Industrial Relations Commission of New South Wales CITATION: New South Wales Nurses' Association v Macquarie Hospital [2007] NSWIRComm 1078 APPLICANT New South Wales Nurses' Association PARTIES: RESPONDENT Macquarie Hospital FILE NUMBER(S): 1115 of 2007 CORAM: McLeay C CATCHWORDS: Dispute - nursing industry - rostering - whether right exists to retain set rosters - meaning of "At this time" when rsoter changed in 1994 - evidence given by parties to the 1994 agreement - conformity with industrial principles - questions of fairness and equity considered - found set rosters are condition of employment - roster can only be changed by mutual agreement LEGISLATION CITED: Industrial Relations Act 1996 In re Shift Workers Case 1972 (1972 AR 633) CASES CITED: Lavings v Barclay Mowlen Construction (NSW) Limited (1994) 99 IR 247 McKerlie v Lakeview and Star Limited (1937) 58 CLR 396 HEARING DATES: 16/10/07 DATE OF JUDGMENT: 8 November 2007 APPLICANT Ms E McMillan New South Wales Nurses' Association LEGAL REPRESENTATIVES: RESPONDENT Mr R Hitchen Northern Sydney Central Coast Area Health Service DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: MCLEAY C 8 November 2007 Matter No IRC 1115 of 2007 Notification under section 130 by New South Wales Nurses' Association of a dispute with Macquarie Hospital re change of member roster DECISION [2007] NSWIRComm 1078 1 This is a notification by the New South Wales Nurses' Association ("the Association") pursuant to s130 of the Industrial Relations Act 1996 ("the Act") of a dispute with Macquarie Hospital. 2 The dispute concerned the rostering of a registered nurse Dr Janine Burns. The Association filed the dispute because of Macquarie Hospital's refusal to honour the terms of the employment contract which they say existed between Dr Burns and hospital management. The substance of the contract was an agreement to work Saturday, Sunday and Monday shifts only. This agreement had been put in writing in 1994. The hospital believed that the document referred to by the Association did not constitute an employment contract as such and that the terms of the Public Health System Nurses and Midwives (State) Award (357 IG 345) ("the Award") applied to Dr Burns' employment. 3 Under clause 8, Rosters of the Award, the employer is required to roster the ordinary hours of work for each employee and display that roster at least two weeks prior to the commencing date of the first working period in the roster. The clause is in similar terms to the clause in the Public Hospital Nurses (State) Award which applied at the time of entering the agreement, along with the 1994 Northern Sydney Area Health Service Nurses' Wages Agreement. The respondent maintained that the Award entitled them to change Dr Burns' roster to suit the operational needs of the Hospital. Background 4 Dr Burns has been employed as a registered nurse at Macquarie Hospital since February 1986, originally on the Gladesville campus. Dr Burns said that she had responded to an advertisement in the Sydney Morning Herald for registered nurses at Macquarie Hospital, in which it stated that one could select one's own shifts. Other witnesses gave evidence to support that this had been the practice at the time, due to the shortage of nurses and the necessity to provide flexible conditions to encourage nurses to apply for employment at the hospital. At the time Dr Burns advised that she was only able to work on Saturdays and Sundays on day shifts. She was employed in February 1986 to work 24 hours a week on Saturday and Sunday day shifts. She continued to work these shifts until the hospital changed the length of the nursing shifts in 1994 when 12 hours shifts were replaced by 8 hour shifts. 5 Negotiations occurred between Mr Paul Spurr who was then Deputy Director of Nursing (DDON), a representative of the Association and Dr Burns, under the direction of Mr Chris Crumlin, Director of Nursing (DON). Mr Spurr suggested that, because of the shorter length of shifts, Dr Burns would be financially disadvantaged if she remained working only Saturday and Sunday and he suggested that she also work Mondays. Dr Burns accepted this suggestion. 6 In 1994 at the time of the negotiations Nurse Burns was studying for a PhD which she completed in April 2005. For the sake of consistency I will refer to her throughout this decision as 'Dr' as she has now earned that title. 7 The Saturday, Sunday and Monday shifts fitted in with Dr Burns' university requirements and still offered her the security of set shifts. In her affidavit evidence she said "it was clearly explained to me that these days could not be changed without my agreement". The evidence also shows that Mr Spurr and Mr Crumlin were aware that Dr Burns was studying at that time and was not in a position to accept a contract that did not guarantee her shifts. 8 A letter dated 22 November 1994 was sent to Dr Burns confirming the discussions as follows: Subject: Changed Employment Hours As discussed on the phone on 21 November 1994, as a result of the move to eight (8) hour shifts, you will work three eight (8) hour shifts in lieu of the two ten (10) hour shifts you currently work. At this time, the shifts will be 'A' shifts (Saturday, Sunday and Monday), totalling twenty-four (24) hours per week beginning 5 December 1994. Could you please fill in the enclosed form and send it back to me as soon as possible. If you have any queries give me a call on xxxx. The letter was signed by Mr Paul Spurr, Deputy Director of Nursing - Operations. 9 The attached form, a Nursing Employment Form, was signed by Dr Burns accepting the conditions set out in the document and agreeing to comply with the customs, policies and procedures of the hospital and Area Health Service. In particular the document stated: I understand my appointment is to the position of Perm. P.T. 24 hours p.w. (from 20 hours p.w.) working a P/T roster from 15.12.94. 10 Mr John McMurray, Nurse Manager at Macquarie Hospital, gave evidence that it is the Area Health Service's obligation to ensure that salary and wage rates and conditions conform strictly with relevant industrial instruments. In his role of monitoring EEO principles he became aware of perceived inequities in the rostering system at Macquarie Hospital and moved to address the issue. Following an audit of rosters in 2003, a survey was distributed to nursing staff at the hospital, resulting in concerns articulated about fairness and equity issues, particularly about access to "lucrative penalty rate shifts". A Roster Working Party established in May 2004 formed the view that "no-one owns a shift". A set of Rostering Guidelines was developed in November 2005. 11 Mr McMurray also provided in evidence a copy of the Policy Directive of November 2003 titled 'Health Service Boards/CEO's/Other Employees Are Not Permitted to Offer Over-Award Salaries'. The directive replaced a previous directive issued in February 2001. The policy is clear that only the Director-General, Department of Health, has the power to determine conditions of employment, and that conformity with the relevant industrial award or agreement is required. 12 On 31 March 2006 a memorandum was sent by Macquarie Hospital Executive to all nursing staff stating that all staff were employed to work on a rotating roster unless they could demonstrate otherwise. The memorandum acknowledged that some agreements existed that may provide for special circumstances. Dr Burns responded by meeting with the then Acting DON Mr Mark Ayling to discuss her contract. Her recollection is that Mr Ayling said that everything was fine and that the hospital would have to honour the contract. 13 On 21 February 2007 a petition was lodged complaining about some nursing staff getting set shifts. In her affidavit Dr Burns said she found the petition upsetting and bullying as she felt she had clearly demonstrated that she had a contract with the hospital to work set days. On 21 March she received a letter from management informing her that from 16 June 2007 her regular shifts would be discontinued. At that time she was rostered to work random shifts including evening shifts. She raised the issue again with the hospital through the Association, resulting in the current proceedings before the Commission. Submissions 14 Mr Hitchen for the respondent submitted that the letter of November 1994 does not constitute a contract as such. He also submitted that a long-standing practice does not constitute a binding contract. He submitted that the condition that Dr Burns is seeking would be an above award arrangement which the hospital was not entitled to make. He cited a decision of Commissioner Connor in which was quoted a 1937 High Court Judgment on Appeal from the Supreme Court of Western Australia in McKerlie v Lakeview and Star Limited (1937) 58 CLR 396 thus (at 405): An award binds parties to which it applies quite independently of any agreement by them to be bound by it. The relation of employer and employee is constituted by an agreement - but the terms of that relation, so far as they are fixed by an award, depend upon the award and not upon any agreement of the parties. 15 Mr Hitchen submitted that neither the DON nor the DDON were authorised to offer Dr Burns an above award condition such as an employment contract that purported to indefinitely remove the hospital's right under the award to alter her rosters. In fact the Nursing Employment Form does not make reference to any particular roster but only the total of 24 hours per week. 16 The primary purpose of the agreed set shifts entered into in 1994 was to enable Dr Burns to attend university to complete her degree of Doctor of Philosophy, submitted Mr Hitchen. She has now completed that degree and has no ongoing study commitments which require particular consideration to be given to her rostering. 17 Dr Burns raised in evidence a personal matter which she said has an ongoing capacity to affect her rostering. She has animals which require her attendance of an evening. She makes it a practice to be home around 9.30pm every day to care for the animals and has made it clear during her oral evidence that in fact she can work on any day of the week but not later than 9pm. However it is her preference not to give up the set shifts which are a matter of some importance to her, and which she believes she has by right. 18 The respondent submitted that such personal reasons might well be held by a number of nursing staff and that the public hospital system could not operate effectively and patients would be seriously disadvantaged and put at risk if nursing staff rosters could not be changed to meet operational needs. While weight is given to reasonable preferences of its employees there still needs flexibility for fair and equitable distribution of rosters amongst the range of staff, said Mr Hitchen. He quoted from In re Shift Workers Case 1972 (1972 AR 633) in which it was said at (at 649): Subject to the needs of the industry and the requirements of law, an employer should give weight to the reasonable preferences of employees as to shift systems. 19 Ms McMillan for the Association submitted that it was the intention of the parties to the 1994 agreement that both documents provided to Dr Burns at that time should be read together. The documents were written confirmation of the variation agreed between the parties, and were not standard documents representing an ordinary type of change in rostering arrangements. The evidence of Dr Burns, Mr Spurr and Mr Crumlin was consistent in terms of the agreement reached and the intention behind that agreement. 20 The respondent submitted that if the Commission accepted that there was a valid contract existing between Dr Burns and Macquarie Hospital that gave her the right to set shifts, it was also reasonable to change that agreement given due notice. It can be argued that notice was given as early as March 2006. The respondent submitted that the Commission should not perpetuate an individual agreement or contractual arrangement that removes an award entitlement of one of the parties against that party's wishes. In other words, it was submitted that the Commission should not remove the respondent's right to vary rosters. 21 The respondent further submitted that the Commission in the exercise of its discretion should not perpetuate an individual agreement or contractual arrangement that is unfair in its operation. In this case the fairness existed at the time that the agreement was entered into but changed circumstances means that it is no longer fair to exclude other nurses from the weekend shifts and weekend penalty rates. The hospital received a petition to this effect. 22 Finally Mr Hitchen submitted that should the Commission find there was a valid agreement in 1994, to the extent that this agreement is silent and makes no provision for notice of termination of the agreement, then common law implies a term of reasonable notice. Mr Hitchen cited the decision of his Honour Justice Staff in Great Scott International Pty Ltd and Anor (No.2) v Cosmetic Suppliers Pty Ltd and Anor (2006) in which the decision in Lavings v Barclay Mowlem Construction (NSW) Limited (1994) 99 IR 247 set out a number of factors which would need to be taken into account to determine reasonable notice to be implied into a contract of employment which is silent on the matter. That notice was in relation to termination of employment. It is argued that 31 March 2006 was the date on which notice of termination of Dr Burns' agreement with the hospital was first given and that the notice period itself must be found to be reasonable. Mr Hitchen submitted that reasonable notice of termination of the agreement has been given and that the respondent should now be able to change shifts as part of the ongoing rotating rosters and to suit the operational needs of the hospital. 23 It was noted by both parties that in the meantime the hospital is observing the status quo so that Dr Burns continues to work Saturday, Sunday and Monday morning shifts. Outcomes Sought 24 Dr Burns and the Association would like the 1994 contract to be honoured in so far as they say it provided guaranteed set shifts for as long as Dr Burns wished them to be so. To vary her shifts is to breach the terms of the employment as agreed in 1994. Ms McMillan argued that any move to other shifts would be a unilateral variation of the contract of employment without the agreement of one of the parties. 25 In short, Ms McMillan sought an order that the contract be maintained allowing Dr Burns to work set shifts as agreed being Saturday, Sunday and Monday morning shifts only until such time as there is a mutual agreement between the parties to change such agreement. 26 Mr Hitchen submitted that the finding should be made that there is no binding employment contract between the respondent and Dr Burns that indefinitely preserves the 1994 shift arrangements. 27 Even if it was found that there was such an arrangement Mr Hitchen submitted that the Commission in the exercise of its discretion under section 136 of the Act should not perpetuate an individual contract which removes the respondent's rights, should not perpetuate an individual contract which is unfair in its operation both administratively and to other nurses and should not perpetuate an individual agreement which was mainly premised on a reason which no longer exists and for which there is no compelling reason to continue. Consideration 28 An award sets minimum conditions of staff and while the practice amongst Area Health Services is not to offer over award conditions, that was not the case when Dr Burns commenced employment or when her hours were re-negotiated in 1994. Her employment was in response to an advertisement which stated that nurses could choose their own rosters. The status of that original agreement was not argued during these proceedings. 29 The current dispute arises from the 1994 agreement reached when a change in rostering practice was introduced at Macquarie Hospital affecting all nursing staff. The agreement resulted in documentation which can only be described as ambiguous, given that both parties to the dispute rely on it to support their point of view. 30 The respondent argued that a binding agreement does not exist because those who discussed conditions with Dr Burns in 1994 were not authorised to offer an above award condition. 31 Any advantage which may arise to one person from an agreement is incidental to that agreement and cannot be undone because it gives a comparative disadvantage to another person unless the agreement undermines the Award. The respondent making every effort to achieve fairness and equity cannot ignore an agreement reached in good faith and binding on the parties. 32 Both parties rely on the letter of 22 November 1994 and the attached Nursing Employment Form. The respondent is relying especially on the words "At this time" and the absence of any particularity in the Nursing Employment Form as to days to be worked. The applicant, on the other hand, relies on her recollection of the discussions and on the particularisation of A shifts on Saturday, Sunday and Monday set out in the letter and her very clear understanding that these were guaranteed set shifts unable to be changed except by negotiation and agreement between the parties. She understood the words "At this time" to indicate that she could request to renegotiate her hours or days at a later time. 33 The evidence of Mr McMurray was that the proposed introductions of new rosters followed extensive consultation with the nursing staff and with the Association. One of the driving factors for change was complaints received from nursing staff regarding the inequities in the rostering practice. Some nurses felt they were unfairly denied opportunities to work some of the weekend shifts and thus were financially disadvantaged by the continuation of the practice of set shifts. This contrasts markedly with the circumstances described by Mr Spurr and Mr Crumlin as they existed in 1986. In those days because of the great shortage of nurses a range of flexible situations were offered to nurses. For the purpose of encouraging people who had retired from the work force back into nursing, the flexibility included advertising nursing positions where nurses could choose their own shifts. Mr Spurr gave evidence that it was never a problem in his experience having people on set shifts because weekend rosters were notoriously difficult to fill. 34 It was submitted that the Commission should not remove the respondent's right to vary rosters. The difficulty with this argument stems from the fact that if it was found that the contractual arrangement was validly entered into and was indefinite, it would have to follow that the respondent gave away the right that it previously held under the Award. It is not a question of the Commission removing a right if that right was given away many years ago. 35 The submission that the parties are bound by an award was supported by reference to the words of Latham CJ in the McKerlie v Lake View and Star Ltd case. In that case it was held, in effect, that deductions from an employee's remuneration could not be increased unreasonably. It reflected circumstances where a principle was carried "beyond its logical application" (at 413) in an attempt to reduce the payment due under the award. In the current proceedings, the award requires rosters to be displayed at least two weeks in advance, and retained for at least six years. It also contains provisions for altering rosters at short notice. There is nothing in clause 8, Rosters, that is contrary to the arrangement made between the employer and Dr Burns in 1984. The agreement does not touch upon the award conditions. 36 The Policy Directive referred to by Mr McMurray is addressed to Health Service Boards, Chief Executive Officers and Others. In my view, it is a directive to senior employees to ensure that no over-award payments or conditions are offered to employees. It makes reference to corrupt conduct and states, in part: It is inappropriate for Health Services Boards, Chief Executive Officers or other Health Service employees to seek to recruit or retain services of employees through over-award payments or employment conditions. 37 Such a policy directive would not have been necessary, it may be assumed, unless there was in place, prior to 2001, a practice in some areas of offering over-award payments or conditions. In fact, the evidence showed that offering nurses the opportunity to select their own hours was indeed common practice at the time Dr Burns was recruited. 38 Dr Burns believed that this condition of her employment was retained in 1994 when she re-negotiated her hours. Both Mr Spurr and Dr Burns were clear in their understanding of the events of November 1994, that Dr Burns retained the right to particular days and hours which could only be varied by mutual agreement. I am satisfied that the words "At this time" in the letter of November 1994 reflected that understanding. I can understand and accept that a reader may presume that the words meant the days could be changed by the employer at a later time, in the usual way of rostering, but such an interpretation would be wrong in this case. The intentions of the parties to the agreement is clear and consistent with each other, as well as being consistent with the practices of the day and earlier arrangement as advertised by the employer in 1986. 39 As one of the parties to the agreement, Dr Burns chooses not to revoke her right to retain the privilege of working on particular hours and days, as set out in the 1994 correspondence. Her reason for choosing those particular shifts has passed, but Mr Spurr's evidence shows that the agreement was not dependent on any particular circumstance. At this time, Dr Burns has different, personal reasons why she wishes to retain the shifts and she believes it is her right to do so. 40 The respondent submitted that the Area Health Service is happy to liaise with Dr Burns and provide her with some flexibility regarding the rostering arrangements. However the Area also states that it is reasonable that all staff have access to both desirable and unpopular shifts. While the principle of equity and access is highly regarded, the respondent cannot overlook any binding agreement in place that overrides the general principle involved. 41 The reference to the 1972 Shift Workers Case is not of particular relevance here, where the preference of a number of employees, as displayed in the 2003 survey and the 2006 petition, remains subject to the requirements of law. Dr Burns' condition of employment takes precedence over the preference of other employees at Macquarie Hospital. 42 I accept that neither the DON nor the DDON were authorised to offer Dr Burns an above-award condition in 1994. They did not do so. I am satisfied on the evidence that the agreement reached in 1994 was a perpetuation of the advertised conditions of employment in 1986, providing Dr Burns with the right to work particular nominated shifts, only to be changed (as they were in 1994) by mutual agreement. 43 The respondent submitted that any agreement found to exist should be able to be varied by the giving of reasonable notice to the employee. In this regard I do not find the case cited by the respondent to be helpful, as it deals with notice of the termination of an employment contract in circumstances of redundancy, a situation which cannot be likened to notice to unilaterally overturn a condition of employment. 44 Often, three months notice would be considered reasonable to change rostering arrangements. In many cases less than three months would be reasonable. In this case, however, the condition of employment provided in 1986 was that Dr Burns could choose her own shifts. That condition did not change in 1994 when the shifts were changed by mutual agreement. In my view, Dr Burns still retains the original condition of her employment, which she has maintained during her loyal service to her employer for more than twenty years. 45 This condition of Dr Burns' employment is not affected by the fact that such a condition can no longer be offered to attract or retain nursing staff. Nor is it affected by the fact that other employees, including those with a lesser period of service, do not enjoy the same benefit. The reason for selecting particular shifts was not part of the condition of employment; in fact, the employer at the time was grateful to nurses willing to work the shifts in question. Policies about equitable access to popular and unpopular shifts do not override the obligation of the employer to abide by the condition of employment offered by the employer and accepted by the employee in 1986. 46 The process which commenced in 2003 took into account the possibility of one-off individual arrangements until at least mid-2006. The investigation which followed took into account the 1994 documentation, but did not take into account the intentions of the parties as stated by Dr Burns and confirmed during these proceedings by Mr Spurr. Nor did it take into account the originating process of 1986, when the position was advertised as one where applicants could select their own shifts. 47 It is unsurprising that a petition was produced in February 2007 stating that the practice of set rosters was seen as unfair and was impacting on other nursing staff, including financial disadvantage. It is highly unlikely that the nursing staff who signed the petition were fully aware of the circumstances of the arrangement with Dr Burns, given that the management were unaware of the relevant details. Dr Burns found the petition distressing, but I read it as being directed towards management for allowing the practice, rather than being directed towards her as the innocent recipient of the benefit. It is an important aspect of this case that the set rosters were not always seen only as a benefit to the employee, but as a real benefit to the employer who had difficulty recruiting qualified nurses for weekend shifts. 48 Similarly, the Roster Working Party minutes of 9 June 2004 includes a line as follows: 'General view of working party is that no one owns a shift'. That statement has arisen in the context that the working party was seeking to devise an optimum practice. The members present could not be expected to be aware of Dr Burns' condition of employment. It follows that the resulting Rostering Guidelines incorporated the following: This procedure complies with State and Area HR Policy, NSW Nurses' Award recommendations and local undertakings. It is the responsibility of the NUM to revise the roster so that it is balanced and fair prior to submitting to Nursing Administration. 49 The local undertakings referred to in the Guidelines include Dr Burns' employment condition and the shifts that were agreed in 1994. The statement emphasised in the Guidelines document needs to be read in conjunction with the local commitment which applied as a priority over the general principle of 'balanced and fair' rostering. 50 It is available to Dr Burns to renegotiate the shifts she currently works, to suit her current needs and to better fit the needs of the hospital, and I would encourage her to do so. As was stated in evidence, the shifts worked may be varied at any time by mutual agreement, but not otherwise. 51 In correspondence to Dr Burns on 10 May 2007, the hospital cited operational needs as a reason for changing the rosters. The evidence indicates that the only 'operational need' under consideration was to satisfy those nurses who expressed concern about a financial disadvantage to them, not having a share of weekend penalties. That issue does not qualify as an operational need. There is no argument that there is any financial effect on the hospital of the current arrangements. Nor is the hospital seeking to introduce a move that will decrease the financial reward to any of the nursing staff when compared to the situation that has been in place since 1986. 52 In 1994, the circumstances were such that any refusal by Dr Burns to vary the arrangement would have been unreasonable, because of the change from 12 hour shifts to 8 hour shifts. Indeed, the change to the arrangement was in response to an operational need. Dr Burns agreed to the variation, without giving up her right to the original and long-standing condition of employment. Conclusion 53 I am satisfied that Dr Burns maintains a condition of her original employment provided in 1986, that she could choose her own shifts. The actual shifts were renegotiated at the initiative of the employer in 1994 and were varied by mutual agreement. While the documentation at that time was ambiguous in that a reading caused the respondent to believe that they had the right to make changes to the agreed rosters, the clear intention of the parties to the agreement was that any changes could only be made by mutual agreement. That understanding is not contrary to the available documentation, but simply allows a clearer interpretation of it. 54 I do not accept the submission that the agreement can be varied by the giving of reasonable notice. It is a long-standing condition of employment requiring mutual agreement, not reasonable notice, for its variation. It remains available to the parties to vary the agreement at any time, so long as they both agree. 55 The matter is concluded. oOo 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.