FEDERAL COURT OF AUSTRALIA Australian Nursing Federation v Flinders Medical Centre [2002] FCA 1534 WORKPLACE RELATIONS – imposition of penalty for breach of certified agreement – whether breach trivial or merely technical – factors relevant to the assessment of penalty Workplace Relations Act 1996 (Cth), ss 178, 356 South Australian Health Commission Act 1976 (SA) Victoria University of Technology v Australian Education Union (1999) 91 IR 96; [1999] FCA 1065 – referred to National Tertiary Education Industry Union v University of Wollongong [2002] FCA 31 - applied Gibbs v City of Altona (1992) 37 FCR 216 – discussed AUSTRALIAN NURSING FEDERATION v FLINDERS MEDICAL CENTRE S 221 of 2001 MANSFIELD J 13 DECEMBER 2002 ADELAIDE IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S.221 OF 2001 BETWEEN: AUSTRALIAN NURSING FEDERATION APPLICANT AND: FLINDERS MEDICAL CENTRE RESPONDENT JUDGE: MANSFIELD J DATE OF ORDER: 13 DECEMBER 2002 WHERE MADE: ADELAIDE THE COURT DECLARES THAT: 1. In August 2001 Flinders Medical Centre breached cl 8.6(iii)(a) of the Nurses' (South Australia Public Sector) Enterprise Agreement 2001 (the Certified Agreement). 2. On about 15 November 2001 Flinders Medical Centre breached cl 8.4 of the Certified Agreement. THE COURT ORDERS THAT: 1. A penalty of $1750 be imposed on Flinders Medical Centre in respect of its contravention of cl 8.6(iii)(a) of the Certified Agreement. 2. A penalty of $3500 be imposed on Flinders Medical Centre in respect of its contravention of cl 8.4 of the Certified Agreement. 3. The said penalties be paid to Australian Nursing Federation by 10 January 2003. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S.221 OF 2001 BETWEEN: AUSTRALIAN NURSING FEDERATION APPLICANT AND: FLINDERS MEDICAL CENTRE RESPONDENT JUDGE: MANSFIELD J DATE: 13 DECEMBER 2002 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 The applicant is a registered organisation of employees pursuant to the provisions of the Workplace Relations Act 1996 (Cth) (the Act). Its membership includes nurses employed by the respondent, a hospital incorporated pursuant to the provisions of the South Australian Health Commission Act 1976 (SA). 2 The terms and conditions of employment of nurses employed by the respondent are governed, at least in part, by the Nurses' (South Australian Public Sector) Enterprise Agreement 2001 (the Agreement). It was certified pursuant to s 170LT of the Act on 14 September 2001. It came into force, by agreement, on 1 April 2001 and remains in force until 31 March 2004. The applicant is a party to the Agreement. 3 The respondent for many years has made use of the computer software programme known as Excelcare, which produces a computer generated nursing care plan for patients, based in part upon data entered by nursing staff concerning the care requirements of patients from a "menu" of units of care. Excelcare then allocates time required for nursing care, and hence produces reports capable of being used for predicating the numbers of nursing staff and the skill mix of nursing staff required to meet patient care needs. The use of Excelcare for prescribing the required numbers of nursing staff from time to time and the skill mix of nursing staff was the subject of considerable negotiation between the applicant and the respondent in the course of negotiation leading to the Agreement. The respondent sought agreement to replace Excelcare with a different clinical information system to determine the numbers of nursing staff required from time to time and the skill mix of nursing staff. Clause 8.6(i) of the Agreement reflected the result of those negotiations. In short, it was agreed that the Department of Health Services of South Australia would take steps to ensure that a replacement system for the Excelcare system would be decided upon by 31 March 2002, after appropriate consultation, and would be implemented by August 2002. The evidence suggests that the implementation of the replacement system has been somewhat delayed. 4 The system for determination of numbers of nursing staff required from time to time, and the skill mix of nursing staff, until the implementation of the proposed new system in August 2002 was to be subject to certain arrangements, including as provided in cl 8.6(iii)(a) of the Agreement: "Hospitals to staff in accordance with Excelcare (where the system has been implemented) wherever possible; …" It is accepted that, in August 2001, the respondent did not comply with cl 8.6(iii)(a) of the Agreement in certain respects. In particular, in Ward 6A on 19 shifts in August 2001 it arranged for nursing staff levels which range between about 35% and 85% of the staffing levels prescribed by Excelcare, mainly at levels between 60% and 70% of those prescribed. The respondent accepts that it was possible to comply with the staffing levels prescribed by Excelcare on those occasions. It has not suggested that the Excelcare system had not been implemented in respect of Ward 6A prior to August 2001. 5 Consequently, as acknowledged now by the respondent, it contravened cl 8.6(iii)(a) of the Agreement in August 2001 in the manner described. The respondent does not oppose the making of a declaration to that effect. The applicant also seeks a penalty under s 178 of the Act in respect of those contraventions, and an order under s 356 of the Act that the penalty imposed be paid to the applicant. 6 The respondent has committed a further breach of the Agreement. Clause 8.4 of the Agreement provides: "It is an accepted principle that effective workplace relationships can only be achieved if appropriate consultation between the industrial parties occurs on a regular basis. In particular, where nursing staff are affected, the parties are to consult in relation to any planned initiatives and strategies that are designed to achieve the objectives of the Principal Undertakings. The following consultation principles are applicable: (i) Consultation involves the sharing of information and the exchange of views between employers and the persons or bodies that must be consulted and the genuine opportunity for them to contribute to any decision-making process. (ii) Employers consult in good faith. (iii) Workplace change that affects a significant number of nurses should not be implemented before appropriate consultation has occurred with employee representatives. (iv) Employee representatives are to be given the opportunity to adequately consult with the people they represent in the workplace, in relation to any proposed changes that may affect employees' working conditions or the services employees provide." That clause was not complied with in relation to the introduction of a policy entitled "Determining Shift Staffing Requirements" (the new policy) introduced on about 15 November 2001 for determining nursing staff requirements by adjusting or over-riding the outcomes generated by Excelcare based on the clinical judgment of the Clinical Nurse Consultant or the Shift Co-ordinator on a shift by shift basis. The respondent did not consult with the applicant or with nursing staff potentially affected by it before its adoption at least before 14 November 2001, and did not give employee representatives an adequate opportunity to consult with those nursing staff they represented in the workplace. The consequence of the new policy was a reduction in the number of nursing staff required from time to time. The applicant was first notified of the proposed new policy only on 14 November 2001, and then in writing on 15 November 2001. Moreover, despite the existence of an Industrial Relations Consultative Committee comprising elected representatives of the applicant and representatives of the respondent, which met on a monthly basis, the proposed new policy was not presented to that committee before its introduction. 7 The respondent does not oppose the making of a declaration that it contravened cl 8.4 of the Agreement by such conduct. Again, the applicant seeks a penalty under s 178 of the Act in respect of that contravention and an order under s 356 for the payment of a penalty to the applicant. 8 The maximum penalty that may be imposed under s 178(1) of the Act for the breach of a certified agreement is prescribed relevantly in s 178(4) of the Act in the following terms: "(4) The maximum penalty that may be imposed under subsection (1) for a breach of a term of an award, order or agreement is: (a) where the penalty is imposed by the Court; (i) … (iia) if the breach is of a term of a certified agreement and continues for more than one day – the total of: (A) $10,000 for a body corporate or $2,000 in other cases; and (B) $5,000 for a body corporate, or $1,000 in other cases, for each day for which the breach continues; and (iib) if the breach is of a term of a certified agreement but subparagraph (iia) does not apply - $10,000 for a body corporate or $2,000 in other cases; and …" Section 178(5A)(c) provides that a penalty for a breach of a term of a certified agreement may be sued for, and recovered by, inter alia, an organisation such as the applicant that is bound by the certified agreement. 9 Section 178(2) deals with multiple breaches. It is in the following terms: "Subject to subsection (3), where: (a) 2 or more breaches of a term of an award, order or agreement are committed by the same organisation or person; and (b) the breaches arose out of a course of conduct by the organisation or person; the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term." Section 178(3) does not apply to the present circumstances. 10 Counsel for the applicant described the respondent's breaches of cl 8.6(iii)(a) of the Agreement in August 2001 as constituting a course of conduct by the respondent which fell within s 178(2)(b). He invited the Court to treat those breaches as constituting a single breach of s 178(1) of the Act. Not surprisingly, counsel for the respondent agreed with the description of those contraventions. In the circumstances, I propose to proceed on the basis that the contraventions by the respondent of cl 8.6(iii)(a) of the Agreement in August 2001 constitute a single breach of the Agreement for the purposes of imposing penalty in respect of them. 11 There are, therefore, two separate contraventions of the Agreement in respect of which it is necessary to determine whether to impose a penalty under s 178 of the Act, namely the contravention of cl 8.6(iii)(a) in August 2001 and the contravention of cl 8.4 in November 2001. 12 There was no real issue between the applicant and the respondent as to the way in which the Court should approach the task of assessing a penalty under s 178 of the Act. 13 I accept that the imposition of a penalty for a contravention of a certified agreement is discretionary: Victoria University of Technology v Australian Education Union (1999) 91 IR 96; [1999] FCA 1065 at [32]; National Tertiary Education Industry Union v University of Wollongong [2002] FCA 31 at [41] (NTEIU). I also accept that where the breach is not trivial or merely technical, it will generally be appropriate to impose a penalty; NTEIU at [46]. 14 In assessing the appropriate penalty, as Branson J said in NTEIU at [42]-[43], it is not appropriate to lay down an exhaustive list of matters which are to be considered by the Court. Generally speaking, some matters are appropriately considered in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of that penalty. Those factors include: (a) the circumstances in which the relevant conduct took place, including whether the conduct was undertaken in deliberate defiance or disregard of the certified agreement; (b) whether the respondent has previously been found to have engaged in such conduct; (c) where more than one contravention of the certified agreement is alleged, whether the various contraventions are properly seen as distinct or whether they arise out of the one course of conduct; (d) the consequences of the conduct found to be in contravention of the certified agreement; (e) the need, in the circumstances, to protect or secure compliance with certified agreements; and (f) the need, in the circumstances for deterrence. In that case, her Honour followed the approach which had been taken by the Court in its consideration of the appropriate penalty under s 298U for contraventions of Part XA of the Act. 15 I accept the unchallenged evidence of the applicant that the applicant has an ongoing interest in securing safe staffing levels to meet the varying care needs of patients, as well as nursing staff. I also accept that Excelcare was a program which, in its view, secured that objective. It does not follow that the staffing levels actually implemented in Ward 6A in August 2001 which did not accord with the Excelcare prescriptions were unsafe for either patients or nursing staff in that ward. Nor does it follow, despite the contravention of cl 8.4 of the Agreement in relation to the introduction of the new policy announced on 15 November 2001, that the new policy results in nurse staffing levels which are unsafe either for patients or for nursing staff. In the absence of further evidence, I do not accept the contention of the applicant through counsel that the contraventions of the Agreement in fact had "potentially serious consequences" to either patient safety or to nursing staff safety. It would require more specific and detailed evidence before such a finding could be made. It does not emerge that the Excelcare program is the only program by which safe nursing staff levels could be determined, and indeed the fact that the Agreement contemplates that a new means of determining nursing staff levels would be introduced by August 2002 tends to suggest to the contrary. 16 On the other hand, I do not consider that either of the contraventions is merely trivial, or that either warrants no imposition of a penalty. 17 The respondent agreed to maintain staffing levels as predicated by Excelcare. It is a program which has been used for many years. The applicant and the respondent obviously accepted it as an appropriate program for setting staffing levels, at least from the time the Agreement came into force. The departures from its prescription in Ward 6A in August 2001 were in both numbers of staff and percentages quite substantial. The respondent has adduced no evidence about why it departed from the agreed arrangement, nor to rebut the inference which I draw from the number of occasions of the departure from the Excelcare prescriptions that the departure was a deliberate one. It appears to have chosen to ignore cl 8.6(iii)(a) of the Agreement. Were the circumstances otherwise, I would have expected some evidence to that effect to be adduced on its behalf. 18 I also consider that the contravention of cl 8.4 of the Agreement warrants a pecuniary penalty. The purpose of the agreed consultation is self-evident. Those to be consulted, including the applicant and nursing staff through their representatives, have a real interest in any change in the processes and principles by which nursing staff numbers are determined. The Agreement reflects that position. The respondent has provided no evidence to explain its failure to consult. Its letter of 15 November 2001 to the applicant that it expected consultation to occur "as part of the usual process at FMC", and that the new policy had been amended between 14 and 15 November 2001 to provide for consultation, shows at best an ignorance of cl 8.4 of the Agreement. The Chief Executive, through her relevant officers, should have been aware of the terms of the Agreement. 19 I note the contention of the respondent that the new policy was in fact the implementation of cl 8.6(iii)(a) of the Agreement because Excelcare had not, until the Agreement, been used as a tool for determining staffing numbers, as distinct from a clinical care management tool. Whether or not that be the case, the new policy was a significant one. It was one which engaged cl 8.4 of the Agreement. The respondent now acknowledges that. The respondent has adduced no evidence to suggest that the responsible officer thought consultation was unnecessary, as the new policy was merely a re-expression of the status quo as agreed. The new policy was a substantial document, and one which the respondent now acknowledges should have been the subject of prior consultation. 20 I further note the contentions that, in respect of the contraventions, there are significant mitigating circumstances and that the delay in introducing the new policy to give effect to the Agreement (as claimed) is readily explained. Apart from what was acknowledged by the applicant, there is no evidence in mitigation. Counsel for the respondent invited the Court to draw, from a comparison of Excelcare and the new policy, an inference that there was a genuine dispute about whether cl 8.6(iii)(a) of the Agreement permits or contemplates staffing levels determined on the basis of the "new projections" provided by Excelcare being adjusted to reflect the clinical judgment of senior staff. I think that difference of views, if it existed, demonstrates the need for consultation as provided by cl 8.4 of the Agreement. In the absence of evidence from the responsible officers of the respondent, I am not prepared to infer (as I was asked to do) either that the respondent failed to appreciate that its view as to the operation of cl 8.6(iii)(a) of the Agreement was contentious, or that it did not consult with the applicant about the new policy through oversight. 21 I accept, on the basis of the material presented, that the respondent has not previously contravened the Agreement, and that it has not previously contravened a certified agreement. I also accept that the respondent did endeavour generally to implement the Agreement. Counsel pointed out a number of matters then agreed upon which found expression in the "Special Network" publications of the respondent of August and October 2001. I accept also that the contravention of cl 8.6(iii)(a) of the Agreement occurred in one ward only of a large and complex teaching hospital. I further note that there is no suggestion that any patient was in fact disadvantaged by the staffing levels in Ward 6A in August 2001, or that any nursing staff were in fact disadvantaged by either contravention. 22 I am prepared to conclude that the contravention of cl 8.6(iii)(a) of the Agreement, in all the circumstances, attracts a penalty well below the maximum provided. Having regard to the factors to which I was referred by counsel and those discussed above, in my judgment the appropriate penalty is $1750. 23 I regard the contravention of cl 8.4 of the Agreement as more serious for the reasons I have given. Despite the respondent's steps taken to give effect to the Agreement in other respects, it failed to consult the applicant and representatives of the nursing staff affected when introducing the new policy. Its claim (unsupported by evidence) that it was simply giving effect to cl 8.6(iii)(a) of the Agreement, even if correct, does not provide any satisfactory explanation for the failure to consult when it was adopting what was a contentious view about the way in which cl 8.6(iii)(a) of the Agreement operated. In my judgment, the appropriate penalty is $3500. 24 In Gibbs v City of Altona (1992) 37 FCR 216 at 223, the Court said that the usual course when a penalty is imposed for a contravention of s 178 on the application of a registered organisation of employees is to order under s 356 of the Act that the whole of the penalties imposed be paid to the organisation. No submission was put by the respondent in opposition to such an order in this matter. I see no reason why the Court should not follow the usual course in the circumstances. I accordingly order that the penalties imposed totalling $5250 be paid to the applicant. I direct payment be made by 10 January 2003. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. Associate: Dated: 10 December 2002 Counsel for the Applicant: Mr AP Durkin Solicitor for the Applicant: Duncan Basheer Hannon Counsel for the Respondent: Mr T Stanley Solicitor for the Respondent: The Crown Solicitor for South Australia Date of Hearing: 9 September 2002 Date of Judgment: 13 December 2002