Industrial Relations Commission New South Wales Medium Neutral Citation: Notification under section 130 by New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union of a dispute with Newcastle City Council re half-day paid leave. [2014] NSWIRComm 15 Hearing dates: 18/12/13 Decision date: 04 April 2014 Before: Harrison DP Decision: Half day absence granted in same terms as those applied in 2012 (Ex tempore Decision 18/12/13) Catchwords: Dispute re half day concession leave on Christmas Eve - custom and practice - Lord Mayor's discretion - substitution with conditional attendance at barbecue one month earlier invalid. Consultation on change pursued with unauthorised parties. Order that 2013 be observed in same manner as 2012 - parties free to negotiate future arrangements in valid manner. Cases Cited: NSW Nurses' Association and Ors v South West Sydney Area Health Service [1994] NSWIRComm 147 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union NSW v Bluescope Steel [2010] NSWIRComm 1007 Health Services Union NSW and Central Coast Local Health District re Regrade Policy [2013] NSWIRComm 44 Category: Principal judgment Parties: New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union (USU) Newcastle City Council Representation: Mr J Murphy of Counsel (Applicant) Mr P Collins, Advocate (Respondent) File Number(s): IRC 976 of 2013 REASONS FOR DECISION 1This is a dispute concerning the arrangements to apply to Newcastle City Council employees on Christmas Eve, 24 December 2013. 2The notifier, New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union (the Union) asserts that the granting of a half day absence to all but a small number of critical staff, is an established custom and practice. 3The respondent, Newcastle City Council (the Council) asserts that there is no such custom and practice and that adequate alternative arrangements have been made in consultation with employee representatives. 4An ex tempore Decision was issued on 18 December 2013 in the following terms: HIS HONOUR: I propose to issue a short ex tempore decision in the matter which I will follow with a more fulsome decision in the usual manner, and I propose to issue an order in this matter. I am satisfied on the evidence that the half day leave on the last working day before Christmas, usually 24 December each year, is a customary usage which has long standing within Newcastle City Council employment and is imported into the contract of employment. The fact that it may have become a Lord Mayoral grant or in other words adopted by the Lord Mayor of the time into policy some decade ago, does not change the nature of the half day leave which is part of the employees' entitlement. Secondly, it is abundantly clear to me that the picnic day/Christmas party observed on 29 November is a different event, has different authority and is not the same in character, substance or utility to employees as the half day off on the last working day before Christmas. To try and substitute one for the other is untenable. The circumstances of each are different, in particular the 29 November event. The employees either decided to participate by buying a picnic ticket 12 months prior or were given an option to attend or not to attend the Christmas Party and were regarded as being at work whether they stayed at their place of employment and did their work or went to the Christmas party. They had no other choice. The nature of the half day before Christmas affords the employees the opportunity to do what anyone would do on a half day leave in preparation for Christmas Day. I reject the productivity and expense arguments put forward by the Council. That I will deal with more fully later. I believe that the appropriate remedy for this year is an order that requires the Council to afford all employees the half day leave, known as the Lord Mayoral grant, on 24 December 2013, in the same terms and conditions as was applied in 2012. I note and accept the argument advances by Mr Collins that an order for one year or for one event is appropriate given the renegotiation of the City of Newcastle Enterprise Agreement in 2014. The parties may wish to and be able to negotiate something which provides clarity, a better alternative or certainty in the present arrangements. That is not an opportunity that I believe they should be deprived of; alternatively the matter could come back for more fulsome arbitration by way of a proper application for an award with all parties represented and be dealt with much in the same terms as the Easter concession in the public sector, wherein it was resolved for the first time before Cahill J, then dealt with more fully later and then considered by a Full Bench. I commend further consideration of those decisions to the parties, as I agree with the submissions of Mr Murphy that the circumstances of those matters provide guidance in the present circumstances. The orders will issue and be available to the parties shortly. The proceedings are so adjourned pending final publication of the full judgment. 5I now deal with those matters appropriate to complete the record of events and reasons. 6The matter was filed on 28 November 2013 and first subject to compulsory conference proceedings on 6 December 2013. 7The notification described the dispute in the following terms: (1)For a period in excess of 30 years the employees at Newcastle City Council have been provided a condition of employment that has now been revoked by Council. (2)The condition of employment in question is that on the last working day prior to Christmas employees were provided a half-day paid leave. (3)On the 7th September 2011 this condition of employment was made "Policy" by Newcastle Council. It was advised that this "Policy" was provided in order to formalise this condition of employment that has existed for over 30 years as "Custom and Practice". (4)The Policy states "that at least one month prior to the date" employees will be advised of the particular day that the half-day of paid leave will be granted. As of the 25th November no date has been announced. 8On that occasion Mr Collins, appearing for the Council, submitted that dispute settlement procedures had not been followed, despite ample time to do so; and that the General Manager had not had the opportunity to discuss the matter with the Union. 9The issues were canvassed in private conference and the proceedings adjourned to permit further consideration by the parties, investigation of how in fact the Council proposed to deal with the afternoon of 24 December, and such other discussion as may be appropriate, having regard to the requirements of the dispute settlement procedure. 10The matter was relisted at the request of the Union on 16 December 2013. The Union at that time filed a Notice of Motion seeking an Order of the Commission pursuant to section 11(1) and (2) and section 136 (b) and (c) of the Industrial Relations Act 1996 ("the Act") in the following terms: "that on the last working day prior to Christmas employees shall be entitled to a half day's paid leave". 11The Notice of Motion was opposed and in the event was not pressed, and so set aside. 12On information from the parties that discussion between them had failed to resolve the matter and the lack of any prospect of resolution in formal conciliation conferences, I formed the view that conciliation was exhausted and the appropriate Certificate of Attempted Conciliation was issued. 13The matter was then adjourned to arbitration proceedings on 18 December 2013 with direction to the Union to file and serve a statement of remedy sought and list of witnesses by 12 noon, 17 December 2013. 14The Union advised that it would call Mr R Potter to give evidence and specified the Orders sought in the following terms: Draft Orders 1. That on the last working day prior to Christmas employees shall be entitled to a half day paid leave and 2. In the event that an employee is required to work on the last working day due to operational reasons such as the Garbage Collection, then the employees shall be paid as follows a. Employee is paid for full shift of 8 hours at ordinary rate and the employee receives 4 hours time in lieu to be taken at a mutually convenient time or b. Employee is paid; 4 hours ordinary time 2 hours at time and one half 2 hours at double time In the alternative Draft Newcastle City Council Half Day Leave Prior to Christmas Award The Award shall be known as The Newcastle City Council Half Day Prior to Christmas Award 2013 Duration This award will take affect from 18 December 2013 and remain in force for a period of three years Persons to apply All employees employed by Newcastle City Council Parties to this Award The New South Wales Local Government Clerical Administrative Energy, Airlines and Utilities Union and Newcastle City Council In the following terms- 1. All employees of Newcastle City Council shall, in addition to their normal annual holidays and public holiday, whether granted pursuant to an award, industrial agreement or the contract of employment, be entitled to one half days leave on the last working day prior to Christmas. 2. Should Council require an employee, due to operational needs to work on such a day, they will be entitled to claim one half day time in lieu to be taken at a mutually convenient time or Be entitled to overtime at the following rates- For the first two hours at time and one half (2 hours at 1.5 times = 3hours pay) The second two hours a double time (2 hours at 2 times = 4 hours pay) Any other such matter that the Commission deems appropriate. 15On Hearing Mr J Murphy, Senior Counsel, appeared on behalf of the Union and brought evidence from Mr Potter, an organiser of the Union. Mr P Collins appeared on behalf of the Council and brought evidence from Ms Sally Smith, employed by the Council as a Human Resources Business Partner, and Mr Martin Coates, Director City Engagement for the Council. Council's Position 16The relevant internal policy, titled "Lord Mayoral Grant Day" (MFI 4), states: 1 Objectives 1.1 The purpose of the policy is to provide a framework for employees to take a half day of leave known as the Lord Mayoral Grant Day. 1.2 The policy applies to all permanent and temporary employees working on the Lord Mayoral Grant Day. 2 Principles 2.1 Council commits itself to the following principles The Lord Mayoral Grant Day is to acknowledge and recognise employee contribution to Council during the past year. 3 Commencement and interpretation 3.1 The policy is effective from 7 September 2011. 3.2 Unless stated otherwise, a reference to a clause is a reference to a clause of the policy. 4 Date Lord Mayoral Grant day to be observed 4.1 Lord Mayoral Grant Day will be the working day immediately prior to Christmas Day, or such other day as the Lord Mayor and General Manager decide. 4.2 The Lord Mayor and General Manager will advise employees of the date of Lord Mayoral Grant Day at least one month prior to the date decided as Lord Mayoral Grant Day. 5 Entitlement to Lord Mayoral Grant Day 5.1 Employees at work on Lord Mayoral Grant Day will be allowed to cease work at 11am (for 38 hour week employees) or midday (for 35 hour week employees), without deduction of pay for ordinary hours. In circumstances where commencement times vary, employees must make arrangements with the appropriate Service Unit Manager, subject to operational requirements. 5.2 Employees who are absent from work on Lord Mayoral Grant Day, whether by way of annual leave, sick leave or for any other reason, will not qualify for Lord Mayoral Grant Day. 5.3 Employees will not be permitted to take Lord Mayoral Grant Day on a substitute day. 6 Christmas celebrations on Lord Mayoral Grant Day 6.1 Council may arrange and hold a formal Christmas celebration on lord Mayoral Grant Day and invite all Council employees. 17There is some dispute that the Lord Mayoral Grant Day has been observed on the afternoon of 24 December, or the last working day prior to Christmas Day, for the past 30 years or so; Council putting that the Policy has only been in place from 2011. 18The evidence in this matter confirms the custom and practice of over 30 years. The "dressing up" of that custom and practice as a grant by the Lord Mayor does not alter that fact. The policy is in itself flawed in as much that the Lord Mayor holds no executive authority to grant or not grant employee entitlements. 19In 2013 a proposal was advanced by management that the Lord Mayoral Grant Day would take the form of a Christmas Party on the afternoon of 29 November 2013 immediately following the Council's Picnic Day (an entitlement prescribed by the industrial agreement). 20The entitlement to Picnic Day is set out at clause 18.7 of the City of Newcastle Enterprise Agreement 2010 [EA 11/6] [2010] NSWIRComm 96 (the Agreement) in the following terms: Picnic Day 18.7 Picnic Day is a day which is not a general holiday and on which Council must continue to provide essential and other services so that the community does not perceive a loss of service. Council will keep the number of employees required to a minimum and finalise arrangements for work to be performed at least one week prior to Picnic Day. 18.8 Picnic day will be observed on a day agreed with the Consultative Committee. 18.9 An employee who has purchased a Picnic Day Ticket will be allowed the day off work and be paid at ordinary rate for the ordinary hours they would otherwise have worked, provided the Ticket was purchased at least one month prior to Picnic Day and not after the employee agreed to work on Picnic Day. 18.10 An employee eligible to be allowed the day off on Picnic Day but who is required to work will be paid ordinary rate for the ordinary hours they would otherwise have worked, reimbursed the cost of the picnic and allowed a day off at a mutually agreed time. 18.11 For all other employees the day will be a normal day. 18.12 Any overtime worked on Picnic Day will be normal overtime, that is, not overtime on a public holiday. 21The proposition was that employees who purchased a picnic ticket, at a cost of approximately $150, could attend the Christmas function, held at the same location as the picnic, with their families and receive a refund of $50 from the Council. 22Employees who did not purchase a picnic ticket could attend the afternoon Christmas party but could not bring their families. Employees not attending either the picnic or the Christmas party were required to remain at work. 23Where a Divisional Director determined an employee could not be released from duty, that employee was required to remain at work. Employees required to remain at work who had purchased a picnic ticket were to be refunded the cost of the ticket. 24There was no arrangement for alternative time off for any employee not attending the picnic for any reason, including the reason that the employee was required by management for duty; or as a personal choice not to attend. 25It is put that this arrangement was by consultation and agreement with the Union and the Picnic Committee. Agreement is denied by the Union. 26The Picnic Committee have no functional role in respect to the Lord Mayoral Grant Day or capacity to represent the interest of employees in any matter, other than the conduct of the picnic. Any such consultation with that group is invalid. The evidence is that the Picnic Committee did not agree, and could not agree to anything other than the arrangements for the picnic. 27The evidence is that Friday, 29 November 2013 was marked by particularly poor weather resulting in low attendance at the picnic and the Christmas party. Managerial Prerogative 28Mr Murphy submitted that the criteria of a Policy does not transfer a custom and usage to a matter of Managerial Prerogative. 29Mr Murphy relied upon a decision of the Commission as presently constituted in Health Services Union NSW and Central Coast Local Health District re Regrade Policy [2013] NSWIRComm 44, where it was held that Managerial Prerogative is limited to operational issues of productivity and efficiency and is not a warrant to treat employees unfairly. Mr Murphy referred to paragraphs 50 and 51 of the Decision which state: (50) The arguments advanced in respect to managerial prerogative are misplaced. (51) There is no managerial prerogative to permit management to treat employees unfairly or in an improperly discriminative manner. Indeed the vast body of workplace law is directed against management practices which are unfair, harsh or unjust. 30A significant submission by Mr Murphy is found at page 3 of transcript from 18 December 2013 in the following terms: If your Honour goes to the orders that we seek, the draft orders, it's effectively an order reverting to the previous situation; it's status quo type order is essentially what we're seeking, that employees be entitled to a half day's paid leave. Very much a status quo, we're in dispute about a proposed change, we seek a status quo and the status quo is they get paid - they get their picnic day which they've had and they get paid their half day's leave prior to Christmas which is now proposed to be taken away. So that's reflected in the order that we've sought. We have an alternative proposal for a draft award, for an award which would make the entitlement to a half day Christmas Eve paid leave, an award entitlement. And there's a precedent for that your Honour and I'll be taking your Honour to this in due course but back in the early 90s, his Honour Cahill J did precisely this same thing in relation to public servants' half day Easter Thursday leave which the government of the day decided they would revoke by way of a change of policy or - I think it was called the Premier's grant, it had a lot of the same language and elements of this case. It was said to be a grant given every year by the Premier. In this particular year, I think it was 1990 in effect, the Premier at the time said, no, no I'm not going to grant that anymore. Cahill J said well we'll have a think about that, in 90 made an interim award requiring the provision of the half day leave on Easter Thursday. The full argument was heard the following year and his Honour then made an award, an ongoing award, enshrining the half day Easter Thursday leave, and I'll provide copies of that decision and take you to it in due course. That went on appeal to a Full Bench and the Full Bench while finding there was a strong prima facie case for making the order his Honour did, upheld the appeal for a number of enumerated reasons, primarily the benefit that public servants, and these are only white collar public servants that had had the entitlement, the benefit that they had gained over time to matters such as flexi time we say could accrue and take at their pleasure subject to agreement, and that entitlement is effect allowed them to maintain the benefit of a half day paid leave on Easter Thursday, so the appeal was upheld and the award was set aside for very specific reasons, none of which apply in this case, none at all. And I'll be ultimately putting the submission to your Honour that you're in effect bound by Full Bench authority. Unless you can find the reasons to allow the setting aside of this entitlement, the Full Bench authority binds you to enshrine it by way of order, interim award or award. Custom and Practice 31The USU submitted that the practice of a half day concession on the last working day before Christmas Day was an established custom and usage of sufficient standing to have become a crystallised custom and practice forming part of the employees' rights and entitlements. 32The USU relied upon NSW Nurses' Association and Ors v South West Sydney Area Health Service [1994] NSWIRComm 147; and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union NSW v Bluescope Steel [2010] NSWIRComm 1007. 33In delivering the Judgment in the Nurses Case a Full Bench of the Commission said: The parties referred to various decisions of the former Industrial Relations Commission of New South Wales as to those issues. We take the view that the approach adopted by his Honour Justice Watson in In re Australian Fertilizers Ltd and the Australian Worker's Union, New South Wales Branch [I983] AR 237 should be followed. His Honour dealt with the concept of a 'usage' at pages 243-244: 'The Commission in Court Session in the Collective Responsibility Case [(1972) AR 80 at 98 and 99] approved the following passage from a judgment of Beattie J (as he then was) in the Furnace Demolishers Case [(1960) AR at 681-2]: The award applicable to the Newcastle Steel Works contains provisions as to the spell time to be allowed to demolishers, but the Port Kembla award is silent on the matter. An award does not necessarily contain all of the terms of the contract of employment between an employer and employee bound by it. They may agree on additional terms, and, moreover, a usage in a particular trade or occupation may become part of the contract and binding on the parties. In the present case the Union has referred to 'custom' and 'practice', but, in my view, to succeed in its claim it must establish the existence of what the law calls a 'usage'. The fact that a 'custom' or 'practice' has been alleged does not affect the validity of the Union claim if in fact a usage be established. If it were established, I would hold that the demolishers were entitled to refuse to work in the way they were directed, because it would have been part of their contract that they should not be required to work that way. If it were not established, I would have to consider whether the requirement made of them was reasonable. In Halsbury's Laws of England 3rd ed., vol. XI, p182, the following appears: Usage may be broadly defined as a particular course of dealing or line of conduct generally adapted by persons engaged in a particular department of business life, or more fully as a particular course of dealing or line of conduct which has acquired such notoriety. that where persons enter into contractual relationships, in matters respecting the particular branch of business life where the usage is alleged to exist, those persons must be taken to have intended to follow that course of dealing or line of conduct, unless they have expressly or impliedly stipulated to the contrary; that is to say that a rule of conduct amounts to a usage, if so generally known in the particular department of business life in which the case occurs, that, unless expressly or impliedly excluded, it must be considered as forming part of the contract. Dealing with the characteristics of a usage, Halsburv says at pp. 184-186: Every usage, whether in respect of a particular trade, branch of business or occupation, and whether affecting land or not, must be notorious, certain, and reasonable, and it must not offend against the intention of any legislative enactment. Every usage must have acquired such notoriety in the particular market or branch of trade or in the department of business or amongst the class of persons who are affected by it, that any person in that branch or department or class who enters into a contract of a nature affected by the usage must be taken to have done so with the intention that the usage should form part of the contract. Notoriety in this connection does not mean that it must be known to all the world, nor even that it should be known to the person against whom it is asserted; but it means that it must be well known at the place to which if applies, and be capable of ready ascertainment by any person who proposes to enter into a contract of which that usage would form part. Every usage must be certain. It must be uniform as well as reasonable, and in order to be incorporated as a term in a written contract it must have just as much certainty as the written contract itself. A usage is not, however, bad for uncertainty merely because it depends in its operation upon what a tribunal thinks to be reasonable. 34Mr Collins submitted that the application should be dismissed without remedy on the grounds set out below; or in the alternative an Order made in respect to 24 December 2013 only, pending renegotiation of the City of Newcastle Enterprise Agreement in 2014. 35The grounds relied upon are: (1)Arrangements were concluded to combine a Christmas function with Council Picnic Day by 7 November 2013; (2)This notification was made on 28 November 2013, the day prior to the combined Christmas Party and Picnic Day, 21 days after notification of the changed arrangements, which is alleged to be disingenuous and ignores the obligation to comply with dispute settling procedures pursuant to the Agreement. (3)The half day leave on Christmas Eve is a concession by Council Policy, not an entitlement under the contract of employment. (4)The combination of the Lord Mayoral Grant with Picnic Day included consideration of cost and a concern over the validity of the Lord Mayoral Grant Policy under the Local Government Act. (5)Council staff have entitlement to the Newcastle Show Day Holiday and Bank Holiday which are well in excess of other councils and the private sector. (6)An order would be unfair as in excess of 550 employees have received some benefit on 29 November 2013 and 200 employees have made application for leave on 24 December 2014. 36It is clear from the evidence that: In early 2013 management were contemplating the half day concession on 24 December 2013. Around October 2013 Council promulgated a cancellation of the Lord Mayor's Concession Day Policy, but did not complete that process. Productivity and Expense 37The productivity and expense argument put by Council is not particularised in any meaningful way. 38There is an assertion that the cost of the half day concession on 24 December 2013 amounted to $150,000 for no return. 39It is not established whether this is the cost of a half day's wages for all employees or whether it includes the cost of the failed Christmas Party attendance. 40The productivity and expense argument is negated by the evidence that a substantive number of employees had applied for leave and were absent on 24 December, funded by leave entitlements. 41The productivity and expense argument is further reduced by the evidence that for many outdoor functions, work cannot proceed as suppliers, such as concrete suppliers, are simply not available; and as 24 December precedes a longer Christmas closedown, the principle task on that day is to make work sites safe and secure, after which no work is possible and prior to occupies all staff. 42No employee would expect to leave a site until it is safe and secure. 43Council services, such as they might be required having regard to the involvement of many people with Christmas, are catered for by the retention of necessary staff. 44There is no evidence that the half day concession on 24 December 2013 gave rise to any complaint or inconvenience. 45The question of productivity has further subjective considerations only touched upon in these proceedings. To the extent that it is put that the half day concession on Christmas Eve is a "thank you" to employees for additional effort, the negation of any real benefit by removing the concession from Christmas Eve and complicating it with the picnic day is more likely to have immediate and longer term negative effects on discretionary effort, which is the foundation of productivity. 46Further, having regard to the limited capacity for productive work on the afternoon of 24 December 2013 and the number of employees who applied for and were granted leave, planned output and production were minimal. The productivity argument fails. ORDER 47An Order was issued on 18 December 2013, attached hereto. 48Matter No IRC 976 of 2013 is so concluded. ********** BEFORE THE INDUSTRIAL RELATIONS COMMISSIONPRIVATE OF NEW SOUTH WALES No. IRC 976 of 2013 PRIVATE The Commission makes the following Order in this matter: IN THE MATTER OF The half day paid leave, known as the Lord Mayoral Grant, shall be afforded to employees of Newcastle City Council on 24 December 2013 in the same terms and conditions as those which applied on the day observed in 2012. Notification under section 130 by New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union of a dispute with Newcastle City Council re half day paid leave Signed at Newcastle ORDER 18 December 2013 Filed by the Industrial Registrar R W Harrison 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. Decision last updated: 04 April 2014