"7 JUDGMENT No. 522/211. INDUSTRIAL LAW - breach of award - administrative restructing in local authority - two positions made redundant - employees terminated - employees consulted - negotiated termination packages - employees requested non-involvement of union - failure to consult union - penalty range. Local Government Officers (Western Australia) Award 1975 Conciliation and Arbitration Act 1904 THE MUNICIPAL OFFICERS ASSOCIATION OF AUSTRALIA V CITY OF BAYSWATER WA 3 OF 1987 THE MUNICIPAL OFFICERS ASSOCIATION OF AUSTRALIA v CITY OF BAYSWATER WA_5 of 1987 FRENCH J. PERTH = 4NOV 1987 30 SEPTEMBER 1987 FEDERAL Cour AUSTRALIA. OF PRINCIPA| REG: 1STRY IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY INDUSTRIAL DIVISION www WA 3 of 1987 BETWEEN: THE MUNICIPAL OFFICERS ASSOCIATION OF AUSTRALIA Applicant and CITY OF BAYSWATER Respondent WA_5 of 1987 BETWEEN: THE MUNICIPAL OFFICERS ASSOCIATION OF AUSTRALIA Applicant and CITY OF BAYSWATER Respondent MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: 30 SEPTEMBER 1987 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The respondent is to pay a penalty of $50.00 in each case. 2. The penalty is to be paid to the Registrar of the Court for payment to the Consolidated Revenue Fund. 3. The penalty is to be paid within 10 days. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY INDUSTRIAL DIVISION WA 3 OF 1987 BETWEEN: THE MUNICIPAL OFFICERS ASSOCIATION OF AUSTRALIA Applicant and CITY OF BAYSWATER Respondent WA_5 of 1987 BETWEEN: THE MUNICIPAL OFFICERS ASSOCIATION OF AUSTRALIA Applicant and CITY OF BAYSWATER Respondent CORAM: FRENCH J. 30 SEPTEMBER 1987 EX TEMPORE REASONS FOR JUDGMENT In these two applications the Municipal Officers Association of Australia sues for the recovery of penalties from the City of Bayswater for the alleged breach by the City of the redundancy provisions of the Local Government Officers (Western Australia) Award 1975. The applications are brought under s.119 of the Conciliation and Arbitration Act 1904. Sub-s. (1) of that section provides:- 2. "(1) Where any organization or person bound by an order or award has committed a breach or non-observance of a term of the order or award, a penalty may be imposed by the Court or, except in the case of a breach or non-observance of a term of an order or award of the kind referred to in sub-section 33(1), by any District, County or Local Court or Court of summary jurisdiction that 1s constituted by a Judge, by a Police, Stipendiary or Special Magistrate or by an Industrial Magistrate appointed under any State Act who 1s also a Police, Stipendiary or Special Magistrate." Sub-section (1A) deals with multiple breaches in the following terms:- "Subject to sub-sections (1B) and (1C), where a Court finds that 2 or more breaches by the same organization or person of a term of an order or award have been committed and those breaches appear to that Court to have arisen out of a course of conduct by that organization or person, those breaches shall, for the purposes of this section, be treated as constituting a single breach of that term." Sub-section (1C) provides:- "(1C) Sub-section (1A) does not apply in relation to separate breaches of a term of an order or award that are to be deemed to have been committed by virtue of a provision included in an order or award in accordance with paragraph 41(1)(c)." The section provides for a maximum penalty in the present case of $1000 and provides also that such penalty may be sued for and recovered by, among others, any organization which 1s affected or whose members, or any of them, are affected by the breach. 3. The statement of claim filed by the applicant is in substantially the same terms in each case. It alleges that at all Material times the applicant was an organization within the meaning of the Conciliation and Arbitration Act 1904 and that 1s admitted. It is also common ground that the respondent was a municipality constituted by the Local Government Act and that at all material times the applicant and respondent were parties to and bound by the Local Government Officers (Western Australia) Award 1975, being an award of the Australian Conciliation and Arbitration Commission. In WA 3 of 1987, it is admitted that on or about 16 July 1986 the respondent made a decision that it no longer wished the job an employee, Anthony Charles Cooper, had been doing, to be done by anyone. That decision led to the termination of Cooper's employment. In WA 5 of 1987 it is alleged that on or about 16 July 1986 the respondent made a decision that it no longer wished the job an employee, Edwin Arthur Long, had been doing to be done by anyone and that that decision led to the termination of the employment of the said Long. Those allegations are also admitted, save that the date of the termination decision is said to have been on or about 1 July 1986. 4. It is in each case not disputed that the respondent failed to hold discussions with the applicant in relation to the termination decision and that this failure was in breach of clause 21B(1)(a) of the award. The applicant seeks imposition of a penalty in each case and although the applications refer to such further or other relief as the court may think fit, no further or other relief has been proposed. It also seeks an order for costs, but 1t was conceded that such an order is not appropriate in these circumstances. The factual history underlying the applications is to be discerned from the pleadings as summarised and from affidavits filed in court at the hearing on behalf of the respondent. The applicant tendered no evidence which would assist the court to determine the seriousness of the contraventions,. It appears from the affidavit of Mr D'Orazio, who is the respondent's Mayor, that in mid-1986 the respondent found itself in economic difficulties and consequently examined the structure of its work-force with a view to making changes to accommodate those difficulties. In August 1985, following an organizational management review conducted by J.P. Young and Associates, it re-classified its employee, Mr Long, from the position of Deputy City Engineer to Senior Engineering Assistant, Works. 5. In that new position Mr Long worked from an office at the council's work depot and was responsible for supervision and organization of the depot workshop and construction staff. Late in June 1986 the respondent's senior management group held a meeting to discuss its budget for the year 1986-87. After considering the roles of various' technical services supervisory staff it was concluded that separate roles for the Works Overseer and Senior Engineering Assistant, Works could not be justified as one person could handle the two jobs. The separation of the jobs had only occurred in August 1985. There were budgetary considerations which warranted the re-amalgamation of the two roles and their separation had, it was said, created operational problems from the start. Following that discussion Mr Bonker, the Director of Technical Services for the respondent, decided that Mr Long's position had to be made redundant. On 1 July he advised him of that decision. Long said that he was not surprised, he had been expecting it and agreed that his duties could be carried out by the works' overseer. Discussion then ensued on the date of departure and terms of settlement. These were negotiated in accordance with terms set out in a subsequent letter to him from the respondent. 6. The terms included provision for 13 weeks pay in lieu of notice and payment of approved leave calculated to 30 July 1986. Bonker says in his affidavit that he was aware that Long was a member of the Municipal Officers Association but that he had expressly requested Bonker not to advise the applicant of the redundancy. Bonker does not say that Long specified any reason for the request, but states a belief that he feared the involvement of the Association could prejudice his chances of future employment in local government. In view of those circumstances, he could see no reason why the request should not be honoured. The position of the employee to whom WA 3 of 1987 relates, Anthony Cooper, was handled by the mayor. In July 1986 Cooper held the position of Senior Administration Manager. D'Orazio discussed with him_~ the possibility that his position would be made redundant, and explained to him in detail that the Council had been forced to that decision because of the deteriorating economic climate and a re-examination of its administrative structure. Cooper accepted the Council's position and said that he would advise D'Orazio of a package that would be acceptable to him. —s I erercene asm ne anti as at ima 7. The formal decision to make his position redundant was taken by the Council on 17 July and Cooper was advised on that day by D'Orazio and by the deputy mayor. A redundancy package was negotiated which amounted to full pay for a further 44 weeks comprising the statutory four weeks notice, eight weeks severance pay and a gratuity component of 32 weeks pay. Cooper advised D'Orazio that he was entirely satisfied with the package. D'Orazio was unaware of any obligation to advise the applicant of the redundancy. Cooper did not say whether he was a member but told D'Orazio on 17 July that he did not want the applicant involved. Subsequently, the town clerk wrote to the applicant's secretary advising him of the fact that the Council had been forced to examine its operations and to abolish two positions. In a response on 11 August, Mr Henderson, the State Secretary, wrote back to the Council saying that it had ignored its obligations under the Local Government Officers (Western Australia) Award 1975 by not notifying the respondent before the redundancies had taken place. In that letter the respondent did say it was prepared to enter into discussions with the City of Bayswater, failing which it would prosecute for a breach of the award. 8. The precise terms of this invitation were stated in the last two paragraphs of the letter:- "The M.O.A. once again, 1S prepared to enter into discussion and be given an opportunity to try and develop a better level of communication, consultation and generally improve industrial relations between Bayswater and ourselves. Our offer is in good faith, however, 1f we cannot resolve to come to a mutual agreement we have an obligation to our members at Bayswater to proceed with prosecuting Council for breach of the award over the latest events of redundancy. I look forward to Council's favourable reply and trust it will be the start of bringing about stability for staff at Bayswater." By letter dated 2 September the Town Clerk responded to the State Secretary confirming what he had indicated in a telephone conversation with another of the applicant's officers, Margaret Dwyer, that the Council would readily enter into discussions with the applicant if the necessity for such discussions existed. He said that he believed that a carefully prepared agenda was required to make the discussions fruitful and would be happy to liaise in the preparation of that agenda. For reasons that do not emerge from any of the materials before me, those discussions did not eventuate, and the applicant instituted these proceedings on 2 June 1987. The relevant provision of the award flows from a decision of the Australian Conciliation and Arbitration Commission 9. on 2 August 1984. It 1s known generally as the Termination Change and Redundancy case. The Commission, presided over by the then president, Sir John Moore, gave some of the background to its decision to propose the inclusion in relevant awards of redundancy clauses' and consultation requirements. At pages 62 and 63 of the report of the judgment in (1984) 8 IR 34, 1t states, referring to the submissions put by the Australian Council of Trade Unions:- "In supporting its claim that consultation procedures ought to be awarded in cases of redundancy, the ACTU submitted that consultation provides an opportunity for unions to present a point of view and to make proposals about redundancies, for instance, how they can _ be handled and how dismissals may be avoided or minimized. Consultation provides an opportunity for employees and unions to have an input into the decision making process so as to ensure that the interests of employees are taken into account when redundancy decisions are being made. The ACTU contended that where a number of unions are involved then all should be given the opportunity to join in the consultation although, 1t did in fact concede that its proposed award provision, with respect to consultative practices, should apply only to employers employing ten or more employees. It relied on the allegation in the CITCA Report that the manner of handling unavoidable retrenchment will determine the intensity of employee resistance to change." At page 63 of the report the Commission said:- "As we said earlier, we are aware that procedures for notification, consultation and provision of information have generally been settled by negotiation and agreement, and we are of the view that, generally speaking, they are not matters which lend themselves to effective legislation or award prescription. Nevertheless, we believe that it is of fundamental importance to involve employees and their 10. representatives in the problems of redundancy as soon as a firm decision has been taken that retrenchments may be necessary, and we are prepared to make an award provision to that effect. We have taken the expression "as soon as a firm decision has been taken" from the NLAC Guidelines and we are not prepared to go any further, particularly having regard to the fact that our decision will apply to redundancy, whatever may be the cause. However, we would indicate that we are not opposed to the concept of a timetable for discussions and the provision of suitable material. Indeed, we feel that sufficient time must be allowed and sufficient material provided 1f discussions are to be satisfactory." The relevant amendment to the Local Government Officers (Western Australia) Award 1975, in which the above principles were implemented, was determined by a decision of the Commission on 24 January 1986. The amendment came into force from 24 January 1986. It provides in clause 21A under the heading "Introduction of Change", for consultation with employees and their unions relating to introduction of any major changes in production, programme, organization, structure or technology that are likely to have significant effects on employees. The clause breached by the respondent is 21B headed "Redundancy". That clause provides under the heading "Discussions before Terminations", in sub-clause (1):- "(1)(a) Where an employer has made a definite decision that the employer no longer wishes the job the employee has been doing done by anyone and this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of ll. employment, the employer shall hold discussions with the employees directly affected and with their union or unions. (b) The discussions shall take place as soon as is practicable after the employer has made a definite decision which will invoke the provisions of paragraph (a) hereof and shall cover, inter alia, any reasons for the proposed terminations, measures to avoid or minimise the terminations and measures to mitigate any adverse effects of any terminations on the employees concerned. (c) For the purposes of the discussion the employer shall, as soon as practicable, provide in writing to the employees concerned and their Association(s), all relevant information about the proposed terminations including the reasons for the proposed terminations, the number and categories of employees likely to be affected, and the number of workers normally employed and the period over which the terminations are likely to be carried out. Provided that any employer shall not be required to disclose confidential information the disclosure of which would be inimical to the employer's interests." The respondent is said to have failed to have complied with sub-clause (1)(a) of clause 21B in that it has failed to hold discussions with the union or unions of the employees directly affected by the proposed redundancy. It is plain that the respondent held discussions with the employees directly affected although those discussions followed the decision to implement redundancy. The terms of the clause contemplate that such discussions will not be held until after an employer has made a definite decision that the employer no longer wishes the job the employee has been doing to be done by anyone. To that extent it 12. might be said the decision is a fait accompli before discussions are commenced. However, the rationale for consultation 1s apparent from paragraph (b) which contemplates that the parties will traverse reasons for the terminations, measures to avoid or Minimise terminations and measures to mitigate adverse effects of any terminations. It 1S plain that the respondent did have a legal obligation to consult with the union prior to the termination of the two employees concerned. This is however something of a limiting case. The positions affected were two in number. There were discussions held with the employees, satisfactory redundancy packages were negotiated and the employees in each case expressed the request, as 1t would appear, that the union not be consulted. That request does not extinguish the legal obligation that arises under the terms of the award. It does however, cast the failure to consult in a somewhat different light from that which would otherwise apply. The penalty provision in sub-s.119(1D) sets a maximum of $1,000 in respect of any breach of an award. That penalty covers a very wide range of possible situations of which failure to consult in the circumstances of impending redundancy is but one. It therefore gives little 13. guidance as to the way 1n which this particular class of breach is to be regarded. And within the class of breach that arises out of non-compliance with clause 21B(1)(a), there 1s again a wide range of possible cases. A failure to consult prior to widespread terminations following the implementation of a redundancy programme associated with a cavalier disregard for the effect of such a redundancy programme upon the lives and fortunes of the employees concerned, would be a much more serious matter than the kind of breach with which we are concerned in this case and would no doubt attract a significant penalty within the range provided for under s.119(1D). It has been suggested, that there is a discretion in the court to impose no penalty and reference in that regard is made to sub~s. 119(1) of the Act and the use of the word "may" in relation to the power of the court to impose a penalty. In my opinion, the circumstances in which a court would decline to impose any penalty would be exceptional assuming that such a discretion exists. It is not necessary for me for the purposes of this decision to determine that such a discretion exists, because I am not of the view that this is an appropriate occasion for its exercise. It has been suggested that I regard the two breaches which have occurred in this case, as breaches which have arisen ee Seen 14. out of a course of conduct by the municipality and therefore to be treated as constituting a single breach of the term, The breaches were separated in time and whilst they arose out of similar circumstances, that 1s to say, the economic constraints and structural review undertaken by the Council, I think 1t would be a little artificial to treat them as one breach. The fact that they do arise out of one set of A circumstances, namely the economic constraints and structural review undertaken by the Council, can be reflected in the penalties imposed in respect of each of them. The breaches are, I think, marginal in character. They are near the bottom end of the range of possible seriousness. The applicant has not put forward any evidence at all to suggest a basis upon which they ought to be regarded as serious. In fact, it was perhaps a little surprising that the only evidence, apart from the bare evidence of breach extracted from the admissions on the pleadings, was tendered by the respondent in this case. In my opinion, having regard to the fact that the redundancy package negotiated with the employees was one that appears to be generous and with which they were happy; that they were employees who occupied comparatively senior positions and would have been, therefore, in a position to better appreciate the range of possibilities which they could negotiate; that both of ord ot A ete RE 3 ali EE a x. 15. them requested that the union not be consulted or involved; and the very limited scope of these particular terminations, affecting only two people, the appropriate penalty in this case would be a fine of $50.00 in respect of each breach. The question then arises as to the application of these penalties. Section 120 of the Conciliation and Arbitration Act provides:- "Where any Court imposes a penalty in pursuance of section 119, or in pursuance of section 122, 1t may order that the penalty, or any part thereof, be paid into the Consolidated Revenue Fund, or to such organization or person as 1s specified in the order." I have not been persuaded that there 1s any reason that this penalty ought to be paid to the applicants. The applicants' interests in respect of these particular redundancies have not been seriously affected. There is no suggestion that' the employees concerned have been in any way undercompensated for the redundancies to which they have been subjected. In the circumstances, I will direct that the penalties imposed be paid to the Consolidated Revenue Fund. 16. I certify the preceding fifteen (15) pages are a true copy of the Reasons for Judgment of his Honour Justice French. Associate: Deteod. Luts Date: 30.49.37 Counsel for the Applicant: Mr G. Droppert Solicitors for the Applicant: D. H. Schapper Counsel for the Respondent: Mr H. Dickson Solicitors for the Respondent: Messrs. Parker & Parker Date of Hearing: 30 September 1987 Date of Judgment: 30 September 1987