PN1

VICE PRESIDENT HATCHER: Yes, can I take appearances. Mr Latham, you appear for the Media Entertainment and Arts Alliance?

PN2

MR I LATHAM: I do, your Honour, and I seek permission to appear.

PN3

VICE PRESIDENT HATCHER: Mr Murdoch, you appear for what I will call the cinema employers?

PN4

MR J MURDOCH: Yes, if the Commission pleases.

PN5

VICE PRESIDENT HATCHER: Mr Hamilton, you appear for the Australian Entertainment Industry Association.

PN6

MR D HAMILTON: That's correct.

PN7

VICE PRESIDENT HATCHER: Does anyone oppose any other party being granted permission for legal representation? No? All right, that permission is granted. Mr Latham?

PN8

MR LATHAM: Yes, your Honour. This is a hearing where the parties are trying to answer the questions raised by the Full Bench in past hearings as to how the 8 per cent loading set out in the award is calculated or, perhaps more appropriately today, how the 8 per cent loading should be calculated because there is clearly a debate as to how it is calculated at the moment.

PN9

I won't read the submissions that have already been handed up, I'll just have a quick summary, perhaps, to begin with and then we can press on.

PN10

The award, at 14.3, sets out a series of minimum wages and states that those minimum wages are subject to the provisions of clause 14.7 and 14.12. 14.12 is the clause that we have to deal with today. That states this:

PN11

All employees in cinemas will receive an 8 per cent penalty averaging component instead of Sunday penalty payments and reduced public holiday penalties.

PN12

In simple terms, and I won't repeat the submissions, these things can be said about the payment: firstly, that it is payable to all employees subject to that award provision; secondly, that it is payable regardless of the hours worked by that employee, so it is not a penalty payment in the ordinary sense; thirdly, the historical context, and this is set out in the statement of Mr Chesher, is one where the allowance was particularly seen as part of the minimum rate of pay, and I will take the Commission just very briefly to those provisions; fourthly, the 8 per cent loading was seen by the employer body, the AIEA, as part of the minimum rate, and that is still the case; and, finally, that the award shows contextually that the base classification rate is subject to the 8 per cent.

PN13

I will go to those matters very briefly, but, to the extent necessary, and it may not be necessary, but, to the extent necessary, the MEAA submits that the Commission should amend the award provision, if necessary, to make it clear because there is certainly at the moment a lack of clarity amongst the employer groups and also between the employer groups and the union as to what the clause actually means and how to interpret it.

PN14

VICE PRESIDENT HATCHER: What are the practical implications for this? Is it, firstly, if you are a casual, whether the casual loading compounds on the 8 per cent?

PN15

MR LATHAM: Correct.

PN16

VICE PRESIDENT HATCHER: And likewise with over time?

PN17

MR LATHAM: Yes, there's a number of things. A casual loading is perhaps the biggest single point because the vast majority of people in the sector are casual employees, but the point is really this: one takes the, if I can call it the base minimum rate in the award, and the two ways that the employers are calculating at the moment is, one position is to take the base rate, you add the 8 per cent to it and then you apply the casual loading to that aggregated rate. The second way of doing it is that you take the base rate and you apply the casual rate to the base rate, and the effect of that can be quite significant, of course. It means that the casual rate is based upon a smaller rate or lower rate.

PN18

There is an unusual disjunct in this case, of course - it's already been commented upon by the Bench - because the different employers have different views about how it is to be calculated and, in fact, how they calculate it themselves. The position is really one where one group of employers are saying that these matters should be determined on a compound basis and the second view is that they should be determined on a cumulative basis, and they are the two different positions I just explained earlier.

PN19

The position of, if I can describe them, the major employers is that it should be - - -

PN20

VICE PRESIDENT HATCHER: This is Mr Murdoch's clients?

PN21

MR LATHAM: Yes, "It should be determined on a cumulative basis essentially because that's the way we, the majors, apply it at the moment." That, for the reasons set out in these submissions, is a fairly unusual position because while, of course, the historical context is important in relation to interpreting an award or an enterprise agreement, the subjective understanding of a particular party is irrelevant to that process. There is some evidence in the past transcript where the industry body has in fact said, "Well, when we negotiated it, it was negotiated on the basis it was part of the minimum wage, being the 8 per cent."

PN22

Just on that point, and I will only deal with it very quickly, the subjective understanding of a particular party to an award or an enterprise agreement being irrelevant has even greater currency probably in a modern award process where those awards are not negotiated between the parties, they are in fact determined by the Commission. To that extent, the modern award probably more closely resembles a statute or a piece of delegated legislation.

PN23

If I can just quickly go to some of the material that we are going to take the Commission to, they are set out in the statement of Mr Chesher. I suppose I should formally tender that and I do so, but that statement attaches some of the historical background to this particular provision. If I can take - - -

PN24

VICE PRESIDENT HATCHER: Sorry, can you just hold on a second.

PN25

MR LATHAM: Certainly.

PN26

VICE PRESIDENT HATCHER: Yes, go on, Mr Latham. Mr Chesher is not required for cross-examination?

PN27

MR MURDOCH: No.

PN28

VICE PRESIDENT HATCHER: All right. The statement of Matthew Chesher dated 28 June 2019 will be marked exhibit 1.

EXHIBIT #1 STATEMENT OF MATTHEW CHESHIRE DATED 28/06/2019

PN29

MR LATHAM: Your Honour, this exhibit is paginated at the top right-hand corner.

PN30

VICE PRESIDENT HATCHER: It is not in our version.

PN31

MR LATHAM: Sorry, your Honour, the attachments should be paginated, hopefully.

PN32

VICE PRESIDENT HATCHER: Yes, they are.

PN33

MR LATHAM: Good. If I can just then take the Commission to a couple of references. If your Honour goes to page 2 of the attachments, there is there a copy of the Theatrical Employees (Cinema and Drive-in) Industry Award of 1983 and that is one of the predecessor awards to the modern award. If I can take the Commission to page 8 of that award, you will see this is a clause that sets out the weekly rates of pay for employees employed in the classifications, and you will see that at the previous page at 15(a), and you will see there that there is, at the top of page 8, a reference to cinema workers 1, 2 and 3 and a base rate per week as described and then penalty averaging per week. Then, importantly, in the third column, minimum rate per week, which is an addition of the first two columns, obviously. If the Commission can then go down to the double asterisk comment, you will see the penalty averaging component is calculated at 8 per cent.

PN34

It is clear that this general sort of provision is a long-standing provision in the cinema industry.

PN35

VICE PRESIDENT HATCHER: So this is a 1997 variation?

PN36

MR LATHAM: Correct.

PN37

VICE PRESIDENT HATCHER: Is this when the 8 per cent was introduced or does that go back further?

PN38

MR LATHAM: It appears from the wording, yes, because if one goes back to the previous page, you will see that the insertion of the clause is made and there is a deletion of the previous clause.

PN39

The essence of the historical background is it is clear, at least at this stage, that the minimum rate is seen as an aggregate of the base rate per week and the penalty averaging of 8 per cent.

PN40

VICE PRESIDENT HATCHER: If you go down the same page at (c), it tells you how to calculate a casual rate?

PN41

MR LATHAM: Yes.

PN42

VICE PRESIDENT HATCHER: Does that tell us what the answer is for this award?

PN43

MR LATHAM: Yes, because it will say, "You will be paid an hourly rate calculated by dividing the relevant minimum rate" and the relevant minimum rate is the minimum rate per week set out in column 3 at the top of the page.

PN44

VICE PRESIDENT HATCHER: Right.

PN45

MR LATHAM: If the Commission can then move forward to the Cinema Award of 1998, which begins at page 48, you will see there that, if the Commission moves to clause 16 at page 61 of the attachments, there is then a very similar sort of process of determining the classification, the base rate, the penalty averaging and then what is described there as the minimum rate in the third column, and you will see, again below, at the very bottom of the page, the penalty averaging component is calculated at 8 per cent.

PN46

Just to go back to your Honour's question, just in terms of the casual employment issue, if the Commission goes over to 16.3 on the next page, you will see that the same sort of wording that we saw beforehand is used, and that again refers to the relevant minimum rates and, in my submission, your Honour, the relevant minimum rate is the minimum rate set out in the third column.

PN47

Could I then just go to page 93, and this is the other relevant part of the historical background. This is a submission by Live Performance Australia which begins at page 93, which is the trading name of the Australian Industry Association, and you will see specifically, at page 95, a submission there referred to that the averaging provision, in the third indented line, was included in the award as part of the minimum rate. That seems to be the clear historical background to this provision.

PN48

Of course, what has happened in the making of the new award is that the clauses have been reformulated and it seems that that sort of historical process has been changed and there is now a question as to what the current provision means. That is a sort of very quick historical background.

PN49

VICE PRESIDENT HATCHER: In the making of the modern award as part of the award modernisation process, was there any reference in any decision to this issue?

PN50

MR LATHAM: It has been discussed at different stages.

PN51

VICE PRESIDENT HATCHER: I mean when the modern award was made back in 2009.

PN52

MR CHESHER: Yes, your Honour.

PN53

VICE PRESIDENT HATCHER: All right.

PN54

MR LATHAM: Can I just finalise that point? At 101, and this is also a submission by Live Performance Australia, at paragraph 25 - - -

PN55

VICE PRESIDENT HATCHER: Mr Serong's name is on this as well.

PN56

MR LATHAM: Yes, your Honour, it is.

PN57

VICE PRESIDENT HATCHER: So was this a joint submission? Yes, this was also the Cinema Industry Employers as well.

PN58

MR LATHAM: This was a submission of the employers and Live Performance Australia, yes.

PN59

MR MURDOCH: Is this the 17 April 2018 submission we are talking about?

PN60

VICE PRESIDENT HATCHER: Yes.

PN61

MR MURDOCH: Yes, it was a joint submission.

PN62

VICE PRESIDENT HATCHER: Yes, thank you.

PN63

MR LATHAM: You will see there that the employers, at that stage, were saying it was part of a properly made minimum rate and had been a provision for more than 20 years.

PN64

The submission, in short, is that if one looks at all of the matters, both the award itself, the text of the award and the history and the way that this has been traditionally implied, it is just manifestly clear that the 8 per cent loading is part of the properly fixed minimum rate and, to the extent that there is any doubt about that, this Commission should amend the provision to make that clear.

PN65

Just in terms of today, I understand my friends have got some short evidence, both in witness evidence and there's also some documents, I think, to hand up. I don't imagine any of that will take a great deal of time.

PN66

VICE PRESIDENT HATCHER: You want to cross-examine upon the employers - - -

PN67

MR LATHAM: There is going to be some short cross-examination, yes, your Honour.

PN68

VICE PRESIDENT HATCHER: All right.

PN69

MR LATHAM: And there are some documents to hand up which we don't object to. I don't imagine the rest of the proceedings is going to take a great deal of time.

PN70

VICE PRESIDENT HATCHER: Thank you. Mr Murdoch?

PN71

MR MURDOCH: So that the Bench is appraised of the extent of the context, if we can put it that way, the various Full Benches of the Commission have put considerable effort into various emanations of the exposure draft and I just enquire as to whether you have a copy of the current version of it?

PN72

VICE PRESIDENT HATCHER: We have.

PN73

MR LATHAM: What I wanted to take you to was clause 13.4, which is at page 23.

PN74

VICE PRESIDENT HATCHER: Yes.

PN75

MR MURDOCH: You will see there that there is a note in relation to the proceedings to come before the Full Bench, but then there is a three-line clause which, while not identical word for word, is substantially the same as the previous award provisions in relation to the 8 per cent loading.

PN76

VICE PRESIDENT HATCHER: So the 8 per cent has not been included in the amounts which appear immediately above?

PN77

MR MURDOCH: No, so that our position is that we would be content for the clause as drafted in the exposure draft to be the clause that goes forward. Now, in a practical sense, that would be a continuation of the status quo.

PN78

Where this matter differs, if I can put it that way, in a historical sense is that up until 31 December 2013, the four majors were not covered by the industry award but they were covered by, in each instance, a company award, so that the majors have a history of each having, up until 31 December 13, a company award and also many years of history of enterprise agreements. So, certainly up until 31 December 2013, the majors weren't covered by the industry award. Now, the majors continue to be under enterprise agreements, each of the four, so that they are covered by the industry award but, in each instance, there is an enterprise agreement that applies.

PN79

Where we have the application, which has not been filed but which has been put forward on behalf of the union, you will see the clause that is proposed, and that's an attachment to the submissions by my learned friend Mr Latham. The point of it is that what the union proposal seeks to do is to alter the base rate to, in effect, include the 8 per cent.

PN80

That has implications for our clients because while they are not in a situation where the award applies to them, it has got direct implications for them because of the provisions of section 206 of the Act because the pay rates under the four enterprise agreements have fallen below the base rates under the award and, consequently, pursuant to 206, the base rate under the award becomes the agreement rate under each of the four enterprise agreements.

PN81

VICE PRESIDENT HATCHER: How old are these agreements?

PN82

MR MURDOCH: They vary in age, but if you worked on the basis of 10 years each, that would be close enough.

PN83

VICE PRESIDENT HATCHER: So they are pre Fair Work Act agreements?

PN84

MR MURDOCH: Yes. The important feature here is that under section 206, the obligation is to apply under the agreement the base rate of pay under the award, and that takes one back to the definition of "base rate of pay" under section 16 of the Fair Work Act. Under section 16(1), the definition of base rate of pay expressly excludes a number of things and, relevantly, they include, (b) loadings, (c) monetary allowances, (d) overtime or penalty rates or (e) any other separately identifiable amounts. What the union proposal seeks to achieve by including the 8 per cent in the base rate runs contrary to the definition of base rate under section 16 of the Act.

PN85

In our submission, the history does not really determine what is to occur here because the history in terms of the majors, if I can call them that, is not really the history in an award sense that my learned friend has described; it has been a parallel history but a history that, in one sense, has merged in terms of coverage from 31 December 2013.

PN86

VICE PRESIDENT HATCHER: Did the former company awards have an allowance - I will call them "allowance" but I understand that's a controversy - but did they have an allowance of this nature?

PN87

MR MURDOCH: They did.

PN88

VICE PRESIDENT HATCHER: Does it have a distinct history from the main award?

PN89

MR MURDOCH: No, the company awards actually incorporated an amount into the pay rates, so it was a different approach but a similar principle.

PN90

VICE PRESIDENT HATCHER: So, in effect, the 8 per cent was mathematically incorporated into the monetary amounts?

PN91

MR MURDOCH: Yes, it was.

PN92

VICE PRESIDENT HATCHER: It must follow then that the casual loading would be payable upon the amount incorporated?

PN93

MR MURDOCH: Yes, it was at that time, but, you see, since the section 206 provisions were enlivened because of the award base rates overtaking the base rates under the agreements, what is now the key provision is the base rate as taken from the award, so that while the majors aren't, in our submission, obliged to pay the 8 per cent, they do, but they do not do it on a compounding basis. If the union were to success in persuading you to adopt a formulation such as they have put in the draft application, in our submission, it would artificially alter the base rate under the award and it would do so in a way which is impermissible in terms of the definition in section 16 of the Act. The situation is - - -

PN94

VICE PRESIDENT HATCHER: The definition in section 16, what work has that got to do with respect to the award-making powers of the Commission?

PN95

MR MURDOCH: Well - - -

PN96

VICE PRESIDENT HATCHER: It defines base rate for purposes - where that expression is used in the Act, how does that feed through to what we do, that is, does it feed into some provision restricting or controlling our award-making powers?

PN97

MR MURDOCH: No, but the provisions of section 206 make the award relevant for the purposes of our clients per medium of the obligation to adopt under the agreements the base rate.

PN98

VICE PRESIDENT HATCHER: I understand what you are putting is that the award, as currently expressed, the base rate doesn't include the 8 per cent at all, in which case, section 206 would not oblige your clients to pay it at all, whether it's cumulative or compound.

PN99

MR MURDOCH: That's right, but they do.

PN100

VICE PRESIDENT HATCHER: So, in that sense, if that submission is legally correct, then the variation sought here would have no legal effect upon your clients.

PN101

MR MURDOCH: Well - - -

PN102

VICE PRESIDENT HATCHER: That would seem to follow from what you have put.

PN103

MR MURDOCH: Except that what you are being asked to do is to, we submit, create an artifice in that the definition of base rate under the award would be a definition that was inconsistent with the definition of base rate under the Act and it would be, in our submission, likely to create more controversy because our clients would be entitled to say that section 206, in using the term "base rate", uses the term as defined in section 16.

PN104

VICE PRESIDENT HATCHER: So it's the variation where it says it forms part of the base rate that affects your clients through the operation of section 206?

PN105

MR MURDOCH: Yes.

PN106

VICE PRESIDENT HATCHER: Yes, all right.

PN107

MR MURDOCH: So far as the practical issues here today are concerned, the purpose of the union case, to put it bluntly, is to impose the compounding formula on the majors and they seek to do this through the, we would say, artificial and impermissible device of making the base rate a base rate that includes the identifiable 8 per cent loading in a way that is inconsistent with the Act. The solution, we would submit, is leave the award as it is.

PN108

The situation is that each of the enterprise agreements, though they be old, were enterprise agreements that were negotiated between the various employers and the applicant union. There has never been an application to terminate the agreements, so they remain lawfully in force and my clients are entitled to get the benefit of them, and the present case, we contend, is an attempt to use the modern award process to override the rights that our clients have got under the enterprise agreements at present.

PN109

I emphasise that the history of coverage of our clients needs to be seen as a history that was based upon each of them having their own award and not having that historical tie with the modern award at the time it was made and the modern award at the time it was varied in 2009 to include the 8 per cent because our clients, at the time, were not parties to the modern award and were not participants in the proceedings in which the smaller employers, represented by our friend Mr Hamilton, sought to, and had, included, with the Commission's concurrence, the 8 per cent, but, having said that, our view is let it remain as it stands and if there be criticism of the way in which our clients currently apply the casual loading and the 8 per cent on a cumulative basis, that's never been challenged in any wage recovery or other attempt, so that the union, it would appear, accept that what our clients are currently doing is lawful and our clients, or one of them, received a ruling from the Fair Work Ombudsman which concurs with the approach that is used, namely the cumulative approach, to casual loading and the 8 per cent.

PN110

VICE PRESIDENT HATCHER: One possible approach is to vary the award to preserve the position which applied in the early awards which Mr Latham took us to, that is, where the 8 per cent is expressed not as part of the base rate but as part of the minimum rate, and that distinction in terminology is maintained in modern awards, so the base rate remains unchanged but, for those covered by the award, it forms part of the minimum rate to which the casual loading is then applied, but it doesn't affect the operation of section 206.

PN111

MR MURDOCH: That would be a way of preserving the status quo as to the majors. It - - -

PN112

VICE PRESIDENT HATCHER: I will take this up with Mr Latham later, but on the historical material, although it was clearly intended to form part of the minimum rate and have the casual loading applied for it, it was never expressed as forming part of the base rate.

PN113

MR MURDOCH: No, it never was. So far as the award is concerned, though, it is to be noted that in the exposure draft, the wage - and I'm talking about 13.3 at page 22.

PN114

VICE PRESIDENT HATCHER: No, the rates there are expressed as minimum rates rather than - - -

PN115

MR MURDOCH: They are.

PN116

VICE PRESIDENT HATCHER: Yes, all right.

PN117

MR MURDOCH: Not only that, this award applies to various other sectors such as technicians, et cetera, the cinemas are really just a minority group, and all of the classifications and pay rates are omnibus in the sense that they apply across all of the sectors, and the cinema employees, as you will see in the definitions in 13.2, are simply lumped in with the categories. For example, under 13.2(b), you will see cinema worker level 1, and not every one of the grades in 13.3 includes a cinema worker category, so that to adopt the approach that your Honour has put to me would mean, frankly, major surgery in terms of the way in which the exposure draft has been put together, and the exposure draft largely follows the classification drafting technique of the previous modern awards.

PN118

It is to be seen also that so far as the 8 per cent is concerned, it is an averaging component that's payable instead of Sunday penalty payments and is compensation for reduced public holiday penalties.

PN119

VICE PRESIDENT HATCHER: I understand your point about major surgery, but if we took the MEAA's proposed variation and changed it to say the loading formed part of the minimum rate of pay rather than the base rate of pay, presumably you rely upon the statutory definition and its interaction with section 206 to say that you would not be affected by that?

PN120

MR MURDOCH: Well, we wouldn't be affected immediately.

PN121

VICE PRESIDENT HATCHER: No.

PN122

MR MURDOCH: But we will be affected next EA, or, if there's an application made to terminate one or more of the EAs, we'll fall under this award, which will mean that we will fall under a regime that's foreign to the way in which the majors currently calculate, so that there are implications.

PN123

VICE PRESIDENT HATCHER: No doubt, but you have gone now for a decade unmolested, so is there any reason to think that's imminent?

PN124

MR MURDOCH: Your Honour, not being evasive, but who knows? And particularly with the force with which the present application is being run, one would expect that it might be a first step in a longer strategy, i.e. get this, then terminate the agreements and then drop us under the regime which we oppose.

PN125

Hence, our view is that on the history that has been demonstrated, there doesn't seem to be any conflict between the union and the employers who have been covered under the modern award and, accordingly, there doesn't seem to be any reason to depart from the status quo, except as a means of targeting our clients, who not only say that historically we have got a case in opposition, but also, as a matter of principle, our submission, as we developed in our written submissions, is that it is contrary to principle to have penalties which compound one upon the other or casual rates that compound upon penalties.

PN126

I have taken rather a long time to open and I'm sorry about that.

PN127

VICE PRESIDENT HATCHER: No, that's all right, it's very useful.

PN128

MR MURDOCH: We do have the three witnesses.

PN129

VICE PRESIDENT HATCHER: All right. Who is going to be first?

PN130

MR MURDOCH: Ms Westwood.

PN131

VICE PRESIDENT HATCHER: She is in Sydney?

PN132

MR MURDOCH: Yes, she is here.

PN133

THE ASSOCIATE: Please state your full name and address.

PN134

MS WESTWOOD: Kerry Westwood, (address supplied).

<KERRY WESTWOOD, AFFIRMED [9.46 AM]

EXAMINATION-IN-CHIEF BY MR MURDOCH [9.46 AM]

*** KERRY WESTWOOD XN MR MURDOCH

PN135

Ms Westwood, your current position in the Event Group of companies is what?‑‑‑Director people and culture.

PN136

The Event Group includes, does it not, the Greater Union Organisation Pty Ltd?‑‑‑That's right, yes.

PN137

As well as Birch Carroll & Coyle Pty Ltd?‑‑‑Yes.

PN138

You provided a statement for use in this matter and it is dated 24 April 2019?‑‑‑Yes, that's right.

PN139

You have got a copy of that with you?‑‑‑I have, yes.

PN140

Are the contents of it true and correct?‑‑‑Yes, they are.

PN141

VICE PRESIDENT HATCHER: If there is no objection, the statement of Kerry Westwood dated 24 April 2019 will be marked exhibit 2.

EXHIBIT #2 STATEMENT OF KERRY WESTWOOD DATED 24/04/2019

PN142

MR LATHAM: No, there's no objection.

PN143

VICE PRESIDENT HATCHER: Mr Latham?

CROSS-EXAMINATION BY MR LATHAM [9.48 AM]

PN144

Ms Westwood, you are described as being responsible as the people and culture. I assume that's modern speak for human resources; is that roughly the case?‑‑‑That's correct, yes.

PN145

How long have you been in that position for?‑‑‑I've been in that position for the overall Event Group for two and a-half years, but, prior to that, was in the same role just looking after the Cinema Division for some years prior to that.

PN146

When you say "some years prior to that", how many years, roughly?‑‑‑Twenty.

*** KERRY WESTWOOD XXN MR LATHAM

PN147

You have got an understanding historically of how pay rates were set for people employed by cinemas in that area?‑‑‑Yes.

PN148

I just want to ask you some questions about your statement. Have you got a copy of your statement there in front of you?‑‑‑Yes, I have, yes.

PN149

You say, at paragraph 2(b), that BCC has, for many years, set minimum wages for - I think it should be "for these employees" - as required by section 206 of the Fair Work Act. That is presumably because the rates set out in the enterprise agreement have now dropped below the modern award; is that the case?‑‑‑That's correct.

PN150

VICE PRESIDENT HATCHER: When did that happen?‑‑‑It happened over a range of dates, depending on the classification, but it would have been in 2014.

PN151

MR LATHAM: If we can go to 2014, if I can hand you this document, this is a document that you prepared, isn't it, that set out the pay rates for Greater Union EBA-covered staff when, in fact, the rates fell below the modern award rate? Is that what that document is?‑‑‑Yes.

PN152

I tender that document, your Honour.

PN153

VICE PRESIDENT HATCHER: Just before we go on, I'm sorry, Mr Murdoch, we have actually got two statements from Ms Westwood. They are the same general structure, but one relates to Birth Carroll & Coyle and the other relates to Greater Union.

PN154

MR MURDOCH: That is an oversight. Could we tender both?

PN155

VICE PRESIDENT HATCHER: Yes, all right.

PN156

MR MURDOCH: In the one exhibit.

PN157

MR LATHAM: No objection to that.

*** KERRY WESTWOOD XXN MR LATHAM

PN158

VICE PRESIDENT HATCHER: All right. The exhibit 2 marking relates to the statement of Kerry Westwood dated 24 April 2019 concerning Birch Carroll & Coyle and then the further statement of Kerry Westwood dated 24 April 2019 concerning Greater Union will be marked exhibit 3.

EXHIBIT #3 FURTHER STATEMENT OF KERRY WESTWOOD DATED 24/04/2019 CONCERNING GREATER UNION

PN159

And then the document - I will just call it by the title on the front page - "Pay Rates for GU EBA-covered Staff as at 1 January 2014" will be marked exhibit 4.

EXHIBIT #4 PAY RATES FOR GU EBA-COVERED STAFF AS AT 01/01/2014

PN160

MR LATHAM: If we can just use the first row, cinema worker 1, you see there that there is a rate of $18.20; is that correct?‑‑‑Yes.

PN161

Is it the case that that rate of $18.20 was seen by the cinema as the minimum rate for those employees in the category of cinema worker 1?‑‑‑Yes, I imagine so.

PN162

That rate of $18.20 is, in fact, made up of the minimum weekly rate under the award plus the 8 per cent, isn't it?‑‑‑Yes, I haven't looked at this document for some time.

PN163

No, no, that's all right, and if you need time - - -?‑‑‑Yes.

PN164

That's what it seems to be, doesn't it? It doesn't set out any separate amount of 8 per cent, does it?‑‑‑No.

PN165

At least in relation to this document, it seems that the position of the cinema was that the minimum rate for employees was the minimum weekly rate under the award plus the 8 per cent?‑‑‑Yes, that would appear to be the 18.20.

PN166

I see. In your statement, you state that the casual loading, for example, is calculated on a cumulative basis?‑‑‑Yes.

PN167

I just want you to explain that to me. How does the cinema, in a practical sense, determine, for example, what a casual employee is paid?‑‑‑So it takes the minimum rate that's applicable in the award and adds the casual loading to that and then takes the minimum rate plus the 8 per cent loading and then adds the two amounts together to get to the casual loading. So, effectively, what we are not doing is adding the 20 per cent to the base plus the 8 per cent; the two amounts are being calculated independently and then they are being added together to arrive at the rate.

*** KERRY WESTWOOD XXN MR LATHAM

PN168

When you say the 20 per cent - - -?‑‑‑Sorry, that's because it's 20 in the Birch Carroll & Coyle and the Greater Union agreement.

PN169

Okay?‑‑‑The casual loading is 20 per cent.

PN170

Just so that we are all clear on this, there is a - can we just call it the "base rate", so the rate leaving aside the 8 per cent?‑‑‑Yes.

PN171

That is determined by reference to the modern award?‑‑‑Yes.

PN172

The casual loading itself is determined by reference to the enterprise agreement?‑‑‑That's correct.

PN173

Which is a lower rate than set out under the modern award; is that correct?‑‑‑That's correct.

PN174

The casual loading of 20 per cent is determined only by regard to the base rate, as we have described it, not to the base rate plus the 8 per cent?‑‑‑Both are used, so we do apply the 8 per cent. So, it's the base rate plus the 8 per cent gives you an amount, the base rate plus the 20 per cent gives you an amount, the difference between those two we add up and that gives you the rate which is for our casual employees. So it's cumulatively applying the 8 per cent and the 20 per cent, not compoundly applying the 20 per cent loading to the loaded base rate with 8 per cent included.

PN175

I think I may have confused myself. To determine what a casual employee would be paid, is it the story that the base rate is determined, and we know what that is, and then there is 8 per cent added to that?‑‑‑Yes.

PN176

Then, as part of a separate exercise, there is a 20 per cent casual loading that is determined by reference to the base rate?‑‑‑Yes.

PN177

And those three amounts are then added together to determine the all-up rate?‑‑‑That's correct.

PN178

I have now clarified the position for myself. Has it always been the case that this calculation process has been used by the cinema?‑‑‑Yes, since 1 January 2014, so since the rates in the agreements started to fall below the award rates, the base rate, that calculation method has been applied.

*** KERRY WESTWOOD XXN MR LATHAM

PN179

There was some reference by Mr Murdoch, which you may not have heard, but a reference to some Fair Work Ombudsman advice that was given. Do you know about that advice?‑‑‑Yes.

PN180

Was that advice given in writing, do you know?‑‑‑Yes.

PN181

My friend may have a copy, so this may just shorten matters?‑‑‑Yes.

PN182

VICE PRESIDENT HATCHER: Just before we move on, just with this document, just staying with the first page, the casual adult rates for the award don't involve simply adding 25 per cent to the full time rates, you have deducted the 8 per cent, added 25 per cent, then added the 8 per cent back on?‑‑‑Yes.

PN183

Looking at this for Greater Union, it appears to me that for cinema workers 1, 2, 3 and 4, your rates were below the modern award rates as soon as your old company awards had been abolished at the end of 2014; is that the position?‑‑‑Yes.

PN184

Thank you.

PN185

MR MURDOCH: We have got copies of Ms Paton's affidavit that attaches that Fair Work Ombudsman letter. Perhaps I should hand that up now.

PN186

VICE PRESIDENT HATCHER: So we don't get our exhibits confused, can you just give us the letter?

PN187

MR MURDOCH: Okay.

PN188

MR LATHAM: I have got multiple copies.

PN189

VICE PRESIDENT HATCHER: Just check with Mr Murdoch they are the same documents. Is that the same document, Mr Murdoch?

PN190

MR MURDOCH: The letter 24 July 12, yes.

PN191

VICE PRESIDENT HATCHER: Yes, all right. The letter from the Fair Work Ombudsman dated 24 July 2012 will be marked exhibit 5.

*** KERRY WESTWOOD XXN MR LATHAM

EXHIBIT #5 LETTER FROM FAIR WORK OMBUDSMAN DATED 24/07/2012

PN192

MR LATHAM: Sorry, Ms Westwood, take your time to read it, but when you've finished reading it, is that the document that you were referring to?‑‑‑Yes.

PN193

Is that the basis upon which your cinema said that the 8 per cent was not part of the minimum rate?‑‑‑Yes.

PN194

Can I just ask you, was there any other basis upon which you determined that the casual loading, for example, was not payable on the 8 per cent?‑‑‑Well, through detailed conversations with our legal counsel just to understand what our position was.

PN195

But in terms of this document, can I ask you where you say it justifies your position that the casual loading is not payable by reference to the base rate plus the 8 per cent?‑‑‑In the calculation or the explanation towards the bottom of page 1, the base hourly rate times the casual loading plus the basic hourly rate, so it's the - yes, so the calculations that are used at the bottom of page 1 is how we arrived at that decision.

PN196

But isn't that a reference to the interaction of the casual loading with a penalty?‑‑‑Yes, but we applied that to the 8 per cent.

PN197

Yes?‑‑‑To the same - to how the 8 per cent was treated.

PN198

Because if you go back to the fourth paragraph beginning "Whether an employee receives a penalty" - do you see that there, that paragraph?‑‑‑Yes.

PN199

The question being answered, isn't it, is whether a person receives a penalty on the casual loaded rate or their base rate?‑‑‑I'm not sure what the question is, sorry.

PN200

If you read that paragraph, it seems that the question that has been asked of the Ombudsman is whether an employee receives a penalty on the casually loaded rate or their base rate?‑‑‑Yes.

PN201

DEPUTY PRESIDENT DEAN: Mr Latham, I think the paragraph that starts "Casual employees are not excluded", read the last part of that sentence or the last sentence:

*** KERRY WESTWOOD XXN MR LATHAM

PN202

This indicates that a casual employee is entitled to the casual loading in addition to the penalties with both calculated on the basic rate of pay.

PN203

MR LATHAM: Yes, your Honour, and I will come to that, but I just want to get the question that was asked of the Ombudsman.

PN204

Do you know what question was asked of the Ombudsman?‑‑‑On what rate was the casual loading to be applied, whether it was minimum or base, and the response in here was that they are both on the base rate of pay.

PN205

Where do you say it says that they are both determined by reference to the base rate of pay?‑‑‑In the paragraph starting with "Casual employees" where it says:

PN206

In our view, this indicates that a casual employee is entitled to their casual loading in addition to the penalties with both calculated on the basic rate of pay.

PN207

VICE PRESIDENT HATCHER: If you look at the calculation underneath that, where does the 8 per cent fit into that?‑‑‑It's not really that clear.

PN208

There are two possibilities: either it's part of the 15.26, and you would have to check historically whether that is right or not?‑‑‑Yes.

PN209

In which case, they have applied the 25 per cent to the loaded rate, or they have just forgotten about it completely, but that calculation doesn't tell us anything, unless it - - -?‑‑‑I think that - sorry, you're right, I would have to just remind myself of that 15.26, whether that was inclusive of the 8 per cent or not.

PN210

Because if it's not, this calculation is just wrong for a cinema worker?‑‑‑Yes.

PN211

Because they have forgotten about the 8 per cent. If it's included, then they have compounded the 25 per cent on the 8 per cent?‑‑‑Yes, like I said, I would just need to remind myself of what that 15.26 and what that actually represents, that particular rate of pay.

PN212

All right.

*** KERRY WESTWOOD XXN MR LATHAM

PN213

MR LATHAM: I am just about finished, but just in relation to your answer to his Honour's question, you do agree with His Honour's question, though, don't you, that it doesn't seem to refer to the 8 per cent at all, does it?‑‑‑In that example, no, it doesn't appear to.

PN214

Is the position of the cinema this, that a cumulative process should be adopted by the Commission because that's the way the cinema currently calculates the rate?‑‑‑And based on historically how we have applied those rates, yes, and the arguments put forward by counsel.

PN215

Can I just take you back to the first document then, the one "Pay Rates for GU EBA-covered Staff"?‑‑‑Yes.

PN216

And let's just look at cinema worker 1 again. In the second block, there is what is called "Casual adult rates." Do you see that there?‑‑‑Yes.

PN217

That, I assume, are the rates for a person who is, for example, in the first row, a cinema worker 1 who is working casually and gets paid the casual rate; is that correct?‑‑‑Yes.

PN218

Is it the case that the rate set out in the third column entitled "1 January 2014", that is a 20 per cent addition to the rate in the first block for full time and part time adult rates of cinema worker 1, being the casual rate.

PN219

VICE PRESIDENT HATCHER: Sorry, did you say 20 per cent?

PN220

MR LATHAM: Yes, your Honour.

PN221

THE WITNESS: Yes, it would be because that was the applicable casual rate, yes.

PN222

MR LATHAM: There is no separate addition of an 8 per cent in that process, is there?‑‑‑No.

PN223

VICE PRESIDENT HATCHER: Sorry, just so I understand, the casual loading at the time was 20 per cent?‑‑‑In the EBA.

PN224

I am sorry, I have lost track of this. Which columns are you comparing, Mr Latham?

*** KERRY WESTWOOD XXN MR LATHAM

PN225

MR LATHAM: Sorry, your Honour, if your Honour begins cinema worker 1 in the top block.

PN226

VICE PRESIDENT HATCHER: Yes.

PN227

MR LATHAM: The amount of $18.20.

PN228

VICE PRESIDENT HATCHER: Yes.

PN229

MR LATHAM: And then cinema worker 1 in the second block, the amount in the third column of $21.84.

PN230

VICE PRESIDENT HATCHER: So we are comparing award rates?

PN231

MR LATHAM: Correct, your Honour.

PN232

VICE PRESIDENT HATCHER: So where did the 20 per cent - - -

PN233

THE WITNESS: They are - sorry, yes, I'm just refreshing. This was some time ago, this document, but that's an award rate, $21,84, that's not an EBA rate.

PN234

MR LATHAM: Yes, and what is happening is we have the amount of $18.20, which includes the 8 per cent on top of the award rate, and the 20 per cent casual loading?‑‑‑25 per cent.

PN235

Sorry, 25 per cent?‑‑‑Because that was the award.

PN236

The 25 per cent is added to that?

PN237

VICE PRESIDENT HATCHER: No, I don't think that's right.

PN238

MR LATHAM: It's 20 per cent, isn't it, in the second block?‑‑‑Well, they are the award rates in that third column, so it's, at 1 January 2014, whatever the casual loading of the award was.

*** KERRY WESTWOOD XXN MR LATHAM

PN239

Your Honour, I can probably cut through this fairly quickly. Could I just hand up a copy of the award rates as at 19 June 2013. Your Honour, just to simplify this, a cinema worker 1 in the top block is a grade 2 under the award and a grade 2 under the award is $16.85 minimum hourly wage as at 19 June 2013. If the Commission then adds 8 per cent to 16.85, they end up with a figure of $18.20, which is the amount set out in the third column, and then the casual adult rate in the same column but in the second block is based on that aggregated figure of $18.20.

PN240

VICE PRESIDENT HATCHER: Plus 20 per cent?

PN241

MR LATHAM: Yes, your Honour.

PN242

VICE PRESIDENT HATCHER: Why 20 per cent? No, this is the award rate.

PN243

MR LATHAM: I think, your Honour, the situation is this: the award rate of 25 per cent, I think is the witness's evidence, is not used for the purposes of calculating the casual rate. It is the enterprise agreement amount of 20 per cent.

PN244

VICE PRESIDENT HATCHER: I thought the third column in each table was meant to represent the modern award rate as at 1 January 2014. Is that not right?

PN245

MR CHESHER: It is incorporating the 8 per cent, your Honour.

PN246

VICE PRESIDENT HATCHER: So why would you add 20 per cent instead of 25 per cent?

PN247

MR LATHAM: I am not answering that question, your Honour.

PN248

VICE PRESIDENT HATCHER: Do you know why you would add 20 per cent?‑‑‑Because we were looking at what we were obligated to pay, which was the 20 per cent casual loading which was in the EBAs.

PN249

So this is not, in fact, the award rate, this is the rate you were obliged to pay as a result of the interaction - - -?‑‑‑Of the award and the EBA.

PN250

- - - and section 206 of the Act? I see. And the EBA had a casual loading of 20 per cent, not 25 percent?‑‑‑That's correct.

*** KERRY WESTWOOD XXN MR LATHAM

PN251

MR LATHAM: I don't have any further questions, your Honour.

PN252

VICE PRESIDENT HATCHER: Any re-examination, Mr Murdoch?

RE-EXAMINATION BY MR MURDOCH [10.10 AM]

PN253

You were asked a number of questions by my learned friend Mr Latham and also by his Honour in relation to the way in which the current rates for Birch Carroll & Coyle and Greater Union Cinemas are calculated?‑‑‑Yes.

PN254

Again, I want to be very clear, you apply 8 per cent to the base rate out of the award?‑‑‑Yes.

PN255

You apply 20 per cent to the base rate out of the award?‑‑‑Yes.

PN256

Then you add the base rate plus the result of the calculation of the 8 per cent and the result of the calculation of the 20 per cent together?‑‑‑That's correct.

PN257

VICE PRESIDENT HATCHER: Is that question directed at what they do or what is in this document?

PN258

MR MURDOCH: It is directed to what they do, but I am going to the document.

PN259

VICE PRESIDENT HATCHER: All right.

PN260

MR MURDOCH: So far as you are aware, that system of what's been done, has it been a continuous practice or has it changed at some stage since 2014?‑‑‑That has been a continuous. I would have to look at these rates compared to the rates that were being paid, but my view is that we have been consistent in the application of the calculation of the rates.

PN261

VICE PRESIDENT HATCHER: It seems to me that - who prepared this document, exhibit 4?‑‑‑There was versions of this document, so I would just need to understand if this was the latest version of the document that was actually being used for the rates of pay that were paid at the time.

PN262

It says it was prepared by you on 25 March?‑‑‑Yes, but I also note there was a few versions of this document prepared.

*** KERRY WESTWOOD RXN MR MURDOCH

PN263

You accept that - - -?‑‑‑I accept that this document was prepared by me at the time, yes.

PN264

You accept the methodology in this document is not the methodology you just described, it's the application of a straight 20 per cent to the aggregation of the award base rate and the 8 per cent?‑‑‑Yes, I do.

PN265

All right. Mr Murdoch?

PN266

MR MURDOCH: When you say there were - did you say "various versions"?‑‑‑Yes.

PN267

Why were there various versions of this document?‑‑‑So we actually looked at this and, on analysis, understood that the way that the rates were being applied needed - were being applied differently in this document to the way that they were - we were obligated to apply them, which is the way that we are now applying them with a cumulative approach to the calculation.

PN268

Taking you back, if I may, to exhibit 5, which is the Fair Work Ombudsman letter, you directed attention to the calculations near the foot of the first page and there's a reference, for example, to a penalty of 200 per cent?‑‑‑Yes.

PN269

So far as penalty of 200 per cent is concerned, what do you say as to the use of that example in relation to other entitlements such as, for example, the 8 per cent penalty averaging component?‑‑‑Well, using that basic hourly rate times the casual loading plus the basic hourly rate times the penalty, that is an accurate description of how to apply the 8 per cent and the 20 per cent casual loading.

PN270

Nothing further, thank you.

PN271

VICE PRESIDENT HATCHER: Thank you for your evidence, you are excused and you may go.

<THE WITNESS WITHDREW [10.15 AM]

PN272

VICE PRESIDENT HATCHER: Who is next, Mr Murdoch?

PN273

MR MURDOCH: Jodie Paton, please.

*** KERRY WESTWOOD RXN MR MURDOCH

PN274

THE ASSOCIATE: Please state you full name and address.

PN275

MS PATON: It's Jodie Marie Paton, (address supplied).

<JODIE MARIE PATON, SWORN [10.16 AM]

EXAMINATION-IN-CHIEF BY MR MURDOCH [10.16 AM]

PN276

Ms Paton, you are the director, people, performance and culture, for the Hoyts Corporation Limited?‑‑‑That's correct.

PN277

How long have you been in that role?‑‑‑About six and a-half years.

PN278

You have prepared a statutory declaration which you were aware was to be used in this proceeding; that's correct?‑‑‑That's correct.

PN279

Are the contents of it true and correct?‑‑‑Yes.

PN280

VICE PRESIDENT HATCHER: Does that have a date on it, Mr Murdoch?

PN281

MR MURDOCH: I was looking for a date but couldn't find it, your Honour.

PN282

MR LATHAM: I think it says 23 April on the second page opposite the signature.

PN283

THE WITNESS: Yes.

PN284

VICE PRESIDENT HATCHER: The statutory declaration of Jodie Paton dated 23 April 2019 will be marked exhibit 6.

EXHIBIT #6 STATUTORY DECLARATION OF JODIE MARIE PATON DATED 23/04/2019

PN285

Mr Latham?

CROSS-EXAMINATION BY MR LATHAM [10.18 AM]

*** JODIE MARIE PATON XN MR MURDOCH

*** JODIE MARIE PATON XXN MR LATHAM

PN286

Ms Paton, I will be quite quick. Just in relation to your statement, the issue, I take it, for Hoyts, is that they have got an enterprise agreement in place and that's the Hoyts Enterprise Agreement of 2001, is that correct, and what, of course, has happened is that the modern award rates have become higher than the minimum rates set out in that agreement; that's correct?‑‑‑Yes.

PN287

Which is why you refer to section 206 of the Fair Work Act?‑‑‑Yes.

PN288

I see.

PN289

MR MURDOCH: Sorry, the witness is not actually speaking up.

PN290

THE WITNESS: Sorry.

PN291

MR LATHAM: The effect of the evidence that you are giving today is that the casual loading, for example, is set by reference to the base rate set out in the award and not the base rate plus the 8 per cent; is that correct?‑‑‑Yes.

PN292

I see. That is the current way that it is calculated. Has that always been the way that it has been calculated?‑‑‑To my knowledge, yes.

PN293

Can I ask this. There has been some reference to the Fair Work Ombudsman advice that we have seen and I think you attach to your statement. Was that advice the basis of the conclusion that this should be the way the award rate is calculated?‑‑‑Yes.

PN294

I see. If I can just have one moment, your Honour. Just a final two questions. In relation to casual loadings, what is the casual loading set out in the enterprise agreement?‑‑‑It's 17 and a-half per cent.

PN295

Is that casual loading of 17 and a-half per cent used for the purposes of determining the final rate for casual employees or is it the award casual loading rate?‑‑‑It's now the award casual loading.

PN296

It's now the award casual loading rate, I see.

PN297

VICE PRESIDENT HATCHER: When you say "now", since when?‑‑‑We transitioned from the start of 2014 to, I think, by mid‑2016, we were at 25 per cent.

*** JODIE MARIE PATON XXN MR LATHAM

PN298

MR LATHAM: Just quickly, there are junior rates also set out in the enterprise agreement, too, aren't there?‑‑‑Yes, that's correct.

PN299

For junior calculations, or, sorry, for the calculation of rates payable to junior employees, is the award rate or the enterprise agreement rate used?‑‑‑The award rate.

PN300

Nothing further, your Honour.

PN301

VICE PRESIDENT HATCHER: Any re-examination, Mr Murdoch?

PN302

MR MURDOCH: No, thank you, your Honour.

PN303

VICE PRESIDENT HATCHER: Thank you for your evidence, Ms Paton, you excused and you can go.

<THE WITNESS WITHDREW [10.21 AM]

PN304

Ms Rust in Melbourne is next?

PN305

MR MURDOCH: That is so, your Honour.

PN306

VICE PRESIDENT HATCHER: All right, we will just put on the sound for Ms Rust.

PN307

THE ASSOCIATE: Ms Rust, can you please state your full name and address.

PN308

MS RUST: Simone Grace Rust, (address supplied).

<SIMONE GRACE RUST, AFFIRMED [10.22 AM]

EXAMINATION-IN-CHIEF BY MR MURDOCH [10.22 AM]

PN309

Ms Rust, you have provided a statement dated 2 May 2019 for use in this matter before the Fair Work Commission?‑‑‑That's correct.

PN310

That is the document that you have in front of you?‑‑‑Yes.

*** SIMONE GRACE RUST XN MR MURDOCH

PN311

Are the contents of it true and correct?‑‑‑That is correct, yes.

PN312

Nothing further, thank you.

PN313

VICE PRESIDENT HATCHER: Mr Latham?

CROSS-EXAMINATION BY MR LATHAM [10.23 AM]

PN314

Ms Rust, can you hear me?‑‑‑Yes, I can.

PN315

Just quickly, the situation - - -

PN316

VICE PRESIDENT HATCHER: Just a moment.

PN317

MR LATHAM: Sorry, your Honour.

PN318

VICE PRESIDENT HATCHER: The statement of Simone Rust dated 22 May 2019 will be marked exhibit 7.

EXHIBIT #7 STATEMENT OF SIMONE GRACE RUST DATED 22/05/2019

PN319

MR LATHAM: Ms Rust, how long have you been employed as a human resources manager of Village?‑‑‑Since January 2019. Before that, I was actually employed at Village as an HR consultant from September 2017.

PN320

Before 2017, were you working for Village at all?‑‑‑No, I was not.

PN321

Can I then just ask you, just quickly in relation to your evidence, I take it that there is an enterprise agreement in place at Village?‑‑‑That's correct. There are actually two.

PN322

At least one of them is a Village Roadshow Agreement of 2006?‑‑‑Not to my knowledge. The ones that we work with are the Village Cinemas Australia Agreement and then there's a Tasmanian partnership agreement.

PN323

When was the Village Cinema Agreement made?‑‑‑2009.

*** SIMONE GRACE RUST XXN MR LATHAM

PN324

2009?‑‑‑Yes.

PN325

I see. I take it from paragraph 2(c) of your statement that the minimum wages under the award have now overtaken the minimum wages under the enterprise agreement that you referred to?‑‑‑Correct.

PN326

You refer, in subparagraphs (d) and (e), to the method of calculation where the casual loading is determined on a cumulative basis. Do you see that there?‑‑‑Yes.

PN327

You may not know the answer to all of that, but do you know when Village first started using that process?‑‑‑I believe, and obviously it was before my time, but I believe the first year that we actually started using the cumulative basis was from 1 July 2017.

PN328

Prior to 1 July 2017, do you know what process was used then?‑‑‑I believe it was the compounding basis, but, again, I've only seen the 1 July 2016 pay rates and not prior to that, so I'm not completely sure.

PN329

I see. You gave got a copy of the pay rates in front of you, don't you, from 2016?‑‑‑I do, yes.

PN330

I will just hand these up, your Honour. I know it's a bit difficult to identify over a video link, but this is a document at the top that should say "Village Cinemas Australia - EBA Pay Rates" and then, in the second line, "Effective 1 July 2016". Is that the document you have got?‑‑‑Yes.

PN331

As far as you know, they were the effective pay rates as at 1 July 2016?‑‑‑I believe so. Again, I haven't looked back into our payroll system, but, yes.

PN332

Certainly. And, as you have said, they used a compounding process?‑‑‑As much as I understand, yes. It was before my time.

PN333

I have got nothing further, your Honour.

PN334

VICE PRESIDENT HATCHER: Do you tender that?

PN335

MR LATHAM: Sorry, I do tender that. Apologies.

*** SIMONE GRACE RUST XXN MR LATHAM

PN336

VICE PRESIDENT HATCHER: The document titled "Village Cinemas Australia - EBA Pay Rates 1 July 2016" will be marked exhibit 8.

EXHIBIT #8 DOCUMENT TITLED "VILLAGE CINEMAS AUSTRALIA - EBA PAY RATES 01/07/2016"

PN337

Ms Rust, you said, as far as you knew, there was a change from a compounding to a cumulative calculation at about the beginning of 2017. Why was that change made? Do you know why?‑‑‑I'm actually not sure, I'm sorry.

PN338

Thank you. Any re-examination, Mr Murdoch?

PN339

MR MURDOCH: No, thank you, your Honour.

PN340

VICE PRESIDENT HATCHER: Thank you for your evidence, Ms Rust, you are excused and you can leave the witness box.

<THE WITNESS WITHDREW [10.28 AM]

PN341

Is there any further evidence, Mr Murdoch?

PN342

MR MURDOCH: No, your Honour.

PN343

VICE PRESIDENT HATCHER: We might take a short break and then we will resume for final submissions.

SHORT ADJOURNMENT [10.28 AM]

RESUMED [11.03 AM]

PN344

VICE PRESIDENT HATCHER: Before we start, I have just provided an extract of a Full Bench decision from 2015 which settled on some of the standard terminologies to be used in the exposure drafts and, if you look at paragraph 43, the upshot of it is that we use the expression "minimum hourly rate" and "ordinary hourly rate", but the notion of a base rate is not something that we intend to refer to in awards any more. That might lead to some modification to the terms of your application, if it were granted, Mr Latham, and then may have implications, or perhaps no implications, for the operation of section 206. It seems it's meant to be a different terminology and different concept.

*** SIMONE GRACE RUST XXN MR LATHAM

PN345

MR LATHAM: Yes, your Honour. Just on that point, could I just have a moment after we finish just to get some instructions on that wording point?

PN346

VICE PRESIDENT HATCHER: Yes. Again, I have obviously caught the parties off guard, so if the parties want to put in a note at some later stage, that's - - -

PN347

MR LATHAM: Perhaps that might be the simplest way of doing it, your Honour.

PN348

VICE PRESIDENT HATCHER: Yes.

PN349

MR LATHAM: Your Honour, I will be quite quick in closing, but could I just say there was a question asked in relation to whether this issue had been dealt with as part of the making of the award. There is a decision of 30 December 2009 - I've only got one copy, unfortunately - that deals with the point, particularly at paragraphs 5 and 6. I can hand my copy to my friend, although it is marked, but if I could just hand that up - I apologise I don't have multiple copies of it - but that gives some of the contextual background to how the issue came here.

PN350

VICE PRESIDENT HATCHER: I think this was quoted in somebody's submission.

PN351

MR LATHAM: Yes, it was. Could I then just close in a very short way. I think the evidence today has made clear that a number of the major employers do calculate the ultimate payment by reference to the modern award payment plus, on a cumulative basis, the 8 per cent, although it does seem that there seems to be some curious interaction between the modern award and the enterprise agreement which has only really been explained today.

PN352

It seems, I think, that, historically at least, one of the majors itself paid in a compound way, and that was the evidence given today, and it's also clear that the independents, which are the non-major cinemas, the Dendys of the world and so on, have always paid on a compound basis and continue to do so. So, there is some considerable confusion in the market place about how this should be done.

PN353

It does seem, however, though, that the crucial change is the advice of the Ombudsman, and I just want to spend a moment on that. The advice of the Ombudsman that has been handed up, which is exhibit 5, doesn't even seem to deal with the question of the 8 per cent specifically at all and, in fact, seems to assume that the payment is rolled into the minimum wage before the casual loading is applied.

PN354

VICE PRESIDENT HATCHER: Working backwards from the 2014 rates which we have, it seems to be that it's likely that the starting point rate used by the Ombudsman did not include the 8 per cent and it was just neglected from the calculation.

PN355

MR LATHAM: I think in relation to - - -

PN356

VICE PRESIDENT HATCHER: That is, we know - exhibit 4 shows us the 2014 rates, which include the 8 per cent, so the Ombudsman refers to a rate of $15.26, so I assume that's a rate without the 8 per cent.

PN357

MR LATHAM: Yes, that seems to be correct.

PN358

VICE PRESIDENT HATCHER: In which case, the calculation is just wrong because it hasn't taken into account the 8 per cent at all.

PN359

MR LATHAM: Yes, it seems that the question being answered by the Ombudsman is a quite different question to the question that we are discussing today, being where does the 8 per cent fit into this process.

PN360

VICE PRESIDENT HATCHER: It is clear from the first question that the Ombudsman was asked about an adult casual cinema worker.

PN361

MR LATHAM: Correct.

PN362

VICE PRESIDENT HATCHER: The calculation relates to a 200 per cent penalty rate. Now, whether it's cumulative or compounding, the 8 per cent would have to come in there somewhere, I assume.

PN363

MR LATHAM: Yes.

PN364

VICE PRESIDENT HATCHER: But it just seems to have been forgotten, in which case it's just simply wrong.

PN365

MR LATHAM: Yes. In our submission, your Honour, it's really of no assistance to the Tribunal at all.

PN366

Can I then just deal with just a couple of quick things said by my friend. Firstly, in relation to the written submissions, at least, which are slightly different to the submissions today, the fact that the majors contend that they pay in a particular way, in our view, for the reasons set out in the opening, is just irrelevant and of no assistance either and certainly not determinative of the meaning of the clause.

PN367

There was a point raised by my friend that the union accepts that the current situation is lawful. That concession is not made, but I don't need to take that any further.

PN368

Just finally, in relation to the question as to wording, if we could have leave, perhaps, to provide an alternate wording, say, within 48 hours, we could certainly do that and that may resolve the technical drafting issues of the Commission, but unless there is anything further, your Honour - - -

PN369

VICE PRESIDENT HATCHER: It may more than that. It may mean that if the variation is made, at least with respect to Mr Murdoch's clients, it has no immediate effect under section 2016.

PN370

MR LATHAM: Yes, that's correct.

PN371

VICE PRESIDENT HATCHER: All right.

PN372

MR LATHAM: But unless there's any further questions, your Honour, they are the submissions.

PN373

VICE PRESIDENT HATCHER: Is it convenient we hear from you next, Mr Hamilton?

PN374

MR LATHAM: You can't escape for ever.

PN375

VICE PRESIDENT HATCHER: You don't have to say anything if you don't want to.

PN376

MR HAMILTON: No, your Honour, our Association will rely on our written submissions, if the Commission pleases.

PN377

VICE PRESIDENT HATCHER: All right, thank you. Mr Murdoch?

PN378

MR MURDOCH: If I may deal first with practical matters, it would be wise if everyone had the benefit of the redraft, but while it's welcomed that we get it in 48 hours, we may need a little longer to respond, so could I respectfully ask for, say, seven days to respond in writing to it?

PN379

VICE PRESIDENT HATCHER: Yes.

PN380

MR MURDOCH: Thank you. So far as the Ombudsman letter is concerned, we see it differently in that when I say "differently", differently with respect to the Bench and to my learned friend. The reference there to penalty of 200 per cent, I would suggest that, given that what we are talking about here is an example, that the 8 per cent would fall into the same category as the penalty of 200 per cent in that it's always been described as a penalty averaging component, so that it's clearly in the nature of a penalty and, accordingly, ought to be dealt with in the same way as any other penalty.

PN381

VICE PRESIDENT HATCHER: Just to be clear, when, if ever, would a casual cinema worker get a penalty of 200 per cent? What is this example actually referring to?

PN382

MR MURDOCH: Well, that's always the problem with abstract queries. Can I say that we did endeavour to find the letter that was sent to the Ombudsman to seek a ruling and, regrettably, with the passage of time, that letter was unable to be recovered.

PN383

VICE PRESIDENT HATCHER: It appears to me that the Ombudsman understood the letter was about calculation of penalty rates for adult casual cinema workers.

PN384

MR MURDOCH: Yes.

PN385

VICE PRESIDENT HATCHER: I am not sure, on any view, that what we are talking about here is a penalty rate.

PN386

MR MURDOCH: Well, the 8 per cent is a penalty rate because it says it's an averaged amount in lieu of penalties. It has to be categorised in that way, we would submit.

PN387

While the discussion has, to a degree, moved on from the matter of base rates, I should, for completeness, give you a Full Federal Court decision in relation to the meaning of that term. The case in point, Maughan Thiem Auto Sales Pty Ltd v Cooper [2014] FCAFC 94, the relevant discussion of base rate of pay commences at paragraph 16 and leads up to the conclusion, which is in paragraph 24. I will pause for a moment, if I may, to let you look at that.

PN388

They put particular emphasis in that case on the notion of amounts that were separately identifiable, and you will see that the view of the Court was that the 18 per cent penalty rate that was incorporated in the salary was one of those separately identifiable amounts that had to be excluded, and that is summarised again at paragraph 57(a).

PN389

The other matter that the Court, in this decision, referred to is that term "base rate" is not only relevant to section 206 but it's also, of course, relevant to various of the entitlements in the National Employment Standards, and in the particular case, in paragraph 15, the Court drew attention to the fact that under section 119(2) of the Act for redundancy pay purposes, the payments are on the basis of the base rate, and throughout the NES, there are various other entitlements which are payable at the base rate.

PN390

VICE PRESIDENT HATCHER: If you look at section 139(1), this goes to the terms that the Commission is empowered to include in the modern award and, insofar as wages are concerned, it doesn't use that "base rate" expression, it empowers us to set minimum wages, so it seems to me our function is to set a minimum rate of pay in an award and then the question of how section 206 operates on the award is really a separate question which we don't get involved with, that is, if there was an issue about it, presumably a court would determine whether someone was getting the base rate of pay or not based on an assessment of what the terms of an award are, but we don't actually set a base rate of pay for the purpose of section 206, do we?

PN391

MR MURDOCH: I understand that, your Honour, and we moved quite away during the course of the morning and we had prepared on the basis of the union's draft - - -

PN392

VICE PRESIDENT HATCHER: Yes.

PN393

MR MURDOCH: - - - which was to adjust a base rate of pay. The other matter that we should mention is that so far as payments being all purpose is concerned, during the course of the various steps before the earlier Full Bench dealing with the modernisation of this award, there was a proposal advanced that the 8 per cent entitlement paragraph in the modern award should include a statement to the effect that it was an all-purpose payment.

PN394

Now, that matter, as we understand it, has been resolved in the steps before the earlier Full Bench and the exposure draft had that phrase about it being an all-purpose payment struck out, so that we would resist any proposal that what had previously been achieved before the earlier Full Bench be retreated from.

PN395

VICE PRESIDENT HATCHER: I understand what you are putting. Even if we called it an all-purpose allowance, it clearly would not be part of the base rate for the purpose of section 206, so it wouldn't affect your clients anyway immediately. That's right, isn't it?

PN396

MR MURDOCH: Immediately, yes, but so far as the award is concerned - you will recall the reference earlier to the joint submission by our clients and Mr Hamilton's clients - that submission dealt with the proposal that the 8 per cent entitlement paragraph carry with it a statement that it was for all purposes. That was opposed and, as a result, that sentence was struck out. That's why I emphasise that it would not be appropriate to backtrack on that. I think you should have a copy of the exposure draft that shows that striking out.

PN397

VICE PRESIDENT HATCHER: No, it's not included in the exposure draft we have.

PN398

MR MURDOCH: Let me - - -

PN399

VICE PRESIDENT HATCHER: But there is no dispute about what you say, is there?

PN400

MR LATHAM: Your Honour, we are not contesting any of this.

PN401

VICE PRESIDENT HATCHER: All right.

PN402

MR MURDOCH: In any event, there doesn't seem to be disagreement that that issue was settled at an earlier stage.

PN403

There is also an earlier decision of Watson VP, if I can hand up a copy of that. The decision in 2012 in re Aged Care Association, starting at paragraph 30, there's a section headed "Casual loadings and weekend penalties" and the relevant paragraphs are 35, 36 and 37. The conclusion that the Vice President drew in that matter is supportive of the general approach we take in relation to the use of the cumulative rather than the compounding technique.

PN404

I should mention also that I understand that a recent Full Bench has had the matter of compounding versus cumulative raised in the context of the Aged Care Award and that a statement has been issued that that issue needs to be addressed by the parties to the Aged Care Industry Modern Award. So far as I know, the Bench hasn't yet done that.

PN405

VICE PRESIDENT HATCHER: I can tell you, Mr Murdoch, because I have recently participated in the common issue proceedings, overtime versus casual, but there is absolutely no standard approach, so, in some cases, casuals don't get the casual loading on overtime at all and, in some cases, it's cumulative and, in some cases, it's compounding. So, one would search in vain for any principle all-standard approach at the current time.

PN406

MR MURDOCH: Yes, I have shared that experience in recent weeks.

PN407

Subject to the opportunity of putting in a written submission in response to my learned friend's redraft, they are our submissions, unless there are any other matters that we can assist with?

PN408

VICE PRESIDENT HATCHER: No, thank you, Mr Murdoch. Anything in reply at this stage, Mr Latham?

PN409

MR LATHAM: Just one point. There was some discussion about the Fair Work Ombudsman's position. In Mr Chesher's statement, at paragraph 12 and at page 90, there are extracts from the Fair Work Ombudsman's Pay Guide and, while it's not specifically explained, those pay guides seem to adopt a compound process, not that that's going to be determinative one way or the other.

PN410

Subject to that, I know I asked for 48 hours, but could I have until the end of Monday?

PN411

VICE PRESIDENT HATCHER: Why don't I just allow seven days to each side? Is that easier?

PN412

MR LATHAM: Yes. Your Honour doesn't wish to hear me about the question of principle as to compounding penalties or not?

PN413

VICE PRESIDENT HATCHER: Well, if you can identify whether there is a principle, I would be interested, but I don't think there is one.

PN414

MR LATHAM: Could I have leave to put that into those submissions as well?

PN415

VICE PRESIDENT HATCHER: Yes.

PN416

MR LATHAM: Thank you. Unless there is anything further?

PN417

VICE PRESIDENT HATCHER: I thank the parties for their submissions. Subject to the receipt of the further material foreshadowed, we will now adjourn and reserve our decision.

ADJOURNED INDEFINITELY [11.28 AM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #1 STATEMENT OF MATTHEW CHESHIRE DATED 28/06/2019 PN28

KERRY WESTWOOD, AFFIRMED................................................................. PN134

EXAMINATION-IN-CHIEF BY MR MURDOCH.......................................... PN134

EXHIBIT #2 STATEMENT OF KERRY WESTWOOD DATED 24/04/2019 PN141

CROSS-EXAMINATION BY MR LATHAM................................................... PN143

EXHIBIT #3 FURTHER STATEMENT OF KERRY WESTWOOD DATED 24/04/2019 CONCERNING GREATER UNION................................................................. PN158

EXHIBIT #4 PAY RATES FOR GU EBA-COVERED STAFF AS AT 01/01/2014 PN159

EXHIBIT #5 LETTER FROM FAIR WORK OMBUDSMAN DATED 24/07/2012 PN191

RE-EXAMINATION BY MR MURDOCH....................................................... PN252

THE WITNESS WITHDREW............................................................................ PN271

JODIE MARIE PATON, SWORN...................................................................... PN275

EXAMINATION-IN-CHIEF BY MR MURDOCH.......................................... PN275

EXHIBIT #6 STATUTORY DECLARATION OF JODIE MARIE PATON DATED 23/04/2019................................................................................................................................. PN284

CROSS-EXAMINATION BY MR LATHAM................................................... PN285

THE WITNESS WITHDREW............................................................................ PN303

SIMONE GRACE RUST, AFFIRMED............................................................. PN308

EXAMINATION-IN-CHIEF BY MR MURDOCH.......................................... PN308

CROSS-EXAMINATION BY MR LATHAM................................................... PN313

EXHIBIT #7 STATEMENT OF SIMONE GRACE RUST DATED 22/05/2019 PN318

EXHIBIT #8 DOCUMENT TITLED "VILLAGE CINEMAS AUSTRALIA - EBA PAY RATES 01/07/2016".............................................................................................. PN336

THE WITNESS WITHDREW............................................................................ PN340