TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984
s23 application for award or variation of award

The Australian Workers' Union, Tasmania Branch
(T10817 of 2003)

BUILDING AND CONSTRUCTION INDUSTRY AWARD
DAIRY PROCESSING AWARD
FISH AQUACULTURE AND MARINE PRODUCTS AWARD
MEAT PROCESSING INDUSTRY AWARD [Correction Order]
SHELLFISH INDUSTRY AWARD

Award variation - 25% casual loading - application approved

REASONS FOR DECISION

[1] This is an application by the Australian Workers Union, Tasmania Branch (AWU) to vary the following awards by increasing the casual loading in the awards to 25%:

[2] At a hearing on 24 August, 2004, the AWU submitted that the applications sought to increase the casual loading in the relevant awards from 20% to 25%. Mr Flanagan, for the AWU, said that there had been comprehensive discussions with the Tasmanian Chamber of Commerce and Industry (TCCI), representing the employer parties to the awards, and that an agreement had been reached in settlement of the claim by the AWU.

[3] It was submitted:

"What is proposed by the union and I understand not objected to by the TCCI, is that in respect to the Dairy Processing Award, the Shellfish Industry Award, the Fish Aquaculture and Marine Products Award and the Meat Processing Industry Award in respect to white meat only is that the casual loading will increase by 1% on 1 October, 2004 to become 21%; on 1 October, 2005 by a further 1% to become 22%; by a further 1% on 1 October, 2006, becoming 23% and then a final adjustment of 2% on 1 October, 2007 taking the loading to a 25% figure.

In addition, in relation to those awards the parties have agreed on a conversion process which will take effect for people that have 12 months service, and the operative date for that will be 1 October 2004 so that from 1 October 2004 if you have completed 12 months service you will then have the capacity to elect to convert to either a full-time or part-time position under those awards."1 (underlining mine)

[4] It is noted that 1 October, 2005, will be the first available date from which there will exist a capacity to convert to full-time or part-time employment.

[5] Mr Flanagan continued:

"In relation to the Building and Construction Industry Award the agreement is that the 20% loading which currently appears in respect to the civil side of that award will move from 20% to 25% from 1 July 2005 and that there would be no conversion process in respect to that award and underpinning that understanding is the recognition on the part of the AWU that there are a number of employers currently bound by the State Award involved in civil operations that currently have in place contractual arrangements, that being the nature of civil construction and therefore there is - by having the operative date of 1 July [2005] is doesn't sort of impact on labour costs adversely but it also identifies to those employers where they are in part using casual employment, from 1 July next year their contractual arrangements will need to reflect the higher rate of pay for casual employees, so that is the position that the parties have reached agreement on."2 (underlining mine)

[6] Reference was made to a number of awards of the Australian Industrial Relations Commission (AIRC) where the casual loading had been increased, the AWU is a respondent to many of those awards.

[7] Supporting evidence was provided by Dr BS Felmingham, Dean of the Faculty of Commerce and Law and Head of the School of Economics and Reader in Economics, University of Tasmania, which considered the effect and economic impact of the AWU applications.

[8] Dr Felmingham noted that Tasmania was one of three Australian States most effected by casualisation and that a study by John Mangan, University of Queensland, and Christine Williams, Queensland Treasury, indicated that over the ten years 1988 to 1997 casual male employment had increased from 12% to 21% and casual female employment from 28% to 32%.

[9] It was also noted by Dr Felmingham that Kelly Madden, in her report "Blue Collared: The Shrinking World of Work in Tasmania," found that "the proportion of people casually employed in Tasmania (25%) is slightly higher than the national average (22.5%) and further that a large proportion (63%) of both male and female workers in Tasmania are employed on a casual basis."

[10] Madden concluded:

"The loss of employment security for people at the bottom of the labour market has arguably been the most fundamental change in the Tasmanian labour market in the past three decades. In the early 1970s those people in the labour market were very unlikely to be unemployed and paid work was generally permanent and full-time. Now, for many Tasmanians a cycle of short stints of casual work interspersed with periods of unemployment has become a key feature of their working lives. Many unemployed, under employed and casually employed people are unable to make firm plans for the future due to the uncertainty about their work situation and income levels. They are often excluded from access to resources such as bank finance which allows individuals to achieve the ordinary milestones of life in Australia.

These changes in the labour market have been driven by Federal Government policy responses to changes in the national and global economy. However, the impacts of these policy changes have had significant negative impacts on many people in the Tasmanian labour force. The casual and unemployed workers interviewed in this research spoke of a grinding financial and emotion struggle with little hope of a more secure future for themselves and their families.

There have been some `winners' to emerge from the upheaval of labour market restructuring but for the most part they do not live in Tasmania. They are located in the large mainland capitals which have experienced quite different outcomes compared to a small regional economy such as Tasmania.

The challenge now for Federal and State governments is to develop policies which respond to the different labour market circumstances that have emerged within Australia. Tasmania has the opportunity to take a lead in implementing policy changes to address the needs of people living in smaller, regional economies. It is a challenge which can and must be met."

[11] It was the recommendation of Dr Felmingham that:

"This overview of the Tasmanian economy has established the presence of a significant improvement in the performance of the region relative to the rest of Australia. There is substantial improvement evident in the regional economy's capacity to reward its workforce and in particular its part-time, casual component which constitutes a much larger proportion of the Tasmanian workforce compared with the Australian situation. The two specific proposals in the application to vary 5 awards appear to be justified in the context of the research completed. First, part-time and casual employment reduces labour productivity, so the proposal to facilitate the transition from part-time and casual to permanent status should result in productivity improvements. Second, the finding that labour costs/income does not have a significant effect on employment, suggest that an increase from 20% to 25% in the loading for casual workers should be absorbed by the Tasmanian economy without any significant impact on Tasmanian employment."

[12] Witness statements of employees, subject to the provisions of one or other of the awards for which the variation is sought, discussed the issue of conversion from casual to permanent full-time or part-time employment. Those statements revealed the desire of the employees to convert to permanent full-time employment. The statement of Ian Wakefield, Tasmanian Branch Secretary of the AWU, "...deals with the circumstances of the civil construction industry and the other awards affected by the application together with some of the difficulties that employees engaged as casuals experience..."

[13] It is noted that the TCCI did not accept all of the comments found in the witness statements but as the parties had reached agreement in settlement of the applications TCCI did not wish to pursue those issues with which it disagreed.

[14] TCCI also noted that its consent to the applications the subject of this decision is without prejudice to any other applications which may be brought to the Commission.

[15] The agreement represents a phasing-in of the increase to the casual loading in the specific awards and introduces an ability to convert from casual employment to permanent full-time or part-time employment. The report of Dr Felmingham indicates there will be little or no impact on the economy of Tasmania and that the variations are affordable and in fact, he said, the ability to convert casual employment to permanent or part-time employment may well increase productivity.

[16] The agreement between the parties reflects, in general terms, the decision of a Full Bench of the AIRC in an application by the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) to vary the Metal Engineering and Associated Industries Award 1909 - Part 1; (C No. 22704 of 1999)[Print T4991] and the decision of a Full Bench of the AIRC in an application by the AWU to vary the Pastoral Industry Award 1998; (C No. 2002/4187)[Print PR930781] to increase the casual loading in each award to 25%.

[17] In its decision in the application to vary the Pastoral Industry Award, 1998, the Bench said:

"In our opinion, the relevance of the Metal Industry Casuals Case to the present matter is as authority for the proposition that if, upon analysis of the true value of award and other benefits enjoyed by permanent employees that are not enjoyed by casual employees and the disadvantages suffered by casual employees that are not suffered by permanent employees, it appears that the current casual loading is inadequate, then this can provide a proper basis for awarding an in crease in a casual loading as part of an award safety net of fair minimum wages and conditions. The various components that contribute to an assessment of a casual loading may vary from award to award. Some components are relevant to all awards. In relation to those components, the approach adopted in the Metal Industry Casuals Case in respect of those components ought be applied unless there is some clear distinguishing circumstance."

[18] And:

"We adopt and emphasise the observations of the Full Bench in the Metal Industry Casuals Case that not all components for calculating a fair casual loading

`....can be specified with precision or individually valued and that paid leave and such other components as may be identified can only be a guide to an overall quantification of the loading. No component can be the determinant of a precise level to be applied. Arbitral judgement is likely to be necessary in making an assessment of what is fair and reasonable.' "

[19] And further:

".....In our opinion the public interest favours allowing the AWU's application. Casual loadings are an integral part of an award safety net of fair minimum wages and conditions. The existing levels of casual loading in the Award do not adequately compensate casual employees for the benefits attaching to permanent employment that casuals do not receive and for the other disadvantages peculiar to casual employment. Fairness and principle requires that the levels of casual loading in the Award be increased to better reflect the true level of disadvantage suffered by casual employees.

There is no basis for concluding that the claimed increase will adversely affect the national economy in any measurable way. There is no evidence from which it may be concluded that the increase will have any significant adverse effect on the level of employment or inflation."

[20] In the applications before us, which are by consent, the AWU provided comparisons of permanent employment v casual employment entitlements in respect to each of the awards adopting a similar approach as that referred to in the applications before the AIRC and referred to above.

[21] Having considered the submissions, authorities and documentation presented by the parties the Commission is satisfied that the requirements of s.36 of the Act as it relates to the public interest, are satisfied and the process agreed between the parties can be implemented as proposed.

[22] The parties are required to provide draft orders reflecting the terms of their agreement in respect to each of the awards to be varied.

P L Leary
PRESIDENT

Appearances:
Ms J Bornstein (12/6/03) with Mr R Flanagan for The Australian Workers' Union, Tasmania Branch
Mr M Watson for Tasmanian Chamber of Commerce and Industry Limited
Mr B White for Construction, Forestry, Mining & Energy Union, Tasmanian Branch (24/8/04)

Date and place of hearing:
2003
June 12
Hobart
2004
August 24
Hobart

1 Transcript PN 88, 89
2 Transcript PN 95