Industrial Relations Commission New South Wales Medium Neutral Citation: Re: Crown Employees (Fire and Rescue NSW Permanent Firefighting Staff) Award 2011 [2014] NSWIRComm 38 Hearing dates: 20 June 2014, 27 June 2014 Decision date: 01 August 2014 Jurisdiction: Industrial Relations Commission Before: Boland AJ Decision: ORDERS AND DIRECTIONS: The Commission makes the following orders and directions: (1)The application in Matter No IRC 457 of 2014 to vary the Crown Employees (Fire and Rescue NSW Permanent Firefighting Staff) Award 2011 is referred to his Honour the President, Justice Walton, for his consideration as to whether it should be joined to proceedings in Matter No IRC 123 of 2014, an application for a new award to be titled Crown Employees (Fire and Rescue NSW Permanent Firefighting Staff) Award 2014. Catchwords: AWARD - Application to vary - Whether in public interest to vary Crown Employees (Fire and Rescue NSW Permanent Firefighting Staff) Award 2011 to increase rates of pay when increases have been passed on by administrative action and applicant has filed an application for a new Award that seeks increases and other changes to employment conditions - Whether there are exceptional circumstances justifying orders with retrospective effect - No extra claims - Application referred to President for consideration as to whether application be joined to proceedings relating to claim for new Award Legislation Cited: Industrial Relations Act 1996 Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 State Revenue and Other Legislation Amendment (Budget Measures) Act 2014 Cases Cited: Roads and Maritime Services Division of the Government Service of New South Wales - Consolidated Salaried Employees Award 2013 (No 2) [2014] NSWIRComm 32 Category: Principal judgment Parties: Fire Brigade Employees' Union of New South Wales (Applicant) Fire and Rescue NSW (Respondent) Representation: J Nolan of counsel for the Applicant M Easton of counsel for the Respondent C Read, Senior Industrial Officer, Fire Brigade Employees' Union of New South Wales (Applicant) B King, Assistant Director, Employee Relations, Fire and Rescue NSW (Respondent) File Number(s): IRC 457 of 2014 Judgment 1This matter concerns an application by the Fire Brigades Employees' Union of New South Wales ("FBEU" or "applicant") to vary the Crown Employees (Fire and Rescue NSW Permanent Firefighting Staff) Award 2011 ("2011 Award"). Essentially, the application seeks an increase of 2.27 per cent in wages and allowances to be paid retrospectively from 21 February 2014. 2Before dealing with the application itself, some background is necessary. That background is neatly summarised in the submissions of Fire and Rescue NSW ("FRNSW" or "respondent"): On 21 February 2014, the FBEU made an application for a new award entitled the Crown Employees (Fire and Rescue NSW Permanent Firefighting Staff) Award 2014 ("the 2014 Award Application"). That application is currently before Justice Walton and the parties are participating in a conciliation process facilitated by His Honour. Save for a brief reference by Mr Read on 13 June 2014, the FBEU has not made any application for an interim award wage increase in the 2014 Award Application. On 4 April 2014 the FBEU made an application for a new award entitled the Crown Employees (Fire & Rescue NSW Firefighting Staff Death & Disability) Award 2014 ("the 2014 D&D Award Application"). That application is also before Justice Walton and is 'travelling with' the 2014 Award Application. The FBEU has not made any application for an interim variation or award in the 2014 D&D Award Application. On 6 June 2014 and again on 13 June 2014, the 2014 Award Application was listed before Acting President Boland at the request of the FBEU because of a concern in relation to interim wage increases. On 13 June 2014 Acting President Boland indicated his preparedness to relist the 2014 Award Application "as a matter of urgency". On 18 June 2014 the FBEU filed a separate application to vary the Crown Employees (Fire and Rescue NSW Permanent Firefighting Staff) Award 2011 ("the 2011 Award"). On 23 June 2014 FRNSW obtained approval to pay a 2.27% wage increase for relevant employees and has accordingly done so. This increase was backdated to 21 February 2014. 3Turning to the application, whilst the 2.27 per cent increase has already been passed on to firefighting staff by administrative action, the FBEU is concerned that the 2011 Award be varied. It is that Award that fixes salary levels for the purposes of the Crown Employees (Fire and Rescue NSW Firefighting Staff Death and Disability) Award 2012 ("Death and Disability Award"). In turn, the NSW Fire Death and Disability Super Fund ("the Fund") refers to the Death and Disability Award for the purpose of determining contributions. According to the evidence of Mr Chris Read, Senior Industrial Officer for the applicant and Director of NSW Fire Brigades Superannuation Pty Limited, the corporate trustee of the Fund, the Fund cannot accept contributions other than those prescribed by the Death and Disability Award. 4The effect of this situation was described by Mr Read: I am aware of at least two former permanent firefighters who have been assessed as suffering on-duty total and permanently incapacity since 20 February 2014and who are now in receipt of a pension from the Fund. These TPI firefighters are receiving a lesser pension than would be the case if the 2011 Award was varied in accordance with the Union's application, and they will continue to receive a lesser pension unless and until the 2011 Award is so varied. I am aware of numerous other claims that are currently before the Fund which if approved, will result in lesser pensions for those TPI firefighters as well. 5The FBEU submitted: Failure to vary the 2011 Award will also result in permanent firefighters who suffer an on duty death or total and permanent incapacity receiving a lesser pension from the Fund than would otherwise be the case. Clause 7.3.2 of the Death and Disability Award provides how such a pension is to be calculated, and includes the salary as defined in that award, which itself refers back to the 2011 Award. The pension is paid by the Fund, which is required to operate in accordance with the terms of the trust deed by which it was created. There is no capacity for the Fund to pay benefits other than in accordance with the trust deed, or it follows, the salaries as set out within the 2011 Award. 6The respondent opposed the application. The bases of its opposition are: a. In the present matter it is contrary to the public interest to vary the 2011 Award as sought because of the consequent effect upon the 2014 Award Application; b. In the present matter there is no substantial reason to grant the variation sought; c. The application should be joined with the main Award matter, IRC123 of 2014, so that the application can be considered in the context of the 2014 Award Application; d. (in the alternate) The Commission should not grant the interim increase as sought because to do so will materially affect the 2014 Award Application before the Commission; e. (in the alternate) The Commission cannot grant the increase with retrospective operation as sought, because there are no exceptional circumstances at all or, in the further alternate, there are not sufficient exceptional circumstances to justify what is in the context of the statutory scheme an exceptional outcome; f. If the Commission is prepared to grant the application sought with retrospective operation, the increases sought can only be applicable from 18 June 2014, being the date that the present application was lodged with the Industrial Registrar; and g. If an increase is granted, the Commission must ensure that, in making or varying any award or order, the resultant award is not silent in respect of No Extra Claims and as such an award cannot be made without some form of No Extra Claims clause being included. Consideration 7In relation to the respondent's public interest contention, s 17(3)(d) of the Industrial Relations Act 1996 ("the IR Act") requires the Commission to be satisfied that it is not contrary to the public interest to vary the Award. In determining this application the Commission must give effect to any relevantly declared policies on conditions of employment of public sector employees: s 146C(1). 8The Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 relevantly provides in subcll 6(1) and 6(2): (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. ... (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). (2) Subclause (1) (e) does not apply if the relevant parties otherwise agree or there are exceptional circumstances." 9It is to be acknowledged that the change effected to subcl 6(1)(a) of the Industrial Relations (Public Sector Conditions of Employment) 2011 by the 2014 Regulation (enacted as Sch 5.2 to the State Revenue and Other Legislation Amendment (Budget Measures) Act 2014 No 37, and which took effect from 24 June 2014) means that for all practical purposes the amount of increase available is not 2.5 per cent, but rather 2.27 per cent (given the statutory requirement to now take into account new or increased superannuation employment benefits promulgated under federal legislation). 10The FBEU submitted that no public interest issue arose of the nature contended by FRNSW, namely, that the effect of a variation to the 2011 Award upon the 2014 Award application would be to prevent the Commission from making further variations by arbitration during the year in which the variation is to apply. It was submitted: True it is that the new award is presently up for negotiations. It is however erroneous to suggest that these award proceedings will somehow be stymied or frustrated by the granting of the variation. The FBEU appreciates - recognising the reality - that any (if any) further increases to be achieved as a result of the new award negotiations will require the identification of employee-related costs savings which fully offset any increase wages in the current year beyond 2.5 per cent (now 2.27). As the Full Bench observed [in Re Crown Employees (Public Sector - Salaries 2011) Award (No 3) [2011] NSWIRComm 104], 'on the face of the Regulation there can be no increase in remuneration for employees beyond that amount.' This - with respect - deals fully with the issue of the effect or impact upon the 2014 award negotiations which the variation will have. There is no particular mystery about it - it is clear from the terms of the policy. The simple fact is that the FBEU members (as with other public sector union members) are entitled to what might conveniently described as the 'automatic adjustment' component of the wages policy [i.e. the 2.27%]. There is no policy reason why this should be denied FBEU members and every good reason why it should be granted (as an award variation) because to do so would be to follow the policy. The FRNSW attitude is to cloud and confuse this clear obligation. The position has been no doubt distracted because of the long running dispute (now resolved by a change of the law) about whether the 'automatic adjustment' component of the policy should be 2.5% or 2.27%. The first two main objections of FRNSW are therefore dealt with. An increase which is consistent with policy cannot, by definition, be contrary to the public interest. The variation the 2011 Award as sought has no relevant 'consequent effect' upon the 2014 Award Application because that application will be dealt with in accordance with the policy. Viewed against the application of the policy it is impossible to see how the increase could 'materially affect' the 2014 Award Application before the Commission. 11If the Commission were to vary the 2011 Award by increasing wages and allowances by 2.27 per cent for a period of 12 months (see s 16(2) of the IR Act) or even on an interim basis (see s 16(4)) that may have the effect of limiting or inhibiting what may be done by way of arbitration in the main proceedings, that is, the 2014 Award proceedings, in which increases are sought in rates of pay and changes to other employment conditions are claimed. 12It may be, for example, that the Commission in the 2014 Award proceedings considers there should be changes to certain conditions of employment rather than adjustments to wages. The changes contemplated might involve increases to employee-related costs. If the 2011 Award is varied to increase costs by 2.27 per cent it may preclude or hinder the Commission, in the 2014 Award proceedings, from making changes it might otherwise consider necessary to conditions of employment. 13There may be circumstances where, despite the effect on proceedings that are on foot relating to a new Award, the Commission would proceed to make a variation to a nominally expired Award because the public interest demands it. However, in the circumstances of this present application and in the face of strong opposition by FRNSW, it may not be in the public interest to vary the 2011 Award. That Award has passed its nominal expiry date. To vary it at this time may cause unnecessary and unforeseen consequences that limit or impinge upon the Commission's discretion in the other current proceedings relating to a new Award to replace the expired 2011 Award. 14That is not the only consideration. There is also the issue of extra claims. The applicant submitted the issue of no extra claims was a "red herring". Attention was directed to the fact that the Crown Employees (Fire and Rescue NSW Retained Firefighting Staff) Award 2011 was varied on 9 May 2014 to formalise the granting of wage increases by administrative action from February 2014 (Matter No IRC 361 of 2014). A no extra claims provision was neither inserted, nor sought by the employer, as part of that variation. 15I am not aware of the circumstances of the variation to the Retained Firefighting Staff Award. I presume it was by consent where no consent exists in the present case. However, it is at least arguable that any variation to the 2011 Award would require the Commission to insert a no extra claims provision: Roads and Maritime Services Division of the Government Service of New South Wales - Consolidated Salaried Employees Award 2013 (No 2) [2014] NSWIRComm 32. 16In those circumstances, I could proceed to make the variation without including a no extra claims provision and leave the variation open to challenge as being inconsistent with the Regulation, or I could include a no extra claims provision which may have the effect of precluding any claims being considered by the Commission in the 2014 Award proceedings. Either course presents a risk. Neither course seems sensible in light of what I propose in respect of the application. 17The last matter that I have given consideration to is the question of retrospectivity. Not only does the FBEU seek variations to the 2011 Award, but it also seeks that the variations operate retrospectively. Indeed, retrospectivity would appear to be the main objective of the application. Without a retrospective adjustment the FBEU's concerns will not be resolved. 18It is clear that in the absence of agreement the Commission may only grant a retrospective adjustment of any increase in exceptional circumstances: cl 6(1)(e) of the Regulation. 19The FBEU contends that such exceptional circumstances exist because of the "demonstrably adverse consequences accruing to totally and permanently incapacitated permanent firefighters in relation to reduced benefits pursuant to the Death and Disability Award." However, I note the following: (1)The Death and Disability Award is presently the subject of proceedings before his Honour the President. According to the affidavit of Bernard King, Assistant Director Employee Relations for the respondent, Fire & Rescue NSW offered the FBEU to hold expeditious talks about the Death and Disability Award so that it might be varied so as to reference the weekly rate being paid on termination, which would pick up weekly rates being paid to classifications by administrative action. The FBEU has not responded to that offer. (2)Fire & Rescue NSW is taking a death and disability contribution from the pays of permanent firefighters based on the rates currently paid by administrative action. Not to do so now would result in having to deduct an increased contribution in the form of an arrears at a later time. That arrears recovery would pose an unnecessary and avoidable financial burden on firefighters when it occurred. (3)Fire & Rescue NSW sent a payment to the Death & Disability Fund on 24 June 2014 which included calculations relying on the 2.27% increase and the backpay to 21 February 2014. According to the affidavit of George Ayoub, Assistant Director Financial Operations, Fire & Rescue NSW: A 2.27 percentage wage increase, backdated to 21 February 2014, was processed for permanent firefighters by administrative action on the evening of 23 June 2014. On 26 June 2014, contributions calculated with reference to the increase and backpayment were remitted to the Death and Disability Superannuation Fund. This deposit has not been rejected, returned or questioned. (4)Clause 12.2 of the Trust Deed of the Fund does not prohibit the making of additional contributions: (a)Clause 12.2 requires "members" to make certain contributions, namely: "A member shall make Contributions to the Fund as required by the Award." (b)Clause 12.1 requires the respondent to make contributions: "The Employer shall make contributions to the Fund as agreed from time to time between the Employer and the Trustee in respect of each of the Employer's Members." (c)Clause 12.4 contemplates contributions made "in accordance with this Deed or any other arrangement agreed by the Trustee". Clause 12.4 also permits the Trustee to refuse to accept contributions which may, in the opinion of the trustee, jeopardise the status of the fund as a complying superannuation fund. 20It appears that a variation to the 2011 Award to increase wages and allowances is not the only way of ensuring firefighters that receive benefits in accordance with the Death and Disability Award are not adversely affected. Given that there is no intention on the part of the respondent to disadvantage incapacitated firefighters and that other options are open to the parties to address the issue, I am of the view that exceptional circumstances do not exist to justify making orders to operate retrospectively. Conclusion 21It is always desirable that increases to wages and allowances are reflected in variations to awards of the Commission rather than having them processed by way of administrative action. 22The FBEU, understandably, is seeking an appropriate variation in accordance with the preferred approach. However, circumstances have given rise to a somewhat messy situation, which may be attributed, to a large extent, to the delay in the respondent receiving approval to apply the increase of 2.27 per cent retrospectively by way of administrative action following the expiry of the 2011 Award in February 2014. The FBEU's concern at the delay was exacerbated by consent variations to the Crown Employees (Fire and Rescue NSW Tradespersons) Award 2012 and the Crown Employees (Fire and Rescue NSW Retained Fire Fighting Staff) Award 2011 that passed on increases of 2.27 per cent. 23In any event, the increase has been passed on administratively to approximately 3,500 permanent firefighters and the only immediate issue - and it is a genuine one - relates to benefits for two total and permanently incapacitated firefighters under the Death and Disability Award. 24It appears the issue of benefits to incapacitated firefighters may be resolved in the short term by means other than a variation to the 2011 Award. That is a matter that should be further explored by the parties. The respondent has demonstrated a willingness to act in good faith in that respect. In those circumstances and given the potential - I put it no higher than that - for any orders varying that Award to interfere with or jeopardise the proceedings and/or outcome in relation to the 2014 Award, the problematic situation regarding no extra claims and the absence of exceptional circumstances justifying a retrospective adjustment, the better course, in my opinion, is to refer the FBEU's application to the President for his consideration as to whether it should be joined to the 2014 Award proceedings so that the application may be considered having regard to all relevant circumstances. Orders and directions 25The Commission makes the following orders and directions: (1)The application in Matter No IRC 457 of 2014 to vary the Crown Employees (Fire and Rescue NSW Permanent Firefighting Staff) Award 2011 is referred to his Honour the President, Justice Walton, for his consideration as to whether it should be joined to proceedings in Matter No IRC 123 of 2014, an application for a new award to be titled Crown Employees (Fire and Rescue NSW Permanent Firefighting Staff) Award 2014. ********** 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: 01 August 2014