Australian Education Union v Victoria (Department of Education and Early Childhood Development)
[2015] FCA 1196
•6 November 2015
FEDERAL COURT OF AUSTRALIA
Australian Education Union v State of Victoria (Department of Education and Early Childhood Development) [2015] FCA 1196
SUMMARY
BROMBERG J
6 NOVEMBER 2015
MELBOURNESUMMARY
In accordance with the practice of the Federal Court in some cases of public interest, importance or complexity, the following summary has been prepared to accompany the publication of the Court’s reasons for judgment. This summary is intended to assist in understanding the outcome of this proceeding and is not a complete statement of the conclusions reached by the Court. The only authoritative statement of the Court's reasons is that contained in the published reasons for judgment which will be available on the internet at together with this summary.
Section 323(1) of the Fair Work Act 2009 (FW Act) requires an employer to pay its employee amounts payable to the employee for the performance of work, in full and in money, except where the making of a deduction from salary is permitted by s 324(1). Section 324(1) permits an employer to make deductions in specified circumstances. One of those circumstances is where a deduction has been authorised by the employee in accordance with an enterprise agreement. Another circumstance is where the deduction is authorised by a State law. Section 325(1) prohibits an employer from requiring its employee to spend amounts payable to the employee in any particular way where the requirement is “unreasonable in the circumstances”. Section 326(1) invalidates a term of an enterprise agreement or a contract of employment which has the effect of permitting the employer to make a deduction, where the deduction is for the benefit of the employer and is “unreasonable in the circumstances”.
Between 1 July 2009 and 29 November 2013 (the claim period), fortnightly deductions of between $4 and $17 were made by the State of Victoria (Department of Education and Early Childhood Development) (DEECD), from the salaries of those teachers and principals employed in Victorian government schools (teachers) who participated in a scheme in which DEECD provided a laptop computer and associated services to the teacher. Prior to March 2012 the scheme was known as the “Notebooks for Teachers and Principals Program” and subsequently as the “eduSTAR.NTP Program” (NTPP). The principal purpose of the NTPP was to provide teachers with a laptop computer for use as a work tool. Subject to some restrictions, teachers were permitted to use the laptop for personal purposes. Most teachers (about nine of every ten) participated in the NTPP and, in the claim period, over $20 million was deducted by DEECD from the salaries of participating teachers as “contributions” to the cost of the laptop computer.
The Australian Education Union has challenged the lawfulness of those deductions and, on behalf of participating teachers, sought orders that the amounts deducted be paid to those teachers. Although not a class action, the proceeding concerns the lawfulness of deductions made in relation to many tens of thousands of teachers. By the agreement of the parties, some of the mechanisms familiar to class action proceedings have been utilised. It was agreed that that part of the claim of unlawful deductions relating to a sample group of teachers, as well as a set of common questions, be determined by an initial trial, with all other issues raised by the proceeding deferred to a further trial.
The reasons published with this summary deal with the claims of a sample of 11 teachers (Group 11 teachers) and, in so far as it has been possible, my reasons provide the answers to the common questions. The claims made in relation to the Group 11 teachers is determined by those answers. The parties intend that the answers to the common questions will enable the resolution of the claims made relating to all affected teachers, without further trial. The common questions are set out at [17] of my reasons and the answers collected at [380].
In relation to the Group 11 teachers, I have found that the NTPP deductions made from their salaries were not deductions permitted by s 324(1) of the FW Act and that the failure of DEECD to have paid those teachers in full, was, in each case, a contravention of s 323(1) of the FW Act.
I have not accepted DEECD’s contention that the deductions were authorised by teachers in accordance with relevant enterprise agreements (Agreements) and thus permitted by s 324(1)(b). That issue largely turned upon whether the arrangements under which the NTPP deductions were made, can properly be characterised as “salary packaging arrangements” within the meaning of the Agreements. In broad terms, because the NTPP laptops were not provided to teachers as remuneration for their services, I have concluded that the NTPP arrangements were not “salary packaging arrangements” and therefore not made in accordance with the Agreements.
I have also not accepted DEECD’s contention that the deductions were authorised by or under a law of the State and thus permitted by s 324(1)(d). The State law relied upon by DEECD was a Ministerial Order made on 19 December 2012 (Ministerial Order). The effectiveness of the Ministerial Order was challenged on a number of basis, only two of which I have accepted. In so far as the Ministerial Order sought to provide retrospective authorisations for deductions made in the period 1 July 2009 to 18 December 2012, I have determined that, as s 324(1)(d) does not apply in relation to authorisations retrospectively given by a State law, those authorisations were ineffective. I have also determined that the Ministerial Order was inoperative in relation to any deduction made pursuant to a term of a teacher’s contract that was rendered of no effect by s 326(1).
In determining whether s 326(1) of the FW Act had that effect upon the deductions made from the salaries of the Group 11 teachers, it was necessary to answer two questions raised by s 326(1). The first was whether the terms that permitted the deductions to be made were, in each case, terms of teachers’ contracts of employment. I have determined that they were. Secondly, it was necessary to determine whether the deductions were “unreasonable in the circumstances”. I have determined that the deductions were “unreasonable in the circumstances”. Broadly speaking, I came to that view because I considered that the contributions made by the Group 11 teachers to the cost of the laptop computers provided to them were (with some exceptions) made in the absence of a genuine choice made by the teacher to participate in the NTPP; because the contribution to the cost was set at an excessive rate; because the deductions made were not principally for the benefit of the teachers concerned; and because the value of the benefits actually received by the teachers (the personal use made of the laptops) did not provide a countervailing justification.
Other complex questions, in which various submissions made by the AEU are rejected, are also dealt with by my reasons, but it is not necessary to refer to them here. There are some unresolved questions including the orders that are now to be made in relation to the Group 11 teachers and the further disposition of the claims yet to be determined. I will provide the parties with an opportunity to consider my reasons and to consult. I will list the proceeding for directions at 9.30 am on 25 November 2015, so that the further steps that now need to be taken may be addressed.
FEDERAL COURT OF AUSTRALIA
Australian Education Union v State of Victoria (Department of Education and Early Childhood Development) [2015] FCA 1196
Citation: Australian Education Union v State of Victoria (Department of Education and Early Childhood Development) [2015] FCA 1196 Parties: AUSTRALIAN EDUCATION UNION v STATE OF VICTORIA (DEPARTMENT OF EDUCATION AND EARLY CHILDHOOD DEVELOPMENT) File number: VID 252 of 2013 Judge: BROMBERG J Date of judgment: 6 November 2015 Catchwords: INDUSTRIAL LAW – payment of wages – Div 2 of Pt 2‑9 of Ch 2 of Fair Work Act 2009 (Cth) (FW Act) – respondent (employer) implemented scheme pursuant to which laptop computers were provided to teachers principally for work purposes and deductions made from salaries of teachers as contributions to the cost of the equipment provided – whether employer contravened s 323(1) of FW Act and relevant Enterprise Agreements (Agreements) by failing to pay salaries in full – whether, and by way of exception to the requirements of s 323(1), s 324(1)(b) or (d) permitted the deductions made – as to s 324(1)(b), whether the deductions made were authorised by teachers in accordance with the Agreements – Agreements provided for salary packaging arrangements – whether the Recipient Agreement by which the deductions were authorised by teachers, was a “salary packaging arrangement” within the meaning of the Agreements – meaning of “salary packaging arrangement” – Recipient Agreement not a “salary packaging arrangement” and thus deductions not permitted by s 324(1)(b) – if, contrary to the finding made, deductions were authorised by Agreements, whether the term of the Agreements which permitted the deductions was rendered of no effect by s 326(1) because the deductions were “unreasonable in the circumstances” – consideration of meaning of “unreasonable in the circumstances” by reference to legislative history including Truck Act provisions – whether the participation of teachers in the scheme occurred in the absence of genuine choice – whether the deductions were set by reference to an unreasonable rate of contribution – whether teachers were the principal beneficiaries of the deductions made – whether the value obtained by teachers through personal use of the laptop computers provided a justification for the deductions made – deductions were “unreasonable in the circumstances” – as to s 324(1)(d), whether the deductions were authorised by or under a State law (Ministerial Order) – Ministerial Order not inconsistent with Agreements and not made in excess of power – whether s 324(1)(d) gave effect to deductions retrospectively authorised by Ministerial Order – consideration of presumption against retrospective operation of statutes in the context of a State law legislating for retrospectivity for the purpose of a Commonwealth law – whether presumption against alienation of vested property applicable – whether acquisition of property other than on just terms – s 324(1)(d) of FW Act did not authorise or act upon retrospective State law – whether any invalidity in Ministerial Order severable – Ministerial Order can be given partial effect – whether Ministerial Order inoperative by reason of the effect of s 326(1) – whether Recipient Agreements form part of teachers’ contracts of employment and whether the terms thereof that permitted the making of deductions were of no effect by reason of s 326(1), as the deductions made were “unreasonable in the circumstances” – if so, was the operation of the Ministerial Order predicated upon the existence of effective Recipient Agreements in which teachers agreed to deductions from their salaries – Ministerial Order inoperative in relation to any deductions made pursuant to a term rendered of no effect by s 326(1) – contraventions of s 323(1) established – whether employer required teachers to spend their salaries on laptop computers in contravention of s 325(1) – whether a requirement made by an employer can be contained in a contract, for the purposes of s 325(1) – whether any requirement made by the employer was “unreasonable in the circumstances” pursuant to s 325(1) – circumstances in which a reduction in salary may be a “deduction” within the meaning of s 324(1). Legislation: Acts Interpretation Act 1901 (Cth), s 46
Australian Courts Act 1825 (UK)
Education and Training Reform Act 2006 (Vic), part 2.4, ss 2.4.2, 2.4.3, 2.4.12, 2.4.14, 5.2.12, 5.10.5
Fair Work (Registered Organisations) Act 2009 (Cth)
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), Sch 16 item 2(2)
Fair Work Act 1994 (SA)
Fair Work Act 2009 (Cth), Ch. 2 Pt. 2-9 Div. 2, ss 50, 323(1), 323(1)(a), 324, 324(1), 324(1)(a), 324(1)(b), 324(1)(c), 324(1)(d), 325, 325(1), 325(2), 326, 326(1), 326(1)(c)(i), 326(1)(c)(ii), 326(2) 326(3), 326(3)(a), 326(3)(b), 545(2)(b),
Fair Work Bill 2008 (Cth)
Fair Work Regulations 2009 (Cth), reg 2.12
Federal Court of Australia Act 1976 (Cth), Pt IVA
Fringe Benefits Tax Assessment Act 1986 (Cth) s 136(1)
Industrial Relations Act 1984 (Tas)
Industrial Relations Act 1996 (NSW), s 119
Industrial Relations Act 1999 (Qld)
Interpretation of Legislation Act 1984 (Vic), s 22(1)
Minimum Conditions of Employment Act 1993 (WA), s 17B(2)
Seat of Government Acceptance Act 1909 (Cth)
Subordinate Legislation Act 1994 (Vic), s 12E
The Constitution, s 51(xxxi)
Truck Act 1831 (UK), ss 2, 23
Truck Act 1887 (UK), s 6
Truck Act 1896 (UK), ss 1, 2, 3
Truck Act 1899 (WA)
Truck Act 1900 (ACT)
Truck Act 1900 (NSW)
Victorian Workers’ Wages Protection Act 2007 (Vic), ss 7, 7(1)(a)(i), 7(1)(a)(iii), 7(2), 9(1)(c), 11(1)Cases cited: AB v State of Western Australia (2011) 244 CLR 390
Adco Constructions Pty Ltd v Goudappel (2014) 308 ALR 213
Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241
Apotex Inc. v. Canada (C.A.) [1994] 1 FC 742
Association of Professional Engineers, Scientist and Managers, Australia v Wollongong Coal Limited [2014] FCA 878
Attorney-General (British Columbia) v Parklane Private Hospital (1974) 47 DLR (3d) 57
Australian Capital Television Pty Limited v The Commonwealth of Australia (1992)177 CLR 106
Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385
Bank of New South Wales v Commonwealth (1948) 76 CLR 1
Bristow v City Petroleum Ltd [1987] 1 WLR 529
Broadcasting Company of Australia Proprietary Limited v The Commonwealth (1935) 52 CLR 52
Cameron v Cameron [2009] SASC 27
Chalmers v The Commonwealth of Australia (1946) 73 CLR 19
Chang Jeeng v Nuffield (Australia) Proprietary Limited (1959) 101 CLR 629
City of Wanneroo v Holmes (1989) 30 IR 362
Commonwealth of Australia v Crothall Hospital Services (Aust) Ltd (1981) 36 ALR 567
Commonwealth v Anti-Discrimination Tribunal (Tasmania) (2008) 169 FCR 85
Construction Forestry Mining and Energy Union v Mammoet Australia Pty Ltd (2013) 248 CLR 619
Fair Work Ombudsman v Quest South Perth Holdings PtyLtd (2015) 228 FCR 346
Forstaff Pty Ltd v Chief Commissioner of State Revenue (2004) 144 IR 1
Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR(NSW) 498
Government of the State of Penang v Beng Hong Oon [1972] AC 425
Harrington v Lowe (1996) 190 CLR 311
Henville v Walker (2001) 206 CLR 459
Hewlett v Allen & Sons [1892] 2 QB 662
Hewlett v Allen (trading as F. Allen & Sons) [1894] AC 383
Hunter Douglas Australia Pty Limited v Perman Blinds (1970) 122 CLR 49
ICM Agriculture Pty Ltd v The Commonwealth of Australia (2009) 240 CLR 140
Kenyon v Darwen Cotton Manufacturing Company, Limited [1936] 2 KB 193
Kucks v CSR Limited (1996) 66 IR 182
La Macchia v Minister for Primary Industry (1986) 72 ALR 23
Marks v GIO Australia Holdings Limited (1998) 196 CLR 494
Massey v Crown Life Insurance Co [1978] 2 All ER 576
Maxwell v Murphy (1957) 96 CLR 261
May v Lilyvale Hotel Pty Limited [1995] IRCA 628
Murrihy v Betezy.com.au Pty Ltd (2013) 238 IR 307
National Provincial Bank Ltd v Ainsworth [1965] AC 1175
Nethermere (St Neots) Ltd v Gardiner [1984] ICR 612
Nicholls v Greenwich London Borough Council [2003] ICR 1020
Penman v The Fife Coal Company Limited [1934] SLT 223
Penman v The Fife Coal Company, Limited [1936] AC 45
Pidoto v Victoria (1943) 68 CLR 87
Plaintiff M47/2012 v Director-General of Security (2012) 251 CLR 1
Polyukhovich v Commonwealth of Australia (1991) 172 CLR 501
Pratt v Cook, Son and Company (St. Paul’s), Limited [1940] AC 437
R v Kidman (1915) 20 CLR 425
Re AGL Cooper Basin Natural Gas Supply Arrangements (1997) ATPR ¶41-593
Re Dingjan; Ex parte Wagner (1995) 183 CLR 323
Re Media Council of Australia (1996) ATPR ¶41-497
Roach v Bickle (1915) 20 CLR 663
Robertson v City of Nunawading [1973] VR 819
Rofin Australia Pty Ltd v Newton (1997) 78 IR 78
Rokobatini v Minister for Immigration and Multicultural Affairs (1999) 90 FCR 583
RS Howard & Sons Limited v Brunton (1916) 21 CLR 366
Secretary of State for Energy and Climate Change v Friends of the Earth [2012] EWCA Civ 28
Settlement Agents Supervisory Board v L J Hooker Settlements Pty Ltd [2009] WASCA 8
Shipping Association of Georgetown and Bookers Shipping (Demerara) Ltd v Hayden (1975) 22 WIR 135
Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67
Sportodds Systems Pty Ltd v New South Wales (2003) 133 FCR 63
Tallerman and Company Proprietary Limited v Nathan’s Merchandise (Victoria) Proprietary Limited (1957) 98 CLR 93
The Queen on the prosecution of J. B. Saunders v The Postmaster General [1876] 1 QBD 658
The Queen v Toohey; Ex parte Meneling Station Proprietary Limited (1983) 158 CLR 327
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165
Union Club v Lord Battenberg (2006) 66 NSWLR 1
Union Fidelity Trustee Company of Australia Limited v Commissioner of Taxation of the Commonwealth of Australia (1969) 119 CLR 177
University of Wollongong v Metwally (1984) 158 CLR 447
Williams v North’s Navigation Collieries (1889) Limited [1906] AC 136
Wilton v Coal & Allied Operations Pty Ltd (2007) 161 FCR 300Date of hearing: 21–24 July 2014 and 29 July 2014 Place: Melbourne Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 612 Counsel for the Applicant: Mr R Niall QC with Ms M Richards SC Solicitor for the Applicant: Holding Redlich Counsel for the Respondent: Ms R Doyle SC with Ms C Harris Solicitor for the Respondent: Corrs Chambers Westgarth
Table of Corrections 22 August 2016 In paragraph [72] “this provisions” corrected to “these provisions”. 22 August 2016 In paragraph [151] extraneous “was” deleted before “intended” 22 August 2016 In paragraph [163] “Trucks Act” corrected to “Truck Act”; citation of Australian Courts Act corrected to 1828, 9 Geo IV, c 83 22 August 2016 In paragraph [171] “Victoria Act” corrected to “Victorian Act” 22 August 2016 In paragraph [180] “necessary” corrected to “necessarily” 22 August 2016 In paragraph [186] “The broad nature by the considerations” corrected to “The broad nature of the considerations” 22 August 2016 In paragraph [215] “SOAF” corrected to “Statement of Agreed Facts (SOAF)” 22 August 2016 In paragraph [227] “license” corrected to “licence” 22 August 2016 In paragraph [229] “appraised” corrected to “apprised” 22 August 2016 In paragraph [247] closing bracket deleted following the citation 22 August 2016 In paragraph [280] “different group of teachers” corrected to “different groups of teachers” 22 August 2016 In paragraph [295] “paragraphs (a) to (e)’ corrected to “subparagraphs (a) to (e)” 22 August 2016 In paragraph [394] “Ms Fisher” corrected to “Ms Fischer” 22 August 2016 In paragraph [426] “an task” corrected to “a task” 22 August 2016 In paragraph [531] “Ms Aulich” corrected to “Ms Terry” 16 May 2016 Paragraph [438] renumbered to [437], there having been no paragraph [437]. All subsequent paragraphs re-numbered down by one accordingly. Internal paragraph references amended accordingly, in paragraphs [474] and [500]. Number of paragraphs in certification and in cover page amended accordingly.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
FAIR WORK DIVISION
VID 252 of 2013
BETWEEN: AUSTRALIAN EDUCATION UNION
ApplicantAND: STATE OF VICTORIA (DEPARTMENT OF EDUCATION AND EARLY CHILDHOOD DEVELOPMENT)
Respondent
JUDGE:
BROMBERG J
DATE OF ORDER:
6 NOVEMBER 2015
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1. The proceeding be listed for directions at 9.30 am on 25 November 2015.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
FAIR WORK DIVISION
VID 252 of 2013
BETWEEN: AUSTRALIAN EDUCATION UNION
ApplicantAND: STATE OF VICTORIA (DEPARTMENT OF EDUCATION AND EARLY CHILDHOOD DEVELOPMENT)
Respondent
JUDGE:
BROMBERG J
DATE:
6 NOVEMBER 2015
PLACE:
MELBOURNE
TABLE OF CONTENTS
Introduction [1] Relevant Legislation [20] Were the deductions authorised in accordance with the agreements? [21] Were the NTPP deductions a “salary packaging arrangement”? [30] The meaning of the phrase “salary packaging arrangement” [33] Does a clause 18 salary packaging arrangement require the agreement of the employer? [52] Was “salary packaging arrangement” understood by the framers of the clause to exclude the NTPP? [57] Was a Recipient Agreement a “salary packaging arrangement”? [64] The Recipient Agreement [67] Discussion [86] The “pre-tax salary” issue [121] Further matters [127] Were the NTPP deductions authorised by teachers in accordance with the Agreements? [135] Was each of the NTPP deductions unreasonable in the circumstances? [140] Legislative History [148] Some Relevant Considerations [176] Discussion [184] Were the NTPP deductions authorised by a law of a state? [230] Is the Ministerial Order inconsistent with the Agreements? [233] Does s 324(1)(d) apply in relation to a retrospective authorisation? [237] The presumption against the alienation of vested property [264] Acquisition of property other than on just terms [269] Is invalidity severable? [271] Was the Ministerial Order inoperative by reason of the effect of s 326(1)? [285] Do the Recipient Agreements contain terms forming part of teachers’ contracts of employment? [309] Did DEECD unreasonably require teachers to spend their salary? [335] The additional questions raised by the Court [358] Conclusion [380] Annexure 1: Introduction to annexures [384] Annexure 2: Computers were essential work tools [403] Classroom teaching [405] Non-teaching tasks [425] Annexure 3: Whether the Group 11 teachers had a practicable alternative to participation in the NTPP [437] Documentary Evidence [443] Ms Aulich [463] Mr Farquhar [470] Ms Fischer [477] Ms Haddow [484] Ms Humphries [489] Mr Kober [496] Mr Kumar [501] Ms MacKinnon [505] Ms O’Grady [511] Ms Renton [523] Ms Terry [527] Annexure 4: reasons for participation in the NTPP [532] Evidence of Group 11 teachers [535] Evidence of DEECD teachers [547] Discussion [558] Annexure 5: extent of personal use of laptops [559] Evidence of Group 11 teachers [560] Evidence of DEECD teachers [571] Discussion [581] Annexure 6: DEECD’s aim in introducing the NTPP [596] Annexure 7: Percentage contributions by teachers to acquisition cost [611] REASONS FOR JUDGMENT
INTRODUCTION
Division 2 of Part 2-9 of Chapter 2 (Division 2) of the Fair Work Act 2009 (Cth) (FW Act) contains provisions (ss 323–327) that are newcomers to Federal industrial law but have a provenance that can be traced back through the English “Truck Acts” to 1465. The provisions deal with the payment of wages. So far as is relevant for the disposition of this proceeding, s 323(1) requires an employer to pay to its employee amounts payable to the employee in relation to the performance of work, in full and in money, except where the making of a deduction is permitted by s 324(1). Section 324(1) specifies the limited circumstances in which deductions may be made and permits a deduction authorised by an employee in accordance with an enterprise agreement, or authorised by or under a law of a State. Section 325(1) prohibits an employer from requiring its employee to spend amounts payable to the employee in any particular way, where the requirement is “unreasonable in the circumstances”. Section 326(1) invalidates a term of an enterprise agreement or a contract of employment that has the effect of permitting the employer to make a deduction, where the deduction is for the benefit of the employer and is “unreasonable in the circumstances”.
Between 1 July 2009 and 29 November 2013, the State of Victoria (Department of Education and Early Childhood Development) (DEECD) deducted over $20 million from the salaries of certain employees. The deductions were made in respect of a scheme known prior to March 2012 as the “Notebooks for Teachers and Principals Program” and subsequently as the “eduSTAR.NTP Program” (NTPP). In broad terms, this proceeding concerns whether deductions made by DEECD were or were not permitted by s 324(1). If they were not, the AEU contends that s 323(1)(a) has been contravened as well as applicable enterprise agreements requiring the payment of wages in full. In considering whether the deductions were authorised in accordance with s 324(1), the operation and effect of s 326(1) is engaged and whether the deductions were “unreasonable in the circumstances” needs to be considered. There is also an issue as to whether DEECD’s conduct contravened s 325(1) by requiring teachers to spend part of their pay on the NTPP.
The simplicity of that statement of the issues is belied by the myriad and complex questions that are necessary to answer in order to resolve the dispute. I will outline the main issues in more detail shortly, but first some more background is required.
This proceeding was brought by the Australian Education Union (AEU). The AEU is an organisation of employees registered under the Fair Work (Registered Organisations) Act 2009 (Cth), and is entitled to represent the industrial interests of teachers and principals (teachers) employed by DEECD, under part 2.4 of the Education and Training Reform Act 2006 (Vic) (ETR Act), in the teaching service in Victorian government schools (schools). It was not in contest that the AEU has standing to apply for the relief it seeks.
The AEU and DEECD were both parties to the Victorian Government Schools Agreement 2004 (2004 Agreement), the Victorian Government Schools Agreement 2008 (2008 Agreement) and the Victorian Government Schools Agreement 2013 (2013 Agreement) (collectively, the Agreements). There was no issue that contravention of the 2008 Agreement or of the 2013 Agreement would constitute contravention of Schedule 16, item 2(2) of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) or of s 50 of the FW Act, respectively.
In around 1995, the then Premier of Victoria launched a scheme known as the “Navigator Schools Project,” the purpose of which was to increase the implementation of technology in Victorian schools. That led some years later (in around 1998) to the commencement of the NTPP. In brief, and relevantly to the issues which arise in this proceeding, the program was designed to provide participating teachers with a laptop computer and associated software for the teacher to use in teaching, preparation, administration and professional development. DEECD entered into arrangements (originally lease arrangements; later purchase arrangements) with third parties to procure large numbers of laptop computers. Those computers were then licensed to teachers pursuant to written agreements called Recipient Agreements. Ordinarily, a teacher retained a laptop for around three to four years, and then returned it to DEECD contemporaneously with the receipt of a new laptop under a new Recipient Agreement. Personal use of the laptop was permitted, on conditions.
NTPP laptops were provided to teachers in “Cycles” and “Rounds.” Each Cycle comprised a number of Rounds: initially seven, though in times material to this proceeding ordinarily five. Each Round entailed a fresh lease or purchase arrangement by DEECD with a third party, and fresh Recipient Agreements between DEECD and teachers. Teachers that participated in a particular Round of a Cycle participated in the same-numbered Round of the next Cycle. That is, a teacher that received his or her laptop as part of Cycle 3 Round 2 (for example) would receive his or her next laptop some three to four years later as part of Cycle 4 Round 2. The NTPP was rolled out progressively, starting with one Round of teachers in 1998, two Rounds in March and November 1999, and so on until seven Rounds had been completed. The first seven Rounds were Cycle 1. Teachers that were part of Cycle 1 Round 1 returned their laptops in around February 2002 and took up computers as part of Cycle 2 Round 1 (amongst others who had not been part of Cycle 1 Round 1). Cycle 2 Round 1 computers were returned in June 2005 and Cycle 2 Round 1 teachers (again, I assume, amongst others) became part of Cycle 3 Round 1.
Teachers made monetary “contributions” to the cost of the NTPP. The Recipient Agreements authorised fortnightly “deductions” from a teacher’s salary. The quantum of the deductions differed depending on the kind of computer licensed by the teacher. In most Rounds during times material to this proceeding, two computers were offered: an Apple-branded computer and a computer of some other brand (commonly Lenovo) running the Windows operating system rather than the Mac operating system. In some rounds (for example Cycle 4 Round 2), only a Windows computer was offered. The nature of teachers’ contributions is the subject of contest, but in neutral terms the outcome for teachers was that they received in their pockets between $4 and $17 less per fortnight (depending on the Cycle and Round and the nature of computer) than would have been the case had they not entered into Recipient Agreements. The fortnightly amounts deducted in respect of individual teachers were not large, but total contributions were not insignificant.
The AEU contended that in deducting the contributions from teachers’ wages (and thereby not paying teachers the amounts payable to them in full), DEECD contravened s 323(1)(a) and one or other of the Agreements (and, consequently the Transitional Act or the FW Act). The AEU’s pleaded case is that the deductions were made, relevantly, in the period 1 July 2009 (being the date Division 2 commenced) to 29 November 2013 (being the date of the Amended Statement of Claim). That the deductions were made in that period is admitted. However, the AEU’s claim for relief seeks an order requiring the repayment of all deductions made to the date of any order for repayment. It may well be that there is no issue that the deductions continued beyond the date of the Amended Statement of Claim and can be the subject of any order which may later be made. For current purposes, however, I will (in accordance with the case as pleaded) proceed on the basis that the deductions alleged to have been made in contravention of s 323(1)(a) and in breach of one or other of the Agreements are those that were made in the period 1 July 2009 to 29 November 2013 (the claim period).
DEECD denied it had required any of the teachers to spend their pay on the NTPP in contravention of s 325. As to the alleged contravention of s 323(1), DEECD relied upon each of s 324(1)(b) and s 324(1)(d) to contend that the deductions were permitted deductions. Each of the Agreements contained a clause providing that teachers may enter into “salary packaging arrangements”. DEECD contended that the deductions made were authorised by the Recipient Agreements as part of salary packaging arrangements which were authorised by the Agreements. DEECD relied on s 324(1)(b) to contend that, in these circumstances, the deductions made were authorised by the teachers “in accordance with an enterprise agreement” and consequently s 323(1) was not contravened. DEECD also contended that the salary packaging arrangements made in accordance with the Agreements qualified its obligation under those Agreements to pay teachers in full and, consequently, that those Agreements were not breached. Whether the Recipient Agreements were “salary packaging arrangements” within the meaning of the Agreements is the main issue in contention in that part of the case. The AEU contends that they were not and that, consequently, s 324(1)(b) is not applicable.
On 19 December 2012, following the commencement of a proceeding against DEECD in which it was alleged that the FW Act and the Agreements had been contravened, Ministerial Order No. 632 (Ministerial Order) was made under the ETR Act. Relevantly, it inserted a new clause 2.9.1 after clause 2.8.1 of the Teaching Service (Employment Conditions, Salaries, Allowances, Selection and Conduct) Order 2009. Clause 2.9.1 included that on and from 1 July 2009 any amount that a person had agreed would be deducted from that person’s salary in accordance with a Recipient Agreement was authorised to be deducted from and may lawfully be deducted from the salary of such a person. DEECD contended that the Ministerial Order, on and from 1 July 2009, attracted both the retrospective and prospective operation of s 324(1)(d) of the FW Act, which provided that an employer may deduct an amount from an amount payable to an employee where “authorised by or under a law of a State”.
The AEU has raised a number of challenges to the operation and effect of the Ministerial Order, including as to whether it can operate retrospectively. In addition, the AEU relies on s 326(1) to contend that, to the extent that the Agreements or the Recipient Agreements permitted or had the effect of permitting the deductions, they were of no effect because the deductions were “for the benefit of the employer” and “unreasonable in the circumstances”. If that is so, the AEU contends that the deductions made from teachers’ salaries were not permitted by s 324(1)(b) or s 324(1)(d).
The number of NTPP laptops in circulation over the claim period varied marginally but was always around 40,000. Given that teachers come and go, the number of affected persons over the claim period may well be 50,000 teachers or more. The matters arising for determination extend to the individual circumstances of each of those affected persons. A potential difficulty arises. If it were necessary to resolve the issues raised including by reference to the individual circumstances of each and every affected teacher the expense for the parties would be prohibitive and the burden placed on the Court would be enormous. Whilst the proceeding is not a representative proceeding under Part IVA of the Federal Court Act of Australia 1976 (Cth), with the agreement of the parties I determined to utilise techniques familiar to class action proceedings to provide an efficient means by which the dispute can be resolved.
Accordingly, it was agreed that that part of the claim of unlawful deductions relating to a sample group of teachers, as well as a set of common questions, be determined by an initial trial, with all other issues raised by the proceeding (including any question of penalty or costs) deferred to a further trial. My orders of 26 May 2014 included the following:
(1)The trial of the proceeding, in so far as it concerns alleged unlawful deductions in respect of the employees listed in Schedule A (the representative employees) (other than on any question of penalty or costs) be heard and determined at the trial commencing on 21 July 2014 (the first trial).
(2)The trial of questions the form of which is agreed between the parties pursuant to orders 4 to 6 hereof or determined by the Court (common questions), be heard at the first trial.
(3)All questions or issues raised by the proceeding, which fall beyond the scope of the matters to be dealt with at the first trial, be adjourned for determination by further trial to be conducted on a date to be fixed after the delivery of judgment determining the matters dealt with at the first trial.
Eleven sample employees (Group 11 teachers) were chosen by the AEU. They are Ms Seona Aulich, Mr Reginald Farquhar, Ms Debra Jane Fischer, Ms Sally Haddow, Ms Jessie Ann Humphries, Mr Sasha Kober, Mr Andrew Kumar, Ms Donna MacKinnon, Ms Erin O’Grady, Ms Jennifer Renton, and Ms Karen Terry. DEECD accepted that those teachers were generally representative of the various kinds of schools and categories of teachers in schools. It was not accepted that the personal use made by those teachers of their NTPP laptops was typical of the personal use made more generally by teachers. To that end and more generally, DEECD called nine teacher witnesses. They are Ms Natalie Barbara Rose Alpine, Ms Jodie Lynne Bray, Ms Kathryn Susan Davis, Ms Janelle Evans, Ms Amanda Jane Henning, Mr Nathan John Jagoe, Ms Amanda Jane Prosser, Mr Peter David Walsh, and Ms Karen Lea Elizabeth Wheeler (DEECD teacher witnesses).
The parties agreed that the witness evidence together with the detailed statements of agreed facts was the evidence upon which the Court can determine both the claims relating to the Group 11 teachers and the common questions.
The common questions (common questions) are as follows (incorporating a change in the wording of question 9 agreed during the hearing):
In these questions:
Ÿthe NTPP refers to the program known as the "Notebooks for Teachers and Principals Program" and the eduSTAR.NTP Program which is referred to in paragraph 7 of the Statement of Agreed Facts dated 11 September 2013.
ŸNTPP deductions refers to the contributions in respect of NTPP notebook computers made by participating teachers.
ŸParticipating teachers means teachers who were parties to recipient agreements pursuant to which NTPP deductions were made.
ŸRecipient agreement means the agreement pursuant to which participating teachers agreed to make the NTPP deductions.
ŸThe Ministerial Order means Ministerial Order 632 made on 19 December 2012 under the Education and Training Reform Act 2006 (Vic).
1.Were the NTPP deductions made between 1 July 2009 to the present a "salary packaging arrangement" within the meaning of any or all of:
a. clause 17 of the Victorian Government Schools Agreement 2004;
b. clause 18 of the Victorian Government Schools Agreement 2008;
c. clause 19 of the Victorian Government Schools Agreement 2013?2.If yes, were the NTPP deductions, or some of them, authorised by the participating teachers in accordance with an enterprise agreement within the meaning of s 324(1)(b) of the Fair Work Act 2009 (Cth) (FW Act), namely any or all of:
a. clause 17 of the Victorian Government Schools Agreement 2004,
b. clause 18 of the Victorian Government Schools Agreement 2008, or
c. clause 19 of the Victorian Government Schools Agreement 2013?3.If the NTPP deductions, or some of them, were authorised by all or any of
a. clause 17 of the Victorian Government Schools Agreement 2004,
b. clause 18 of the Victorian Government Schools Agreement 2008,
c. clause 19 of the Victorian Government Schools Agreement 2013,were those deductions
(i) directly or indirectly for the benefit of the respondent; and
(ii) unreasonable in the circumstances
within the meaning of s 326(1) of the FW Act?
4.Is the effect of the Ministerial Order that:
a.the NTPP deductions made from 19 December 2012 to the present; and/or
b.the NTPP deductions made between 1 July 2009 and 19 December 2012
were authorised by or under a law of a State within the meaning of s 324(1)(d) of the FW Act?
5.Does s 326 of the FW Act have any application where a deduction from an amount payable to an employee is authorised by a law falling within the scope of s 324(1)(d) of the FW Act?
6.Is the recipient agreement a term of the contract of employment of participating teachers within the meaning of s326(1) of the FW Act?
7.If yes, does the recipient agreement:
a.permit, or have the effect of permitting, the respondent to deduct an amount from an amount that was payable to participating teachers in relation to the performance of work; or
b.require, or have the effect of requiring, participating teachers to make a payment to the respondent,
within the meaning [sic] s326(1) of the FW Act?
8.If yes, are the NTPP deductions:
a.directly or indirectly for the benefit of the respondent; and
b.unreasonable in the circumstances
within the meaning of s 326(1) of the FW Act?
9.Does the respondent, as employer, require participating teachers to spend any part of an amount payable to them in relation to the performance of work within the meaning of s325(1) of the FW Act?
10.If so, is that requirement unreasonable in the circumstances, within the meaning of s325(1) of the FW Act?
The position, then, is that that by this initial trial the claim relating to the Group 11 teachers (Group 11 claims) is to be determined to completion. Further, I am to answer the common questions. My determination of the common questions will determine the Group 11 claims. It is intended by the parties that the answers to the common questions will enable the parties to resolve the claims made relating to all affected teachers, without further trial.
Having set out that context, and before moving on, I note that the relief sought by the AEU in its Amended Originating Application was (in broad terms) as follows: declarations of breach of provisions of Division 2; declarations of contravention of the Agreements, and (consequentially) of the sections of the FW Act and of the Transitional Act that proscribe such contraventions; an injunction prohibiting further deductions from the salaries of teachers; orders requiring DEECD to pay to teachers the amounts deducted from their salaries in respect of NTPP laptop computers; and, penalties, payable to the AEU, in respect of contraventions of the FW Act and of the Transitional Act.
RELEVANT LEGISLATION
While I have described the effect of Division 2 above, it will assist the reader to set it out, in so far as relevant, in full:
Division 2—Payment of wages
323 Method and frequency of payment
(1)An employer must pay an employee amounts payable to the employee in relation to the performance of work:
(a) in full (except as provided by section 324); and
(b)in money by one, or a combination, of the methods referred to in subsection (2); and
(c) at least monthly.
…
324 Permitted deductions
(1)An employer may deduct an amount from an amount payable to an employee in accordance with subsection 323(1) if:
(a)the deduction is authorised in writing by the employee and is principally for the employee’s benefit; or
(b)the deduction is authorised by the employee in accordance with an enterprise agreement; or
(c)the deduction is authorised by or under a modern award or an FWC order; or
(d)the deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a court.
Note 1: A deduction in accordance with a salary sacrifice or other arrangement, under which an employee chooses to:
(a)forgo an amount payable to the employee in relation to the performance of work; but
(b)receive some other form of benefit or remuneration;
will be permitted if it is made in accordance with this section and the other provisions of this Division.
Note 2: Certain terms of modern awards, enterprise agreements and contracts of employment relating to deductions have no effect (see section 326). A deduction made in accordance with such a term will not be authorised for the purposes of this section.
(2) An authorisation for the purposes of paragraph (1)(a):
(a)must specify the amount of the deduction; and
(b)may be withdrawn in writing by the employee at any time.
(3)Any variation in the amount of the deduction must be authorised in writing by the employee.
325 Unreasonable requirements to spend amount
(1)An employer must not directly or indirectly require an employee to spend any part of an amount payable to the employee in relation to the performance of work if the requirement is unreasonable in the circumstances.
Note: This subsection is a civil remedy provision (see Part 4-1).
(2)The regulations may prescribe circumstances in which a requirement referred to in subsection (1) is or is not reasonable.
326 Certain terms have no effect
Unreasonable payments and deductions for benefit of employer
(1)A term of a modern award, an enterprise agreement or a contract of employment has no effect to the extent that the term:
(a)permits, or has the effect of permitting, an employer to deduct an amount from an amount that is payable to an employee in relation to the performance of work; or
(b)requires, or has the effect of requiring, an employee to make a payment to an employer or another person;
if either of the following apply:
(c)the deduction or payment is:
(i)directly or indirectly for the benefit of the employer, or a party related to the employer; and
(ii)unreasonable in the circumstances;
(d)if the employee is under 18—the deduction or payment is not agreed to in writing by a parent or guardian of the employee.
(2)The regulations may prescribe circumstances in which a deduction or payment referred to in subsection (1) is or is not reasonable.
Unreasonable requirements to spend an amount
(3)A term of a modern award, an enterprise agreement or a contract of employment has no effect to the extent that the term:
(a)permits, or has the effect of permitting, an employer to make a requirement that would contravene subsection 325(1); or
(b)directly or indirectly requires an employee to spend an amount, if the requirement would contravene subsection 325(1) if it had been made by an employer.
WERE THE DEDUCTIONS AUTHORISED IN ACCORDANCE WITH THE AGREEMENTS?
The statutory exemption case raised by DEECD that relied upon s 324(1)(b) agitated the following three common questions:
1. Were the NTPP deductions made between 1 July 2009 to the present a “salary packaging arrangement” within the meaning of any or all of:
a. clause 17 of the Victorian Government Schools Agreement 2004;
b. clause 18 of the Victorian Government Schools Agreement 2008;
c. clause 19 of the Victorian Government Schools Agreement 2013?
2. If yes, were the NTPP deductions, or some of them, authorised by the participating teachers in accordance with an enterprise agreement within the meaning of s 324(1)(b) of the Fair Work Act 2009 (Cth) (FW Act), namely any or all of:
a. clause 17 of the Victorian Government Schools Agreement 2004,
b.clause 18 of the Victorian Government Schools Agreement 2008, or
c. clause 19 of the Victorian Government Schools Agreement 2013?
Relying on s 324(1)(b), DEECD contended that the NTPP deductions were “authorised by the employee in accordance with an enterprise agreement.” DEECD contended that the NTPP deductions made by it from participating teachers’ salaries were authorised in accordance with one or another of the Agreements.
Clause 18 of the 2008 Agreement provided that:
(1)An employee may enter into a salary packaging arrangement in respect of a range of salary packaged benefits including:
(a) superannuation;
(b) a novated lease on a motor vehicle;
(c)payment of medical benefits insurance to a fund nominated by the employee;
(d) mobile telephones;
(e) note book and lap top computers;
(f) membership fees and subscriptions to professional associations;
(g) home office expenses;
(h) financial counselling fees;
(i) disability/income protection insurance premiums; and
(j) self education expenses.
(2)All costs associated with salary packaging, including administrative costs and any additional tax associated with the employment benefit, are to be met from the salary of the participating employee.
The text of clause 17 of the 2004 Agreement is in precisely the same form. Clauses 19(1) and (2) of the 2013 Agreement are also in precisely the same form. Although clause 19 contains additional provisions in relation to the authorisation of deductions, nothing turns on a consideration of those provisions.
Each of the Agreements binds DEECD, the AEU and (amongst others) teachers and principals employed in government schools in the State of Victoria. Each requires that principals and teachers be paid the specified remuneration (expressed in monetary terms) set out in a salary schedule included in the Agreement.
As the issues in contest relate to the proper interpretation of identical terms found in each Agreement, I will focus my consideration on the proper meaning of clause 18 of the 2008 Agreement (clause 18). It is accepted that if the NTPP deductions are a “salary packaging arrangement” within the meaning of clause 18, then they would also meet that description in clause 17 of the 2004 Agreement and clause 19 of the 2013 Agreement. The same approach may be taken in answering questions 2 and 3, as no point of distinction has been raised by either party and none is apparent.
I should say at this point that it is not entirely clear to me why common questions 1, 2 and 3 raised clause 17 of the 2004 Agreement. The 2008 Agreement came into force and replaced the 2004 Agreement on 1 August 2008. The claim period commenced on 1 July 2009 and the AEU made no claim in relation to any earlier period. It was not explained, or at least not clearly explained, why in those circumstances it was necessary for DEECD to rely upon the 2004 Agreement as a foundation for a s 324(1)(b) exception.
It may be that DEECD held the precautionary view that reliance on the 2004 Agreement was necessary to support deductions made after 1 July 2009 which had been authorised under a Recipient Agreement made before 1 July 2009 and whilst the 2004 Agreement was in operation. To my mind it is unnecessary for DEECD to adopt such a precautionary position, if that is what it did. I have no difficulty in reading clause 18 of the 2008 Agreement as picking up arrangements entered into prior to that Agreement coming into force (assuming those arrangements met the description “salary packaging arrangement”, etc.). I consider that to have been the likely intent of the parties to the 2008 Agreement.
I need not, at this juncture, determine that issue, although it may require determination at a later time. There is, as I have said, no relevant distinction between the terms of cl 17 of the 2004 Agreement and cl 18 of the 2008 Agreement and the case was conducted on the basis that, if DEECD’s submissions are correct, all NTPP deductions made in the claim period were authorised by one of the 2004, 2008 or 2013 Agreements. I will proceed on that foundation.
Were the NTPP deductions a “salary packaging arrangement”?
The question raised on this part of the case, is whether the NTPP deductions were deductions from salary of the kind that clause 18 permitted DEECD to make. That question turns on whether the NTPP was a “salary packaging arrangement in respect of a range of salary package benefits” within the meaning of clause 18(1).
Clause 18 does not expressly authorise DEECD to make any deductions from the salary that the 2008 Agreement obliges it to pay to each of its teachers. However, it is not in contest that the clause is to be read as authorising the making of deductions from the full salary to which a teacher is otherwise entitled, where the deduction is made pursuant to a “salary packaging arrangement”. In the context of the 2008 Agreement, which contained a primary requirement upon DEECD to pay to its teachers their salaries in money and in full, clause 18(1) must have been intended to provide a capacity for a “salary packaging arrangement” to qualify that primary rule. Clause 18(1) thus contemplated that the full salary payable to a teacher in money may be reduced in accordance with a “salary packaging arrangement”. I accept that clause 18(1) is capable of authorising a deduction to be made from the monetary salary which would otherwise have been payable to an employee under the 2008 Agreement, where that deduction was made pursuant to a “salary packaging arrangement”.
Whether the NTPP is a “salary packaging arrangement” within the meaning of clause 18(1) is where the contest lies. The determination of that issue involves two questions. First, what is the intended meaning of “salary packaging arrangement”? Second, as a matter of characterisation of the NTPP arrangement made between DEECD and each relevant teacher, was the NTPP arrangement a “salary packaging arrangement”?
The meaning of the phrase “salary packaging arrangement”
The phrase “salary packaging arrangement” is not defined by the 2008 Agreement. Its meaning falls to be determined according to established principles of construction of an industrial instrument.
The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context: City of Wanneroo v Holmes (1989) 30 IR 362 at 378 (French J). The interpretation “… turns on the language of the particular agreement, understood in the light of its industrial context and purpose …”: Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [2] (Gleeson CJ and McHugh J). The words are not to be interpreted in a vacuum divorced from industrial realities (Holmes at 378): rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they frequently are couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament: see Holmes at 378–9, citing Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR(NSW) 498 at 503 (Street J). To similar effect, it has been said that the framers of such documents were likely of a “practical bent of mind” and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced: see Kucks v CSR Limited (1996) 66 IR 182 at 184 (Madgwick J); Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16] (Marshall, Tracey and Flick JJ); Amcor at [96] (Kirby J).
It will become apparent in the analysis that follows, that I draw an important distinction between the payment made to an employer out of an employee’s entitlement to salary and the substitution for an entitlement to salary of another form of remuneration. It is only the latter which, to my mind, is capable of constituting a “salary packaging arrangement” within the meaning of clause 18(1). It is convenient that I commence the discussion by identifying what is remuneration.
Remuneration is the reward paid or provided in return for the performance of a service or for work done. The ordinary meaning of “remuneration” is pay for services rendered: Chalmers v The Commonwealth of Australia (1946) 73 CLR 19 at 37 (Williams J). That connotes a connection between the payment or benefit received and the provision of work or services: Settlement Agents Supervisory Board v L J Hooker Settlements Pty Ltd [2009] WASCA 89 at [22] (Martin CJ, with whom Pullin JA and Newnes AJA agreed). As Blackburn J observed in the Queen on the prosecution of J. B. Saunders v The Postmaster General [1876] 1 QBD 658 at 663, “… I think the word ‘remuneration’ is a wider term and means a quid pro quo. If a man gives his services, whatever consideration he gets for giving his services seems to me a remuneration for them.” A comparable understanding has been applied in Australia: May v Lilyvale Hotel Pty Limited [1995] IRCA 628 at 9–12 (Wilcox CJ). In Rofin Australia Pty Ltd v Newton (1997) 78 IR 78 at 81, a Full Bench of the Australian Industrial Relations Commission defined remuneration as:
… the reward payable by an employer to an employee for the work done by that employee in the course of his or her employment with that employer. It is a term that is confined neither to cash payments nor, necessarily, to payments actually made to the employee. It would include non-pecuniary benefits and payments made on behalf of and at the direction of the employee to another person out of moneys otherwise due to that employee as salary or wages.
In an employment relationship an employer will ordinarily remunerate its employee for the work provided by paying a monetary salary. However, as the passage just cited illustrates, remuneration can be provided in other ways. Where a mix of remunerative benefits is provided in exchange for work, that will often be collectively referred to as a “remuneration package”.
The phrase “salary packaging”, in the context of an existing employment relationship, describes a situation where an employee’s total remuneration paid by way of salary is restructured by the employee sacrificing salary in exchange for a non-salary form of remuneration. To engage in “salary packaging” is to make a salary packaging arrangement. Sometimes this process is referred to as “salary sacrificing”.
The CCH Macquarie Dictionary of Employment and Industrial Relations describes the practice of salary packaging synonymously with “salary sacrifice” as follows (D Yerbury & M Karlsson, The CCH Macquarie Dictionary of Employment and Industrial Relations (CCH Australia Limited & Macquarie Library Pty Ltd, 1992), at 310):
the structuring of the total remuneration to an employee … so as to increase that employee’s disposable income and maximise his/her choice as to which elements of a remuneration package would be most personally beneficial, while retaining the same net cost of employment to the employer. Often the package involves less direct salary than hitherto and more fringe benefits.
…As that definition makes clear, the subject of a salary packaging arrangement is remuneration earned. A salary packaging arrangement, or salary packaging, is the making of an arrangement that will restructure the remuneration otherwise payable to an employee as salary for a mix of salary and non-salary remuneration. In an existing employment, that restructure will involve the employee sacrificing part of an existing entitlement to receive salary in return for service for other benefits earned by the employee and provided by the employer as remuneration in return for service. A fundamental feature of a salary packaging arrangement is the substitution of one form of remuneration for another.
The remuneration provided in substitution for salary may take various forms. It may be the provision of a good or service like a vehicle or access to a gym. It may be the discharge of a debt owed by the employee to another person, such as a membership subscription to a union or to a health fund. What is crucial, to my mind, is that the salary substitute is provided to the employee as remuneration for services rendered. Only if that is so, is remuneration the subject of the arrangement and the arrangement a salary packaging arrangement.
Where a good or service is not provided by an employer to an employee as remuneration, it is not provided as part of a salary packaging arrangement. In that case, there is no exchange of salary for a different remunerative benefit, there is simply the provision of a benefit either gratuitously or in exchange for a payment. If such a benefit is paid for, it may be paid for out of the salary due to be paid to the employee, but that would simply be a payment made by the employee, out of salary, for a good or service provided by the employer. It would not be the substitution of salary for another form of remuneration where the good or service was not provided as remuneration. By definition, it would not constitute a salary packaging arrangement.
I should add that, in addressing the meaning of “salary packaging arrangement”, I have taken into account the views of two accountants called by the parties which, in each case, were contained in expert reports received, pursuant to order, as submissions. I think it fair to say, as DEECD contended, that both experts agreed that the general understanding of the term “salary packaging arrangement” is:
An arrangement between an employer and employee whereby the employee agrees to forego an amount of monetary remuneration in return for the provision of non-cash benefits by the employer.
Neither expert directly addressed whether a fundamental feature of a salary packaging arrangement is the substitution of one form of remuneration for another, but that seems implicit from their agreed definition.
DEECD also contended that the definition of “salary packaging arrangement” in s 136(1) of the Fringe Benefits Tax Assessment Act 1986 (Cth) (FBTAA) could shed light on the intended meaning of “salary packaging arrangement” in clause 18. I accept that the definition there provided is arguably broader than that which I have described as reflecting the ordinary understanding of the phrase. There are, however, two reasons why I consider that the FBTAA definition does not assist. First, while true of all legislation, it is notorious that a definition found in tax legislation is often driven by the imperatives of that kind of legislation and is not necessarily designed to reflect the ordinary usage of the term defined. Second, the definition was only introduced on 28 June 2013. Even if it is the case, as DEEDC contended, that the definition was modelled upon words first introduced into s 41(2) of the FBTAA in May 2008, the introduction of those words pre-dated by many years the making of the 2001 Agreement when, as DEECD accepted, the meaning of the phrase “salary packaging arrangement” as found in the Agreements, was settled.
The terms of the 2004 Agreement do not suggest that the phrase “salary packaging arrangement” utilised in clause 18(1) was intended to have a meaning other than the ordinary meaning that I have identified. The words “in respect of a range of salary packaged benefits” do not add very much. Those words simply confirm the nature of the intended arrangement which is already apparent. The “benefits” identified in the non-exhaustive list are recognisable as those for which concessional taxation treatment is available and are reflective of the fact that salary packaging will usually be utilised so as to enable the employee to obtain a financial advantage by restructuring the manner in which remuneration earned is received.
That last observation and two other features of clause 18 suggest that the clause contemplates facilitating an employee’s desire to obtain an advantage through restructuring his or her remuneration. The opening line of clause 18(1) provides that “an employee may enter into a salary packaging arrangement.” That suggests that the arrangement contemplated is an arrangement made for the employee’s benefit. The conclusion is reinforced by the terms of clause 18(2) which require the employee to bear all of the costs associated with the arrangement.
I accept the AEU’s contention that the word “benefit” in clause 18(1) must be understood by reference to its context, namely, a “salary packaged benefit” the subject of a “salary packaging arrangement.” In that context, as the AEU correctly contended, the kind of benefit addressed in clause 18(1) is a substitute for wages provided by DEECD in consideration of the teacher’s services, or, as the AEU submitted, “earned remuneration standing in the place of monetary compensation”. As I have said already, by definition, a fundamental feature of a salary packaging arrangement is the provision by the employer of non-salary remuneration. Accordingly, a benefit provided to an employee for a purpose other than as the quid pro quo for services is not a benefit of the kind that clause 18(1) contemplates.
The AEU went on to contend that, as the purpose of the provision of the non-monetary benefit is to remunerate the employee, a benefit that benefits the employer and only incidentally the employee cannot be a benefit within the meaning of clause 18(1). I do not accept that submission. I would accept that the provision to an employee of a non-salary benefit that principally advantages the employer and only incidentally the employee, is a situation that is unlikely to evidence the provision of a benefit for the purpose of remunerating the employee. But, the question is whether or not the benefit was provided as remuneration, not whether provision of the benefit was more beneficial to the employer than it was to the employee.
Similarly, I do not accept the AEU’s submission that a “benefit” must be a benefit that an employee has control over. Again, lack of employee control over how a benefit can be utilised and the fact that its utilisation is controlled by the employer will likely assist in establishing that the benefit was not provided as remuneration. But, to my mind, an absence of control is not necessarily a disqualifying feature.
All of that reflects the fact that an employer and its employee may have a range of reasons for agreeing that a particular good or service be provided in a salary package. The arrangement may be a good or a bad bargain for the employee, or it may reflect some peculiar need of the employee. What matters, in my view, is whether the substituted benefit was provided as remuneration.
Whilst DEECD contended (as I accept) that none of the degree to which the employee obtains an advantage, the degree of control the employee has over a benefit, or the degree to which the benefit is utilised for work purposes, is determinative, DEECD’s submissions did not really confront the AEU’s proposition that a “benefit” must be a form of remuneration. In so far as DEECD contended to the contrary, I reject that contention. For the reasons I have already given, to construe a “salary package benefit” as capable of being any kind of benefit provided for any kind of purpose fails to understand that the subject matter of a salary packaging arrangement (as the phrase is ordinarily understood and as it is used in clause 18) is remuneration.
Does a clause 18 salary packaging arrangement require the agreement of the employer?
The AEU contended that a salary packaging arrangement of the kind contemplated by clause 18 does not require the employer’s approval. That proposition was contested. Its determination has some indirect relevance to issues otherwise raised. It is convenient that I deal with it now.
The contention was based upon clause 18 making no reference to employer approval. The AEU contrasted that position with other provisions of the 2004 Agreement where, in relation to some aspects of the taking of various kinds of leave, the express approval of the employer is referred to. The AEU relied on the employee-initiated nature of the salary packaging arrangement contemplated by clause 18 and submitted that if an employee sought a restructuring of his or her salary the employee could insist upon it as long as the arrangement was cost neutral to the employer.
DEECD contended that the purpose of clause 18 was to authorise a deduction from salary. Its purpose was not to impose an obligation upon DEECD to make a salary packaging arrangement that it did not wish to make.
A common feature of a salary packaging arrangement is the agreement of both employee and employer. Despite a proposed arrangement being cost neutral for an employer, the employer may have a host of legitimate reasons for wanting to pay the totality of an employee’s remuneration by way of salary. That may be simpler, or it may be more efficient for the employer even where any cost burden to the employer is negated.
The AEU’s contention inheres that the ordinary capacity of an employer to refuse an employee’s proposal for salary packaging was intended to be overridden and an obligation to accept such a proposal was intended to be imposed. There is, in my view, insufficient support for that construction in the text of clause 18 or in the context in which that text appears.
Was “salary packaging arrangement” understood by the framers of the clause to exclude the NTPP?
Each of the parties led evidence about the surrounding circumstances to the making of clause 18 and its successor provisions. Evidence was also led about the making of the Victorian Government Schools Agreement 2001 (2001 Agreement). That was because a predecessor to clause 18 was clause 14 of the 2001 Agreement and it was on the making of that agreement that a clause like clause 18 was first introduced. The terms of clause 14(2) and (3) of the 2001 Agreement are nearly identical to the terms of clause 18(1) and (2). The sole difference is that, whereas clause 18(2) includes the words “and any additional tax associated with the employment benefit”, clause 14(3) does not. It seems to me that nothing turns on this difference. Clause 14(1) imposed upon DEECD an obligation to pay its employees the salary specified by the salary schedules elsewhere set out in the 2001 Agreement.
The AEU contended that the evidence of the surrounding circumstances known to the parties at the time of the making of the 2001 Agreements was to the effect that the NTPP deductions were not regarded as, or understood to be, salary packaging arrangements because they were separate to and excluded from the arrangements understood to be the salary packaging arrangements available for teachers to make with DEECD. On that foundation, the AEU contended that an NTPP arrangement was not a “salary packaging arrangement” as contemplated by the 2001 Agreement, and that the intended meaning carried over to each of the 2004, 2008 and 2013 Agreements.
The evidence relevant to this issue is largely uncontentious. From the AEU’s perspective, the strongest evidentiary support is that, at the time the 2001 Agreement was made, DEECD had in place a comprehensive policy on salary packaging in a Salary Packaging Guide dated March 1999 (1999 SP Guide). The 1999 SP Guide set out a wide range of options for salary packaging which included a capacity for the salary packaging of laptops or notebook computers. The policy prescribed a range of mechanisms and processes by which salary packaging could be arranged and provided for that to be done through external providers. The 1999 SP Guide specifically excluded the NTPP arrangements as capable of being included in any permitted salary packaging arrangements for a laptop or notebook computer. The policy relevantly said:
A computer provided as part of the Department’s ‘notebook computers for teachers’ initiative cannot be included as an optional benefit in the salary package.
There is a controversy between the parties as to whether or not that exclusion was removed in November 2002 when the 1999 SP Guide was updated. It will be necessary to address that matter for other purposes shortly. For current purposes, that is not necessary. DEECD accepted that whatever meaning was intended for the phrase “salary packaging arrangement” by the framers of clause 14 on the making of the 2001 Agreement carried through to clauses 17, 18 and 19 of the 2004, 2008 and 2013 Agreements respectively. In essence, DEECD accepted that the substance of clause 14 was transposed into the Agreements that followed.
The relevant question, then, is whether the evidence of surrounding circumstances, as at the time the 2001 Agreement was made, demonstrated that the terms utilised by the parties in clause 14 were intended to have a meaning that excluded an NTPP arrangement. In my view, the surrounding circumstances do not suggest that the parties intended to restrict the meaning of “salary packaging arrangement” so as to exclude the NTPP. The evidence does not sustain a view that the parties intended the phrase to have anything other than its ordinary meaning.
The extent to which DEECD was prepared to allow or not allow any particular item at any particular time to be the subject of salary packaging should not be regarded as of any significance to the meaning of the clause. As I have indicated already, DEECD had a capacity, unaffected by clause 14, to determine whether it would make or would not make a salary package with any particular employee about any particular salary restructure. There is no reason to assume that the framers of clause 14 intended that DEECD’s position as to what benefits could or could not be included in a salary packaging arrangement would remain fixed by any policy that DEECD had at any particular time, or that clause 14 was intended to reflect that fixed scope. The policy embodied in the 1999 SP Guide was made pursuant to a discretion conferred upon the Secretary to the Department of Education by Ministerial Order No. 154 (see clauses 2.1.2 and 2.3.2(3)). Within the broad parameters set by that Ministerial Order, the policy was capable of being altered at the discretion of the Secretary. There is no reason to suppose that the framers of clause 14 intended that, over the course of its operation, the salary packaging arrangements available under clause 14 should be restricted by what DEECD regarded at an earlier time to have been an appropriate item for salary packaging. It is more likely that, if the framers of clause 14 had turned their mind to the issue, they would have recognised that the optional benefits that DEECD was prepared to allow to be salary packaged may vary over time. In my view, the terms of clause 14 were broadly drawn and intended to facilitate salary packaging for whatever remunerative benefits an employee sought and DEECD was prepared to allow.
It is not, therefore, necessary for me to determine DEECD’s contention that a relevant change to the surrounding circumstances was made in August 2000 when deductions of NTPP contributions commenced to be made from “pre-tax salary”. Even if the AEU is correct in its contention that no relevant change to the surrounding circumstances was thereby effected, my view as to the meaning of the phrase would be unaltered.
Was a Recipient Agreement a “salary packaging arrangement”?
Although common question 1 was posed by reference to the NTPP deductions, in substance the question asks whether the NTPP arrangements which authorised those deductions were “salary packaging arrangements”. The only relevant deductions were the fortnightly deductions made pursuant to the Recipient Agreements between each teacher and DEECD. If a “salary packaging arrangement” was made between a teacher and DEECD it was made by the Recipient Agreement. No party contended to the contrary. The AEU contended that DEECD could only succeed if the whole of the Recipient Agreement could be characterised as a “salary packaging arrangement”. On the other hand, DEECD relied on particular features of the Recipient Agreement to contend that the NTPP arrangement was a “salary packaging arrangement”.
To my mind, if a part of an arrangement with a wider purpose or subject is able to be characterised as a “salary packaging arrangement” then such a part can be regarded as an arrangement of itself. The features of a “salary packaging arrangement” may be embedded in an arrangement of wider compass. If those features are sufficiently connected to be recognisable as an arrangement of themselves, then I can see no reason why their placement within a wider arrangement should deny those features their combined character. Accordingly, I should consider whether, either as a whole or in respect of a part thereof, a Recipient Agreement was a “salary packaging arrangement”.
That consideration ought not be based upon the evidence led by the AEU from teachers to the effect that, when they made a Recipient Agreement, subjectively they did not believe they were committing their salary to a salary packaging arrangement. The nature of the legal relations created when teachers and DEECD entered into Recipient Agreements is to be assessed objectively by reference to what a reasonable person would have understood to be the common intention of the parties from the text of the Recipient Agreements, the surrounding circumstances known to the parties, and the purpose and object of the transaction: Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). It is appropriate that I commence the analysis by considering the text.
The Recipient Agreement
A number of different versions of the standard-form Recipient Agreement were in evidence. Each version had application during a different period within the claim period. In so far as terms differed, no party suggested any relevant distinction.
The standard form Recipient Agreement commenced with its title: Notebooks for Teachers and Principals Program Licence Agreement (or, in later versions, “Recipient Agreement” rather than “Licence Agreement”). The descriptor “Licence Agreement” is a fair representation of the content that followed. The document set out the terms and conditions of the licence offered by DEECD which the teacher was invited to accept. The document was formal, comprehensive, and readily recognisable as an agreement intended to be legally binding.
It commenced by explaining the “Background”. The NTPP was described as an initiative of the Government of Victoria administered by DEECD. It referred to the NTPP, or “the Program”, as:
… designed to support and encourage principals and teachers (“Recipients”) to integrate the use of learning technologies into the classroom, and to provide Recipients with a tool for professional planning, classroom practice, assessment and reporting.
In further describing the Background, the document stated that DEECD had entered into an operating lease with a finance company (or, in later versions, a “procurement agreement”) for the lease of notebook computers and other related items for the purposes of the NTPP. Those items were defined as the “Equipment” set out in Schedule 1. There were non-substantive differences in the scheduled “Equipment” as between the various versions of the Recipient Agreements. The following is the “Equipment” as set out in the earliest of the three versions I was provided:
ŸNotebook Computer and peripherals (battery, adaptor, power cord, Optical Drives (where provided) and carry bag or backpack) with operating system software sufficient for use by the Recipient as a work tool and for self education purposes both at home and at school.
ŸMicrosoft Office software, Anti-Virus software and other selected software preloaded on the Notebook Computer, Guides and Manuals.
ŸUser manuals as supplied by the notebook manufacturer.
The Background continued that, in accordance with the NTPP, DEECD “has agreed to make the Program package as described in Schedule 2 (Notebook Package), available to the Recipient under a non-exclusive licence in accordance with these Terms and Conditions.” Later versions of the Recipient Agreement omitted the words, “under a non-exclusive licence”. Schedule 2 identified the Notebook Package as the Equipment together with “Equipment warranty support and Help Desk for dealing with product faults and difficulties” as well as “Insurance against loss or damage of the Equipment.” Again, there were immaterial differences in Schedule 2 of later Recipient Agreement versions. Finally, the Background stated that the Notebook Package was provided directly to the Recipient and that the agreement was between DEECD and the Recipient personally and not with the Recipient’s school.
The next part of the document should be set out in full. Again, there were differences in the wordings of these provisions in the various versions of the Recipient Agreement. Most are immaterial, so I will set out below the first version, noting important differences in later versions in square brackets:
2. LICENCE [later versions said “Provisions of Notebook Package”]
2.1The Department agrees to make the Equipment available to the Recipient for his or her non-exclusive [later versions omitted “non‑exclusive”] use in accordance with these Terms and Conditions (“Licence Agreement”) [later versions omitted the words “Licence Agreement”].
2.2In consideration of receiving the Notebook Package, the Recipient will:
(a)contribute to the cost of the Notebook Package at the nominated fortnight rate (referred to as the “Contribution Rate”);
(b)authorise the deduction of the Contribution Rate from the Recipient’s pre-tax salary by equal fortnightly instalments for the period:
(i)commencing on the date of delivery of the Equipment in accordance with this Licence Agreement, or at a date agreed between the Department and the Recipient (with an agreed date taking precedence over the date of delivery); and
(ii)ending on the date when the total contribution for the notebook package is paid or the date upon which the Equipment is returned to the Department, whichever is the latter;
(c)demonstrate a commitment to ongoing professional development as set out in Schedule 4; [in later versions, “Schedule 3”] and
(d)observe and comply with the terms and conditions of this Licence Agreement.
2.3The Department will give the Recipient reasonable written notice of any proposed or actual change to the Contribution Rate.
2.4The Department in relation to the collection of information from the Recipient will comply with the Information Privacy Act 2000 and its Privacy Collection Statement referred to in Schedule 3 [in later versions, “Schedule 4”].
Ms Davis’s evidence was that personal use was around 25 per cent of overall use of her laptop. Ms Davis did not recall a particular discussion about personal use when she first signed up to the NTPP, but most of her laptop use initially was for work and so she did not turn her mind to personal use. Over time, however, her personal use increased. As at the time of her evidence, she used her laptop to call her family using Skype, to order books from Amazon, and for personal emails and research. She engaged in more personal use around Christmas (for shopping), at tax time (for doing her tax), and during school holidays. Her personal use decreased somewhat after she got an iPad, but she still used the NTPP laptop for personal word processing and printing things at home. Ms Davis agreed that 90 per cent of her work-related computing, when physically at school, was done on her desktop rather than her laptop, and that use of the laptop for classroom teaching and at home for work purposes comprised 75 per cent of her use of her laptop.
Ms Evans’s evidence was that her personal use was around 25 per cent of overall use of her laptop. Her evidence was that she used her notebook pretty much constantly while at school. She was part-time and did not work Wednesdays. It is likely that with a higher number of work hours, as that of a full-time teacher, Ms Evans’s personal use percentage would be lower. She did not recall, when first signing up to the NTPP, anyone explaining what the laptop was to be used for, but she mainly used it for school-related work rather than personal things. As at the time of her affidavit, she used it for social media, to store music and photos, for internet banking, eBay, general research, searching using Google, booking holidays, personal emailing, paying bills and other day-to-day tasks, online shopping, and sending text messages. She also had an iPad and sometimes used that for reading newspaper articles and looking up recipes, but found her laptop more convenient. She used her smartphone for social media and emails. She had a PC at home, but did not find it convenient to use. Ms Evans said that she did not use her laptop for personal use at school. Her evidence was that, when at home, her personal use sometimes came in the form of a diversion in the course of work use, and sometimes in the form of taking out the computer purely for personal use. The former was more common, because if she was not already working on her computer she sometimes used her iPad for personal use.
Ms Henning’s evidence was that personal use was around 50 per cent of overall use of her laptop. She thought that that was around 10 hours per week. As an assistant principal, she had a desktop at school, which she used for work purposes. Ms Henning’s evidence was that personal use of laptops was discussed at an information session she attended in around 1998, that is, in the infancy of the NTPP program. Teachers were told that if they used the laptop more they would be more confident, and were therefore encouraged to use laptops for personal things. At that time, Ms Henning also had a home computer, but she later disposed of it and her NTPP laptop became and remained her main home computer. She used it for word processing initially, and for research concerning genealogy. She continued, as at the date of her affidavit, to use it for those purposes, and also for emails, banking, internet shopping, general surfing of the internet, social media, reading newspapers, looking up recipes, Google Maps, and printing. Occasionally she played games so as to familiarise herself with them before using them in a school context—but mainly used her tablet computer for that purpose. She agreed that DEECD’s personal use policy affected what she could do on her laptop, including that she would not consider it to be open to her to make her laptop available to other persons for private use. She said that her personal use percentage varied and that in holiday periods there would be a higher proportion of personal use than in non-holiday periods.
Mr Jagoe’s evidence was that he was never informed of restrictions on personal use and did not initially think there were any such restrictions, but that he did not have a great need for personal use. Initially he did not use his laptop much for personal use, but as technology improved so too did his personal use and, as at the time of his affidavit, he used his laptop for personal emails, banking, sports updates, viewing, and replays, fantasy sports, downloading TV shows, reading newspapers, and occasionally online betting. That personal use was generally limited to nights and weekends. He estimated that his personal use was around 20 to 30 minutes per night. His weekend usage varied: sometimes a few hours per day; sometimes no use at all. His daughters used his laptop for homework or use of educational software, especially on the weekend.
Ms Prosser gave evidence that she did not need a NTPP computer for home use when she first signed up because she had a personal computer. She recalled being told by her principal that personal use would not be monitored, but should be appropriate for the school environment. When she first enrolled, she did not make much personal use of the laptop. However, over time, she came to use her laptop more, and did not any longer have a desktop at home. As at the time of her affidavit, she used her laptop for nearly all of her personal internet use. She estimated her personal use at one hour per day, including on weekends. Her personal use included internet searching, social networking, downloading music, buying tickets, internet banking, internet shopping, Skype calls to overseas friends, and occasionally personal word processing. She also used her phone for internet browsing, but when at home more often used the NTPP laptop.
Mr Walsh’s evidence was that when he first signed up to the NTPP he did not recall anything in particular being said about the difference between personal and professional use and that he thought he could use the laptop for personal use if he wanted. However, he stated that he did not use his laptop much for personal use notwithstanding he was permitted to. He had, at the time of his evidence, a personal computer at home, but did not make much personal use of that either. He had a smartphone and an iPad which he occasionally used for checking football scores or other things on the internet. Mr Walsh agreed that any personal use was incidental to the fact that he used his laptop as a work tool. He agreed that there were limitations in policy documents on permissible use, but said that the infrequency of his personal use was caused not by those limitations but instead by the availability of his other personal devices, which he preferred to use for personal use.
Ms Wheeler’s evidence was that her personal use of her laptop was around five to ten hours per week. She said that, when she first received a laptop, she already had a personal computer, but that as her home computer got older she did not bother to replace it because she could use her laptop for personal use. As at the date of her affidavit, she used her laptop for storage of photos, checking emails and social media, as a DVD player for watching movies, and for personal banking and shopping. She had an iPhone that she used to check email or social media, and for internet banking. She had also been given an iPad by her school, and occasionally used that for personal use at home.
Discussion
As a preliminary matter, I note two shortcomings in the evidence. First, much of the evidence related to personal use as at the time of the affidavit or oral evidence. There was very little evidence as to personal use earlier in the claim period, though some evidence of trends. The two such trends were, at least on their faces, contradictory. Some teachers said that personal use had declined in recent years (e.g., Ms Alpine, Ms Bray); a larger number said that personal use had increased (e.g., Ms Davis, Ms Henning, Mr Jagoe, Ms Prosser, and Ms Wheeler). As to the latter, the explanation for increased use was in some cases that, as technology improved, more uses became available (e.g., Ms Davis, Mr Jagoe), and in other cases that the teacher had a home computer at the time of entrance into the NTPP but did not replace it as it became obsolete, because the NTPP laptop could be used for personal use (e.g., Ms Henning, Ms Prosser, Ms Wheeler). In the case of teachers whose use had declined over time, the explanation was increasing availability of alternative devices. That was also an explanation given for low personal use by other teachers, including Ms Aulich, Ms Fischer, Ms Haddow, Mr Kober, Mr Kumar, Ms MacKinnon, and Ms Renton.
I think it most likely that, when the NTPP was introduced in 1998, classroom and non-teaching (including administrative) use was not as pervasive as it would later become, so personal use made up a reasonably high percentage of overall use (though probably not a majority), but was not especially diverse. As technology improved, and the diversity of available uses increased, so too did extent of personal use. Equally, use in the classroom and for non-teaching duties (including administration) became increasingly pervasive. Probably, personal use increased in quantum but decreased as a percentage of overall use. Finally, as competing devices proliferated (e.g., tablet computers, smartphones), personal usage likely decreased both in quantum and as a percentage of overall use. But, I do not know when any of these inflection points occurred, and I proceed on the assumption that the extent of personal use was generally static throughout the claim period. No party sought to suggest that the evidence of personal use was not representative of the claim period.
Second, often teachers gave figures for personal use in terms of time (e.g., 30 minutes a day). The more useful figure is personal use as a percentage of total use. But, most teachers did not give evidence as to total hours of use, making transformation from absolute to percentage terms difficult. It has been necessary to rely on other evidence to make findings as to likely total use.
The first source is the enterprise agreements. Clause 22(1) of the 2008 Agreement stipulated ordinary hours as 76 per fortnight, with not less than 30 minutes for lunch (clause 22(4)). A teacher could not be required to undertake face-to-face teaching in excess of 20 hours per week for secondary teachers (clause 21(4)(b)(i)), or 22.5 hours per week for primary teachers (clause 21(4)(b)(ii)). The 2013 Agreement contained terms to the same effect for ordinary hours (clause 24(1)), lunch (clause 24(4)), face-to-face teaching hours for secondary teachers (clause 22(4)(b)(i)), and face-to-face teaching hours for primary teachers (clause 22(4)(b)(ii)).
The second source is teacher evidence. Many teachers gave evidence that they worked at home after school attendance hours, and some estimated how long: Mr Kober estimated 1.5 hours per night; Mr Farquhar 5–10 hours per week; Ms Evans 1–2 hours per night; Ms Wheeler at least 2 hours a night; Mr Walsh 2–3 hours per night; Ms Henning around 1–2 hours per night; Ms Prosser one hour per night and two hours over the weekend.
Further, a number gave evidence as to hours worked: Ms Fischer used her laptop for work use for more than 45 hours per week, including time spent in the evenings and on weekends. Mr Walsh arrived at around 8:00 or 8:15, and left at 5:00, and then (as noted above) spent 2‑3 hours working from home in the evening. That is around 10–11 hours per day, or around 50–55 hours per week. Ms Davis said that most staff at Glengarry Primary School (of which she was principal) arrived just after 8:00 am and left between 4:00 and 5:00 pm, and that some did further work at home. Assuming 8:00 to 4:30 pm with 30 minutes for lunch, such teachers would work 40-hour weeks plus some time at home. Ms Davis herself worked from around 8:00 am to around 5:30 pm, or (assuming 30 minutes for lunch), around 45 hours per week. Ms Evans, who worked four days per week, worked from 8:00 am to 5:00 pm on Mondays, to 4:30 pm on Tuesdays, and to 4:00 on Thursdays and Fridays, or (with 30-minute lunches) 31.5 hours per week total (plus 1-2 hours per night).
Ms Henning worked from around 7:00 or 7:30 am to 5:30 or 6:00 pm, which she accepted (perhaps conservatively) was around 45 hours working at school per week. She worked one or two hours per night away from school. Though, of that time, she used her laptop for only around 10 hours of work use, it being the case that she had a desktop computer dedicated to her use. Ms Humphries arrived at around 7:30 or 8:00 am and left at around 4:30 or 5:00 pm, or 6:30 pm if she had a subcommittee meeting. Assuming one subcommittee meeting per week, and 30 minutes for lunch, that is around 44 hours per week. She did not ordinarily take her laptop home because she used her private computer for working at home instead. Ms Prosser arrived at 7:30 am and left at 5:30 pm, which she accepted was a nine-hour day or 45-hour week.
There is one further difficulty: it is not clear whether the teachers’ evidence related to the hours during which they required access to their laptops, or whether instead it related to the amount of time that they physically used their laptops. That is, if a teacher said that she used her laptop around 15 per cent of the time for personal use, does that imply that the other 85 per cent was actual work use, or that the other 85 per cent was time during which the laptop was required to be available for work use, so that it could be used if needed? I think the latter. I think it more likely that a teacher in a one-hour class during which there was 10 minutes of actual physical manipulation of the laptop computer throughout the class would say that she had used her laptop for one hour, not for ten minutes. Ms Fischer is illustrative. She said that she used her laptop for work purposes for 45 hours per week. It seems unlikely that she was actually physically manipulating the laptop for that amount of time per week. Rather, it is more likely that intermittent use in class over the course of an hour had been treated by Ms Fischer as one hour’s use, and reasonably so.
The matters set out in the foregoing paragraphs lead me to think as follows. First, many teachers worked more than the 38 hours per week required by the Agreements. Indeed, many were at work for around 45 hours per week, and in some cases (especially in the case of principals), more. Second, many teachers worked from home for around 1–2 hours per night, or between 5–10 hours per week. Overall, then, many teachers would have worked between 50 and 55 hours per week. Many teachers would have required that a computer be available for the entirety of that period, even if it was not being physically manipulated the entire time. On those bases, one hour of personal use would constitute around 2 per cent of total use.
But, the evidence is somewhat sparse, piecemeal, and reliant upon inference. In that circumstance, and where it was for the AEU to prove facts if it wanted to rely upon them in the unreasonableness analysis, I think it is appropriate to adopt a conservative approach. Thus, I will proceed instead on the basis that 30 hours of work use is to be regarded as typical for those witnesses who did not give direct evidence of their work use or total use, but instead only their personal use. I think the supposition that those teachers used NTPP laptops for at least 30 hours per week is well open on the evidence, and is quite conservative. Then, one hour of personal use would be one hour in thirty-one total, or around 3.2 per cent; five hours would be five hours in thirty-five total, or around 14.3 per cent.
I turn to evaluating the percentages of personal use. Where that involves translation of a figure given in terms of time rather than percentage, I will use the method described above. For the Group 11 teachers, the evidence was, and the personal-use percentages that I have ascribed are, as follows:
(i)Ms Aulich: not more than 10 per cent (10 per cent);
(ii)Mr Farquhar: not extensive (5 per cent);
(iii)Ms Fischer: two hours per week as compared with 45 hours of work use (5 per cent);
(iv)Ms Haddow: probably less than one hour per week (i.e., around 3.2 per cent) (5 per cent);
(v)Ms Humphries: 10-15 minutes per day on school days (i.e., around one hour, or 3.2 per cent, per week) (5 per cent);
(vi)Mr Kober: 5 per cent (5 per cent);
(vii)Mr Kumar: very little (5 per cent);
(viii)Ms MacKinnon: less than 5 per cent (5 per cent);
(ix)Ms O’Grady: 10 per cent (10 per cent);
(x)Ms Renton: little if any (5 per cent);
(xi)Ms Terry: less than 5 per cent (5 per cent).
On average, that rounds to 6 per cent personal use.
For teachers called by DEECD, the evidence was, and the personal-use percentages I have ascribed are, as follows:
(i)Ms Alpine: 20 per cent of overall usage as at the time of her affidavit, down from 30 per cent a few years earlier (25 per cent),
(ii)Ms Bray: 30 minutes in the evenings (i.e., around 3.5 hours per week, out of 33.5 hours total or 10.4 per cent) (10 per cent);
(iii)Ms Davis: 25 per cent (25 per cent);
(iv)Ms Evans: 25 per cent (25 per cent);
(v)Ms Henning: 50 per cent (50 per cent);
(vi)Mr Jagoe: 20 to 30 minutes per night (i.e., around 3.5 hours) and sometimes a few hours per day on weekends, but other times no weekend use at all (say, 2 hours for an average weekend), being 5.5 hours personal use per week out of 35.5 total hours, or 15.49 per cent (15 per cent);
(vii)Ms Prosser: one hour per day including on weekends (i.e., around 7 hours per week out of 37 hours total, or 18.9 per cent) (19 per cent);
(viii)Mr Walsh: little personal use (5 per cent);
(ix)Ms Wheeler: 5 to 10 hours per week (say 7.5 hours on average, out of 37.5 hours total, or 20 per cent) (20 per cent).
On average, that rounds to 22 per cent. It should be noted that Ms Davis’s and Ms Henning’s high percentages of personal use occurred in the context of each having a desktop devoted to her use at school. That meant that much work-related activity was done on the desktop, overall usage of the laptop was less, and personal use as a percentage was necessarily higher. The large number of principals in the DEECD sample of teachers (four principals or assistant principals as against five teachers) may well have the result that the average percentage of personal use for the DEECD sample is higher than it would have been for a more representative ratio of principals to teachers. Nevertheless, I do not adjust for this, in keeping with the conservative approach I have taken.
The average of all teachers is 12.95 per cent. If two additional teachers were added at the DEECD average of 22 per cent (to take account of the AEU having called two more teachers than DEECD), the average would be 13.77 per cent. As accuracy to four significant figures is not justifiable on the quality of the available data, I will round the latter figure to 14 per cent and proceed on the basis that the average teacher called as a witness (adjusting for DEECD having called two fewer teachers) used his or her NTPP laptop for personal use at a rate of 14 per cent of total use.
ANNEXURE 6: DEECD’S AIM IN INTRODUCING THE NTPP
At [206] above, I referred to DEECD’s purpose in introducing the NTPP scheme. This annexure sets out the factual basis for that finding. While the NTPP’s background was discussed in the main body of reasons, DEECD’s purpose in introducing the NTPP can be divined, in some measure, from an understanding of that background. Thus, it is set out below, avoiding duplication where possible.
In October 1995, the NSP was launched. Its objectives included the creation of a network of “exemplar” schools with accessible models of new learning environments with access to technology in every classroom. The NSP was thereafter commenced in seven schools, including Essendon North Primary School. Participating schools “investigated and developed new ways to use technology in teaching, and in learning opportunities for students”. It resulted in the July 1998 Navigator Report.
In around 1996, Ms Davie commenced to work at Essendon North as a teacher. Later, she commenced to work in a position which was divided 50 per cent as a school-based project officer for the NSP, and 50 per cent as a project officer with State-wide responsibilities, focused on sharing experiences relating to use of technology in teaching and learning with other teachers across the State. She was involved in the project until 2006.
Ms Davie said that the NSP informed the development of the NTPP, “in particular through the outcomes observed in relation to the benefits to teachers of providing individual notebook computers”. An understanding of the findings of the NSP, set out in the Navigator Report, assists in understanding the purpose of the NTPP. It is apparent from page 2 of the Navigator Report that one of the Navigator Schools, Bendigo Senior Secondary College, had by 1994—i.e., before the NSP’s launch—developed a learning technology plan. That plan was “based around computers in all learning areas, with rooms connected by a fast network, and a commitment to providing notebook computers for all teachers” (emphasis added). It was identified at page 7 that Bendigo Senior Secondary College’s technology plan was used as a planning model for all schools to follow.
Key finding 8 on page 16 of the Navigator Report identified that “Teachers need[ed] emotional, technical and pedagogical support in the integration of learning technologies. Support should include routine access to computers and appropriate software at school and at home, and ongoing professional development programs”. Evidently by way of explanation or in support of key finding 8, there was a statement that teachers’ access to their own laptops had been a pivotal agent of change. Ms Davie agreed that that meant that the possession by participant teachers of their own laptops was key to the success of the project. The importance of the teachers’ access to laptops was identified, under key finding 8, as consisting in these matters:
•they feel they have been treated as professionals by being given a tool of their trade
•they can learn technical skills with people they feel comfortable with, eg family, friends and colleagues, when it suits them
•with remote access into the school, they can maximise the use of the laptop as an efficient tool, able to access their own files, students' work and administrative documents
•giving teachers a laptop puts many of them in the position of learner and gives a great base to discuss teaching and learning issues.
Thereunder, it was stated that dial-in access to the school’s network enabled access to electronic facilities and programs on the network and thus to “effectively operate from home where a major proportion of planning has traditionally occurred.” It was further stated that professional development was most effective where, inter alia, “teachers have hands-on guided time, and then have access to the technology to experiment in their own time”. Ms Davie agreed that by far the most effective way to provide the support referred to in key finding 8 was through provision of a laptop to, or access to a laptop by, teachers.
Ms Davie’s evidence was that the findings from the NSP informed the NTPP. Key finding 8, along with others, guided the expansion of use of technology in Victorian Government schools. A focus of the NSP, from its inception in the learning technology plan of Bendigo Senior Secondary College, was widespread access by teachers to laptops. Ms Davie agreed that it was DEECD’s intention that widespread access to laptops would help replicate the results of the NSP across government schools. She agreed that the need was particularly for laptops, because of their portability, versatility, the ability to use them in a range of settings, and the fact that teachers could do everything they needed to do (including planning, teaching, assessment, reporting, and administration) on one computer. Ms Davie also said in her affidavit that an important motivator for the NTPP was the flexibility of laptops. At the NTPP’s commencement, computers were not as portable as presently, and were not as common in private homes. Accordingly, access to an NTPP laptop would enable teachers to prepare materials away from class for utilisation while teaching, record assessment of students in real time, and assist in the preparation of curriculum and assessment planning. It enabled work away from school, especially after the advent of Wi-Fi. That was significantly more efficient than the previously-available method of making handwritten plans, assessments, or reports at home.
Ms Davie identified that one of the most important features of a laptop was that it was portable and enabled work to be completed at home (or elsewhere) as well as school. Ms Davie said that she had found in her teaching and preparatory work that having a laptop was a “significant advantage”. She also said that her observation was that the use of laptops facilitated the work of her colleagues and generally enhanced the conduct of any group-related work. For instance, planning days were held off-site every term, so teachers would bring laptops to record activities before breaking into smaller groups for further planning. Off-site planning would have been considerably more difficult without access to portable computers.
I draw from the foregoing that portability was an important consideration in the design of the scheme coming out of the NSP. The NTPP scheme pre-dated widespread use of portable technology, including smartphones and Wi-Fi-enabled tablets, and so, at that time, a requirement for portability largely inhered a requirement for a laptop. Ms Davie stated in her affidavit that while access to technology was an essential part of Victorian teaching, that need not necessarily be in the form of a laptop. She said that access to a school-based desktop or a home-based computer would be sufficient to access necessary resources, and that Cloud technology permitted accessing of documentation in various ways, from various devices, and in various places. But, she agreed that Cloud technology did not exist in 1998 or in 2009, and had really only become generally available in the one or two years prior to her oral evidence. And, she said that it was “undoubtedly more advantageous to be able to use a notebook computer because of the portability of the device and the ability to prepare outside of a classroom for the proposed classroom usage on the same device”.
Ms Davie agreed that significant to the success of the NTPP was that teachers felt that they were being treated as professionals by being given a tool of their trade. She agreed that, amongst other factors, widespread adoption of the NTPP had been a key component in the achievement of the vision of the NSP, and that technology in schools, including the NTPP, enabled teachers to work in the way that DEECD wanted them to work in the twenty-first century. The integration of technology allowed greater collaboration between teachers and greatly enhanced the productivity of teachers that used it. It allowed a different approach to work and created efficiencies.
Ms Henning, whose experience with the NTPP went back to its beginning, said similar things: that the NTPP had real benefits for student learning outcomes; that Victorian schools were far ahead of other schools in technology use (though in the previous 3–4 years other States had caught up), and that teachers’ access to laptops was important to that outcome; that in the early stages of the NTPP Victorian teachers had a “real acceleration of use of computers in classrooms,” and that “[t]he use of technology in our classrooms [was] seamless”; that giving teachers access to “a tool they can use at home” was important; and, that the student engagement that is enabled by use of computers was crucial.
At every stage of the evolution into and of the NTPP, portability was a focus. From its conception, the means of providing portability had been through laptops. Initially, that was of necessity in that smartphones and tablets did not yet exist. While those devices did later exist, it seemed that they were not yet seen as a like-for-like substitute for laptops. Ms Henning said, “For children to be engaged at school, it is necessary to have the tools at hand that they will use to interact. At the moment, it is computers. This may change over time, to tablets or smartphones, but computers are vital at the moment.”
While Ms Henning was there speaking of student rather than teacher use, her sentiment is echoed in FAQ Policy, which was annexed to the SOAF. At page 5 of the FAQ Policy the question is asked, “Why can’t I get a touch screen computer (iPad, Android or Windows Tablet) from this Program?” The answer that follows is this:
The Department’s teaching and learning group constantly evaluates reviews and recommends a range of technologies for inclusion on the Department’s ICT Products and Services panels and for use in its various programs across schools.
At this time these devices don’t provide the full range of features or applications that are provided on the notebooks offered to eduSTAR.NTP participants.
The FAQ Policy is dated March 2012. There is some evidence that, more recently and in some cases, tablets have become more-closely interchangeable with laptops. Ms Terry said that at her school there was a one-to-one tablet program for students, and that certain teachers had opted to purchase the same tablets as those used by students rather than get NTPP laptops. That was in February 2014. Ms Henning’s evidence in re-examination was to similar effect. She said that it was no longer vital to have access to laptops because a wide range of other technologies was available, including that in her school there were desktops and netbooks, and that at the beginning of that year all staff had been given eight-inch Android tablets. The force of her evidence was that the combination of available non-laptop devices was substitutable for a laptop. But, tablet and laptop interchangeability did not seem yet to be generally applicable across the system. The evidence from other teachers that touched on the use of tablets—including that of Ms Humphries, Ms Prosser, Ms O’Grady, and Ms Henning—contemplated that iPads or tablets supplemented rather than replaced laptops.
Ms Davie’s evidence included that teaching was still fundamentally a personal relationship with students, and that, in so far as computers were required, it would be possible to fulfil job requirements using desktop or home-based computers, especially given the advent of Cloud technologies. I accept that evidence. But, that is not inconsistent with Ms Davie’s other evidence that a portable laptop is “undoubtedly more advantageous.” Whilst I accept that DEECD could have adopted another means of bringing technology to classrooms, in the event DEECD’s focus was on providing laptops to teachers.
ANNEXURE 7: PERCENTAGE CONTRIBUTIONS BY TEACHERS TO ACQUISITION COST
As set out above at [212], the AEU provided a table showing, in each Round and Cycle and in relation to the unit price to DEECD of NTPP laptops, the proportion of the unit price that would have been met by a teacher who made contributions for the whole round. That is replicated below.
Round/Cycle Computer model Unit price to
DepartmentFortnightly NTPP
contributionsTotal NTPP
contributionsDifference
between
unit price
and NTPP
contributionsProportion
of cost met
by teacherRound 1, Cycle 4 Lenovo
ThinkPad R61$720.50 $4.00 $320.00 $400.50 44.4% Apple MacBook
MB13.3$1,311.00 $7.00 $560.00 $751.00 42.7% Round 2, Cycle 4 Lenovo
ThinkPad R61$795.00 $4.00 $320.00 $475.00 40.3% Round 3, Cycle 4 Lenovo
ThinkPad R500$889.75 $4.00 $312.00 $577.75 35.1% Apple MacBook
White - 2.13GHz$1,444.00 $7.00 $546.00 $898.00 37.8% Round 4, Cycle 4 Lenovo
ThinkPad L510$986.40 $4.00 $392.00 $594.40 39.7% Apple MacBook
MC207X/A White$1,698.00 $7.00 $686.00 $1,012.00 40.4% Round 5, Cycle 4 Lenovo
ThinkPad L412$945.80 $4.00 $364.00 $581.80 38.5% Round 1, Cycle 5 Lenovo
ThinkPad L420$684.00 $4.00 $364.00 $320.00 53.2% Apple MacBook
White$1,149.00 $11.50 $1,046.50 $102.50 91.1% Round 2, Cycle 5 Lenovo
ThinkPad L420$772.00 $5.00 $455.00 $317.00 58.9% Apple MacBook
Pro C-i5$1,399.00 $15.00 $1,365.00 $34.00 97.6% Round 3, Cycle 5 Lenovo
ThinkPad L430$772.00 $5.00 $455.00 $317.00 58.9% Apple MacBook
Pro C-i5$1,549.00 $17.00 $1,547.00 $2.00 99.9%
The only alteration is that the AEU’s table contained an error in Round 2, Cycle 4 (30.3% was written rather than 40.3%). In the above table, that has been corrected and the correction indicated by underlining.
I certify that the preceding six hundred and twelve (612) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg. Associate:
Dated: 6 November 2015
24
10
26