PN1

THE SENIOR DEPUTY PRESIDENT: Yes, could I have the appearances please.

PN2

MR A PARDO: Pardon, initial A, of the SDA. With me is Mr Galbraith, initial M, for the SDA.

PN3

THE SENIOR DEPUTY PRESIDENT: Thank you.

PN4

MS S GARLAND: Garland, initial S, solicitor for Employment Innovations and with me is Duffy, initial S.

PN5

THE SENIOR DEPUTY PRESIDENT: Thank you. Just on the question of standing. I mean my understanding is, Mr Pardo, you're representing a member of yours who's employed by the company. Are you happy to proceed on that basis?

PN6

MR PARDO: That's right, your Honour. We filed the form F24B in the name of the applicant but withheld his name under the auspices of section 594 of the Act, which allows us to submit evidence in confidence to the Commission, and we're happy at any moment to provide his details to the Commission, on the basis - - -

PN7

THE SENIOR DEPUTY PRESIDENT: So are you - - -

PN8

MR PARDO: Yes, your Honour.

PN9

THE SENIOR DEPUTY PRESIDENT: Are you happy to proceed on that basis?

PN10

MS GARLAND: We are, your Honour.

PN11

THE SENIOR DEPUTY PRESIDENT: Thanks. So Mr Pardo, it's over to you really.

PN12

MR PARDO: May it please the Commission. The Employment Innovations agreement was approved on 23 July 2010 and expired nominally on 29 July 2014. At the outset I'd like to say that the SDA doesn't intend to complicate or prolong these proceedings any more than necessary. We rely on form F24B and F24C and our comprehensive comparison that we provided to the Commission between the agreement and the GRIA. Just noting a few things about the agreement, it lacks protections for part-time employees which in effect allows them to be rostered as casuals. It lacks most of the rostering provisions of the GRIA, significantly a break between work periods. It lacks an annual leave loading. Most allowances under the GRIA, particularly a laundry allowance and significantly penalty rates.

PN13

At least 12 employees have contacted the Commission supporting the termination of the agreement in this matter. The SDA notes that a further 16 employees contacted the Commission regarding the termination of the HRO 2007 Collective Agreement. At the hearing on 4 July regarding the termination of that agreement, the respondent indicated that these employees were properly covered by the agreement in question today.

PN14

The SDA notes that in at least three of these emails before the Commission, employees alleged that they were not properly served with notice and directions as your Honour directed. The issue at hand is twofold; should the agreement be terminated under section 226 of the Act? As your Honour notes the test is one not contrary to the public interest and appropriateness. The SDA submits on the facts that these tests have indicated, although if necessary I'm happy to go into further detail on these points.

PN15

The remaining question seems to be when the agreement will be terminated under section 227 of the Act. If I may just briefly refer to the objects of the Fair Work Act at section 3(b) and I quote:

PN16

Ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders.

PN17

Paragraph (c) and (f) are also of persuasive value in this situation. We say that Employment Innovations is by its own admission in paragraph 8 of their submissions, that they are employment specialists. They have continued to hire at least 950 at present retail employees under an expired agreement that pays no penalty rates and leaves employees under the aware far worse off. It's the SDA's submission therefore that the termination should take effect as soon as is practicable. The mechanics of this is within your Honour's discretion.

PN18

If I may just note some brief points regarding the evidence of the respondents. At the outset I'd like to note that although we don't object to the respondents' evidence, it was rather difficult for us to go through it with the proper care and detail considering how late it was served. Just a few general points, your Honour, and if you'd like I can go into further detail later.

PN19

Several statements refer to the employees as employees of respective clients of Employment Innovations. It should be noted rather they're employed by Employment Innovations. As I referred to in the objects of the Act, the GRIA, the General Retail Industry Award, is a minimum - the legal minimum regarding pay and standards in the retail industry. The considerations brought forth in the statements and the submissions of the respondents in effect seem to wish to circumvent this minimum by an extension of an agreement which has expired and which underpays its staff.

PN20

The respondents have benefited for the past three years from an expired agreement that gives a monetary and therefore a competitive advantage to itself and to its clients in the retail industry. By asking for an extension, in effect they're asking for an extension of this competitive edge. Many other considerations brought forward by the respondent's evidence are largely superfluous to the application in question. Questions regarding the sale of businesses and the transfer of employees, sale of business is a market consideration, it's not directly appropriate to consider whether the section 227 application, taking that section 225 and 226 have already been satisfied.

PN21

If I may take the point of the statutory declaration of Mr Shane Duffy. At paragraph 29 he admits that the agreement is unsustainable. Just very broadly speaking, his transition proposal of part A and part B. Part A transitioning employees to the award, to the direct employment of their clients over a period until December. The SDA submits that that's far too long in the circumstances.

PN22

If I may refer to the General Retail Industry Award, the notification for change to a roster is seven days or 14 if there's a dispute. Regarding part B of his proposal, to negotiate a new agreement, five per cent above the award and matching the penalty rates of the award. As of - with the view of having it in place by 30 June 2018, that also seems far too long, but also it would appear more appropriate to go to the GRIA in the meantime both as a show of good faith to its employees and to assist the company itself in the transition for rostering provisions, payroll, allowances and so forth. Those are the SDA's general submissions, your Honour. We're happy to go into more detail if requested. May it please the Commission.

PN23

THE SENIOR DEPUTY PRESIDENT: Thanks. Ms Garland.

PN24

MS GARLAND: Good morning, your Honour. This is an application by the Shop Distributive and Allied Employees Association. They've applied to the Fair Work Commission for an order to terminate the agreement, Employment Innovations Agreement, on behalf of an unnamed employee member. This agreement currently has coverage of approximately 2800 employees across 56 client host sites. The employees are engaged in New South Wales, Queensland, Victoria and Western Australia. The agreement applies to employees of Employment Innovations across the industries of restaurant, fast food, hospitality and retail.

PN25

This application has been made under section 225 of the Fair Work Act. It's accepted that this is an enterprise agreement that has reached its nominal expiry date. In terms of the considerations of the Commission for termination of an enterprise agreement, we would refer to section 226 of the Act, in particular that the Fair Work Commission needs to be satisfied that it's not contrary to the public interest to make a termination, and that the Fair Work Commission considers it appropriate to terminate the agreement, taking into account the circumstances of the views of employees, the employer and employee organisations and the circumstances of the employees, employers and the likely effect that the termination will have upon them.

PN26

In terms of evidence today, your Honour, employment relations relies on the statements of Shane Duffy CEO of Employment Innovations, signed on 5 July. The declaration of Danielle Morriss a Brumby's business owner in Ascot, the statutory declaration of Raelene Hopper of HG Retail and the statement of Andrew Thompson an IGA Coomera business owner, all of whom are clients of Employment Innovations and whose employees are placed in their business sites.

PN27

Your Honour, have you got copies of the - - -

PN28

THE SENIOR DEPUTY PRESIDENT: I do, I do, and I'll accept those into evidence.

PN29

MS GARLAND: Your Honour, Employment Innovations is a specialist labour hire organisation and it provides a full range of workplace management services to our clients, which includes human resources, in terms of expertise under administrative functions, work health and safety, injury management, payroll capability, employment systems and technology. For over 10 years Employment Innovations has provided a complete tailor made, people management solution for clients, so they can focus on running and growing their businesses. Clients that utilise our full range of services include large entities and many smaller medium-sized enterprises, who do not have the internal capacity or the necessary systems to operate that service themselves.

PN30

The Employment Innovations Enterprise Agreement was approved in July 2010 and reached its nominal expiry date in July 2014. Since the expiry of the agreement, Employment Innovations has continued to ensure the agreement is enhanced by the incorporation of relevant award hourly rates and the payment of a 25 per cent casual loading for casual employees, which is over and above the provisions contained in the agreement.

PN31

Despite this, Employment Innovations does concede that since July 2014 the agreement provides conditions which are considered overall inferior to the applicable award terms. Employment Innovations understands that this is the basis of the SDA application. Employment Innovations maintains, however, that if a termination of the agreement were to occur with immediate or imminent effect it would have a significant adverse impact on the employees of Employment Innovations and a broader sector of the community, including 14 clients in the retail industry.

PN32

By way of example, it is the evidence of Shane Duffy that up to 950 employees' employment is at significant jeopardy. In the context of a larger enterprise, it was utilising Employment Innovations employees at its sites since 2007, it is the evidence or Raelene Hopper of HG Retail that it's of genuine concern that the termination of the agreement could lead to redundancies and other reduction of hours of employees to ensure the viability of her operations.

PN33

THE SENIOR DEPUTY PRESIDENT: Can I just stop you there. I mean realistically I think it's better said, I think you concede this that the - you know, I'm going to have to terminate the agreement. The question is with effect from when? Some of these issues really go to arguing for well, you know, if we have to pay penalty rates and public holidays we're going to have to close on public holidays. Now I accept that when - you know, that's what their evidence is but that's not really going to help you when it comes to - I mean to put it basically the award is the relevant safety net and it's not the purpose of enterprise bargaining to allow employers to pay employees overall less than they would get under the award. So arguments that well, you know, it's good for the business and it raises employment for us to pay people at below award conditions isn't really going to be very relevant to my - to the issue I've got to determine. The real issue - to be frank, the real issue I've got to determine is with effect from when do I do this. So I just think some of the evidence isn't very helpful on that point.

PN34

MS GARLAND: It might be useful, your Honour, if I take you to the evidence of Shane Duffy the CEO.

PN35

THE SENIOR DEPUTY PRESIDENT: Yes.

PN36

MS GARLAND: Which goes into a lot more detail, the timeframe that is - we've mapped out would be necessary to have a really fair and detailed transition of these affected employees onto the relevant award. If I can take you to schedule - the attachment B to the statutory declaration of Shane Duffy. You'll see there a 21 week plan, which sets out the steps that we have identified need to be taken prior to termination, to ensure that there is an orderly controlled transition of employees onto the relevant award terms, and to avoid some of the adverse implications that have been stated by the other witnesses in their statements, such as redundancies and reduced hours of work.

PN37

Within this initial section part A of the transition of clients onto the relevant award, you'll see your Honour an end date of 1 December 2017. The initial process will be consulting with all impacted businesses to determine whether they are wanting to transition to the relevant award or whether they are wanting to transition to other services that can be provided by Employment Innovations. Once we have that determined about which clients decide in which direction they want to go, we will then be able to progress with our timeframe in developing alternative services. That might be a payroll management service to pay employees under the award versus the agreement, develop appropriate fee structures for those clients to develop a plan to manage the priorities and delegate projects internally at Employment Innovations, to develop toolbox meetings with employees and communicate the changes to them. That would include drafting employment contracts and potentially seeking to find other work for employees who are deemed at risk of redundancy, given the process that is taking place.

PN38

Once we have determined which clients wish to in-source their employees under the award and which ones wish to keep their relationship with Employment Innovations, we will then know how many employees will remain at Employment Innovations and at that point, your Honour, we submit at 1 December we will be in a position to bargain for a new enterprise agreement for those employees. Which depending upon the number of employees involved at various sites, we are suggesting a timeframe to 30 June 2018 in order for that agreement - - -

PN39

THE SENIOR DEPUTY PRESIDENT: I don't see why you couldn't start negotiating for a new enterprise agreement now, if that's what you want to do. I don't see why you have to wait until you've worked out, you know, who's going to be left in your employment.

PN40

MS GARLAND: Well we'd need to know who to issue notices to, your Honour, so - - -

PN41

THE SENIOR DEPUTY PRESIDENT: Well while they're your employees you can issue the notice to them. You could do it tomorrow I guess.

PN42

MS GARLAND: So potentially bargain with employees that won't end up ultimately being asked - - -

PN43

THE SENIOR DEPUTY PRESIDENT: Well there's always the risk that, you know, people - I mean that's just the way it goes. I means there's always potentially going to be a period of time between you know when you issue the notice and who might be covered by the agreement and when it takes effect.

PN44

MS GARLAND: Your Honour, I'd submit that that may lengthen the process.

PN45

THE SENIOR DEPUTY PRESIDENT: Can I assume that you haven't taken - you haven't taken any steps to start negotiating any new agreement? I mean you've been - this agreement's been expired for now about three years, so you haven't done anything about negotiating - re-negotiating the agreement for three years.

PN46

MS GARLAND: Not with these particular employees named.

PN47

THE SENIOR DEPUTY PRESIDENT: This agreement.

PN48

MS GARLAND: Yes.

PN49

THE SENIOR DEPUTY PRESIDENT: Yes, yes. So it's kind of how much more time do you need really. See I mean I'll be upfront, I mean I have obviously read the - obviously in a bit of a hurry because I only got them - just got them but I have read the statements. As I said, quite a lot of the evidence is not really very helpful with all due respect to the people who gave the evidence, in that it was more kind of an argument for not terminating the agreement. But I don't think I have any choice given the legislation and the framework of the Act but to terminate this agreement.

PN50

Obviously I've had a look at Mr Duffy's statement but I - you haven't done anything about negotiating a new agreement as far as I can tell or nothing significant. I appreciate there is a need to - you know, it's quite a lot of employees and they're scattered across a lot of different workplaces. There are issues about putting in place payroll changes. I think you have to assume you're going to go onto the award, in other words. If you can negotiate a new agreement, great, but you haven't even started. It's not like you're halfway down the process, you haven't started.

PN51

That's not necessarily a criticism. I mean you're not obliged to negotiate a new agreement but it's the reality. So the reality is going to be, you're going to have to go onto the award I would think. That's the most practical situation and obviously there are some practical issues in terms of getting the payroll sorted, you know, putting in a payroll system, obviously it'll have an impact on rostering. It might have an impact on opening hours, I accept, given the evidence but I don't see that that's going to take 12 months or anything like it. I'm not even sure that it will take - I don't think it'll take six months. It would take some time, but how long do you think it would take based on the evidence to do that?

PN52

MS GARLAND: Your Honour, well the submissions are that that process could be completed by 1 December.

PN53

THE SENIOR DEPUTY PRESIDENT: Yes, yes.

PN54

MS GARLAND: That's taking into account the number of clients, each have an individual - need an individual tailored approach to their current circumstances.

PN55

THE SENIOR DEPUTY PRESIDENT: Yes. I mean I want to be practical because I don't want people, I don't want there to be award breaches for example, I want to ensure everybody is complying with the law and their obligations, and have an opportunity to plan appropriately for their - obviously it will involve changes for businesses. That's what the whole point of it is, is that it's going to involve change and I'm not trying to be difficult or impractical but I also hear what the SDA is saying which is these businesses have had the advantage and you have had an advantage of, if you like, below award conditions for some - well, you've had an expired agreement. I'm not saying there's anything improper or unlawful about it but you've had an expired agreement for three years and I also have to weigh that - employees are, if you like, out of pocket compared to what they would be getting under the award, or some employees are, I don't know whether all employees are.

PN56

We have, as you know, received quite a lot of email messages from employees. In terms of the total number of employees, they're a relatively small percentage but we haven't received anything from employees saying oh no, we really love this agreement, please keep this so - and a number of the employees are asking me to do something that I don't know that I could do and certainly have no intention of doing which is to terminate the agreement with the retrospective effect. I'm certainly not going to do that. It's a question of balancing what's practical for the business and your clients with the legitimate, quite frankly, expectations of the employees that they receive, you know, at least award conditions. I don't know if you want to say anything more about that.

PN57

MS GARLAND: No, your Honour.

PN58

THE SENIOR DEPUTY PRESIDENT: Thanks. Did you - do you have anything more to say?

PN59

MS GARLAND: I haven't.

PN60

THE SENIOR DEPUTY PRESIDENT: Thank you. Mr Pardo, did you want to say anything further in response?

PN61

MR PARDO: Just the SDA would wish to point out that they're self-described employment expert specialists, six months to make adjustments to payroll and rostering seems far in excess. The SDA submits once more that it should be applied as soon as possible.

PN62

THE SENIOR DEPUTY PRESIDENT: Yes. I'm satisfied that it's not contrary to the public interest to terminate the enterprise agreement. I'm also satisfied that it would be appropriate to terminate the agreement having regard to all the circumstances as the parties have presented them to me, taking into account the views of the employees of those who have expressed a view anyway, the employer, and the circumstances of the parties. Look, the agreement is around three years past its nominal expiry date, its conditions are well below the relevant award in a number of key respects. I mean it sounds like almost everybody is - I mean we talked about retail, all the evidence is about retail. I think you may have some people under the - there are some people who you employ under this agreement who aren't in retail but - - -

PN63

MS GARLAND: That's correct, but the main impact businesses that we are concerned for are in the retail sector.

PN64

THE SENIOR DEPUTY PRESIDENT: Yes, but the reality is that the conditions are well below the retail award in a number of key respects, especially the lack of weekend and public holiday penalty rates. So as I said before, the key issue in contention really is the operative date. It's important to appreciate that the award is meant to provide a minimum safety net, it's not the purpose of enterprise bargaining to provide employees with conditions that are overall below that safety net, and that argues in favour of treating - terminating the enterprise agreement as soon as practicable. I appreciate that moving to the award raises practical issues in relation to payroll, rostering and so on. Accordingly, I think that the agreement should be terminated with effect from 31 October 2017 and I will issue an order to that effect. Thank you.

ADJOURNED INDEFINITELY [10.30 AM]