PN1

JUSTICE ROSS: Good morning, it's Justice Ross. I have the other members of the Bench online as well. As I understand it, the appearances are Mr Friend for the SDA, Mr Arndt for ABI, New South Wales Business Chamber, Mr Millman for the NRA and Mr Booth for the Newsagents' Association. Is that correct? Have I missed anybody? No? Earlier this morning we circulated an information note which summarises some of the answers to the questions to the earlier background paper and also poses some additional questions. Has everyone received that? Have you had an opportunity to read it and if not, do you require any further time to consider it - short time to consider it? Mr Friend?

PN2

MR FRIEND: No, we're ready, thank you, your Honour.

PN3

JUSTICE ROSS: Mr Millman?

PN4

MR MILLMAN: We're prepared to proceed, your Honour.

PN5

JUSTICE ROSS: Thank you. Mr Arndt?

PN6

MR ARNDT: Your Honour, there is one or two questions which we might need or we might have used some further time to check in terms of summaries of charts and so forth but I don't see any reason why we can't proceed and, to be honest, I'm not sure that any further inquiries would take things much further anyway.

PN7

JUSTICE ROSS: Mr Booth, you okay to proceed?

PN8

MR BOOTH: Yes, your Honour.

PN9

JUSTICE ROSS: Mr Booth, in the information note, you'll see that it doesn't ask you any questions. That is an oversight on my part. I had forgotten your earlier involvement and I was looking more at the submissions that had been filed. But you should take it that you'll be given an opportunity to respond to any of those questions and to ask or to make any further submissions you wish to make, okay?

PN10

MR BOOTH: Thank you for that accommodation, your Honour.

PN11

JUSTICE ROSS: If it's convenient, I was proposing to go through the questions in the information note and hear what each of you wish to say about that and then see if you wish to add anything generally. I'd go to the SDA first and then the employers in response to that and then to conclude with whether Mr Friend had anything he wanted to say about the employer response. Are you content to proceed on that basis or did you want to make some opening introductory observations?

PN12

MR FRIEND: Your Honour, I was going to say a couple of things about the material that we'd filed that I thought could perhaps have been clarified. It would only take me about five or 10 minutes.

PN13

JUSTICE ROSS: Sure, I'm happy for you to do that, Mr Friend; that's fine.

PN14

MR FRIEND: If I go to our submissions - - -

PN15

JUSTICE ROSS: Yes, which part of the submission - - -

PN16

MR FRIEND: Twenty-six, they start at 26 and you'll see we there deal with annexure A and annexure B.

PN17

JUSTICE ROSS: Yes.

PN18

MR FRIEND: And I just wanted to make sure that everyone was aware that annexure A had been revised slightly but it doesn't change the fundamental point that of all the awards only 14 have no limitation on junior rates. As to annexure B, since that was filed we've found two more relevant awards. This is dealing with apprenticeships. They are the Sugar Industry Award and the Water Industry Award, and if I can just indicate where they would fit in because we haven't filed an amended document. The Water Industry Award would fit in in the first category, so where in the annexure it says there are four awards that are silent on what happens, it should be five awards because the Water Industry Award is one of those.

PN19

The Sugar Industry Award is somewhat different and it'll fit in later on in the document where we indicate that there are 10 awards with apprenticeship arrangements where the hour rates apply at 18 years old. Under that, under the list of those 10 we would indicate that the Sugar Industry Award has apprentices in two different areas; bulk terminal operations and milling and distillery refining maintenance. In bulk terminals there are no junior rates and in the milling stream adult rates apply for 18 year olds and above. So those are some slight changes there.

PN20

If I could then turn to and there was a question asked about this and this is one of the reasons I decided to make this submission now. The tables which are on page 8 of our submissions, just to make it abundantly clear how they were compiled. They are compiled using the ADS data which is referred to on page 7, and that data as it relates to persons in the retail sector, obviously that's broader than the people covered by the GRIA but it's the best information you can get and that's compiled from that data. Thousands of employees (indistinct) access on the left-hand side of the chart in relation to those areas in relation to those areas, but you will see the GRIA is a very substantial part of the retail sector, employees covered by that and there's clearly no drop in employment for persons aged 20 - in that 20 to 24 year age group in the relevant time.

PN21

JUSTICE ROSS: You've put in the trend line there, Mr Friend.

PN22

MR FRIEND: Yes. Yes, that's correct.

PN23

JUSTICE ROSS: I'd understood the short point was that if you look at figure 2, had you expected an employment effect as a consequence of the earlier Full Bench decision in relation to the age at which junior rates cease to operate, you would have expected to see some deviation in the trend line for 20 to 24 year olds and you don't see it. Is that the - - -

PN24

MR FRIEND: That's the point, your Honour, yes.

PN25

JUSTICE ROSS: Yes, and really the 15 to 19, is that how it - that really shows the trend line that's been forming - - -

PN26

MR FRIEND: Going a different way, yes. I'm not sure that that really takes things much further but it's there for completeness.

PN27

JUSTICE ROSS: No, because you wouldn't - would you have expected to have seen any change in employment in the 15 to 19 as a result of that Full Bench decision?

PN28

MR FRIEND: Well, the only thing that you might have expected if there was a move from employers away from 20 year olds because of the increased cost might have led to an increase in 19 year olds or younger because of the intention of the lower rates.

PN29

JUSTICE ROSS: Yes, I see, yes.

PN30

MR FRIEND: We don't see that. Now then there's the question which we deal with later on in the submissions, answering the issue about the Certificate II of the Pharmacy Award and just to be - the table that we've provided was I think used in the award proceedings. That's annexure C and I thought it would be helpful if I could just explain that a little bit. This was provided as I understand to (indistinct) relevant time.

PN31

You'll see the first page of that shows classification wage rates to 1 October and the column that's shaded blue is level 1 in the retail and in the Pharmacy Award, $603. Ultimately the award rate that was struck was $600 for that level, but you'll see that pharmacy there lines up with retail stream at level 1 which you can see at the bottom of that column and then turning over to the next page.

PN32

JUSTICE ROSS: Mr Friend, can I just clarify, this was a document that the SDA provided to the Award Modernisation Bench when the original conception was, I think, for a retail award that would encompass pharmacy and other areas and then ultimately the position became there'd be separate awards. Is that - - -

PN33

MR FRIEND: That's my understanding, your Honour. Ms (indistinct) will let me know if I'm wrong about that but that's my understanding.

PN34

JUSTICE ROSS: But how does it advance it in the sense that this isn't the Full Bench's drawing the alignment, this is the union proposing the alignment.

PN35

MR FRIEND: I accept that but what happens at the end is that the Full Bench strikes a rate of $600 both in pharmacy and in retail and agree it for level 1. Then for level 2 in retail and level 2 in pharmacy the rate is $615, so to that extent they're aligned. Then if you - and you'll see that that's the next column.

PN36

JUSTICE ROSS: I'm sorry, Mr Frank, could you just repeat that last point?

PN37

MR FRIEND: Yes. So you'll see that the blue column is level 1 and that aligns in the union's submission pharmacy level 1 with retail level 1. The next column is pharmacy level 2 and retail level 2 at the bottom of the page. You'll see the suggested rate there was $613 and the ultimate rate if one looks at the award that was ultimately made was $615. Now if then turn over to the third page and look at the proposed classification definitions, you have a retail worker level 1 in the classification definition that we're familiar with and pharmacy assistant competency level 1. And then if you go over to retail worker level 2 means, and then you have again the definition that we're used to in the GRIA. Pharmacy assistant competency level 2 is a Cert II.

PN38

JUSTICE ROSS: Yes, but you don't require a Cert II to be a retail worker level 2 do you?

PN39

MR FRIEND: You don't, you don't, but the point was there's an alignment - we were asked to explain how it was that we made that submission and this is the answer.

PN40

JUSTICE ROSS: All right. Well, as far as I can see the answer is that the rates of pay are the same as determined by the AIRC Full Bench as between a pharmacy assistant level 2 and a retail worker level 2.

PN41

MR FRIEND: Yes.

PN42

JUSTICE ROSS: But my recollection is the Bench doesn't make any observation about the Certificate II equivalents or anything like - - -

PN43

MR FRIEND: No, I believe that's correct, your Honour.

PN44

JUSTICE ROSS: And in fact they don't say much at all about the rates and if I can, you know, I'm speaking for myself, I'm not sure the - and I'm not saying this by way of inviting everyone to revisit the issue but the indicative tasks and the sort of descriptors of the retail levels aren't particularly informative either.

PN45

MR FRIEND: No. That may well be right, your Honour, but that's the explanation for the statement.

PN46

JUSTICE ROSS: No, I follow that. Yes, thanks.

PN47

MR FRIEND: Those are the only matters that I thought might be helpful to clarify in relation to our submissions, your Honour.

PN48

JUSTICE ROSS: No, that is helpful. Thank you, Mr Friend. If I go through the information note that was sent to you this morning, if I can go to then the first question and as I mentioned earlier once we've finished going through the questions the parties will have an opportunity to say whatever additionally they wish to say, but you can take it that we've had the opportunity to read the material, but if we've misunderstood something or you want to emphasise something you should feel free to bring that to our attention.

PN49

The first one is you'll see at paragraph 60 in the NRA's answers the submission about the work value question and it was we wanted to invite the ABI and SDA to say whether they agreed with that part of the NRA's submission. Do you want to go first, Mr Friend?

PN50

MR FRIEND: Thank you, your Honour. Yes, the words relate to a very broad sort of concept with I think we've seen them referred to in - described to the High Court various sets of union rules as being very broad suggesting any sort of connections either direct or indirect. So understood in that way we wouldn't cavil with what's been put, so long as it's understood that it's a very broad connection.

PN51

JUSTICE ROSS: Yes, thank you. Mr Arndt?

PN52

MR ARNDT: Your Honour, keeping it very brief, we agree with the position put.

PN53

JUSTICE ROSS: Thank you. At paragraph 7 there's the SDA's submission in respect of the work value proposition because it's put in the context where the SDA accepts that its application involves the adjustment of modern award minimum rates and that it follows that the Commission has to be satisfied that any such variation is justified by work value reasons. Then the SDA goes on to make the submission that you see at paragraph 7, and it was really to invite ABI and NRA to say what they - and you, Mr Booth, to say what you wish to say in response to that short point. Mr Arndt?

PN54

MR ARNDT: Thank you, your Honour. I might split up the paragraph into the SDA's paragraph or the SDA's submission into two aspects. The first part being the - I guess the axiomatic proposition which is the first sentence and then I'll get to whether the background underlying award position is a work value reason. Just dealing with the axiomatic proposition first, we would disagree with the submission put and it is put in our written submissions that merely because employees are performing at the same classification level that does not necessarily mean that the work they are doing is of the same value, within the meaning of the definition of the work value reasons which is the provision which the previous question was about.

PN55

JUSTICE ROSS: Is that your submission that's put in your material on the basis that they may still require the supervision of an adult that - albeit at a higher classification level?

PN56

MR ARNDT: That's correct. That would be - I guess that's an example in which this would play out, an example of which why they may not necessarily be of the same work value. I guess returning to the more theoretical question as to whether it's axiomatic. If that were the case junior rates wouldn't exist in this award, they wouldn't exist in other awards and they wouldn't be specifically contemplated in the Fair Work Act either. We say that obviously they do exist, meaning that employees engaged at the same classification level can be paid on a differential rate based on the work value proposition. There's obviously a difference in opinion between the parties as to where that - what those circumstances should be but in the current proceedings we would fall back on the position that if the current position is to change there needs to be reasons, it needs to be established in evidence. It needs to be tested as to why a junior employee employed at a level 2 or above would - the works value would necessarily be the same as an adult employee, and we say that the axiomatic argument doesn't get there.

PN57

JUSTICE ROSS: All right.

PN58

MR ARNDT: I mean the example, and I don't want to re-hash our submissions but the example in the 2012 case which has already been referred to earlier on this morning, that was - this is a much bigger case than that and a comparatively significant evidentiary case was run in those proceedings.

PN59

JUSTICE ROSS: Yes.

PN60

MR ARNDT: The second question as to whether - and I might just make sure I get the submission right. When it is recalled that junior rates were established in the retail award against the background of their non-existence in major awards, from which the award was drawn it can be readily seen that there is a very strong work value argument for the abolition. I don't follow that submission. I don't see how the historical position can - - -

PN61

JUSTICE ROSS: Let's leave that one for the moment, Mr Arndt. I think it raises a broader argument. As I understand the union's position it is that when the award was established, the award modernisation Full Bench made an error in - it may not be put exactly this way, Mr Friend - but insofar as it established junior rates in circumstances where the relevant underpinning awards didn't have junior rates, seems to be the thrust of it. But we can deal with that point separately when we come to look at the joint report, because as you'll see in the joint report there is a reference to areas of dispute so we can come back to that at that point.

PN62

But as I understand your point, Mr Arndt, it's a short one that, well, whatever might be said about the historical background doesn't justify a - doesn't constitute a work value reason.

PN63

MR ARNDT: Precisely, and it certainly doesn't constitute evidence, your Honour.

PN64

JUSTICE ROSS: No.

PN65

MR ARNDT: Thank you, your Honour.

PN66

JUSTICE ROSS: Thank you. Mr Millman, anything you want to add?

PN67

MR MILLMAN: No, your Honour; we agree with what our colleagues at ABI have just submitted.

PN68

JUSTICE ROSS: Thank you. Mr Booth?

PN69

MR BOOTH: Thank you, your Honour. We would support the comments made by Mr Arndt and also those reflective comments which you made.

PN70

JUSTICE ROSS: Thank you. Mr Friend, anything you want to say in response to any of that?

PN71

MR FRIEND: No, your Honour; we'll deal with that. we've said what we want to say and - - -

PN72

JUSTICE ROSS: Yes.

PN73

MR FRIEND: - - - we will deal with that other part when we come to the joint report.

PN74

JUSTICE ROSS: All right, thank you. Then we deal with the figures one to three and this is in the SDA's submission and it's part of the SDA's response to the question that had been put in the background paper where the SDA had made the assertion that the Commission's decision to increase the 20-year-old rate to the adult rate had not resulted in any detrimental employment impact. It showed the three figures and you've heard what Mr Friend has said about those earlier this morning.

PN75

The question is do you take issue with the charts? Is there any suggestion the charts are not accurate and I suppose the subsidiary question is what do you say about the proposition that is advanced on the basis of the charts? Mr Arndt.

PN76

MR ARNDT: Thank you, your Honour. In all honesty, we haven't run the numbers in relation to assessing whether the charts are accurate or not. We don't advance an alternative position, however, and we don't have anything different to put in relation to the effect of that decision on employment levels. I mean, we would say that to the extent it relies on ABS numbers, a lot of the issues, some of which have been identified by Mr Friend this morning, that were dealt with in relation to the parties' written submissions and some of their cross-examination of Dr O'Brien would arise but the short point is we don't advance an alternative position.

PN77

So there is not much I can say to contest the fact and I certainly don't claim that the decision of the Commission had caused a catastrophic decline in the engagement of the relevant employees who that claim was subject to. We would say, however, that the effect of the proposal in this case is more material than that case and therefore merely because in relation to those proceedings, if it's accepted that no material difference in employment level was realised in the data it doesn't necessarily follow that the same would happen in this case. This claim is broader, potentially would result in greater increases in rates to a broader group of people and that's as much as I can put in relation to those charts. I certainly don't think they're overly persuasive in making out the case that's been put by the SDA.

PN78

JUSTICE ROSS: Thank you. Mr Millman.

PN79

MR MILLMAN: Thank you, your Honour. When it comes to the accuracy of the charts themselves, again, we haven't had the opportunity to run the full numbers. However, I would just like to take this opportunity to emphasise or to point out that in the period August 2014 to November 2014 we do see a slight change in the number of jobs in those relevant age brackets. So the total number of persons aged 15 to 19 in the retail trade ANZSIC classification increased by approximately 7,400 over that period while the total number of persons aged 20 to 24 decreased by 4,700.

PN80

This did normalise after the fact but it would appear to be some kind of - at the very least - short-term impact.

PN81

JUSTICE ROSS: Yes, difficult to tell from this chart, Mr Millman, but it does seem like - if you accept the trend line, and that's a line of best fit between them, there is fluctuation at various times. But the trend line doesn't seem to deviate.

PN82

MR MILLMAN: Correct, your Honour.

PN83

JUSTICE ROSS: Thank you. Mr Booth, was there anything you wanted to say?

PN84

MR BOOTH: No, your Honour. We have got no submission in relation to the figures one to three.

PN85

JUSTICE ROSS: Thank you. You've heard - if I go to question four, this is the alignment proposition and you've heard the additional exchange between myself and Mr Friend earlier this morning. You've seen the SDA's response at pages 9 to 10 of its submission and question four invites the employer interest to respond to those submissions. Mr Arndt, what if anything do you want to say about that?

PN86

MR ARNDT: Very little, your Honour - I think the observations made by your Honour this morning in the exchange with Mr Friend would be the sum of those - sum of our response to it. It may be that other employer parties have more to say about that but it's not clear to us that the - it's not clear to us that the position is that it was mapped or aligned from the Commission's side of things. It may have been put that way in the SDA documents or proposals in relation to awards which ultimately the form of which didn't come to pass but I will just - if we were going to make submissions we would make submissions noting the observations that your Honour has made this morning.

PN87

JUSTICE ROSS: Thank you, Mr Arndt. Mr Millman.

PN88

MR MILLMAN: We substantially echo those comments from Mr Arndt, your Honour, and just point out that the retail award doesn't really, in its classification structure, start to consider certifications until retail employee level four classification, where it starts talking about trade qualifications and certificate IIIs. So the observation in the SDA submissions at page 10 about retail level one or GRIA level one encompasses both employees with and without a certificate II could well be extended to GRIA levels one, two or three, including compass persons, both with and without a certificate II.

PN89

JUSTICE ROSS: Thank you. Mr Booth, anything you wanted to say?

PN90

MR BOOTH: We would submit, your Honour, that there - whilst we don't disagree with the contention that there is an alignment, we would agree with the submissions which have been made by the other employer parties. By way of observation we would also submit that there is a very low level of formal certification of employees in the sectors in which our members operate.

PN91

JUSTICE ROSS: Thank you. Anything you wish to say in response, Mr Friend?

PN92

MR FRIEND: No, your Honour, thank you.

PN93

JUSTICE ROSS: Thank you. If we then go to the O'Brien report, I don't think any party took issue with the observations we made in the background paper or that were made in the background paper. You'll see at paragraph 10 of this morning's information note that the SDA proposes those five findings on the basis of the O'Brien report and question five invites the employer interests to say what they wish to say about those proposed findings. We have noted that both ABI and the NRA have identified - well, submitted that there are further limitations to Dr O'Brien's evidence and they've identified what those are so you don't need to repeat those.

PN94

But was there anything you wished to say specifically about the five findings sought by the SDA, Mr Arndt?

PN95

MR ARNDT: Not substantively, your Honour. The only dot points for us to think about would be the last two in relation to the words (but a small number). Obviously, small number is not - there is a level of imprecision about that. But we wouldn't cavil with the general proposition that that is certainly a minority of the subset.

PN96

JUSTICE ROSS: Yes. Thank you. Mr Millman.

PN97

MR MILLMAN: We would agree with the proposition advanced by Mr Arndt and otherwise repeat and rely on our written submissions on that point, your Honour.

PN98

JUSTICE ROSS: Thank you. Mr Booth.

PN99

MR BOOTH: Thank you, your Honour. Again, we would support those submissions made by the other employer representatives. We do make a comment in relation to the fourth dot point in respect to level three employees. There is a very low engagement of junior employees at that level with the exception of possibly opening and closing duties and the approach which is generally taken in our sector is that is treated as a higher duties element and the employees are paid at the higher rate for the time occupied in performing those duties.

PN100

In respect to the fifth dot point, I'm not aware that there are any people, any junior employees or any employees, for that matter, engaged as store persons in our sector. So we really can't comment on that fifth dot point.

PN101

JUSTICE ROSS: All right.

PN102

MR BOOTH: Thank you, your Honour.

PN103

JUSTICE ROSS: Thank you, Mr Booth. If we go to question six, that invites the SDA to comment on the additional observations made by ABI and the NRA about Dr O'Brien's report. Is there anything you wanted to say about those observations, Mr Friend?

PN104

MR FRIEND: Yes, your Honour; those matters come from the evidence and the report. But ultimately, all of this is, we would submit, chiselling about the edges. There is a general trend or a picture that emerges from Dr O'Brien's report which is that there is not a large number of juniors employed above level one and while you might be able to say there might be some here that are missed and some there that are missed, ultimately the picture he paints is - we would submit - a pretty accurate one on the basis of the best-available evidence.

PN105

JUSTICE ROSS: Yes. Thank you, Mr Friend. The information note then goes to the survey report. It characterises - seek to characterise what the - what ABI and the SDA have said about it. It's a bit of a blend of both submissions but does any party take issue with that summary? No? All right. If we go to the junior rates information note, you've heard the clarification from Mr Friend about the SDA's analysis of that information note, the thrust of which, whilst it's sliced and diced in various ways, was that only 14 modern award that provide for junior rates have no limitation on the application of the junior rates.

PN106

The question is whether any party takes issue with the SDA's analysis. Mr Arndt.

PN107

MR ARNDT: Your Honour, that analysis, including the clarification by Mr Friend this morning, in all candour, has not been checked by ABI. That is one of the questions in answer to your Honour's first question this morning which if any time was available, or any time beyond this morning was available for parties to provide a note, that's analysis which we would do. We haven't identified, obviously, any defect or any problem with that analysis as yet but I can't confirm that we agree with it either, your Honour.

PN108

JUSTICE ROSS: One approach may be to provide a short opportunity to file a note, bearing in mind that - I'm not sure that we will necessarily descend to the detail of whether it's 40 or 41 awards in a particular category. Its' really the thrust of the argument about - I suppose the observation that, speaking for myself, I would make about the analysis and the earlier information notice, there doesn't seem to be any consistent practice across the award system in the manner in which junior rates are applied and I think the central point that Mr Friend is advancing - correct me if I'm wrong about this, Mr Friend - is that of those awards that provide junior rates, only a minority don't' have any limitation on their application up the classification structure.

PN109

They identify that as 14. But, Mr Arndt, I'm content to provide the short opportunity, perhaps till 4 pm tomorrow, and in the event you want to say anything about the note, Mr Friend - I'll ask, Mr Arndt, that you discuss that with Mr Millman and Mr Booth, just to make sure we don't - you can consolidate any comments each of you wish to make. Mr Friend, I don't think it would take you long to look at the note. I mean, I have sought to try and put it in a context which we'd like you to have regard to the material. I'd asked our research people to prepare the original note really to see if there was any consistent way these matters are dealt with.

PN110

So perhaps if you could respond to anything that Mr Arndt files by 12 noon on Friday, if that suits.

PN111

MR FRIEND: Yes, yes, thank you.

PN112

JUSTICE ROSS: Thank you. There's liberty to apply in the event there is some huge problem that arises but that's what - that is how we'll deal with that issue. You can take it the same thing in relation to the accuracy of the charts, Mr Arndt, Mr Millman and Mr Booth, but don't repeat your submissions about what you say about the employment issue. Really, it's just giving you a chance to check the numbers, that's all. Okay?

PN113

MR ARNDT: Appreciate the accommodation, your Honour.

PN114

JUSTICE ROSS: Mr Millman, does that approach satisfy you about what you might want to say about the SDA's analysis of the junior rates?

PN115

MR MILLMAN: It does, your Honour, although I would also like to take this opportunity to make the oral submission that even if the SDA submission is taken as read, effectively what it means is that the retail award in its current form is by no means idiosyncratic in its approach to junior rates. Yes, there is a minority of award that treat it in the same fashion but the retail award is by no means unique in that regard. So to that extent it somewhat undermines the axiomatic argument advanced by the SDA.

PN116

JUSTICE ROSS: Thank you. Mr Booth, are you content with liaising with Mr Arndt to put in a note about the - what you want to say about the SDA's analysis?

PN117

MR BOOTH: Yes, your Honour, thank you.

PN118

JUSTICE ROSS: Then there are some additional questions put. The first deals with the SDA's merit argument.

PN119

MR FRIEND: Your Honour, sorry to interrupt but I think you've missed question nine.

PN120

JUSTICE ROSS: Yes, I'm sorry, I have.

PN121

MR FRIEND: There was some (indistinct) that I wanted to say about that. If one turns to the information paper, the paper that was published in October, question 7 on page 19 compares junior rates with those applicable apprentice not completed Year 12 who is 16 years old. Then the table starts at 15 years. That is the part in which the NRA analysis departs from the Commission because it starts at 16 years. We just simply note that the 15-year rate and that part of the table is still accurate and still potentially relevant to the matters for the Commission.

PN122

JUSTICE ROSS: Thank you, Mr Friend. Was there anything you wanted to say about that, Mr Millman?

PN123

MR MILLMAN: No, thank you, your Honour.

PN124

JUSTICE ROSS: The additional questions at 18 and 19 - I appreciate this isn't the totality of your merit argument, Mr Friend, but as I've understood it, it is that when the award was - the modern award was made, there was no consideration of the merits of the junior rates that were introduced and you say that insofar as it was based on pre-existing awards, that was erroneous and is that put on the basis that the Victorian and New South Wales shops award and the ACT award did not provide for junior rates above level one?

PN125

MR FRIEND: I think it was level two in the Victorian award but yes, that's the basis. The best way that I can demonstrate this, your Honour, and it may be of assistance that I do this, is to go through the joint report and just highlight those parts of the submissions relevant - - -

PN126

JUSTICE ROSS: Yes.

PN127

MR FRIEND: - - - to the argument because it's a long document.

PN128

JUSTICE ROSS: No, no - if I can put the employer parties on notice, when you'll be invited to respond to the SDA's argument there are two parts of it. I want to know whether there is any dispute about the factual element of the proposition and that is that at the time the award was made, the three pre-reform awards that are referred to - Victoria, New South Wales and the ACT - did not provide for junior rates to apply to all classifications. New South Wales and the ACT were limited to the application of junior rates to level one and Victoria to levels one and two.

PN129

So it's whether that proposition's right and of course the second element in the response is, well, the relevance of that to the present proceedings. Yes, Mr Friend, if you go to the joint report - - -

PN130

MR FRIEND: I'm sorry, your Honour, I was wrong: Victoria was limited to level one.

PN131

JUSTICE ROSS: Okay.

PN132

MR FRIEND: I led you up the garden path. If one goes to the joint paper, and through to page 9 - - -

PN133

JUSTICE ROSS: It's not actually page numbered.

PN134

MR FRIEND: My copy is, I'm afraid.

PN135

JUSTICE ROSS: What are we seeing on page 9?

PN136

MR FRIEND: We're seeing a block of text. The first word is - the first phrase is, "applying in those streams."

PN137

JUSTICE ROSS: No, I don't have that.

PN138

MR FRIEND: I don't know - - -

PN139

JUSTICE ROSS: The joint report I've got, it's sort of an odd document. It's in mark up and it's - - -

PN140

MR FRIEND: Yes, that's so.

PN141

JUSTICE ROSS: - - - not page numbered. But where does that extract come from? Does it come from the 19 December decision?

PN142

MR FRIEND: No, no - this is an extract from the SDA submission of 1 August 2008.

PN143

JUSTICE ROSS: All right, well - - -

PN144

MR FRIEND: We could forward a clean copy to the Commission and the other parties, of course.

PN145

JUSTICE ROSS: Just tell us, for the moment, what it says.

PN146

MR FRIEND: It might be the easiest way and we'll make sure everyone is given a highlighted copy.

PN147

JUSTICE ROSS: Okay.

PN148

MR FRIEND: The SDA's submission was that in the retail stream, bearing in mind that the award - they were dealing with a number of different steams, the SDA specified age-based discounted rates of pay to employees under 21, limited to retail workers level 1 and 2. That is where I got that from, your Honour. That was the starting point and then turning over a couple of pages, they have the proposed draft retail award to that effect. We need to go through a number of pages to 29 August 2008 submission by the SDA in reply to the NRA. That notes that they've chosen not to adopt junior percentages out of agreements and expresses disappointment with the position in opposition to the SDA position.

PN149

Then there is an exposure draft of the award which has junior rates applying to all classifications. SDA submissions of 10 October 2008 notes that the exposure draft allows every employee under 21 to be paid a reduced rate and notes that a qualified tradesperson at retail employee level four would be at 20 years old paid 90 per cent and suggests that there is perhaps an error in what's been proposed. Then there is a decision of 19 December 2008 and this is the Commission's decision at paragraph 21 - sorry, paragraph 71, which simply says that it's not possible to standardise all the junior rates from all the awards and all the (indistinct) and has adopted the position that we have seen.

PN150

Then there is an SDA application to vary clause 18 of the GRIA on 5 November 2009, seeking that junior percentages - variation one is junior percentages should not apply to tradespersons in above rates. A person who is a tradesperson should not be paid less and then also to vary the junior rates more generally. Junior employees employed as level one, two or three paid the junior rates so the restriction on junior rates as proposed at that stage by the SDA was to levels one, two and three.

PN151

The NRA response to that, which is a document of 20 November 2009, says if the SDA was able to point to current common law instrument provisions, which reflect the proposed variation that the Commission be entitled to at least consider this and chosen not to. The AFEI made a submission on 23 November 2009 which was to the effect that the proposed limitation of junior rates to the first three levels of the classification structure in the modern award is inconsistent with current junior provisions. For example, in the NABSA, took clerical employees in the retail state award in New South Wales, not for retail employees but for clerical employees in retail award.

PN152

The SDA replied to that on 27 November, pointing out that the Victorian Shops Interim Award 2000 does not allow junior percentages to apply to department managers or floor supervisors. The Commission decision of 29 January 2010 notes that the - simply said this:

PN153

The SDA seeks to exclude junior rates from applying to trades classifications. The applications are opposed and not supported by underpinning instruments. We reject the application.

PN154

MR FRIEND: We say that the actual situation at the time was much more complex than that. We are not being critical of the Commission, which was dealing with an enormous amount of material and so were all of the parties. But it was not as it seems to have been regarded the case that there was junior rates applicable throughout the industry and a wide range of awards and two very important awards and one major award did not have junior rates above level one. That is the situation we're trying to achieve now.

PN155

JUSTICE ROSS: Can I make this observation about that history, Mr Friend: the SDA at the time this award was made knew all the underpinning awards and what the position was and yet its position at that time initially was junior rates should be limited to levels one and two. Its position then became it should be limited to levels one, two and three. In advancing those arguments, it sought to rely on the underpinning awards and now it's advancing an argument it should be limited to level one on the basis - inferentially - of those underpinning awards. I'm not quite sure how the underpinning awards can get you to three different positions.

PN156

MR FRIEND: Well, they can't. Obviously, one takes the pragmatic position at different times. But you can clearly gain support for the proposition that junior rates should be limited to level one on the basis that that was what was in the underpinning awards, the major underpinning awards. You can take different views, which try to achieve a course that is the position that is less directed to, perhaps, the union's desired position. But that doesn't meant that the fact that the underpinning awards were limited to level one wasn't the case. It may be that the submissions were too generous on the union's part (indistinct).

PN157

JUSTICE ROSS: Mr Friend, there must be a statute of limitations upon all of this; that is 11 years after the process finished you're relying on the pre-modernisation awards? How long do we - - -

PN158

MR FRIEND: It's 11 years, your Honour, but it's the 2014 review - - -

PN159

JUSTICE ROSS: Yes.

PN160

MR FRIEND: - - - which is the first major review of the award.

PN161

JUSTICE ROSS: Yes, all right. Thanks, Mr Friend.

PN162

MR FRIEND: Thank you.

PN163

JUSTICE ROSS: Mr Arndt, can I go to you? Is there anything you wish to say about both merit submissions?

PN164

MR ARNDT: Thank you, your Honour. I might break it up in the way that your Honour did in relation to the factual element and then what the relevance of the factual proposition is. We don't contest the factual proposition. Notwithstanding the stylistic problems of the joint report, that report obviously identifies that position. In terms of the relevance of all of that, I guess how it's being put as a merit reason, we may just have a different definition or conception of what a merit reason is. I mean, we see this as an historical proposition. We would say that a merit position would be, well, why should this claim be granted now as opposed to what the historical position would be? We've gone into some depth in our likely original submission but at least the submissions that were filed in 2019 - 27 August - about detailing (indistinct) of being prima facie satisfying the modern awards objective.

PN165

I don't want to reventilate any of those submissions again. But we say, based on the position that the award prima facie satisfied the modern awards objective when it was made, if that position is to be disturbed, a case needs to run which goes beyond merely noting the fact that certain awards in the consideration of the Commission at the time it was made had a different position. As your Honour has put moments ago, it's also not clear if this is to be understood as a merit argument. It's also not clear how that historical position could then support three different merit arguments.

PN166

One would think if it were a true merit argument it would apply and relate and translate into a position. On the SDA's own claims throughout this long history, that doesn't follow. It was also - and this is put in our 2019 submission - revisited in 2012 as well. So I note the exchange between the Vice President and Mr Friend about the delay or the time that has passed in relation to the making of this claim, the revisitation of this issue, and also the duration of the four-yearly review. But we say based on all the prima facie submissions that we have made in our written submissions; this is not a position to relitigate the making of this modern award or to appeal that decision.

PN167

The position that has been taken by the Fair Work Commission in other matters and the position as we understand it through the judgments of the Fair Work Commission is that prima facie the award satisfies the modern awards objective on being made. If that is to be disturbed a merits case needs to be run beyond simply pointing to pre-modern awards which are, as we've already stated, not entirely consistent anyway. Those three pre-modern awards aren't the totality of awards either. Beyond that, we don't have any further submissions on this issue.

PN168

JUSTICE ROSS: Mr Arndt, it might be convenient to also get you to answer question 11. Again, that is a sort of a factual proposition where the SDA notes in the 2010 decision it's dealt with junior rates. The Full Bench did not deal with the SDA's claim in respect of junior employees who are not tradespersons.

PN169

MR ARNDT: Our submissions on this would be - obviously, the words of the decision are what they are. Noting the pressures and the scale of the task before the Commission at that time, obviously these words and the activities of the Commission and the whole process needs to be viewed with a degree of understanding about the enormity of the task that they are undertaking. One way of viewing paragraph 25 - I mean, one way of viewing it is that an inference could be made that in the first sentence or both sentences that one way of reading that could be that we reject the application in terms of junior rates applying to trades classifications and above.

PN170

That inferentially perhaps could follow: if junior rates shouldn't apply to trade classifications, the same would apply to - the same logic seems to follow for classifications above trade classifications. But that is now what it says. It simply said, "trades classifications." But that could be one explanation as to why it's put the way it is.

PN171

JUSTICE ROSS: Thanks, Mr Arndt. Mr Millman, what do you wish to say about the response to the SDA's merit submissions, question 10 and question 11?

PN172

MR MILLMAN: Substantially agree with the submissions put by Mr Arndt, your Honour, and just reiterate that the three awards referred to - the New South Wales, Victoria and ACT awards referred to by the SDA in earlier cases - do not represent the totality of the award system as a whole and the Commission was fully entitled to place great weight on awards other than those to reach a more nationally consistent basis. With respect to question 11, we note that in the 5 November 2009 application, the SDA started off its claim by seeking a variation that junior percentages should not apply to tradespersons at above rates, which is effectively what paragraph 25 of the 29 January 2010 decision addresses.

PN173

The word order is slightly different but it is effectively the same. The variation sought by the SDA in annexure A to its application is worded to limit junior rates to retail employees one, two and three. But the effect of the Full Bench's decision on 29 January 2010 was to deal with that application in its terms. It uses different language but our submission is that it was in fact dealt with at the time.

PN174

JUSTICE ROSS: Thank you, Mr Millman. Anything you wish to add, Mr Booth?

PN175

MR BOOTH: No, your Honour: we support the submissions made by Mr Arndt and Mr Millman.

PN176

JUSTICE ROSS: Thank you. Mr Friend, anything you wish to say in response to what the parties have said about question 11?

PN177

MR FRIEND: No, we have made our position clear, I think, or I hope, your Honour.

PN178

JUSTICE ROSS: Thank you. If I can go to paragraph 21, where the SDA responds to ABI's earlier submission, and question 12 is inviting ABI to respond to what the SDA has said about their submission.

PN179

MR ARNDT: Thank you, your Honour. The response of the SDA to our submission - I mean, I think it's perhaps not a misunderstanding of the submission but at least a mischaracterisation of it. The position that we put that junior employees may be engaged at levels higher than level one, because of the lower pay rate applying to junior employees, it's not put as a - to use the SDA words - it's not put as a sole justification or a sound reason for retaining junior rates. It's not meant as a positively merit argument in favour of retention of junior rates or saying that those rates should be retained in the way that they are.

PN180

The purpose of the submission - it's intended to undermine a matter that we spoke to earlier on in this hearing. It's intended to undermine the central proposition of the SDA's case, which is - it seems to be that it's axiomatic that any employee engaged at level two or above has the same work value as any other employee and essentially if you were a junior employee who is engaged at level two and above, no one would engage a junior employee at those levels for any other reason than they had the same work value as an adult employee in those roles.

PN181

We contest that position and one of the obvious reasons why would contest that position is the obvious point that some employees - some junior employees - engaged at level two, three, four and above are engaged because of the pay rate. So it's not meant to be put as a positive merit argument necessarily, although you could make it for slightly broader reasons. It's meant to undermine the axiomatic argument, which I've dealt with earlier.

PN182

JUSTICE ROSS: Thanks, Mr Arndt. Was there anything you wanted to say in response to that, Mr Friend?

PN183

MR FRIEND: Well, your Honour, if it's not put as a merit argument then it doesn't advance the case. It doesn't undermine the axiomatic argument, because the employee will still be doing the work at level two. What really is occurring in this scenario is that the junior employee is favoured over the adult employee because of the lower rates, which as we say is discriminatory against the adult employee on that basis. It's also discriminatory against the junior employee that they're doing the work of the adult employee and getting a lower rate.

PN184

We do see this as no sound basis for maintaining the junior rates at those levels.

PN185

JUSTICE ROSS: Thanks, Mr Friend. The next question goes to the disputed matters in the joint report. We've canvassed various elements of the joint report. Was there anything any party wished to say further in relation to it? Was there anything additional you wished to say, Mr Arndt?

PN186

MR ARNDT: Thanks, your Honour - only that the content of the report which is identified as not agreed between the parties was identified in such a way that because the ABI took the position that those comments or the summation that is included in that section hadn't been asked for by the Commission. ABI was of the view that the reason why a joint report in relation to all the nitty gritty details of what was in submissions, what was in awards, what was in decisions - we had understood because that wasn't asked for, it was unnecessary to put that summation in and that is why it's been marked as disputed.

PN187

JUSTICE ROSS: All right. Is there anything else anyone wishes to say about that - - -

PN188

MR FRIEND: Just this, your Honour - that I understood the dispute to be about whether it should be in or not but I don't take the ABI to be disputing the actual factual accuracy of those summaries.

PN189

JUSTICE ROSS: All right. The final question directed to all parties is that in the event we decided to grant the application in whole or part, what do the parties submit about the operative date and any variation arising from such a decision? Mr Friend?

PN190

MR FRIEND: The union's position, your Honour, is that it should commence operation as soon as possible.

PN191

JUSTICE ROSS: All right. Mr Arndt?

PN192

MR ARNDT: Thank you, your Honour. This is one of the few cases which I've run or been involved with recently that hasn't has the mention of Coronavirus or pandemic or isolation or JobKeeper in it. Obviously these are extraordinary times, potentially very, very complicated economic times, which are on the horizon or hopefully not. We would say that if the Commission was minded to grant the SDA's application it would need to have very strong considerations of the changes in the economy and the changes - the conditions of retail in relation to the broader economic conditions which Australia is currently facing.

PN193

I would very likely think that those who will speak after me will perhaps speak longer and perhaps more passionately on that issue than I will but we wouldn't think it appropriate that an immediate - an immediate introduction or as soon as possible introduction of what could be, not on a global scale because as all the numbers in this case demonstrate the actual group of employees who may be affected by this it's a minority of employees. However, for those employees and this is a matter that we identified in a table in our August 2019 submissions, for those employees the pay rate differential has the potential to be quite large.

PN194

Some of those categories or some of those scenarios that are put in our table are theoretical scenarios because the more senior an employee the less likely it is that the junior employees are going to be in that senior position. But this will have an effect on employees and it will have an effect on junior employees who I think it's probably uncontroversial, probably are likely to be some of the most vulnerable employees that are in the economy, particularly in retail. So that's all I would say on that point, your Honour.

PN195

JUSTICE ROSS: Thanks, Mr Arndt. Mr Millman?

PN196

MR MILLMAN: Your Honour, when it comes to the implementation of changes to the wage rates we do find that a pragmatic and practical approach is rather necessary. It's not as simple as waving a wand or snapping your fingers and suddenly everyone is dancing from the same song book, and we do need to bear in mind that we do have an upcoming change to the minimum rates in the modern awards anyway, or in the Retail Award specifically on 1 February 2021. We would suggest that from a practical perspective for the purpose of the administrative burden that would be placed on employers to implement such change through their payroll systems, tying it into that change would be the most pragmatic approach so 1 February 2021 at the absolute earliest but I would agree with the comments of Mr Arndt that the parties have only have a very limited time to actually consider this specific question as asked in the information notes and some further consideration of prevailing economic conditions on the information available and the best data available as of now or perhaps soon in the future would be appropriate to give to the Commission to have a full and thorough consideration of the timing of any such implementation if the Commission were to grant the application.

PN197

JUSTICE ROSS: Thank you, Mr Millman. Mr Booth?

PN198

MR BOOTH: Thank you, your Honour. In addition to those comments made by the other employer representatives, we also believe that if the application is to be agreed to that serious consideration should be given as to the timing of any resultant increase in the levels - those levels which apply to junior employees. We would contend that even the 1 February 2021 operative date would be too early and our view would be that 1 July 2021 would be a more appropriate date.

PN199

We would also submit that the - if the Commission was mindful to grant the application that it may consider a phased approach to any resultant change to the rates of juniors, similar to what has occurred in recent times for a number of the penalty rates which are applied to different aspects of the General Retail Industry Award. Thank you, your Honour.

PN200

JUSTICE ROSS: Thank you. Anything any party wishes to say further? Either in response to those submissions or more generally?

PN201

MR FRIEND: Just in response to those submissions. We just note that - as I pointed out to Hatcher VP the application was made in 2014, obviously there's been a lot of things that have been done in that time and I'm not making any comment about the length of time it's taken although a number of employees will (indistinct) during the time since the application was made, but there is a sound reason for doing it promptly rather than delaying it off into the never never as had been requested, at least in part. Commission pleases.

PN202

JUSTICE ROSS: All right, thank you. Are there any - is there anything finally any party wishes to say before we adjourn the proceedings? No? All right. Well, thank you very much for your attendance today and for your submissions, both written and orally. We'll adjourn and reserve our decision.

ADJOURNED INDEFINITELY [12.09 PM]