C2006/2485, Transcript of Proceedings [2006] AIRCTrans 806 (6 June 2006)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 15087-1

SENIOR DEPUTY PRESIDENT WATSON
SENIOR DEPUTY PRESIDENT O’CALLAGHAN
COMMISSIONER WHELAN

C2006/2485

APPEAL BY AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION
s.45 - Appeal to Full Bench
(C2006/2485)

MELBOURNE

10.05AM, TUESDAY, 23 MAY 2006

Reserved for Decision

PN1

MR N HENDERSON: If the Commission pleases, I appear for the Australian Services Union, with me, MR B MILLER.

PN2

MR N RUSKIN: If it please the Commission, I seek leave to appear on behalf of Moreland City Council, with me, MS C OPPY.

PN3

SENIOR DEPUTY PRESIDENT WATSON: Yes. Is there any objection, Mr Henderson?

PN4

MR HENDERSON: No objection.

PN5

SENIOR DEPUTY PRESIDENT HARRISON: Leave is granted, Mr Ruskin. We have received, in accordance with directions, written submissions of the parties.

EXHIBIT #A1 - WRITTEN SUBMISSIONS OF ASU
EXHIBIT #R1 - WRITTEN SUBMISSIONS OF MORELAND CITY COUNCIL

PN6

SENIOR DEPUTY PRESIDENT WATSON: We would remind the parties that the matter has been listed this morning for brief oral submissions in support of those submissions, and obviously in your case, Mr Henderson, any matters you need to deal with arising out of the respondent's submissions. Mr Henderson?

PN7

MR HENDERSON: Thank you, your Honour. In terms of the approach the union takes, I should explain to the Bench how we see the two matters being dealt with. I have raised this with Mr Ruskin yesterday. In relation to the section 170LW matter, the union presses an appeal, but really because of a peripheral matter in the decision rather than an appeal against the decision in toto on the 170LW application. Clearly, the evidence in the 170LW matter is the evidence for the 170MD matter as well, in terms of the interpretation of the agreement and so forth. We appreciate the difficulty which we faced, in that the employee concerned had in fact departed employment by the time the matter became before the Commission.

PN8

The issue that remains and gives rise to the appeal is an observation by the Commissioner at the end of his decision, that the ASU may not indeed even be a party to the - - -

PN9

COMMISSIONER WHELAN: Gave you a bit of a shock, did it, Mr Henderson?

PN10

MR HENDERSON: It was a bit of a shock, Commissioner. One which the Commissioner had raised with us, and as you know, we responded. But it leaves us sort of outside the camp, really, in terms of the section 170LW, but also in terms of the section 170MD application because it seemed to remove from us the capacity to make the application at all. So in relation to that particular matter, we would submit that is a jurisdictional fact, whether we are a party to the agreement or not. We'd press the submissions that we put to the Commissioner about the matter, although with one further aspect which the Commissioner may have been aware of, but didn't specifically advert to. That is, in the agreement itself, on the opening page, it describes it as being between the unions and the employer.

PN11

I think, coupled with the submissions which we had already made about how the original application was before Commissioner Simmonds as a section 170LJ application, it would seem to put beyond argument, in our submission, that we were in fact a party, notwithstanding the difficult wording of the clause, the parties bound clause in the agreement. We relied on that decision of the Full Bench in Unilever, which more of an observation than anything, but an important observation made by the Full Bench there. We had also referred to the decision of Marshall J in the AMWU v Nestle, which I will hand up a copy to the Bench.

PN12

In this decision, at page 5 of 7, his Honour at paragraph 18 starts to look at the issue of who were the parties to the agreement, and in particular he noted that that agreement provided that the employees were parties, but his Honour noted that really that couldn't be the case because the agreement had been submitted as a section 170LJ agreement and 170LJ agreements, under the provisions of the Act, which his Honour set out there, are clearly between the employer and the unions, or organisations. If the agreement had not been between the employer and the organisations as required by 170LJ, it couldn't have been made in the way it was. In our submission, really the certificate of Commissioner Simmonds has to be taken on its face, that the Commission has properly exercised its power within the agreement properly characterised.

PN13

That leaves us with the standing as party to bring these applications. As I say, that really is the only aspect of the 170LW that we wanted to put before the Bench today, to leave us open to argue the variation aspect, if the Commission pleases. In terms of documents to hand up, Mr Ruskin, you'll be pleased to note, has brought along substantial authorities which cover many of the ones - I think all of the ones other than that one that the union referred to, so I will leave him to burden you with those. I do have some matters that I wanted to raise by way of reply to Mr Ruskin's submissions. Does the Bench want to hear those now, or would you prefer to hear Mr Ruskin and then hear me in reply?

PN14

SENIOR DEPUTY PRESIDENT WATSON: It might be preferable, Mr Henderson, if you were to deal with them now and then retain your right of reply, of course.

PN15

MR HENDERSON: Thank you, your Honour. The issue before the Commission is that we say the way in which the employer has applied the terms of the agreement has had an unfavourable outcome for a particular employee, and that that has then been characterised as being an indirect discrimination under the Sex Discrimination Act. At paragraph 41 of the submissions, the respondent deals with the arguments we have raised by focusing in on the purpose of severance pay and focusing in on the decision in the first termination change redundancy case, that it is compensation for non-transferable benefits and inconvenience and hardship.

PN16

Following that particular paragraph, it refers to a number of decisions which focus in on the issue, for example, at 42, Temporary Income Maintenance is referred to in the report of the Commission of Inquiry to ..... at 43, a decision of Fisher J in the New South Wales Commission, and there is a paragraph quoted there, that it is designed to assist the retrenched employee to maintain family living standards. Then also in 44, there is a reference to a survey in the United Kingdom which was quoted in the first TCR decision. It seems to us the whole purpose of the line of these submissions is to add weight to the employer's argument that those future benefits and the loss of income must be clearly referable to the income the employee was in receipt of at the time of the termination of employment.

PN17

In our submission, that places too much weight on the wage and salary aspect at the time of the termination. This is evidenced by discussion of the matter in the second TCR decision, which is in Print 32004. I will hand up an excerpt of that decision that I want to take the Bench to. I think I have photocopied the pages back to front. It starts at paragraph 135, which is on the second page.

PN18

SENIOR DEPUTY PRESIDENT WATSON: And the final page.

PN19

MR HENDERSON: The only other page. At 135, the Bench notes:

PN20

Leaving aside income maintenance issues, those areas that are covered include a trauma associated with the termination itself, loss of non-transferable benefits such as sick leave and potential costs associated with employment security and varying conditions, loss of seniority, lower job satisfaction and diminished social status.

PN21

Then the Bench deals with trauma and it notes, at paragraph 136:

PN22

The employer contended that the effects may be less severe because of the employee's expectations of job duration have declined, but there is little evidence before us of an actual decline in job duration. While trauma was an element which the Commission no doubt took into account in 1984, it may be that the relationship between length of service and trauma was not fully appreciated and not reflective of the scale which was adopted.

PN23

Then the Bench deals with non-transferable credits, and the case of the employee involved in this matter, long service leave is not an issue because of the length of service which she had and because of the way the local government long service leave regulations operate. No doubt there was substantial personal leave entitlements, but those entitlements would have - the entitlements which she had accrued in the last two years would have necessarily been quite small given the fact that she was working point 2. The Bench notes at the end of that paragraph:

PN24

We place only limited weight on this factor.

PN25

That is, the loss of personal leave entitlements. Then at paragraph 139 there is consideration of loss of job security and the change of status that is involved. It looked at:

PN26

Overall, part-time and casual employment may be less secure than fulltime employment. Further, depending on their length of service, employees may go from an environment of relative security based on the duration of their employment, to an environment in which, having no or short service with their new employer, there are vulnerable to a retrenchment in the event of further rationalisation.

PN27

Then there is paragraph 140:

PN28

The real likelihood that for some employment post-redundancy would be of a lesser quality, that the remuneration will be lower, job satisfaction and social status will be reduced.

PN29

At 141, Loss of Seniority, and then at 142:

PN30

It is also legitimate to take into account that the hardship associated with a retrenchment is likely to vary relative to the length of service with the particular employer.

PN31

Those matters, other than the non-transferable benefits, are matters which really would affect an employee in no different ways, whether they were part-time or fulltime, and the case of the employee that is before the Commission, we have a situation where that employee, over a period of 16 years, moved through a variety of jobs within the employment relationship with the respondent. We put it on the basis when the music stopped, in the terms of her overall employment relationship with the respondent, it stopped at a time which significantly detrimental to her in terms of her entitlements, detrimental to her in terms of seeking new employment. One can only assume that someone looking for a job on the basis of point 2 of a normal working arrangement, or 20 per cent of the normal working arrangement, is going to be disadvantaged looking for the level of work that she was undertaking.

PN32

She was a senior executive officer with the Council. So those matters that the Bench has taken into account in the second TCR case. They are a much broader focus than what the respondent would have the Bench consider. In that respect, decisions such as the decision in the UK that deals with similar circumstances, Barry's case, I think it is, that is referred to at paragraph 71 and onwards in the respondent's submission, can't be considered as being on all fours with the situation which we are dealing with here, because it appears in the UK, there is a great focus on the loss of salary to the job than what would seem to be the case, having regard to the decision in the TCR case.

PN33

There is a reference also in Mr Ruskin's submissions to the recent decision of the High Court in New South Wales and Amery, I think it is. Amery, yes. We don't take the Commission specifically to that, although I understand it is in the material you have been receiving. We simply say that in that matter, it seems to us that ultimately the decision, for the three-judge joint judgment in the majority, turned on the issue of were casual teachers to be compared with permanent teachers, and ultimately the decision was made that they should be compared to casual teachers. It seems to us that really the way the New South Wales Education Act operated is what determined that matter, and there doesn't seem to be much, in our submission, to be gleaned from it that deals with the issue before the Commission today one way or the other.

PN34

COMMISSIONER WHELAN: Mr Henderson, in the 2004 - it was not argued that in looking at severance payments based on years of service, that you should look at average wages or average salary - - -

PN35

MR HENDERSON: No, it doesn't seem to be mentioned. I can't explain why that would be, but clearly looking at the circumstances we have here, it is clearly a significant issue. One can only speculate that it is one which becomes more significant, given the recent decision of the Commission in relation to parental leave, to extend access to part-time employment. Women employees, in particular, are coming back to work on a part-time arrangement after long service as a fulltime employee are clearly placing themselves in some risk if the sort of argument we are advancing in these proceedings is unsuccessful.

PN36

COMMISSIONER WHELAN: But obviously if they come back part-time and then they go fulltime and the week after they get made redundant, they get paid out at the fulltime salary, don't they?

PN37

MR HENDERSON: They do. They do. It is a questioning of timing, but - - -

PN38

COMMISSIONER WHELAN: It is a question of timing, yes.

PN39

MR HENDERSON: It is a Tatts Lotto timing, if I can put it that way, because it is not something that anyone could predict.

PN40

SENIOR DEPUTY PRESIDENT WATSON: Does that take it outside the scope of discrimination, in that there is a detrimental effect in relation to the class of employees? I can understand the detrimental effect for Ms Bartlett, but that arises out of her particular circumstances and could equally work to the advantage of that class of female employees associated with their family responsibilities.

PN41

MR HENDERSON: That is the point that the respondent makes in their submissions, your Honour, I think at paragraph 48. Sorry, no. Paragraph 70. That may not be it either. I know it's in there somewhere.

PN42

MR RUSKIN: It's in 49.

PN43

MR HENDERSON: 49, sorry. Yes. That is the point made there. In our submission, because that advantages the employee, it doesn't fall within the operation of the Sex Discrimination Act which only deals with circumstances in which the employee is treated less favourably. So it becomes a windfall, if you like, or an advantage, but it's not anything that would attract the operation of any Act such as the Sex Discrimination Act.

PN44

COMMISSIONER WHELAN: To attract the operation of the Sex Discrimination Act, you need to have a class of employees, in relation to indirect discrimination, anyway. You need to have a class of employees. Are you saying the class of employees are those who, as a quirk of timing, happen to have worked fulltime and then worked part-time, and happened to be part-time at the time that the employment was terminated?

PN45

MR HENDERSON: That would be the class. We rely then - - -

PN46

COMMISSIONER WHELAN: What is your evidence that such a class exists here?

PN47

MR HENDERSON: We would simply rely on the approach taken by Commissioner Evatt, and then subsequently in Escobar v Rainbow Printing which is under tab 3 in the ASU exhibits, where the Federal Magistrate in that case, Commissioner Evatt, in the earlier case, simply took judicial notice that the main reason for part-time employment was for family responsibilities.

PN48

COMMISSIONER WHELAN: Yes, but you are not talking about people who are part-time employees as a class, is the class of part-time employees is more likely to be weighted towards women than towards men. You are talking about a much narrower class. You are talking about a class of people who were fulltime, then go part-time, and have their employment terminated at the time that they are working part-time. That is a much narrower class than the class of part-time employees.

PN49

MR HENDERSON: A narrower class, but a class which would exist for the same reasons, we would submit, as - - -

PN50

COMMISSIONER WHELAN: Yes, okay.

PN51

MR HENDERSON: There are observations by Kirby J - - -

PN52

COMMISSIONER WHELAN: I'm sorry, I suppose the question I am putting to you is, can we assume that that class exists and that that class is dominated by women?

PN53

MR HENDERSON: Well, we would submit - - -

PN54

COMMISSIONER WHELAN: That very specific class that you were talking about.

PN55

MR HENDERSON: We would submit that you could, Commissioner, because if one accepts the approach taken in Escobar and the early approach by Commissioner Evatt, in taking judicial notice of those reasons, then really that can extend to the sort of proposition that we are advancing. As I say, there are comments by Kirby J along the same lines, in dissent of course, in the New South Wales and Avery, where his Honour makes some observations about why the employees in this case are casual employees. So in our submission, we simply say it's open to make that finding. It doesn't go against the earlier findings, but it doesn't expand it beyond what was the reasonable breach. They are the main issues I wanted to raise in relation to the submissions, if the Commission pleases.

PN56

SENIOR DEPUTY PRESIDENT WATSON: Thank you, Mr Henderson. Yes, Mr Ruskin?

PN57

MR RUSKIN: Thank you, your Honour. Shall I hand up the authorities?

PN58

SENIOR DEPUTY PRESIDENT WATSON: You may as well. It will save you carrying them back to the office.

PN59

MR RUSKIN: In relation to the submissions that we filed which are R1, there are three changes I wish to make in those submissions, which are mostly typographical. In paragraph 13 on the third line, it should be "pursues", that should be a "u" in the word. "Purses" should be "pursues". In paragraph 41, third line, the TCR decision should be 1984, not 2985. In paragraph 48, there is a "not" missing. In the last sentence in paragraph 48 it should read:

PN60

Further, for non-retirees, as the purpose of redundancy ...(reads)... then the employee such as Ms Bartlett should not earn more or less for a week's pay than immediately prior to the appointment.

PN61

I just want to deal with the points that Mr Henderson raises. The issue about whether the ASU is a part of the agreement of not is not a matter which was dealt with by my client at first instance and we don't deal with it in our appeal. What we do say, and which I reemphasise, is that it was not determinative of the decision of the Commission in this matter. In the decision, he is equivocal about his view about whether the ASU is a party and it seems to us goes on to deal with the issues before him as if the ASU were a party. He does make a sort of finding, but I don't think it bears on the appeal at all. Furthermore, it is not a relevant point in that this agreement expires on 30 June this year. I am instructed that there is an agreement being negotiated. So I don't think it's a point that has any bearing on this appeal.

PN62

COMMISSIONER WHELAN: They might fix up the wording next time, do you think?

PN63

MR RUSKIN: I think they might do that, Commissioner.

PN64

SENIOR DEPUTY PRESIDENT WATSON: And they may remove definition with no utility.

PN65

MR RUSKIN: They might do all sorts of things. The issue about the TCR decision which Mr Henderson raises and refers to paragraphs 135 to 137 of the TCR 2004 decision. That is in tab 18, I won't take you to it, you have the relevant extract. But just on that point, let me say that it does deal with issues of non-transferable credits, et cetera, but it is noteworthy that the decision doesn't change in a material way the meaning of the word "pay". It extends the benefits, the number of weeks that you obtain when you are retrenched. So what we say is that the TCR decision and that part of it that we refer to about the hardship arising from termination of employment on the grounds of redundancy, is dealt with in that pay should be maintained.

PN66

There should be an income that you can receive representing redundancy pay post your employment based on the salary you were on when your employment ended. That part of the decision that talks about loss of transferable credits, et cetera, deals with the number of weeks that you should receive upon your employment ending. So, the fact that there is a discussion in the decision about non-transferable credits, et cetera, and trauma, is not a matter that bears on the meaning of weeks' pay, which has not changed for a generation, we say. The other point I wish to make is about the issue before this Commission. As I understand Mr Henderson's submission, really the focus of his submission is on ambiguity and uncertainty.

PN67

He says the 170LW was pursued because of the tentative finding of the Commission about whether the union was a party. I don't know if he is dropping his 170LW arguments otherwise, but on the issue of ambiguity, uncertainty, the submissions today concern what he or the ASU thinks it should be, not what it is. It is interesting to articulate what pay should be, why it would be fair if pay took account of part-time employment so that you would get a pro rata payment calculated on your fractions of your employment, but if we deal with 170MD, we are dealing with ambiguity and uncertainty, what the parties intended. On that score, there is not a shred of evidence that the parties ever intended that pay means anything other than what its ordinary and natural meaning is, and its derivation from the TCR decisions.

PN68

So to the extent that one can articulate why it should be a certain way isn't really to the point. Thirdly, the House of Lords decision is absolutely on point. There isn't a discrimination decision that we can find that deals with this issue, but the House of Lords decision, dealing with similar legislation and reflecting the view of the Court of Appeal from where the appeal came, says that redundancy pay isn't discriminatory in relation to part-time employees, indirectly discriminatory, if it provides for redundancy pay calculated on the rate that you were on at the time your employment ended. In particular, I think the quote was that decision in paragraph 77 of my decisions, well-deals with this point, and it really is very much like our own spin:

PN69

The emphasis is upon final salary because the main purpose of redundancy payment is to cushion the employee against the hardship of a sudden cessation of his salary, whatever it may have been. On the other hand, the inclusion of past years of service and the calculation recognises that the employer may feel a greater duty to provide such a cushion to those who have worked for him for longer time.

PN70

That is about the dual purpose of redundancy pay. So it is absolutely pertinent. The other point is that, yes, when it comes to looking at ambiguity or uncertainty, the Commission has powers to look - provisions of the Act that enable it to make its decisions, and section 93 is one of those. But firstly, section 93 talks about the principles of the Sex Discrimination Act, the principles to have regard to. If the parties didn't intend that pay means other than what it normally means, then one can't change the meaning of the agreement because it may have a discriminatory effect, if that was never the intention of the parties. As I say in my submissions, perhaps rather crudely, if there was a clause in the agreement that got past the Commission and was certain, but discriminatory, you can't use 170MD to change it.

PN71

Now, in our submission, it is not discriminatory, this provision, but most importantly, there is no uncertainty or ambiguity. If there were an uncertainty or ambiguity that required some change, why on earth would one change the meaning of the word pay to mean the interpretation that the ASU puts on it? There is no evidence that anybody intended that pay means taking into account fractions of employment and paying people on current pay, bearing in mind for fractions of employment going back during their periods of service. It doesn't. There's no evidence that that is what was intended. Maybe pay might mean averaging wages over the period of employment, which would not be in the interests of employees, but it's the word "pay", it's not the word "fraction".

PN72

One needs a much more specific - in order to change the meaning of the word pay one would need to have a different definition to pay as in one such decision which I have referred to where an award does give a definition of pay which says you average it over the past 12 months of employment. So if there is an ambiguity and uncertainty, there's nothing to suggest the interpretation of it should be the way that the ASU puts it. Finally, this agreement is expiring on 30 June, and that is another consideration.

PN73

Another point which I will finish on is that the way that the union wishes to place the meaning of redundancy pay can have a discriminatory effect on people, perhaps with family responsibilities, perhaps there will be less of those than others, who might have been working for short - part-time, and might increase their part-time hours and then have their employment terminated, and they are going to receive a number of weeks' pay, not based on the salary they were on at the time their employment ended, but on a lower salary which is not the purpose for which redundancy pay is being set because their salary was lower because they were on part-time employment, or lesser hours prior to increasing it.

PN74

For those reasons, we say that there is no ambiguity, uncertainty. There is no interpretation on this agreement that could otherwise change the meaning of the word pay, particularly the definition in clause 5.9 of appendix 2 which seeks to define it, particularly because it derives from the TCR decisions. They are the only points I wish to raise in these submissions, if it please the Commission.

PN75

SENIOR DEPUTY PRESIDENT WATSON: Thank you. Mr Henderson, anything further?

PN76

MR HENDERSON: Your Honour, only I forgot to hand up a copy of a decision I have relied on, CoInvest, a decision of the Full Bench, Ross VP, Ives DP and Commissioner Blair, which I hand up now, if the Commission pleases. In that matter, we would simply rely on paragraph 48 in relation to the issue of how the Commission's powers to - or the jurisdiction to vary an agreement under section 170MD(6) arises. And 47, noting that that's a jurisdictional fact, and paragraph 58, noting that such a circumstance could give rise to a - because it was a jurisdictional error, that in that case leave to appeal was granted and we'd submit the same would apply here. If the Commission pleases.

PN77

SENIOR DEPUTY PRESIDENT WATSON: Yes. We will reserve our decision in the appeal and now adjourn.

<ADJOURNED INDEFINITELY [10.43AM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #A1 - WRITTEN SUBMISSIONS OF ASU PN5
EXHIBIT #R1 - WRITTEN SUBMISSIONS OF MORELAND CITY COUNCIL PN5