Industrial Relations Commission New South Wales Medium Neutral Citation: Notification under s130 by Director General, Department of Education and Communities of a Dispute with New South Wales Teachers Federation Re Schedule A [2011] NSWIRComm 160 Hearing dates: 1 November 2011, 11 November 2011, 30 November 2011 Decision date: 02 December 2011 Jurisdiction: Industrial Relations Commission Before: Kavanagh J Decision: Orders entered 7 December 2011. Variation to existing Award to allow 2.5% increase in salaries and allowances for teachers and other covered by Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award 2009 Catchwords: s 136(1) - Arbitration of Dispute re increase in salaries and allowances for teachers and others covered by the Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award 2009 - application by Director General, Department of Education and Communities for new Award in dispute procedures - application opposed by Union - consideration of purpose and effect of s 149C of Industrial Relations Act 1996 and cl 6 of Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 - determination to order 2.5% increase in salaries and allowances from 1 January 2012 for employees under relevant Award - alternative forms for order considered - effect of interim Award (s 16) - effect of variation of existing Award (s 173) - variation as agreed to clause related to employees at the Saturday School of Community Languages - order for increase to be in the form of a variation of existing Award - order for parties to consider how to advance application for new Award Legislation Cited: Industrial Relations Act 1996 Cases Cited: Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award 2009 Health Employees Conditions of Employment (State) Award and other Awards [2011] NSWIRComm 129 Public Hospital Nurses' (State) Award Re (No 3) (2002) 121 IR 28 Re Crown Employees (Public Sector - Salaries 2011) Award (No 3) [2011] NSWIRComm 104 Category: Consequential orders Parties: Director General, Department of Education and Communities (Applicant) New South Wales Teachers Federation (Respondent) Representation: Mr M Easton of counsel (Applicant) Crown Solicitor (Applicant) Federation Law (Respondent) File Number(s): IRC 1658 of 2011 DECISION 1On 26 October 2011, the Director General, Department of Education and Communities ("the DE&C ") gave notification of a dispute with the NSW Teachers Federation ("the Union"). The relevant Award between the parties is the Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award 2009 ("the Award"). This Award reaches the end of its nominal term on 31 December 2011. Negotiations between the parties for the terms and conditions of a new Award have not succeeded. There is industrial unrest. 2Given the dispute between the parties re the terms and conditions for a new Award has led to industrial unrest, the dispute came before the Commission on three separate occasions in conciliation. On 11 November 2011, the last conciliation hearing, the Commission issued the following Recommendation: 1. The NSW Teachers Federation reply to the offer of 11 November 2011. 2. That the parties enter into negotiations related to a new Award and that negotiation period be from 12 November to 30 November 2011. 3. That the parties report back to the Commission at 10am on Wednesday 30 November 2011. 4. That there be no further industrial action during the period of negotiations set by the Commission. 5. If negotiations fail, at the report back on 30 November 2011 the Commission will hear argument as to: (i) entering an interim award for NSW teachers in accordance with government policy; or (ii) entering a new award for NSW teachers in accordance with government policy. Consideration in relation to the above alternatives will be given to the proposed terms and duration of any such Award. 3On Wednesday 30 November 2011, the parties reported that still no agreement had been reached in negotiations between the parties as to the terms and conditions for a new Award. 4A Certificate of Failed Conciliation was issued. The Commission then determined to arbitrate the dispute between the parties. 5The DE&C then filed a draft new Award for the Commission's consideration in the dispute proceedings. It has a nominal term to 31 December 2013. The draft new Award allows for an increase for NSW Teachers and related employees, in salaries and rates of pay and allowances of 2.5% in accordance with cll 3.1 and 3.2 of the NSW Government Wages Policy 2011; amends the No Further Claims Clause in the existing Award (cl 33); amends the Area, Incidence and Duration Clause of the existing Award (cl 37.1, 37.2 and 37.3); provides Schedules reflecting the proposed rates of pay and allowances for a 2.5% increase in salaries and allowances over a further two year period to 2013. The draft Award also deletes the Leave Reserved Clause in the present Award (cl 36). 6In support of its application for a new Award, reliance is placed by the DE&C on s 136(1)(b) of the Industrial Relations Act 1996 (as amended) (subject to Part 1 of Chapter 2). 7In the Commission's consideration as to whether to make an Award in the form of an interim Award, the DE&C contended: a. it is not open, as a matter of jurisdiction, for the Commission to make an interim award whereby an initial 2.5 per cent would be paid to the relevant employees where it is also contemplated that there be later proceedings to determine the extent to which, if any, wages and salaries could be increased beyond 2.5 per cent; b. only one award can be made and that award must deal with all issues that are the subject of the proceedings. The award, once made, may be subsequently varied but only by with the agreement of the relevant parties; and c. an interim award would impermissibly allow for matters to be reserved unless it also included a provision excluding the making and/or granting of extra claims during the term of the award or order. d. An award or order made in contravention of s. 146C and the Regulation would be of no effect: s. 146C(3). 8The Union firstly opposes the making of a new Award in accordance with the draft new Award relied upon by the DE&C given the content of the further amendments to the existing Award contained in the proposed draft new Award as tendered to the Commission. The Union opposes the proposed amendments to cll 33; 37.1, 37.2 and 37.3. The Union further does not agree to the deletion in the new draft Award application of Clause 36, the Leave Reserved Clause. The Union asks for time to confirm the employer's calculations on the rates of pay and allowances per the DE&C schedules. 9The draft new Award application also adds a new clause 36 reflecting a prior consideration of the Commission re the conditions of employment and rates of pay for employees at the Saturday School of Community Languages. The latter clause 36 is agreed to in its terms by the Union. 10Secondly, the Union presses for an increase in the rates of pay and allowances from 1 January 2012 for all teachers and related employees in accordance with the NSW Public Sector Wages Policy 2011. The Union therefore asks for a 2.5% increase in salaries and associated allowances for teachers and others covered under the relevant Award. 11If the Commission considers making an Interim Award, the Union submits there are "special circumstances" required for any consideration of an interim Award as required by s 16(1) and such should include the failure of the DE&C to negotiate over a three month period, as required by Government Policy (cll 8.3 and 8.6), and the failure to make an offer of a salary/allowance increase without conditions attached. 12Given the submissions argued before the Commission, a further consideration was raised as to whether it would be more appropriate for the Commission to consider a variation to the existing Award given the Commission's powers under s 136(1)(b) and the reference to Part 1, Chapter 2 which includes s 17(3)(c)&(d) and s 17(4) of the Industrial Relations Act 1996. Consideration 13To determine a resolution of this dispute the Commission must consider firstly, the effect of the Government's Wages Policy and, secondly, the ambit of the Commission's powers re awards and orders for the resolution of a dispute in its conduct of an arbitration. 14The NSW Government announced a NSW Public Sector Wages Policy in 2011. That Policy as to salary and allowances states: 3. The Policy 3.1 .... 3.1.2 ... 3.1.3 Public sector employees may be awarded increases in remuneration or other conditions of employment that do not increase costs by more than 2.5 per cent per annum. 3.1.4. Increases in remuneration or other conditions of employment that increase employee related costs by more than 2.5 per cent per annum can be awarded, but only if sufficient employee related cost savings have been achieved to fully offset the increased employee related costs. For this purpose: 3.1.4.1. whether relevant savings have been achieved is to be determined by agreement of the relevant parties or, in the absence of agreement, by the IRC, and 3.1.4.2. increases may be awarded before the relevant savings have been achieved, but are not payable until they are achieved, and 3.1.4.3. the full savings are not required to be awarded as increases in remuneration or other conditions of employment. 3.1.5. Awards and orders are to resolve all issues the subject of the proceedings (and not reserve leave for a matter to be dealt with at a later time or allow extra claims to be made during the term of the award or order). However, this does not prevent further variations made with the agreement of the relevant parties. 3.1.6. Changes to remuneration or other conditions of employment may only operate on or after the date the relevant parties finally agreed to the change (if the award or order is made or varied by consent) or the date of the IRC's decision (if the award or order is made or varied in arbitration proceedings). . . . (See also Regulation 6 which reflects the above policy) 15The relevant Award reaches its nominal date on 31 December 2011. Teachers and associated employees covered under the Award received their last pay rise on 1 January 2011. As no agreement has been reached between the parties on the terms and conditions of a new Award, including any increase in salaries and allowances, the teachers and others will receive no pay rise as expected on 1 January 2012. This is the heart of the dispute before me. While the DE&C have offered a 2.5% salary and allowance increase in negotiations, it has never offered the increase of 2.5% without conditions. Its draft new Award, while it contains provision for an increase of 2.5% on salary and allowances for a two year period also requires other changes in the conditions of the existing Award which are not agreed to. 16To give effect to its Policy on salaries and allowances, the Government amended the Industrial Relations Act 1996 (s 149C) and proclaimed an associated Regulation. 17The Full Bench of the Commission has considered applications for new public sector Awards brought before it in Re Crown Employees (Public Sector - Salaries 2011) Award (No 3) [2011] NSWIRComm 104 (the PSA Salaries Case) and in the matter of Health Employees Conditions of Employment (State) Award and other Awards [2011] NSWIRComm 129 (the HSUeast Case) the Commission considered applications for variations to existing Awards. In each of these matters there had to be a consideration of the Government's Wages Policy. 18The DE&C has conceded, this Commission is bound by the reasoning of the Full Bench and particularly the reasoning in the HSUeast Case. In that matter, the Full Bench considered the Policy; the terms of s 149(C) and the associated Regulation and their purpose and effect and held at [37]: . . . A union seeking increases above the 2.5 per cent is not required to demonstrate or make available cost savings to cover the initial 2.5 per cent, which is assured and paid in accordance with cl 6(1)(a) of the Regulation. . . . and at [49]: . . . At the heart of the provisions to give effect to that policy is the availability of 2.5 per cent per annum as a reflection of the median point of expected cost of living increases and the requirement that anything over 2.5 per cent requires costs off-sets equal to the increases sought before any increase can be granted by the Commission in salaries, wages, allowances and conditions involving employee-related costs. and further at [55]: . . . the Commission is unable to discern any impediment to the implementation of the Government's public sector wages policy that would arise from the granting of interim increases no higher than the 2.5 per cent available as the first tranche. . . .. 19It is the Commission's view that it is appropriate to make a determination for the resolution of this dispute or at least to resolve the essential element of the dispute, as to the expected salary and allowance increase for NSW teachers and others under the relevant Award and in accordance with the Government's Wages Policy. Such a determination will allow the Union time to consider the DE&C application for a new Award (which contains a number of significant amendments to the existing Award) and allow the Union time to also consider whether it wishes to make an application for an increase beyond the Policy stated as no higher than 2.5% and to formulate in a document its objections to the clauses of the proposed new Award. Many of the amendments (and deletions) in the draft new Award were, in submissions, opposed by the Union. The Union revealed it had filed no documents as it only received a copy of the proposed new (marked up) Award very late on the day before the hearing. 20In adopting the reasoning of the Full Bench in the HSUeast Case, it has therefore been determined the Commission can order an increase of up to 2.5% to the salaries and allowances of New South Wales teachers and others covered by the relevant Award. I make this determination. I am persuaded such a determination will assist in the resolution of the dispute. Type of Order 21Next the powers of the Commission must, therefore, be given consideration as to the form the Commission adopts to provide this relief. 22Submissions were made as to whether the appropriate form under which to implement the Commission's decision to allow an increase in teachers' salaries and allowances be through an Award on an interim basis (s 16) or by variation to the existing Award (s 17). The DE&C pressed for a two year term to a new Award but submitted an interim Award with a 12 month term would be, in the alternative to a new Award, the most appropriate order. The Union pressed for a one year variation to the existing Award. 23The Commission under s 136(1)(b) has the following powers: 136 Arbitration of dispute (1) ( Action by Commission ) The Commission may, in arbitration proceedings, do any one or more of the following: (a) . . . (b) make or vary an award under Part 1 of Chapter 2, (c) . . . (d) make any other kind of order it is authorised to make (including an order made on an interim basis). (2) ( When action may be taken ) Any such action may be taken by the Commission on its own initiative . . . . 24The Commission is empowered, therefore, in the arbitration of a dispute to make an Award (including an interim Award) or vary an existing Award. Part 1 of Chapter 2, as referred to in s 136(1)(b) refers the Commission to its powers under s 16 and s 17: 16 Term of award (1) An award applies for the period specified in it as its nominal term and, after that period, until rescinded by the Commission. (2) The nominal term of an award must not be less than 12 months nor more than 3 years. (3) However, an award that sets conditions of employment in connection with a project may have a specified nominal term that does not exceed the expected duration of the project. (4) An award may in special circumstances be made on an interim basis. Any such award is to be expressed to be an interim award and applies only for the period (not exceeding 12 months) specified in it. 17 Variation or rescission of award (1) . . . (2) . . . (3) An award may be varied or rescinded in any of the following circumstances only: (a) . . . (b) . . . (c) during its nominal term if the Commission considers that it is not contrary to the public interest to do so and that there is a substantial reason to do so, (d) after its nominal term if the Commission considers that it is not contrary to the public interest to do so. (4) This section extends to a variation or rescission of an award in the course of an arbitration by the Commission under Chapter 3 to resolve an industrial dispute. 25An Award therefore applies for a period specified in it as its nominal term and, after that, until rescinded by the Commission (s 16(1)). An Award on an interim basis can be made in "special circumstances" but applies only for the period (not exceeding 12 months) specified in it (s16(4)(1)). Further, any increase of salaries and allowances ordered through an interim Award must be approached on a cautious basis so as not to "embarrass the final result" (see Public Hospital Nurses' (State) Award Re (No 3) (2002) 121 IR 28 at [124]. 26In the circumstance, the Commission determines the most appropriate form for the relief proposed by it will be by a variation of the existing Award. A variation can be made to an Award in the course of an arbitration to resolve an industrial dispute. I reject, at this stage of the proceedings, the DE&C application for a new Award. Both parties need to further advance the negotiations or otherwise, prepare submissions in support of or in opposition to the proposed alterations in the proposed new Award amending clauses in the existing Award in preparation for arbitration. It will also allow the Union time to consider whether it will file an alternative Award application and/or cross claim to the DE&C application. While an interim Award is available to the Commission, at this stage a variation of the existing Award is the fairer and more practical way to resolve the dispute on salaries and allowances. 27However, the nominal term of the existing Award does not expire until 31 December 2010. Although the Commission is considering this issue during the nominal term of the existing Award (s17(3)(c)) (given the urgency of the matter, the industrial unrest and the approaching school vacation), the implementation of its decision will occur after the end of the nominal term (s 17(3)(d)) and before the end of the school vacation. I am of the view it is not contrary to the public interest to allow the teachers and others covered by the relevant Award to receive a salary and allowance increase as expected on 1 January 2012. I find, because of the failure of the parties to agree to the terms of a new Award; the failure of the DE&C to make an unconditional offer of a 2.5% wage increase (without requiring alteration to conditions in the existing Award from its employees) and the fact that this circumstance has led to industrial unrest, there is a substantial reason to allow a variation to the existing Award within the government's policy guidelines on wages and to order a salary and allowance increase of 2.5% for the relevant employees covered by the existing Award. This variation is to take effect from 1 January 2012. 28Given the proposed order will take effect after the nominal term of the existing Award expires, the above reasoning also satisfies the test required under s 17(3)(d), that is, the variation which is to apply after the expiry of the nominal term is not contrary to the public interest. Term 29As the Order of the Commission will not have effect until the expiry of the nominal term, on a reading of the Act, there can be no term applied to the granting of the 2.5 per cent increase for the salaries and allowances for teachers and others under the relevant Award. In the PSA Salaries Case the Full Bench considered this issue and held the Industrial Relations Act does not permit the nominal term of an Award to be extended where the Award is merely varied after the expiry of its nominal term (see decision at [40]). Therefore, no term having the effect of extending the nominal life of an Award should be included as part of any variation. 30In the HSUeast Case, the Full Bench concurred with this view, saying at [41]: ... an award that has expired by passing its nominal date no longer has a term and any variation to that award (as distinct from the making of a new award to replace it) can have no term but the variation so made continues until further varied or replaced by a new award. It is in those circumstances that, in the present proceedings, a variation of expired awards by granting an interim increase of 2.5 per cent would have no term ... 31Further, the parties have agreed to insert into the existing Award the proposed cl 36 as contained in the proposed draft new Award as it reflects in its terms a prior agreement related to the conditions of employment and rates of pay for employees at the Saturday School of Community Languages. That agreed variation can be incorporated into the Award as varied by the Commission. I am persuaded such an agreed variation is not contrary to the public interest and there is a substantive reason (the agreement) to allow the variation. 32This Decision does not address all the amendments to the existing Award sought by DE&C in its proposed new Award. I accept the finding in the HSUeast Case that the Regulation entertains a two stage procedure. The Full Bench held at [37]: The Regulation itself, nevertheless, contemplates the possibility of a two-stage process. The first stage is the availability of 2.5 per cent per annum for all public sector employees - these are the increases that the Minister referred to in his second reading speech as being assured under the amendment as being available. The second stage involves any claims seeking increases beyond that assured 2.5 per cent and requires sufficient employer-related cost savings to be achieved to fully offset the cost of the increase to be granted. . . . There are, therefore, no specified policy reasons for requiring these two elements of the proposed increase to be dealt with only in one hearing. 33While this reasoning is directed to the increases in salaries, the principle can be applied to allow outstanding matters to be dealt with in a further hearing of the application if it is pressed. It is important to note in this Decision there is an interim order varying an existing Award and all of the issues pressed by the DE&C are not finally determined through a new Award nor has the Union had time to press any alternative application or cross claim. 34The parties are directed to file the variations to be made to the existing Award in accordance with this Decision by Wednesday 7 December 2011 at 4pm. The variations are to take effect from the first pay period after 1 January 2012. 35The Commission will make the necessary formal orders in Chambers. 36The parties are to come to some agreement as to the future conduct of the proposed new Award application and a timetable for any future arbitration. The Commission will set a timetable if there is a failure to agree. 37On 7 December 2011, the Commission therefore orders and directs: 1. That the Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award 2009 is varied in terms of the attached schedule. 2. This variation will take effect from the first full pay period on or after 1 January 2012. ********** Schedule Amendments 07 May 2012 - Correction to the coversheet fields. Amended paragraphs: Decision Date and the Decision. 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. Decision last updated: 07 May 2012