Industrial Relations Commission of New South Wales CITATION: Crown Employees (Police Officers - 2009) Award [2009] NSWIRComm 190 PARTIES: Police Association of New South Wales (Applicant) Commissioner of Police (Respondent) FILE NUMBER(S): IRC 942 of 2009 CORAM: Boland J President CATCHWORDS: POLICE - Agreement between Police Association and Commissioner of Police - Agreement provided for leave reserved to Association to pursue improved remuneration for certain officers having regard to attraction and retention - Whether leave reserved permitted separate work value case cumulative upon case based on attraction and retention - Subjective intention of parties - Objective test applied to agreement - Meaning of 'having regard to' - Leave reserved limited to attraction and retention. Construction, Forestry, Mining and Energy Union (New South Wales Branch) and Macquarie Generation [2009] NSWIRComm 160 Crown Employees (NSW Fire Brigades Permanent Firefighting Staff) Award 2008 [2008] NSWIRComm 174 Crown Employees (Public Sector - Salaries 2008) Award [2008] NSWIRComm 193 Health Employees Pharmacists (State) Award and other Awards [2003] NSWIRComm 453; (2003) 132 IR 244 Local Courts Anomaly Case 1989 AR (NSW) 638 CASES CITED: Notification under section 167 by the Minister for Industrial Relations of a dispute between BHP Billiton and The Australian Workers Union and others re proposed strike action [2002] NSWIRComm 378 Operational Ambulance Officers (State) Award, Re [2001] NSWIRComm 331; (2001) 113 IR 384 Operational Ambulance Officers (State) Award [2008] NSWIRComm 168 Public Hospital Nurses (State) Award (No 3) [2002] NSWIRComm 325; (2002) 121 IR 28 R v Hunt; exparte Sean Investments Pty Ltd (1994) 180 CLR 322 R v Toohey; exparte Meneling Station Pty Limited (1983) 158 CLR 327 State Wage Case 2009 [2009] NSWIRComm 120 HEARING DATES: 11 November 2009 DATE OF JUDGMENT: 16 November 2009 Mr A A Hatcher of counsel with Mr A Howell, solicitor (Applicant) LEGAL REPRESENTATIVES: Mr R C Kenzie QC with Mr T J Dixon of counsel (Respondent) JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: BOLAND J, President Monday 16 November 2009 Matter No IRC 942 of 2009 CROWN EMPLOYEES (POLICE OFFICERS - 2009) AWARD Application by Police Association of New South Wales for new award INTERLOCUTORY DECISION [2009] NSWIRComm 190 1 During 2009 there had been a series of negotiations between the Police Association of NSW and the Commissioner of Police over improvements to wages and employment conditions. The Commission was involved to the extent it chaired a number of conciliation conferences of the parties in an endeavour to facilitate a resolution of the matters in dispute. The negotiations were conducted against the backdrop of the New South Wales Government's wages policy that required any wage increases beyond 2.5 per cent per annum to be funded by employee related cost savings. 2 By August 2009 the negotiations had become intense and on 28 August an offer to settle the Association's claims was made. The offer provided for salary increases of 4 per cent per annum for two years and improvements to various employment conditions. The Commission recommended to the Association and its members that the offer be accepted. 3 An element of the offer, which was later accepted by the Association, was a leave reserved provision in the following terms: Leave will be given to the Association to pursue improved remuneration having regard to attraction and retention for: · Officers attached to the Tactical Operations Unit · Officers attached to the Police Prosecutors Branch 4 Directions were subsequently made by the Commission for the filing and serving of material in relation to the matters in respect of which leave reserved had been agreed and an arbitration of those matters was listed for hearing on 7 to 18 December (except 17 December) 2009. 5 At a Directions hearing on 29 October 2009, it emerged that the parties had different understandings of the nature and scope of the proceedings relating to the leave reserved matters. It was the Association's view that it was entitled to conduct a case in which attraction and retention was to be a principal feature, but that it was entitled to rely upon work value considerations that were directly connected to or cumulative upon attraction and retention. It proposed that the datum point for measuring work value change was 2005. 6 Mr A Hatcher of counsel for the Association explained his client's position thus at a further Directions hearing on 9 November: HATCHER: Can I put it this theoretical way. Let's assume we make out proposition A, attraction and retention, and that justifies an increase in remuneration of, say $50, per week. Then we also demonstrate cumulative upon but independent of attraction and retention there are also work value considerations which would justify a further increase of $50 per week. We are entitled, on that analysis, to $100 per week. 7 The Commissioner accepted that there could be a connection between attraction and retention and work value, but contended that given the terms of the agreement reached between the parties, and particularly the terms of the leave reserved provision, the Association was not entitled to conduct a work value case that was 'cumulative upon attraction and retention'. In other words, the Association was not entitled to conduct an attraction and retention case and, in addition, run a work value case under the Commission's work value principle: see State Wage Case 2009 [2009] NSWIRComm 120. 8 On 30 October 2009, the Full Bench issued a ruling in the following terms: It is difficult to see how leave reserved to seek 'improved remuneration having regard to attraction and retention' opens the door to a full blown work value case with a datum point of 2005. However, it is acknowledged that there may be a connection between work value and labour shortages: see Public Hospital Nurses (State) Award (No 3) [2002] NSWIRComm 325; (2002) 121 IR 28 and Health Employees Pharmacists (State) Award and other Awards [2003] NSWIRComm 453; 132 IR 244. Having regard to the terms of the leave reserved to the Association, the nature and scope of the proceedings should limit any claim based on work value change to a direct connection such change has with attraction and retention in accordance with what was said in Public Hospital Nurses and Pharmacists. If the applicant wishes to widen the scope of the proceedings beyond what has been directed it will need to file a notice of motion within seven days. 9 Subsequently the Association, on 6 November 2009, filed a notice of motion seeking the following orders: 1. The Police Association be permitted, in respect of its claim for improved remuneration for officers attached to the Tactical Operations Unit and the Police Prosecutors Branch, to rely upon work value considerations that are directly connected to or cumulative upon attraction and retention. 2. Liberty to apply is granted. 10 The motion was heard on 11 November 2009. This decision deals with that motion. 11 In support of the motion, the Association relied on an affidavit of Mr Peter Remfrey who is the Secretary of the Association. For the Commissioner reliance was placed on an affidavit of Assistant Commissioner Mark Jenkins, Director, Corporate Human Resources for the NSW Police Force. Both Mr Remfrey and Assistant Commissioner Jenkins played key roles in the negotiations earlier referred to. Both men were required for cross-examination. 12 Both men gave their account of the discussions that led to the making of the agreement, with the focus being on the leave reserved provisions. It is apparent from the evidence of the Association, that in agreeing to the final terms of the leave reserved provision it was not intending to confine the scope of its claim strictly to considerations of attraction and retention but clearly had in mind what it regarded as significant changes in demands placed on Tactical Operations Unit ('TOU') officers and officers in the Police Prosecutors Branch. However, at the time the negotiations were taking place over the wording of the agreement, the Association never articulated a clear intention that part of its case to secure increased remuneration for these two groups of officers would involve work value considerations that were cumulative upon attraction and retention. 13 For the Commissioner, Assistant Commissioner Jenkins never contemplated, in agreeing to the wording of the leave reserved provision, that it opened the way for the Association to conduct a work value case cumulative upon an attraction and retention case. It was Assistant Commissioner Jenkins' evidence that the only time work value was discussed was 'in the context of it being bought out generally until the next wage round in 2011'. Assistant Commissioner Jenkins further stated: The final agreement reached by the parties did not ultimately involve the creation of a new datum point (being different to that referred to at [31] of Mr Remfrey's affidavit). However, that agreement also prevents the Association from bringing a work value claim for anyone (including Tactical Operations Unit and Police Prosecutors) during the life of the new award. 14 Nevertheless, it was not articulated by the Commissioner's representatives that work value was not an element of the leave reserved provision, although it should be said work value would probably not have presented itself as an issue in the context of the leave reserved provision such as to require any caveat to be issued by those representatives. 15 The evidence demonstrates that the subjective intentions of the parties as to the nature and scope of the leave reserved provision were not aligned. Regrettably, in intense and complex negotiations such as those that I have referred to, matters which at the time are not at the forefront of the negotiators' concentration in trying to achieve a settlement sometimes receive less attention to detail than what might ultimately have proved to be necessary and thereby later lead to misunderstanding. 16 In the circumstances, it would not be either fair or reasonable to impose upon the Commissioner an outcome that represented the subjective intention of the Association in relation to the nature and scope of the leave reserved provisions of the agreement, when the Commissioner made the agreement on the basis of an entirely different understanding and where the terms of the agreement, considered objectively, do not support the Association's interpretation. 17 The agreement gives leave to the Association 'to pursue improved remuneration having regard to attraction and retention for' TOU officers and officers in the Police Prosecutors Branch. It is impossible to construe those words as permitting the Association to pursue a work value case cumulative upon an attraction and retention case. 18 Mr Hatcher referred to R v Toohey; exparte Meneling Station Pty Limited (1983) 158 CLR 327 and R v Hunt; exparte Sean Investments Pty Ltd (1994) 180 CLR 322 to support the proposition that the words 'having regard to' provided sufficient scope to enable the Association to pursue both its attraction and retention claim and its work value claim. I disagree. The words 'having regard to' indicate that whilst attraction and retention is a fundamental element to be considered in the Association's pursuit of improved remuneration, it is not to be the exclusive consideration. However, what the Association seeks to do is introduce another fundamental element - work value - that requires a construction of the words of the agreement that the words cannot reasonably bear. 19 The Commission's work value principle represents one of the few ways that wage increases may be achieved outside of State Wage Case increases. The principle is well known and well understood by industrial parties. If the intention was to allow wage increases to be pursued under the work value principle it would be a simple matter of saying so. If work value is not mentioned, the natural and ordinary conclusion would be that it was not being relied upon to achieve increases in remuneration. 20 The Association submitted that the principal basis of its claim was attraction and retention and that if it were unsuccessful in that regard, it could not succeed on the basis of work value alone. However, if the Association is successful in making out its case based on attraction and retention, on the Association's case that opens the gateway to what is a separate claim based on work value. I do not regard that as being consistent with the High Court's treatment of 'having regard to' in Toohey or Hunt. 21 It follows that the Association is entitled to pursue a claim for improved remuneration for TOU officers and officers in the Police Prosecutors Branch having regard to attraction and retention. Work value change associated with attraction and retention will necessarily arise for consideration. In my opinion, however, the Association is not entitled to pursue a separate claim based on work value cumulative upon a case the centrepiece of which is a claim for increased remuneration that is necessary and desirable in the public interest to attract and retain officers in key branches of the Police Force. 22 I would add these observations: it has been agreed between the parties that the Commission should determine whether the Association has made out a case for improved remuneration having regard to attraction and retention. It seems from what was said by counsel for the Association in the interlocutory proceedings that it will be contended there is a continuing shortage of personnel in the two agencies concerned and that what is being sought is an increase in their remuneration in order to attract and retain officers, such officers possessing valuable skills and knowledge that are highly marketable. 23 Attraction and retention is not, of itself, a basis upon which the Commission would award salary increases: see for example, Local Courts Anomaly Case 1989 AR (NSW) 638 at 645. If it is to be contended that special case considerations arise, in order to satisfy the requirement for a special case the applicant must demonstrate that the case has 'special attributes' or is 'out of the ordinary' so as to take it outside the restrictions which may otherwise apply under the wage fixing principles: Re Operational Ambulance Officers (State) Award [2001] NSWIRComm 331; (2001) 113 IR 384. 24 Insofar as work value is concerned, in order to succeed in a case for improved remuneration, the applicant will need to demonstrate change in the context of shortages and the consequential need to raise salaries to attract and retain officers. If the applicant is successful in that respect, a value will need to be placed on the work of such officers. 25 There is no bright line separating attraction and retention considerations and work value considerations, and whilst the Health Employees Pharmacists (State) Award and other Awards [2003] NSWIRComm 453; (2003) 132 IR 244 and Public Hospital Nurses (State) Award (No 3) [2002] NSWIRComm 325; (2002) 121 IR 28 provide some assistance in that regard, those cases should not necessarily be regarded as an exhaustive exposition on the subject. Moreover, I do not think the applicant is as confined as it seems to think so. 26 The appropriate course is for the Association to present its evidentiary case in the manner it has prepared for, but on the basis that a separate work value case with a datum point of 2005, and cumulative upon attraction and retention, will not constitute any part of the proceedings. Any complaint that the Association has overstepped into the territory of a separate case will be dealt with by the Full Bench in the course of the proceedings. 27 Finally, given the unusual nature of what has been agreed the Commission should determine, the parties may wish to consider the claim being dealt with under the 'Bluescope' process: see Construction, Forestry, Mining and Energy Union (New South Wales Branch) and Macquarie Generation [2009] NSWIRComm 160; Operational Ambulance Officers (State) Award [2008] NSWIRComm 168; Notification under section 167 by the Minister for Industrial Relations of a dispute between BHP Billiton and The Australian Workers Union and others re proposed strike action [2002] NSWIRComm 378; Crown Employees (NSW Fire Brigades Permanent Firefighting Staff) Award 2008 [2008] NSWIRComm 174; and Crown Employees (Public Sector - Salaries 2008) Award [2008] NSWIRComm 193. 28 The Association's notice of motion is dismissed. ________________________________ 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.