Industrial Relations Commission New South Wales Medium Neutral Citation: Re Nurses' (Department of Family and Community Services – Ageing, Disability and Home Care) (State) Award 2017 [2018] NSWIRComm 1006 Hearing dates: 5 October 2017 Date of orders: 07 February 2018 Decision date: 07 February 2018 Jurisdiction: Industrial Relations Commission Before: Chief Commissioner Kite SC; Murphy C; Seymour C Decision: The application for variation is refused. Catchwords: INDUSTRIAL LAW – New South Wales – awards and agreements – application for variation to remove ambiguity – dispute resolution clause Legislation Cited: Fair Work Act 2009 (Cth) Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) Industrial Relations Act 1988 (Cth) Industrial Relations Act 1996 (NSW) National Disability Insurance Scheme (NSW Enabling) Act 2013 (NSW) Cases Cited: Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd [2015] FCAFC 123; 235 FCR 305 Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission [2001] HCA 16; 203 CLR 645 Re Crown Employees (New South Wales Department of Family and Community Services) Residential Centre Support Services Staff Award 2015; Re Crown Employees Ageing, Disability and Homecare - NSW Department of Family and Community Services (Community Living Award) 2015 [2017] NSWIRComm 1058; 270 IR 19 TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia [2013] HCA 5; 251 CLR 533 Category: Principal judgment Parties: New South Wales Nurses and Midwives' Association (Applicant) Industrial Relations Secretary (Respondent) Representation: Counsel: S Crawshaw SC (Applicant) R C Kenzie QC with R Warren and A Perigo (Respondent) Solicitors: Crown Solicitor (Respondent) File Number(s): 2017/00240154 DECISION 1. Following the introduction of the National Disability Insurance Scheme ("NDIS") by the Commonwealth, the New South Wales Government ("Government") announced in 2012 that it would cease providing disability services directly. It intended to provide these services through non-government agencies. 2. In 2013 the National Disability Insurance Scheme (NSW Enabling) Act 2013 (NSW) ("the Enabling Act") was passed. The Enabling Act permitted the Government to give effect to its decision. This legislation enabled the unilateral transfer of staff by the Government from the public service to private employers. This would affect the employment of some 1,000 persons employed in nursing classifications in the Department of Family and Community Services ("FACS"). The award which currently covers these employees is the Nurses' (Department of Family and Community Services - Ageing, Disability and Home Care) (State) Award 2017 ("the Award") 3. In response to this development, these proceedings were commenced by way of notification of an industrial dispute dated 7 August 2017 by the New South Wales Nurses and Midwives' Association ("the Association") pursuant to s 130 of the Industrial Relations Act 1996 (NSW) ("the Act"). 4. A number of compulsory conferences were convened before the Chief Commissioner for the purpose of conciliation of the dispute. Ultimately, conciliation failed to resolve all matters in dispute and on 1 September 2017 the Association filed an Application for Orders to Resolve a Dispute. That application sought the following orders: 1. Amend the definition of "Department" contained in Clause 2 Definitions, of the Nurses' (Department of Family and Community Services - Ageing, Disability and Home Care) (State) Award 2017 by adding the words in bold and underline to the existing definition as follows: "Department" means Ageing, Disability and Home Care (ADHC) within the Department of Family and Community Services or the entity whose employees are engaged in a classification covered by this award. 2. Amend sub clause 18(v) contained in Clause 18 Disputes, of the Nurses' (Department of Family and Community Services - Ageing, Disability and Home Care) (State) Award 2017 by adding the words in bold and underline to the sub clause as follows: (v) If these procedures are exhausted without the matter being resolved, or if any of the time limits set out in those procedures are not met, either the Association or the Department may seek to have the matter mediated by an agreed third party, or the matter may be referred in accordance with the provisions of the Industrial Relations Act 1996, to the Industrial Relations Commission of New South Wales or to the Fair Work Commission as appropriate, for its assistance in resolving the issue. The Industrial Relations Commission or the Fair Work Commission may deal with the dispute by mediation, conciliation and/or arbitration as permitted by relevant legislation at the request of either the Association or Department. 1. When the matter came before the Full Bench for hearing on 5 October 2017, senior counsel for the Association sought and was granted, by consent, leave to file in court an amended schedule to the application setting out the orders sought by the Association. Reference to the Fair Work Commission ("the FWC") had been removed from the proposed amended subclause 18(v) of the Award, which was now in the following terms: (v) If these procedures are exhausted without the matter being resolved, or if any of the time limits set out in those procedures are not met, either the Association or the Department may seek to have the matter mediated by an agreed third party, or the matter may be referred in accordance with the provisions of the Industrial Relations Act 1996, to the Industrial Relations Commission of New South Wales, for its assistance in resolving the issue. The Industrial Relations Commission may deal with the dispute by mediation, conciliation and/or arbitration as permitted by relevant legislation at the request of either the Association or Department. 1. The additional words proposed by the Association were intended to have the effect of expressly investing this Commission with the power to deal with disputes by mediation, conciliation and/or arbitration. 2. In Re Crown Employees (New South Wales Department of Family and Community Services) Residential Centre Support Services Staff Award 2015; Re Crown Employees Ageing, Disability and Homecare - NSW Department of Family and Community Services ((Community Living Award) 2015 [2017] NSWIRComm 1058; 270 IR 19, a Full Bench of this Commission (Kite SC Chief Commissioner; Murphy C; Seymour C) reviewed and set out extracts from the Enabling Act at [13] – [20]. We see no particular advantage in repeating that detail. At [21] the Full Bench provided a summary of the important features of this legislation as follows: 21. The important features of these provisions may be summarised as follows: 1. The Minister may enter into an agreement with a non-government employer to transfer staff to that employer. 2. The transfer does not require the consent of the employee. 3. The transfer agreement is required to contain a provision that the terms and conditions of employment of the transferred employee are to be the same as applied under an industrial instrument which applied to the employee prior to the transfer. 4. The transfer agreement may contain a requirement for an employment guarantee period (subsequently specified as 2 years). 5. The transfer agreement may contain other provisions as to the terms and conditions of employment of the transferred employees. 6. The transfer is not a termination of employment. 7. The transferred employee is not entitled to any payment or other benefit by reason of the transfer. 1. The Full Bench then made the following observations which are equally applicable to this matter: 22. These are unilateral transfers from secure public sector employment to non-government sector employers. Employees' accrued rights may well be transferred but the financial obligation to meet those rights in the future is not guaranteed by the Government (see s 9). The precise terms of the transfer agreements are not disclosed to the employees, nor are they parties to such agreements with rights of enforcement of terms potentially made for their benefit. 23. The only substantial protection the employees have in their future employment is found in the industrial instruments which cover them. That is so because of s 14(4)(a) of the Enabling Act and the terms of the Fair Work Act 2009 (Cwlth). 1. At [24] – [26] the Full Bench extracted and commented upon relevant sections of the Fair Work Act 2009 (Cth) ("the FW Act"): 24. Part 6-3A of the Fair Work Act makes provision for the transfer of terms and conditions of employment when there is a transfer of business from a State public sector employer to a national system employer. Section 768AD of the Fair Work Act provides: 768AD When there is a transfer of business (1) There is a transfer of business from a non-national system employer that is a State public sector employer of a State (the old State employer) to a national system employer (the new employer) if the following requirements are satisfied: (a) the employment of a person who is a State public sector employee of the old State employer has terminated; (b) within 3 months after the termination, the person becomes employed by the new employer; (c) the work (the transferring work) the person performs for the new employer is the same, or substantially the same, as the work the person performed for the old State employer; (d) there is a connection between the old State employer and the new employer as described in subsection (2), (3) or (4). 25. There was no debate about the interaction of s 768AD(1)(a) and s 16(b) of the Enabling Act, perhaps because of s17 of the latter Act. In any event it was common ground that Part 6-3A of the Fair Work Act would apply to the transferred employment. In that regard the provisions of Part 6-3A are of importance. 26. Of paramount current importance is s 768AI. It provides: 768AI What is a copied State award? (1) If, immediately before the termination time of a transferring employee: (a) a State award (the original State award) was in operation under the State industrial law of the State; and (b) the original State award covered (however described in the original State award or a relevant law of the State) the old State employer and the transferring employee (whether or not the original State award also covered other persons) then a copied State award for the transferring employee is taken to come into operation immediately after the termination time. Note 1: Even though a copied State award comes into operation in relation to the transferring employee, it will not be enforceable by the employee or another person (for example, the new employer) unless and until it applies to the employee or other person. In particular, it will not apply to the employee or new employer before the employee becomes employed by the new employer. For when the copied State award applies to a person, see section 768AM. Note 2: A copied State employment agreement for the transferring employee may also come into operation immediately after the termination time, see subsection 768AK(1). If it does, then the State's interaction rules that were in force immediately before the termination time apply for the purposes of working out the interaction between the copied State award and the copied State employment agreement (see item 11 of Schedule 3A to the Transitional Act as that item applies in a modified way because of section 768BY). (2) The copied State award is taken to include the same terms as were in the original State award immediately before the termination time. Note: The State's instrument content rules that were in force immediately before the termination time apply to the copied State award (see item 10 of Schedule 3A to the Transitional Act as that item applies in a modified way because of section 768BY). (3) If the terms of the original State award were affected by an order, a decision or a determination of a State industrial body or a court of the State that was in operation immediately before the termination time, the terms of the copied State award are taken to be similarly affected by the terms of that order, decision or determination. 1. For completeness, we set out the following provisions of the FW Act: 737 Model term about dealing with disputes The regulations must prescribe a model term for dealing with disputes for enterprise agreements. 738 Application of this Division This Division applies if: (a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or (b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or (c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or (d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards. 739 Disputes dealt with by the FWC (1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute. (2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless: (a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or (b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter. Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same ((or substantially the same) effect as subsection 65(5) or 76(4) ((see also subsection 55(5)). (3) In dealing with a dispute, the FWC must not exercise any powers limited by the term. (4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate ((however described) the dispute, the FWC may do so. Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)). (5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties. (6) The FWC may deal with a dispute only on application by a party to the dispute. …………………… 768AH What is a copied State instrument? A copied State instrument for a transferring employee is the following: (a) a copied State award for the employee; (b) a copied State employment agreement for the employee. ……………………… 768AM When does a copied State instrument apply to a person? Transferring employee and organisations (1) A copied State instrument for a transferring employee applies to the transferring employee or an organisation if: (a) the instrument covers the employee or organisation; and (b) the instrument is in operation; and (c) no other provision of this Act provides, or has the effect, that the instrument does not apply to the employee or organisation; and (d) immediately before the employee's termination time, the employee or organisation would have been: (i) required by the law of the State to comply with terms of the original State award or original State agreement for the instrument; or (ii) entitled under the law of the State to enforce terms of the original State award or original State agreement for the instrument. New employer and other employers (2) A copied State instrument for a transferring employee applies to an employer (whether the new employer or another employer) if: (a) the instrument covers the employer; and (b) the instrument is in operation; and (c) no other provision of this Act provides, or has the effect, that the instrument does not apply to the employer; and (d) immediately before the employee's termination time, the old State employer would have been: (i) required by the law of the State to comply with terms of the original State award or original State agreement for the instrument; or (ii) entitled under the law of the State to enforce terms of the original State award or original State agreement for the instrument. Note: This subsection may operate in relation to an employer that is not the new employer in the situation where there has been a later transfer of business by the new employer ((see Part 2-8). Other circumstances when instrument applies (3) A copied State instrument for a transferring employee also applies to a person if an FWC order made under a provision of this Act provides, or has the effect, that the instrument applies to the person. Instrument only applies in relation to transferring work (4) A reference in this Act to a copied State instrument for a transferring employee applying to the employee is a reference to the instrument applying to the employee in relation to the transferring work of the employee. 768AN When does a copied State instrument cover a person? Transferring employee and new employer (1) A copied State instrument for a transferring employee covers the employee and the new employer in relation to the transferring work from the employee's re-employment time. Employee organisation (2) A copied State instrument for a transferring employee covers an employee organisation in relation to the employee if: (a) the instrument covers the employee because of subsection (1); and (b) immediately before the employee's termination time, the original State award or original State agreement for the instrument covered ((however described in the original State award or original State agreement or in a relevant law of the State) the organisation in relation to the employee. Employer organisation (3) A copied State instrument for a transferring employee covers an employer organisation in relation to the new employer if: (a) the instrument covers the new employer because of subsection (1); and (b) immediately before the employee's termination time, the original State award or original State agreement for the instrument covered ((however described in the original State award or original State agreement or in a relevant law of the State) the organisation in relation to the old State employer. Other circumstances when a person is covered (4) A copied State instrument for a transferring employee also covers a person if any of the following provides, or has the effect, that the instrument covers the person: (a) a provision of this Act or of the Registered Organisations Act; (b) an FWC order made under a provision of this Act; (c) an order of a court. Example: The FWC may make a consolidation order specifying that the instrument covers a person specified in the order (see subsections 768BE(1) and 768BH(1)). Circumstances when a person is not covered (5) Despite subsections (1), (2), (3) and (4), a copied State instrument for a transferring employee does not cover a person if any of the following provides, or has the effect, that the instrument does not cover the person: (a) a provision of this Act; (b) an FWC order made under a provision of this Act; (c) an order of a court. Example: If, after the transferring employee's re-employment time, an enterprise agreement starts to cover the employee, subsection 768AU((2) provides that a copied State instrument for the employee ceases to cover the employee. (6) Despite subsections (1), (2), (3) and (4), a copied State instrument for a transferring employee that has ceased to operate does not cover a person. Covered only in relation to transferring work (7) A reference to a copied State instrument for a transferring employee covering the employee is a reference to the instrument covering the employee in relation to the transferring work of the employee. 768AO When is a copied State instrument in operation? When instrument comes into operation (1) A copied State instrument for a transferring employee comes into operation immediately after the employee's termination time. When copied State award ceases to operate (2) A copied State award for a transferring employee ceases to operate at the following time: (a) unless paragraph (b) applies--the end of the period ((the default period ) that is 5 years or such longer period as is prescribed by the regulations, starting on the day the employee's termination time occurred; (b) if the regulations allow the FWC to make an order to extend the period of operation of a copied State award for a transferring employee and, in accordance with those regulations, the FWC makes an order that the award operates for a period that is longer than the default period--the end of that period. (3) The regulations may: (a) prescribe circumstances in which the FWC may make an order for the purposes of paragraph (20(b); and (b) prescribe a maximum period that the order may specify; and (c) otherwise make provision in relation to the making of the order. When copied State agreement ceases to operate (4) A copied State employment agreement for a transferring employee ceases to operate when it is terminated, which may happen before or after the nominal expiry date of the agreement. Note 1: See section 768AY for how the copied State employment agreement can be terminated. Note 2: If, after the transferring employee's re-employment time with the new employer, an enterprise agreement is made that covers the employee and the new employer, then the copied State employment agreement will cease to cover the employee and the new employer and will never cover them again, see section 768AU. (5) The nominal expiry date of a copied State employment agreement for a transferring employee is: (a) the day the original State agreement would nominally have expired under the State industrial law of the State; or (b) if that day falls after the end of 4 years beginning on the day the employee's termination time occurs--the last day of that 4-year period. Once instrument ceases operation, can never operate again (6) A copied State instrument for a transferring employee that has ceased to operate can never operate again. ………………………. 768BX Modification of this Act for copied State instruments This Act has effect in relation to a transferring employee on and after the employee's re-employment time as if a reference in a provision referred to in column 1 to a term referred to in column 2 included a reference to the term referred to in column 3. Item Column 1 Column 2 Column 3 Provision of this Act Current term New term ……………………. 16 Part 6-2 (dealing with disputes) modern award copied State award for transferring employee 768BY Modification of the Transitional Act and regulations for copied State instruments (1) Each relevant transitional provision (see subsection (2)) has effect in relation to a transferring employee as if a reference to a term referred to in column 1 were a reference to the term referred to in column 2. The provision has effect from the time specified in column 3 of the table in subsection (2). Item Column 1 Column 2 Current term New term 1 Division 2B State instrument Copied State instrument for the transferring employee ………………….. (2) For the purposes of subsection (1), the relevant transitional provisions are: (a) the provisions of the Transitional Act that are listed in column 1; and (b) the regulations made for the purposes of those provisions. Item Column 1 Column 2 Column 3 Relevant transitional provision Which is about Relevant time ………………………. 3 item 13 (other than note 1 and note 2) of Schedule 3A references to State industrial bodies The transferring employee's termination time 1. Also relevant are the following provisions of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) ("the Transitional Act"): Schedule 3A – Treatment of State awards and State employment agreements of Division 2B referring States …………………………. 7 Terms about disputes relating to matters arising under Division 2B State awards (1) If the source award for a Division 2B State award includes a term that provides for disputes relating to matters arising under the award to be settled by: (a) a State industrial body; or (b) a person who is independent of the employers, employees or organisations covered by the source award; the Division 2B State award is taken not to include that term. (2) Each Division 2B State award is taken to include the model term that is prescribed by the regulations for dealing with disputes relating to matters arising under Division 2B State awards. Note: This subitem applies whether or not the source award included a term as mentioned in subitem ((1). (3) The model term does not apply to disputes about matters arising under the source award before the Division 2B referral commencement. (4) The model term, as taken to be included in a Division 2B State award: (a) cannot be varied; and (b) cannot be removed from the award. ………………………. 13 References in Division 2B State instruments to State industrial bodies (1) Subject to subitem (2), if a term of a Division 2B State instrument is expressed to confer a power or function on a State industrial body, that term has effect as if references in it to the body were instead references to the FWC. (2) If a term of a Division 2B State instrument is expressed to confer a power or function on the registrar, or a deputy registrar, of a State industrial body, that term has effect on and after the Division 2B referral commencement as if references in it to the registrar or a deputy registrar were instead references to the General Manager of the FWC. (3) This item has effect subject to: (a) a contrary intention in this Act; and (b) the regulations. Note 1: A Division 2B State award will be taken not to include a term from the source award that provides for the settlement of disputes relating to matters arising under the award: see item 7. Note 2: This item does not apply to a term of a Division 2B State employment agreement that provides for the settlement of disputes relating to matters arising under the agreement: see item 8. 1. The Respondent made the following submissions, based upon these legislative provisions: 28. At the time of transfer of employees to the non-government sector, the 2017 Nurses Award will become a copied State award pursuant to Part 6 – 3A Transfer of Business from a State Public Sector Employer of the Fair Work Act 2009 (the FW Act) for those employees transferring and the relevant non-government sector provider. 29. In summary, where there is a transfer of business, as defined in section 768AD of the FW Act from a State public sector employer to a national system employer, the State industrial award that applied before the transfer continues to apply to the relevant employees after the transfer and binds the new national system employer. The State award becomes a copied State award and is a federal instrument enforceable under the FW Act. The copied State Award comes into operation immediately when the employee is terminated by the State public sector employer and will cease to operate at the end of five years pursuant to section 768AO of the FW Act. 30. Section 768BX of the FW Act sets out the modifications to the Act for copied State instruments, which includes a copied State award. Item 16 in section 768BX provides that in relation to Part 6 – 2 Dealing with Disputes of the FW Act, where the term modern award is used, this term includes a reference to a copied State award. 31. The FWC, therefore, has power to deal with disputes in accordance with Part 6 – 2 of the FW Act, arising out of a copied State award. Part 6 – 2 includes section 739 Disputes dealt with by the FWC. 32. Also relevant is section 768BY of the FW Act. This section provides for modification of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 ((the Transitional Act) for copied State instruments. 33. Section 768BY(1) provides that a reference to a Division 2B State instrument is a reference to a copied State instrument for the transferring employee for each relevant transitional provision from the time specified in section 768BY(2). 34. "Relevant transitional provision" is defined in section 768BY(2) of the FW Act. Item 3 of section 768BY(2) designates item 13 of Schedule 3A of the Transitional Act as a relevant transitional provision, with the exception of note 1 and note 2. The exception of the notes achieves the result that the particular regime provided for dispute clauses in Item 7 of Schedule 3A in the Transitional Act is inapplicable to copied State Awards - so that the provisions requiring references to the IRC NSW to be read as references to FWC take full effect. 35. Item 13(1) of Schedule 3A of the Transitional Act relevantly states that if a term of a Division 2B State instrument is expressed to confer a power or function on a State industrial body, that term has effect as if references in it to the body were instead references to the FWC. The FWC, a creature of statute, can only exercise power in accordance with the provisions of the FW Act. Therefore, the replacement of IRC NSW with FWC necessarily brings with it the powers applicable to the Fair Work Commission under the FW Act - but no more. Importantly, the relevant time is expressly stipulated to be the time of the "transferring employee's termination time" 36. Taking the 2017 Nurses Award as it is now, from the moment that an employee is transferred to a non-government employer, the provisions of the Award will apply to that employee and his or her employer as modified by these sections of the Transitional Act. Clause 18 will apply to the employee so that any dispute concerning that employee arising will be able to be dealt with, in accordance with the provisions of the FW Act, by the FWC. 37. That is, Clause 18(v) will be read as replacing the IRC NSW with the FWC. Similarly, the power exercised by the FWC will be necessarily power under the FW Act. This is the only sensible way to give effect to item 3 of section 768BY(2) of the FW Act. 38. As a result, whatever power to arbitrate existed under clause 18 will be transferred to the FWC as long as there is nothing in the Federal Act to provide otherwise. (Emphasis added) 1. Ultimately, the Association accepted the correctness of these submissions and amended its application by deleting reference to the FWC from its proposed subclause 18(v) of the Award on the basis that term "Industrial Relations Commission" appearing in that subclause will be read as "Fair Work Commission" when the Award becomes a copied State award under the FW Act upon the transfer of employees from FACS to an employer in the non-government sector as part of the implementation of the NDIS. 2. As a consequence, all that remained in the proceeding was the proposed amendment to the definition of "Department" in Clause 2 of the Award and the addition of the last sentence of the proposed subclause 18(v), which purports to invest this Commission with the power to deal with disputes by "mediation, conciliation and/or arbitration as permitted by relevant legislation at the request of either the Association or Department". The stated purpose of the proposed amendment is to invest the FWC with the power to deal with disputes by arbitration after the affected employees are transferred from the jurisdiction of this Commission into the federal system. Case for the Association 1. The Association, in support of its claim for the orders varying the Award, relied upon a witness statement from Dennis Ravlich, Member Industrial Services Team, of the Association. That witness statement canvassed developments leading up to the "forced transfer of employment" of nurses employed by FACS. In that statement, Mr Ravlich stated as follows: 34. The issue of enforceability of employment entitlements (along with other associated concerns) arising from services and employment being transferred from the NSW Government to the NGO sector has also been regularly raised by public sector unions during 2017, including by myself on behalf of the Association, at the monthly Public Sector Union Consultative Forum meetings chaired by NSW Industrial Relations. 35. In the absence of any resolution or certainty being achieved, and therefore the issue remaining unresolved, the Association remains concerned that the current dispute resolution clause in the NSW Award, and therefore future copied State award, could not be assumed to provide the Fair Work Commission the jurisdiction to hear and resolve disputes. 36. In the absence of any alternative dispute mechanism being agreed to by NSW Industrial Relations/FACS to resolve issues pertaining to the employee entitlements of transferred employees, it could not be assumed that access to the Fair Work Commission would be available, including that of arbitration, something currently available to FACS staff under the Industrial Relations Act 1996. 1. In its initial submissions in support of the proposed amendments to the Award, the Association set out the current terms of clause 18 and then put the following: 21. It is apparent that the present provision contemplates that, if a dispute is incapable of being resolved by direct discussions between the parties, the matter may be referred to the Commission to be resolved in accordance with clause 18(v). The powers capable of being exercised by the Commission include, of course, the capacity to resolve the dispute by arbitration under Chapter 3 of the Act. 22. The Government and FACS has represented to the Association and its members that, upon transfer to non-government employment, disputes will be capable of resolution by the Fair Work Commission. It is unclear how, on the existing provision, it would be possible for this Commission or the Fair Work Commission to deal with disputes upon transfer for the following reasons: (a) Firstly, this Commission is able to exercise dispute resolution functions if authorised or permitted to conduct such a process under a federal enterprise agreement under s 146B of the Act. The Award will take effect as a copied State award following the transfer of staff to non-government employment. A copied State award has effect as if it were a modern award rather than as an enterprise agreement for the purposes of various parts of the FW Act, including with respect to the resolution of disputes: s 768BX((Item 16). On its face, s 146B of the Act would not appear to permit this Commission to deal with a dispute under a copied State award. (b) Secondly, the Fair Work Commission is able to exercise dispute resolution functions if a modern award, enterprise agreement, a contract of employment or public sector determination "requires or allows the FWC to deal with a dispute": ss 738 and 739(1). Clause 18 of the Award, as it current stands, does not expressly require or allow the Fair Work Commission to deal with a dispute relating to employees covered by the Award. Again, on its face, ss 739 of the FW Act would not appear to permit the Fair Work Commission to deal with a dispute arising under the Award as a copied State award. 23. The effect of the variation sought by the Association is no more than to ensure that the existing dispute resolution options remain part of the conditions of employment of employees subject of transfer to non-government employment. As has been mentioned, a copied State award generally has effect under the FW Act as a modern award, including for the purposes of Part 6-2 of the FW Act in relation to dispute: see s 768BX (Item 16). The FW Act specifically contemplates that, if a copied State award requires or allows the Fair Work Commission to deal with a dispute, it may do so in accordance with s 739(1) of that Act. 24. The Commission should vary the Award as sought in the following circumstances: (a) In circumstances in which a large number of employees are in the process of being forcibly transferred from the public sector to non-government employers, it is peculiarly important to employees that effective procedures exist for the resolution of disputes in relation to the transfer and their conditions of employment generally. (b) A number of significant commitments given by the NSW Government, including the employment guarantee period, are subject of agreement between the NSW Government and non-government providers rather than directly with the employees and may be incapable of being enforced at all in the absence of an appropriate dispute resolution provision. (c) The NSW Government and representatives of FACS have repeatedly assured of the Association and its members that the conditions of employees upon transfer to non-government employers will include the capacity for disputes to be resolved by the Federal Courts or the Fair Work Commission. The variation sought is consistent with the representatives made to the Association and its members in the period leading up to the transfer. Case for the Respondent 1. In opposing the proposed amendments, the Respondent submitted as follows: 39. In paragraph 22(b) of its submission, the Union points to section 739(1) of the FW Act as relevantly limiting the power of the FWC to arbitrate if clause 18 is left in its existing form. This is alleged to be because the Award as it stands "does not expressly require or allow the FWC to deal with a dispute relating to employees covered by the Award." 40. This submission could not be accepted. Once "FWC" is read for "State Industrial Commission" in clause 18, it is clear from the language of the provision that it permits the Tribunal to "deal with" the dispute. That is its very purpose. 41. The critical limiting aspect of section 739 that is however potentially relevant appears from section 739(4) which provides that: "If in accordance with the term the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so." 42. The term (clause 18) clearly does not provide that the parties have agreed that the IRC NSW (let alone the FWC) can arbitrate. 43. Accordingly, it may be considered that the better view of clause 18 is that there is nothing in the clause providing for arbitration by consent as "assistance in resolving the dispute" does not equate with the power to arbitrate. Section 739(4) requires that the term for dealing with disputes must itself specifically refer to the power given to the FWC to arbitrate. There is nothing surprising in the fact that the existing clause does not address matters required by section 739(4) of the FW Act because under state legislation, there is no concept of any requirement for consent as a precondition of arbitration. Indeed, sections 135 and 136 of the IR Act empowers the IRC NSW to arbitrate regardless of the wishes of parties or expressions in relevant industrial instruments. 44. If it is accepted that accordingly clause 18 does not satisfy s.739(4) then, as contended by the Union in paragraph 22(b), there would indeed be a relevant limitation on the capacity of the FWC to arbitrate if the clause remained unamended – though not for the reasons contended for by the Union. 45. However, this situation (unlike the limitation suggested by the Union in paragraph 22(b)) is not able to be altered by any order that the IRC NSW is validly able to make. In terms, the IRC NSW is not empowered to make a decision, in a contested proceeding, that the FWC has jurisdiction to arbitrate regardless of the limitations imposed by section 739(4). This is because the inclusion of a provision for arbitration in the form sought by the Union as a result of this contested proceeding would not be a matter done by consent. 46. In R v Hughes the High Court identified two relevant propositions, saying: "The first is that a State by its laws cannot unilaterally invest functions under that law in officers of the Commonwealth; the second is that a State law which purported to grant a wider power or authority than the acceptance of which was prescribed by Commonwealth law would, to that extent, be inconsistent with the Commonwealth law and invalid under s.109 of the Constitution." 47. On the other hand, if the view is taken that clause 18 meets the requirements of section 739(4) then there is nothing in section 739 or elsewhere in the FW Act that would relevantly limit the capacity for arbitration to occur. 48. On this basis the variation sought, insofar as they refer to a power to arbitrate, would be entirely unnecessary. 49. It follows that, whatever view is taken on the question of whether clause 18 satisfies the requirements of section 739(4) of the FW Act, there is no basis whatsoever justifying a variation of the clause to identify a power to arbitrate. 50. In any event there is the broader consideration that on any view, the proposed amendment specifically takes the form of seeking to empower the Fair Work Commission to arbitrate, and as is made quite clear by the court in R v Hughes, this is not something that can be validly done in any event. ………………... 60. The Union's submissions at paragraph 24 put forward a number of circumstances that, in their view, justify the proposed variations. In response to those matters, the IR Secretary submits: (a) The FW Act currently provides for effective procedures for dealing with disputes and the proposed variations do nothing more than confuse; (b) The FW Act provides the FWC with power. The FWC can only act within this power. Matters of enforcement are not matters within the FWC's jurisdiction and cannot be matters over which a disputes procedure purports to invest in the FWC; (c) The FWC may deal with a dispute in accordance with sections 739 and 595 as set out above. The FWC can only deal with a dispute in the terms of the disputes procedure and the relevant provisions of the FW Act. 61. The net result is that the Union has not and could not identify an issue that is not capable of arbitration now but capable of arbitration should the proposed variation be made by the IRC NSW. Definition of Department 62. The proposed variation to the definition of Department to include any new entity adds to the confusion. 63. Following the creation of the copied State award for each relevant employee, the Department will no longer have any role in an employment dispute between the Union, an employee and any new entity. 64. Sections 768AM and 768AN of the FW Act deal with when a copied State instrument applies to an employer and covers an employer respectively. In simple terms, the effect of these sections is that the new employer will have the obligations of the Department as described in the copied State award. 65. The variation is unnecessary given these legislative provisions. (Emphasis added) The Association's submissions in reply 1. In its submissions in reply to the submissions of the Respondent, the Association accepted that it was unnecessary to seek the amendments to subclause 18(v) of the Award that inserted references to the FWC. The Association then put the following: 4. This means that the only amendment to Clause 18(v) that needs to be pursued is the addition of the final sentence in the application without any reference to the FWC. That amendment would now read: The Industrial Relations Commission may deal with the dispute by mediation, conciliation and/or arbitration as permitted by relevant legislation at the request of either the Association or Department. …………………. 6. Contrary to what is suggested by the Respondent's submissions at [62] to [65], it is necessary to pursue the amendment to Clause 2 of the Award relating to the extended definition of "Department" to ensure that the new employer can make such a request. 7. Given that the Association is no longer seeking an amendment that directly seeks that the IRC gives power to the FWC to do anything, no question of validity arises as suggested by the Respondent's submissions at [50]. Any power given to the FWC to arbitrate will arise directly from the transfer of employees and the terms of the FW Act. 8. The Respondent's submissions at [41] seek to raise s 739(4) of the FW Act as an impediment to the application being effective in so far as it refers to a power to arbitrate. 9. However, in relation to copied State instruments, s739(4) is not the only source in the FW Act of the power of the FWC to arbitrate. The effect of s 768BY is that the FWC has the same powers as the relevant State industrial body. If a State industrial body has the power to arbitrate, it follows that the FWC will also have the power to arbitrate. 10. In any event, the question of the satisfaction of the requirements in s 739(4) if the application is granted would depend on whether in Clause 18(v) the parties have agreed that the IRC "may arbitrate (however described)" a dispute. 11. It is evident that in its current form, Clause 18(v) provides that the parties have agreed that the tribunal may arbitrate a dispute. That agreement is described by reference in Clause 18(v) to the dispute being "referred in accordance with the provisions of the Industrial Relations Act 1996, to the Industrial Relations Commission of New South Wales for its assistance in resolving the issue". That provision, made by consent, clearly contemplates that the IRC may arbitrate a dispute in accordance with ss 135 and 136 of the IR Act. 12. The Respondent's submissions at [43] rely on ss 135 and 136 of the IR Act applying irrespective of the consent of the parties. However, that does not detract from the fact that the parties have also consented in Clause 18((v) to the IRC arbitrating disputes in accordance with ss 135 and 136 of the IR Act. It should be noted that the dispute resolution procedure mandated by s 14 of the IR Act does not require any reference to the involvement of the IRC. 13. The submissions of the parties in these proceedings suggest that there might be an ambiguity as to whether the Association and Respondent have agreed under Clause 18(v) that the IRC may arbitrate a dispute. The effect of the Respondent's submissions at [48] is that any such ambiguity need not be resolved at this point in time. 14. However, there are compelling reasons for the IRC to remove any such ambiguity before the terms of the Award apply as a copied State instrument for transferring employees. Although made by consent, Clause 18(v) was approved by the IRC pursuant to the provisions of the IR Act. Therefore the IRC is the tribunal best suited to resolve any such ambiguity. The FWC should not be left in the invidious position of having to investigate the intention of the parties when they were subject to the jurisdiction of the IRC. 15. Although the Association submits that, in its current form, Clause 18(v) provides that the parties have agreed that the IRC may arbitrate a dispute, it is appropriate that any question of ambiguity be resolved before the IRC is replaced by the FWC in relation to the transferring employees. 16. Indeed it is in the public interest that any doubt be removed before the employees are transferred. Consideration Clause 2 - Definitions 1. An amendment is sought by the Association to the definition of "Department" in Clause 2 - Definitions of the Award to include the words "or the entity whose employees are engaged in a classification covered by this award". The stated purpose of this proposed amendment is to make it clear that, following the transfer of employees to a non-government employer, that employer will have the capacity under subclause 18(v) of the copied State award to take the same steps in relation to an unresolved dispute that the Department is currently able to take under the Award. 2. This aspect of the Association's claim did not occupy a great deal of attention in the proceedings. 3. As was submitted by the Respondent, sections 768AM and 768AN of the FW Act operate so that the new employers will, in effect, stand in the shoes of the Department once a copied State award comes into existence. The new employer will have the same rights and obligations under the copied State award as the Department now has under the Award. This will include those rights and obligations which Department currently has under subclause 18(v) of the Award. 4. The proposed variation to the definition of "Department" is unnecessary and is refused. Clause 18 - Disputes 1. The starting point for consideration of this aspect of the Association's application is the current wording of subclause 18(v) of the Award, which is as follows: If these procedures are exhausted without the matter being resolved, or if any of the time limits set out in those procedures are not met, either the Association or the Department may seek to have the matter mediated by an agreed third party, or the matter may be referred in accordance with the provisions of the Industrial Relations Act 1996, to the Industrial Relations Commission of New South Wales, for its assistance in resolving the issue. 1. On the submissions of the Association, this award provision is uncertain in relation to the Commission's power to resolve disputes by arbitration. The provision does not purport, expressly, to confer upon the Commission the power to resolve disputes by arbitration. It is said by the Respondent that, to the extent that the Commission possesses such power, the source of power is not the Award but the Act. It may be readily argued that the terms of the clause are drafted, and are to be understood, in that context. If so, it is possible the clause may be construed as an agreement that the Commission may, in providing "assistance", arbitrate. The agreement is demonstrated by the consent to the making of the Award. 2. The dispute settlement powers of the FWC, when dealing with a dispute involving an employer and employees covered by a copied State award, will be governed and limited by the FW Act 3. The Association points to subs 739(4) of the FW Act as a potential source of power for the FWC to exercise arbitration powers in relation to a dispute involving an employer and employees covered by a copied State award. A number of points need to be made about this submission. 4. Senior counsel for the Association referred the Commission to the following passage from the judgement of the High Court in Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission [2001] HCA 16; 203 CLR 645 at [34] ("Gordonstone"): 34. The parties to an industrial situation are free to agree between themselves as to the terms on which they will conduct their affairs. Their agreement has effect according to the general law. If their agreement is certified, it also has effect as an award. To the extent that an agreement provides in a manner that exceeds what is permitted either by the Constitution or by the legislation which gives the agreement effect as an award, it cannot operate with that effect. But the underlying agreement remains and the validity of that agreement depends on the general law, not the legislative provisions which give it effect as an award. 1. Senior counsel for the Association then put the following submission: And we make a similar point about clause 18, that the provision that in effect we say provides for arbitration, doesn't depend for its validity on the terms of the legislation, but it depends on the general law and if it gives the power to a body like the New South Wales Industrial Relations Commission or the Fair Work Commission for that matter, the Fair Work Commission cannot exceed what it is entitled to do under the statute, but the provision relies on the general law… If the parties agree to it, they are agreeing according to the general law. It may separately be right that there is a right under the Act to invoke arbitration under the statute, but the parties have still separately agreed to the Commission having a role via arbitration. And as a result of that, the Commission has, we submit by consent, been given the power under clause 18 and by virtue of section 768BY the Fair Work Commission has that power. 1. However, immediately before the passage from Gordonstone cited by senior counsel for the Association, the High Court stated as follows: 30. There is, however, a significant difference between agreed and arbitrated dispute settlement procedures. As already indicated, the Commission cannot, by arbitrated award, require the parties to submit to binding procedures for the determination of legal rights and liabilities under an award because Ch III of the Constitution commits power to make determinations of that kind exclusively to the courts. However, different considerations apply if the parties have agreed to submit disputes as to their legal rights and liabilities for resolution by a particular person or body and to accept the decision of that person as binding on them. 31. Where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. Of its nature, judicial power is a power that is exercised independently of the consent of the person against whom the proceedings are brought and results in a judgment or order that is binding of its own force. In the case of private arbitration, however, the arbitrator's powers depend on the agreement of the parties, usually embodied in a contract, and the arbitrator's award is not binding of its own force. Rather, its effect, if any, depends on the law which operates with respect to it. 32. To the extent that s 170MH of the IR Act operates in conjunction with an agreed dispute resolution procedure to authorise the Commission to make decisions as to the legal rights and liabilities of the parties to the Agreement, it merely authorises the Commission to exercise a power of private arbitration. And procedures for the resolution of disputes over the application of an agreement made by parties to an industrial situation to prevent that situation from developing into an industrial dispute are clearly procedures for maintaining that agreement. Parliament may legislate to authorise the Commission to participate in procedures of that kind. Accordingly, s 170MH of the IR Act is valid. 1. Section 170MH of the Industrial Relations Act 1988 (Cth) was a predecessor provision to s 739 of the FW Act. 2. It is apparent from the High Court judgement in Gordonstone that the Australian Industrial Relations Commission was acting in the capacity of a private arbitrator, as it was authorised to do by the legislation and empowered to do by the agreement of the parties, and was not exercising arbitral power conferred by statute. 3. In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd [2015] FCAFC 123; 235 FCR 305, the Full Federal Court (Dowsett, Tracey and Katzmann JJ) considered the effect of ss 738 and 739 of the FW Act in the light of the High Court judgement in Gordonstone and the subsequent judgement in TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia [2013] HCA 5; 251 CLR 533 and then stated: 35. Thus it is well settled that "arbitration" by FWC pursuant to a term in an enterprise agreement is a private arbitration, based upon the consent of the parties, and not upon the coercive authority of the Australian state. Subject to the Union's submission that the proceedings before the Full Bench were by way of appeal pursuant to the Fair Work Act, this principle is not in dispute. 1. Thus, the power of the FWC to settle disputes by arbitration pursuant to subs 739(4) of the FW Act is as a private arbitrator exercising power pursuant to a "term" in an award or enterprise agreement to which the parties have agreed and which is permitted by the statute. 2. If the current subclause 18(v) of the Award is not such a "term", which is a matter we cannot authoritatively determine, then making the amendment sought by the Association will not change that position. That is because the amendment is opposed. If the amendment makes the difference it will be to no avail because, in terms of subs 739(4), it is not "agreed". 3. While we accept the merit of the Association's contention that the application seeks to do no more than put the employees in the position they were in prior to transfer, the application must be refused. The addition of the words proposed by the Association, over the opposition of the Department, will not provide the remedy which the Association is seeking. Moreover, the inclusion of the proposed amendment is likely to add to the issues before the FWC rather than reduce them. 4. For these reasons we consider the proposed amendment will serve no utility and is refused. Order 1. The application for variation is refused. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 February 2018