National Union of Workers v Chep Australia Limited

[2010] FWA 6660

[2010] FWA 6660

FAIR WORK AUSTRALIA

DECISION

Workplace Relations Act 1996
s.709 - Application to Commission to have a dispute resolution process conducted (Div 5)

National Union of Workers
v
CHEP Australia Limited
(DR2010/36)

CHEP GILLMAN SERVICE CENTRE (SA) UNION COLLECTIVE AGREEMENT 2008

Storage services
COMMISSIONER HAMPTON	ADELAIDE, 30 SEPTEMBER 2010

Dispute relating to productivity targets - agreement made under former legislation - jurisdiction for Fair Work Australia to determine the matter - proper application of productivity provisions of agreement - whether change to equipment and process significant - whether consultation undertaken as required - impact on quality and safety considered - whether increase in minimum productivity rates warranted and consistent with the agreement in the new circumstances - determination made.

BACKGROUND

[1] This is an application by the National Union of Workers (the NUW or the union) for the resolution of a dispute relating to an agreement originally approved pursuant to the Workplace Relations Act 1996 (the WR Act). 1 That agreement is the CHEP Gillman Service Centre (SA) Union Collective Agreement 2008 (the Agreement).

[2] CHEP Australia Limited (CHEP or the employer) is the employer party to the Agreement and the respondent in this matter.

[3] I have dealt with this matter in accordance with s.709 of the WR Act. I have done so as the Agreement in this matter is preserved as a ‘WR Act instrument’ by virtue of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the TPCA Act). Schedule 19 to the TPCA Act provides that the WR Act continues to apply in dealing with disputes under WR Act instruments and confirms, in effect, that Fair Work Australia takes over the role of the Australian Industrial Relations Commission (the AIRC).

[4] The parties have, pursuant to s.712(2)(b) of the WR Act, consented to the public disclosure of this decision.

[5] The Agreement in effect provides at clause 13 that a dispute arising under the Agreement, should it not be resolved between the parties, may be referred to the AIRC (Fair Work Australia) to arbitrate to settle the dispute.

[6] The dispute concerns the proper application of clause 45 of the Agreement and in particular the decision of the employer to introduce new minimum productivity levels for the repair of wooden pallets. The employer proposes to increase the nominated productivity levels following the introduction of some new technology on the benches that are used to facilitate the repair of the pallets. That new technology has been called “Repair Assist”.

[7] The matter was subject to conciliation by another Member of Fair Work Australia and whilst a resolution on one aspect of the dispute (associated with the issuing of warnings to employees) has been reached, the substantive dispute as to the new productivity levels remains.

[8] I have now conducted an inspection of the workplace, during which I viewed the process of the repairing of pallets with and without the Repair Assist technology, and conducted a hearing where comprehensive evidence and submissions was provided by both parties.

THE JURISDICTION OF FAIR WORK AUSTRALIA

[9] I have earlier stated why this matter falls to be determined by Fair Work Australia under the provisions of the WR Act. Sections 709 and 711 of the WR Act provide as follows:

“709 Application

(1) A person may apply to the Commission to have a dispute resolution process conducted by the Commission under this Division in relation to a matter or matters in dispute if:

(a) the dispute is one that, under the terms of a workplace agreement, may be resolved using a dispute resolution process conducted by the Commission; and

(b) any steps that, under the terms of agreement, must be taken before the matter is referred to the Commission have been taken.

(2) An application to have a dispute resolution process conducted by the Commission under this Division must:

(a) be in the form (if any) prescribed by the regulations; and

(b) describe the matter, or matters, in dispute in relation to which the dispute resolution process is to be conducted; and

(c) be signed by the party to the dispute on that matter or those matters who is making the application; and

(d) specify that the dispute resolution process is to be conducted under the terms of a workplace agreement and not under the model dispute resolution process.

(3) The Commission may request the parties to provide further information about:

(a) the matter or matters in dispute; and

(b) the steps that have been taken to resolve the dispute.

Note: Under section 353, a workplace agreement must include a dispute resolution process. That process may be something other than the model dispute resolution process, and may involve applying to have the Commission conduct an alternative dispute resolution process.

...

711 Commission’s powers

(1) In conducting the dispute resolution process under this Division, the Commission has, subject to subsection (2), the functions and powers:

(a) given to it under the workplace agreement; or

(b) otherwise agreed by the parties.

(2) The Commission does not have the power to make orders.

(3) The Commission must, as far as is practicable, act:

(a) quickly; and

(b) in a way that avoids unnecessary technicalities and legal forms; and

(c) if the parties have agreed, either in the workplace agreement or otherwise, that an aspect of the process is to be conducted in a particular way—in accordance with that agreement.

(4) Subdivision B of Division 4 of Part 3 of this Act does not apply in relation to the conduct of the dispute resolution process by the Commission under this Division.”

[10] The dispute resolution procedure of the Agreement is set out in clause 13 as follows:

“13 DISPUTES RESOLUTION PROCEDURE

Any dispute or claim (whether any such dispute or claim arises out of the operation of this agreement or not) shall be settled in the following manner:

13.1 The parties will attempt to resolve the matter at the workplace level, including, but not limited to:

(a) the employee and his or her supervisor meeting and conferring on the matter, and

(b) if the matter is not resolved at such a meeting, the parties arranging further discussions involving more senior levels of site management as appropriate.

13.2 The parties acknowledge the right of either party to appoint another person/organisation to act on behalf of the party at any stage in the dispute resolution procedure.

13.3 The status quo shall be maintained until the matter is resolved. The status quo is defined as that which existed immediately prior to the change or incident or event which led to the dispute.

13.4 Subject to sub clause 13.3, during the time when the parties attempt to resolve the matter it is agreed that:

(a) the employee will continue to work in accordance with his or her contract of employment unless the employee has a reasonable concern about an imminent risk to his or her health or safety; and

(b) the employee will comply with any reasonable direction given by the Company to perform other available work, either at the same workplace or another workplace; and

(c) work must continue without any form of stoppages, strikes, lockouts and/or other ban or limitations on the performance of work; and

(d) the parties will cooperate to ensure that the dispute resolution procedure is carried out as quickly as is reasonably possible.

13.5 If a matter in dispute cannot be resolved at the workplace level, either party may refer the matter to the Australian Industrial Relations Commission (‘the Commission’) for conciliation.

13.6 If the matter still remains unresolved after conciliation, either party may ask the Commission to arbitrate to settle the dispute and all parties will accept the outcome, subject to any legal appeal procedures. If the Commission is asked to arbitrate it is agreed that the Commission shall have the power to do all such things as are necessary for the just resolution or determination of the matter in dispute. This includes the exercising of procedural powers in relation to directions, hearings, witnesses, evidence and submission which are necessary to make the arbitration effective.

[11] It is common ground that Fair Work Australia has jurisdiction to arbitrate this matter. The NUW has sought that orders be made in terms that would provide that there should be no increase in pallet repair rates, or in the alternative that the increase be set at specified rates less than those as determined by the employer.

[12] CHEP contends that no intervention should be made but accepts that Fair Work Australia is able to determine the matter, but not in the form of orders.

[13] I find that I have the jurisdiction to determine this matter in accordance with the relevant provisions of the WR Act and the dispute resolution provision of the Agreement. This means in this case that I must consider and determine the proper application of the Agreement and arbitrate the dispute within those parameters. Any such determination is to be expressed as being the appropriate resolution of the dispute in the present context rather than in the form of orders.

THE AGREEMENT PROVISIONS

[14] This matter principally concerns the proper application of clause 45 of the Agreement and as almost all its provisions are relied upon by one or both parties, I set it out in full as follows:

“45 POSITIVE PERFORMANCE MEASURES AND INDICATORS

The parties in this Agreement are committed to continuous improvement in order to exceed the expected targets in productivity, quality and customer service.

The parties are committed to:

45.1 Quality

(a) Repairing consistent with the Pallet Quality Standard (PQS) & Right Repair Right (RRR) in line with the requirements of CHEP Australia and their customers.

(b) Issue Surveys - no more than one legitimate customer complaint per six-month period.

(c) The company commits to undertaking quality checks on the standard of sorting to ensure that sorting is accurate and meets expectations.

45.2 Results

(a) Real gains in productivity, reflecting skills and competency.

(b) Continuous improvements from reviewing operational and production procedures, through consultation.

(c) Cost controls in relation to efficient and effective use of resourcing eg. timber, paint and nails

(d) Preventative maintenance schedules.

(e) Waste management in relation to scrap volumes; recycling of timber and other resources.

(f) Productivity. It is agreed that the parties will strive to continuously improve productivity per man hour without compromising the primary objectives related to safety, quality, and existing productivity levels.

(g) Asset Controls - Stocktake accuracy to be within 300 per stocktake.

45.3 Continuous Improvement in Productivity and Quality

(a) The parties to this Agreement are committed to continuous improvement within the service centre in order to exceed the following minimum productivity and quality targets.

Minimum productivity levels - Pallets per man hour

Repair timber	Repair No Timber	Unsorted	Double faced	Single bearers
Year 1	39.5	67	57	31	11
Year 2	40.5	69	58	32	11.5
Year 3	41	71	59	33	12

(b) The productivity numbers for Single Bearers is based upon a minimum 2 man operation.

(c) These numbers do not represent a ‘quota’ but rather minimum targets which the employees genuinely commit to achieve and exceed.

(d) The company commits to ongoing review of the repair process which may include new techniques, tools, equipment or technology in order to assist the employees with the continuous improvement process. As such, should there be a significant change in technology, tools or equipment, the minimum productivity levels will be changed in consultation with employees, to suit the new conditions.

45.4 Job Performance

Day shift and Afternoon shift will repair sorted pallets. In the event of sorted pallets not being available then employees will have the opportunity to take an RDO, annual leave or repair unsorted pallets.

45.5 Behaviour

(a) Safety - Commitment to adhering to zero harm including all safety related programs and policies.

(b) Environment - No breaches of policy.

(c) Reduction of Work Cover Claims and effective Workplace Rehabilitation.

(d) Maintaining performance levels through training.

(e) Attitude and Commitment in relation to continually improving customer service, quality and products as outlined in CHEP’s Vision & Values.

(f) Responsibilities should reflect levels of training, skills and competencies.

(g) Accountability will be emphasised for each individual employee.

(h) Autonomy in the work environment will be commensurate with responsibilities and accountability.

(i) Empowerment of employees to undertake their duties and conduct themselves in consultative processes aimed at changing work methods to improve efficiency and productivity.

45.6 Cost Effectiveness

(a) The parties are committed to improving the cost effectiveness in operations through:

(1) Working diligently to reduce non-productive time by minimising “Down Time” in relation to employee’s start and finish times and work breaks.

(2) Developing an effective reporting and preventative maintenance program to be implemented by employees responsible for equipment and machinery used in performing their duties. This is relating to hand tools on their workstations.

(3) It is agreed that employees and the Company implement suggestions to maintain cleanliness and improve housekeeping within the work environment.

45.7 Cleaning

It is agreed that staff during their normal working day are to undertake the cleaning of the work area and surrounding areas, these are to be kept in a neat and tidy manner. Employees have agreed to dispense with allocated cleaning times. Employees have agreed to include housekeeping in their normal shift hours without effecting productivity.

45.8 Waste Separation

It is agreed that waste associated with pallet repair will be sorted at each individual workstation separating cardboard to category, timber used for second hand boards and general rubbish. This still includes reclaiming all timber meeting right repair right requirements at the Bench.

45.9 Information Sharing

The following information sharing arrangements have been agreed to:

(a) The Company will communicate with employees at least quarterly or more frequently if necessary, productivity/quality issues, cost effectiveness, key forward activities and events, continuous improvement activities, occupational health and safety issues and training.

(b) It is agreed that all employees will work under the Gillman site conditions.

(c) The continuation of quarterly consultative meetings involving management and the consultative committee, together with a rotating staff member from the shop floor.

(d) The consultative committee is to monitor the results of the Certified Agreement and report back to the Company and employees every month.

[15] The objects (described as goals) of the Agreement are set out in clause 7 in the following terms:

“7 GOALS OF THE AGREEMENT

The parties to this agreement are committed to:

(a) continuous improvement that achieves and strives to exceed the minimum targets in productivity and quality;

(b) improving the culture of the service centre so that the employees and the Company work together as a team to co-ordinate their efforts and become an efficient and effective group;

(c) supporting technology change and the introduction of new equipment to facilitate the continuous improvement process. Employees will increase productivity and quality in line with any new technology;

(d) maintaining flexibility in the workplace to support the changing business environment;

(e) ensuring that all employees are responsive to customer needs and operational requirements;

(f) building openness, trust and open communications which deliver positive employee relations benefits to all participants;

(g) providing leadership which exhibits consideration for people, promotes trust and teamwork and empowers people to improve their work processes; and

(h) promoting the growth and retention of permanent employment.

[16] I also note that the nominal life of this Agreement extends until 28 February 2011 but the instrument will apply beyond that time pending the making of a new instrument (or potentially its rescission).

THE POSITION OF THE NATIONAL UNION OF WORKERS

[17] The NUW contend that the proposed new productivity rates represent an increase of 18 percent above the existing rate of 59 pallets per hour whereas the Repair Assist technology was not in its view a significant change to the repair process and has not led to meaningful time savings.

[18] The union also contends that to the degree that there may be any small productivity improvements on the repair bench, there have been other consequences that mean that the new repair rates are unachievable and unfair. These include the impact of line stoppages (as the repair line becomes full and clogged with more under-repaired pallets) and the requirements for additional manual handling when the pallet is on the repair table.

[19] The NUW contend that clause 45 of the Agreement means that CHEP is not able to unilaterally change the repair rate, but rather it establishes a number of requirements that must be met before the (agreed) productivity rates may be increased. These include:

• The requirements that there be genuine prior consultation about the changes and the proposed new productivity target;



• The change must represent a significant change in technology, tools or equipment as contemplated by clause 45.3(d) of the Agreement;



• The need to avoid safety concerns; and



• The need to be able to meet established quality standards.

[20] It has been argued that none of these requirements have been met in relation to the Repair Assist technology and the proposed new productivity requirements.

[21] The alleged consultation was said to have been after the technology and new productivity rates had been introduced and even then, no more than the employer reducing an ambit claim.

[22] The Repair Assist technology change was described as being minor and simply the addition of a tacked on process to remove the “lead board” rather than being done manually, which of itself now required further turning of the pallet on the repair table.

[23] The additional movements of most pallets on the repair table was said to increase manual handling and be such as to place other strains on the body of the repairers.

[24] In terms of the quality outcomes, the NUW contended that quality had declined with the introduction of Repair Assist technology and the only way in which the employees could cope with increased repair rates was to under-repair pallets which was contrary to the intent of the Agreement.

[25] The union argued that any new productivity rates had to suit the new conditions at the Gillman site and this means that any new rates had to be reasonable having regard to the requirements outlined above. In that regard, given the variation between repair tables and circumstances (including the nature of pallets that may be handled) at the various service centres in other parts of Australia, any experience from those sites was not indicative of what was reasonable at Gillman.

[26] The NUW also contended that the proposed productivity rates were being rarely achieved by employees at the Gillman service centre, including those with the best repair rates, and that the required quality standards had not been achieved since the introduction of the Repair Assist technology.

[27] As a result, the NUW argued that CHEP was not entitled to attempt to enforce its proposed productivity target (of 70 moving to 75 pallets per hour) or to increase the rate at all, and Fair Work Australia should determine the dispute in that way. Alternatively, if an increase in productivity rates is warranted, it should be set at a level between 59 and 65 pallets per hour.

THE POSITION OF CHEP

[28] CHEP has argued that clause 45.3 of the Agreement permits it to increase the productivity requirements of the employees engaged at the Gillman site given the introduction of the Repair Assist technology and the circumstances surrounding its introduction.

[29] Further, the employer contends that in any event it retains the managerial prerogative to impose productivity requirements which exceed the minimum requirements of the Agreement given that these are minimums and the employees are committed through the Agreement to achieve and exceed these targets.

[30] Given the relevance of the WR Act to this matter, CHEP contend that the public interest requirements of s.103, the safety, health and welfare considerations of s.107 and the principal (productivity) objects in s.3 of that Act must all be taken into account.

[31] CHEP contend that the provisions of the Agreement should not be applied in a narrow or pedantic manner but rather to give effect to its evident purpose in the context in which it was made. In so doing, it is not appropriate to give effect to the notion of what would be fair or just, regardless of what has been written in the Agreement. 2

[32] Applying these considerations, CHEP contends that the proper application of clause 45 of the Agreement is that even if it is necessary to meet the requirements of clause 45.3(d), it retains the ability to increase the minimum productivity targets that the employees are required to achieve or exceed provided that:

• There has been a significant change in technology, tools or equipment;



• CHEP consults with the employees in relation to the productivity levels; and



• CHEP sets the new levels to suit the new conditions.

[33] CHEP contend that the Repair Assist technology represents a significant change given the substantial development and implementation expenditure associated with its introduction and its impact on the work of the repairers. The positive impact on the work was said to be due to:

• The removal of the most physically demanding components of the job;



• The ability for employees to view both sides of the pallet without spinning it;



• The mechanical realignment of the lead boards; and



• The simplified process involved with the removal of (damaged) lead boards.

[34] In terms of consultation, the employer argues that the changes must take place in consultation with the employees and not after the consultation has taken place. Further, having given notice of its intent to change the productivity levels, afforded a reasonable opportunity to present their views and given genuine consideration to those views (including by reducing the proposed level), it had met its consultation obligations under the Agreement. 3 In that regard, the employer contended that it had consulted about the introduction of Repair Assist more generally and although it was not obliged under the Agreement to consult with the NUW, it had done so with the NUW delegate as was normal practice at the Gillman worksite.

[35] CHEP contend that the new productivity rate of 75 pallets per hour (when working on a Repair Assist modified bench) was suitable and appropriate to the new conditions at the Gillman site on the basis that comparative data from other service centres operated by the employer, with and without the Repair Assist, and from employees with little experience who used the new bench during its trial introduction, demonstrated that the new rate was fair and achievable.

[36] In terms of quality, CHEP contested the notion that the introduction of Repair Assist technology has led to a reduction in quality. Rather, it contended that the quality outcomes achieved by employees using the new technology were not materially different to those who were doing so. Further, the decrease in quality at Gillman took place without any new productivity target and was said to coincide with the dispute notification in this matter, rather than progressive implementation of the new technology.

[37] On that basis, CHEP contended that Fair Work Australia should not prevent it from seeking to strive for improve productivity in line with the objects and requirements of the Agreement, and as facilitated by its significant investment into the new technology. This was said to be consistent with the approach taken by the AIRC in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd. 4

[38] Accordingly, CHEP sought that Fair Work Australia use its discretion to decline to intervene in the dispute or alternatively, to confirm that it may introduce the new productivity target of 75 pallets per hour.

THE EVIDENCE BEFORE FAIR WORK AUSTRALIA

[39] The NUW led evidence from the following:

• Mr Heath Agius, Pallet Repairer and NUW delegate;



• Mr Arnold Taylor, Pallet Repairer, and



• Mr James Bodnick, Pallet Repairer and night shift NUW delegate.

[40] This evidence included the workers’ perspective as to the impact of the Repair Assist technology on the work involved and the productivity, quality and safety consequences. In addition, the evidence went to the processes surrounding the introduction of the new technology and the setting of the revised repair rates.

[41] CHEP led evidence from the following:

• Mr Frans Helleman, Director, Operations - Pallets with CHEP, and



• Mr Michael O’Flaherty, Manager Operations SA.

[42] This evidence went to the implementation of the Repair Assist technology, both at the Gillman site and more generally, and its consequences on the work in question. Further, the view of management as to the appropriate productivity and quality levels in that context was also provided.

[43] Significant documentary material was also provided by CHEP as part of the respective witness statements and this included technical information, minutes of tool box and other consultative forums, surveys of productivity and quality results relating to work performed with and without the Repair Assist technology (both at the Gillman site and others within Australia), and video of the repair process.

[44] All of the evidence before Fair Work Australia on this matter is of assistance in determining this matter. In my view, all of the witnesses have been influenced to some degree by their respective roles and experience. This does not mean that their evidence is to be discounted, rather, I need to approach the opinions embedded in each witnesses’ evidence with caution.

[45] Subject to the above comments, I found that the evidence of Mr Agius (and in particular his verbal evidence) as to the actual work involved and the impact of the Repair Assist technology to be useful. I also found that the evidence of Mr Helleman and Mr O’Flaherty (and in particular the work process studies as referred to in that evidence) to be objective and reliable, albeit without the benefit of them having personally undertaken the work in question.

GENERAL FINDINGS AND CONSIDERATION

The proper application of the Agreement

[46] In accordance with the approach taken in National Union of Workers v GrainCorp Operations Limited - PR918161 [2002] AIRC 638 at paragraph 47 discussing Bond & Co Ltd (in liquidation) v McKenzie (1929) 28 AR 499:

“ …the words used in an industrial instrument should not be interpreted in a strict, technical fashion, because those who framed the industrial instrument are often non-lawyers drafting words in the context of custom and practice in an industry or particular enterprise.”

[47] This approach is supported by the decision in Nylex Industrial Products Pty Ltd v TCFUA [2007] FMCA 2084 at 28, quoting NTEIU v University of Wollongong [2002] FCA 31, where the Federal Court stated:

“…The proper construction of the subclause is to be derived from a consideration of the meaning of the words of the subclause read in the context of the Agreement, and having regard to the nature and purpose of certified agreements under the WR Act. The critical question is what is the meaning reasonably attributed to the words of the subclause in all the circumstances.”

[48] Part of the context in this case is that the terms surrounding the productivity expectations within the Agreement were specifically negotiated as part of an agreement. That is, the productivity and quality expectations and the basis upon which they will operate have been expressly agreed. In that context, both parties should have the reasonable understanding that these arrangements will be applied during the life of the Agreement. Any change to those arrangements also need to be in accordance with its terms.

[49] A further part of the context is the objects (goals) in clause 7 which include continuous improvement that achieves and strives to exceed minimum targets in productivity and quality, and supporting technological change and increasing productivity in line with the new technology. These goals also include improving the team culture and consideration for the employees and their empowerment.

[50] The objects of the WR Act and the considerations cited in ss.103 and 107 of that Act are also relevant to the application of the Agreement provisions and the determination of this matter more generally.

[51] I note that the Agreement in clause 12 provides a standard workplace change consultation arrangement requiring the employer to consult with the employees and the NUW about major changes likely to have significant effect on employees. This provision also defines “significant effects” for present purposes as not including changes on any matters where the Agreement already makes for provision for alterations. In my view, clause 45 deals comprehensively with any changes concerning the productivity targets and it is these provisions that must be considered. It is also clear on the evidence that CHEP has consulted with the NUW delegates and that this is the normal method of consultation in this particular workplace.

[52] Having regard to the provisions of clause 45 in the context of the Agreement and my statutory charter more generally, I find that it provides as follows:

• The agreement establishes productivity targets depending upon whether the pallets are sorted or not and if so, the extent of the repairing that is required;



• These productivity targets are not quotas but rather are minimum targets;



• There is an expectation that the productivity and quality targets will be exceeded wherever possible;



• The quality targets are set by reference to the Pallet Quality Specifications and related policies;



• Productivity and its improvement is a major objective and the provision requires that such will be pursued without compromising the “primary objectives” related to safety, quality and existing productivity levels;



• The minimum productivity levels may be altered in consultation with employees where a significant change in technology, tools or equipment is introduced and provided that the adjusted level suits the new conditions operating as a result of those changes; and



• The implementation of the expectations of clause 45 will be subject to ongoing information and monitoring through the consultative committee.

[53] In my view, the concept of the adjusted productivity level “suiting” the new conditions must mean that it is appropriate and reasonable having regard to the expectation of continuous improvements, the impact of the change upon the work in question, and to the consequences for safety and quality.

[54] The requirement that any adjusted productivity levels are set in consultation with the employees means that before any revised level is set, CHEP must have facilitated the employees having an understanding of the changes in technology, tools or equipment, explained the basis of any proposed change in productivity level, afforded them with a genuine opportunity to express a view, and then given genuine consideration to those views in reaching any final decision. In the present context, this does not however require that the adjusted rate be agreed with the employees.

[55] Given the nature of the provision and the terms of clause 13, where there is a dispute as to whether the adjusted rate has then been set in accordance with the parameters of clause 45, the dispute may be resolved by Fair Work Australia in a manner that gives effect to the intent of clause 45.

[56] It is the common evidence that the production targets are set by reference to pallets repaired per hour of paid work at the repair benches (including clean-up time and paid rest periods), averaged over a month 5, and that some allowance is made for circumstances where the throughput is disrupted due to mechanical breakdown (the precise extent of this accommodation is in dispute but there is no suggestion that it has changed).

[57] It is also evident that the operations are presently conducted on the basis of unsorted pallets and this means that putting aside these proceedings, the minimum productivity target within the Agreement is presently 59 pallets repaired per hour. I also note that the existing minimum productivity target for pallets requiring no timber (replacement) under the Agreement is 71 pallets per hour. Although the Gillman site is using unsorted pallets for present purposes, this benchmark is however part of the context as to what the parties themselves considered to be reasonable as a minimum productivity level in those earlier circumstances.

[58] Against that background, I will consider the implications of the evidence in terms of the proper application of the Agreement and the resolution of the dispute.

Findings and consideration from the evidence

[59] There are two aspects in particular upon which findings must be made for present purposes. Firstly, the impact of the Repair Assist technology. Secondly, the processes surrounding its introduction and the setting of the proposed new productivity levels.

[60] It is convenient to establish the broad context and then to initially deal with the implementation process.

[61] The Gillman service centre operated by CHEP employs some 35 employees (along with some 17 or so labour hire workers) to repair wooden pallets across three shifts.

[62] In excess of 3,000,000 pallets are processed through the Gillman service centre each year.

[63] Although the quality of pallets (and the extent of repair that is required) varies between the clients using the pallet and the age of the pallets, in general repair rates through the Gillman site are broadly the same as those elsewhere in Australia. This is confirmed by the fact that the overall use of timber (replacement of boards) and other elements used in the repair process is generally consistent throughout Australia. 6

[64] Although there is a dispute as to the quality of pallets and the proportion requiring significant repair, it is clear that there has not been a significant change to the nature of the pallets being processed through Gillman that would bear upon the immediate dispute. A proportion of pallets require little or no repair whilst some require many boards to be replaced. Further, even if the number of pallets requiring board removal is higher than stated by the employer, I am satisfied that the lead boards are a relatively common element to be replaced or adjusted and that these represent the work that has historically required the most time and physical exertion to undertake. 7

[65] The Repair Assist technology was introduced as a result of the review of the repair processes in late 2006 and 2007 which involved the consideration of changes that would reduce some of the physical work associated with pallet repair, and in particular the need to realign or remove the lead boards, and to reduce the time that should be taken on those elements. This was done after considering the input of the workers involved nationally as to how the process could be improved.

[66] The Repair Assist technology has been progressively installed at many of the service centres operated by CHEP across Australia. It was initially introduced in a form whereby the mechanical removal or adjustment of the lead boards was added to the existing repair benches. Later, additional items were added including modified wings to better facilitate the turning-over of the pallets, a moving arm to carry the nail gun and a mirror that allowed the side facing away from the operator to be seen without having to always spin the pallet.

[67] The earlier forms of Repair Assist were the subject of an internal time analysis assessment by Mr Helleman and an external contractor in early 2007 and this involved the compilation of a cycle time study for the repair of pallets using the new technology. In March 2007, CHEP also commissioned a physiotherapist and ergonomist to analyse the work involved with the Repair Assist enabled benches. The result of these exercises was that the average time to repair a pallet could be 45 seconds and that on average, 75 to 80 wooden pallets could be repaired per hour on a Repair Assist enabled repair table.

[68] At Gillman, the prospect that the Repair Assist technology would be introduced was announced in December 2008 at a safety committee meeting and this included the fact that a trial would be conducted on bench three.

[69] Bench three was modified with the Repair Assist technology in January 2009 and was originally trialled using casual employees. The concept of being trialled in this particular way was not itself the subject of consultation but management did discuss the process to trial the introduction of the Repair Assist technology with the employees through both various safety and tool box meetings. These discussions included the nature of the changes, some improvements that were suggested and the safety implications of the modified bench.

[70] On 6 May 2009, discussion took place between management and each shift during which the proposed productivity rate of 75 pallets per hour was raised and employee concerns about that level were discussed. This included a suggestion by the employees that their counterparts in other centres were only averaging between 60 to 65 pallets per hour. I interpose that this notion is rejected by CHEP.

[71] Later in May 2009 at a safety meeting, the productivity rates were again discussed and CHEP management confirmed its view that a rate between 75 to 80 pallets per hour of paid time was achievable.

[72] In late June 2009 at a tool-box meeting, management confirmed that it had reduced its expected productivity rate from an average of 75 pallets per hour to an average of 70 pallets per hour working towards 75 pallets per hour in the future. 8

[73] The trial period for bench three was for six months ending July 2009. On average the repair rate over the trial was almost 70 pallets per hour for these employees with higher averages up to 75 pallets per hour depending on the turnover of the casual staff. I will return to the significance of the trial results in due course.

[74] From around July 2009, CHEP began to train the permanent employees on the Repair Assist bench and they began to use that bench on a rotating basis at first.

[75] In late July 2009, discussions through a day shift tool box meeting included the experience of the employees with the Repair Assist technology and some suggestions were made to further improve the bench at that time.

[76] During September 2009, discussions involving, amongst others, the NUW site delegates were conducted by management and this concluded with the understanding by CHEP that the modified rate of 70 pallets per hour working towards 75 pallets per hour in the future was acceptable to the employees. This view was advised to the NUW. 9 I interpose that CHEP has not contended that this understanding should prevent the NUW from now agitating this dispute. I also add that this is in line with recommendations made by Fair Work Australia in resolving the other aspects of the dispute.10

[77] During October there were further discussions about the Repair Assist technology including an independent ergonomic assessment that had been obtained by CHEP. Minor modifications were made to the set up of the tables and additional training on the Repair Assist technology bench was organised for the remaining permanent employees.

[78] In December 2009, the employees were advised that the existing repair benches would be fitted with the Repair Assist technology in January 2010. During January, the technology was installed on some three additional benches. The Repair Assist technology has subsequently been rolled out to almost all of the repair benches at the Gillman site.

[79] The NUW notified this dispute to Fair Work Australia in early January 2010.

[80] I note that further modifications to the Repair Assist technology are being trialled by CHEP and are expected to be introduced more broadly to Gillman, including an enhanced rolling mechanism (to reduce the effort to push and control the pallet once on the repair table) and a pusher to move the pallets out of the lead board component of the bench when the lead board has been realigned or removed.

[81] I also add that some further discussions about the resolution of this matter have apparently been held between the parties. I will not canvass this aspect further. I do however note that recently CHEP management proposed a bonus arrangement (as a further productivity incentive) and that this was apparently rejected by some of the shifts and ultimately not adopted.

[82] I turn now to consider the impact of the Repair Assist technology on the work of the employees and the quality of the repairs.

[83] It is clear to me that the Repair Assist technology is a significant change to the repair table and to the process of repairing pallets. Although the inspection and repair of non-lead boards remains largely the same, the work associated with the realignment or replacement of the lead boards is significantly different. This includes the fact that the amount of manual handling involved with the use of the lead board puller (a relatively heavy pneumatic hand tool) and the lead board remover (in effect a lead board with a handle used to manually lever off the lead boards) has been replaced with the need to put the pallet into the Repair Assist technology.

[84] I find that the element of the repairs associated with the lead boards is both less time consuming and less onerous than under the earlier process. However, there are some natural limitations on the capacity for this improvement to directly lead to an increase in productivity. These include that other elements of manual handling of the pallets remain and there other limitations on the capacity of individuals to perform repetitive tasks over long periods without negative consequences.

[85] In that context I have considered the experience of the trials of the Repair Assist technology at Gillman and that of other service centres. This in my view is of general assistance in making the present assessment. In terms of the trial, I do accept that the fact that this was done by the casual employees whose employment is by definition contingent and of shorter term duration is a relevant consideration. However, the fact that these employees do not have the extent of training and skills of the experienced employees at CHEP is a counter-veiling consideration.

[86] Given my findings that the nature of the pallets being repaired across the service centres is broadly the same, and that the Repair Assist technology is also broadly similar, the experience of these other centres is of assistance to the assessment of the reasonable productivity levels that could be expected. This is however only a guide as there may well be differences in working and employment conditions that also bear upon this matter and there is little before me on these factors. Further, the existing productivity level at Gillman, and the impact of changes resulting from the Repair Assist technology at Gillman must be the primary focus for this determination. This is reinforced by the “primary objectives” cited in clause 45.2 of the Agreement.

[87] The issue of the capacity to perform this work without compromising safety is also a very important consideration. I have found that the degree and nature of the manual handling of the pallets and the associated equipment has been improved. Even allowing for the need to do some further rotations of some pallets in order to check certain factors (the mirror may not be a substitute for direct inspection in some cases) the overall manual handling is better. However, as with each of the other considerations, care must be taken as the speed and repetition of movements in itself provides some limitation on the capacity to handle the pallets without undue physical loads over long periods.

[88] The competing views associated with the quality impact in the matter are of particular concern in this application. There has been a decline in quality during 2010 and this has coincided with the introduction of the Repair Assist technology, at least to some degree. However, there is no correlation between the two in that quality from the Repair Assist technology enabled tables is not different to the older tables and fluctuations in quality have been pronounced but have not reflected the progressive implementation of the new technology.

[89] Indeed, there was an improvement in both productivity and quality at Gillman in March, April and May 2010 from the low points in February 2010. There has also been a small decline in both factors since that time, with the quality on the non-Repair Assist technology benches declining more significantly. I have also considered the fact that in February 2010, the minimum productivity rate increased under the terms of the Agreement to 59 pallets per hour. This was only a marginal increase (one pallet per hour) and does not in reality coincide with or explain the fluctuations in quality. There are clearly other factors at play here.

[90] The evidence from the NUW witnesses is that employees are under-repairing in order to achieve the required productivity levels and that this is their only way to manage the expectations. Further, it is contended that the quality standards are now being more rigorously applied. CHEP contend that there is under-repairing which has coincided with this dispute and that the quality standards have been consistently applied.

[91] I accept that the quality standards have not been changed and that these are applied consistently across the various service centres. However, there is some evidence to support the notion that these standards are being more rigorously applied. That is, in recent times management training has emphasised the need to maintain the quality standards and this emphasis has been communicated to the employees through requesting them to note these standards. 11 This may partially explain the drop in recorded quality however in my view this aspect is of only margin impact.

[92] Importantly, there is evidence that employees do under-repair as a means of managing the productivity expectations and it is possible that the fact that this dispute has been unresolved has also played a role in the quality performance in recent months.

[93] In all of these circumstances, I find that there may be some reduction in quality as the productivity expectations increase and that this is a relevant consideration. However, given the largely positive influence of the Repair Assist technology on the work in question, and the objective evidence as to the capacity to properly process repairs at a faster rate, this consideration needs to be carefully weighed into the overall assessment.

[94] As to the capacity to safely undertake the work at higher productivity rates, this is a significant consideration given the objects and provisions of the WR Act and the terms of the Agreement itself. Although Mr Taylor in particular expressed concerns about the Repair Assist technology, the balance of the evidence is that the new processes will facilitate a significant reduction in the risk of manual handling injuries. I do however note that the risk of overuse injuries remains a relevant consideration, particularly for some employees if there is not sufficient variety in the work in question. As with all of these matters, the capacity to safely work at higher productivity levels is a product of the technology and processes themselves and certain individual considerations such as training, skills and physical attributes.

[95] These considerations mean that the productivity level itself must be reasonable and importantly, that its application is such as to recognise both the systematic and individual limitations that exist. Some of these change over time and clearly any revised productivity levels must be monitored and reassessed on an ongoing basis as provided in clause 45.9 of the Agreement.

[96] In particular many of the systematic limitations are beyond the capacity of the individual workers to influence (such as a dramatic change in the overall quality of the pallets coming into the system and any breakdown or capacity limit in the overall handling of pallets) and these must be monitored and taken into account where appropriate.

OUTCOME AND CONCLUSIONS

[97] Having regard to the proper application of the Agreement and to my findings, CHEP has consulted as required by the clause 45.

[98] There has been a significant change in the technology as contemplated by the Agreement with the introduction of the Repair Assist technology. Accordingly, there are grounds to increase the nominated productivity level within the Agreement. 12

[99] The question is what level of adjustment is appropriate to suit the new circumstances having regard to the considerations relevant to the matter? These considerations have been outlined earlier in this decision and include the productivity improvement objectives of both the WR Act and the Agreement, the OHS objectives of the WR Act and the Agreement, and the need to take quality standards into account. Importantly, it is the terms of the Agreement that I am required to apply.

[100] The context for this assessment is primarily the circumstances at the Gillman service centre noting that the productivity rates as established are minimum rates and not a quota. The nature and level of the existing productivity rates agreed as part of the Agreement, and the fact of the continuing obligation to seek to exceed the minimum rate, are also important considerations.

[101] It is also relevant that the process of fine-tuning of the Repair Assist technology is ongoing and that additional improvements are being trialled and discussed with the workforce. Equally, the fact that there may be some constraints in the overall system as outlined earlier, is also a relevant consideration. In that respect, this aspect will also need to be managed and monitored with any increase in output across the whole repair line.

[102] Having regard to all of the circumstances of this matter, I consider that the proper and reasonable application of clause 45 of the Agreement is that the nominated productivity rate for repair work on Repair Assist technology enabled repair tables may be increased but not to the level of 75 pallets as proposed by CHEP. In my view, that rate in the context of this dispute does not fairly reflect the changes brought about by the Repair Assist technology and the new conditions as contemplated by the Agreement.

[103] Having regard to all of the relevant considerations, in my view the proper application of the Agreement would ultimately permit a minimum rate of 70 pallets per paid hour for repair work on Repair Assist technology enabled repair tables with unsorted pallets (averaged over a month) to operate in the new conditions. Given the need to improve quality from existing levels at the same time, and to allow a period for the additional improvements to the Repair Assist technology to be further implemented and consolidated, I consider that the new rate should be introduced in two stages.

[104] The minimum rate (on the same basis as outlined above) should be 65 pallets per hour for six months from this decision and then become 70 pallets per hour thereafter.

[105] I note that the length of that phase-in will marginally extend beyond the nominal life of the present Agreement. This is not however inappropriate and will enable the adjusted rate to be confirmed as part of the package to be established by any subsequent enterprise agreement. This also means that unless and until that subsequent agreement is made, the adjusted minimum rate of 65, and then 70 pallets per hour, will apply. 13

[106] As discussed earlier, the revised productivity levels, and its impact on the relevant considerations, must be monitored on an ongoing basis as provided in clause 45.9 of the Agreement. In terms of the application of the increased rate, monitoring should include the consideration of the capacity of individual employees to work safely at those rates and the obligation to attempt to exceed the minimum rates where possible. Any systematic limitations or changes should also be monitored and assessments made in the context of any significantly adjusted environment.

[107] Although this would be a matter primarily for the parties, any move beyond 70 pallets per hour as the minimum productivity rate would in my view require further significant enhancements in the technology, tools and/or process beyond those presently operating and as considered in this matter.

COMMISSIONER

Appearances:

A Portelli with H Agius for the National Union of Workers.

M Cooper (Solicitor appearing with permission) with Z Costi and A Heng for CHEP Australia Ltd.

Hearing and Inspection details:

2010

Adelaide

August 23, 24

 1   The Agreement is preserved under the Fair Work Act 2009 by virtue of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

 2   Kucks v CSR Ltd [1996] 66IR 182 as applied to certified agreements in AMIEU v Coles Supermarkets Australia Pty Ltd [1998] 80 IR 208.

 3   CEPU v Optus Administration Pty Ltd, AIRC PR9121222, 4 December 2001 per Smith C.

 4   AIRC PR958009, 16 May 2005, per Smith C.

 5   Some of the evidence referred to a weekly average however I understand that a monthly average is used for formal purposes - transcript PN 541 and PN 1384.

 6   Helleman - transcript PN1205 - 1207.

 7   I leave aside for this purpose those pallets where a bearer needs to be replaced as these are undertaken off-line.

 8   Witness Statement of Mr O’Flaherty para 115.

 9   By letter to the NUW from CHEP on 22 September 2009 (MO 25 as attached to the Statement of Mr O’Flaherty).

 10   O’Callaghan SDP made recommendations on 1 February 2010 and these have been accepted by all parties.

 11   Agius - PN 431 - 433 and O’Flaherty - PN 1259 - 1262 and PN 1319.

 12   I have dealt only with the adjustment of the unsorted repair rate in this matter.

 13   The Agreement remains in force unless and until it is rescinded or replaced under the terms of the Act.

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