Industrial Relations Commission of New South Wales CITATION: New South Wales Local Government, Clerical, Administrative, Energy, Airlines and Utilities Union and Blue Mountains City Council [2006] NSWIRComm 127 NOTIFIER New South Wales Local Government, Clerical, Administrative, Energy, Airlines and Utilities Union PARTIES: RESPONDENT Blue Mountains City Council FILE NUMBER(S): 5169 of 2005 CORAM: Sams DP Industrial dispute - local government employees - review of Council's vehicle fleet requirements - Council decision to terminate vehicle lease back agreements - cost considerations - 12 months notice of termination of agreements - four affected employees - lease back agreements for a number of years - cost savings - alternatives for reducing costs - recruitment and retention - Council's policies - terms of agreement - letters of offer - whether agreements a benefit or a condition of employment - no consultation with affected employees - mutual trust in employment relationship - implied terms in employment contract - award provision - nature of relief sought - application for award and orders CATCHWORDS: Held, no jurisdictional issue raised - new award unnecessary - employees unlikely to have accepted positions knowing vehicles would be withdrawn - award provision not relevant - renewal of agreements little more than administrative exercise - no distinction between benefit and condition of employment - lease back agreements integral component of remuneration package - implied term of the contract of employment - true nature and purpose of relationship cannot be altered - no genuine attempt to consult employees or Union - poor industrial relations practice - orders warranted to preserve the status quo - orders made. Industrial Relations Act 1996 LEGISLATION CITED: AWARDS Local Government (State) Award 2004 350 IG 471 Australian Salaried Medical Officers' Federation (New South Wales) (on behalf of Bruce Hall) v South Western Sydney Area Health Service [2006] NSWIRComm 101 Byrne v Australian Airlines Ltd 185 CLR 410 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales 149 CLR 337 Ellisons Bulk Haulage Coal Allowance Award (unreported) Full Bench IRC433 of 1995 CASES CITED: Gambotta v John Fairfax Publications Pty Ltd [2001] NSWIRComm 87 Local Government Engineers' Association of New South Wales and Wollongong City Council [1995] NSWIRComm 31 Network Ten Pty Ltd v Rowe [2005] NSWSC 1356 Pacific Power v Electrical Trades Union of Australia, New South Wales Branch [1997] NSWIRComm 70 Whitehead v Hillier Hewitt Elsley Pty Ltd [2003] NSWIRComm 382 HEARING DATES: 13/03/06, 14/3/06, 21/03/06 DATE OF JUDGMENT: 04/21/2006 NOTIFIER Ms M Wilson, Industrial Officer New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union LEGAL REPRESENTATIVES: RESPONDENT Mr L Smith, Industrial Officer Local Government Association of New South Wales JUDGMENT: - 27 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM : SAMS, DP 21 April, 2006 Matter IRC05/5169 Notification under s130 by New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union of a dispute with Blue Mountains City Council re review of its vehicle fleet DECISION [2006] NSWIRComm 127 1 This decision arises as a consequence of a notification lodged by the New South Wales Local Government, Clerical, Administrative, Energy, Airlines and Utilities Union ('the Union') pursuant to s130 of the Industrial Relations Act 1996 ('the Act') of a dispute with the Blue Mountains City Council ('the Council'). 2 The dispute concerns the outcome of a review undertaken by Council of its light vehicle fleet requirements. The review resulted in a number of the Union's members being given 12 months notice that their leaseback vehicle agreements with Council were to be terminated. 3 While the notification of dispute was lodged on 6 October 2005, the issues in the dispute had been the subject of negotiations between the Union and Council from about the time the employees received the 12 months' notice between the 17 and 27 January 2005. 4 The proceedings originally came before Bishop, C and were listed for conciliation on three occasions in October and November 2005. On 27 October the Commissioner issued a certificate of attempted conciliation, pursuant to s135 of the Act and issued directions for the arbitration of the matter. The Council subsequently invoked its rights under s173 of the Act and during the law vacation, the Duty Judge (Marks, J) re-allocated the arbitration of the matter to the Commission as presently constituted. 5 It is pertinent, at this point, to note that the eventual arbitration of the dispute and the orders sought by the Union were intended to prevent Council from proceeding to terminate the leaseback agreements of four employees all of whom gave evidence in the proceedings. These employees and their positions with Council were: Mr Rhett Hahn - Business Development and Systems Officer Mr Gary Brown - Co-ordinator Plant and Resources Mr John Odgers - Risk Management Co-ordinator Mr Stephen Lees - Team Leader/Mechanic 6 Notwithstanding that the 12 months' notice has expired, the Commission notes that the Council had earlier given an assurance that the termination of the agreements would not occur pending determination of these proceedings. Thus, the Union's draft interim orders preserving the status quo until determination by the Commission are unnecessary. The Leaseback Agreements 7 Each of the four employees provided details of their leaseback agreements with Council. By and large, these arrangements are not in dispute and may be summarised as follows: Rhett Hahn 8 Mr Hahn commenced employment with the Council in December 1995. In early 2000 he was appointed acting Business Systems Support Officer. As the position was being trialled, he had access to a Council vehicle for use to and from work. 9 In December 2000 Mr Hahn had access to a leaseback vehicle for private use and a new leaseback agreement was signed in December 2001. On 10 October 2002 Mr Hahn was appointed to a permanent position as Business Systems Support Officer. He continued to have access to a leaseback vehicle. 10 In late 2003 and early 2004 Mr Hahn's position was regraded and changed to Business Development and Systems Officer. During the negotiations for this position it was agreed that the leaseback vehicle was part of his package and the following was confirmed on 23 January 2004: Agreed That the memo stating the existing entitlement to a lease back vehicle be honoured in the new job be attached to the job offer and retained on file as a Present Incumbent Only condition Agreed The memo reflects that the condition of lease back vehicle will be transferred to the new job however acknowledges that there is a Council wide review of all fleet vehicle leases and any lease may in the future be subject to change. 11 Mr Hahn pays $77.00 as weekly vehicle fee contribution. Gary Brown 12 Mr Brown commenced work as a labourer with Council in May 1990. In March 1999 he became acting Restorations Officer and received the use of a vehicle to and from work. 13 In September 1999 he signed a letter of offer for the permanent position of Restorations Officer with full vehicle lease. The letter of offer records this at para 4: As discussed, a lease back vehicle is available for your use. 14 In late 2003 Mr Brown was approached to take up an offer for the position of Co-ordinator Plant and Resources. After negotiations with management, Mr Brown agreed to accept the position on the condition that he retained his vehicle lease, a 35 hour week and existing wage. This was agreed and Mr Brown said he was assured he would not lose his vehicle with the new position. He claimed this assurance was given by Mr Dave Allen, Group Manager. Mr Brown's weekly fee contribution is $77.00. John Odgers 15 Mr Odgers was employed by Council as a Risk Management Co-ordinator in May 2000. No vehicle was provided for this position. Mr Odgers believed that a vehicle was necessary for him to properly carry out his duties. After raising his concern with his manager, Mr Paul Bennett it was agreed that a business case would be prepared which Mr Bennett would support. 16 The business case was submitted and, after further negotiations Mr Odgers was provided with a full leaseback vehicle on 30 November 2001. He has retained the vehicle since that time. His current weekly fee contribution is $83.50. Mr Stephen Lees 17 Mr Lees commenced employment with Council as a Gardener's Assistant in December 1996. This position did not include a vehicle. On 28 September 1998 he signed a letter of offer for the position of Team Leader/Mechanic within the Operations Group. 18 Part 3 records as follows: A restricted leaseback vehicle is available for use. Please discuss the agreement with your supervisor during your first week of employment. 19 The restricted lease was for 48 weeks. Mr Lees did not have access to the vehicle while on annual leave. His weekly leaseback fee is $67.50. The terms of the Leaseback Agreement 20 The relevant provisions of the leaseback agreements to which the Commission's attention was directed are as follows: Preamble The motor vehicle internal management procedure for salaried staff is intended to establish Council policy and guidelines for the provision of motor vehicles as a job facility and/or benefit to employees. The Council constantly assesses the cost-benefit implications in maintaining a motor vehicle fleet including the payment of fringe benefit tax, operating costs, and return on sale. The ongoing provision of motor vehicles may therefore change depending upon the circumstances prevailing at the time and the overall cost-benefit to the Council. Employee Contributions Lessees will be required to enter into a Lease-back agreement (refer attachments 1 and 2) with Council. The amount proposed will be reviewed annually as part of the budget process and Lessees will be given a minimum notice of 90 days of any change to the level of contribution. The amount will be deducted as a post tax rate from the Lessees weekly earnings. Review of Procedures This Motor Vehicle Internal Management Procedure will be reviewed annually, in conjunction with the annual budget to ensure that: (a) the objectives of the policy continue to be met (b) it is meeting the needs of Council with regard to attracting and retaining suitably qualified personnel (c) appropriate costs are recovered. Attachment 1 - Offer Conditions for Provision of Motor Vehicle with Lease Back Scheme 4. The motor vehicle provided being available for Pool usage during working hours. 6. You may terminate this Agreement in relation to your own personal use at any time by notice in writing. Except as provided under the heading of Entitlement (points 4 and 5) of the Motor Vehicle Internal Management Procedure, Council may terminate the Agreement by giving you twelve (12) month's written notice. 7. This Agreement shall operate year to year as amended, or until terminated by either party. 21 Mr Smith also referred to cl 14 of the Local Government (State) Award: 14. Motor Vehicle Leaseback (i) Where a council and an employee enter into a motor vehicle lease back agreement on or after the date of the commencement of this award, the council shall give a minimum of 12 months written notice of termination of the agreement. (ii) The notice requirement of this clause shall not apply on termination of employment; loss of licence; breach of the leaseback agreement or if the employee accepts a new position with the council. 22 A further document referring to the weekly lease back fee and signed by the employee and a representative of Council includes these conditions: The opportunity to participate in Council's Vehicle Lease-Back Agreement is a benefit offered but is not a condition of employment. Both Parties agree to abide by the Vehicle Lease Back Policy and the Terms and Conditions as outlined in the Motor Vehicle Internal Management Procedure. The Evidence 23 Much of the evidence in this matter was uncontested. I provide below a summary of the witness evidence. Ms Tania Salijevic 24 During 2005 Ms Salijevic was the Chairperson of the Council's Staff Consultative Committee. She is no longer employed by the Council. 25 Ms Salijevic said she received several complaints from staff who were unhappy about the Light Vehicle Fleet Review. On 5 April 2005, Ms Salijevic sent a detailed memo to the General Manager outlining the staff's concerns, in particular citing the process as unfair and questioning the formula used to determine which vehicles were to be deleted. Despite discussion at the Consultative Committee and representations from the Committee, Ms Salijevic believed that the Council was not prepared to alter any aspect of the Fleet Review and that Council's decision had been firmly made. 26 In oral evidence, Ms Salijevic said she was not aware that the current vehicle policy was the same as that which was considered by the Staff Consultative Committee in 2001. She had not been aware of any objection to the policy being made by the members or the Union at the time. Ms Salijevic was not aware of any other employee losing their vehicle before the present dispute. Mr Gary Brown 27 Mr Brown deposed that when he was approached in late 2003 by Mr Dominic O'Brien, Manager Operations and Mr Dave Allen, Group Manager to take up the new position of Coordinator Plant and Resources, he was assured he would retain his vehicle lease. Mr Brown had sold his own vehicle in 1999 when he was first provided with a leaseback vehicle. When his new letter of offer did not contain reference to his vehicle, he met with Mr Allen again and indicated that he would rather stay in his existing position if there was any possibility he would lose his car. Mr Allen assured him that he wouldn't "lose conditions" and would "gain some". Mr Brown made a diary note of this conversation. 28 On 18 January 2005 Mr Brown was called to a meeting with Mr Allen and Mr Nassif, his supervisor. He was handed a letter terminating his lease agreement with 12 months notice. Mr Brown reminded Mr Allen of his earlier assurances to which Mr Allen agreed, but said it was "out of my hands as it was a corporate decision". 29 Mr Brown met with the General Manager, Mr Willis. Mr Willis stated that Mr Allen had not given him any such assurances. Mr Brown said he would not have accepted the new position if there had been any chance he would lose his vehicle. He also expressed concern about the lack of consultation. 30 Mr Brown sought, but was denied details and documentation concerning how the decision had been arrived at. Mr Brown again confronted Mr Allen who agreed that he had given him assurances about his vehicle. Mr Brown denied Mr Allen mentioned anything about the Fleet Review or the possibility of his lease being withdrawn. Mr Brown strongly disagreed with Council's decision and said it was contrary to the express agreement he had about the new position. He had been given no proper opportunity to respond to the Review findings and was not consulted before any decisions were made. 31 Mr Brown believed his leaseback vehicle was part of his employment salary and a condition of employment. In oral evidence, he said he would have to purchase another vehicle if his leaseback vehicle was withdrawn. He referred to the NRMA's weekly running costs of $217.09 for a Holden Commodore Acclaim (his present vehicle). 32 In cross examination, Mr Brown agreed he was aware that Council's policy was subject to change depending on circumstances, but believed it must be by agreement. He believed employees keep a vehicle for however long they are the present incumbent in the position. Mr Brown accepted that the agreement makes reference to termination with 12 months' notice and that there is no requirement for consultation. 33 In re-examination, Mr Brown deposed that no one from Council had spoken to him about the new policy in 2001. He said that while it could be downloaded, it was difficult to understand. Mr Brown said that there was no opportunity to contrast the conditions of the agreement. He added that, if you didn't sign it, you wouldn't get the vehicle. Mr Rhett Hahn 34 Mr Hahn believed that when he was appointed to a permanent position as Business Systems Support Officer in 2002 his leaseback vehicle was part of the position and conditions of employment and he did not believe it could be taken away. 35 During negotiations for a regraded Business Development and Systems Officer position it was determined that the conditions would be "present occupant only". The negotiations referred to the value of the car and his "in hand" salary. Relocation and travelling allowances were waived because of the leaseback vehicle. Mr Hahn was clearly of the understanding that the car was part of the position. If it had not been, he wouldn't have accepted the position or he would have negotiated alternative remuneration to compensate for its loss. 36 Mr Hahn was handed the letter terminating his leaseback vehicle in January 2005. There was no discussion or offer to compensate him for the loss of conditions. He had not been consulted about the Fleet Review or asked to provide any information on usage. He said the majority of his travel was for business purposes. 37 In oral evidence Mr Hahn said no one had spoken to him about the vehicle leaseback policy, but he did find it on the internet about five years ago. 38 Mr Hahn accepted that the agreement he signed provided that the policy was subject to change. He believed the termination clauses were waived when he negotiated his new conditions in 2002/03. These resulted in conditions based on "present occupant only". Mr Hahn said his weekly fee covers about $4,500 of the annual cost of his vehicle of $12,000. 39 Mr Hahn believed that the reference to the policy being subject to change was a reference to a change in the position occupied by the employee. He accepted that a memo to him from Mr Allen recognised that the Council's Fleet Review might result in changes. Mr John Odgers 40 Mr Odgers prepared a business case for his vehicle in 2000 and he subsequently negotiated a full leaseback vehicle in November 2001. Mr Odgers said that, at no time, prior to receiving a memo in January 2005, terminating his lease, was he interviewed or questioned about usage. 41 He had sought a meeting with Mr Sut, Executive Officer to express his concerns at the lack of transparency, failure to consult, workplace change and unfair process. Mr Odgers identified a number of Councils which provide a leaseback vehicle to its Risk Management position. 42 Mr Odgers owns another vehicle and was offered a weekly car allowance payment of $133.00 to use his own vehicle for business purposes. However, he did not believe it compensated him for the loss of the leaseback vehicle. 43 In oral evidence, Mr Odgers confirmed that his position and his duties had not changed since 2001 when his business case had been put and accepted. 44 Mr Odgers said he was probably aware his leaseback agreement was subject to change and to the Council's policy. He agreed it was a benefit because he signed the agreement. However, he believed he was entitled to compensation if it was withdrawn. He said there was no consultation which is why he went to the Union. 45 Mr Odgers agreed he was offered a weekly car allowance on condition he provide his own vehicle for Council business. He was also aware of Council's pooling proposal on the online booking system, but had had no recourse to the system as yet. 46 Mr Odgers deposed that when he renewed his agreement in 2005 he was simply invited to sign the document. As he trusted his Manager, he saw no need to read the details. Mr Stephen Lees 47 Mr Lees said the provision of a vehicle was one of the main reasons he applied for the position of Team Leader Mechanic in 1998. He had an agreement with his supervisor for a 48 week lease. Mr Lees said that a vehicle was necessary for call outs after hours and it would now cost Council more money if he didn't have a vehicle. Mr Lees agreed he had signed three agreements in March 1997, March 1999 and March 2002, all of which referred to the vehicle as being a benefit and that he agreed to abide by Council's policy. However, nothing had ever been explained to him. He said "never in anyone's estimation did they think Council would try to change that at all". 48 Mr Lees returned from annual leave on 24 January 2005 and received a memo terminating his leaseback agreement. A meeting was held with management that day, but Mr Lees said it was clear the decision had been made. Up to this date, Mr Lees was unaware of any threat to his conditions of employment and he had not been consulted about the use of his vehicle or asked to participate in the process. 49 In oral evidence, Mr Lees said he was called out three or four times a week which was why he was provided with a vehicle. Mr Lees deposed that he had not seen the Council's Fleet Policy and no one had ever discussed it with him. All he had received were inter office memos requiring him to sign for the fee deductions to be taken out of his pay. He didn't retain a copy of the terms and conditions and accepted it was all done in good faith. 50 Mr Lees assumed that the policy reference to changes meant increases to his contributions. He never believed it would be used as a "deceitful means to take away these conditions". He confirmed that he wouldn't have taken the job otherwise. Mr Lees believed it would be "unfair and deceitful" if the policy made no provision for consultation. 51 Mr Lees agreed that his weekly fee contribution did not fully recover the total cost of the vehicle and its running expenses. Mr Lees accepted a pooled vehicle would be made available to him if he lost his leaseback vehicle. This would be difficult to access after hours at night for call outs. Council's Evidence 52 Mr Fausto Sut was formerly the Council's Executive Officer and a member of the Council's Executive Management Team (EMT). He now works at Liverpool Council. Mr Sut referred to the role of the EMT to effectively account for and manage Council's assets. The Council's vehicle fleet was not excluded from these considerations. 53 Mr Sut referred to the various Council policies dealing with motor vehicles and, in particular, highlighted the 2001 policy which had been discussed with the Staff Consultative Committee. The policy made clear that vehicle leaseback agreements are a benefit and not a condition of employment and that Council may terminate an agreement by giving an employee 12 months' written notice. Mr Sut said the policy is available on Council's intranet service and accessible through the Human Resources Branch. 54 Mr Sut believed that it was apparent from the terms of the policy that the provision of leaseback vehicles was never intended to be a permanent arrangement for salaried and wages staff. An employee is invited to participate, he or she must read and acknowledge the policy and contribute a standard weekly fee. 55 Mr Sut referred to the Light Vehicle Review which had been undertaken in 2003/04 as a result of cost pressures on Council. The Council had over 500 full time staff with 150 light fleet vehicles. The Review resulted in a net reduction of nine vehicles. Affected staff had been given 12 months' notice and Council had introduced an online vehicle booking system to enable all employees access to a vehicle for operational reasons. 56 In oral evidence, Mr Sut detailed the nature and purpose of the Vehicle Fleet Review which was based on the type of use, the purpose of use and the recruitment/retention factor based on a ranking system. As the issue was emotive it was decided to engage a consultant to undertake an independent review. The objective was to reduce costs and better utilise the existing fleet. In progressing the matter, a project team of five executives worked with the consultant. The Group Managers were consulted about usage. 57 Mr Sut agreed there was no consultation with the holders of the vehicles because Council wanted an objective test and employees would receive 12 months' notice, in any event, in accordance with the Policy. Mr Sut was not aware of any other employees having been given 12 months' notice prior to January 2005. 58 After determining the number of vehicles to go, the second phase of the review dealt with better utilisation. Mr Sut said a number of employees spoke to him about the outcome. Mr Sut said employees were not asked to submit log books because it wasn't compulsory to keep one. However, other data was available such as FBT records. 59 During Mr Sut's evidence, Council tendered a document relating to the costs and savings associated with the Vehicle Fleet Review. Mr Sut said that in the Review, 18 positions were to lose vehicles and nine were to gain vehicles, leaving a net reduction of nine. There was much discussion about the actual cost savings to Council. In so far as the four employees were concerned, it may be said that the cost savings are between $135,000 and $158,000 on an ongoing basis, with significant other capital cost and recurrent savings. Mr Bob Bentley 60 Mr Bentley is the Council's Manager, Corporate Human Resources. Mr Bentley's affidavit dealt with each of the leaseback agreements with the four employees. 61 In respect to Mr Odgers, Mr Bentley noted that the original offer of employment in April 2000 did not include access to the leaseback vehicle scheme. His subsequent access to the scheme was subject to agreed terms. This arrangement was far from a fixed term and when he sought to extend the agreement, Mr Bentley believed Mr Odgers understood the leaseback vehicle was not a fixed condition of employment. Mr Bentley said that all the leaseback agreements signed by Mr Odgers indicated that he must abide by Council's policy and the terms and conditions - one of which stated that the leaseback scheme was a benefit and not a condition of employment. 62 In respect to Mr Lees, Mr Bentley believed that because he had been introduced to the restricted leaseback scheme when he was acting up for one month in 1997, this rendered the termination provisions of the agreement redundant. 63 Mr Bentley deposed that the use of a restricted leaseback vehicle is subject to an agreement made pursuant to the terms and conditions of Council's policy. Mr Lees' signature on his agreements in 1999 and 2002 indicate his acceptance that the vehicle is a benefit and not a condition of employment. 64 In cross examination, Mr Bentley could not say why Council had not signed Mr Lees' agreements of April 1999 and 2002. He presumed this was because they were renewals of an earlier agreement. Mr Bentley believed that supervisors would discuss the terms of the agreement with the employee. 65 With Mr Hahn's arrangements, Mr Bentley said he first signed a leaseback vehicle agreement in 2001 and then for a fixed period of time from January 2002. The agreement continued beyond the identified period without change to the terms and conditions. 66 Mr Hahn was offered employment in the position of Business Development and Systems Officer on 2 February 2004. Prior to this offer, Mr Bentley received a memo concerning discussions held between Mr Hahn and Mr Allen and the agreed outcomes. Mr Bentley believed that it was resolved that Mr Hahn's leaseback vehicle would be carried over to the new position, but subject to decisions arising from Council's Light Vehicle Review. 67 In respect to Mr Brown, Mr Bentley believed that when he signed four leaseback agreements in 1999 and 2001 the documents indicated Mr Brown had full knowledge the vehicle was a benefit and not a condition of employment and Council had the right to terminate the agreement with 12 months' notice. 68 Mr Bentley believed that Council's policy was couched in clear and express terms and that vehicles are provided on contingent grounds. The preamble to the agreement states that the ongoing provision of the vehicles is subject to change. Council's policy and the terms and conditions were appropriately communicated to employees in unambiguous terms and 12 months' notice is fair and reasonable. Mr Bentley believed that the notice provision is not uncommon in local government and is consistent with the terms of the Local Government (State) Award. 69 In oral evidence Mr Bentley said that when Council's policy was changed in 2001, there was a consultation with staff for some three months in which there was an opportunity to comment. 70 Mr Bentley gave evidence of his involvement in the Vehicle Fleet Review in which he was called upon to consider issues of recruitment and retention of staff. Mr Bentley said that the Review did not consult with the individual employees as the Council wanted an objective view. Employees had not been asked to fill out a log book. 71 Mr Bentley agreed that job advertisements for some positions, such as planners included provision of a vehicle. It was necessary for such positions as this was what the market expected. However, there was a clear distinction between planners and the persons involved in this dispute. 72 Mr Bentley denied that letters of offer to employees which included reference to leaseback vehicles formed part of the contract of employment. Acceptance of the vehicle was optional and employees were asked to discuss the arrangement with their supervisor or manager. Mr Bentley agreed there was no specific training for supervisors about communicating Council's policies. However, he didn't believe it was necessary, as most supervisors would have signed agreements themselves. Mr David John Allen 73 Mr Allen is the Council's Group Manager Blue Mountains City Services. Mr Allen responded to the evidence by disputing Mr Brown's version of the conversations in 2003 and 2004 between them concerning Mr Brown's retention of his vehicle. 74 Mr Allen recalled that he stressed to Mr Brown that Council was undertaking a vehicle review and he could not guarantee any outcomes and vehicles may, indeed be withdrawn. 75 Mr Allen deposed that when he handed Mr Brown the letter terminating his agreement, Mr Brown challenged him and said he had been assured his vehicle would remain with his position. Mr Allen told him that he had not given such a guarantee beyond the review of the fleet and his own agreement with the Council. Mr Allen further said the review findings were a corporate decision and he had no authority to reverse any decision. 76 Mr Allen denied lying about any assurance and had explained to the General Manager that no such assurance would, or could have been given by him. He believed Mr Brown had a selective memory or chose only to hear what he wanted to hear. 77 Mr Allen said he made it abundantly clear to Mr Hahn that he could not guarantee the continued provision of a vehicle for his position as all vehicles would be subject to review. Mr Hahn acknowledged this during the negotiations for his position and the vehicle did not form part of his total remuneration. Salary negotiations were distinct and separate from the leaseback vehicle agreement. Mr Allen had indicated to Mr Hahn that if he wished to be compensated for the loss of his vehicle he should make a formal submission to the General Manager. 78 In oral evidence, Mr Allen said the information on vehicle usage came from managers. Log books were not required, because they were a "hassle". Council made a deliberate decision to deem the split of private and business usage at 40/60 per cent. Mr Allen estimated the saving to Council if the four employees have their vehicles withdrawn as $158,000 in year one and $45,000 each year thereafter. SUBMISSIONS For the Union 79 Ms Wilson submitted that while the Union accepted the Council had a discretion to terminate the vehicle leaseback agreements, to do so without consultation or an investigation into alternative solutions to Council's financial problems, amounted to a breach of trust between the employer and employee. 80 Ms Wilson put that the employees' contract of employment included a number of elements; the Award, the leaseback agreements, Council's policies and implied terms such as procedural fairness and mutual trust and confidence. The provision of a motor vehicle is part of the contract of employment. It was used as an incentive to recruit the employees and to withdraw it constitutes a reduction in remuneration. 81 She said Mr Odgers had submitted a business case for a vehicle which had been accepted and no changes to operational requirements had been evidenced such as to warrant its removal. 82 Ms Wilson noted that it was not disputed that Council had not consulted with employees until August 2005; well after they had received their notices of withdrawal of their vehicles. In addition, Council had made the decision before examining other means of reducing the fleet costs. 83 Ms Wilson questioned the accuracy of Council's cost savings, by submitting that no account was taken of the fee contributions of employees and certain operational costs had not been achieved because some vehicles were not to be sold. 84 Ms Wilson put that employees were given no explanation of Council's policies and were simply told to sign the agreement or forego the vehicle. The procedures for renewal were haphazard and all employees signed the same agreement, whether it was a condition of employment or a so called benefit. Employees signed the agreements by relying on the mutual trust in the employment relationship. 85 The evidence of Mr Brown and Mr Hahn was not seriously challenged, in that they would not have accepted alternative positions in Council if they had known their vehicles would be withdrawn. Council's policies and agreements don't excuse Council from its obligation to deal with employees in good faith. See Gambotta v John Fairfax Publications Pty Ltd [2001] NSWIRComm 87; Whitehead v Hillier Hewitt Elsley Pty Ltd [2003] NSWIRComm 382; Local Government Engineers' Association of New South Wales and Wollongong City Council [1995] NSWIRComm 31. For the Council 86 Mr Smith submitted that the leaseback agreements were clear and unambiguous. The employees were aware of the policy and the terms of their agreements and had not questioned them when signing the agreements. The fact that this situation may not have happened before, doesn't mean it wasn't provided for, as it was clearly in the documentation. 87 Mr Smith noted that the decision to terminate the agreements had been preceded by an extensive, independent review of Council fleet requirements and the necessity to have regard for financial pressures and the significant savings which would be made. 88 Mr Smith noted that the offer of a leaseback vehicle was an invitation which an employee could accept or refuse. It is a benefit which is subject to change; not a condition of employment. 89 Mr Smith dealt with what constitutes reasonable notice. He said that 12 months' notice was entirely reasonable in these circumstances. He relied on Pacific Power v Electrical Trades Union of Australia, New South Wales Branch [1997] NSWIRComm 70 and the Local Government (State) Award itself. Mr Smith accepted that the Award clause post-dated the employees' agreements, but argued that the Commission should take it as a guide to industry standards. 90 In responding to the Union's submissions on implied terms of the contract of employment, Mr Smith relied on Codelfa Construction Pty Ltd v State Rail Auithority of New South Wales 149 CLR 337 and Network Ten Pty Ltd v Rowe [2005] NSWSC 1356. He said that it was not reasonable or equitable to imply a term into the leaseback agreement which prevents the Council from bringing the agreement to an end. To do so would not give business efficiency to the arrangement. 91 As to consultation, Mr Smith said the emphasis was on consultation at the "front end"; that is when the policy was being developed in 2001 with the employees and the Consultative Committee. No objections had been raised at that time. 92 Mr Smith submitted that there was no evidentiary basis for the employees to assert an ongoing entitlement to leaseback vehicles. Further, it was wrong to suggest there had been no consultation with employees. All the employees had accepted the Council's policy and the terms and conditions of their agreements. 93 Mr Smith said that Council has taken measures to ensure that employees who require a Council vehicle to fulfil their duties will be able to access vehicles through an online pooled arrangement. 94 Mr Smith submitted that the Commission would not convert an extra award benefit into an award prescription by the reasoning found in Ellisons Bulk Haulage Coal Allowance Award (unreported) Full Bench IRC433 of 1995. 95 Mr Smith summarised Council's case as follows: (a) the provision of a leaseback vehicle was always subject to change; (b) the provision of a leaseback vehicle was a benefit offered and not a condition of employment; (c) a leaseback vehicle agreement was capable of termination by the respondent, with the provision of twelve months' written notice; (d) employees will now have access to pool vehicles via an online booking system enabling them to perform the requirements of the position; and (e) there is a cost benefit to Council in reducing its light vehicle fleet. 96 In reply, Ms Wilson stressed that the Union was not suggesting that Council could never terminate a leaseback vehicle agreement. However, it depended on the particular circumstances. 97 Ms Wilson agreed Council had consulted the Union and employees, but only after the decision had been made. The Union had expected that consultation would occur before a final decision was made. CONSIDERATION Nature of relief to be granted 98 Neither party raised any issue as to the jurisdiction of the Commission to make orders either preserving the four employees' leaseback agreements or, as sought by Mr Smith, endorsing the Council's right to terminate the employees' leaseback agreements. 99 Ms Wilson sought by way of an amended claim, both an award and order of the Commission pursuant to s136 of the Act; the effect of which was to firstly, ensure the Unions' four members retained their leaseback vehicles and secondly, requiring the Council to properly consult with the Union should it wish to change its vehicle policy in the future. On this latter issue, I believe it is unnecessary to make an award and/or an order requiring such consultation. As a matter of common sense and good industrial relations practice, I would expect the parties to do no less. Moreover, the Award's dispute resolution procedure and the good faith bargaining provisions of the Act (s134(4)) ensure that any future dispute is processed in an orderly way, with eventual recourse to this Commission, if necessary. 100 For reasons to be shortly expressed, and while I do not think it is desirable or necessary to make an award in overall settlement of this dispute, I accept that the Union's case has been substantially made out and appropriate orders should flow accordingly. Merits of the Issue 101 Three of the four employees accepted positions within the Council which included the provision of a leaseback vehicle. The fourth employee, Mr Odgers, put a business case for a leaseback vehicle in 2000 which was supported by his Manager and accepted by Council. 102 Nothing is remarkable about these arrangements and they were an obvious incentive to employees in accepting a position and retaining that position. It is trite to observe that offers of positions at these levels and/or for the nature of the work performed will often make provision for a vehicle to be available for private use. Indeed, Council assessed an employee's continued allocation of a vehicle during its Fleet Review by, inter alia, its recruitment and/or retention value. 103 Viewed in this way, I do not see how it could be reasonably believed that employees would enter into such arrangements with the possibility their leaseback vehicle could be withdrawn at any time - even with 12 months' notice. Thus, I accept the evidence of the employees that they had regarded the provision of a leaseback vehicle as a condition of employment and would not have accepted letters of offer had they known the vehicle could be unilaterally withdrawn. Their belief was reinforced by the fact there was no evidence that the Council had ever withdrawn any other employee's leaseback vehicle in the circumstances here disclosed, notwithstanding the express language used in the leaseback agreement. I ask rhetorically, is it any wonder that Mr Sut described the issue as emotive, and quite contentious? Clause 14 of the Award 104 Mr Smith placed some reliance (albeit as a guide) on the Award provision dealing with motor vehicle leaseback agreements (see para 21). Indeed, the letter from the General Manager to the Chairperson of the Staff Consultative Committee dated 14 January 2005, purported to terminate the leaseback agreements pursuant to this Award provision. 105 It will be immediately apparent that this clause only applies to leaseback agreements entered into after the commencement of the Award; that is 1 November 2004. There was no similar provision, or any at all, in any predecessor to the current Local Government (State) Award. 106 All four employees had agreements predating the 2004 Award. Accordingly, the Award provision does not apply to the circumstances of the four employees in this dispute and cannot be used in aid of the Council's arguments in this case; particularly when the 2004 Award was made by consent. Renewal of leaseback agreements 107 The evidence disclosed that once having first entered into a leaseback agreement as a condition of their letters of offer, the renewal of the leaseback agreements is little more than an administrative exercise. So much so was amply demonstrated by Mr Lees' evidence that he only received a two page inter office memo when he renewed his agreement and that his renewal documents of 1999 and 2000 were not even countersigned by a Council senior officer. This prompted a suggestion that Mr Lees' use of the vehicle over some years was not authorised. However, I do not accept this to be the case. Rather, it demonstrated that the enforcement of the policy was somewhat haphazard and not strictly complied with. The relative automatic renewal of agreements convinces me that the agreement was an ongoing condition of employment and considered by the employees as such. Conclusions 108 Mr Smith primarily relied on the description of the leaseback agreements as a benefit and drew a clear distinction between the provision of a benefit and a condition of employment. In my view, this is a distinction without a difference. Moreover, the Council itself does not appear to have made such a distinction. This is so because Council required employees to sign the same document, whether their vehicle was a condition of their contract of employment or able to be withdrawn any time as a so called "benefit". 109 In light of the manner in which the four employees were provided with their leaseback vehicles, I have no doubt that these arrangements were an integral component of their remuneration packages such as to constitute, if not an actual condition of employment, then an implied term of their contracts of employment. In this regard, Mr Smith's reliance on Network Ten Pty Ltd v Rowe in respect to the characteristics of an implied term of a contract of employment does not, in my opinion, assist his case at all; rather the reverse. In Network Ten Pty Ltd v Rowe, Simpson, J said: 48 The next position argued on behalf of the defendant was that a term, limiting the duration of the contract to two years, ought to be implied in order to give business efficacy to the agreement. The circumstances in which an unexpressed term might be implied into a written contract were stated by the Privy Council in BP Refinery (Westernport) Pty Ltd v President, Councillors and Rate Payers of the Shire of Hastings (1977) 180 CLR 266, and cited with approval by Mason J (as he then was), with whom Stephen J and Wilson J agreed, in Codelfa. The conditions were stated as follows: "(1) It must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." See also Byrne v Australian Airlines Ltd 185 CLR 410. 110 In my view, the leaseback agreements were entirely consistent with the five conditions cited in the above passage. 111 Firstly, I have little doubt that the ongoing provision of a leaseback vehicle is reasonable in the circumstances. It would be unfair and inequitable for it to be withdrawn. Secondly, the agreements provide business efficacy to the contracts of employment in that they encouraged the recruitment and retention of the employees and maintained industrial harmony. Thirdly, I have no doubt that it was obvious to the employees (and more than likely to the Council) that the ongoing provision of a vehicle was a condition of their employment. Fourthly, the provision of the vehicle was given clear expression by the letters of offer to the employees, the conduct of the parties at the time and their ongoing conduct towards each other. Fifthly, the provision of the vehicle does not contradict any of the express terms of the employees' contracts of employment. On the contrary, it reflects the clear intent and purpose of the relationship between the employee and employer. 112 I would wish to add that to describe these arrangements as a benefit that can be so readily disposed of, as some form of gratuity, able to be unilaterally withdrawn in the Council's absolute discretion, completely misstates the true nature and purpose of the benefit. At this point, it is apposite to refer to what Staff, J recently said in Australian Medical Officers' Federation (New South Wales) (on behalf of Bruce Hall) v South Western Sydney Area Health Service [2006] NSWIRComm 101 at para 150: 150 In Abdalla v Viewdaze Pty Ltd (2003) 53 ATR 30, a decision of the Full Bench of the Australian Industrial Relations Commission, it was observed the terms and terminology of the contract are always important and must be considered. However, in doing so, it should be borne in mind that parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: that is, the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that the relationship has a character contrary to the terms of the contract. If, after considering all other matters, the relationship is ambiguous and is capable of being one or the other, then the parties can remove that ambiguity by the very agreement itself which they are making with one another. 113 To my mind, the Council's decision to terminate the employees' leaseback agreements has the effect of altering "the true nature of their relationship by putting a different label on it" and should not be condoned. 114 To further suggest that it is open to Council to remove the benefit without consultation because its policy says so, flies in the face of any sensible contempory industrial relations practice. Such a suggestion is offensive and silly. Moreover, I do not accept that Council undertook any genuine attempt to consult with affected employees - its mind was made up in January 2005 and any request for further information or explanation was not going to change the decision. Mr Bentley's evidence in this regard is frank and instructive. He said "well once the final decision was made group managers were then asked to consult with the affected employees". 115 For all the aforementioned reasons, I find that Council's decision to terminate the leaseback agreements of Messrs Brown, Hahn, Odgers and Lees to be unfair and unreasonable, which warrants the intervention of the Commission. Accordingly, I intend to make the following orders: ORDERS 116 Pursuant to s136(1)(d) of the Industrial Relations Act 1996, the Industrial Relations Commission of New South Wales orders that: 1. The Blue Mountains City Council take no further steps to terminate the vehicle leaseback agreements of Messrs Gary Brown, Rhett Hahn, John Odgers and Stephen Lees. 2. This Order shall apply only to the named persons in Order 1 and leaseback agreements need not apply, or be offered, to any future occupants of the positions now held by them. 3. The above Orders shall not affect the general operation of the Council's Vehicle Fleet Policy; for example in respect to periodic changeover of vehicles or adjustments to employees' fee contributions. 4. This Order shall take effect on and from 21 April, 2006. 5. These dispute proceedings are concluded. Peter J Sams, AM Deputy President 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.