to management.
[139] In our determination of the issues about exclusion of a class of employees from the operation of the award, we start from an examination of the application of the section 170MX award relative to the application of the certified agreements. We use application in the long established sense connoting the scope or incidence of the award or agreement in its effect through definition of the employments to which the award or agreement's commands are directed. The parties did not proffer a uniform formula for wording what they captioned as the coverage of the award. However, it seemed to be common ground that the award should apply to the employment of all employees in the specified PSO classification structure but subject to the exclusion from the operation of the award of a class of employees to be determined by the Commission. The first issue about what employments came within that excluded class concerned employment covered by the three section 170LK agreements.
[140] The identification of who would be brought within any such class pursuant to the three certified agreements is not a simple matter. There is no application clause at all in the SDPU Agreement. The nearest approach to an application clause is the following provision:
"1.2 Parties
(1) The parties to this Agreement are:
· APS staff, at the Australian Public Service classifications mentioned in Schedule 1, employed in the Sydney Diplomatic Protection Unit (employees) under the Public Service Act 1999
· the Minister for Justice and Customs (the Minister).
(2) For this Agreement, the Secretary of the Department (the Secretary) acts for the Minister."
The classifications mentioned in Schedule 1 are ASO Level 1 to Level 4, with local designations of trainee, DPO 1, SDPO 1, DPO 2 and DPS.
[141] The NCMS Agreement also has no application clause. It has a "Parties" clause in terms substantially similar to the SDPU Agreement but based on classifications listed as PSO 1 to SPSO local designations in Schedule 1. The Geraldton Agreement is much the same except that the reference in the "Parties" clause to Schedule 1 classifications imports only a PSO Grade 1; it is Schedule 2 of that Agreement that sets out a full list of "pre-agreement" classifications.
[142] We have not attempted an exhaustive analysis of each agreement. They have many common features but there is some variance in particular station conditions. The most notable features of the SDPU Agreement are that it:
· provides for a 40 hour standard working week;
· provides for a composite penalty allowance for 24 hour rotating shift roster based on a fortnightly value for shift penalties approximating to 30% of annual salary; and for half pay annual leave penalties allowance approximating to 1.4% of annual salary;
· links overtime rates to an average rate of 170% for 84 hours Monday to Saturday prepaid overtime for six months, approximating to 13.7% of annual salary. Overtime rates for further hours revert to the Australian Public Service Award 1998 (the Public Service Award) standard rates as a percentage of single time;
· increases classification rates by a total 15% comprised of: 9% from date of certification, (inclusive of a 5.2% adjustment of the extra two hours); a further 2% increase after one year; and, 4% after two years;
· specifies that conditions of service for an employee who performs duty overseas are set out in AG's Department Determination 1998/1 and may be further determined under section 24 of the Public Service Act49;
· specifies:
"1.9 Global certified agreement
(1) This clause applies if, after this Agreement, the APS successfully negotiates a global or part global certified agreement (the global agreement):
(a) to which most APS stations or their employees are parties; and
(b) that provides for wage adjustments, wage increases or additional entitlements to those in this Agreement.
(2) Within 1 month after the global agreement is certified, the employees may vote on whether to vary this Agreement to meet the same overall package as provided by the global agreement.
(3) The vote is to be decided by secret ballot.
(4) If a majority of the employees who vote approve the proposed variation, this Agreement is to be varied in accordance with the proposed variation."
[143] The Geraldton Agreement provided for a translation from the four level Australian Public Service classifications to a four level PSA - PSO structure. It allowed a composite pay increase of 14% over three years incorporating salary adjustments for a 40 hour week without RDOs; like the SDPU Agreement, it provided for similar averaged shift penalty allowance on duty, prepaid public holidays when rostered off, and recreation leave half shift penalty allowance. The NCMS Agreement adopted the same classification structure but otherwise appears to have replicated the SDPU Agreement with a few relatively minor differences. Among others are the absence of a Station Implementation Committee, several locally used allowances, and the date of operation.
[144] The agreements came into operation from 23 May 2000, 16 August 2000 and 5 October 2000 for SDPU, Geraldton and NCMS respectively; each remains in force for three years from the relevant date. None of the agreements defines the business in which the employer parties are engaged. However, the SDPU, the Defence Satellite Communication Station and the NCMS each appear to be relatively specific geographic areas: APS stations. Each station is associated with particular clients of the APS, and in a broad sense is an organisational unit of the APS business. Each of the three agreements provides that an employee assigned temporarily to duties at another station is subject to the agreement. An employee "assigned permanently to duties at another station may choose to be subject to conditions that apply to the other station, or an AWA". Each agreement enables the Secretary to enter into an AWA that will operate to the exclusion of the relevant agreement; or, to incorporate the terms of the certified agreement but prevail over any inconsistent terms.
[145] The APS debated the extent to which there is, or could be, mobility into or out of each of the stations to which the respective agreements refer. We do not consider the contentions made in that debate to be of much assistance. The vagary of drafting each agreement makes the application of it contingent upon the construction of the Parties clauses and the remainder of the section 170LK agreement. However, each agreement clearly enough seems intended to apply to employees at the classifications and in each of the respective stations. Paragraph 170M(1)(b) of the Act operates to bind all persons whose employment, at any time when the agreement is in operation, is subject to the agreement. Despite the limitation in the Parties clause, each agreement contains stipulations about conditions to apply on temporary, or permanent, assignment or transfer to other stations. Moreover, each agreement might be seen as intended also to cover provision for duty overseas. However, the relevant provision is concerned with appropriate allowances not with a broadening of the application of the part of the single business to which the section 170LK agreement applies. In our view it should be read in that way.
[146] Those aspects of the content of the agreement are consistent with employees outside the relevant station being from time to time bound by the agreement provided they have been engaged at the classification and employed in the station. Employees who are parties to the agreement would appear to be bound by it when on temporary transfer to other stations; each agreement purports also to regulate conditions of employees assigned permanently to another station. There have been only a couple of actual deployments into the SDPU. None the less, there is quite cogent evidence about mobility and deployments within the APS. There is an expectation that such deployability will be a feature of the APS meeting exigencies.
[147] The provisions of the Act most relevant to consideration of the effect of the various instruments that must be assessed in determining any class excluded from the award are sections 170LY and 170VQ. Sections 170MN and 170VU are also significant. So far as relevant those provisions read:
"170LY Effect of a certified agreement in relation to awards and other certified agreements
(1) While a certified agreement is in operation:
(a) subject to this section, it prevails over an award or order of the Commission, to the extent of any inconsistency with the award or order; and
(b) it has no effect to the extent of any inconsistency with another agreement certified before it, whose nominal expiry date has not passed.
(2) If:
(a) an award is made under subsection 170MX(3) (which deals with the exercise of arbitration powers on termination of a bargaining period); and
(b) before the award is made, or after it is made but before its nominal expiry date passes, a certified agreement is certified; and
(c) the employment of at least one employee is subject to both the award and the certified agreement;
the certified agreement does not operate at any time while the award operates.
(3) An exceptional matters order prevails, to the extent of any inconsistency, over a certified agreement that was certified before the order was made.
Note: Part VID deals with the relationship between AWAs and certified agreements.
170MN Industrial action etc. must not be taken until after nominal expiry date of certain agreements and awards
(1) From the time when:
(a) a certified agreement; or
(b) an award under subsection 170MX(3) (which deals with the exercise of arbitration powers on termination of a bargaining period);
comes into operation until its nominal expiry date has passed, an employee, organisation or officer covered by subsection (2) must not, for the purpose of supporting or advancing claims against the employer in respect of the employment of employees whose employment is subject to the agreement or award, engage in industrial action.
(2) For the purposes of subsection (1), the following are covered by this subsection:
(a) any employee whose employment is subject to the agreement or award;
(b) an organisation of employees that is bound by the agreement or award;
(c) an officer or employee of such an organisation acting in that capacity.
(3) If the employee, organisation or officer contravenes subsection (1), the action concerned is not protected action.
(4) From the time when:
(a) a certified agreement; or
(b) an award under subsection 170MX(3);
comes into operation until its nominal expiry date has passed, the employer must not, for the purpose of supporting or advancing claims in respect of the employment of employees whose employment is subject to the agreement or award, lock out such an employee from his or her employment.
(5) If the employer does so, the lockout is not protected action.
(6) Engaging in industrial action, or locking out an employee, in contravention of section170VU is not protected action.
170VQ Effect of AWA on awards and agreements
(1) During its period of operation, an AWA operates to the exclusion of any award that would otherwise apply to the employee's employment. This subsection has effect subject to subsections (2) and (3).
(2) An AWA is of no effect if it is made:
(a) after the commencement of an award that is made under subsection 170MX(3) and applies to the employee's employment; and
(b) before the nominal expiry date of the award.
(3) An AWA does not operate to the exclusion of an exceptional matters order, but prevails over an exceptional matters order to the extent of any inconsistency.
(4) During its period of operation, an AWA operates to the exclusion of any State award or State agreement that would otherwise apply to the employee's employment.
...
(6) The relationship between an AWA and a certified agreement is as follows:
(a) a certified agreement prevails over the AWA to the extent of any inconsistency if:
(i) the certified agreement is in operation at the time the AWA comes into operation; and
(ii) the nominal expiry date of the certified agreement is after the date on which the AWA comes into operation; and
(iii) the certified agreement does not expressly allow a subsequent AWA to operate to the exclusion of the certified agreement or to prevail over the certified agreement to the extent of any inconsistency;
(b) a certified agreement that comes into operation after the nominal expiry date of the AWA prevails over the AWA to the extent of any inconsistency;
(c) in all other cases, the AWA operates to the exclusion of any certified agreement that would otherwise apply to the employee's employment.
170VU Industrial action etc. by party to AWA
(1) During the period of operation of an AWA before its nominal expiry date, the employee must not engage in industrial action in relation to the employment to which the AWA relates.
(2) During the period of operation of an AWA before its nominal expiry date, the employer must not lock out the employee for the purpose of supporting or advancing claims in respect of the employee's employment."
[148] Those provisions establish a clear hierarchical and structured basis determining the precedence of the effect of awards and agreements. The provisions also reflect a distinction between the legal notion of repugnancy or inconsistency between conflicting provisions of two legislative instruments and the statute based notion of priority of "operation" of one instrument over or to the exclusion of another. The application of the legislative instrument is a third legal notion connoting a separate function. The differences between each of those notions must be kept in mind in the construction and application of the provisions we have set out.
[149] An unstated premise of subsection 170LY(1) is the existence of an overlapping application between a certified agreement and an award, or between two agreements. The work of that subsection is to establish that an agreement provision prevails over an inconsistent award provision, or an inconsistent provision of an agreement made after the agreement first certified but prior to the expiry of its term. In paragraph 170LY(1)(b) the operative words are:"has no effect to the extent of any inconsistency". They may be read to mean much the same thing as the corresponding words in paragraph 170LY(1)(a): the relevant certified agreement provision does not prevail over an inconsistent provision of a prior agreement applying to the same employment.
[150] On first impression, it would appear that a similar reading should be given to the words in subsection 170LY(2): the certified agreement does not operate at any time while the award operates. On that reading, the expression does not operate is a variation on the theme establishing the instrument which prevails in the event of inconsistency. Even so, the use in one section of three different forms of expression of a common notion is brave draftmanship. But the strain on giving the word operates a meaning divergent from its ordinary meaning, of being in force or having legal effect, is increased by the use made of the same expressions in section 170VQ.
[151] Subsection 170VQ(1) provides that an AWA operates to the exclusion of any award. Those words may be contrasted with two other equally specific stipulations in the same Section. An AWA is of no effect in subsection 170VQ(2) if made after the commencement of a subsection 170MX(3) award; an AWA does not operate to the exclusion of an exceptional matters order, but prevails over it to the extent of any inconsistency. Subsection 170VQ(6) reflects an equally precise and conventional use of distinctions in wording. The words "prevails" and "operates" import the different notions of which instrument prevails in the event of a repugnancy, and the operation of one instrument to the exclusion of another.
[152] We do not consider that the words used in subsection 170LY(2) should be stretched to avoid their natural meaning in the overall statutory context. If the conditions in paragraphs 170LY(2)(a) and (b) are met, and if the employment of at least one employee is subject to both the section 170MX award and a certified agreement, the certified agreement does not operate at any time the award operates. It is the Act which speaks to that effect, not the Commission. Certainly it is open to the Commission to tailor its section 170MX award in a manner that may influence the circumstance of whether or not the employment of an employee is subject to both award and certified agreement. However that determination is predominantly if not entirely a function of the application of the respective instruments.
[153] The words whose employment is subject to the agreement are relatively ubiquitous in Part VIB of the Act. It is sufficient here to emphasise that they appear in section 170LI as an element in the identification of what agreements may be certified. Relevantly, to be the subject of an application for certification, an agreement must pertain to the relationship between the employer, and all persons employed in a part of a single business of the employer, whose employment is subject to the agreement.
[154] An application clause is the standard, although much honoured in the breach, mode of identifying the persons whose employment is subject to an agreement. When properly drafted, such a clause applies the agreement to employment by the employer in the specified part of the single business. For more reasons than one, the omission of either an application clause, or a definition of the single business or part of it from a Division 2 agreement can result in conjecture about what employment is actually or jurisdictionally covered by the relevant agreement50.
[155] We have done the best we can with the certified agreements in this matter. We have assumed they are intended to apply to employment of persons who are employees in the part of the single business of the APS constituted by the SDPU, Geraldton and NCMS stations respectively; as distinct operational or organisational units within the APS as a single business. However, even if it be accepted that those units have that quality, the ambulatory potential and design of the application of the agreements to temporary or even permanent employment in other stations is manifest on the face of the agreements. The provisions about assigned employments have colonising propensities.
[156] In the circumstances, it would be extremely difficult to formulate the application of the section 170MX award to prevent the award from applying to the employment of at least one employee whose employment is subject to each one of the agreements. Moreover, we are not persuaded on the merits of the cases presented that we should undertake that task. We have had regard to all relevant circumstances. We are satisfied that the application of the section 170MX award should be to employment by the APS within protective service officer classifications under the APS Act. The CPSU's specification of those classifications is in much the same terms as that advanced by the APS. We will therefore adopt a definitional reference to the classifications listed in proposed clause 8.2.7.
[157] We are not satisfied that we should make any exclusion from that application of the award. Nor are we satisfied that it is appropriate to make any exclusion from the operation of the award in relation to the operation of the three certified agreements. We do not need to elaborate in detail on how and to what extent the Act may itself operate on those agreements.
[158] For reasons that run along much the same lines, we are not persuaded that we should attempt to limit the application of the proposed award in a way that takes account of existing or prospective AWAs. The Act also operates upon those agreements and the proposed award. We are not appraised of the content, period of operation, or operative location of the agreements. We do know that 42 employees at Sydney Airport would seek to have their expired agreements terminated.
[159] On balance, we are not persuaded that we should apply subsection 170MN(3) to terminate those 42 agreements. We should not be taken to look with favour on the use of procedural formalities to create an obstacle to the most expeditious practicable determination of the request made. The petition documents establish that 42 requests were made to Mr Studdert in October 2000. Each request asked him to approve the termination of the expired agreements either by his agreement, or by his support for an application under subsection 170VM(3). It appears that no direct response to that request was ever made, although an indirect negative response may have been put to the CPSU officer who communicated the requests.51 Be that as it may, an APS response is implicit in the lack of formal communication; and in the advocacy in these proceedings of provisions in the section 170MX award that would perpetuate AWAs, the three certified agreements, and those or successor agreements or AWAs after their nominal expiry date.
[160] We have not been persuaded by that advocacy that we should adopt any such provision. The ramifications of doing so would be complex, unpredictable, and shrouded from us. Moreover, such ambulatory succession would be at odds with the precept of the Act in sections 170LY and 170VQ establishing a hierarchical effect to which we have given weight in balancing the considerations and interests at issue. We have also given weight on fine balance to the consideration that the 42 employees have not themselves since October 2000 made application to the Commission to terminate each relevant AWA, and that no current statement of each individual's position was put to this Full Bench. In the circumstances, for any termination to take effect, the subsection 170MV(3) process will need to be commenced, determined by the Commission, and a copy of the determination issued to the Employment Advocate.
[161] Finally, we are not persuaded that it is either necessary or desirable to exclude a class of employment based on performance of particular duty from the operation of the award. Although the classifications of PSOs were once in issue, they have now been agreed. The provisions of the agreed Clause 12 of the proposed award allow for its operation in conjunction with the Public Service Award, and explicitly save a body of special conditions determinations applicable to public service employment in the AG's Department. We do not discount the possibility that a need may arise for a special allowance to cover duty on what is said to be new work. We have not been persuaded that the Public Service Award entitlements and existing AG's Department determinations will not be adequate to cope with any problem. A CPSU proposal for a facilitative provision linked with the continuous improvement review might have assisted in resolving any such problem, but it has not found support from the APS. If the parties were even now to reach agreement on a clause, we see no reason why it could not be included in the award if the terms agreed are submitted prior to signing the order for the award. However, any such provision will not affect the application of the award.
[162] Our determination is that Clause 11 of the award will read:
"11. APPLICATION OF AWARD
This award will apply to the employment of all employees in the classifications listed in clause 8.27."
10.4 Station flexibility, facilitation, and implementation of Continuous Improvement Program:
[163] The parties are agreed that a continuous improvement program (CIP) should be developed and implemented. They are at issue about how to implement arrangements arising from the reviews that require changes to specific provisions of the award. The APS seeks that the only method of implementation for outcomes of that kind should be through a process involving revocation of the award and its replacement by an agreement under the Act.
[164] The CPSU proposes implementation of some changes of that kind through a facilitation process prescribed by the award. It would be available for the purposes of implementing such arrangements, or for the provision of employment arrangements for employees required to perform work in new locations, in new ways or for new clients. That facilitation process would allow a departure from the award provisions as to salary rates, allowances, overtime, time off in lieu, emergency duty shift work, and shift penalties. The process could be used only for the specified purpose and with the prior consent of the CPSU. It would require agreement between the APS and the majority of employees in a station. Upon such agreement, the particular form of flexibility agreed could be used by agreement between the APS and an individual employee without need for the majority to be consulted.
[165] The review of continuous improvement process is an apparent extension of a process integral to the September 1995 enterprise agreement between the Commonwealth Government and the public sector unions. That agreement, the Continuous Improvement Agreement52, (the CIP Agreement), bound 15 unions with members in the Australian Public Service and all Ministers of the Crown in respect in such employment, including employment in the APS. We will not summarise the content of that omnibus agreement. The pay increases granted by it were founded upon a number of measures, including commitments to a multifaceted review process. Review outcomes were to be given effect through either agency level agreements53, or variation of the agreement itself approved under section 170ML of the Industrial Relations Act 198854 (the former Act). Agency level agreements were of two types, certified agreements for some subject matters, informal agreements for others.
[166] For the purposes of the section 170MX award, the parties have agreed that the CIP at national and station level may now include but is not limited to:
"7.2.2(a) hours of duty;
7.2.2(b) penalty payments associated with roster and shift arrangements and cycles;
7.2.2(c) annualised or composite salary;
7.2.2(d) improvements in attendance;
7.2.2(e) implementation of the Performance Management System;
7.2.2(f) simplification of the Pay system and its components; and
7.2.2(g) simplification of penalty payments."
[167] We have noted a resemblance between the CIP and the process envisaged in the CIP Agreement. There is a major difference between them. The CIP Agreement was founded upon a coherent protocol for implementations of review outcomes through the three tiers of agreements that it enabled, supplemented where necessary by the agreement making processes of the former Act. The proposed section 170MX award CIP process envisages that the parties will adopt various improvements, including combination of efforts and resources at stations to achieve continuous improvement. It may be expected that the consultation process provided under other provisions will be available to promote implementation of matters which require no formal agreement. Clauses 13 and 14 of the proposed award are agreed provisions about station flexibility and consultation procedures. However, the matters specified in the preceding paragraph may be key variables in the formula for securing optimal use of resources at station level. Such matters will desirably be subject to review but agreements about them may necessitate changes to the way in which the provisions of the award are applied to circumstances at a station, or to particular work operations.
[168] The CPSU proposal would accommodate or perhaps facilitate agreements at national station and individual level subject to the process it propounds. In that respect, the CPSU proposal adapts the CIP Agreement model for implementation of changes that may require departures from the standard conditions.
[169] The APS and the Commonwealth have challenged the validity of the CPSU facilitation model for a section 170MX award. They have opposed generally the merits of the CPSU's approach. The APS proposes what is in effect an all or nothing process for implementing agreements that require a departure from standards regulated by the proposed award. The culmination of that process would be the revocation of the section 170MX award itself and the replacement of it by one or more of the forms of agreement allowed under the Act. The Commonwealth offered less resistance to possible variations around Board of Reference powers under section 131 of the Act: or perhaps around an unspecified version of a Metal Award facilitative clause.
[170] In the course of the proceedings before us, we encouraged the parties to consider ways and means of achieving a process that would allow flexibility in the application of standard conditions at station level. We did so because the parties themselves stressed the desirability of there being a capacity to make adjustments at station level, or to meet exigencies associated with changes in workloads. We regret that the parties have been unable to reach a common position. They have almost no common ground between them about a mechanism that might be availed of to achieve such flexibility, or enable a determinative process based on an agreement to adapt standard conditions to meet exigencies over the life of the award. Moreover, in its closing submission, the CPSU retreated from the station flexibility model it proposed. The CPSU preferred to jettison that proposal if the possibility existed that further delay to salary increases may occur because an award including such a mechanism might be subjected to challenge on judicial review.
[171] We are not persuaded by the Commonwealth or the APS that it is beyond the Commission's power to include in a section 170MX award a provision allowing for a determination to vary the application of a matter provided for in the award. The Commonwealth's submissions were directed to knocking down a proposition that it set up to the effect that a provision of that kind depends upon a variation of the award itself. Any such proposition misconceives the character of a flexibility or facilitation process that might properly be drafted. In short, a section 170MX award could, like any other award, include a provision for a process that is sufficiently specific to allow adjustments to a condition prescribed by the award. To be valid, a process specific to nominated conditions would need to be productive of a form of determination that, to quote Mason J, "results ... in a factum upon which the provisions of the award then operate"55. The authority of that proposition and the principles associated with it were invigorated by the recent decision of the High Court in CFMEU v Gordonstone56. In the circumstances of this case, a detailed examination of how those principles might be applied would be necessary only if we are persuaded to adopt or modify the CPSU' station flexibility proposal.
[172] We consider that the APS contentions opposing the CPSU model were infected by the misconception that any such provision would be an illicit means of varying a section 170MX award contrary to the Act. However the all or nothing process for some CIP outcomes sought by the APS was not advocated solely on that basis. The APS proposal could be supported as a reiteration in the award of what the Act prescribes in subsection 170MZ(4). The proposal is also consistent with several more general positions reflected in the APS conduct of negotiations during the bargaining period, or advocated in relation to issues about the content of the award.
[173] It is apparent from the spread of certified agreements and AWAs that the APS negotiated and reached agreements with negotiating parties other than the CPSU. Those negotiations must have occurred during, but prior to the termination of the two bargaining periods to which the APS and the CPSU were parties. The APS continues to be committed to a policy of making whatever use it may see fit of options for reaching agreements with employees or negotiating parties not confined to the CPSU. The content of the three section 170LK agreements and the APS advocacy of the effective extension of them through exclusions from the operation of a section 170MX award is a basis from which such a commitment may be inferred.
[174] The Act allows for and in some respects encourages the use of alternative forms of agreement. The Act places no barrier in the path of an employer electing to deal with a negotiating party other than a union representing a body of its employees57. Moreover, negotiations may more or less concurrently or simultaneously be conducted by the employer with several different negotiating entities within the one business about similar subjects. There appears to be no barrier to such negotiating conduct. However, there is no small risk that resort to such conduct may cause one or other of the negotiating parties to present with symptoms indicative of what could be described as a form of multiple negotiator's personality disorder. The evidence and the entire course of proceedings in this matter suggest that each party at times displayed symptoms consistent with a disorder of that kind.
[175] We have taken that state of affairs into account. We have also had regard to the difficulty that the parties have encountered in arriving at an agreed provision about how to implement certain potential outcomes from the CIP. In the circumstances, we are not persuaded that it is appropriate, or likely to be beneficial, to attempt to impose a process for such implementation on either party. Accordingly we will not adopt either of the provisions proposed by the parties although we will draw upon some elements common to each proposal. We determine that there should be a relatively minimal provision about implementation. It will read:
"7.3 Implementation of Continuous Improvement
7.3.1 Arrangements arising from the Continuous Improvement or station flexibility reviews may be implemented consistent with the provisions of this Award and/or other instruments governing employment within the APS, following a period of consultation with employees and their representatives.
7.3.2 Each station will establish a consultative forum of management and employment representatives.
7.3.3 In the event that either party seeks to implement arrangements arising from the review(s) that require changes to provisions of this Award, the parties to the award shall consider and seek to reach agreement about an appropriate process to secure such changes before or after the expiry of the term of the Award, and to provide for flexibility in the application of standard conditions at station level."
[176] It follows that we see no need for the proposed consequential provision proposed by the CPSU at Clause 13.4 in the context of station flexibility. Should the parties chance to agree upon some additional provision prior to our signing of the order for an award, we would be disposed to allow it. Otherwise, where we determine a need for a facilitative provision, it will be included in the clause dealing with the particular entitlement.
10.5 Hours of work and rostered days off:
[177] The APS proposed the general re-establishment of a 40 hour standard ordinary time working week, and the cessation of rights to accrue RDOs associated with working a 38 hour week on a 40 hour week pattern. Those proposals and the wage increase associated with any such change were the most intensely debated issues in both the bargaining period and the hearing before us. The CPSU opposed any mandatory changes, but would concede a provision allowing for an election to relinquish RDOs, attracting a 6% wage increase premium.
[178] A significant factor in our thinking about working hours is that in a continuous seven day 24 hour shift operation there are 168 hours in the week to be rostered. In rotating shift operations, this commonly involves combinations of four crews working 40 hours a week in 8 hour shifts, with each crew working an extra shift ("the 21st shift") one week in every four. (The APS long ago agreed to schedule the "21st shift" on a Saturday, so that it attracts a higher penalty rate.) Alternatively, combinations of 12 hour shifts achieve the hours coverage with the same staff numbers.
[179] The range of shift rosters established by the APS with its staff is outlined in the table at paragraph 79. The shift lengths used are predominantly 12 and eight hours although nine, 10 and four hour shifts are used at Adelaide and Sydney Airports. The predominance of eight and 12 hour shift lengths is probably a function of the mathematic that 168 hours have to be rostered each week for continuous shift. The basic building block for doing so was the 40 hour standard working week and continues to be a 40 hour working week. APS staff generally are now working 40 hours per week as the rostering unit (as disclosed in all calculations of standard hours). But over a shift cycle of 4 weeks they accrue a RDO to reduce ordinary working hours from 160 to 152. This results in 11 RDOs per year or 88 working hours.
[180] The CPSU did not demur at the APS proposition that 40 hours remains the effective standard working week. Moreover, the CPSU conceded that staff could trade off the RDO accrual and be paid for the extra hours worked. The principal issue was whether the surrender of the RDO should be adopted as standard for all staff or be a matter for each individual's election. The latter option would produce a combination of some staff accruing an RDO for every four weeks worked, and some staff not. This is already the situation at locations where there is a combination of staff on AWAs (who we assume work 40 hours of ordinary time with no RDO accrual) and others working under the CIP Agreement. The APS argued that this hybrid arrangement has two demerits. It blocks the way to the simplicity benefits of having staff subject to common rostering arrangements. It is in itself a rostering difficulty that contributes to high overtime levels in the organisation.
[181] The secondary issue was the quantum of the price to be paid by APS for whatever change might be made. That issue is founded upon differences about whether the extra two hours work per week aggregated in the RDO should be valued at ordinary time rate, or should be assessed in whole or part at overtime or penalty rates.
[182] That the incidence of RDOs produces overtime in a continuous shift operation is not surprising. For the employer, there are three generic alternatives: accept reduced staffing when RDOs fall due (equivalent to not scheduling the hours to be worked); cover the absence of one staff member with another working additional hours; or, increase staff numbers to do the work as ordinary hours. The first of these options is generally not available to APS, given the nature of customer security requirements. We note that, all other things being equal, it would be a rational management decision to cover RDOs with overtime, given the higher on-costs for employing additional staff.
[183] The APS further submitted that, in the circumstances where it is seeking to offset the cost of a wage offer with productivity gains, uncertainty about how many staff might elect to surrender RDOs in a voluntary system makes it impractical to put a firm value on this element for the purposes of its salary offer. In effect, the APS argued that, if there is to be a change, the only practical alternative from all points of view is that it should be common to all. We agree. We are not prepared to impose on the APS a continuing cost in a shiftwork environment of hybrid arrangements with some staff accruing RDOs and others not. We accept that any change to working hours should be common to all.
[184] The parties inconclusive bargaining over the reintroduction of a 40 hour week through abolition of RDOs left the Commission to decide an issue of whether we should include any such arrangement in an award made under subsection 170MX(3); and whether to do so would be an unacceptable departure from an established standard. The APS was unable to refer us to any precedent s.170MX decisions or awards that provided for an increase in ordinary hours of work.
[185] The movement from a 40 hour standard to a 38 hour working week for the APS was achieved through an attenuated process. It included negotiations leading to a Memorandum of Understanding (the MoU) between the APS and the Australian Council of Trade Unions (the ACTU), and a subsequent ratification by the Commission in 1988.
[186] From 1983, a series of National Wage Case decisions grappled with hours of work matters. By June 1986, the last of those decisions had established a Standard Hours Principle 5. The relevant part of that Principle read:
"In dealing with claims for a reduction in standard hours to 38 per week, the cost impact of the shorter week should be minimised. Accordingly, the Commission should satisfy itself that as much as possible of the required cost offset is achieved by changes in work practices."58
[187] The Standard Hours Principle had been amended in June 1986 to remove an earlier requirement that an opposed reduction of standard hours to 38 be rejected by the Commission. That change was associated with both a recognition of the difficulty that might be encountered in arbitration on cost offsets achieved by changes in work practices, and with acceptance that award provisions relevant to such offsets should be open to variation in such arbitration:
"We are also of the view that there are substantial practical problems associated with arbitrating both shorter hours and offsets. Nevertheless, having regard to other aspects of our decision, we are prepared to relax this Principle to the extent that the Commission may arbitrate in matters involving a claim for a 38 hour week. We make it clear however that such decisions should not be made on the understanding that the 38 hour week is a Commission standard. Further, when it comes to offsets, existing award standards are not sacrosanct."59
We will not enter here into a debate about whether that evolution principle and the consequential award variations by consent or by arbitration resulted in the 38 hour week becoming a Commission standard. Many instances of awards prescribing less than 38 hours survived the process; we are not aware of any instances of standard ordinary time working hours being prescribed by award in excess of 38 hours.
[188] In practice, both consent and arbitrated movement from a standard working week in excess of 38 hours, to introduce a 38 hour working week was subject to a not always rigorously applied test for whether the introduction could be given effect at negligible cost60.
The negotiations that preceded the APS MoU and the ratification of it by the Commission conformed with the Standard Hours Principle. The negotiations also gave effect to an express reservation of the parties right to negotiate the conversion from the 40 hour week applicable to Division 9F officers at the time of their transfer from the AFP61.
[189] We note that the content of the APS MoU acknowledged a cost of introduction of about 5.12% of the gross wages cost which was to be offset to a net 3.54% by various measures and trade offs. The listed offsets included: the rescheduling of day shift commencement times to avoid shift penalties; the proposed non-replacement of some single day absences; and, a number of minor cost or time saving measures. Among others was the cessation of a contract whereby chevrons were sewn on officers' uniforms, and of a practice allowing a uniform to be picked up from the tailor during working hours.
[190] The APS MoU sets out the details from which the cost of introduction of a 38 hour week, worked as 40 hours with a rostered day off each month, was calculated. Those details disclose the relative overtime and penalty costs as a proportion of total wages of the 1986/1987 staffing complement, an average 648 PSOs, of whom 611 were engaged on shift work. The figures given for the overtime bill and penalty payment bill were respectively 21.79% and 29.38% of the estimated gross wages bill, overall 51%62. Among cost effects attributed to the introduction of the 38 hour standard, and taken into account were a reduction in the overtime divisor from 40 to 38; staff supplementation through recruitment of an additional 30.55 officers; and overtime, higher duties allowance, penalty, training, and other effects, in total amounting to 7.74% of the base wages bill or 5.12% of the gross wages bill inclusive of penalties and overtime.
[191] Our task is to determine, for the purposes of a section 170MX award, the merits of a proposal to restore the 40 hour standard. The APS case was almost entirely dependent upon the cost benefit effect and the value to the employees of having RDOs cashed out as salary. The only instances of increased ordinary hours of work through certified agreements in the Australian Public Service advanced by the APS involved increases from 7 hours and 21 minutes per day to 7 hours 30 minutes, effectively to a 38 hour week standard. The APS also sought to support its case by reference to a statistical analysis showing that, of agreements certified in 2000, 61 had been certified with an increase in ordinary hours of work, and 245 had average weekly hours over 38 hours per week63. Evidential material of such generality, removed from any explanatory context, is of slight persuasive weight. However, as we have shown the effective hours of work has been a legitimate area of bargaining between the parties. In effect we must determine whether we should impose by arbitration an extension to the measure conceded by the CPSU, allowing RDOs to be surrendered to re-establish 160 hours rostered as normal hours over a four week cycle.
[192] We have no doubt that in the operations of the APS, the continued availability of RDOs is a significant barrier to optimal rostering practices; it is also an entitlement valued highly by at least a significant minority of employees. We have considered as an alternative option the abolition of RDOs, combined with retention of a nominal 38 hour week and a requirement for two hours compulsory overtime. Such an approach would retain the basic shift building block of 40 hours per week; would deal with the rostering complexity that APS seeks to eliminate with RDOs, and would provide an income increase for staff by way of additional penalty payments for two hours per week. However, the arrangement would further institutionalise high overtime in APS employment and rostering practices. We have commented on the character of the "overtime culture" in APS. We hope to avoid any further contribution to it. It would in our view be more constructive for the APS and its staff to ensure that base salaries are appropriate for the work. Rostering arrangements should be developed to promote both the welfare of staff and minimise damage to the relative competitiveness of the APS. Consequently, it is our preferred position for staff to be paid appropriately through direct salary adjustment for the hours worked, rather than through an indirect device which produces the same outcome.
[193] We are satisfied that the circumstances of this case are relatively exceptional for several reasons. The actual working week of PSOs has always been well in excess of the normal standard hours. The resourcing of the service is founded upon the PSOs' willingness to be available to meet such requirements. The CPSU's position about allowing an election to forgo entitlement to RDOs is a pragmatic acknowledgement that in practice a high proportion of RDOs are consumed as extra time worked. Consequently, the cases presented raise the issue of variation of the standard hours paid for in a relatively singular juxtaposition with other conditions and overall operational imperatives. The surrounding circumstances of the determination required include the question of whether justification can be found for a substantial pay rise after a period in which there has been a relative wage freeze. In the operational circumstances of the APS, a pay increase based on the conversion of actual hours worked to standard hours carries an extra benefit for employees. That benefit is in the use of the adjusted rates for all purposes including superannuation entitlements.
[194] Having regard to those considerations and all the circumstances, we determine that the award should provide that the ordinary working hours will be 40 per week; the entitlement to RDOs based on working 38 hours as a 40 hour week will cease upon the coming into effect of that provision which will apply to all APS staff covered by this award. We will adopt the APS proposal for the transitional treatment of RDOs accrued up to the date of effect of the relevant provisions.
[195] As we noted earlier, while the CPSU was willing to countenance the reintroduction of the 40 hour week for those who elected to work on that basis, the parties were also not agreed on the appropriate price to be paid. The APS valued the change at 5.2%, the simple increase of two hours over 38. CPSU argued that the cost saving to APS was much greater due to reduced "backfill" overtime that would result from the abolition of RDOs and that accordingly the increase from 38 hours to 40 with the abolition of RDOs should be matched with a higher salary increase than APS' offer of 5.2%.
[196] On the material supplied to us, no conclusive view could be stated about the direct value of the restoration of the 40 hour standard, the cessation of RDO, and the increases of the overtime divisor from 38 to 40. There will be savings to the employer. There will also be some extra costs linked with the cashing out of the extra hours worked as wages, and increased superannuation contributions. There will also be losses and benefits to the employees. Much of the debate and the limited evidence put to us addressed only a rudimentary calculation of the cost benefit of the extra two hours as a proportion of ordinary time worked. Even in that rudimentary calculation, the cost benefit to the employer is dependent upon whether the extra hours worked are valued at ordinary time, time and a half or double time. The effect of those alternatives produces a range. The APS estimate of 5.2% may be contrasted with the arithmetic of a 5.37% increase in working hours if the 88 hours attributable to RDOs is taken as a proportion of effective working time as calculated by the APS. The bare effect of adding those hours back in at the same hourly labour cost, but on overtime rates varies between 7.9% and 10.5% of the notional ordinary time wage cost. The calculation agreed between the APS and the ACTU when negotiating the APS MoU of the cost of introducing the 38 hour standard was 7.74%. An effective value to the employer of around that level may be equally plausible in the current transaction. The plausibility of that figure is increased by the detail of the APS three station models for calculating the cost savings expected to arise from an RDO free conversion to the 40 hour standard. They estimated that total direct labour costs would be kept constant by salary increases of 9.01% to 9.8%64. That measure is different from the direct notional increase to labour productivity. That simple measure is not the only benchmark for assessing the value to the employer, or the loss of benefit to the employee of the change to standard conditions imposed by a section 170MX arbitration.
[197] Moreover, whatever that value or benefit, offsetting allowance also needs to be made for the cost effect of any associated increase to hourly rates. We will not determine any exact level of cost value. It is a matter to be taken into account in determining appropriate wage rates.
[198] The retention of existing award entitlements to continuous duty and to make up time are two other issues that it is convenient to deal with under the heading - hours of work.
[199] The Public Service Award contains the following clause:
"24.6 Worked continuously: The ordinary hours of duty will be worked continuously, except for meal breaks. Meal breaks should not be regarded as breaking continuity."
[200] The CPSU submitted that clause 24.6 should continue to apply through the terms of the section 170MX award. The APS argued that the clause should have no operation during the life of the award.
[201] Neither party presented any argument in support of the position taken. The APS closing submission65 noted that, unlike metal industry employees, APS employees who are to be covered by the section 170MX award do not take paid meal breaks, but remain on call throughout their paid meal break. The APS also pointed to the requirement in the Metal Award for all hours to be worked continuously and stated that this requirement " does not take into account the possibility of split shifts dependant upon client demand"66. While split shifts are not currently utilised by the APS, the APS recognised that in some circumstances they are " an appropriate cost effective way of delivering service".
[202] Clause 24.6 of the Public Service Award currently applies to the employment of those APS employees subject to the CIP Agreement. The APS advanced no argument other than that set out above for altering this provision. In the absence of any cogent argument for alteration to the status quo, the terms of clause 24.6 of the Public Service Award will continue to apply by operation of the section 170MX Award.
[203] Clause 24.8 of the Public Service Award provides as follows:
"An employee may elect, with the consent of the Agency Head, to work make up time under which the employee takes time off during ordinary hours, and works those hours at a later time, during the spread of ordinary hours provided in the award. The agreement reached will be recorded in the time and wages records kept by the Agency Head in accordance with Division 1 of Part 9A of Workplace Relations Regulations".
[204] The APS proposes that that entitlement should be displaced by the section 170MX award. The CPSU would retain the entitlement contained in the clause. No evidence, and very little argument, was put forward by the parties in support of their respective positions in relation to this matter.
[205] The question of make up time was considered by the Full Bench in the Personal Leave Test Case Stage 267. Having considered the earlier decision of Ross VP (dealing with make up time being worked within the spread of ordinary hours) the Full Bench concluded:
"In a subsequent decision which varied the Metal Industry Award 1984 - Parts I and II to provide for Stage 1 of the November 1994 decision Senior Deputy President Marsh granted an application by the MTIA, supported by ACM, which distinguished the position of shift workers in respect of make-up time [Print M0900]. As a result of her Honour's decision subclause 18C(b) of Part I of the award provides:
"(b) An employee on shift work may elect, with the consent of their employer, to work make-up time under which the employee takes time off ordinary hours and works those hours at a later time, at the shift rate which would have been applicable to the hours taken off."
In these proceedings the ACTU submitted that make-up time should only occur within the ordinary spread of hours and consistent with other award provisions. Further where awards currently provide for flexibility, for example in relation to hours and rosters, the Commission should exercise its discretion as to whether the facilitative clause is required. The ACTU argued that to allow make-up time to be worked at any time would be contrary to the general principle that time worked outside ordinary hours should be compensated at a higher rate.
The ACCI, MTIA and others submitted that an employer and employee should be permitted to agree to make-up time outside of ordinary hours, for example at night or the weekend.
There was general support for the approach taken by Senior Deputy President Marsh in relation to shift workers.
At this stage we are not prepared to vary the current limitation that for day workers make-up time be limited to the spread of ordinary hours. We adopt the approach taken by Senior Deputy President Marsh in the Metal Industry Award in relation to shift workers." 68
[206] The Public Service Award does not distinguish between shift workers and non-shift workers in relation to make-up time. A clause in similar terms to that approved for shift workers in the Personal Leave Test Case did exist in the applicable award prior to the development of the Public Service Award through the award simplification process. The relevant decision69 notes the fact that the simplified make up time provision does not make special provision for shift workers but does not disclose the reasons for the change, which was apparently a matter agreed between the parties.
[207] It follows that retention of a provision for make up time is consistent with a test case decision, and has been approved as a facilitative provision, the use of which is subject to employer consent. Having regard also to the lack of any cogent argument for the removal of the provision, we are not persuaded that the section 170MX award should displace the relevant Public Service Award clause.
[208] The existing Public Service Award prescription for overtime rates differentiates between overtime rates for shift workers and non-shift workers. For the former it stipulates a standard loading of 150% of single time rates for the first three hours and double time thereafter, including for work scheduled on a Saturday or Sunday, apart from public holidays when 250% applies. Under Public Service Award Clause 26.4 for non-shift workers, the standard is 150% per week the first three hours and 200% thereafter, Monday to Saturday; 200% for Sunday and 250% for public holidays. Under the Metal Award, for continuous shift workers, the rate for working overtime is double time70.
[209] The CPSU accepted that a 170% loading should be substituted for Monday to Friday in an overtime clause that reflects an apparently common assumption that all employees are shift workers, or at least that no differential rate is necessary for non-shift workers. The parties were at issue about the application of that rate to Saturday duty. The APS submission in support of its proposal boiled down to a proposition that it had factored into the quantum of the pay increase it proposed a flat rate for overtime Monday to Saturday. The reduction in the overtime rate reflected a productivity gain that could be passed back to employees71. We note that the APS proposal has an antecedent in the three section 170LK agreements although it is there confined to the valuation of a prepaid 84 hours overtime for each six months.
[210] The CPSU submission pointed to the fact that the Metal Award prescribes an overtime rate for continuous shift workers at 200% for any overtime worked, and three hours at 150% and 200% thereafter for ordinary shift workers. The CPSU supported the APS requirement that productivities must be realised, contending that a standard overtime rate of 170% Monday to Friday for shift workers had been offered for that reason. The CPSU submitted that, on the evidence presented by the APS, 35% of salary costs are overtime, of which 25% is emergency duty. The proposed reduction in overtime rates, including any emergency duty that will under the proposed award be worked at normal overtime rates, should result in a significant reduction in salary costs attributable to overtime. The CPSU argued that the effect would be to take APS officers overtime entitlement below both the Metal Award and security industry awards. The overtime rate of 170%, whether applied to Saturday or not, would produce a greater reduction in entitlement for a 12 hour shift than for an eight hour shift. It would result in a reduced payment for any shift of five hours or more. Another CPSU objection was that earnings from the 21st shift (which each person on a continuous roster can expect to work 10 or 11 times per year) would be reduced.
[211] We have already commented that the APS is at a great disadvantage if it seeks to offer commercially competitive seven day a week, 24 hours a day security services with an employment model based on a central assumption of Monday to Friday day work. That disadvantage is unsurprising, given the AFP and Public Service pedigree of the APS. More surprising to us has been the apparent inability or unwillingness of the parties to develop employment models based on different assumptions about normal working hours and shift arrangements. It is our view that during the life of this award, the parties need to review shiftwork arrangements in toto with a view to substituting arrangements more properly designed for a continuous shift service business. Against that background, a relatively minor tinkering with overtime rates for Saturday work may address the wrong question. Within the context of the bargaining and of the material put before us, a change to Saturday overtime rates has been debated strongly. We regard it as a relatively marginal issue. The parties would have been better served channelling the same energy into more fundamental reform. However, we are obliged to decide the question.
[212] The CPSU argument that it had made a concession to enhance productivity is founded upon an assumption that overtime will be worked for an entire shift. Under existing arrangements for an eight hour shift, the first three hours at 150% and the next five hours at 200%, produce a weighted average of 181% over the eight hour period. We have no reason to doubt that assumption is sound enough in the context of the APS work practices and APS management capability. However we cannot gauge what effect it might have on APS costs and employee incomes. We do not need to. Although the change proposed by the CPSU may not have been agreed between the parties, the APS was not heard to insist that it wanted all its proposal or none of it.
[213] The second leg of the CPSU argument was that, having agreed to a single overtime rate for any hours worked Monday to Friday, that concession was sufficient. In this context, we note that any increase in base salaries attributed to the reduction in overtime rate would also flow through into overtime payments, since the overtime rates are paid as a percentage of base salary. We note also that the change to the overtime divisor; the increase to standard ordinary time hours; the decreased availability of days off in lieu of public holidays falling on RDOs; and the cessation of RDOs will operate to deflate any such effect on total earnings attributable to overtime.
[214] The parties did not put more than basic estimated cost effect calculations in evidence or submissions as to the effect of the change to the Saturday overtime rate. Mr Ter Bogt's calculations put the differential effect at 0.3% offset from total labour costs72. Simple arithmetic might be applied to APS salaries and overtime levels to demonstrate that a modest increase in base salary levels could operate in combination with the proposed lower Saturday overtime rate to produce higher overall earnings for staff. An increase of around 2.7% to salary would be necessary to equate overall earnings for an employee working an average 10 hours overtime per week, half of it on a Saturday. Similarly, if it be assumed that an employee works a high proportion of Saturdays at overtime rates, say 26, the effect of the reduced overtime rate would translate to approximately 62 fewer hours paid for per year. We accept that any such assumption is very questionable. We hazard it because there is evidence that PSOs on average may work 58 extra eight hour shifts a year73. Moreover, the barriers sought to be placed in the way of taking single day recreation leave on weekends, suggest an assumption along those lines may not be farfetched74. However, if the assumption is allowed as a basis for calculating wage effect, the breakeven salary increase for whole of year salary is about 2.9%.
[215] We were not exposed to any such detailed calculations or conjectures. That may mean that the argument put to us was more about adopted positions than a negotiation based on data. The paucity of evidence or argument on the merits of either position increases that likelihood.
[216] Having regard to those circumstances, we are not persuaded that we should alter the status quo to make a piecemeal departure from the award standard overtime rates for shift workers on Saturday duty. In short, the APS has not made out a sufficient case. The changes to conditions of employment agreed or to be imposed by the proposed award will have substantial impact on work patterns, income effects for particular shifts, and disposable leisure time. We have not been provided with a reasonably adequate prediction of the multiple effects on overall incomes of the changes to be made to give effect to our determination. Those changes to conditions of employment will be applied to PSOs who on average now work at least one extra shift for each of the 41 weeks they are calculated to be at work. A further lowering of a standard penalty on Saturday overtime for shift workers cannot in the circumstances be seen as merely a matter of achieving a cost saving that the employer can pass back as a wage increase. In all the circumstances, on the balance of a majority view, we are not satisfied on the material put to us that we should, or need to, make the additional change to overtime for Saturday work within the existing shift and non-standard working regime.
10.7.1 12 hour shift penalty issue:
[217] There is no disagreement between the APS and the CPSU about shift penalty rates other than the penalty applicable to a 12 hour shift. Under the Public Service Award, a 12 hour shift attracts a 15% penalty loading. Officers of the APS who have 9F status are, however, entitled to a penalty of 22.5% for a 12 hour shift. The CPSU wishes to retain these penalty loadings.
[218] Two of the three 8 hour shifts attract a 15% penalty (i.e. afternoon and night). Day shift attracts no penalty. The APS argued that by averaging the applicable penalties over a 12 hour shift, the logical result is a 10% penalty. The APS claimed that most employees preferred to work 12 hour shifts. However, it submitted that unless a 10% penalty is applied to create a cost neutral outcome of an election between 8 and 12 hour shifts, the latter would not be a viable option. More generally, the APS argued that it was at a disadvantage because comparable Security Industry sector employers do not pay separate penalties. Based on that, the APS employees earn an average $10,000 p.a. more than their peers in penalties alone75.
[219] We were mindful of the different effects of shift work regime options when we canvassed with the parties the industrial merits of a substantial reconstruction and re-alignment of the shift and pattern of working time regime as an outcome of this arbitration. That attempt to explore how productivity might be improved appeared to fall on barren ground. In the circumstances, the APS selection of an aspect of the shift regime in Security Industry awards or agreements does not carry persuasive weight. We consider that the least worse option is to make changes within the existing regime and to do so, as far as practicable, by extending the compass of precedent agreements between the negotiating parties.
[220] The CPSU noted that the agreed reduction of the overtime rate to 170% (whether or not Saturdays are affected) results in a greater reduction in entitlements where 12 hour shifts are worked. It was claimed that unchallenged CPSU evidence demonstrated that a 15% loading for a 12 hour shift is an industry standard. The CPSU also argued that averaging 8 hour shift penalties to provide a 10% penalty for a 12 hour shift is not cost neutral, as claimed by the APS. In the CPSU's submission, that assessment of cost neutrality does not take into account overtime savings made through ease of shift management resulting from the larger blocks of time worked. It contended that 12 hour shifts could be used to roster off in larger blocks on weekends, resulting in a productivity improvement. The CPSU noted that current station agreements have averaged the penalty loadings to provide for 12.5% penalty for a 12 hour shift.
[221] In November 1998, agreement was reached between the APS and the CPSU for the introduction of 12 hour shifts attracting a penalty of 10%. That approach was applied at the APS Parliament House station, ostensibly because averaging of shift penalties in this manner was provided for in the Public Service Award. 12 hour shifts established prior to November 1998 continue to attract the 15% penalty (22.5% for 9F officers).
[222] That 1998 agreement established a process for a voluntary transition to 12 hour shifts with 10% penalty. We consider that position should be preserved. However, the process by which that agreement was ostensibly implemented should be placed beyond dispute. It is not readily apparent to us how Clause 26.1.7 of the Public Service Award was applied to achieve that result in respect of day work. The provision we will make will treat existing arrangements agreed between the CPSU and the APS as arrangements made under the award. Where 12 hour shifts are mandated by the APS, the current award penalty (15% and 22.5% for 9F officers on night shift) will be retained in the new award. However, the shift work clause will include a facilitative provision. It will provide that under the award a 10% penalty may be applied to new 12 hour shifts if a majority of employees at the relevant station agree. 12 hour shifts currently attracting a 10% penalty will continue to do so.
10.8 Payment for annual leave penalties:
[223] Under the Public Service Award shift workers receive either a 17.5% annual leave loading or an amount equal to the shift penalties they would have received if not on leave, whichever is the greater amount. Under the Continuous Improvement Agreement, the loading paid is 50% of the shift penalties that would have applied had leave not been taken.
[224] The APS argued that, under the section 170MX award, the loading of 50% of shift penalties should apply but that all loadings should be paid in the first pay period after 1 January each year. According to the APS, payment of an averaged amount of shift penalties as a leave loading would be administratively more convenient and more equitable. Employees would not then plan to take annual leave when rostered over weekends and public holidays, so as to take advantage of the increase in the loading based on the shift penalties.
[225] The CPSU agreed that the loading should be 50% of the shift penalty amount (as is the case under the Continuous Improvement Agreement) but seeks to retain the existing practice whereby the loading should be paid at the time the leave is actually taken. The CPSU proposes that the loading be 50% of the amount of the shift penalty that would have applied to that period had the leave not been taken.
[226] It is clear that it is administratively simpler and more efficient to pay leave loadings for all employees on one occasion per year. To treat the leave loadings in the manner proposed by the APS would deliver a worthwhile saving in administrative effort for the APS at a small cost to individual employees. The loadings would be simple to determine. The alteration would mean a small reduction in entitlement to some employees, depending on the timing of the leave, and would mean little or no reduction in entitlement to others. As the provision currently stands the calculations must be performed individually. Only when each individual determines to take annual leave can the APS now determine the cost of the loading for that individual. Thus, the cost of the leave loading to the organisation can not be determined until all leave for the particular year has been accessed.
[227] Under agreements negotiated in many Commonwealth departments and agencies leave loadings have been among conditions "traded off" for wage increases. We note, however, that shift penalties are a significant part of each APS employee's wage. We accept the CPSU argument that the loading is to compensate for the reduction in salary at the time the leave is taken. We also accept the APS argument that it is more equitable for all employees to receive a loading calculated by reference to the same period rather than the period the leave is actually taken. The process for payment in that form is also administratively much simpler.
[228] We determine in favour of gleaning the enhanced productivity delivered by an alteration to the leave loading arrangements. The section 170MX award will contain that part of Clause 37.11 proposed by the APS to require that the leave loading will be calculated for the period commencing 1 January each year. The timing for payment of the loading will be in accordance with Clause 27.8.6 of the Public Service Award, as follows:
"27.8.6 Payment: Leave loading will be payable to an employee who takes annual leave after the date on which the loading accrues, and who requests that payment be made. Where annual leave credits for a particular year are exhausted, the leave loading in respect of that particular year will be paid as soon as practicable."
[229] The CPSU and the APS have agreed the terms of a clause providing for the Director to grant Miscellaneous leave, for a purpose not otherwise specifically provided for in the award. Such leave may be paid or unpaid and may count as service, if unpaid, at the Director's discretion. The only part of this clause not agreed by the parties is one word in the second item of clause 39.2.2, as follows,
"39.2.2 The Director may grant discretionary miscellaneous leave to an employee as leave for the following purposes:
...
to attend to a short-term emergency or for exceptional short-term circumstances arising in the affairs of the employee" (our emphasis)
The CPSU would delete the word exceptional.
[230] Little in the way of justification was provided for the position taken by either party. The CPSU argued that with some, if not all, employees likely to lose access to RDOs as a consequence of the making of the section 170MX award, there was even greater need for a liberal mechanism for the granting of miscellaneous leave.
[231] The provision is discretionary. The inclusion or deletion of the word "exceptional" would not appear to be of major importance. Our decisions about RDOs and, to a lesser extent, make up time, influence our judgment of the issue. We do not believe that inclusion of the word exceptional is warranted in this clause. The grant of the leave is at the Director's discretion. Further restriction to the circumstances in which that discretion may be exercised is unnecessary.
[232] We note that another issue about the taking of leave may not have been resolved, although not referred to in the list submitted to us when we reserved decision. The CPSU version of the proposed award would delete several provisions about duration of leave breaks. The APS seeks provisions whereby an employee may be encouraged to take recreation leave in seven day breaks, and be generally precluded from taking in one year, on more than six Saturdays or Sundays and two public holidays, such leave for a single day's duration. We have had regard to the qualification of that provision for exceptional circumstances and to the practicality that the operation of the APS is conducted almost generally on a seven day rotating shift basis. In the circumstances, if the parties have not themselves resolved that issue, we determine that the APS proposal shall be given effect.
10.10 Rate for public holiday falling on day rostered off duty:
[233] The APS proposed the forfeiture of an existing entitlement to be paid an extra day's pay for a public holiday which occurs on a day on which an employee is rostered off duty. In return, the APS allocated a 1% salary increase. The CPSU opposed the withdrawal of so much of the condition as requires payment at the ordinary rate for the day.
[234] Clause 26 of the Public Service Award 1998 includes the following provision:
"26.2.2 Day off in lieu: Where, in a cycle of shifts on a regular roster, a shiftworker is required to perform rostered duty on each of the days of the week, that employee will, in respect of a public holiday which occurs on a day on which the employee is rostered off duty, be granted, if practicable, within one month after the holiday, a day's leave in lieu of that holiday.
26.2.3 Payment: Where it is not practicable to grant a day off under 26.2.2 and 25.6.9, the employee will be paid one day's pay at the ordinary rate."
[235] Provisions to substantially similar effect are well established in Commission arbitral precedents76. The justification for such a provision was touched upon by the Public Holidays Test Case Full Bench77. In that decision the Full Bench proposed a standard provision related to a minimum safety net of 10 public holidays per year. In several supplementary decisions the Full Bench addressed non-standard work situations. In the fourth of those decisions78, the Full Bench stated principles which so far as immediately relevant were summarised by a later Full Bench79 as follows:
"21. This decision dealt with the position of employees who did not work "standard" hours, that is:
". . . full-time workers who do not regularly work a five-day, Monday-Friday week. Such workers include persons who work regularly on Saturday or Sunday, workers with variable rosters, continuous shift workers and employees who work for nine days per fortnight or 19 days in each four weeks. This list is not intended to be exhaustive."
22. The key elements of the decision are set out below.
23. First, full time workers who do not regularly work a five day, Monday to Friday week - including persons who regularly work on a Saturday or Sunday, those with variable rosters and employees who work for nine days per fortnight or 19 days in each four week cycle - should be assured of the benefit of prescribed holidays. They should not forfeit that benefit because a prescribed holiday falls on a non-working day. If a prescribed holiday falls on a day when the employee would not be working in any event the appropriate compensation is:
· an alternative day off; or
· an addition of one day to annual leave; or
· an additional day's wages."80
[236] The APS proposal about forfeiture of the existing entitlement to payment for normal hours of duty was put as a simple cost trade off for a 1% salary increase. The APS submitted that the majority of employees currently opt against being granted a day off in lieu, preferring to be paid for the public holidays. The value of forgoing the benefit was calculable as 1% on base salary. Converting the benefit to salary would benefit employees through its effect on the calculation of penalties and superannuation entitlements. Removal of the requirement for an extra payment to be made whenever the situation occurs would simplify payroll administration.
[237] The CPSU rejected the APS proposal, seeking instead that the situation be covered by an entitlement to one day's pay at ordinary rates. In its closing submission, the CPSU put the issue and the CPSU proposal into a wider perspective:
"... a days pay, a day added to annual leave, or a day off on an alternative weekday. ... The standard practice in the APS has been to pay a day's pay when staff are rostered off, however there is currently an entitlement to take a day off in lieu if practicable. The Security Industry awards provide for options similar to ME&AI Award. Day workers are entitled to a day off on a Public Holiday, and receive payment for that day. Similarly a shift worker where rostered off on a Public Holiday generally has the day off and receives payment for that day. Where they are rostered to work on a Public Holiday they are paid the appropriate ordinary rate and penalties. The current entitlement is to either a day's pay or a day off in lieu. CPSU is limiting the liability to the APS by forfeiting the day off in lieu but retaining a day's pay. This results in there being no requirement for backfill of the officer for their day in lieu."81
[238] We are not persuaded that we should do other than adopt the concession made by the CPSU proposal. We have explained in Section 8 above the heavy reliance that the APS places upon its staff working non-standard patterns of hours including extensive overtime. Discontinuance of an entitlement to an extra day off in lieu when the holiday falls in a rostered off period could assist in the cost effective scheduling of APS work. The CPSU's proposal made an important concession, the significance of which may be increased if PSOs were in future to have less reason to opt against taking the extra day off.
[239] The availability or non-availability of a public holiday is a significant personal consideration for an employee working a non-standard pattern of hours. The employee's effective leisure and social relationships may be affected. The APS proposal will convert an individual employee's entitlement to payment in lieu for the day into a generally applicable salary increase. The industrial merits of that step are not self evident. It is not a step we will impose by making a departure from such a clear test case standard without agreement between the parties. We will adopt the CPSU proposal. It has some cost effect benefit to the APS, albeit not one acknowledged in the APS's calculations.
[240] The terms of proposed Clause 28.4 - relocation assistance - are agreed between the parties with the exception of the provision of relocation assistance to new employees. The APS proposes the inclusion of Clause 28.4.2 to provide the Director with the discretion to grant financial assistance to a new employee for the purposes of relocation.
[241] The CPSU claimed that under the Public Service Award, financial assistance is provided for the purposes of relocating to take up employment in the APS on the same terms as it is provided to existing employees who relocate. The CPSU argued that this entitlement should be retained. The CPSU contended that the provision would become increasingly important if the APS undertakes work for the Department of Immigration and Multicultural Affairs at remote detention centres.
[242] This provision was not the subject of evidence or argument of any substance. It is an area where savings may be made. If staff can be recruited to a particular location without the necessity for the provision of financial assistance to aid relocation then it is difficult to argue that the APS should be forced to provide this assistance. If recruitment of staff is difficult in the absence of such assistance, the discretion remains for the Director to provide it. The provision in the Public Service Award entitles "eligible relocated employees" to certain relocation allowances. The relevant definition of that term for new employees is in the following terms:
"22.8.1 a person who is obliged to relocate to a new locality as a result of engagement in the APS or engagement in an agency for a specified term or a specified task, and reimbursement for the cost of conveyance and removal is approved." (our emphasis).
[243] It is apparent that currently a discretion is provided in relation to new employees under the Public Service Award. In the circumstances the APS proposal for sub clause 28.4.2 will be included in the Award.
10.12 Remote locality leave fares:
[244] Clause 22.12 of the Public Service Award provides employees working in specified remote localities with an entitlement to reimbursement for fares paid by the employee for the purposes of taking leave at another location. The exact entitlement of each employee depends upon the location of their workplace and their personal circumstances (i.e. the number of dependents, etc.)
[245] The APS position is that there should be no such entitlement under the section 170MX award. The APS produced figures82 to show that 40 of the 85 APS employees in remote localities were locally engaged. It was argued that there was no justification for the accrual of such an entitlement in these circumstances. The CPSU would "grandfather" the entitlement to preclude it being lost to currently engaged employees with that condition of employment. The CPSU argued that many of the employees in remote localities moved to those localities to take up service with the APS. It was also submitted that just "grandfathering" the entitlement would produce efficiencies for the APS.
[246] Attachment J2 to APS 23 listed a number of Commonwealth Agencies that have altered, through certified agreements, entitlements for employees working in remote localities. In all the examples put forward the entitlements were "grandfathered" for existing employees but removed for new employees.
[247] We give weight to the circumstance that many current APS employees relocated to remote areas to take up employment with the APS. It is our view that the section 170MX award should retain the remote leave fares entitlement for existing employees with the entitlement. Should a current employee lose an existing entitlement to remote leave fares, no subsequent entitlement will accrue. No new employees will have an entitlement to remote leave fares provided in the section 170MX award.
[248] The clause will also provide that the Director may grant remote locality leave fares on a case by case basis, as provided for in both the APS and CPSU drafts of the clause.
[249] The positions put by the APS and the CPSU about salary increases are broadly summarised in the Table explained at paragraphs 60 - 63 above. The CPSU case in support of its claim is summarised at paragraphs 26 and 27 above. In speaking to that case, the CPSU made much of the fact that salaries had not been adjusted since 17 October 1996 just before the nominal end of the CIP Agreement in December 1996; the only Commonwealth Government agency not to have reached agreement with its staff on adjustments to wages and conditions in the period since is the APS.
[250] The APS case is broadly summarised at paragraphs 38 to 40 above. Mr O'Brien gave most force to points that were variations on the theme of affordability: the APS commercial challenges - its clients are value conscious, espousing a view that APS charges have been high for the service provided; an increase in salary costs (which account for 83% of the APS charge-out rate) may have an effect on APS position where it is competing as a service provider. The APS consistently submitted that it has little opportunity to increase its charges and therefore any salary increase must be offset by productivity improvements so as not to increase cost.
[251] Our sympathy for the APS predicament has influenced our determination of several issues. However, as with those issues, judgments about questions of weight and degree necessarily enter into a determination of where the balance lies between considerations of the kind respectively relied upon by parties contesting an arbitrated increase to salaries. One APS argument suggested that its competitive disadvantage stemmed from the marginal cost incurred for shift penalty payments to PSOs whereas comparable Security Industry employers do not pay separate penalties. We have considered that argument in the context of shift work and overtime loadings at paragraphs 219 - 220 above. But the APS operates under several other competitive cost penalties that are integral to the APS cost structure. They include differential entitlements to superannuation contributions and retention periods on redundancy peculiar to Australian Public Service employees. Thus, in paragraphs 112 - 117 above, we have commented that several unreconstructed or unreconstructable elements of the APS cost structure virtually preclude it from competing effectively with private sector security firms in the areas of static guarding or security screening.
[252] We accept unequivocally that the APS cost structure imposes limits on the market opportunities for the APS. The negotiations which prompted this section 170MX award did not seek to, and could not have addressed all elements of the APS cost structure that limit its market opportunity. It follows that for the purposes of these proceedings, it is appropriate for us to balance the reality against the notion of affordability promoted by the APS. The competitive focus for APS must be to concentrate on those areas where high value is ascribed to its competitive advantage: that is a uniformed, armed service with powers of arrest under Commonwealth legislation. That limits its market opportunities. Moreover, there is unlikely to be a market need for a government operated security force to compete in basic security services. The APS has no present alternative but to operate in a well defined market segment for protective services. That market will need to see value at the prices the APS will have to charge for the distinctive advantages it brings through its status and accountability as a public service security provider.
[253] On the evidence, and taking account of the factors discussed above, we have concluded that the cost/price pressure on the APS is not sufficient reason to limit the salary award which we determine in this case. The corollary is that quantified productivity changes, although important considerations in our determination of the quantum of salary increase, do not preclude other considerations from being given weight in the act of judgment required.
[254] A portion of any salary increase awarded will be "funded" by the changes to be made by the award to existing conditions of employment. The APS notion of funding however masked some sharp methodological differences in calculating a value for changes to existing employment conditions. In the ordinary sense no "funding" can be assumed to be forthcoming for any part of the increase. However, for the purpose of balancing increased wage cost against changes to conditions, one measure of the effect could be the increase to labour productivity; another the estimated cost saving effect; another, the amount of salary increase necessary to achieve overall earnings neutrality. In form, the APS presented its assessment of the effect on costs in a way that suggested a disciplined calculation had been applied. None the less sharp differences emerged about the methodology possibly appropriate to calculation of the effect of particular changes. The evidence in total presented us with a relative smorgasbord from which to assess the possible effect on employer cost or employee income of the changes.
[255] Thus, the change to 40 hours ordinary time per week was valued by APS at 5.25%; a direct increase to labour productivity measure; by the CPSU at 6% if based on voluntary election to forgo RDOs; was plausibly at around 7% to 8% on the 1988 APS MoU figures, or on an assumed reduction of overtime usage; and perhaps at around 9% to 9.8% for direct salary cost neutrality if the APS three station cost model were to be given credence. The funding effect of the changes we have decided for overtime rates, and for the APS agreement with the CPSU on tightening arrangements for emergency duty, is not readily estimated. We have made some changes to the proposals and some of the calculations were at best rough estimates.
[256] The effects of some other relatively minor changes were not quantified by APS or the CPSU. No figure has been put in evidence on the salary value to the APS of: the change agreed to shorten the retention period; clarifying that Assignment of Duties Allowance is payable after at least one shift in the higher position (compared to previous practice of half a day); discontinuing for new appointees remote locality leave fares; equating shift penalties for eight and twelve hour shift patterns for staff electing to change the roster pattern. The APS generally assessed the value of prospective cultural change in the organisation, associated with initiatives such as performance management (provided for to a degree in this award), as likely to enable it over a period to cover 4.8% of salary costs which were not in their calculations funded by specific productivity improvements. The CPSU challenged the various calculations of the value to APS of productivity improvements. In its submission, the value of each of these changes was higher than estimated by APS.
[257] The cost estimates supplied were informative and a factor to be considered by the Full Bench. None the less, for the reasons we have stated, the productivity cost-offset effect is not determinative of the quantum that may properly be awarded in this matter. Neither the Act nor commercial considerations dictate that the productivity effect limits the factors or the merits that may be taken into account in fixing the quantum of the salary awarded. Certainly, the direct productivity effect is a factor weighing on the employer's capacity to pay. The Act and industrial commonsense oblige us to give it serious consideration. Having done so, we think there are reasons in this case to go beyond what APS submits to be the limit of its competitive capacity to pay.
[258] The APS was willing to offer staff a further pay premium of 2.5% to achieve an agreement. It was submitted that this premium could reasonably be paid for a voluntary agreement, as opposed to an arbitrated decision. The premise for that submission was that an agreed settlement provided a sounder foundation for shared improvement initiatives to reduce costs. We are not aware of empirical evidence that supports or refutes that proposition.
[259] We have formed the view during the extensive proceedings before us that since 1996 there have been significant gains made by the APS in the cost effective use of its staff resources. The impact of such measures cannot readily be quantified. We do not share the APS opinion that elimination of inefficient work practices does not enhance productivity. No allowance for any such improvements appears in the APS calculation of allowable salary increases.
[260] Moreover, there are further improvements in productivity available to APS. We note evidence put before us that more pro-active management of rosters has generated some heat with staff members who may perceive an attack on established employment practices. However, the APS has been criticised and could legitimately be criticised for not having moved earlier to bring disciplined cost management to this important area. We do not criticise moves to tighten managers' control of overtime and to lower costs through intelligent rostering. It should be continued and extended. We are of the view that an employment system characterised by high overtime and penalty payments is not in anyone's interests. A necessary part of changing it is that managers are held accountable for cost effective application of employment terms.
[261] Similarly, the APS would benefit from re-thinking its shift arrangements. The current hybrid shiftwork model is unlikely to be the most cost effective for APS. Shiftwork is effectively layered on top of a payment system designed for day work Monday to Friday. We have encouraged the parties to examine employment models based on different assumptions, particularly involving annual salaries and simplified administration. Our collective knowledge of industry practice suggests that examples might be found of organisations of similar size operating with only one or two staff required for all of the administrative and payroll processing work to support an annual salaries payment model.
[262] We have already noted the unanimity of the parties in rejecting alternatives raised by the Commission. One option raised was the possibility of extra leave above four weeks being available only to staff who were "rostered and worked" on 10 Sundays over a year. The parties were content with their agreed position "that an extra week's leave be conditional on officers being entitled to an additional half a day (to a maximum of 5) for each Sunday or public holiday worked on shift. In addition, staff employed at a remote locality accrue additional leave for periods of more than 30 days in the locality"83. The Commission's query was not a fully developed proposal formulated to take account of the relatively singular history of APS conditions. However, we have not been persuaded by the parties generally negative responses. Further change beyond what is presently contemplated by the parties is justified in the APS.
[263] We have had regard generally to the quite diverse array of comparators upon which the parties sought to rely, or invoked as meriting more than a sideway's glance. The more significant references for that purpose included the agreement based wages movement for classifications of PSO in the Victorian Police. The classification structure for that agency embraces seven pay points which moved by 6.3% over the period 2 December 1997 to 2 December 2000 as a result of a certified agreement84. The base salary rates for that service from PSO first year through to a Senior PSO level at the latter date ranged from $33,374 to $45,457; the vertical relativity between the top salary point of that classification structure and the first year entry point is only marginally different from that of the existing PSO structure in the APS.
[264] Several other comparative bases already referred to were advanced by the CPSU as reference points for what it submitted would be a fair award for the work. To the extent that any such figures are relevant, allowance needs to be made for the adjustment to ordinary working hours in moving from 38 to 40. A figure of 6% was suggested by the CPSU as a reasonable allowance by way of direct compensation to an employee electing to work to that standard.
[265] As a comparator specific to the APS, the CPSU tendered evidence that salaries for Assistant Inspectors will rise by 20% for the period December 1996 to September 2002, including an adjustment recognising the change from 38 hours to 40 per week85. We note that the Protective Service Assistant Inspector (the PSAI) classification levels derive from the APS classification Level 5. The relevant agreement allows a PSAI a top salary point of $48,824 in the third year of satisfactory performance under the third adjustment taking effect from 1 September 2002. Under the last adjustment of the CIP Agreement, the internal vertical relativity factor of the top salary point for a PSAI ($40,675) to the top salary point of PSO 1 classification ($30,042) was 1.35. Of course, PSAI classification rates are now detached from the PSO 6 classification structure. Moreover, it seems that the rates quoted by the CPSU were rates struck generally for PSAI Station Managers under AWAs. Subject to that important qualification, we note that relativity factor for the PSAI rate to the PSO is currently 1.59 extending to 1.63 from September 200286.
[266] The APS referred us, via a "sideways glance", to movements in Public Service wage outcomes. We were also given estimated earnings for private sector security employees working the same hours as APS staff. The latter estimated earnings below current APS outcomes87. Figures from a table in the April 2001 Report published by Department of Employment, Workplace Relations and Small Business (DEWRSB) for the period from the end of 1996 to the end of 2000, show pay outcomes across the Public Service:
Total Increases to end 2000 (since 1996)
Weighted average |
Average |
Highest |
Q3 |
Median |
Q1 |
No. of employees |
10.8% |
9.8% |
18.1% |
11.4% |
10.1% |
8.1% |
110,255 |
[267] The same source indicated that the average increase granted across agreements for 68 agencies for 2001 is 3.5%; and, across 22 agencies which have agreements covering 2002, is 3.4%. The APS directed us to the lowest quartile outcome in the Public Service as the most appropriate indicator of a fair wages movement for APS. The lowest quartile was said to be appropriate as it would not reward intransigence in productivity bargaining.
[268] If we were to adopt the APS argument and apply it to the proposed term of the award, the resultant increase would be about 8.1% to the end of 2000, plus the first quartile of Public Service increases for 2001 to 2003. Those latter figures are not available. Were the average outcomes for 2001 to be added to the 1996-2000 figures proposed by APS, in order to estimate Public Service movements to September 2001, that would produce an outcome of the order of 11%. Based on the median increase, rather than the Q1 movement to the end of 2000, the current outcome would be of the order of 13%. Thus, even the comparison to which the APS directed us suggests a current adjustment in the range 11 to 13%. A judgment would then need to be made about what, if anything, is appropriate for the prospective period of the award. The DEWRSB figures point to at least 7% over a three year period, simply applying the median yearly increase. Those figures contrast with the APS agreement to an increase for its Assistant Inspectors of 20% from the end of 1996 until September 2002, incorporating an adjustment to the ordinary working week from 38 hours to 40. Presumably, other changes in arrangements were also part of the package.
[269] We do not endorse any of the specific methodologies proposed to us. Rather, we have weighed all of the evidence and arguments in the particular circumstances of this case and made an act of judgment of what we consider to be fair and reasonable. We determine that APS salaries for PSOs covered by this award shall be increased by 12% from the date on which the provision for salary rates will come into operation; with a further 4% to apply 12 months after that date and a further 3% to apply 12 months later. That is, there shall be an increase of just under 20% compounded over the three years of this award until October 2004. We will adopt the classification structure proposed by the APS. Our disposition to do so is reinforced by our understanding that the CPSU no longer disputes any significant aspect of that structure.
[270] One other factor deserves mention. The CPSU and APS had already agreed that salary packaging should be available to staff under this award. In our observation, the parties' understanding of the significance of packaging for individuals was weak. Certainly the CPSU had not appreciated the size of the benefit in after tax remuneration available to staff. On the basis of figures provided by APS, the salary packaging of an employee's superannuation contributions could add of the order of 2% to a staff member's after tax income. It is difficult for someone unversed in such matters to work this out from information supplied. We have a concern that a significant source of value in the long negotiations between the parties has gone unrecognised and unappreciated. In that sense, the APS was perhaps unwise to make the offer if it was not able to explain its value simply to staff. In the same way, the CPSU could also be said to be uninformed in not exploring real value in a tough and protracted negotiation. That said, the parties now have the task of explaining to staff that the value of this salary award is higher in after tax terms than the simple percentages indicate.
10.14 Date of effect and term:
[271] The parties were agreed that the term of the award should be three years. We consider that is an appropriate term for an award of the kind.
[272] The CPSU sought that the first instalment of any pay increase awarded should be given substantial retrospective effect. It proposed 25 May 2000, the date on which the CPSU application under section 170MW was lodged. The ground upon which that substantial retrospectivity was claimed was almost entirely the conduct of the APS as negotiating party, although considerations of industrial equity and good conscience were also pleaded. The APS and the Minister opposed any retrospectivity of operation.
[273] For reasons that we do not need to develop, we consider that some aspects of the CPSU's conduct of the bargaining period is open to reproach. Conversely on a balanced view, several aspects of the conduct of the APS at the threshold and after the commencement of the bargaining period could properly be perceived as dilatory, or open to other criticism. However, we do not consider that any of the conduct in the circumstances of the case generally constitutes a ground for awarding substantial retrospectivity. We hope that the past conduct of both parties will prove to be exceptional. On any view of it, we do not accept that it establishes an exceptional circumstance for the purpose of subsection 146(2). That subsection requires that the Commission must be satisfied that there are exceptional circumstances before it specifies that an award shall come into force from a date earlier than the date of the award. That requirement may not prevent a particular provision from taking effect prior to that date of the award. However, we see no reason why the Commission should not be satisfied that an exceptional circumstance exists before any such retrospective effect is provided for.
[274] In our view, in the determination of section 170MX award, it is more than usually undesirable to award retrospectivity. Such awards have a special role within the structure of the Act. In this instance, the resolution of many of the matters in issue, especially the productivity enhancing measures, can only operate prospectively. Most of the usual reasons against awarding retrospectivity also apply.
[275] On the other hand, we accept that there are some aspects of the matter that may properly be considered to give rise to an exceptional circumstance within the meaning of subsection 146(2). They are the five year period that has lapsed since the last pay adjustment; the protracted hearing; the constraints within which the APS was obliged to conduct its negotiations and this case.
[276] In this case, all parties went into the arbitration "with their eyes open", aware that there were no assured outcomes. The APS was concerned that there should be no reward for a failure of bargaining. The CPSU equally argued that APS should not be endorsed in intransigence. Our decision is not intended to "reward" or "penalise" any party for alleged counter-productive behaviour, but to be reasonable in the circumstances.
[277] We have weighed those considerations along with our assessment of the quantum of the salary increases we have determined. We consider that the circumstances of the case justify a measure of retrospectivity. We have determined that the first salary increase shall take effect from the first pay period commencing on or after 24 August 2001, the completion of argument in the case. The date of operation of the salary increase will not apply for the purpose of extraneous payments.
[278] The effect of our determination is that the resultant classification table payments for a 40 hour week operation will be substantially as follows:
Designation |
Current ASO aligned rate |
Rate with effect from 24 August 2001 |
Pay period on or after 24 August 2002 |
Pay period on or after 24 August 2003 |
$ |
$ |
$ |
$ | |
Security Assistant Trainee |
22,100 |
24,752 |
25,742 |
26,514 |
Security Assistant |
22,393 |
25,080 |
26,083 |
26,866 |
22,705 |
25,430 |
26,447 |
27,240 | |
23,016 |
25,778 |
26,809 |
27,613 | |
Trainee Protective Service Officer |
24,395 |
27,322 |
28,415 |
29,268 |
PSO1 |
27,091 |
30,342 |
31,556 |
32,502 |
27,837 |
31,177 |
32,424 |
33,396 | |
28,568 |
31,996 |
33,276 |
34,274 | |
29,310 |
32,827 |
34,140 |
35,164 | |
30,042 |
33,647 |
34,993 |
36,043 | |
AFR New Pay Point |
34,826 |
36,219 |
37,305 | |
PSO2 |
30,857 |
34,560 |
35,942 |
37,020 |
31,659 |
35,458 |
36,876 |
37,982 | |
32,463 |
36,359 |
37,813 |
38,947 | |
33,304 |
37,300 |
38,792 |
39,956 | |
AFR New Pay Point |
34,357 |
35,731 |
36,803 | |
SPSO |
34,391 |
38,518 |
40,059 |
41,260 |
35,485 |
39,743 |
41,333 |
42,573 | |
36,408 |
40,777 |
42,408 |
43,680 | |
37,341 |
41,822 |
43,495 |
44,800 | |
AFR New Pay Point |
43,001 |
44,721 |
46,063 |
[279] The parties will need to examine carefully the schedules of the award that will implement the translation to those pay points. Other provisions of the award will take effect from the first pay period commencing on or after 9 November 2001. That lag in the prospective operation is intended to allow the parties an opportunity to consider and if necessary consult about the implementation of changes introduced by the award.
[280] We will publish to the parties with this decision a draft order. Deegan C will list the matter to hear the parties speak to the draft and to settle the order on 7 November 2001 with recourse to the Full Bench if necessary.
BY THE COMMISSION:
JUSTICE P.R. MUNRO
Appearances:
S. Mountford with A. Rich for the CPSU, the Community and Public Sector Union.
A. O'Brien with J. Ashurst and S. Kibble for the Australian Protective Service, and for the Minister for Employment, Workplace Relations and Small Business, intervening.
Hearing details:
Sydney:
February 2 (before Munro J);
March 8 (before Munro J);
April 2, 23 (before Munro);
April 26-27;
May 8-9, 21;
June 25-26;
August 10.
Printed by authority of the Commonwealth Government Printer
<Price code M>
Endnotes:
2 Ibid Print T3458 at paragraph 22.
3 Journal of Industrial Relations, September 2001, Vol 43, Dabschek B: "The Slow and Agonising Death of the Australian Experiment with Conciliation and Arbitration" 277 at 285-288.
4 SA Teachers Case Print T1383 at paragraph 21 per McIntyre VP, Hampton DP and Deegan C.
5 Exhibit CPSU1, submission of the CPSU, March 2001, paragraph 40.
6 Clause 1.9, APS National Central Monitoring Station Certified Agreement 2000 - 2003 (the NCM Agreement).
7 HSUA v Victorian Charitable Organisations Print S6655.
8 Exhibit APS 1, paragraph 36; evidence of Mr M. Studdert Exhibit APS 17, paragraphs 11 and 12, Annexure A; transcript at PN 2886 - page 11, Annexure A.
9 Transcript at PN 3882 - 3885.
10 Exhibit APS 19; transcript at PN 4226.
11 Transcript at PN 5551; Exhibit APS 23, paragraph 8.
12 Paid Rates Review decision, Print Q7661.
13 Exhibit APS1, Attachment 17.
14 Ibid Exhibit APS1, paragraphs 194-196; and see also Exhibit APS 25 paragraphs 136-613 and Exhibit APS 26.
15 Exhibit COM1 at paragraphs 9-11.
16 Print S4568 at paragraph 53.
17 Exhibit COM3 at paragraph 20.
18 Subsections 170MX(4) and (5).
19 Continuous Improvement in the Australian Public Service Enterprise Agreement 1995-1996 (CIP Agreement).
21 Air Navigation Regulations 1947, Regulation 71(4).
22 Commonwealth Competitive Neutrality Complaints Office Report No. 1 December 1998 (CCNCO Report) at p. 5, Exhibit CPSU 1, Tab 21.
24 Ibid CCNCO Report, Exhibit CPSU 1, Attachment 21 at pp. 11-12.
25 Transcript at PN 5077: Mr O'Brien responding to questions from the Bench.
26 Source: Exhibit APS1, Tab 10, Attachment O. The accuracy of the figures was challenged in the CPSU closing submission: Exhibit CPSU 23 at paragraph 41; however no material issue turns upon the outcome of that exchange.
27 Exhibit APS 17 at paragraphs 13-16.
28 Ibid Exhibit APS 17 at paragraph 13, Footnote 1.
29 Exhibit APS 18, Attachment E.
30 Exhibit CPSU 27 at page 10, referring to Exhibit APS 1, Attachment H.
31 See Attachment H1, Table 1 and Table 3.
32 See Exhibits CPSU 19 and CPSU 26 closing submission at paragraphs 19-20.
33 Exhibit APS 23 at paragraphs 35-36.
34 Exhibit CPSU 26 at paragraph 31.
35 Paragraphs 74-78 and 83-88.
37 Exhibit APS 23 at paragraph 151.
38 Exhibit APS 23 at paragraph 69; and paragraph 235 ff.
40 Exhibit APS 23 at paragraphs 189-199; paragraphs 207 Attachment L.
41 Australian Industrial Relations Commission: "Making Federal Awards Simpler" 27 October 1995, ISBN 0 642 234507 at Tab 4, page 11.
42 Australian Protective Service, Sydney Diplomatic Protection Unit, Certified Agreement 2000-2003, Doc S6419 made under section 170LK of the Act on 25 May 2000 for a term expiring 23 May 2003.
43 Australian Protective Service, Australian Defence Satellite Communications Station, Geraldton, Certified Agreement 2000-2003, Doc S9172 made under section 170LK of the Act on 16 August 2000 for a term expiring 16 August 2003.
44 Australian Protective Service, National Central Monitoring Station, Certified Agreement 2000-2003, Doc S7972 made under section 170LK of the Act on 5 October 2000 for a term expiring 4 October 2003.
46 See particularly paragraphs 45-48.
47 Ibid Print S4568 at paragraph 53.
50 For an example see Delosa v RMIT Print N3223 at 6-7.
51 Transcript PN 3812-3817: Mr M. Studdert.
52 Print M5408 [Agreement C0993] as amended by Docs M9852 and N0884.
55 R v Hegarty; Ex parte City of Salisbury (1981) 147 CLR 617 at 629.
56 [2001] HCA 16 (15 March 2001).
58 1986 National Wage Decision Print G3600; (1986) 301 CAR 611 at 648.
59 Ibid (1986) 301 CAR 611 at 648.
60 See generally National Wage Case June 1986 Print G3600; ACT Retail Industry 38 Hour Week Case Print G8830; Print H9525;
61 Exhibit CPSU 1 at Tab 14: Letter of 3 August 1984 at p. 2.
62 PSO 38 Hour Week Agreement MoU, Exhibit CPSU 1, Attachment 17 at pages 6 and 8; Exhibit CPSU 29.
63 Exhibit APS 23, Attachments K1 and K2.
64 See generally Price Waterhouse Report: Exhibit APS 18, Annexure K.
65 Ibid Exhibit APS 23 at paragraphs 211-212.
66 Paragraph 212 of Exhibit APS 23.
67 Print M6700, November 1995.
70 Ibid Metal Award, clause 6.4.1(a).
71 Exhibit APS 23 at paragraph 185.
75 Exhibit APS 23 at paragraph 151.
76 Among other examples that may be cited is clause 7.5.4 of the Metal, Engineering and Associated Industries Award 1998.
80 Ibid Print R3183 at paragraphs 21-29.
82 Attachment J1 of the APS Closing Submission Exhibit APS 23.
83 Exhibit APS 23 at paragraph 226.
84 Exhibit CPSU 1, Attachment 22.
85 Exhibit CPSU 23, based on Exhibit CPSU 24 which is an extract from Station Managers AWA, dated 15 January 2001; Exhibit CPSU 23 shows movement across all APS classifications 1996 - 2002 including PSAIs under what appear to be AWAs.
86 Extract of the CIP Agreement at Exhibit CPSU 1, Tab 5 at p. 49.