Industrial Relations Commission of New South Wales CITATION: PSA v Dept. Industry & Investment [2010] NSWIRComm 1026 APPLICANT: PARTIES: Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales RESPONDENT Department of Industry and Investment FILE NUMBER(S): 239 of 2010 CORAM: Ritchie C Dispute notification re applicant seeking to cease pending announcement re voluntary redundancies. Applicant sought an interim order preventing respondent from offering voluntary redundancies. Applicant made application for new award requiring respondent to consult and provide relevant information to employees and applicant. CATCHWORDS: Respondent sought hearing and determination that application in breach of no extra claims clause. Applicant claimed not in breach of no extra claims clause and that award would result in a new entitlement and not a benefit. Commission found that application in breach of no extra claims clause. No requirement to make an interim order or hear application for new award. LEGISLATION CITED: Industrial RelationsAct 1996 NSW Education Employees (Non-Contract Employment) Award 92IR 239 at 47. Health Services Union and others and Director-General,NSW Department of Health and another [2010}NSWIRComm42 CASES CITED: Corrections Health Nurses'(State) Award 90IR 235. United Firefighters' Union of Australia v Transfield Services Australia Pty Ltd [2007]AIRC 781 Castlemaine Tooheys Ltd v South Australia(1986) 161 CLR 148 HEARING DATES: 19/05/10 DATE OF JUDGMENT: 24 May 2010 Applicant: Mr M Gibian of Counsel Solicitors WG McNally Jones Staff LEGAL REPRESENTATIVES: Respondent Mr S Benson of Counsel Solicitor Crown Solicitor DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: RITCHIE C. 24 May 2010 Matter No IRC 239 of 2010 IN THE MATTER OF :Notification under section 130 by Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales of a dispute with Department of Industry and Investment re announcement of voluntary redundancies. DECISION [2010] NSWIRComm 1026 Background 1 The Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (the applicant) filed a dispute under section 130 of the Industrial Relations Act 1996 on 1 April 2010. The respondent to this dispute was the Department of Industry & Investment. 2 The dispute was expressed in the following terms The PSA is applying to cease the pending announcement of voluntary redundancies to the workforce of the Department of Industry & Investment. No further action should be undertaken until there has been full and proper consultation with the PSA regarding the proposed workplace structural reforms. The current general offer to seek expressions of interest for voluntary redundancies is contrary to the NSW government's "Managing Excess Employees Policy". The policy requires change management plans, criteria of what defines excess employees and definition of change in the workplace. None of these issues have been addressed by the Government. 3 The dispute centres around the requirement by the State Government for the respondent to reduce its workforce by approximately 90 employees by offering voluntary redundancies through a general expression of interest communiqué directed to its workforce. The respondent has set the last day of work for those chosen to be around 24 June 2010. 4 The dispute came before Bishop C who held a number of conciliations prior to raising a Certificate of Attempted Conciliation on 16 April 2010. 5 The applicant then pressed a section 173 and the matter was re allocated to the Commission as presently constituted. 6 On 19 April 2010 the applicant by correspondence to the Commission set out their proposed award entitled Crown Employees (Department of Industry and Investment-Redundancy Consultation) Award. (the redundancy award) 7 A mention of the matter was held on 23 April 2010 when Directions for the filing and swerving of evidentiary material was provided to the parties and dates of 1 and 2 June 2010 were set. 8 The matter was relisted on 13 May 2010 when a threshold issue was raised by the respondent and the matter was set down for hearing of this issue on 19 May 2010. 9 On 13 May 2010 the Commission was advised that approximately 302 employees had responded to the expression of interest and that the respondent had identified 103 for tentative approval. 10 On the same day the applicant advised by correspondence that they would be seeking the following interim order to preserve the status quo: "That the Department of Industry and Investment not proceed with offering voluntary redundancies to its employees, pending the arbitration and determination of these proceedings." 11 On 19 May 2010 the Commission heard argument with respect to the applicant's claim for an Interim Order and the respondent's claim that the application for an award was contrary to a Memorandum of Understanding (MOU) signed by the NSW Government and the applicant covering the period from 1 July 2008 and 30 June 2011 and the industrial award covering the employees that being Crown Employees( Public Sector Salaries-2008) Award (the award). Case for the Applicant. 12 In its submissions the applicant stated that the Commission had the power to make orders preserving the status quo pending the arbitration of an industrial dispute. The status quo in this matter being where no employee is made redundant. 13 In determining whether interim orders should be made, the applicant went to Castlemaine Tooheys Ltd v South Australia for guidance in considering whether there is a serious question to be tried, whether the applicant will suffer irreparable injury and whether the balance of convenience favours granting an injunction. The criteria identified in the above case should not be applied strictly or inflexibly. The Commission has a broad discretion to fashion appropriate relief by reference to the merits of the industrial dispute itself. 14 By making a general call for expressions of interest in voluntary redundancy without identifying its proposed structure the respondent has denied the applicant the opportunity to properly consult with its members, asses the impact of the redundancies on the services and functions of the respondent and workload of its members and ensure that redundancies are minimised.. If offers of redundancy are made, acceptance by employees will be immediate. 15 The balance of convenience favours the making of interim orders restraining the respondent from offering voluntary redundancies pending the hearing and determination of the proceedings listed for hearing on 1-2 June 2010. The orders sought would have the effect of restraining the offers of voluntary redundancy for a period of two weeks at most. 16 With respect to the no extra claims objection, the applicant stated that clause 8(iii) of the award also refers and incorporates the no extra claims commitment in clause 8 of the MOU. Clause 8(iii) of the award does not purport to expand upon the operation of clause 8 of the MOU. 17 It was the submission of the applicant that the redundancy award application made is not precluded by either clause 8 of the MOU or clause 8 (iii) of the award. The applicant submitted that the redundancy award application made by the applicant which is the subject of the dispute proceedings is not a claim that fulfils the description of "no extra wage claims, claims for improved conditions of employment or demands made in respect of the employees covered under the award" for the purposes of clause 8 of the MOU. It seeks no more than the respondent consult with the applicant. Secondly clause 8 of the MOU should be interpreted by reference to the matters that were in contemplation of the parties at the time the agreement was made and will not be interpreted as preventing a party advancing claims with respect to matters not contemplated at the time of the signing of the MOU. 18 The applicant stated that in approaching the construction of a no extra claims clause whilst a strict approach is to be adopted to the construction one must be alert so as not to ignore the actual words used in the provision or to ignore the actual words used in the provision or to ignore an attempt by the parties to limit the terms of the commitment. Appeals to the widest conceivable literal meaning of the words used in a no extra claims provision are liable to mislead and result in a construction of the provision at odds with the industrial context and intention of the agreement as a whole. 19 What is being sought by the applicant is not an increase in wages nor a claim for improved conditions of employment or demands made in respect of the employees covered. The application does not seek to revisit matters contained in the awards that apply to the employees during the life of the MOU. All that is sought is a requirement for consultation between the respondent and the applicant in the context of proposed redundancies. 20 In any event the application made is not precluded by the no extra claims provision since there can be no suggestion that its subject matter was in contemplation at the time the MOU was signed. The MOU was signed in settlement of a claim advanced by the applicant for increases in the salaries payable to employees covered by particular industrial awards. Nothing in the MOU suggested that the parties had in contemplation the consultation arrangements applying with respect to redundancies in the public sector at all in making the MOU. 21 The applicant rejected the respondent's submission that the subject matter of the application was contemplated by clause 5.1 of the MOU. That clause deals with compulsory redundancy as a last resort and the retrenchment payment payable. That clause and the MOU generally did not deal with issues relating to consultation in the event of the introduction of restructures within Departments or agencies. What the applicant is seeking to do was not contemplated in making the MOU. Case for the Respondent. 22 It was the respondent's submission that the subject matter of the proposed award is precluded by the "no extra claims" clauses in both the award and the redundancy award. A perusal of the proposed redundancy award reveals that the substantive subject matter sought to be regulated relates to consultation requirements to apply in circumstances where the respondent proposes to declare any of its employees excess or to offer voluntary redundancy to any of its employees. 23 A consideration of the MOU clearly shows that the "no extra claims" undertaking is couched in extremely broad terms and precludes any "proceedings, claims or demands" concerning (amongst other things) conditions of employment in respect of employees covered by the agreement. 24 When considered in the light of the MOU, the "no extra claims" commitment in the award clearly extends to any claim for improved conditions of employment or demands made in respect of the employees covered under the award. 25 The undertaking was given in the context of concessions of salary increase over a three year period. 26 The consent award was made a few weeks after the MOU was signed and reflected the outcome of the MOU as was intended by the parties. 27 The proposed redundancy award requires that the respondent consults with the applicant and its employees. It was the view of the respondent that the claim clearly relates to the conditions of employment for the employees covered by the award and are clearly demands made in respect of such employees. 28 It was the submission of the respondent that the proposed new redundancy award deals with matters that were not previously the subject of specific award regulation applicable to the respondent and which were not contemplated by the parties at the time of the execution of the MOU. This would only be material if the "no extra claims" commitment was couched in such prescriptive terms (i.e. that it was limited to "no extra claims" for award provisions then in existence). That is not the language adopted in the MOU or the award. 29 Also the view of the applicant that the proposed award deals with subject matter that was not contemplated by the parties at the time of the execution of the MOU is contradicted by the fact that clause 5.1 of the MOU expressly deals with issues concerning excess employees. Consideration. 30 In consideration as to whether an interim order as sought by the applicant should be granted it should be first determined as to whether the no extra claims clause as expressed in the award and the MOU prevents the applicant seeking a redundancy award. 31 The MOU was signed by the parties on 2nd October 2008 and the award was made two weeks later. 32 The award clause is expressed in the following fashion 8. No Extra Claims (i) This Award provides pay increases of 4% with effect from the first full pay period that commenced on or after 1 July 2008, a further increase of 4% with effect from the first full pay period to commence on or after 1 July 2009, and a further increase of 4% with effect from the first full pay period to commence on or after 1 July 2010. (ii) These increases arise from the agreement of the parties contained in the Memorandum of Understanding between the NSW Government and the Association for the period of 1 July 2008 to 30 June 2011 entered into on 2 October 2008 ("Memorandum of Understanding"). (iii) Subject to clause 9, Leave Reserved, the pay increases under this Award are provided on the basis of the "no extra claims" commitment of the parties contained in clause 8 of the Memorandum of Understanding, provided that this shall not prevent the parties from applying for the award changes identified in the Memorandum of Understanding. 33 Expressed within the MOU under the heading of Objectives : This Memorandum of Understanding (Memorandum) between the NSW Government and the Public Service Association of NSW sets out the understanding and agreement of the parties in relation to wages and conditions outcomes for employees covered by the Crown Employees(Public Sector Salaries-July 2007) Award for the period 1 July 2008 to 30 June 2011. The parties agree that the change of conditions and agency improvement initiatives outlined in this Memorandum underpin the agreement regarding the quantum of wage increases (above 2.5%) for the period covered by this Memorandum. and.......... This Memorandum of Understanding is designed to provide both parties with certainty of outcomes for the period of the Memorandum. 34 Expressed within the MOU at Clause 8 is the following : No Extra Claims Subject to clause 6, the parties agree that during the term of this memorandum there will be no extra wage claims, claims for improved conditions of employment or demands made in respect of the employees covered under the Award, and further, that no proceedings, claims or demands concerning wages or conditions of employment in respect of those employees will be instituted before the Commission or any other arbitral tribunal. The agreement in the preceding paragraph does not prevent the parties from taking any proceedings with respect to the interpretation ,application or enforcement of existing award provisions, or this Memorandum. The PSA is to have leave reserved to pursue its filed application in respect of probation and parole officers. The parties further agree that during the Term of this Memorandum consent variations to the awards can proceed. 35 Both parties agreed that Clause 6 of the MOU was not relevant to these proceedings. 36 In submissions both parties took the Commission to Health Services Union and others and Director-General , NSW Department of health and another.(The Health Case) In this matter a Full Bench of this Commission considered the issue of whether the proposed fee increase for private use of Dept. cars fell within the "no extra claims" clause of the health industry awards and the MOU's. The Full Bench considered the strict approach one takes to the construction of "no extra claims" provisions of industrial instruments should be adopted. I note the comments of the Full Bench 40 We also agree with the contentions advanced by the unions that a strict approach to the construction of the "no extra claims" provisions of industrial instruments should be adopted by the Commission. Wright J in Re Corrections Health Service Nurses' Award (1999) 90 IR 235 at 245 described the correct approach to construction in such cases (with a necessary caveat) as follows: It should be emphasised that the Commission must ensure the integrity of not only its own wage fixing principles but also the strict observance of agreements and undertakings given by parties compliance with which, properly considered, are important and indeed essential to the integrity to the principles. Undertakings such as no extra claims provisions are crucial parts of the integrity of the system of wage fixation which occurs in the New South Wales system of industrial regulation. Therefore, nothing in this decision should be seen as providing any precedent for any other award or for any other part of the public sector. It is to be emphasised that this decision is arrived at in the light of the very particular and unusual set of circumstances of the present application. Any other consideration of such matters would necessarily depend on its particular facts. In approaching the construction of no extra claims provisions, or provisions such as those contained in the Heads of Agreement, a strict approach of [sic] their construction should be applied consistent with the necessity of maintaining the integrity of the wage fixation principles. Nevertheless, a strict construction (that is, one which would be alert to ensure inappropriately brought claims do not proceed) does not require the Commission to ignore actual words used in the provision or to ignore a clear attempt by the parties to limit the terms of the commitment. and 45 A determination by the Department to exercise a right to vary the private rate for motor vehicles in accordance with an agreement made with a particular employee could not, in our view, be described as a claim for the purposes of the "no extra claims" provisions of the health industry awards. and 46 Whilst such a determination may, in appropriate cases, and subject to jurisdictional questions, be challenged on grounds of fairness or reasonableness, it neither has the effect of reducing an existing award entitlement nor advancing any new or additional claim or demand over those existing at the time the parties entered into the award provisions (or the pre-existing agreements in the form of the MOUs). and 49 When considered in the light of the MOUs, the "no extra claims" commitments are said to prevent two types of claims or actions. First, the parties committed to precluding "claims for improved conditions of employment or demands made in respect of the employees covered by the Union and employed under the Awards". Secondly, the "no extra claims" provisions of MOUs provide "that no proceedings, claims or demands concerning wages or conditions of employment in respect of those employees will be instituted before the Commission or any other arbitral tribunal". (The provisions are very similar in each case with some minor but immaterial differences such as in the NSWNA's MOU which states that "no proceedings, claims or demands concerning wages or conditions of employment in respect of those employees will be instituted before the Commission or any other arbitral tribunal except as provided in the Leave Reserved Clause below".) 37 The applicant's redundancy award entitled Crown Employees (Department of Industry and Investment-Redundancy Consultation) Award states the following under 3. Excess employees -Consultation (a) Where it is proposed by the State Government and/or the Department to declare employees excess or call for employees to take up offers of voluntary redundancies, the Department shall immediately engage in discussions with effected employees and the PSA. Such discussions shall cover all relevant matters, including: (i) the reasons for proposing to declare employees excess or to offer voluntary redundancies; (ii) measures to avoid or minimise the need to declare employees excess or offer voluntary redundancies; (iii) available measures to mitigate any adverse effects of employees being declared excess or the proposed redundancies; (iv) the availability of reasonable alternative employment within the Department. (b) For the purpose of such discussions, the Department shall as soon as practicable supply the affected employees and the PSA with all relevant information about the proposed redundancies; including but not limited to: (i) the reasons for proposing to declare employees excess or to offer voluntary redundancies; (ii) the number and categories of employees likely to be affected; (iii) the method of identifying an employee as excess, having regard to the efficient and economical working of the department, and the relative efficiency of employees; (iv) the future of any services or functions affected including, where such services or functions are to be retained, how they are to be effectively managed on reduced staff; and under Clause 6 Area, Incidence and Classification (a) This award shall apply to the State of New South Wales, The Director of Public Employment, The Department of Industry and Investment, and employees of the Government Service of New South Wales employed in the Department of Industry and Investment. (b) This award shall take effect on and from 12 April 2010 and shall remain in effect thereafter for a period of three years. 38 The MOU and the "no extra claims " clause disallows any party to either document from seeking increase in rates of pay or improvements in conditions of employment. No claim for an increase in rates of pay are present in this dispute. The question therefore is whether the applicant's proposed award constitutes a demand for an improvement in a condition and therefore breaches the no extra claims clause. Mr Gibian quoted from United Firefighters' Union of Australia v Transfield Services Australia Pty Ltd which was concerned with proposed changes to manning levels that was sought to be implemented by the employer. [7] The UFU contends that the expression "conditions of employment" has a wide meaning. It relies upon the decision of the High Court in R v Booth and Others; Ex Parte The Administrative and Clerical Officers Association [1] ( Booth ) where the High Court held: [2] "The expression 'conditions of employment' is defined in s3.(1) of the Act to mean 'Salaries, wages, rates of pay or other terms or conditions of service or employment'. The expression as so defined is obviously intended to have a wide meaning. In Australian Tramway Employees Association v Prahran and Malvern Tramway Trust (13), in a passage cited by Dixon CJ in Reg. v Findlay; Ex Parte Commonwealth Steamship Owners' Association (14), Isaacs and Rich JJ said: 'The 'terms' of employment are the stipulations agreed to or otherwise existing on both sides upon which the service is performed. The 'conditions' of employment include all the elements that constitute the necessary requisites, attributes, qualifications, environments or other circumstances affecting the employment.' No doubt this extensive meaning should be attributed to the word 'conditions' in the definition…" and [13] In my view, the expression "conditions of employment" is not an expression with a single fixed meaning, being that expressed by the High Court in Booth . It is an ambiguous expression and is capable of more than one meaning. [9] In many circumstances, the expression "conditions of employment" is used with a narrower meaning and refers to the benefits and entitlements affirmatively conferred on employees by their contract of employment or any applicable award or collective agreement. 39 It was Mr Gibian's submission, that its that meaning that should be applied to the No Extra Claims clause found in the MOU, in that the application made in the present dispute proceedings seeks to confer a new an additional entitlement upon employees, does not seek to provide an additional benefit to employees, does not improve their conditions of employment. 40 As expressed by Mr Benson for the respondent what is being proposed by the applicant is a redundancy award that imposes obligations on the respondent which creates rights for those employees under the award. In accordance with the redundancy award once the respondent proposes to declare employees excess or call for voluntary redundancies there is a requirement for the respondent to comply with an expressed prescriptive procedure. The respondent must consult with both the employees and the applicant. It is mandatory. It is a requirement that would have the weight of law. 41 This Mr Benson stated differs from the Health Case. The Health Case dealt with a determination by the Department to exercise a right to vary the private rate for motor vehicles in accordance with an agreement made with a particular employee. No award covered this area of employment. He also stated that whilst the Full Bench recognised that the claim was not a demand made in respect of employees, this is in contrast with the present case where you have a demand from employees that would benefit employees. I accept Mr Bensons submissions with respect to the Health Case 42 Within the MOU Clause 5 Conditions Agreement, Managing Excess Employees is a comprehensive clause covering the procedure where an employee(s) is declared excess by an agency when they no longer have a substantive position. This clause covers such an employee who has proceeded through a twelve month retention period and have not been placed in a suitable position. The clause outlines what procedure has to occur prior to a forced redundancy. Mr Benson submitted that the parties had directed their minds to the extent they wished to consider the operation of the Governments policy on managing excess employees and it would be absurd proposition for this clause to be read down so narrowly as to mean a subset of managing excess employees. To support this submission he quoted from NSW Education Employees (Non-Continuing Contract Employment)Award : Mr Taylor argued that these matters are not "claims in relation to issues covered by the (1996) award which the No Further Claims clause of that Award prohibits, on the basis that there is no specific provision about those matters already contained in the existing Award. We disagree. There is no doubt that the claims, if granted, would confer significant additional benefits on casual employees and significant additional obligations, both monetary and otherwise, on the respondents in relation to the class of employee. In an industrial relations context the purpose of a no extra claims clause in a consent Award is that for the period of duration of the Award there will be no extra claims in favour of either side unless by agreement. To limit the no extra claims provision to the type of matter already specified in the Award would leave the way open for legalistic, unscrupulous claims in relation to additional matters to be put forward. We do not think that such an interpretation is justifiable in the circumstance of this case : rather , in our opinion , the no extra claims clause precludes the present claims which are aimed at substantially improving , at the expense of the employer, the employment conditions for casuals authorised by the current award. Mr Gibian for the applicant disagreed with this submission. It was his submission that the contents of the MOU constitute the changes that will occur to fund the wage increases. It discusses employees that are declared excess in that they no longer have a substantive position. 43 The No Extra Claims clause as expressed in the MOU prevents no extra wage claims, claims for improved conditions of employment or demands made in respect of the employees covered under this Award. These dispute proceedings, in the view of the applicant, seeks to confer a new additional entitlement upon employees. One that would require the respondent to immediately engage in discussions with affected employees and the applicant. Such discussions shall cover all relevant matters (which are listed ) and then require the respondent to supply to the affected employees and the PSA all relevant information about the proposed redundancies as expressed. 44 The respondent has stated that such a claim is in breach of the "no extra claims" clauses in the award and the MOU. Their primary submission was that when one reads the terms of clause 8 ( No Extra Claims) in the context of the MOU as a whole which includes the objectives, and the first paragraph (Objectives) that sets out the understanding and agreement of the parties in relation to wages and conditions outcomes for employees. It did not state: and conditions, outcomes to the extent that they're expressly referred to. The final paragraph of the clause was that the MOU was designed to provide both parties with certainty of outcomes. I accept the submissions of the respondent. What is being sought by the applicant requires the respondent to both immediately engage in discussion and provide relevant information. Failure to do so would find the respondent in breach of the redundancy award. 45 It is my finding that such a redundancy award would result in employees covered by this award become entitled to a new condition of employment. 46 Each employee would have a legal right to require discussions to take place immediately and relevant information to be provided. The redundancy award would impose the creation of an obligation on the respondent and therefore consequently create rights for the employee. Whilst the applicant has categorised the redundancy award as a new entitlement and not a benefit to the employee, it still would result as a legal enforceable right and a condition of employment. 47 After a close consideration of the evidence and the submissions, it is my finding that the redundancy award as proposed by the applicant would be in breach of the "no extra claims" clause of the award and the MOU. 48 As a consequence of my finding it therefore does not become necessary to make the interim order as sought by the applicant nor hold a Hearing on 1st and 2nd June 2010 with respect to the claim for the redundancy award. 49 I will stand this matter over generally pending communication from either of the parties. D. RITCHIE 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. 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