Australian Municipal, Administrative, Clerical and Services Union v Sydney Water Corporation t/a Sydney Water

[2011] FWA 1894

[2011] FWA 1894

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Australian Municipal, Administrative, Clerical and Services Union
v
Sydney Water Corporation t/a Sydney Water
(C2010/272)

DEPUTY PRESIDENT SAMS SYDNEY, 5 APRIL 2011

Dispute in relation to Clause 48 of the Sydney Water Enterprise Agreement 2009 - job evaluation - creation of new positions in restructure - jurisdictional challenge - whether dispute concerns a matter arising under the Agreement.

BACKGROUND

[1] This decision arises as a result of a challenge by Sydney Water Corporation (‘Sydney Water’) to the jurisdiction of Fair Work Australia (‘FWA’) to deal with a dispute by means of arbitration under the Dispute Settlement Procedure (cl 48) in the Sydney Water Enterprise Agreement 2009 (‘the Agreement’). The application for FWA to deal with the dispute, under s 739 of the Fair Work Act 2009 (‘the Act’), was filed by the Australian Municipal, Administrative, Clerical and Services Union (‘the Union’) on 13 May 2010.

[2] Since that time there have been seven conciliation conferences before FWA, resulting in some procedural recommendations being issued by me. In essence, the dispute concerns a proposal by Sydney Water to restructure and re-evaluate 51 administrative positions in the Business Support Services Unit resulting in a reduction of 21 of the pre-existing positions. In addition to the conferences before FWA, there have been numerous meetings between the parties and exchanges of correspondence and documents. I think it fair to say that the Union does not oppose the restructure per se, but has complained about the process of consultation and evaluation of the new jobs, such as to have now pressed two amended questions for determination by FWA. These are:

1. As part of the implementation of the Sydney Water Business Support Services Restructure a pay point is to be assigned to the newly created position of Business Support Adviser pursuant to Clause 7.1.3 and Schedule 2 of the Sydney Water Enterprise Agreement 2009. Sydney Water has conducted an evaluation and has assigned the position to pay point Level 6C. The ASU disputes this evaluation and proposes that the position be assigned to pay point 7C (mid).

(a) Has Sydney Water correctly conducted a job evaluation for the position of

Business Support Advisor in way which is consistent with:

(i) The skills, authority, accountability and value of the position?

(ii) Sydney Water procedures for job evaluation?

(b) If the answer to 1(a)(i) and/or 1(a)(ii) is “no”:

(i) What is the appropriate pay point to be assigned to the position of Business Support Adviser?

(ii) Further, and in the alternative, should the position of Business Support Adviser be referred back to the parties for re-evaluation?

2. As part of the implementation of the Sydney Water Business Support Services

Restructure a pay point is to be assigned to the newly created position of Business

Executive Support pursuant to Clause 7.1.4 and Schedule 2 of the Sydney Water

Enterprise Agreement 2009. Sydney Water has conducted an evaluation and has

assigned the position to pay point 7C. The ASU disputes this evaluation and proposes

that the position be assigned to pay point 9B.

(a) Has Sydney Water conducted a job evaluation for the position of Business

Executive Support in a way which is consistent with:

(i) The skills, authority, accountability and value of the position?

(ii) Sydney Water procedures for job evaluation?

(b) If the answer to 2(a)(i) and/or 2(a)(ii) is “no”:

(i) What is the appropriate pay point to be assigned to the position of Business Executive Support?

(ii) Further, and in the alternative, should the position of Business Executive Support be referred back to the parties for re-evaluation?

[3] The parties had initially agreed that I would arbitrate the above questions and directions for the filing of evidence had commenced to be complied with. Moreover, the parties have filed an Agreed Statement of Facts as follows:

1. Sydney Water is a statutory Corporation that is wholly owned by the NSW Government. It is responsible for providing water, wastewater and some stormwater services in Sydney, the Blue Mountains and the Illawarra.

2. Rates of pay for Sydney Water administrative staff are established pursuant to clause 7 of the Sydney Water Enterprise Agreement 2009. Schedule 2 of the Agreement identified a range of pay levels. Positions are assigned a pay level by job evaluation.

3. Positions are analyzed against the following factors:

• Complexity of job activities

• Analytical and creative requirements

• Education and experience

• Independence, guidelines and constraints

• Supervision and managerial scope

• Communication requirements

• Impact on results

• Physical environment

• Responsibility for staff

4. Sydney Water conducts a training course for job evaluators.

5. Upon a position being approved by a General Manager for job evaluation information is collected about the job which includes the position description, and may include a Position Analysis Questionnaire (PAQs). The position is then submitted to a job evaluation panel. The panel conducts an evaluation and completes a Job Evaluation Results Sheet. The Job Evaluation Results Sheet identifies the job evaluation points allocated by the panel to each job evaluation factor together with a total work value point tally of up to 700.

6. The work value point tally is allocated a pay level (as referred to in Schedule 2 of the Enterprise Agreement 2009) by reference to a Work Value Point / IPS Translation Sheet. The recommended pay level for the position is then identified by reference to the Sydney Water Enterprise Agreement 2009 Pay Translation Table. The table translates Sydney Water IPS levels to the pay levels provided for at Schedule 2 of the Sydney Water Enterprise Agreement 2009. The recommended pay level is then referred to the General Manager for approval prior to the position being filled.

Job Evaluation and the New Positions

7. On or about 1 April 2010 Sydney Water referred several new positions for job evaluation. (A copy of the Position Analysis Questionnaires position of Business Executive Support and Business Support Advisor were attached to the Agreed Statement of Facts).

8. Attachment “H” (at page 69) identified the point scores awarded by the job evaluation panel for each job evaluation factor for each of these positions, together with a total point score and evaluated IPS rating.

9. Attachment “I” (at page 70) identified the organisation structure by reference to pay IPS Level and Pay Levels for the new positions. This information is summarised in the table below:

Position Title	No of Positions	IPS Level	EA Level
Business Support Services Manager	1
Team Manager	3	IPS 56	11B
Business Executive Support	2	IPS 42	7C
Business Support Advisor	31	IPS 36	6C

10. The job evaluation panel awarded the positions of Business Support Advisor a total of 140 points, translating to IPS Level 36 and EA pay level 6C. The next highest IPS Level is IPS 42, commencing at 146 points, translating to EA Pay Level 7C. In assessing the position of Business Support Advisor at 140 points the position fell 6 points short of IPS Level 42.

11. The job evaluation panel awarded the position of Business Executive Support a total of 150 points, translating to IPS 42, and EA Pay Point 7C. The next highest IPS Level is IPS 47, commencing at 163 points, translating to EA Pay Level 8B. Thereafter the next highest IPS Level is IPS 50, commencing at 181 points, translating to EA Pay Point 9B. In assessing the position of Business Executive Support at 150 points the position fell 13 points short of IPS Level 47 and 31 points short of IPS 50.

Level in the Organisation

12. In conducting job evaluations the level that a position holds in the organisation structure can be relevant in assessing a range of job evaluation factors. More senior positions have a lower Level in Organisation number. Attached at page 71 and marked “J” is a table entitled Business Support Services: job evaluation score for Impact on Results. This table identified the points awarded by the evaluation panel for the factor “Impact on Results” and related this information to the level that each position holds in the organisation structure.

13. Historical data concerning Administration roles and the evaluation of Impact on Results factors by reference to positions title and Level in the Organisation is outlined in the table attached at page 72 and marked “K.”

[4] However, on 16 December 2010, Mr Ray Ferrier, Sydney Water’s Industrial Relations Manager, wrote to the Tribunal as follows:

FWA C2010/272: ASU and Sydney Water Corporation: Potts Hill Administration review: questions to be arbitrated.

Your Honour,

I refer to the above matter, and in particular the questions for determination submitted to Fair Work Australia by the ASU on 11 November 2010.

I have attached a letter which I sent to the ASU on 10 December 2010 which outlines the concerns I have regarding both the jurisdiction of Fair Work Australia to arbitrate the matter, and the scope of the questions. I have discussed these concerns with the ASU but I have not persuaded them to change their approach.

These matters have a significant impact on the preparation of the case.

In view of the above Sydney Water seeks a listing for directions, and a hearing on the jurisdictional issues prior to either party having to finalise submissions.

Yours sincerely,

R Ferrier

Industrial Relations Manager

[5] It is appropriate, at this point, to refer to the precise terms of Step 5 of the Agreements’ Dispute Resolution and Grievance Procedures, which Sydney Water maintains prevents FWA from exercising its arbitral functions otherwise available under the Agreement:

Clause 48.6

Step 5 - Involvement of Fair Work Australia

If the dispute or grievance remains unresolved after exhausting Steps 1 to 4, and relates to a matter arising under this Agreement (my emphasis) and/or the National Employment Standards, either party may refer the matter to Fair Work Australia, provided that they provide all other parties at least three working days’ notice in writing of their intention to refer.

Fair Work Australia may deal with the dispute in two stages:

(a) Fair Work Australia will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

(b) if Fair Work Australia is unable to resolve the dispute at the first stage, Fair Work Australia may then:

(i) arbitrate the dispute; and

(ii) make a determination that is binding on the parties.

If Fair Work Australia arbitrates the dispute, it may also use the powers that are available to it under the Fair Work Act. Subject to any right of appeal the parties to the dispute agree to be bound by a decision made by Fair Work Australia in accordance with this subclause (48.6).

[6] This clause must also be read in conjunction with FWA’s powers under s 739 of the Act, which are expressed as follows:

739 Disputes dealt with by FWA

(1) This section applies if a term referred to in section 738 requires or allows FWA to deal with a dispute.

(2) FWA must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to FWA dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises FWA to deal with the matter.

Note: This does not prevent FWA from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effectas subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, FWA must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that FWA may arbitrate (however described) the dispute, FWA may do so.

Note: FWA may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), FWA must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) FWA may deal with a dispute only on application by a party to the dispute.

[7] The Act’s model disputes resolution clause is found at Reg 6.01, Sch. 6.1 as follows:

Model term

(1) If a dispute relates to:

(a) a matter arising under the agreement; or

(b) the National Employment Standards;

this term sets out procedures to settle the dispute.

(2) An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.

(3) In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management.

(4) If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Australia.

(5) Fair Work Australia may deal with the dispute in 2 stages:

(a) Fair Work Australia will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

(b) if Fair Work Australia is unable to resolve the dispute at the first stage, Fair Work Australia may then:

(i) arbitrate the dispute; and

(ii) make a determination that is binding on the parties.

Note If Fair Work Australia arbitrates the dispute, it may also use the powers that are available to it under the Act.

A decision that Fair Work Australia makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.

(6) While the parties are trying to resolve the dispute using the procedures in this term:

(a) an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and

(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

(i) the work is not safe; or

(ii) applicable occupational health and safety legislation would not permit the work to be performed; or

(iii) the work is not appropriate for the employee to perform; or

(iv) there are other reasonable grounds for the employee to refuse to comply with the direction.

(7) The parties to the dispute agree to be bound by a decision made by Fair Work Australia in accordance with this term.

[8] It will be readily apparent that the Agreement’s Dispute Resolution and Grievance Procedures clause is relevantly identical to the Act’s model term for dealing with disputes under enterprise agreements.

[9] Shortly stated, Sydney Water contends that the matters proposed in the questions posed by the Union for determination by FWA, are not matters “arising under this Agreement and/or the National Employment Standards.” Of course, the latter jurisdictional limitation does not apply to the present dispute. However, if Sydney Water is correct, then the former limitation would prevent FWA from dealing with the dispute by arbitration. As I apprehend it, no other jurisdictional impediment, relevant to the other provisions of the Dispute Settlement Clause and Grievance Procedures, is advanced by Sydney Water.

THE EVIDENCE

[10] While both parties provided extensive documentary material, evidence was also adduced from Mr Ferrierand Mr S Hatter, a Union Organiser.

[11] Mr Ferrierhas been employed by Sydney Water since 1990 and has held his present position since 2001. He has been employed in human resources and industrial relations for 30 years. Mr Ferrierattached to his statement various documents relating to the exchanges of correspondence between the parties relevant to this dispute. Mr Ferrierdeposed that as a general practice, Sydney Water would always agree to participate in conciliation of a dispute and not raise issues of jurisdiction. However, if the dispute is not resolved, Sydney Water reserved the right to raise jurisdictional objections - as it has done in this case. Mr Ferrier stated that the Sydney Water job evaluation process had never been the subject of arbitration or binding determination by any Industrial Tribunal or Court. In describing Sydney Water’s job evaluation processes, Mr Ferriersaid that since the late 1980s the model has been a proprietary system owned by an external consultancy firm Mercer (Australia) Ltd. The model is detailed in a Sydney Water Manual and Policy, which were annexed to Mr Ferrier’s statement.

[12] Mr Ferriersaid that when a new position is created the job evaluation process will assess that position and assign one of the 17 pay levels set out in the Agreement. In further describing the process, Mr Ferrieradded that if there is a dispute about the process or the outcome, there is an internal review mechanism or, alternatively, Stages 1 to 4 of the Agreement’s Dispute Settlement and Grievance Procedure clause can be utilised, as these provisions are not limited to resolving disputes about matters under the Agreement.

[13] Mr Hatter’sstatement dealt in some detail with the Agreement’s pay structure, pay translation and the process of job evaluation. He noted that the review of a position is evaluated against the following factors:

• Complexity of job activities



• analytical and creative requirements



• education and experience



• independence, guidelines and constraints



• supervisory and managerial scope



• communication requirements



• impact on results



• physical environment



• responsibility for staff

[14] He also referred to the process of ‘red circling’ which, while a significant issue in this dispute, is not relevant, as will become evident later, to the instant preliminary issue to be determined by the Tribunal.

[15] Mr Hatterdealt with the specifics of the Business Services Restructure and traced the history of the dispute. He said his members were concerned that:

• The restructure declared all pre-existing positions redundant;



• The new structure was substantially smaller in terms of job numbers, raising the prospect that a significant number of employees would lose their job or be redeployed into the redeployment pool;



• Lower job evaluation outcomes for the new positions had substantially decreased the rates of pay in comparison with equivalent jobs under the new structure; and



• The rates of pay for a large number of employees would be the subject of absorption of future general wage increases by way of ‘red circling’ provisions.

[16] Mr Hatteroutlined the Union’s objections to both the process and outcome of the job evaluation process. These matters also go to the merits of the dispute and will become relevant should the jurisdictional challenge not succeed.

SUBMISSIONS

For the Union

[17] Mr B Kruse submitted that:

• The application has been validly made in accordance with the Act.



• The Sydney Water Dispute Resolution and Grievance Procedure empowers Fair Work Australia to arbitrate and make a binding determination.



• The disputes concerning the positions of Business Administration Adviser and Business Support Officer and the assignment of pay levels through job evaluation are matters arising from the enterprise agreement.



• The application is neither frivolous nor vexatious and has prospects of success; there is a case to answer.



• Regardless of the jurisdictional findings concerning the pay level disputes, a further and alternative cause of action exists concerning IPS remuneration rates and ‘red circling.’ These are matters arising from the agreement. The applicant should be granted leave to amend the pleadings incorporating this further and alternative cause of action.

[18] Mr Kruse outlined the steps in the Agreement’s Dispute Resolution and Grievance Procedures and put that this procedure closely follows the Act’s model term referred to at s 737. This term is comprehensive and facilitates the hearing of disputes by way of arbitration: see Woolworths Ltd trading as Produce v Recycling Distribution Centre [2010] FWAFB 1464.

[19] Mr Kruse submitted that the present dispute relates to a matter arising under the Agreement; namely, the assigning of pay levels and pay points pursuant to cl 7, which is expressed as follows:

7. Pay

7.1 Pay Structure

7.1.1. There are 17 pay levels.

7.1.2. Each pay level includes a number of pay points, as specified in Schedule 2 to this Agreement.

7.1.3 Positions will be assigned to:

a. a pay level by job evaluation; or

b. a pay band in accordance with a Competency Program; or

c. either the undergraduate or graduate pay scale in accordance with subclause 7.3; or

d. a Senior Manager pay band.

7.1.4 Where a Competency Program is introduced in relation to a position that has previously been assigned to a Pay Level by job evaluation, the work value that is assigned to that position under the Competency Program will be verified through the job evaluation process.

[20] Mr Kruse distinguished this case from the authorities relied on by Sydney Water in which the Unions in those matters had sought to use the arbitration process to create new rates of pay or entitlements: see Sydney Ferries Corporation v The Australian Maritime Officers Union (2007) AIRCFB 909. Mr Kruse said that the Union’s application here does not seek to vary the Agreement, create new entitlements or establish new pay levels. He added that job evaluation is a mechanism for the assignment of pay levels which is a reasoned and logical process.

[21] Mr Kruse submitted that Sydney Water had consented to the dispute being arbitrated by FWA and represented this position to the affected employees. He referred to an email of 20 October 2010, from the Business Change Manager, Ms Ira Williams, in which it was said:

“If at any time, by re-evaluation or through a determination of FWA, the pay rate for the job is increased, then Sydney Water must pay the new rate for the job.

If that pay rate is equal to the level at which the employee is red-circled, that employee will no longer be red-circled and will receive the new pay rate. In this case, if at any stage in the future the BSS role is re-evaluated at 7B (IPS42), then anyone who is currently an 7B (or lower) will be paid 7B, and will not be red-circled.

Please rest-assured that your acceptance of these positions, as they are currently evaluated, does not change your entitlement to be paid the higher rate, should that be the outcome of FWA in the coming months.”

In light of these representations, Mr Kruse put that Sydney Water cannot now withdraw its consent to arbitration by FWA.

[22] Mr Kruse dealt with Sydney Water’s alternative submission that irrespective of jurisdiction, FWA would not, as a matter of discretion, arbitrate the dispute. He said that the Union’s application was not frivolous or vexatious and had reasonable prospects of success. He relied on the principles of ‘strike out’ motions: see Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955.

[23] Mr Kruse also dealt with the substantive merits of the application, which, as I said earlier, are not relevant at this stage of the proceedings. Mr Kruse submitted that the Agreement specifically refers to job evaluation as an available mechanism for the assignment of pay levels and that there is nothing remarkable about the Tribunal receiving evidence about job evaluation results and processes. A proprietary model does not make the system immune from review.

[24] As an alternative pleading, Mr Kruse said that a dispute exists, in the present context, about the ‘red circling’ provisions in the Agreement and these are matters arising directly under the Agreement. ‘Red circling’ is defined in Sch 1 cl 3 and cl 4.3.12 of the Agreement as:

Sch. 1, Cl.3

Red circled: where an employee’s remuneration is frozen until the remuneration of the new position reaches the remuneration they were paid before they were displaced.

Sch. 1, Cl.4.3.12

The Redeployee will be paid at the remuneration level of the new position except where the remuneration of new position is lower than they are currently paid in which case their salary will be Red Circled.

[25] He put that the above safeguards are designed to protect employees who may be disadvantaged by absorption of general wage increases if they are positioned at a lower pay level. These safeguards are also found at cl 4.2 of the Sydney Water Remuneration Policy under the title “Regression:”

“Regression” where an employee applies for a role that is of a lower grade pay level, pay band or TRP band, the rate of pay for the new role will apply...Where an employee is permanently moved to the role of lower work value (not as a result of poor performance), they will normally be red circled, that is the rate of pay is frozen until it is equalled or exceeded by the hourly rate of pay for the new position. Each case will be judged on its merits and exceptional circumstances may dictate that grandfathering (the pay rate and pay level is maintained and they continue to receive increases if they remained in the original position is appropriate. (emphasis added)

[26] Mr Kruse submitted that in the present case, an individual’s circumstances were not reviewed on their merits and the Union disputed a ‘one size fits all’ approach. Rather, it sought a ‘grandfathering’ approach and this issue remains in dispute.

[27] In oral submissions, Mr Kruse accepted that under the terms of the Agreement, FWA has discretion to arbitrate a dispute. Mr Kruse said that there is a clear relationship between the pay levels at Sch 2 of the Agreement and the assignment of positions to those levels by means of job evaluation. It was plainly contemplated by the parties that disputes about these matters would be the subject of arbitration. It is not to the point that, historically, the job evaluation processes have been applied rationally.

[28] Mr Kruse relied on National Tertiary Education Union v Victoria University (2008) FCA 1630, as authority for the proposition that disputes about ‘matters’ should be given a wide meaning relating to controversies over the proper application of an industrial instrument. Mr Kruse submitted that, as this case essentially involved a private arbitration, it was necessary for the Tribunal to ascertain the character of the dispute before it can determine whether the matter is a dispute over the application of the Agreement: see Maritime Union of Australia v Australian Plant Services Pty Ltd PR908236 [2001] AIRC 898 (3 September 2001); Construction Forestry Mining and Energy Union v Australian Industrial Relations Commission [2001] HCA 16; 203 CLR 645; 75 ALJR 670; 178 ALR 61 and Australian Municipal, Administrative, Clerical and Services Union - New South Wales and ACT (Services) Branch v Qantas Flight Catering Limited PR939695; PR923623 (2003) FWA (22 October 2003).

[29] Finally, Mr Kruse said that in this case there are multiple clear references to job evaluation in the Agreement. The foundation stone of the Agreement is the relationship between pay levels and the IPS levels which support them, namely job evaluation and the process of assigning rates of pay. Mr Kruse put that even if the Tribunal finds that there is no power to arbitrate this dispute, Sydney Water has, in any event, consented to arbitration.

For Sydney Water

[30] In a written submission, it was put that FWA has no jurisdiction to determine a dispute about job evaluation because:

• no term of the Enterprise Agreement is in dispute - the dispute is about the application of Sydney Water’s Job Evaluation Manual and Job Evaluation Policy and not about a term of the Enterprise Agreement itself;

• job evaluation is a process that occurs, and has occurred for over 20 years, outside of the terms of any industrial instrument, including the Enterprise Agreement;

• objectively, it was not the intention of the parties that job evaluation would be amenable to step 5 of the dispute resolution process in the Enterprise Agreement; and

• mere reference to job evaluation in clause 7.1.3 (a) of the Enterprise Agreement is not sufficient to invest jurisdiction in Fair Work Australia to arbitrate the Amended Proposed Questions for Determination.

• Further, and in the alternative, the Respondent submits that as an exercise of discretion, Fair Work Australia would not arbitrate the Amended Proposed Questions for Determination given the breadth of the questions and the disconnection with the notified dispute and the terms of the Enterprise Agreement.

[31] After outlining the relevant terms of the Agreement and the facts in this case, it was submitted that FWA may only deal with a dispute that ‘relates to a matter arising under the Agreement.’ This requires that there be a connection between the dispute and the Agreement, see: Ansett Pilots Association v Ansett Australia Limited PR8525 (30 August 1999) (‘the Ansett decision’) and National Tertiary Education Union v Victoria University [2008] FCA 1630. The Job Evaluation Manual and Policy are not referred to, or incorporated into, the Agreement and are completely separate matters. The Agreement does not deal with methodology and the process of job evaluation. This is to be contrasted to Competency Programs which are dealt with comprehensively under the Agreement, including by reference to disputes being referred to FWA. It was highlighted that the questions sought to be answered by FWA are not referred to, or contained in the Agreement.

[32] Sydney Water also argued that the jurisdictional objection is strengthened when regard is had to the objective intention of the parties when consideration is given to the terms of the Agreement as a whole. Reliance was also had on Sydney Ferries Corporation v The Australian Maritime Officers Union [2007] AIRCFB 909, where a Full Bench held that a dispute over a new roster was not within the then Commission’s power to arbitrate. After considering the Agreement as a whole, and in context, it was put, that:

• The Enterprise Agreement has not dealt with job evaluation (including its methodology and process) itself - it stipulates no detail about job evaluation;

• The Enterprise Agreement has not explicitly conferred dispute resolution powers on Fair Work Australia to deal with a dispute about job evaluation; and

• It can be safely inferred that the intention of the parties was not to have job evaluation amenable to Step 5 and arbitration by Fair Work Australia.

• Further, and to emphasise that the dispute resolution process in clause 48.6 of the Enterprise Agreement does not apply to job evaluation disputes, is the fact that Sydney Water has an internal appeal process from the job evaluation process. The Union exercised that appeal process.

[33] In the alternative, Sydney Water submitted that even if FWA was found to have jurisdiction, the Tribunal, as a matter of discretion (arising from the use of the word ‘may’ in s 739(4) of the Act and Cl 48.6 of the Agreement), would not determine the questions proposed by the Union. This was because:

• The breadth of the questions are not reflective of the terms of the Enterprise Agreement; and or

• The breadth of the questions are not connected to the notified dispute and / or the dispute dealt with by conciliation.

• Further, given the specialist nature of the job evaluation system and the need for specialist training in the proprietary system, it is not appropriate for Fair Work Australia to determine the job evaluation of the two positions (and hence questions (1)(b)(i) and 2(b)(1) are not appropriate).

[34] In oral submissions, Ms E Raper, of Counsel, put that Sydney Water’s application was not a ‘strike out’ motion, but purely a jurisdictional issue. She said the dispute before the Tribunal in conciliation was limited, and not the same dispute which is now being pursued by the Union. Ms Raper said that nowhere in the Agreement is there reference to the process undertaken in job evaluation. It is not permissible to rely on earlier agreements which may have had such a reference, although there remains a clear distinction with disputes over Competency Programs in both agreements. In addition, reliance on references to the IPS rate is no more than a description of the current rate of pay. There is no internal referencing to link it to job evaluation. Ms Raper noted from the Agreed Statement of Facts and even Mr Hatter’sstatement, that there were comprehensive details of the job evaluation process and how it works. This demonstrates that there is nothing in the Agreement about it. Ms Raper submitted that this case was not about managerial prerogative, as Steps 1 to 4 of the Disputes Settlement Procedure can, and has been utilised by the parties, as has the internal review mechanism.

[35] Ms Raper said that classifications are not in the Agreement, but pay points are. There are then four possible choices of assignment to the pay structure which may form the basis of a dispute, but once there is an assignment, there is no recourse to arbitration, except in respect to Competency Programs. Ms Raper relied on the Ansett decision as exactly what is being sought here - assigning a new rate of pay to a new position after an evaluation of the work. This would be contrary to the parties’ intentions about job evaluation.

[36] Ms Raper further submitted that, notwithstanding Sydney Water’s willingness to discuss the matter with the Union and the employees, parties cannot consent to FWA’s jurisdiction, if it does not exist. Even so, if it had been the intention of the parties to permit arbitration of such matters, the Agreement would have plainly said so. The Union has brought no evidence that this was ever the intention. Ms Raper said that even if one took a ‘blinkered’ view of cl 7, the clause must be informed by cl 6, which does not say how specific positions will be assessed by job evaluation. There is no internal referencing to job evaluation.

[37] Ms Raper made a detailed examination of the legislative provisions in conjunction with the terms of the Agreement to demonstrate that the Tribunal has, in any event, a discretion to determine the matter, which it would decline to do so in this case.

CONSIDERATION

[38] It is difficult to imagine a more important matter relevant to the relationship between an employee and an employer than the rate of pay which is determined for the work performed by the employee. Perhaps the only matter which is more important is the existence of the employment relationship itself. It follows that a corollary matter which must be of vital significance to the employment relationship is the manner, or process, by which the rate of pay is determined. In Sydney Water’s case, the rates of pay for employees are referred to in cl 7 of the Agreement. When viewed in this light, I cannot comprehend a circumstance where a process and outcome of a job evaluation to determine where an employee sits in the IPS, could be properly or fairly said to be a matter not “arising from the terms of the Agreement.” It seems to me that this finding sits comfortably with the ordinary industrial notion that the process of setting a wage rate, and disputes about the process of setting wage rates, will invariably arise from time to time and be settled by arbitral processes. Notwithstanding this global analysis, I am fortified in my conclusion that job evaluation is “a matter arising from the terms of the Agreement,” by the following:

[39] In my view, the appropriate authority to be applied to this matter is that of National Tertiary Education Union v Victoria University [2008] FCA 1630, where Ryan J said:

In common with similar provisions in other industrial instruments, cl 63 is concerned to provide a mechanism for the settlement of disputes about “matters” arising under the Agreement itself. Although I accept that the word “matters” is capable of having a wide connotation, it is confined, in this context, to controversies between parties to the agreement or award about the proper application of the instrument itself. It does not extend to controversies which have been resolved by the making of the award or agreement or new disputes between the same parties which have arisen subsequently.

[40] I consider that the terms of the Agreement should be construed beneficially and therefore given a wide meaning. I do not consider that the authorities relied on by Ms Raper are applicable to the facts and circumstances of this case. While the Tribunal is being asked to set the rates of pay by assigning an appropriate pay point for Business Support Adviser and Business Executive Support, the Tribunal is firstly being asked to find fault with the process by which the rates of pay were determined under the job evaluation process. It may well be that the Tribunal would do more than refer the dispute back to the job evaluation process, should a finding be made that the process was invalid or produced an unfair result. I hasten to add that I make no conclusive finding in this regard, at this point, and any number of outcomes might flow from a discretionary finding on the merits of the dispute.

[41] Of course, job evaluation is directly referred to in the Agreement. It appears at cl 7.1.3 as follows:

7.1.3 Positions will be assigned to:

a. a pay level by job evaluation; or

b. a pay band in accordance with a Competency Program; or

c. either the undergraduate or graduate pay scale in accordance with subclause

7.3; or

d. a Senior Manager pay band.

[42] Conversely, there are references to the Agreement in the Job Evaluation Policy at Cl. 3.1 and 3.3. Given this cross referencing, I do not see how it is logically possible to argue that the direct reference to job evaluation in the Agreement is not relevant to a consideration of whether disputes about job evaluation is not a matter “arising from the terms of the Agreement.” In my opinion, the fact that the reference is made, not to mention its paramount importance to the employment relationship, must result in a conclusion that job evaluation is a term of the Agreement when applying the ordinary English meaning of the words in the clause.

[43] In addition, I note that Sydney Water’s Job Evaluation Policy, which Sydney Water submitted is distinct and separate to the Agreement, defines work value as “the result of job evaluation is a point score, known as work value.” (Cl. 3.1). I would have thought it uncontroversial that work value has been a traditional function of industrial tribunals. Given the juxtaposition between the Policy and the Agreement and the direct relationship between job evaluation and work value, it would seem difficult to sustain this leg of Sydney Water’s case.

[44] It seems pellucidly clear to me that the parties have historically accepted that job evaluation is an important concept underpinning their agreed industrial instruments. One only needs to refer to the wording of cl 5 in the Sydney Water Agreement 2004 - the immediate predecessor to the present Agreement. That clause was expressed as follows:

The rate of pay for all positions, except positions covered by competency schemes as agreed between the parties, subclause 6.4 (Special Movements) and Clause 57 (Water Services Division (Civil Maintenance) Production Employee Skills Development Programme), will be determined by job evaluation.

[45] Further, I note that the Job Evaluation Policy includes the following question: “Why is job evaluation used at Sydney Water?” One of the answers is “∙” part of Sydney Water Award.” Surely, this answer demonstrates, in unequivocal terms, the view of the parties that job evaluation is, and has been, an integral component of their industrial instruments for some time.

[46] There was no evidence that either party expressly or impliedly, eschewed or intended to expunge job evaluation as an industrial matter, in their negotiations for the 2009 Agreement. The fact that it has been referred to in a different contextual setting, does not change what I believe to be the true historical intent of the parties over many years.

[47] The above observation is fortified by the fact that Sydney Water has plainly represented to the affected employees and the Union, that FWA would ultimately resolve any dispute over the job evaluation process and outcome. The view of Ms Ira Williams, as referred to in her email of 20 October 2010, (see para 21 above), cannot be dismissed as a mere misunderstanding or unintended error. Ms Williams is no insignificant player in this dispute, but is the manager directly responsible for the restructure. Her express and unequivocal words do not limit FWA to conciliation only. Even if this had been the true intention of Sydney Water, it was incumbent on its senior manager to say so in clear and precise terms.

[48] Moreover, the undertaking given by Ms Williams was expressly designed to encourage employees to accept the result of the process, knowing any dispute would ultimately be resolved by a third party; being FWA. Given the force of this commitment and the context in which it was given, I do not consider it appropriate, or reasonable, that Sydney Water can now withdraw its undertaking. In addition, I note that Sydney Water cooperated, without demur, in the setting of directions by FWA for the arbitration of the matter.

[49] One of the arguments advanced by Sydney Water was that there had never been any arbitration or binding determination over the issue of job evaluation. In my view, this is not the point. I presume this argument really relates to a discretionary decision of the Tribunal, rather than a jurisdictional objection. In any event, the fact that a matter has not been subject to arbitral proceedings is not, of itself, a sufficient basis to presume that no dispute would ever arise requiring third party determination. I readily acknowledge that, in respect to Competency Programs, disputes over the process and outcomes are expressly referable to FWA, as being able to be determined by conciliation or arbitration. It was said that the inclusion of these references are to be contrasted with no similar references dealing with disputes about job evaluation. It was said therefore that the parties must have intended that arbitration would not apply to disputes over job evaluation. However, given the history of the parties’ industrial regulation and the representations made by its senior managers to the contrary, I do not consider that such an inference is available.

[50] I turn now to the alternative submission of Sydney Water, that the Tribunal would not, as a matter of discretion, proceed to arbitrating this dispute. Mr Kruse described this submission as a ‘strike out’ motion. Ms Raper disagreed. In my opinion, Ms Raper’s conclusion amounts to a ‘distinction without a difference.’ There can be no doubt that the practical effect of accepting Sydney Water’s alternative submission would be to dismiss the Union’s claims in the dispute unilaterally and, in my view, prematurely. I have no evidence presently before me which would permit FWA to form a preliminary view as to the merits of this dispute, which would lead to a refusal to arbitrate the matter. What I can positively conclude, at this point, is that the Union has an obvious and serious issue to be tried. In this respect, I rely on the comments of Gilmour J in Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955, where his Honour said at par 6:

Success under s 31A does not require a demonstration that the case is hopeless or bound to fail. The following principles are of general application to an application under s 31A:

(a) the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings;

(b) the Court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed;

(c) in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading;

(d) it is not Parliament’s intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospects of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial;

(e) if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds that there is ‘no reasonable prospect of success’;

(g) it ought not be used to shut out proceedings where, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial;

(h) evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects;

(i) in determining if there are real issues of fact in issue so as to preclude summary judgment the courts must draw all reasonable inferences in favour of the non-moving party.

[51] I would stress, however, that in considering the evidence and further submissions in this matter, FWA might well decide that, as a matter of discretion, it would decline to arbitrate the dispute; that is, answer the questions posed by the Union, either in the affirmative or otherwise. In my view, the use of the word ‘may’ in s 739 (4) of the Act, must be construed as to mean that FWA would not choose to arbitrate a dispute, where the claims in dispute are so obviously untenable as unlikely to succeed or are patently beyond FWA’s jurisdiction, such as the exclusion of a National Employment Standard (see s 55 of the Act).

[52] Finally, I consider it to be inappropriate, at this stage, to decide whether the additional pleadings of the Union should form the basis of a future arbitration of the dispute. Having said that, it is obvious that ‘red circling’ is an essential component of the range of issues in this dispute. I invite the parties to consider an agreement as to any additional questions to be posed in the context of this dispute. In default of agreement, the Tribunal will consider any application in this regard as a further preliminary matter.

[53] For the aforementioned reasons, I find and determine that job evaluation is a matter arising under the terms of Cl 48 of the Sydney Water Agreement 2009. It follows that the amended questions posed by the Union at par 2 of this decision, are competently before the Tribunal in accordance with s 739 of the Act and the terms of the Agreement itself.

[54] I shall relist the matter for further directions on Friday 8 April, 2010 at 9:30am.

DEPUTY PRESIDENT

Appearances:

Mr B Kruse, for the Union

Ms E Raper, for the respondent

Hearing details:

2011

SYDNEY

17 February

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