Industrial Relations Commission New South Wales Medium Neutral Citation: Secretary, NSW Ministry of Health v Health Services Union NSW [2018] NSWIRComm 1007 Hearing dates: 13 October 2017 Date of orders: 07 February 2018 Decision date: 07 February 2018 Jurisdiction: Industrial Relations Commission Before: Chief Commissioner Kite SC, Stanton C and Murphy C. Decision: Order: 1. Leave to appeal is granted: 2. The appeal is upheld. 3. The award and orders made by Commissioner Newall on 11 May 2017 are quashed. 4. The matter is remitted to Commissioner Newall to be dealt with according to law. Catchwords: INDUSTRIAL LAW – New South Wales – leave to appeal and appeal - awards and agreements – statutory provisions relating to public sector employees – evidence of employee-related cost increases and employee-related cost savings – onus to adduce such evidence - duty of Commission to make findings as to cost impact Legislation Cited: Industrial Relations Act 1996 Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 Cases Cited: Commissioner of Police v Morris [2017] NSWIRComm 1010 Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Acciona Infrastructure Australia Pty Ltd and Ferrovial Agroman (Australia Pty Ltd t/as the Pacifico Acciona Ferrovial Joint Venture [2017] NSWIRComm 1029 Fire Brigades Employees' Union of NSW (o/b Challinor) v Fire and Rescue NSW [2016] NSWIRComm 1050 Industrial Relations Secretary v Wattie [2017] NSWIRComm 1007 Merrin v Mosman Municipal Council [2016] NSWIRComm 1048 Notification under section 130 by NSW Department of Health of a dispute with the Health Services Union re work bans [2008] NSWIRComm 168 Operational Ambulance Officers (State) Award [2015] NSWIRComm 17 Public Service Association and Professional Officers Association Amalgamated Union of New South Wales v Roads and Maritime Services [2015] NSWIRComm 16; 250 IR 412 Re Crown Employees (NSW Fire Brigade Retained Firefighting Staff) Award 2008 [2012] NSWIRComm 122 Re Public Hospital Medical Physicists (State) Award [2008] NSWIRComm 5; 171 IR 45 Re: Application for a New Award for Patient Transport Officers [2017] NSWIRComm 1024 Secretary of The Treasury v Public Service Association & Professional Officers' Association Amalgamated Union of NSW [2014] NSWCA 138; 89 NSWLR 688 Transport Industry – General Carriers Contract Determination [2016] NSWIRComm 3; 257 IR 294 Category: Principal judgment Parties: Ministry of Health (Appellant) NSW Industrial Relations Secretary (Intervener) Health Services Union NSW (Respondent) Representation: Counsel: M Kimber SC with M Easton (Appellant) T Wong (Intervener) A Slevin with J Fox (Respondent) Solicitors: Lea Armstrong, Crown Solicitor (Appellant) File Number(s): 2017/150802 Decision under appeal Court or tribunal: Industrial Relations Commission of NSW Date of Decision: 11 May 2017 Before: Commissioner Newall File Number(s): 2016/113658 DECISION 1. These are proceedings brought by the Ministry of Health ("appellant") pursuant to s 187 of the Industrial Relations Act 1996 (NSW) ("the Act") for leave to appeal and, if leave is granted, an appeal against a decision of Commissioner Newall ("the Commissioner") in Re: Application for a New Award for Patient Transport Officers [2017] NSWIRComm 1024. The NSW Industrial Relations Secretary ("intervener") sought and was granted leave to intervene. The Health Services Union NSW is the respondent. 2. The Commissioner made the NSW Health Service Patient Transport Officers Crib Breaks (State) Award ("NPTO Award") pursuant to s 10 of the Act in accordance with the respondent's application. The respondent sought an award to regulate crib breaks for non-emergency Patient Transport Officers (PTO) and Trainee PTOs. 3. Prior to the making of the NPTO Award, 218 full time equivalent (FTE) PTOs were covered by the Operational Ambulance Officers (State) Award and 100 FTE PTOs were covered by the Health Employees Conditions of Employment (State) Award and the Health Employees (State) Award. 4. As explained by the Commissioner, (see [12] below) a decision was made in 2015 to merge the non-emergency patient transport ("NEPT") operations of the NSW Ambulance Service and Local Heath Districts into a single standardised NEPT fleet managed by NSW HealthShare. Consistent with that decision award coverage for NSW Ambulance non-emergency PTOs transferred from the Operational Ambulance Officers (State) Award to the Health Employees Conditions of Employment (State) Award. 5. During the course of proceedings, the appellant confirmed that no application had been made to flow the pay increases of 2.5% that were applied generally to public sector health workers from 1 July 2016 and 1 July 2017 to NEPT PTO's. 6. A stay on the application of the NPTO Award was granted by the Chief Commissioner on 25 May 2017. At that time the appellant committed to maintain the records necessary to ensure compliance with the NPTO Award should the appeal not succeed. 7. By Notice of Motion filed on 10 August 2017, the appellant sought to have admitted additional evidence concerning the increase in employee-related costs as a result of the making of the NPTO Award. Commissioner's Decision 1. Shortly stated, the Commissioner awarded an allowance equal to one hour's pay in circumstances where a PTO is directed to take their 30 minute crib break at a location other than their home base. The precise details of the allowance were set out at [4] of the decision: 4. I do not replicate the whole of the award application here. The relevant, and contentious, clause in the proposed draft award is Clause 5, and in particular subclause 5.4, which provides in terms: An employee who is directed to have crib away from his or her station will be paid a crib away from station allowance as follows: (a) where an employee is entitled to one crib break per shift the payment for any crib directed to be taken away from station will be the rate prescribed in Item 1 of Table 1 – part B, Other Rates and Allowances for each occasion that the employee is so directed. (b) Where the employee is entitled to two crib breaks per shift the payment for any crib directed to be taken away from station will be the rate prescribed in Item 2 of Table 1 – part B, Other Rates and Allowances for each occasion that the employee is so directed. Reference to the tables discloses that the allowance to be paid is in effect an allowance based on the relevant hourly rate of pay. 1. The Commissioner considered the award sought satisfied the requirements of s 10 of the Act and relied on the principles of award making set out by the Full Bench in City of Sydney Wages/Salary Award 2014 [2014] NSWIRComm 49; 247 IR 386 to support the proposition that the allowance sought by the respondent was "fair and reasonable" and not inconsistent with the Commission's Wage Fixing Principles. 2. The Commissioner observed at [51] that the quantum of the allowance he awarded was fair as it drew upon: an allowance which the Commission has determined to be fair in analogous circumstances in a comparable award dealing with work of a similar or related nature. (See the decision of the Full Bench of the Commission in Notification under section 130 by NSW Department of Health of a dispute with the Health Services Union re work bans [2008] NSWIRComm 168). 1. The change to crib practices so as to require officers to crib away from their station where directed was expressly advanced before the Commissioner by HealthShare as a measure to improve the employer's productivity and efficiency. 2. The context in which the respondent sought the award was set out at paragraphs [5] to [11] of the Commissioner's decision: 5 The award is sought in the following context. In October 2015, the Minister for Health determined that the then-existing fleets providing non-emergency patient transport ('NEPT'), one fleet operated by NSW Ambulance and others operated by the Local Health Districts, would be combined into a single standardised NEPT fleet. As a consequence, those PTO's who had previously been engaged pursuant to the terms of the Operational Ambulance Officers (State) Award came instead under the control of HealthShare within the coverage of the Health Employees Conditions of Employment (State) Award. No evidence was able to be brought about how many actual employees were affected by this move, but it is accepted that 218 full-time equivalent ('FTE') PTO positions were brought from NSW Ambulance into the combined NEPT fleet. 6 That change was accompanied by a change in job allocation methods; all NEPT jobs undertaken by former Ambulance PTO's are now allocated by a centralised booking hub established by NSW Health. 7 HealthShare further determined that there was to be a change in the arrangement of crib breaks. 8 In the past the NEPT officers employed by NSW Ambulance returned to their home station for their paid crib breaks. NEPT officers employed by the Local Health Districts ('LHD's') officially did not return to their home station, but on the evidence they conducted their paid crib breaks at, if not always at their home station, a station within their own local area where they were known and knew the facilities. I observe that in the case of one NSW Ambulance station, Picton, a local agreement had been reached that NEPT officers would crib away from station, but that applied to a handful of officers in a particular and unusual geographic location. Otherwise, NSW Ambulance NEPT officers cribbed at station. 9 The Operational Ambulance Officers Award which, before the reconstitution of the fleet, applied to the ex-NSW Ambulance PTO's provided, at Clause 15(b), that an employee directed to have a meal away from his or her station was to be paid a crib/meal away from station allowance, but that that allowance was not to apply to crib breaks taken by NEPT Officers. That part of the clause which excluded NEPT officers must be seen in the light of the fact that, on the evidence, NEPT officers under the Operational Ambulance Officers Award (with the single minor exception noted above) did not crib away from base. 10 As I observe above, HealthShare has now decided that NEPT officers will not be automatically permitted to crib at their home station, but may instead be directed to crib away from their station. That decision has been put into effect. 11 The decision effects a significant change to the practice surrounding crib breaks. It means that former NSW Ambulance PTO's are at times required to crib away from base, when before they were able to crib at base. It also means that former LHD NEPT officers who previously cribbed at their home station or one nearby where they were known will now at times be required to crib away from their local area. On how many occasions this will occur to either category of officer is not clear, and will depend on operational requirements, but as a matter of fact it is occurring and will continue to occur. Commissioner's Consideration of Section 146C of the Act 1. The Commissioner at [34] considered that the award sought, if made, must give effect to s 146C as it had a capacity to increase employee-related costs. However, the Commissioner considered at [35] that there was a lack of evidence to enable him to determine with any degree of certainty the increase to employee-related costs that would result from the application of the allowance. 2. There was evidence from HealthShare that the base cost of the proposed allowance was $1.82m per annum if its application was restricted to NEPT PTOs and $2.54m if it was extended to all employees including nurses. In that regard, the Commissioner observed at [38]: I was also not given any insight into what $1.84m might mean in relation to the NSW Ambulance annual wages and salaries bill. Certainly it was not suggested that even the maximum amount that Ms Van Cleef estimated would, if required to be paid, equal or exceed 2.5% of that bill. In those circumstances I am unable to see the Commission would be prevented from making the award sought by the provisions of s.146C. 1. In deciding to make the award in the terms sought, the Commissioner at [53] concluded: I am satisfied that s.146C does not prevent the award being made. There was no suggestion at all that the maximum cost impost that might possibly arise if the award were made would meet or exceed 2.5% of employee costs. The pay increase of 2.5% extended across Health from 1 July 2016 has not been extended to NEPT PTO's. The questions raised by the appeal 1. The Application for Leave to Appeal and Appeal set out the questions raised by the Appeal in the following terms: 1. Does the Commission have power to make an award in the absence of probative evidence on which to be satisfied that the application does not involve an increase in employee-related costs more than 2.5 per cent per annum? 2. In a contested application for an award variation that will increase employee-related costs, does the applicant bear the onus of establishing that the application does not involve an increase in employee-related costs of more than 2.5 per cent per annum? 3. When making an award or order that will increase employee-related costs and giving effect to declared policies for the purposes of s 146C, is the Commission required to compare employee-related costs on an annual basis both before and after the making of the proposed award or order? 4. In setting fair and reasonable conditions of employment, can the transition of workers from coverage under one award to a second award render the terms and conditions of the second award unfair? 5. Where an increase in productivity or efficiency measures constitutes the basis for an increase in employment conditions under Principle 8.3 (Productivity and Efficiency Considerations) of the 2016 State Wage Case Principles, what connection does there need to be between the quantum of the increase and the productivity or efficiency measures upon which it is based? 6. Can the increase in employee related costs (via the new allowance) completely eliminate the economic benefit of the productivity and efficiency measure identified to be the basis for the increase in the employer related costs? 7. In what circumstances can a substantial proportion of the relevant workforce be entitled to share the benefit of a productivity or efficiency measure, even though they are not required to give up their existing terms and conditions? 1. The appellant and intervener contended the effect of s 146C and clause 6(1) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 ("the Regulation") is to remove any discretion for the Commission to make an award relating to the conditions of employment of public sector employees that has the capacity to increase employee-related costs by more than 2.5% per annum. Moreover, in order to make any such award, the Commission is obliged to make findings as to: 1. the employee-related costs for the annual period before the commencement of the proposed award; 2. the amount by which total employee-related costs would be increased as a result of making the award; and 3. the comparison between the total employee-related costs before and those after the making of the award leading to satisfaction that any increase does not exceed 2.5 % Additional Evidence 1. The appellant also sought to admit additional evidence. It sought to rely on an affidavit sworn by Ms Jennifer Van Cleef, Director, Patient Support Services, HealthShare NSW, read without objection on 25 May 2017 in support of the stay application, and a further affidavit sworn by Ms Van Cleef on 10 August 2017. 2. The appellant sought to rely on the decision in Re Public Hospital Medical Physicists (State) Award [2008] NSWIRComm 5; 171 IR 45 at [6], to support the proposition that the Full Bench should admit the additional evidence. The intervener did not wish to be heard on this issue. The respondent considered the additional evidence sought to be relied upon by the appellant was unnecessary and opposed the application. 3. Both affidavits were subsequently read. 4. At paragraphs 6 to 8 of her 25 May 2017 affidavit, Ms Van Cleef deposed: 6. On 30 May 2016, Commissioner Newall recommended that proposed changes to the location for taking crib breaks not be put in place until after 18 July 2016. Following the lifting of this Recommendation on 18 July 2016, Patient Transport Officers have been regularly taking their paid crib break at the nearest NSW Health staff meal room (ie without any allowance for doing so). 7. I have caused a review to be conducted of the records available in the Patient Transport Services and have been advised that Patient Transport Officers and crews of Drivers and Nurses have taken their paid crib break away from their base station for approximately 90% of shifts 8. Using this 90% figure I have estimated the cost of paying the new Crib Allowance to Patient Transport Officers for a one week period to be an 11.8 % increase on the base wage rate … And at paragraphs 11 and 12: 11.Th[e] impact on patients and the NSW Health system is magnified during winter, due to the increased activity across the system.With increases in demand for patient transport services over the peak winter period, it would be expected that Patient Transport Officers will have their crib away from their home base on a 95-100% of occasions. 12. Given the increased demands over winter and the reduction to only four metropolitan Patient Transport Service bases, HealthShare wants to, and has no practical option but to, continue directing Patient Transport Officers and crews of Drivers and Nurses to take their paid crib break away from their base station. Over this coming winter Patient Transport Officers and crews of Drivers and Nurses will be directed to take their paid crib break away from their base station for at least 95% of their shifts 1. The 10 August 2017 affidavit updated the evidence of 25 May in light of actual experience. Ms Van Cleef stated, at paragraph 2, that since the commencement of the Award, she had: … taken steps to ensure that records are kept of Patient Transport Officers who are eligible for payment of the allowance under the New Award. No payments had been made given a stay was granted by the Chief Commissioner on 26 May 2017. 1. At paragraph 5 Ms Van Cleef pointed to a 5.53% increase in employee-related costs: 5. HealthShare has kept full records of amounts due to employees under the New Award since 15 May 2017. Using these records the cost of the New Award would cause a 5.53% increase in employee related costs for Patient Transport Officers A document setting out the methodology supporting the 5.53% calculation, based on the actual cost of the crib allowance if paid ($256,227.40) and Total Salary Costs paid to PTOs ($4,630,141.51) was annexed to her affidavit. 1. The appellant and intervener referred to the decision in Secretary of The Treasury v Public Service Association & Professional Officers' Association Amalgamated Union of NSW [2014] NSWCA 138; 89 NSWLR 688 where the Court of Appeal held that cl 6(1)(a) of the Regulation specifically limits any increases in costs that satisfy the definition of "employee-related costs" to 2.5% per annum 2. The appellant and intervener contended that in the absence of any formal onus on the appellant or the respondent to prove whether the requirements of cl 6(1)(a) had been satisfied, the Commission itself was required to be satisfied that in making a new award, it is giving effect to the declared policy on employee-related costs contained in the clause. 3. Moreover, in award making proceedings such as the present, the onus must fall to the applicant to present evidence in support of its application so as to enable the Commission to determine whether that evidence is sufficient to satisfy the cost limitations imposed by cl 6(1)(a): Re Crown Employees (NSW Fire Brigade Retained Firefighting Staff) Award 2008 [2012] NSWIRComm 122 at [32(1)]. 4. In the event the Full Bench upheld the appeal, parties to the appeal considered the possibility of resolving this matter through a two-stage process involving an application to flow the pay increase of 2.5% that applied generally to public sector health workers from 1 July 2016 to NEPT PTO's and subsequently consider the increase that applied from 1 July 2017 with the award application to determine with some degree of precision the actual costs and savings achieved. Principles on leave to appeal 1. The principles in relation to the grant of leave to appeal a decision of the Commission were summarised in Public Service Association and Professional Officers Association Amalgamated Union of New South Wales v Roads and Maritime Services [2015] NSWIRComm 16; 250 IR 412. In that matter the Full Bench stated at [10] and [11]: It is well settled that an appeal under the IR Act is an appeal in the strict sense: see s 191 of the IR Act and King v State Bank of New South Wales (No 2) [2002] NSWIRComm 353; (2002) 126 IR 407. In such an appeal the appellate tribunal will only intervene to correct error: Aboud v State of New South Wales (Department of School Education) [1999] NSWIRComm 449; (1999) 92 IR 32. In the case of discretionary decisions it is not enough that the appellate tribunal would have come to a different view. It must be shown that the primary judge had failed to properly exercise the discretion committed to him: Mace v Murray [1955] HCA 2; (1955) 92 CLR 370 and House v The King [1936] HCA 40; (1936) 55 CLR 499. It is important to bear these principles in mind in approaching the question of leave to appeal. The principles guiding the determination of leave were clearly set out in this often cited passage from Hosemans v Commissioner of Police (No 4) (2005) 150 IR 263: [5] The law and practice governing leave to appeal is well settled and does not require restatement: see Knowles v Anglican Church Property Trust (No. 2) (1999) 95 IR 380. However, two principles warrant particular mention: first, leave will not be lightly or automatically granted (see King v State Bank of New South Wales (No 2) (2002) 126 IR 407 at [52]-[55] and Knowles at 381 - 382) and, subject to the requirements of s188(2) of the Act, will not, generally, be granted unless the appellant demonstrates that the appeal "raises substantial issues of principle or law or has wider implications for the jurisprudence of this Commission, including whether the decision has widespread practical application" (see Knowles at 382) or raises issues going to the proper administration of justice. Secondly, leave will rarely be granted where an appeal primarily seeks to challenge findings of fact which are otherwise reasonably open on the evidence: Box Valley Pty Ltd v Price (2000) 97 IR 484; Austin v NF Importers Pty Limited [2005] NSWIRComm 353 at [5]. That statement has been approved since in a number of decisions: Merrin v Mosman Municipal Council [2016] NSWIRComm 1048 at [6]-[7]; Fire Brigades Employees' Union of NSW (o/b Challinor) v Fire and Rescue NSW [2016] NSWIRComm 1050 at [11]; Industrial Relations Secretary v Wattie [2017] NSWIRComm 1007at [11]. In Wattie, the Full Bench also observed at [12]-[13]: Further, we reiterate the observations of the Full Bench in Antonakopoulos v State Bank of NSW (1999) 91 IR 385 at 392, referring to the then-recently enacted provisions of the Act: "The provisions of the Act as to appeals give primacy to first instance decision making in a manner not earlier found in industrial legislation in this State. We note that the Full Bench in Antonakopoulos v State Bank of NSW (1999) 91 IR 385 also held, immediately before the statement set out above, that an appeal bench should not substitute its own views as to a decision that was reasonably open at first instance. We endorse and apply that approach. Lastly, we add, as the Full Bench said in Fire Brigade Employees' Union of NSW (o/b Challinor) v Fire and Rescue NSW [2016] NSWIRComm 1050, that it will rarely be appropriate to grant leave to appeal unless an appellant can mount at least an arguable case pointing to appellable error. This is by no means a new element of the Commission's jurisprudence; it has long been held that an appellate body in an appeal of this nature will only substitute its own judgment where the first-instance decisionmaker has fallen into error of law, or made a finding of relevant determinative fact that is demonstrably wrong: Drake Personnel Ltd v Workcover Authority of NSW (1999) 90 IR 432 at 440. There will rarely be utility in granting leave to appeal where that degree of error cannot at least arguably be agitated on appeal. These principles were recently endorsed in Commissioner of Police v Morris [2017] NSWIRComm 1010 at [6] and Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Acciona Infrastructure Australia Pty Ltd and Ferrovial Agroman (Australia Pty Ltd t/as the Pacifico Acciona Ferrovial Joint Venture [2017] NSWIRComm 1029 at [10]-[11]. As no party to the appeal has suggested that the Full Bench should not apply these principles, we propose to apply them. Statutory Scheme 1. Section 10 of the IR Act provides: 10 Commission may make awards The Commission may make an award in accordance with this Act setting fair and reasonable conditions of employment for employees. 1. Section 146C of the Act is cast in mandatory terms and provides: 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. (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. 1. Clause 6(1) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 ("the Regulation") provides: 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. Consideration 1. At the outset, we note the Full Bench determined it was appropriate in the circumstances of this particular case to accept the additional evidence concerning employee-related costs set out in the affidavits sworn by Ms Van Cleef on 25 May and 10 August 2017. The appellant relied upon the evidence to inform the Commission as to the nature of the issues which were likely to remain outstanding if the appeal were to succeed. In that sense the evidence was relevant to the Full Bench proceeding to determine the matter or remitting it to the Commissioner. 2. It was appropriate also because the combined operation of s 146C and the Regulation requires the Commission to properly assess the impact of employee-related costs imposed by the award so as to avoid a "miscarriage of justice": CCH Australia Limited v Bowen (1998) 79 IR 206 at 211; Re Public Hospital Medical Physicists (State) Award (2008) 171 IR 45 at [6]. The evidence of Ms Van Cleef, although not definitive, supports the submission advanced below that there was a probability that the making of the award, absent identified employee related cost savings, would exceed the limitations imposed by the Regulation and therefore the Commission's power. 3. Section 146C compels the Commission when making or varying any award or order to give effect to any NSW Government policy that concerns the conditions of employment of public sector employees. 4. In Public Service Association and Professional Officers' Association Amalgamated of NSW v Director of Public Employment (2012) 87 ALJR 162; (2012) 293 ALR 450; (2012) 228 IR 316; [2012] HCA 58 the High Court stated at [43] per French CJ: The second question relates to the constitutional character of a regulation of the kind referred to in s 146C. That question is shortly answered. A regulation of the kind referred to in s 146C declares a policy in the sense explained above and attaches legal consequences to it, including the Commission's duty to give effect to it. The policy becomes part of the body of law which the Commission is required to apply in the proceedings before it. 1. The requirement for the Commission to consider any NSW Government policy that concerns the conditions of employment of public sector employees has incorporated NSW Government Wages Policy into law. Under s 146C and the Regulation, it is mandatory that the Commission must require employee- related cost savings to be identified to fully offset any wage related increases above 2.5% per annum. It follows that cl 6(1)(a) of the Regulation imposes limits on the conferral of power on the Commission and operates to restrain the award making powers of the Commission. 2. The appellant and intervener submitted, correctly in our view, that in the light of s146C and cl 6(1)(a) of the Regulation, the Commissioner had no power to make the award sought by the respondent given: 1. the effect of the statutory scheme; 2. the potential increase in employee-related costs identified in the evidence of Ms Van Cleef in the hearing before the Commissioner; 3. the absence of evidence upon which the Commissioner could make findings about the employee-related costs before and after the making of the proposed award; 4. the (consequent) absence of such findings; 5. the absence of a finding about the level of increase; and 6. the identification of any necessary employee-related cost savings. 1. The restriction on the Commission's award making powers imposed cl 6(1) of the Regulation was canvassed by the Court of Appeal in Secretary of The Treasury v Public Service Association & Professional Officers' Association Amalgamated Union of NSW . Meagher JA said at [65]-[68]: 65 The Regulation was made under s 407 of the Industrial Relations Act 1996 (NSW). Section 146C(1) of that Act requires that when making or varying any award or order, the Commission "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". The validity of that provision was upheld in Public Service Association v Director of Public Employment [2012] HCA 58; 87 ALJR 162. 66 The text of cl 6(1) makes clear that its purpose is to impose a limit on the exercise of the power of the Commission to make or vary an award that increases the remuneration or other conditions of employment of "public sector employees". That limit adopts as its reference point the costs to the employer of employing those employees and those costs are defined as "employee-related costs". They are costs to the employer related to the salary or other remuneration payable to the employee or to benefits, including superannuation, which may be payable to or in respect of the employee. 67 Those costs include costs that are not imposed directly on the employer by an award. The superannuation guarantee shortfall payable to the Commonwealth under s 16 of the Superannuation Guarantee (Administration) Act 1992 (Cth) is an example. The obligation to pay that charge is imposed by statute and the amount payable is calculated by reference to the salary or wage paid to the employee. It follows, all other matters remaining constant, that an increase in that salary or wage will result in an increase in that cost to the employer. 68 Clause 6(1)(a) permits the Commission to award increases in remuneration or other conditions of employment "that do not increase employee-related costs by more than 2.5% per annum". Clause 6(1)(b) permits it to award increases "that increase employee-related costs by more than 2.5% per annum" but only if sufficient "employee-related costs savings" (also a defined term) have been achieved to "fully offset the increased employee-related costs". To decide whether that limit will be exceeded it is necessary to determine the employee-related costs for the annual period before the commencement of the proposed award and the increases in those costs for the following period. 1. The error identified by Meagher JA concerned an increase in employee-related costs caused by an increase in the Superannuation Guarantee. In this matter, as we have noted, it is apparent there was no finding or assessment made concerning employee-related costs for the annual period before the commencement of the award nor the "best estimate" available at the time concerning projected increased costs. 2. The approach identified by Meagher JA in [68] above also has the practical effect of dividing a case into at least two stages to determine firstly, whether actual employee-related costs do not exceed the 2.5% cap and second, where they do exceed 2.5%, whether the excess component can be fully offset by "employee-related cost savings". 3. A similar approach was outlined by the Full Bench of the Commission in Operational Ambulance Officers (State) Award [2015] NSWIRComm 17 at [5]-[6] and earlier in Re Crown Employees (NSW Fire Brigade Retained Firefighting Staff) Award 2008 [2012] NSWIRComm 122 at [32] where agreement was reached to split the proceedings into "two stages". 4. The first stage of the proceedings in each of these cases concerned the merits of the application and the second, the identification of potential employee-related costs savings where any proposed remuneration increases would cause employee-related costs to increase by more than 2.5% per annum. Conclusion 1. We have considered the grounds of appeal advanced by the appellant and in particular, the first three grounds relied upon. Given the restriction imposed by the application of s 146C and the Regulation, it is clear that the Commission does not have power "to make an award in the absence of probative evidence on which to be satisfied that the application does not involve an increase in employee-related costs more than 2.5% per annum" as pressed under Ground 1. 2. We observe in that respect that the appellant is in possession of the relevant information to allow the determination of these issues by the Commission if they cannot be agreed. It is true that the respondent can use the coercive powers of the Commission to require the production of that material but we would have an expectation that the appellant, and other public sector employers, would bring that information before the Commission to allow it to comply with its statutory mandates. We considered the costs and delays experienced in this case could have been significantly mitigated if that evidence had been brought before the Commissioner. 3. The issue of onus in award making, as the authorities recognise, differs from that in other forensic proceedings see for example Transport Industry – General Carriers Contract Determination [2016] NSWIRComm 3; 257 IR 294 at [34] – [35]. There is an evidentiary onus on an applicant to establish a case under s 10 of the Act. The onus in relation to the restriction on the operation of s 10 imposed by s 146C is in a different category. We consider even in contested matters such as the present, the onus falls on both the applicant and respondent to assist the Commission to establish the outer limits of employee-related costs having regard to any agreed or determined quantified cost savings available to offset any increase employee-related costs beyond the 2.5% cap. We do not regard that proposition as in any way inconsistent with the decision of the Full Bench in NSW Fire Brigade (Retained Firefighting Staff) Award 2008. 4. We grant leave to appeal and uphold the appeal. Given that finding, it is unnecessary to consider the remaining grounds advanced by the appellant. 5. The appellant proposed that the Full Bench might quash the award made by the Commissioner with no further order or in the alternative remit the matter to the Commissioner for hearing and determination in accordance with this decision. The Full Bench will remit the matter to Commissioner Newall to be dealt with according to law and this decision. 6. We remain concerned that the employees whose conditions of employment are the subject of these proceedings have not had an increase in remuneration since 1 July 2015. With regard to the 2.5% increase that became available from 1 July 2016, the Full Bench directs the parties to confer and determine a time-table for an application to be made to flow that increase to NEPT PTO's at the earliest opportunity. 7. We also propose that the parties give active consideration to adopting a two-stage approach in relation to the second pay increase of 2.5% that may be applied to NEPT PTO's from 1 July 2017 and the award application. 8. We envisage the first stage of the proceedings should quantify all employee-related costs savings identified by the parties relevant to the application. The second stage would involve a further analysis to determine the cost of the allowance, the agreed or determined value of any offsetting employee-related cost savings and what combinations of pay increases and the determined of an allowance as sought by the respondent could be accommodated so as not to cause employee-related costs to increase by more than 2.5% per annum. 9. It is clear that the additional evidence in relation to costs prepared by Ms Van Cleef and relied upon by the appellant in this appeal, together with any quantified cost savings identified need to be scrutinised. The proposed two-stage approach will test whether the requirements of cl 6(1)(a) of the Regulation have been satisfied, that is, there should be no increase in employee-related costs in excess of the 2.5% per annum limit as a result of the making or variation of an award, except where increases in excess of 2.5% are fully offset by employee-related cost savings. 10. Given the force of s 146C and the Regulation, it was incumbent upon the Commissioner to dismiss summarily the application for the award Disposition of Appeal 1. Given the force of s 146C and the Regulation, it was incumbent upon the Commissioner to dismiss summarily the application for the award. The Full Bench makes the following orders: 1. Leave to appeal is granted; 2. The appeal is upheld; 3. The orders of Newall C in Re: Application for a New Award for Patient Transport Officers [2017] NSWIRComm 1024 are quashed. 4. The matter is remitted to Commissioner Newall to be dealt with according to law. Amendments 11 April 2019 - Amendment to the Coversheet and Paragraph [28] Decision under appeal changed File Number to read 16/113658 Road and Maritime Services [2015] changed IR 512 to read 412 Paragraph [28] removed the letter 'n' 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: 11 April 2019