IRC puts brakes on belligerent seven – depaNews June 2009

Commission puts brakes on the Belligerent Seven

Who would have thought that out of 152 councils, the first to leap into an argument with their managers and Senior Staff about the cost of their superannuation would be this lot:

Great Lakes Council

Lake Macquarie City Council

Liverpool

The Council of the Municipality of Kiama

The Hills Shire (nee Baulkham Hills)

Warringah

Wyong

But, in the Industrial Relations Commission this morning, Justice Staff recommended that those seven councils not proceed to collect increased superannuation from affected employees (see May depaNews) until proceedings in the Commission had resolved the issue. There may be an eighth, with some doubt about how Pittwater is responding to our letters. We'll see.

These proceedings arose from a dispute depa filed with 83 councils over whether or not the Council would pay the increased "compulsory employer contributions" from 1 July for employees who are members of the LGSS Defined Benefits Scheme and who are employed on contracts with a TRP. When the dispute was filed on 20 May, there were six councils refusing to pay and 77 councils which had not responded to letters from depa dated 1 April and 5 May.

Between the date of filing and the proceedings this morning, Waverley was removed from the list of six refusing to pay (they're still wondering what to do) and Great Lakes and Lake Macquarie were added. And of the 77 councils which had failed to respond, we were now down to 49. That is the least, some progress.

depa was supported this morning in the Commission by the LGEA (Martin O'Connell had also attended our meetings with the LGSA on 12 March and 5 May trying to properly manage this issue) and the USU. We appreciate their support.

But first, what's this all about?

This is as a dispute arising from an increase in the compulsory employer contribution in the Defined Benefits Scheme of the LGSS. The collapse in financial markets has meant that all defined benefit schemes are now in deficit and employers are being urged by superannuation regulators to address the deficiency as quickly as possible.

Yes, that's right, this is a dispute generally with the highest paid employees in the industry. Who said unions were only relevant lower in the organisation? And what sort of employer wants to pick a fight with their directors and managers? Leaving aside whether they can legally make employees pay, what sense is there from a human resources perspective, in irritating those most critical to an organisation's delivery of services?

There are two critical and simple issues here:

1 If an employee is not on a contract, then there is no argument about who will pay. It will be the employer.

2 Employees on contracts are employed on contracts solely because of a decision by the Council or, in the case of Senior Staff under the Local Government Act, the Act itself.

To resolve the issue, councils should simply treat these employees like everyone else.

And 49 councils will do that and have agreed to pay

Here are the 49 councils which have already agreed to do the right thing:

 

In an exhibit handed up in the Commission this morning, these 49 councils were identified as agreeing to pay the increased compulsory employer contribution. At the very least, this is a persuasive argument for those seven councils refusing to pay to review their anti-employee attitude and the Commission accepted depa’s submission that it was sufficient of a developing majority opinion to put a hold on those councils which would defy it.

So, the Commission recommended that they not proceed pending further hearings to settle the dispute. This will take some pressure off the employees affected and also focus the attention of those councils on whether they can, or cannot, try to extract the additional increase from the salary cash component of their employees’ packages.

13 councils are currently taking advice

These councils are:

 

34 councils say they are not affected (but are they really?)

The following councils claim that they are not affected. They say they do not have employees who are members of the Defined Benefit Scheme who are employed on contracts or other arrangements which include a TRP.

 

We are prepared to accept that these councils are acting in good faith when they advise us that they are not affected, but just to be sure, if you work at any of these councils and are on a contract or contractual arrangement with a TRP, can you please let us know?

Please note also here that depa has filed a dispute asking for a response from all councils about "employees" generally, not just depa members. So, if you are not a member but are affected, let us know. People who are eligible to be members but are not members yet are all potential members.

What happens next?

The Commission made three recommendations. They will shortly be available officially but, in summary and from the best of our notes, they were:

1 That the (forty nine) councils yet to respond to depa’s letters of 1 April and 5 May, do so by 5pm on Friday 5 June.

2 That the (seven) councils which propose not to pay the increased compulsory employer contribution reply by 5pm on Friday 5 June and indicate which of the four categories in depa’s letter of 1 April the affected employees fall into.

3 The Commission “urges” that any decision by the seven councils to deduct from employees salaries be not implemented until further assistance is provided by the Commission.

Proceedings were adjourned for a report back before Justice Staff at 11am on Wednesday 10 June.

What happens next?

The LGSA and the unions are planning to meet with the Belligerent Seven (and possibly Pittwater) next week. At that meeting we can examine why the councils believe they can extract the increase in the compulsory employer contribution from an employee’s salary component. We can also deal with any of the 49 councils which are yet to respond, or the 13 councils which are taking advice, if they decide to try to gouge these increases from employees.

In the meantime, we need to know if the councils which claim to not be affected are really not affected and we need advice from members (and people who aren't members) at the Belligerent Seven so we can check the four categories of employees.