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

[2015] FWC 6258

[2015] FWC 6258

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.608 – Referring questions of law to the Federal Court

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

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

JUSTICE ROSS, PRESIDENT SYDNEY, 9 SEPTEMBER 2015

Section 608 Fair Work Act 2009 Referral of a question of law to the Federal Court - Applications refused.

[1] This decision deals with two applications made by the CEPU, ASU and APESMA (collectively, the Unions) for the referral of certain questions of law to the Federal Court pursuant to s.608 of the Fair Work Act 2009 (Cth) (the Act). The referral applications arise in the context of two s.739 applications for the resolution of disputes in accordance with the dispute settlement terms in two enterprise agreements. The s.739 applications have been made by Essential Energy and Ausgrid, and the Unions are the respondents to those applications.

[2] The background to the referral applications is uncontentious 1 and may be shortly stated.

The Ausgrid matter

[3] Ausgrid is a NSW State owned corporation with responsibility for the safe management and operation of the electricity network within its franchise area. Ausgrid employs a number of employees who are members of the Unions and both Ausgrid and the Unions are covered by an enterprise agreement approved by the Commission known as the Ausgrid Agreement 2012 (the Ausgrid Agreement).

[4] The nominal term of the Ausgrid Agreement has passed but the agreement continues in force as it has not yet been replaced.

[5] The Agreement provides in clause 38.10 that:

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

[6] In April 2015 the Australian Energy Regulator issued a final determination for the 2014-2019 regulatory period (the AER Determination). As a result of the AER determination Ausgrid's funding has been significantly reduced. Ausgrid asserts that from 1 July 2015 it does not have funding for approximately 1,100 jobs and that the cost of these unfunded jobs is approximately $12.6 million per month. As a consequence of the AER Determination, Ausgrid is planning significant labour reductions within its workforce.

[7] On 4 June 2015, the Electricity Network Assets (Authorised Transactions) Act 2015 (NSW) (ENA Act) commenced. Ausgrid is one of the electricity network state owned corporations subject to the ENA Act.

[8] On 25 June 2015 Ausgrid notified the Unions of its intention to nominate up to 600 positions as redundant in September 2015 followed by a further nomination of 500 redundant positions in October 2015. Ausgrid also circulated a document titled ‘Managing Excess Employees Policy’ (MEE Policy) around this time. The MEE Policy provides, inter alia, that upon an employee being declared an ‘excess employee’ they will be made compulsorily redundant after a 3 month redeployment period.

[9] For some months the Unions and Ausgrid have been in the process of bargaining for a replacement to the Ausgrid Agreement, including negotiations concerning the issue of job security and forced redundancies. A critical issue that has arisen between the parties is as follows:

(i) the Unions have advised Ausgrid that Ausgrid was precluded by the terms of the Agreement from introducing its proposed MEE Policy;

(ii) the Unions further allege that by introducing the proposed MEE Policy Ausgrid would in fact be in breach of the terms of the Agreement; and

(iii) the Unions also stated that any revised redundancy policy could only be implemented through the parties agreeing a new Agreement.

[10] On 8 July 2015 Ausgrid notified the Commission of a dispute as to the introduction of a new redundancy policy, by filing a s.739 application (the Dispute Proceedings). The application states that:

(a) it is Ausgrid’s contention that as a result of the AER Determination Ausgrid has pursued a voluntary redundancy process pursuant to the existing policy;

(b) as at 30 June 2015 approximately 400 voluntary redundancies have been implemented;

(c) Ausgrid considers it necessary to now proceed to identify positions for compulsory redundancy; and

(d) Ausgrid is seeking to change its redundancy policy given the circumstances.

[11] The relief sought in the application is as follows:

‘... will seek orders that it is at liberty to introduce its MEE Policy and that it is at liberty to proceed to identify positions for redundancy in accordance with the proposal contained in Annexure B hereof.’

[12] Ausgrid are seeking to arbitrate the Dispute Proceedings utilising the powers granted under Clause 4 of the Ausgrid Agreement. On 30 July 2015 Ausgrid wrote to the Commission requesting that the Commission arbitrate the following question:

‘Do the terms of the Ausgrid Agreement 2012 (the Agreement), specifically clauses 2.6 and 38.10, enable Ausgrid to amend the terms of the Ausgrid Redundancy and Redeployment Policy dated 17 May 2013 after the expiry of the term of the Agreement on 18 December 2014 and after consultation in accordance with the provisions of the Agreement?’

[13] At a directions hearing before Vice President Hatcher on 3 August 2015:

(a) the Applicant identified it wanted its question dealt with as a threshold matter before questions as to the merit of any new redundancy policy and its terms would be considered;

(b) VP Hatcher indicated he had only been allocated the issue of determining the threshold question, and that any further hearing as to whether and how the redundancy policy can be varied would be dealt with by SDP Hamberger;

(c) the Unions indicated that in addition to the threshold issue raised by the Applicant’s question there was also a further threshold question that arises as to the true effect of Schedule 4 to the ENA Act;

(d) the Unions indicated that they believe the questions falling to VP Hatcher to determine would be better determined by the Federal Court, as that would ensure the question was determined to finality expeditiously, and foreshadowed that this application would be made; and

(e) VP Hatcher made no directions in light of the foreshadowed application by the Unions.

[14] The referral application seeks to refer the following questions to the Federal Court:

‘(i) Can Ausgrid apply a Redundancy and Redeployment Policy that is different to the Ausgrid Redundancy and Redeployment Policy dated 171512013 ('the Policy') while the Ausgrid Enterprise Agreement 2012 (Ausgrid Agreement) remains in force in its current terms?

(ii) While it remains in effect in its current terms does the Ausgrid Agreement, and in particular Clauses 38.9 and 38.1 0, read with the Policy, prevent Ausgrid from implementing forced redundancies?

(iii) Given s 739(5) of the Fair Work Act 2009 does the Fair Work Commission ('Commission') have power to determine the Dispute Proceedings in a manner that would permit Ausgrid to amend the Policy?

(iv) On the proper construction of Schedule 4 to the Electricity Network Assets (Authorised Transactions) Act 2015 (NSW) (ENA Act), can the Commission resolve a dispute about redundancy terms in a manner that permits Ausgrid to implement forced redundancies?

(v) Were the Commission in the exercise of arbitration powers conferred on it by clause 4.2 of the Ausgrid Agreement to resolve a dispute in a manner that purported to permit Ausgrid to implement forced redundancies, would Ausgrid be prevented from implementing forced redundancies by Schedule 4 to the Electricity Network Assets (Authorised Transactions) Act 2015 (NSW) (ENA Act)?’

The Essential Energy matter

[15] Essential Energy is a privately owned corporation with responsibility for building, operating and maintaining Australia’s largest electricity network across 95 per cent of New South Wales and parts of southern Queensland. Essential Energy employs a number of employees who are members of the Unions and both Essential Energy and the Unions are covered by an enterprise agreement approved by the Commission in accordance with the Act, known as the Essential Energy Enterprise Agreement 2013 (the Essential Energy Agreement).

[16] The nominal term of the Essential Energy Agreement has passed but the agreement continues in force as it has not yet been replaced. Clause 3.7 of the Essential Energy Agreement refers to a redundancy policy known as the Essential Energy Redundancy Policy (Management of Surplus Employees) dated 20 November 2013.

[17] Essential Energy’s funding has been significantly reduced as a result of the AER Determination referred to in paragraph [6] above.

[18] At a briefing on 17 June 2015 the Deputy Chief Executive Officer of Essential Energy informed the Unions that:

(i) as a consequence of the determination of the Essential Energy will not have funding for 1,395 jobs across the Essential Energy network;

(ii) Essential Energy intends to announce 700 redundant positions in September 2015; and

(iii) a further 700 redundant positions will be announced in October 2015 following the outcome of any appeal to the AER Determination.

[19] On or around 25 June 2015, Essential Energy circulated a document titled 'Managing Excess Employees Policy' (MEE Policy). The MEE Policy provides, inter alia, that upon an employee being declared an excess employee they will be made compulsorily redundant after a 3 month redeployment period if they do not find a new role.

[20] A critical issue that has arisen between the parties is as follows:

(i) the Unions have advised Essential that Essential was precluded by the terms of the Agreement from introducing its proposed MEE Policy; and

(ii) the Unions further allege that by introducing the proposed MEE Policy Essential would in fact be in breach of the terms of the Agreement; and

(iii) the Unions also stated that any revised redundancy policy could only be implemented through the parties agreeing a new Agreement.

[21] Essential Energy asserts the existing redundancy policy can be amended pursuant to clauses 1.7, 1.13 and 3.7 of the Essential Energy Agreement. Essential Energy wishes to implement the MEE Policy.

[22] For around 4 months the Unions and Essential Energy have been in the process of bargaining for a replacement to the Essential Energy Agreement, including negotiations concerning the issue of job security and forced redundancies.

[23] On 9 July 2015, Essential notified the Commission of a dispute as to the introduction of a new redundancy policy by filing an Application pursuant to s.739 (‘the Dispute Proceedings’). Essential Energy is seeking to arbitrate the Dispute Proceedings utilising the powers granted under Clause 1.15 of the Essential Energy Agreement.

[24] On 24 July 2015 there was a conciliation conference in relation to the matter and Essential Energy confirmed to the Commission that it was seeking, through the Dispute Proceedings, to be permitted to implement the MEE policy in replacement of the prior policy.

[25] On 31 July 2015, Essential requested that the Commission determine the following question:

Do the terms of the Essential Energy Enterprise Agreement 2013 (the Agreement) specifically clauses 3.7 and 1.7 and 1.13 enable Essential Energy to amend the terms of the Essential Energy Redundancy Policy dated 20 November 2013 after consultation in accordance with the provisions of the Agreement?

[26] At a directions hearing before Vice President Hatcher on 3 August 2015:

(a) The Applicant identified it wanted its question dealt with as a threshold matter before questions the remainder of the Dispute Proceedings would be considered;

(b) VP Hatcher indicated he had only been allocated the issue of determining the threshold question, and that any further hearing as to whether and how the redundancy policy can be varied would be dealt with by SDP Hamberger.

[27] The referral application seeks to refer the following questions to the Federal Court:

‘(i) 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 2014 (the Policy) when a role has become redundant?

(ii) Can Essential apply a Redundancy and Redeployment Policy that is different to the Policy while the Essential Agreement remains in force in its current terms?

(iii) 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?

(iv) Given s.739(5) of the Fair Work Act 2009, does the Commission have power to determine the Dispute Proceedings in a manner that would permit Essential to amend the Policy?’

Consideration

[28] There are a number of common elements to the matters before me.

[29] Ausgrid and Essential Energy have each been financially impacted by the AER Determination and as a consequence they are both seeking to amend their existing redundancy policies. In each case a dispute exists as to their capacity to amend the existing redundancy policies given the terms of the respective enterprise agreements. In the case of Ausgrid the dispute extends to the effect of Schedule 4 to the ENA Act.

[30] As I have mentioned, the referral applications are brought pursuant to s.608 of the Act. Section 608 confers a discretion on the President to refer questions of law for the opinion of the Federal Court. The questions sought to be referred must be questions of law arising in a matter before the Commission. In the present matter I am satisfied that the questions sought to be referred are questions of law and that they arise in a matter before the Commission. I now turn to the discretionary considerations.

[31] The discretion conferred by s.608(1) is to be exercised having regard to the purpose and objects of the Act. Section 577 is relevant in this regard. It provides, among other things, that the Commission must perform its functions and exercise its powers in a manner that is ‘fair and just’ and ‘is quick, informal and avoids unnecessary technicalities’.

[32] In my view the discretion conferred by s.608 should, where appropriate, be exercised in such a way as to avoid undue delay in the determination of matters before the Commission. Such an approach is entirely consistent with the decisions of a number of Full Benches in relation to the legislative antecedents to s.608. 2

[33] The Unions submit that the proposed questions are appropriate for referral on the basis that there is a degree of complexity associated with the questions and that the determination of the questions will have significant consequences for Ausgrid, Essential Energy and a large number of employees. The Unions also submit that the matters will be determined more quickly if the referrals are granted.

[34] It may be accepted that the questions sought to be referred in the present matter involve a degree of complexity and that the determination of the questions will have significant consequences for those covered by the agreements. But I am not persuaded that such considerations warrant granting the referral applications.

[35] The resolution of the disputes which are the subject of the present applications will involve the Commission forming and acting upon its opinions about the construction of the respective enterprise agreements and, in the Ausgrid matter, the terms of a State act insofar as they are relevant to the determination of the dispute. There is nothing unusual or novel about such a task. In exercising the power of private arbitration part of the Commission’s function usually involves interpreting the terms of the relevant agreement. The task of interpreting the terms of an enterprise agreement often presents a degree of complexity, particularly where the agreement incorporates other instruments. Further, the resolution of such disputes will often have significant consequences for the parties. While the present matters are of importance to the parties concerned they do not raise issues of general importance which travel beyond the resolution of the particular disputes. I am not persuaded that it is appropriate to elevate the issues in these matters to a Full Court of the Federal Court.

[36] There is a further matter which tells against granting the referrals.

[37] Ausgrid and Essential Energy are incurring substantial costs as each day passes. It is necessary that the relevant disputes be dealt with expeditiously. The most expeditious course is to allow the matters to proceed before Vice President Hatcher. I note that the Vice President has reserved 9 October 2015 for the hearing of the preliminary questions. Contrary to the submissions put on behalf of the Unions I am not persuaded that these matters will be determined more quickly if the referrals are granted. It is common ground that the answers to the questions sought to be referred will not necessarily determine the issues between the parties. The agreed facts documents prepared by the parties state that should the threshold questions be determined against the Unions there will remain a dispute as to whether any new policy should be introduced and, if so, the terms of that new policy, including whether that new policy ought to permit forced redundancies and/or provide for significantly lower redundancy payments.

[38] In all the circumstances I am not persuaded that it is appropriate to grant the referrals.

[39] The applications are refused.

PRESIDENT

Appearances:

Mr Taylor SC of Counsel and Mr Aron Neilson for 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.

Mr H Dixon SC and Mr Gerard Phillips for Ausgrid.

Mr H Dixon SC and Ms Alice DeBoos for Essential Energy.

Hearing details:

2015.

Sydney.

September 3.

 1   See Joint Exhibit Essential Energy and Joint Exhibit Ausgrid

 2   The Hoyts Corporation Pty Ltd and Australian Theatrical and Amusement Employees Association, Print K4341; Re Firemores Pty Ltd, Print M5301; Bulga Coal Management Pty Ltd v CFMEU, Print PR92444

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