METAL TRADES (GENERAL) AWARD 1966

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES The Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers - Western Australian BRANCH AND THE COMMUNICATIONS, ELECTRICAL, ELECTRONIC, AND ENERGY INFORMATION, POSTAL, PLUMBING AND ALLIED WORKERS UNION OF AUSTRALIA, ENGINEERING AND ELECTRICAL DIVISION WA BRANCH

APPLICANTS

-v-

Anodisers W.a. and others

RESPONDENTS

CORAM Senior Commissioner J F Gregor

 Commissioner J H Smith

 Commissioner J L Harrison

HEARD Tuesday, 11 March 2003, Tuesday, 14 December 2004, Wednesday, 27 April 2005, Thursday, 28 April 2005, Monday, 20 March 2006, Wednesday, 4 August 2004

DELIVERED MONDAY, 26 JUNE 2006

FILE NO. APPL 740 OF 2002

CITATION NO. 2006 WAIRC 04600

CatchWords Award variation - casual loading – de-aggregating of components – increase granted - Industrial Relations Act, 1979 s.26, s.40, s.40B

Result Casual loading granted

Representation 

Applicant Mr L. Edmonds, of Counsel, for the Applicant Unions

Respondent Mr J. Uphill for the Respondents and Mr G. McCorry intervening for the Motor Traders Association

Reasons for Decision

1         This application was originally filed in May 2002 by the application the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union of Workers – Western Australian Branch and the Communications, Electrical, Electronic and Energy Information, Postal, Plumbing and Allied Workers Union of Australia, Engineering and Electrical Division, WA Branch (the Unions) sought to vary the Metal Trades General Award 1966 (the Award) by:

• Increasing the casual loading from 20% to 25%
• Altering the provisions for part time and casual employment under the Award to give effect to the Decision of the Full Bench of the Australian Industrial Relations Commission in Print No. T4991 and
• Inserting new provisions in the Award for parental leave, carers leave and leave for jury service based on provisions contained in the Federal Metal Engineering and Associated Industries Award 1998. 

2         The contention of the Unions is that the application is justified and allowable State Wage Fixing Principles as enunciated by the Commission in Court Session in the 2001 State Wage Case.

Background

3         The treatment of the application has been characterised by long periods during which the parties were inactive in dealing with the application.  The Commission conducted proceedings on 11th March 2003 to ascertain how the discussions were progressing and the Commission issued Directions on various occasions.  For instance on 12th March 2003 Direction 2003 WAIRC 07916 was issued which required that the parties and the intervenor should meet at the times and dates fixed for the purpose of exploring whether conciliation could resolve the application as the Commission was of the view that this application would not be listed until the parties advised the Commission that attempts to conciliate were unavailing.  The parties also debated whether the Commission could deal with this application and as a result a hearing took place on 14th December 2002 during which the Commission was told that there were a number of procedural difficulties in dealing with the application.  Most issues raised centred upon whether the Commission as constituted by a single Commissioner could deal with the matter.  A further hearing was held on 4th August 2004 whereby the parties raised with the Commission that a s.40B review of the Metal Trades Award was taking place at that time, however the Commission was advised that little progress had been made in dealing with the application.

4         At a hearing held on 14th December 2004 the Commission determined that the application would have the effect of varying the wages or conditions above the safety net and therefore submissions were requested from the Unions concerning Principle 10 of the State Wage Fixing Principles.  Under this Principle a party making a claim must support it with material justifying why the matter had not been progressed or finalised pursuant to s.41 of the Industrial Relations Act, 1979 (the Act), why the matter had not been pursued under any other of the Principles set out in the Wage Principles and how in the discharge of its statutory function to consider varying an award above or below the Safety Net that the Commission should take into account matters identified in s.26 of the Act. 

5         The Unions submitted that they had used their best endeavours to advance their claim through enterprise bargaining and had been unsuccessful partly because the coverage of the award is extremely broad and covered many hundreds of employers with potential to employ many thousands of employees.  It was therefore difficult in those circumstances to negotiate agreements.

6         The Unions also stated that the only Principle under which the claim could be advanced is Principle 10 and therefore none of the other Principles were relevant.  The Unions claimed that the granting of the application would vary the award so the Safety Net reflects the changes that have occurred in economic, social and industrial conditions since the award was made and they submitted that productivity increases had already occurred and that work was being performed more effectively.

7         As a result of these submissions the Chief Commissioner allocated the matter to the Commission in Court Session as constituted for hearing and determination.

8         At the commencement of proceedings on 27th April 2005 the Commission was advised that the application insofar as it related to part time and casual workers and parental leave, carers leave, leave for jury service and the contract of service provisions would be put aside so that these proceedings would only deal with the issue of an increase to the casual loading in the Award from 20% to 25%.  It was on this one issue that the Commission in Court Session heard the submissions of the parties.

Applicants submissions

9         The essential argument was that insofar as the requirements of Principle 10 were concerned the Unions had used their best endeavours to advance claims for the proposed change through bargaining and that this had been unsuccessful due to the extensive range of employers covered by the Award.  Evidence was given by Mark Carl Goldsworthy, a Union Organiser, in support of these submissions.  Mr Goldsworthy was cross examined by Mr Uphill who appeared for the Respondent employers.  The purpose of the cross examination seemed to be directed to discovering just how strong the attempts had been by the Unions to try and achieve agreements and how casual employees are used in the industry.  Mr Goldsworthy’s evidence was that the percentage of casual employment as at July 2005 was around 30% of the workforce and was still rising.  He offered the opinion to that the ‘Casual’ clause, as contained in the award, was hardly ever applied in practise and that since 1996 employers had tended to employ more casuals or at least what Mr Goldsworthy identified as persons that employers wanted to call casuals.  Mr Goldsworthy stated that this tendency had been increasing and sometimes these employees are known as long term casuals or fulltime casuals. 

10      Mr Edmonds, of Counsel, submitted to the Commission that the issues before the Commission had been previously ventilated in the Federal Commission over 12 days of hearings.  Mr Edmonds stated that the Federal Commission considered voluminous amounts of evidence over a substantial amount of time and consumed a significant amount of the resources of both employers and employees.  Mr Edmonds stated that organisations such as the Women’s Electoral Lobby and the Human Rights and Equal Opportunity Commission also appeared.  The Unions argued that because all of this information had been collected and analysed by the AIRC it was not the intention of the Unions to repeat the same exercise before this Commission. The Unions argued that the AIRC had made certain findings in relation to the engagement of casual employees and that even though it was conceded that the WAIRC must make up its own mind when deciding the application they claim that the findings of the Full Bench of the AIRC should be persuasive. 

11      The Unions argued that the Commission should also be mindful of the findings made in subsequent applications before the Queensland Industrial Relations Commission and the Tasmanian Industrial Relations Commission which essentially flowed the findings of the Full Bench of the AIRC on in those States.  It was conceded that the Federal Metal Trades Award applies in both of those States and that could be seen as a significant factor as to why the Queensland Industrial Relations Commission and the Tasmanian Industrial Relations Commission may have been persuaded to do the same.  The Unions submit that these events are a relevant consideration for the Commission in determining this application and argues that the Commission should be endeavouring to ensure that workers employed in the metals and engineering industry in Western Australia are on a comparable set of conditions to those who are bound by similar awards in other States.

12      The second leg of the argument was that casual employment should not be a cheaper option for the employer than the cost of employing an employee on a fulltime basis.  The nature of casual employment is that it should provide flexibility and the ability for employers to respond to changes in demand for their work but it should not be a cheaper option to engage people as casual employees to achieve that end.  The Unions argue that casual employees suffer from lower wages, lower superannuation and lower conditions of employment around Australia compared to fulltime employees and that the loading of 25% for the casual employee restores some of the balance albeit not all of it.

13      Mr Edmonds developed his argument by reference to the quantities of annual leave recognised in the casual loading and he referred to clause 23 and 24 of the Award in this respect and he argued that a casual worker should receive equal pay for an equal number of days worked.  He made similar suggestions in respect to long service leave and argued that this should be a right because a casual employed on a regular basis could never ever receive long service leave.  Further, the adoption of long service leave as a component of casual loading was something that the AIRC had done in some of its awards for instance the Parcel Industry Award and the Graphic Arts Award.

14      Mr Edmonds also mentioned a so called transitional allowance being included in the casual loading to compensate employees for lost time between jobs.  It was submitted by the Unions that there should be an element of deterrence to employers from using casual employees. 

15      The Unions argue that when one aggregates all of these ingredients they came to a loading of well over 25% but the Unions would be happy to settle at this point for a 25% loading and would not pursue changes to the contract of service.  Mr Edmonds went on to adumbrate upon additional components that he said should be taken into account, for example casual employees were less likely to receive superannuation benefits, carers’ leave, parental leave or a number of other provisions that fulltime workers receive under the award.  In Mr Edmonds submission the components of the loading could well be 18.8% for forgoing annual leave, personal and sick leave, public holidays, 1.59% for annual leave loading, 10% for loss time and a general deterrence figure of 1.95% (Exhibit    ).  On his calculations the casual loading would be 31.72%.  That well and truly covers the 25% which has been fixed and would provide an equitable compensation for casuals than the current loading of 20%.

16      The Commission heard from Mr G. McCorry as an intervenor for the Motor Traders Association.  He made submissions concerning the Wage Fixing Principles and the procedures that are required to be followed by the Commission.  Mr McCorry was critical of the evidence of Mr Goldsworthy whose evidence he described as limited and he described as telling the admission by Mr Goldsworthy that 30% of people in industry are long term casuals and he questioned whether such persons were casuals in the true sense.  He claims that in any event there had been no analysis of the decisions which had been made following the AIRC Metal Trades Decision to install a rate of 25% and argued that the issue of long term permanent casuals was simply not applicable in this State.  However, Mr McCorry did not offer any evidence to prove this assertion.  Mr McCorry then provided a detailed analysis of how the component parts of the rate ought be constructed and he said on behalf of his client that the Unions had not established a proper case under the Wage Fixing Principles.  Mr McCorry mentioned that the 20% loading already meets the requirements of s.26(1)(d)(iv) of the Act and that it was not the role of the Commission to assist the Unions by doing their work to better protect the interest of members. 

Respondents’ submissions

17      The Commission heard submissions from Mr Uphill for the Respondents.  Mr Uphill suggested that the situation in Queensland and Tasmania is vastly different to in Western Australia as there was a need there for those Commissions to adopt the casual loading from the Federal Award to maintain consistency because those employers who had the employees working under applicable State Metal Trades Award worked alongside employees covered by the Federal Metal Industry Award.  Mr Uphill described as eminently sensible that similar occupational groups have their conditions ostensibly the same.  Mr Uphill argued that the Federal Metal Industry Award does not apply in Western Australia and the Commission did not need to give consideration to differing loadings applying to tradespersons. 

18      Mr Uphill described the submissions of the Unions as nothing but an attempt to flow on the casual loading of 25% which exists in the Metal Industry Award Federally to Western Australia and argued that the notion of comparative conditions is not a factor which has any force nor should it.  Mr Uphill stated that it cannot be suggested that the Federal Metal Industry Award creates a precedent which binds this Commission to adopt in the same casual loading which exists in it and Mr Uphill’s clients suggest that the movement in the Federal Metal Industry Award of a casual loading from 20 to 25% is not a sufficient reason fro this Commission to grant the same increase in this State.

19      Mr Uphill made detailed submissions about the Wage Principles and whether the matter should have been finalised by agreements under s.41 of the Act.  He suggested by reference to Exhibit U1 that the Unions had been able to reach agreement with many companies on matters affecting the Metal Trades Award as this exhibit contained some three pages of agreements to which the Unions were party and which had been registered and a number of the agreements referred to a casual loading being paid to employees.  The Respondents argued that whether the Unions have been successful or not in respect of negotiating a high casual loading is not a relevant consideration when the Commission applies Principle 10. 

20      Mr Uphill addressed the provisions of s.26.  He complained that the claim does not provide any improved efficiency in work and he suggested there needs to be a balance according to the provisions, but that was not achieved.  Mr Uphill claimed that there is no merit in increasing the loading to 25% and that it was increased from 15 to 20% in 1974 at the same time as annual leave was increased from three to four weeks, and that this was preceded a year earlier by an annual leave loading of 17½% being introduced. 

21      The Respondents then analysed the Decision of the Federal Commission and each of the components in the Federal Commission which make up the 25% was analysed.  Mr Uphill provided criticism for each of those, concluding that the Federal Commission had a choice of a loading of 121.6 or 125.88 and they chose the higher and that this was not justified on the evidence before it.  He finalised his submission on the basis that the material indicates the casual loading should not be increased.  The Respondents argued, however, that if the Commission is persuaded to grant the claim the increase should be phased in so as to ease the burden on employers and this could be achieved by increasing the casual loading to 22.5% from the date the Award is amended and 25% a year later. 

22      The Respondents called Mr John Andrew Nicolau who gave detailed evidence and provided an analysis of a survey which had been conducted by the Chamber of Commerce and he was subjected to cross examination about this survey.  The information presented by Mr Nicolau (Exhibit U3) became very important to the outcome of this case as it contained data particularly relevant to the circumstances described in detail later in these Reasons.

23      The Commission considered the submissions in a preliminary way and on 11th May 2005 wrote to the parties in the following terms:

“RE: APPLICATION TO VARY METAL TRADES (GENERAL) AWARD 1966

On the 27th April 2005 the Commission in Court Session heard submissions from the parties and intervenor concerning the above application.

Since receiving these submissions, the Commission in Court Session has given some preliminary consideration to the matter. 

All parties drew to the attention of the Commission in Court Session material presented to the Australian Industrial Relations Commission in Re Metal Engineering & Associated Industries Award - Part 1 (2000) 110 IR 247 at [190] – [191];.(re Metal Engineering).  In our opinion the parties have not provided enough information to allow the Commission in Court Session to properly assess and investigate the underlying assumptions upon which the Australian Industrial Relations Commission based its Decision in re Metal Engineering and the application of this decision to circumstances which exist in Western Australia.

Because of this, the Commission in Court Session has decided to invite the Union, the Chamber and the Intervenor to call evidence and or produce documentary evidence whether through an expert or otherwise to address the following:

(a)            Whether the conclusion reached in the 2004 CCI survey that full time casuals work the same hours as full time employees was based on the same issues, matters and evidential material considered in the ABS material presented to the AIRC by the parties in Re Metal Engineering.

(b)           Whether the CCI survey results constitute a sufficient representative sample of employers in Western Australia who engage casual and fulltime employees under the terms of the Award for this Commission to reach the conclusion that full time casuals work the same hours as fulltime employees in Western Australia;

(c)              Whether unpublished or published ABS statistics in relation to Western Australia support the conclusions reached by the AIRC at paragraphs [190]-[191] or whether they support the conclusion reached in the 2004 CCI survey;

(d)              The matters set out in s26 (1)(d)(ii) and (iii) and (vi) of the IR Act 1979 (the Act).  In particular the parties are encouraged to provide any relevant unpublished or published ABS statistics, Treasury or other relevant documentation.

(e)            The matters set out in s26(1)(d)(vi) of the Act..  In particular whether the information contained in Chart 3 of the 2004 CCI survey constitutes a sufficient sample and sufficient information on which conclusions can be reached relevant to this application and additional evidence or information which is to be adduced under paragraph (c) above which addresses this matter.

(f)              The current levels of casual employment under the Metal Trades (General) Award in Western Australia compared with the level of casual employment under this Award in 1995 and 1985. 

 In due course the matter will be re-listed to allow the parties to address the above issues pursuant to the powers vested in the CIC Session under s27 of the Act.”

24      On 20th March 2006 the Commission in Court Session foreshadowed to the parties that the matter would be re-listed to allow the parties to make comments and submissions upon the letter from the Commission. 

25      Mr Edmonds made submissions concerning the ABS Publication Manufacturing Industry Code A221.5.  He also addressed a document headed ‘Skills Shortage in Western Australia’ (Exhibit C).  As for the CCI survey he criticised the sample size of 123 employers who engage 16,000 employees.  There are, according to Mr Edmonds, some 28,000 employees in the industry.  It is therefore open to conclude that the sample is not sufficiently large enough to allow the Commission to draw a conclusion from it; that is; fulltime casual workers work the same time that fulltime employees work in Western Australia. 

26      The Unions provided some answers to the questions posed by the Commission but essentially the Commission in Court Session fell back on the submissions previously made that there should be an equivalent benefit to casual employees as accorded to permanent part time and permanent fulltime employees.  The figure of 25% goes somewhere towards equalising the situation in the workforce. 

27      Mr Uphill answered the questions of the Commission, he said that the ABS material was not material available to the AIRC.   Mr Uphill submitted that there are casuals who do not work fulltime hours and that if the conclusions reached by the AIRC are extrapolated to those casuals who work significantly less than fulltime then it substantially inflates the casual loading. 

28      In reply Mr Edmonds submitted that there are large bodies of precedent that recognise the itinerant nature of casual work which produces a debilitating uncertainty of income which has previously been recognised and compensated for in a loading by all Tribunals when determining casual loadings.  Mr Edmonds argued that is also relevant to the length of employment of casual employees and there must be some recognition for the fact that as they are itinerant they usually suffer a significant level of lost time.

29      Mr Edmonds agreed with the Respondents that the issue as to whether or not fulltime and casual workers work the same number of hours as fulltime employees is misleading.  Mr Edmonds argued that fulltime casual employees necessarily implies that they are working as a fulltime employee is often not the case there are a large number of casuals who are not fulltime casuals and do not get fulltime hours.  He argued that casual need to be compensated for the uncertainty of their income and that there is a destabilising effect that style of work has upon their life.  The Unions also agree that the purpose of the casual loading is not to put casuals in the same situation as full timers but to put them in a situation where they are equitably compensated for the different hours they work.

Finding and Conclusions

30      The Commission is aware that the incidence of casual employment is substantial and includes approximately 30% of employees employed under the Award and that many long term casual employees are paid at a lower base rate than their counterparts.

31      The Commission has been given a considerable volume of evidence to consider in these proceedings in relation to the Unions’ claim, however the most substantial and directly relevant to the Award and the issue of casual loadings was that given in the proceedings by Mr Nicolau in relation to a survey of CCI members with employees employed under the Award (Exhibit U3 Metal Trades (General) Award Survey 2004).  This evidence was subjected to cross examination and was not diminished by that.  It is therefore the finding of this Commission that the findings of fact contained in the Metal Trades (General) Award Survey 2004 should be accepted.  The key findings are:

 1. An average of 6.2 days of sick leave is taken by fulltime employees each year.

 2. Turnover of fulltime employees is 10% per year and only 23% of that 10% are terminated by their employer.

 3. On average casual employees are employed for less than 3 months.

 4. Casual employees work the same hours as fulltime employees.

32      It should be noted that to ensure consistency the CCI survey and analysis compares the benefits paid to fulltime and casual employees on the basis of service for one year.  When assessing that information the loading can be calculated as follows:

 (a) Annual leave, sick leave and public holidays:

 Based on 260 working days per year fulltime employees receive pay for 20 days annual leave, 10 public holidays and 6.2 sick days which mean they work 223.8 days in a year.

  36.2    x    100    =    16.18%

 223.8           1

 (b) The value of annual leave loading is not in dispute between the parties:

    =    1.59%

 (c) As the turnover of fulltime employees is very low the calculation of the termination benefit of 0.7 days a year in Exhibit U3 should be accepted.  When this amount is calculated as a percentage it is:

  0.7    x    100    =    0.27%

 260            1

 (d) As casual employees are on an average employed for very short periods it is legitimate for the Commission to compensate casual employees for the disability of uncertain, intermittent and insecure employment including the lack of entitlement to notice and for deterrence.  At pages 304 to 305 of AIRC decision (110 IR 247) the AIRC assessed an amount of 10% for compensation for these matters and in doing so had regard to a decision of 5 members of the Victorian ERC in Ministerial Reference Re:  Minimum Wages for Casuals; Juniors and Piece Rate Categories unreported VERC 2 July 1996 in which 10% was allocated for broken time, the intermittent nature of work, the lack of access to pt 5 Div 1 and the lack of entitlement to notice.  The Victorian Bench concluded that the setting of rates for casuals should be approached on a sector by sector basis.  Within the 10% amount the AIRC included for these matters they also included an amount based on evidence before it that casuals work 5% less than fulltime employees (broken time – see pages 316-319).  CCI contend that the AIRC assessed the amount for broken time as 5% but the decision and table at pages 318-319 is not clear on that point.

 (e) When the following matters are also considered an assessment of at least 8% for the disability of uncertain, intermittent and insecure employment including the lack of entitlement to notice and for deterring casual employment in preference to weekly employment can be justified in this case:               

 (i) Casuals are theoretically entitled to LSL but because of their usual precariously length of service they are extremely unlikely to gain the benefits of such leave;

 (ii) Casual employees under Part 1 of the award are not entitled to redundancy pay or paid job search leave;

 (iii) No assumption can be made about lack of training and promotion opportunities as there is no evidence before this Commission in relation to these issues;

 (iv) From 27 March 2006 all eligible casual employees in Western Australia are entitled to parental leave;

 (v) Casual employees who work for an employer for less than 30 days in a 12 month period do not receive superannuation (clause 33(1));

 (vi) Casuals are entitled to two days bereavement leave each year (see The Australian Workers’ Union, West Australian Branch, Industrial Union of Workers v Kalgoorlie Consolidated Gold Mines Pty Ltd & Others (2003) 83 WAIG 3596);

 (vii) Casuals are not entitled to paid carers’ leave.

33      The calculations which are set out in paragraphs (a), (b) and (c) are not disputed by employers represented by Mr Uphill.  When the amounts are added together the casual loading can be assessed at 25.77%.  In arriving at this amount we have not included in this amount a consideration for lost time which is unable to be calculated on the information before us. 

34      It therefore follows that the West Australian data, independent of the federal data which allowed the AIRC to arrive out a figure of 25%, confirms that 25% should be the fair and appropriate casual loading.  In determining that an amount of 25% is a fair and appropriate casual loading the Commission has also had regard to s.26 of the Act and the requirement on the Commission to act according to equity, good conscience and the substantial merits of the case. 

35      For these reasons the Commission in Court Session will grant the application to amend the Metal Trades (General) Award by inserting a casual loading of 25%.