Industrial Relations Commission New South Wales Medium Neutral Citation: New South Wales Local Government, Clerical, Administrative, Energy, Airlines and Utilities Union v Council of the City of Sydney [2024] NSWIRComm 1006 Hearing dates: Determined on the papers. Date of orders: 21 February 2024 Decision date: 21 February 2024 Jurisdiction: Industrial Relations Commission Before: Commissioner Muir Decision: The Commission recommends that: (1) for any public holidays prior to 1 July 2022, in the relevant circumstances the respondent pays the allowances in accordance with previous arrangements; and (2) that backpay should be calculated accordingly. Catchwords: EMPLOYMENT AND INDUSTRIAL LAW — Awards — Interpretation EMPLOYMENT AND INDUSTRIAL LAW — Industrial disputes — Relief EMPLOYMENT AND INDUSTRIAL LAW — Industrial Relations Commission — Procedure and powers — Arbitration EMPLOYMENT AND INDUSTRIAL LAW — Contract — Terms — Implied terms Legislation Cited: Industrial Relations Act 1996 City of Sydney Wages/Salary Award 2017 Cases Cited: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance Australia Ltd (1986) 160 CLR 226 Davidson v Commissioner of Police (No 3) [2022] NSWIRComm 1102 Local Government Engineers' Association of New South Wales v MidCoast Council (No 2) [2022] NSWIRComm 1069 Category: Principal judgment Parties: New South Wales Local Government, Clerical, Administrative, Energy, Airlines and Utilities Union (Notifier) Council of the City of Sydney (Respondent) Representation: Nil File Number(s): 2023/93765 Publication restriction: Nil decision 1. The notifier brought a dispute to the Commission as to whether three allowances should be paid to particular categories of employees when the employees work on a public holiday, falling on was otherwise their ordinary day of work. 2. It is not in dispute that, for many years, and perhaps even decades, the allowances have been paid in such circumstances, and that in March 2022 the respondent ceased to pay the allowances. 3. When the dispute first came before the Commission, it was asserted that the City of Sydney Wages/Salary Award 2017 (the Award) expressly entitled the employees to the allowances when they worked on a public holiday which was otherwise their ordinary day of work. The notifier also asserted that "the long history of this allowance being paid" required the continued payment of the allowances in such circumstances (the relevant circumstances). 4. It was the position of the respondent that the Award did not require payment of the allowances in the relevant circumstances, and that the prior payment of the allowances in the relevant circumstances was an error. The allowances in dispute 1. The three allowances are a travel allowance, a fare allowance and a meal allowance. Respectively they are paid for time taken to travel to and from work, based on the cost of public transport travel for that journey, and to cover the cost of one meal for every four hours worked. The notifier's Summary of Case, filed on 28 August 2023, summarised the circumstances for payment of each allowance as: "3. The Travel Allowance was paid to team leaders in [Parks and Gardens Team] PGT and [Cleansing Team] CT to cover their travel expenses to work. It was calculated based on an estimation of the time it would take to travel to and from work based on your distance from the workplace. The maximum that could be claimed was 3 hours. The travel time was then paid at time and a half. 4. The Fare Allowance was paid to all employees in PGT. It was paid to all employees in CT except for Team Leaders. This allowance was based on the cost of public transport travel fares from home to work and back with a maximum fare of $14. 5. The Meal Allowance was paid to all employees in the PGT and CT. Employees would be paid one meal allowance of about $17 after every 4 hours worked." [Footnotes omitted.] Evidence 1. The notifier filed witness statements from four employees in support of its claim that the three allowances have been paid in the relevant circumstances. 2. The respondent fairly described the substance of the notifier's evidence as being: "5. The Notifier's evidence and 'Short Summary of Case' was filed on 28 August 2023. The Notifier's evidence included affidavits from: a. Gavin Heffernan, a Cleansing Team Member employed by the Respondent; b. Jeffrey Duncum, a Parks Operations Coordinator employed by the Respondent; c. Benjamin Hansen, a Supervisor (Parks East) employed by the Respondent; and d. Peter Cole, an Organiser employed by the Notifier. 6. The first claim made by the Notifier's witnesses is that they all started receiving the 'allowances' upon, or four years following in the case of Mr Heffernan, the commencement of their employment with the Respondent. 7. According to their respective statements, Gavin Heffernan and Benjamin Hansen have been employed by the Respondent for 24 and 13 years respectively. Jeffrey Duncum and Peter Cole state that they were first employed by the Respondent in 1987 and 'about 2013' respectively. 8. Regarding the commencement of their employment, Gavin Heffernan, Benjamin Hansen and Peter Cole all state: 'I became aware of these allowances at this time.' 9. The second claim made by the Notifiers witnesses regards their views on who has received the 'allowances'. Peter Cole and Benjamin Hansen state that all Parks and Gardens staff received the 'allowances' on all public holiday shifts, whilst Gavin Heffernan states that only Team Leaders within Parks and Gardens received payments for travelling time (but not expenses) and meal allowances on all public holiday shifts. It is likely that Mr Heffernan intended to refer to Team Leaders in Cleansing and Waste, where he is employed and where only Team Leaders receive payments for travelling time. 10. The third claim made by the Notifier's witnesses is that, on or about March/Easter 2022, the 'allowances' were not paid for public holidays that fell on a weekday, and that the Respondent communicated that the 'allowances' would not be paid on future public holidays falling on a weekday. In respect of this event, Jeffrey Duncum and Benjamin Hansen state that this was the first time that the 'allowances' were not paid for a public holiday that fell on a weekday. 11. The final claim is made by Mr Cole individually, who states that he attended a meeting with the Council in May 2023 where the USU stated its position that the 'allowances' have become entitlements by virtue of custom and practice. Mr Cole states that the Council did not deny the historical payment of the 'allowances' but stated that they were a mistake." 1. While there was some difference at the margin as to the substance of the notifier's witnesses' evidence, the Commission does not believe there is any meaningful difference between the parties as to the way the three allowances have been historically paid by the respondent. 2. The respondent filed evidence from two management employees, being: 1. George Bletsas, the respondent's Time and Attendance Coordinator; and 2. Michael Ridge, the respondent's Lead People and Culture Business Partner. 1. Mr Bletsas gave some detail of how the respondent's payroll and time and attendance management systems operated; described how some aspects of allowances were automated, but that historically certain allowances could be manually overwritten by line managers; and gave a history of his attempts to automate attendance processes in order to reduce the management time involved. 2. Mr Bletsas set out how he had discovered that the three allowances were being manually added to employees' time and attendance records, overriding the system's automation which did not add these allowances to the relevant employees. When he came to the view that the Award did not entitle the employees to the three allowances, he arranged for payroll to remove those allowances for a recent public holiday, and reconfigured the payroll system such that a manual override by line management was no longer possible in the relevant circumstances. 3. The majority of Mr Ridge's witness statement was not evidence as such, but rather set out his reasons for believing that the Award did not entitle the employees to the three allowances as asserted by the notifier. 4. Mr Ridge supported Mr Bletsas' statement that the payments were made under a mistaken belief by the respondent, compounded by line management manually overriding automated systems. 5. In his statement, Mr Ridge's statement quoted paragraphs 10 and 11 of the notifier's Summary of Case, which are: "10. The USU believes it is incredibly unlikely that the Allowances were a mistake or that they simply appeared out of thin air. It would seem likely that the Allowances came about for one of the usual reasons allowances are created. For example, they were promised as an incentive or were meant to offset some unfavourable condition that was introduced. 11. We do not accept that these Allowances were paid for 35 years, and quite possibly even longer, without payroll or anyone else at the City becoming aware of the apparent error and querying the payments." 1. Mr Ridge responded to these paragraphs by saying "… the [respondent] can confirm that the payments for travelling time, travel fares and meal allowances are long-standing provisions of the City of Sydney awards and are not a mistake nor have they appeared out of thin air." The Commission understood his evidence to be that the general existence of the allowances is not a mistake. 2. Mr Ridge then set out at some length the purpose for which he said the allowances existed, although he did not refer to any document, record, or recollection of events in support of his assertions. His evidence was as summarised by the Respondent's Outline of Submissions, set out below at [37]. Remedies sought by the parties Notifier 1. In its Summary of Case, the notifier set out that: "12. … regardless of the reason is behind the payment of these Allowances, we believe that these allowances have now become ingrained condition of employment. This is because the payment has been paid for such a long period (35 years plus). The employees in the PGT and CT have now come to expect this to form part of their pay and would have come to rely on the additional income these Allowances generate. Conclusion 13. We put to the Commission that as a result the City's over 35 years payment history of these Allowances, these Allowances are now an expected part of the PGT and CT pay and have become a condition of employment. Remedy 14. That the Allowances be re-instated; and 15. That the City backpay the Allowances, on all Public Holidays that fall on a weekday, to all employees in both the PGT and CT who had been receiving the allowances prior to the City removing them in March 2022." 1. Earlier, in its Notification of an Industrial Dispute the notifier set out, under the heading "Remedies", the following: "11. The USU seeks the following remedies: a. That The City recommence payment of both the travel and meal allowance for all outdoor employees who were receiving these allowances up until 10 March 2022. b. That the City backpay allowances to any employees who were disadvantaged by the City's decision to remove the allowances on 10 March 2022." Respondent 1. In its Outline of Submissions, the respondent set out the following: "16. The question for determination by the Commission is whether employees have a right to receive payments for travelling time, travel expenses and/or meal allowances for all work performed on public holidays that fall on a weekday. 17. The Respondent asserts that the answer to this question is that employees do not have a right to receive payments for travelling time, travel expenses and/or meal allowances for all work performed on public holidays that fall on a weekday." 1. The respondent also addressed at length a series of cases, and in particular Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance Australia Ltd (1986) 160 CLR 226, as to the common law principles for the implication of the term of a contract, including in a contract of employment, based on custom and usage. Jurisdiction of the Commission 1. Neither party addressed the Commission's jurisdiction to answer the questions posed by the notifier, nor the Commission's power to determine the question on the basis put by the respondent. 2. The Form 4 by which the dispute was originally notified to the Commission expressly asserts that the Award requires payment of the allowances in the relevant circumstances. The notifier's Summary of Case makes no such assertion and relies only on the historical payment of the allowances as the basis upon which future payment should be made. 3. Section 136 of the Industrial Relations Act 1996 (IR Act) sets out the powers of the Commission in arbitration proceedings. 136 Arbitration of dispute (1) The Commission may, in arbitration proceedings, do any one or more of the following— (a) make a recommendation or give a direction to the parties to the industrial dispute, (b) make or vary an award under Part 1 of Chapter 2, (c) make a dispute order under Part 2, (d) make any other kind of order it is authorised to make (including an order made on an interim basis). (2) Any such action may be taken by the Commission on its own initiative or on application by any person authorised to notify the Commission of the industrial dispute. 1. It is clear that the notifier is not asking the Commission to make or vary an award or to make a dispute order. For completeness it is also clear that the respondent similarly makes no such request. It is obvious to the Commission that there is no proper basis for the Commission to do either of those things. 2. Although not express, it is apparent to the Commission that the notifier seeks a recommendation that the respondent resumes payment of the allowances in the relevant circumstances and pays the relevant employees for any public holidays worked by the employees since the respondent ceased paying the allowances. 3. For the reasons set out by the Full Bench in Local Government Engineers' Association of New South Wales v MidCoast Council (No 2) [2022] NSWIRComm 1069, the Commission determines it would not have the power pursuant to 136(1)(a) of the IR Act to make a direction to the effect sought by the notifier. Such a direction would constitute a substantive action extending beyond power pursuant to paragraph (a). It would be in the nature of an injunction. 4. Without expressly setting it out as such, clearly the respondent is seeking to have the Commission exercise the power of interpretation set out in section 175 of the IR Act, pursuant to s 136(1)(d) of the IR Act. 5. It is not controversial that the Commission would have the power in the current circumstances to make a recommendation, nor that that power is discretionary. The Commission should consider such matters as the practicality of its recommendation, whether the recommendation is likely to assist in settlement of the dispute and may in appropriate cases give consideration to whether the parties are likely to accept the recommendation. It is clear, however, that the power to make that recommendation is discretionary at large and such considerations may not be of assistance in any particular case. 6. The Commission concludes that making a recommendation about the payment of the allowances will assist in resolving the industrial dispute before the Commission, as well as significantly reducing the prospect of further disputation concerning the allowances. Not least, this is because the parties brought the dispute to the Commission and asked the Commission to determine the issues between them. 7. Consistent with the reasoning of the Full Bench in Davidson v Commissioner of Police (No 3) [2022] NSWIRComm 1102, the power of the Commission pursuant to s 175 of the IR Act is not a power that may be exercised for its own end. That is, the power may only be employed to support the exercise of a function of the Commission, other than s 175 itself. 8. Further, the power of the Commission pursuant to s 175 of the IR Act is expressed to be discretionary and the Commission should be persuaded that it is appropriate for the Commission to exercise that power in a particular case. 9. In determining that it is appropriate to exercise the powers of the Commission pursuant to s 175 of the IR Act, the Commission has had regard in particular to three matters: 1. firstly, that the notifier originally asserted that the respondent was bound to pay the allowances because the Award required the payment. Whilst by omission this ground was not pressed at arbitration, it was not expressly disavowed by the notifier; 2. secondly, and as a consequence of the first matter, the respondent necessarily relied on its view that the Award did not require payment of the allowances in the relevant circumstances, and needed to set out why this was the case; and 3. thirdly, and partly as a consequence of the case put by the notifier, it is only possible to fairly understand the respondent's case if the Commission comes to a concluded view as to the obligations created by the Award in respect of the three allowances. The parties' substantive cases Notifier 1. The notifier's case was: "8. The City had been paying these Allowances on all Public Holidays since as early as 1987. This is the earliest record we have from our member Jeffery Duncum. However, it is possible that these Allowances had been paid even earlier then this date as these Allowances already existed when Mr Duncum commenced employment. 9. The City have asserted that the Allowances were paid in error and that this has simply been an oversight. They have offered no other explanation as to why the Allowances were removed. 10. The USU believes it is incredibly unlikely that the Allowances were a mistake or that they simply appeared out of thin air. It would seem likely that the Allowances came about for one of the usual reasons allowances are created. For example, they were promised as an incentive or were meant to offset some unfavourable condition that was introduced. 11. We do not accept that these Allowances were paid for 35 years, and quite possibly even longer, without payroll or anyone else at the City becoming aware of the apparent error and querying the payments. 12. However, regardless of the reason is behind the payment of these Allowances, we believe that these allowances have now become ingrained condition of employment. This is because the payment has been paid for such a long period (35 years plus). The employees in the PGT and CT have now come to expect this to form part of their pay and would have come to rely on the additional income these Allowances generate." [Footnotes omitted] Respondent 1. The respondent's case as to why the allowances are not required to be paid was that that: 1. the clear terms of the Award did not require their payment in the relevant circumstances; 2. there is a clear rationale as to why at least some of the allowances are not payable in the relevant circumstances; 3. any past payment of the allowances was a result of a mistake, compounded by incorrect intervention by line management to manually override automatic payroll structures; and 4. the case put by the notifier provides no basis on which payment of the allowances fall within the common law principles relating to implied incorporation of customary terms. The Award provisions 1. In light of what has been set out above at [31] as to the basis on which the respondent's case was put, and more importantly because any conclusion by the Commission that the Award did require the payment of the allowances the relevant circumstances would weigh heavily in favour of a recommendation that the allowances be paid, the Commission turns first to interpretation of the Award provisions. 2. Those provisions set out that: 29. Travelling Time and Expenses 29.1 The provisions of this clause do not apply to: 29.1.1 employees employed prior to 9 June 2018 in the previous classifications, grades and levels of Refuse Collection and Disposal Group which is now known as the Cleansing and Waste Unit; 29.1.2 employees whose substantive role is outside the Cleansing and Waste Unit in respect of any period when they perform work for the Cleansing and Waste Unit in the Cleansing and Waste classifications; or 29.1.3 any employee who commenced employment on or after 9 June 2018. 29.2 For all other employees, the time occupied in travelling to and from work in accordance with clauses 29.6, 29.7, 29.8 and 29.9 will be paid at the following rates: 29.2.1 Monday to Friday inclusive, except Public Holidays - Ordinary Rate of Pay. 29.2.2 Saturdays, Sundays and Public Holidays - time and a half Ordinary Rate of Pay. 29.3 The City is not liable for travelling time in excess of three (3) hours at the appropriate rate. 29.4 Travelling expenses reasonably and necessarily incurred in accordance with clause 29.2 will be reimbursed, based on expenses which are or would be incurred in travelling by normal means of public transport. The City is not liable for travelling expenses in excess of $16.80 on any day. 29.5 Travelling expense rates will be adjusted (up to the nearest ten cents) in line with variations to metropolitan public transport ticket prices. 29.6 An employee required, for the purposes of ordinary working hours, to travel between their home and place of employment a fixed number of times in each pay period, and who is required to travel in excess of such number of times, will be paid for the time occupied in such excess travel. 29.7 An employee required to work at a location outside the boundaries of the City will be paid the additional time spent travelling between home and the location which is in excess of their normal home to work travelling between the Town Hall, Sydney and home (to a maximum of 3 hours). The employee will also be entitled to travelling expenses calculated on the same basis. This payment will be provided for six (6) months only. 29.8 An employee required to work at a location which is not their normal place of work within the boundaries of the City will be paid for the time spent travelling between the location and home where it is more than 20 minutes otherwise spent travelling between the Town Hall, Sydney and home. This payment will be provided for six (6) months only. 29.9 An employee who is required to commence and/or cease duty at a location other than the workshop or depot they are normally attached to will be reimbursed for any additional expenses incurred in travelling between home and such location. 1. The notifier made no submissions as to the interpretation of the Award provisions. 2. The submissions of the respondent were that: "Clause 29: 'Traveling time and expenses' … 28. An entitlement to payments for travelling time and expenses may arise on any given public holiday pursuant to the terms of subclauses 29.7-9. Subclauses 29.7-9 can not be interpreted as extending such an entitlement on all public holidays. 29. An employee does not undertake any additional weekly travel between work and home when they work ordinary hours on a public holiday. Therefore, an employee is not entitled to be paid for travelling time or expenses under subclause 29.6 where they work ordinary hours on a public holiday that falls on a weekday. 30. The existence of a public holiday within any given week does not, of itself, have any effect on the entitlement of an employee to be paid for travelling time and expenses pursuant to clause 29. 31. For public holidays that fall on a weekday, an employee is only entitled to receive payments for travelling time and travel expenses where: a. Where the day is a non-working day for the employee, and the employee works overtime hours on that day; b. Where the employee has ordinary hours scheduled for the day but is called to work early and sent home prior to commencing their ordinary hours or where the employee has returned home after finishing their ordinary hours and is called back to work; c. Where the employee works a split shift of ordinary hours that causes them to exceed their fixed number of weekly trips to work; or d. Pursuant to clauses 29.7-9, where the employee starts or finishes work at a location other than their normal place of work. 32. Except in the circumstances detailed in subclauses 29.6-9, the Award does not establish any other right for employees to be paid for travelling time and travel expenses. Subclauses 29.6-9 do not establish any entitlement for employees to be paid for travelling time, travel expenses and meal allowances on all public holidays that fall on a weekday. … Clause 27: "Meal allowance" 33. Meal allowances are provided for by clause 27 of the Award. … 36. An employee who works only ordinary time on a public holiday that falls on a weekday is not entitled to be paid a meal allowances. 37. Employees do not have a right to be paid meal allowances for all work performed on public holidays that fall on a weekday. An employee may become entitled to meal allowances on any given public holiday, but only after working the requisite period of overtime." [Emphasis in original] Consideration 1. The Commission respectfully agrees with and adopts the logic of the respondent's submissions. It is clear to the Commission that, on the face of the Award, there is no obligation on the respondent to pay the allowances in the relevant circumstances. 2. Further, paragraph 29 of the respondent's submission as to the rationale for not paying the allowances is also sound. This clearly supports the logic of a plain reading of the words of the Award provisions. 3. The Commission therefore concludes that the Award does not require payment of the allowances in the relevant circumstances. 4. The notifier's case that the allowances have been paid for very many years is accepted by the Commission. The respondent did not seriously challenge that this was the case. This is clearly the notifier's strongest argument. 5. Beyond that, however, the notifier's case is at best slight, and could more fairly be described as speculative. The notifier's submission is rational to the extent that it submits it is unlikely the allowances "simply appeared out of thin air", and that it proposes a rationale for their existence, being payment as an incentive, or as an offset to another unfavourable condition. 6. The difficulty for the notifier is that it has not identified any circumstances leading to either the payments as an incentive or as an offset, let alone produced any evidence that such circumstances existed. 7. The respondent has identified the circumstances in which various line managers have manually added allowances contrary to automated payroll system calculation. Albeit there has been no attempt to identify how this originally came to be the practice, it has countered the notifier's argument that the allowances "would not simply appear out of thin air". The respondent has explained how the allowances were paid when not required. 8. Responding to the notifier's submission that employees have come to expect the payment, and to an extent rely on it, the respondent has submitted that there was no evidence advanced by the notifier that any employees were aware of payment of the allowances in the relevant circumstances prior to being employed, much less that they were promised such payments as a basis for accepting employment with the respondent. 9. In the absence of the dispute notification including any claim pursuant to s 380 of the Act, a detailed consideration of the respondent's submissions as to the common law principles applying to implication of the term into a contract is beyond the scope of the matter before the Commission. No contract is before the Commission for interpretation. 10. The Commission observes that the submissions of the respondent appear orthodox, and that the notifier did not exercise its opportunity to respond to or make any submissions contrary to the submissions of the respondent. Had the Commission found it necessary to address the respondent's submissions it is likely that they would have been accepted. 11. Given the foregoing it is inevitable that the Commission would decline to make a recommendation that the allowances be paid in the relevant circumstances in the future. It is also inevitable that the Commission would accordingly decline to make a recommendation for payment of the allowances on public holidays which have fallen since the respondent ceased to pay the allowances, subject to one matter not addressed by either party. 12. None of the foregoing addresses the fact, agreed implicitly but unspoken, that the respondent unilaterally ceased payment of the allowances without notice to the employees or the notifier. 13. Given the lengthy period over which the allowances were paid it was reasonable that the employees expected it would continue to be paid in the relevant circumstances, subject to any proper notice from the respondent that it did not intend to continue a payment which it was not otherwise legally obliged to make. 14. At common law any change in such circumstances should follow a notice provision in the employment contract, or in the absence of any express provision be the subject of reasonable notice to the other party. What would constitute "reasonable" notice is very much a value judgement in light of the particular circumstances. 15. In conformity with the observations of his Honour Walton J in Secretary of the Ministry of Health v Australian Paramedics Association (NSW) [2022] NSWSC 1431, the Commission does not propose to provide a lengthy rationale for the recommendation the Commission intends to make. Suffice to say that a change after such a lengthy period would in the Commission's view likely have been seen as a breach of contract had enforcement been sought in a court. Outcome 1. The Commission recommends that any public holidays to 30 June 2022 should be paid in accordance with the prior practices of the respondent, and that backpay should be calculated by the respondent to all affected employees for any public holidays falling up to that date and for which the allowances were not paid in accordance with previous arrangements. Orders 1. The Commission recommends that: 1. for any public holidays prior to 1 July 2022, in the relevant circumstances the respondent pays the allowances in accordance with previous arrangements; and 2. that backpay should be calculated accordingly. C Muir Commissioner ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 February 2024