Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v State of New South Wales [2014] NSWCA 116 Hearing dates: 4 December 2013 Decision date: 10 April 2014 Before: Bathurst CJ at [1]; Basten JA at [72]; Emmett JA at [117] Decision: (1)Declare that regulation 6(1)(f) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 (NSW) is invalid. (2)Quash the decisions of the Industrial Commission of NSW and of the Full Bench of the Commission dismissing an application to vary the Crown Employees' (School Administrative and Support Staff) Award to incorporate provisions dealing with redundancy and severance pay ("the variation application"). (3)Remit the matter to a member of the Commission to determine the variation application according to law. (4)No order as to costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: STATUTORY INTERPRETATION - principles - validity; interpretation to ensure - in order that the thing may have effect rather than be destroyed - Interpretation Act 1987 (NSW), s 32 - contrary intention - construction of validity contrary to legislative intention WORDS AND PHRASES - "Policies regarding the management of excess public sector employees" - Industrial Relations (Public Sector Conditions of Employment) Regulations 2011 (NSW), s 6(1)(f) STATUTORY INTERPRETATION - regulation - within power of enabling act - inconsistent with obligations of enabling act - Henry VIII clauses - regulatory not prohibitory - regulation removing jurisdiction to deal with matter not a policy on the matter WORDS AND PHRASES - "policy on conditions of employment" - Industrial Relations Act 1996 (NSW), s 146C APPEAL - Jurisdiction of Industrial Court to hear appeal - regulation removing jurisdiction of Industrial Court invalid ADMINISTRATIVE LAW - jurisdictional error - mistaken denial of existence of jurisdiction Legislation Cited: Education (School Administrative and Support Staff) Act 1987 (NSW) Industrial Relations Act 1996 (NSW), ss 6, 10, 11, 17, 21, 24, 130, 133, 135, 136, 137, 145, 146, 146C, 153, 179, 407, Part 1 Chs 3 and 4 and Part 2 Ch 3 Industrial Relations (Public Sector Conditions of Employment) Regulations 2011 (NSW), regs 4, 5, 6 and 7 Interpretation Act 1987 (NSW), ss 5 and 32 NSW Employment Protection Regulation 2001 Supreme Court Act 1970 (NSW), s 69 Workers Compensation Act 1987 (NSW), s 242 Cases Cited: Airservices Australia v Canadian Airlines International Limited [1999] HCA 62; (2000) 202 CLR 133 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41; (2009) 239 CLR 27 Australian Education Union v Department of Education and Children's Services [2012] HCA 3; (2012) 248 CLR 1 Australian Securities and Investments Commission v DB Management Pty Ltd [2000] HCA 7; (2000) 199 CLR 321 Birch v Australian Mutual Provident Society [1906] HCA 51; (1906) 4 CLR 324 Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 86 ALJR 1044 Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 Carbines v Powell [1925] HCA 16; (1925) 36 CLR 88 Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 Chevron USA Inc v Natural Resources Defense Council, Inc, 467 US 837 (1984) CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384 City of Arlington, Texas v Federal Communications Commission, 133 S Ct 1863 at 1868; 81 USLW 4299 (2013) City of Footscray v Maize Products Pty Ltd [1943] HCA 15; (1943) 67 CLR 301 Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389 Combined State Unions v State Service Co-ordinating Committee [1982] 1 NZLR 742 Commissioner of Taxation v Consolidated Media Holdings Ltd (ACN 009 071 167) [2012] HCA 55; (2012) 87 ALJR 98 Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; (2000) 199 CLR 135 Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163 De L v Director-General Department of Community Services (NSW) (No 2) [1997] HCA 14; (1997) 190 CLR 207 King Gee Clothing Company Pty Ltd v The Commonwealth [1945] HCA 23; (1945) 71 CLR 184 Kirk v Industrial Court of NSW [2010] HCA 1; (2010) 239 CLR 531 McKiernon v Secretary of State for Social Security (1989-1990) 2 Admin LR 133 Newcastle City Council v GIO General Ltd [1997] HCA 53; (1997) 191 CLR 85 Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 Public Service Association and Professional Officers' Association Amalgamated (NSW) v Director of Public Employment [2012] HCA 58; (2012) 87 ALJR 162 Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Department of Education and Communities [2013] NSWIRComm 32 Public Service Association of South Australia Inc v Industrial Relations Commission (SA) [2012] HCA 25; (2012) 86 ALJR 862 Re Crown Employees (School Administrative and Support Staff) Award [2012] NSWIRComm 127 R v Secretary of State for Social Security, Ex parte Britnell [1991] 1 WLR 198 R v Secretary of State for the Environment, Transport and the Regions; Ex parte Spath Holme Ltd [2001] 2 AC 349 Shanahan v Scott [1957] HCA 4; (1957) 96 CLR 245 Shergold v Tanner [2002] HCA 19; (2002) 209 CLR 126 Speirs v Industrial Relations Commission of New South Wales [2011] NSWCA 206; (2011) 81 NSWLR 348 State of New South Wales v Law (1992) 45 IR 62 Technical Products Pty Ltd v State Government Insurance Office (Qld) [1989] HCA 24; (1989) 167 CLR 45 The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc [1994] HCA 54; (1994) 181 CLR 404 Widgee Shire Council v Bonney [1907] HCA 11; (1907) 4 CLR 977 Texts Cited: D Pearce and S Argument, Delegated Legislation in Australia (4th ed, 2012) D Meyerson, "Rethinking the constitutionality of delegated legislation" (2003) 11 A J Admin L 45 G Ng, "Slaying the ghost of Henry VIII: A reconsideration of the limits upon the delegation of Commonwealth legislative power" (2010) 38 Fed L Rev 205 S Bottomley, "The notional legislator: The Australian Securities and Investments Commission's role as a law-maker" (2011) 39 Fed L Rev 1 Category: Principal judgment Parties: Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (Applicant) State of New South Wales (First Respondent) Industrial Relations Commission of New South Wales (Second Respondent) Representation: Counsel: M Gibian (Applicant) M Kimber SC / M Easton (Second Respondent) Solicitors: W G McNally Jones Staff (Applicant) Crown Solicitor's Office (First and Second Respondents) File Number(s): 197461 of 2013 Publication restriction: - Decision under appeal Citation: [2013] NSWIRComm 32 Date of Decision: 2013-04-26 00:00:00 Before: Walton J Vice President, Staff J and Backman J File Number(s): IRC 1210 of 2012 Judgment 1BATHURST CJ: By Amended Summons filed on 5 December 2013, the Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (the applicant) sought orders, pursuant to s 69 of the Supreme Court Act 1970 (NSW), in the nature of certiorari, quashing the decision of the Full Bench of the Industrial Commission of NSW (the Commission) in Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Department of Education and Communities [2013] NSWIRComm 32 . The Full Bench of the Commission (the Full Bench) had dismissed an appeal against a decision of Boland P in Re Crown Employees (School Administrative and Support Staff) Award [2012] NSWIRComm 127 dismissing an application to vary the Crown Employees' (School Administrative and Support Staff) Award (the award) to incorporate provisions dealing with redundancy and severance pay. 2Both Boland P and the Full Bench held that the effect of reg 6(1)(f) of the Industrial Relations (Public Sector Conditions of Employment) Regulations 2011 (the Regulations) made pursuant to s 146C(1) of the Industrial Relations Act 1996 (NSW) (the Act) precluded the varying of such an award. Background 3The application for variation of the award related to a group of employees known generally as School Administrative and Support Staff (the employees). The employees are employed by the first respondent pursuant to the Education (School Administrative and Support Staff) Act 1987 (NSW). It was common ground that these employees were not covered by the redundancy policy applicable to public sector employees generally; namely, Premier's Memorandum M2011/11 "Managing Excess Employees Policy". 4The employees comprised both temporary and permanent employees. The award which covered these employees made no provision for redundancy in respect of either category. 5It was in this context that the application for variation of the award was made. However, on the first day of the hearing before Boland P the NSW Department of Education and Communities issued a policy, "Managing Excess School Administrative and Support Staff Employees policy". This policy provided for redundancy procedures and payments for permanent employees. The policy stated that it did not apply to temporary employees however, in limited circumstances, such employees may be entitled to a severance payment based on the NSW Employment Protection Regulation 2001. 6Prior to dealing with the reasons for which Boland P and the Full Bench rejected the application for variation of the award, it is convenient to set out the relevant provisions of the Act and Regulations. The relevant legislation 7Section 146 of the Act sets out the functions of the Commission. It relevantly includes setting remuneration and other conditions of employment, resolving industrial disputes and hearing and determining other industrial matters. The expression "industrial matters" is defined in s 6 of the Act in the following terms: "6 Definition of industrial matters (1) General definition In this Act, industrial matters means matters or things affecting or relating to work done or to be done in any industry, or the privileges, rights, duties or obligations of employers or employees in any industry. (2) Examples Examples of industrial matters are as follows: (a) the employment of persons in any industry (including the employment of minors, trainees, apprentices and other classes of employees), (b) the remuneration (including rates of pay, rates for piece-work and allowances) for employees in any industry, (c) the conditions of employment in any industry (including hours of employment, qualifications of employees, manner of work and quantity of work to be done), (d) part-time or casual employment (including part-time work agreements), (e) the termination of employment of (or the refusal to employ) any person or class of persons in any industry, (f) discrimination in employment in any industry (including in remuneration or other conditions of employment) on a ground to which the Anti-Discrimination Act 1977 applies, (g) procedures for the resolution of industrial disputes, (h) the established customs in any industry, (i) the authorised remittance by employers of membership fees of industrial organisations of employees, (j) the surveillance of employees in the workplace, (k) the mode, terms and conditions under which work is given out, whether directly or indirectly, to be performed by outworkers in the clothing trades." 8There was no dispute that the application for variation of the award involved an industrial matter. 9By s 10 of the Act the Commission may make an award setting fair and reasonable conditions of employment for employees. Section 11 provides such an award can be made in the course of arbitration to resolve an industrial dispute, either on an application to the Commission or on the Commission's initiative. Section 17 empowers the Commission to vary an award. Section 21 provides that the Commission must, on application, make an award setting conditions of employment, including employment protection provisions. The section provides as follows: "21 Conditions to be provided in awards on application (1) The Commission must, on application, make an award setting any of the following conditions of employment: (a) ordinary hours of employment, (b) equal remuneration and other conditions for men and women doing work of equal or comparable value, (c) employment protection provisions, (d) provisions relevant to technological change, (e) sick leave, (f) part-time work, (g) casual work. (2) Those conditions are to be set: (a) in accordance with any relevant requirement of this Division and any other provision of this Act, and (b) with due regard to any established principles of the Commission or other matters considered relevant. (3) Those conditions may be set in a new award or by the variation of an existing award. (4) This section applies even though there is an existing award dealing with the matter." 10Section 24 defines employment protection provisions as provisions relating to the rights and obligations of an employer and an employee on the termination, or proposed termination of employment of the employee. 11Thus, subject to the effect of s 146C of the Act and the Regulations, the Commission has an obligation on application to make an award dealing with the rights of employees on termination. 12Part 1 of Ch 3 of the Act provides for the conciliation and arbitration of industrial disputes. Section 136 empowers the Commission in such arbitration proceedings to make or vary an award, to make a dispute order under Pt 2 of Ch 3 or to make any other kind of order it is authorised to make. Section 137 of the Act sets out the type of dispute orders which can be made. They include an order for the reinstatement of any employee. 13Section 146C of the Act is of central relevance in the present case. It provides as follows: "146C Commission to give effect to certain aspects of government policy on public sector employment (1) The Commission must, when making or varying any award or order, give effect to any policy on conditions of employment of public sector employees: (a) that is declared by the regulations to be an aspect of government policy that is required to be given effect to by the Commission, and (b) that applies to the matter to which the award or order relates. (2) Any such regulation may declare a policy by setting out the policy in the regulation or by adopting a policy set out in a relevant document referred to in the regulation. (3) An award or order of the Commission does not have effect to the extent that it is inconsistent with the obligation of the Commission under this section. (4) This section extends to appeals or references to the Full Bench of the Commission. (5) This section does not apply to the Commission in Court Session. (6) This section extends to proceedings that are pending in the Commission on the commencement of this section. A regulation made under this section extends to proceedings that are pending in the Commission on the commencement of the regulation, unless the regulation otherwise provides. (7) This section has effect despite section 10 or 146 or any other provision of this or any other Act. (8) In this section: award or order includes: (a) an award (as defined in the Dictionary) or an exemption from an award, and (b) a decision to approve an enterprise agreement under Part 2 of Chapter 2, and (c) the adoption under section 50 of the principles or provisions of a National decision or the making of a State decision under section 51, and (d) anything done in arbitration proceedings or proceedings for a dispute order under Chapter 3. conditions of employment - see Dictionary. public sector employee means a person who is employed in any capacity in: (a) the Public Service, the Teaching Service, the NSW Police Force, the NSW Health Service, the service of Parliament or any other service of the Crown, or (b) the service of any body (other than a council or other local authority) that is constituted by an Act and that is prescribed by the regulations for the purposes of this section." 14Conditions of employment are defined in the dictionary to the Act in the following terms: "conditions of employment includes any provisions about an industrial matter." I have already set out the definition of industrial matters. 15The regulations referred to in s 146C(1) of the Act, so far as is relevant are contained in regs 4, 5 and 6 of the Regulations. These regulations provide as follows: "4 Declarations under section 146C The matters set out in this Regulation are declared, for the purposes of section 146C of the Act, to be aspects of government policy that are to be given effect to by the Industrial Relations Commission when making or varying awards or orders. 5 Paramount policies The following paramount policies are declared: (a) Public sector employees are entitled to the guaranteed minimum conditions of employment (being the conditions set out in clause 7). (b) Equal remuneration for men and women doing work of equal or comparable value. Note: Clause 6 (1) (c) provides that existing conditions of employment in excess of the guaranteed minimum conditions may only be reduced for the purposes of achieving employee-related cost savings with the agreement of the relevant parties. Clause 9 (1) (e) provides that conditions of employment cannot be reduced below the guaranteed minimum conditions of employment for the purposes of achieving employee-related cost savings. 6 Other policies (1) The following policies are also declared, but are subject to compliance with the declared paramount policies: (a) Public sector employees may be awarded increases in remuneration or other conditions of employment, but only if employee-related costs in respect of those employees are not increased by more than 2.5% per annum as a result of the increases awarded together with any new or increased superannuation employment benefits provided (or to be provided) to or in respect of the employees since their remuneration or other conditions of employment were last determined. (b) Increases in remuneration or other conditions of employment can be awarded even if employee-related costs are increased by more than 2.5% per annum, but only if sufficient employee-related cost savings have been achieved to fully offset the increased employee-related costs beyond 2.5% per annum. For this purpose: (i) whether relevant savings have been achieved is to be determined by agreement of the relevant parties or, in the absence of agreement, by the Commission, and (ii) increases may be awarded before the relevant savings have been achieved, but are not payable until they are achieved, and (iii) the full savings are not required to be awarded as increases in remuneration or other conditions of employment. (c) For the purposes of achieving employee-related cost savings, existing conditions of employment of the kind but in excess of the guaranteed minimum conditions of employment may only be reduced with the agreement of the relevant parties in the proceedings. (d) 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 variations made with the agreement of the relevant parties. (e) 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 Commission's decision (if the award or order is made or varied in arbitration proceedings). (f) Policies regarding the management of excess public sector employees are not to be incorporated into industrial instruments. (2) Subclause (1) (e) does not apply if the relevant parties otherwise agree or there are exceptional circumstances. (3) The relevant parties in relation to a matter requiring agreement under this clause are the employer and any other party to the proceedings that is an industrial organisation of employees with one or more members whose interests are directly affected by the matter. (4) In subclause (1) (a), new or increased superannuation employment benefits means any new or increased payments by an employer to a superannuation scheme or fund of an employee as a consequence of amendments to the Superannuation Guarantee (Administration) Act 1992 of the Commonwealth or the State Authorities Non-contributory Superannuation Act 1987." 16There is a general regulation-making power contained in s 407 of the Act: "407 Regulations (1) The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act. (2) In particular, the regulations may prescribe the forms required or permitted to be used for the purposes of this Act or the regulations (including provision for any such forms to be as approved by the Minister or other body or officer). (3) A regulation may create an offence punishable by a penalty not exceeding 50 penalty units." The decision of Boland P and the Full Bench 17Boland P who heard the application in the Commission concluded that reg 6(1)(f) of the Regulations (the regulation) declared a policy. However, he rejected the applicant's contention that the regulation only prevented the Commission from incorporating a policy laid down by the government in an award leaving it free to deal with the issue in any other fashion it saw fit. 18In reaching this conclusion Boland P stated that the purpose of the regulation was to ensure that the long established practice of managing excess employees through the medium of government policy rather than award prescription was maintained. He concluded that the applicant's contention was contrary to such legislative purpose and would render the policy ineffective. 19In these circumstances Boland P concluded that he had no power to vary the award in the manner sought. 20The Full Bench reached a similar conclusion. They concluded that the text should be construed consistent with a broader construction than that advocated for by the applicant and that was textually available. They referred to the statement by French CJ in Public Service Association and Professional Officers' Association Amalgamated (NSW) v Director of Public Employment [2012] HCA 58; (2012) 87 ALJR 162 (PSA v Director of Public Employment) at [39] that s 146C of the Act accommodates the concept of policy as a principle or principles adopted or proposed by government but not extending to a policy that was ambulatory, that is a policy which required compliance with future variations of its terms. The Full Bench concluded (at [26(2)]) that the construction urged by the applicant had the ambulatory effect referred to by French CJ. 21The Full Bench then concluded (at [26(2)]) that the literal meaning of the words of the regulation were wide enough to accommodate circumstances that where a policy concerning the management of excess staff exists, conditions or matters relating to that subject matter may not be included or regulated by awards. They ultimately concluded (at [26(5)]) that by reason of the context in which the regulation appeared and the provision of s 146C of the Act, the regulation should be interpreted as preventing the inclusion in awards of any matter relating to the management of excess staff where a government policy on that topic existed. 22The Full Bench did not conclude that the Commission was absolutely prohibited from including matters relating to the management of excess public sector employees in awards. Rather they concluded the limitation only arose where a government policy relating to the matter existed. The parties' submissions The applicant 23The applicant submitted that the words of the regulation should be construed in accordance with their ordinary and grammatical meaning having regard to their context and legislative purpose. It submitted that so construed the only restriction the regulation placed on the Commission was on incorporating particular government policies on the management of excess public sector employees. Provided the award or variation of the award did not incorporate the particular policy laid down by the government, there was no constraint on the Commission in providing for redundancy in respect of public sector employees. 24The applicant submitted that this construction was supported by the use of the word "incorporated" in the regulation since as a matter of ordinary language, a provision in an award dealing with the subject matter of excess employees did not necessarily incorporate a government policy regarding the management of excess public sector employees. It submitted that this conclusion was supported by the fact that for many years government policies have dealt with this issue. It submitted if such a policy existed, it could not be incorporated into an award or order but, subject to this restriction, the Commission was entitled to make an award covering the matter. 25The applicant submitted that if it had been intended to prevent the Commission from making provision for the treatment of public sector employees on redundancy, the regulation could readily have set this out. It submitted that the jurisdiction of a court or tribunal will not be taken to have been withdrawn unless done in clear terms and that the regulation in question did not clearly withdraw any part of the jurisdiction of the Commission. 26The applicant submitted that a purposive approach provided no basis for the construction of the regulation contended for by the first respondent. It submitted that that construction effectively involved redrafting the regulation to conform to an assumed desire of the legislature, an approach that the courts were not entitled to take. In that context counsel for the applicant submitted that the construction contended for by the first respondent involved reading the words "not be incorporated" as if they said "not to be dealt with in". Counsel submitted this amounted to rewriting the provision. 27Counsel for the applicant submitted that on its construction the regulation could not be subverted by simply making minimum changes to any government policy because the regulation prohibited the incorporation of existing policies in substance. 28Counsel for the applicant submitted that the assertion that the government wished to enshrine the position that public sector employee redundancy be dealt with by government policy did not appear from the text, context and structure of the statute and submitted that the first respondent had pointed to no extrinsic material which supported that outcome. Counsel for the applicant submitted there was very little assistance to be gained from the extrinsic material. 29The applicant submitted that the relief it sought before the Commission did not seek to incorporate any government policy regarding the management of public sector employees but rather a variation of the award on that subject matter and the Court thus erred in declining to exercise jurisdiction. 30Counsel for the applicant accepted that had the regulation stated that management of excess employees was to be governed by government policy and not by a provision in an industrial instrument that might have produced a different result but emphasised that that was not what the regulation in fact provided. 31Counsel for the applicant also submitted that the word "Policies" in the regulation is not apt to describe what the Commission does when it sets terms and conditions of employment by way of an award. He submitted that the expression "Policies" is apt to describe a course of action adopted by government. 32The applicant further submitted that if the construction placed on the regulation by the Full Bench was correct, the policy adopted by the government immediately prior to the commencement of the hearing did not extend to temporary employees and the Commission in those circumstances had a residual power to deal with such employees by way of variation of an award. 33During the course of argument the applicant submitted that if the construction of the regulation contended for by the first respondent was correct then the regulation was outside the regulation-making power conferred by the Act as the regulation did not relate to a policy concerning conditions of employment. Leave was granted to amend the Summons to raise this point. The first respondent 34In its written submissions the first respondent submitted that the policy set out in the regulation is that "government policies (enunciated principles or established practices) regarding the management of excess public sector employees are not to be the subject of, or (by necessary implication) be subject to, award prescription". 35That construction of the regulation seems to leave open the question of whether the prohibition only arises when a government policy on the issue is in existence or arises irrespective of whether such a policy exists. However, subsequently in its oral submissions the first respondent made it clear that its contention was that the prohibition applied irrespective of whether or not a government policy on the issue was in existence. 36The first respondent contended that the question of construction of the regulation could not be resolved simply by a consideration of the literal or ordinary grammatical meaning of the words. Rather, the words needed to be considered having regard to their context and the purpose of the legislation. It submitted that, if the purpose was clear, a strained construction of the legislation could be justified to achieve that purpose providing the construction is neither unnatural nor unreasonable. 37The first respondent accepted that a literal reading of the regulation could support the construction contended for by the applicant but submitted that such a construction should be rejected because of, amongst other reasons, what it described as the perverse consequences which would flow from its adoption. The first respondent submitted that a literal reading would enable the Commission to make an award entirely inconsistent with government policy, something clearly contrary to the intention envisaged by s 146C of the Act. It contended that whilst the Commission could, on that construction, make an award inconsistent or radically different from government policy, it would not be able to make an award reflective (without any deviation) of that policy. In those circumstances, presumably, there would be very little need to make such an award. 38The first respondent contended that the readily discernible purpose behind the regulation was to enshrine the longstanding practice that issues of public sector redundancy were to be dealt with as a matter of government policy rather than through the award mechanism. It noted that it was common ground that the redundancy of public sector employees had been dealt with by way of government policy rather than through awards. Senior counsel for the first respondent contended that the regulation was designed to ensure that that approach continued to be adopted. 39The first respondent pointed out that the effect of s 146C of the Act was to impose upon the award-making functions and powers of the Commission contained in ss 146 and 10, the restrictions contained in s 146C. The first respondent contended that once a policy is declared, the Commission could not make an award inconsistent with it because that would not be giving effect to the policy in accordance with s 146C. It submitted that there was no need for a policy document to have been published provided the policy in question had been declared. 40The first respondent submitted that in the context of the regulation, the word "incorporate" did not mean "incorporated by reference" in the commonly understood sense. It was submitted that the wording of s 146C of the Act and the regulation made it clear that the regulation is not confined to cases where the government has in existence a statement of policy. Senior counsel for the first respondent submitted that in the context of the present case the word "incorporated" is to be read as if the words "and not be subject to industrial instruments" appeared at the conclusion of the regulation. The first respondent submitted the regulation prohibited both the inclusion in awards of government redundancy policies and awards otherwise dealing with public sector redundancy. 41Senior counsel for the first respondent submitted that the word "Policies" in the regulation meant principles or rules. He submitted that, understood in that way, the regulation prohibited rules concerning the management of excess public sector employees being included in awards. However, he accepted that there was a difference in meaning between the two expressions, "policies" and "awards" and that the word "Policies" in the regulation bore the same meaning as it did in the chapeau to s 146C of the Act. 42The submission of the first respondent did not embrace the view of the Full Bench that the prohibition in the regulation only arose when a general policy on the topic had been published (see par [21] above). However, it was submitted by counsel that assuming that that construction was correct, the policy as promulgated demonstrated an intention to "cover the field" as the position of temporary employees was considered and the redundancy rights limited to those set out in the NSW Employment Protection Regulation 2001. 43Senior counsel for the first respondent submitted that the regulation so construed was a valid exercise of the regulation-making power contained in the Act. Senior counsel submitted that a policy that public sector employees should not have enforceable rights to redundancy enshrined in awards was the policy on conditions of employment. Senior counsel submitted it did not lose this character because it restricted the options available to the Commission to deal with the matter. Consideration Construction 44The principles governing the construction of delegated legislation, such as the regulation in the present case, are those applicable to Acts of Parliament generally: Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389 at 398; King Gee Clothing Company Pty Ltd v The Commonwealth [1945] HCA 23; (1945) 71 CLR 184 at 195. 45The relevant principles have been stated on a number of recent occasions by the High Court. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41; (2009) 239 CLR 27, the plurality emphasised (at [47]) that construction must begin with a consideration of the text itself and while the language employed is the surest guide to legislative intention, the meaning of the text may require consideration of the context which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy: See also Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 86 ALJR 1044 at [41]; Commissioner of Taxation v Consolidated Media Holdings Ltd (ACN 009 071 167) [2012] HCA 55; (2012) 87 ALJR 98 at [39]; Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 at [23]. 46Determination of the purpose of the statute or a particular provision may be based not only on an express statement of purpose in the statute itself but also by inference from its text and structure and where appropriate by reference to extrinsic material. However, the process does not involve a search for what those who presented and passed the legislation had in mind: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355; Certain Lloyd's Underwriters v Cross supra at [23]-[26]. 47Extrinsic material cannot be used to construe a legislative provision unless a construction of the provision suggested by the material is reasonably open: CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384 at 408; Newcastle City Council v GIO General Ltd [1997] HCA 53; (1997) 191 CLR 85 at 113. In particular it is not for a court to construct its own idea of a desirable policy, impute it to the legislature and then characterise it as a statutory purpose: Australian Education Union v Department of Education and Children's Services [2012] HCA 3; (2012) 248 CLR 1 at [28]. 48There is one other matter which should be noted. It is well established that where a regulation is open to two constructions, one within the power conferred by the enabling Act and the other outside of such power, the former construction should be adopted: ut res magis valeat quam pereat: Widgee Shire Council v Bonney [1907] HCA 11; (1907) 4 CLR 977 at 983; Birch v Australian Mutual Provident Society [1906] HCA 51; (1906) 4 CLR 324 at 343; Airservices Australia v Canadian Airlines International Limited [1999] HCA 62; (2000) 202 CLR 133 at [229]-[230] and [408]. This principle finds statutory embodiment in s 32 of the Interpretation Act 1987 (NSW). However, that section is subject to any contrary intention appearing in the legislation (Interpretation Act, s 5). 49In considering the context in which the regulation falls to be considered, it is necessary to have regard to the opening words of s 146C(1), and s 146C(1)(a) of the Act. The opening words of s 146C(1) require the Commission when making or varying an award or order to give effect to any policy on conditions of employment of public sector employees. The extent of that requirement is limited by s 146C(1)(a) to any such policy that is declared by the Regulations to be an aspect of government policy that is required to be given effect to by the Commission and that applies to the matter to which the award or order relates (per s 146C(1)(b)). The matters in regs 5 and 6 of the Regulations are matters which are said to be aspects of government policy. So much is made clear by reg 4. The purpose of the legislation can thus be seen to require the Commission to comply with certain aspects of government policy concerning public sector employees in setting awards or resolving industrial disputes. 50Each of the sub-regulations 6(1)(a)-(e) of the Regulations impose particular constraints on the award or order the Commission can make in exercising its powers under ss 10 or 21 of the Act (or its equivalent jurisdiction in making an order). Each of the matters referred to in those sub-regulations reasonably can be seen as an aspect of government policy. By contrast reg 6(1)(f) of the Regulations does not on its face identify any particular aspect of government policy but refers generally to "Policies" regarding the management of excess public sector employees. 51The applicant submits that the word "Policies" in the regulation means policies on the management of excess public sector employees laid down by the government. That construction, which involves reading the word "Policies" in the regulation as policies in fact promulgated by the government, may be open on the words of the regulation but, in my opinion, produces a result directly contrary to the legislative intent to which I have referred to above. 52The construction contended for by the applicant would prevent the Commission from implementing any government policy by including it in an award or order but entitle it to ignore such a policy by including provisions in the award which did not conform with, or were directly contrary to the policy promulgated. It seems to me to be contrary to the legislative intention to read the word "Policies" in the regulation in a manner that produces that result. The interpretation is not compelled by the text, which refers to policies without the limitation contended for by the applicant. 53The construction placed on the regulation by the Full Bench was not supported by either party other than as a fallback position with respect to the issue of temporary employees. With respect to the Full Bench, I do not consider that construction is consistent with the words of the regulation. It involves reading the regulation as prohibiting the Commission from making provision for excess public sector employees if a government policy is in existence. That is not what the regulation says. Rather, the regulation contains a general prohibition on the incorporation of policies. Further, it is difficult to see how the regulation would operate where an order was made and a policy subsequently brought into existence. The award presumably would prevail, a matter again contrary to the express legislative intent. Section 146C(3) of the Act would not produce a contrary result because on this interpretation the Commission originally having power to make the award would not have acted inconsistently with its obligations under s 146C. 54The regulation operates to prohibit the inclusion in awards of provisions relating to the management of excess public sector employees. It was accepted correctly by the parties, that the expression "policies" had the same meaning in the Act as in the regulation and that the word referred to rules and principles which have been made by regulation as statements of "policy" or "government policy": PSA v Director of Public Employment at [39] and [58]. If the word "Policies" in the regulation is read in that way, the regulation precludes the incorporation in awards of rules or principles relating to the management of excess public sector employees. The relevant policy expressed in the regulation as envisaged by s 146C(2) of the Act is to prohibit the Commission inserting in awards or orders, rules or principles dealing with those matters. 55Such a construction does no violence to the language of the regulation. Although it is true that the word "incorporates" is commonly used to refer to the inclusion of material by reference, in the context of a prohibition on incorporation it can simply mean include whether by reference or otherwise. This is consistent with s 146C(2) of the Act which makes it clear that no separate policy document need be in existence for a regulation to be made. The prohibition is against the inclusion of policies construed in the manner to which I have referred to above. 56The applicant pointed to the fact that s 21(1)(c) of the Act required the Commission in setting an award to include employment protection provisions as defined in s 24. It submitted that the legislation would not have been taken to have withdrawn that jurisdiction unless the withdrawal was clear and unmistakeable. 57It is a well known principle that withdrawal of jurisdiction from a court will not be held to have taken place unless the implication is clear and unmistakeable: Shergold v Tanner [2002] HCA 19; (2002) 209 CLR 126 at [34]. In that context it should be noted that s 146C(5) of the Act provides that the section does not apply to the Commission in Court Session. Whether the principle, referred to in cases such as Shergold v Tanner supra, applies in the case of a tribunal exercising non-judicial functions, need not be considered in the present case. Even if it did apply, I am satisfied for the reasons which I have given that the legislation clearly took away the jurisdiction of the Commission to deal with issues relating to public sector employee redundancy. 58As will be seen from what I have written below, this construction leads to the conclusion that the regulation falls outside the regulating power conferred by s 407 in conjunction with s 146C of the Act. As I have said if two alternative constructions were available, the construction which leads to the conclusion that the regulation was within power should be preferred. The construction contended for by the applicant would lead to the regulation being within power. However, for the reasons I have given I do not consider that such a construction is available. The validity of the regulation 59Section 407(1) of the Act relevantly confers the power to make regulations with respect to any matter that is required or permitted to be prescribed. There was no suggestion that any section of the Act other than s 146C permitted the prescription of a regulation in the nature of the regulation. 60The validity of the regulation thus depends on the construction of s 146C of the Act. In that context authorities on other legislation are of little use: City of Footscray v Maize Products Pty Ltd [1943] HCA 15; (1943) 67 CLR 301 at 308. However, it is clear that the regulation would be ultra vires if it extends the scope or operation of s 146C or goes beyond the confines of that section: Shanahan v Scott [1957] HCA 4; (1957) 96 CLR 245 at 250; Carbines v Powell [1925] HCA 16; (1925) 36 CLR 88 at 91-92. 61The chapeau to s 146C(1) of the Act requires the Commission when making an award or order, to give effect to any policy on conditions of employment of public sector employees. Section 146C(1)(a) limits the operation of s 146C to such of those policies which are declared by the regulation to be an aspect of government policy to which the Commission is required to give effect. 62In the present case the relevant aspect of government policy is that the Commission, when making an award or order, shall not make provision for policies regarding the management of excess public sector employees as distinct from requiring the Commission to insert particular provisions or adopt a particular approach to that issue. The critical question is whether that can be described as a policy on conditions of employment. 63The definition of "industrial matter", pivotal to the meaning of "conditions of employment" is detailed at par [7] above. This definition would not seem to extend to provisions relating to the jurisdiction of the Commission. However, s 6(2)(g) of the Act gives, as an example of an industrial matter, procedures for the resolution of industrial disputes. 64In those circumstances s 146C of the Act may well be sufficiently wide to permit regulations prescribing procedures for the resolution of industrial disputes which have become part of government policy. However, as appears from s 11 of the Act, the power of the Commission to make an award extends beyond doing so in the context of the resolution of an industrial dispute. Further, a prohibition on making a particular type of order goes well beyond the prescription of procedures relating to the resolution of disputes. 65I have concluded that reg 6(1)(f) prohibits the Commission from dealing with matters relating to public sector employee redundancy. Notwithstanding the fact that the definition of conditions of employment is an inclusive definition, a regulation embodying a policy, the only effect of which is to exclude the power of the Commission to deal with an aspect of employment in its entirety (despite the obligation contained in s 21(1)(c)) seems to me to fall outside the scope of a policy on conditions of employment. 66Whilst a policy limiting or defining what could be awarded under s 21(1)(c) on termination of employment would be a policy on conditions of employment, the policy preventing the Commission from dealing with the matter at all does not seem to me to fall within the definition. 67For these reasons the regulation was not one permitted or required by s 146C of the Act. It follows that the regulation is ultra vires and invalid. 68Both Boland P and the Full Bench relied on the regulation in concluding that they had no jurisdiction to make the award. This mistaken denial of the existence of jurisdiction constitutes jurisdictional error: Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163 at 177; Kirk v Industrial Court of NSW [2010] HCA 1; (2010) 239 CLR 531 at [71]-[72]; Public Service Association of South Australia Inc v Industrial Relations Commission (SA) [2012] HCA 25; (2012) 86 ALJR 862 at [56]-[57]. 69So far as relief is concerned, the plurality in Public Service Association of South Australia Inc v Industrial Relations Commission (SA) supra (at [57]) stated that the appropriate order in cases of a failure to exercise jurisdiction was mandamus without any order in the nature of certiorari quashing any decision not to exercise jurisdiction. In the circumstances the appropriate order is to remit the matter to the Commission to be dealt with according to law. As the basis for setting aside the decision of the Commission is the invalidity of the regulation, the Court should make a declaration to that effect. 70As to costs, the applicant was only successful on a ground raised during the course of argument on the appeal. The applicant failed on its construction argument. In these circumstances there should be no order as to the costs of the application. Conclusion 71In the result I would make the following orders: (1)Declare that regulation 6(1)(f) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 (NSW) is invalid. (2)Quash the decisions of the Industrial Commission of NSW and of the Full Bench of the Commission dismissing an application to vary the Crown Employees' (School Administrative and Support Staff) Award to incorporate provisions dealing with redundancy and severance pay ("the variation application"). (3)Remit the matter to a member of the Commission to determine the variation application according to law. (4)No order as to costs. 72BASTEN JA: The applicant is the union representing a group of public sector employees known as the "School Administrative and Support Staff" ("school staff"). The conditions of employment of school staff are governed by an award; the applicant sought to vary the award so as to include entitlements in the event of staff being made redundant. The variation was opposed by the State. 73The dispute was not resolved by conciliation and went before the Industrial Relations Commission (NSW). At an initial hearing, the President, Boland J, determined that the Commission was precluded from including such provisions in the award by s 146C of the Industrial Relations Act 1996 (NSW) and cl 6(1)(f) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 (NSW) ("the Regulation"). An appeal to the Full Bench of the Commission was dismissed. 74There is no right of appeal from a decision of the Commission: Industrial Relations Act, s 179(1). Accordingly, the applicant sought to invoke the supervisory jurisdiction of this Court under s 69 of the Supreme Court Act 1970 (NSW). Section 179, in its terms, purports to remove the operation of that jurisdiction with respect to most decisions of the Commission. However, such a privative clause is ineffective to prevent review for want or excess of jurisdiction: Kirk v Industrial Court of New South Wales [2010] HCA 1; 239 CLR 531. "Jurisdictional error" includes the purported exercise of powers which are not available to the court or tribunal; it also includes a refusal to consider the exercise of a power which is available: Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia [2012] HCA 25; 86 ALJR 862 at [34] (French CJ), [65] (Gummow, Hayne, Crennan, Kiefel and Bell JJ) and [72]-[73] (Heydon J). 75The existence of "jurisdiction" in a particular case may depend upon the construction of a relevant law, the application of law to facts as found, or the existence of particular facts. (It may depend upon a combination of these elements; indeed, such a tripartite classification will often appear artificial.) With respect to facts, the question is usually reformulated so as to inquire whether the legislation confers jurisdiction on a tribunal on the basis of its satisfaction as to the existence of certain facts, or whether those facts must be established to the satisfaction of a reviewing court. If the latter is the correct construction of the legislation, the fact itself is described as "jurisdictional". 76A similar exercise can be undertaken with respect to legal preconditions to the exercise of a statutory power. In such a case, the question is whether the proper construction of the law was intended by Parliament to be vested in the tribunal, or whether that construction depended upon the view of a reviewing court. An authoritative determination of the meaning of a law will usually involve the exercise of a judicial function. In respect of a Commonwealth law, that function can only be vested in a court. That follows from the doctrine of the separation of powers, which does not operate, or at least not in the same way, in respect of State judicial power: The Public Service Association and Professional Officers' Association Amalgamated (NSW) v Director of Public Employment [2012] HCA 58; 87 ALJR 162 ("PSA (NSW)") at [57]. This dichotomy is reflected in the conventional proposition that there can be errors of law "within jurisdiction" and errors of law as to the existence of jurisdiction. Were that not so, all errors of law would constitute jurisdictional error. On one view, a comprehensive privative clause, in the form of s 179, may have work to do in defining which errors may be jurisdictional and which not. 77The applicant's case in this Court was that the Commission had erred in its construction of a paragraph of the Regulation. It submitted that the effect of the misconstruction was to deny the existence of jurisdiction and therefore to commit jurisdictional error. The respondent employer did not challenge this form of reasoning, but only the conclusion. 78There is a further preliminary matter to note. The written submissions of the parties were directed exclusively to the proper construction of the Regulation. In the course of the hearing, the applicant adopted a further alternative line of argument, namely that, if the construction of the Regulation supported by the State were to be accepted, it was not within the scope of the regulation-making power in the Industrial Relations Act. Leave was granted to amend the application to identify this additional ground. There are, therefore, two issues to be resolved in this Court. Proper construction of the Regulation 79The first question concerned the construction of cl 6(1)(f) of the Regulation. The Regulation identified certain government policies for the purposes of s 146C. That provision, set out at [13] above, requires that the Commission "give effect to any policy on conditions of employment of public sector employees ... that is declared by the regulations to be an aspect of government policy that is required to be given effect to by the Commission": s 146C(1)(a). 80The relevant parts of the Regulation have been set out by the Chief Justice at [15] above. It is sufficient to note here the specific language of the paragraph in question, namely cl 6(1)(f): 6 Other policies (1) The following policies are also declared, but are subject to compliance with the declared paramount policies: ... (f) Policies regarding the management of excess public sector employees are not to be incorporated into industrial instruments. 81It was common ground that school staff fell within the definition of "public sector employee" in s 146C of the Industrial Relations Act, being persons employed in "any other service of the Crown", within s 146C(8), public sector employee, (a). It was also common ground that the award governing the terms of employment of school staff, which was sought to be varied, was an "industrial instrument" within par (f). 82Further, to the extent that it was relevant, on 29 October 2012 (after the date of the application for a variation of the award and after the dispute had been referred to the Commission, but before the decision of Boland J) the Director General, New South Wales Department of Education and Communities, promulgated a policy entitled "Managing Excess School Administrative and Support Staff Employees". The policy applied to permanent school staff, but did not purport to apply to temporary staff. 83It is not possible to construe cl 6(1)(f) of the Regulation without reference to the statutory provision which supports it, namely s 146C. It will be necessary to return to the concept of a "policy" in considering the scope and operation of this provision; it is sufficient for present purposes to note that a policy, adopted by a government, is a statement of principles designed to guide future action of the government, its officers and agencies: see PSA (NSW), at [39] (French CJ). Policies can be of different kinds: they can set minimum standards for conditions of employment (as do the "paramount policies" referred to in the Regulation, cll 5 and 7) or they can impose limits on the benefits available to employees, as do each of the policies identified in sub-cl 6(1), with the exception of paragraphs (d) and (f). Each of paragraphs (a)-(c) and (e) concerns remuneration and related issues; for example, paragraph (a) limits pay increases to 2.5% per annum. Paragraph (f) is in a different form: it seeks to preclude the incorporation into awards of "policies regarding [redundancies]". 84The use of the term "policies" in this context is awkward in two related respects. First, one would generally expect an award to include conditions of employment or procedures for dealing with issues which might arise in the course of employment. A "policy" might ordinarily be understood to operate at a higher level of generality, to be translated into more specific conditions or procedures in a particular document. So understood, the word "policies" in paragraph (f) could have been replaced by "provisions", so as to state that provisions regarding redundancies are not to be incorporated into awards. Secondly, the term "policy" appears to be used in a different sense from that of "an aspect of government policy", referred to in s 146C(1)(a). The "policy" which is reflected in paragraph (f) is the exclusion of all provisions relating to redundancies from industrial instruments (or awards). Specific conditions and procedures might reflect policies, but would not usually be described as the 'incorporation' of the policy into the award. It is even more awkward to describe a prohibition on such provisions as the 'incorporation' of the policy not to include such provisions. 85The explanation for the language used in paragraph (f) is to be found in the identical language used in the NSW Public Sector Wages Policy 2011, referred to by the applicant in its submissions. In that document, the language constituted a direction to government departments and agencies. Perhaps to demonstrate continuity rather than change, the identical language was transposed to the Regulation. As a direction to the Commission, the language was inapt. 86So understood, paragraph (f) is a straightforward prohibition on inclusion by the Commission of provisions relating to redundancy in awards governing public sector employees. That was (broadly speaking) the construction accepted by the Industrial Commission, both at first instance and on appeal. The applicant challenged that construction in submissions articulated in various ways, summarised by the Chief Justice above. The substantial arguments were, however, twofold. 87First, it was contended that in the ordinary meaning of the language, the reference to "policies" was a reference to existing policies. Thus, what could not be included in an award was an existing government policy with respect to redundancy. The application by the PSA to include such provisions in an award did not attempt to pick up the terms of any existing policy: indeed, at the time the application was made, the government had no policy specific to school staff. (Even now, the submission continued, it had no policy with respect to temporary school staff.) 88The second element of the submissions relied upon other powers of the Commission, found in ss 21 and 24 of the Industrial Relations Act. Thus, s 21 provides that the Commission "must, on application, make an award setting any of the following conditions of employment" which include "employment protection provisions": s 21(1)(c). The phrase "employment protection provisions" is defined in s 24 to be "provisions relating to the obligations and rights of an employer and an employee on the termination or proposed termination of employment of the employee." If, the submission proceeded, it had been the government's intention to exclude the statutory obligations of the Commission as identified in these provisions, in making awards for public sector employees covered by s 146C, it would have been a simple matter for the government to amend those specific provisions. 89Neither of these submissions is persuasive. The first would have the consequence that, while the Commission could not incorporate a policy as to redundancy which had been articulated by the government, it could make provisions with respect to redundancies in any case where there was no specific policy. Indeed, on one view, it would be free to incorporate conditions which were inconsistent with an existing government policy, but not conditions consistent with the existing policy. These propositions are fundamentally inconsistent with the clear intention of paragraph (f). It is true that paragraph (f) appears to use the term "policies" in a different sense from its use in s 146C and elsewhere in the Regulation, however, the different use of the term does not give rise to an absurdity, or even a strained construction; the intention of the paragraph remains clear. 90The proposition that the government could have amended the legislation so as to address more directly the interrelationship of the particular policy with inconsistent provisions of the Act may be accepted. However, it does not affect the construction of paragraph (f) in the Regulation. With respect to the conditions of employment of public sector employees, the underlying purpose of s 146C is to require the Commission to give effect to "government policy", as identified in the Regulation. It was recognised that the effect of such a provision might be in conflict with other parts of the Industrial Relations Act, a consequence expressly addressed in s 146C(7), which provides that the section "has effect despite section 10 or 146 or any other provision of this or any other Act". 91The applicant also sought assistance from a passage in the judgment of French CJ in PSA (NSW) at [39]. There the Chief Justice stated: "That meaning of the word 'policy', particularly in a context in which it gives content to delegated legislation, does not extend to a policy which is ambulatory. That is to say, it does not extend to a policy which requires compliance with future variations of its terms or with future ministerial directions." 92That approach would exclude from the scope of the Regulation a policy which, for example, rendered conditions of employment subject to direction or variation by a Minister or the promulgation of a future policy. The precise scope of that limitation need not be explored in this case: it is not addressed to a policy in the terms of cl 6(1)(f). 93It follows that both Boland J and the Full Bench were correct in concluding that paragraph (f) precluded the Commission from incorporating into the school staff award provisions relating to "excess" employees, although the reasons given above differ from those adopted in the Commission. As to the reasoning of the Commission, I agree with the criticisms expressed by the Chief Justice. Validity of regulation 94It remains to consider the validity of paragraph (f). The narrow point of construction turns on whether the phrase "any policy on conditions of employment", in the chapeau to s 146C(1), can extend beyond policies addressing the substance of the conditions to a metapolicy that some aspects of employment are not to be governed by conditions of an award at all. The broader point involves the proper approach to construing what are described as "Henry VIII clauses", that is, statutory provisions which permit the statute to be varied by delegated legislation by giving the latter the status of an enactment. 95Because this issue was only raised in the course of argument, it is not unfair to the parties to say that the basis for such a contention was not clearly articulated. The argument for invalidity grew out of a submission that the Court should not read expansively a provision which had the effect of limiting the jurisdiction of the Commission, namely paragraph (f) in the Regulation. That submission was translated to the construction of s 146C. The argument was, in substance, that a policy "on conditions of employment" should be read conservatively so as not to include a policy that no conditions of a particular kind be included in an award. 96Support for that approach was sought to be derived from the "well-established principle that a power vested in a court should not be construed as subject to limitations not clearly to be seen", a principle identified by this Court in Speirs v Industrial Relations Commission of New South Wales [2011] NSWCA 206; 81 NSWLR 348 by Giles JA (Allsop P and Hodgson JA agreeing) at [89], referring to a number of supportive authorities: see also The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc [1994] HCA 54; 181 CLR 404 at 421. Speirs and the authorities referred to in it were somewhat different from this case. Speirs itself concerned the power of the Industrial Relations Commission to reinstate an injured worker in his or her previous employment, pursuant to s 242 of the Workers Compensation Act 1987 (NSW). In fact, the general principle may have had a muted application in that case which involved not so much a denial of jurisdiction, as a question concerning the distribution of powers, in particular to determine the existence of an entitlement to compensation. 97The Commission, for present purposes, is not a court: in making an award it is not exercising the jurisdiction of the Commission in Court Session, as identified in s 153 of the Industrial Relations Act. The argument was therefore one step removed from the usual operation of the established principle. Reformulated to allow for that point of distinction, the question was whether s 146C extended to a policy which excluded from the scope of an award particular matters, so that they did not become legally enforceable by a court. (This argument did not turn on whether particular conditions should form part of the contract of employment or should merely be enforceable as terms of an award: cf Byrne v Australian Airlines Ltd [1995] HCA 24; 185 CLR 410.) 98The reformulated submission should not be accepted. It is one thing to read a conferral of jurisdiction on a court or tribunal responsible for enforcing legal rights as not being subject to implied limitations; it is quite another to read the powers conferred on a body capable of creating legal rights in the same way. There is no reason in principle why the legislature cannot limit the power of such a body in any way it thinks fit, without the need to identify limitations expressly and with clarity. It will usually be the case, as it is with terms or conditions of employment, that the power to confer rights on one party will involve the power to impose obligations on another. Whether a presumption in favour of one party or the other may arise will depend upon the particular circumstances of the case: often there will be no presumption. The conferral of jurisdiction on a court is not subject to similar considerations. 99There is no obligation on an employer to include in any contract of employment conditions dealing with possible redundancies. Nor is there any requirement that such terms be included in an award. That is illustrated by the present case: until the question of possible redundancies amongst school staff was expressly raised by the government, the relevant award contained no protections for school staff facing redundancy. Furthermore, there is no constitutional or legal requirement that the government submit all or any part of its dealings with persons in public sector employment to a particular body, such as the Commission. Ultimately, the argument on the construction of s 146C depended on the proposition that some policies may not be "on conditions of employment" and could not, therefore, govern the functions of the Commission, pursuant to that section. On that approach, the policy identified in cl 6(1)(d), imposing a requirement that an award resolve all issues before the Commission in a particular proceeding, without permitting some matters to be reserved for the future or extra claims to be made during the term of the award, may also be invalid, or else one must allow a more expansive view of policies "on conditions of employment". 100The narrow argument for invalidity must focus on the scope of the term "on", which requires a relevant relationship between the policy and conditions of employment. The relevant linkage could have been expressed in terms such as "with respect to" or "relating to". Such phrases take their colour and scope from their context: Technical Products Pty Ltd v State Government Insurance Office (Qld) [1989] HCA 24; 167 CLR 45, at 47 (Brennan, Deane and Gaudron JJ) and 51 (Dawson J). It is not clear that "on" has any particular colour or scope which similar prepositional phrases would not have. It must take its meaning from its context. It is undoubted that terms which relate to redundancy would be terms which could form part of the conditions of employment. A policy with respect to such terms would therefore be a policy "on conditions of employment". 101However, there is a broader argument. A policy which purports to deny the Commission the power to make an award with respect to "the obligations and rights of an employer and an employee on the termination or proposed termination of employment" contradicts the statutory obligation on the Commission, "on application, to make an award setting" such terms, known as "employment protection provisions": ss 21(1)(c) and 24. Whilst a policy may impose limits on the substantive rights and obligations to be included in the award, it is less clear that s 146C permits the declaration of a policy which contradicts the statutory obligation imposed by s 21. 102There is no doubt constitutionally that a state legislature, acting with respect to a matter within its constitutional powers, can delegate legislative authority: D Pearce and S Argument, Delegated Legislation in Australia (4th ed, 2012), [23.2]; cf in the federal sphere - a tentative assumption as to constitutionality noted by Brennan CJ and Dawson J in De L v Director-General Department of Community Services (NSW) (No 2) [1997] HCA 14; (1997) 190 CLR 207 at 212; D Meyerson, "Rethinking the constitutionality of delegated legislation" (2003) 11 A J Admin L 45; G Ng, "Slaying the ghost of Henry VIII: A reconsideration of the limits upon the delegation of Commonwealth legislative power" (2010) 38 Fed L Rev 205; S Bottomley, "The notional legislator: The Australian Securities and Investments Commission's role as a law-maker" (2011) 39 Fed L Rev 1. Delegation to the executive by the inclusion of a power to make regulations is a common feature of most statutes. In that tradition, the Industrial Relations Act contains a provision permitting the Governor to make regulations "not inconsistent with this Act ... for carrying out or giving effect to this Act": s 407(1). 103What is less common, indeed uncommon in the State sphere, is an express power to make regulations which may be inconsistent with, or amend, the statute by which the power is conferred. Because such powers are said to be "exceptional", the boundaries of the power will be construed "narrowly and strictly", rather than expansively: R v Secretary of State for Social Security, Ex parte Britnell [1991] 1 WLR 198 at 204, Lord Keith of Kinkel (with whom other members of the House agreed) referring to McKiernon v Secretary of State for Social Security (1989-1990) 2 Admin LR 133, (EWCA (Civ)). That approach was affirmed by Lord Bingham of Cornhill in R v Secretary of State for the Environment, Transport and the Regions; Ex parte Spath Holme Ltd [2001] 2 AC 349 at 382, although Lord Bingham was at pains to emphasise that such an approach was "only appropriate where there is a genuine doubt about the effect of the statutory provision in question." 104A similar approach was adopted by Woodhouse P in Combined State Unions v State Service Co-ordinating Committee [1982] 1 NZLR 742 (NZCA) at 745: "It is an important constitutional principle that subordinate legislation cannot repeal or interfere with the operation of a statute except with the antecedent authority of Parliament itself. It is a constitutional principle because it gives effect to the primacy of Parliament in the whole field of legislation. And as a corollary a rule of construction springs from it that the Courts will not accept that Parliament has intended its own enactments to be subject to suspension, amendment or repeal by any kind of subordinate legislation at the hands of the Executive unless direct and unambiguous authority has been expressly spelled out to that effect, or is to be found as a matter of necessary intendment, in the parent statute." 105That passage was adopted by Kirby P in considering the scope of a power conferred on the executive to close a superannuation scheme established by statute by amending a schedule to the Act: State of New South Wales v Law (1992) 45 IR 62 at 75. The approach appears to have been rejected by Mahoney JA, in dissent, at 87; the other member of the majority, Priestley JA, defined the scope of the power by reference to the purpose of the statute: at 89. 106In the United States of America, the power of federal authorities to implement the provisions of legislation are understood to extend to providing interpretations of ambiguous or uncertain statutory provisions: Chevron USA Inc v Natural Resources Defense Council, Inc, 467 US 837 (1984). If the intent of Congress is clear, the agency (and the court) is bound to give effect to that intention; however, "if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute": Chevron at 843. As the Supreme Court recently noted, "Congress knows to speak in plain terms when it wishes to circumscribe, and in capacious terms when it wishes to enlarge, agency discretion": City of Arlington, Texas v Federal Communications Commission, 133 S Ct 1863 at 1868; 81 USLW 4299 (2013) (Scalia J speaking for the Court). 107Chevron has not been adopted in Australia, in its terms, as understood in 2000: Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; 199 CLR 135 at [40]-[42]. It follows that there can be no reason in principle not to follow the English approach of caution with respect to the scope of Henry VIII clauses. However, the need to allow a degree of flexibility in relation to administrative schemes which operate in a complex and fast-changing market-place may support particular reliance on the purpose of the regulation-making power: see in relation to the 'exemption and modification' power under the former Corporations Law (NSW), Australian Securities and Investments Commission v DB Management Pty Ltd [2000] HCA 7; 199 CLR 321. Indeed, that was the approach which proved decisive in Spath Holme, at 390B-391B (Lord Bingham), 400E-F (Lord Cooke of Thorndon) and 407A-D (Lord Hope of Craighead); it is also the approach adopted by Priestley JA in Law. 108Although Lord Bingham in Spath Holme referred to the need for "genuine doubt about the effect of the statutory provision", it would seem that he was referring to the need for Parliament to express itself clearly, rather than imposing any requirement of ambiguity. The outer boundaries of a power will often be uncertain in this sense. How the Court should approach the question of uncertainty will depend upon the nature of the power involved. 109In the present case, the power in question involves the scope of the Industrial Relations Commission, as an independent arbiter, to establish the conditions of employment for workers in the public sector. Section 146C provides that it "has effect despite section 10 or 146 or any other provision of this or any other Act": subs (7). That provision is not designed to confer a carte blanche to overrule other statutory provisions, but to confer paramountcy on s 146C to the extent that it conflicts with other provisions. The particular references to s 10 and s 146 are instructive. Section 10 empowers the Commission to make an award "setting fair and reasonable conditions of employment". Section 146 confers functions on the Commission, including "setting remuneration and other conditions of employment" and "resolving industrial disputes": s 146(1)(a) and (b). Section 146(2) requires that, in exercising its functions, the Commission must have regard to, amongst other matters, the state of the economy of New South Wales and the likely effect of its decisions on that economy: s 146(2)(b). Those sections impose powers and functions in general terms and subject to broad qualifications: they do not impose on the Commission specific obligations. 110Section 146C assumes that the powers and functions of the Commission are engaged, so that it operates only when the Commission is "making or varying any award or order": subs (1). In exercising those functions, the Commission must give effect to any policy on conditions of employment, in so far as the function involves public sector employees. Viewed in the abstract, the government policies which the Commission must give effect to might be expected to regulate, by imposing limits on, the capacity of the Commission to provide particular conditions of employment to particular groups of public sector employees. In the context of the present case, the question is whether, in declaring a policy to which the Commission must give effect, the government can prohibit an award setting out any employment protection provisions at all, despite the terms of the statute requiring the Commission to include such terms and conditions, if sought. 111The permissible scope of a regulation must be determined by reference to the scope of permissible policies, identified by reference to s 146C(1). It is not extended by subs (7), the purpose of which may be described, variously, as (a) giving the section paramountcy over any inconsistency in the Act, or (b) removing from judicial scrutiny the possibility of inconsistency with the Act, or (c) as s 146C does not, in terms, confer power to make a regulation, removing from s 407(1) the requirement that a regulation be "not inconsistent with this Act". The descriptions depend on one's perspective, but identify a single purpose. That purpose is effectuated by reference to a valid regulation; it does not purport to validate a policy which is beyond the scope of the policies permitted under subs (1). 112Because s 146C(1) envisages policies which will confine the scope of the Commission's powers to set conditions of employment, it is thus regulatory in form, rather than prohibitory: cf Shanahan v Scott [1957] HCA 4; 96 CLR 245 at 253 (Dixon CJ, Williams, Webb and Fullagar JJ). Such a provision does not authorise a regulation (or policy) transforming an obligation imposed on the Commission by statute (under s 21) into a prohibition. 113Accepting that there is a fine line between a regulation which imposes restrictions on a power of the Commission and a regulation which prohibits the exercise of a power of the Commission, nevertheless in the present case the policy in question falls on the wrong side of that line. That conclusion depends on three propositions. First, the power conferred by s 146C(1) assumes the continued operation of the powers and functions of the Commission. Secondly, there is nothing in that provision which contemplates a regulation (or policy) prohibiting the exercise of a mandatory power, rather than regulating the exercise of a permissive power. Thirdly, if there be doubt as to which side of the line the policy falls, the section being in the nature of a Henry VIII clause, the court should prefer the more restrictive option. 114I therefore agree with the Chief Justice, that cl 6(1)(f) of the Regulation is invalid. Orders 115For these reasons, the applicant has made good its challenge to the refusal of the Commission to vary the award for school staff to include terms with respect to the management of excess public sector employees covered by the award. Because the result follows from a ground not originally identified by the applicant, there should be no order as to the costs in this Court. 116Orders should be made as proposed by the Chief Justice. 117EMMETT JA: These proceedings are concerned with the proper construction of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 (the Regulation) and of s 146C of the Industrial Relations Act 1996 (the Act). The validity of part of the Regulation depends upon the construction of s 146C. 118In the proceedings, the applicant, Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (PSA) seeks orders under s 69 of the Supreme Court Act 1970 quashing a decision of the Full Bench of the Industrial Relations Commission of New South Wales (the Commission). The proceedings arise out of an application by the PSA to the Commission under s 17 of the Act for a variation of the Crown Employees (School Administrative and Support Staff) Award (the Award). The variation involves the insertion of clauses in the Award dealing with redundancy pay and notice of termination in relation to permanent and long-term temporary employees affected by the Award. 119The first respondent, the State of New South Wales (NSW), contends that the Commission has no power to make the variation to the Award because of the effect of cl 6(1)(f) of the Regulation, made under s 146C of the Act. On 16 November 2012, Boland J, the President of the Commission, dismissed PSA's application on the basis that the Commission is precluded from varying the Award in the terms sought, by reason of the provisions of cl 6(1)(f). On 26 April 2013, the Full Bench of the Commission gave leave to appeal from the President's orders but dismissed the appeal. 120By summons dated 26 June 2013, the PSA seeks orders under s 69 of the Supreme Court Act 1970 that: the record of the proceedings in the Commission be brought up into this Court; the whole of the decision of, and the orders made by, the Full Bench of the Commission on 26 April 2013 be quashed; and the matter be remitted to the Commission to be decided according to law in conformity with the decision of this Court. 121Under s 10 of the Act, the Commission may make an award in accordance with the Act setting fair and reasonable conditions of employment for employees. Under s 17(1), the Commission may vary or rescind an award. Section 21(1) provides that the Commission must, on application, make an award setting any of the conditions of employment described in that provision, including employment protection provisions. Under s 24, employment protection provisions in an award are provisions relating to the obligations and rights of an employer and an employee on the termination or proposed termination of employment of the employee. 122Chapter 3 of the Act, which consists of ss 130 to 144, deals with industrial disputes. Under s 130(1)(a), an industrial organisation of employees may notify the Commission of an industrial dispute for the purpose of resolving the dispute. Section 133 provides that the Commission must first attempt to resolve an industrial dispute by conciliation. Under s 135, the Commission is to deal with an industrial dispute by arbitration only if it is not resolved by conciliation. Arbitration by the Commission is not to proceed until the Commission has issued a certificate that reasonable attempts have been made to resolve the industrial dispute through conciliation. Under s 136(1)(b), the Commission may, in arbitration proceedings, make or vary an award. 123Part 1 of Chapter 4 of the Act deals with the establishment and functions of the Commission. The Commission is established by s 145(1). Under s 146, the functions of the Commission include setting remuneration and other conditions of employment, resolving industrial disputes and hearing and determining other industrial matters. 124Section 146C(1) provides, relevantly, that the Commission must, when making or varying any award or order, give effect to any policy on conditions of employment of public sector employees that is declared by the Regulations to be an aspect of government policy that is required to be given effect to by the Commission. Any such regulation may declare a policy by setting out the policy in the regulation or by adopting a policy set out in a relevant document referred to in the regulation. 125Under s 146C(3), an award or order of the Commission does not have effect to the extent that it is inconsistent with the obligation of the Commission under s 146C. Section 146C has effect despite s 10 or s 146 or any other provision of the Act or any other Act. Conditions of employment, defined in the Dictionary, includes any provisions about an industrial matter. Industrial matters, defined in s 6, means matters or things affecting or relating to work done or to be done in any industry, or the privileges, rights, duties or obligations of employers or employees in any industry. 126Under cl 4 of the Regulation, the matters set out in the Regulation are declared, for the purposes of s 146C of the Act, to be aspects of government policy that are to be given effect by the Commission when making or varying awards or orders. By cl 5 of the Regulation, the following paramount policies are declared: public sector employees are entitled to the guaranteed minimum conditions of employment; equal remuneration for men and women doing work of equal or comparable value. 127By cl 6, the following policies are also declared, but are subject to compliance with the declared paramount policies: (a)Public sector employees may be awarded increases in remuneration or other conditions of employment that do not increase employee-related costs by more than 2.5% per annum; (b)Increases in remuneration or other conditions of employment that increase employee-related costs by more than 2.5% per annum can be awarded, but only if sufficient employee-related cost savings have been achieved to fully offset the increased employee-related costs; (c)For the purposes of achieving employee-related cost savings, existing conditions of employment of the kind but in excess of the guaranteed minimum conditions of employment may only be reduced with the agreement of the employer and any relevant industrial organisation of employees; (d)Awards and orders are to resolve all issues the subject of the proceedings; (e)Changes to remuneration or other conditions of employment may only operate on or after the date when the employer and any relevant industrial organisation of employees finally agreed to the change or the date of the Commission's decision; (f)Policies regarding the management of excess public sector employees are not to be incorporated into industrial instruments. 128The question that was agitated before Boland J and the Full Bench of the Commission was whether cl 6(1)(f) precluded the Commission from varying the Award by inserting a new clause dealing with redundancy pay and notice of termination. The PSA contended that the language of cl 6(1)(f) made clear that the policy to which the Commission is required to give effect is that an existing policy regarding the management of excess employees may not be incorporated in an industrial instrument. That is to say, a policy on excess employees must not, in substance or by reference, be included in and given force as part of an industrial instrument. The PSA contended that the variation propounded by it did not entail the incorporation of any existing policy into the Award. 129NSW, on the other hand, contended that cl 6(1)(f) should be understood as providing that policies (namely principles) regarding the management of excess public sector employees are not to be incorporated into (namely dealt with in) industrial instruments. Alternatively, NSW contended that cl 6(1)(f) should be understood as meaning that policies (namely principles) regarding the management of excess public sector employees are not to be incorporated into (namely inserted or included in) industrial instruments, and are not to be subject to industrial instruments. NSW says that the PSA's contention, that cl 6(1)(f) is to be read as doing no more than prohibiting the Commission from converting a government department policy document dealing with the management of excess public sector employees into an industrial instrument, by inserting the terms of any such policy document verbatim in an Award, would frustrate the clear purpose of Regulation 6(1)(f). 130In the course of the hearing, the Court raised with the parties the question of whether cl 6(1)(f) is supported by s 146C. The question is whether the policy described in cl 6(1)(f) can fairly be characterised as a policy on conditions of employment of public sector employees within the meaning of s 146C(1). If not, cl 6(1)(f) would be invalid. The alternative view is that cl 6(1)(f) does not state a policy on conditions of employment, but rather states a policy as to the matters that are to be incorporated, or are not to be incorporated, into industrial instruments. One matter that is not to be incorporated into an industrial instrument is policies regarding the management of excess public sector employees. 131I have had the advantage of reading in draft form the proposed reasons of the Chief Justice for concluding that cl 6(1)(f), on the construction advanced by NSW, was not permitted or required by s 146C and that, consequently, the clause is ultra vires and invalid. I agree with his Honour that the matter should be remitted to the Commission to be dealt with according to law and that there should be no order as to the costs of the proceedings in this Court. ********** 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: 10 April 2014