Industrial Relations Commission of New South Wales CITATION: Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales and Director-General, Department of Premier and Cabinet [2009] NSWIRComm 131 Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (Notifier) PARTIES: Director-General, Department of Premier and Cabinet (Respondent) FILE NUMBER(S): IRC 591 of 2009 CORAM: Walton J Vice-President CATCHWORDS: INDUSTRIAL DISPUTE - conciliation - Recommendation by Commission - Memorandum of Understanding - agreed process to implement MOU - endorsement by Commission CASES CITED: Crown Employees (Public Sector - Salaries 2008) Award [2008] NSWIRComm 193 Operational Ambulance Officers (State) Award [2008] NSWIRComm 168 HEARING DATES: 22 May 2009, 27 July 2009 DATE OF JUDGMENT: 6 August 2009 Mr A Hatcher of counsel W G McNally Jones Staff LEGAL REPRESENTATIVES: Mr A Britt of counsel Crown Solicitor's Office JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: WALTON J, Vice-President Thursday 6 August 2009 Matter No IRC 591 of 2009 PUBLIC SERVICE ASSOCIATION AND PROFESSIONAL OFFICERS' ASSOCIATION AMALGAMATED UNION OF NEW SOUTH WALES AND DIRECTOR-GENERAL, DEPARTMENT OF PREMIER AND CABINET Notification under s 130 of the Industrial Relations Act 1996 STATEMENT [2009] NSWIRComm 131 1 In April 2008, the Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales ('the PSA') made an application for a new Crown Employees (Public Sector – Salaries) Award (Matter No IRC 445 of 2008). That application sought an increase in salaries and allowances for employees covered by the Crown Employees (Public Sector – Salaries 2007) Award in the amount of 6.5 per cent per annum for three years. 2 The matter proceeded as a Major Industrial Case and was listed for arbitration in September 2008. 3 Shortly before the arbitration commenced, the parties sought and were granted the assistance of the Commission in conciliation. Conciliation conferences conducted by Justice Boland, President, took place over approximately seven days in September 2008. However, there remained some significant matters that did not resolve at conciliation. 4 On 17 September 2008, the President issued an extensive Recommendation to the parties in Matter No IRC 445 of 2008 (as well as in the related matter, Matter No IRC 879 of 2008, which was an application by the Roads and Traffic Authority of New South Wales ('the RTA') for a new award). The Recommendation included a settlement of the PSA's claim for salary increases as well as addressing the reforms put forward by the respondents during the conciliation process consistently with the Wages Policy of the New South Wales Government. 5 The parties accepted his Honour's Recommendation and entered into a corresponding Memorandum of Understanding on 2 October 2008 ('the MOU'). 6 In the result, the application by the PSA proceeded, by consent, before a Full Bench on 2 October 2008 and an award entitled the 'Crown Employees (Public Sector – Salaries 2008) Award' ('the award') was made: Crown Employees (Public Sector - Salaries 2008) Award [2008] NSWIRComm 193 ('Crown Employees Award 2008 Case'). The award operated for three years and provided a 4 per cent per annum increase in salaries and allowances for those employees covered by it. A separate award was made for certain employees of the RTA at the same time. 7 The MOU set out the reforms, changes to conditions and other initiatives which were agreed by the parties. These included reforms in areas such as human resources and recruitment practices, sick leave, family and community service leave, maternity leave, annual leave, managing excess employees, travelling compensation and transferred employees' compensation. Matters of this nature have been referred to by the parties as 'central reforms'. 8 The MOU also provided for "agency level improvement initiatives" during the life of the MOU. In his Recommendation, Justice Boland considered it open to the parties to negotiate outcomes at the agency level that would produce cost savings for the agencies to fund the difference between the central reform matters and the recommended salary increase. 9 Accordingly, the MOU envisaged discussions on reform matters at two levels: 1. between representatives of the Government (the Department of Premier and Cabinet) and the PSA on the central reforms; 2. at a departmental level, between individual agencies and the PSA in relation to agency level improvement initiatives. 10 The MOU reflected the Recommendation by requiring that any disputes arising during the process of the agency level improvement initiatives would be dealt with under the 'BlueScope' model of dispute resolution in the Commission: see Operational Ambulance Officers (State) Award [2008] NSWIRComm 168. 11 Since the making of the award and the entering into of the MOU, a number of steps have been taken to implement the MOU including: 1. a variation to the Crown Employees (Public Service Conditions of Employment) Reviewed Award 2006 (in November 2008); 2. the making of a new Crown Employees (Public Service Conditions of Employment) Award 2009 (in May 2009); 3. the making of a new Crown Employees (Transferred Employees Compensation) Award 2009 (in July 2009). 12 There are further ongoing discussions between the Government and the PSA as to outstanding central reform matters, and discussions have commenced at a Departmental level in relation to the agency level improvement initiatives. 13 There are some 50 agencies affected by the MOU. Some agencies have completed their agency level improvement initiatives (also referred to as Savings Implementation Plans or SIPs). For other agencies, the discussions are ongoing or yet to commence. 14 The parties have agreed on a process (the terms of which are annexed to this Statement) involving the assistance of the Commission in conciliation and arbitration to resolve any outstanding matters arising under the MOU and/or its interpretation for both central reform matters and agency level improvement initiatives. The utilisation of a 'BlueScope' model process for central reform matters may presently occur only by agreement. 15 The parties are to be commended for their constructive implementation of the MOU, notwithstanding some disagreement about its operation. The 'agreed process' will facilitate the attainment of that outcome by the prompt and orderly resolution of any disputes. 16 However, it is necessary to make some additional observations about the implementation of the MOU before turning to formally endorse the 'agreed process'. 17 Since the promulgation of the Wages Policy of the New South Wales Government, the Commission has consistently assisted parties in conciliation and, where agreed, by the 'BlueScope' arbitral process, to resolve differences over the application of the Policy. This has normally involved the resolution of disputes over that part of the Policy which required salary increases over 2.5 per cent be funded by employee related reform measures or cost savings. These dispute resolution processes have not only resolved any industrial discord but have also resulted in a successful implementation of the Policy itself, notwithstanding the sometimes entrenched opposition to the application of the Policy and a lack of complete conformity with the current wage fixing strictures (which may feature as an impediment to the application of the Policy in formal arbitral processes). I refer, in this respect, to the observations of the Full Bench in Crown Employees Award 2008 at [8] and [9]: Secondly, the consent arrangements in these matters derive not only from compromises reached between the parties by their bargaining or through conciliation processes conducted under the auspices of the Act, but from an acceptance of the Recommendations made by the Commission under s 134(2) of the Act. It must be a corollary of provisions of s 134(2) which permit the Commission to take into account the rejection of a Recommendation in exercising its dispute resolution functions under the Act that it may have regard to affirmative steps deriving from the same source. Here, we think it is incumbent upon us to have particular regard to the Memorandum between the parties because it has as its genesis those recommendations. There is a further factor involved in this matter which we consider requires particular comment. The Recommendation and the Memorandum which follows it represent an intricate balancing of the respective industrial interests of the Union, its Members and the New South Wales Government. As was emphasised in the Recommendation (at para [4]), a real prospect arising from the failure of the conciliation process would have been that the New South Wales Government's employment reform agenda may not have received attention in the way that it did during the course of the conciliation process, or, ultimately, the Recommendation. Whilst the Structural Efficiency Principle still remains part of the wage fixing principles enunciated by this Commission (see State Wage Case 2008 [336(1)] and at Preamble, Annexure A), those observations must be correct, having regard to the limits of the applications advanced in these proceedings. When seen in this light, the proposed awards have an overwhelming industrial merit (although we do not rule upon the merits of the reform process itself, as that matter is strictly not before us). 18 The origins and underpinnings of the MOU, so described, are instructive, in my view, of the approach the parties should adopt in implementing the MOU and activating the 'agreed process'. The instrument the parties are implementing is a creation of the Commission's dispute resolution process, and not an agreement simpliciter. As a matter of principle, the Commission will require parties to fully give effect to their agreements both in their letter and spirit. However, the genesis of the MOU gives an even greater emphasis to those obligations and requires the parties to diligently ensure the implementation of the MOU within a reasonable period of time. 19 Some ten months have passed since the parties entered into the MOU. Whilst, as I have observed, the parties are making some considerable progress, it should not be assumed that the process of implementation of the MOU is interminable. Given the passage of a substantial period of time since agreement was reached, the parties should now be approaching that task with a real determination to bring about the reforms required by the MOU as expeditiously as possible. 20 Further, agency level negotiations should be approached in the knowledge that matters referred to the Commission under the second step of the agreed process will be subject to close scrutiny as to why agreement has not been reached and why the unresolved matters should require the attention of a Full Bench of the Commission. 21 The Commission endorses the attached 'agreed process' of the parties for the implementation of the MOU. The parties should, accordingly, approach the resolution of the issues raised in these dispute proceedings in conformity with that procedure. ________________________ 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.