Unions

The Stellar Experiment

By Andrew Hillard

The agenda for the future job-shedding program by Telstra has been revealed via it's bastard child, Stellar.

This week Telstra confirmed that a mega-call centre at Joondalup, in Perth will be contracted for outsourcing, at diminished wages and conditions from the applicable industry awards.

While Telstra have been coy in not confirming that this work is contracted to its own hybrid company, Stellar, the fact is that Stellar advertised the positions 6 months ago and have imported 5 specialists from their operations in the UK to set up the centre.

In 1998 Telecommunications giant Telstra sought to reduce or eliminate its labor-intensive and wages-expensive call centres as part of the corporate workforce slash and burn policy of the then CEO, Frank Blount.

Telstra created an outsource hybrid company...Stellar Call Centres Pty Ltd, which was an ambitious joint-venture with U.S. call centre specialists, Excell Global Services, based in Phoenix Arizona. Telstra owns 50% of Stellar Call Centres Pty Ltd.

The creation of Stellar gave Telstra access to a workforce to outsource future call centre work, and control of a company which would contract staff to work longer hours at cheaper wages.

The existence of Stellar also allows Telstra to continue to downsize by offering further redundancies to its existing call centre workers.

Outsourcing to Stellar was intended to break the stranglehold of the powerful unions - specifically the CEPU (Communications, Plumbers and Electricians Union) and the CPSU (Community Public Sector Union), who for decades had forced Telstra to provide high wages and conditions to its own workers.

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The first Stellar call centre began business operations in December 1998 at Robina on the Gold Coast, employing over 150 staff to provide Telstra 132200 residential sales and service information.

Staff at the new Stellar Robina centre was offered $ 28,000 base pay for a 40-hour working week; five days sick leave and 4 weeks annual leave without leave loadings...wages and conditions which fell substantially short of the existing Telstra benchmark awards for identical work.

The Gold Coast region has a high unemployment with a predominantly tourist-based business economy, providing seasonal, casual work.

So even with sub-standard wages and conditions on offer there were long queues of applicants seeking permanent employment at Stellar.

The new Stellar/Telstra experiment on the Gold Coast was predictably brief.

It was only a matter of weeks before the Telstra unions, notably the CEPU, confronted Stellar, demanding right of entry to the Robina site, a request that was repeatedly denied to the unions by Stellar.

Seasoned veteran of many skirmishes, Mr Ian McLean, Queensland Branch Secretary of the Communications, Electricians and Plumbers Union (CEPU), led the charge by accusing Stellar management of treating its staff like "battery-hens" who worked in "sweat-shop conditions".

McLean and his CEPU together with Stephen Jones from the Community Public Sector Union (CPSU) vowed to mount a campaign to ensure that Stellar employees would receive parity with Telstra awards and conditions.

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The Stellar war with the Telstra unions has resulted in a series of protracted hearings before the Federal Court of Australia and the Industrial Relations Commission.

The court judgments, still pending, may eventually cost Stellar/Telstra over one million dollars in fines and back-pay claims by staff at the Stellar Robina site and at other Stellar call centres in Sydney, Adelaide and Perth...and this does not take into account the escalating costs of legal representation in court appearances.

When first hired, Stellar employees were required to sign a personal work agreement that enshrined the original pay and conditions offered during the interview process.

But those contracts had no validity in Industrial Law.

Stellar management then gambled by having the Robina staff vote on a Certified agreement.

Stellar backed away from having that agreement ratified before the Queensland Industrial Relations Commission when the unions showed up at the hearing in force to oppose the Certification of the Stellar agreement.

The CEPU and ASPU argued that the work that Telstra had outsourced to Stellar was a "transmission of business" from the principal, Telstra.

The unions submitted that the work description was identical to that performed within Telstra and therefore the Telstra awards for pay and conditions should apply equally to Stellar workers.

The case was then taken to the Federal Court of Australia, where the union successfully argued that Telstra awards bound Stellar and that identical business had been transmitted under contract from Telstra to Stellar.

This was a landmark test case in which Justice Wilcox, on 3 September 1999, defined the legal definition of "transmission of business" and if the current Stellar appeal against this decision is rejected, there will be wide-ranging ramifications for many businesses in Australia.

Justice Wilcox ordered that Stellar immediately apply the Telstra awards to their Telstra Robina site and to retrospect payments to staff that had not received correct remuneration and entitlements under a Telstra award.

Stellar then applied unsuccessfully to the Federal Court of Australia to have the judgment set aside until an appeal could be mounted.

The appeal to the Wilcox decision was heard in early February 2000 and if upheld by the full bench of the Federal Court, will be devastating to the future of the Stellar/Telstra deals.

Stellar are currently challenging the legal validity of the Telstra awards in a separate court action in anticipation of losing the Wilcox appeal and may seek to stall the application of Telstra awards through protracted litigation.

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However, Stellar are now risking the wrath of the Federal Court - and a contempt ruling - by failing to comply with specific court orders to apply the Telstra awards for their Robina staff as required by Justice Wilcox in September 1999.

The Wilcox decision has set an unexpected precedent by defining the term in industrial law called "transmission of business".

The "transmission of business" ruling has the potential to affect every business in Australia where the principal business has contracted an outsource company providing identical services.

This means that contractors will have a legislated obligation to maintain the same level of pay and conditions as those that apply under the relevant awards for workers in the principal business.

For Stellar and other outsource contractors in the Call Centre industry, the "transmission of business" ruling threatens the death knell for those who have sought to exploit the union-free environment.

Soaring wage bills in compliance with relevant industry awards may result in many call centre operations and contracts becoming financially unviable.

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The call centre industry rode to prominence in the 1990's on the back of an epidemic of closures of banks, medical benefit groups, insurance companies, airlines and other public-contact businesses in regional and rural areas and the drastic reduction of staffing levels in their city operations.

Big business sought cost-salvation by using call centres as a high volume, low cost service provider for their customers.

The call centre industry responded by bidding for lucrative low-margin but high-call volume outsource contracts, filling the void left by thousands of retrenchments and redundancies of service staff from the banks and other businesses.

Call centres flourished, recruiting staff by the thousands, most of whom were new to the industry and grateful to have a new career, despite having to accept offers of minimum wages and below award conditions for employees.

When customers talk to their bank, airline or insurance company and make enquiries about transport timetables, they are likely to be talking to an operator who works, not for the business they rang, but for at outsource company representing that business.

In the case of Stellar, who service several Telstra contracts as well as a contract to provide information to callers to 131500 on behalf of the NSW Transit authorities, the future under the Wilcox "transmission of business" judgment appears bleak.

And Telstra will have to determine whether the cost of further legally challenging their unions via the Stellar experiment is defensible to the Federal Government and Telstra shareholders.

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However if the Wilcox decision is set aside, Stellar will continue its bid to lockout the Telstra unions and break the influence of the Telstra awards.

A contentious issue in the near future is the opening a 24 hour, 7 day a week mega-call centre at Juniup, north of Perth, which is mooted to employ 400 permanent staff servicing Telstra OAS (Operator Assisted Services) the 1223 directory information business.

If this centre proceeds, unions fear that it will pave the way for Telstra to close a number of regional and rural sites it operates for OAS, a move that is certain to embarrass the Federal Government in rural areas.

Unions believe that several other Telstra call centre core-businesses are likely to be moved over to Stellar workplaces, further eroding the strength of the Telstra unions and security of Telstra employees.

At its new Perth Telstra site, Stellar are offering a base wage of just $25,000 for a 40-hour week with no holiday leave loadings, evening or weekend loadings.

This remuneration is at least one-third less than Telstra awards and the Perth venture is bound to unleash another wave of widespread union activity against Stellar and Telstra.

Staff is currently being hired for Stellar Perth and several managers from Excell Global Services U.S. & U.K. operations have already arrived in Perth to launch the controversial new Telstra venture.

If the Wilcox decision is upheld, Stellar is likely to take an appeal to the High Court in a bid to stall for time to allow it to continue to expand its Telstra operations.

Also in the union's sights will be the Stellar operation at Hornsby, where over 200 permanent and casual employees service the State Transit authorities 131500 timetable hotline number.

Unions have already applied several times to enter the Hornsby site, and with employees paid a base wage of $26,000, well below Sydney standards for equivalent work, Stellar is likely to be targeted with unprecedented union attention.

If the Wilcox decision is upheld, transmission of business may well affect the Hornsby site and have member-starved unions suing for entry and access to the employees.

Obviously Telstra, with 3 million shareholders as fiscal watchdogs, cannot pour limitless funds into defending the ill-fated Stellar experiment.

If Telstra push forward with its controversial bid to break the power of the telecommunications unions by diverting work to its own satellite company, Stellar Call Centres Pty Ltd, it risks wide-spread condemnation from unions and from the public who own shares in Telstra.

For a Telstra desperate to restore public support for the final share sell-off, continuing to support the Stellar experiment against the directives of the courts and the activities of the unions would be yet another wrong call.

The full bench of the Federal Court of Australia is expected to hand down the landmark Wilcox "transmission of business" appeal decision before the end of March 2000.

Andrew Hillard is a former human resources manager with Telstra. See next week's Workers Online for an interview with Telstra's Troubleshooter.

   Got some dirt on Telstra? Contact Andrew Hillard

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  Issue 46 contents

»	Carr Vows to Move on Casuals
»	NSW Government in Hot Seat Over Individual Contracts
»	Telstra Troubleshooter Bombs Stellar
»	Illegal immigrants Working Next Door to PM
»	Education Department Hit By Massive Fine
»	Victims Comp Changes Exclude Traumatised Worker
»	SOCOG Agrees: Ceremonies Not an Eisteddfod
»	Senate Guts 'Ships from Hell' Bill
»	Campaigners Seek Dissident Web Domains

»	The Soapbox
»	The Locker Room
»	Trades Hall
»	Tool Shed

»	The Real Big Fella
»	That's It For Labor
»	Join Australia's Gas Out
»	Tribute to Jennie

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