Industrial Relations Commission New South Wales Medium Neutral Citation: Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Director of Public Employment (No 2) [2011] NSWIRComm 161 Hearing dates: 21 November 2011, 1 December 2011 Decision date: 05 December 2011 Jurisdiction: Industrial Court of NSW Before: Boland J, President Decision: The Court: (1) DECLARES that each of the Listed Officers are party to an overall arrangement constituted by: (a) A contract of employment; and (b) The terms of the Premier's Memorandum M2008-22 "Managing Excess Employees" and the terms of the Premier's Memorandum M2011-11 ("the Arrangements"). (2) DECLARES that the Arrangements are unfair contracts within the meaning of s 105 of the Industrial Relations Act 1996. (3) ORDERS that the Arrangements are varied for each of the Listed Officers so as to include, where applicable having regard to Order (3)(b) hereof, the following terms for each of the Listed Officers in Appendix A: (a) The terms of the Premier's Memorandum M2008-22 "Managing Excess Employees" will continue to apply to the exclusion of the terms of the Premier's Memorandum M2011-11 until 31 July 2014. (b) If the Listed Officer is forcibly retrenched before 1 August 2014: (i) they will be given three months' written notice of the intention to be made redundant (or if agreed three months' pay in lieu of notice); and (ii) they will receive a severance payment as follows: a. three weeks per year of continuous service with a maximum of 39 weeks, with pro-rata payments for incomplete years of service to be on a quarterly basis; plus b. the benefit allowable as a contributor to a retirement fund; plus c. pro rata annual leave loading for leave accrued at the date of termination. (4) MAKES no order as to costs. Catchwords: UNFAIR CONTRACT - Consequential orders - Certain arrangements between officers employed in the public service and their employer declared to be unfair contracts within the meaning of s 105 of the Industrial Relations Act 1996 - Orders made varying the arrangements - No order as to costs Legislation Cited: Industrial Relations Act 1996 Public Sector Employment and Management Act 2002 Cases Cited: Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Director of Public Employment [2011] NSWIRComm 152 Category: Consequential orders Parties: Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (Applicant in IRC2011/1286 and 1376) Australian Services Union of N.S.W (Applicant in IRC2011/1497) Director of Public Employment (Respondent in IRC2011/1286, 1376) Maritime Authority of New South Wales (Respondent in IRC2011/1497) State of New South Wales (Respondent in IRC2011/1497) Unions NSW (Intervenor in all matters) Representation: Mr M Gibian of counsel (Applicant in IRC2011/1286 and 1376) W G McNally Jones Staff Lawyers Mr B Kruse, Industrial Officer (Applicant in IRC2011/1497) Mr M Kimber SC with Mr M Easton of counsel (Respondent in all matters) Crown Solicitor's Office File Number(s): IRC 1286 of 2011 IRC 1376 of 2011 IRC 1497 of 2011 Judgment 1In Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Director of Public Employment [2011] NSWIRComm 152 ("Judgment (No 1)"), the Court determined that certain overall arrangements were unfair contracts within the meaning of s 105 of the Industrial Relations Act 1996. 2In respect of those unfair contracts, the Court made the following directions: (1) The parties shall confer on the form of orders to be made under s 106 of the Industrial Relations Act 1996 in light of this judgment. The applicants shall file the short minutes of order they seek (whether by consent or otherwise) by 4.00pm on Friday 18 November 2011. (2) The relevant parties shall confer on the implications of this judgment for those 20 Listed Officers who did not give evidence in the proceedings to which this judgment relates. (3) The parties shall confer on the question of costs. (4) If there is agreement in relation to (2) and (3) hereof the parties shall file the agreed terms by 4.00pm on Friday 18 November 2011. If there is disagreement, the parties shall file an outline of their respective positions by 4.00pm on Friday 18 November 2011. (5) The parties shall report to the Court on the outcome of their discussions at 9.30am on Monday 21 November 2011. 3There was no agreement on the form of orders and on 18 November 2011 the parties filed short minutes of order reflecting their respective positions. On 21 November 2011 the parties made short submissions in support of their respective positions. However, it was apparent to the Court that more time should be allowed for the parties to further consider their positions and, consequently, the proceedings were adjourned until 1 December 2011. 4On that date the Court was advised that the principal applicant, the Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales ("the PSA") and the principal respondent, the Director of Public Employment ("the DPE") had been unable to reach agreement on the form of the orders. The Australian Services Union ("the ASU") and the Maritime Authority of New South Wales, however, had settled the ASU's claim, which involved only one person, namely, Mr Asmar. The ASU indicated that once an appropriate Deed had been executed it would file a Notice of Discontinuance. 5One matter that was agreed between the PSA and DPE concerned those officers who were the subject of the PSA's claims, but who did not give evidence. Some 12 officers gave evidence in the proceedings and the Court had indicated any orders it made would apply to those officers, but orders would not automatically apply to the 20 other officers on whose behalf claims were made, but who did not give evidence: see [21]-[23] of Judgment (No 1). The parties agreed, however, that any orders should apply to all officers who were the subject of the PSA's claims with the exception of Ms E Johnson, Mr M Kuskis and Mr R Towler. In respect of these three individuals either they had been found positions or had taken voluntary redundancy. I shall refer to the 32 officers less the three just mentioned, as the "Listed Officers". The names of the Listed Officers are set out in Appendix A to this judgment. 6The other matter that was agreed was that there should be no order as to costs. 7There were a number of matters disagreed between the PSA and the DPE. First, the PSA proposed that there should be an order declaring that both the relevant contracts of employment and the overall arrangements should be declared unfair. The Court did not find that the contracts of employment were, per se , unfair and, therefore, there is no foundation upon which they could be declared unfair. 8Secondly, the DPE sought that the arrangements for each of the Listed Officers, which were constituted by the Premier's Memorandum M2008-22, "Managing Excess Employees" ("the 2008 policy") and the Premier's Memorandum M2011-11 ("the 2011 policy"), should be varied so that the 2008 policy continued to apply only until 31 July 2012. This was opposed by the PSA, which contended there should be no "sunset provision" in relation to the 2008 policy. 9The PSA submitted that to insert a sunset provision in respect of the 2008 policy would be inconsistent with the Court's finding at [281(5)] and [281(6)] of Judgment (No 1), which identified the elements of unfairness in the arrangements as follows: (5) The arrangements permit the employer to unilaterally depart from express promises made to the Listed Officers who gave evidence upon being declared excess that they would be treated in accordance with and afforded the benefits contained in the 2008 policy including the promise of a 12 months' retention period, valuable assistance in finding a permanent position with the public service and a particular level of severance payments in the event of forcible retrenchment. As a consequence, the Officers will suffer a detriment. (6) The arrangements permit Listed Officers who gave evidence to be forcibly retrenched whether or not all practicable steps are made to redeploy the employees and even if there is ongoing work available for the employee to perform or a position into which the employee could be redeployed. As a consequence, the Officers will suffer a detriment. 10A further element of unfairness was identified by the Court at [281(4)] of Judgment (No 1), namely: (4) That part of the arrangement constituted by the 2011 policy is sought to be imposed on the Listed Officers who gave evidence without consultation or reasonable notice, contrary to past practice. 11There is substantial merit in what the PSA put. On the other hand, the unfairness derived from the absence of consultation and lack of notice could be addressed by a sunset provision. 12If the Court were to make an order that the 2008 policy should continue until 31 July 2014, that would significantly ameliorate if not eliminate any unfairness and at the same time provide certainty as to when the 2008 policy no longer has application to the Listed Officers. 13The third area of disagreement concerned whether an officer should be entitled to three months' notice or, if agreed, three months' pay in lieu, of forcible retrenchment plus all of the benefits available for voluntary redundancy under the 2008 policy, but in particular including: four weeks' notice or payment in lieu; for employees aged 45 years and over with five or more years of completed service, an additional one week's notice of pay in lieu. 14The PSA contended that under the 2008 policy an employee who was forcibly retrenched would have been entitled to three months' notice plus the benefits available in respect of voluntary redundancy. 15It seems to me it would be double counting to provide for three months' notice (or pay in lieu if agreed) and a further four weeks' or five weeks' notice or pay in lieu as the case may be. 16The third area of disagreement concerned Ms Sherlaimoff. In Judgment (No 1) the Court said at [246]-[247]: [246] I note that Ms Sherlaimoff is 59 years old. She has been in the public service for 20 years and has a PhD in demography. In her evidence Ms Sherlaimoff stated that she is 15 months short of her retirement date and that she would be financially disadvantaged if she were to leave early. Ms Sherlaimoff said: The last three years before retirement are particularly important for determining the final pension in my superannuation scheme. I have enough long service and recreation leave to take me through until the final retirement date, but the new policy precludes me from exiting through normal retirement. ... However in accordance with the 2011 MEE Policy as I am not in an established temporary position I will be forcibly retrenched on reduced payments as of 22 November 2011. [247] It would not seem to be at all unreasonable in Ms Sherlaimoff's case to allow her to take her accumulated leave through to her retirement and avoid the financial disadvantage she would otherwise suffer. This was suggested to the respondents in the course of the hearing but the Court received no final response. 17The PSA proposed that in the event Ms Sherlaimoff was to be forcibly retrenched, she should be entitled to either: (i) access her accrued long service leave and recreation leave at the expiry of the notice period and continue in employment whilst on leave until the day of her 60 th birhday on condition that she retire on that date; or (ii) accept forcible retrenchment and be retrenched at the expiry of the notice period and be paid a severance payment in accordance with the 2008 policy. 18Whilst the Court may have expressed certain views regarding Ms Sherlaimoff, the option of taking accrued leave until retirement was not the subject of proper debate in the proceedings and I am, therefore, reluctant to impose on the DPE such an outcome. I note, however, discussions are continuing between the parties regarding Ms Sherlaimoff's situation. The Court has expressed its view in that respect. 19The fourth area of disagreement was that the PSA submitted that if the Court were to apply a sunset provision, the Court should grant the declaration sought by the PSA regarding the operation of s 56 of the Public Sector Employment and Management Act 2002 ("PSEM Act"). In that respect, the declaration sought was that the services of any of the employees can only be lawfully dispensed with if the requirements of s 56 of the PSEM Act are met, namely, that: The relevant Department Head has determined that he or she is satisfied that the number of officers exceeds the number necessary for the effective, efficient and economical management of the Department's functions. The relevant Department Head has taken all practicable steps to secure a transfer to another Department or public sector service. No useful work can be found for the employee. 20The Court had found in Judgment (No 1) that it was open to make such a declaration because the Court had upheld the PSA's submissions in that regard. However, the Court stated: [304] I do not propose to make the declarations sought by the PSA because they were sought in the alternative in the event the first two limbs of the PSA's case were unsuccessful. The PSA was successful in the second limb. The "second limb" was the claim regarding unfairness. 21The DPE opposed any declaration regarding s 56. It was submitted the Court had determined that issue and it was not open to the Court to re-open its decision in that respect. 22In Judgment (No 1) the Court stated: [301] Under the 2011 policy, the concept of redeployment is limited to "permanent placement in a funded position on an agency's establishment." Employees will be forcibly retrenched if they do not secure a "permanent placement in a funded position" even though there may be "useful work" for the employee to perform for the purposes of s 56 of the PSEM Act. [302] For instance, a Department head must take all practicable steps to secure a transfer, including a secondment to the service of another public sector agency that is not a permanent placement (s 86), or a temporary assignment to carry out work for another agency (s 88) that also will not be a permanent placement. In those circumstances, the Department head could not be regarded as taking all practicable steps to secure a transfer if the only step taken was to secure a transfer to a permanent placement in a funded position. [303] Under the 2011 policy, any assistance with respect to redeployment will apply only during the three months' retention period and, even if the employee continues in employment in a temporary position, no steps will subsequently be taken to secure a transfer to another position in the public sector. As the PSA submitted, a Department head will not have taken all practicable steps to secure a transfer to another Department or public sector service if, months before it is contemplated the services of an employee will be dispensed with, no such efforts are made. 23Given that the 2008 policy will continue to apply to the Listed Officers until 31 July 2014 to the exclusion of the 2011 policy, any declaration of the nature sought by the PSA in respect of the operation of s 56 would have very little, if any, utility. In any event, if the PSA perceived such a declaration had become necessary it seems to me it would not be estopped from seeking such a declaration in other proceedings. Orders 24Having regard to the foregoing, the Court makes the following orders in Matter Nos IRC 1286 and 1376 of 2011: The Court: (1) DECLARES that each of the Listed Officers are party to an overall arrangement constituted by: (a) A contract of employment; and (b) The terms of the Premier's Memorandum M2008-22 "Managing Excess Employees" and the terms of the Premier's Memorandum M2011-11 (" the Arrangements "). (2) DECLARES that the Arrangements are unfair contracts within the meaning of s 105 of the Industrial Relations Act 1996. (3) ORDERS that the Arrangements are varied for each of the Listed Officers so as to include, where applicable having regard to Order (3)(b) hereof, the following terms for each of the Listed Officers in Appendix A: (a) The terms of the Premier's Memorandum M2008-22 "Managing Excess Employees" will continue to apply to the exclusion of the terms of the Premier's Memorandum M2011-11 until 31 July 2014. (b) If the Listed Officer is forcibly retrenched before 1 August 2014: (i) they will be given three months' written notice of the intention to be made redundant (or if agreed three months' pay in lieu of notice); and (ii) they will receive a severance payment as follows: a. three weeks per year of continuous service with a maximum of 39 weeks, with pro-rata payments for incomplete years of service to be on a quarterly basis; plus b. the benefit allowable as a contributor to a retirement fund; plus c. pro rata annual leave loading for leave accrued at the date of termination. (4) MAKES no order as to costs. ********** Appendix A 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: 05 December 2011