The Breweries and Bottleyards Employees' Industrial Union of Workers of Western Australia -v- Kirin Australia Pty Ltd

Document Type: Decision

Matter Number: FBA 56/2001

Matter Description: Against the decision in matter No 1394/2001 given on 2/11/2001

Industry:

Jurisdiction: Full Bench

Member/Magistrate name: Full Bench His Honour The President P J Sharkey Commissioner J F Gregor Commissioner J H Smith

Delivery Date: 30 Jan 2002

Result:

Citation: 2002 WAIRC 05011

WAIG Reference: 82 WAIG 412

DOC | 120kB
2002 WAIRC 05011

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES THE BREWERIES AND BOTTLEYARDS EMPLOYEES' INDUSTRIAL UNION OF WORKERS OF WESTERN AUSTRALIA
APPELLANT
-V-

KIRIN AUSTRALIA PTY LTD
RESPONDENT
CORAM FULL BENCH
HIS HONOUR THE PRESIDENT P J SHARKEY
COMMISSIONER J F GREGOR
COMMISSIONER J H SMITH

DELIVERED WEDNESDAY, 13 MARCH 2002
FILE NO/S FBA 56 OF 2001
CITATION NO. 2002 WAIRC 05011

_______________________________________________________________________________
Decision Appeal upheld, decision at first instance suspended and remitted to the Commission at first instance, and appeal otherwise dismissed
Appearances
APPELLANT MR D H SCHAPPER (OF COUNSEL), BY LEAVE

RESPONDENT MR S HEATHCOTE, AS AGENT

_______________________________________________________________________________

Reasons for Decision

THE PRESIDENT:
INTRODUCTION

1 This is an appeal brought by the abovenamed organisation of employees pursuant to s.49 of the Industrial Relations Act 1979 (as amended) (hereinafter referred to as “the Act”) against the whole of the decision of the Commission constituted by a single Commissioner given on 2 November 2001 in application No 1394 of 2001. The notice of appeal was filed on 22 November 2001, the decision having been deposited in the office of the Registrar on 6 November 2001.
2 The decision appealed against (see page 9 of the appeal book (hereinafter referred to as “AB”)) was a dismissal of an application made by the abovenamed appellant. It is that decision that the appellant organisation of employees has now appealed against on the following basis.
GROUNDS OF APPEAL
3 The grounds of appeal are as follows:-
“1. In dismissing the application the Commission erred in the exercise of its discretion in that the Commission:
(a) failed to give any or any sufficient weight to the scheme of the Act and/or the wage fixing principles
(b) failed to give any or any sufficient weight to the respondent’s evidence that it engaged contractors for the purpose of avoiding payment of the rates prescribed in the applicable industrial agreement
(c) wrongly regarded the evidence of Mr Murphy as demonstrating that there was some custom and practice regarding contractors
(d) wrongly regarded the evidence of Mr Murphy, however characterised, as conclusive of the application or requiring that it be dismissed
(e) failed to distinguish between the purpose of using of contractors as described by Mr Murphy and the purpose to which the respondent was using contractors.
Relief sought:
An order quashing the order appealed from and remitting the matter back to the Commission for hearing and determination in accordance with the decision of the Full Bench.”

BACKGROUND
4 There were two applications made by the appellant organisation of employees, The Breweries and Bottleyards Employees’ Industrial Union of Workers of Western Australia (hereinafter referred to as “the BBEIU”). The applications arose from a dispute that the respondent employer, Kirin Australia Pty Ltd (hereinafter referred to as “Kirin”), in relation to the employment of one of the BBEIU members, Mr Denis Patrick Carmody, and the engagement of malt production operators via a labour hire firm. Both applications were heard together, by consent. The reasons for decision, at first instance, encompass both applications, but this appeal relates only to the decision in application No 1394 of 2001.
Application No C169 of 2001
5 The original application No C169 of 2001 related to the employment of Mr Carmody and came on for conference before the Commission pursuant to s.44 of the Act. There were conferences held on 24 July 2001 and 14 August 2001, but the matter was not resolved and was referred for hearing and determination in the following terms:-
“The union claims an order but upon the making of this order, the respondent shall offer to employer Denis Carmody as a full time malt production operator under the terms of the Malt Industry Award and any applicable industrial agreement between the parties.”

6 The respondent opposed this claim.
7 The matter was referred for hearing on 7 September 2001 and heard on 19 October 2001. Having heard the matter, the Commissioner at first instance, determined that Mr Carmody be offered employment by the respondent employer. There is no appeal against that decision.
Application No 1394 of 2001 – The Application to vary the Award
8 By the second application, No 1394 of 2001, lodged in the Commission on 27 July 2001, the appellant organisation sought variation of the Malting Industry Award 1993 (hereinafter referred to as “the award”) by the insertion of two clauses as follows:-
“Clause 8A.- Part time Employees

(It is not necessary to reproduce clause 8A because that clause was inserted by consent in the award and its insertion is not the subject of this appeal).

Clause 23. — Use of Contractors

(1) This clause shall apply only to Kirin Australia Pty Ltd (“Kirin”).
(2) All work falling within the classifications covered by this award or any industrial agreement between the union and Kirin shall only be performed by persons employed directly by Kirin.
(3) Provided that subclause 2 shall not apply for engagements not exceeding 3 months where:
1. temporary coverage for an employee on leave is required
2. for seasonal reasons there is a temporary increase in the need for labour
3. an emergency or breakdown necessitates increased or specialised labour which Kirin’s employees are unable to provide.
(4) The period of 3 months referred to in subclause (3) may be extended by consent of the union provided that consent shall not be unreasonably withheld.
(5) No work referred to in subclause (2) shall be let out to contractors unless the contractor’s employees are paid in accordance with the terms and conditions of this award and any agreement between the union and Kirin.”

9 The only other respondent to the award, Joe White Maltings Ltd was not represented and did not appear at the hearing.
10 The reasons advanced by the union for the insertion of the proposed clauses were as follows.
(a) Clause 8A:-
“The applicant seeks the insertion of this clause to increase the modes of employment available to the employer thereby increasing flexibility and maintaining the relevance of the award for modern work practices.”

(b) Clause 23:-
This clause was required because Kirin has employed and continues to engage long term labour by way of labour hire firms and thereby avoid payment of the terms and conditions of employment for the working question which terms and conditions are agreed between the appellant and Kirin as being fair and reasonable.
11 Kirin consented to the inclusion of the proposed Clause 8A, but did not consent to the inclusion of the proposed Clause 23, and indeed opposed its inclusion.
12 The reason advanced was that the proposed Clause 23 would impose restrictions on the employer’s right to engage contractors and upon its right to engage persons under terms and conditions determined by the employer.
BACKGROUND
13 There was evidence before the Commissioner, at first instance, from Mr Denis Patrick Carmody, a member of the BBEIU, and Mr Ronald James Murphy, the Secretary of the BBEIU. There was evidence given for Kirin by Mr Naoki Inoue, the Financial Director and Secretary of Kirin.
14 Kirin, which commenced its malt production business in Western Australia in 1978, processes malt for sale to brewers of beer. The only other such enterprise in this State is Joe White Maltings Ltd.
15 Both of those companies are named parties to the Malting Industry Award 1993 (No A6 of 1993). BBEIU is also a party to the award (see Schedule A of the award) and is an organisation of employees duly registered under the Act.
16 The Scope clause of the award, Clause 2 applied the provisions to the two companies which are the only employer parties to the award and to “employees engaged” by them in the classification contained in the award.
17 Both employers employ “Malt Production Operators” which classification is defined in the award, Clause 6(2) “to mean and be deemed to be a classification consisting of various levels of employee who handles malt or barley or work specifically associated with a malthouse”. “Malthouse” is not defined in the award.
18 However, it was common ground between the parties that the applications related to “Malt Production Operators”, although the variation would, on its face, apply to all employees covered by the award.
19 It should be noted that Clause 2 – Scope of the Award, provides that the provisions of the award applies to parties named in the Schedule attached to (the) award and the employees engaged by the employer in the classifications contained in this award.
20 Joe White Maltings Ltd was not involved in the proceedings because all of its employees are covered by workplace agreements.
21 There was evidence for the respondent from Mr Naoki Inoue, as to a number of facts which I recite hereunder and which were not in issue.
22 The background to the making of the industrial agreements (as defined in s.7 of the Act), was that Kirin and the BBEIU entered into such an industrial agreement in 1997, and that until March 2000 Kirin attempted to contain or reduce labour costs through negotiations with the BBEIU. In other words there was a history of industrial agreements during that time, based on the award.
23 Kirin next attempted to contain labour costs through negotiation of individual agreements directly with its employees, but these attempts were abandoned because the employees refused to enter into the proposed agreements.
24 In March 2000, Kirin withdrew from the existing industrial agreement and returned to the award conditions as a safety net above which conditions could be negotiated.
25 Between March 2000 and 11 August 2000 Kirin experienced a period of low level industrial disputation, with no industrial action occurring.
26 The industrial disputation was resolved by this Commission making orders to register the two hereinafter mentioned agreements by consent:-
“(a) Kirin Australia (“Fitters”) Enterprise Agreement 2000 which expired on 11 August 2001; and
(b) Kirin Australia Enterprise Agreement 2000 (80 WAIG 5669) which expired on 8 November 2001.”
(The latter covered malt production operators, inter alia).
(At the time when the order appealed against was made the second agreement (the agreement applying to the malt production operations), had not expired).
27 Mr Denis Patrick Carmody commenced work at Kirin’s premises on 28 September 1999. He was employed by an employee hire company called Westaff. He worked as a malt production operator.
28 It is unnecessary to deal further with Mr Carmody’s situation other than to note that the Commissioner, at first instance, accepted that he had been promised employment by the respondent itself after three months, which promise had not been honoured and the Commissioner, having heard and determined the application, ordered that he be offered such employment.
29 The most relevant evidence in support of the application to vary the award was that of Mr Murphy who gave evidence that, before Mr Giuliani, a long term employee on an enterprise bargaining agreement finished his employment, two additional employees were brought on through labour hire companies; and they were being trained on the malt production operation. They were from Drake Industrial and Westaff respectively. Labour hire firm employees were also referred to in evidence as contractors.
30 He said that there were eight out of the nine malt production employees who were on enterprise bargaining agreements at Kirin, at the time of the hearing, at first instance. Now there are only seven – with the two hired employees.
31 Mr Murphy made it clear (see page 43 (AB)) that Kirin had used contractors labour hire employees in the past and have been doing it, at least, since September 1999. It had done so before that time when there were shutdowns and people were brought in to assist with the plants maintenance, and for finite periods.
32 Persons were also brought in on one or two occasions to work when there was not a shutdown, but never for a long time. No employee had lost a benefit of his employment because a contractor was engaged, or was dismissed because a contractor was taken on. He was, however, able to say that all of Kirin’s employees were less secure now that there were contract workers on the site. He agreed that Kirin had not threatened to dismiss the union member employees. The insecurity, he said, existed because Kirin had demonstrated that they could engage people through a labour hire company at a lesser rate. He said that Kirin had abused its right to engage contractors and it was unfair for a number of reasons. First, he said that he believed that any employee or person engaged in full-time employment in malt production at Kirin’s was entitled to the conditions agreed upon between Kirin and the union. He agreed that there was a justifiable case for labour hire “for extraordinary means” and that the union operates its own local hire company. He did not dispute that Joe White Maltings Ltd was a significantly larger “player”. He agreed that the first clause of Clause 23 expressly excludes or rather only includes Kirin in the use of contractor’s proposal. He did not agree that that led to a competitive disadvantage. Labour hire in the past had been used for malt production operators and fitters, but not for a long period of time, and it may be while someone was on extended leave, his evidence was.
33 Significantly, The Kirin Australia Enterprise Agreement (“the agreement”), was registered by consent of the parties, as I have observed.
34 The agreement did not, according to Mr Inoue, deliver any significant reduction in Kirin’s labour costs. Thus, he said, Kirin still needed to look for further options to reduce costs. Mr Inoue in evidence too, (page 120 (AB)) said “historically Kirin has employed its own work force and relied on contractors only at peak times. It has enjoyed a right to use contractors and has always exercised that right responsibly”. That is clear evidence of the limited use of hire firm employees also called “contractors”.
35 Mr Inoue made it quite clear in evidence that Kirin considered and decided to use labour hire from “external labour suppliers” instead of direct employment. Indeed, these resulted in significant savings “and make labour hire financially attractive compared with the cost of direct employment” Mr Inoue said. There are other benefits to which Mr Inoue referred in evidence (see page 122 (AB)).
36 On 27 September 1999, Mr Carmody’s services were provided to Kirin by a labour hire firm, Westaff. This experiment, Mr Inoue said, proved successful in that the cost of obtaining his services from Westaff was up to 30 percent lower than the cost of engaging him as a full-time employee. When it became necessary to reduce Kirin’s labour requirement, the arrangement it had with Westaff enabled it to reduce labour hours by eight per week at no cost and at reasonably short notice.
37 At the hearing the Commissioner, at first instance, was informed, quite clearly in evidence, by Mr Inoue that Kirin had decided to increase the number of people which it engaged through external labour suppliers and to expand on the success of its labour hire strategy. Mr Inoue said that it did not propose to take any action which would disadvantage any of its permanent employees “by comparison to their current entitlements”.
38 Of significance, too, was that there are only two employers in the malt industry. Joe White Maltings Ltd employs persons, as I have said, only on workplace agreements so that the actuality is that the award applies to the respondent (see page 115 (AB)).
FINDINGS AT FIRST INSTANCE
39 I refer to the findings made at first instance, relevant to this appeal.
40 The Commissioner found that Kirin decided to engage in the further hire of labour through labour hire firms to reduce the cost of engaging full-time employees. This was as a result of not achieving sufficient reduction in wages costs as a result of the agreement.
41 As a result there was a strategy entered into of hiring labour through external labour suppliers to reduce costs and increase flexibility. Therefore having made the offer of employment to Mr Carmody, conditional upon only the settlement and negotiations between the union, and those negotiations having been completed and the company not having been satisfied, Mr Carmody was then caught in the revised strategy to source new labour from external labour suppliers to reduce costs.
42 The Commissioner went on to find that the “balance of equity” lay with Mr Carmody’s case and that he should have been provided with full-time employment directly by the respondent as a malt processing operator.
43 The condition precedent to the finalisation of his employment at exhibit DC1.4 was a finalisation of negotiation with the union which condition was fulfilled and the resulting agreement was registered by the Commission in November 2000. This refusal to employ Mr Carmody, he found to be unfair.
44 However, the Commissioner went on to dismiss the application to vary the award because he was of opinion that, having regard to s.26 of the Act, the application cut across some of the already established practice in the industry regarding engagement of contractors for “short fall” work. He was of the view that such a clause would put an obligation on the employer which was not due. Whilst the Commissioner did not accept Mr Heathcote’s submission on behalf of Kirin that the matter takes away the rights of the employer in the conduct of his business, he found that the application did, particularly in respect of Clause 25.5 (sic), make a third party, the contractor, apply the rates of the award and agreement; and in that sense, he held the clause also extended too far.
45 He went on to finally dismiss the application for award variation for the reasons which he had expressed.
ISSUES AND CONCLUSIONS
Discretionary Decision - Principles
46 The decision made in this matter was a discretionary decision as that is defined in Norbis v Norbis (1986) 161 CLR 513.
47 The grounds of appeal were directed only to a complaint that there had been a miscarriage in the exercise of the discretion at first instance. Of course, it is for the appellant to establish that the Commissioner at first instance erred in the exercise of its discretion in accordance with the principles laid down in House v The King [1936] 55 CLR 499 (see also Gromark Packaging v FMWU 73 WAIG 220 (IAC)).
48 The Full Bench has no warrant to interfere with the exercise of the discretion at first instance, and, in particular, cannot substitute the exercise of the Full Bench’s discretion for that of the Commissioner, at first instance, unless it is established that the Commissioner erred in accordance with the principles laid down in House v The King (op cit) and Gromark Packaging v FMWU (op cit).
Effect of the variation
49 What was sought to be effected by the variation, was that Kirin should, by the award, be bound to employ only employees falling within the classifications covered by the award (which includes malt production operators) if they were employed directly by Kirin.
50 In other words no person could be engaged to do that work who was a “contractor” or who was hired from a labour hire company.
51 This prohibition would not affect the engagement of persons for periods not exceeding three months; where temporary coverage for an employee on leave was required, or to cover a temporary seasonal increase in labour needs; or where an emergency or breakdown necessitates increased or specialised labour; or, in the case of specialised or increased labour, which Kirin employees are unable to provide.
52 Next, the variation if made, could prevent the respondent from employing labour hire firm employees or “contractors” on lesser wages and conditions than directly employed labour who are covered by the award and any agreement based on the award.
The decision and the issues
53 There was little dispute about the facts.
54 What was open to the Commissioner to find (see the evidence of Mr Murphy and Mr Inoue) and what it should have found, was that there was no evidence that contract or labour hire company employees were used, except from time to time when there were shutdowns to enable maintenance to be carried out, and sometimes while staff were on leave before September 1999.
55 It was also open to find (on Mr Inoue’s evidence) that, shortly before September 1999, the respondent had decided that in order to attempt to reduce employment costs it would engage employees of labour hire firms to work for it. Mr Carmody was one such person. This was successful and the respondent intends now to embark on such a course of labour hire on an expanded basis. This was because the respondent wanted to reduce its costs and alter or reduce the number of hours of work to better fit operational requirements. Further, of course, the labour hire employees received a wage 30 percent less than that payable under the agreement to those employees covered by the award and the agreement, and the total wage bill accordingly reduced.
56 It was also open to the Commissioner, at first instance, to find that the respondent did not intend, and had not intended to reduce its employees’ conditions of employment or disadvantage them in relation to their current entitlements, I must say however.
57 It was quite clear, on the evidence, and it was open to so find, and should have been found, it being Mr Inoue’s evidence, that the respondent engaged contractors for the purpose of avoiding payment of the rates prescribed by the industrial agreement, and, include that wages up to 30 percent less than those payable under the industrial agreement were payable to labour hire employees and to reduce costs and the hours of work.
58 It was also open to find, and it should have been found, as a fact, that within twelve months of entering into a consent agreement in order to settle industrial disputation the respondent was engaging persons on a planned basis to reduce the expense of its award or enterprise bargaining agreement workforce.
Grounds of appeal
59 I now deal with the grounds of appeal.
60 It was submitted that the Commissioner, at first instance, erred in the exercise of his discretion in that he gave no weight to the scheme of the Act.
61 It was the respondent’s case that the Commissioner, at first instance, had not erred in the exercise of his discretion.
62 I have carefully considered all of the submissions made to me in relation to the grounds of appeal.
63 It was a relevant fact, as the Commission should have found, that whilst a party to consent industrial agreements, the most recent of which was entered into by consent to put an end to industrial disputation, the respondent embarked upon a new systematic and alternative labour recruitment programme using labour hire for employees in order to reduce labour costs and hours, as I have outlined above, and as was clearly asserted in evidence by Mr Inoue.
64 It is difficult to reconcile that approach with the fact that an industrial agreement, fixing the wages and conditions of employees, was entered into whilst this process was being embarked upon.
65 It was the fact, as all of the evidence revealed, that before that plan was embarked upon, labour hire employees or temporary employees were not engaged or used except in times of shut down and maintenance, or to fill in during leave and always on a very short term basis, called “short fall”.
66 The use of labour hire employees embarked upon from about September 1999 onwards was the fruit of a decision which became even firmer later, namely to engage a bigger component of work force in the form of labour hire from labour hire employers. This was not on a short term basis or to fill in for short falls, or for any of the limited purposes for which labour hire or “contract” employees were engaged in the past. Simply as a matter of fact there was no custom or practice similar to the practice embarked upon after September 1999 in relation to the use of labour hire firm employees. The Commissioner himself so found, and found correctly.
67 In any event, there was no custom or practice within the plain English meaning of either word, or within the legal definition of that phrase. I say that because there was no habitual custom or practice or usual way of acting in given circumstances, (see the Macquarie Dictionary) which reflected an unlimited, in time numbers of employees and/or otherwise, the proposed or actual use of labour hire employees as a permanent or substantial part of the work force, in lieu of directly employed persons who enjoyed the benefits of the award or any agreement based on it.
68 Further, there was no question in this matter of the implication into any contract of employment, of a “crystallised” custom as there was in Byrne and Frew v Australian Airlines Ltd [1995] 185 CLR 410.
69 As to custom otherwise, the custom must be established to be the custom of the industry generally and not merely the practice of a particular employer. It must be generally recognised too, throughout a calling or locality (see Ivanhoe Gold Mine v Wood (1923) 27 WALR 20).
70 Further, it must be notorious, certain, reasonable and must not offend against the intention of any enactment or an award (see per Dwyer P in AWU (Goldfields) v Lake View and Star (1936) 16 WAIG 344). In this case the practice adopted by one employer, not the whole industry, was not a custom within the meaning of the industrial law for those reasons. It was not notorious. It was not industry wide.
71 In any event there was, as I have observed, no practice until 1999 of employment of labour hire employees on anything but a short term basis and for restrictive objects and limited labour requirements.
72 The Commission expressly dismissed the application for two reasons. One was because of what he called an established custom in the industry regarding engagement of contractors or labour hire firm employees, for short term work, which itself was not a contract. I have already commented above on the limited nature of that practice and the fact that it was not a custom as such, across the industry. There was no custom and practice which would be “cut across” by the variation sought. Indeed if there were a custom and practice in employment of “contractors” and labour hire employees, it was more accurately reflected in the variation sought and, in the limited terms applied in the variation.
73 Next, the Commission expressed a view that the new Clause 23 took the matter too far by binding a third party to rates agreed between the respondent and the applicant, at first instance.
74 First I must say that that is not so because no third party is bound by such a provision, and could not be. Only the respondent is. Whether a labour hire firm agrees that the amounts at which it hires its employees to the respondent should be the rates which the respondent has agreed to pay, is a matter for that labour hire firm. Presumably it does not hire to the respondent if the price is not acceptable, whatever the reason for that is. The Commission erred in finding as it did in that respect.
75 Further, there is no evidence that there is any such custom and practice in either the ordinary meaning or the legal meaning of that phrase which is contrary to what the variation would apply in any significant term.
76 Next, the question of whether the variation sought would affect any competitiveness between Joe White Maltings Ltd and the respondent was not directly before the Commission. The Commissioner observed correctly that he did not know about the respondent’s competitiveness vis a vis Joe White Maltings Ltd.
77 There was no evidence on which he could have found otherwise.
78 Indeed, it was clearly expressed to us in any event that Joe White Maltings Ltd employees were all subject to workplace agreements and not at all subject to the terms of the award or any agreement based on it.
79 It seems to me, therefore, that in the absence of evidence to the contrary, and if it were at all a matter properly raised on this appeal, which I doubt, then it would be entirely academic, if not futile, to seek to vary the award to cover Joe White Maltings Ltd employees, or to suggest that the failure to cover them was at all unfair, when they were all on workplace agreements; and when by that very fact it would difficult to equate labour hire firm employees to workplace employment employees; and when s.26A prohibits the Commission from examining the terms of any workplace agreements.
80 It was submitted, as was the fact, that the conditions and wages applicable to the existing award employees had not been reduced. It was also the fact that the company does not propose to take any action which would disadvantage any of the permanent employees by comparison to their current entitlements. That, in my opinion, is not a factor which is at all favourable to the respondent given that the respondent could not contract out of the industrial agreement or the award without committing a breach of s.114 of the Act, and is bound not to do so. All that can be said about that fact is that if the respondent were to seek to do otherwise, then it would be grossly unfavourable to it on any proper consideration of the equity and good conscience of the application.
81 Another factor, of course, was that the respondent embarked on a systematic process of employing labour hire employees at a reduced rate at the same time as it had entered into an industrial agreement, by consent with BBEIU, to resolve industrial disputation between them. That leads me to deal with the submission that it was contrary to the intent of the Act, the award and the Wage Fixing Principles to, in effect, permit the respondent to avoid the operation of an industrial agreement which was extant at the time the application, at first instance, was made and heard and the order appealed against was made.
82 S.6(a) reads as follows:-
“(a) to promote goodwill in industry;”

83 S.6(c), which is also a principle object of the Act, reads as follows:-
“(c) to provide means for preventing and settling industrial disputes not resolved by amicable agreement, including threatened, impending and probable industrial disputes, with the maximum of expedition and the minimum of legal form and technicality;”

84 S.6(d), which is also an object of the Act, reads as follows:-
“(d) to provide for the observance and enforcement of agreements and awards made for the prevention or settlement of industrial disputes;”

85 In my opinion it is not, on the face of it, conducive to the promotion of goodwill in industry to permit the avoidance of the operation of an agreement clearly directed to covering the whole of the permanent directly employed workforce by the use of labour hire firm staff. I say that because inevitably labour hire staff use was to be directed to the replacement of directly employed persons. Further, the labour hire staff are paid 30 percent lesser rates which, on Mr Murphy’s evidence, was a cause of insecurity in the respondent’s employees.
86 Next, it would be correct to say that the object of the Act to provide a means for preventing and settling industrial disputes, which clearly was implemented in this case by the registration of a consent agreement, would not be advanced by refusing to vary the award to prevent the circumvention of an agreement which was consented to in order to settle disputation, in the manner in which it has occurred in this case (see s.6(c)).
87 S.6(d) would not at all be advanced by allowing agreements not to be observed directly or circumvented indirectly or enforced when the agreement had been reached, particularly by consent, for the settlement of an industrial dispute. It is, of course, clear that the act of engaging labour hire firm employees during the course of the industrial agreement, on the basis on which this was done, has lead to a dispute which was sought to be resolved by the award variation applied for at first instance.
88 It is difficult for me to see that s.49A is, on the face of it, relevant to a consideration of this matter; nor do I see the appendix to the award concerning dispute resolution to be relevant.
89 Those provisions deal with the requirement and the mechanism for dispute resolution in awards. The application, at first instance, sought to deal with a matter which had given rise to a dispute sought to be resolved by variation of the award.
90 It is, in any event, quite clear that the Commission correctly took account of the following relevant factors in the context of s.6(a), (b) and (d) of the Act and the Wage Fixing Principles (see Re Minister for Labour Relations and Others (2001) 81 WAIG 1721).
91 The Commission correctly held that the nature of the Act and the nature of the Wage Fixing Principles are to provide an orderly structure for the conduct of industrial relations and are fundamental to the conduct of industrial relations.
92 Correctly, and relevantly as well, the Commissioner adverted to the existence of an award, its operation, and an agreement which took time to complete. That, of course, was correctly a recognition of the existence of the agreement, how it came about, and the effect of the respondent’s act which, in effect, represented a circumvention of it. It follows that the Commissioner recognised correctly that the appellant sought to prevent that and future circumventions of the agreement or the award by the application to vary the award.
WAGE FIXING PRINCIPLES – THEIR APPLICATION
93 It is necessary to consider this matter and the appeal generally in the context of Mr Schapper’s concession and submission (see page 23 of the transcript on appeal) which were that “the award should have been varied by inserting the new clause 8A, but also by omitting subclause 5 of clause 23”, and inserting clause 23(1 to 4).
94 This would mean that there would be no requirement in the new clause 23 that no work be let out unless the contractors’ employees were paid in accordance with the terms and conditions of the award or any agreement between BEBIU and Kirin.
95 Thus the new clause 23 would provide only that all of the work falling within the classifications of the award would be performed by persons employed directly by Kirin and further, would limit the use of hire firm employees by Kirin.
96 The appellant’s case, at first instance, was clearly directed at that and the variation sought was directed only at the limitation of the use of hire firm employees, not the right of the employer to use outside contractors with their own employees.
97 Mr Heathcote, for the respondent, made a submission that the application was, in any event, not dealt with in accordance with the Wage Fixing Principles in that, it could only be dealt with by the Commission in Court Session and not by a single Commissioner, as in fact was the case. It was common ground that that submission was not made at first instance, and it was somewhat unhelpful that it was not. Indeed to all intents and purposes the matter proceeded before the Commission, at first instance, constituted by a single Commissioner on the basis that the application was able to be decided by the Commission, at first instance, and the Commission, at first instance, constituted by a single Commissioner accordingly, without objection, decided the matter.
98 Mr Schapper opposed the question of the Wage Fixing Principles and the compliance with them or non compliance with them being raised on appeal when it had not been raised at first instance. Indeed, it could not prima facie be raised (see s.49(4) and see also Metwally v University of Wollongong (1985) 60 ALR 68 (HC)). That is authority for the proposition that since the point was not argued or raised, at first instance, and then in the circumstances of this case, the respondent should be bound by the case which it had “run” at first instance. It was not part of that case of either party, at first instance, that the Wage Fixing Principles were not complied with because the matter was not heard by a Commission in Court Session.
99 Of course, if the fact that the matter was heard by a single Commissioner instead of the Commission in Court Session constituted a jurisdictional error, then the respondent would not be excluded upon this appeal by the doctrine in Metwally v University of Wollongong (op cit) from arguing that there was no jurisdiction or that the matter had been heard by a jurisdictional error, at first instance (see SGS Australia Pty Ltd v Taylor (1993) 73 WAIG 2328 (FB)).
100 The law is also quite clear that the Commission, constituted by a single Commissioner, is bound by a general order of the Commission; and, where the principles are, as is the case here, prescribed as part of a general order giving effect to a national wage decision, then they bind the Commission constituted by a single Commissioner, and the Commissioner is required to apply those principles (see RRIA v AMWSU and Others (1993) 73 WAIG 1993 at 1998-9 per Nicholson J with whom Wallwork and Owen JJ agreed (IAC)).
101 As to the Wage Fixing Principles see In The Matter of the State Wage Case and in Re The Minister for Labour Relations and Others (op cit). If the Commission fails to apply those principles, that is more than an error committed by failure to have regard to a relevant consideration because the Commission is bound to apply the principles.
102 It is also, of course, a failure to have regard to a relevant consideration because the principles by prescription are entirely relevant.
103 The next question is whether such an error, if made, is a jurisdictional error, that is that the Commission acted without jurisdiction or, put another way, committed a jurisdictional error. It was a condition of the exercise of jurisdiction in this case that the Commissioner, at first instance, applied the Wage Fixing Principles if, on a proper construction of their terms, they were applicable (see Re Robins SM; Ex parte WA Newspapers Ltd (1999) 20 WAR 511 at pages 520-1 per Ipp J with whom Pidgeon and Steytler JJ agreed, and the cases cited therein).
104 It is fair to say that I do not think that there was a constructive failure to exercise jurisdiction within the meaning of that term as used by Gaudron J in Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 75ALJR 889 at 903-4 (HC).
105 The crucial question is, of course, whether the principles in their terms were applicable to the application, at first instance. If they were not, there was no jurisdictional error because the Commissioner was not bound to apply them. It was the case for the respondent that the principles were applicable and that the matter should have been heard by a Commission in Court Session after being referred by the Chief Commissioner. It was the case for the appellant that they were not.
106 It was common ground that if the Wage Fixing Principles were applicable, this could only be because of the operation of Principles 1, 2 and 10. It is to be noted that the principles are Wage Fixing Principles (my emphasis). They do not purport to govern other industrial matters, save and accept as such matters are prescribed in the actual terms of the principles.
107 First, what is clearly expressed by Principle 1, is that existing wages and conditions in an award or a relevant agreement of the Commission, constitutes the safety net which protects employees who may be unable to reach an industrial agreement.
108 Second, by virtue of Principle 2, there is a prescription of those instances when an award or agreement may be varied (or another award made), without the claim being regarded as above or below the safety net. All of the exceptions relate specifically to wages or related matters, namely structural efficiency or productivity. The principles otherwise refer to work value and wage rates, hours of work, safety net adjustments and the minimum adult award wage. There is no doubt that an application to insert Clause 23 is not authorised to be made by Principle 2. The question is whether the principles, read as a whole, on a fair reading of the principles, forbids such an application being made to a single Commissioner.
109 Clause 10 regulates the making of an application to vary “wages or conditions” above or below the safety net, which application can only be made to the Commission in Court Session if the Chief Commissioner refers such an application.
110 The safety net is of course the award in its existing terms. It is entirely plain, on a fair reading of the whole of the principles, that the safety net which the award provides, was not at all sought to be varied by the application to insert Clause 23 (with Clause 23(5) omitted). I do not, of course, say that with Clause 23(5) the application would be an application to vary the award qua safety net. Further, there is a clear relationship between the words “wages” and “conditions” used in the phrase “wages or conditions”, in Principle 10. Thus, if the conditions do not bear a relationship to wages, since the principles are Wage Fixing Principles, then the application is not one to which Principle 10 can apply or does apply.
111 The application insofar as it related to the insertion of Clause 23 without the proposed Clause 23(5), was not an application to vary wages or conditions within the meaning of Clause 10. The application bore no relationship to “wages and conditions” and sought no variation of the award as a safety net. Indeed it was the clear evidence that the practice which it sought be regulated, did not affect existing conditions of employment. The new Clause 23 sought and seeks merely to preserve the employment of directly employed employees and limit the use of hire firm employees, or alternatively formally provide further use.
112 The application and its subject matter, in that respect, were not matters to which the Wage Fixing Principles, on a fair reading of them as a whole, could or did apply. There is no element of influence upon wages, hours, conditions, flexibility, efficiency etc, in the variation sought. The Commission had jurisdiction and power sitting alone to grant the application and should have done so for the reasons which I have advanced above.
CLAUSE 8A
113 The new Clause 8A which was sought to be inserted is palpably indifferent case. Clause 8A deals with hours of work, variations in rates, and conditions of employment in the wage fixing principle sense of the word in relation to part time employees.
114 The application could only be dealt with by the Commission, in Court Session, on reference from the Chief Commissioner, according to the prescription of Principle 10. That this did not occur constituted a jurisdictional error which should be corrected. Hence, the decision to dismiss the application in that respect could not be held to be in error. I would add, however, that as I read the grounds of appeal, they do not constitute an appeal against the inclusion of the new Clause 8A.
INDUSTRIAL MATTER
115 There was one other matter which I would wish to make some comment upon. I am not at all persuaded, despite Mr Schapper’s concession that the application to insert the proposed Clause 23(5) in the award was outside jurisdiction, a concession which seemed to be implicit in his not pursuing that part of the appeal, that the application to insert such a clause and the resultant order sought by the application were not industrial matters or within jurisdiction.
116 In my opinion, cases such as R v Commonwealth Industrial Court Judges; Ex parte Cocks (1968) 121 CLR 313 and R v Moore Ex parte FMWU (1978) 140 CLR 470 and ALHMWU v Abergeldie – St Andrew’s Hospital Inc (1995) 37 AILR 3-001, are distinguishable on the facts and by reference to the narrow definition of “industrial dispute” in the Federal legislation, from the facts in this case and the definition in s.7 of the Act of the phrase “industrial matter”.
117 In my opinion, an apposite authority because of the greater similarity in the two definitions of “industrial matter” in s.7 of the Act and in the South Australian Act, the Industrial Conciliation and Arbitration Act 1972-9 (s.25), is The Queen v Industrial Commission of South Australia; ex parte Master Builders’ Association of SA Inc (1981) 26 SASR 535 at 537-8 per King CJ (Mohr J agreeing) and Zelling J (In Banco).
FINALLY
118 In my opinion, the Commission erred in making findings in error and in not having regard to a number of relevant matters which I have explained above. It is quite clear that the appellant, for those reasons, has established error in the exercise of the discretion, in accordance with House v The King (op cit). For my part the findings which the Commission made and the relevant factors above which should have been considered, and some of which were, would enable me, for the reasons which I have expressed, to say that the Full Bench should substitute the exercise of its discretion for the exercise of the discretion, at first instance, and grant the application, the equity, good conscience and substantial merits of the case and a proper exercise of discretion requiring it.
119 That being so, there is no need to put and no point in putting the parties to inconvenience and expense by remitting the matter.
120 I would therefore, for those reasons, uphold the appeal, insofar as it relates to the failure to grant the application to vary by inserting the new Clause 23 without Clause 23(5), and issue a minute of proposed order to reflect the variation sought by the application, namely the insertion of that clause, as expressed in the application at first instance. I would otherwise hold that the dismissal was correct and otherwise dismiss the appeal insofar as it might bear upon the failure to insert Clause 8A.
121 I would order accordingly.

COMMISSIONER GREGOR AND COMMISSIONER SMITH:
122 The matter subject to the appeal arises from decisions of the Commission in dealing with two Applications, No. CR169 of 2001 and Application 1394 of 2001. The determination in Application No. CR169 of 2001 finalised that matter however that relating to Application No. 1394 of 2001 gave rise to No. FBA56 of 2001.
123 Application No. 1394 of 2001 seeks orders from the Commission to vary the Malting Industry Award 1993 by inserting a Clause 8A. – Part Time Employees and Clause 23. – Use of Contractors. It appears from the Reasons for Decision at first instance that the Commission was of the opinion that if the claim to insert Clause 23 failed then, the claim for the new Clause 8A. – Part Time Employees also fell away.
124 In dealing with the award variation at paragraph 20 of the Reasons for Decision the Commission at first instance wrote as follows:

“I turn to the other application that is the award variation, application 1394 of 2001. Mr Schapper advises me the application should stand as one and having read the application and having heard you both today, can I say that I have some sympathy for the view put by Mr Schapper that the nature of the Act, and the nature of the wage fixing principles, are to provide an orderly structure and form to the conduct of industrial relations and that at base, in both the Act and the principles, parties are bound by the agreements they make. That is fundamental to the conduct of industrial relations, I think generally, but certainly within the jurisdiction that I deal.” (AB016)

125 It is clear that the Commissioner had cognizance of the importance of the Wage Fixing Principles, however not sufficiently according to the Appellant because the grounds of appeal in paragraph 1(a) are as follows: (AB002)

“1. In dismissing the application the Commission erred in the exercise of its discretion in that the Commission:

(a) failed to give any or any sufficient weight to the scheme of the Act and/or the wage fixing principles
(b) …
(c) …
(d) …
(e) …”

126 Mr Schapper (of Counsel) who appeared for the Appellant, submits that the Commission at first instance clearly failed to attach any weight to the matters referred to in paragraph 20 of the Reasons for Decision among which is the weight which ought to have been given to the Wage Principles. It is argued on behalf of the Appellant that the thrust of the Principles is that industrial agreements are to be the prime means by which improvements in wages and conditions of employment were to be secured and that it is contrary to the spirit of the Principles to allow parties to contract out and sidestep industrial agreements they make. In particular clause 1 of the Principles sets out this policy. However the Appellant argues that Principle 10 does not apply because the Union's application to amend the award is not to vary the award above or below the award safety net.
127 In its argument the Respondent concedes that the Commission is required to abide by the Principles. It claims that Principle 1 was irrelevant to the matter given the observations of the Commission at first instance that the relevant employees were covered by both an award and an agreement. Principle 2 was of greater significance because it sets out matters with which the Commission constituted by a single Commissioner might deal without working outside the safety net. The Respondent’s submission was that the Commission had rightly concluded that there is no Principle upon which he could decide the application. The Respondent also argued that the application before the Commission at first instance did not fit into any of the categories set out in (a) to (h) of Principle 2, and was therefore outside the safety net and subject to Principle 10. Although the Respondent in its written submissions did not cast this argument in the alternative, clearly such an argument is cast in the alternative.
128 We now consider these submissions. The Schedule to the Statement of Principles issued by the Commission in Court Session in June 2001 (81 WAIG 721) describes the Principles to be applied by the Commission. It is our view that those relevant to the disposition of this appeal are as follows:

1. “Role of Arbitration and the Award Safety Net
Existing wages and conditions in awards and relevant agreements of the Commission constitute the safety net which protects employees who may be unable to reach an industrial agreement.

2. When an Award or relevant Agreement may be varied or another Award made without the claim being regarded as above or below the Safety Net:
In the following circumstances an award or relevant agreement may, on application, be varied or another award made without the application being regarded as a claim for wages and/or conditions above or below the award safety net:

(a) to include previous State Wage Case increases in accordance with Principle 3.
(b) to incorporate test case standards in accordance with Principle 4.
(c) to adjust allowances and service increments in accordance with Principle 5.
(d) to adjust wages pursuant to work value changes in accordance with Principle 6.
(e) to reduce standard hours to 38 per week in accordance with Principle 7.
(f) to adjust wages for arbitrated safety net adjustments in accordance with Principle 8.
(g) to vary an Award or relevant Agreement to include the Minimum Adult Wage in accordance with Principle 9.
(h) a consent variation to a single enterprise specific award or a consent replacement award to a single enterprise specific award under Principle 10 giving effect to structural efficiency initiatives or productivity based arrangements.

10. Making or Varying an Award or issuing an Order which has the effect of varying wages or conditions above or below the safety net
An application or reference for a variation in wages or conditions above or below the safety net will be referred to the Chief Commissioner for determination by the Commission in Court Session.

A party seeking such a claim must support it with material justifying:

· why the matter has not been progressed and/or finalised pursuant to s.41 of the Act;
· why the matter has not been pursued under any other Principle set out in this Statement; and
· how in the discharge of its statutory function to consider varying above or below the safety net the Commission should take into account, to the extent that it is relevant, each of the matters identified in section 26 of the Act.

Provided that where parties to a single enterprise specific award apply to vary the award by consent or consent to a replacement award to give effect to structural efficiency initiatives or productivity based arrangements the Chief Commissioner may allocate the matter to a single Commissioner.

11. First Award and Extension to an existing Award

The following shall apply to the making of a first award and an extension to an existing award

(c) In the extension of an existing award to new work or to award-free work the rates applicable to such work will be assessed by reference to the value of work already covered by the award, providing structural efficiency considerations including the minimum rates adjustment provisions where relevant have been applied to award."

129 The Commission is required to apply the Principles in determining matters before it (Robe River Iron Associates v Amalgamated Metal Workers and Shipwrights Union of Western Australia and Others (1993} 73 WAIG 1993). Pursuant to Principle 1 – Role of Arbitration and the Award Safety Net, existing wages, conditions, awards and relevant agreements constitute the safety net. This means that the awards and relevant agreements as they were at the time the Statement of Principles was made are the safety net. By Principle 2 the award or relevant agreement cannot be varied by the Commission singularly constituted unless it is varied in accordance with the exceptions which are listed in paragraphs (a) to (h) of Principle 2. A variation of the safety net includes an addition to awards or relevant agreements that varies a wage or condition. If the proposed Clause 23. – Use of Contractors is inserted in the Malt Industry Award 1993 (the Award), it would vary that award. Under Principle 2 no such variation can be made unless the variation is in one of the circumstances described in paragraphs (a) to (h) of Principle 2. The subject matter of Clause 23 is not mentioned in any of the paragraphs and therefore the claim is required by the Principles to be regarded as a claim for wages and/or conditions above or below the safety net.
130 Further it is apparent from the terms of the variations sought to the award that what is sought in relation to the proposed Clause 23 (1) to (4) is in our opinion the creation of provisions that are arguably an extension to the existing award, as the provisions seek to extend the operation of the award to award free work, in that the extension is to the circumstances under which the Respondent can engage contractors. In such a case pursuant to Principles 2 and 11 the claim must be dealt with under Principle 10. Prima facie Principle 11 appears to be invoked, as proposed clause 23(2) to (4) expressly prohibits the Respondent from engaging contractors to carry out work falling within the classifications covered by the Award or any industrial agreement unless the pre-conditions in proposed clause 23(3) and (4) are met. Presently the Respondent is unrestricted in its ability to engage contractors to carry out work covered by the classifications in the Award or the Kirin Australia ("Fitters") Enterprise Agreement 2000 or the Kirin Australia Enterprise Agreement 2000. Where it engages contractors to perform such work the terms of the engagement are award free. As to proposed clause 23(5) the extension sought is not only to an extension to award free work but is to a matter that is beyond the jurisdiction of the Commission as it does not constitute an "industrial matter". Although the issue of jurisdiction in respect of proposed clause 23(5) was not the subject of argument before the Full Bench, it was conceded by counsel by the Appellant that proposed 23(5) was objectionable and could have been severed by the Commission at first instance. In our view this concession was properly made. In R v Commonwealth Industrial Court Judges; ex parte Cocks (1968) 121 CLR 313, the High Court held that a log of claims containing a demand that no employer shall permit any of the relevant work to be done by a contractor except in accordance with the terms of the award, did not raise a dispute as to an industrial matter. (See also R v Moore; ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 and ALHMWU v Albergeldie – St Andrews Hospital Inc (1995) 37 AILR 3-002).
131 Leaving aside proposed clause 23(5), it is our view that the proposed clause 23 would constitute a variation in wages or conditions, above the safety net and in that case Principle 10, must be applied. The effect of the decisions of Full Court in The Western Australian Industrial Relations Commission; ex parte Confederation of Western Australian Industry (Incorporated) (1992) 6 WAR 555 per Rowland J at 561 and Murray J at 574 and the Industrial Appeal Court in Robe River Iron Associates v The Amalgamated Metal Workers and Shipwrights' Union of Western Australia (op cit) is that by operation of s.51(2) of the Act, where a National Wage decision by General Order has been made by the Commission and in a particular case the Principles are invoked, the Commission has no discretion but to apply the Principles.
132 The Reasons for Decision of the Commission at first instance show that it did not apply the Wage Principles. The failure to do so is a jurisdictional error. A jurisdictional error arises when a court or tribunal mistakenly asserts or denies the existence of jurisdiction or if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist (Craig v South Australia (1995) 184 CLR 163 per the Court at 177). The Appellant argues that as the Respondent did not argue at first instance that the application to amend the Award should proceed under Principle 10, the Respondent should be bound by the case which it ran at first instance (Metwally v University of Wollongong (1985) 60 ALR 68). However the principle enunciated by the High Court in Metwally v University of Wollongong (op cit) prohibiting a party from raising a matter on appeal that was not raised at first instance, does not apply to a jurisdictional error of law (see SGS Australia Pty Ltd v Taylor (1993) 73 WAIG 2328).
133 For these reasons we are of the view that Appeal Ground 1(a) is made out.
134 As the Commission at first instance made an error going to jurisdiction, there is no need to examine the other appeal grounds. We would remit the matter back to the Commission at first instance for hearing and determination in accordance with the Decision herein.

THE PRESIDENT:
135 For those reasons, the appeal is upheld, the decision of the Commission in matter No 1394 of 2000 delivered on the 2nd of November 2001 be and is hereby suspended and the case be and is remitted to the Commission at first instance to be heard and determined according to the reasons for decision herein and according to law, and the appeal be and is otherwise hereby dismissed

Order accordingly.
The Breweries and Bottleyards Employees' Industrial Union of Workers of Western Australia -v- Kirin Australia Pty Ltd

 

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

 

PARTIES THE BREWERIES AND BOTTLEYARDS EMPLOYEES' INDUSTRIAL UNION OF WORKERS OF WESTERN AUSTRALIA

APPELLANT

 -v-

 

 KIRIN AUSTRALIA PTY LTD

RESPONDENT

CORAM FULL BENCH

  HIS HONOUR THE PRESIDENT P J SHARKEY

  COMMISSIONER J F GREGOR

  COMMISSIONER J H SMITH

 

DELIVERED WEDNESDAY, 13 MARCH 2002

FILE NO/S FBA 56 OF 2001

CITATION NO. 2002 WAIRC 05011

 

_______________________________________________________________________________

Decision  Appeal upheld, decision at first instance suspended and remitted to the Commission at first instance, and appeal otherwise dismissed

Appearances

Appellant   Mr D H Schapper (of Counsel), by leave

 

Respondent   Mr S Heathcote, as agent   

 

_______________________________________________________________________________

 

Reasons for Decision

 

THE PRESIDENT:

INTRODUCTION

 

1                 This is an appeal brought by the abovenamed organisation of employees pursuant to s.49 of the Industrial Relations Act 1979 (as amended) (hereinafter referred to as “the Act”) against the whole of the decision of the Commission constituted by a single Commissioner given on 2 November 2001 in application No 1394 of 2001.  The notice of appeal was filed on 22 November 2001, the decision having been deposited in the office of the Registrar on 6 November 2001.

2                 The decision appealed against (see page 9 of the appeal book (hereinafter referred to as “AB”)) was a dismissal of an application made by the abovenamed appellant.  It is that decision that the appellant organisation of employees has now appealed against on the following basis.

GROUNDS OF APPEAL

3                 The grounds of appeal are as follows:-

“1. In dismissing the application the Commission erred in the exercise of its discretion in that the Commission:

(a) failed to give any or any sufficient weight to the scheme of the Act and/or the wage fixing principles

(b) failed to give any or any sufficient weight to the respondent’s evidence that it engaged contractors for the purpose of avoiding payment of the rates prescribed in the applicable industrial agreement

(c) wrongly regarded the evidence of Mr Murphy as demonstrating that there was some custom and practice regarding contractors

(d) wrongly regarded the evidence of Mr Murphy, however characterised, as conclusive of the application or requiring that it be dismissed

(e) failed to distinguish between the purpose of using of contractors as described by Mr Murphy and the purpose to which the respondent was using contractors.

Relief sought:

An order quashing the order appealed from and remitting the matter back to the Commission for hearing and determination in accordance with the decision of the Full Bench.”

 


BACKGROUND

4                 There were two applications made by the appellant organisation of employees, The Breweries and Bottleyards Employees’ Industrial Union of Workers of Western Australia (hereinafter referred to as “the BBEIU”).  The applications arose from a dispute that the respondent employer, Kirin Australia Pty Ltd (hereinafter referred to as “Kirin”), in relation to the employment of one of the BBEIU members, Mr Denis Patrick Carmody, and the engagement of malt production operators via a labour hire firm.  Both applications were heard together, by consent.  The reasons for decision, at first instance, encompass both applications, but this appeal relates only to the decision in application No 1394 of 2001.

Application No C169 of 2001

5                 The original application No C169 of 2001 related to the employment of Mr Carmody and came on for conference before the Commission pursuant to s.44 of the Act.  There were conferences held on 24 July 2001 and 14 August 2001, but the matter was not resolved and was referred for hearing and determination in the following terms:-

“The union claims an order but upon the making of this order, the respondent shall offer to employer Denis Carmody as a full time malt production operator under the terms of the Malt Industry Award and any applicable industrial agreement between the parties.”

 

6                 The respondent opposed this claim.

7                 The matter was referred for hearing on 7 September 2001 and heard on 19 October 2001.  Having heard the matter, the Commissioner at first instance, determined that Mr Carmody be offered employment by the respondent employer.  There is no appeal against that decision.

Application No 1394 of 2001 – The Application to vary the Award

8                 By the second application, No 1394 of 2001, lodged in the Commission on 27 July 2001, the appellant organisation sought variation of the Malting Industry Award 1993 (hereinafter referred to as “the award”) by the insertion of two clauses as follows:-

“Clause 8A.- Part time Employees

 

 (It is not necessary to reproduce clause 8A because that clause was inserted by consent in the award and its insertion is not the subject of this appeal).              

 

Clause 23. — Use of Contractors

 

(1) This clause shall apply only to Kirin Australia Pty Ltd (“Kirin”).

(2) All work falling within the classifications covered by this award or any industrial agreement between the union and Kirin shall only be performed by persons employed directly by Kirin.

(3) Provided that subclause 2 shall not apply for engagements not exceeding 3 months where:

1. temporary coverage for an employee on leave is required

2. for seasonal reasons there is a temporary increase in the need for labour

3. an emergency or breakdown necessitates increased or specialised labour which Kirin’s employees are unable to provide.

(4) The period of 3 months referred to in subclause (3) may be extended by consent of the union provided that consent shall not be unreasonably withheld.

(5) No work referred to in subclause (2) shall be let out to contractors unless the contractor’s employees are paid in accordance with the terms and conditions of this award and any agreement between the union and Kirin.”

 

9                 The only other respondent to the award, Joe White Maltings Ltd was not represented and did not appear at the hearing.

10              The reasons advanced by the union for the insertion of the proposed clauses were as follows.

(a) Clause 8A:-

“The applicant seeks the insertion of this clause to increase the modes of employment available to the employer thereby increasing flexibility and maintaining the relevance of the award for modern work practices.”

 

(b) Clause 23:-

This clause was required because Kirin has employed and continues to engage long term labour by way of labour hire firms and thereby avoid payment of the terms and conditions of employment for the working question which terms and conditions are agreed between the appellant and Kirin as being fair and reasonable.

11              Kirin consented to the inclusion of the proposed Clause 8A, but did not consent to the inclusion of the proposed Clause 23, and indeed opposed its inclusion.

12              The reason advanced was that the proposed Clause 23 would impose restrictions on the employer’s right to engage contractors and upon its right to engage persons under terms and conditions determined by the employer.

BACKGROUND

13              There was evidence before the Commissioner, at first instance, from Mr Denis Patrick Carmody, a member of the BBEIU, and Mr Ronald James Murphy, the Secretary of the BBEIU.  There was evidence given for Kirin by Mr Naoki Inoue, the Financial Director and Secretary of Kirin.

14              Kirin, which commenced its malt production business in Western Australia in 1978, processes malt for sale to brewers of beer.  The only other such enterprise in this State is Joe White Maltings Ltd.

15              Both of those companies are named parties to the Malting Industry Award 1993 (No A6 of 1993).  BBEIU is also a party to the award (see Schedule A of the award) and is an organisation of employees duly registered under the Act.

16              The Scope clause of the award, Clause 2 applied the provisions to the two companies which are the only employer parties to the award and to “employees engaged” by them in the classification contained in the award.

17              Both employers employ “Malt Production Operators” which classification is defined in the award, Clause 6(2) “to mean and be deemed to be a classification consisting of various levels of employee who handles malt or barley or work specifically associated with a malthouse”.  “Malthouse” is not defined in the award.

18              However, it was common ground between the parties that the applications related to “Malt Production Operators”, although the variation would, on its face, apply to all employees covered by the award.

19              It should be noted that Clause 2 – Scope of the Award, provides that the provisions of the award applies to parties named in the Schedule attached to (the) award and the employees engaged by the employer in the classifications contained in this award.

20              Joe White Maltings Ltd was not involved in the proceedings because all of its employees are covered by workplace agreements.

21              There was evidence for the respondent from Mr Naoki Inoue, as to a number of facts which I recite hereunder and which were not in issue. 

22              The background to the making of the industrial agreements (as defined in s.7 of the Act), was that Kirin and the BBEIU entered into such an industrial agreement in 1997, and that until March 2000 Kirin attempted to contain or reduce labour costs through negotiations with the BBEIU.  In other words there was a history of industrial agreements during that time, based on the award.

23              Kirin next attempted to contain labour costs through negotiation of individual agreements directly with its employees, but these attempts were abandoned because the employees refused to enter into the proposed agreements.

24              In March 2000, Kirin withdrew from the existing industrial agreement and returned to the award conditions as a safety net above which conditions could be negotiated.

25              Between March 2000 and 11 August 2000 Kirin experienced a period of low level industrial disputation, with no industrial action occurring. 

26              The industrial disputation was resolved by this Commission making orders to register the two hereinafter mentioned agreements by consent:-

“(a) Kirin Australia (“Fitters”) Enterprise Agreement 2000 which expired on 11 August 2001; and

 (b) Kirin Australia Enterprise Agreement 2000 (80 WAIG 5669) which expired on 8 November 2001.” 

 (The latter covered malt production operators, inter alia).

 (At the time when the order appealed against was made the second agreement (the agreement applying to the malt production operations), had not expired).

27              Mr Denis Patrick Carmody commenced work at Kirin’s premises on 28 September 1999.  He was employed by an employee hire company called Westaff.  He worked as a malt production operator.

28              It is unnecessary to deal further with Mr Carmody’s situation other than to note that the Commissioner, at first instance, accepted that he had been promised employment by the respondent itself after three months, which promise had not been honoured and the Commissioner, having heard and determined the application, ordered that he be offered such employment.

29              The most relevant evidence in support of the application to vary the award was that of Mr Murphy who gave evidence that, before Mr Giuliani, a long term employee on an enterprise bargaining agreement finished his employment, two additional employees were brought on through labour hire companies; and they were being trained on the malt production operation.  They were from Drake Industrial and Westaff respectively.  Labour hire firm employees were also referred to in evidence as contractors.

30              He said that there were eight out of the nine malt production employees who were on enterprise bargaining agreements at Kirin, at the time of the hearing, at first instance.  Now there are only seven – with the two hired employees.

31              Mr Murphy made it clear (see page 43 (AB)) that Kirin had used contractors labour hire employees in the past and have been doing it, at least, since September 1999.  It had done so before that time when there were shutdowns and people were brought in to assist with the plants maintenance, and for finite periods.

32              Persons were also brought in on one or two occasions to work when there was not a shutdown, but never for a long time.  No employee had lost a benefit of his employment because a contractor was engaged, or was dismissed because a contractor was taken on.  He was, however, able to say that all of Kirin’s employees were less secure now that there were contract workers on  the site.  He agreed that Kirin had not threatened to dismiss the union member employees.  The insecurity, he said, existed because Kirin had demonstrated that they could engage people through a labour hire company at a lesser rate.  He said that Kirin had abused its right to engage contractors and it was unfair for a number of reasons.  First, he said that he believed that any employee or person engaged in full-time employment in malt production at Kirin’s was entitled to the conditions agreed upon between Kirin and the union.  He agreed that there was a justifiable case for labour hire “for extraordinary means” and that the union operates its own local hire company.  He did not dispute that Joe White Maltings Ltd was a significantly larger “player”.  He agreed that the first clause of Clause 23 expressly excludes or rather only includes Kirin in the use of contractor’s proposal.  He did not agree that that led to a competitive disadvantage.  Labour hire in the past had been used for malt production operators and fitters, but not for a long period of time, and it may be while someone was on extended leave, his evidence was.

33              Significantly, The Kirin Australia Enterprise Agreement (“the agreement”), was registered by consent of the parties, as I have observed.

34              The agreement did not, according to Mr Inoue, deliver any significant reduction in Kirin’s labour costs.  Thus, he said, Kirin still needed to look for further options to reduce costs.  Mr Inoue in evidence too, (page 120 (AB)) said “historically Kirin has employed its own work force and relied on contractors only at peak times.  It has enjoyed a right to use contractors and has always exercised that right responsibly”.  That is clear evidence of the limited use of hire firm employees also called “contractors”.

35              Mr Inoue made it quite clear in evidence that Kirin considered and decided to use labour hire from “external labour suppliers” instead of direct employment.  Indeed, these resulted in significant savings “and make labour hire financially attractive compared with the cost of direct employment” Mr Inoue said.  There are other benefits to which Mr Inoue referred in evidence (see page 122 (AB)).

36              On 27 September 1999, Mr Carmody’s services were provided to Kirin by a labour hire firm, Westaff.  This experiment, Mr Inoue said, proved successful in that the cost of obtaining his services from Westaff was up to 30 percent lower than the cost of engaging him as a full-time employee.  When it became necessary to reduce Kirin’s labour requirement, the arrangement it had with Westaff enabled it to reduce labour hours by eight per week at no cost and at reasonably short notice.

37              At the hearing the Commissioner, at first instance, was informed, quite clearly in evidence, by Mr Inoue that Kirin had decided to increase the number of people which it engaged through external labour suppliers and to expand on the success of its labour hire strategy.  Mr Inoue said that it did not propose to take any action which would disadvantage any of its permanent employees “by comparison to their current entitlements”.

38              Of significance, too, was that there are only two employers in the malt industry.  Joe White Maltings Ltd employs persons, as I have said, only on workplace agreements so that the actuality is that the award applies to the respondent (see page 115 (AB)).

FINDINGS AT FIRST INSTANCE

39              I refer to the findings made at first instance, relevant to this appeal.

40              The Commissioner found that Kirin decided to engage in the further hire of labour through labour hire firms to reduce the cost of engaging full-time employees.  This was as a result of not achieving sufficient reduction in wages costs as a result of the agreement.

41              As a result there was a strategy entered into of hiring labour through external labour suppliers to reduce costs and increase flexibility.  Therefore having made the offer of employment to Mr Carmody, conditional upon only the settlement and negotiations between the union, and those negotiations having been completed and the company not having been satisfied, Mr Carmody was then caught in the revised strategy to source new labour from external labour suppliers to reduce costs.

42              The Commissioner went on to find that the “balance of equity” lay with Mr Carmody’s case and that he should have been provided with full-time employment directly by the respondent as a malt processing operator.

43              The condition precedent to the finalisation of his employment at exhibit DC1.4 was a finalisation of negotiation with the union which condition was fulfilled and the resulting agreement was registered by the Commission in November 2000.  This refusal to employ Mr Carmody, he found to be unfair. 

44              However, the Commissioner went on to dismiss the application to vary the award because he was of opinion that, having regard to s.26 of the Act, the application cut across some of the already established practice in the industry regarding engagement of contractors for “short fall” work.  He was of the view that such a clause would put an obligation on the employer which was not due.  Whilst the Commissioner did not accept Mr Heathcote’s submission on behalf of Kirin that the matter takes away the rights of the employer in the conduct of his business, he found that the application did, particularly in respect of Clause 25.5 (sic), make a third party, the contractor, apply the rates of the award and agreement; and in that sense, he held the clause also extended too far.

45              He went on to finally dismiss the application for award variation for the reasons which he had expressed.

ISSUES AND CONCLUSIONS

Discretionary Decision - Principles

46              The decision made in this matter was a discretionary decision as that is defined in Norbis v Norbis (1986) 161 CLR 513.

47              The grounds of appeal were directed only to a complaint that there had been a miscarriage in the exercise of the discretion at first instance.  Of course, it is for the appellant to establish that the Commissioner at first instance erred in the exercise of its discretion in accordance with the principles laid down in House v The King [1936] 55 CLR 499 (see also Gromark Packaging v FMWU 73 WAIG 220 (IAC)).

48              The Full Bench has no warrant to interfere with the exercise of the discretion at first instance, and, in particular, cannot substitute the exercise of the Full Bench’s discretion for that of the Commissioner, at first instance, unless it is established that the Commissioner erred in accordance with the principles laid down in House v The King (op cit) and Gromark Packaging v FMWU (op cit).

Effect of the variation

49              What was sought to be effected by the variation, was that Kirin should, by the award, be bound to employ only employees falling within the classifications covered by the award (which includes malt production operators) if they were employed directly by Kirin.

50              In other words no person could be engaged to do that work who was a “contractor” or who was hired from a labour hire company.

51              This prohibition would not affect the engagement of persons for periods not exceeding three months; where temporary coverage for an employee on leave was required, or to cover a temporary seasonal increase in labour needs; or where an emergency or breakdown necessitates increased or specialised labour; or, in the case of specialised or increased labour, which Kirin employees are unable to provide.

52              Next, the variation if made, could prevent the respondent from employing labour hire firm employees or “contractors” on lesser wages and conditions than directly employed labour who are covered by the award and any agreement based on the award.

The decision and the issues

53              There was little dispute about the facts. 

54              What was open to the Commissioner to find (see the evidence of Mr Murphy and Mr Inoue) and what it should have found, was that there was no evidence that contract or labour hire company employees were used, except from time to time when there were shutdowns to enable maintenance to be carried out, and sometimes while staff were on leave before September 1999.

55              It was also open to find (on Mr Inoue’s evidence) that, shortly before September 1999, the respondent had decided that in order to attempt to reduce employment costs it would engage employees of labour hire firms to work for it.  Mr Carmody was one such person.  This was successful and the respondent intends now to embark on such a course of labour hire on an expanded basis.  This was because the respondent wanted to reduce its costs and alter or reduce the number of hours of work to better fit operational requirements.  Further, of course, the labour hire employees received a wage 30 percent less than that payable under the agreement to those employees covered by the award and the agreement, and the total wage bill accordingly reduced.

56              It was also open to the Commissioner, at first instance, to find that the respondent did not intend, and had not intended to reduce its employees’ conditions of employment or disadvantage them in relation to their current entitlements, I must say however.

57              It was quite clear, on the evidence, and it was open to so find, and should have been found, it being Mr Inoue’s evidence, that the respondent engaged contractors for the purpose of avoiding payment of the rates prescribed by the industrial agreement, and, include that wages up to 30 percent less than those payable under the industrial agreement were payable to labour hire employees and to reduce costs and the hours of work.

58              It was also open to find, and it should have been found, as a fact, that within twelve months of entering into a consent agreement in order to settle industrial disputation the respondent was engaging persons on a planned basis to reduce the expense of its award or enterprise bargaining agreement workforce.

Grounds of appeal

59              I now deal with the grounds of appeal. 

60              It was submitted that the Commissioner, at first instance, erred in the exercise of his discretion in that he gave no weight to the scheme of the Act.

61              It was the respondent’s case that the Commissioner, at first instance, had not erred in the exercise of his discretion. 

62              I have carefully considered all of the submissions made to me in relation to the grounds of appeal.

63              It was a relevant fact, as the Commission should have found, that whilst a party to consent industrial agreements, the most recent of which was entered into by consent to put an end to industrial disputation, the respondent embarked upon a new systematic and alternative labour recruitment programme using labour hire for employees in order to reduce labour costs and hours, as I have outlined above, and as was clearly asserted in evidence by Mr Inoue.

64              It is difficult to reconcile that approach with the fact that an industrial agreement, fixing the wages and conditions of employees, was entered into whilst this process was being embarked upon. 

65              It was the fact, as all of the evidence revealed, that before that plan was embarked upon, labour hire employees or temporary employees were not engaged or used except in times of shut down and maintenance, or to fill in during leave and always on a very short term basis, called “short fall”.

66              The use of labour hire employees embarked upon from about September 1999 onwards was the fruit of a decision which became even firmer later, namely to engage a bigger component of work force in the form of labour hire from labour hire employers.  This was not on a short term basis or to fill in for short falls, or for any of the limited purposes for which labour hire or “contract” employees were engaged in the past.  Simply as a matter of fact there was no custom or practice similar to the practice embarked upon after September 1999 in relation to the use of labour hire firm employees.  The Commissioner himself so found, and found correctly.

67              In any event, there was no custom or practice within the plain English meaning of either word, or within the legal definition of that phrase.  I say that because there was no habitual custom or practice or usual way of acting in given circumstances, (see the Macquarie Dictionary) which reflected an unlimited, in time numbers of employees and/or otherwise, the proposed or actual use of labour hire employees as a permanent or substantial part of the work force, in lieu of directly employed persons who enjoyed the benefits of the award or any agreement based on it.

68              Further, there was no question in this matter of the implication into any contract of employment, of a “crystallised” custom as there was in Byrne and Frew v Australian Airlines Ltd [1995] 185 CLR 410.

69              As to custom otherwise, the custom must be established to be the custom of the industry generally and not merely the practice of a particular employer.  It must be generally recognised too, throughout a calling or locality (see Ivanhoe Gold Mine v Wood (1923) 27 WALR 20).

70              Further, it must be notorious, certain, reasonable and must not offend against the intention of any enactment or an award (see per Dwyer P in AWU (Goldfields) v Lake View and Star (1936) 16 WAIG 344).  In this case the practice adopted by one employer, not the whole industry, was not a custom within the meaning of the industrial law for those reasons.  It was not notorious.  It was not industry wide.

71              In any event there was, as I have observed, no practice until 1999 of employment of labour hire employees on anything but a short term basis and for restrictive objects and limited labour requirements.

72              The Commission expressly dismissed the application for two reasons.  One was because of what he called an established custom in the industry regarding engagement of contractors or labour hire firm employees, for short term work, which itself was not a contract.  I have already commented above on the limited nature of that practice and the fact that it was not a custom as such, across the industry.  There was no custom and practice which would be “cut across” by the variation sought.  Indeed if there were a custom and practice in employment of “contractors” and labour hire employees, it was more accurately reflected in the variation sought and, in the limited terms applied in the variation.

73              Next, the Commission expressed a view that the new Clause 23 took the matter too far by binding a third party to rates agreed between the respondent and the applicant, at first instance.

74              First I must say that that is not so because no third party is bound by such a provision, and could not be.  Only the respondent is.  Whether a labour hire firm agrees that the amounts at which it hires its employees to the respondent should be the rates which the respondent has agreed to pay, is a matter for that labour hire firm.  Presumably it does not hire to the respondent if the price is not acceptable, whatever the reason for that is.  The Commission erred in finding as it did in that respect.

75              Further, there is no evidence that there is any such custom and practice in either the ordinary meaning or the legal meaning of that phrase which is contrary to what the variation would apply in any significant term.

76              Next, the question of whether the variation sought would affect any competitiveness between Joe White Maltings Ltd and the respondent was not directly before the Commission.  The Commissioner observed correctly that he did not know about the respondent’s competitiveness vis a vis Joe White Maltings Ltd.

77              There was no evidence on which he could have found otherwise.

78              Indeed, it was clearly expressed to us in any event that Joe White Maltings Ltd employees were all subject to workplace agreements and not at all subject to the terms of the award or any agreement based on it.

79              It seems to me, therefore, that in the absence of evidence to the contrary, and if it were at all a matter properly raised on this appeal, which I doubt, then it would be entirely academic, if not futile, to seek to vary the award to cover Joe White Maltings Ltd employees, or to suggest that the failure to cover them was at all unfair, when they were all on workplace agreements; and when by that very fact it would difficult to equate labour hire firm employees to workplace employment employees; and when s.26A prohibits the Commission from examining the terms of any workplace agreements.

80              It was submitted, as was the fact, that the conditions and wages applicable to the existing award employees had not been reduced.  It was also the fact that the company does not propose to take any action which would disadvantage any of the permanent employees by comparison to their current entitlements.  That, in my opinion, is not a factor which is at all favourable to the respondent given that the respondent could not contract out of the industrial agreement or the award without committing a breach of s.114 of the Act, and is bound not to do so.  All that can be said about that fact is that if the respondent were to seek to do otherwise, then it would be grossly unfavourable to it on any proper consideration of the equity and good conscience of the application.

81              Another factor, of course, was that the respondent embarked on a systematic process of employing labour hire employees at a reduced rate at the same time as it had entered into an industrial agreement, by consent with BBEIU, to resolve industrial disputation between them.  That leads me to deal with the submission that it was contrary to the intent of the Act, the award and the Wage Fixing Principles to, in effect, permit the respondent to avoid the operation of an industrial agreement which was extant at the time the application, at first instance, was made and heard and the order appealed against was made.

82              S.6(a) reads as follows:-

“(a) to promote goodwill in industry;”

 

83              S.6(c), which is also a principle object of the Act, reads as follows:-

  “(c) to provide means for preventing and settling industrial disputes not resolved by amicable agreement, including threatened, impending and probable industrial disputes, with the maximum of expedition and the minimum of legal form and technicality;”

 

84              S.6(d), which is also an object of the Act, reads as follows:-

  “(d) to provide for the observance and enforcement of agreements and awards made for the prevention or settlement of industrial disputes;”

 

85              In my opinion it is not, on the face of it, conducive to the promotion of goodwill in industry to permit the avoidance of the operation of an agreement clearly directed to covering the whole of the permanent directly employed workforce by the use of labour hire firm staff.  I say that because inevitably labour hire staff use was to be directed to the replacement of directly employed persons.  Further, the labour hire staff are paid 30 percent lesser rates which, on Mr Murphy’s evidence, was a cause of insecurity in the respondent’s employees.

86              Next, it would be correct to say that the object of the Act to provide a means for preventing and settling industrial disputes, which clearly was implemented in this case by the registration of a consent agreement, would not be advanced by refusing to vary the award to prevent the circumvention of an agreement which was consented to in order to settle disputation, in the manner in which it has occurred in this case (see s.6(c)).

87              S.6(d) would not at all be advanced by allowing agreements not to be observed directly or circumvented indirectly or enforced when the agreement had been reached, particularly by consent, for the settlement of an industrial dispute.  It is, of course, clear that the act of engaging labour hire firm employees during the course of the industrial agreement, on the basis on which this was done, has lead to a dispute which was sought to be resolved by the award variation applied for at first instance.

88              It is difficult for me to see that s.49A is, on the face of it, relevant to a consideration of this matter; nor do I see the appendix to the award concerning dispute resolution to be relevant.

89              Those provisions deal with the requirement and the mechanism for dispute resolution in awards.  The application, at first instance, sought to deal with a matter which had given rise to a dispute sought to be resolved by variation of the award. 

90              It is, in any event, quite clear that the Commission correctly took account of the following relevant factors in the context of s.6(a), (b) and (d) of the Act and the Wage Fixing Principles (see Re Minister for Labour Relations and Others (2001) 81 WAIG 1721).

91              The Commission correctly held that the nature of the Act and the nature of the Wage Fixing Principles are to provide an orderly structure for the conduct of industrial relations and are fundamental to the conduct of industrial relations.

92              Correctly, and relevantly as well, the Commissioner adverted to the existence of an award, its operation, and an agreement which took time to complete.  That, of course, was correctly a recognition of the existence of the agreement, how it came about, and the effect of the respondent’s act which, in effect, represented a circumvention of it.  It follows that the Commissioner recognised correctly that the appellant sought to prevent that and future circumventions of the agreement or the award by the application to vary the award.

WAGE FIXING PRINCIPLES – THEIR APPLICATION

93              It is necessary to consider this matter and the appeal generally in the context of Mr Schapper’s concession and submission (see page 23 of the transcript on appeal) which were that “the award should have been varied by inserting the new clause 8A, but also by omitting subclause 5 of clause 23”, and inserting clause 23(1 to 4).

94              This would mean that there would be no requirement in the new clause 23 that no work be let out unless the contractors’ employees were paid in accordance with the terms and conditions of the award or any agreement between BEBIU and Kirin.

95              Thus the new clause 23 would provide only that all of the work falling within the classifications of the award would be performed by persons employed directly by Kirin and further, would limit the use of hire firm employees by Kirin.

96              The appellant’s case, at first instance, was clearly directed at that and the variation sought was directed only at the limitation of the use of hire firm employees, not the right of the employer to use outside contractors with their own employees.

97              Mr Heathcote, for the respondent, made a submission that the application was, in any event, not dealt with in accordance with the Wage Fixing Principles in that, it could only be dealt with by the Commission in Court Session and not by a single Commissioner, as in fact was the case.  It was common ground that that submission was not made at first instance, and it was somewhat unhelpful that it was not.  Indeed to all intents and purposes the matter proceeded before the Commission, at first instance, constituted by a single Commissioner on the basis that the application was able to be decided by the Commission, at first instance, and the Commission, at first instance, constituted by a single Commissioner accordingly, without objection, decided the matter.

98              Mr Schapper opposed the question of the Wage Fixing Principles and the compliance with them or non compliance with them being raised on appeal when it had not been raised at first instance.  Indeed, it could not prima facie be raised (see s.49(4) and see also Metwally v University of Wollongong (1985) 60 ALR 68 (HC)).  That is authority for the proposition that since the point was not argued or raised, at first instance, and then in the circumstances of this case, the respondent should be bound by the case which it had “run” at first instance.  It was not part of that case of either party, at first instance, that the Wage Fixing Principles were not complied with because the matter was not heard by a Commission in Court Session.

99              Of course, if the fact that the matter was heard by a single Commissioner instead of the Commission in Court Session constituted a jurisdictional error, then the respondent would not be excluded upon this appeal by the doctrine in Metwally v University of Wollongong (op cit) from arguing that there was no jurisdiction or that the matter had been heard by a jurisdictional error, at first instance (see SGS Australia Pty Ltd v Taylor (1993) 73 WAIG 2328 (FB)).

100           The law is also quite clear that the Commission, constituted by a single Commissioner, is bound by a general order of the Commission; and, where the principles are, as is the case here, prescribed as part of a general order giving effect to a national wage decision, then they bind the Commission constituted by a single Commissioner, and the Commissioner is required to apply those principles (see RRIA v AMWSU and Others (1993) 73 WAIG 1993 at 1998-9 per Nicholson J with whom Wallwork and Owen JJ agreed (IAC)).

101           As to the Wage Fixing Principles see In The Matter of the State Wage Case and in Re The Minister for Labour Relations and Others (op cit).  If the Commission fails to apply those principles, that is more than an error committed by failure to have regard to a relevant consideration because the Commission is bound to apply the principles.

102           It is also, of course, a failure to have regard to a relevant consideration because the principles by prescription are entirely relevant.

103           The next question is whether such an error, if made, is a jurisdictional error, that is that the Commission acted without jurisdiction or, put another way, committed a jurisdictional error.  It was a condition of the exercise of jurisdiction in this case that the Commissioner, at first instance, applied the Wage Fixing Principles if, on a proper construction of their terms, they were applicable (see Re Robins SM; Ex parte WA Newspapers Ltd (1999) 20 WAR 511 at pages 520-1 per Ipp J with whom Pidgeon and Steytler JJ agreed, and the cases cited therein).

104           It is fair to say that I do not think that there was a constructive failure to exercise jurisdiction within the meaning of that term as used by Gaudron J in Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 75ALJR 889 at 903-4 (HC).

105           The crucial question is, of course, whether the principles in their terms were applicable to the application, at first instance.  If they were not, there was no jurisdictional error because the Commissioner was not bound to apply them.  It was the case for the respondent that the principles were applicable and that the matter should have been heard by a Commission in Court Session after being referred by the Chief Commissioner.  It was the case for the appellant that they were not.

106           It was common ground that if the Wage Fixing Principles were applicable, this could only be because of the operation of Principles 1, 2 and 10.  It is to be noted that the principles are Wage Fixing Principles (my emphasis).  They do not purport to govern other industrial matters, save and accept as such matters are prescribed in the actual terms of the principles.

107           First, what is clearly expressed by Principle 1, is that existing wages and conditions in an award or a relevant agreement of the Commission, constitutes the safety net which protects employees who may be unable to reach an industrial agreement.

108           Second, by virtue of Principle 2, there is a prescription of those instances when an award or agreement may be varied (or another award made), without the claim being regarded as above or below the safety net.  All of the exceptions relate specifically to wages or related matters, namely structural efficiency or productivity.  The principles otherwise refer to work value and wage rates, hours of work, safety net adjustments and the minimum adult award wage.  There is no doubt that an application to insert Clause 23 is not authorised to be made by Principle 2.  The question is whether the principles, read as a whole, on a fair reading of the principles, forbids such an application being made to a single Commissioner.

109           Clause 10 regulates the making of an application to vary “wages or conditions” above or below the safety net, which application can only be made to the Commission in Court Session if the Chief Commissioner refers such an application.

110           The safety net is of course the award in its existing terms.  It is entirely plain, on a fair reading of the whole of the principles, that the safety net which the award provides, was not at all sought to be varied by the application to insert Clause 23 (with Clause 23(5) omitted).  I do not, of course, say that with Clause 23(5) the application would be an application to vary the award qua safety net.   Further, there is a clear relationship between the words “wages” and “conditions” used in the phrase “wages or conditions”, in Principle 10.  Thus, if the conditions do not bear a relationship to wages, since the principles are Wage Fixing Principles, then the application is not one to which Principle 10 can apply or does apply.

111           The application insofar as it related to the insertion of Clause 23 without the proposed Clause 23(5), was not an application to vary wages or conditions within the meaning of Clause 10.  The application bore no relationship to “wages and conditions” and sought no variation of the award as a safety net.  Indeed it was the clear evidence that the practice which it sought be regulated, did not affect existing conditions of employment.  The new Clause 23 sought and seeks merely to preserve the employment of directly employed employees and limit the use of hire firm employees, or alternatively formally provide further use. 

112           The application and its subject matter, in that respect, were not matters to which the Wage Fixing Principles, on a fair reading of them as a whole, could or did apply.  There is no element of influence upon wages, hours, conditions, flexibility, efficiency etc, in the variation sought.  The Commission had jurisdiction and power sitting alone to grant the application and should have done so for the reasons which I have advanced above.

CLAUSE 8A

113           The new Clause 8A which was sought to be inserted is palpably indifferent case.  Clause 8A deals with hours of work, variations in rates, and conditions of employment in the wage fixing principle sense of the word in relation to part time employees.

114           The application could only be dealt with by the Commission, in Court Session, on reference from the Chief Commissioner, according to the prescription of Principle 10.  That this did not occur constituted a jurisdictional error which should be corrected.  Hence, the decision to dismiss the application in that respect could not be held to be in error.  I would add, however, that as I read the grounds of appeal, they do not constitute an appeal against the inclusion of the new Clause 8A.

INDUSTRIAL MATTER

115           There was one other matter which I would wish to make some comment upon.  I am not at all persuaded, despite Mr Schapper’s concession that the application to insert the proposed Clause 23(5) in the award was outside jurisdiction, a concession which seemed to be implicit in his not pursuing that part of the appeal, that the application to insert such a clause and the resultant order sought by the application were not industrial matters or within jurisdiction.

116           In my opinion, cases such as R v Commonwealth Industrial Court Judges; Ex parte Cocks (1968) 121 CLR 313 and R v Moore Ex parte FMWU (1978) 140 CLR 470 and ALHMWU v Abergeldie – St Andrew’s Hospital Inc (1995) 37 AILR 3-001, are distinguishable on the facts and by reference to the narrow definition of “industrial dispute” in the Federal legislation, from the facts in this case and the definition in s.7 of the Act of the phrase “industrial matter”.

117           In my opinion, an apposite authority because of the greater similarity in the two definitions of “industrial matter” in s.7 of the Act and in the South Australian Act, the Industrial Conciliation and Arbitration Act 1972-9 (s.25), is The Queen v Industrial Commission of South Australia; ex parte Master Builders’ Association of SA Inc (1981) 26 SASR 535 at 537-8 per King CJ (Mohr J agreeing) and Zelling J (In Banco).

FINALLY

118           In my opinion, the Commission erred in making findings in error and in not having regard to a number of relevant matters which I have explained above.  It is quite clear that the appellant, for those reasons, has established error in the exercise of the discretion, in accordance with House v The King (op cit).  For my part the findings which the Commission made and the relevant factors above which should have been considered, and some of which were, would enable me, for the reasons which I have expressed, to say that the Full Bench should substitute the exercise of its discretion for the exercise of the discretion, at first instance, and grant the application, the equity, good conscience and substantial merits of the case and a proper exercise of discretion requiring it.

119           That being so, there is no need to put and no point in putting the parties to inconvenience and expense by remitting the matter.

120           I would therefore, for those reasons, uphold the appeal, insofar as it relates to the failure to grant the application to vary by inserting the new Clause 23 without Clause 23(5), and issue a minute of proposed order to reflect the variation sought by the application, namely the insertion of that clause, as expressed in the application at first instance.  I would otherwise hold that the dismissal was correct and otherwise dismiss the appeal insofar as it might bear upon the failure to insert Clause 8A.

121           I would order accordingly.

 

COMMISSIONER GREGOR AND COMMISSIONER SMITH:

122    The matter subject to the appeal arises from decisions of the Commission in dealing with two Applications, No. CR169 of 2001 and Application 1394 of 2001.  The determination in Application No. CR169 of 2001 finalised that matter however that relating to Application No. 1394 of 2001 gave rise to No. FBA56 of 2001.

123    Application No. 1394 of 2001 seeks orders from the Commission to vary the Malting Industry Award 1993 by inserting a Clause 8A. – Part Time Employees and Clause 23. – Use of Contractors.  It appears from the Reasons for Decision at first instance that the Commission was of the opinion that if the claim to insert Clause 23 failed then, the claim for the new Clause 8A. – Part Time Employees also fell away.

124    In dealing with the award variation at paragraph 20 of the Reasons for Decision the Commission at first instance wrote as follows:

 

“I turn to the other application that is the award variation, application 1394 of 2001.  Mr Schapper advises me the application should stand as one and having read the application and having heard you both today, can I say that I have some sympathy for the view put by Mr Schapper that the nature of the Act, and the nature of the wage fixing principles, are to provide an orderly structure and form to the conduct of industrial relations and that at base, in both the Act and the principles, parties are bound by the agreements they make.  That is fundamental to the conduct of industrial relations, I think generally, but certainly within the jurisdiction that I deal.” (AB016)

 

125    It is clear that the Commissioner had cognizance of the importance of the Wage Fixing Principles, however not sufficiently according to the Appellant because the grounds of appeal in paragraph 1(a) are as follows: (AB002)

 

“1. In dismissing the application the Commission erred in the exercise of its discretion in that the Commission:

 

(a)             failed to give any or any sufficient weight to the scheme of the Act and/or the wage fixing principles

(b)            

(c)             

(d)            

(e)             

 

126    Mr Schapper (of Counsel) who appeared for the Appellant, submits that the Commission at first instance clearly failed to attach any weight to the matters referred to in paragraph 20 of the Reasons for Decision among which is the weight which ought to have been given to the Wage Principles.  It is argued on behalf of the Appellant that the thrust of the Principles is that industrial agreements are to be the prime means by which improvements in wages and conditions of employment were to be secured and that it is contrary to the spirit of the Principles to allow parties to contract out and sidestep industrial agreements they make.  In particular clause 1 of the Principles sets out this policy.  However the Appellant argues that Principle 10 does not apply because the Union's application to amend the award is not to vary the award above or below the award safety net.

127    In its argument the Respondent concedes that the Commission is required to abide by the Principles.  It claims that Principle 1 was irrelevant to the matter given the observations of the Commission at first instance that the relevant employees were covered by both an award and an agreement.  Principle 2 was of greater significance because it sets out matters with which the Commission constituted by a single Commissioner might deal without working outside the safety net.  The Respondent’s submission was that the Commission had rightly concluded that there is no Principle upon which he could decide the application.  The Respondent also argued that the application before the Commission at first instance did not fit into any of the categories set out in (a) to (h) of Principle 2, and was therefore outside the safety net and subject to Principle 10.  Although the Respondent in its written submissions did not cast this argument in the alternative, clearly such an argument is cast in the alternative.

128    We now consider these submissions.  The Schedule to the Statement of Principles issued by the Commission in Court Session in June 2001 (81 WAIG 721) describes the Principles to be applied by the Commission.  It is our view that those relevant to the disposition of this appeal are as follows:

 

1. Role of Arbitration and the Award Safety Net

Existing wages and conditions in awards and relevant agreements of the Commission constitute the safety net which protects employees who may be unable to reach an industrial agreement.

 

2. When an Award or relevant Agreement may be varied or another Award made without the claim being regarded as above or below the Safety Net:

In the following circumstances an award or relevant agreement may, on application, be varied or another award made without the application being regarded as a claim for wages and/or conditions above or below the award safety net:

 

(a) to include previous State Wage Case increases in accordance with Principle 3.

(b) to incorporate test case standards in accordance with Principle 4.

(c) to adjust allowances and service increments in accordance with Principle 5.

(d) to adjust wages pursuant to work value changes in accordance with Principle 6.

(e) to reduce standard hours to 38 per week in accordance with Principle 7.

(f) to adjust wages for arbitrated safety net adjustments in accordance with Principle 8.

(g) to vary an Award or relevant Agreement to include the Minimum Adult Wage in accordance with Principle 9.

(h) a consent variation to a single enterprise specific award or a consent replacement award to a single enterprise specific award under Principle 10 giving effect to structural efficiency initiatives or productivity based arrangements.

 

10. Making or Varying an Award or issuing an Order which has the effect of varying wages or conditions above or below the safety net

An application or reference for a variation in wages or conditions above or below the safety net will be referred to the Chief Commissioner for determination by the Commission in Court Session.

 

A party seeking such a claim must support it with material justifying:

 

  • why the matter has not been progressed and/or finalised pursuant to s.41 of the Act;
  • why the matter has not been pursued under any other Principle set out in this Statement; and
  • how in the discharge of its statutory function to consider varying above or below the safety net the Commission should take into account, to the extent that it is relevant, each of the matters identified in section 26 of the Act.

 

Provided that where parties to a single enterprise specific award apply to vary the award by consent or consent to a replacement award to give effect to structural efficiency initiatives or productivity based arrangements the Chief Commissioner may allocate the matter to a single Commissioner.

 

11. First Award and Extension to an existing Award

 

The following shall apply to the making of a first award and an extension to an existing award

 

(c) In the extension of an existing award to new work or to award-free work the rates applicable to such work will be assessed by reference to the value of work already covered by the award, providing structural efficiency considerations including the minimum rates adjustment provisions where relevant have been applied to award."

 

129    The Commission is required to apply the Principles in determining matters before it (Robe River Iron Associates v Amalgamated Metal Workers and Shipwrights Union of Western Australia and Others (1993} 73 WAIG 1993).  Pursuant to Principle 1 – Role of Arbitration and the Award Safety Net, existing wages, conditions, awards and relevant agreements constitute the safety net.  This means that the awards and relevant agreements as they were at the time the Statement of Principles was made are the safety net.  By Principle 2 the award or relevant agreement cannot be varied by the Commission singularly constituted unless it is varied in accordance with the exceptions which are listed in paragraphs (a) to (h) of Principle 2.  A variation of the safety net includes an addition to awards or relevant agreements that varies a wage or condition.  If the proposed Clause 23. – Use of Contractors is inserted in the Malt Industry Award 1993 (the Award), it would vary that award.  Under Principle 2 no such variation can be made unless the variation is in one of the circumstances described in paragraphs (a) to (h) of Principle 2.  The subject matter of Clause 23 is not mentioned in any of the paragraphs and therefore the claim is required by the Principles to be regarded as a claim for wages and/or conditions above or below the safety net.

130    Further it is apparent from the terms of the variations sought to the award that what is sought in relation to the proposed Clause 23 (1) to (4) is in our opinion the creation of provisions that are arguably an extension to the existing award, as the provisions seek to extend the operation of the award to award free work, in that the extension is to the circumstances under which the Respondent can engage contractors.  In such a case pursuant to Principles 2 and 11 the claim must be dealt with under Principle 10.  Prima facie Principle 11 appears to be invoked, as proposed clause 23(2) to (4) expressly prohibits the Respondent from engaging contractors to carry out work falling within the classifications covered by the Award or any industrial agreement unless the pre-conditions in proposed clause 23(3) and (4) are met.  Presently the Respondent is unrestricted in its ability to engage contractors to carry out work covered by the classifications in the Award or the Kirin Australia ("Fitters") Enterprise Agreement 2000 or the Kirin Australia Enterprise Agreement 2000.  Where it engages contractors to perform such work the terms of the engagement are award free.  As to proposed clause 23(5) the extension sought is not only to an extension to award free work but is to a matter that is beyond the jurisdiction of the Commission as it does not constitute an "industrial matter".  Although the issue of jurisdiction in respect of proposed clause 23(5) was not the subject of argument before the Full Bench, it was conceded by counsel by the Appellant that proposed 23(5) was objectionable and could have been severed by the Commission at first instance.  In our view this concession was properly made.  In R v Commonwealth Industrial Court Judges; ex parte Cocks (1968) 121 CLR 313, the High Court held that a log of claims containing a demand that no employer shall permit any of the relevant work to be done by a contractor except in accordance with the terms of the award, did not raise a dispute as to an industrial matter.  (See also R v Moore; ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 and ALHMWU v Albergeldie – St Andrews Hospital Inc (1995) 37 AILR 3-002).

131    Leaving aside proposed clause 23(5), it is our view that the proposed clause 23 would constitute a variation in wages or conditions, above the safety net and in that case Principle 10, must be applied.  The effect of the decisions of Full Court in The Western Australian Industrial Relations Commission; ex parte Confederation of Western Australian Industry (Incorporated) (1992) 6 WAR 555 per Rowland J at 561 and Murray J at 574 and the Industrial Appeal Court in Robe River Iron Associates v The Amalgamated Metal Workers and Shipwrights' Union of Western Australia (op cit) is that by operation of s.51(2) of the Act, where a National Wage decision by General Order has been made by the Commission and in a particular case the Principles are invoked, the Commission has no discretion but to apply the Principles.

132    The Reasons for Decision of the Commission at first instance show that it did not apply the Wage Principles.  The failure to do so is a jurisdictional error.  A jurisdictional error arises when a court or tribunal mistakenly asserts or denies the existence of jurisdiction or if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist (Craig v South Australia (1995) 184 CLR 163 per the Court at 177).  The Appellant argues that as the Respondent did not argue at first instance that the application to amend the Award should proceed under Principle 10, the Respondent should be bound by the case which it ran at first instance (Metwally v University of Wollongong (1985) 60 ALR 68).  However the principle enunciated by the High Court in Metwally v University of Wollongong (op cit) prohibiting a party from raising a matter on appeal that was not raised at first instance, does not apply to a jurisdictional error of law (see SGS Australia Pty Ltd v Taylor (1993) 73 WAIG 2328).

133    For these reasons we are of the view that Appeal Ground 1(a) is made out.

134    As the Commission at first instance made an error going to jurisdiction, there is no need to examine the other appeal grounds.  We would remit the matter back to the Commission at first instance for hearing and determination in accordance with the Decision herein.

 

THE PRESIDENT:

135    For those reasons, the appeal is upheld, the decision of the Commission in matter No 1394 of 2000 delivered on the 2nd of November 2001 be and is hereby suspended and the case be and is remitted to the Commission at first instance to be heard and determined according to the reasons for decision herein and according to law, and the appeal be and is otherwise hereby dismissed

 

Order accordingly.