Industrial Relations Commission of New South Wales CITATION : Notification under s130 by Australian Services Union of NSW of a dispute with Sydney Water re the direct appointment of an employee without their consent [2000] NSWIRComm 64 NOTIFIER: PARTIES : Australian Services Union of NSW RESPONDENT: Sydney Water Corporation FILE NUMBER: IRC155 of 2000 CORAM: Kavanagh J CATCHWORDS : Section 130 Dispute arbitration - Award provision not complied with in determining position to be made redundant by employer authority - agreed procedures with union for voluntary redundancies and the placing of redeployees into substantive positions breached - State guidelines for voluntary redundancies and the rights of redeployees breached LEGISLATION CITED : Industrial Relations Act 1996 s130 HEARING DATES: 02/24/2000; 02/25/2000; 04/06/2000 DATE OF JUDGMENT: 05/05/2000 NOTIFIER: Mr John Tierney, Assistant Secretary Australian Services Union ( NSW & ACT) RESPONDENT: LEGAL REPRESENTATIVES: Mr P.M. Kite SC SOLICITORS: Ms J. Patterson MINTER ELLISON JUDGMENT: - 11 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: KAVANAGH J Date: Friday 5 May 2000 IRC155 of 2000 NOTIFICATION UNDER S130 BY AUSTRALIAN SERVICES UNION OF NSW OF A DISPUTE WITH SYDNEY WATER RE THE DIRECT APPOINTMENT OF AN EMPLOYEE WITHOUT THEIR CONSENT DECISION 1 This matter came before the Commission by way of a notification under s130 of the Industrial Relations Act 1996 of a dispute between the Australian Services Union and a corporation known as Sydney Water. 2 After notification on 17 January 2000 the issues raised in the notification went to conciliation before the Commission on 19 January and 2, 4 and 14 February 2000. 3 Conciliation of the dispute failed but the Commission made a Recommendation arising out of conciliation which was complied with by both the parties. The matter was set down for hearing on 24 and 25 February 2000, then stood over part-heard to 6 and 20 April 2000. 4 The nature of the dispute is as follows: A member of the union, Mr Jeff Mainstone, a long time employee of Sydney Water, and at the relevant time a re-deployee, was issued with a letter of appointment dated 14 January 2000 by Sydney Water which offered him a substantive position and relevantly stated: Should this appointment be unacceptable to you your only alternative is redundancy. At the time this letter of appointment was issued, Sydney Water knew the position was unacceptable to Mr Mainstone. The matter first came before the Commission for conciliation. After the failure of the conciliation process the Commission made a recommendation that Mr Mainstone temporarily serve in the substantive position to which he had been appointed, given the position in which he had been working was abolished. Mr Mainstone has continued to act on a temporary basis in this substantive position. 5 The substantive position to which Mr Mainstone was appointed on 14 January 2000 was that of Office Manager, Retail Business. 6 Before the arbitration hearing, the Commission required the union to submit the Draft Orders it sought arising out of the arbitration hearing. The union filed in the hearing the following draft order: That employees of Sydney Water have the right to acceptance in regards to offers of substantive employment when their positions have been declared surplus to requirements and they have sought re-deployment rather than redundancy. The union accepts all employees are expected to genuinely pursue all reasonable offers of re-deployment. 7 At the hearing, Mr J Tierney of the Australian Services Union represented Mr Mainstone and Mr P Kite SC of counsel, represented Sydney Water Corporation. The union called in evidence Mr Mainstone and the Secretary of the Union, Ms Alison Peters. It relied upon significant documentation of both a historical nature as to Redundancy/Re-deployment Policy of Sydney Water and associated correspondence between Sydney Water and Mr Mainstone. The employer called Mr Stephen Cox, Property Manager and Mr S.J. Baxter, Manager, Marketing and Business Growth and also tendered significant documentation falling into the same category as that tendered by the union. They also tendered a policy statement on Redundancy from the NSW Premier. Background as to Redundancy 8 Employees of the Sydney Illawarra and Blue Mountains Water Board relevantly now Sydney Water, work under the Water Board Award 1994 (as amended). Relevantly this award anticipates the significant further restructure that has occurred (with co-operation of the union) enabling employee numbers to drop from some 16,000 persons in 1977 to a little over 4000 persons today. 9 The award contains an Introductory Statement of Intent. The statement of intent acknowledges the award was established in recognition of a "climate for continuing change." 10 A number of other documents outline the agreements reached between the Water Board and the union as to how proposed redundancy/redeployment were to be conducted in the re-structure of the Water Board. The primary document addressing this change is the Award. Relevantly, under the heading "Consultative Procedures" s57 of the Award states: CONSULTATIVE PROCEDURES 57. Implementation of this award may result in changes to the work place. These changes may take the form of reorganisation of the work place, job design/ redesign and the introduction of new technology. The process of change may be ongoing. Where change is to occur, the following procedures will be applied: (a) In developing significant re-organisation proposals, management is required to discuss with employees affected the broad principles involved in the proposals. (b) When formalised, the proposal will be considered and evaluated by the relevant Director. The Branch Manager of the area concerned will be consulted and advised of any amendments to the original proposals. (c) The proposals will then be forwarded to the union(s)/consultative committee affected and a presentation will be made to representatives of union(s)/ consultative committees involved. Should positions be identified as redundant as a consequence of the implementation of any proposal, the Board will provide to the unions/consultative committee clear statements as to why the positions are no longer required . (d) Management of the Branch concerned will be available to confer with unions within the framework and principles of the proposals. However Branch Management has no authority to bind or commit the Board to any amendments to the proposals unless specifically delegated to do so. (e) During a period of up to four (4) weeks from a union/consultative committee receiving the Board's proposals, unions/consultative committee members will have an opportunity of making written submissions or seek to negotiate with nominated Board's representatives in relation to any alterations or objections they may wish to raise in relation to the proposals. (f) At the end of the four week period, the relevant Director or their representative will again consider the proposals and determine the Board's position. (Emphasis added) 11 Arising out of this Award and, in co-operation between Sydney Water and the union a document entitled "Human Resources Manual" of the Sydney Water Board ("the HR Manual") was drawn up. The Commission has before it a revised edition dated 9 April 1998. This becomes the second relevant document. Three sections of this HR Manual address redundancy/redeployment issues. 12 (1) Section 1 of the HR Manual relevantly reads: Recruitment Policy, Procedures and Pro-forma Documents Class 1-16/IPS 1-76 . . . (c) Direct Appointments may be considered an option in the following circumstances: . Where redeployed employees are considered suitable on the basis of merit and performance for appointment to the position . As a result of restructuring/re-organisation and the position to which appointment is made is not significantly different. The process for direct appointment which are a result of re-organisation should be raised with the relevant Unions during the consultative procedures. If as a result of re-organisation, there are more employees than positions available, then the direct appointments must be as rigorous as any competitive selection process. . . . . Appointment is made to a position from an existing eligibility list recommended at the time of interview. . . . Attached to Section 1 are Pro-Forma documents. Document 15 reads: IPS Appointee - Internal Applicant or Appointment on a Transfer Basis (Internal Appointment Letter for Employees currently in the IPS) Congratulations, you have been successful in being appointed (on transfer basis) to the Sydney Water Corporation . . . Delete whichever is not required: (i) I accept the above offer and am willing to take up duties. (ii) I do not accept the above offer. Signed ............ Dated .......…. (2) Section 8 of the HR Manual is also relevant: Employee Movements . . . 2. Types of Employee Movements There are several related types of employee movements: . redeployment . transfer (relocation) . job rotation . placement in off-line projects . external secondment." and it defines: (a) Redeployment The policy on redeployment deals with the placement of employees whose positions are changed or eliminated as a result of restructuring or reorganisation of the Corporation. Redeployment takes precedence over other transfers. For details, reference should be made to the Guidelines for Managing Excess Employees, section 11, part 1 in the Human Resources Manual. (3) Section 11 of the HR Manual is also relevant: Managing Career Transition Part 4 is headed: Redeployment Policy To ensure that employees are treated with equity, respect and sensitivity . . . . To manage the redeployment of affected employees in a prompt and professional manner. . . . Managers should note that employees seeking re-deployment have priority when filling job vacancies in the organisation. Prior to the advertising of and/or interviewing for job vacancies, managers shall review the availability of suitable employees seeking re-deployment across the organisation with the required skills to competently perform the duties of the job. This review will involve an assessment of the available employees' skills against the skill requirements of the vacant position. Where the employees' skills match an existing job vacancy, the employee will be interviewed by the relevant manager in conjunction with a human resources practitioner. If the employee is considered suitable for the position by the relevant manager, the employee can be directly appointed to the position . . . Sydney Water expects employees to genuinely pursue all reasonable offers of re-deployment made available to them bearing in mind re-deployment opportunities are becoming fewer as the organisation continues to change. Re-deployees could under this agreement be redeployed to positions attracting up to twelve per cent more than their substantive position pay rate but not lower than six per cent less than their substantive position pay rate. In the latter situation pay maintenance was provided for a period of twelve months. 13 The policy as drawn up therefore requires for restructure leading to redundancies and re-deployees, there be consultation with the union committee to co-ordinate the planned restructure; then employees to elect for voluntary redundancy or re-deployment; the consideration of re-deployees for vacant positions; then a discussion with the re-deployee and a person from human resources about the vacant position; then agreement with the re-deployee after an offer. This procedure always requires the genuine co-operation of the re-deployee. 14 A further relevant document is headed "Memorandum No 96" dated 20 February 1996. It is a memorandum from the Premier of New South Wales addressed to all State Ministers and their Chief Executives. In its introduction the memorandum states: This memorandum explains the arrangement for managing displaced employees in all public sector organisations. Relevantly it states: As you are aware, the Government has indicated that there will be no forced redundancies. Every effort should be made to re-deploy displaced employees in your organisation. . . . Redeployment is the principal means for managing displaced employees whose positions/jobs have been deleted. A displaced employee may be redeployed to a position/job within their existing organisation or another organisation. In certain circumstances, voluntary redundancy may be offered to displaced employees where it is considered that re-deployment is not viable in a reasonable period of time. . . . The circumstances that may lead to voluntary redundancy are expected to be where the parties agree that redeployment is not likely to be viable in a reasonable period of time. Chief Executives should ensure that consultation is undertaken with relevant public sector unions, ideally to the point of agreement, prior to seeking the support of the Workforce Management Centre and the approval of the relevant Minister to proceed with voluntary redundancy. . . . Redeployment Displaced employees must: - make themselves available to be considered for re-deployment to a vacancy; and - accept reasonable redeployment opportunities on existing salary. Organisations must: - facilitate re-deployment action; and - release employees immediately for redeployment opportunities. The Facts 15 Mr Mainstone has been employed by the Sydney Water Board for a total of 22 years. The Water Board has undergone a massive re-organisation over a number of years and in 1994 this re-structure led to an agreement being struck with the union for a new award. Originally Mr Mainstone was employed under a "unified salary scale" but he was transferred to an "integrated pay scale" ("IPS"). He was substantially appointed to IPS55 level in 1990 and this was confirmed under the 1994 award. 16 In accordance with the Sydney Water policy for restructure, agreed to and with the co-operation of the Union, Mr Mainstone in 1994 was declared "redundant" and became what is known in this state as a "re-deployee". Re-deployees are appointed to temporary positions or project positions while there is an endeavour to place them in substantive positions within their organisation. 17 Mr Mainstone has, since being made a re-deployee in 1994, served in three re-deployment positions - the first, Office Manager - Planning Branch from 24/9/90 to 4/3/94 which position was then made redundant. He was then redeployed as Property Management Budget Analysis from 9/6/94 to 23/10/95. This he served in at a higher level, namely, IPS 60. Then he served as Property Operations - Property Administration Officer from 23/10/95 to 1/10/96, then Group Human Resources (People and Quality) - Re-deployment Co-ordinator from December 1996 to 31 December 1999. 18 A new head of Sydney Water was appointed in late 1998. In accordance with modern management practice he has adopted a communication policy and sends, from the Managing Director, e-mails directly to the staff. On 27 July 1999 he wrote an e-mail, "Message to Staff from the Managing Director" under the same heading "Voluntary Exit Programme." It reads: In recent months the major focus of my messages to you have been on the importance of building our business plan. . . . I have been talking to you about our programme to rationalise non-labour costs. Now we are seriously addressing labour costs so we can work towards reducing operating costs by 23 per cent over three years. 19 Between July and October 1999 a further, more attractive Redundancy Package had been offered to Sydney Water employees. It was an offer more attractive to long serving employees as it increased the number of weeks pay available as a redundancy payment for each year of service. It was, however, a Voluntary Redundancy package and, once again, not one accepted by Mr Mainstone. He has not accepted, since 1994, any of the offers of voluntary redundancy. The Managing Director then announced for a limited period, a very generous Voluntary Exit Programme. Throughout this memorandum the package was referred to as a Voluntary Redundancy package. Mr Mainstone also refused this package in that he did not volunteer to take it and therefore was still identified as a re-deployee. 20 An Information Bulletin was made available to employees by management in support of this voluntary redundancy package. In a question and answer format relevantly it reads: Q7. I am on re-deployment, will I be offered one of the positions that has been vacated by someone who has offered to take redundancy. A. If possible YES . It is our aim to have no employees on re-deployment at the conclusion of the programme. Re-deployees will either have made a decision to take the enhanced package while it is available or will have to be placed in a substantive position which will mean they cannot exercise their previous option to take redundancy. 21 The answer to this question seems to suggest there was a policy change at management level. Such a policy change seems to be endorsed in a further memorandum headed "Update" dated 22 September 1999 (again signed by the Managing Director). This came again in an e-mail to the employees. The e-mail has a number of headings and under the heading "The Human Resources Manual". It states Employees' Rights: At this time no policy has changed. Redeployees: Hopefully, at the end of this process all redeployees will have been placed in substantive positions. . . . Prior to the appointment of a redeployee to substantive position they will have at that time an option to take redundancy - in other words they may take redundancy or the job. Importantly the word "voluntary" is now removed from the word "Redundancy" in the General Manger's communications. This e-mail reflects a complete change of policy although it positively states there is no policy change to employees' rights. When it was shown to the Secretary of the union, while she was giving evidence, it was the first time she had seen such a document. She gave evidence there had never been negotiations to alter the agreed Voluntary Redundancy programme or the agreed Re-deployment policy programme. It would appear the General Manager had determined all re-deployees must be placed in substantive positions or take redundancy. This decision seems to be reflected in the decision to abolish the Re-deployees Unit where ironically Mr Mainstone worked. 22 Mr Kite submits this memorandum should be read as follows: That requires analysis in this context. When an employee is on a redeployment list that employee has the right to take voluntary redundancy at any time. Because their position has been declared excess they sit in that position. So that they have an eligibility to redundancies at any time. If they are appointed to another permanent position they lost that right. So at the time of making the appointment or posting the appointment to another position, what Ex M says in our submissions is that the employee may still take redundancy up to the point of the appointment. So if their choice is, no, I want to get out notwithstanding that there is a reasonable suitable position there for me then they are not prejudiced in the sense of saying no, I'd rather take the redundancy package. But if they don't elect to do that they are expected and indeed directed to take up the job and they will lose that standing right to put their hand up at any stage and take the redundancy package because they are no longer on the redeployed list; they are permanently appointed. 23 About October 1998, after hearing his position and Unit were to be abolished, Mr Mainstone made every effort to find a job for himself. He expressed an interest to the Financial Section. The position available however was not offered to him. It appears to the Commission the re-deployment policy encourages workers to look for suitable positions for themselves and no adverse inference could or should be cast on Mr Mainstone for attempting to determine if there was a position in finance suitable for him. I reject any inference from Sydney Water that Mr Mainstone's attempt to secure any such position should be used to cast an aspersion on his endeavours. 24 Following what appears to be this change in policy, Mr Mainstone received his first letter of appointment to the substantive position "Office Manager - Retail Business" on 14 December 1999. It had attached to it a description of the position. This appointment letter was handed to Mr Mainstone one day before he went on Christmas holidays. Sydney Water conducted no interview with him although he had received a preliminary telephone call about the position and he was already on notice of the abolition of the re-deployment section in which he was working. There was no interview conducted between Mr Mainstone and the manager of Retail Business and a Human Resources representative as required under the agreed procedures. He was given no opportunity to discuss the placement. The agreed policy was completely flouted. 25 The letter of appointment of 14 December 1999 was withdrawn when Mr Mainstone complained the agreed procedures for the placement of a re-deployee had not been followed. He also pointed out he had the right under the procedures to reject an unsuitable offer. Sydney Water challenges his right to reject an offer. The union became involved. After Mr Mainstone returned from holidays his situation was discussed between the union and management. No agreement was reached. On 13 January 2000, Mr Ferrier, the Human Resources Manager, wrote to the union saying: It is our view that offer and acceptance is not required in the case of re-deployment. 26 On 17 January 2000, Mr Mainstone received yet again a letter of appointment to the same substantive position. He refused this second offer. The matter was then filed in the Commission as a dispute under s130 of the Industrial Relations Act 1996. Mr Mainstone is acting in this substantive position as Office Manager on a temporary basis arising out of the recommendation of the Commission in conciliation. 27 Mr Mainstone's view of the position, as revealed in his evidence is of relevance. With some adjustments he perceives the position as suitable, especially if he is given re-training in some identified areas. Re-training is guaranteed as part of the Re-deployment policy. It would appear there could be negotiations between the parties to make this position most suitable. It is a great pity that the employer did not hold the required interviews with Mr Mainstone and follow its own established procedure in the appointment of Mr Mainstone. Sydney Water, had it but followed its own procedures and consulted with this re-deployee, might not have this industrial dispute. 28 Part of the evidence revealed the position is titled "Office Manager". Mr Mainstone was advised after he was made redundant by the counsellor to whom he was sent by the employer that modern management techniques make the position of Office Manager redundant. He does not wish to go back in that direction because of this professional advice. Such fear is not futile when one accepts the position from which he was originally made redundant was an office manager type position. 29 However, Mr Mainstone has been acting in the substantive position throughout this hearing. His evidence is the position, with some adjustment, is suitable. 30 From Mr Baxter's evidence it would appear there was also a breach of the Award provision when the restructure of the Marketing and Business Growth Retail Division was designed without recognising the consultative committee process as outlined in the Award. There was no approach to the committee to discuss this new structure of this Division. However this is not a case where the Commission intends to find formally as to a breach of the award. The Commission, however, does find there has been a complete disregard by Sydney Water of the agreements in place between the union and Sydney Water as to the procedures to be followed in the appointment of a re-deployee to a substantive position. 31 The Commission finds Mr Mainstone on all the evidence genuinely persevered in his efforts to gain a substantive position. He has built up some finance management skills and wishes to develop and incorporate these into a future career placement. Such skills according to Mr Baxter are valuable to this substantive position. While consultation as required by the established procedures may have resolved this impasse, it did not occur. 32 The record put before the Commission indicates Sydney Water has entertained a massive restructure with the minimum industrial disputation because of the sensible co-operation between management and the union. However, such restructure has left Sydney Water with about 100 re-deployees. In this State a public utility cannot arbitrarily declare voluntary redundancies are no longer voluntary. One is sympathetic to the organisation when its practices reveal an employee like Mr Mainstone has been "acting" in positions for seven years. This becomes a management problem but it is also a heartfelt problem for Mr Mainstone and any other employee. To have a worker "acting" in a job for up to seven years cannot be ideal business practice for an employer and must be totally disheartening for the employee. 33 The only answer is to continue the successful consultative process. Such procedures as have been agreed to provide courtesies and rights that must be protected and enjoyed by the very last of the re-deployees. Redundancies in NSW Government organisations are to be voluntary. All employees must genuinely pursue all reasonable offers of redeployment however the Commission finds Mr Mainstone has not rejected a reasonable offer but rather there was no reasonable offer of appointment made to him. 34 Accordingly, I give the following orders: (1) Mr Mainstone has the right to interview, consultation and acceptance of an offer of substantive employment given his position has been declared surplus to requirements and he has sought redeployment rather than redundancy. (2) Sydney Water and Mr Mainstone with the Australian Services Union have formal consultation as to the job description and duties of Office Manager/RD in which Mr Mainstone is acting temporarily. I do not intend to order any further relief at this stage. The parties have leave to apply on 24 hour's notice. ********* 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.