Essential Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

[2015] FWC 6931

[2015] FWC 6931

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Essential Energy
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; Australian Municipal, Administrative, Clerical and Services Union; and the Association of Professional Engineers, Scientists and Managers, Australia
(C2015/3270)

Ausgrid
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; Australian Municipal, Administrative, Clerical and Services Union; and the Association of Professional Engineers, Scientists and Managers, Australia
(C2015/4663)

VICE PRESIDENT HATCHER SYDNEY, 2 NOVEMBER 2015

Alleged dispute about matters arising under the enterprise agreement and the NES.

Introduction and background

[1] Essential Energy and Ausgrid are both electricity distribution companies owned by the State Government of New South Wales. Ausgrid will in the near future be partially privatised through the long term lease of assets pursuant to the Electricity Network Assets (Authorised Transactions) Act 2015 (NSW) (ENA Act).

[2] Both Essential Energy and Ausgrid are subject to regulation by the Australian Energy Regulator (AER) under the Competition and Consumer Act 2010 (Cth). In April 2015 the AER issued a determination which had the effect of significantly reducing the amount of revenue which Essential Energy and Ausgrid can recover for the 2014-2019 regulatory period. Essential Energy contends that the determination will leave it without funding for approximately 1,395 current employee positions, and Ausgrid similarly contends that it will be left without funding for about 1,100 current positions. Although the determination is currently subject to appeal, both companies wish to effect a large number of redundancies in the wake of this regulatory development.

[3] An enterprise agreement approved under the Fair Work Act 2009 (Cth) (FW Act), the Essential Energy Enterprise Agreement 2013 (Essential Energy Agreement), applies to a large part of Essential Energy’s workforce. This agreement took effect on 16 July 2014 and has a nominal expiry date of 30 June 2015, and remains in effect. Clause 3.7, Redundancy, of the Essential Energy Agreement provides:

“3.7 REDUNDANCY

The redundancy policy for the term of this Agreement is the Essential Energy Redundancy Policy (Management of Surplus Employees) dated 20 November 2013.

The application of this policy will be subject to Clause 1.13 (Consultation and Communication) of the Essential Energy Enterprise Agreement.”

[4] The policy referred to in the above provision allows for voluntary redundancy and redeployment of employees in the event that their roles become redundant, but makes no provision for involuntary redundancy. The unions covered by the Essential Energy Agreement, the CEPU, ASU and APESMA 1 (the unions), contend that the effect of the specified policy is that Essential Energy is not permitted to effect any involuntary redundancies in relation to employees covered by the agreement, and Essential Energy does not dispute this contention. Essential Energy and the unions agree, consistent with the Federal Court Full Court majority decision in Australian Rail, Tram and Bus Industry Union v KDR Victoria Pty Ltd Trading as Yarra Trams2 that the effect of clause 3.7 is to make it an obligation under the Essential Energy Agreement, non-compliance with which would constitute a contravention of s.50 of the FW Act, to comply with the specified policy. Where they disagree is in relation to the period during which the obligation operates. Essential Energy contends that the reference to “the term of this Agreement” is to be read as referring to a period ending on the nominal expiry date of the agreement (30 June 2015), so that the obligation to apply the policy no longer has effect. In that context Essential Energy wishes to promulgate a new policy which would allow for involuntary redundancies and to engage in consultation with the unions about this. The unions contend that “the term of this Agreement” is the whole period during which the Essential Energy agreement remains in operation, with the result that Essential Energy is prohibited from effecting involuntary redundancies while the agreement is in effect. They oppose the introduction of the new policy.

[5] A similar dispute exists in relation to Ausgrid. The major part of Ausgrid’s workforce is covered by the Ausgrid Agreement 2012 (Ausgrid Agreement). That agreement took effect on 4 July 2013 and has a nominal expiry date of 18 December 2014, and remains in effect. Clauses 38.9 and 38.10 of the Ausgrid Agreement provide:

“38.9 Where a role covered by this agreement has become redundant then the employee in that role will be managed in accordance with the Ausgrid Redundancy and Redeployment Policy.

38.10 The redundancy policy for the term of this agreement is the Ausgrid Redundancy and Redeployment Policy dated 17/5/2013.”

[6] Ausgrid and the unions agree that the policy referred to in clause 38.10, which relevantly provides that “Redundancy is voluntary, but not available indefinitely” and “Compulsory redundancy is not practised at Ausgrid”, prohibits involuntary redundancies, and that the effect of clauses 38.9 and 38.10 is to make this prohibition an obligation of the Ausgrid Agreement which is given legal effect by s.50 of the FW Act. However Ausgrid contends that the obligation only applied during “the term of this agreement”, which referred to a period ending on the nominal expiry date of 18 December 2014. Consequently it contends that the obligation no longer applies and, like Essential Energy, wants to introduce a new policy which permits involuntary redundancies. The unions, who are covered by the Ausgrid Agreement, contend that “the term of this agreement” is the period during which the agreement remains in operation, so that the prohibition on Ausgrid effecting involuntary redundancies remains in effect, and are opposed to the introduction of the new policy.

The proceedings before the Commission

[7] Essential Energy and Ausgrid have both lodged applications under s.739 for the Commission to deal with the disputes described above pursuant to the disputes settlement procedures in the Essential Energy Agreement and the Ausgrid Agreement respectively. In both cases those procedures empower the Commission to resolve disputes by conciliation and arbitration.

[8] The disputes were initially the subject of conciliation before another member of the Commission. However it was considered that the threshold determination of the legal questions concerning the proper interpretation of clause 3.7 of the Essential Energy Agreement and clauses 38.9 and 38.10 of the Ausgrid Agreement was desirable on the basis that conciliation could proceed more productively once the parties’ legal rights and obligations with respect to involuntary redundancy were determined. The unions applied for these questions of law to be referred to the Federal Court pursuant to s.608 of the FW Act. In a decision issued on 9 September 2015, 3 the President of the Commission declined to grant the referral, and the matters have been allocated to me for determination.

[9] The parties formulated a number of questions for determination. In the Essential Energy dispute the questions are as follows:

(1) Is Essential Energy precluded by the terms of the Essential Energy Enterprise Agreement 2013 from changing or altering the redundancy policy identified in clause 3.7 of the Agreement after 30 June 2015 including so as to terminate the employment of employees whose positions become redundant in the absence of their consent (forcibly)?

(2) Does the Essential Energy Enterprise Agreement 2013 (Essential Agreement), and in particular Clauses 3.7 and 1.7 and 1.13, require Essential to apply the Essential Energy Redundancy Policy dated 20 November 2013 (‘the Policy’) when a role has become redundant?

(3) While it remains in effect in its current terms does the Essential Agreement, and in particular Clauses 3.7 and 1.7 and 1.13, read with the Policy, prevent Essential from implementing forced redundancies?

[10] In the Ausgrid dispute the questions are:

(1) Is Ausgrid precluded by the terms of the Ausgrid Enterprise Agreement 2012 from changing or altering the redundancy policy identified in clause 38.10 of the Ausgrid Agreement after 18 December 2014 including so as to terminate the employment of employees whose roles are redundant in the absence of their consent (forcibly)?

(2) Can Ausgrid apply a Redundancy and Redeployment Policy that is different to the Ausgrid Redundancy and Redeployment Policy dated 17/5/2013 while the Ausgrid Agreement remains in force in its current terms?

(3) While the Ausgrid Agreement remains in effect in its current terms does it, and in particular Clauses 38.9 and 38.10, read with the Policy, prevent Ausgrid from implementing forced redundancies?

(4) Given Schedule 4 to the Electricity Network Assets (Authorised Transactions) Act 2015 (NSW), can the Commission resolve a dispute that arises under the Ausgrid Agreement about redundancy terms in a manner that permits Ausgrid to unilaterally implement forced redundancies?

[11] This decision is concerned with the determination of the above questions. They are legal questions which require the interpretation of the relevant provisions of the Essential Energy Agreement and the Ausgrid Agreement. This decision is not concerned with the industrial or commercial merit or fairness of Essential Energy and Ausgrid being able to reduce the size of their respective labour forces by means of involuntary redundancies due to the change in the regulatory environment. As earlier indicated, it is not in dispute that Essential Energy and Ausgrid have both voluntarily entered into enterprise agreements, enforceable under the FW Act, which contain provisions effectively prohibiting involuntary redundancies. The question is only whether those prohibitions remain legally in effect or not. In exercising the dispute resolution functions conferred on the Commission by those agreements, the Commission is prohibited by s.739(5) from making a decision which is inconsistent with the applicable enterprise agreement. As was stated in the often quoted decision of the Industrial Relations Court of Australia (Madgwick J) in Kucks v CSR Ltd:

“… the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award.” 4

Relevant provisions of the Essential Energy Agreement

[12] Clause 3.7 of the Essential Energy Agreement has already been set out. Other provisions relevant to the determination of the proper interpretation of clause 3.7 and referred to by the parties in the course of argument are set out below. Clause 1.5 of the Essential Energy Agreement provides:

“1.5 DATE AND PERIOD OF OPERATION

This agreement shall take effect from the first full pay period beginning seven (7) days after Fair Work Australia approves the enterprise agreement. Thereafter, this Agreement shall remain in force until 30 June 2015 and will continue to operate until it is replaced by a new Agreement or terminated in accordance with the Act.”

[13] Clauses 1.7 and 1.8 provide:

“1.7 POLICIES AND PROCEDURES

All operational policy and procedures relating to conditions of employment shall be developed or altered in accordance with the consultation process set in Section 1 Clause 1.13 (Consultation and Communication) of this Agreement. All such policies will be made available at all Essential Energy locations for access by all employees.

1.8 FUTURE NEGOTIATIONS

At least three (3) months before the nominal expiry of this Agreement the parties will commence negotiations for a replacement Enterprise Agreement.”

[14] Clause 1.13 provides:

“1.13 CONSULTATION AND COMMUNICATION

1.13.1 Consultative Committee Formation

Essential Energy will form Consultative Committees from time to time consisting of representatives of Essential Energy employees, the unions and Essential Energy management.

During the term of this agreement, proposed changes (other than in direct response to a statutory obligation) that will materially impact employees will be subject to consultation using Consultative Committees.

Consultative Committees will seek to apply interest-based techniques to assist in understanding the interests and concerns of Essential Energy employees, the unions and Essential Energy management.

As part of the formation of any Consultative Committee, the Committee will establish an agreed consultation plan, clearly describing the subject nature of the consultation, the intended consultative process steps and the timetable for completion of these steps.

Should the representatives on a Consultative Committee be unable to agree upon a consultation plan as described in this clause, they will have recourse to the Dispute & Grievance Resolution Procedure (Clause 1.15).

1.13.2 Consultative Committee Objectives

The objectives relate to major and strategic issues that may affect the relationship between Essential Energy and its employees and include:

a) to enable Essential Energy to keep its employees, and the unions representing them, informed;

b) to enable unions and their members to keep Essential Energy informed;

c) to enable employees to have input to the decisions of management;

d) to facilitate the exchange of views between employees and management;

e) to provide a forum for the exploration and understanding of “best practice” and its application within Essential Energy;

f) to act as a ‘think tank’ to raise ideas and concepts and provide a forum to discuss improvements in Essential Energy's performance and efficiency;

g) to enable the establishment of mechanisms to gauge and report upon productivity improvement.

1.13.3 Disputes

At any time during the process outlined in this clause either party may refer the matter to the Dispute and Grievance Resolution Procedure (Clause 1.15 of this Agreement) for resolution.”

[15] Clauses 1.14.1 and 1.14.2 relevantly provide:

“1.14.1 Continuous Improvement and Best Practice

Essential Energy seeks continuous improvement and best practice in all that we do. Essential Energy employees, the unions and Essential Energy management commit to actively supporting and contributing to the “process” of change.

The primary focus for improvement will be upon internally developing and implementing efficiencies to address Essential Energy’s performance challenges while ensuring safety, cost effectiveness and service to our customers. Our collective aim is to be safe, competitive and achieve best practice with the goal of achieving sustainable internal employment levels.
…

1.14.2 Change Following Consultation

Any change will only occur following the consultation process outlined in Clause 1.13 (Consultation and Communication).

…”

[16] Clause 3.6 provides:

“3.6 REDEPLOYMENT AND SALARY MAINTENANCE

a) Employees whose positions have been identified as being no longer required or restructured/redesigned to a lesser value and who elect to remain with the organisation will be subject to the provisions of Essential Energy’s Redeployment Policy (CEC1083) as varied from time to time in accordance with subclause c) of this clause.

b) In conjunction with the provisions of the Redeployment Policy employees who have elected to remain with the organisation will also be subject to the provisions of Essential Energy’s Salary Maintenance Policy (CEC1026) as varied from time to time in accordance with subclause c) of this clause, from the date of being informed in writing that their position is no longer required.

c) The parties agree that Salary Maintenance and Redeployment policies will not be altered without consultation and the agreement of the Union parties to this Agreement.”

[17] Clause 6.8 of the Essential Energy Agreement provides as follows:

“6.8 NO EXTRA CLAIMS

The parties to this Agreement agree not to pursue any additional or extra claims during the term of this Agreement except in accordance with Section 1 Clause 1.8 (Future Negotiations), or in accordance with any decision of the Fair Work Commission.”

Relevant provisions of the Ausgrid Agreement

[18] Clauses 38.9 and 38.10 of the Ausgrid Agreement have already been set out. Other parts of the agreement relevant to the determination of the proper interpretation of these provisions and referred to in the course of argument are set out below. Clause 2, Coverage, of the Ausgrid Agreement relevantly provides:

“…
2.2 This Agreement covers employees to the exclusion of the Electrical Power Industry Award 2010, rescinds and replaces all awards and previous Ausgrid Agreements between the persons covered by this agreement including but not limited to the Ausgrid Agreement 2010 including schedules 1 to 4 Inclusive.

…

2.6 This Agreement shall take effect as from 19 December 2012 until 18 December 2014 (the term).

…

2.11 Negotiations for a replacement agreement will commence within the 6 month period, but no later than 4 months, before the expiry of this Agreement.”

[19] Clause 5 relevantly provides:

“5 CONSULTATION

5.1 The term 'consultation' is understood as a process of seeking information, seeking advice, exchanging views and information, and taking the views and information into consideration before making a final decision.

5.2 Consultation regarding workplace change. Ausgrid seeks to continually improve its work processes and where possible to adopt the best practice in terms of efficiency and productivity in all work areas. Ausgrid's employees and their unions commit to supporting and contributing positively to the process of workplace change and improvement and agree not to unduly delay or frustrate the process described within this clause.

5.2.1 Employer to notify:

5.2.1.1 Before Ausgrid has made a final decision to introduce changes in production, program, organisation, structure, technology or policies that are likely to have an effect on employees, the employer must notify the employees who may be affected by the proposed changes and their representatives, if any.

Employees and Unions that may be impacted on by the proposals for change will be consulted and will be able to provide input on how any changes may be implemented.

5.2.1.2 Effects include, but not limited to, termination of employment; changes in the composition, operation or size of the employer's workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work including; the need for retraining or transfer of employees to other work or locations; and the restructuring of jobs.

5.2.2 Employer to discuss change:

5.2.2.1 The employer will consult with the employees affected and their representatives, if any, the introduction of the changes in 5.2.1, the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and consider the matters raised by the employees and/or their representatives in relation to the changes.

5.2.2.2 For the purposes of such discussion, the employer will provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees.

If there is any dispute during the abovementioned process then the persons covered by this Agreement agree to resolve the dispute through the resolution procedure at Clause 4.
…”

[20] Clause 9 relevantly provides:

“9 WAGES & SALARIES

9.1 Employees covered by this Agreement as classified in Appendix 1C are to be paid the appropriate wage or salary according to their approved pay point as per Appendix 1. Wages under this agreement will increase as shown in the table below.

Date	19/12/2012	18/12/2013
Percentage	2.7%	2.7%

9.2 The rates of pay set out in Appendices 1 include an “Ausgrid Allowance”. This is set a shown in the table below:

Date	19/12/12	18/12/13
Amount per week	$51.74	$53.14

…”

[21] Clauses 11.1 and 11.2 relevantly provide:

“11.1 Qualified Supervisor Electrical Work Allowance

Only paid to employees who are appointed as trades people and who hold a current NSW Qualified Supervisor Electrical Work. The allowance is also payable to employees who were appointed certain positions prior to 10 December 1981 whether or not they hold an electrician licence. The positions eligible for this allowance as at 19 December 2012 will remain eligible for the allowance for the term of this Agreement. The Qualified Supervisor Electrical Work Allowance remains an all purpose allowance. (Appendix 1D Allowances Item No. 28).

11.2 Electrical Safety Rules and Skills Allowance

Only paid to employees who are appointed to electrical positions who have passed the test and knowledge of the rules and who are required to work or supervise or direct work in accordance with those rules. The positions eligible for this allowance as at 19 December 2012 will remain eligible for the allowance for the term of this Agreement. …”

[22] Clause 45 deals with superannuation, and clause 45.4 provides as follows:

“45.4 Additional Employer Superannuation Contribution

45.4.1 All employees will receive a 1% increase to their employer superannuation contribution in addition to their existing arrangements effective from 19 December 2008 (SGC+5% = 14% in total) with a further 1% increase effective from 19 December 2009 (SGC +6% = 15% in total).

45.4.2 Should any increase to the Commonwealth Government Superannuation Guarantee (SGC) occur during the term of this agreement these increases will be absorbed.

45.4.3 Persons covered by this agreement who are in the Defined Benefit Superannuation Scheme will have any SGC increase absorbed in the 6% employer contribution.”

[23] Clause 48 provides:

“48 NO EXTRA CLAIMS

It is a term of this Agreement that the persons covered by this Agreement undertake that for the period of the duration of this Agreement that they will not pursue any extra claims, Agreement or over Agreement.”

[24] Clause 3.2.4 of Schedule 1 provides:

“3.2.4 A weekly skills retention allowance, payable for all purposes, for the term of this Agreement only:

Rate per Week
19/12/12	18/12/13
$55.58	$57.08	”

[25] Clause 8.3 of Schedule 1 provides:

“8.3 As part of this Agreement an individual will have the option to vary his/her remuneration and conditions of employment by agreement with the employer once during the term of this Agreement, provided that the employee is not disadvantaged when his/her remuneration and conditions are viewed as a whole against the unvaried remuneration and conditions. Variations made under this item 8 may include matters additional to those specified in clause 25.2.1 and 25.2.2 of the Ausgrid Agreement 2012 which shall specifically include but not be limited to variation of hours of work and entitlements above statutory minimums.”

[26] Clause 7.2 of Schedule 2 provides:

“7.2 As part of this Agreement an individual will have the option to vary his/her remuneration and conditions of employment by agreement with the employer once during the term of this Agreement, provided that the employee is not disadvantaged when his/her remuneration and conditions are viewed as a whole against the unvaried remuneration and conditions. Variations made under this item 7 may include matters additional to those specified in clause 25.2.1 and 25.2.2 of the Ausgrid Agreement 2012 which shall specifically include but not be limited to variation of hours of work and entitlements above statutory minimums.”

[27] Clause 5.3 of Schedule 3 provides:

“5.3 As part of this Agreement an individual will have the option to vary his/her remuneration and conditions of employment by Agreement with the employer once during the term of this Agreement, provided that the employee is not disadvantaged when his/her remuneration and conditions are viewed as a whole against the unvaried remuneration and conditions. Variations made under this item 5 may include matters additional to those specified in clause 25.2.1 and 25.2.2 of the Ausgrid Agreement 2012 which shall specifically include but not be limited to variation of hours of work and entitlements above statutory minimums.”

Consideration

Issues not in dispute

[28] Although the questions posed for determination on their face require the redundancy policies referred to in clause 3.7 of the Essential Energy Agreement and clauses 38.9 and 38.10 of the Ausgrid Agreement to be interpreted, it was not as earlier stated in dispute that those policies had the effect of prohibiting involuntary redundancies. Beyond stating that I accept that agreed position, it is not necessary to traverse that issue further. Likewise it was not in dispute, and I accept, that these clauses of the agreements gave effect as terms of the agreements to these policy prohibitions at least for the “term” of the agreements.

[29] There was no dispute about the legal principles to be applied to the interpretation of the Essential Energy Agreement and the Ausgrid Agreement. They are as stated by the Full Bench in relation to enterprise agreements generally in Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited. 5

The statutory context

[30] Because in each of the matters what constitutes the “term” of the agreement is of critical significance, it is necessary at the outset to examine the provisions of the FW Act which bear upon the period of operation of enterprise agreements.

[31] The expression “nominal expiry date”, as applicable to enterprise agreements, is defined in s.12 of the FW Act as follows:

nominal expiry date:

(a) of an enterprise agreement approved under section 186, means the date specified in the agreement as its nominal expiry date; or

(b) of an enterprise agreement approved under section 189 (which deals with agreements that do not pass the better off overall test): see subsection 189(4); …

[32] Section 186(1) of the FW Act requires the Commission to approve an enterprise agreement if the requirements for approval set out in ss.186 and 187 are satisfied. One of those requirements is contained in s.186(5):

Requirement for a nominal expiry date etc.

(5) The FWC must be satisfied that:

(a) the agreement specifies a date as its nominal expiry date; and

(b) the date will not be more than 4 years after the day on which the FWC approves the agreement.

[33] Section 189 empowers the Commission to approve an enterprise agreement that does not pass the “better off overall test” (one of the normal approval requirements) if satisfied that, because of exceptional circumstances, the approval of the agreement would not be contrary to the public interest. In relation to an enterprise agreement approved on this basis, s.189(4) provides:

Nominal expiry date

(4) The nominal expiry date of an enterprise agreement approved by the FWC under this section is the earlier of the following:

(a) the date specified in the agreement as the nominal expiry date of the agreement;

(b) 2 years after the day on which the FWC approved the agreement.

[34] The combined effect of ss.50 and 51 of the FW Act is that a person to whom an enterprise agreement applies must not contravene a term of an enterprise agreement. Under s.52(1)(a), an enterprise agreement applies to an employee, employer or employee organisation if, relevantly, “the agreement is in operation”. Section 54 deals with when an enterprise agreement is in operation as follows:

(1) An enterprise agreement approved by the FWC operatesfrom:

(a) 7 days after the agreement is approved; or

(b) if a later day is specified in the agreement—that later day.

(2) An enterprise agreement ceases to operate on the earlier of the following days:

(a) the day on which a termination of the agreement comes into operation under section 224 or 227;

(b) the day on which section 58 first has the effect that there is no employee to whom the agreement applies.

Note: Section 58 deals with when an enterprise agreement ceases to apply to an employee.

(3) An enterprise agreement that has ceased to operate can never operate again.

[35] Subdivision C of Div.7 of Pt.2-4 of the FW Act concerns the termination of enterprise agreements by agreement between the employer(s) and employees covered by the agreement. Sections 219-221 set out the procedures by which agreement as to termination may be reached. This may occur before or after the nominal expiry date of the agreement. Notwithstanding that termination of the agreement has been agreed, such termination does not take effect unless it is approved by the Commission under s.223 upon an application being made under s.222. Section 224 (referenced in s.54(2)(a), set out above) provides that if a termination of an enterprise agreement is approved under s.223, the termination operates from the day specified in the decision to approve the termination.

[36] Subdivision D of Div.7 of Pt.2-4 concerns termination of enterprise agreements after the nominal expiry date. Section 225 allows an employer, an employee or an employee organisation covered by an enterprise agreement to apply to the Commission for the termination of the agreement. Section 226 provides that the Commission must terminate the agreement upon such an application being made if the criteria set out in the section are satisfied. Section 227 (referenced in s.54(2)(a)) provides that if an enterprise agreement is terminated under s.226, the termination operates from the day specified in the decision to terminate the agreement.

[37] Section 58, which is referenced in s.54(2)(b), relevantly provides in subsection (2) that where an earlier enterprise agreement applies to an employee in relation to a particular employment and a later enterprise agreement that covers the employee in relation to the same employment comes into operation, the later agreement cannot apply until the earlier agreement has passed its nominal expiry date, but the earlier agreement ceases to apply once it passes its nominal expiry date and the later agreement then applies.

[38] The nominal expiry date of an enterprise agreement otherwise has significance under the FW Act in respect of the following provisions:

• s.417(1) prohibits the organisation or engagement in industrial action during the period from the date an enterprise agreement is approved until its nominal expiry date has passed;



• under s.438(1), an application for a protected action ballot order may not be made earlier than 30 days before the nominal expiry date of an applicable enterprise agreement (or, where more than one enterprise agreement applies, the latest nominal expiry date of those agreements);



• under s.229(3), an application for a bargaining order cannot be made more than 90 days before the nominal expiry date of an applicable enterprise agreement (or, where more than one enterprise agreement applies, the latest nominal expiry date of those agreements), unless the relevant employer has requested that a proposed enterprise agreement be approved by employees;



• s.211(1) provides that the Commission is required to approve a variation to an enterprise agreement if, relevantly, it is satisfied that the agreement as proposed to be varied would not specify a nominal expiry date which is more than 4 years after the day on which it was approved; and



• the nominal expiry date must be taken into account by the Commission in relation to orders concerning transferable instruments under ss.318-320, whether pattern bargaining has occurred under s.412, and in relation to the making of certain orders concerning employees transferring from a State public sector employer under ss.768BA, 768BD and 768BG.

[39] Two relevant conclusions may be drawn about the statutory context based on the above analysis. The first is that nowhere does the FW Act use the word “term” to describe either the period during which an enterprise agreement has legal effect or the period from the date an enterprise agreement takes effect to the nominal expiry date. The second is that an enterprise agreement does not cease to have legal effect or “expire” upon reaching its nominal expiry date, but continues to have effect thereafter until its termination is approved or ordered by the Commission or it is replaced by a later enterprise agreement.

The word “term” - some general observations

[40] On its ordinary meaning the word “term”, insofar as it relates to a period of time, is defined as “the time or period through which something lasts” or “a period of time to which limits have been set”. 6 That ordinary meaning is therefore equally apposite to a period of defined duration or an undefined period during which something is in existence (and ceases at the end of that period).

[41] In legal usage, “term” is commonly used to describe the time period in which a legal instrument such as a contract has effect. Such a period may be defined by reference to a period that lasts from one date to another, or a period of time measured in days, weeks, months or years, or an indefinite period which ends upon the occurrence of a defined event. In relation to employment contracts, for example, Neil and Chin’s The Modern Contract of Employment discusses the term of such contracts in the following way:

“The parties to a contract of employment can fix the length of the contract by their agreement. There is, in theory, no limit to the period that can be fixed in this way, up to the life of the employee. And there is no limit to the way in which the period can be fixed: for example, it can be by reference to time, or the happening of a specified event, such as the completion of a task stipulated in the contract.” 7

[42] Having regard to this legal usage, it may be observed at a high level of generality and absent a specific definition or textual indicators to the contrary that the word “term” when used in relation to an enterprise agreement is more apt to refer to the indefinite period in which the agreement remains in effect rather than simply the fixed period until the nominal expiry date has passed. The lack of any direct connection in the FW Act between the nominal expiry date and the period of operation of an enterprise agreement points to that conclusion. However it cannot be said, having regard to the ordinary meaning of the word, that “term” is completely inapt to refer to the period from the date an enterprise agreement takes effect until the nominal expiry date. That degree of ambiguity means that the context becomes critical in determining the correct meaning.

Essential Energy Agreement

[43] The immediate context of clause 3.7 of the Essential Energy Agreement is that it falls within Section 3, Employment Provisions. The provisions of Section 3, leaving aside clause 3.7 itself, deal with probationary employment, the termination of employment, types of employment (permanent full time, permanent part time, temporary or fixed term and casual as well as trainees and apprentices), the performance of alternative work, working away from home, workplace flexibility and redeployment and salary maintenance. None of these provisions is expressed so as not to operate after the nominal expiry date, and in no case would there be any intelligible rationale for this to be the case.

[44] Clause 3.6, which like clause 3.7 gives legal effect to a separate policy issued by Essential Energy, is instructive. Its subject matter, namely redeployment and salary maintenance, is related to the subject matter of clause 3.7 in that, as clause 3.6(a) discloses, it operates in relation to employees “whose positions have been identified as being no longer required” - that is, employees whose positions have become redundant - or whose positions have been “restructured/redesigned to a lesser value”. The application of the clause is further qualified in clause 3.6(a) in that the employees to whom it applies are those who “elect to remain with the organisation”. That qualification strongly suggests that where an employee’s position has become redundant, that employee has a right to elect whether to leave their employment by way of voluntary redundancy or stay and be redeployed. The reference to an employee electing to stay is difficult if not impossible to reconcile with the possibility that the employer might have the right to make any employee involuntarily redundant.

[45] The effect of clause 3.6(a) is to require Essential Energy’s Redeployment Policy, identified by the code “CEC1083”, to be applied to employees needing to be redeployed. There is no time limitation on this requirement by reference to the nominal expiry date of the Essential Energy Agreement or any other date or occurrence, so that it applies for the period that the Essential Energy Agreement remains in operation. The clause contemplates variation of the policy in accordance with clause 3.6(c) - that is, by consultation and agreement with the union parties to the Essential Energy Agreement.

[46] Clause 3.6(b), which concerns salary maintenance, is structured in the same way as clause 3.6(a). It applies to employees “who have elected to remain with the organisation”, establishes a requirement for compliance with a specified Essential Energy policy concerning salary maintenance (with the code “CEC1026”) that is not time-limited, and contemplates that the policy might be varied in accordance with clause 3.6(c) by consultation and agreement.

[47] I consider that two significant contextual inferences may be drawn from clause 3.6: first, that the identified policies concerning redeployment and salary maintenance, which operate in respect of employees whose positions have become redundant, are to be applied for the whole period that the Essential Energy Agreement remains in operation unless varied by consultation and agreement; and second, that over the same period it was not contemplated that involuntary redundancy could occur. An interpretation of clause 3.7 which confines the operation of the Essential Energy Redundancy Policy to the period up to the nominal expiry date therefore suffers the difficulty of inconsistency with these inferences arising from clause 3.6.

[48] Clause 3.7, like clause 3.6, requires compliance with a policy external to the text of the Essential Energy Agreement itself, namely the “Essential Energy Redundancy Policy (Management of Surplus Employees)”dated 20 November 2013. This Redundancy Policy is stated to apply “for the term of this Agreement”. There is nothing in clause 3.7 which indicates that the “term” referred to is the period until the nominal expiry date, and for the reasons earlier stated the word “term” is more apt to describe the period in which the Essential Energy Agreement remains in operation. Clause 1.5, which concerns the “Date and Period of Operation”, identifies that the agreement operates from seven days after approval until 30 June 2015 (the nominal expiry date) and “will continue to operate until it is replaced by a new Agreement or terminated in accordance with the Act”. Consistent with the FW Act provisions to which reference has earlier been made, clause 1.5 does not confine the period of operation of the agreement by reference to the nominal expiry date. Clause 1.5 therefore does not supply any reason to read the expression “term of this Agreement” in clause 3.7 as referring to a period ending on the nominal expiry date.

[49] Essential Energy sought to draw a contrast between the reference to the “term of this Agreement” in clause 3.7 and the absence of such a reference in clause 3.6, and submitted that this indicated that the Redundancy Policy was intended to operate only for the limited period up until the nominal expiry date. I accept that the contrast in usage requires an explanation, but I prefer the explanation advanced by the unions that clause 3.7 emphasises that the Redundancy Policy was to apply for the “term of this Agreement” because, unlike clause 3.6, it did not contemplate that there would be any change to that Policy during the period of operation of the Agreement, even by consent.

[50] Additionally, I consider it unlikely to have been intended that, in respect of so important an issue as redundancy, clause 3.7 would provide that the rights and obligations in respect of that subject matter set out in the Redundancy Policy would simply cease in their entirety at the nominal expiry date with nothing to replace them for the remaining period of operation of the Essential Energy Agreement. Essential Energy submitted that there was a mechanism in the agreement for replacement redundancy provisions to be developed, in that clause 1.13.1 requires “proposed changes … that will materially impact employees” to be the subject of consultation using the Consultative Committee, and that clause 1.13.3 allows any matter that was the subject of the Consultative Committee to be referred to the Dispute and Grievance Resolution Procedure set out in clause 1.15 for resolution. It also identified clause 1.7 as requiring, relevantly, that alterations to policy relating to conditions of employment are to be altered in accordance with the consultation process in clause 1.13. That process ultimately allows for arbitration by this Commission or, if agreed, by another person.

[51] However there is a major flaw in this argument. The requirement in clause 1.13.1 for “proposed changes … that will materially impact employees” to be the subject of consultation is itself said to operate only “[d]uring the term of this agreement”. If, on Essential Energy’s argument, that expression means only the period until the nominal expiry date, then the consultation requirement would not apply after the nominal expiry date and there would be no mechanism to replace the Redundancy Policy once the obligation to apply it also ceased on the nominal expiry date. I can identify no sensible rationale as to why a consultation requirement concerning changes materially affecting employees would cease to operate on the nominal expiry date. Under s.205(1), an enterprise agreement is required to contain a consultation term which, relevantly, requires the employer to consult with employees about “a major workplace change that is likely to have a significant effect on the employees”. If clause 1.13.1 did not operate beyond the nominal expiry date, the Essential Energy Agreement would not contain a consultation term that complied with s.205(1). That would not be fatal to the validity of the agreement, since s.205(2) provides that in the absence of such a term the model consultation term prescribed by the regulations would be taken to be a term of the agreement. However, it is again difficult to identify a sensible rationale for the model consultation term replacing the agreed consultation provisions in clause 1.13 after the nominal expiry date.

[52] Essential Energy sought to avoid this difficulty with the submission that clause 1.7 applied the consultation process to alterations to policies whenever they occurred, notwithstanding the temporal limitation in clause 1.13.1 which, on their case, necessarily existed. I consider this to be a strained and artificial approach which involves discordance between clause 1.7 and 1.13.1. That discordance disappears if the expression “the term of this agreement” in clause 1.13.1 is read as meaning the period in which the Essential Energy Agreement remains in operation, not the limited period up until the nominal expiry date. I therefore consider that clause 1.13.1 is to be read as operating while the Essential Energy Agreement remains in effect, which is a contextual indicator that clause 3.7 is to be read the same way.

[53] Essential Energy pointed to clause 6.8, No Extra Claims, as demonstrating that the expression “the term of this Agreement” meant the period until the nominal expiry date. It submitted that the clause would make little sense if it prohibited extra claims beyond the nominal expiry date, since that would prohibit negotiation of a new agreement and would be inconsistent with the scheme of the FW Act under which a claim for a proposed new agreement supported by protected industrial action could be advanced once the nominal expiry date of an existing enterprise agreement had passed. That argument is, superficially, a strong one. By analogy of reasoning with the Federal Court Full Court decision in Toyota Motor Corporation Australia Limited v Marmara 8, a provision of an enterprise agreement would not be read as impermissibly excluding bargaining rights under the FW Act when an alternative interpretation was available which did not have that effect.9

[54] However the prohibition on extra claims in clause 6.8 operates subject to two exceptions. The first is to the effect that extra claims may be pursued “in accordance with Section 1 Clause 1.8 (Future Negotiations)”. Clause 1.8 requires the parties to commence negotiations for a replacement enterprise agreement at least three months prior to the nominal expiry date. Reading clause 1.8 together with clause 6.8, it is apparent that “extra claims” may be advanced in such negotiations for a replacement enterprise agreement. Although clause 1.8 requires such negotiations to commence three months before the nominal expiry date, there is nothing in clause 1.8 to suggest that such negotiations will necessarily be completed by the nominal expiry date. That is, the first exception to clause 6.8 is to be read as applying to such negotiations from when they commence (at least three months prior to the nominal expiry date) to whenever they end (presumably when agreement is reached as to a replacement enterprise agreement). In that sense, clause 6.8 if read as operating beyond the nominal expiry date does not prevent extra claims being advanced in respect of negotiations for a new enterprise agreement after the nominal expiry date, and is therefore not repugnant to the bargaining provisions of the FW Act. I accept the submissions of the unions to that effect.

[55] It may also be noted that clause 1.8 is expressed to operate by reference to “three (3) months before the nominal expiry date of this Agreement”. If the expression “term of this Agreement” as used in clause 3.7 meant the period up until the nominal expiry date, that expression might have been expected to have been used in clause 1.8 so that it read “three (3) months before the end of the term of this Agreement” or something similar.

[56] The second exception in clause 6.8 is that the prohibition on extra claims does not apply “in accordance with any decision of the Fair Work Commission”. The Commission does not, under the FW Act, make decisions which in terms permit parties to pursue “extra claims”. However it is empowered to make a range of decisions which are concerned with the bargaining process for enterprise agreements - for example, bargaining orders under s.230, majority support determinations under s.237, and, most significantly, protected action ballot orders under s.443. In order to give the second exception in clause 6.8 practical work to do, it may be read as referring to decisions of this nature which are associated with the process ofadvancing claims for a proposed enterprise agreement. Such decisions may be made after the nominal expiry date of an existing enterprise agreement (and may only be made in limited circumstances prior to the nominal expiry date - see, for example, s.438 in respect of protected action ballots), with the consequence that for the exception in clause 6.8 to be practically effective, the clause itself must be interpreted as having application beyond the nominal expiry date.

[57] I conclude therefore that the expression “the term of this Agreement” in clause 3.7, as in clauses 1.13.1 and 6.8, is to be read as meaning the period in which the Essential Energy Agreement remains in operation and not the period up until the agreement’s nominal expiry date. The consequence of that conclusion is that clause 3.7 has the effect of prohibiting Essential Energy from effecting involuntary redundancies notwithstanding that the nominal expiry date has passed.

[58] I therefore answer the questions posed by the parties for determination as follows:

(1) Yes.

(2) Yes.

(3) Yes.

Ausgrid Agreement

[59] The critical element of Ausgrid’s submission that clauses 38.9 and 38.10 of the Ausgrid Agreement are to be read as limiting the application of the “Ausgrid Redundancy and Redeployment Policy dated 17/5/2013”, and the prohibition on involuntary redundancies contained in that policy, to the period until the agreement’s nominal expiry date, was that clause 2.6 was to be read as defining the expression “the term” as it appears throughout the agreement to mean the period 19 December 2012 until 18 December 2014 (the latter date being the nominal expiry date).

[60] At first sight, that appears to be what clause 2.6 does. However, on closer examination, that proposition cannot be accepted for a number of reasons. First, it is apparent having regard to the earlier analysis of the statutory scheme for enterprise agreements in the FW Act that clause 2.6 cannot be read literally. The Ausgrid Agreement could not actually take effect as from 19 December 2012, since under s.54(1) an enterprise agreement operates from 7 days after the Commission approves it or from any later date specified in the agreement. There is no capacity under the FW Act for an enterprise agreement to be given retrospective operation. The Ausgrid Agreement was approved on 27 June 2013 and took effect on 4 July 2013 10, not 19 December 2012. That date can only usefully be understood, particularly when read with clause 9, Wages and Salaries, as a requirement for Ausgrid to pay employees, upon the agreement taking effect, a monetary amount equivalent to the payment of the wage and salary increases provided for in the agreement from 19 December 2012. Likewise, the period in which the agreement had effect did not end on 18 December 2014 because, as earlier discussed, an enterprise agreement does not cease to have effect under the FW Act until its termination is approved or ordered by the Commission or it is replaced by a later enterprise agreement. The reference in clause 2.6 to the agreement having effect until 18 December 2014 can, in my view, only be sensibly understood as the identification of the nominal expiry date of the agreement as required by s.186(5) (there being no other provision in the agreement which identifies a nominal expiry date). Hence on no view can the period 19 December 2012 to 18 December 2014 be described as “the term” of the Ausgrid Agreement. It is not even what might be called the “nominal term” of the agreement (that is, the period from the date the agreement began to operate until the nominal expiry date). The obvious lack of care in the drafting of clause 2.6, which is not of itself a definitions clause, makes it difficult to conclude that the words “the term” in clause 2.6 were meant to convey a clear intention that that expression was to mean the period 19 December 2012 to 18 December 2014 whenever the expression was used in the agreement. Nor, having regard to the actual period of operation of the Ausgrid Agreement under the FW Act would the description of that period as “the term” have an identifiable rationale.

[61] Second, the expression “the term” is not, as such, used anywhere in the Ausgrid Agreement. The expression that is actually used in clause 38.10, as well as in clauses 11.1 and 11.2 in relation to allowances, clause 45.4.2, clauses 3.2.4 and 8.3 of Schedule 1, clause 7.2 of Schedule 2 and clause 5.3 of Schedule 3, is “the term of this Agreement”. This lack of correspondence between the putative defined expression in clause 2.6 and the expressions actually used elsewhere in the agreement tells against Ausgrid’s reliance on clause 2.6 as indicative of the meaning of clause 38.10.

[62] Third, it is highly likely that in a number of cases where the expression “the term of this Agreement” is used it was not intended to mean the period 19 December 2012 to 18 December 2014. For example, the “Qualified Supervisor Electrical Work Allowance”provided for in clause 11.1 applies only to employees appointed as trades persons who hold a current “NSW Qualified Supervisor Electrical Work” as well as a grandparented group, namely those employees who were in receipt of the allowance as at 19 December 2012. The quantum of the allowance as at the nominal expiry date of 18 December 2014 was $39.16 per week, payable for all purposes 11. While arguably there might be a sensible rationale for having the nominal expiry date as a cut-off date for the payment of a grandparented allowance, no rationale is apparent at all for those persons who qualify for the allowance in accordance with its stated criteria for payment losing such a substantial monetary amount whilst the agreement remains in operation. At the very least, a provision to that effect would have to be considered highly unusual. The same observations apply a fortiori to the “Electrical Safety Rules and Skills Allowance”in clause 11.2, the quantum of which as at 18 December 2014 was $129.89 per week, payable for all purposes.12

[63] Fourth, the provisions in the schedules to the Ausgrid Agreement (earlier identified) which use the expression “the term of this Agreement” in respect of various entitlements are all expressed in relevantly identical terms to equivalent provisions in the schedules to the preceding enterprise agreement, the Ausgrid Agreement 2010. Clause 2.6 of the 2010 agreement provided: “This Agreement shall take effect from 19 December 2010 and shall cease to have effect on 18 December 2012”. The words in parentheses “(the term)” in clause 2.6 of the current agreement did not appear in clause 2.6 of the 2010 agreement. Therefore there was no basis, by reference to clause 2.6, to read the expression “the term of this Agreement” as it appeared in the schedules to the 2010 agreement as referring to a period ending at the nominal expiry date of the 2010 agreement. This historical context strongly indicates that the schedules to the current agreement were simply picking up the language of the 2010 agreement when the expression “the term of this Agreement” was used, and that this did not reflect any defined expression established by clause 2.6 of the current agreement.

[64] Fifth, the “no extra claims” obligation in clause 48, No Extra Claims, which Ausgrid contended operated until the nominal expiry date had passed, does not refer to “the term” but for the “period of the duration of this Agreement”. This inconsistency in terminology tells against the proposition that clause 2.6 created a defined expression for the purposes of the Ausgrid Agreement.

[65] I therefore reject the submission that clause 2.6 has the effect of defining the expression “the term of this Agreement” to mean the period 19 December 2012 until 18 December 2014, or any period ending on the nominal expiry date. For the reasons explained, the context rather tends to indicate that the expression is used in the Ausgrid Agreement to mean the period in which the agreement is in operation under the FW Act.

[66] Having dealt with these contextual considerations, it is necessary to turn directly to clauses 38.9 and 38.10. The effect of clause 38.9 is to require Ausgrid to apply the Ausgrid Redundancy and Redeployment Policy to any employee whose role becomes redundant. Clause 38.9 does not apply any temporal limitation to that requirement, so that it must be complied with for the whole of the period during which the Ausgrid Agreement is in operation. I consider that clause 38.9 is critical in providing the direct context for the proper interpretation of clause 38.10. The obligation upon Ausgrid imposed by clause 38.9, and the consequent rights conferred upon employees by the provision, would have little substantive content if Ausgrid was free to vary its Redundancy and Redeployment Policy from time to time as it saw fit. In that context, clause 38.10 serves the ancillary function of identifying the precise form of the policy which clause 38.9 requires to be applied, and thus gives it content. The policy so identified is the “Ausgrid Redundancy and Redeployment Policy dated 17/5/2013” - that is, the policy as it was at that date. Once that is understood, the purpose of the use of the expression “for the term of this Agreement” in clause 38.10 becomes apparent. It signifies that the 17/5/2013 version of the policy is the applicable policy for the purpose of the whole period in which the obligation in clause 38.9 applies - that is, the whole of the period during which the Ausgrid Agreement remains in operation. In other words, its effect is to give the obligation in clause 38.9 a fixed content whilst ever that obligation operates.

[67] The alternative interpretation advanced by Ausgrid, whereby “for the term of this Agreement” in clause 38.10 means a period ending on 18 December 2014, would effectively render the obligation upon Ausgrid in clause 38.9 a nullity after that date even though the clause itself was not subject to any temporal limitation. It would mean that Ausgrid would cease to be required to apply the 17/5/2013 version of the policy, and would be able to vary the policy as it saw fit. This would allow, for example, a reduction in the scale of severance payments, the abolition of salary maintenance or the alteration to the redeployment arrangements in the policy. An interpretation which would render clause 38.9 otiose in this way for a substantial part of its period of operation is not to be preferred. I do not consider it to be an answer to that difficulty to say, as Ausgrid does, that clause 5.2 would require consultation about any such change to the redundancy policy, because it still leaves clause 38.9 without practical work to do after the nominal expiry date. That interpretation also does not conform to the more apt meaning to be ascribed generally to the word “term” as used in relation to an enterprise agreement as earlier discussed.

[68] The answers to the first three Ausgrid questions are therefore as follows:

(1) Yes.

(2) No.

(3) Yes.

Effect of the ENA Act on determination of the Ausgrid dispute

[69] Having answered the first three Ausgrid questions as above, it is not strictly necessary for me to answer the fourth question, which relates to the operation of the ENA Act. The unions only relied on the ENA Act as a fall-back position in the event that it was determined that there was no current prohibition on involuntary redundancies in the Ausgrid Agreement. Since I have determined otherwise, the effect of the ENA Act cannot make any difference to the outcome. Because s.739(5) prohibits the Commission, in the exercise of dispute resolution powers, from making a decision inconsistent with (relevantly) an enterprise agreement, the Commission could not in any arbitration of the Ausgrid dispute determine an outcome inconsistent with the prohibition on involuntary redundancies in the Ausgrid Agreement.

[70] I have considered whether, since this decision may be subject to an appeal, it would be useful to express my views about the fourth question in the event that my answers to the first three questions are overturned. There was no dispute between the parties that I had jurisdiction in the exercise of the dispute resolution powers conferred on the Commission by the Ausgrid Agreement to determine question 4. However, for reasons which will be explained, I do not consider that question 4 can properly be addressed at this stage on the basis of the submissions advanced to date.

[71] The debate between the parties concerning the ENA Act centred on Schedule 4 of that Act. Schedule 4, Employment Guarantees, contains a number of protections applicable to “continuing employees” of an “electricity network SOC” who may be affected by the privatisation process. These protections came into the ENA Act as a result of amendments moved in the upper house of the NSW Parliament, the Legislative Council, by the Hon. Fred Nile MLC. The expression “continuing employee” is defined in clause 23 of Schedule 4 as follows:

"continuing employee" means:

(a) an employee of an electricity network SOC, or

(b) an employee whose employment is transferred under this Act.

[72] The expression “electricity network SOC” is defined in s.3, and relevantly includes Ausgrid.

[73] The protections relevant to the issue of redundancy are contained in clauses 4 and 5 of Schedule 4 as follows:

4 Voluntary redundancies

A continuing employee may be offered voluntary redundancy in accordance with the terms and conditions of an enterprise agreement or a redundancy policy that applies to the employee.

5 Forced redundancies

There are to be no forced redundancies of continuing employees during the employment guarantee period, except by agreement between the affected employees (or a person authorised to act on their behalf or on behalf of a majority of them) and the employer, or in accordance with the Fair Work Act 2009 of the Commonwealth.

[74] The expression “employment guarantee period” used in clause 5 is defined in clause 23 to mean “the period of 5 years starting on 1 July 2015 and ending on 30 June 2020”.

[75] It is clear that, subject to two identified exceptions, clause 5 has the effect of forbidding forced redundancies of continuing employees over the period from 1 July 2015 to 30 June 2020. Having regard to the definition of the expression “continuing employees”, and subject to the exceptions, the effect of clause 5 in respect of Ausgrid is that no employee engaged by Ausgrid as at 1 July 2015 may involuntarily be made redundant by Ausgrid during that period. The submissions concerned whether either of the two exceptions had application in relation to the dispute.

[76] The first exception - “except by agreement between the affected employees (or a person authorised to act on their behalf or on behalf of a majority of them) and the employer” - was not suggested by either party to be applicable in the current circumstances. It appears to allow affected employees - presumably meaning employees who the employer would wish to make redundant - or their representative or a representative of a majority of them to agree to involuntary redundancy. Therefore either individual affected employees, directly or through a representative, could agree to involuntary redundancy (although that would appear to make it a voluntary redundancy), or the majority of a group of affected employees could agree to involuntary redundancy through their representative, and the guarantee in clause 5 would not apply. That appears to be reasonably clear.

[77] It was about the meaning of the second exception that the parties disagreed. Ausgrid submitted that the second exception is constituted by the words “in accordance with the Fair Work Act 2009 of the Commonwealth”, and that any conduct which is not prohibited by the FW Act is in accordance with it. Because, Ausgrid submitted, the Ausgrid Agreement did not after its nominal expiry date of 18 December 2014 prohibit involuntary redundancy, and the FW Act did not otherwise forbid involuntary redundancy, it would be open for the Commission in the exercise of the dispute resolution powers conferred upon it by the Ausgrid Agreement to determine that involuntary redundancies should be permitted to occur.

[78] The unions submitted that clause 5 was to be read distributively, so that the second exception was constituted by the words “except by agreement … in accordance with the Fair Work Act 2009 of the Commonwealth”. On this approach, the prohibition on involuntary redundancies in clause 5 would not apply if an electricity network SOC and its employees chose to enter into an “agreement” - that is, an enterprise agreement - in accordance with the FW Act which authorised involuntary redundancies to occur. This might also extend to an agreed variation to an existing enterprise agreement, but would not apply to a pre-existing agreement such as the Ausgrid Agreement, however it was to be interpreted, since clause 5 was intended to add a statutory protection against involuntary redundancy which did not previously exist, not just to confirm the pre-existing legal rights of electricity network SOCs and their employees.

[79] However these submissions do not, in my view, properly address the primary issue raised by question 4, namely whether anything in the ENA Act, however interpreted, could operate to constrain the exercise by the Commission of the dispute resolution powers conferred upon it by the Ausgrid Agreement. To put this another way, the real question is: does the Commission, in the arbitration of the Ausgrid dispute, have power to determine an outcome which is inconsistent with clause 5 of Schedule 4 of the ENA Act? If the answer is “yes”, it ultimately does not matter (as a question of power) what the effect of the ENA Act is.

[80] Section 109 of the Constitution relevantly provides that, in the event of any inconsistency between a law of a State and a law of the Commonwealth, the Commonwealth law shall prevail and the State law shall be invalid to the extent of the inconsistency. Section 29 of the FW Act provides, subject to certain exceptions which do not appear to be relevant here, that an enterprise agreement prevails over a law of a State or Territory to the extent of any inconsistency. Thus, while the Ausgrid Agreement is not itself a law of the Commonwealth to which s.109 of the Constitution applies, the effect of s.29 of the FW Act is that any inconsistency between a State law such as the ENA Act and the Ausgrid Agreement would involve an inconsistency with s.29 of the FW Act, to which s.109 would apply. Further, s.739 of the FW Act gives authority to the Commission to determine a dispute by arbitration in accordance with a dispute resolution procedure in an enterprise agreement such as the Ausgrid Agreement. Prima facie, it would therefore appear that the ENA Act could not validly limit the power of the Commission under the FW Act to determine the Ausgrid dispute consistent with the provisions of the Ausgrid Agreement. That would be the case no matter how clause 5 of Schedule 4 of the ENA Act is interpreted.

[81] The parties’ submissions did not address question 4 from this perspective, although I note that Ausgrid did submit, in effect, that the second exception in clause 5 of Schedule 4 was an expression of deference to the prevailing provisions of the FW Act as an Act of the Commonwealth. In the absence of such submissions, I do not propose to go beyond the strictly provisional views I have expressed and give a final answer to question 4. If the parties wish me to provide such an answer, they should advise my chambers within seven days, and arrangements will be made for the receipt of further submissions on question 4.

[82] The unions invited me in their submissions to express a view about the proper meaning of clause 5 of Schedule 4 of the ENA Act on the basis that it might inform the exercise of the discretion in any later arbitration of the dispute, even if the ENA Act did not limit the power of the Commission to arbitrate the dispute. I am not prepared to do this since it would go beyond answering the threshold questions which the parties posed for determination.

VICE PRESIDENT

Appearances:

H. J. Dixon SC and Y. Shariff of counsel with A. DeBoos solicitor for Essential Energy.

H. J. Dixon SC and Y. Shariff of counsel with G. Phillips solicitor for Ausgrid.

I. Taylor SC and O. Fagir of counsel with A. Neilson solicitor for the Respondent unions.

Hearing details:

2015.

Sydney:

9 October.

 1   Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), Australian Municipal, Administrative, Clerical and Services Union (ASU) and the Association of Professional Engineers, Scientists and Managers, Australia (APESMA)

 2 [2014] FCAFC 24

 3   [2015] FWC 6258

 4 (1996) 66 IR 182 at 184

 5   [2014] FWCFB 7447 at [41]

 6   Macquarie Online Dictionary

 7   At [11.20], footnotes omitted.

 8 [2014] FCAFC 84; (2014) 222 FCR 152

 9   Ibid at [112]

 10   [2013] FWCA 4108

 11   Appendix 1D, item 28

 12   Appendix 1D, item 25

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