C2015/6236, Transcript of Proceedings [2015] FWCTrans 688 (27 November 2015)

TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 1052732

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SENIOR DEPUTY PRESIDENT HAMBERGER

C2015/6236

s.739 - Application to deal with a dispute

Essential Energy

and

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; Australian Municipal, Administrative, Clerical and Services Union; Association of Professional Engineers, Scientists and Managers, Australia, The

(C2015/6236)

Essential Energy Enterprise Agreement 2013

Sydney

10.04 AM, MONDAY, 16 NOVEMBER 2015

PN1

THE SENIOR DEPUTY PRESIDENT: Yes, can I have the appearances please.

PN2

MS A DEBOOS: Thank you, your Honour, Deboos, initial A, solicitor appearing with Ms BEVAN, initial R for the applicant. I believe you've already granted me permission to appear but if that's not recorded somewhere, I seek permission to appear.

PN3

THE SENIOR DEPUTY PRESIDENT: Let me deal with the issue of permissions now, just to put it on the record. I grant both parties permission to be represented legally on the basis that I think it will assist me in dealing with the matter in a more efficient manner.

PN4

MR A NEILSON: Your Honour, my name is Neilson, and with permission being granted, I appear for the respondent union.

PN5

Your Honour, perhaps before Ms Deboos starts, I actually have an application to make. Your Honour, in accordance with the directions, my client has filed submissions on Friday afternoon and I'm not sure if your Honour's had a chance to read those yet. Your Honour will see that in the submissions there is, beginning at paragraph 5, there's a heading that determination of the matter is premature. Your Honour would be aware, and perhaps before I do, can I just indicate or hand up to the Commission, a copy of an order that currently exists as between the parties.

PN6

Your Honour would be aware there was an application filed by my respective clients as a consequence of a decision or a direction that was made by Essential Energy to essentially send people home. My clients allege that that was in contravention of the relevant redundancy policy and your Honour made a decision that at least it was reasonably arguable and also balance of convenience favoured the making of an order. You made that order on 16 October 2015.

PN7

You will see from the terms of that order that I've just handed up that the first obligation is that they be restrained from giving any effect to any direction that employees not attend for work. The third order that is more relevant is that the respondent is placed under an obligation to place employees in a meaningful work placement as defined in the Management of Surplus Employees' Policy.

PN8

Your Honour, that ended your Honour's involvement in that matter and the matter was subsequently referred to Commissioner Johns. Those proceedings are listed for hearing on 18 December where the Commissioner, as we set out in paragraph 6 of our submissions will be required to determine a question as to whether or not there is an obligation under the relevant policy to enable Essential to issue a direction that employees not return for work.

PN9

Our primary submission your Honour, is that given that order and given those proceedings it is necessary for this question to be referred to Commissioner Johns because of the necessary interaction that exists between the ability or the requirement we say that exists under the policy to make available a meaningful work placement and the application that is made in these proceedings that the Essential is entitled to direct employees to take annual leave.

PN10

We set out in the submissions, your Honour, various scenarios that the Commission might have to consider in these proceedings and they are sort of set out at paragraph 9 through to paragraph 14. You'll see at paragraph 12 that a relevant question might be whether a direction to take leave can ever be reconciled with an obligation to provide a meaningful work placement? Can the requirement to take leave be reconciled with the order that's actually been made?

PN11

THE SENIOR DEPUTY PRESIDENT: Even though they're both in the same document?

PN12

MR NEILSON: Even though they're both in the same document and the issue here, your Honour, and this is why we say it unfortunately has to go before Commissioner Johns is because it will require a consideration of both requirements. Your Honour, having made the order, and having decided to refer that element of the proceedings to Commissioner Johns, in some respects he's constrained by what's already happened in considering the entire context that exists in this dispute. So we say that it's actually more efficient for the matter to be decided in whole by Commissioner Johns.

PN13

THE SENIOR DEPUTY PRESIDENT: Where is that matter up to before Commissioner Johns?

PN14

MR NEILSON: It's listed for hearing on 18 December, your Honour. There's a direction made for my client to file its material today and subsequent directions for Essential to file its material. I appreciate that it is listed for 18 December which is some way off. Essential, on its own case in the policy that it has promulgated, at least with respect to the principles that it's set out for how it's going to direct employees to take leave, says that it won't actually issue any direction without giving employees a period of 28 days' notice.

PN15

So even if a decision was issued today, which is probably unlikely subject to your Honour's view, any such direction would take some time for that to be dealt with in accordance with the principles that Essential have set out because they say that employees will have to be identified, those employees will have to have a discussion about a leave plan being formulated. That leave plan will be given to the employees, they'll have a couple of days' notice to object to that leave plan and then the 28 days' notice period will kick in.

PN16

It's very unlikely that even if Essential is successful in these proceedings, that the outcome that it seeks will be in place prior to the Commissioner Johns proceedings. We say that given the circumstances, it's more efficient and would enable the Commission to have a full consideration of the issues for the matter being remitted to Commissioner Johns. Now we appreciate that's probably an unsatisfactory scenario to be placed into, but it is the better scenario with respect to this matter.

PN17

THE SENIOR DEPUTY PRESIDENT: Actually, I don't have with me the Management of Surplus Employees' Policy. That's presumably the key. I had it, but I don't have it any more. Okay great, thanks.

PN18

MR NEILSON: My friend has helpfully provided a tender bundle.

PN19

THE SENIOR DEPUTY PRESIDENT: Great, thanks. If I could just have that before me while I - - -

PN20

MS DEBOOS: It's tab 4.

PN21

MR NEILSON: Paragraph 3, paragraph 4 are the relevant sections, as we would see them, and also paragraph 3 under the heading of Purpose.

PN22

THE SENIOR DEPUTY PRESIDENT: It would be odd to think that parties would agree or indeed the employer would develop a policy which has two paragraphs, one after the other, that sort of fundamentally are at odds with each other. You would normally try and read - if there was any intention, you would tend to think that the appropriate approach would be to assume there would be a way of reconciling the two. It would be pretty odd to say that, because of the requirement, for example, to put somebody in a meaningful work placement, the second sentence in the next paragraph doesn't have any work to do. I'm presuming you're not saying that are you?

PN23

MR NEILSON: No, your Honour, and we recognise that my friend has an application to make and certainly has, but in interpreting the policy and this is a subject I've also dealt with in the submissions, one needs to have regard to the purpose of the policy which we point out in the third paragraph under the heading of Purpose. The employees are given opportunities and assistance to secure an acceptable alternative position.

PN24

THE SENIOR DEPUTY PRESIDENT: Sure, but I mean, it's got to be given - you wouldn't disagree would you that the sentence that we're really dealing with here, "Where an employee lacks redeployment, at its discretion the company may require employees to take all accrued leave, in lieu, annual and long service leave et cetera" must have some work to do.

PN25

MR NEILSON: Well, there's a question as to whether it does, your Honour, because of the requirement that it has to be in accordance - - -

PN26

THE SENIOR DEPUTY PRESIDENT: It's going to be pretty hard to persuade me that somebody would have something in an agreement, or in a policy of an incorporated agreement that just simply doesn't have any work to do.

PN27

MR NEILSON: It has to be in accordance with the enterprise agreement notice provisions, your Honour.

PN28

THE SENIOR DEPUTY PRESIDENT: Okay, I understand that's a separate argument, but there is a problem with that argument I have to say as well, from my point of view. But to suggest that well because you've got to have a meaningful work placement - well because you've got to place the employee in a meaningful work placement, you can't require - I mean, I'm not quite sure what you're trying to argue.

PN29

MR NEILSON: This is the issue, your Honour, insofar as that what we're saying is that we have the proceedings that have been determined before Johns where this issue is going to be firmly debated as to what is the obligation.

PN30

THE SENIOR DEPUTY PRESIDENT: Right.

PN31

MR NEILSON: Now we've got this question as to how it reconciles with an annual leave question. What we're saying is that it's better to be dealt with as one, where they both can be dealt with, rather than having the paragraph 4 dealt with in these proceedings and then the paragraph 3 dealt with in those proceedings, where Commissioner Johns, in dealing with paragraph 3 no doubt, is going to have to have regard to paragraph 4 in the outcome in these proceedings.

PN32

What we're saying, is that ordinarily it would be better to have it dealt with by one and that would be the most efficient course because even on Essential's case, what it proposes to do is not, at least as we understand it, going to be in place before the Commissioner John's proceedings are heard and determined and Commissioner Johns has given a firm indication to the parties, that the decision will be issued prior to Christmas.

PN33

An outcome will be, at least on the indications dealt with by then, and even on Essential's case, given its principles, it's not going to be able to do what it wants to do prior to that determination being made. So there's no prejudice in our respectful submission from the matter being remitted to Commissioner Johns. In fact, it would be a more efficient use of the Commission's resources to do that. Because what we potentially might have is that your Honour might issue a decision in relation to paragraph 4 which one side doesn't like, which subsequently appeals that decision which then gets up before the Full Bench which is only considering paragraph 4. Paragraph 3 is being dealt with by Commissioner Johns. In the circumstances as I've probably said now ad nauseum, there is no prejudice to the respondent or to Essential.

PN34

THE SENIOR DEPUTY PRESIDENT: Well, Ms Deboos what do you say in response?

PN35

MS DEBOOS: We say they are separate and distinct issues. The subject is separate dispute notifications and can be dealt with separately and determined separately. I have to say at the outset that it's disappointing that this issue is raised as of Friday afternoon. I appreciate my friend only became involved in this perhaps the day before that, but this matter has been the subject of conciliation, the Johns proceedings, if you can call it that. It's been the subject of conciliation and directions and it's only very lately that an attempt has been made to draw the two issues together.

PN36

Leaving that aside, the task that Commissioner Johns has before him is to determine the meaning of the paragraph above the paragraph we're looking at today. We say that there's no disharmony and no contradiction between those two particular paragraphs. Whichever way the decisions fall, if the proceedings are to remain separate, the outcomes can live in harmony with each other. We may indeed be talking about different types of redeployees. In this proceeding, we're only talking about redeployees according to our client's leave principles that have particular excessive leave accruals.

PN37

THE SENIOR DEPUTY PRESIDENT: Presumably though, you would say they were a subset though?

PN38

MS DEBOOS: Yes.

PN39

THE SENIOR DEPUTY PRESIDENT: When you say different, you mean one is a subset of the other.

PN40

MS DEBOOS: They're all redeployees, yes, that's right. So the Essential issue in the Johns proceedings is whether Essential Energy can direct employees where it asserts no meaningful work placement is available, not to return to work. That's a question for determination that he is looking at. It will not consider in any way, nor does it need to, whether or not these particular employees, be they placed in a meaningful work placement or not, could be directed to take leave. It is perfectly feasible that during the course of a meaningful work placement then a redeployee is also directed to take excessive accruals of annual leave or long service leave to then return to the workplace and return to the meaningful work placement in which they've been allocated or placed.

PN41

We say there's no issue with compliance with your interim order. Your interim order is in respect of a specific direction. The order that my friend drew your attention to is A3, that the respondent is to place the employees, the subject of the direction and the direction was the direction given on 13 October 2015. We say there is no issue with complying with that direction and that at the same time, giving perhaps the same people, perhaps not, a direction to take accrued annual leave or long service leave in accordance with the policy.

PN42

We say that your Honour is more than aware of the circumstances surrounding Essential Energy at this particular time. It's wrong to say that there is no prejudice to our client in a further delay. We conceded that Commissioner Johns has given a firm indication of when he will hand down his decision and I may be being unfair but I expect that you're not going to hand down a decision today. So we do concede that it would be 28 days from whenever you handed down your decision if, in fact, we were successful, before we could direct these redeployees to take leave, but it would still be a delay, when compared to 28 days after Commissioner Johns.

PN43

THE SENIOR DEPUTY PRESIDENT: He might get in before me.

PN44

MS DEBOOS: Provided that he received your decision before Christmas, of course. But assuming that would be the case, there would still certainly be a delay on your client's part. We say that this is a dispute that our client filed. It was the subject of extensive consultation between the parties over a period of months. It's also been the subject of a conciliation conference and on that basis we're entitled to have it heard in accordance with the directions that you issued from the conciliation conference.

PN45

THE SENIOR DEPUTY PRESIDENT: Did you want to say anything in response Mr Neilson?

PN46

MR NEILSON: No, perhaps just one brief point. I don't think it's fair to say that the direction will be made on 28 days after the decision has been made. The policy or the principles that have been set out and attached to the application make it quite clear that there is a period of discussion that needs to take place and I think it's referred to at least five days for that discussion to take place and there's various other things that need to be done. I think in fairness, as I understood it, there was at least a concession that even if it is successful, it won't be implemented before the Johns proceedings are determined.

PN47

THE SENIOR DEPUTY PRESIDENT: I'm not going to accede to your application to refer the matter to Commissioner Johns. I think the matters can be dealt with as separate and distinct. There might be some limited relationship between the two matters, everything's linked to everything else ultimately, but I think I can deal with this issue quite separately from the matter before Commissioner Johns. So I think we should proceed on that basis.

PN48

MS DEBOOS: Thank you, your Honour. I have a number of things to hand up to start with. I've already given you a copy of the printed bundle, apologies for not providing that earlier, we only agreed that late last week when my friend received his instructions. Those documents are agreed.

PN49

I may also, before I start, I'll hand you a copy of our case law and lastly some further submissions in reply. We also rely on an outline of submissions that we filed 30 October 2015.

PN50

THE SENIOR DEPUTY PRESIDENT: Yes. So I have had the chance to read all those submissions, well I had a chance to read the submissions that you already filed, not the other ones.

PN51

MS DEBOOS: As your Honour is aware, this is a section 739 application to resolve a dispute in accordance with the dispute resolution procedure. The question we say here is quite a narrow one. It is whether Essential Energy's proposal to direct redeployees to take accrued annual leave and long service leave in accordance with the management of surplus employees' policy dated 20 November 2013.

PN52

If you look at your tender bundle under tab 5, the letter to Graham Kelly from Essential Energy. Immediately behind that is a document called Principles Redeployee Leave Management. That document outlines the proposed scheme that our client would like to put in place.

PN53

THE SENIOR DEPUTY PRESIDENT: Are you asking me to make a determination that these principles are consistent with the management surplus policies, or you're not asking me to go that far? I don't want there to be another dispute if I do vote in your favour that there was some other dispute.

PN54

MS DEBOOS: Absolutely, no, the orders that we are asking you to make are as follows. That the terms of clause 3.7 and the management of Surplus Employees Policy permit Essential Energy to require redeployees to take accrued annual leave and long service leave, excluding pro rata accruals provided that it gives such redeployees the notice of this requirement as follows.

PN55

Firstly, for annual leave, two weeks - and I'll take your Honour through why that is. Secondly, for long service leave, one month. I should make it clear because that's what we say is in accordance with the enterprise agreement notice periods. The redeployee leave management principles are in fact a policy which we say complies, but is slightly different to what would be the minimum we say is required under the policy and is more generous.

PN56

I'm not sure I need to go into great detail as to the reasons why Essential Energy could like to implement this scheme, but suffice to say that it is dealing with a large number of redeployees, such a number that it has not had to manage in the past and one of the areas that it would like to look at in order to manage the redeployment pool at the moment is the ability to require these people, where they have excessive leave accruals, to take such leave in accordance with the policy. There is no contest that this is not something that has been implemented in the past. It's a line that had appeared, or a document that has appeared in the enterprise agreement only from this enterprise agreement, but it has not been used by Essential Energy until this recent dispute.

PN57

Our primary submission in this matter is that there is no ambiguity in the relevant terms of the policy and as a consequence, the words should be given their ordinary meaning and any extrinsic evidence should not be admitted. In the alternative, if the Commission decides that the admission of extrinsic evidence would assist in determining whether there is an ambiguity, then the evidence cannot be admitted to contradict the plain meaning of the words. That is, we say that the Commission cannot make a finding which is contrary to the term itself, which is reflected in section 739(5) of the Act.

PN58

We say that the policy is in very clear and unambiguous terms. It states:

PN59

A redeployee may request to be considered for a voluntary redundancy until they have been placed in a suitable role. Where an employee elects redeployment, at its discretion, the company may require an employee to take all accrued leave in lieu, annual and long service leave, excluding pro rata accruals in accordance with the enterprise agreement notice periods (where applicable).

PN60

I'll take your Honour through what we say that last part of the sentence means in a moment because I think that's where the area of greatest contest actually is.

PN61

I think your Honour is well aware that clause 3.7 of the Essential Energy agreement states that the redundancy policy for the term of this agreement is the Essential Energy Redundancy Policy Management of Surplus Employees dated 20 November 2013 and that's the document to which we are referring to today.

PN62

As I said, this policy was adopted during negotiations for this current agreement and was circulated to employees during the access period and during the voting process. Included in the tender bundle are the explanation documents and the form 17 which we've provided to the Fair Work Commission in order to approve the agreement and you'll see from there, I won't take you to them now, but you'll see from there that the employee received both the enterprise agreement and the management of surplus employees policy as part of the voting process. So, did receive both documents in order to be fully educated as to the nature of the agreement they were agreeing to.

PN63

We say that the principles relating to the interpretation of industrial agreements are also relevant to the interpretation of the policy due to the direct referral to the policy in the enterprise agreement. I know you would be familiar with these, but I think, for the purposes of today, I would like to go through them. As outlined in Golden Cockrell which I've handed up to you, there are a number of principles that the Commission should pay attention to in order to interpret a provision in an enterprise agreement.

PN64

Firstly, construction begins with a consideration of the ordinary meaning of the words and as a first step it is necessary to determine whether an agreement has a plain meaning or contains an ambiguity. However, regard may be had to evidence of surrounding circumstances in order to assist in determining whether an ambiguity exists. If an agreement has a plain meaning, which we say it does, evidence of the surrounding circumstances will not be admitted to contradict the pain language of the agreement. However, if the language is ambiguous or susceptible to more than one meaning, then evidence of the surrounding circumstances will be admissible to aid interpretation.

PN65

THE SENIOR DEPUTY PRESIDENT: You're probably going to come to this, there's an argument, I suppose, that if you took back the notice periods, the notice periods are expressed about the employee giving notice.

PN66

MS DEBOOS: They are.

PN67

THE SENIOR DEPUTY PRESIDENT: So, whereas you're sort of interpreting, in the circumstances of the application of the policy, the employer has to allow that notice period.

PN68

MS DEBOOS: Yes.

PN69

THE SENIOR DEPUTY PRESIDENT: Arguably, you could also read it to say, or could you read it to say, well, because it says where applicable. You could argue, couldn't you, that there are no notice periods applicable because there are actually no notice periods for the employer, in which case, arguably, there's an ambiguity. You don't necessarily have to come to this now, but I mean that's just something I need you to address that.

PN70

MS DEBOOS: Yes, I absolutely will address that. I think my friend will argue that as well. But we say that where applicable means where applicable to annual leave or long service leave, because they actually have different notice periods under the agreement and one is shorter than the other.

PN71

We say that the only logical interpretation which is available, given the clear and unambiguous terms at the beginning of the sentence, is that the notice periods there refer to the company having to comply with that length of time in order to take the benefit of directing the employee to take annual leave.

PN72

This is a relevant point because, as you will see when I take you to some of the correspondence in the tender bundle. Admissible evidence of surrounding circumstances is evidence only of the objective framework of fact and can include evidence of prime negotiations to the extent that negotiations tend to establish objective background facts known to all the parties, notorious facts of which knowledge is to be presumed, and evidence of matters in common contemplation and constituting a common assumption.

PN73

The resolution of a dispute of construction of an agreement would turn on the language of the agreement, understood having regard to its context and purpose. We say that its context might appear from the text of the agreement viewed as a whole, the dispute of provisions place and arrangement in the agreement, and this is particularly important here and I'll come back to that.

PN74

Also where a common intention of the parties is sought to be identified, regard is not to be had to subjective intentions or expectations of the parties. A common intention must be identified objectively by reference to that which a reasonable person would understand by the language the parties have used to express their agreement. Lastly, that the task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by the parties.

PN75

In terms of the plain meaning of the document, we say that the relevant sentence which is "where an employee elects redeployment at its discretion, the company may require an employee to take all accrued leave" is in clear and unambiguous terms. No employee reading this provision could be left with any doubt that the policy contemplated the employer having the ability to direct relevant employees, so not all employees, but the relevant employees to which this policy applies to take accrued leave during redeployment.

PN76

But there are two conditions or handbrakes on this right which are drafted into the policy. First, the direction must exclude pro rata accruals. Second, the directions must be in accordance with the enterprise agreement notice periods where applicable.

PN77

Reading into this clause the direction requires employee consent or agreement, flies in the face of the plain words of the sentence. If in fact, enterprise agreement notice periods were read to mean leave could only be taken in accordance with these notice periods by agreement, then the rest of the sentence has no work to do and is plainly contradicted by that interpretation.

PN78

The agreement in terms of the policy itself, we say that it augments, amends or varies the terms and conditions of the enterprise agreement for one class of employees only, which is redeployees. So they are the only employees who are subject to the policy. The policy recognises, in the absence of involuntary redundancy, as your Honour is well aware, the policy recognises that there must a separate set of conditions which apply to these class of employees who no longer hold their substantive position because it's been abolished.

PN79

The agreement does not contain any terms to the effect that should the terms of the agreement and the policy be contradictory, that the terms of the agreement will prevail. On the contrary, the reference to the policy in the agreement creates a set of rights for both the applicant and the redeployees which are different to and distinct from the ordinary terms and conditions of employment which are detailed in the agreement.

PN80

Once an employee is a redeployee, the effect of clause 3.6 which is the salary maintenance clause, and 3.7, the redundancy clause, is that their ongoing employment is subject to those policies.

PN81

We say that in order for the relevant provision of that policy to have any work to do at all, the requirement in the policy for the direction to take leave in accordance with notice periods, is a clear reference to the notice periods outlined in 4.1.3, which is the annual leave notice period. I can take you to tab 3 is the enterprise agreement which is page 39 of 89 behind tab 3.

PN82

4.1.3 says it gives a notice period of two weeks prior to the proposed commencement date. Obviously with a different set of surrounding conditions, but we say that where applicable, means that when we're directing redeployees to take annual leave, that is the applicable notice period. Similarly, 4.6.5 deals with the long service leave which again gives a notice of leave provision on page 44, which says one month's notice of taking the long service leave.

PN83

In accordance with the leave principles which I recognise that your Honour is not being asked to make any determination in relation to today, but it's worthwhile to note that the applicant has agreed to provide redeployees with 28 days' notice of the direction to take annual leave and long service leave. We say that this is above the requirement of the agreement in relation to annual leave and consistent with the requirements, although I do concede that 28 days is not one month.

PN84

THE SENIOR DEPUTY PRESIDENT: I suppose 28 days and one month - I don't want to get too cute about it, but most months have more than 28 days in them.

PN85

MS DEBOOS: I would certainly proffer that if we were successful in this application, that that should be changed to one month's notice in order to be consistent. I think it's fair to say our client overlooked that particular inconsistency.

PN86

We say that if we're talking about context and purpose which does go to the plain meaning, we say that the context and purpose of the provision in question is clear. It sits within the policy and the policy is designed to comprehensively deal with the management of those employees who have been made redundant or declared surplus to requirements.

PN87

The purpose of the provision is to provide the company with the discretion to manage the activities, including the leave accruals of those redeployees whose role had been abolished. This purpose has a clear industrial logic and it at home in the policy amongst the other arrangements applying to redeployees.

PN88

In terms of extrinsic evidence, which there will be submissions made by my friend, we say as a primary submission, it should not be admitted, because no ambiguity in the words exists. However, if the Commission is minded to consider extrinsic evidence, then that evidence cannot contradict the plain meanings of the words as I've already said and that even if the Commission did decide there was an ambiguity, that evidence does not, of itself, establish and cannot establish a different meaning.

PN89

Leaving aside the agreement, the policy and the enterprise agreement approval document, the tender bundle that I've handed up which is agreed with the respondents, contains the course of correspondence between the parties prior to making this enterprise agreement, well prior to concluding negotiations between the bargaining representatives to this agreement in late November and early December 2013.

PN90

There are some relevant documents that I'd like to take you to. The first one is behind tab 6. This is a letter from Gary Humphries from Central Energy dated 21 November 2013. It's to the three relevant union secretaries. It does talk about a number of matters in relation to the concluding the negotiations for this enterprise agreement but relevantly I want to point you to a couple of things.

PN91

Importantly, it attaches a policy which is over the page. A policy that is in very much the same shape that ended up being attached to the current enterprise agreement. It's a policy that actually comes from Endeavour Energy. You will see the insignia at the top there. I wanted to take you to the relevant equivalent paragraph in this policy because it does differ.

PN92

So the fourth paragraph down it says,

PN93

Where an employee elects redeployment, the employee relinquishes their entitlement to a voluntary redundancy payment. Likewise at its discretion, the company may require an employee to take all accrued leave in lieu

PN94

and the rest is the same.

PN95

But your Honour will note that the first sentence of that paragraph is very different to what ended up being in the Management of Surplus Employees' Policy that we're talking about today. The first sentence in the fourth paragraph of the policy that ended up being attached, says instead,

PN96

A redeployee may request to be considered for a voluntary redundancy until they have been placed in a suitable role.

PN97

I point that out because, as you will see as the letters go through, that particular sentence in that paragraph was the subject of some considerable discussion in the correspondence between the parties and in our submission appears to be the main point in issue between them.

PN98

The second letter I take you to is behind tab 7. That's a letter dated 25 November 2013 from Graham Kelly from the USU to Vince Graham who raises two concerns relevantly in relation to the policy. It raises a concern about what I'll call the voluntary redundancy issue, so that first sentence of the policy. But importantly for today's proceedings, it also raises a direct concern about the provision that we're talking about today. He says on the second page, he raises contradictory issues between the policy and the agreement.

PN99

On the second page, it's subparagraph (1), he says

PN100

Will an employee be forced to take accumulated leave and if so, in what circumstances? This statement contradicts the Essential Energy agreement obligations with respect to who can notify taking leave, to the extent that the USU would say that the agreement provisions will apply on taking leave.

PN101

That's where Mr Kelly asks the direct question of Mr Graham as to how this policy would operate.

PN102

Then behind tab 8 Mr Butler from the ETU asks the question in very similar terms. He says in the third paragraph from the bottom,

PN103

The second issue is in relation to the contradiction of the present redeployment policy and the proposed redundancy policy and enterprise agreement where an employee will be required, at the company's discretion to use their existing leave and that once an offer of redeployment is elected, then the employee relinquishes their entitlement.

PN104

THE SENIOR DEPUTY PRESIDENT: That's the two issues, isn't it?

PN105

MS DEBOOS: Yes, he's bound the issues together, but he certainly still asks the same question.

PN106

THE SENIOR DEPUTY PRESIDENT: Yes, it's all in one sentence.

PN107

MS DEBOOS: He's bound the issues together, but he certainly still asks the same question.

PN108

And I'm sorry to take you to all of these, but there are a lot of letters written and if you don't go to each you kind of can't understand the process that was involved.

PN109

Behind tab 9 is Mr Graham's response. It's addressed to Graham Kelly, but is copied into Mr Butler and APESMA as well. In that letter Mr Graham addresses a number of issues and I think it attempts to clarify what were the alleged inconsistencies between the proposed agreement and the policy. He asserts in relation to both issues that there is no inconsistency and in respect of the provision what he says is in the third paragraph from the top,

PN110

Your first question is whether an employee will be forced to take accumulated leave and if so, in what circumstances. As you are aware the Management of Surplus Employees' Policy states that Essential Energy may require an employee to take accrued leave in accordance with the enterprise agreement notice periods where applicable. Where the Essential Energy enterprise agreement makes provision for notice periods for taking accrued leave, the terms of the enterprise agreement will apply.

PN111

THE SENIOR DEPUTY PRESIDENT: Whatever that means. What do you think that means?

PN112

MS DEBOOS: I think that he's just restating the paragraph frankly.

PN113

THE SENIOR DEPUTY PRESIDENT: Yes.

PN114

MS DEBOOS: I think that he's restating the paragraph and he's saying our submission is that he is simply saying that the notice periods in clause 4.1.3 and 4.6.5 of the agreement are the notice periods that apply and when the applicant chooses to exercise the discretion which is contained in the provision that we're talking about today. We say that it can't be gleaned from this response that the terms of the agreement prohibiting a unilateral direction to take accrued leave would actually apply. Because this would mean that the entire provision has no work to do, and why is it there if in fact that's what he is saying. But it does get slightly more complicated.

PN115

THE SENIOR DEPUTY PRESIDENT: So, to the terms of the agreement as they apply to note the provision of the notice period, are you saying, that's what he meant?

PN116

MS DEBOOS: That's right, yes.

PN117

Tab 10 doesn't take us any further but it's included for completeness because he does refer back to that letter, but tab 11, is a very important letter. That is a letter from Graham Kelly to Vince Graham purporting to respond to the letter I just read out and it's dated 27 November. He says there in the first paragraph,

PN118

Thank you for your reply. We note Essential Energy's confirmation that the enterprise agreement provisions will apply with respect to notice periods for leave, and as such, the proposed policy provisions which would allow Essential Energy to force redeployees to take leave do not apply.

PN119

So, we say that this is an assertion made by Mr Kelly which is not available to him based on the response that I read to you in Mr Graham's letter. Nothing in Mr Graham's letter can be said to provide Mr Kelly with any reasonable basis upon which to say that Essential Energy have provided this confirmation. Indeed, Mr Graham's letter makes the contrary position clear, we say.

PN120

We say that it says that the terms of the provision would operate in relation to redeployees subject to the notice periods in the agreement. Not that the terms of the provision would not apply at all. Simply stating that a proposition is agreed does not make it so. I wish it did from time to time, but it certainly does not make it so.

PN121

Some positive act or affirmation has to be required from the other party in order to establish an agreed understanding. All of the events that follow this particular letter confirm that no such action or affirmation is provided. The letter which immediately follows this, or the series of correspondence that immediately follows this, 27 November Mr Smith sends an email to Mr Butler attaching the Management of Surplus Employees' Policy. It has not been amended at all to reflect Mr Kelly's purported confirmation.

PN122

Then behind tab 13, a letter dated 28 November 2013 from Gary Humphries to two of the respective union secretaries. Again, does not provide the confirmation that Mr Kelly purported that Mr Graham's letter did. I think that this letter is particularly important. What this letter does, is that it represents a compromise on the part of Essential Energy in response to the concerns that have been previously raised by the unions about what I've called the voluntary redundancy issue. So about that first sentence of the clause about redeployees not being able to stick up their hand for a VR.

PN123

There's been this exchange of letters on a couple of issues and this letter actually says well Essential Energy has compromised on that voluntary redundancy provision. What they do, or what Mr Humphries says he will do in order to reach agreement, is to insert the following amended paragraph as a full replacement of the existing paragraph 4 on page 1 of the relevant policy. You will see there that that's the form that ultimately ends up in the final agreement.

PN124

THE SENIOR DEPUTY PRESIDENT: You didn't read it to me, but I mean most of the letter of 27 November to Mr Graham and the USU is about the issue of whether once you've fell into the redeployment pool, you've given up your right for a voluntary redundancy.

PN125

MS DEBOOS: That's right.

PN126

THE SENIOR DEPUTY PRESIDENT: This is what they've did change.

PN127

MS DEBOOS: That's what they changed.

PN128

THE SENIOR DEPUTY PRESIDENT: And you would say this is what they've changed in the response to make it clear that the mere fact that you opted for redeployment doesn't mean that you can't subsequently apply for a VR basically.

PN129

MS DEBOOS: That's right. So, they changed what was clearly an important issue between the parties, not a relevant issue for today, but clearly an important issue, but they reaffirmed the very clear and unambiguous terms that exist in the policy today with respect to the direction to take leave. We say that that's important because that comes after Mr Kelly's purported confirmation that the clause would not apply.

PN130

After that we also have letters which on the 3^rd behind tab 14, a letter from Vince Graham to Steve Butler which is just included for continuity purposes. That's again confirming that they've addressed this issue of voluntary redundancies for redeployees and doesn't address in any way the issue of leave.

PN131

Likewise on 3 December there are a series of letters behind tabs 15, 16, and 17 from each of the union secretaries who are the bargaining representatives from the unions, each of whom offer their agreement to the proposal put by Mr Graham in his letter. None of these letters, so the letters of 3 December which are incredibly important letters in the development of this enterprise agreement, none of these letters require the removal of the provision whatsoever.

PN132

The agreement was thereafter put to employees for approval. The information pack provided to the employees clearly establishes that employees were provided with access to the policy. There is no evidence from anything in the tender bundle that Essential Energy or indeed any of the unions ever stated or implied to employees that the provision would not actually apply.

PN133

In terms of the admission of the admission of evidence of the negotiations which these letters are, the assessment must be limited to the objective framework of fact as stated in Golden Cockrell and we say that the objective framework of fact is as follows:

PN134

The provision was provided to the respondents for agreement. Questions were asked, in particular by the USU, including a question as to the operation of the agreement. Those questions were answered by the applicant and the answer provided, we say, was that the notice periods referred to in the provision were those contained in the enterprise agreement. The USU asserted a contrary confirmation had been provided by the applicant, namely that the provision would not apply at all.

PN135

The applicant did not agree with this assertion and instead proposed a final version of the provision which amended it in part, but relevantly did not amend the sentence which is now in dispute. None of the union respondents offered any objection to the inclusion of the provision despite its clear and unambiguous meaning. The employees (so those who are actually party to the agreement) voted on and approved the agreement which included the policy and provision.

PN136

Based on this framework we say no common understanding can be established from this evidence. We say that silence, so silence to Mr Kelly's confirmation cannot be read as acquiescence or agreement in these matters. This is particularly so when none of the steps taken by the applicant which followed Mr Kelly's letter of 17 November resiled from the provision, at all as put, or the interpretation which had been provided by Mr Graham.

PN137

There's an analogous case we say, of ALS Australia which I've given you a copy of. That was a recent case which up to the Full Court of the Federal Court. In this, you may recall, was about travel allowances. In this particular case the union alleged that the company had taken a different approach in the interpretation of a particular clause in negotiations prior to the conclusion of an enterprise agreement and this was disputed by the company.

PN138

THE SENIOR DEPUTY PRESIDENT: Which case is this:

PN139

MS DEBOOS: AMWU and ALS.

PN140

THE SENIOR DEPUTY PRESIDENT: Okay, sorry yes.

PN141

MS DEBOOS: The Full Court of the Federal Court stated at paragraph 120:

PN142

We must keep in mind the points made by Mason J, in Kudelka concerning the use of negotiations in construing the resulting contract. First, evidence of negotiations may be used to determine background facts known to parties, however such evidence may not be adduced in it only goes to intentions or expectations.

PN143

Second, where the parties are united in refusing to include a term which would give effect to the presumed intention of the parties of persons in their position. Evidence of such refusal may be used to rebut any inference that they shared such a presumed intention.

PN144

Both parties were seeking to achieve a benefit from negotiations but they could not agree. They were resolved by leaving the clause as it was. The only inference that can drawn is that the parties agreed to leave the question for resolution on another day.

PN145

I don't say that our client agreed to leave the question of how this clause should be interpreted for resolution on another day, but I do say that the relevant principle here is that you cannot construe that by failing to address Mr Kelly's assertion that was somehow some acquiescence or agreement that a provision would operate in a particular way. In fact, the evidence is that the provision in its clear and unambiguous terms was then agreed to by all parties and placed into the resultant enterprise agreement.

PN146

There is no agreement on the face of anything in the tender bundle that Essential Energy would not apply the provision. Mr Kelly's characterisation of Mr Graham's interpretation of the provision we say, is not available to him and was not confirmed in any express or implied manner by the applicant. We say that if the Commission were to accept that Mr Kelly's asserted confirmation of the applicant's position was in fact acquiesced to by the applicant, then in our submission such an acceptance would be an error would mean that the extrinsic evidence was being used to reach a conclusion that had no foundation in the text of the coverage clause but rather simply, displaced what the clause said.

PN147

In that regard, I rather delicately refer you to the decision of the Full Bench in Essential Energy and the same respondent parties, no doubt principles of which you are aware.

PN148

We say that Mr Kelly's asserted confirmation is no more of his opinion than the answer given by Mr Graham. We don't have him and we don't have Mr Graham, and to be honest, the solicitor parties in this matter came to an agreement on the tender bundle to ensure that this matter could be dealt with in a more appropriate way than to have those witnesses give evidence.

PN149

Even if Mr Kelly's asserted confirmation was accepted as reasonable, which we say it cannot be, it is not permissible to use it to interpret the words of an agreement as it falls into that Codelfa category of statements and actions of the parties which are reflective of their actual intentions and expectations.

PN150

Finally, we say that it's nonsensical to suggest that the provision was included in the policy and voted on by employees, even though the common intention of the parties was that they never intended it to actually operate as the respondents will put. It defies industrial logic that a company would include in an enterprise agreement a clear and unambiguous term, even though it intended that it would never actually operate and it would never have any work to do.

PN151

We say that not only does this defy logic, but it would also amount to a serious misleading of the employees who actually then voted on and approved the agreement, complete with the provision in its unequivocal terms. We say on that basis, that the Commission should make the orders which I've included in the further submissions that we've handed up today. I know my friend is probably going to address some further issues that I haven't addressed, but I might leave that till reply.

PN152

Unless you have any questions, your Honour.

PN153

THE SENIOR DEPUTY PRESIDENT: No, no. Thanks very much.

PN154

MR NEILSON: Thank you, Commissioner.

PN155

Before I start, can I just hand up to the Commission some cases that I will refer to. My friend has a copy of those cases. Your Honour, in considering this matter, one must have regard both to the terms of the policy, but also the terms of the enterprise agreement to give effect to the policy. What we say is that the terms of the enterprise agreement directly contradict the terms of the policy, such creating an ambiguity.

PN156

Insofar as that my friend submits that the policy is clear and unambiguous, I don't think that submission can go very far when one takes into account the meaning of the words "in accordance with the enterprise agreement", such that if one considers the terms of the agreement one will see that that provision, in fact, is not reflected in the agreement.

PN157

Before I start can I just take the Commission to the provisions of the Act insofar as it regulates the taking of annual leave? One would be aware of the fact that the National Employment Standards provides a series of provisions with respect to the taking of annual leave and those provisions cannot of course be undermined by the terms of an enterprise agreement howsoever expressed.

PN158

The Commission would be aware that section 88 of the Fair Work Act provides that paid annual leave may be taken for a period agreed between the employee and his or her employer. That provision was the subject of some consideration in the Valspar decision which I've just handed up which I'll take you to in a moment.

PN159

Section 93 provides that that provision, in essence, may be varied by section 93 subsection 3 of the Act which provides that a modern award or enterprise agreement may include terms requiring an employee, and in this case, or allowing for an employee to be required to take paid annual leave in particular circumstances, but only if the requirement is reasonable. What that term means, in the context of this dispute and in considering the clause here, will be the subject of some debate in these proceedings.

PN160

Your Honour, just bear with me one moment. Those two provisions were considered in the Valspar decision. Now the Valspar litigation was first heard in the Federal Circuit Court, it was appealed up to the Full Court of the Federal Court and I provided you with a copy of that decision and it was subsequently remitted to the Federal Circuit Court for further consideration.

PN161

I haven't provided a copy of the further Federal Circuit Court cases, as I don't see it going to any of the issues here. I accept that Valspar certainly turned on the provisions of that particular agreement at that particular time. But there were some principles arising out of the first Federal Circuit Court decision that weren't disturbed on appeal but we say, are relevant in these proceedings.

PN162

If your Honour will turn to paragraph 20, you will see that the submission was made squarely in those proceedings, that the respondent, being the employer was entitled to require employees to take annual leave on the days that it specifies by reason of clause 34(c) of the enterprise agreement. In these proceedings the respondent says that it's entitled to direct employees to take annual leave by virtue of the existence of the policy.

PN163

One needs to keep in mind that an enterprise agreement clause can only contain a provision directing the taking of annual leave insofar as it's reasonable. The Commission will have to have some consideration of that term in determining these proceedings. You will see at paragraph 22 that the union, in that case, submitted that - - -

PN164

THE SENIOR DEPUTY PRESIDENT: Just to be clear, this is the original Federal Circuit Court.

PN165

MR NEILSON: This is the original Federal Circuit Court, yes.

PN166

The union submitted at paragraph 22 that section 93(3) of the Act should be construed so that it's consistent with the language and purpose of all provisions of the statute. Then, in the last sentence before the dot points commenced, his Honour then refers to the explanatory memorandum to the Fair Work Bill as it was in 2008 and he quotes from that Bill that then without attempting to provide an exhaustive list, identifies a number of matter that are relevant considerations in assessing the reasonableness of an employer's requirement or direction. Then there's various subheadings or various categories that are referred to there.

PN167

Then the submission was made, the applicant submits to the extent that the enterprise agreement purports to permit the respondent to unreasonably require an employee to take leave is without effect cannot be relied upon. Now, relevantly in these proceedings is paragraph 25 where his Honour held that significantly the Act does not allow an employer to require an employee to take annual leave. That's a reflection, at least on his interpretation of section 88 of the Act which I took you to before.

PN168

As a premise, insofar as it's submitted by the respondents that there is some form of managerial discretion in these proceedings, and my friend didn't go to it in her oral submissions, but she certainly went to it in her written submissions, we say that the NES ousts that managerial discretion if it ever existed. But that can be varied by the existence of an enterprise agreement clause.

PN169

You'll see his Honour continues on with it. Section 93(3) of the Act does however, allow an enterprise agreement to have terms requiring an employee or allowing an employer to be required to take paid annual leave in particular circumstances, but only if the requirement is reasonable.

PN170

In these proceedings there is no evidence put forward by the applicant apart from its principles in relation to how the leave clause is going to be exercised by the applicant in these proceedings. If one takes a look at the policy on its face, there is no consideration for the reasonableness of any direction.

PN171

THE SENIOR DEPUTY PRESIDENT: But I mean, I suppose you could argue that this policy only arises in a very specific set of circumstances. It's not like a general ability of the employer to tell people to take annual leave. It's in this situation where their position has been abolished, they're in this redeployment pool and then they may be in these circumstances, required to take annual leave. It's not like you're sort of saying well, so you could argue, and I'm being devil's advocate if you like, that the reasonableness is because this is in this particular set of circumstances.

PN172

MR NEILSON: The problem with that characterisation is that the right to direct an employee arises to that individual employee and it requires, in our respectful submission, consideration of the circumstances of that employee Because to determine reasonableness, requires a consideration of the particular circumstances and in our respectful submission, it applies to that particular employee. There's no submission made in relation to how that's going to apply to particular employees. There's categories of employees, but again they're not identified.

PN173

You simply have an assertion by the applicants in these proceedings that there's a category of employees and they're going to be directed to take annual leave, but there's no consideration of their particular circumstances. But, the principles that apply with respect to the Act dictate, in our respectful submission, how the provisions of both the agreement and the policy are to be interpreted.

PN174

In our argument about whether or not the matter should be remitted to Commissioner Johns, we referred to the purpose of the policy. Now the purpose of the policy is set out - - -

PN175

THE SENIOR DEPUTY PRESIDENT: Say if you've got a provision in an award, just the retail award that says when an employee has accrued excess of a certain number of weeks' leave, the employer may require on the provision of a month's notice, or whatever it is, that they take a certain amount of leave. You would think that that gave an employer the right to do that, without having to then go in and sort of evaluate the individual's personal circumstances as to whether it was fair. Are you saying that in fact, there's an obligation to go in and evaluate people's individual circumstances?

PN176

MR NEILSON: Not quite, your Honour, because the agreement itself provides for what is reasonable in terms of the direction. Your Honour, if one has a look at the terms of the agreement, and we make this submission in our outline. The essential enterprise agreement actually regulates the circumstances in which an employee can be directed to take both annual leave and long service leave, if in fact it can be directed to.

PN177

THE SENIOR DEPUTY PRESIDENT: I suppose that it's hard to see how this provision in the Management of Surplus Employees' Policy isn't meant to add something to what's in the main text of the agreement. In other words, we've got the text of the agreement and that's what normally applies, but there's this extra provision that applies to these employees. It must be doing something more than, I would think, it must be doing something more than just simply saying well, see the agreement.

PN178

MR NEILSON: Well the problem that exists, is because of the words "in accordance with the notice periods of the agreement". But there is a contradiction between the actual express words of the agreement and the policy because the agreement doesn't draw a distinction between employees and redeployees.

PN179

THE SENIOR DEPUTY PRESIDENT: No, well I mean of course the policy essentially is incorporated into the terms of the agreement.

PN180

MR NEILSON: But that creates the issue insofar as how do you reconcile the express words of the agreement which says that in certain circumstances annual leave can be directed, but only in certain circumstances, and long service leave cannot be directed. It must be with the consent or at the election of the employee.

PN181

THE SENIOR DEPUTY PRESIDENT: But while you might have to reconcile them, that's not the same as saying well you just ignore what's in the Management of Surplus Employees' Policy, it has no effect at all. That just doesn't seem logical if I look at it that way.

PN182

MR NEILSON: I appreciate that.

PN183

THE SENIOR DEPUTY PRESIDENT: I mean, I'm clear that you have to marry the two up and work out how it works, but I don't see that's about saying well you just ignore one.

PN184

MR NEILSON: But it's not a case of ignoring it, because the policy itself, at least in our submission, isn't reflected in the terms of the agreement because of the existence of those words "in accordance with the notice provisions of the agreement".

PN185

THE SENIOR DEPUTY PRESIDENT: So what's the meaning? What does it mean? You seem to be, in effect, saying it doesn't mean anything.

PN186

MR NEILSON: That's consistent with the understanding that was in the USU representation that my friend took you to a little bit earlier.

PN187

THE SENIOR DEPUTY PRESIDENT: It's pretty odd to think you'd put - especially this was something that there was a bit of an argument about, this particular sentence. It's a bit odd to think that it's all in there, but it actually doesn't do anything.

PN188

MR NEILSON: Again, I was going to take your Honour to this. That's consistent with, at least on our respectful submission, that the letter that was put by Mr Kelly which was written by Mr McNamara, where it was squarely put, there was a question and there was a position put that it didn't apply

PN189

THE SENIOR DEPUTY PRESIDENT: That's the union's position, yes. That's the union's position, no matter what you're putting today, I'm saying what's the logical basis for that?

PN190

MR NEILSON: The question that was put by the USU wasn't resiled from directly by Mr Graham, because there was no reply forthcoming to that.

PN191

THE SENIOR DEPUTY PRESIDENT: But he didn't say he agreed to it either.

PN192

MR NEILSON: But by implication, one could argue, by his failure to respond to that particular assertion, that it had been accepted.

PN193

THE SENIOR DEPUTY PRESIDENT: Okay, you could argue that.

PN194

MR NEILSON: Well you can do that of course, and my clients proceeded on the basis that it had been accepted and that was on the basis that they move forward. Now I understand the difficulties that exist here because the policy in some respects is contradictory because you have - at least on my friend's case, and this was the problem that we tried to identify earlier, the position that exists on my friend's case is that you can direct annual leave, but the policy is directed to providing redeployees with suitable alternative work. How do you reconcile those two?

PN195

THE SENIOR DEPUTY PRESIDENT: But it's not - we have to deal with this all the time. You get a general provision about whether it's the general provision that applies to employees in general or it's a general purpose, but then often there's specific qualifications that are an exception to that. It seems to be natural to read that yes, the general aim is all about getting people suitable work placements and I've given an interim decision on that as you're aware, and it's going to be dealt with in more detail elsewhere I appreciate, but that's what the terms say.

PN196

But then it also says the same thing, but we can send him off on subject to these qualifications. We can send him off on leave, if they've got excess leave.

PN197

MR NEILSON: Yes, and that's the very tension that we were trying to - which comes first, I suppose? How does it apply? Do you send them off on leave, in which case it's inconsistent with the obligations of the purpose of the policy which says that the purpose is to try to, as I said before, identify suitable alternative arrangements.

PN198

On the applicant's case, if you meet a certain criteria, you're just going to be sent off. In which case, the obligation that exists under the terms of the policy, how does that apply? That was the issue that we were trying to say before, there's this inherent tension that exists between their case and our case and how do you marry the two?

PN199

But in any event, what we say is that the actual terms of the agreement don't support the position that is advanced by the applicants because your Honour will appreciate that under the terms of the policy, and I've said this ad nauseum, that it is required to be in accordance with the enterprise agreement notice periods.

PN200

THE SENIOR DEPUTY PRESIDENT: Right.

PN201

MR NEILSON: Now if one looks at the actual terms of the agreement, at section 4.1 and your Honour will appreciate that the notice periods clause that my friend took you to need to be read in the context of the entirety of the clause. So section 4.1(c) says that annual leave shall be taken in accordance with the Annual Holidays Act (as amended) unless inconsistent with the terms of this agreement. The Annual Holidays Act provides that the employer can require an employee to take annual leave only in shut down circumstances. There's nothing inconsistent with the terms of the agreement as it applies to that particular clause.

PN202

Paragraph 4.1.1 is an attempt to address section 93(3) of the Act insofar as at (e) it says that where an employee has more than eight weeks' accrued annual leave - now it's an employee. It doesn't define redeployee, doesn't make a distinction. The employee must in conjunction with their manager develop a leave plan for the following 12 months which will facilitate the reduction of the overall balance to no more than six weeks' accrued annual leave at the end of the 12 month period.

PN203

The principles that have been developed by the respondent in this matter, and I appreciate your Honour isn't required to determine that. There may exist an dispute about it later, but the principles actually directly contradict clause 4.1(e) because 4.1 says that it cannot be reduced to a period of less than six weeks on the principle that's been advanced by the respondent or the applicant in these proceedings, it's 20 days, being four weeks.

PN204

So how do you reconcile - what? The agreement says, with respect to employees, with what it is actually proposed that the applicant intends to do, and that's the problem that we're faced with here. I appreciate that your Honour is having to deal with it and try to find some meaning in all of this, but we say that the meaning, unfortunately, for whatever reason, isn't as clear cut as my friend says it is. In those circumstances, you have to have regard to the extrinsic material. The extrinsic material, at least as we'll take you to, at least we'll attempt to take you to and persuade you, supports the position that we have.

PN205

In further support of the contradiction that exists between the two, is that long service leave is more express in its direction that long service leave can only be taken at the election of the employee. 4.6.3 which my friend didn't take you to, says

PN206

An employee shall not be entitled to take any period of long service leave until the employee has completed 10 years of service. The taking of long service leave shall be at the discretion of the employee.

PN207

So, in essence, what the policy, at least on my friend's case seeks to do is to bury that clause, and I appreciate what your Honour is saying is it can only vary for the redeployees, yes.

PN208

THE SENIOR DEPUTY PRESIDENT: For this particular class of people, yes.

PN209

MR NEILSON: But whether or not it actually does that, because the agreement itself doesn't make a distinction between the two. So your Honour, interpreting the policy and having regard to the agreement, as you must do, must read into the direct provisions of the agreement that there is that distinction.

PN210

THE SENIOR DEPUTY PRESIDENT: Well in effect the policy is incorporated into the agreement, and you're not going to argue that it's not.

PN211

MR NEILSON: No, no, certainly not.

PN212

THE SENIOR DEPUTY PRESIDENT: You'd be on dangerous ground otherwise, I think. So, it's not a question of well you give precedence to the text, of the agreement proper, if you like and sort of give that some sort of primacy over. Yes, clearly on one level they're different, but it's not inherently unreasonable to read the policy as providing an exception to what's in the rest of the agreement, for this particular subset of people.

PN213

There is a logic from an employer point of view. You can see why they press to have this in the policy because it's a way of reducing their costs of these people whose position have been abolished. And I can understand why the unions would resist it as well.

PN214

MR NEILSON: Your Honour, the further problem is, and not to load your Honour up with problems, but clause 3.7 also needs to be considered in the context of clause 3.6. Now 3.6 provides that - and this was something that was referred to in Mr Kelly's correspondence, was that employees who's positions have been identified as being no longer required or restructured, and who elect to remain within the organisation will be subject to the provisions of the Essential Energy's redeployment policy. See EC1083.

PN215

The redeployment policy has not provision in it for the taking of leave, or the direction to take leave. In fact leave is just not contemplated.

PN216

THE SENIOR DEPUTY PRESIDENT: Right, there's not much in the redeployment (indistinct), surprisingly. To accept as much it's in the subtle, this extra bit, the management of surplus employees.

PN217

MR NEILSON: Your Honour, the position that we just highlight there is again the inconsistency that exists between the two. You have on the applicant's case an ability to take it in accordance with 3.7, or correct it in accordance with 3.7 and then you have 3.6 which also applies, which makes no reference to it at all, and the agreement itself, as we have said, which contemplates something completely different.

PN218

So the only way that the applicant can make its case as you've point out, your Honour, is to say that there is a distinction in the agreement itself through the policy creates a separate category of employees. But as we've said, your Honour, to do that, you would have to read into 4.1 and at 4.6, that exception. It doesn't exist from the express words.

PN219

THE SENIOR DEPUTY PRESIDENT: Okay, might actually have to read that again.

PN220

MR NEILSON: Your Honour, the provisions - I'll make this submission and leave it at that, don't draw the distinction.

PN221

THE SENIOR DEPUTY PRESIDENT: No, there they don't, I agree.

PN222

MR NEILSON: To draw the distinction, there has to be some reading in that there is a distinction between an employee and one who is a redeployee. The position that is sort of advanced, at least as we understand it for the applicant, is that these words are express, that is if one reads the policy you will see that it is clear and express that they're entitled to do what they want to do. We say that that's just clearly not the case.

PN223

When one has regard to the extrinsic material that has been put on, one will see, at least from our case, that that material supports the position of the unions. Now, just before doing that, your Honour, I just wanted to take you to the Full Court Decision in Woolworths Ltd v Shop, Distributive and Allied Employees' Association where the court was considering, as is often the case, the principles around the interpretation of an enterprise agreement and enterprise awards.

PN224

At paragraph 13 the task that the court was faced with in those proceedings is identified at least at the last sentence and says,

PN225

However, a literal interpretation that is at odds with the intention of the makers of the Agreement is one where a person who ordinarily worked both days gets public holiday rates for both, in effect two Anzac Days.

PN226

Then it goes on to cite the Amcor Limited v Construction, Forestry, Mining and Energy Union decision and it says,

PN227

Support for the position that the industrial context and the intention or purpose of the makers of an industrial instrument should be paramount notwithstanding the strict wording of the document is found in the judgments of members of the High Court.

PN228

THE SENIOR DEPUTY PRESIDENT: I'm not going to move away from Golden Cockrell. I got done last time. Golden Cockrell hadn't come out when I gave my decision on the Essential scope matter. It then came out and I thought oh. I wasn't all that surprised by the appeal as outcome. But I'm not going to now, having Cockrell just say yes, but we just look at that. Just warning you. You'll have to persuade me this is consistent with Golden Cockrell.

PN229

MR NEILSON: Well, your Honour, the only reason I take you to that is simply as to try to understand what it was the parties were trying to do at the time they entered into the agreement. Your Honour can take that as high as you want to, but we say it does have some relevance.

PN230

The bundle of correspondence that my friend took you to - I'll just try to follow with respect to her tender bundle so that it's consistent. The first letter as my friend referred you to, at least so far as I want to identify it, is behind tab 7. My friend took you to the quote there that came from the policy that was referred to by Mr Kelly. You'll see there that the inconsistency that was identified with the policy as existed in clause 3.6 was directly put in that correspondence.

PN231

Because at that time, at least as I understand it, and on my instructions, the policy that is now the subject of debate, wasn't in the agreement. So all that existed was the CEC1083 policy. So, in putting the correspondence, it was squarely put to Mr Graham that the proposal was certainly inconsistent with the existing clause.

PN232

My friend took you to, and I won't repeat it, question 1 which is on page 2 of the letter where it was squarely put to Mr Graham as to what the understanding was and what his intention was. Then on page 3, you'll see that given the long application - this is the second paragraph,

PN233

Given the long application of the redeployment policy at Essential Energy (and that's the policy in 3.6) we propose the practice of access to voluntary redundancy once an employee is redeployed, continues to be governed by the redeployment policy that exists at Essential Energy.

PN234

Again, referring to policy 1083, in identifying what his understanding was of the proposal.

PN235

The next letter again, I'm don't take you to this other than to point it out, was Mr Butler asking essentially the same question. Now the key is the next tab, which is the response from Mr Graham, being the 26 November where he refers directly to the letter from Mr Kelly from 25 November. He refers directly to the existing redeployment policy, and what he says is "I offer the following clarification". So he's making a representation as to his position to the recipient of the letter, that the recipient is entitled to rely upon in moving forward with the negotiations.

PN236

In the third paragraph as Ms Deboos pointed out, he specifically identifies the question that was directly put to him and in the last sentence of that paragraph and the key here is where the Essential Energy agreement makes provision for notice periods of taking accrued leave, the terms of the enterprise agreement will apply.

PN237

The key is though, at least on our submission, is the word where because at least as we understand it, and at least as we submit it, the enterprise agreement makes no reference to notice periods as it applies for the employer directing the employee. It makes reference to notice periods for the employee giving notice.

PN238

THE SENIOR DEPUTY PRESIDENT: Is that what you think that means in that sentence?

PN239

MR NEILSON: Well, it must mean that as it was directly put to him, because it has to be kept in the context of what he is replying to, that insofar as the enterprise agreement would provide for notice periods, it would only do so in circumstances where - the employer, if it's to give notice, the policy would be interpreted consistent with the terms of the enterprise agreement. And the enterprise agreement and that provision of the policy would only apply in circumstances where the enterprise agreement contained a term permitting it to.

PN240

THE SENIOR DEPUTY PRESIDENT: I actually don't follow that.

PN241

MR NEILSON: No, no I appreciate that, your Honour, it was probably poorly expressed - and in fact it was.

PN242

THE SENIOR DEPUTY PRESIDENT: The question I'm asking is what do you think Mr Graham meant by that last sentence beginning "Where the Essential Energy".

PN243

MR NEILSON: We say that provision will only be exercised in circumstances where the enterprise agreement contains a provision enabling notice to be given by the employer.

PN244

THE SENIOR DEPUTY PRESIDENT: Well why doesn't it say that then?

PN245

MR NEILSON: Well, your Honour, that's the problem.

PN246

THE SENIOR DEPUTY PRESIDENT: That's what you're saying it says. But I don't understand how you can say it says that.

PN247

MR NEILSON: Because my instructions are, and this is probably something that doesn't take us very far, but the policy itself came from Endeavour Energy.

PN248

THE SENIOR DEPUTY PRESIDENT: Right, yes.

PN249

MR NEILSON: So, it's been a mish mash that the parties have tried to squeeze into - - -

PN250

THE SENIOR DEPUTY PRESIDENT: Yes, it's been modified to apply to Essential.

PN251

MR NEILSON: Your Honour needs to keep in mind what it was that he was replying to and that is that the statement in the policy directly contradicted the existing policy.

PN252

THE SENIOR DEPUTY PRESIDENT: And there were these two issues - there was this issue that we're talking about today and there was this other issue of that you wouldn't be able to act once you had moved into the redeployment pool, you wouldn't be subsequently able to access voluntary redundancy. See the way it reads now, they moved on the second one, but I'm still struggling to see where this letter indicates that they moved on the first one.

PN253

MR NEILSON: Well, your Honour, it does insofar as it provides that the agreement must make provision for notice periods and we read into that, because it's replying to the correspondence from Mr Kelly, that the enterprise agreement must contain a provision.

PN254

THE SENIOR DEPUTY PRESIDENT: So, you're saying it doesn't.

PN255

MR NEILSON: It doesn't, and I don't think there's any consensus that it does.

PN256

THE SENIOR DEPUTY PRESIDENT: So why would you say the terms of the enterprise agreement will apply? What will it mean to say that? So what you're actually saying is if the enterprise - and then we're talking about an enterprise agreement that had been settled essentially, so we knew what it said. This is my problem, it's not like this is just some theoretical - you know if the enterprise agreement had these provisions then this - but we don't actually know what the enterprise agreement has at this stage. This is kind of like the last issue. So we knew what the enterprise agreement said about the taking of annual leave, so when Mr Graham wrote this letter, he knew what the terms of the agreement said, so it's not like this is some kind of speculative provision - speculative answer about what if you did this, then this would apply because - well we don't whether it does.

PN257

If what you're saying is well - tell me if I've got this wrong. But if it turns out that the Essential Energy enterprise agreement has a provision for the employer to give notice to employees that they must take leave, then those will be the terms that will apply. Is that what you're saying?

PN258

MR NEILSON: Yes.

PN259

THE SENIOR DEPUTY PRESIDENT: In fact they don't.

PN260

MR NEILSON: Well, it doesn't, no.

PN261

THE SENIOR DEPUTY PRESIDENT: Well why would he say it then? But I mean, logically, you're trying to read something into this that he's conceding something when, it seems a very odd reading. If he knew what was in the Essential Energy enterprise agreement, he knew there were notice periods as they related in fact to employees giving notice, and he knew there were no provisions for employers to give notice in the general body of the agreement, so why would he say if it was the case that the employer had the ability to give employees notice, then the terms of the agreement would apply?

PN262

MR NEILSON: Because he's responding to directly what Mr Kelly said to him in his previous letter.

PN263

THE SENIOR DEPUTY PRESIDENT: But isn't it more logical in saying well, we just can't require, it's a qualified concession if you like. He's not saying, it seems to me, unless you can persuade me I've got this wrong, he's not saying well, okay then, despite what it says in the policy, we can't make people take leave, because you'd think if that's what he was saying he'd just say it.

PN264

He's saying well, we won't just make people take leave, and ignore the enterprise agreement provision on notice, like we will give that much notice. So we won't just turn around to somebody who's on the redeployment, who's position's been abolished and who's elected to take redeployment, well, tomorrow you're off on leave.

PN265

MR NEILSON: But your Honour, you can't consider that with respect, without considering what it was he was replying to.

PN266

THE SENIOR DEPUTY PRESIDENT: But on this reading anyway, he's not agreeing with what Mr Kelly put to him. He's saying well it is perhaps a bit of a concession in the sense of, but he's not agreeing to the position, even though Mr Kelly chose to interpret it that way.

PN267

MR NEILSON: What is said directly in the previous correspondence is the statement contradicts the Essential Energy agreement obligations with respect to who can notify the taking of leave. So, who can notify the taking of leave was specifically put to him and to this extent the USU would say that the agreement provisions will apply on the taking of leave, and that's what he's responding to, because the provision in the agreement said that it was only the employees who could give notice.

PN268

I appreciate that there is some confusion and Mr Graham isn't here to clarify what he meant and probably doesn't recall what he meant, but you can't consider his reply without considering exactly what it was he was reply to. That clearly was put to him that the clause in the agreement contradicts the agreement as to who can take the leave and he says, where the agreement makes provision for the notice period, the terms of the agreement will apply.

PN269

So he's put it directly in response to that proposition that was put to him and that was subsequently interpreted, if you like, by Mr Kelly in his correspondence of 27 November where he said,

PN270

We note Essential Energy's confirmation that the enterprise agreement's provisions will apply with respect to notice and as such the proposed policy provisions which would allow Essential Energy to force redeployees to take leave, do not apply.

PN271

He doesn't reply to that correspondence at all. He doesn't disagree. If he was of a mind at the time he wrote the agreement and he received the reply, I don't think it's unreasonable to expect he would have replied to that correspondence and that proposition that was put to him, but he didn't. So at least, as our case goes, he acquiesced in the interpretation and the proposition that was directly put to him.

PN272

It's not a case whereby an interpretation was raised and there was some discussion. An interpretation was raised and that interpretation was specifically put and it wasn't resiled away from and the USU in particular, as a consequence of that representation, relied upon it. It moved forward with the enterprise agreement, consistent with its view that we're now arguing about, that clause 3.6 as it existed at the time, didn't permit it to happen. The enterprise agreement as it was drafted didn't permit the employer to give notice. In fact, it does the opposite.

PN273

Mr Graham was squarely put on the spot with respect to that interpretation. He didn't resile away from it. So insofar as the parties then exchanged some correspondence in relation to these issues, it had to be kept in mind that it was firmly on the basis of the representation and at least as they understood it, the acceptance that was made by Mr Graham.

PN274

The relevance of that all comes back to the terms of the actual policy where it provides that the provision can only be given in accordance with the agreement procedures. Perhaps Mr Graham intended it not to apply at all.

PN275

THE SENIOR DEPUTY PRESIDENT: Okay, I think if that's what he meant, he would have said so.

PN276

MR NEILSON: Well, the problem that we have is that he's made the representation.

PN277

THE SENIOR DEPUTY PRESIDENT: That would be a big concession. If I was making a big concession like that, you'd probably make a song and dance about it.

PN278

MR NEILSON: But he did, insofar as he didn't reply.

PN279

THE SENIOR DEPUTY PRESIDENT: I would say that wouldn't just do - anyway. I understand your point, you're saying his silence amounted to agreement, that's your point.

PN280

MR NEILSON: And that was relied upon.

PN281

THE SENIOR DEPUTY PRESIDENT: Subjective intentions.

PN282

MR NEILSON: My instructors tell me of course, that if he of course intended something completely different, then of course an option available to him was to insert a direct provision in the agreement, and he didn't do that.

PN283

THE SENIOR DEPUTY PRESIDENT: Literally who?

PN284

MR NEILSON: Mr Graham.

PN285

THE SENIOR DEPUTY PRESIDENT: Well he did, and he thought it was pretty clear.

PN286

MR NEILSON: Well, does he?

PN287

THE SENIOR DEPUTY PRESIDENT: Well, we don't know. There's no point speculating about that.

PN288

MR NEILSON: Insofar as if your Honour does consider the extrinsic material, we say that clearly as a consequence of those representations made that they were accepted by the union and the union moved ahead on that basis. Your Honour, in considering this matter, will have to consider the tension that exists between the obligation as we say in the policy to provide suitable redeployment, because your Honour will have to wrestle with what comes first.

PN289

Does the employer get to direct an employee off on annual leave, exhaust that annual leave and then exhaust that long service leave, which may take, depending on the employee, a number of months, more than likely, given the length of service of most employees? Or does the employer have to permit the employee, or make arrangements for the employee to be redeployed in that period? Is it some mish mash of both? Do they get to take some annual leave and then they get to move into a redeployed position?

PN290

The problem that exists, your Honour, is that we say, and it will certainly be the subject of some comment in the Johns proceedings, that what this is, is an attempt to actually get out of the obligations that exist in accordance with the policy. Because if one looks at the principles that have been developed by Essential, and I note that they're not part of these proceedings, the principles are said to apply to all redeployees who are covered by the agreement, who are not currently in a secondment or work placement.

PN291

According to your Honour's order, they should be in a work placement, in which case the principles don't apply, and I'm not sure why we're here. But my friend says that they will be applied, so how do we reconcile that with the order that exists. You'll see in the fourth dot point, a few meaningful work placement opportunities exist. Again, we say that that's inconsistent with the terms of the agreement.

PN292

Further down, redeployees will be given 28 days' notice. Again, as your Honour pointed out, that's inconsistent with the terms of the agreement. Then it goes on to say that in the third last paragraph, no employee initiated annual or long service leave will be approved in people soft unless it's as per the approved leave plans. Again, inconsistent with the terms of the agreement.

PN293

Because the agreement says that the employee gets to elect and they get to provide notice, but the employer has decided as part of its principles, to deny that entitlement. Again, relying upon, presumably the terms of the policy. Now the terms of the policy don't permit that to occur in which case we're now going to have presumably, another dispute in relation to whether or not the principles are in fact consistent with the terms of the policy and in fact consistent with the terms of the agreement.

PN294

So, your Honour, in considering the matter, will have to consider that tension, unfortunately that exists between the policy as it's presently drafted.

PN295

We have put some submissions in writing which - - -

PN296

THE SENIOR DEPUTY PRESIDENT: I'll certainly take those into account.

PN297

MR NEILSON: Your Honour, I'm instructed that the principles have to be the subject of consultation. I'll just note that for the record. I'm not sure whether or not it's something that has been circulated and intended to be enacted by Essential or not. It was part of the tender bundle so I thought it necessary to comment. In light of the fact that it hasn't been consulted on, I think it's likely to be the subject of some further discussion.

PN298

MS DEBOOS: Well, your Honour, I can readily hand up a folder of minutes of consultation meetings where these issues have been discussed, but I do think that's an issue for another day. There's a difference between the ability to direct people to take the leave which is what you're being asked to look at today under the policy and the principles which are an attempt to address the reasonableness requirement in the Act.

PN299

Obviously the policy doesn't go into the details in order to deal with the reasonableness question, the principles are an attempt to deal with that. What I will say on the principles is that they're not final. I'm make the submission that they've been the subject of extensive consultation. It's clearly disputed, but your Honour doesn't need to decide that today. But in the event that you decided in our favour, then the principles are by no means final and we don't make any representation that they would in fact be the final principles that would dictate the use of the benefit under the policy.

PN300

MR NEILSON: Your Honour, I don't like to do this, but the order that my friend proposes at paragraph 7 is Essential Energy is at liberty to implement the directions contained in the leave principles.

PN301

MS DEBOOS: And I withdraw that, your Honour.

PN302

THE SENIOR DEPUTY PRESIDENT: Okay, that was a question I had right at the beginning of that.

PN303

MS DEBOOS: Yes. There's just a couple of things that I would like to address. Firstly, there is that question of reasonableness under section 93(3) of the Act. We say that again that the principles would be an attempt - how you enacted or how you implemented the power that exists in the enterprise agreement is the issue that would go to compliance with the Act. But on the face of it, we say that the power to direct someone who no longer has a job to do, to take excessive accruals of annual leave and long service leave is more than reasonable in the circumstances.

PN304

We say that of course the Management of Surplus Employees Policy is meant to add something to the provisions in the agreement. For example, the agreement doesn't deal with express provisions in relation to salary maintenance for people whose positions have been abolished. That's dealt with in a separate policy being the salary maintenance policy. In the absence of the salary maintenance policy, there would be significant questions over what these people would be paid, particularly in relation to allowances for example. These policies are provided and drafted to augment and amend the terms and conditions for that particular class of employees.

PN305

We say that the submission of my friend mean that the words themselves have no meaning. So the sentence that says the company in its discretion can direct employees to take annual leave and long service leave have no meaning and we say that that is a submission that certainly can't be sustained because it lacks logic. The logical position is that the company did not resile from its position as expressed by Mr Graham in his letter to the union secretaries and that he clearly did not agree because if he had agreed, one can assume that a number of things would have happened. Mostly he would have changed the words, I would have thought, and that experienced industrial parties like the three unions would not have agreed to an enterprise agreement which contained words which were contrary to what they thought would actually happen in the event that these circumstances arose.

PN306

Furthermore, and the most important consideration is that that's not went to employees. What went to employees was the Management of Surplus Employees Policy which says, on a plain reading, if you picked it up, if you were an Essential Energy employee, it would say to you that in the event that you were a redeployee the company may, in its discretion direct you to take annual leave and long service leave in accordance with the notice period in the enterprise agreement. We say that means, in accordance with those specified notice periods, regardless of who is initiating the request to take leave.

PN307

We say that the failure to respond can't be seen as an acceptance of an acquiescence and I've already made submissions on that point. In relation to any alleged tension between the policy and the agreement and the policy and the meaningful work placement question, we say there is no tension. The ability to direct someone to take annual leave or long service leave is for a finite period. It's only for as much leave as they have accrued. That person still has to come back to work and that person still needs to be managed when they come back to work and they've exhausted their annual leave and long service leave accrual as directed by the company.

PN308

It's when they come back to work that the other elements of the policy come into play such as the meaningful work placement question that your Honour has dealt with on an interim basis. On that basis we say that there is no contradiction between either 3.6 and 3.7 or between the terms of the Managing of Surplus Employees Policy itself.

PN309

In relation to Valspar decisions, they turn solely on the interpretation of that particular clause and whether or not the employer directed its employees to take leave in accordance with the clause in that enterprise agreement. They don't turn on whether the employer had the ability to do that in the first place, but simply whether or not it accepts that they had the ability to do it under the enterprise agreement. But what the Full Court of the Federal Court finds and then the Federal Circuit Court on remission finds is that the employer did not do it in accordance with the terms of their enterprise agreement and hence breached their enterprise agreement and breached the Act.

PN310

The last thing I say is in relation to Mr Graham's letter of 26 November which is in response to Mr Kelly's question. He doesn't agree with Mr Kelly. He says at the bottom of the second paragraph, "I offer the following clarification". Now, my friend might say that in his view it didn't clarify things at all, but he says I offer the following clarification. He doesn't say oops, sorry, there is a tension, this is not what we'll do, we'll change the words in this way. He says I offer the following clarification. He repeats the word of the clause and then he says "that where to clarify where the Essential Energy enterprise agreement makes provision for notice periods for taking accrued leave, the terms of the enterprise agreement will apply".

PN311

We say that that clarification is saying that they are the time periods which are Essential Energy will use when it goes to direct redeployees in accordance with the policy to take leave. As your Honour point out, at this point in time, Mr Graham knew exactly what the enterprise agreement said in relation to taking leave and notice periods. It wasn't that the agreement wasn't negotiated, those terms of the agreement, I'll venture to say without looking at it, I assume have been in the agreement for some long period of time. He knew exactly what they said. He was offering a clarification for how the new policy would operate with those well known terms of the enterprise agreement.

PN312

Lastly I would say that this move on the part of Essential Energy certainly does not represent an attempt to get out of any obligations it has towards these employees. It is a move by Essential Energy to avail itself of the benefit of the bargain that it believes it struck in this enterprise agreement and a reasonable move in order to manage the unprecedented number of redeployees and the financial situation facing the company at this time.

PN313

THE SENIOR DEPUTY PRESIDENT: Thank you. I will reserve my decision.

ADJOURNED INDEFINITELY [11.54 AM]